Richly Field China Development Limited — M&A Activity 2017

May 19, 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.

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(Stock Code: 0176)

DISCLOSEABLE TRANSACTION IN RELATION TO ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF SPEED FAME ENTERPRISES LIMITED

THE ACQUISITION

The Board is pleased to announce that on 18 May 2017 (after trading hours), the Vendors, the Guarantors and the Purchaser, a wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement, pursuant to which the Vendors have agreed to sell and the Purchaser has agreed to purchase the Sale Shares, representing the entire issued share capital of the Target Company upon Completion.

The Consideration for the Sale Shares shall be HK$59,474,576.26, of which (i) HK$23,788,896.00 shall be satisfied by the Purchaser by procuring the Company to allot and issue 36,768,000 Consideration Shares at the Issue Price of HK$0.647 per Consideration Share to the Vendors or their respective nominee(s) or designated person(s) within seven Business Days from the Completion Date; and (ii) HK$35,685,680.26 shall be satisfied in cash within one month from the Completion Date. The Consideration Shares will be allotted and issued pursuant to the General Mandate.

Upon Completion, the Group will acquire the entire equity interests in the Target Company. The financial results of the Target Group will be consolidated into the financial statements of the Company.

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LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Acquisition exceed 5% but are below 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Completion is subject to the fulfilment of the conditions precedent under the Sale and Purchase Agreement. As the Acquisition may or may not proceed, Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

THE ACQUISITION

The Board is pleased to announce that on 18 May 2017 (after trading hours), the Vendors, the Guarantors and the Purchaser, a wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement, pursuant to which the Vendors have agreed to sell and the Purchaser has agreed to purchase the Sale Shares, representing the entire issued share capital of the Target Company upon Completion.

THE SALE AND PURCHASE AGREEMENT

Date: 18 May 2017 (after trading hours) Parties Vendors: (1) Capital Wheel Holdings Limited (“ Vendor A ”) (2) Mr. Yiu Chow Shun, Barry (“ Vendor B ”) (3) Mr. Li Yik Wai, Kinnie (“ Vendor C ”) (4) Loyalgain Corporation Limited (“ Vendor D ”) Guarantors: (1) Mr. Tang (2) Mr. Chan (3) Mr. Mark Vaile Purchaser: Toran International Limited, a wholly-owned subsidiary of the Company Listco: The Company

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Vendor A and Vendor D are companies incorporated in Hong Kong with limited liability and are principally engaged in investment holdings. As at the date of this announcement, Vendor A is directly owned as to 66.67% by Vendor D and indirectly owned as to 33.33% by Mr. Mark Vaile respectively, while Vendor D is owned as to 50% and 50% by Mr. Tang and Mr. Chan respectively.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendors and the Guarantors is an Independent Third Party.

Subject matter

Pursuant to the Sale and Purchase Agreement, the Vendors shall as beneficial owners sell and the Purchaser shall purchase the Sale Shares free from all Encumbrances with effect from Completion together with all rights now and hereafter attaching thereto including but not limited to all dividends to be paid, declared or made in respect thereof at any time on or after the Completion Date.

The Purchaser shall not be obliged to purchase any of the Sale Shares unless the sale and purchase of all the Sale Shares are completed simultaneously.

Consideration

The consideration of HK$59,474,576.26 shall be payable by the Purchaser to the Vendors in the following manner:

• (a) HK$23,788,896.00 shall be satisfied by the allotment and issue of 36,768,000 Consideration Shares by the Company to the Vendors or their respective nominee(s) or designated person(s), comprising as to 18,751,680 Consideration Shares, 7,353,600 Consideration Shares, 3,309,120 Consideration Shares and 7,353,600 Consideration Shares to Vendor A, Vendor B, Vendor C and Vendor D (or their respective nominee(s) or designated person(s)) respectively at the Issue Price within 7 Business Days after the Completion Date; and

• (b) the remaining balance of HK$35,685,680.26, in cash by the Purchaser to the Vendors or their respective nominee(s) or designated person(s), as to HK$18,199,696.94 to Vendor A, HK$7,137,136.05 to Vendor B, HK$3,211,711.22 to Vendor C and HK$7,137,136.05 to Vendor D within one month from the Completion Date.

The Issue Price of HK$0.647 per Consideration Share represents:

• (a) a premium of approximately 1.09% over the closing price of HK$0.64 per Share as quoted on the Stock Exchange on the date of the Sale and Purchase Agreement; and

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• (b) a discount of approximately 3.72% to the average closing price of HK$0.672 per Share for the last five consecutive trading days immediately prior to the date of the Sale and Purchase Agreement.

The Consideration Shares represent approximately 2.79% of the existing issued share capital of the Company as at the date of this announcement and approximately 2.71% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares.

