MAJOR TRANSACTION IN RELATION TO PROPOSED SPIN-OFF AND SEPARATE LISTING OF THE FOUNDATION BUSINESS ON THE MAIN BOARD OF THE STOCK EXCHANGE

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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. This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company. This announcement does not constitute and is not an offer to sell or the solicitation of an offer to buy any securities referred to in this announcement in the United States of America or elsewhere. The Company has not registered and does not intend to register any of these securities under the US Securities Act of 1933, as amended (the US Securities Act ) and such securities may not be offered or sold in the United States of America absent registration under the US Securities Act or an exemption from registration. * (Incorporated in Bermuda with limited liability) (Stock Code: 385) MAJOR TRANSACTION IN RELATION TO PROPOSED SPIN-OFF AND SEPARATE LISTING OF THE FOUNDATION BUSINESS ON THE MAIN BOARD OF THE STOCK EXCHANGE THE PROPOSED SPIN-OFF The Company refers to the Announcements made by the Company relating to the Proposed Spin-off. The Proposed Spin-off is expected to be implemented by way of a Global Offering which will consist of the Hong Kong Public Offer, the International Offer, the Preferential Offer and the Employee Preferential Offer, and a separate Listing of the CKW Shares on the Main Board of the Stock Exchange. It is expected that if the Global Offering proceeds, the total number of CKW Shares to be offered under the Global Offering will be 382,500,000 (assuming that the Over-allotment Option is not exercised), representing 25.5% of the issued share capital of Chinney Kin Wing immediately following the completion of the Global Offering, and 439,875,000 (assuming that the Over-allotment Option is exercised in full), representing approximately 28.2% of the issued share capital of Chinney Kin Wing immediately following the completion of the Global Offering. The total number of CKW Shares which is expected to be in issue immediately following the completion of the Global Offering is 1,500,000,000 (assuming that the Overallotment Option is not exercised). If the Global Offering proceeds, the Offer Price is expected to be not less than HK$0.50 per Offer Share and not more than HK$0.66 per Offer Share (exclusive of brokerage, SFC transaction levy and Stock Exchange trading fee). It is currently expected that Chinney Kin Wing will grant to the International Underwriters, exercisable by the Sole Global Coordinator on behalf of the International Underwriters, the Over-allotment Option to require Chinney Kin Wing to issue and allot additional CKW Shares representing up to 15% of the initial Offer Shares at the Offer Price under the International Offer to cover the over-allocations in the International Offer, if any. The final structure of the Proposed Spin-off, including the size of the Global Offering and the exact apportionment between the Hong Kong Public Offer, the International Offer, the Preferential Offer and the Employee Preferential Offer will be decided by the Board and the CKW Board

2 The CKW Shares to be issued pursuant to the Global Offering will rank pari passu in all respects with all the CKW Shares then in issue. Based on the current structure of the Proposed Spin-off which is subject to finalisation, assuming that the Over-allotment Option is not exercised, immediately following completion of the Proposed Spin-off, the Company will continue to hold approximately 74.5% of all the CKW Shares in issue. If the Over-allotment Option is exercised in full, the Company s direct shareholding in Chinney Kin Wing will be reduced to approximately 71.8%. In any of these events, Chinney Kin Wing will continue to be a direct non-wholly owned subsidiary of the Company upon completion of the Proposed Spinoff and the operating results of the CKW Group will continue to be consolidated into the consolidated financial statements of the Group. LISTING RULES IMPLICATIONS The Proposed Spin-off constitutes a deemed disposal of the interest in a subsidiary of the Company under Rule of the Listing Rules. As the highest of the applicable percentage ratios in respect of the Proposed Spin-off exceeds 25% but is less than 75%, the Proposed Spinoff will constitute a major transaction of the Company under Chapter 14 of the Listing Rules. The Proposed Spin-off is therefore subject to, among other things, the approval of the Shareholders under paragraph 3(e)(1) of PN 15 and Chapter 14 of the Listing Rules as and when necessary. Since no Shareholder would be required to abstain from voting if the Company were to convene a general meeting for the approval of the Proposed Spin-off, written Shareholders approval has been obtained in lieu of holding a general meeting pursuant to Rule of the Listing Rules. Enhancement Investments, Multi-Investment and Chinney Capital, which constitute a closely allied group of Shareholders holding an aggregate of 435,940,216 Shares representing approximately 73.28% of the issued share capital of the Company as at the date of this announcement, have given a written approval to the Company in respect of the Proposed Spinoff. Accordingly, no general meeting of the Company will be convened for the purposes of approving the Proposed Spin-off. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER The Independent Board Committee formed by all the independent non-executive Directors, namely Mr. Yuen-Tin Ng, Mr. Chi-Chiu Wu, Mr. Ronald James Blake, has been established to advise the Shareholders as to whether the terms of the Proposed Spin-off are fair and reasonable and whether the Proposed Spin-off is in the interests of the Company and the Shareholders as a whole, taking into account the recommendation of the Independent Financial Adviser. KGI has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Shareholders as to whether the terms of the Proposed Spin-off are fair and reasonable and whether the Proposed Spin-off is in the interests of the Company and the Shareholders as a whole. CIRCULAR A circular which contains, among other things, details of the Proposed Spin-off, the Preferential Offer and the Employee Preferential Offer, the letter from the Independent Board Committee and the letter from the Independent Financial Adviser to the Independent Board Committee and the Shareholders will be despatched to Shareholders on 30 October GENERAL The Global Offering (including the Preferential Offer) is subject to, among other things, the granting of listing of, and permission to deal in, the CKW Shares on the Stock Exchange, and the Hong Kong Underwriting Agreement and the International Underwriting Agreement having been signed and becoming unconditional. Accordingly, - 2 -

