Richly Field China Development Limited — M&A Activity 2017

Aug 10, 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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

SUPERACTIVE GROUP COMPANY LIMITED 先機企業集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 0176)

MAJOR TRANSACTION IN RELATION TO ACQUISITION OF THE ENTIRE EQUITY INTEREST IN SHENZHEN CITY QIANHAI WANKE FINANCIAL SERVICES COMPANY LIMITED

THE ACQUISITION

The Board is pleased to announce that on 9 August 2017 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company, and the Vendors entered into the Sale and Purchase Agreement, pursuant to which the Vendors conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Sale Equity, representing the entire equity interest of the Target Company at the consideration of RMB20,000,000.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Acquisition exceed 25% but are less than 100%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement, reporting and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As no Shareholder has a material interest in the Acquisition, no Shareholder would be required to abstain from voting if the Company was to convene a general meeting for approving the Acquisition. Pursuant to Rule 14.44 of the Listing Rules, written shareholders’ approval can be accepted in lieu of holding a general meeting provided that no qualified opinion will be issued by auditors in respect of the accountants’ reports of the Target Company and the Project Company to be included in the circular to be despatched by the Company in connection with the Acquisition.

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The Directors expect that no qualified opinion shall be issued by the auditors of the Target Company and the Project Company for the audited financial statements and accountants’ report of the Target Company for the period from 20 April 2015 to 31 December 2015, the year ended 31 December 2016 and the six months ended 30 June 2017 and the audited financial statement and accountants’ report of the Project Company for the three years ended 31 December 2016 and the six months ended 30 June 2017. The Company intends to obtain a written Shareholder’s approval from its controlling Shareholder, Super Fame, being the holder of 768,487,998 Shares (representing 56.71% of the issued capital of the Company as at the date of this announcement), for the Sale and Purchase Agreement and the transactions contemplated thereunder.

In the event that the Company is unable to obtain the written Shareholder’s approval from Super Fame, a special general meeting of the Company will be convened as soon as practicable at which ordinary resolution(s) will be proposed for the Shareholders to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

GENERAL

A circular containing, inter alia, (i) further information on the Acquisition; and (ii) the audited financial information of the Target Company and the Project Company, is expected to be despatched to the Shareholders on or before 30 August 2017.

Reference is made to the announcement of the Company dated 7 July 2017 in respect of the memorandum of understanding in respect of the possible acquisition of the entire equity interest in the Target Company.

The Board is pleased to announce that on 9 August 2017 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company, and the Vendors entered into the Sale and Purchase Agreement, pursuant to which the Vendors conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Sale Equity, representing the entire equity interest of the Target Company at the consideration of RMB20,000,000.

SALE AND PURCHASE AGREEMENT

Date: 9 August 2017 (after trading hours)

Parties: (1) Joint Faith Enterprises Limited, an indirect wholly-owned subsidiary of the Company, as purchaser; (2) Ms. You Xuemian, as Vendor A; (3) Ms. Lin Yuqin, as Vendor B; and (4) the Target Company.

As at the date of this announcement, the Target Company is beneficially owned as to 90% and 10% by Vendor A and Vendor B respectively. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendors is an Independent Third Party.

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Subject matter

Pursuant to the Sale and Purchase Agreement, the Vendors conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Equity, representing the entire equity interest in the Target Company.

Consideration

The aggregate consideration payable by the Purchaser shall be RMB20,000,000, which shall be payable to the Vendors on the date falling two years from the date of signing of the Sale and Purchase Agreement.

The consideration was arrived at after arm’s length negotiations between the Purchaser and the Vendors after taking into account (i) the arrangement in respect of the Assumed Creditors’ Rights and the Assumed Liabilities of the Project Company; (ii) the capital commitment of the Target Company under the Project Company Acquisition Agreement; (iii) the value of the Project and (iv) the construction of the Project having been completed and the Project Company being able to recover its investment and obtain a reasonable return within a short period of time.

