Qihang Equipment Company Limited Disposal (0341V)

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RNS Number : 0341V

Qihang Equipment Company Limited

08 January 2013

Qihang Equipment Company Limited

8 January 2013

Disposal of Zhenjiang Anda Coal Mine Special Equipment Co., Ltd

On 6 January 2012 Qihang Equipment Company Limited ("Qihang" or "Company") announced the acquisition of Zhenjiang Anda Coal Mine Special Equipment Co. Ltd ("Anda") for a consideration of RMB 35 million in cash (approximately GBP3.5 million), of which RMB 5 million (approximately GBP0.5 million) was deferred until 31 March 2013 and conditional upon Anda reporting a profit after taxation of at least RMB 9 million (approximately GBP0.9 million) in the year ended 31 December 2012.

It has become apparent to the directors of Qihang that Anda will not be capable of meeting its profit target for the year ended 31 December 2012 and that its prospects as part of the Qihang group are not as great as previously envisaged. As a result, the directors of Qihang have reached agreement with the original vendors to sell Anda back to them for a consideration of RMB 30 million in cash, representing the consideration paid originally. The proceeds of the disposal will be used to reduce group indebtedness and for general working capital purposes

In the year ended 31 December 2011, being the last full accounting period reported upon, Anda achieved a profit after taxation of RMB 4.8 million (approximately GBP0.48 million) on turnover of RMB 67.4 million (approximately GBP6.7 million) and at 31 December 2011 it had net assets of RMB 22.1 million (approximately GBP2.2 million).

Commenting on the disposal, Mr Li, chief executive of Qihang stated:

"Due to the slowdown of China's economy, the demand for coal mining equipment decreasing during 2012. As a result, Anda did not meet our expectations. We are pleased to have reached agreement with the original vendors to sell Anda back to them for the cash consideration Qihang originally paid. After the disposal, the group will have reduced indebtedness and increased working capital and can focus on its core machine tools operations, which we believe will have a positive effect for the group and shareholders overall."

Further Information:

Qihang Equipment Company Limited

   Mr Yuanqing Li, CEO                                       Tel: [phone] 
   Mark Chapman, Chairman                           Tel: [phone] 

Northland Capital Partners Limited, Nominated Adviser and Joint Broker

   William Vandyk / Tim Metcalfe                 Tel: [phone] 

This information is provided by RNS

The company news service from the London Stock Exchange

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