Hong Kong Finance : DISCLOSEABLE TRANSACTION PROVISION OF FINANCIAL ASSISTANCE

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Hong Kong Finance Group Limited

香 港 信 貸 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1273)

DISCLOSEABLE TRANSACTION PROVISION OF

FINANCIAL ASSISTANCE

PROVISION OF FINANCIAL ASSISTANCE

The Board is pleased to announce that on 19 August 2020, the Loan Agreement was entered into between HK Finance as the lender and Customer C, Customer D, Customer E, Customer F and Customer G, collectively as the Borrowers. Pursuant to the Loan Agreement, HK Finance has agreed to grant the Loan to the Borrowers for a term of 12 months.

LISTING RULES IMPLICATIONS

As an applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Loan granted to the Borrowers under the Loan Agreement exceeds 5% but is less than 25%, the grant of the Loan constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

PROVISION OF FINANCIAL ASSISTANCE

The Board is pleased to announce that on 19 August 2020, the Loan Agreement was entered into between HK Finance as the lender and Customer C, Customer D, Customer E, Customer F and Customer G, collectively as the Borrowers. Pursuant to the Loan Agreement, HK Finance has agreed to grant the Loan to the Borrowers for a term of 12 months.

Summarised below are the principal terms of the Loan Agreement.

THE LOAN AGREEMENT

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INFORMATION ON THE CREDIT RISK RELATING TO THE LOAN

The making of the Loan is collateralised. The collateral provided by the Borrowers for the Loan is sufficient as the loan-to-value ratio of the mortgaged properties for the Loan to the Group is approximately 75.5% based on the value of the mortgaged properties for the Loan determined by an independent valuer.

The proceeds of the Loan is to be applied for the repayment and discharge of previous mortgages granted by other finance company and secured by the same group of collaterals. The advance in respect of the Loan were also made on the basis of the Company's credit assessments made on (i) the collateral provided by the Borrowers; (ii) the fact that the personal net worth of both Customer F and G is strong and solid to prove their repayment ability; (iii) the healthy and satisfactory repayment history and records of previous mortgages in other finance company with no default record; (iv) the good credit grading of both Customer F and Customer G issued by a reputable credit reference agency; and (v) the relatively short term nature of the advance. After taking into account the factors as disclosed above in assessing the risks of the relevant advance, the Company considers that the risks involved in the advance to the Borrowers are low and manageable.

FUNDING OF THE LOAN

The Group will finance the Loan with the Company's general working capital.

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INFORMATION ON THE BORROWERS

Each of Customer C, Customer D and Customer E is a company incorporated in Hong Kong engaging in the business of property investment holdings, and all of them are directly-owned by Customer F and Customer G jointly, being individuals who are merchants. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, the Borrowers are Independent Third Party and not connected with the Group.

INFORMATION ON THE GROUP AND THE LENDER

The Company is an investment holding company. The Group is principally engaged in money lending business in Hong Kong and mainly provides mortgage loans under the Money Lenders Ordinance. HK Finance, as the lender of the Loan, is an indirect wholly- owned subsidiary of the Company.

REASONS FOR ENTERING INTO THE LOAN AGREEMENT

Taking into account the principal business activities of the Group, the grant of the Loan to the Borrowers is in the ordinary and usual course of business of the Group.

The terms of the Loan Agreement were negotiated on an arm's length basis between HK Finance and the Borrowers. The Directors consider that the grant of the Loan is a financial assistance provided by the Group within the meaning of the Listing Rules. The Directors are of the view that the terms of the Loan Agreement were entered into on normal commercial terms based on the Group's credit policy. Taking into account the satisfactory financial background of the Borrowers and that a stable revenue and cashflow stream from the interest income is expected, the Directors consider that the terms of the Loan Agreement are fair and reasonable and the entering into of the Loan Agreement is in the interests of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

As an applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Loan granted to the Borrowers under Loan Agreement exceeds 5% but is less than 25%, the grant of the Loan constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

It is required under Rule 14.58(2) of the Listing Rules to disclose the identities of the Borrowers. Since (i) the Loan is not regarded as a material transaction of the Company as compared to the Company's overall financial position; (ii) the Company has practical difficulties in complying with the aforesaid disclosure requirement as the Borrowers have confirmed to the Group that they will not consent to the disclosure of their identities in this announcement; (iii) the disclosure of the identities of the Borrowers does not reflect its financial standing or repayment abilities and thus will serve little purpose in assisting the Shareholders to evaluate their creditworthiness and the risks and exposure of the Loan; and

1. the Company has made alternative disclosures in respect of the Loan in this announcement, including but not limited to the details of the collateral and the loan-to-value ratio of the collateral in respect of the Loan, which would be much more meaningful for the Shareholders in assessing the risk and exposure of the Loan and the repayment abilities of the Borrowers, the Company has applied to, and been granted by, the Stock Exchange for a waiver from strict compliance with Rule 14.58(2) of the Listing Rules.

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DEFINITIONS

In this announcement, the following expressions have the following meanings:

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''Money Lenders Ordinance'' the Money Lenders Ordinance (Chapter 163 of the laws of Hong Kong) as amended, supplemented or otherwise

As at the date of this announcement, the Board comprises the following members:

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