Conditions precedent

Completion is conditional upon and subject to the following conditions:

• (1) the Purchaser being satisfied with the results of the due diligence of the Target Group (in particular the review on the assets, liabilities, operations and affairs of the Target Company and the Project Company as considered appropriate by the Purchaser);

• (2) the Purchaser and the Vendors having obtained all necessary consents and approvals required to be obtained in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder;

• (3) there shall not have occurred any material adverse effect or any event, change, effect or development that would, individually or in the aggregate, have had or reasonably be expected to have a material adverse effect on the Target Company, the Project and the Project Company, taken as a whole; and

• (4) if necessary, the passing of the resolution(s) by the Shareholders in a special general meeting of the Company approving the Sale and Purchase Agreement and the transactions contemplated thereunder.

The Purchaser may in its absolute discretion at any time waive the conditions set out in (1) and (3) above. None of the conditions set out in (2) and (4) above are capable of being waived.

If the conditions set out above have not been satisfied or waived on or before the Long Stop Date, the Sale and Purchase Agreement shall cease and determine and thereafter neither party shall have any obligations and liabilities towards each other hereunder save for any antecedent breaches of the terms thereof.

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Completion

Completion shall take place within 20 working days after the fulfillment or waiver of the conditions precedent set out in the Sale and Purchase Agreement, or such other date as may be agreed between the Vendors and the Purchaser.

INFORMATION ON THE TARGET GROUP AND THE PROJECT

The Target Company

The Target Company was established in the PRC on 20 April 2015 and is owned as to 90% by Vendor A and as to 10% by Vendor B. As at the date of this announcement, the registered capital of the Target Company amounted to RMB100,000,000 which has not been paid up as at the date of this announcement. The Target Company was engaged in P2P lending business in the PRC during the period from February 2016 to December 2016 and was dormant after December 2016 other than entering into the Project Company Acquisition Agreement.

The Project Company

The Project Company was established on 18 September 2012 in the PRC with limited liability. It is principally engaged in the development of the Project. As at the date of this announcement, the Project Company is owned as to 95% by Project Vendor A and 5% by Project Vendor B respectively.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of Project Vendor A and Project Vendor B is an Independent Third Party.

The Project Company Acquisition Agreement

On 5 June 2017, the Target Company entered into the Project Company Acquisition Agreement with the Project Vendors for the acquisition of the entire equity interest in the Project Company.

The Project

The Project Company is the developer and owner of the Project. The construction has been completed and the final acceptance of the Project is pending and expected to be completed in around 2018. The Project is located near the north exit of the Old Town of Lijiang and at the underground of Minzhu Road and Fuhui Road in Lijiang City, Yunnan Province, the PRC. The actual gross floor area of the Project is approximately 36,583 sq. m. comprising a people’s air defense work structure of approximately 13,730 sq. m., 741 units of the saleable shop premises with a total gross floor area of approximately 19,923 sq. m., a non-saleable property utility room of approximately 15 sq. m. and a commercial function room of approximately 2,915 sq. m. As at the date of this announcement, 151 units of the saleable shop premises (the “ Sold Premises ”) with a total floor area of approximately 3,926 sq. m. have been agreed to be sold under the relevant pre-sale contracts and 590 units of the saleable shop premises (the “ Unsold Premises ”) with a total gross floor area of approximately 15,997 sq. m. remain unsold. The Project has been charged as security for the Huarong Loan.

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According to the approval by the People’s Air Defence Office of Yunnan Province, the gross floor area of the Project shall be 34,660 sq. m. with a people’s air defense work structure of 18,430 sq. m.. The actual gross floor area of the Project exceeds the approved gross floor area by approximately 1,923 sq. m. and the actual size of the people’s air defense work structure is smaller than the approved size by approximately 4,700 sq. m. Additional fee and/ or compensation (the “ Additional Costs ”) may be payable by the Project Company for the excess actual gross floor area and the shortfall of the actual gross floor area of the people’s air defense work structure. Under the Project Company Acquisition Agreement, the Project Vendors have warranted the saleable area of the Project. In addition, in order to fulfill the Final Acceptance Condition and the No Breach Condition to the payment by the Target Company to the Project Company of the Balance of RMB80,000,000, the Project Vendors will have to bear the Additional Costs. Otherwise the Target Company will withhold the payment of the Balance and use the Balance to settle the Additional Costs. It is expected that the Balance will be sufficient to cover all the Additional Costs.

