Symphony : ESTABLISHMENT OF JOINT VENTURE INVOLVING DISTRIBUTION AGREEMENT AND CONTINUING TRANSACTIONS

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.

新灃集團有限公司*

(Incorporated in Bermuda with limited liability)

The Board is pleased to announce that on 27 February 2017, the Company, Arena Shanghai, Shanghai Descente and Descente entered into an agreement for a joint venture, which includes the Distribution Agreement pursuant to which Shanghai Descente subsequently appointed Arena Shanghai as its exclusive distributor for the sale and distribution of Products in the Territory.

After execution of the JV Agreement and the Distribution Agreement Shanghai Descente was issued 30% of the equity interest of Arena Shanghai and became a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules. Thus, the transactions entered into between Arena Shanghai with Shanghai Descente pursuant to the Distribution Agreement became continuing connected transactions of the Company under the Listing Rules subject to the requirements of Listing Rule 14A.60.

None of the Directors has a material interest in the transactions under the JV Agreement or the Distribution Agreement and was required to abstain from voting on the relevant resolution(s) in the Board meeting to approve the JV Agreement or the Distribution Agreement.

On 27 February 2017, the Company, Arena Shanghai, Shanghai Descente and Descente entered into the JV Agreement, and the Distribution Agreement was subsequently signed. The JV Agreement is not a notifiable transaction of the Company.

Shanghai Descente was subsequently issued 30% of the equity interest of Arena Shanghai and thereupon became a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules.

1

* for identification purposes only

The transactions entered into between Arena Shanghai with Shanghai Descente pursuant to the Distribution Agreement thus became continuing connected transactions of the Company under the Listing Rules subject to the requirements of Listing Rule 14A.60. Details of the Distribution Agreement are set out below.

1. Principal Terms

   Date:	27 February 2017
   Parties:	The Company, as distributor's guarantor; Arena Shanghai, as distributor; Shanghai Descente, as seller; and Descente, as seller's guarantor
   Term:	The Distribution Agreement has a term commencing from 27 February 2017 and ending on 31 December 2021 (both days inclusive).
   Distributorship:	Shanghai Descente appoints Arena Shanghai as its exclusive distributor for conducting local marketing activities and the sale and distribution of Products in the Territory.
   Minimum Purchases:	Arena Shanghai is required to make the following minimum purchases in each year of the Distribution Agreement:- 2017: RMB 86,702,000 2018: RMB 90,875,000 2019: RMB 97,481,000 2020: RMB 120,613,000 2021: RMB 133,403,000 (all inclusive of tax)
   Price:	The purchase price for Products is the landed cost of the Products (including but not limited to, the price of the goods purchased by Shanghai Descente, any fees for shipping, and any port fees, taxes, customs duties or inland transportation fees that may apply and are paid or to be paid by Shanghai Descente) times a constant pricing factor determined by Shanghai Descente.
   Payment terms:	Payments under the Distribution Agreement shall be made by Arena Shanghai within 30 days after the delivery of the Products.

   To the best of the Directors' knowledge, information and belief and having made all reasonable enquiries, Shanghai Descente and Descente and their ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.

2. Reasons for and benefits of the transactions contemplated under the Distribution Agreement

Over the last two years, the Company has been reviewing its strategy and development of sports brands and the Speedo cooperation has been concluded. In light of the Company's extensive retail distribution network in the swimwear market in the PRC plus a veteran local team, the Company considers is in its commercial interest to enter into a distribution agreement with a renowned Japanese swimming brand such as "arena".

In view of the aforesaid reasons and benefits, the Directors (including the independent non-executive Directors) are of the view that (i) the transactions contemplated under the Distribution Agreements are in the ordinary and usual course of business and in the interests of the Company and its Shareholders as a whole; (ii) the terms of the Distribution Agreement are on normal commercial terms or on terms not less favorable than those of similar transactions with independent third parties and are fair and reasonable to the Company and its Shareholders; and (iii) the proposed Minimum Purchases under the Distribution Agreement are fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

After execution of the Distribution Agreement and as required under the JV Agreement, 30% of the equity interest of Arena Shanghai was subsequently issued to Shanghai Descente. Before that issue Descente and Shanghai Descente had no material interest in the Company or any other member of the Group. As at the date of this announcement, Shanghai Descente directly holds 30% of the equity interest of Arena Shanghai and is therefore now a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules. Thus, the transactions entered into between the members of the Group with Arena Shanghai pursuant to the Distribution Agreement became continuing connected transactions of the Company under the Listing Rules and this announcement is made in compliance with Listing Rule 14A.60 which amongst other things requires the Company to comply with the annual review and disclosure requirements including publishing an announcement and annual reporting if the Group continues to conduct the transaction under the Distribution Agreement and when the agreement is renewed or its terms are varied, to comply with all connected transaction requirements.

None of the Directors has a material interest in the transactions under the JV Agreement or the Distribution Agreement and was required to abstain from voting on the relevant resolution(s) in the Board meeting to approve the JV Agreement or the Distribution Agreement.

1. The Company

   The Company is an investment holding company. The principal business activities of the Group are the development and management of outlet malls, branding, retailing and

   sourcing, property investment and holding in Hong Kong and the PRC, provision of financial services and duty-free business.

2. Arena Shanghai

   Arena Shanghai is engaged in the business of local marketing activities, sale and distribution of swimming wear and other sportswear, shoes and related accessories in the PRC.

3. Shanghai Descente

   Shanghai Descente is engaged in the business of the sale of sportswear and related accessories in the PRC, and the owner of know-how related to "arena" branded products.

4. Descente

Descente is engaged in the business of manufacture and sale of sportswear and sports equipment all over the world and is the owner of certain trademarks relating to "arena" branded products.

Unless the context requires otherwise, capitalised terms used herein shall have the meanings set forth below: