HC Group Inc. — Capital/Financing Update 2016

Jul 5, 2016

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.

==> picture [55 x 57] intentionally omitted <==

==> picture [149 x 25] intentionally omitted <==

HC INTERNATIONAL, INC. 慧聰網有限公司[*] (incorporated in the Cayman Islands with limited liability) (Stock Code: 02280) (Stock Code: 05839)

DISCLOSEABLE TRANSACTION ACQUISITION OF SHARES OF DIGITAL CHINA

The Board is pleased to announce that on 5 July 2016 (after trading hours of the Stock Exchange), the Purchaser (a wholly-owned subsidiary of the Company) entered into the Share Purchase Agreement with the Vendor, pursuant to which the Purchaser has agreed to acquire 9,400,000 Purchase Shares of Digital China (representing approximately 0.80% of the issued shares of Digital China) at the Purchase Price of HK$56,400,000.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in the Listing Rules) exceeds 5% and all the applicable percentage ratios are less than 25%, the Acquisition and the transactions contemplated under the Share Purchase Agreement constitute a discloseable transaction of the Company and are therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

The principal terms of the Share Purchase Agreement are summarised as follows:

SHARE PURCHASE AGREEMENT

Date: 5 July 2016 (after trading hours)

Parties: The Purchaser (a wholly-owned subsidiary of the Company), as purchaser The Vendor, as vendor

– 1 –

Assets acquired

9,400,000 shares of Digital China with a nominal value of HK$0.10 each, representing approximately 0.80% of the issued shares of Digital China as of the date of this announcement. The Purchase Shares shall be sold by the Vendor at completion of the Acquisition free from any claim, option, charge, lien, equity, encumbrance, rights of pre-emption or any other third party rights and together with all rights attaching to them.

Consideration

The Purchase Price is HK$56,400,000 in aggregate (being HK$6.0 per Purchase Share), and will be paid by the Purchaser on delivery of the Purchase Shares. The Purchaser shall also be responsible for, among others, all stamp duty in respect of the Purchase Shares payable, together with the Purchaser’s respective SFC transaction levy and Stock Exchange trading fee.

The Purchase Price was determined after arm’s length negotiations between the Purchaser and the Vendor after taking into account the market price of Digital China, and the financial performance of Digital China. The Directors consider that the Purchase Price is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Completion and settlement

Completion of the Acquisition is expected to take place on 8 July 2016 (or such other date as may be mutually agreed between the Purchaser and the Vendor), when the Vendor and the Purchaser shall procure its agent to give irrevocable instruction to effect the sale and purchase of the Purchase Shares.

INFORMATION OF DIGITAL CHINA

Digital China is a company incorporated in Bermuda with limited liability, and whose shares are listed and traded on the Main Board of the Stock Exchange (Stock code: 861).

As of the date of this announcement, based on published information of Digital China, Digital China is principally engaged in businesses commanding high added value and growth potential such as Internet urban services, Internet agriculture, Internet healthcare, Internet manufacturing, Internet taxation, Internet logistics and related Internet financial services, developed on the basis of its core Sm@rt City operations through the provision of IT services and operations in combination with various industry applications, leveraging on technological expertise in the Internet, Cloud Computing and Big Data. It has a share capital of HK$117,653,658.1, comprising 1,176,536,581 shares with a nominal value of HK$0.10 each, as at the date of this announcement.

As of the date of this announcement, to the best knowledge, information and belief of the Directors, Digital China is a substantial shareholder (as defined under the Listing Rules) of the Company interested in approximately 16.43% of the issued Shares of the Company.

– 2 –

Set out below are certain consolidated financial information of Digital China as extracted from its published annual reports:

	For the financial year ended	For the financial year ended
	31 December
	2014	2015
	(HK$’000)	(HK$’000)
Revenue from continuing operations	12,156,231	10,630,672
Profit before tax from continuing operations	599,985	670,879
Profit after tax from continuing operations	510,081	463,508
Profit before tax from discontinued operation	541,521	542,570
Profit after tax from discontinued operation	392,169	462,207
	As at 31 December
	2014	2015
	(HK$’000)	(HK$’000)
Total assets	33,707,772	37,486,363

INFORMATION OF THE VENDOR

The Vendor is a limited liability company organized under the laws of the British Virgin Islands. The Vendor is an investment holding company.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor is an Independent Third Party as at the date of this announcement.

INFORMATION OF THE GROUP

Currently, the Group has five business segments, namely: (i) on-line services, (ii) trade catalogues and yellow page directories, (iii) seminars and other services, (iv) O2O household electrical appliances business exhibition centre and (v) anti-counterfeiting products and services.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Directors consider the Acquisition represents an attractive investment project to the Group.

Based on the above, the Directors consider that the Acquisition has been entered into on normal commercial terms and the terms of the Share Purchase Agreement are fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

– 3 –

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in the Listing Rules) exceeds 5% and all the applicable percentage ratios are less than 25%, the Acquisition and the transactions contemplated under the Share Purchase Agreement constitute a discloseable transaction of the Company and are therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

“Acquisition” the sale and purchase of the Purchase Shares pursuant to the terms of the Share Purchase Agreement “associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “Company” HC INTERNATIONAL, INC., a company incorporated with limited liability under the laws of the Cayman Islands, the Shares of which are listed on the Main Board of the Stock Exchange

“connected person(s)” has the meaning ascribed to it under the Listing Rules “Digital China” Digital China Holdings Limited, a company incorporated with limited liability in Bermuda, the shares of which are listed on the Main Board of the Stock Exchange (Stock code: 861) “Group” the Company and its subsidiaries

• “Independent any person or company and their respective ultimate Third Party(ies)” beneficial owner(s), to the best knowledge, information and belief of the Directors and having made all reasonable enquiries, are third parties independent of the Company and its connected persons

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Purchase Price” HK$56,400,000 in aggregate (being HK$6.0 per Purchase Share)

• “Purchase Shares” 9,400,000 shares of Digital China with a nominal value of HK$0.10 each, representing approximately 0.80% of the issued shares of Digital China as of the date of this announcement

– 4 –

“Purchaser” Hong Kong Huicong International Group Limited, a whollyowned subsidiary of the Company incorporated in the British Virgin Islands with limited liability “Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company “Share Purchase Agreement” the agreement for sale and purchase of the Purchase Shares entered into between the Purchaser and the Vendor on 5 July 2016 “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Vendor” Sparkling Investment (BVI) Limited, a limited partnership organized under the laws of the British Virgin Islands, and an Independent Third Party

“HK$” Hong Kong Dollars, the lawful currency of Hong Kong “%” per cent.

By order of the Board of HC International, Inc. Guo Jiang Chief Executive Officer and Executive Director

Beijing, the People’s Republic of China, 5 July 2016

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

• Mr. Guo Fansheng (Executive Director and Chairman)

• Mr. Guo Jiang (Executive Director and Chief Executive Officer)

• Mr. Lee Wee Ong (Executive Director and Chief Financial Officer)

• Mr. Li Jianguang (Non-executive Director)

• Mr. Guo Wei (Non-executive Director)

• Mr. Zhang Ke (Independent Non-executive Director)

• Mr. Xiang Bing (Independent Non-executive Director)

• Mr. Zhang Tim Tianwei (Independent Non-executive Director)

• For identification purpose only

– 5 –