Assets and liabilities of the Project Company

The Target Company shall undertake the Huarong Loan incurred prior to the Handover Date and the creditors’ rights and liabilities of the Project Company arising from the operating act of the Target Company as from the Handover Date.

The Project Vendors shall undertake all the Assumed Creditors’ Rights and the Assumed Liabilities existing prior to the Handover Date. Within two years from the date of the Project Company Acquisition Agreement, the Project Vendors shall be responsible for the completion of the clearance of all the accounts receivable and the accounts payable existing before the Handover Date.

Consideration

The total consideration for the acquisition of the Project Company as stated in the Project Company Acquisition Agreement is RMB500,000,000, which shall be settled in the following manner:

• (1) a refundable deposit (the “ Deposit ”) of RMB7,000,000 has been paid by the Target Company to the Project Vendors within two working days after signing of the Project Company Acquisition Agreement, which shall be used to repay the interest due under the Huarong Loan;

• (2) the second installment of RMB280,000,000 (the “ 2nd Installment ”) shall be settled within five working days after the fulfillment of the following conditions:

• (a) Project Vendor A and Project Vendor B having completed the transfer of 65% and 5% equity interest in the Project Company to the Target Company respectively, the necessary registration procedures and the hand-over of the Project Company;

• (b) the Project Vendors having assisted the Target Company and the Project Company in completing the signing of a contract for an entrusted loan in the principal amount of RMB280,000,000 provided by the Target Company to the Project Company;

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• (c) the completion of registration of a charge over the land of the Project and the Unsold Premises for securing the debt of RMB280,000,000 in favour of the Target Company as the second ranking chargee (the Target Company shall become the first ranking chargee after the repayment of the Huarong Loan in full);

• (d) the Project Vendors having completed the registration of the pledge over the 30% equity interest in the Project Company held by Project Vendor A in favour of the Target Company as security for the Project Vendors’ guarantee for hidden historical liabilities; and

• (e) the Management Agreement having been terminated,

where the 2nd Installment shall be applied in the following priority: (i) the repayment of the Huarong Loan; (ii) repayment of the Deposit; (iii) settlement of the transaction service fee of RMB600,000 in respect of the Project Company Acquisition Agreement; and (iv) payment of the construction costs payable by the Project Company under the Project which are estimated to be approximately RMB126,000,000;

• (3) the third installment of RMB140,000,000 shall be settled by payment to the Project Vendors the net amount of the accounts receivable which includes the balance payment of the Sold Premises after utilising the funds from such accounts receivable to settle the Assumed Liabilities. No further amount is payable by the Target Company to the Project Vendors if the net amount of the accounts receivable is less than RMB140,000,000. The Project Vendors shall be responsible for resolving the disputes with the creditors and debtors during the recovery process and undertake all the benefits and results from the handling of the disputes. If any of the buyers of the Sold Premises requests for the termination of the contract and the return of the Sold Premises, the Project Vendors shall pay such refund amount to the buyer and the Sold Premises so returned shall belong to the Project Vendors.

• (4) the balance of consideration (the “ Balance ”) of RMB80,000,000 shall be payable by the Target Company to the Project Vendors within five working days after the fulfillment of the following conditions:

• (a) the expiry of two years from the date of the Project Company Acquisition Agreement;

• (b) the Project Vendors having completed the clearance of all the Assumed Liabilities;

• (c) the Project having passed the final acceptance and the ownership of the Project having been registered under the name of the Project Company, all the Unsold Premises having satisfied the conditions for issue of the ownership certificates, and the Sold Premises having been delivered to the respective owners as per the relevant sale contracts and the application for the ownership certificates of the Sold Premises having been processed (the “ Final Acceptance Condition ”);

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• (d) the Project Vendors having completed the transfer of the remaining 30% equity interest in the Project Company to the Target Company and the necessary registration procedures; and

• (e) there having been no breach of the Project Company Acquisition Agreement by the Project Vendors (the “ No Breach Condition ”).