3 Shareholders and potential investors of the Company should be aware that there is no assurance that the Proposed Spin-off and the Listing will take place and, if so, when they may take place. Shareholders and potential investors of the Company should exercise caution when dealing in or investing in the securities of the Company. The timetable for the Global Offering, including the Preferential Offer, will be set out in the CKW Prospectus. The Company will make further announcement(s) in relation to the Proposed Spin-off and the Listing in accordance with the requirements of the Listing Rules as and when appropriate. INTRODUCTION The Company refers to the announcements made by the Company on 22 May 2015, 29 June 2015, 18 August 2015, 6 October 2015, 9 October 2015 and 27 October 2015 respectively (collectively, the Announcements ) relating to the Proposed Spin-off. This announcement is made pursuant to Chapter 14 and PN15 of the Listing Rules. THE PROPOSED SPIN-OFF The Proposed Spin-off is expected to be implemented by way of a Global Offering which will consist of the Hong Kong Public Offer, the International Offer, the Preferential Offer and the Employee Preferential Offer, and a separate Listing of the CKW Shares on the Main Board of the Stock Exchange. Further information on the Preferential Offer and the Employee Preferential Offer is set out in the paragraphs headed Preferential Offer and Employee Preferential Offer below. It is expected that if the Global Offering proceeds, the total number of CKW Shares to be offered under the Global Offering will be 382,500,000 (assuming that the Over-allotment Option is not exercised), representing 25.5% of the issued share capital of Chinney Kin Wing immediately following the completion of the Global Offering, and 439,875,000 (assuming that the Overallotment Option is exercised in full), representing approximately 28.2% of the issued share capital of Chinney Kin Wing immediately following the completion of the Global Offering. The total number of CKW Shares which is expected to be in issue immediately following the completion of the Global Offering is 1,500,000,000 (assuming that the Over-allotment Option is not exercised). If the Global Offering proceeds, the Offer Price is expected to be not less than HK$0.50 per Offer Share and not more than HK$0.66 per Offer Share (exclusive of brokerage, SFC transaction levy and Stock Exchange trading fee). It is currently expected that Chinney Kin Wing will grant to the International Underwriters, exercisable by the Sole Global Coordinator on behalf of the International Underwriters, the Over-allotment Option to require Chinney Kin Wing to issue and allot additional CKW Shares representing up to 15% of the initial Offer Shares at the Offer Price under the International Offer to cover the over-allocations in the International Offer, if any. The final structure of the Proposed Spin-off, including the size of the Global Offering and the exact apportionment between the Hong Kong Public Offer, the International Offer, the Preferential Offer and the Employee Preferential Offer will be decided by the Board and the CKW Board. The CKW Shares to be issued pursuant to the Global Offering will rank pari passu in all respects with all the CKW Shares then in issue. Based on the current structure of the Proposed Spin-off which is subject to finalisation, assuming that the Over-allotment Option is not exercised, immediately following completion of the Proposed Spin-off, the Company will continue to hold approximately 74.5% of all the CKW Shares in issue. If the Over-allotment Option is exercised in full, the Company s direct shareholding in Chinney Kin Wing will be - 3 -

4 reduced to approximately 71.8%. In any of these events, Chinney Kin Wing will continue to be a direct non-wholly owned subsidiary of the Company upon completion of the Proposed Spinoff and the operating results of the CKW Group will continue to be consolidated into the consolidated financial statements of the Group. On the basis of the above, immediately following completion of the Proposed Spin-off, Chinney Kin Wing will have a public float of not less than 25%, and will be able to comply with the minimum public float requirement under Rule 8.08 of the Listing Rules. Separate listing of the CKW Shares On 18 August 2015, Chinney Kin Wing submitted a listing application form (Form A1) to the Stock Exchange for an application for the listing of, and permission to deal in, the CKW Shares on the Main Board of the Stock Exchange. Members of the CKW Group will remain as nonwholly owned subsidiaries of the Company upon completion of the Proposed Spin-off. The Company is required to comply with the requirements under PN15. The Directors confirm that the Company will comply with all requirements of the Listing Rules in respect of the Proposed Spin-off. The Listing of the CKW Shares on the Main Board of the Stock Exchange is conditional upon the fulfillment or waiver of conditions stated in the paragraph headed Conditions of the Proposed Spin-off below. Subject to the Stock Exchange granting approval of the listing of, and permission to deal in, the CKW Shares on the Main Board of the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the CKW Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the Listing Date or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange is required to take place in CCASS on the second Business Day after any trading day. All activities under CCASS are subject to the General Rules of CCASS and the CCASS Operational Procedures in effect from time to time. The Shares will continue to be listed on the Main Board of the Stock Exchange after completion of the Proposed Spin-off. Shareholding effects of the Proposed Spin-off Shareholding structure of the CKW Group upon completion of the Proposed Spin-off Based on the current structure of the Proposed Spin-off, the number of CKW Shares which will initially be available under the Global Offering is expected to represent 25.5% of the total number of CKW Shares in issue immediately following completion of the Global Offering and the Capitalisation Issue (assuming that the Over-allotment Option is not exercised), and the Company s equity interest in Chinney Kin Wing will be reduced to approximately 74.5% (assuming that the Over-allotment Option is not exercised) or to approximately 71.8% (assuming the Over-allotment Option is exercised in full) immediately following completion of the Global Offering and the Capitalisation Issue. The corporate structure of the CKW Group after completion of the Reorganisation, and immediately after the Capitalisation Issue and the Global Offering (assuming that all Qualifying Shareholders (except Chinney Capital, Enhancement Investments and Multi-Investment) take up their respective Preferential Entitlements under the Preferential Offer in full, and without taking into account any CKW Shares which may be issued pursuant to the exercise of the Overallotment Option) is set out below: - 4 -

