Central Development Holdings Limited — M&A Activity 2017

Nov 13, 2017

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.

ZHONG FA ZHAN HOLDINGS LIMITED 中發展控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 475)

ANNOUNCEMENT

This announcement is made by Zhong Fa Zhan Holdings Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) pursuant to Rule 13.09(2) of the Rules (the “ Listing Rules ”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

BACKGROUND

Reference is made to the announcements (the “ Announcements ”) of the Company dated 18 December 2015 and 30 August 2017. Capitalised terms used in this announcement shall have the same meaning as those defined in the Announcements, unless the context requires otherwise.

As set out in the Announcements, on 18 December 2015, the Company entered into the Framework Tenancy Agreement with CECEP Yuyao in relation to the Group’s proposed lease of the Factory upon CECEP Yuyao’s completion of the Factory construction. RMB3,795,000 was paid by the Company as deposit (the “ Deposit ”) pursuant to the Framework Tenancy Agreement. The Company intended to use the Factory as the production plant of the CoolStore cooling-stored pipes. However, no Tenancy was signed between the Group and CECEP Yuyao because construction of the Factory had yet been completed, and no rent was paid to CECEP Yuyao. As set out in the Announcement dated 30 August 2017, among other things, the Group was then under negotiations with CECEP Yuyao for proposed

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acquisition of the Factory and/or renewal of the Framework Tenancy Agreement. No agreement had been reached when the Framework Tenancy Agreement expired on 31 August 2017.

Based on the information available to the Company, construction of the Factory is completed, pending completion inspection by governmental agencies.

THE MEMORANDUM OF UNDERSTANDING

The Board is pleased to announce that on 13 November 2017, after trading hours of the Stock Exchange, 寧波升谷節能科技有限公司 (NingBo Shenggu Energy Reservation Technology Co, Ltd.) (a wholly-owned subsidiary of the Company) (the “ Purchaser ”), the Company and CECEP Yuyao entered into a memorandum of understanding (the “ MOU ”) in relation to the proposed acquisition (the “ Proposed Acquisition* ”) of the Factory (and the land on which it is constructed), as well as interim use of the Factory. Principal terms of the MOU are as follows:

Date

13 November 2017 (after trading hours of the Stock Exchange)

Parties

• (1) 寧波升谷節能科技有限公司 (NingBo Shenggu Energy Reservation Technology Co, Ltd.*), being the Purchaser;

• (2) CECEP Yuyao, as vendor; and

• (3) the Company.

Assets to be acquired

The Factory, as well as the land on which it is constructed, located on the North of Binhai Avenue, Binhai New Area, Yuyao, Zhejiang Province, the PRC (the “ Target Assets ”).

Formal Agreement

The parties to the MOU agree to use their best endeavours to negotiate and enter into a formal sale and purchase agreement (the “ Formal Agreement ”) before expiry of the Exclusivity Period (as defined below).

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Exclusivity Period

CECEP Yuyao agreed that it will not engage in any discussions or negotiations, or sign any agreement or contract with any other parties relating to the transfer, charge, disposal, rent or co-operation of the Target Assets from the date of the MOU until (i) 31 March 2018, or (ii) if the Group’s use of the Factory has been extended as set out in the paragraph headed “Interim use of the Factory” below, the date on which such extended use expires; or (iii) such other date as may be agreed by the Purchaser and CECEP Yuyao (the “ Exclusivity Period ”).

Interim use of the Factory

Pursuant to the MOU, the Group shall have the right to use the Factory free-of-charge until 31 March 2018. In the event no Formal Agreement has been entered into by the parties before 31 March 2018, the Group shall be entitled to extend its use of the Factory free-of-charge until 30 June 2018 or such other date as may be agreed between the Purchaser and CECEP Yuyao.

To ensure the Group shall use the Factory in compliance with all applicable rules, the parties to the MOU agreed that the Deposit shall be applied as security deposit (the “ Security Deposit ”) to secure the Group’s performance of its obligations. In the event there being any damage to the Factory or its facilities, CECEP Yuyao shall be entitled to deduct any amount from the Security Deposit as compensation. If the Security Deposit falls short of the amount of compensation, the Purchaser shall be liable to pay any excess. Thereafter, CECEP Yuyao shall have no claim against the Purchaser.

CECEP Yuyao has undertaken not to transfer or dispose of, or grant any charge on the Target Assets during the Group’s use of the Factory.

Refund of Security Deposit

Pursuant to the MOU, in the event (i) no Formal Agreement has been entered into between the Purchaser and CECEP Yuyao before the expiry of the Exclusivity Period, CECEP Yuyao shall refund the Security Deposit to the Purchaser within 15 business days after expiry of the Exclusivity Period; or (ii) the Formal Agreement has been entered into between the Purchaser and CECEP Yuyao during the Exclusivity Period, CECEP Yuyao shall refund the Security Deposit to the Company within 15 business days after the date of the Formal Agreement or apply the Security Deposit as part payment of the consideration under the Formal Agreement.

Non-legally Binding

Save for provisions relating to confidentiality, exclusivity, representations and undertakings, use of the Factory, the Security Deposit and governing law, the terms of the MOU are not legally binding.

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GENERAL

The Proposed Acquisition may or may not proceed. Shareholders and investors of the Company are advised to exercise caution when dealing in the securities of the Company. Further announcement in respect of the Proposed Acquisition will be made by the Company as and when appropriate in compliance with the Listing Rules, if applicable.

By order of the Board Zhong Fa Zhan Holdings Limited Chan Wing Yuen, Hubert Chief Executive and Executive Director

Hong Kong, 13 November 2017

• For identification purpose only

As at the date of this announcement, the Company has five executive Directors, namely Mr. Wu Hao, Mr. Hu Yangjun, Mr. Hu Yishi, Mr. Chan Wing Yuen, Hubert and Ms. Kwong Wai Man, Karina; a non-executive Director, namely Mr. Li Wei Qi, Jacky; and three independent non-executive Directors, namely Mr. Wu Chi Keung, Ms. Kwok Pui Ha and Mr. Jin Qingjun.

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