The total capital commitment for the Acquisition will be RMB373,000,000, which comprises the following:

• (i) the consideration for the Acquisition of RMB20,000,000; and

• (ii) the capital commitment of RMB353,000,000 for the acquisition of the Project Company by the Target Company (comprising the 2nd Installment of RMB280,000,000 (less RMB7,000,000 as the repayment of the Deposit) and the Balance of RMB80,000,000.

FINANCIAL INFORMATION OF THE TARGET GROUP

The unaudited consolidated net liabilities of the Target Company and the Project Company as at 30 June 2017 were approximately RMB30,000 and RMB12,789,000 respectively.

The unaudited net (loss)/profit before and after taxation of the Target Company for each of the period ended 31 December 2015, the year ended 31 December 2016 and the six months ended 30 June 2017 are set out below:

	For the
	period from	For the	For the
	20 April 2015 to	year ended	six months
	31 December	31 December	ended 30 June
	2015	2016	2017
	RMB’000	RMB’000	RMB’000
	(unaudited)	(unaudited)	(unaudited)
Net (loss)/profit before taxation	(16)	10	(24)
Net (loss)/profit after taxation	(16)	10	(24)

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The unaudited net profit/(loss) before and after taxation of the Project Company for each of the year ended 31 December 2015, the year ended 31 December 2016 and for the six months ended 30 June 2017 are set out below:

	For the	For the	For the
	year ended	year ended	six months
	31 December	31 December	ended 30 June
	2015	2016	2017
	RMB’000	RMB’000	RMB’000
	(unaudited)	(unaudited)	(unaudited)
Net (loss) before taxation	(12,509)	(2,566)	(14,316)
Net (loss) after taxation	(12,509)	(2,566)	(14,316)

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is engaged in the business of, inter alia, manufacturing of consumer-electronic products, money lending business in Hong Kong, nursery education in the PRC and investment in an associate which is engaged in afterlife services in Taiwan.

The Directors undertake strategic reviews of its assets from time to time with a view to maximising returns to the Shareholders. The construction of the Project has been completed with pre-sales. It is expected that the Project Company can recover its investment and obtain a reasonable return within a short period of time. The Directors consider that the Acquisition provides an attractive opportunity for the Company to enhance its future development and strengthen its revenue bases.

In consideration of the above, the Directors are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Acquisition exceed 25% but are less than 100%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement, reporting and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As no Shareholder has a material interest in the Acquisition, no Shareholder would be required to abstain from voting if the Company was to convene a general meeting for approving the Acquisition. Pursuant to Rule 14.44 of the Listing Rules, written shareholders’ approval can be accepted in lieu of holding a general meeting provided that no qualified opinion will be issued by auditors in respect of the accountants’ reports of the Target Company and the Project Company to be included in the circular to be despatched by the Company in connection with the Acquisition.

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The Directors expect that no qualified opinion shall be issued by the auditors of the Target Company and the Project Company for the audited financial statements and accountants report of the Target Company for the period from 20 April 2015 to 31 December 2015, the year ended 31 December 2016 and the six months ended 30 June 2017 and the audited financial statement and accountants’ report of the Project Company for the three years ended 31 December 2016 and the six months ended 30 June 2017. The Company intends to obtain a written Shareholder’s approval from its controlling Shareholder, Super Fame, being the holder of 768,487,998 Shares (representing 56.71% of the issued capital of the Company as at the date of this announcement), for the Sale and Purchase Agreement and the transactions contemplated thereunder.

In the event that the Company is unable to obtain the written Shareholder’s approval from Super Fame, a special general meeting of the Company will be convened as soon as practicable at which ordinary resolution(s) will be proposed for the Shareholders to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

GENERAL

A circular containing, inter alia, (i) further information on the Acquisition; and (ii) the audited financial information of the Target Company and the Project Company, is expected to be despatched to the Shareholders on or before 30 August 2017.

