Addchance Holdings Limited, a leading global textile manufacturer principally engaged in the production and sale of dyed yarn, knitted sweaters and cotton yarn; the provision of dyeing and knitting services; and the trading of cotton and yarns in Hong Kong, mainland China and Cambodia, announced that it has entered into an operation rights transfer agreement with an independent third party.
The Group has agreed to transfer the Operation Rights of its wholly owned PRC Subsidiary to the independent third party for an aggregate consideration of approximately HK$554 million. The PRC Subsidiary currently holds the land use rights of eight sites situated in Luoding City, Guangdong Province, China.
Upon the completion of the transaction, the Group will record a gain before tax of approximately HK$435 million. The proceeds will serve as working capital for the Group. The transaction will bring a positive financial gain, and will strengthen the Group's cash flow and financial position, put further focus and resources on the development of the Group's core business, and thus enhance the overall operating strength and profitability of the Group.
The Group's Chairman Mr. Sung Kim Wa said, "The European debt crisis and slow recovery of the US economy, together with the fluctuation in raw material prices and the appreciation of the RMB, will continue to affect the operating environment and the landscape of the textile industry, which will remain challenging. However, we strive to maintain our cost advantages leveraging our stepped up efforts in improving operational efficiency and our supply chain management, as well as efforts to stabilize raw material costs. In addition, the Group will continue to focus on the production of mid-to-high end products, further expand domestic sales and the scale of production of sweaters, and enhance the sales contribution and market share of the China market."
The Group's environmentally friendly plant, which began construction in Cambodia last year, is being built in two phases to increase the Group's production capacity of knitted sweaters and to meet the growing demand from renowned European customers. The total investment cost of the environmentally friendly plant exceeds HK$100 million.
The design of the newly-built plant aims to achieve energy efficiency and emissions reduction, and is the first environmentally friendly plant in Cambodia featuring the most advanced and comprehensive environmentally friendly production facilities, meeting the strict environmental protection standards and regulations of our European customers. The establishment of this green factory is well underway, and the Group expects to launch phase one to commence mass production in the second half of 2012. Upon the completion of the entire project, the overall annual production capacity of the Group's knitted sweaters will increase by 20%, which will further satisfy the demand from renowned European customers and enhance the Group's market share.
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