Chen Lin Education : DISCLOSEABLE TRANSACTION ACQUISITION OF THE TARGET GROUP

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Chen Lin Education Group Holdings Limited

辰 林 教 育 集 團 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1593)

DISCLOSEABLE TRANSACTION

ACQUISITION OF THE TARGET GROUP

THE ACQUISITION

The Board is pleased to announce that, on 27 April 2021 (after trading hours), the Purchaser (a company accounted as a subsidiary of the Company by virtue of the Contractual Arrangements), the Vendor, the Target Company, the Target School, Huang Ping'an (黃平安) and Ye Ruihua (葉瑞華), entered into the Acquisition Agreement, pursuant to which the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of the Target Company, at a consideration of RMB300 million.

Upon completion of the Acquisition, the Purchaser will own the entire equity interest of the Target Company and will control the entire school sponsor's interest of the Target School. The Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceeds 5% but all are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that, on 27 April 2021 (after trading hours), the Purchaser (a company accounted as a subsidiary of the Company by virtue of the Contractual Arrangements), the Vendor, the Target Company, the Target School, Huang Ping'an (黃平 安) and Ye Ruihua (葉瑞華), entered into the Acquisition Agreement, pursuant to which the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of the Target Company, at a consideration of RMB300 million.

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THE ACQUISITION AGREEMENT

The principal terms of the Acquisition Agreement are set out below.

Date: 27 April 2021

Parties: (1) the Purchaser;

1. the Vendor;
2. the Target Company;
3. the Target School;
4. Huang Ping'an; and
5. Ye Ruihua.

To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, as of the date of this announcement, the Vendor (include its ultimate beneficial owners namely Huang Ping'an and Ye Ruihua), the Target Company and the Target School are third parties independent from the Company and its connected persons (as defined in the Listing Rules).

Nature of the transaction and assets to be acquired by the Purchaser

Pursuant to the Acquisition Agreement, the Vendor has agreed to sell, and the Purchaser has agreed to acquire, the entire equity interest of Target Company. Upon completion of the Acquisition, (i) the Purchaser will own the entire equity interest of the Target Company; (ii) the Purchaser will control the entire school sponsor's interest of the Target School; and (iii) the Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.

Consideration

The consideration of the Acquisition amounted to RMB300 million. Such consideration shall be fully settled within 60 days upon the completion of the Acquisition.

Basis of Consideration

The consideration of the Acquisition was determined after arm's length negotiations between the Vendor and the Purchaser with reference to: (i) the historical turnover and assets, the location and branding, the programs offered, the employment opportunities and the prospect of the graduates, the number of students and enrollments of the Target School; and (ii) a valuation report (the ''Valuation Report'') prepared by an independent professional valuer (the ''Independent Valuer'') on the Target Group; and (iii) other reasons and benefits of the Acquisition as stated under the section headed ''Reasons for and Benefits of the Acquisition'' below.

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Valuation Report

In preparation of the Valuation Report, after considering the characteristics of the Target Group and comparing different valuation methodologies, the Independent Valuer adopted the market approach for the valuation. The market approach considers prices paid for similar assets, with adjustments made to market prices to reflect condition and utility of the appraised assets relative to the market comparative. According to Valuation Report, the preliminary valuation amount of the Target Group is approximately RMB305 million. The Board considers that the Valuation Report provides a general reference in assessing the fairness and reasonableness of the fair value of the Target Group.

Source of funding

The consideration of the Acquisition will be funded by the Group's internal financial resources and bank borrowings.

Conditions Precedent

The completion of the Acquisition is upon the satisfaction (or, as the case may be, waived by the Purchaser) of the following conditions (the ''Conditions Precedent''):

1. the Purchaser being satisfied with the results of the due diligence review of the Target School; and
2. the Vendor's representations and warranties under the Acquisition Agreement remaining true and accurate in all respects and not misleading in any respect as of the completion of the Acquisition.

Completion

As all of the Conditions Precedents have been satisfied as of the date of the Acquisition Agreement, the Acquisition is completed on the same date.

INFORMATION ON THE VENDOR

The Vendor is a limited liability company established in the PRC. As of the date of this announcement, the Vendor was owned as to 49% to Huang Ping'an and as 51% to Ye Ruihua, both of whom are nature persons of Chinese nationality. In addition, as of the date of this announcement, the Vendor holds the entire equity interest of the Target Company and therefore indirectly controls the entire school sponsor's interest of the Target School. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as of the date of this announcement, the Vendor and its respective beneficial owners, namely Huang Ping'an and Ye Ruihua, are third parties independent from the Company and its connected persons (as defined in the Listing Rules).

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INFORMATION ABOUT THE TARGET GROUP

1. The Target Company
   The Target Company is a limited liability company established under the laws of PRC and wholly-owned by the Vendor. The Target Company is a holding company that owns the entire school sponsor's interest of the Target School and has no substantive business operation as of the date of this announcement.
2. The Target School
   The Target School is a secondary vocational college established in May 2015 that specializes in training junior and senior technicians. As of the date of this announcement, the Target School offers over 20 education programs including but not limited to industrial machine technology, machinery design and manufacture, construction engineering management, automobile manufacturing and testing, big data technology, information technology, marketing and sales, business management, tourism management, interior art design and fashion design. The Target School has approximately 7,765 students as of the date of this announcement.

