Web3 Meta Limited — Capital/Financing Update 2019

Feb 18, 2019

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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MILLION STARS HOLDINGS LIMITED 萬 星 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8093)

DISCLOSEABLE TRANSACTION DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE SUBSIDIARY OF THE COMPANY

THE DISPOSAL

The Board announces that on 18 February 2019, after trading hours, the Purchaser and the Company, as the Vendor, entered into the SPA, pursuant to which the Company agreed to sell, and the Purchaser agreed to purchase, the entire issued share capital of the Target Company at the total Consideration of HK$10,000,000.

IMPLICATIONS UNDER THE GEM LISTING RULES

As certain applicable percentage ratios (as defined under the GEM Listing Rules) in respect of the Disposal exceed 5% but are less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 19 of the GEM Listing Rules and is therefore subject to the notification and announcement requirements under Chapter 19 of the GEM Listing Rules.

INTRODUCTION

The Board hereby announces that on 15 February 2019, after trading hours of the Stock Exchange, the Company, being the Vendor, entered into the SPA with the Purchaser pursuant to which the Company agreed to sell, and the Purchaser agreed to purchase, the entire issued share capital of the Target Company at the Consideration of HK$10,000,000.

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THE SALE AND PURCHASE AGREEMENT

The principal terms of the SPA are set out below:

Date

18 February 2019 (after trading hours)

Parties

• (i) Purchaser: Hong Kong Men’s Health Sciences Research Center Limited, a company incorporated in Hong Kong with limited liability

• (ii) Vendor: Million Stars Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on GEM of the Stock Exchange (Stock Code: 8093)

To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, as at the date of this announcement, the Purchaser and its ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons as defined under the GEM Listing Rules.

The Disposal

100% of the entire issued share capital of the Target Company to be sold by the Vendor to the Purchaser pursuant to the SPA. Upon completion, the Company will no longer have any interest in the Target Company and the Target Company will cease to be a subsidiary of the Company.

Consideration

The Consideration is HK$10,000,000 payable by the Purchaser to the Vendor in cash before the Completion in accordance with the SPA.

The Consideration was arrived based on normal commercial terms after arm’s length negotiations between the Purchaser and the Vendor after taking into consideration of various factors, including (i) the reasons for and the benefits of the Disposal as mentioned in the section headed ‘‘Reasons for and Benefits of the Disposal’’ in this announcement; (ii) the current financial position of the Target Group; and (iii) the Waiver of Inter-company Loan.

The Directors consider that the Consideration is fair and reasonable.

Completion

Completion shall take place on or before 28 February 2019 or such other date as the Company and the Purchaser may agree.

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At Completion, the Company shall execute and deliver a deed of waiver in favour of the Target Group for irrevocably and unconditionally waiving the inter-company loan amounting to approximately HK$19.7 million as at 31 December 2018 owed by the Target Group to the Company.

Termination

The SPA may be unilaterally terminated by the Vendor if the Purchaser fails to pay the Consideration in full to the Vendor on or before 28 February 2019.

FINANCIAL EFFECT OF THE DISPOSAL

With the Waiver of the Inter-company Loan of approximately HK$19.7 million and based on the unaudited net liabilities of the Target Group of approximately HK$8.6 million as at 31 December 2018, the Company is expected to record a loss of approximately HK$1.1 million (before taxation and subject to audit) from the Disposal, which the final financial effect of the Disposal on the Group will be subject to the values of assets and liabilities of the Target Group at Completion and therefore, may vary from the current estimate.

The actual loss on disposal to be recorded is subject to audit and may be different from the estimated amount as the actual loss will depend on, amongst other factors, the actual net assets of the Target Group as at Completion.

After Completion, the Target Group will cease to be subsidiaries of the Company and, as a result, the results and assets and liabilities of the Target Group will no longer be consolidated into the consolidated financial statements of the Group.

USE OF PROCEEDS FROM THE DISPOSAL

Proceeds of the Disposal are intended for general working capital purposes of the Group.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The profit generated from the Target Group is declining as a result of unfavourable market conditions and price competition in the relevant industry, and the business of the Target Group was stagnant since the first quarter in 2018/2019. The Target Group recorded a net loss HK$1.8 million in six months ended 31 December 2018, it may continue to incur loss in foreseeable future. Due to the net liability position of the Target Group (before the Waiver of Inter-Company Loan), the Purchaser would only purchase the Target Group providing that the Inter-Company Loan is waived. As the Group is able to dispose of the Target Group for cash in a simple and timely way compared to the time and cost required for the business of the Target Group, the Disposal is a good opportunity of the Group to evade its loss making towards the manufacture and sales of leather products business and consolidate its financial resources for future business development. The Disposal represents a continuation of the Group’s strategy to strip slow-growing or loss-making business, streamline its businesses and increase its overall performance and prospects.

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Based on the above, the Directors (including the independent non-executive Directors) consider that the terms and conditions of the Disposal are fair and reasonable and the Disposal is in the interests of the Company and its Shareholders as a whole.