5 Notes: 1. Kinwing Macau is legally owned as to 99.9% by Kin Wing and 0.1% by Kin Wing Engineering. By a declaration of trust dated 1 June 2005, Kin Wing Engineering declared that it held one quota in Kinwing Macau on trust for Kin Wing. On 8 August 2015, Kin Wing Engineering has granted an irrevocable power of attorney in favour of Kin Wing granting Kin Wing all powers relating to its social rights and its quota in Kinwing Macau, and hence Kin Wing beneficially owns the entire registered capital of Kinwing Macau. 2. DrilTech Macau is legally owned as to 99.9% by Kin Wing and 0.1% by DrilTech Ground. By a declaration of trust dated 1 June 2005, DrilTech Ground declared that it held one quota in DrilTech Macau on trust for Kin Wing. On 8 August 2015, DrilTech Ground has granted an irrevocable power of attorney in favour of Kin Wing granting Kin Wing all powers relating to its social rights and its quota in DrilTech Macau, and hence Kin Wing beneficially owns the entire registered capital of DrilTech Macau

6 INFORMATION ON THE REMAINING GROUP AND THE CKW GROUP Business overview of the CKW Group The CKW Group is engaged in a wide range of foundation works including (i) piling construction (such as bored piling, percussive H-piling, socketed H-piling, mini-piling and sheet piling) and other ancillary services (such as excavation and lateral support works, site formation and pile cap construction); and (ii) drilling and site investigation. The table below sets forth the breakdown of the turnover by activity of the CKW Group for each of the three years ended 31 December 2014 and for the four months ended 30 April Turnover by activity For the year ended 31 December For the four months ended April 2015 HK$ 000 % HK$ 000 % HK$ 000 % HK$ 000 % Piling construction and other ancillary services 933, ,059, ,233, , Drilling and site investigation 114, , , , ,048, ,178, ,381, , Clear business delineation between the business of the Remaining Group and the CKW Group The Remaining Group will, upon the Listing, principally engage in the Retained Business whilst the CKW Group will principally engage in the Foundation Business. The business and/or scope of services provided by each of the Retained Business and the Foundation Business differ significantly. The table below sets out the major differences between the Foundation Business of CKW Group and the Retained Business of the Remaining Group: Foundation Business Engage in foundation piling business focusing on bored piling, percussive H-piling, socketed H-piling, mini- piling and sheet piling, with specialisation in bored piling design and construction Engage in drilling and site investigation business Provide foundation related ancillary services such as excavation and lateral support works, site formation, and pile cap construction Retained Business Engage in importing, marketing and distribution of plastic and chemical productions Engage in provision of building services and electrical and mechanical installation and maintenance services such as airconditioning, fire systems and electrical and extra-low voltage works Engage in sales and installation of airconditioning systems, digital energy optimisation systems, outdoor LED lighting systems and other building related electrical systems Engage in provision of superstructure construction works Engage in distribution and installation of aviation systems and other hi-tech products Engage in other investment activities such as equity investments and investments in real estates - 6 -

7 As shown in the table above, there is clear business delineation between the respective services provided by the CKW Group and the Remaining Group as they are of different nature. In practice, their respective business operations are independent from each other. Members of the Remaining Group do not, and it is expected that they will not, engage in any business activities that compete or will compete with those of the CKW Group. To address potential conflicts of interests between the Remaining Group and the CKW Group, the Company and Dr. Wong have entered into the Deed of Non-competition in favour of Chinney Kin Wing (for itself and for the benefits of its subsidiaries). Underwriting agreements, lock up restrictions and Stock Borrowing Agreement Underwriting agreements The Company has entered into the Hong Kong Underwriting Agreement in relation to the Hong Kong Public Offer with Chinney Kin Wing, the Sole Global Coordinator and the Hong Kong Underwriters. The Company will also enter into the International Underwriting Agreement relating to the International Offer with Chinney Kin Wing, the Sole Global Coordinator and the International Underwriters. The Offer Shares will be underwritten by the Underwriters subject to the terms set out in the underwriting agreements. Lock-up Pursuant to Rule 10.07(1) of the Listing Rules, each of the CKW Controlling Shareholders has undertaken to Chinney Kin Wing, the Stock Exchange and the Sole Global Coordinator (for itself and on behalf of the Hong Kong Underwriters) and the Hong Kong Underwriters that he/it shall not and shall procure that the relevant registered holder shall not, without the prior written consent of the Stock Exchange, except pursuant to the Global Offering or the Capitalisation Issue or the Over-allotment Option or the Stock Borrowing Agreement: (i) (ii) at any time during the period commencing on the date of the CKW Prospectus and ending on and including, the date which is six months from the Listing Date (the First Six-Month Period ), dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the CKW Shares in respect of which he/it is shown in the CKW Prospectus to be the beneficial owner; or at any time during the period of six months commencing on the date on which the period referred to in paragraph (i) above expires (the Second Six-Month Period ), dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the CKW Shares referred to in paragraph (i) above if, immediately following such disposal or upon the exercise or enforcement of such options, rights, interests or encumbrances, he/it would cease to be a CKW Controlling Shareholder. The Company has entered into similar non-disposal arrangements with the Hong Kong Underwriters under the Hong Kong Underwriting Agreement. Stock Borrowing Agreement It is expected that the Company will enter into the Stock Borrowing Agreement with the Stabilising Manager under the Global Offering. Further details about the stock borrowing arrangements will be set out in the CKW Prospectus

8 Financial information of the CKW Group Set out below is certain selected financial information of the CKW Group based on its audited consolidated financial statements for each of the three years ended 31 December 2014 and the four months ended 30 April 2015: For the year ended 31 December r For the four months ended April 2015 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Revenue 1,048,694 1,178,324 1,381, ,825 Profit before tax 42,449 66, ,528 69,516 Profit for the year/period and total comprehensive income for the year/period 33,386 58,821 98,590 58,077 As at 30 April 2015, based on the audited financial statements of the CKW Group, the consolidated net assets value of the CKW Group is HK$281,599,000. FINANCIAL IMPACT OF THE PROPOSED SPIN-OFF The following estimates the financial impact of the Proposed Spin-off on the Group on the basis of the current structure of the Proposed Spin-off that Chinney Kin Wing will offer 25.5% of the total number of CKW Shares in issue immediately following completion of the Global Offering and the Capitalisation Issue (assuming that the Over-allotment Option is not exercised) and is for illustration purposes only. The actual financial impact of the Proposed Spin-off on the Group is subject to the review by the Company s auditors. Net asset value The unaudited consolidated net assets of the Group were approximately HK$1,005.1 million as at 30 June Based on (i) the number of Offer Shares, (ii) the current proposed structure of the Global Offering, and (iii) the audited consolidated net assets of the CKW Group as at 30 April 2015, the estimated minimum market capitalisation of Chinney Kin Wing (assuming that the Over-allotment Option is not exercised) will be approximately HK$750.0 million. The Board expects that the consolidated net assets of the Group will be increased as a result of the issue of the CKW Shares at an issue price above their attributable underlying combined net asset value (the Increase in Net Assets ), based on the audited consolidated net assets of CKW Group as at 30 April 2015 of approximately HK$281.6 million, the net proceeds from the Global Offering and special dividend to be distributed by Chinney Kin Wing to the Company before Listing, and the consolidated cash balances of the Group will be increased by the net proceeds from the Global Offering. In accordance with the Hong Kong Financial Reporting Standards, the Increase in Net Assets, which constitutes changes in a parent s ownership interest in a subsidiary that do not result in a loss of control, is accounted for within equity. Therefore, there will be no gain or loss arising from the deemed disposal by the Company of its interest in Chinney Kin Wing under the Global Offering to be recognised in the consolidated income statement of the Company given that - 8 -

9 Chinney Kin Wing will remain as a direct non-wholly owned subsidiary of the Company immediately upon completion of the Proposed Spin-off and the Global Offering. Earnings Following completion of the Proposed Spin-off, members of the CKW Group will continue to be non-wholly owned subsidiaries of the Company. The operating results of the CKW Group will therefore be consolidated into the financial statements of the Company. Based on the audited consolidated financial statements of the Group for each of the two years ended 31 December 2014, the consolidated net profits before taxation of the Group were approximately HK$115.4 million and HK$165.7 million, respectively. For each of the two years ended 31 December 2014, the audited consolidated net profits after taxation of the Group were approximately HK$104.5 million and HK$142.3 million, respectively. Based on the unaudited consolidated financial statements of the Group for the six months ended 30 June 2015, the unaudited profit before and after taxation of the Group was HK$95.0 million and HK$77.4 million, respectively. Assuming that no new CKW Shares will be issued before the Listing, following completion of the Proposed Spin-off, the proportion of the Group s earnings contributed from the CKW Group is expected to be reduced as the Company s interest in Chinney Kin Wing will be reduced from 100% to approximately 74.5% (assuming that the Over-allotment Option is not exercised) and Chinney Kin Wing will be regarded as a direct non-wholly owned subsidiary of the Company. Consequently, financial results of the CKW Group will be consolidated into the accounts of the Group and the profit attributable to non-controlling interests will increase. REASONS FOR AND BENEFITS OF THE PROPOSED SPIN-OFF The Board believes that the Proposed Spin-off and the Listing will bring about the following benefits to both the Company and Chinney Kin Wing: (i) as there are clear strategic and operational differences between the Foundation Business and the Retained Business, the Proposed Spin-off and the Listing will create Chinney Kin Wing as an investment opportunity for new investors and also unlock the shareholder value for the Shareholders by better identifying and establishing the stand-alone corporate value of the Foundation Business; (ii) the Proposed Spin-off and the Listing will increase the operational and financial transparency of each of the Foundation Business and the Retained Business, through which investors would be able to appraise and assess the performance and potential of the Company and Chinney Kin Wing as separate entities rather than as a conglomerate. It allows both the Company and Chinney Kin Wing to target their respective investor bases more effectively, which in turn improves capital raising on a competitive basis and capital allocation to enhance growth within each company; (iii) the Proposed Spin-off and the Listing will lead to a more direct alignment of the responsibilities and accountability of the management of both the Company and Chinney Kin Wing with their respective operating and financial performances. It leads to enhanced management focus, better resources allocation, more efficient decision-making process, and faster responsiveness to market changes, on the respective businesses of the Remaining Group and the CKW Group; (iv) the Proposed Spin-off and the Listing will enable Chinney Kin Wing to directly and independently access both equity and debt capital markets, and will facilitate it in securing banking facilities, which in turn will increase the financing flexibility to achieve the business strategies of the CKW Group; and - 9 -

10 (v) the separate listing status of Chinney Kin Wing will also enhance the CKW Group s profile amongst its customers, suppliers and other business partners, as well as its ability to recruit, motivate and retain key management personnel. Chinney Kin Wing will enjoy greater flexibility in providing management incentives through adoption of equity based incentive program such as share option scheme, and making acquisitions by using its stock as acquisition currency. In light of the above reasons, the Board (excluding the independent non-executive Directors) believes that the Proposed Spin-off is in the best interests of the Shareholders. CONDITIONS OF THE PROPOSED SPIN-OFF The Proposed Spin-off will be conditional upon, among other things: (a) the Listing Committee of the Stock Exchange granting approval for listing of, and permission to deal in, the CKW Shares in issue and the Offer Shares to be issued pursuant to the Global Offering (including any CKW Shares to be issued upon the exercise of the Over-allotment Option) on the Main Board of the Stock Exchange; (b) the terms and structure of the Global Offering being agreed among the Company, Chinney Kin Wing and the Underwriters appointed under the Global Offering; (c) the execution and delivery of the International Underwriting Agreement on or about the Price Determination Date; and (d) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement and the obligations of the International Underwriters under the International Underwriting Agreement becoming unconditional and not having been terminated in accordance with the terms of the respective agreements. If any of these and other applicable conditions are not fulfilled or waived, if applicable, prior to the dates and times to be specified, the Proposed Spin-off will not proceed and an announcement will be published by the Company as soon as practicable thereafter. PROPOSED USE OF NET PROCEEDS FROM THE GLOBAL OFFERING Chinney Kin Wing estimates that the aggregate net proceeds from the Global Offering (after deducting underwriting fees and estimated expenses payable by Chinney Kin Wing in connection with the Global Offering, and assuming an Offer Price of HK$0.58 per Offer Share, being the mid-point of the indicative price range) will be approximately HK$185.8 million (assuming that the Over-allotment Option is not exercised). Chinney Kin Wing currently intends to apply such net proceeds in the following manner: (i) (ii) approximately 60.0% of the net proceeds for the acquisition in additional machinery and related storage and maintenance expenditures to expand the CKW Group s capacity and enhance its project implementation capability; approximately 20.0% of the net proceeds for the investment in human resources to increase the CKW Group s productivity and capabilities; (iii) approximately 10.0% of the net proceeds for enhancement of the CKW Group s design capability and streamline the project implementation progress and also including expenditures in modifications of the CKW Group s existing plant and machinery to increase efficiency; and

11 (iv) approximately 10.0% of the net proceeds will be used as general working capital of the CKW Group. To the extent the net proceeds from the Global Offering are either more or less than expected, Chinney Kin Wing intends to apply the net proceeds to the above purposes on a pro-rata basis. If the Over-allotment Option is exercised in full or in part, Chinney Kin Wing intends to apply the additional net proceeds from the exercise of the Over-allotment Option to the above purposes on a pro-rata basis. To the extent that the net proceeds of the Global Offering are not immediately used for the above purposes and to the extent permitted by the relevant laws and regulations, Chinney Kin Wing intends to deposit such net proceeds into interest-bearing bank accounts with licensed banks and/or financial institutions. The above intended use of net proceeds from the Global Offering is indicative only and is subject to change. Further information on the application of the net proceeds from the Global Offering will be set forth in the CKW Prospectus. PREFERENTIAL OFFER As disclosed in the announcement of the Company dated 27 October 2015, in order to enable the Shareholders to participate in the Global Offering on a preferential basis as to allocation only, subject to the Stock Exchange granting approval for the listing of, and permission to deal in, the CKW Shares on the Main Board of the Stock Exchange and the Proposed Spin-off becoming unconditional, it is expected that Qualifying Shareholders will be invited to apply for an aggregate of 34,425,000 Reserved Shares in the Preferential Offer representing 10% and 9% of the Offer Shares available under the International Offer and the Global Offering, respectively (assuming that the Over-allotment Option is not exercised) as Preferential Entitlement. The Reserved Shares will be offered out of the International Offer Shares under the International Offer and will not be subject to reallocation. The basis of the Preferential Entitlement is one Reserved Share for every integral multiple of 17 Shares held by Qualifying Shareholders as at 4:30 p.m. on the Record Date. Preferential Entitlement of Qualifying Shareholders to Reserved Shares are not transferable and there will be no trading in nil-paid entitlements on the Stock Exchange. Shareholders are reminded that this announcement is not intended to be and does not constitute an offer or any invitation to apply for their Preferential Entitlement under the Preferential Offer. Such offer or invitation is made through the CKW Prospectus and Shareholders should refer to the CKW Prospectus for details of the offer and the invitation to them under the Preferential Offer. EMPLOYEE PREFERENTIAL OFFER It is expected that of the 38,250,000 Offer Shares to be initially offered under the Hong Kong Public Offer, 3,825,000 Offer Shares (representing 10% and 1% of the total number of Offer Shares to be initially offered under the Hong Kong Public Offer and the Global Offering (assuming that the Over-allotment Option is not exercised), respectively) will be offered as the Employee Reserved Shares for subscription by the Eligible Employees on a preferential basis, subject to the terms and conditions set out in the CKW Prospectus and the PINK Application Forms. The Employee Reserved Shares will be offered out of the Hong Kong Offer Shares