The Consideration Shares will be issued under the General Mandate. The Consideration Shares shall rank pari passu in all respects among themselves and with the existing issued Shares on the date of allotment. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

Basis of Consideration

The Consideration was arrived at after arm’s length negotiations between the Vendors and the Purchaser with reference to, among other things, the business development and future prospects of the Target Group. The Consideration for the Acquisition will be financed by internal resources of the Group and/or external financing.

The Directors consider that the Consideration are on normal commercial terms and fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions precedent

Completion is conditional upon and subject to the following conditions:

• (1) the Purchaser being satisfied with the results of due diligence review on the assets, liabilities, operations and affairs of the Target Group;

• (2) all warranties given by the Vendors in the Sale and Purchase Agreement remaining true and correct in all respects and not misleading;

• (3) the Purchaser having reasonably satisfied that there has not been any material adverse change on the Target Company since the date of the Sale and Purchase Agreement;

• (4) all necessary consents, licneces and approvals required to be obtained on the part of the Vendors and the Target Group in respect of the Sale and Purchase Agreement and the transactions contemplated thereby having been obtained and remain in full force and effect;

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• (5) all necessary consents, licneces and approvals required to be obtained on the part of the Purchaser in respect of the Sale and Purchase Agreement and the transactions contemplated thereby having been obtained and remain in full force and effect;

• (6) the Listing Committee of the Stock Exchange having granted the approval for the listing of, and permission to deal in, the Consideration Shares; and

• (7) the Waiver of Loans having been obtained.

The Vendors shall use their best endeavours to procure the fulfillment of the conditions set out in (1), (2), (4) and (7) above. The Purchaser shall use its best endeavours to procure the fulfillment of the conditions set out in (5) and (6) above. The Purchaser may in its absolute discretion at any time waive the conditions set out in (1), (2) and (3) above by notice in writing. None of the conditions set out in (4), (5), (6) and (7) above are capable of being waived.

If the conditions set out above have not been satisfied (or as the case may be, waived by the Purchaser) on or before 5:00 p.m. on 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 hereof.

Waiver of Loans

Pursuant to the Sale and Purchase Agreement, the Vendors and the Guarantors shall waive all the obligations, liabilities and debts owing or incurred by the Target Group to them on or at any time prior to the Completion whether actual, contingent or deferred and irrespective of whether or not the same is due and payable on Completion.

Guarantee provided by the Guarantors

In consideration of the Consideration and the Vendors entering into the Sale and Purchase Agreement, the Guarantors have irrevocably and unconditionally guaranteed to the Purchaser the due and punctual performance of all obligations of the Vendors under the Sale and Purchase Agreement. The amount of liability of the

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respective Vendors for any claim made in connection with any breach of any warranties given by the Vendors and the Guarantors under the Sale and Purchase Agreement shall be borne by Vendors in the following proportion:

Vendor	A:	51%
Vendor	B:	20%
Vendor	C:	9%
Vendor	D:	20%

In the event that Vendor A becomes liable for any claims made in connection with the Sale and Purchase Agreement, the liability of Vendor A shall also be guaranteed by the Guarantors in equal proportion.

In the event that Vendor D becomes liable for any claims made in connection with the Sale and Purchase Agreement, the liability of Vendor D shall also be guaranteed by Mr. Chan and Mr. Tang, being the shareholders of Vendor D, in equal proportion.

Deed of Non-competition

Pursuant to the Sale and Purchase Agreement, the Vendors, the Guarantors and Mr. Poon (collectively the “ Covenantors ”) shall enter into a Deed of Non-competition at Completion, pursuant to which each of the Covenantors shall irrevocably and unconditionally undertake to and covenant with the Target Company (for itself and for the benefit of the members of the Target Group) and the Purchaser that a period of 18 months from the Completion Date:

• (a) such Covenantor shall not, and shall procure each of his/her associates not to, whether on his/her own account or in conjunction with or on behalf of any person, firm or company and whether directly or indirectly, whether for profit or not, carry on, engage, invest, be interested or involved or engaged in, acquire or hold any rights or interest, or otherwise involved in any business which competes or is likely to compete directly or indirectly with the business currently and from time to time engaged by the Target Group (the “ Restricted Business ”); and

• (b) if such Covenantor and/or any of his/her associates is offered or becomes aware of any project or new business opportunity that relates to the Restricted Business, whether directly or indirectly, he/she shall: (i) promptly with ten Business Days notify the Target Company in writing of such opportunity and provide such information as is reasonably required by the Target Company in order to enable the Target Company to come to an informed assessment of such opportunity; and (ii) use his/her best endeavours to procure that such opportunity is offered to the Target Company on terms no less favourable than the terms on which such opportunity is offered to such Covenantor and/or his/her associates.

