Television Broadcasts Limited — Capital/Financing Update 2016

Mar 31, 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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China Fortune Financial Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 290) Website: http://www.290.com.hk

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

On 31 March 2016 (after trading hours), the Vendor, a direct 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 the Sale Shares free from all Encumbrances and with all rights now attached to the Sale Shares including the right to receive all dividends and other distributions declared, made or paid on or after the date of the Completion and the benefits of the Sale Loan for a consideration of HK$73,000,000.

As the applicable percentage ratios as set out in Rule 14.07 of the Listing Rules in relation to the Disposal are 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:

31 March 2016

Parties:

(1) the Vendor : Promiseasy Limited

• (2) the Purchaser : Celestial Tycoon Limited

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 and its ultimate beneficial owner are Independent Third Parties.

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Sale and purchase of the Sale Shares and the benefits of the Sale Loan

The Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Shares free from all Encumbrances and with all rights now attached to the Sale Shares including the right to receive all dividends and other distributions declared, made or paid on or after the date of the Completion and the benefits of the Sale Loan. The Sale Shares represent 35% of the entire issued share capital of the Target Company as at the date of this announcement.

Consideration

The consideration for the Disposal is HK$73,000,000.

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 respective financial position of the Group and the Target Group; and (iii) the past financial performance and business plan of the Target Group. The Directors consider that the terms of the Sale and Purchase Agreement are fair and reasonable, on normal commercial terms and in the interests of the Group and the Shareholders as a whole.

First instalment of the Consideration in the amount of HK$10,000,000 shall be paid by the Purchaser to the Vendor on or before 30 April 2016. The balance of the Consideration in the amount of HK$63,000,000 shall be paid by the Purchaser to the Vendor on or before 30 June 2016.

Conditions precedent

Completion is conditional upon the following conditions being satisfied on or before the Longstop Date:

• (a) the due execution of a deed of waiver and consent by Topsource International Holding Co., Limited, the existing shareholder holding a 30% equity interest in the Target Company as at the date of this announcement; and

• (b) the Vendor having obtained, in terms acceptable to the Purchaser, all consents, approvals, clearances and authorisations of any relevant governmental authorities or other relevant third parties in Hong Kong or elsewhere as may be considered necessary or desirable by the Purchaser for the execution and implementation of the Sale and Purchase Agreement.

The Purchaser may, to such extent as it thinks fit and is legally entitled to do so, at any time waive in writing any of the above conditions precedent on such terms as it may decide.

Completion

Completion shall take place on the fifth Business Day following satisfaction or waiver of the above conditions precedent, or such other date as the Vendor and the Purchaser may agree in writing.

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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, corporate finance services, asset management and margin financing in Hong Kong.

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

INFORMATION ON THE PURCHASER

The Purchaser is a company incorporated in BVI with limited liability and an Independent Third Party. The principal business activity of the Purchaser is investment holding. As at the date of this announcement, the Purchaser is an existing shareholder holding a 35% equity interest in the Target Company.

INFORMATION ON THE TARGET COMPANY

The Target Company is a company incorporated in BVI on 25 September 2009 and its principal business is investment holding. The Target Company has not owned any asset other than its investment in Rongtong. The Target Company is indirectly interested in the entire equity interest of Rongtong, a company principally engaged in the business of finance leases, leasing, sale and purchase of local and overseas leasing business and assets, determination of the residual values of leasing business, and advisory and guarantee services in relation to leasing business in Shanghai and the adjacent regions and has registered and paid up capital of HK$206,000,000.

Set out below are the key financial figures extracted from the unaudited consolidated management accounts of the Target Company for the years ended 31 December 2014 and 2015, which were prepared in accordance with the Hong Kong Financial Reporting Standards.

	For the	For the
	year ended	year ended
	31 December	31 December
	2014	2015
	(RMB’000)	(RMB’000)
	(unaudited)	(unaudited)
Revenue	7,636	14,504
(Loss) before taxation	(618)	(10,505)
(Loss) after taxation	(629)	(10,505)
	As at	As at
	31 December	31 December
	2014	2015
	(RMB’000)	(RMB’000)
	(unaudited)	(unaudited)
Net asset value/(Net liabilities)	7,055	(5,525)

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FINANCIAL EFFECT OF THE DISPOSAL AND INTENDED USE OF PROCEEDS

As the Company made an impairment loss in respect of an amount due from the Target Company during the financial year ended 31 March 2015, it is estimated that the Group will record an unaudited gain before taxation of approximately HK$72,800,000 upon Completion. Such gain is estimated based on the Consideration to be received from the Disposal less related expenses of approximately HK$200,000.

