Differ Group Auto Limited — Capital/Financing Update 2017

Sep 27, 2017

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.

DIFFER GROUP HOLDING COMPANY LIMITED 鼎豐集團控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 6878)

EXEMPTED CONNECTED TRANSACTION

ACQUISITION OF 25% EQUITY INTEREST IN A NON-WHOLLY OWNED SUBSIDIARY

THE ACQUISITION

On 27 September 2017, the Vendor and the Company entered into the Sale and Purchase Agreement, pursuant to which the Vendor agreed to sell and the Company agreed to purchase 25% equity interest in Differ Supply Chain Development at a consideration of RMB$8,000,000 (equivalent to approximately HK$9,523,810).

LISTING RULES IMPLICATIONS

Prior to completion of the Acquisition, the Vendor is a substantial shareholder of Differ Supply Chain Development, which was a 75% non-wholly owned subsidiary of the Company, and hence the Vendor is the Company’s connected person at the subsidiary level under Chapter 14A of the Listing Rules. The Acquisition constitutes a connected transaction of the Company.

As all the applicable percentage ratios are less than 5%, the Acquisition is subject to the reporting and announcement requirements, and is exempt from the circular, independent financial advice and independent shareholders’ approval requirements under Rule 14A.76 of the Listing Rules.

BACKGROUND

Differ Supply Chain Development was established on 24 November 2015 and was a wholly owned subsidiary of the Company at the time of incorporation.

In July 2016, the Company and the Vendor entered into a sale and purchase agreement, pursuant to which the Company agreed to sell and the Vendor agreed to purchase 25% equity interest in Differ Supply Chain Development at a consideration of RMB$7,500,000. Since July 2016, the Vendor has been a 25% substantial shareholder of Differ Supply Chain Development, and the Company has been holding the remaining 75% until immediately prior to the completion of the Acquisition.

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THE ACQUISITION

On 27 September 2017, the Company and the Vendor entered into the Sale and Purchase Agreement, pursuant to which the Vendor agreed to sell and the Company agreed to purchase 25% equity interest in Differ Supply Chain Development at a consideration of RMB$8,000,000 (equivalent to approximately HK$9,523,810).

The completion of the Sale and Purchase Agreement took place on the same day and the consideration was financed by the Group’s internal resources.

None of the Directors have a material interest in the transaction.

INFORMATION RELATING TO DIFFER SUPPLY CHAIN DEVELOPMENT

Differ Supply Chain Development is an investment holding company and its subsidiaries are engaged in the supply chain agency services.

The consolidated financial information of Differ Supply Chain Development and its subsidiaries for the two financial years ended 31 December 2016 is set out below:

	For the year	ended
	31 December
	2015	2016
	(RMB’000)	(RMB’000)
(Loss)/Profit before tax	(75)	720
(Loss)/Profit after tax	(75)	563

As at 31 August 2017, the net asset value of Differ Supply Chain Development was approximately RMB31,828,000.

REASONS FOR AND BENEFITS FOR THE ACQUISITION

The Directors consider that the Acquisition represents a good investment opportunity for using the Group’s surplus fund. Following completion of the Acquisition, Differ Supply Chain Development will become a direct wholly-owned subsidiary of the Company. The Company, by strengthening its holding in Differ Supply Chain Development, can enjoy more benefits arising from the future growth and success of Differ Supply Chain Development.

The terms of the Sale and Purchase Agreement were determined after arm’s length negotiations between the parties by reference to, among other things, (i) the net asset value of Differ Supply Chain Development as at 31 August 2017; (ii) the consideration for which the Vendor initially acquired the equity interest in Differ Supply Chain Development; and (iii) the business prospects of Differ Supply Chain Development. The Directors believe that the Sale and Purchase Agreement was entered into on normal commercial terms, and the terms of the Acquisition are fair and reasonable and in the interests of the Shareholders as a whole.

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INFORMATION ON THE GROUP, THE COMPANY AND THE VENDOR

The Group is a provider of short to medium-term financing and financing-related solutions in the PRC and Hong Kong and is principally engaged in the provision of (i) financing guarantee services, (ii) express loan services, (iii) financial services, (iv) finance lease services and (v) asset management business. The Company is a limited liability company established in the Cayman Islands. The principal activity of the Company is investment holding.

The Vendor is an ordinary resident in Hong Kong and owns 25% equity interest in Differ Supply Chain Development immediately prior to the completion of the Acquisition, and hence is the Company’s connected person at the subsidiary level. Save for being a substantial shareholder at the subsidiary level, the Vendor is otherwise an independent third party.

LISTING RULES IMPLICATIONS

Prior to completion of the Acquisition, the Vendor is a substantial shareholder of Differ Supply Chain Development, which was a 75% non-wholly owned subsidiary of the Company, and hence the Vendor is the Company’s connected person at the subsidiary level under Chapter 14A of the Listing Rules. Therefore, the Acquisition constitutes a connected transaction of the Company.

As all the applicable percentage ratios are less than 5%, the Acquisition is subject to the reporting and announcement requirements, and is exempt from the circular, independent financial advice and independent shareholders’ approval requirements under Rule 14A.76 of the Listing Rules.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise.

“Acquisition” the acquisition of the 25% equity interest in Differ Supply Chain Development by the Company from the Vendor pursuant to the Sale and Purchase Agreement “Board” the board of Directors

“Company” Differ Group Holding Company Limited “connected person at the has the meaning ascribed to it under the Listing Rules subsidiary level” “Differ Supply Chain Differ Supply Chain Development Group Limited, a Development” company established in the British Virgin Islands and a 75%-owned subsidiary of the Company immediately prior to the completion of the Acquisition

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“Directors” the directors of the Company “Group” the Company and its subsidiaries “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PRC” the People’s Republic of China, which, for the purpose of this announcement, excludes Hong Kong, Macau Special Administrative Region and Taiwan “RMB” Renminbi, the lawful currency of the PRC “Sale and Purchase The agreement for the sale and purchase of 25% of the Agreement” issued shares of Differ Supply Chain Development dated 27 September 2017 entered into between the Vendor and the Company “Shareholders” shareholders of the Company “Vendor” Yung Tin Yuet, an ordinary resident in Hong Kong “Stock Exchange” The Stock Exchange of Hong Kong Limited “%” per cent.

By Order of the Board Differ Group Holding Company Limited HONG Mingxian Chairman and Executive Director

Hong Kong, 27 September 2017

In this announcement, translation of RMB into HK$ is based on the exchange rate of HK$1:RMB0.84. No representation is made that any amounts in RMB and HK$ can be or could have been converted at the above exchange rate or any other rates.

As at the date of this announcement, the executive Directors are Mr. HONG Mingxian, Mr. NG Chi Chung and Mr. CAI Huatan; the non-executive Directors are Mr. CAI Jianfeng and Mr. WU Qinghan; and the independent non-executive Directors are Mr. CHAN Sing Nun, Mr. LAM Kit Lam and Mr. ZENG Haisheng.

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