Hope Education : CONNECTED TRANSACTION - ACQUISITION OF PROPERTIES

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HOPE EDUCATION GROUP CO., LTD.

希望教育集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code:1765)

CONNECTED TRANSACTION

ACQUISITION OF PROPERTIES

ACQUISITION OF PROPERTIES

The Board of Directors announced that on 13 December 2019 (after trading hours), the Purchasers, consolidated affiliated entities of the Company, entered into Sale and Purchase Agreements with the Vendors, pursuant to which the Purchasers have agreed to acquire the Properties for the purpose of providing training venues and student accommodation at a total consideration of RMB84,660,000 (equivalent to approximately HK$94,204,833.76).

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Tequ Education, Jintang Property and Ziyang Property are connected persons of the Company under the Listing Rules. Accordingly, the transactions contemplated under the Sale and Purchase Agreements constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios for the Properties' Acquisition are more than 0.1% but less than 5%, the Properties' Acquisition are subject to the reporting and announcement requirements, but are exempt from the requirement of the shareholders' approval under the Listing Rules.

INTRODUCTION

The Board of Directors announced that on 13 December 2019 (after trading hours), the Purchasers, consolidated affiliated entities of the Company, entered into the Sale and Purchase Agreements with the Vendors, pursuant to which the Purchasers have agreed to acquire the Properties for the purpose of providing training venues and student accommodation at a total consideration of RMB84,660,000 (equivalent to approximately HK$94,204,833.76).

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MAJOR TERMS OF THE SALE AND PURCHASE AGREEMENT

The major terms of the Sale and Purchase Agreements are summarized as follows:

	Date	Parties	Properties	Consideration
1.	13 December	Purchaser:	3/F-5/F of Building 8 of	RMB68,660,000
	2019	Hope College,	Jintang Hope Future City	(equivalent to
		a consolidated	located at 555 Xuefu	approximately
		affiliated entity	Avenue, Sanxing Town,	HK$76,400,943.61)
		of the Company	Chengdu City
			(situated proximate to the
		Vendor: Jintang	Hope College),
		Property	with a total area of
			approximately 15,057.01 sq.m.
2.	13 December	Purchaser:	3/F-6/F of Building 2 of	RMB16,000,000
	2019	Automotive	Ziyang Hope Future City	(equivalent to
		College	located at Chengnan	approximately
			Avenue, Songtao Town,	HK$17,803,890.15)
		Vendor: Ziyang	Ziyang City
		Property	(situated proximate to the
			Automotive College),
			with a total area of
			approximately 3,270.64 sq.m.

CONSIDERATION AND PAYMENT

The consideration of RMB68,660,000 (equivalent to approximately HK$76,400,943.61) for 3/F-5/F of Building 8 of Jintang Hope Future City was determined after arm's length negotiations between the parties on normal commercial terms or better with reference to the valuation of the Property by the independent valuer, pursuant to which the valuation of the Property as at 24 December 2018 was RMB110,750,300 (equivalent to approximately HK$122,966,058). To the best knowledge of the Company, the original establishment cost of 3/F-5/F of Building 8 of Jintang Hope Future City was approximately RMB52,402,133.36 (approximately HK$58,167,782.88).

The consideration of RMB16,000,000 (equivalent to approximately HK$17,803,890.15) for 3/F-6/F of Building 2 of Ziyang Hope Future City was determined after arm's length negotiations between the parties on normal commercial terms with reference to the valuation of the Property prepared by the independent valuer on 31 October 2019, pursuant to which the valuation of the Property as at 31 October 2019 was RMB16,040,000 (equivalent to approximately HK$17,760,437). To the best knowledge of the Company, the original establishment cost of 3/F-6/F of Building 2 of Ziyang Hope Future City was approximately RMB11,156,153.04 (approximately HK$12,383,631.09).