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Each of the Covenantors shall undertake to the Target Company and the Purchaser that during the period in which such Covenantor is (i) subject to the provisions of the Deed of Non-competition and/or (ii) a director of the Target Company:

• (a) he/she will not invest or participate in any project or business opportunity that competes or may compete, directly or indirectly, with the business activities engaged by the Target Group from time to time;

• (b) he/she will not solicit any existing or then existing employee of the Target Group for employment by it or its associates (excluding the Company);

• (c) he/she will not without the consent from the Target Company, make use of any information pertaining to the business of the Target Group which have or may have come to his/her knowledge in his/her capacity as the controlling shareholder and/or director of the Target Company for any purposes; and

• (d) he/she will procure his/her associates (excluding the Target Company) not to invest or participate in any project or business opportunity mentioned above, unless pursuant to the provisions stipulated in the Deed of Non-competition.

Completion

Completion shall take place within three Business Days after the fulfillment or waiver (as the case may be) of the conditions precedent set out in the Sale and Purchase Agreement or such other date as shall be agreed in writing between the parties to the Sale and Purchase Agreement.

Upon Completion, the Group will acquire the entire equity interests in the Target Company. The financial results of the Target Group will be consolidated into the financial statements of the Company.

INFORMATION ON THE TARGET GROUP

The Target Company is a company incorporated in the British Virgin Islands with limited liability which is principally engaged in investment holding. As at the date of the Sale and Purchase Agreement:

• (i) the Target Company is owned as to 51% by Vendor A, 20% by Vendor B, 9% by Vendor C and 20% by Vendor D;

• (ii) the HK Company is owned as to 80% by the Target Company, 10% by Vendor D, 7% by Jieri Limited and 3% by 123 Global Holdings (China) Pty Ltd. (“ 123 Global ”);

• (iii) each of Jieri Limited, 123 Global and Chengdu Zhongfeng is an Independent Third Party; and

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• (iv) Jieri Limited, 123 Global and Chengdu Zhongfeng are principally engaged in investment holdings.

The Target Group is principally engaged in the provision of nursery education in Chengdu, the PRC. The following charts show the group structure of the Target Group (i) immediately before Completion; and (ii) immediately after Completion:

Immediately before Completion

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Vendor A Vendor B Vendor C Vendor D
51% 20% 9% 20%
123 Global
Holdings (China)
Target Company Vendor D Jieri Limited Pty Ltd.
80% 10% 7% 3%
HK Company
100%
One Two Three Beijing
100%
One Two Three Chengdu Chengdu Zhongfeng
80% 20%
Chengdu Nursery
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Immediately after Completion

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Purchaser
100% 123 Global
Holdings (China)
Target Company Vendor D Jieri Limited Pty Ltd.
80% 10% 7% 3%
HK Company
100%
One Two Three Beijing
100%
One Two Three Chengdu Chengdu Zhongfeng
80% 20%
Chengdu Nursery
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Set out below is the summary of the key financial data of the Target Group based on the unaudited consolidated financial statements of the Target Group for the financial years ended 31 December 2015 and 31 December 2016 which were prepared in accordance with the generally accepted accounting principles in Hong Kong as provided by the Vendors:

	**For **	the year ended	**For **	the year ended
	31 December 2015		31 December 2016
HK$’000		(unaudited)		(unaudited)
Revenue		4,888		6,078
Net (loss) before taxation		(937)		(4,408)
Net (loss) after taxation		(937)		(4,408)
Net (liabilities)		(16,815)		(25,736)

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REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is engaged in the business of, inter alia, manufacturing of consumer-electronic products and investment in an associate which engaged in afterlife services in Taiwan.

Immediately after Completion, the Group would commence a new business segment of nursery education in PRC. With the change of fertility policy in mainland China, that subject to the conditions allowing couples to give birth to second child, the Group believes that the demand for nursery education will increase. The Board considers that the new business segment of nursery education will diversify the Group’s business and broaden its revenue base.

Accordingly, the Directors are of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable and 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 5% but are below 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Completion is subject to the fulfilment of the conditions precedent under the Sale and Purchase Agreement. As the Acquisition may or may not proceed, Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares.

