Television Broadcasts Limited — Capital/Financing Update 2016

Jun 3, 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.

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DISCLOSEABLE TRANSACTION IN RELATION TO DISPOSAL OF EQUITY INTEREST IN THE TARGET COMPANY

On 3 June 2016 (after trading hours), the Vendor, a wholly-owned subsidiary of the Company, and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase 25% of the entire issued share capital of the Target Company for the Consideration.

As one of the applicable percentage ratios as set out in Rule 14.07 of the Listing Rules in relation to the Disposal is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company pursuant to Rule 14.06 of the Listing Rules and is subject to the reporting and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

Date:

3 June 2016

Parties:

• (1) the Vendor: Giant Talent Group Ltd.

• (2) the Purchaser: Ms. KWONG Mei Ling Merlin

As at the date of this announcement, to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Purchaser is an Independent Third Party.

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Asset to be disposed

The Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase 25% of the entire issued share capital of the Target Company.

Consideration

The Consideration shall be payable by the Purchaser to the Vendor upon Completion.

The Consideration was determined after arm’s length negotiations between the Vendor and the Purchaser by taking into consideration of various factors, including but not limited to (i) the factors stated in the section headed “Reasons for and Benefits of the Disposal” set out below; (ii) the dividend payments declared and received by the Group from the Target Company during the two financial years ended 31 March 2016; (iii) the repayment of HK$1,117,965 due from the Purchaser to the Vendor as a result of the profit shortfall as determined in accordance with the terms of the sale and purchase agreement between the Vendor and the Purchaser dated 20 January 2015; (iv) the respective latest financial position of the Group and the Target Company; (v) the financial performance and prospects of the Target Company; and (vi) the cost of financing of the Group. The Directors consider that the terms of the Sale and Purchase Agreement are fair and reasonable, on normal commercial terms and in the best interests of the Group and the Shareholders as a whole.

Condition precedent

Completion of the Sale and Purchase Agreement is conditional upon all necessary approvals having been obtained to permit the entry into and implementation of the Sale and Purchase Agreement in the manner described in or contemplated by the Sale and Purchase Agreement on or before 30 June 2016.

Completion

Completion shall take place on the next Business Day following the fulfilment of the above condition.

INFORMATION ON THE COMPANY, THE GROUP AND THE VENDOR

The Company is a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Stock Exchange. The Group is principally engaged in securities and insurance brokerage, margin financing, provision of corporate finance services, asset management and money lending services in Hong Kong.

The Vendor, a company incorporated in BVI with limited liability and a wholly-owned subsidiary of the Company, is an investment holding company.

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INFORMATION ON THE PURCHASER

The Purchaser is an individual, a merchant and an Independent Third Party.

INFORMATION ON THE TARGET COMPANY

The Target Company is an investment holding company incorporated in Hong Kong with limited liability and is principally engaged in the provision of consultancy services.

Set out below are the key financial figures extracted from the consolidated accounts of the Target Company for the two financial years ended 31 March 2016, which were prepared in accordance with the Hong Kong Financial Reporting Standards.

	For the	For the
	year ended	year ended
	31 March 2015	31 March 2016
	(HK$’000)	(HK$’000)
	(audited)	(unaudited)
Revenue	98,216	44,354
Profit before taxation	13,659	5,528
Profit after taxation	11,415	4,656
	As at	As at
	31 March 2015	31 March 2016
	(HK$’000)	(HK$’000)
	(audited)	(unaudited)
Net asset value	2,360	1,657

FINANCIAL EFFECT OF THE DISPOSAL AND INTENDED USE OF PROCEEDS

It is estimated that the Group will record an unaudited net loss before taxation of approximately HK$1,420,000 upon Completion. Such accounting net loss was estimated based on the cost of investment made by the Group in the Target Company and the Consideration to be received from the Disposal less related expenses of approximately HK$50,000. However, as dividend incomes in the aggregate amount of HK$1,340,000 were received by the Group from the Target Company for the two financial years ended 31 March 2016, the overall cash position of the Group was not adversely affected as a result of the Disposal. The Group recorded dividend incomes in the amount of HK$590,000 and HK$750,000 from the Target Company for the financial years ended 31 March 2015 and 2016, respectively.

