OSL Group Limited — Capital/Financing Update 2015

Nov 16, 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.

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BRANDING CHINA GROUP LIMITED 品牌中國集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 863)

VOLUNTARY ANNOUNCEMENT IN RELATION TO (1) NEW BUSINESS DEVELOPMENT; (2) MEMORANDUM OF UNDERSTANDING RELATING TO THE PROPOSED ACQUISITION; (3) MEMORANDUM OF UNDERSTANDING RELATING TO THE PROPOSED SUBSCRIPTION; (4) APPOINTMENT OF MANAGEMENT; AND (5) SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

NEW BUSINESS DEVELOPMENT

Under the promotion of the “mass entrepreneurship and innovation” policy in the PRC, and to meet the needs of increasing demand of entrepreneurial and developing enterprises, the Board is pleased to announce that the Group, on the foundation of brand communication services, will expand its corporate customer services to include the park area services, equity investment services and corporate value-added services. Moreover, the Group will serve its existing corporate brands while expanding its target customers to attract start-ups and developing enterprises.

The Board believes that the Group is developing its new business based on its experience and resources in providing services to corporate customers accumulated in the past years. Such expansion is a natural development on its current principal businesses to better meet the demand of the market and is in line with the objective of the Company to cater the needs of the customers. The Group’s new businesses are designed to provide start-ups, developing enterprises and developed corporations with integrated services, including park services, equity investment services and corporate value-added services. Through developing these new businesses, the Group will be able to develop into a corporate service provider that provides comprehensive and in-depth professional services. By capturing the trend of entrepreneurship and innovation in the PRC, the Group will be able to enhance its value for its customers and Shareholders.

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MEMORANDUM OF UNDERSTANDING IN RELATION TO THE PROPOSED ACQUISITION

On 16 November 2015, the Company entered into the First Memorandum of Understanding in relation to the Proposed Acquisition with Shanghai Shenmeng, an independent third party, pursuant to which Shanghai Shenmeng intended to sell and the Company intended to acquire the Sale Capitals, representing 34% of the entire registered capital of Shanghai Lingang held by Shanghai Shenmeng. If the Proposed Acquisition proceeds to completion, Shanghai Lingang will be owned as to 35%, 34% and 31% by Shanghai Caohejing, the Company and Shanghai Dahan respectively. The parties agreed to negotiate and decide on a fair valuation method to determine the consideration and enter into a formal acquisition agreement by 31 January 2016.

The First Memorandum of Understanding is non-legally binding save for certain provisions relating to the confidentiality, termination, costs and the governing law of the First Memorandum of Understanding.

As the First Memorandum of Understanding may or may not lead to the entering into of the formal acquisition agreement and the Proposed Acquisition may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

In the event that the Proposed Acquisition materialises, it may constitute a notifiable transaction for the Company under the Listing Rules. Further announcement(s) will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate.

MEMORANDUM OF UNDERSTANDING IN RELATION TO THE PROPOSED SUBSCRIPTION

On 16 November 2015, the Company entered into the Second Memorandum of Understanding in relation to the Proposed Subscription with Shanghai Hejing and its existing shareholders, pursuant to which the Company intended to subscribe for and Shanghai Hejing intended to issue and allot to the Company such number of shares which shall not be less than 15% of the entire registered capital of Shanghai Hejing upon completion of the Proposed Subscription. The parties agreed to negotiate and decide on a fair valuation method to determine the consideration and enter into a formal subscription agreement by 31 January 2016.

The Second Memorandum of Understanding is non-legally binding save for certain provisions relating to the confidentiality, termination, costs and the governing law of the Second Memorandum of Understanding.

As the Second Memorandum of Understanding may or may not lead to the entering into of the formal subscription agreement and the Proposed Subscription may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

In the event that the Proposed Subscription materialises, it may constitute a notifiable and connected transaction for the Company under the Listing Rules. Further announcement(s) will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate.

