PDF《中国东方集团控股有限公司》

31 December

2013 and

31 December

2014 prepared in accordance with the general accepted accounting principles of the PRC: For the year ended

31 December

2013 For the year ended

31 December

2014 Other revenues RMB146,115,000 RMB136,794,000 Profit/(loss) before tax RMB512,000 (RMB31,441,000) Profit/(loss) after tax RMB371,000 (RMB23,582,000) Net assets RMB129,623,000 RMB107,820,000

5 REASONS FOR AND BENEFITS OF THE ACQUISITION Currently Jinxi Special Steel leases from Jinxi Wan Tong its production facilities which are used for production of the Group'

s steel products at the annual rental of RMB 204,000,000 plus sharing of 30% of the net profit but not the net loss of Jinxi Special Steel pursuant to the Tenancy Agreement. Jinxi Special Steel attains an annual steel production capacity of 2,000,000 tonnes through such lease arrangement. With entering into the Share Transfer Agreement, the Acquisition will reduce the Group'

s future cash outflows in the long term by terminating rental payment under the Tenancy Agreement. Therefore, the Acquisition will help reducing the Group'

s production costs and future cash outflows, and securing the Group'

s annual steel production capacity of 2,000,000 tonnes. The Directors (including the independent non-executive Directors) are of the view that the Share Transfer Agreement and the Acquisition contemplated thereunder are entered into in the ordinary and usual course of the business of the Group on normal commercial terms or better and have been negotiated on an arm'

s length basis between Jinxi Special Steel and Xin Ding Da and the terms thereof together with the Acquisition under the Share Transfer Agreement are fair and reasonable and in the interest of the Company and its Shareholders as a whole. IMPLICATION UNDER THE LISTING RULES As the relevant applicable percentage ratios in respect of the Acquisition exceed 5% but are less than 25%, the entering into of the Share Transfer Agreement and the Acquisition contemplated thereunder constitutes a connected and discloseable transaction for the Company and is subject to the reporting, announcement and independent Shareholders'

approval requirements under Chapter

14 and Chapter 14A of the Listing Rules. By virtue of Rule 14A.101 of the Listing Rules, as (i) Xin Ding Da is a connected person of the Company at the subsidiary level;

(ii) the Acquisition under the Share Transfer Agreement is on no........