Business Scope Extended to Northern and Western PRC
Further Strengthen Profitability
HONG KONG, Aug. 20 /Xinhua-PRNewswire/ -- China Water Industry Group Limited (“China Water Industry” or the “Group”) (stock code: 1129) today announced that its wholly-owned subsidiary has entered into an agreement with an independent party (the “Vendor”) about the acquisition of 100% issued share capital in Affluent Boom Enterprises Limited(“Affluent”).
Affluent is an investment holdings company, and its subsidiaries are involved in sewage treatment and water supply businesses in China. The water service group held by Affluent is currently operating seven sewage treatment plants in Huizhou City, Sihui City, Huidong County, Boluo County of Guangdong Province and Baoji City of Shaanxi Province, and one water supply plant in Tangshan City of Hebei Province, which is partially under construction and will commerce operation by next year. The aggregate sewage water treatment capacity reached 480,000 tons per day, and the aggregate water supply capacity reaches 180,000 tons per day. The profits before taxation of Affluent for the year 2007 and first half year of 2008 are HK$41,000,000 and HK$29,730,000 respectively.
The total consideration of the acquisition of Affluent is HK$700,000,000, among which i) as to RMB30,000,000 having been paid in two phases within 21 days from the date of the Agreement as deposit; ii) by issue of the Convertible Bond which to be matured in 2012, up to a maximum amount of HK$585,000,000 to the Vendor on Completion; and iii) the remaining balance by way of allotment and issue of the Consideration Shares at the Issue Price.
The Vendor has unconditionally warranted and guaranteed a consolidated net profit after tax the Group would obtain from the acquisition during the first year, the second year and the third year after the acquisition shall not be less than RMB40,000,000, RMB80,000,000 and RMB120,000,000 respectively, and it shall deposit with an escrow agent the Certificates representing HK$120,000,000 as a guarantee.
Huizhou, Huidong, Boluo and Sihui in Guangdong are located at the North-Eastern and North-Western end of the Pearl River Delta. With rapid growth in populations as well as economies, local governments in the area regarded sewage treatment projects and actively nourished corporations in the water industry. Sewage treatment fee at the area was RMB0.86 per ton to RMB1.10 per ton with sewage treatment scale growing on a stable track. At the same time, Baoji City and Tangshan City, being the industry hubs in the western and northern PRC, is where locally and internationally renowned large scale state-owned enterprise and large number of private and foreign-invested companies located. Industrial water usage and sewage treatment demand grew by high speed of 35% to 50% per annum and industrial-use water price is on a rising trend. Benefited from such a favourable environment and various policies, the eight sewage treatment and water supply projects have a huge development potential and very good profitability.
Mr. Li Yu Gui, Chairman of China Water Industry, said, “Apart from the number of water service corporations, the water service group controlled by Affluent is equipped with strong team of experienced environmental protection professionals, National Grade A standard pollution treatment facilities, as well as ISO9001 environmental project design and sewage treatment operations quality control certification. This acquisition is a very important milestone for China Water Industry as this raised the Group’s water supply and sewage treatment capacity to 2,480,000 tons per day and 580,000 tons per day respectively. If the above is added to the water supply capacity of 3,050,000 tons per day and sewage treatment capacity of 835,000 tons per day of projects with letter of intent signed in Shenyang City, Yunfu City, and Geermu City, the total water supply capacity and sewage treatment capacity of the Group will reach 5,500,000 tons per day and 1,415,000 tons per day respectively. The group is getting closer and closer to its goal of attaining water supply capacity of 10,000,000 tons per day and sewage treatment capacity of 2,000,000 tons per day. Furthermore, the Group has successfully expanded its water business network to western and northern PRC, and gradually became a nation-wide influential water service group. We will actively pursuit and acquire more quality water service projects to strengthen the Group’s profitability and bring better return to shareholders.”
About China Water Industry Group Limited (stock code: 1129)
China Water Industry Group Limited is set to become a leader in China’s water investment and operation and management industry. The Group has been actively tapping the water industry in China during these years. Recently, the Group has progressively acquired all or part of the interests in the water supply and/or sewage treatment projects in Yichun City and Yingtan City of Jiangxi Province, Dangshan County of Anhui Province, Jinan City of Shandong Province, Jinxiang County in Jining city of Shandong Province, Linyi City of Shandong Province, Shangqiu City of Henan Province and Danzhou City of Hainan Province. With a wealth of professional management team comprising experts of city construction and water infrastructure investment, operation and management, the Group has also forged close cooperative relationship with many leading water facilities construction and design enterprises in China.
For press enquiries：
Strategic Financial Relations (China) Limited
Mr. Marcus Keung
Tel: +852-2114-4967
Email: marcus.yeung@sprg.com.hk
Ms. Arlene Wong
Tel: +852-2864-4899
Email: arlene.wong@sprg.com.hk
Ms. Amanda Xu
Tel: +852-2864-4860
Email: amanda.xu@sprg.com.hk
List of sewage treatment and water supply projects under Affluent
Project Location Term of Daily water
name operation supply/
sewage
treatment
capacity
Sewage treatment projects
Da Xin Baoji 25 years Approximately - Baoji City in western
Waterworks City, 38,000 tons central Shaanxi Province
Management Shaanxi comprises 9 counties and 3
(Baoji) Province districts of total area
Co., Ltd. 18,000 sq. km. and has a
population of 3,670,000
- Baoji has a strong
industrial foundation, with
state-owned enterprises,
enterprises and
multi-investor enterprises
gaining strength since the
country started to reform
and open its economy
- Economic growth has fuelled
demand for sewage treatment
Boluo Boluo 22 years Approximately - Bolo County is in
Municipal County, 30,000 tons southeastern Guangdong
City Guangdong Province, at the
Sewage Province northeastern end of the
Treatment Pearl River Delta and on the
Co., Ltd. northern shore middle and
downstream Dongjiang river
- The county spans 2,795 sq.
km. and has a population of
1,200,000. It is one of the
modern industry and
agricultural bases in
Guangdong with vision
Transcending boundary.
