Acquisition (1194V)
06 Janeiro 2012 - 5:19AM
UK Regulatory
TIDMQIH
RNS Number : 1194V
Qihang Equipment Company Limited
06 January 2012
Qihang Equipment Company Limited
Acquisition of Zhenjiang Anda Coal Mine Special Equipment Co.,
Ltd
Qihang Equipment Company Limited (the "Company") is pleased to
announce that it has entered into an agreement for the acquisition
of the entire issued share capital of Zhenjiang Anda Coal Mine
Special Equipment Company Limited ("CM Special Equipment") for a
cash consideration of up to RMB 35 million (approximately GBP3.6m)
(the "Acquisition"), to be met from existing cash resources.
CM Special Equipment is a manufacturer of coal mining equipment
such as drilling machines, pumps, dust catchers, drill pipe and
accessories. The acquisition of CM Special Equipment will open an
entirely new machine market to the Company, increase its revenue
and profitability and, it is hoped, lead to increased operational
efficiencies through shared sales and research & development
channels.
During the year ended 31 December 2011, CM Special equipment
recorded an unaudited turnover of RMB 67.38m (approximately
GBP6.8m), EBIT of RMB 9.79m (approximately GBP1.0m) and net profit
of RMB 6.2m (approximately GBP0.6m). The unaudited net assets of CM
Special Equipment as at 31 December 2011 was RMB 23.84m
(approximately GBP2.42m).
RMB 30 million of the consideration is payable immediately and
the balance RMB 5 million is payable by 31 March 2013 conditional
upon CM Special Equipment reporting profit after tax of at least
RMB 9 million (approximately GBP0.9m) for the year ended 31
December 2012. In the event that CM Special Equipment does not
achieve this profit target then the deferred consideration will be
reduced proportionally.
CM Special Equipment is a company registered in Zhenjiang,
China. As Jiangsu Qihang CNC Machine Tool Company Limited, the
principal operating subsidiary of the Company, has guaranteed a
loan to CM Special Equipment and as a result of the commercial
relationship between the parties, the Acquisition constitutes a
related party transaction under the AIM Rules for Companies issued
by the London Stock Exchange. The directors of the Company
consider, having consulted with Northland Capital Partners Limited,
the Company's nominated adviser, that the terms of the Acquisition
are fair and reasonable insofar as the shareholders are
concerned.
Trading Update
As a result of a number of factors, 2011 witnessed slower growth
in the Chinese economy than previously anticipated, but Qihang has
performed in line with expectations. The Company is pleased to
report steady improvement in the sales of higher margin CNC machine
tools, rising to 28.3% of sales in 2011 from 24.5% in 2010, and in
exports, which accounted for approximately 8.8% of sales in 2011
against 4.2% in 2010. The Company anticipates publishing its
audited accounts for the year ended 31 December 2011 by no later
than 30 May 2011.
Mr Li, the CEO of the Company, commented:
"Today Jiangsu Qihang CNC Machine Tool Co., Ltd has successfully
conducted a strategic acquisition which takes Qihang into the coal
mine equipment market-a promising and prosperous market with high
barriers to entry but high gross margins. By means of the
Acquisition, Qihang could not only share its advanced technology
and rich experiences in the machinery manufacturing industry to
help improving the competitive power of Anda Coal Mine Special
Equipment Co., Ltd, but also further widen Qihang's markets."
Further Information
Qihang
Mr Yuanqing Li, CEO Tel: 0086 139 2159 4638
Mark Chapman, Chairman Tel: 0044 1483 894 627
Nominated Adviser and Joint Broker Tel: 0044 20 7796 8800
Northland Capital Partners Limited
William Vandyk / Tim Metcalfe
Joint Broker
Rivington Street Corporate Finance Tel: 0044 20 7562 3357 Jon
Levinson
This information is provided by RNS
The company news service from the London Stock Exchange
END
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