WH Group Limited — Capital/Financing Update 2012

Aug 19, 2012

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.

China Gamma Group Limited

中 國 伽 瑪 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

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

On 17 August 2012, the Seller and the Purchaser entered into the Sale and Purchase Agreement pursuant to which the Seller, an indirect wholly-owned subsidiary of the Company, agreed to sell and the Purchaser agreed to purchase, at the Consideration, the entire issued share capital of the Disposal Target, an indirect wholly-owned subsidiary of the Company.

Completion took place on 17 August 2012. Immediately after Completion, the Group does not hold any equity interests in the Disposal Target, and the Disposal Target is no longer a subsidiary of the Company.

As one or more of the percentage ratios applicable to the Disposal under Chapter 14 of the Listing Rules are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules.

On 17 August 2012, the Seller and the Purchaser entered into the Sale and Purchase Agreement pursuant to which the Seller, an indirect wholly-owned subsidiary of the Company, agreed to sell and the Purchaser agreed to purchase the entire issued share capital of the Disposal Target, an indirect wholly-owned subsidiary of the Company. Completion also took place on 17 August 2012.

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SALE AND PURCHASE AGREEMENT

Principal terms

Set out below are the principal terms of the Sale and Purchase Agreement:

Date: 17 August 2012

Parties:

• (i) the Seller, as seller; and

• (ii) the Purchaser, as purchaser.

Assets to be disposed of: The Sale Share

Consideration: RMB10,000,000 (equivalent to approximately HK$12,240,000)

In addition, when the Sale and Purchase Agreement has been entered into, the Purchaser shall pay RMB25,000,000 (equivalent to approximately HK$30,600,000) to the Project Company to settle and repay the current debts and other relevant debts between 重慶旭 日房地產開發有限公司 (Chongqing Sunrise Property Development Company Limited), an indirect wholly-owned subsidiary of the Company, and the Project Company (the " Sunrise Debts* ").

The Consideration will be satisfied in cash and paid to the Designated Bank Account. The Consideration was determined after arm’s length negotiation between the Purchaser and the Seller with reference to (i) the value of the Land as at 31 March 2012 as determined by an independent valuer and taking into account the current property market condition, future development cost, transaction cost for property sale and relevant tax and the government policy on land and property development in the PRC and (ii) the unaudited net asset value of the Disposal Group of HK$11,622,000 (being the carrying value of the Disposal Group of HK$42,222,000 less the amount of the Sunrise Debts) as at the date of the Sale and Purchase Agreement.

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Conditions Precedent:

The conditions precedent to the Disposal are that:

• (i) the representations, warranties and undertakings (as the case may be) given by the parties under the Sale and Purchase Agreement remain true and accurate in all material respects and not misleading; and

• (ii) the Purchaser shall have paid RMB25,000,000 to the Project Company, and that the Sunrise Debts have been settled and repaid.

The Purchaser may waive by notice in writing to the Seller condition precedent (i) of the above while the Seller may waive by notice in writing to the Purchaser condition precedent (ii) of the above.

In the event that the conditions precedent shall not have been fulfilled (or waived pursuant to the terms of the Sale and Purchase Agreement) before the Long-Stop Date, the Purchaser shall not be bound to proceed with the purchase of the Sale Share, and the Sale and Purchase Agreement shall cease to be of any effect, save for the clauses set forth in the Sale and Purchase Agreement which are to survive its termination and save in respect of claims arising out of any antecedent breach of the Sale and Purchase Agreement.

Completion:

Completion took place on 17 August 2012.

Post-Completion obligations:

Application

The Seller will procure to assist the Purchaser with the Application.

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Operation of the Designated Bank Account

Pursuant to the Sale and Purchase Agreement, it has been agreed that an individual chop of the Purchaser shall be used as one of the bank signature mandate for the purpose of operating the Designated Bank Account. It has been further agreed that neither the Seller nor the Purchaser shall in any way withdraw any amount from the Designated Bank Account by any means before the Change of Legal Representative has taken effect.

