HSC Resources Group Limited — M&A Activity 2019

Oct 25, 2019

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.

WINDMILL GROUP LIMITED (海鑫集團有限公司)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1850)

VOLUNTARY ANNOUNCEMENT ACQUISITION OF THE ENTIRE EQUITY INTEREST OF THE TARGET COMPANY

This is a voluntary announcement made by Windmill Group Limited (the “ Company ”, together with its subsidiaries the “ Group ”).

INFORMATION OF THE ACQUISITION

The board (the “ Board ”) of directors (the “ Directors ”) of the Company is pleased to announce that on 25 October 2019 (after trading hours), Golden Chariot International Limited (a wholly-owned subsidiary of the Company) (the “ Purchaser ”) and an individual (the “ Vendor ”) entered into a sale and purchase agreement (the “ SP Agreement ”), pursuant to which the Purchaser conditionally agreed to purchase (the “ Acquisition ”) and the Vendor conditionally agreed to sell the entire equity interest of Greenleaf Enterprises Pte. Ltd. (the “ Target Company ”).

Principal terms of the SP Agreement are as follows:

• Date 25 October 2019 (after trading hours) Consideration US$1,100,000 (equivalent to approximately HK$8,635,000) Payment of the (i) 50% of the Consideration (the “ Completion Payment ”) will Consideration be paid on the third (3rd) business day after the receipt of the stamped instrument of transfer by the Purchaser subject to the completion of the Acquisition (the “ Completion ”); and

• (ii) 50% of the Consideration will be paid on the seventh (7th) business day after the date on which the last of the conditions subsequent stated in the SP Agreement are fulfilled or waived.

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• Conditions Precedent Completion shall be conditional in all respects on, among others, the Purchaser being satisfied with the results of due diligence review of the Target Company including but without limitation that: (i) the Target Company does not and will not at Completion have any material indebtedness or liabilities; (ii) all the material contracts of the Target Company are, and will be at Completion, valid and subsisting; and (iii) all trademark applications in respect of certain trademarks material to the Target Company’s business have not been rejected or withdrawn.

The long stop date for fulfilment of the conditions precedent will be on or before 25 January 2020 or such other date as the parties may agree in writing.

• Completion Completion shall take place on the fifth (5th) business day after the fulfilment of the Conditions Precedent stated in the SP Agreement. Upon Completion, the Target Company will become a wholly-owned subsidiary of the Company and the financial performance and position of the Target Company will be consolidated into the Group’s consolidated financial statements.

• Conditions All consents and approvals for the registration of the trademarks Subsequent and domain names having been granted by the relevant authorities and certificate(s) of registration having been delivered to the Purchaser, and all trademarks and domain names having been registered in the name of the Target Company if requested by the Purchaser.

The long stop date for fulfilment of the conditions subsequent will be on or before 25 October 2020 or such other date as the parties may agree in writing (“ CS Long Stop Date ”).

In the event where the conditions subsequent are not fulfilled, the Purchaser has the option to either: (i) waive the fulfillment of the conditions subsequent and proceed with Completion; or (ii) not pay the balance of the Consideration and exercise a put option within three (3) months following the CS Long Stop Date to require the Vendor to acquire the Target Company at a price equivalent to the Completion Payment, but both parties agree that they shall negotiate in good faith for an adjustment mechanism to the Consideration to arrive at the balance of the adjusted Consideration which is acceptable to both parties. If such an agreement has been reached, the put option will lapse accordingly.

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INFORMATION OF THE TARGET COMPANY

The Target Company is a company incorporated in Singapore with limited liability. It is principally engaged in trading and distributing cannabidiol (“ CBD ”) based health and beauty products.

To the best knowledge of the Directors and having made all reasonable enquiries, the Vendor is a third party independent of the Company and its connected person(s) (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”)).

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Company is always seeking potential opportunities to enhance shareholders’ value for the Company. Pursuant to the memorandum of understanding signed between the Company and All Blue Capital dated 17 July 2019 (the “ MOU ”), the Company will explore new synergistic and attractive investment opportunities which aim to achieve this objective. The Target Company was introduced to the Company pursuant to the MOU.

The products of the Target Company, marketed under the brand name “Greenleaf”, are currently distributed to the United States, Japan and South Korea, with the primary focus in the Asia Pacific countries. In view of the vast potential CBD based health and beauty products market in the Asia Pacific region which is relatively untapped at the moment, the Directors are of the view the Acquisition represents a good opportunity to enter into this industry which has a potential of achieving high growth.

LISTING RULES IMPLICATIONS

As all the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisition are less than 5%, the Acquisition does not constitute a notifiable transaction under Chapter 14 of the Listing Rules.

For the purpose of this announcement, amounts denominated in US$ have been translated into HK$ at an exchange rate of US$1:HK$7.85. No representation is made that any amounts in US$ and HK$ can be or could have been converted at the relevant dates of the above rates or at any other rates at all.

By Order of the Board WINDMILL Group Limited Li Shing Kuen Alexander

Chairman and chief executive officer

Hong Kong, 25 October 2019

As at the date of this announcement, the executive Directors are Mr. Li Shing Kuen Alexander and Mr. Poon Kwok Kay; the non-executive Director is Mr. Cheung Wai Hung; and the independent non-executive Directors are Mr. Pun Kin Wa, Mr. Tsang Man Biu and Mr. Lee Kwok Tung Louis.

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