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APPOINTMENT OF MANAGEMENT

The Board is pleased to announce that with effect from 16 November 2015, Mr. Fan, a non-executive Director, has been appointed as the Chief Executive Officer of the Company and re-designated as an executive Director. Mr. Fan will be responsible for the business of the Company under immediate authorisation of the Board and the daily operation of the Company.

The Board is pleased to announce that with effect from 16 November 2015, Mr. Huo was appointed as the Chief Operating Officer of the Company. He shall be responsible for the operation of the Company, including equity investment and value-added services businesses. He shall also work with the Chief Strategic Officer of the Company to implement acquisitions and other capital-related matters.

For details of the appointment and the biographical details of Mr. Fan and Mr. Huo, please refer to the announcement issued by the Company on 16 November 2015.

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

The Group intends to introduce independent third party investors to replenish the liquidity of the Group and to raise funds for its new business development. The Company agreed to allot, and the investors (who are independent third parties) agreed to subscribe for, certain number of Shares subject to the terms and conditions of the subscription agreements entered into between the Company and each of the investors. Such Shares will be allotted and issued pursuant to the general mandate granted to the Directors by a resolution approved by the Shareholders at the annual general meeting of the Company held on 12 June 2015.

For details of the subscription of new Shares under general mandate, please refer to the announcement issued by the Company on 16 November 2015.

NEW BUSINESS DEVELOPMENT

(a) Existing business

The Group is a business provider of integrated marketing communications services focusing on serving reputable brands in the consumer goods and services sector. The Group provides unique brand communications services, integrating digital media business with advertising, public relations and event marketing businesses. The Group has gained sufficient experience and resources in providing corporate services during its development in the last decade.

(b) The reasons for exploring the new business

Under the promotion of the “mass entrepreneurship and innovation” policy in the PRC, and to meet the needs of increasing demand of entrepreneurial and developing enterprises, the Board is pleased to announce that the Group, on the foundation of brand communication services, will expand its corporate customer services to include the park area services, equity investment services and corporate value-added services. The Group will serve its existing corporate brands while expanding its target customers to include start-ups and developing enterprises.

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The Board believes that the Group is developing its new business based on its experience and resources in providing services to corporate customers accumulated in the past years. Such expansion is a natural development on its current principal businesses to better meet the demand of the market and is in line with the objective of the Company to cater the needs of the customers. The Group’s new businesses are designed to provide start-ups, developing enterprises and developed corporations with integrated services, including park services, equity investment services and corporate value-added services. Through developing these new businesses, the Group will be able to develop into a corporate service provider that provides comprehensive and in-depth professional services. By capturing the trend of entrepreneurship and innovation in the PRC, the Group will be able to enhance its value for its customers and Shareholders.

(c) Summary of the new businesses

The Group intends to extend its provision of corporate services to include park area services, equity investment services and corporate value-added services.

Park area services are services provided within the existing parks which are operated, managed and promoted by the Group and parks to be developed and operated by the Group when opportunities arise to better meet different demands of corporations at different stages by providing them with flexible business options. The Group intends to develop parks that incorporate unique ideas and design, flexible business points, auxiliary public spaces and business/residential facilities that complement the increasing demands for “social aspect of office life” and “industry in the community”. In view of this, the Group has established Shanghai Hefei Investment Management Co., Ltd.* (上海和斐投資管理有限公司) to operate and manage the existing parks and parks to be developed and operated by the Group when opportunities arise. The Group plans to achieve the management of park area of 800,000 to 1,000,000 sq.m. in the following three years.

On the other hand, the Group intends to provide corporations at different stages with equity investment services, which include establishment and management of angel and start-up fund, development fund and buyout fund. These funds shall invest in various developing high-tech enterprises, and particularly in outstanding enterprises operating or registered in the park of the Group. In this connection, the Group has established Shanghai Jingzhi Asset Management Co., Ltd.* (上海鯨致資產管理有限公司) to operate and manage its equity investment services. The Group plans to achieve the management of a fund of a size of RMB5 billion (equivalent to approximately HK$6.075 billion) within the next three years.