Pursuant to the Sale and Purchase Agreement, within two business days after the Change of Legal Representative has taken effect and the trade and commerce authority （工商局）of Chongqing, PRC has issued the business license of the Project Company indicating that the Change of Legal Representative has taken effect, the Purchaser shall unconditionally instruct the bank of the Designated Bank Account immediately to withdraw his individual chop as one of the bank signature mandate for operating the Designated Bank Account with a view that the Seller can operate the Designated Bank Account solely with full authority.

In the event that the Change of Legal Representative has not taken effect within 3 months from the date of the Sale and Purchase Agreement due to the Purchaser’s wilful misconduct or fault after the Completion, the Purchaser agrees that it shall unconditionally instruct the bank of the Designated Bank Account immediately to withdraw his individual chop as one of the bank signature mandate for operating the Designated Bank Account with a view that the Seller can operate the Designated Bank Account solely with full authority.

Employees

The Seller confirms that, after Completion, it will assist the Disposal Target and the Project Company with terminating the employment relationship with their employees who were employed before Completion, and to assist the Disposal Target and the Project Company with dealing with payments arising from such terminations.

INFORMATION RELATING TO THE PURCHASER

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

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FINANCIAL INFORMATION RELATING TO THE DISPOSAL GROUP

Set out below are certain financial information attributable to the Disposal Group for each of the last two financial years:

	For the	For the
	year ended	year ended
	31 March 2011	31 March 2012
	(audited)	(audited)
	(HK$’000)	(HK$’000)
Net loss before and after tax and
extraordinary items	1,246	41,572

The unaudited net asset value of the Disposal Group as at the date of the Sale and Purchase Agreement is HK$11,622,000 (being the carrying value of the Disposal Group of HK$42,222,000 less the amount of the Sunrise Debts).

REASONS AND BENEFITS FOR ENTERING INTO THE SALE AND PURCHASE AGREEMENT AND USE OF PROCEEDS

The growth of property market in the PRC slowed down in the recent years in view of the macro economic control measures imposed by the government. In light of the uncertainty of market condition, the Directors consider that the Disposal provides an opportunity to realise the Group’s investment in the Disposal Target, through which the Group held the interests in the Project Company and the Land Use Rights before the Disposal.

Gross proceeds from the Disposal are RMB35,000,000, being the Consideration of RMB10,000,000 together with the amount of RMB25,000,000 received by the Project Company for repayment of the Sunrise Debts. Net proceeds from the Disposal, being the gross proceeds of RMB35,000,000 net of professional fees, tax and relevant expenses, are expected to be RMB34,500,000. The Company intends to apply such net proceeds for the Group’s general working capital.

The Directors (including the independent non-executive Directors) believe that the terms of the Sale and Purchase Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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FINANCIAL EFFECT OF THE DISPOSAL

Immediately after Completion, the Group does not hold any equity interests in the Disposal Target, and the Disposal Target is no longer a subsidiary of the Company.

It is expected that the Group will record a profit of approximately HK$1,557,000 from the Disposal, being the difference between the carrying value of the Disposal Group as of the date of the Sale and Purchase Agreement, the proceeds received and cumulative exchange differences.

LISTING RULES IMPLICATIONS

As one or more of the percentage ratios applicable to the Disposal under Chapter 14 of the Listing Rules are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules.

INFORMATION RELATING TO THE GROUP AND THE DISPOSAL GROUP

The Group is principally engaged in rare resources business, gamma ray irradiation services, property development, rental and sales, trading of building materials and provision of renovation services, and securities trading and investment.

The Seller is an indirect wholly-owned subsidiary of the Company. The Seller’s principal business activity is investment holding.

The Disposal Target is an indirect wholly-owned subsidiary of the Company. Its principal business activity is investment holding, and it owns the entire equity interests in the Project Company, which does not have any business other than the ownership of the Land Use Rights. The Disposal Target does not have any business other than investment in the Project Company.

