Chinney Alliance : DISCLOSEABLE TRANSACTION - ACQUISITION OF THE ENTIRE EQUITY INTEREST IN THE TARGET COMPANY

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.

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(Incorporated in Bermuda with limited liability)

(Stock Code: 385)

DISCLOSEABLE TRANSACTION -

ACQUISITION OF THE ENTIRE EQUITY INTEREST IN

THE TARGET COMPANY

THE ACQUISITION

The Board wishes to announce that on 26 November 2019 after trading hours, the Purchaser (being an indirect wholly-owned subsidiary of the Company), the Vendor and the Guarantor entered into the Acquisition Agreement, pursuant to which the Purchaser has agreed to purchase and the Vendor has agreed to sell the Target Equity (representing the entire equity interest in the Target Company) at the consideration of RMB104,000,000.

The Target Company is principally engaged in manufacture and sale of lighting and accessory products and LED lighting and accessory products with its own manufacturing facilities.

LISTING RULES IMPLICATION

As the highest applicable percentage ratio calculated in accordance with Rule 14.07 of the Listing Rules is above 5% and all applicable percentage ratios are less than 25%, the Acquisition constitutes a discloseable transaction for the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

INTRODUCTION

The Board wishes to announce that on 26 November 2019 after trading hours, the Purchaser, the Vendor and the Guarantor entered into the Acquisition Agreement, pursuant to which the Purchaser has agreed to purchase and the Vendor has agreed to sell the Target Equity.

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THE ACQUISITION AGREEMENT

Date: 26 November 2019 (after trading hours)

Parties:
Vendor:	Decoriental Manufacturing Co. Limited
Purchaser:	CSC (China) Limited
Guarantor:	Mr. Lau Chun Yin, the sole shareholder of the Vendor, as guarantor for
	the Vendor

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the principal activity of the Vendor is trading of lighting products, and both the Vendor and its ultimate beneficial owner (being the Guarantor) are Independent Third Parties.

Assets being acquired

Pursuant to the Acquisition Agreement, the Purchaser has agreed to purchase, and the Vendor has agreed to sell, the Target Equity, being all the paid up registered capital of and equity interest in the Target Company, free from encumbrances.

Upon completion of the Acquisition, the Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated into the Group's financial statements.

Consideration and payment terms

The consideration payable by the Purchaser for the Target Equity is RMB104,000,000, which shall be paid in cash in the following manner:

1. upon the signing of the Acquisition Agreement, a sum of RMB10,400,000 has been paid to the Vendor and the balance of the Consideration in the sum of RMB93,600,000 ("Stakeholder Monies") has been paid to the Purchaser's solicitors who shall held the same as stakeholders until the transaction has been completed (i.e. Completion Date has occurred and the agreed handover matters have been completed);
2. part of the Stakeholder Monies in the sum of RMB88,400,000 shall be released to the Vendor within 2 business days after the Completion Date and the transaction has been completed; and
3. the balance of the Stakeholder Monies in the sum of RMB5,200,000 shall be released to the Vendor (and/or its nominee as the Vendor and the Purchaser may agree) on the 90th day after the date of the Acquisition Agreement or the 7th business days after the Completion Date, whichever is later.

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The Consideration was determined after arm's length negotiation between the Purchaser and the Vendor with reference to the unaudited net asset value of the Target Company as at 30 September 2019 and valuation of the factory premises owned by the Target Company by a professional valuer in Hong Kong (which is an Independent Third Party) in the amount of RMB100,000,000 as at 31 October 2019.

Payment of the Consideration was financed by internal resources of the Group.

The Purchaser shall be entitled to deduct from the Stakeholder Monies any undisclosed liabilities of the Target Company prior to the Completion Date.

Taxes

The Purchaser shall be responsible for payment of the Bulletin 7 Tax and (if any) land appreciation tax arising from the sale of the Target Equity to the Purchaser, as well as the stamp duty payable on the transfer of the Target Equity.