The Group intends to provide corporate value-added services through mobile internet devices and other tools to provide general corporate services in the areas of business registration, financial and tax, legal, human resources, information and technology and strategic consultancy. Taking advantage of the competitive edges of the Group’s existing businesses, the Group will also provide unique brand communication services to corporations. The Group is going to establish specialised teams as and when appropriate, while these teams are expected to establish a leading status in the PRC in two to three areas of its services.

(d) Existing business as principal business

The Board wishes to clarify that the Group has not changed its principal business of brand communication services, and the above-mentioned three new businesses may share customer resources with the principal business, creating deepened synergies and an integrated business entity.

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THE PROPOSED ACQUISITION AND THE PROPOSED SUBSCRIPTION

In order to achieve new business layout, the Board hereby announced the Proposed Acquisition, the Proposed Subscription, appointment of management and subscription of new Shares under general mandate as follows:

(a) The Proposed Acquisition

On 16 November 2015, the Company entered into the First Memorandum of Understanding in relation to the Proposed Acquisition with Shanghai Shenmeng, an independent third party, pursuant to which Shanghai Shenmeng intended to sell and the Company intended to acquire the Sale Capitals, representing 34% of the entire registered capital of the Shanghai Lingang held by Shanghai Shenmeng. If the Proposed Acquisition proceeds to completion, Shanghai Lingang will be owned as to 35%, 34% and 31% by Shanghai Caohejing Development Area Sheshan Technology Development Company Limited (上海漕河涇開發區佘山科技城發展有限公司) (“ Shanghai Caohejing ”), the Company and Shanghai Dahan Investment Holdings Company Limited (上海 大涵投資控股有限公司) (“ Shanghai Dahan ”) respectively. The parties agreed to negotiate and decide on a fair valuation method to determine the consideration and enter into a formal acquisition agreement by 31 January 2016.

i. Parties

• (1) Shanghai Shenmeng Cultural Investment Company Limited* (上海申夢文化投資有限公司), an independent third party and the intended vendor; and

• (2) the Company, the intended purchaser

ii. Background of Shanghai Lingang and reasons for the Proposed Acquisition

Shanghai Lingang is a company established in the PRC on 11 April 2014 with limited liability, which is owned as to 35%, 34% and 31% by Shanghai Caohejing, Shanghai Shenmeng and Shanghai Dahan respectively as at the date of this announcement. Shanghai Caohejing is a company established in the PRC with limited liability and is principally engaged in the management and operation of large-scale parks. Its ultimate controller, Shanghai Lingang Economic Development (Group) Investment Management Co., Ltd (上海臨港經濟發展集團投 資管理有限公司) (“ Lingang Group* ”), is a major domestic park development and management agency. Lingang Group is managing the Shanghai Linggang Industrial Park, a park with a planned area of approximately 218 square kilometres. Shanghai Lingang is the authorised operating agency of Lingang Group in the field of cultural park.

Shanghai Lingang mainly operates the cultural park management project of “Sheshan Cultural Oasis*” (“佘山文化綠洲”) with a planned floor area of approximately 160,000 sq.m. which adopts a unique operation model of “Base + Capital”, as a result of which, Shanghai Lingang is also managing a mergers and acquisitions fund which amounted to approximately RMB2 billion (equivalent to approximately HK$2.43 billion). In view of the principal business of Shanghai Lingang, the Proposed Acquisition is in line with the plan of the Group to develop new business activities. Through the Proposed Acquisition, the Group will acquire the exceptional park area, fund management team, experiences and business resources of Shanghai Lingang.

