China Environmental Technology : Announcements and Notices - Major Transaction in Relation to the Acquisition of the Entire Issued Share Capital in Ubaby Holdings Inc. Involving the Issue of Convertible Bonds under Specific Mandate

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

中國環保科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

The Board is pleased to announce that, on 25 July 2017 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, the Vendor, the Warrantor and the Company entered into the Agreement, pursuant to which the Purchaser has conditionally agreed to acquire, and the Vendor has conditionally agreed to sell, the Sale Shares, representing the entire issued share capital of the Target Company, at the Consideration of HK$104,000,000, which will be satisfied by the issue of the Convertible Bonds.

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 25% but all of them are below 100%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules, and is therefore subject to the reporting, announcement and Shareholders' approval requirements.

The issue of the Convertible Bonds and allotment and issue of the Conversion Shares under the Agreement are subject to the Specific Mandate to be sought from the Shareholders at the EGM.

As at the date of this announcement, to the best knowledge, information and belief of the Directors, having made all reasonable enquiries, no Shareholder has any material interest in the Acquisition and as such, none of the Shareholders is required to abstain from voting at the EGM in respect of the resolution(s) to approve the Acquisition and the Specific Mandate.

The EGM will be convened and held for the Shareholders to consider, and if thought fit, to approve, the Agreement and the transactions contemplated thereunder, including the grant of the Specific Mandate.

A circular containing, among other things, (i) further information of the Agreement and the transactions contemplated thereunder; (ii) financial information of the Group and the Target Group; (iii) pro forma financial information on the enlarged group; (iv) valuation report on the Target Company; and (v) notice of the EGM, will be despatched to the Shareholders on or before 29 September 2017 so additional time is required for the preparation of the relevant information for inclusion in the circular.

The Board is pleased to announce that, on 25 July 2017 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, the Vendor, the Warrantor and the Company entered into the Agreement, pursuant to which the Purchaser has conditionally agreed to acquire, and the Vendor has conditionally agreed to sell, the Sale Shares, representing the entire issued share capital of the Target Company.

The principal terms of the Agreement are summarized as follows:-

25 July 2017 (after trading hours)

1. Purchaser: INNOMED Group Limited;

2. Vendor: Circle Chain Limited;

3. Warrantor: Gold Champion Corporation; and

4. the Company.

As at the date of this announcement, to the best knowledge, information and belief of the Directors, having made all reasonable enquiries, the Vendor, the Warrantor and their ultimate beneficial owners are Independent Third Parties.

The Sale Shares, representing the entire issued share capital of the Target Company which is wholly owned by the Vendor.

The Consideration of HK$104,000,000 shall be payable by the Purchaser through issuing the Convertible Bonds at the initial Conversion Price of HK$0.22 per Conversion Share by the Company to the Vendor in the following manner:

1. 50% of the Consideration shall be payable by the Purchaser through duly and validly issuing the Convertible Bonds in the aggregate principal amount of HK$52,000,000 to be issued by the Company to the Vendor upon Completion (the "First Batch Convertible Bond"); and

2. 50% of the Consideration shall be payable by the Purchaser through duly and validly issuing the Convertible Bonds in the aggregate principal amount of HK$52,000,000 to be issued by the Company to the Vendor immediately upon the guaranteed net profit as set out in the section headed "Net Profit Guarantee" below having been met and reflected in the Audited Statements (the "Second Batch Convertible Bond").

The Consideration was determined after arm's length negotiations between the Purchaser and the Vendor with reference to among others, the preliminary valuation of the entire interest of the Target Company of HK$104,000,000 million as at 30 June 2017 prepared by Crowe Horwath (HK) Consulting & Valuation Limited, an independent valuer, based on the market approach.

Completion is conditional upon the satisfaction (or waiver) of the following conditions precedent:

1. the passing of the necessary resolutions by the Vendor approving the Agreement and all other transactions contemplated under the Agreement and the granting of such regulatory approvals as may be necessary;

2. all necessary authorisations, consents, licences, agreements, approvals or permissions of any kind of, from or by third parties and/or government or regulatory authorities required to implement all the transactions contemplated under the Agreement having been obtained by the Vendor and/or the Target Group on terms acceptable to the Purchaser and remaining in full force and effect in any material respect;

3. the Stock Exchange having granted or having agreed to grant and not having withdrawn or revoked the listing of, and permission to deal in, the Conversion Shares;

4. the passing of the ordinary resolution(s) by the Shareholders (to the extent they are not prohibited from voting on such resolution(s) under the Listing Rules) at the extraordinary general meeting of the Company approving the Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate for the issue of the Convertible Bonds and allotment and issue of the Conversion Shares);

5. the representation, warranties and/or undertakings given by the Vendor and the Warrantor under the Agreement are given on and as at the date of the Agreement with respect to the facts and circumstances subsisting as at the date of the Agreement and shall remain true, accurate in all material respects and not misleading in any material respect throughout the period from the date of the Agreement to the Completion Date, and there having been no breach by any party of the Agreement which has a Material Adverse Effect;