Discloseable transaction in relation to the disposal of 33% equity interest in hebao (nantong) real estate development co., ltd.* (in pdf)

29 March 2019

Parties

(i)Vendor: Zhejiang Baoye Real Estate Group Company Limited* (浙江寶業房地 產集團有限公司), a wholly-owned subsidiary of the Company

(ii)Purchaser: Daiwa House Industry Co., Ltd.* (大和房屋工業株式會社)，a company incorporated in Japan and listed on Tokyo and Osaka Stock Exchange (stock code:1925).

To the best of the Directors' knowledge, information and belief 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.

Assets to be disposed

Pursuant to the Agreement, the Vendor shall dispose of the 33% equity interest in the Target Company to the Purchaser.

Completion

Upon signing the Agreement:

(i)the Vendor and Purchaser shall arrange the relevant registration with the industry and commerce administration authorities in relation to the Disposal;

(ii)upon completion of the registration with the industry and commerce administration authorities, directors of the Target Company as appointed by the Vendor shall resign;

(iii)the Purchaser shall procure the Target Company to obtain registration certificate from Administration of Foreign Exchange of Nantong City and inform the Vendor of the registration details for the purpose of opening a domestic asset liquidation account; and

(iv)the Vendor shall notify the Purchaser in writing of the details of its domestic asset liquidation account.

Consideration and settlement

The Consideration of RMB307,330,140.43 (equivalent to approximately HK$359,576,264) shall be payable by the Purchaser to the Vendor in a Japanese yen equivalent sum of ¥5,085,805,498 calculated at the central parity rate of 22 March 2019 as announced by the People's Bank of China i.e.¥100 = RMB6.0429.

The Consideration shall be settled on or before the 10th business day after the Vendor notifies the Purchaser in writing of the details of the domestic asset liquidation account.

The Consideration was determined after arm's length negotiations among the Vendor and the Purchaser with reference to, including but not limited to, (i)the net asset value of the Target Company as at 31 December 2018; (ii) the paid-up registered capital of

the Target Company; and (iii) the Target Company's loss making position.

Post-completion undertaking

To facilitate a smooth handover of management and business functions, the resigned directors and deputy general manger of the Target Company previously appointed by the Vendor shall provide necessary assistance to the Target Company until the registration with the industry and commerce administration authorities is completed.

INFORMATION OF THE TARGET COMPANY

The Target Company is a sino-foreign joint venture enterprise incorporated in the PRC on 15 March 2018 which equity interest held as to 33% by the Vendor and 67% by the Purchaser before the Disposal with registered capital of RMB869,182,000. It is principally engaged in property development.

Set out below is a summary the audited financial information of the Target Company prepared in accordance with accounting principles generally accepted in the PRC:

The audited equity attributable to owners of the Target Company as at 31 December 2018 was RMB831,851,299 (equivalent to approximately HK$973,266,020).

INFORMATION OF THE VENDOR AND THE GROUP

The Vendor is a wholly-owned subsidiary of the Group and is principally engaged in property development.

The Group is principally engaged in the provision of construction services, sale and installation of building materials and development and sale of properties in the PRC.

USE OF PROCEEDS AND EXPECTED FINANCIAL EFFECTS OF THE DISPOSAL

The Board estimates that the Company will record an estimated gain of approximately RMB20,500,140 (HK$23,985,164) before taxation. The Company intends to use the net proceeds from the Disposal as general working capital of the Group and funding of possible acquisition of land reserve for property development businesses in the future.

INFORMATION OF THE PURCHASER

The Purchaser is a company incorporated in Japan and listed on Tokyo and Osaka Stock Exchanges (stock code: 1925). The Purchaser is principally engaged in the business of housing, commercial facilities and urban development.

REASONS FOR THE DISPOSAL

The Group primarily operates our development business in the regions of Zhejiang, Shanghai, Anhui and Hubei. The Directors have been constantly reviewing the business and aiming to strive for the best interests for the Company and the Shareholders. The Board considers that the Disposal will enable the Company to reallocate resources to the property markets which our management team is more experienced in and familiar with.

Taking into account of the above, the Directors consider that the entering into of the Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and the Disposal is in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement requirement but is exempt from the circular and Shareholders' approval requirements.

DEFINITIONS

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

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