ACE.L Regulatory News (ACE)



AUHUA CLEAN ENERGY PLC

("Auhua" or "the Company")

Acquisition of Ziolar Pte Ltd and Taiwan Ziolar Technology Co. Ltd

3 March 2014: Auhua Clean Energy Plc (AIM: ACE) (the "Company" or "Auhua"), the environmental technology group, is pleased to announce that it and its subsidiary, Auhua Holdings Pte Ltd have today entered into a definitive Sale and Purchase agreement ("S&P Agreement") with Ziolar Pte Ltd ("Ziolar"), Steve Peng, Yu-Yao Eddie Chen, Riezen Pte Ltd , SSP Innovations Pte Ltd and Taiwan Ziolar Technology Co. Ltd ("Taiwan Ziolar") for the acquisition of (i) the entire business and assets of Ziolar (the "Business Acquisition"); and (ii) the entire issued share capital of Taiwan Ziolar, a company incorporated in Taiwan (the "Share Acquisition") (together the "Ziolar Acquisition").

The Company has agreed to satisfy the total consideration of US$4.5 million (approximately £2.7 million) for the Ziolar Acquisition by issuing 6,944,400 Auhua Shares (the "Consideration Shares") at 40 pence per Auhua Share to SSP Innovations (3,086,400 Auhua Shares), Steve Peng (2,314,800 Auhua Shares) and Yu-Yao Eddie Chen (1,543,200 Auhua Shares). Of the Consideration Shares, 3,086,400 shares (equivalent to US$2.0 million) will be subject to a lock-in for 18 months from the date of issue and the remainder of the Consideration Shares (equivalent to US$2.5 million) will be subject to a lock-in of 24 months from the date of issue. 

The Ziolar Acquisition is subject to the fulfilment of certain conditions precedent customary for these types of transactions such as regulatory approvals. The expected completion date for the Ziolar Acquisition is 30 April 2014.

The Ziolar Acquisition will provide Auhua with high-end solar thermal panel manufacturing technology and assist it in its transformation from being a successful Chinese domestic solar split-unit water heater manufacturer to an international player. The financial benefits of the acquisition are expected to start to take effect from 2015.

Auhua specializes in energy efficient water heating solutions, with a focus on the manufacture and sale of solar powered water heating systems. Taiwan Ziolar is expected to bring state-of-the-art thermal panel technology to Auhua, a vital component in solar powered water heater systems. The proposed Taiwan Ziolar acquisition is expected to add advanced coating technology that would enhance Auhua's system efficiency performance and reduce production costs, thereby helping to create a long-term competitive advantage for Auhua in the solar thermal water heater industry. Initial prototypes have shown a reduction in manufacturing costs by up to 30% and efficiency yields equivalent to the best international products. Patents have been filed in both the United States and China. Further, the innovative technology would enable the installation of smaller sized panels with good efficiencies, better utilised in high rise buildings.

Commenting on the acquisition, David Sumner, non-executive Chairman of Auhua, said: "The acquisition of Ziolar's business and technologies will significantly broaden our technical capability, enhance our competitive advantage and a stepping stone to our internationalisation strategy."

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About Auhua:

Auhua Clean Energy (www.auhuacleanenergy.com) is an environmental technology group based in the Shandong Province of Eastern China specialising in the development and application of green energy and energy efficient solar water heating solutions. In particular, the Group is focused on the manufacture and sale of split-unit solar water heating systems. Auhua Clean Energy operates through its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd and Weihua Auhua New Energy Co., Ltd., of which Auhua Holdings Pte Ltd is the intermediate holding company.