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To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, each of Shanghai Shenmeng, Shanghai Caohejing and Shanghai Dahan, and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

Mr. Fan, being an executive Director and the Chief Executive Officer of the Company, is a director, authorised representative and general manager of Shanghai Lingang.

iii. Conditions Precedent

The Proposed Acquisition is conditional upon, among other things, the following conditions precedent:

• (a) obtaining all relevant and necessary approvals from the parties;

• (b) obtaining all necessary approvals from the relevant governmental and industry regulatory departments, such approvals shall allow satisfactory implementation and operation of the business development of Shanghai Lingang;

• (c) completing auditing assessments at a satisfactory level, and using a reasonable valuation as the benchmark of determining a mutually acceptable final consideration;

• (d) completing all final documents at a satisfactory level, including but not limited to the formal acquisition agreement (which contains customary representations and warranties and indemnification provisions), amendments to the articles of association and other necessary ancillary agreements; and

• (e) any other conditions that the parties agree to be added as conditions during the course of negotiation for cooperation.

iv. Non legally-binding effect

Save for the clauses on confidentiality, termination, costs and the governing law of the First Memorandum of Understanding, other terms of the First Memorandum of Understanding do not constitute legally-binding commitment in respect of the Proposed Acquisition. The Proposed Acquisition will be subject to the execution and completion of the formal acquisition agreement.

v. General

As the First Memorandum of Understanding may or may not lead to the entering into of the formal acquisition agreement and the Proposed Acquisition may or may not proceed, Shareholders and potential investors are advised to exercise caution when trading in the Shares. In the event that the Proposed Acquisition materialises, it may constitute a notifiable transaction for the Company under the Listing Rules. Further announcement(s) will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate.

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(b) The Proposed Subscription

On 16 November 2015, the Company entered into the Second Memorandum of Understanding in relation to the Proposed Subscription with Shanghai Hejing and its existing shareholders. Pursuant to the Second Memorandum of Understanding, the Company intended to subscribe for and Shanghai Hejing intended to issue and allot to the Company such number of shares which shall not be less than 15% of the entire registered capital of Shanghai Hejing upon completion of the Proposed Subscription. The parties agreed to negotiate and decide on a fair valuation method to determine the consideration and enter into a formal subscription agreement by 31 January 2016.

i. Parties

• (1) Shanghai Hejing, the intended issuer;

• (2) the Company, the intended subscriber; and

• (3) Mr. Huang Wei, Ms. Yuan Yuan and Shanghai Yunhe, the existing shareholders of Shanghai Hejing

As at the date of this announcement, Shanghai Hejing is owned as to 50%, 40% and 10% by Mr. Huang Wei, Shanghai Yunhe and Ms. Yuan Yuan (Mr. Huang Wei’s wife). Shanghai Hejing is therefore an associate of Mr. Huang Wei, who is an executive Director and a substantial Shareholder of the Company, and hence is a connected person of the Company under Chapter 14A of the Listing Rules.

Shanghai Yunhe is wholly owned by Mr. Huo, the Chief Operating Officer of the Company.

ii. Background of Shanghai Hejing and reasons for the Proposed Subscription

Shanghai Hejing is a capital fund management company established in the PRC on 19 May 2014. It mainly provides equity investment services for start-ups through fund raising with a focus on technology, media and telecommunication and consumer sector enterprises. As at the date of this announcement, Shanghai Hejing is independently managing a start-up investment fund and is in preparation of a cultural fund with Ximalaya FM (上海證大喜馬拉雅網絡科技有限公 司), the leading mobile audio platform in the PRC. The team of Shanghai Hejing has invested in several projects in the technology, media and telecommunication and consumer sectors, including “Smartisan” (“錘子科技”), the mobile internet terminals; “Yitiao” (“一條”), a life aesthetics video; “Mingdao” (“明道”), an enterprise collaboration SaaS software; “Vingoo” (維果部落), an intelligent juice vending terminal; and “Phantouch”, the virtual reality devices.

As Shanghai Hejing’s business is in line with the proposed business development of the Group, the Board is of the view that the completion of the Proposed Subscription will enrich the business resources, experiences and the human resources of the Group, which will enable the Group to achieve its plan to diversify its business activities.