In 2007, it boasted a total
domestic product of RMB19.81
billion in value
- Rapid economic and
population growth in areas
along the Dongjiang river
has led to discharge of
untreated sewage into the
river causing serious
pollution. Thus,
construction of the sewage
treatment plant is necessary
and urgent
Huidong Huidong 22 years Approximately - Huidong County is in Daya
Municipal County, 40,000 tons Bay and Red Sea Bay,
Pingshan Guangdong neighboring the Shenzhen
Sewage Province Special Economic Zone
Treatment and Shantou Special Economic
Factory Zone. It is a major
Co., Ltd. transportation hub and
product distribution center
in eastern Guangdong
Province
- It is a major city on the
ocean shore with land
spanning 3,535 sq. km. and
a population of 730,000.
- In 2007, its total domestic
product value reached
RMB17.82 billion
- Pingshan Sewage Treatment
Plant project is the first
local sewage treatment plant
in Huidong
- The sewage treatment plant
will not only help to
improve quality downstream
West Lake, but will also
help to enhance the general
environment and ecological
well-being of areas
surrounding Huidong County
Huizhou Huizhou 25 years Approximately - Shuikou Town, Huicheng
No. 4 City, 30,000 tons District is in eastern part
Sewage Guangdong of Huizhou City, neighboring
Treatment Province the Huizhou Airport in the
Co., Ltd. south and the Huizhou city
area in the west. It is a
key development focus of
Guangdong Province
- It has a total area of 120
sq. km. and a population
of 100,000
- The arrival CNOOC and Shell
Petrochemicals Company and
their project in the town
has brought its development
and environmental endeavors
under the spotlight
- The revised overall plan of
Shuikou predicts notable
population and industrial
growth for the town, which
will lead to quick increase
in sewage discharge
- A new sewage treatment plan
will help to address
effectively the problem of
pollution resulting from
economic prosperity
Huizhou Huizhou 22 years Approximately - Huizhou City is in
No. 6 City, 30,000 tons Southeastern Guangdong
Sewage Guangdong Province and the
Treatment Province northeastern end of the
Co., Ltd. Pearl River Delta. It
neighbors Daya Bay in the
south and Hong Kong
and Shenzhen. It is the home
of two state-level
development zones, namely
the Daya Bay Economic and
Technological Development
Zone and Huizhou Zhongkai
Hi-tech Development Zone
- It has an area of 11,200 sq.
m. and a total population
of 2,600,000 Currently,
there is no central
processing of sewage in
Jiangbei and Qiaodong and
the sewage collection
engineering project in
Hengjiangli has yet to be
completed
Sihui Sihui 20 years Approximately - Sihui City is in
City City, 50,000 tons central-western
South Guangdong Guangdong Province, on the
China Province northwestern brim of the
Waterworks Pearl River Delta and
Development downstream the Xijiang,
Co., Ltd. Beijiang and Suijiang
rivers
Sihui Sihui 30 years Approximately - It spans 1,163 sq. km. and
Urban City, 30,000 tons has a population of about
City Guangdong 440,000
Sewage Province - Rapid growth of the
Treatment population, tertiary
Co., Ltd. industries and other
industries in the city has
resulted in surge of urban
household sewage and
industrial waste water
discharge
- Having an urban sewage
treatment plant in the city
will effectively alleviate
pollution in sections of the
Suijiang and Longjiang
rivers
- Sewage will be collected
within the boundary of
Suijiang in the south and
the urban area of Sihui
city in the east and west
and City Park also in the
west, covering a total area
of about 31 sq. km. and a
population of 235,000
Water supply projects
Tangshan Laoting Infinite Approximately - Laoting County is in the
City harbor 180,000 tons southeastern part of Tangshan
Hongxiang front City, Hebei Province. It is
Waterwork industrial One of the largest coastal
Co., Ltd. park, counties in Hebei Province
Tangshan - Capitalizing on its advantage
City, as a coastal county, Laoting
Hebei has built an industrial park
Province facing the ocean and so far
major tenants such as
Tangshan Heavy Plate plant
and Baoye Coking plant have
moved in
- Enterprises building
facilities there included
Shougang steel plant, Tongle
chemical plant, Xuyang Coking
plant, cold rolled sheet of
Tangshan Iron and Steel
Co., shipbuilding factories
and glacial acetic acid
factories
- Water consumption in 2008,
2009 and 2010 is estimated
at 22,360,000 tons,
42,210,000 tons and
63,750,000 tons respectively
Da Xin Huizhou 30 years Approximately - Fixed annual income of
Waterworks City, 38,000 tons RMB15,000,000 for provision
Management Guangdong of management and
(Huizhou) Province technological consultancy
Co., Ltd.