Completion

The Vendor and the Guarantor shall procure the Target Company to complete, and assist the Purchaser with, the registration and filing of the transfer of the Target Equity and other incidental changes with the relevant PRC authorities as soon as possible.

Completion Date shall be the 3rd business days after the Vendor has provided the Purchaser with the original (which has to be verified by the Purchaser's PRC legal counsel) of the official filing receipt, notification of change and, where applicable, a new business license for the Target Company reflecting the changes.

If the Vendor and/or Guarantor shall be in breach of their obligations under the Acquisition Agreement, the Purchaser may terminate the Acquisition Agreement prior to the Completion Date, in which event the Vendor shall refund to the Purchaser forthwith all parts of the Consideration it received and compensate the Purchaser with a sum of RMB10,400,000 as liquidated damages and the Stakeholder Monies shall be returned to the Purchaser, but the Purchaser shall not have any further claims against the Vendor.

If the Purchaser refuses to proceed with completion (including paying the relevant taxes as mentioned above), then unless the same is due to the relevant PRC authorities, the Vendor may terminate the Acquisition Agreement and forfeit the RMB10,400,000 paid by the Purchaser but the Vendor shall not have any further claims against the Purchaser and the Stakeholder Monies shall be returned to the Purchaser.

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INFORMATION OF THE GROUP AND THE PURCHASER

The Group is mainly engaged in trading of plastics and chemical products, provision of building related contracting services (the "Building Services Division"), superstructure construction works, foundation piling works and sub-structure works in Hong Kong and Macau, distribution of aviation system and other hi-tech products, and property and investment.

The Purchaser is an indirect wholly-owned subsidiary of the Company and an investment holding company.

INFORMATION OF THE TARGET COMPANY

The Target Company is a wholly foreign owned enterprise established in the PRC in 1992 and principally engaged in manufacture and sale of lighting and accessory products and LED lighting and accessory products. It has its own manufacturing facilities in Changping Town, Dongguan, the PRC with a site area of approximately 33,000 square meters.

Based on the audited accounts of the Target Company for each of the two years ended 31 December 2018 prepared in accordance with the generally accepted accounting principles of the PRC, the loss, both before and after tax, of the Target Company were approximately RMB1,501,000 and RMB871,000 for the year ended 31 December 2018 and 2017, respectively.

Based on the unaudited management accounts of the Target Company, the net asset value of the Target Company as at 30 September 2019 amounted to approximately RMB20,881,000.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Purchaser is an indirect wholly-owned subsidiary of the Company under the Building Services Division, which engages in building related contracting services which mainly consist of (a) provision of electrical and mechanical ("E&M") engineering services in the areas of air-conditioning and ventilation systems, fire service systems, plumbing and drainage systems and electrical and extra-low voltage systems; (b) sales, installation and system integration of E&M products and equipment; and (c) provision of engineering, design and build and other consultancy services for the E&M systems used in data centers.

The Building Services Division has performed satisfactorily in Hong Kong and Macau during the last few years and the management of the division has been continuously looking for opportunities to further expand this business segment, in both services and products variety and in other geographical areas. In 2015, the Building Services Division acquired a company engaging in the sales and distribution of E&M products and equipment in Hong Kong. An original equipment manufacturer ("OEM") in the PRC has been engaged for the production of cable containment products and air ducts which are

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used not only for projects awarded and carried out by the Building Services Division, but also for sales to other third parties contractors in the E&M industry. The division also commenced the sale and installation of LED lighting in 2017, which includes products under its own trademark manufactured in the PRC by OEM. It has been the intention of the management of the Building Services Division to establish its own production facilities to further develop its business in sales of such products and equipment.

The Acquisition is considered as a good opportunity for the Building Services Division to realise its objective to establish its own production facilities. The factory owned and operated by the Target Company is located at Changping Town, Dongguan, the PRC and has good traffic connection to other areas in Greater Bay Area. The gross floor area of all the buildings in the factory is approximately 15,780 square meters and is considered to be sufficient for business expansion in the coming few years. The Building Services Division currently intends to set up its own production lines phase by phase in this factory and gradually reduce the reliance on the OEM. Also, other new product lines such as in-house generators assembly, pre-fabricated E&M products (which include standard units such as pump bases, and integrated services units with electrical containment products, air ducts and water/gas pipes) and research and development workshop on robotic machines for use in construction sites are also intended to be established in this new production facilities.

