Glory Flame Holdings Limited — M&A Activity 2016

Jul 20, 2016

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.

GLORY FLAME HOLDINGS LIMITED 朝威控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8059)

INSIDE INFORMATION

ACQUISITION OF 51% OF THE ENTIRE ISSUED SHARE CAPITAL OF HONGKONG XINCHENG

This announcement is made by the Company pursuant to Rule 17.10 of the GEM Listing Rules and the Inside Information Provisions (as defined under the GEM Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong).

On 20 July 2016 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Purchaser has conditionally agreed to purchase and the Vendor has conditionally agreed to sell the Sale Shares, representing 51% of the entire issued share capital of the Target Company as at the date of this announcement. Set out below are the principal terms of the Sale and Purchase Agreement.

THE SALE AND PURCHASE AGREEMENT

Date: 20 July 2016

Parties: (1) The Purchaser, a wholly-owned subsidiary of the Company; and

• (2) The Vendor.

The Purchaser is a company incorporated in the British Virgin Islands with limited liability and a whollyowned subsidiary of the Company. It is principally engaged in investment holding.

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Vendor is an Independent Third Party.

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Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares at the consideration of HK$5,100. The Sale Shares represent 51% of the entire issued share capital of the Target Company as at the date of this announcement.

Conditions Precedent

Completion shall be conditional upon and subject to:

• (1) the Purchaser having completed the due diligence review in respect of the Target Company and the Purchaser being satisfied with the results of the due diligence review at its absolute discretion;

• (2) the representations and warranties in respect of the Target Company given by the Vendor under the Sale and Purchase Agreement remaining true, accurate and complete in all respects on the date of Completion;

• (3) no material adverse change in the business, prospect, operation, financial or other conditions of the Target Company has occurred since the date of the Sale and Purchase Agreement; and

• (4) all necessary authorisations, approvals, consents, filing or registration procedures by the relevant governmental department or other third parties in connection with the entering into and the performance of the Sale and Purchase Agreement and the transactions contemplated thereunder having been completed or obtained by the parties thereto, and all necessary disclosure having been made (if required).

If any of the conditions set out above is not fulfilled on or before 29 July 2016 (or such other date as the parties to the Sale and Purchase Agreement may agree in writing), the Purchaser may waive any of the conditions as stated above as the Company considers appropriate (if applicable) or terminate the Sale and Purchase Agreement.

Completion

Upon the fulfillment or waiver (as the case may be) of the Conditions Precedent, either party to the Sale and Purchase Agreement may serve a notice to the other party requesting for Completion (the “ Completion Notice ”). Completion shall take place on the date falling on the seventh business day after the date of the Completion Notice (or such other date as the parties to the Sale and Purchase Agreement may agree in writing).

Upon Completion, the Target Company will be owned as to 51% and 49% by the Purchaser and Hongkong Zhonghe respectively and the Target Company will become an indirect subsidiary of the Company.

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INFORMATION ON THE TARGET COMPANY

The Target Company is a company incorporated in Hong Kong with limited liability and its principal business is trading of mobile phone screens. The entire issued share capital of the Target Company is owned as to 51% and 49% by the Vendor and Hongkong Zhonghe respectively immediately before the Acquisition. As at the date of this announcement, the Target Company has not commenced business operation.

INFORMATION ON HONGKONG ZHONGHE

Hongkong Zhonghe is a company incorporated in Hong Kong with limited liability and is owned as to 18.37% and 81.63% by the Vendor and three individuals respectively as at the date of this announcement, each of whom is an Independent Third Party.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The principal activity of the Company is investment holding. The Group’s principal activities are the provision of concrete demolition service in Hong Kong as a subcontractor and trading of LED light sources for decoration.

The management of the Group has been actively exploring new business opportunities so as to diversify its business scope with a view to broaden the Group’s revenue base and achieve better return for the Shareholders. The Target Company will be engaged in the trading of screens for mobile phones and has been considering trading of products related to the upper and lower streams of the electronic industry, such as Touch IC, Fingerprint Sensor and Identifier IC, Glass Substrate, Indium Tin Oxide Transparent Conductive Film, Conductive Adhesive, Foam Tape, Heat Sink. The management team of Hongkong Zhonghe has years of experience in the electronic industry, sound knowledge of clients’ needs and the development trend of the industry and rich base of clientele. The Directors consider that the Acquisition and the cooperation with Hongkong Zhonghe can assist the Group in the entering into of the trading business of electronic products and therefore are in the interest of the Company and its shareholders as a whole.

GEM LISTING RULES IMPLICATIONS

As all the applicable percentage ratios in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder are lower than 5%, the Sale and Purchase Agreement and the transactions contemplated thereunder do not constitute a notifiable transaction of the Company under Chapter 19 of the GEM Listing Rules.

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DEFINITIONS

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

“Acquisition”	the purchase of the Sale Shares by the Purchaser in accordance with the
	terms of the Sale and Purchase Agreement
“Board”	the board of Directors
“Company”	Glory Flame Holdings Limited, a company incorporated in the Cayman
	Islands with limited liability, the shares of which are listed on GEM
“Completion”	completion of the transactions contemplated under the Sale and Purchase
	Agreement
“Conditions Precedent”	the conditions precedent to the completion of the transactions contemplated
	under the Sale and Purchase Agreement
“Directors”	the directors of the Company
“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic of
	China
“Hongkong Zhonghe”	HONGKONG ZHONGHE HI-TECH CO., LIMITED (香港眾合高科技有
	限公司), a company incorporated in Hong Kong with limited liability, an
	Independent Third Party
“Independent Third Party”	any person or company and their respective ultimate beneficial owner(s)
	which are third parties independent of the Company and its connected
	persons (as defined under the GEM Listing Rules)
“percentage ratios”	has the meaning ascribed to it under the GEM Listing Rules

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“Purchaser”

Time Chance Investments Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

“Sale and Purchase the sale and purchase agreement dated 20 July 2016 entered into between Agreement” the Vendor and the Purchaser relating to the Acquisition “Sale Shares” 5,100 shares of the Target Company, representing 51% of the entire issued share capital of the Target Company

“Shareholders” Shareholders of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Company” or HONGKONG XINCHENG HI-TECH CO., LIMITED ( 香港信誠高科技有 “Hongkong Xincheng” 限公司 ), a company incorporated in Hong Kong with limited liability on 27 October 2015

“Vendor” Li Qiang ( 李強 )

“%” per cent

By order of the Board Glory Flame Holdings Limited Pei Wing Fu Chairman

Hong Kong, 20 July 2016

As at the date of this announcement, the executive Directors are Mr. Pei Wing Fu, Ms. Pei Wing Sze Clare, Ms. Che Xiaoyan and Mr. Liu Zhong Ping; the non-executive Director is Mr. Zheng Si Rong; and the independent non-executive Directors are Mr. Liu Ping, Mr. Chan Kam Wah and Mr. Bai Honghai.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the website of the Growth Enterprise Market of the Stock Exchange at www.hkgem.com for at least seven days from the date of publication. This announcement will also be published on the website of the Company at www.drillcut.com.hk.

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