Shirble Department Store China : DISCLOSEABLE TRANSACTION IN RELATION TO THE CAPITAL INJECTION AND ACQUISITION AGREEMENT

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Shirble Department Store Holdings (China) Limited

歲寶百貨控股（中國）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00312)

DISCLOSEABLE TRANSACTION

IN RELATION TO

THE CAPITAL INJECTION AND ACQUISITION AGREEMENT

The Board announces that on 21 November 2019, the Purchaser (a wholly-owned subsidiary of the Company), the Vendor and the Target Company entered into the Capital Injection and Acquisition Agreement, pursuant to which (i) the Vendor has agreed to sell, and the Purchaser has agreed to purchase, the entire equity interest in the Target Company for the Share Consideration of RMB38,000,000 (equivalent to approximately HK$42,480,200) and (ii) the Purchaser has agreed to effect the Capital Injection of RMB40,000,000 (equivalent to approximately HK$44,716,000) into the Target Company. Upon completion of the Acquisition, the Purchaser will hold the entire equity interest in the Target Company and the Target Company will become a wholly-owned subsidiary of the Company.

The Target Company has also agreed to repay the Vendor the Shareholder's Loan in the amount of RMB112,800,000 (equivalent to approximately HK$126,099,120) in accordance with the terms of the Capital Injection and Acquisition Agreement. The Purchaser will settle the Shareholder's Loan on behalf of the Target Company in the event that the Target Company fails to pay. The Target Company is the beneficial owner of the Development Project, which is situated at the east side of Provincial Road No. S272, West Lake Area, Jinwan District, Zhuhai City, Guangdong Province, the PRC with a gross plot-ratio floor area of approximately 16,074.21 sq.m. (the "Zhuhai Land") and is expected to be developed into a two-building complex for commercial use.

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As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Capital Injection and Acquisition Agreement and the transactions contemplated thereunder exceed 5% but are below 25%, the Capital Injection and Acquisition Agreement and the transactions contemplated thereunder constitute a discloseable transaction (as defined in Chapter 14 of the Listing Rules) for the Company and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

The Board announces that on 21 November 2019, the Purchaser (a wholly-owned subsidiary of the Company), the Vendor and the Target Company entered into the Capital Injection and Acquisition Agreement.

THE CAPITAL INJECTION AND ACQUISITION AGREEMENT

The table below sets forth a summary of the principal terms of the Capital Injection and Acquisition Agreement:

Date : 21 November 2019

Parties

: (a) The Purchaser (a wholly-owned subsidiary of the Company);

1. the Vendor; and
2. the Target Company.

To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, the Target Company, the Vendor and its ultimate beneficial owners are Independent Third Parties.

Subject matter

The Vendor has agreed to sell, and the Purchaser has agreed to purchase, the entire equity interest in the Target Company for the Share Consideration of RMB38,000,000 (equivalent to approximately HK$42,480,200). In addition, the Purchaser has agreed to effect the Capital Injection of RMB40,000,000 (equivalent to approximately HK$44,716,000) into the Target Company. Upon completion of the Acquisition, the Purchaser will hold the entire equity interest in the Target Company and the Target Company will become a wholly-owned subsidiary of the Company. The Target Company has also agreed to repay the Vendor the Shareholder's Loan in the amount of RMB112,800,000 (equivalent to approximately HK$126,099,120) in accordance with the terms of the Capital Injection and Acquisition Agreement. The Purchaser will settle the Shareholder's Loan on behalf of the Target Company in the event that the Target Company fails to pay.

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Capital Injection

Pursuant to the Capital Injection and Acquisition Agreement, the Purchaser has agreed to effect the Capital Injection of RMB40,000,000 (equivalent to approximately HK$44,716,000) into the Target Company. Of the Capital Injection of RMB40,000,000,

1. RMB22,000,000 (equivalent to approximately HK$24,593,800) will be payable by the Purchaser within 3 Business Days from the signing of the Capital Injection and Acquisition Agreement and the receipt by the Purchaser of the executed Guarantee, and (ii) the remaining RMB18,000,000 (equivalent to approximately HK$20,122,200) will be payable by the Purchaser as appropriate upon the completion of the Acquisition. After the Capital Injection, the total registered capital of the Target Company will be increased from RMB38,000,000 (equivalent to approximately HK$42,480,200) to RMB78,000,000 (equivalent to approximately HK$87,196,200). Unless with prior written consent of the Vendor and the Purchaser, the Target Company may only use the amount of RMB22,000,000 from the Capital Injection to satisfy the payment of part of the Loan Consideration to the Vendor.