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iii. Conditions Precedent

The Proposed Subscription is conditional upon, among other things, the following conditions precedent:

• (a) obtaining all relevant and necessary approvals from the parties;

• (b) obtaining all necessary approvals from the relevant governmental and industry regulatory departments, such approvals shall allow satisfactory implementation and operation of the start-up investment fund management business by Shanghai Hejing in accordance with the business development plan;

• (c) completing auditing assessments at a satisfactory level, and using a reasonable valuation as the benchmark of determining a mutually acceptable final consideration;

• (d) completing all final documents at a satisfactory level, including but not limited to the formal subscription agreement (which contains customary representations and warranties and indemnification provisions), amendments to the articles of association and other necessary ancillary agreements; and

• (e) any other conditions that the parties agree to be added as conditions during the course of negotiation for cooperation.

iv. Non legally-binding effect

Save for the clauses on confidentiality, termination, costs and the governing law of the Second Memorandum of Understanding, other terms of the Second Memorandum of Understanding do not constitute legally-binding commitment in respect of the Proposed Subscription. The Proposed Subscription will be subject to the execution and completion of the formal subscription agreement.

v. General

As the Second Memorandum of Understanding may or may not lead to the entering into of the formal subscription agreement and the Proposed Subscription may or may not proceed, Shareholders and potential investors are advised to exercise caution when trading in the Shares. In the event that the Proposed Subscription materialises, it may constitute a notifiable and connected transaction for the Company under the Listing Rules. Further announcement(s) will be made by the Company in accordance with all applicable requirements of the Listing Rules as and when appropriate.

APPOINTMENT OF MANAGEMENT

(a) Appointment of Chief Executive Officer and re-designation of executive Director

The Board is pleased to announce that with effect from 16 November 2015, Mr. Fan, a non-executive Director, has been appointed as the Chief Executive Officer of the Company and redesignated as an executive Director. Mr. Fan will be responsible for the business of the Company under immediate authorisation of the Board and the daily operation of the Company.

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Mr. Fan has extensive experience in media and advertising, cultural and real estate industries and the management of parks and listed companies. Mr. Fan has been a non-executive Director of the Company for over three years and is familiar with the Group’s strategies and business. The Board believes that the appointment of Mr. Fan as the Chief Executive Officer of the Company will facilitate smooth implementation of the strategy of developing new business.

For details of the appointment and re-designation and the biographical details of Mr. Fan, please refer to the announcement issued by the Company on 16 November 2015.

(b) Appointment of Chief Operating Officer

The Board is pleased to announce that with effect from 16 November 2015, Mr. Huo has been appointed as the Chief Operating Officer of the Company. He shall be responsible for the operation of the Company, including equity investment and value-added services. He shall also work with the Chief Strategic Officer to implement acquisitions and other capital-related matters.

Mr. Huo has extensive industry experience in mergers and acquisitions and equity investment projects. Moreover, he has been the financial advisor of the Company in the past years and is familiar with the strategy and businesses of the Group.

As such, the appointment of Mr. Huo as our Chief Operating Officer will benefit the Group in developing its business activities. The Board would like to take this opportunity to welcome Mr. Huo on becoming the Chief Operating Officer of the Company.

For details of the appointment and the biographical details of Mr. Huo, please refer to the announcement issued by the Company on 16 November 2015.

SUBSCRIPTION OF NEW SHARES UNDER GENERAL MANDATE

The Group intends to introduce independent third party investors to replenish the liquidity of the Group and to raise funds for its of new business development. The Company agreed to allot, and the investors (who are independent third parties) agreed to subscribe for, certain number of Shares subject to the terms and conditions of the subscription agreements entered into between the Company and each of the investors. Such Shares will be alloted and issued pursuant to the general mandate granted to the Directors by a resolution approved by the Shareholders at the annual general meeting of the Company held on 12 June 2015.

For details of the subscription of new Shares under general mandate, please refer to the announcement issued by the Company on 16 November 2015.

