Discloseable Transaction in relation to the Disposal of 60% equity interests in Target Company

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.

The Board is pleased to announce that on 29th September 2017 (after the trading hours of the Stock Exchange), Perfect Day Ventures Limited (an indirect wholly owned subsidiary of the Company) as the vendor ("Vendor") and Excellence Steps Limited as the purchaser ("Purchaser") have entered into a sales and purchase agreement pursuant to which the Vendor had conditionally agreed to sell and the Purchaser had conditionally agreed to purchase the Sale Shares representing 60% of the issued share capital of the Target Company at an a consideration of $97,800,000.

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

On 27 September 2017 (after the trading hours of the Stock Exchange), the Purchaser, an independent third party, entered into the Agreement with the Vendor pursuant to which the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to

* For identification purpose only

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purchase the Sale Shares representing 60% of the issued share capital of the Target Company at a consideration of HK$97,800,000.

29 September 2017

1. Perfect Day Ventures Limited, as Vendor; and

2. Excellence Steps Limited, as Purchaser.

The Group currently holds a 60% equity interest in the Target Company through the Vendor which is accounted for as a joint venture company of the Group.

The Purchaser is an investment holding company incorporated in the BVI. Save as aforesaid, to the best of the Directors' knowledge, information and belief after making reasonable enquiries, the Purchaser and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons.

Pursuant to the Agreement, the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Sale Shares. The Sale Shares represent 60% of the issued share capital of the Target Company as at the date of the Agreement.

The consideration for the Sale Shares of HK$97,800,000 shall be payable in the following manner:

1. an initial cash payment of HK$5,000,000 shall be payable by the Purchaser to the Vendor in the manner as follows : -

2. HK$1,000,000 payable upon the signing of the Agreement;

3. HK$4,000,000 payable within 7 Business Days after the conditions precedent for Completion have been satisfied

4. the remaining balance of HK$92,800,000 shall be payable in the form of newly issued promissory notes issued by Megalogic : -

5. HK$35,000,000 maturing 6 months after the date of issue;

6. HK$57,800,000 maturing 12 months after the date of issue carrying an interest rate of 2% per annum.

The Consideration was determined after arm's length negotiations between Vendor and Purchaser on normal commercial terms with reference to the (a) price-earnings ratio of market comparable companies listed on the Stock Exchange engaging in the business of a similar nature to the Target Group; and (b) the reasons for Disposal as outlined in the section headed "Reasons for the Disposal".

Profit Guarantee:

Pursuant to the Agreement, the Vendor unconditionally and irrevocably represents and warrants to and undertakes with the Purchaser that: (a) for the financial year ending on 31 December 2017, the Consolidated Net Profit of Target Company shall not be less than HK$10,000,000.00; (b) for the financial year ending on 31 December 2018, the Consolidated Net Profit of Target Company shall not be less than HK$11,000,000.00; (c) for the financial year ending on 31 December 2019, the Consolidated Net Profit of Target Company shall not be less than HK$12,000,000.00; and (d) for the financial year ending on 31 December 2020, the Consolidated Net Profit of Target Company shall not be less than HK$13,000,000.00 (the aforesaid undertaking is defined as "Profit Guarantee"). This Profit Guarantee shall survive Completion.

If there shall be any shortfall (the shortfall being the difference between the Guaranteed Profit and the actual Consolidated Net Profit of the Target Group) in relation to the Consolidated Net Profit of Target Group for: (a) the financial year ending 31 December 2017; or (b) the financial year ending 31 December 2018 or (c) the financial year ending 31 December 2019 or (d) the financial year ending 31 December 2020, the Vendor shall pay the Target Company the shortfall in cash, within 14 Business Days after the audited accounts of the subsidiary of the Target Company for the respective period is issued.

The Vendor also undertakes to the Purchaser to use its best endeavours to reserve the net assets value of the Target Group upon Completion to not less than HK$10,000,000 for ongoing business operations.

Conditions precedent:

Completion of the Agreement is conditional upon the fulfillment or waiver (as the case may be) of the following conditions : -

1. the shareholders of Megalogic passing at the extraordinary general meeting of Megalogic the necessary resolution(s) approving the Agreement and the transactions contemplated thereunder in accordance with the requirements of the Listing Rules, the constitution of Megalogic and applicable laws and regulations;

2. the representations and warranties in the Agreement given by the Vendor remain true and accurate as at the date of the Agreement and at Completion;

3. none of the undertakings, negative pledges, warranties and representations of the Vendor contained in the Agreement having been breached in any material respect or being misleading or untrue or inaccurate in any material respect;

4. the Purchaser having completed and being satisfied with the results of the due diligence review, including but not limited to accounting, financial, legal and business diligence on the Target Group; and

5. (if necessary) all other authorizations, approvals, consents, waivers and permits, including but not limited to those from the Stock Exchange and the SFC and/or other relevant authorities which are necessary or relevant to give effect to the transactions contemplated hereunder having been granted, received or obtained and not revoked.

INFORMATION ON TARGET COMPANY

The Target Company is an investment holding company incorporated in the BVI with limited liability. It is accounted for as a joint venture company of the Group.

Set out below are the unaudited consolidated financial information of the Target Company prepared under the Hong Kong Financial Reporting Standards for the two years ended 31 December 2016 and 2015:

For the year ended 31 December 2015	For the year ended 31 December 2016
HK$	HK$
Turnover	26,912,822.00	27,943,366.44
Profit before taxation	11,733,690.55	11,861,733.42
Profit after taxation	9,781,996.55	9,887,907.42

REASONS FOR THE DISPOSAL

The principal activities of the Group consist of retailing and sourcing, outlet malls, duty free, branding, financial services and property investment and holding.

The core business of the Target Group is the sourcing, manufacturing, designing, packaging, wholesaling and trading of health supplement products and as the original equipment manufacturer of various health supplement products in Hong Kong. The Disposal of the non-core business enables the Group to focus its management resources on its core business activities. With the acquisition of a community mall in Chongqing in January and the opening of the Anyang CITS Park Outlets in September this year, the