The Board intends to apply the net sale proceeds as general working capital of the Group.

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The actual gain or loss arising from the Disposal is subject to confirmation by the auditor of the Group.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Group is a provider of financial services, including but not limited to securities and insurance brokerage, margin financing, provision of corporate finance services, asset management and money lending services.

The Group acquired an equity interest in the Target Company in January 2015. At that time, the Directors expected the said acquisition would, among other factors, broaden the source of income of the Group. Nevertheless, by taking into consideration (i) the Target Company did not perform in accordance with the expectation of the Group; (ii) the business prospects of the Target Company may be adversely affected as a result of the slowdown of the local economy and changes in governmental and regulatory policies; (iii) the Disposal is not expected to adversely affect the financial position of the Group; and (iv) the Disposal will allow the Group to focus on the development of its remaining financial related businesses, the Directors are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable, on normal commercial terms and in the best interests of the Group and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As one of the applicable percentage ratios as set out in Rule 14.07 of the Listing Rules in relation to the Disposal is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company pursuant to Rule 14.06 of the Listing Rules and is subject to the reporting and announcement requirements but exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

As the completion of the Sale and Purchase Agreement is subject to the fulfilment of the condition precedent as stipulated therein, the Disposal may or may not proceed. Shareholders and any potential investors are advised to take caution in dealing in the securities of the Company.

DEFINITIONS

Terms or expressions used in this announcement shall, unless the context otherwise requires, have the meanings ascribed to them below:

“Board” the board of Directors

“Business Day” a day (other than a Saturday, Sunday and public holiday in Hong Kong) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

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“BVI”	the British Virgin Islands
“Company”	China Fortune Financial Group Limited, a company incorporated in
	the Cayman Islands with limited liability and the Shares of which
	are listed on the Main Board of the Stock Exchange (stock code:
	290)
“Completion”	the completion of the Disposal in accordance with the terms and
	conditions of the Sale and Purchase Agreement
“Consideration”	the total consideration in the amount of HK$1,217,965 for the
	Disposal and settlement of the profit guarantee given by the
	Purchaser to the Vendor under the sale and purchase agreement
	between the Vendor and the Purchaser dated 20 January 2015
“Director(s)”	the director(s) of the Company
“Disposal”	the disposal of 25% of the entire issued share capital of the Target
	Company
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Independent Third Party”	person or company and their respective ultimate beneficial owner
	which, to the best of the Directors’ knowledge, information and
	belief having made all reasonable enquiries, are third parties
	independent of and not connected with the Company and its
	connected persons as defined under the Listing Rules
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Purchaser”	Ms. KWONG Mei Ling Merlin, an Independent Third Party
“Sale and Purchase	the sale and purchase agreement dated 3 June 2016 entered into
Agreement”	between the Vendor and the Purchaser in respect of the sale and
	purchase of 25% of the entire issued share capital of the Target
	Company

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“Share(s)”

ordinary share(s) of HK$0.10 each in the share capital of the Company

“Shareholder(s)” holder(s) of the Shares of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Target Company” Prior Capital Limited, a company incorporated in Hong Kong with limited liability

“Vendor” Giant Talent Group Ltd., a company incorporated in BVI with limited liability and a wholly-owned subsidiary of the Company

By Order of the Board China Fortune Financial Group Limited NG Cheuk Fan Keith Managing Director

Hong Kong, 3 June 2016

As at the date of this announcement, the Board consists of four executive Directors, namely Mr. WONG Kam Choi (Chairman), Mr. NG Cheuk Fan Keith (Managing Director), Mr. HON Chun Yu and Mr. XIA Yingyan; two non-executive Directors, namely Mr. TANG Baoqi and Mr. WU Ling; and three independent non-executive Directors, namely Mr. CHAN Kin Sang, Mr. NG Kay Kwok and Mr. TAM B Ray Billy.

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