China Healthcare : Announcements and Notices - Discloseable and Connected Transaction

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CHINA HEALTHCARE ENTERPRISE GROUP LIMITED

華 夏健 康產 業集團 有 限公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1143)

DISCLOSEABLE AND CONNECTED TRANSACTION

THE AGREEMENT

The Board is pleased to announce that on 18 July 2017 (after trading hours), the Purchaser and the Vendor entered into the Agreement pursuant to which the Purchaser has agreed to acquire, and the Vendor has agreed to sell 51% of the entire issued share capital of the Target Company at the consideration of RMB1 (equivalent to approximately HK$1.14).

IMPLICATIONS OF THE ACQUISITION UNDER THE LISTING RULES

As one or more of the relevant percentage ratios under Rule 14.07 of the Listing Rules are over 5% but do not exceed 25% for the Company in relation to the Acquisition, the Acquisition constitutes a discloseable acquisition for the Company under Rule 14.06(5) of the Listing Rules.

The Vendor is indirectly wholly-owned by Mr. Yang, a substantial Shareholder, and therefore is a connected person of the Company. Hence the Acquisition also constitutes a connected transaction of the Company. As at the date of this announcement, Mr. Duan Chuanhong, an executive Director, is also a director of the Vendor and has abstained from voting on the board resolution of the Acquisition. Save for this, no Director has any interest in the Acquisition. As all the percentage ratios of the Acquisition are less than 25% and the total consideration is less than HK$10,000,000, the Acquisition constitutes a de minimis transaction under Rule 14A.76 of the Listing Rules, and therefore is exempt from the circular and shareholders'approval requirements.

The Board is pleased to announce that on 18 July 2017 (after trading hours), the Purchaser and the Vendor entered into the Agreement pursuant to which the Purchaser has agreed to acquire, and the Vendor has agreed to sell 51% of the entire issued share capital of the Target Company at the consideration of RMB1 (equivalent to approximately HK$1.14).

Set out below are details of the Agreement:

THE AGREEMENT

Date 18 July 2017

Parties (1) the Purchaser (as the purchaser); and

(2) the Vendor (as the vendor)

The Vendor is a company incorporated in the PRC and principally engaged in healthcare business in the PRC. As at the date of this announcement, the Vendor is indirectly wholly-owned by Mr. Yang, a substantial Shareholder of the Company, and therefore is a connected person of the Company. In addition, Mr. Duan Chuanhong, an executive Director, is also a director of the Vendor.

Based on information provided by the Vendor, the Vendor's purchasing cost attributable to the Target Company was RMB1 (equivalent to approximately HK$1.14).

Assets to be acquired

Pursuant to the Agreement, the Purchaser has agreed to acquire, and the Vendor has agreed to sell 51% of the entire issued share capital of the Target Company at the consideration of RMB1 (equivalent to approximately HK$1.14).

Conditions and completion

The Vendor has agreed to, within two Business Days from the date of the Agreement, present relevant documents and assist the Purchaser to register share transferring under the Agreement in relevant industry and commercial bureau, and ensure that documents for share transferring under the Agreement can fulfill the bureau's requirement.

Consideration

The Consideration under the Acquisition is RMB1 (equivalent to approximately HK$1.14), which will be paid by the Purchaser in cash within two Business Days from the date of the Agreement. The Consideration was arrived at after arm's length negotiations between the Purchaser and the Vendor, with reference to, among others, (a) financial performance and position of the Target Company; (b) growth potential in the Target Company; and (c) historical purchasing cost of the Vendor.

INFORMATION ON THE TARGET COMPANY

The Target Company is a company incorporated in the PRC in 2005 and principally engaged in trading and selling of medical equipments (such as Gastroscopy and Duodenoscopy) to customers including local hospitals. The Target Company mainly focuses on medical business in the Anhui Province, the PRC.

Financial information

Based on the information provided by the Vendor, set out below is a summary of the unaudited financial information of the Target Company for two years ended 31 December 2016:

For the year

ended 31 December

2015

For the year

ended 31 December

2016

RMB'000 RMB'000

(unaudited) (unaudited)

Revenue 22,601 34,945

Net profit before taxation 989 3,525

Net profit after taxation 785 2,644

As at 31 December

2016

HK$'000

(unaudited)

Net assets 7,428

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITION

The Group is principally engaged in (i) electronic manufacturing services; (ii) marketing and distribution of communications products; and (iii) securities and other assets investments.

It is the Company's business strategy to shift its business focus on the medical and healthcare industry in the PRC, which is now expanding at a high speed. Having considered the Target Company's business and financial performance in the past, the Acquisition represents a good opportunity for the Group to expand into the medical industry and to broaden its income base. The terms of the Agreement were arrived at arm's length negotiations between the Purchaser and the Vendor. The Board (including all independent non-executive Directors) considers the terms of the Agreement are normal commercial terms and fair and reasonable, and, if materialized, will be in the interests of the Company and its Shareholders as a whole.

IMPLICATIONS OF THE ACQUISITION UNDER THE LISTING RULES

As one or more of the relevant percentage ratios under Rule 14.07 of the Listing Rules are over 5% but do not exceed 25% for the Company in relation to the Acquisition, the Acquisition constitutes a discloseable acquisition for the Company under Rule 14.06(5) of the Listing Rules.

The Vendor is indirectly wholly-owned by Mr. Yang, a substantial Shareholder, and therefore is a connected person of the Company. Hence the Acquisition also constitutes a connected transaction of the Company. As at the date of this announcement, Mr. Duan Chuanhong, an executive Director, is also a director of the Vendor and has abstained from voting on the board resolution of the Acquisition. Save for this, no Director has any interest in the Acquisition. As all the percentage ratios of the Acquisition are less than 25% and the total consideration is less than HK$10,000,000, the Acquisition constitutes a de minimis transaction under Rule 14A.76 of the Listing Rules, and therefore is exempt from the circular and shareholders'approval requirements.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following respective meanings:

''Acquisition'' the sale and purchase of 51% of the entire issued share

capital of the Target Company as contemplated under the Agreement;

''Agreement'' the share purchase agreement dated 18 July 2017 entered into between the Purchaser and the Vendor in respect of the Acquisition;

''Board'' the board of Directors;

''Business Day'' means any day (other than a Saturday or Sunday or public

holiday) on which banks in Hong Kong are open for the transaction of normal business;

''Company'' China Healthcare Enterprise Group Limited, a company incorporated in the Cayman Islands with limited liability and the securities of which are listed on the Stock Exchange;

''connected person'' has the meaning given to it under the Listing Rules;

''Director'' the directors of the Company;

''Group'' the Company and its subsidiaries;

''Hong Kong'' the Hong Kong Special Administrative Region of the PRC;

''Listing Rules'' the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited;