CHTC Fong International : VOLUNTARY ANNOUNCEMENT UPDATE ON THE STATUS OF THE URBAN RENEWAL PROJECT

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CHTC FONG'S INTERNATIONAL COMPANY LIMITED

中 國 恒 天 立 信 國 際 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 641)

VOLUNTARY ANNOUNCEMENT

UPDATE ON THE STATUS OF THE URBAN RENEWAL PROJECT

Reference is made to the circular of CHTC Fong's International Company Limited (the "Company", together with its subsidiaries, the "Group") in relation to the Urban Renewal Project dated 25 April 2014 (the "Circular"). This announcement is issued by the Company to provide an update on the Urban Renewal Project. Unless otherwise defined in this announcement, capitalised terms used in this announcement have the same meanings as defined in the Circular.

On 28 March 2014, Fong's National Engineering (Shenzhen) Company, Limited（立信染整 機械（深圳）有限公司）("FNES"), an indirect wholly-owned subsidiary of the Company, entered into a Co-operation Agreement (the "Agreement") with a third party (the "Project Company"), for the redevelopment of FNES's existing land with a site area of approximately 113,932 m2 at Longgang District, Shenzhen, the PRC (the "Land") by way of urban renewal (the "Urban Renewal Project").

Pursuant to the Agreement, the parties have designated the Project Company as the sole principal of the Urban Renewal Project with the sole right to redevelop and reconstruct the Land based on the terms of the Agreement. The Project Company is responsible for obtaining approvals from the PRC government for the redevelopment and reconstruction works contemplated under the Urban Renewal Project, including the demolition of the existing properties, the design, construction, completion and operation of the proposed facilities to be constructed on the redeveloped Land, and paying all costs in connection therewith (including reconstruction expenses, renovation expenses and land premium). FNES is responsible for the provision of the Land.

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As part of the Agreement, FNES will receive (through resettlement and demolition compensation) (i) RMB1 billion in cash in five installments; and (ii) substitution of part of the existing properties on the Land (with a gross floor area of approximately 29,391 m2) with facilities to be constructed on the redeveloped Land with a total gross floor area of approximately 30,000 m2 (and, in addition, at least 100 car-parks).

On 22 December 2014, 30 September 2016 and 29 September 2017, FNES received the first, second and third installment payments of RMB100 million each respectively. Pursuant to the Agreement, the fourth installment of RMB300 million shall be payable by the Project Company within 30 days of the Project Company being designated by the relevant governmental authority in Shenzhen as the sole principal of the Urban Renewal Project and the fifth installment of RMB400 million shall be payable within 30 days of the Project Company signing the land use rights transfer agreement with relevant governmental authorities and registering itself as the owner of the land use rights of the Land.

As advised by the Project Company, due to the various measures implemented by the PRC government in administering the urban renewal projects in Shenzhen, it would take much longer than expected to obtain approval of the registration of the Project Company as the sole principal of the Urban Renewal Project by the relevant governmental authorities in Shenzhen.

On the other hand, as disclosed in the Company's Interim Report 2019, the new production plant of the Group in Zhongshan City, Guangdong Province, the PRC has been conducting interior decoration and equipment installment by phases. The Group has also entered into the stage of executing new labour contracts with existing staff and workers who are willing to relocate to work in Zhongshan City or discharging their labour contracts for those who want to quit. For that, the Group has incurred relocation expenses including relocation and reassembly of manufacturing equipment as well as severance payment.

In view of the above, after friendly negotiation, the Group and the Project Company entered into an agreement on 28 November 2019 whereby the Project Company has agreed to advance FNES a further amount RMB50 million as part of the fourth installment before 31 December 2019 and the payment was made on 18 December 2019. The amount received by FNES will be utilised to finance the relocation expenses and help to strengthen the cash flow of the Group. Both parties have also agreed that they will negotiate to find out possible solutions to speed up the progress of the Urban Renewal Project in 2020.

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In the future, the Company will continue to update shareholders of the Company of the development of the Urban Renewal Project by way of voluntary announcements or in its subsequent interim and annual reports.

On behalf of the Board

CHTC Fong's International Company Limited

Ye Maoxin

Chairman

Hong Kong, 20 December 2019

As at the date of this announcement, the Company's Executive Directors are Mr. Ye Maoxin (Chairman), Mr. Guan Youping (Chief Executive Officer), Mr. Du Qianyi (Chief Financial Officer) and Mr. Wu Xudong; the Non-executive Director is Mr. Fong Kwok Leung, Kevin; and the Independent Non-executive Directors are Mr. Ying Wei, Dr. Yuen Ming Fai and Mr. Li Jianxin.

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