In the event that the Purchaser fails to effect the Capital Injection in accordance with the Capital Injection and Acquisition Agreement, the Vendor will be entitled to terminate the Capital Injection and Acquisition Agreement by written notice.

Basis of Capital Injection

The amount of Capital Injection under the Capital Injection and Acquisition Agreement was determined after arm's length negotiation among the parties thereto with reference to the capital requirements of Target Company. The Capital Injection by the Purchaser will be financed by internal resources of the Group.

Acquisition and settlement of Shareholder's Loan

Share Consideration

Pursuant to the Capital Injection and Acquisition Agreement, the Vendor has agreed to sell, and the Purchaser has agreed to purchase, the entire equity interest in the Target Company for the Share Consideration of RMB38,000,000 (equivalent to approximately HK$42,480,200). Upon completion of the Acquisition, the Purchaser will hold the entire equity interest in the Target Company and the Target Company will become a wholly-owned subsidiary of the Company.

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Loan Consideration

Pursuant to the Capital Injection and Acquisition Agreement, within 5 days from the signing of the Capital Injection and Acquisition Agreement, the Vendor will restructure and consolidate all of the outstanding liabilities of the Target Company (other than the Bank Loan and the liabilities under the Construction Contracts) into a loan, which will be not more than RMB112,800,000 (equivalent to approximately HK$126,099,120), and will be payable by the Target Company (failing which, by the Purchaser) to the Vendor in the following manner:-

1. RMB22,000,000 (equivalent to approximately HK$24,593,800) will be payable on the same day upon completion of the capital injection in the same amount pursuant to the Capital Injection and Acquisition Agreement;
2. RMB20,000,000 (equivalent to approximately HK$22,358,000) will be payable within 3 Business Days upon the Vendor having provided a written confirmation confirming the satisfaction of, amongst others, the following conditions:
3. 1. the Target Company having completed the business registration in relation to the Acquisition with the relevant industry and commerce authorities, and provided documentary proof to the Purchaser; and
   2. the Vendor having delivered to the Purchaser a written confirmation within 5 days from the signing of the Capital Injection and Acquisition Agreement confirming the amount and payment schedule of the Shareholder's Loan and that the Shareholder's Loan will be interest-free in accordance with the Capital Injection and Acquisition Agreement;
4. RMB20,000,000 (equivalent to approximately HK$22,358,000) will be payable within 3 Business Days upon, amongst others, the obtaining of a pre-sale permit in respect of the Development Project and a written confirmation to that effect having been provided to the Purchaser by the Vendor; and
5. RMB50,800,000 (equivalent to approximately HK$56,789,320) will be payable in the following manner:
6. 1. RMB15,800,000 (equivalent to approximately HK$17,662,820) will be payable after the settlement of the liabilities under the Construction Contracts, which shall take place 20 days before the inspection for acceptance upon completion of the Development Project; and

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1. the remaining RMB35,000,000 (equivalent to approximately HK$39,126,500) will be payable within 3 Business Days after the full settlement of costs in relation to the Development Project, subject to adjustments under the Capital Injection and Acquisition Agreement.

Any outstanding liabilities of the Target exceeding RMB112,800,000 (equivalent to approximately HK$126,099,120) and all development costs (including but not limited to the liabilities under the Construction Contracts) in relation to the Development Project and the Zhuhai Land shall be borne solely by the Vendor.

In the event that the Target Company or the Purchaser fails to pay the Loan Consideration in accordance with the Capital Injection and Acquisition Agreement, the Vendor will be entitled to (i) demand the Purchaser to pay RMB20,000 (equivalent to approximately HK$22,358) for each day of delay as liquidated damages, and (ii) in the event that any payment obligations remains outstanding for more than 180 days, the Vendor shall have the right to terminate the Capital Injection and Acquisition Agreement by written notice.

Vendor's Undertakings

Pursuant to the Capital Injection and Acquisition Agreement, the Vendor has undertaken to the Purchaser that, among other things, the development of the Development Project and the Zhuhai Land to the satisfaction of the Purchaser will be completed by 30 April 2020 ("Completion Date"). In the event that the development of the Development Project and the Zhuhai Land remains incomplete by the Completion Date, the Purchaser will be entitled to (i) demand the Vendor to pay RMB20,000 (equivalent to approximately HK$22,358) for each day of delay as liquidated damages, and (ii) in the event that the development of Development Project and the Zhuhai Land remains incomplete for more than 180 days after the Completion Date, the Purchaser shall have the right to (a) terminate the Capital Injection and Acquisition Agreement by written notice, or (b) demand the Vendor to reimburse the Purchaser for all costs necessary to complete the development of the Development Project and the Zhuhai Land.