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DEFINITIONS

• “Application”

• the change of the directors of the Project Company to person(s) appointed by the Purchaser and the application to the relevant foreign investment authorities and trade and commerce authorities of Chongqing, PRC, for the purpose of the Change of Legal Representative;

• “Board”

the board of Directors;

• “Change of Legal Representative”

• the change of the legal representative of the Project Company to a person as appointed by the Purchaser;

• “Company”

• China Gamma Group Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Stock Exchange;

• “Completion” the completion of the sale and purchase of the Sale Share in accordance with the terms and conditions of the Sale and Purchase Agreement;

• “connected person(s)” has the meaning given to it under the Listing Rules;

• “Consideration”

• RMB10,000,000;

• “Designated Bank Account”

the bank account designated by the Seller for which the Purchaser shall pay the Consideration into;

• “Directors”

• directors of the Company;

• “Disposal”

• the disposal of the Sale Share by the Seller in accordance with the terms and conditions of the Sale and Purchase Agreement;

• “Disposal Group”

• the Disposal Target and the Project Company;

• “Disposal Target”

• Unique Gold Investments Limited, a company incorporated in Hong Kong with limited liability;

• “Group”

• the Company and its subsidiaries;

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• “Hong Kong”

• Hong Kong Special Administrative Region of the People’s Republic of China;

• “HK$”

• Hong Kong dollar, the lawful currency of Hong Kong;

• “Independent Third Party(ies)”

• a third party independent of the Company and the connected persons of the Company, and not a connected person of the Company;

• “Land”

• Phase III of Phoenix Town, No. 500 Hongjin Avenue, Yubei District, Chongqing, the PRC* 中國重慶市渝北 區紅錦大道500號鳳凰城3期, with a gross floor area of approximately 5,802.60 square metre;

• “Land Use Rights”

• the land use rights in respect of the Land（201房產証 2005字第00131號《重慶市房地產權証》）;

• “Listing Rules”

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• “Long-Stop Date” 31 August 2012;

• “PRC”

• the People’s Republic of China excluding, for the purpose of this announcement, Hong Kong, Macau and Taiwan;

• “Project Company”

• 重慶鳳弘吉實業有限責任公司 (Chongqing Feng Hong Ji Enterprise Company Limited*), a wholly foreign-owned enterprise established and existing under the laws of the PRC;

• “Purchaser”

• Mr. Guo Qingguo（郭青國）;

• “RMB”

• Renminbi, the lawful currency of the PRC;

• “Sale and Purchase Agreement”

the agreement for the sale and purchase of the entire issued share capital of the Disposal Target dated 17 August 2012 between the Seller and the Purchaser;

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“Sale Share” one (1) ordinary share of HK$1.00 in the share capital of the Disposal Target, representing the entire issued share capital of the Disposal Target; “Seller” Fame Plus International Limited, a company incorporated in the British Virgin Islands with limited liability; “Share(s)” the ordinary share(s) of HK$0.01 each in the issued share capital of the Company; “Shareholder(s)” the holder(s) of the Share(s); “Stock Exchange” The Stock Exchange of Hong Kong Limited; and “%” per cent.

By order of the Board China Gamma Group Limited Wong King Shiu, Daniel Executive Director

Hong Kong, 17 August 2012

As at the date of this announcement, the executive director of the Company is Mr. Wong King Shiu, Daniel; the non-executive directors of the Company are Mr. Ma Kwok Hung, Warren and Mr. Chow Siu Ngor; and the independent non-executive directors of the Company are Mr. Wong Hoi Kuen, Mr. Chan Chi Yuen and Mr. Hung Hing Man.

For the purpose of illustration in this announcement, unless otherwise specified, conversion of RMB into HK$ is based on the approximate exchange rate of HK$1 to RMB0.817.

* the English translations of Chinese names or words in this announcement, where indicated, are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

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