Solis : VOLUNTARY ANNOUNCEMENT - LETTER OF INTENT IN RESPECT OF POSSIBLE FORMATION OF JOINT VENTURE

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SOLIS HOLDINGS LIMITED

守 益 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2227)

VOLUNTARY ANNOUNCEMENT

LETTER OF INTENT IN RESPECT OF

POSSIBLE FORMATION OF JOINT VENTURE

This is a voluntary announcement made by Solis Holdings Limited (the ''Company'', together with its subsidiaries, the ''Group'').

The board (the ''Board'') of directors (the ''Directors'') of the Company is pleased to announce that on 23 September 2019 (after trading hours), the Company, through its wholly-ownedsubsidiary, entered into the letter of intent (the ''LOI'') with FEIHONGDA INVESTMENT GROUP LIMITED (飛鴻達投資集團有限公司) (''Feihongda'') in relation to the proposed formation of a joint venture company (the ''JV Company'') for the purpose of exploring, engaging and diversifying its existing business of the Group outside Singapore (the ''Proposed Joint Venture'').

PRINCIPAL TERMS OF THE LOI

Pursuant to the LOI:

1. subject to the entering into the definitive agreement (the ''Definitive Agreement'') by the parties and the terms and conditions thereof, the parties to the LOI will set up the JV Company in Hong Kong and the Company and Feihongda will own 51% and 49% respectively of the issued shares of the JV Company;
2. subject to agreement by the parties and to be set out in the Definitive Agreement, the initial aggregate investment in the JV Company is expected to be HK$1,000,000, of which HK$510,000 and HK$490,000 will be contributed by the Company and Feihongda respectively by way of their internal resources to the JV Company; and

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3. after the signing of the LOI, the parties will proceed with further negotiation for the Definitive Agreement in respect of the JV Company including but not limited to board composition, restriction on transfer and encumbrances, any conditions precedent, representations and warranties, covenants, events of default, illegality, severability, submission to jurisdiction.

This LOI was intended to record the preliminary mutual understanding between the parties to the LOI and to serve as a platform for further negotiations and was not intended to be legally binding on the relevant parties.

Subject to the business needs and development plans of the JV Company, as and when required, the Company and Feihongda may make further contribution to the JV Company for the Proposed Joint Venture. In such case, the Company may make further announcement to comply with the applicable Listing Rules requirements as and when appropriate, if necessary.

INFORMATION ABOUT FEIHONGDA

Feihongda is a company with limited liability incorporated in British Virgin Islands and is an investment holding company. Feihongda is a company wholly-owned by Mr. HE Hongbing (何紅兵) who has a close network with construction companies/property developers engaged in Thailand projects, and will be responsible for sourcing mechanical and electrical (''M&E'') projects in Thailand for the JV Company.

To the best knowledge, information and belief of the Directors, and having made all reasonable enquiries, Feihongda and its ultimate beneficial owner are an independent third party who is not a connected person of the Company (as defined in the Listing Rules) and is independent of the Company and its connected persons.

REASONS FOR THE PROPOSED JOINT VENTURE

The Group is a design and build M&E engineering contractor in Singapore and our scope of services comprises (i) designing of M&E systems, which involves the design for functionality and connectedness of various building systems; and (ii) building and installation of the M&E systems. Solis (BVI) Investments Limited is a wholly-owned subsidiary of the Company, one of the parties to the LOI, which will be responsible for providing M&E know-how and expertise for the projects sourced by Feihongda.

The construction market sentiment in Singapore has been subdued since the start of 2018 and expects to remain challenging and volatile in the foreseeable future. Due to the diminishing demand for construction works, competitions for local construction works have become more intense with competitors, which leading to a reduction on their margins despite prices for construction materials and labour costs are on a rising trend.

After careful consideration, the Board considered that leveraging with our industry know-how and solid construction experience, diversification of the M&E business of the Group outside Singapore will broaden the income stream and profitability of the Group.

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To minimize the risk of initial penetration into a new market and capital commitment of the Group, the Board considered that the formation of JV Company is in the best interest of the shareholders and the company as a whole.

GENERAL

The Directors consider that the entering into the LOI is in the interests of the Company and its shareholders as a whole as the transactions contemplated under the LOI, if materialized, are expected to diversify and broaden the income stream of the Group.

The LOI may or may not lead to the entering into of the Definitive Agreement and the transactions contemplated thereunder may or may not be proceed. The Definitive Agreement and Proposed Joint Venture, if materialized, would not constitute a notifiable transaction of the Company under the Listing Rules as all the applicable percentage ratios under Rule 14.07 of the Listing Rules are below 5%. This announcement is made by the Company on a voluntary basis.

Further announcement(s) on the Definitive Agreement and Proposed Joint Venture will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate to keep shareholders of the Company and potential investors updated.

Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

By Order of the Board

Solis Holdings Limited

Tay Yong Hua

Executive Chairman and Executive Director

Singapore, 23 September 2019

As at the date of this announcement, the executive Directors are Mr. Tay Yong Hua, Mr. Tay Yong Meng and Mr. Kenneth Teo Swee Cheng (Kenneth Zhang Ruiqing); the independent non-executive Directors are Ms. Theng Siew Lian Lisa, Mr. Tan Sin Huat Dennis, Mr. Cheung Garnok and Dr. Guan Huan Fei.

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