Basis of Consideration

The amount of Consideration was determined after arm's length negotiations with reference to the net asset value (as adjusted by the latest valuation amount) and registered capital of the Target Company, the value of the Zhuhai Land and the Development Project of RMB300.6 million (equivalent to approximately HK$336.0 million) based on the preliminary valuation prepared by an independent valuer, and the prevailing market conditions. The Consideration will be financed by internal resources of the Group.

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Guarantee

Mr. Chen Hong Tian, a controlling shareholder of the Vendor according to the information provided by the Vendor, will execute a personal guarantee in favour of the Purchaser guaranteeing the due performance and observance of the Vendor's obligations under the Capital Injection and Acquisition Agreement.

Information on the Target Company, the Development Project and the Zhuhai Land

The Target Company is a limited liability company incorporated in the PRC and is principally engaged in the development of the Development Project and the Zhuhai Land.

The Target Company is the beneficial owner of the Development Project, which is situated at the east side of Provincial Road No. S272, West Lake Area, Jinwan District, Zhuhai City, Guangdong Province, the PRC with a gross plot-ratio floor area of approximately 16,074.21 sq.m. (the "Zhuhai Land") and is expected to be developed into a two-building complex for commercial use.

The unaudited consolidated total assets and net assets of the Target Company as at 31 October 2019 were RMB463.2 million (equivalent to approximately HK$517.8 million) and RMB37.5 million (equivalent to approximately HK$41.9 million), respectively. The unaudited net (loss) (both before and after taxation) of the Target Company for the two years ended 31 December 2017 and 2018 and the ten months ended 31 October 2019 are as follows:

	For the year ended	For the year ended	For the ten months
	31 December 2017	31 December 2018 ended 31 October 2019
	(RMB)	(RMB)	(RMB)
Net (loss) before and	(65,965)	(189,897)	(72,208)
after taxation	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$(73,742))	HK$(212,286))	HK$(80,721))

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REASONS FOR AND BENEFITS OF ENTERING INTO THE CAPITAL INJECTION

AND ACQUISITION AGREEMENT

As disclosed in the Group's 2019 interim report, the Group will expand its property business mainly in the Greater Bay Area, focusing on both property project management business and property development business. The Group will bolster its land reserve through bidding, equity acquisitions, joint ventures, and development and sales of properties under the Company's brand name, so as to facilitate the long term growth of the business, and to create synergies between the Group's retail businesses. As the major business operations of the Target Company cover the development of commercial properties in Zhuhai City, Guangdong Province which includes a modern shopping centre and service apartments with locational advantages, the Acquisition will be in line with the Group's strategic focus to expand its footprint for both its department store and property business into cities other than Shenzhen in the Greater Bay Area. The development status and expected payback period of the Development Project is also seen by the Board as good investment with rapid cash return.

The Board confirms that the terms of the Capital Injection and Acquisition (including the basis of the Capital Injection and the Consideration) are on normal commercial terms, fair and reasonable and the entering into of the Capital Injection and Acquisition Agreement is in the interests of the Company and its shareholders as a whole.

INFORMATION OF THE PARTIES

The Group is principally engaged in the operation of department stores in the PRC. The Purchaser is a wholly-owned subsidiary of the Company. Its principal business is to carry out property management and property development business.

The Vendor is a limited liability company established in the PRC, and its principal businesses are development of commercial and residential properties and financial investments.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Capital Injection and Acquisition Agreement and the transactions contemplated thereunder exceed 5% but are below 25%, the Capital Injection and Acquisition Agreement and the transactions contemplated thereunder constitute a discloseable transaction (as defined in Chapter 14 of the Listing Rules) for the Company and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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None of the Directors has a material interest in the transactions contemplated under the Capital Injection and Acquisition Agreement and has abstained from voting on the Board resolutions to approve the transactions contemplated under the Capital Injection and Acquisition Agreement.