The Board believes that, under the leadership of the new management team with Mr. Fan and Mr. Huo as members and following (i) the establishment of the park management company and asset management company; (ii) completion of the Proposed Acquisition and Proposed Subscription; and (iii) the introduction of independent third party investors to the Group, the Group will integrate the existing business activities of the Group with the new development opportunities, with a view to becoming an important player in the trend of entrepreneurship and innovation in the PRC and delivering attractive returns to its Shareholders.

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DEFINITIONS

Unless the context otherwise requires, terms used in this announcement shall have the meanings below:

“Board”	the board of Directors;
“Company”	Branding China Group Limited, a company incorporated in the
	Cayman Islands with limited liability, the issued shares of which
	are listed on the Main Board of the Stock Exchange (Stock Code:
	863);
“connected person(s)”	has the meaning ascribed to it under the Listing Rules;
“Directors”	the director(s) of the Company;
“First Memorandum of	the non-legally binding (save for certain provisions relating to
Understanding”	the confidentiality, termination, costs and the governing law
	of the First Memorandum of Understanding) memorandum of
	understanding dated 16 November 2015 entered into between
	Shanghai Shenmeng and the Company in relation to the Proposed
	Acquisition;
“Group”	the Company and its subsidiaries from time to time;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Mr. Fan”	Mr. Fan Youyuan, an executive Director and Chief Executive
	Officer of the Company since 16 November 2015;
“Mr. Huo”	Mr. Huo Zhongyan, the Chief Operating Officer of the Company
	since 16 November 2015;
“PRC”	the People’s Republic of China, and for the purpose of this
	announcement only, excluding Hong Kong of the People’s
	Republic of China and Taiwan;
“Proposed Acquisition”	the proposed acquisition of the Sale Capitals by the Company
	from Shanghai Shenmeng;
“Proposed Subscription”	the proposed subscription of such number of shares which shall
	not be less than 15% of the entire registered share capital of
	Shanghai Hejing upon completion of the proposed subscription by
	the Company;
“RMB”	Renminbi, the lawful currency of the PRC;

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“Sale Capitals”	34% of the entire registered capital of Shanghai Lingang, legally
	and beneficially owned by Shanghai Shenmeng;
“Second Memorandum of	the non-legally binding (save for certain provisions relating to
Understanding”	the confidentiality, termination, costs and the governing law
	of the Second Memorandum of Understanding) memorandum
	of understanding dated 16 November 2015 entered into among
	Shanghai Hejing, its existing shareholders and the Company in
	relation to the Proposed Subscription;
“Shanghai Hejing”	Shanghai Hejing Leyi Investment Advisory Co., Ltd.* (上海合鯨
	樂宜投資顧問有限公司) , a company established in the PRC;
“Shanghai Lingang”	Shanghai Lingang Cultural Industry Development Company
	Limited* (上海臨港文化產業發展有限公司), a company
	established in the PRC;
“Shanghai Shenmeng”	Shanghai Shenmeng Cultural Investment Company Limited* (上
	海申夢文化投資有限公司), a company established in the PRC;
	and
“Shanghai Yunhe”	Shanghai Yunhe Investment Company Limited* (上海允和投資有
	限公司), a company established in the PRC;
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company;
“Shareholders”	holder(s) of ordinary share(s) in the share capital of the Company;
“sq.m.”	square metres;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited; and
“%”	per cent.

By order of the Board Branding China Group Limited Fang Bin Chairman

In this announcement, amounts in RMB are translated into HK$ on the basis of RMB1 = HK$1.215. The conversion rate is for illustration purpose only and should not be taken as a representation that RMB could actually be converted into HK$ at such rate or at all.

Shanghai, the PRC, 16 November 2015

As at the date of this announcement, the executive Directors are Mr. Fang Bin, Mr. Fan Youyuan, Mr. Patrick Zhen, Mr. Huang Wei and Mr. Song Yijun and the independent non-executive Directors are Mr. Zhou Ruijin, Mr. Lin Zhiming and Ms. Hsu Wai Man, Helen.

• For identification purposes only

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