In light of the above, the Directors are of the view that the terms of the Acquisition Agreement are fair and reasonable and the Acquisition is in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio calculated in accordance with Rule 14.07 of the Listing Rules is above 5% and all applicable percentage ratios are less than 25%, the Acquisition constitutes a discloseable transaction for the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

"Acquisition"	acquisition of the Target Equity by the Purchaser from
	the Vendor pursuant to the terms of the Acquisition
	Agreement
"Acquisition Agreement"	the acquisition agreement dated 26 November 2019
	entered into between the Purchaser, the Vendor and the
	Guarantor in respect of the sale and purchase of the
	Target Equity

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"Board"	the board of Directors
"Bulletin 7"	Bu l le t in 2015 N o . 7 is s ue d b y t he P RC S tat e
	Administration of Taxation on 3 February 2015
	(including any law, rule, regulation, circular and
	bulletin officially promulgated or issued in replacement
	thereof)
"Bulletin 7 Tax"	the amount of PRC tax payable by the Vendor pursuant
	to the requirements of Bulletin 7 arising out of the
	disposal of the Target Company to the Purchaser
"Company"	C h i n n e y A l l i a n c e G r o u p L i m i t e d , a c o m p a n y
	incorporated in Bermuda with limited liability the
	shares of which are listed on the main board of the
	Stock Exchange (Stock Code: 385)
"Completion Date"	the 3rd business days after the Vendor has provided the
	Purchaser with the original (which has to be verified by
	the Purchaser's PRC legal counsel) of the official filing
	receipt, notification of change and, where applicable, a
	new business license for the Target Company reflecting
	the changes
"connected person(s)"	has the same meaning ascribed to it under the Listing
	Rules
"Consideration"	the sum of RMB104,000,000 payable by the Purchaser
	for the Target Equity
"Director(s)"	director(s) of the Company
"Group"	the Company and its subsidiaries from time to time
"Hong Kong"	the Hong Kong Special Administrative Region of the
	People's Republic of China
"Independent Third Party(ies)"	p e r s o n ( s ) o r c o m p a n y ( i e s ) w h o / w h i c h i s ( a r e )
	independent of the Company and its connected
	person(s)
"Listing Rules"	the Rules Governing the Listing of Securities on the
	Stock Exchange
"PRC"	the People's Republic of China

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"Purchaser"	CSC (China) Limited, a company incorporated in Hong
	K o n g w i t h l i m i t e d l i a b i l i t y a n d a n i n d i r e c t
	wholly-owned subsidiary of the Company
"RMB"	Renminbi, the lawful currency of the PRC
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Target Company"	東 莞 東 寶 龍 燈 光 設 備 有 限 公 司 ( D o n g g u a n
	Dongbaolong Light Equipment Co., Ltd.*), a wholly
	foreign owned enterprise established in the PRC
"Target Equity"	the entire paid up registered capital of and equity
	interest in the Target Company
"Vendor"	Decoriental Manufacturing Co. Limited, a company
	incorporated in Hong Kong with limited liability and
	the sole legal and beneficial shareholder of the Target
	Company
"%"	per cent.
	By Order of the Board
	CHINNEY ALLIANCE GROUP LIMITED
	Yun-Sang Lo
	Company Secretary

Hong Kong, 26 November 2019

At the date of this announcement, the Board comprises of eight Directors, of which four are executive Directors, namely Dr. James Sai-Wing Wong, Mr. Yuen-Keung Chan, Mr. James Sing-Wai Wong and Mr. Philip Bing-Lun Lam; and one is non-executive Director, namely Ms. Wendy Kim-See Gan; and three are independent non-executive Directors, namely Mr. Yuen-Tin Ng, Mr. Chi-Chiu Wu and Mr. Ronald James Blake.

• For identification purpose only

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