Zall : Announcements and Notices -

Hong Kong Exchange 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.

卓 爾 集 團 股 份 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

The Board is pleased to announce that after trading hours on 27 June 2017, the Purchaser, an indirect wholly-owned subsidiary of the Company, the Company, Zall Development Investment, Mr. Yan and the Vendors entered into the Framework Agreement in relation to a proposed acquisition of the Second Target Equity Interest from Vendor E, representing approximately 8.36% of the total equity interest of the Project Company.

The Second Consideration for the Second Target Equity Interest is tentatively fixed at approximately RMB307 million, representing a price of RMB7.22 (equivalent to approximately HK$8.414) per each unit of RMB1 in the registered capital of the Project Company which will be settled by cash payable to Vendor E. Assuming that the First Acquisition is completed and upon Completion, the equity interest of the Project Company will be indirectly held up to approximately 68.85% by the Company.

Pursuant to the Framework Agreement, the Company also undertook to the Vendors that if the Second Acquisition materialises and subject to separate share purchase agreements to be further negotiated by the Parties, the Company should further acquire in cash the Subsequent Target Equity Interest from Vendor E and Vendor F in two equal tranches, each representing approximately 3% of the total equity interest of the Project Company on or before 31 December 2019 and 31 December 2020 respectively at a tentative price of RMB7.22 per each unit of RMB1 in the registered capital of the Project Company (or per share).

The Project Company, together with its subsidiaries, is principally engaged in B2B e-commerce for the trading of agricultural products, services including supply chain management and supply chain finance.

As one of the applicable percentage ratios, the revenue ratio, under Rule 14.07 of the Listing Rules in respect of the Further Acquisition exceeds 100%, the Further Acquisition constitutes a very substantial acquisition for the Company under Rule 14.06(5) of the Listing Rules. As such, the Framework Agreement and the transactions contemplated thereunder are subject to the Shareholders' approval at the EGM.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no Shareholder has a material interest in the Further Acquisition and no Shareholder and his associates are therefore required to abstain from voting at the EGM in respect of the resolutions approving the Further Acquisition.

A circular containing, among other things, further details about the transactions contemplated under the Framework Agreement and the notice of the EGM will be despatched to the Shareholders. As the Company expects that it will need more time to collate the information to be included in the circular, the circular is expected to be despatched to the Shareholders on or before 25 August 2017.

References are made to the Previous Announcement and the Previous Circular in relation to, among others, the Company's proposed acquisition of shares in certain target companies pursuant to the First Acquisition Agreement. Capitalised terms in this announcement should have the same meanings ascribed to them in the Previous Circular unless the context requires otherwise.

The Board is pleased to announce that after trading hours on Tuesday, 27 June 2017, the Purchaser, an indirect wholly-owned subsidiary of the Company, the Company, Zall Development Investment, Mr. Yan and the Vendors entered into the Framework Agreement in relation to a proposed acquisition of the Second Target Equity Interest, representing approximately 8.36% of the total equity interest of the Project Company and a proposed acquisition of the Subsequent Target Equity Interest representing approximately 6% of the total equity interest of the Project Company.

The principal terms of the Framework Agreement are set out below:

27 June 2017

1. Zall Commerce Supply Chain (Wuhan) Co. Ltd.*（卓爾雲商供應鏈（武漢）有限公司）(as the Purchaser);

2. the Company;

3. Zall Development Investment (as the guarantor of the Purchaser and the Company);

4. Mr. Yan (as the guarantor of the Purchaser and the Company);

5. Shenzhen Agricultural Products Co., Ltd.*（深圳市農產品股份有限公司）(as the Vendor E); and

6. Shenzhen HiGreen Investment Management Co., Ltd.*（深圳市海吉星投資管理股份有限公司） (as the Vendor F).

   Subject matter

   The Purchaser conditionally agreed to acquire, and Vendor E conditionally agreed to sell, the Second Target Equity Interest free from all encumbrances, representing approximately 8.36% of the total equity interest of the Project Company. Pursuant to the Framework Agreement, the Company also undertook to the Vendors that if the Second Acquisition materialises and subject to, among others, the approval of state-owned asset management, valuation, filing, listing for sale in the PRC and separate share purchase agreements to be further negotiated by the Parties, the Company should further acquire in cash the Subsequent Target Equity Interest from Vendor E and Vendor F in two equal tranches, each representing approximately 3% of the total equity interest of the Project Company on or before 31 December 2019 and 31 December 2020 respectively at a tentative price of RMB7.22 per each unit of RMB1 in the registered capital of the Project Company (or per Share). Subject to the success in bidding for the relevant Target Equity Interest by the Purchaser in the trading platform for transfer of shares by means of listing for sale in the PRC, the Parties will enter into the Share Purchase Agreement to give effect to the Second Acquisition and separate share purchase agreements to give effect to the Subsequent Acquisition.

   Further information regarding the Project Group is set out in the paragraph headed "Information on the Project Group" below.

   Consideration

   The Second Consideration for the Second Target Equity Interest is tentatively fixed at approximately RMB307 million, representing a price of RMB7.22 (equivalent to approximately HK$8.414) per each unit of RMB1 in the registered capital of the Project Company which will be settled by cash payable to Vendor E upon Completion.

   The Subsequent Consideration for the Subsequent Target Equity Interest is tentatively fixed at RMB220.5 million in total, representing a price of RMB7.22 (equivalent to approximately HK$8.414) per each unit of RMB1 in the registered capital of the Project Company (or per Share) which will be settled by cash payable to the Vendors upon completion of the relevant Subsequent Acquisition.

   Since Vendor E is a state-owned and A share listed enterprise in the PRC, the proposed sale of the Second Target Equity Interest of the Project Company will be subject to, among others, the approval of state-owned asset management, valuation, filing and listing for sale in the PRC. In the event that the listed for sale transfer price (or the adjusted listed for sale transfer price, if applicable) of the Second Target Equity Interest is not higher than RMB7.22 per each unit of RMB1 in the registered capital of the Project Company, the Purchaser has undertaken to submit a bid of RMB7.22 per each unit of RMB1 in the registered capital of the Project Company in the bidding of the Second Target Equity Interest. The Purchaser is not obliged to submit a bid in the bidding of the Second Target Equity Interest if the listed for sale transfer price is higher than RMB7.22 per each unit of RMB1 in the registered capital of the Project Company.

   The Company intends to finance its payment of the Consideration under the Framework Agreement by its internal resources and/or debt financing.

   The Consideration was determined after arm's length negotiation among the Parties with reference to the consideration of the First Acquisition, being up to HK$2.591 billion, for the acquisition of the shares representing up to approximately 60.49% of the total equity interest of the Project Company, which accounted for approximately HK$8.414 per each unit of RMB1 in the registered capital of the Project Company. The Company, when assessing the Second Acquisition and the Subsequent Acquisition, has adopted the same pricing benchmark (i.e., HK$8.414 per each unit of RMB1 in the registered capital of the Project Company) and taken into account the following factors:

7. as disclosed in the Previous Circular, the consideration of the First Acquisition was determined after the arm's length negotiation between the parties with reference to the business and growth prospects and the historical financial performance of the Project Group;

8. a report from independent financial adviser was issued on 15 February 2017 and was included in the Previous Circular, which had assessed the fairness and reasonableness of the consideration of the First Acquisition. The independent financial adviser had concluded that the terms of the First Acquisition Agreement were on normal commercial terms or better and were fair and reasonable so far as the independent shareholders of the Company are concerned and in the interests of the Company and its shareholders as a whole;