The total consideration for the Properties' Acquisition shall be paid in cash in the following manner:

The Purchasers shall pay to the Vendors 35% of the total consideration within 30 working days after the signing of the Sale and Purchase Agreements, 55% of the total consideration within 10 working days after the signing of the "Commodity Properties Sales Contract", and the remaining 10% within 10 working days after the delivery of the Properties. The consideration for the purchase of Properties will be funded by the Group's internal resources.

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REASONS FOR AND BENEFITS OF THE PROPERTIES' ACQUISITION TRANSACTION

1. The Hope College has been operating in Jintang County, Chengdu City, with the number of its students exceeding 20,000 recently. In response to the call of vigorously promoting the development of vocational education this year, the Hope College is applying to be part of the "Double-10,000" Program (construction of 10,000 national first-class undergraduate faculty development stations and 10,000 provincial first-class undergraduate faculty development stations), therefore, it is in urgent need to expand its training venues. As the Properties are located next to the Hope College, it can be refurbished and put into use immediately after the acquisition.
2. The Automotive College set a new record for student enrollment this year, which consequently exposed it to the shortage of dormitories that has to be solved immediately. Upon on-the-spot inspection, they identified the Property, which is located next to the Automotive College and can be refurbished and put into use immediately after the acquisition.

In order to support the development of our colleges, the Company believes that acquiring the Properties with such geographical location as training venues and student accommodation not only can meet our urgent needs in a timely and expedient manner, but also improve our teaching conditions and support the development of our colleges. The Directors (including independent non-executive Directors) other than Mr. Wang Degen, Mr. Wang Huiwu, Mr. Xu Changjun, Mr. Li Tao, Mr. Tang Jianyuan and Mr. Lu Zhichao consider that the terms of Sale and Purchase Agreements (including the total consideration for the Properties' Acquisition) are fair and reasonable and entered into on normal commercial terms or better, in the ordinary and normal course of business of the Company and in the interests of the Company and the Shareholders as a whole.

GENERAL INFORMATION

Information about the Company and Sichuan Hope Education

The principal business of the Company is investment holding, and its subsidiaries are mainly engaged in private higher education. Sichuan Hope Education is one of the consolidated affiliated entities of the Company mainly engaged in education management and investment in the education industry.

Tequ Education

Tequ Education is a limited liability company incorporated under the laws of the PRC, and an indirect wholly-owned subsidiary of Hope Education Investment Limited. It is a connected person of the Company and its major business is the provision of education and training services, promotion of education brands, and development of education and education derivative products.

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Information of the Purchasers and the Vendors

Hope College

Hope College, established in April 2009 with the approval of the Ministry of Education, is a full-time undergraduate college of higher education majoring in rail transportation engineering.

Automotive College

Automotive College, established in 2013 with the approval of the Sichuan Department of Education, is a vocational college majoring in automobile engineering and electrical and mechanical engineering.

Jintang Property

Jintang Property is a limited liability company incorporated under the laws of the PRC, and a wholly-owned subsidiary of Tequ Education. The principal business activity of Jintang Property is the operation and development of real estates in Jintang.

Ziyang Property

Ziyang Property is a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of Tequ Education. The principal business activity of Ziyang Property is the operation and development of real estates in Ziyang.

LISTING RULES IMPLICATION

Mr. Wang Huiwu, an executive Director and one of the controlling shareholders of the Company, is also the controlling shareholder of Tequ Education, indirectly holding approximately 38.96% interests in the same. Tequ Education in turn wholly owns Jintang Property and Ziyang Property. Therefore, pursuant to Chapter 14A of the Listing Rules, Tequ Education, Jintang Property and Ziyang Property are connected persons of the Company. Accordingly, the transactions contemplated under the Sale and Purchase Agreements constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios for the Properties' Acquisition are more than 0.1% but less than 5%, the Properties' Acquisition are subject to reporting and announcement requirements, but are exempt from the shareholders' approval requirement of the Listing Rules.