DEFINITIONS

Unless otherwise specified, the following terms have the following meanings in this announcement:

“Acquisition” the acquisition of the Sale Equity pursuant to the Sale and Purchase Agreement “Assumed Creditors’ all creditors’ rights of the Project Company prior to the Rights” Handover Date “Assumed Liabilities” all debts and liabilities incurred or to be incurred by the Project Company (other than the Huarong Loan) prior to the Handover Date (which includes the construction costs of approximately RMB126,000,000 payable by the Project Company under the Project) “Board” the board of Directors “Company” Superactive Group Company Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the Main Board of the Stock Exchange (stock code: 0176) “connected person” has the meaning ascribed to it under the Listing Rules “Director(s)” the director(s) of the Company

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“Group”	the Company and its subsidiaries
“Handover Date”	the date on which the Project Vendors completed transfer of
	70% of the equity interest in the Project Company to the Target
	Company
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Huarong Loan”	the loan in the principal amount of RMB200,000,000 granted
	by China Merchant Bank Lijiang as trustee on behalf of 華
	融（中國）投資管理有限公司(Huarong (China) Investment
	Management Company Limited*) to the Project Company
“Independent Third	third party(ies) independent of and not connected with the
Party(ies)”	Company and its connected persons
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Long Stop Date”	31 October 2017 or such later date as may be agreed by the
	Vendors and the Purchaser in writing
“Management Agreement”	the management agreement entered into between the Project
	C o m p a n y a n d上海恒百經營管理有限公司麗江分公司
	(Shanghai Hengbai*) in respect of the management and
	operation of the commercial walkway of the Project
“PRC”	the People’s Republic of China which, for the purpose of
	this announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Project”	underground walkway and people’s air defense structure project
	located at the underground of Minzhu Road and Fuhui Road,
	Lijiang city, Yunan province, the PRC which is wholly-owned
	by the Project Company
“Project Company”	麗江華歐房地產置業有限公司(Lijiang Hua Ou Real Estate
	Company Limited*), a company established in the PRC with
	limited liability
“Project Company	the share acquisition agreement dated 5 June 2017 and entered
Acquisition Agreement”	into between the Project Vendors as vendors and the Target
	Company as purchaser in respect of the acquisition of the entire
	equity interest in the Project Company
“Project Vendor A”	Mr. Fang Zhaoan

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“Project Vendor B”	Mr. Xu Lebin
“Project Vendors”	Project Vendor A and Project Vendor B
“Purchaser”	Joint Faith Enterprises Limited, a company incorporated in
	Hong Kong with limited liability and an indirect wholly-owned
	subsidiary of the Company
“Sale and Purchase	the sale and purchase agreement dated 9 August 2017 and
Agreement”	entered into between the Vendors and the Purchaser in respect
	of the Acquisition
“Sale Equity”	the entire equity interest in the Target Company which is owned
	as to 90% by Vendor A and 10% by Vendor B as at the date of
	this announcement
“Share(s)”	ordinary share(s) of HK$0.1 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of issued Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Super Fame”	Super Fame Holdings Limited, a company incorporated in the
	British Virgin Islands with limited liability, which is owned
	as to 55% by Ms. Yeung So Lai, the chairman and executive
	Director of the Company, and as to 45% by Mr. Lee Chi Shing
	Caesar, an executive Director
“Target Company”	深圳市前海萬客金融服務有限公司(Shenzhen City Qianhai
	Wanke Financial Services Company Limited*), a company
	established in the PRC with limited liability
“Target Group”	the Target Company and the Project Company
“Vendors”	Vendor A and Vendor B
“Vendor A”	Ms. You Xuemei
“Vendor B”	Ms. Lin Yuqin
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC

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“sq. m.”

square metre

“%”

per cent.

By Order of the Board Superactive Group Company Limited Yeung So Lai Chairman

Hong Kong, 9 August 2017

As at the date of this announcement, the executive directors of the Company are Ms. Yeung So Lai and Mr. Lee Chi Shing Caesar; and the independent non-executive directors of the Company are Mr. Chiu Sze Wai Wilfred, Mr. Chow Wai Leung William and Ms. Hu Gin Ing.

• For identification purposes only

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