Differ Group Auto Limited — Regulatory Filings 2015

Aug 28, 2015

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)

COMMENCEMENT OF MONEY LENDING BUSINESS IN HONG KONG

References are made to the announcements of Differ Group Holding Company Limited (the “ Company ”) dated 18 November 2014 (the “ First Announcement ”) and 8 December 2014 (the “ Second Announcement ”) in relation to the clarification to press articles and business update. Capitalised terms used in this announcement shall have the same meanings as those defined in the First Announcement and the Second Announcement.

As disclosed in the Second Announcement, the Board had resolved that a preliminary study regarding the New Businesses be carried out. On 28 August 2015, a meeting of the Board was convened to discuss the results of the preliminary study. During the Board meeting, the Board resolved the following:

1. Commencement of money lending business in Hong Kong

As disclosed in the First Announcement, Differ Hong Kong made an application for a money lender’s licence in Hong Kong in August 2014 and such application was granted by the Licencing Court on 18 November 2014. As disclosed in the First Announcement, such application was made for the purpose of providing the flexibility for the Group to readily expand into the Hong Kong money lending industry should it consider appropriate and in the interest of the Company and the Shareholders.

Based on the results of the preliminary study, the Board noted that money lenders in Hong Kong could charge reasonable interest rate on loans granted to corporate and individual customers in Hong Kong, subject to certain statutory limitations. The Board considered that the Group’s existing client base and its network in Fujian Province give the Group an advantage in locating potential corporate and individual customers in Hong Kong with PRC and/or Fujian Province connections. The Board further considered that the Group’s experiences in undertaking approval and due diligence procedures when granting loans to its customers in its ordinary and usual course of business (such as assessing the quality and value

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of the collateral and guarantees, the source of funds for repayments, the business conditions and creditworthiness of the borrowers and guarantors, etc.) give the Group an advantage in assessing potential corporate and individual customers in Hong Kong.

Based on the foregoing, the Board concluded that engaging in the money lending business in Hong Kong poses an opportunity for the Group to diversify its source of income and to increase Shareholders’ value. The Board is therefore of the view that it is in the interest of the Company and the Shareholders as a whole to commence the money lending business in Hong Kong.

Accordingly, the Board directed that a Hong Kong money lending business division be established with immediate effect. The Board appointed Mr. Ng Chi Chung, the chief executive officer of the Group and an executive Director, as the head of the Hong Kong money lending business division. The Group will recruit more staff in Hong Kong for the development and expansion of the Hong Kong money lending business.

2. Operation of money lending business in Hong Kong

The Board resolved that the Group’s money lending business in Hong Kong shall be operated under the following business model:

• (a) Source of revenue and cost structure

The Group intends to generate interest income by charging interest on loans to be granted under Differ Hong Kong’s money lender’s licence in Hong Kong. The Group’s target customers for its money lending business in Hong Kong are corporate and individual customers with short to medium-term financing needs. Customers are intended to be located and acquired mainly based on the Group’s existing client base and network and through referrals. Interest rates charged on loans are to be determined on a case-by-case basis having regard to the results of the Group’s approval and due diligence procedures, which are to be undertaken by the Group’s existing business and risk management personnel and, where considered necessary, additional staff to be recruited from time to time. The Group will operate its money lending business in its current principal place of business in Hong Kong and has no current intention to open any additional branch offices or shop outlets for its Hong Kong money lending business.

• (b) Risk management

The Board considers that the money lending business in Hong Kong exposes the Group to a number of risks. Since the application for a money lender’s licence in Hong Kong in August 2014, the Board has been carefully reviewing and assessing the risks associated with the Hong Kong money

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lending business for more than a year before deciding to commence the Hong Kong money lending business. The Board considers that one of the most significant risks is credit risk in relation to potential default of customers. In this connection, the Group will conduct in-depth approval and due diligence procedures before deciding whether to grant a loan to a customer and on what terms. Such procedures shall be consistent with the Group’s established approval and due diligence procedures for its other financing and financingrelated businesses and shall include in-depth assessments on the customer and, where applicable, the guarantor and the collateral. In addition, the Group’s legal and compliance personnel will also be closely involved in the Group’s money lending business in Hong Kong in order to ensure the enforceability of all relevant agreements with customers in Hong Kong as well as the full compliance with relevant laws and regulations in Hong Kong. The Group has also sought advice from external professional legal advisers in relation to the commencement of the Hong Kong money lending business and will continue to seek their advice where appropriate in the future.

3. Business scale and funding of the money lending business in Hong Kong

The Board resolved that the operation of the money lending business in Hong Kong shall be financed entirely by the Group’s internal resources as well as the proceeds from the placing of bonds (if any) (details of which are set out in the Company’s announcements dated 15 April 2015 and 17 July 2015). The Board further resolved that the total amount of loans receivables arising from its money lending business in Hong Kong shall not exceed 15% of the total consolidated assets value of the Group at any point in time in order to limit the Group’s potential exposure in connection with the money lending business in Hong Kong while achieving diversified sources of income and profits for the Group and increasing Shareholders’ value.

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

Hong Kong, 28 August 2015

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. TSANG Hin Man Terence and Mr. ZENG Haisheng.

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