DISCLOSEABLE TRANSACTION: LEASE OF THE PREMISES TO A THIRD PARTY

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1 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. (Incorporated in Bermuda with limited liability) (Stock Code: 00057) DISCLOSEABLE TRANSACTION: LEASE OF THE PREMISES TO A THIRD PARTY The Board announces that on 15 February 2019, the Landlord, an indirect wholly-owned subsidiary of the Company, and the Lessee entered into the Lease Agreement, pursuant to which the Landlord has agreed to lease to the Lessee the Premises for a fixed term of 5 years commencing from 10 March 2019 and ending on 9 March 2024 (both days inclusive) at a monthly rent (inclusive of 5% PRC value-added tax but exclusive of management fee, electricity, water charges and all other charges and outgoings) of RMB1,609, (equivalent to approximately HK$1,868,074) (1 st -3 rd year of Rental Period); RMB1,770, (equivalent to approximately HK$2,054,882) (4 th -5 th year of Rental Period and 1 st year of Renewal Period, if applicable); and RMB1,947, (equivalent to approximately HK$2,260,370) (2 nd year of Renewal Period, if applicable). As at least one of the applicable percentage ratios as defined under the Listing Rules in respect of the Lease exceeds 5% but all applicable percentage ratios are lower than 25%, the Lease constitutes a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules and is subject to notification and announcement requirements pursuant to Chapter 14 of the Listing Rules. The Board announces that on 15 February 2019, the Landlord and the Lessee entered into the Lease Agreement, the principal terms of which are set out below. 1

2 LEASE AGREEMENT Date : 15 February 2019 Lessor : The Landlord, an indirect wholly-owned subsidiary of the Company and is principally engaged in property holding and management. Lessee : The Lessee, a limited liability company established in the PRC and is principally engaged in production, research and sales of indoor cleaning equipment, water purification equipment and air purification equipment. To the best of the Directors knowledge, information and belief having made all reasonable enquiry, each of the Lessee and its ultimate beneficial owner(s) is an Independent Third Party. Premises : The ground floor and first floor of the factory building 13-B situated at the Chen Hsong Industrial Park (Shenzhen), Pingshan New District, Shenzhen, PRC. Gross floor area : A total of approximately 58, square metres. Use : Office and production Facilities for Lessee s use (free of charge) : 2 cargo lifts, car parking space (446 square metres), 2 toilet rooms, 1 pump room, 1 hydraulic room and 1 air compressor room ( square metres) Term : A fixed term of 5 years commencing from 10 March 2019 and ending on 9 March 2024 (both days inclusive) ( Rental Period ) with option to renew for a term of 2 years ( Renewal Period ) subject to Lessor s right of early termination by giving Lessee 6 months written notice by reason of redevelopment. 2

3 Rent : A monthly rent of RMB1,609, (equivalent to approximately HK$1,868,074) (1 st -3 rd year of Rental Period); RMB1,770, (equivalent to approximately HK$2,054,882) (4 th -5 th year of Rental Period and 1 st year of Renewal Period, if applicable); and RMB1,947, (equivalent to approximately HK$2,260,370) (2 nd year of Renewal Period, if applicable). The rent is inclusive of 5% PRC value-added tax but exclusive of management fee, electricity, water charges and all other charges and outgoings. The monthly rent is payable within 10 days of commencement of each month under the Term. Rent free period : A total of 40 days during the Term of the Lease Agreement, being from 10 March 2019 to 29 March 2019 and from 10 February 2020 to 29 February Management fee : The Lessee shall pay to the Lessor a monthly management fee of RMB116, (equivalent to approximately HK$135,451), inclusive of tax. Electricity charges : The Lessee shall be responsible for the corresponding electricity charges incurred during the Term of the Lease Agreement. In addition, the Lessee shall pay to the Lessor a base tariff of RMB11, (equivalent to approximately HK$12,766) per month regardless of electricity usage. Security deposit : RMB4,024, (equivalent to approximately HK$4,670,186), equivalent to 2.5 months of rent. 3

4 REASONS FOR AND BENEFITS OF THE LEASE The Group is principally engaged in the manufacturing and sale of plastic injection moulding machines and related products. The Chen Hsong Industrial Park (Shenzhen) in Pingshan New District, Shenzhen, PRC, where the Premises are located, is the flagship production, sale and distribution, research and development facilities, property management and leasing of the Group. The Directors consider that the entering into of the Lease Agreement will allow the Group to have a steady rental income from the Premises and at the same time to increase the utilisation rate of factory buildings in the Chen Hsong Industrial Park (Shenzhen). The receipt of the rental income will enhance the working capital of the Group and return to the Shareholders, which is in the best interests of the Company and its shareholders as a whole. The terms of the Lease Agreement were determined after arm s length negotiations between the parties thereto and are on normal commercial terms. In light of the reasons above, the Directors are of the view that the Lease is in the interests of the Company and that the terms of the Lease Agreement are fair and reasonable and in the interests of the Shareholders as a whole. IMPLICATIONS UNDER THE LISTING RULES As at least one of the applicable percentage ratios as defined under the Listing Rules in respect of the Lease exceeds 5% but all applicable percentage ratios are lower than 25%, the Lease constitutes a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules and is subject to notification and announcement requirements pursuant to Chapter 14 of the Listing Rules. 4

5 DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: Board Company connected person Director(s) Group HK$ Hong Kong Independent Third Party Landlord Lease Lease Agreement Lessee Listing Rules the board of Directors Chen Hsong Holdings Limited, an exempted company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange has the meaning ascribed to it under the Listing Rules the director(s) of the Company the Company and its subsidiaries Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the People s Republic of China a third party independent of the Company and the connected persons of the Company (in English, for identification only, Chen Hsong Industrial Park (Shenzhen) Co., Ltd.), an indirect wholly-owned subsidiary of the Company the lease of the Premises under the Lease Agreement the lease agreement dated 15 February 2019 and entered into between the Landlord and the Lessee in respect of the lease of the Premises (in English, for identification only, Shenzhen Yuk Tai Water Purification Equipment Co., Ltd.), a limited liability company established in the PRC the Rules Governing the Listing of Securities on the Stock Exchange 5

6 PRC the People s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan Premises the ground floor and first floor of the factory building 13-B situated at the Chen Hsong Industrial Park (Shenzhen), Pingshan New District, Shenzhen, PRC RMB Renminbi, the lawful currency of the PRC Share(s) ordinary share(s) of HK$0.10 each in the capital of the Company Shareholder(s) holder(s) of the Share(s) Stock Exchange The Stock Exchange of Hong Kong Limited In this announcement, amounts quoted in RMB have been converted into HK$ at a rate of RMB1 to HK$ Such exchange rate has been used, where applicable, for the purposes of illustration only and does not constitute a representation that any amounts were or may have been exchanged at this or any other rates at all. By Order of the Board CHEN HSONG HOLDINGS LIMITED Chi Ngai CHAN Company Secretary Hong Kong, 15 February 2019 As at the date of this announcement, the executive directors of the Company are Ms. Lai Yuen CHIANG, Mr. Chi Kin CHIANG, Mr. Stephen Hau Leung CHUNG and Mr. Sam Hon Wah NG; and the independent non-executive directors of the Company are Mr. Johnson Chin Kwang TAN, Mr. Anish LALVANI, Mr. Bernard Charnwut CHAN and Mr. Michael Tze Hau LEE. 6