12 LISTING RULES IMPLICATIONS The Proposed Spin-off constitutes a deemed disposal of the interest in a subsidiary of the Company under Rule of the Listing Rules. As the highest of the applicable percentage ratios in respect of the Proposed Spin-off exceeds 25% but is less than 75%, the Proposed Spinoff will constitute a major transaction of the Company under Chapter 14 of the Listing Rules. The Proposed Spin-off is therefore subject to, among other things, the approval of the Shareholders under paragraph 3(e)(1) of PN15 and Chapter 14 of the Listing Rules as and when necessary. Since no Shareholder would be required to abstain from voting if the Company were to convene a general meeting for the approval of the Proposed Spin-off, written Shareholders approval has been obtained in lieu of holding a general meeting pursuant to Rule of the Listing Rules. As at the date of this announcement, Enhancement Investments, Multi-Investment and Chinney Capital, which were all controlled by Dr. Wong, were interested in 243,244,521, 173,093,695 and 19,602,000 Shares, representing approximately 40.89%, 29.10% and 3.29% of the issued share capital of the Company, respectively. Enhancement Investments and Chinney Capital were wholly-owned by Dr. Wong, directly or indirectly; and Multi-Investment was indirectly whollyowned by Chinney Investments, which was in turn indirectly and directly owned as to approximately 63.12% and 0.09% by Dr. Wong respectively. Enhancement Investments, Multi-Investment and Chinney Capital, which constitute a closely allied group of Shareholders holding an aggregate of 435,940,216 Shares representing approximately 73.28% of the issued share capital of the Company as at the date of this announcement, have given a written approval to the Company in respect of the Proposed Spinoff. Accordingly, no general meeting of the Company will be convened for the purposes of approving the Proposed Spin-off. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER The Independent Board Committee formed by all the independent non-executive Directors, namely Mr. Yuen-Tin Ng, Mr. Chi-Chiu Wu, Mr. Ronald James Blake, has been established to advise the Shareholders as to whether the terms of the Proposed Spin-off are fair and reasonable and whether the Proposed Spin-off is in the interests of the Company and the Shareholders as a whole, taking into account the recommendation of the Independent Financial Adviser. KGI has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Shareholders as to whether the terms of the Proposed Spin-off are fair and reasonable and whether the Proposed Spin-off is in the interests of the Company and the Shareholders as a whole. CIRCULAR A circular which contains, among other things, details of the Proposed Spin-off, the Preferential Offer and the Employee Preferential Offer, the letter from the Independent Board Committee and the letter from the Independent Financial Adviser to the Independent Board Committee and the Shareholders will be despatched to Shareholders on 30 October GENERAL To the best of the Directors knowledge, information and belief having made all reasonable enquiries, the proposed subscribers for the CKW Shares under the Global Offering (and their respective ultimate beneficial owners), will be Independent Third Parties, except that all Qualifying Shareholders (including connected persons of the Company who are Qualifying Shareholders) will be entitled to participate in the Preferential Offer

13 The Global Offering (including the Preferential Offer) is subject to, among other things, the granting of listing of, and permission to deal in, the CKW Shares on the Stock Exchange, and the Hong Kong Underwriting Agreement and the International Underwriting Agreement having been signed and becoming unconditional. Accordingly, Shareholders and potential investors of the Company should be aware that there is no assurance that the Proposed Spin-off and the Listing will take place and, if so, when they may take place. Shareholders and potential investors of the Company should exercise caution when dealing in or investing in the securities of the Company. The timetable for the Global Offering, including the Preferential Offer, will be set out in the CKW Prospectus. The Company will make further announcement(s) in relation to the Proposed Spin-off and the Listing in accordance with the requirements of the Listing Rules as and when appropriate. DEFINITIONS Unless the context otherwise requires, capitalized terms used in this announcement shall have the following meanings: associate(s) BLUE Application Form(s) Board or Board of Directors Business Day Capitalisation Issue has the meaning ascribed to it under the Listing Rules the application form(s) to be sent to the Qualifying Shareholders to subscribe for the Reserved Shares pursuant to the Preferential Offer the board of Directors any day (other than a Saturday, Sunday or public holiday) on which banks in Hong Kong are generally open for normal banking business the issue of CKW Shares to be made upon capitalisation of certain sum standing to the credit of the share premium account of Chinney Kin Wing, details of which will be set out in the CKW Prospectus CCASS the Central Clearing and Settlement System established and operated by HKSCC Chinney Capital Chinney Capital Limited, a company incorporated in Hong Kong with limited liability on 15 December 1978, which is interested in approximately 3.29% of the issued shares in the Company and is indirectly wholly-owned by Dr. Wong Chinney Investments Chinney Investments, Limited, a company incorporated in Hong Kong on 23 June 1959 with limited liability, whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 0216) and Dr. Wong has an indirect interest in 63.12% and a direct interest in 0.09% of its issued shares

14 Chinney Kin Wing CKW Board CKW Controlling Shareholder(s) CKW Group CKW Prospectus CKW Share(s) Company connected person(s) Deed of Noncompetition Director(s) Chinney Kin Wing Holdings Limited, an exempted company with limited liability incorporated in Bermuda on 29 May 2015 and a direct wholly-owned subsidiary of the Company the board of directors of Chinney Kin Wing the Company and Dr. Wong, or any one of them Chinney Kin Wing and its subsidiaries following completion of the Reorganisation the prospectus to be issued by Chinney Kin Wing for the Global Offering ordinary share(s) of HK$0.10 each in the share capital of Chinney Kin Wing Chinney Alliance Group Limited, a company incorporated in Bermuda on 16 April 1993 with limited liability, whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 0385) and a CKW Controlling Shareholder has the meaning ascribed to it under the Listing Rules the deed of non-competition dated 20 October 2015 and entered into between the CKW Controlling Shareholders and Chinney Kin Wing pursuant to which the CKW Controlling Shareholders agreed not to, among other things, carry on, engage, or participate or hold any right or interest in or be involved in any foundation business which is in competition with the CKW Group s foundation business the director(s) of the Company DrilTech Geotechnical DrilTech Geotechnical Engineering Limited (formerly known as Good Win Resources Limited), a company incorporated in Hong Kong with limited liability on 13 February 1998, and an indirect whollyowned subsidiary of Chinney Kin Wing DrilTech Ground DrilTech Macau DrilTech Ground Engineering Limited, a company incorporated in Hong Kong with limited liability on 12 November 1996, and an indirect wholly-owned subsidiary of Chinney Kin Wing DrilTech Ground Engineering (Macau) Limited, a private limited liability company by quotas incorporated in Macau on 1 June 2005, and an indirect wholly-owned subsidiary of Chinney Kin Wing