DEFINITIONS

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

“Acquisition” the acquisition of the Sale Shares by the Purchaser from the Vendors pursuant to the terms of the Sale and Purchase Agreement

“Board” the board of Directors

“Business Day ” a day (other than a Saturday, Sunday or public holiday) on which the licensed banks in Hong Kong are generally open for business throughout their normal business hours

“Chengdu Nursery” 成都市天府新區壹貳叁澳中幼兒園 (Chengdu Tianfu New Area One Two Three Nursery School*), a nursery school established in Chengdu, the PRC and is funded as to 80% by One Two Three Chengdu and 20% by Chengdu Zhongfeng respectively

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“Chengdu Zhongfeng”

• 成都中豐易通投資有限公司 (Chengdu Zhongfeng Yifong Investment Company Limited*), a company established in the PRC with limited liability and an Independent Third Party

• “Company”

• United Pacific Industries Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the Main Board of the Stock Exchange (stock code: 0176)

• “Completion”

• completion of the Acquisition

• “Completion Date”

• date of Completion

• “connected person”

• has the meaning ascribed to it under the Listing Rules

• “Consideration Shares”

• 36,768,000 new Shares to be allotted and issued by the Company to the Vendors or their respective nominee(s) or designated person(s) at the Issue Price to satisfy part of the Consideration

• “Deed of Non-competition”

• the deed of non-competition to be entered into by the Vendors, the Guarantors and Mr. Poon in favour of the Target Group and the Purchaser at Completion

• “Director(s)”

• the director(s) of the Company

• “Encumbrance”

• any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law), hypothecation or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale and purchase or sale and leaseback arrangement whatsoever nature and includes any agreement for any of the same

• “General Mandate” the general mandate granted to the Directors by the Shareholders at the annual general meeting of the Company held on 26 May 2016 to allot, issue and deal with up to 266,341,518 new Shares, being approximately 20% of the then issued capital of the Company as at the date of the said annual general meeting

• “Group” the Company and its subsidiaries

• “Guarantors”

• Mr. Tang, Mr. Chan and Mr. Mark Vaile

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“HK Company”

• 123 China Education Development Limited, a company incorporated in Hong Kong with limited liability and is owned as to 80% by the Target Company, 10% by Vendor D, 7% by Jieri Limited and 3% by 123 Global Holdings (China) Pty Ltd.

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Third Party(ies)”

• third party(ies) independent of and not connected with the Company and its connected persons

• “Issue Price”

• HK$0.647 per Consideration Share, which represents that average closing price per Share as quoted on the Stock Exchange for 20 consecutive trading days up to and including the date of the Sale and Purchase Agreement

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

• “Long Stop Date” 30 September 2017, or such later date as the Vendors and the Purchaser may agree in writing

• “Mr. Chan”

• Mr. Chan Wai Lun, Anthony

• “Mr. Mark Vaile”

• Mr. Mark Anthony James Vaile

• “Mr. Poon”

• Mr. Poon Chi Yuen, a former shareholder of the Target Company and a current director of the Target Company and the HK Company

• “Mr. Tang”

• Mr. Tang Yui, Ian

• “One Two Three Beijing”

• 一二三澳中教育諮詢(北京)有限公司 (One Two Three Aozhong Education Consultancy (Beijing) Company Limited*), a company established in the PRC with limited liability and a direct wholly-owned subsidiary of the HK Company

• “One Two Three Chengdu”

• 成都壹貳叁澳中教育投資公司 (Chengdu One Two Three Aozhong Education Invesment Company Limited*), a company established in the PRC with limited liability and a direct wholly-owned subsidiary of One Two Three Beijing

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“PRC”

• “Purchaser”

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 Toran International Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

• “Sale and Purchase Agreement”

• the sale and purchase agreement dated 18 May 2017 and entered into between the Vendors, the Guarantors, the Purchaser and the Company in relation to the Acquisition

• “Sale Shares”

• 100 shares of US$1.00 each in the share capital of the Target Company from the Vendors as to 51 shares by Vendor A, 20 shares by Vendor B, 9 shares by Vendor C and 20 shares by Vendor D, representing the entire issued share capital of the Target Company immediately prior to Completion

• “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

• “Target Company” Speed Fame Enterprises Limited, a company incorporated in the British Virgin Islands with limited liability

• “Target Group” the Target Company and its subsidiaries

• “Vendor A”

• Capital Wheel Holdings Limited, a company incorporated in Hong Kong with limited liability and is directly owned as to 66.67% by Vendor D and indirectly owned as to 33.33% by Mr. Mark Vaile respectively

• “Vendor B” Mr. Yiu Chow Shun, Barry

• “Vendor C”

• Mr. Li Yik Wai, Kinnie

• “Vendor D”

• Loyalgain Corporation Limited, a company incorporated in Hong Kong with limited liability and is owned as to 50% and 50% by Mr. Tang and Mr. Chan respectively

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“Vendors”

Vendor A, Vendor B, Vendor C and Vendor D

“Waiver of Loans”

the waiver of all obligations, liabilities and debts owing or incurred by the Group to the Vendors and the Guarantors on or at any time prior to the Completion whether actual, contingent or deferred and irrespective of whether or not the same is due and payable on Completion

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

* For identification purposes only

By Order of the Board United Pacific Industries Limited Yeung So Lai Chairman

Hong Kong, 18 May 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.

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