Build King : DISCLOSEABLE TRANSACTION - INCREASE IN COMMITMENT TO JOINT VENTURE

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BUILD KING HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00240)

DISCLOSEABLE TRANSACTION

INCREASE IN COMMITMENT TO JOINT VENTURE

On 21 October 2019, Wai Kee China, an indirect wholly-owned subsidiary of the Company, agreed with Gold Earth and Ms. Liu to increase the existing registered capital of the Joint Venture to RMB156.5 million (equivalent to approximately HK$176.8 million), as a result of which the Joint Venture is to be owned as to 79.62%, 20% and 0.38% by Wai Kee China, Gold Earth and Ms. Liu respectively. The increased registered capital of the Joint Venture will be attributable to Wai Kee China, Gold Earth and Ms. Liu as to RMB124.6 million, RMB31.3 million and RMB600,000 respectively (equivalent to approximately HK$140.8 million, HK$35.4 million and HK$678,000 respectively).

As one or more applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules in respect of the aggregate of capital contribution of Wai Kee China to the Joint Venture is more than 5% but less than 25%, the capital contribution therefore constitute a discloseable transaction for the Company, which is subject to the announcement requirement but exempt from the shareholders' approval requirement under the Listing Rules.

INCREASE IN COMMITMENT TO JOINT VENTURE

On 21 October 2019, Wai Kee China, an indirect wholly-owned subsidiary of the Company, agreed with Gold Earth and Ms. Liu to increase the existing registered capital of the Joint Venture from RMB50.0 million (equivalent to approximately HK$56.5 million) to RMB156.5 million (equivalent to approximately HK$176.8 million) of which RMB23 million (equivalent to approximately HK$26 million) has been paid up by Wai Kee China, as a result of which the Joint Venture is to be owned as to 79.62%, 20% and 0.38% by Wai Kee China, Gold Earth and Ms. Liu respectively. The increased registered capital of the Joint Venture will be attributable to Wai Kee China, Gold Earth and Ms. Liu as to RMB124.6 million, RMB31.3 million and RMB600,000 respectively (equivalent to approximately HK$140.8 million, HK$35.4 million and HK$678,000 respectively).

The registered capital was determined amongst the shareholders of the Joint Venture with reference to the capital requirement of the Joint Venture, and is required to be contributed in full by 26 August 2048. It is expected that Wai Kee China will make the contribution by stages from now to end of 2020 depending of the progress of the projects of the Joint Venture.

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INFORMATION ON THE JOINT VENTURE

Shareholders

Upon the incorporation of the Joint Venture, the Joint Venture was owned as to 46% by Wai Kee China, 48% by Gold Earth and 6% by Ms. Liu, respectively. Immediately before the increase of the registered capital, Ms. Liu transferred 4.8% equity interests to Wai Kee China. Immediately upon the increase of registered capital, the Joint Venture is owned as to 79.62% by Wai Kee China, 20% by Gold Earth and 0.38% by Ms. Liu, respectively, and becomes a subsidiary of the Company.

Wai Kee China is a company established in Hong Kong and is an indirect wholly-owned subsidiary of the Company. It is an investment holding company.

Gold Earth is a company established in the PRC. It is principally engaged in the renewable energy business. Ms. Liu is a PRC individual. As of the date of this announcement, to the best knowledge, information and belief of the Directors, and having made all reasonable enquiry, each of Ms. Liu, Gold Earth and its ultimate beneficial owners is an Independent Third Party.

Purpose and terms of the Joint Venture

The Joint Venture is a company established in the PRC on 30 August 2018 with a term of thirty (30) years. As at 30 September 2019, the Joint Venture had net asset value of RMB25 million and recorded a loss of RMB4 million for the period from the date of incorporation to 30 September 2019.

The Joint Venture is an investment holding company holding interests in project companies engaged in provision of steam fuel. The Joint Venture has two subsidiaries, namely 甘肅大地新能源有限 公司 (Gansu Earth New Energy Company Limited*) and 惠記大地（玉門）新能源有限公司 (Wai Kee Earth (Yumen) New Energy Company Limited*), which are engaged in the business of provision of steam fuel to industrial customers.

Composition of Board

The board of directors of the Joint Venture comprises five directors, three (3) are nominated by Wai Kee China and two (2) by Gold Earth. The chairman is to be appointed by Gold Earth.

Matters relating to the amendment of articles of association, increase or reduction of registered capital, dissolution of the Joint Venture, pledge of assets of the Joint Venture and merger, separation and change in form of organisation will require unanimous consent of all directors.

REASONS FOR AND BENEFITS OF THE CAPITAL COMMITMENTS

The Company is an investment holding company and its group companies are principally engaged in the undertaking of construction projects in Hong Kong and the PRC and are also engaged in environmental and waste management and marine engineering.

As disclosed in the Company's interim report for the period ended 30 June 2019, the Joint Venture has commenced the construction of two steam generating facilities sites in Gaotai County and Yumen City in Gansu Province. It is expected that both sites will commence operation to generate steam energy for the nearby factories in the second half of 2019. The capital contribution will finance the further steam generating facilities project(s) of the Joint Venture, with a view that the investment can progressively increase the profit contribution to the Group.

In view of the above, the Directors are of the view that the capital contribution in the Joint Venture is fair and reasonable and in the interests of the Company and its shareholders as a whole.

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IMPLICATIONS UNDER THE LISTING RULES

As one or more applicable percentage ratios calculated in accordance with Rule 14.07 of the Listing Rules in respect of the aggregate of capital contribution of Wai Kee China to the Joint Venture is more than 5% but less than 25%, the capital contribution therefore constitute a discloseable transaction for the Company, which is subject to the announcement requirement but exempt from the shareholders' approval requirement under the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the meanings ascribed to them below:

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For convenience only and unless otherwise noted, all translations from RMB into HK$ in this announcement were made at the rate of RMB1 to HK$1.13. No representation is made that the HK$ or RMB amounts referred to in this announcement could have been or could be converted into RMB or HK$, as the case may be, at any particular rate or at all.

By Order of the Board

Build King Holdings Limited

Chang Kam Chuen, Desmond

Company Secretary

Hong Kong, 21 October 2019

As at the date hereof, the Board comprises two executive Directors, namely Mr. Zen Wei Peu, Derek and Mr. Chang Kam Chuen, Desmond, two non-executive Directors, namely Mr. David Howard Gem and Mr. Chan Chi Hung, Anthony, and three independent non-executive Directors, namely Mr. Ho Tai Wai, David, Mrs. Ling Lee Ching Man, Eleanor and Mr. Lo Yiu Ching, Dantes.

* for identification purpose only

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