The following table sets out the summary of the audited combined financial information of the Target Group for the two years ended 31 December 2019 and 2020 and as of 31 December 2019 and 2020 prepared in accordance with the Generally Accepted Accounting principles of the PRC:

	Year ended	Year ended
	31 December	31 December
	2019		2020
	(RMB'000)	(RMB'000)
Revenue	37,283		50,418
Profit before income tax	9,745		18,791
	As of	As of
	31 December	31 December
	2019		2020
	(RMB'000)	(RMB'000)
Total assets	406,117		486,739
Total liabilities	364,026		425,857
Net assets	42,091		60,882

Upon the completion of the Acquisition, (i) the Purchaser will own the entire equity interest of the Target Company; (ii) the Purchaser will control the entire school sponsor's interest in the Target School; and (iii) the Target Company and the Target School will be accounted as subsidiaries of the Company by virtue of the Contractual Arrangements.

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The Target School specializes in providing vocational education services in Guizhou Province, PRC. The Acquisition will further expand our school network and coverage, increase the total number of students of the Group, improve profitability, and will also form strong synergy with the Target School and our other schools.

Given the abovementioned reasons, and after considered the terms and conditions of the Acquisition Agreement, our Directors are of the view that the terms of the Acquisition are on normal commercial terms, fair and reasonable. The Acquisition will expand the Group's influence in the region and enhance its reputation, which is in line with the Group's business strategy and in the interests of the Group and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition exceeds 5% but all are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

INFORMATION OF THE GROUP

The Group is one of the leading providers of private higher education in Jiangxi Province, China, with years of experience in the private higher education industry. As of 31 December 2020, the Group operated one private university and one full-time vocational college located in Jiangxi Province, namely the Jiangxi University of Applied Science (江西應用科技學院) (the ''JUAS'') and Jiangxi Wenli Jishi College (江西文理技師學院) (''Jishi College'', together with JUAS, collectively referred to as ''Schools''), and offer undergraduate, junior college and vocational programs, as well as diverse education related services. As of 31 December 2020, the Schools had a total number of student enrollment of 21,990, consisting of 8,029 undergraduate students, 8,735 junior college students and 5,226 vocational school students. The Group also provides a variety of education related services including internship management services as well as tutoring and program management services to enterprises and education institutions.

DEFINITIONS

Unless otherwise specified, the following terms have the following meanings in this announcement:

''Acquisition''	the acquisition of the entire equity interest in the Target
	Company under the Acquisition Agreement;
''Acquisition Agreement''	the acquisition agreement dated 27 April 2021 between the
	Purchaser and the vendor in relation to the Acquisition;
''Board''	the board of directors of the Company;

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''Company''	Chen Lin Education Group Holdings Limited (辰林教育集
	團控股有限公司), an exempted company incorporated in the
	Cayman Islands with limited liability on 25 May 2018, the
	share of which are listed on the Main Board of the Stock
	Exchange (stock code: 1593);

''Contractual Arrangements'' certain contractual arrangements entered by the Group on 15

	September 2018;
''Director(s)''	the directors of the Company;
''Group''	the Company, subsidiaries and companies accounted as
	subsidiaries by virtue of the Contractual Arrangements;
''Global Offering''	the global offering of initially up to 250,000,000 shares with
	a nominal value of HK$0.0001 each in the capital of the
	Company, including a public offering in Hong Kong of
	31,798,000 shares and an international offering of initially
	218,202,000 shares to professional, institutional and other
	investors outside the United States;
''JUAS''	Jiangxi University of Applied Science (江西應用科技學院)
	a private institution operated by the Group which offers
	both undergraduate and junior college programs;
''Jishi College''	Jiangxi Wenli Jishi College (江西文理技術學院), a full-time
	vocational college established in November 2019, which
	offers vocational programs;
''Listing Rules''	the Rules Governing the Listing of Securities on the Main
	Board of the Stock Exchange;
''PRC''	the People's Republic of China;
''Purchaser''	Nanchang Di Guan Education Consultancy Co., Ltd. (南昌
	迪冠 教育諮詢有限公司), a company established under the
	laws of the PRC with limited liability on 17 September 2009
	and accounted as a subsidiary of the Company by virtue of
	the Contractual Arrangements;
''RMB''	Renminbi, the lawful currency of the PRC;
''Shareholder(s)''	holder(s) of the share(s) of the Company;
''Stock Exchange''	The Stock Exchange of Hong Kong Limited;

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''Target Company''	Guizhou Xikai Education Investment Co., Ltd (貴州西凱教
	育投資有限公司), a company established under the laws of
	the PRC with limited liability and owns the entire school
	sponsor's interest of the Target School as of the date of this
	announcement;
''Target Group''	including the Target Company and the Target School;
''Target School''	Guizhou Institute of Industry and Trade (貴州工貿職業學
	院), a full-time vocational college locates in Guizhou
	Province, PRC, specialize in training junior and senior
	technicians;
''Vendor''	Jiangxi Mingda Education Consulting Co., Ltd (江西銘達教
	育諮詢有限公司), a company established under the laws of
	the PRC with limited liability;
''%''	Per cent.
	By order of the Board
	Chen Lin Education Group Holdings Limited
	Huang Yulin
	Chairman
Hong Kong, 27 April 2021

As of the date of this announcement, the executive Directors are Mr. Huang Yulin, Mr. Li Cunyi, Mr. Bau Siu Fung, Mr. Wang Li and Ms. Gan Tian; and the independent non- executive Directors are Mr. Chan Hon Ki, Mr. Chen Wanlong, Mr. Huang Juyun and Mr. Wang Donglin.

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