SOCAM Development : Connected transaction - acquisition of Property Management Business in Hong Kong and Continuing Connected Transaction - Provision of SOC Property Management Services

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瑞安建業有限公司*

SOCAM Development Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 983)

CONNECTED TRANSACTION

ACQUISITION OF PROPERTY MANAGEMENT BUSINESS IN HONG KONG

AND

CONTINUING CONNECTED TRANSACTION

PROVISION OF SOC PROPERTY MANAGEMENT SERVICES

ACQUISITION OF PROPERTY MANAGEMENT BUSINESS IN HONG KONG

The Board announces that on 18 April 2019, the Purchaser (a direct wholly-owned subsidiary of the Company) entered into the Sale and Purchase Agreement with the Vendor (an indirect wholly-owned subsidiary of SOCL), pursuant to which the Purchaser has agreed to acquire and the Vendor has agreed to sell the Sale Shares, representing the entire issued share capital of SOPMSL, for the Consideration of HK$35 million.

SOPMSL, via its wholly-owned subsidiary SOPML, principally engages in the provision of property management services in Hong Kong.

The Vendor is an indirect wholly-owned subsidiary of SOCL, the controlling shareholder of the Company, and therefore is a connected person of the Company. Accordingly, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

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As the Consideration exceeds HK$3 million while all the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Acquisition are less than 5%, the Acquisition is subject to the reporting and announcement requirements but exempt from the circular (including independent financial advice) and shareholders' approval requirements under Rule 14A.76 of the Listing Rules.

PROVISION OF SOC PROPERTY MANAGEMENT SERVICES

SOPML (an indirect wholly-owned subsidiary of SOCL at the date of this announcement) currently provides the SOC Property Management Services to SOCPML (an indirect wholly-owned subsidiary of SOCL) pursuant to the Property Management Services Agreement.

Subject to and following Completion, members of the Target Group (including SOPMSL and SOPML) will become indirect wholly-owned subsidiaries of the Company. The continual provision of the SOC Property Management Services by SOPML to SOCPML under the Property Management Services Agreement will, following Completion, become a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.60 of the Listing Rules, the Company is required to comply with the annual review and disclosure requirements for this continuing connected transaction. When the Property Management Services Agreement is renewed or its terms are varied, the Company will comply with all connected transaction requirements under Chapter 14A of the Listing Rules where appropriate.

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Parties

(1)Purchaser: Grateful Tide Limited, a direct wholly-owned subsidiary of the Company

(2)Vendor: Shui On Investment Company Limited, an indirect wholly-owned subsidiary of SOCL, holding the entire issued share capital of SOPMSL

SOCL is the controlling shareholder and a connected person of the Company. It is held under the Bosrich Unit Trust, the units of which are the property of a discretionary trust, of which Mr. Lo, an executive Director and the Chairman of the Company, is the founder and both he and Ms. Lo, a non-executive Director, are discretionary beneficiaries.

Subject Matter

Pursuant to the Sale and Purchase Agreement, the Purchaser has agreed to acquire and the Vendor has agreed to sell the Sale Shares, representing the entire issued share capital of SOPMSL, free from all encumbrances.

SOPMSL, via its wholly-owned subsidiary SOPML, principally engages in the provision of property management services in Hong Kong.

Consideration

Pursuant to the terms of the Sale and Purchase Agreement, the Consideration is HK$35 million and shall be satisfied by payment to the Vendor in cash in the following manner:

(i)an amount of HK$3.5 million shall be paid upon signing of the Sale and Purchase Agreement; and

(ii)the remaining balance of the Consideration shall be paid on Completion.

The Consideration was determined after arm's length negotiations between the Purchaser and the Vendor having taken into account, among other things, (i) the existing property management contracts portfolio under the Target Group's management, which will generate a steady stream of income and cash flow; (ii) the prospective synergy effect that would be achieved after the Acquisition; (iii) the net asset value of the Target Group; and (iv) the future business prospects of the property management market in Hong Kong. The Group intends to finance the Acquisition by its internal resources and banking facilities available to the Group.

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Conditions

Completion is conditional upon satisfaction, or waiver by the Purchaser, of the following conditions:

(a)no material adverse change in the business, operations, assets, position (financial, trading or otherwise), profits or prospects of the Target Group having occurred on or before the date of Completion; and

(b)the warranties provided by the Vendor in the Sale and Purchase Agreement remaining true, accurate and not misleading in all respects.

If any of the conditions (which have not previously been waived by the Purchaser) is not satisfied on Completion, the Purchaser may by notice to the Vendor terminate the Sale and Purchase Agreement.

Completion

Completion shall take place within 14 business days from the date of the Sale and Purchase Agreement, i.e. on or before 10 May 2019, or on such other date as the Purchaser and the Vendor may agree in writing. Following Completion, members of the Target Group (i.e. SOPMSL and SOPML) will become indirect wholly-owned subsidiaries of the Company and their financial results, assets and liabilities will be consolidated into the financial statements of the Group.

Financial Information on the Target Group

Set out below is the unaudited consolidated results of the Target Group for the two years ended 31 December 2017 and 31 December 2018:

The unaudited consolidated net asset value of the Target Group at 31 December 2018 was approximately HK$20.11 million.

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Based on the financial information on the Target Group, SOPML incurred management fees payable to the SOCL Group for sharing certain administrative and other services with the SOCL Group in an amount of approximately HK$4.24 million and HK$4.32 million for the years ended 31 December 2017 and 2018, respectively. Following Completion, such sharing of administrative and other services will not be required, and such kind of management fees would no longer be charged by the SOCL Group to SOPML. For illustration purposes and assuming that the management fees charged by the SOCL Group to SOPML were excluded, the adjusted unaudited consolidated results of the Target Group for the two years ended 31 December 2017 and 31 December 2018 would be as follows:

PROVISION OF SOC PROPERTY MANAGEMENT SERVICES

SOPML has been providing services in relation to the management and maintenance of Shui On Centre (the "SOC Property Management Services") to SOCPML and the Property Management Services Agreement was entered into between the parties on 16 March 2019 to set out the terms in connection therewith.

The Property Management Services Agreement

Date

16 March 2019

Parties

(1)SOCPML, an indirect wholly-owned subsidiary of SOCL and the management company under the DMC in respect of Shui On Centre

(2)SOPML, an indirect wholly-owned subsidiary of SOCL at the date of this announcement

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