Mr. Wang Degen, Mr. Wang Huiwu, Mr. Xu Changjun, Mr. Li Tao, Mr. Tang Jianyuan and Mr. Lu Zhichao (Directors of the Company) are deemed to have material interests in the transactions and have therefore abstained from voting on the relevant resolutions at the Board meeting. Save for the above Directors, no other Directors have a material interest in such transactions.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

"Automotive College" Sichuan Hope Automotive Vocational College* (四川希望汽車職業 學院), a college established by the Group in March 2013 under PRC laws;

"Board"

"Company"

the board of directors of the Company;

Hope Education Group Co., Ltd. (希望教育集團有限公司), an exempted company incorporated in the Cayman Islands with limited liability on 13 March 2017;

"Director(s)"

"Group"

"HK$"

"Hong Kong"

"Hope College"

"Jintang Property"

the directors of the Company;

the Company and its subsidiaries, including its consolidated affiliated entities;

Hong Kong dollars, the lawful currency of Hong Kong;

the Hong Kong Special Administrative Region of the PRC;

Southwest Jiaotong University Hope College* (西南交通大學希望學

院), a college approved by the Ministry of Education of the People's Republic of China (MOE) to be established under the cooperation

between Southwest Jiaotong University, Chengdu West Hope Group Limited* (成都華西希望集團有限公司) and our Group in April 2009;

Jintang Golden May Property Development Co., Ltd.* (金堂金五月 房地產開發有限公司), a limited liability company established on 18

August 2011 under the laws of the PRC, and a wholly-owned subsidiary of Tequ Education;

"Listing Rules"

"PRC"

"Property(ies)"

the Rules Governing the Listing of Securities on the Stock Exchange

the People's Republic of China;

1. 3/F-5/Fof Building 8 of Jintang Hope Future City located at 555 Xuefu Avenue, Sanxing Town, Chengdu City (situated proximate to the Hope College), with a total area of approximately 15,057.01 sq.m.;
2. 3/F-6/Fof Building 2 of Ziyang Hope Future City located at Chengnan Avenue, Songtao Town, Ziyang City (situated proximate to the Automotive College), with a total area of approximately 3,270.64 sq.m., respectively

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"Properties' Acquisition" the acquisition of the Properties by the Purchasers from the Vendors

	under the Sale and Purchase Agreements;
"Purchaser(s)"	Hope College and Automotive College, respectively;
"RMB"	Renminbi, the lawful currency of the PRC;
"Sale and Purchase	two respective sale and purchase agreements dated 13 December 2019
Agreements"	entered into between the Purchasers and the Vendors in respect of the
	sale and purchase of the Properties;
"Shareholder(s)"	holder(s) of the Share(s) of the Company with a nominal value of
	USD0.00001 each;
"Sichuan Hope	Sichuan Hope Education Industry Group Limited* (四川希望教育產
Education"	業集團有限公司), a limited liability company established under the
	laws of PRC on 12 January 2005, one of the Company's consolidated
	affiliated entities;

"Stock Exchange"

"Tequ Education"

The Stock Exchange of Hong Kong Limited;

Sichuan Tequ Education Management Limited* (四川特驅教育管理有 限公司), a limited liability company established on 30 November 2017 under the laws of the PRC which is indirectly controlled by Mr. Wang Huiwu;

"Vendor(s)"

"Ziyang Property"

Jintang Property and Ziyang Property, respectively;

Ziyang May Sunshine Property Development Co., Ltd.* (資陽五月陽 光房地產開發有限公司), a limited liability company established on 17

May 2011 under the laws of the PRC, and a wholly-owned subsidiary of Tequ Education;

"%"Percentage.

By order of the Board

Hope Education Group Co., Ltd.

Chairman

Xu Changjun

Hong Kong, 15 December 2019

As at the date of this announcement, the executive Directors are Mr. Xu Changjun, Mr. Wang Huiwu and Mr. Li Tao; the non-executive Directors are Mr. Wang Degen, Mr. Tang Jianyuan and Mr. Lu Zhichao; and the independent nonexecutive Directors are Dr. Gao Hao, Mr. Chen Yunhua and Mr. Zhang Jin.

• For identification purpose only.

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