INFORMATION OF THE TARGET GROUP

The Target Company is a company incorporated in the British Virgin Islands with limited liability. The principal business activity of the Target Company is investment holding. The Target Company directly holds 100% of the entire issued share capital of Perline Company Limited, a company incorporated in Hong Kong with limited liability, and Perline Company Limited holds 100% of equity interests of Foshan Nanhai Shengli Leather Garment Co. Ltd.* (佛山市南海盛麗皮衣有限公司), a company incorporated in the PRC with limited liability. Both Perline Company Limited and Foshan Nanhai Shengli Leather Garment Co. Ltd. are principally engaged in manufacturing and sales of leather products.

The consolidated financial information of the Target Group for the two financial years ended 30 June 2017 and 30 June 2018 based on its unaudited management accounts are as follows:

	For the	For the
	year ended	year ended
	30 June 2017	30 June 2018
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Revenue	54,185	60,448
Profit before income tax expense	1,696	853
Profit after income tax expense	1,012	399

As at 31 December 2018, the unaudited total asset value and net liability[1] of the Target Group were approximately HK$24.5 million and HK$8.6 million, respectively. Loss before income tax expense and loss after income tax expense of the Disposal Company for the six months ended 31 December 2018 were approximately HK$1.7 million and HK$1.8 million respectively.

Note:

1. Excluding the Waiver of the Inter-company Loan.

INFORMATION OF THE PURCHASER

The Purchaser is principally engaged in cross border e-commerce business.

INFORMATION OF THE COMPANY

The Company is an investment holding company and its subsidiaries are principally engaged in (i) the internet advertising agency business; and (ii) the manufacture and sales of leather products for its customers before the Disposal.

• translation for identification only

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IMPLICATIONS UNDER THE GEM LISTING RULES

As certain applicable percentage ratios (as defined under the GEM Listing Rules) in respect of the Disposal exceed 5% but all of them are less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 19 of the GEM Listing Rules and is therefore subject to the notification and announcement requirements under Chapter 19 of the GEM Listing Rules.

DEFINITIONS

In this announcement, unless the context requires otherwise, the following terms shall have the following meanings:

‘‘Board’’	board of the Directors
‘‘Company’’ or ‘‘Vendor’’	Million Stars Holdings Limited, a company incorporated in
	the Cayman Islands with limited liability, the Shares	of
	which are listed on GEM of the Stock Exchange (Stock
	Code: 8093)
‘‘Completion’’	the completion of the Disposal
‘‘Conditions Precedent’’	the conditions precedent to Completion
‘‘Consideration’’	the consideration of HK$10,000,000 payable by	the
	Purchaser to the Vendor for the Sale Shares pursuant to	the
	SPA.
‘‘Director(s)’’	directors of the Company
‘‘Disposal’’	the disposal of the Sale Shares as contemplated under	the
	SPA
‘‘GEM’’	GEM operated by the Stock Exchange
‘‘GEM Listing Rules’’	the Rules Governing the Listing of Securities on GEM of
	the Stock Exchange
‘‘Group’’	the Company and its subsidiaries
‘‘HK$’’	Hong Kong dollar, the lawful currency of Hong Kong
‘‘Hong Kong’’	Hong Kong Special Administrative Region of the People’s
	Republic of China
‘‘Parties’’	the Purchaser and the Vendor
‘‘PRC’’	the People’s Republic of China, which for the purpose	of
	this announcement, shall exclude Hong Kong, Taiwan and
	the Macau Special Administrative Region of the PRC

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• ‘‘Purchaser’’ Hong Kong Men’s Health Sciences Research Center Limited, a company incorporated in Hong Kong with limited liability

• ‘‘Sale Shares’’ 100% of the entire issued share capital of the Target Company

• ‘‘Shareholder(s)’’ holder(s) of the Share(s) ‘‘Share(s)’’ ordinary share(s) of HK$0.01 each in the capital of the Company

• ‘‘SPA’’ the sale and purchase agreement dated 18 February 2019 entered into between the Purchaser and the Vendor in relation to the Disposal

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Target Company’’ Odella International Limited, a company incorporated in the British Virgin Islands with limited liability and is direct wholly owned subsidiary of the Company

• ‘‘Target Group’’ the Target Company and its subsidiaries

• ‘‘Waiver of Inter-company the waiver of inter-company loan owing by members of the Loan’’ Target Group to the Company on or at any time prior to Completion, which amounted to approximately HK$19,700,000 as at 31 December 2018

• ‘‘%’’ per cent.

By Order of the Board Million Stars Holdings Limited Zhu Yongjun Chairman

Hong Kong, 18 February 2019

As at the date of this announcement, the Board comprises: Mr. Zhu Yongjun, Ms. Wang Fei and Ms. Tian Yuan as executive Directors; Mr. Chong Ka Yee as a non-executive Director; and Mr. Chen Ce, Ms. Ji Fang and Mr. Gao Shuo as independent non-executive Directors.

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This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the GEM website at http://www.hkgem.com on the ‘‘ Latest Company Announcements ’’ page for at least 7 days from the day of its publication and on the website of the Company at http://www.millionstars.hk.

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