15 Dr. Wong Dr. James Sai-Wing Wong, a controlling Shareholder, an executive Director and the chairman of the Board Eligible Employee(s) Employee Preferential Offer Employee Reserved Share(s) Enhancement Investments Foundation Business Global Offering Group HKSCC Hong Kong or HKSAR or HK Hong Kong dollars, HK$ or cents full-time employee(s) of either (i) the CKW Group (including full-time secondee to the CKW Group) or (ii) the Remaining Group and who: (a) is/are at least 18 years of age; (b) has/have Hong Kong address and is/are holder of Hong Kong Identity Card; (c) remain(s) as full-time employee of either the CKW Group (including a full-time secondee to the CKW Group (if applicable)) or the Remaining Group, and is/are not on probation, as at 20 October 2015; (d) has/have not tendered his/her/their resignation or been given notice of termination of employment for any reason other than redundancy or retirement on or before 20 October 2015; and (e) is/are neither, nor associate of, existing beneficial owner(s) of the CKW Share(s) or of share(s) of any of the subsidiaries of Chinney Kin Wing, excluding directors of Chinney Kin Wing or any of its subsidiaries the preferential offer of the Employee Reserved Share(s) to the Eligible Employee(s) for subscription at the Offer Price on a preferential basis as to allocation only the Offer Share(s) to be offered pursuant to the Employee Preferential Offer and which are to be allocated out of the Hong Kong Offer Shares Enhancement Investments Limited, a company incorporated in the British Virgin Islands with limited liability on 10 July 2006, which is interested in approximately 40.89% of the issued shares in the Company and is directly wholly-owned by Dr. Wong foundation business engaged by the CKW Group which includes piling construction and other ancillary services and drilling and site investigation the Hong Kong Public Offer and the International Offer the Company and its subsidiaries before the Proposed Spin-off including the CKW Group Hong Kong Securities Clearing Company Limited the Hong Kong Special Administrative Region of the PRC Hong Kong dollars and cents, respectively, the lawful currency of Hong Kong

16 Hong Kong Offer Shares Hong Kong Public Offer Hong Kong Underwriters Hong Kong Underwriting Agreement Independent Board Committee Independent Third Party(ies) International Offer International Offer Shares International Underwriters International Underwriting Agreement the 38,250,000 new CKW Shares (subject to reallocation) to be initially offered at the Offer Price by Chinney Kin Wing for subscription in the Hong Kong Public Offer the issue and offer of the Hong Kong Offer Shares for subscription in Hong Kong at the Offer Price (plus a brokerage fee of 1%, Stock Exchange trading fee of 0.005% and SFC transaction levy of %) on and subject to the terms and conditions described in the CKW Prospectus and the application forms to be used in relation to the Hong Kong Public Offer, the Preferential Offer or the Employee Preferential Offer the underwriters of the Hong Kong Public Offer the conditional underwriting agreement dated 29 October 2015 relating to the Hong Kong Public Offer and entered into by, among others, the Company, Chinney Kin Wing, the Sole Global Coordinator and the Hong Kong Underwriters the independent board committee formed by the Company comprising all the independent nonexecutive Directors to advise the Shareholders on the Proposed Spin-off individual(s) or company(ies) which is/are independent of and not connected with (within the meaning of the Listing Rules) any director, chief executive or substantial shareholder of the Company or any of its subsidiaries or any of their respective associates the placing of the International Offer Shares at the Offer Price to professional, institutional and other investors the 344,250,000 CKW Shares (subject to reallocation and the Over-allotment Option) to be initially offered at the Offer Price by Chinney Kin Wing for subscription under the International Offer the underwriters named in the International Underwriting Agreement the conditional underwriting agreement expected to be entered into on or about the Price Determination Date by, among others, the Company, Chinney Kin Wing, the Sole Global Coordinator and the International Underwriters in respect of the International Offer

17 KGI or Independent Financial Adviser Kin Wing Kin Wing Engineering KGI Capital Asia Limited, a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the Shareholders in connection with the Proposed Spin-off Kin Wing Chinney (BVI) Limited (formerly known as Pui Shan Holding Limited from 15 March 1994 to 28 June 1994 and Kin Wing-Chinney Holdings Limited from 29 June 1994 to 14 August 1997), a company incorporated in the British Virgin Islands with limited liability on 15 March 1994, and a direct wholly-owned subsidiary of Chinney Kin Wing Kin Wing Engineering Company Limited (formerly known as Sheen Glory Limited), a company incorporated in Hong Kong with limited liability on 19 August 1993, and an indirect wholly-owned subsidiary of Chinney Kin Wing Kin Wing Foundations Kin Wing Foundations Limited, a company incorporated in Hong Kong with limited liability on 2 May 1995, and an indirect wholly-owned subsidiary of Chinney Kin Wing Kin Wing Machinery Kinwing Macau Listing Listing Committee Listing Date Listing Rules Macau Main Board Kin Wing Machinery & Transportation Limited, a company incorporated in Hong Kong with limited liability on 24 February 1994, and an indirect whollyowned subsidiary of Chinney Kin Wing Kinwing Engineering (Macau) Company Limited, a private limited liability company by quotas incorporated in Macau on 1 June 2005, and an indirect wholly-owned subsidiary of Chinney Kin Wing the listing of the CKW Shares on the Main Board of the Stock Exchange the listing committee of the Stock Exchange the date on which dealings in the CKW Shares first commence on the Main Board of the Stock Exchange the Rules Governing the Listing of Securities on the Stock Exchange, as amended, supplemented or otherwise modified from time to time the Macau Special Administrative Region of the PRC the stock exchange (excluding the option market) operated by the Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Stock Exchange