DEFINITIONS USED IN THIS ANNOUNCEMENT

Unless the context requires otherwise, the capitalised terms used herein shall have the following meanings:

"Acquisition"	the acquisition of the entire equity interest in the Target
	Company from the Vendor by the Purchaser;
"Bank Loan"	the existing bank loan of the Target Company in respect of the
	development of the Development Project and the Zhuhai Land;
"Board"	the board of Directors;
"Business Days"	any day other than the holidays prescribed by the relevant
	department of the State Council of the PRC;
"Capital Injection"	capital injection of RMB40,000,000 (equivalent to
	approximately HK$44,716,000) by the Purchaser into the
	Target Company;
"Company"	Shirble Department Store Holdings (China) Limited (歲寶百貨
	控股（中國）有限公司), a company incorporated in the Cayman
	Islands with limited liability, whose shares are listed on the
	Stock Exchange (stock code: 00312);
"Completion Date"	the date by which the development of the Development Project
	on the Zhuhai Land to the satisfaction of the Purchaser will be
	completed, which is expected to be 30 April 2020;
"Consideration"	the Share Consideration and the Loan Consideration;
"Construction Contracts"	certain construction contracts entered into by the Target
	Company with other third party contractors in relation to the
	development of the Development Project and the Zhuhai Land;

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"Development Project"	the property development project situated at the Zhuhai Land
	and is beneficially owned by the Target Company;
"Director(s)"	the director(s) of the Company (including all independent
	non-executive director(s) of the Company);
"Group"	the Company and its subsidiaries;
"Guarantee"	the personal guarantee to be executed by Mr. Chen Hong Tian,
	a controlling shareholder of the Vendor according to the
	information provided by the Vendor, in favour of the Purchaser
	guaranteeing the due performance and observance of the
	Vendor's obligations under the Capital Injection and
	Acquisition Agreement;
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong;
"Hong Kong"	The Hong Kong Special Administrative Region of the People's
	Republic of China;
"Independent Third Party"	a party independent of and not connected with the Company
	and its connected persons;
"Listing Rules"	The Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited;
"Loan Consideration"	RMB112,800,000 (equivalent to approximately HK$126,099,120);
"PRC"	The People's Republic of China which for the purpose of this
	announcement does not include Hong Kong, the Macau Special
	Administrative Region of the People's Republic of China and
	Taiwan;
"Purchaser"	Shenzhen Shirble Enterprise Management Co., Ltd.* (深圳市
	歲寶企業管理有限公司), a limited company established in
	China, and is a wholly owned subsidiary of the Company;
"RMB"	Renmibi, the lawful currency of the PRC;

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"Share Consideration"	Consideration for the Acquisition of the entire equity interest
	in the Target Company from the Vendor by the Purchaser of
	RMB38,000,000 (equivalent to approximately HK$42,480,200);
"Shareholder's Loan"	A loan which will become owing by the Target Company to the
	Vendor in the amount of RMB112,800,000 (equivalent to
	approximately HK$126,099,120) after the restructure and
	consolidation of all of the outstanding liabilities of the Target
	Company (other than the Bank Loan and the liabilities under
	the Construction Contracts) by the Vendor;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Target Company"	Zhuhai Xiangqi Real Estate Development Co., Ltd.* (珠海市祥
	耀房地產開發有限公司), a limited company established in the
	PRC;
"Vendor"	Zhuhai Xiangqi Real Estate Development Co., Ltd.* (珠海市祥
	祺房地產開發有限公司), a limited company established in the
	PRC;
"Zhuhai Land"	a piece of land situated at the east side of Provincial Road No.
	S272, West Lake Area, Jinwan District, Zhuhai City,
	Guangdong Province, the PRC with a gross plot-ratio floor
	area of approximately 16,074.21 sq.m. which is expected to be
	developed into a two-building complex for commercial use and
	is beneficially owned by the Target Company.

For illustration purposes, amounts in RMB have been translated into HK$ at the rate of RMB1 = HK$1.1179.

• The English names of the Chinese entities included in this announcement are unofficial translations of their Chinese names and are included for identification purposes only.

By order of the Board

Shirble Department Store Holdings (China) Limited

YANG Xiangbo

Co-Chairman and Executive Director

Hong Kong, 21 November 2019

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As of the date of this announcement, the Board is comprised of six Directors, namely Mr. YANG Xiangbo (Co-Chairman), Mr. HAO Jian Min (Co-Chairman) and Mr. YANG Ti Wei (Chief Executive Officer) as the executive Directors and Mr. CHEN Fengliang, Mr. JIANG Hongkai and Mr. FOK Hei Yu as the independent non-executive Directors.

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