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

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 and money lending services.

The Group acquired an equity interest in the Target Company in December 2011. At that time, the Directors expected the said acquisition would provide an opportunity for the Group to enter into the finance lease business in the PRC and additional income source for the Group. Having considered (i) recent financial crisis and credit crunch in the PRC; (ii) the Target Company has been unable to deliver the performance as expected by the Directors at the time when the Group acquired the equity interest in the Target Company; (iii) the Target Company recorded an unaudited net liability of approximately RMB5,525,000 as at 31 December 2015; (iv) the Disposal could prevent the Group from bearing further risks and costs associated with the business of the Target Group; (v) the proceeds to be received from the Disposal will allow the Group to strengthen its cashflow and consolidate its resources for the expansion of certain existing businesses of the Group; and (vi) the Disposal will provide additional working capital for the Group, the Directors are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable, on normal commercial terms and it is in the best interests of the Company and the Shareholders as a whole to implement the Disposal.

IMPLICATIONS UNDER THE LISTING RULES

As the applicable percentage ratios as set out in Rule 14.07 of the Listing Rules in relation to the Disposal are 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 conditions 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.

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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
‘‘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’’	completion of the Disposal in accordance with the terms and
	conditions of the Sale and Purchase Agreement
‘‘Consideration’’	HK$73,000,000
‘‘Director(s)’’	the director(s) of the Company
‘‘Disposal’’	the disposal of the Sale Shares and the benefits of the Sale Loan as
	contemplated under the Sale and Purchase Agreement
‘‘Encumbrance’’	mortgage, charge, pledge, lien, option, restriction, right of first
	refusal, right of pre-emption, third-party right or interest, other
	encumbrance or security interest of any kind, or another type of
	preferential arrangement (including, without limitation, a title
	transfer or retention arrangement) having similar effect and any
	agreement or obligation to create or grant any of the aforesaid
‘‘Group’’	the Company and its subsidiaries
‘‘HK$’’	Hong Kong dollar, the lawful currency of Hong Kong
‘‘Hong Kong’’	the Hong Kong Special Administrative Region of the PRC
‘‘Independent Third	person(s) or company(ies) and their respective ultimate beneficial
Party(ies)’’	owner(s) 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
‘‘Longstop Date’’	30 June 2016 or such other date as the Vendor and Purchaser may
	agree in writing

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• ‘‘PRC’’ the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purposes of this announcement

• ‘‘Purchaser’’ Celestial Tycoon Limited, a company incorporated in BVI with limited liability and an Independent Third Party

• ‘‘RMB’’ Renminbi, the lawful currency of the PRC

• ‘‘Rongtong’’ 融通融資租賃（上海）有限公司(**Rongtong Finance Lease (Shanghai) Company Limited), a company principally engaged in the business of finance leases, leasing, sale and purchase of local and overseas leasing business and assets, determination of the residual values of leasing business, and advisory and guarantee services in relation to leasing business in Shanghai and the adjacent regions, which is a whollyforeign-owned enterprise established in the PRC and an indirect wholly-owned subsidiary of the Target Company

• ‘‘Sale and Purchase the sale and purchase agreement dated 31 March 2016 entered into Agreement’’ between the Vendor and the Purchaser in respect of the sale and purchase of the Sale Shares and the benefits of the Sale Loan

• ‘‘Sale Loan’’ the loan in the amount of HK$73,000,000 owed by the Target Company to the Vendor as at the date of this announcement

• ‘‘Sale Shares’’ 35 shares of the Target Company, representing 35% of the entire issued share capital of the Target Company as at the date of this announcement

• ‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company

• ‘‘Shareholder(s)’’ shareholders of the Company

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Target Company’’ Measure Up International Limited, a company incorporated in BVI with limited liability and an investment holding company which is indirectly interested in the entire equity interest of Rongtong

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the Target Company and its subsidiaries

‘‘Target Group’’

‘‘Vendor’’

• Promiseasy Limited, a company incorporated in BVI with limited liability and a direct wholly-owned subsidiary of the Company

• ** The English transliteration of the Chinese name in this announcement, where indicated, is included for information purpose only, and should not be regarded as the official English name of such Chinese name.

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

Managing Director

Hong Kong, 31 March 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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