18 Multi-Investment Multi-Investment Group Limited, a company incorporated in the British Virgin Islands with limited liability on 11 September 1998, which is interested in approximately 29.10% of the issued shares in the Company and is an indirect wholly-owned subsidiary of Chinney Investments controlled by Dr. Wong New Public CKW Shareholder(s) Non-Qualifying Shareholder(s) Offer Price Offer Share(s) Over-allotment Option PINK Application Form(s) PN15 PRC Preferential Entitlement the new public shareholder(s) of Chinney Kin Wing upon completion of the Listing and the Global Offering Shareholder(s) whose name(s) appeared in the register of members of the Company at 4:30p.m. on the Record Date and whose address(es) as shown in such register is/are in any of the Specified Territories and any Shareholder(s) or Beneficial Shareholder(s) at that time who is/are otherwise known by the Company to be resident in any of the Specified Territories the final price for each Offer Share (exclusive of brokerage fee, SFC transaction levy and the Stock Exchange trading fee) at which the Offer Shares are to be offered for subscription pursuant to the Global Offering the Hong Kong Offer Share(s) and the International Offer Share(s) together, where relevant, with any additional CKW Share(s) issued pursuant to the exercise of the Over-allotment Option the option expected to be granted by Chinney Kin Wing to the International Underwriters, exercisable by the Sole Global Coordinator on behalf of the International Underwriters pursuant to the International Underwriting Agreement the application form(s) to be sent to Eligible Employee(s) to subscribe for the Employee Reserved Shares pursuant to the Employee Preferential Offer Practice Note 15 of the Listing Rules the People s Republic of China which, for the purpose of this announcement, excludes Hong Kong, Macau and Taiwan the entitlement of the Qualifying Shareholder(s) to apply for the Reserved Shares under the Preferential Offer on an assured basis to be determined on the basis of their respective shareholdings in the Company as at 4:30p.m. on the Record Date

19 Preferential Offer Price Determination Date Proposed Spin-off Qualifying Shareholder(s) Record Date Remaining Group Reorganisation Reserved Share(s) Retained Business the preferential offer of the Reserved Shares to the Qualifying Shareholders for subscription as Preferential Entitlement at the Offer Price on and subject to the terms and conditions stated in the CKW Prospectus and in the BLUE Application Form the date, expected to be on or about 4 November 2015, on which the Offer Price is expected to be fixed for the purpose of the Global Offering or any later date as may be agreed between Chinney Kin Wing and the Sole Global Coordinator (for itself and on behalf of the Underwriters), but, in any event, no later than 9 November 2015 the proposed separate listing of the CKW Shares on the Main Board of the Stock Exchange, which is expected to be effected by way of the Global Offering including the Preferential Offer Shareholder(s) whose names(s) appearing on the register of members of the Company at 4:30 p.m. on the Record Date, excluding the Non-Qualifying Shareholder(s) and directors of Chinney Kin Wing or any of its subsidiaries 27 October 2015, being the record date for ascertaining entitlements to the Preferential Offer the Company and its subsidiaries after the Proposed Spin-off, which excludes the CKW Group the corporate reorganisation of the Group in preparation for the Proposed Spin-off, pursuant to which Chinney Kin Wing has become the holding company of the CKW Group the Offer Share(s) available in the Preferential Offer to be offered by Chinney Kin Wing to Qualifying Shareholders pursuant to the Preferential Offer as Preferential Entitlement which are to be allocated out of the International Offer Shares the principal activities engaged by the Remaining Group, including (i) importing, marketing and distribution of plastics and chemical products; (ii) provision of building services and electrical and mechanical installation and maintenance services such as air-conditioning, fire systems and electrical and extra-low voltage works; (iii) sales and installation of air-conditioning systems, digital energy optimisation systems, outdoor LED lighting systems and other buildings related electrical systems; (iv) provision of superstructure construction works; (v) distribution and installation of aviation systems and other hi-tech products; and (vi) other investment activities such as equity investments and investment in real estates

20 SFC SFO Share(s) Shareholder(s) Sole Global Coordinator or Stabilising Manager Specified Territories Stock Borrowing Agreement Stock Exchange subsidiary(ies) substantial shareholder(s) Underwriters the Securities and Futures Commission of Hong Kong the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time ordinary share(s) of HK$0.10 in the share capital of the Company holder(s) of the Share(s) Haitong International Securities Company Limited, a licensed corporation to conduct Type 1 (dealing in securities), Type 3 (leveraged foreign exchange trading) and Type 4 (advising on securities) regulated activities for the purpose of the SFO, being the sole global coordinator, the sole bookrunner and the stabilising manager of the Global Offering in respect of the Preferential Offer, such territory or territories which Chinney Kin Wing and its directors consider it necessary or expedient to exclude from the Preferential Offer on account of the legal restrictions under the laws of the relevant jurisdiction or the requirements of the relevant regulatory body or stock exchange in that jurisdiction the stock borrowing agreement expected to be entered into between the Company and the Stabilising Manager on or about the Price Determination Date The Stock Exchange of Hong Kong Limited has the meaning ascribed to it under the Listing Rules has the meaning ascribed to it under the Listing Rules the Hong Kong Underwriters and/or the International Underwriters % per cent By Order of the Board Yun-Sang Lo Company Secretary Hong Kong, 29 October 2015 At the date of this announcement, the Board comprises of nine Directors, of which four are executive Directors, namely Dr. James Sai-Wing Wong, Mr. Yuen-Keung Chan, Mr. James Sing-Wai Wong and Mr. Philip Bing-Lun Lam; two are non-executive Directors, namely Mr. Herman Man-Hei Fung and Ms. Wendy Kim-See Gan; and three are independent non-executive Directors, namely Mr. Yuen-Tin Ng, Mr. Chi-Chiu Wu and Mr. Ronald James Blake. * For identification purpose only