Jia Meng : DISCLOSEABLE TRANSACTION DISPOSAL OF 100 INTEREST IN THE TARGET.pdf

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JIA MENG HOLDINGS LIMITED

家 夢 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8101)

DISCLOSEABLE TRANSACTION:

DISPOSAL OF 100% INTEREST IN THE TARGET

THE DISPOSAL

The Board is pleased to announce that after trading hours on 21 July 2017, the Vendor, a wholly- owned subsidiary of the Company, and the Purchaser entered into the SP Agreement pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares, representing 100% of the issued shares of the Target as at Completion free from all encumbrances together with all rights attaching thereto at any time on or after the Completion Date, at the Consideration of HK$57,005,593.

The Target is a company incorporated in Hong Kong with limited liability and principally engaged in investment holding. The Target owns 99% interest in GDJM whose principal assets are the Land and Properties.

Immediately after Completion, each member of the Target Group will no longer be a subsidiary of the Company and the Group will cease to have any equity interest in each member of the Target Group.

IMPLICATIONS UNDER THE GEM LISTING RULES

As the highest applicable percentage ratio (as defined under the GEM Listing Rules) in respect of the Disposal is more than 5% but is less than 25%, the Disposal constitutes a discloseable transaction for the Company under Chapter 19 of the GEM Listing Rules and is subject to notification and announcement requirements under Rule 19.34 of the GEM Listing Rules.

The Board is pleased to announce that after trading hours on 21 July 2017, the Vendor, a wholly- owned subsidiary of the Company, and the Purchaser entered into the SP Agreement pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares, representing 100% of the issued shares of the Target as at Completion free from all encumbrances together with all rights attaching thereto at any time on or after the Completion Date, at the Consideration of HK$57,005,593.

THE SP AGREEMENT

Major terms of the SP Agreement are set out below.

Date

21 July 2017

Parties

1. Vendor: Jia Meng Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

2. Purchaser: Ever Winner Investment Development Limited 恒勝投資發展有限公司, a company incorporated in the British Virgin Islands with limited liability and the principal business of which is investment holding

To the best of the Directors'knowledge, information and belief having made all reasonable enquiry, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

Assets to be disposed of

The Sale Shares, representing 100% of the issued shares of the Target as at Completion.

Consideration

The Consideration is HK$57,005,593, which shall be payable by the Purchaser to the Vendor in the following manner:

1. as to HK$2,000,000 (''Deposit'') payable by the Purchaser to the Vendor in cash within five Business Days after the signing of the SP Agreement as refundable deposit;

2. as to such amount equal to the Advance to Vendor, payable by the Purchaser to the Vendor by way of the Purchaser accepting the novation of the Advance to Vendor by executing the Deed of Novation at Completion; and

3. as to the remaining balance of the Consideration after deducting the Deposit and an amount equal to the Advance to Vendor (''Balance of Consideration''), payable by the Purchaser to the Vendor in cash at Completion.

Basis of Consideration

The Consideration was determined after arm's length negotiations between the Vendor and the Purchaser on normal commercial terms with reference to, among others, the unaudited consolidated net asset value of the Target attributable to the Sale Shares as at 31 May 2017 as adjusted by the valuation on the Land and Properties, being the principal assets of the Target Group, conducted by an

independent professional property valuer appointed by the Target. The value of the Land and Properties as at 31 May 2017 indicated by the valuer in the valuation report is RMB30,600,000 (equivalent to approximately HK$34,916,000 at an exchange rate of RMB1=HK$1.14104). The unaudited consolidated net asset value of the Target as at 31 May 2017 as adjusted by such valuation is HK$63,780,000 (disregarding the estimated deferred tax expenses of approximately HK$6,240,000).

Condition precedent

The obligations of the Vendor and the Purchaser to effect Completion shall be conditional upon the Purchaser being reasonably satisfied with the results of the due diligence exercise (whether on legal, accounting, financial, operational, properties or other aspects that the Purchaser may consider reasonably necessary) on the Target Group.

The Purchaser may waive the Condition Precedent at any time before the Long Stop Date by notice in writing to the Vendor.

If the Condition Precedent has not been fulfilled or waived at or before 5: 00 p.m. on the Long Stop Date, all rights and obligations of the parties thereunder shall cease and terminate, save and except for

(i) those relating to confidentiality, costs and expenses and miscellaneous matters which provisions shall remain in full force and effect, and no party shall have any claim against the other save for claim (if any) in respect of such continuing provisions or any antecedent breach thereof; and (ii) the Vendor shall within seven Business Days from the date of such termination return an amount equal to the Deposit, without interest, to the Purchaser.

Completion

Completion of the SP Agreement shall take place on the Completion Date.

Immediately after Completion, each member of the Target Group will no longer be a subsidiary of the Company and the Group will cease to have any equity interest in each member of the Target Group.

INFORMATION ABOUT THE TARGET GROUP

The Target is a company incorporated in Hong Kong with limited liability and principally engaged in investment holding. The Target owns 99% interest in GDJM which in turn owns the entire issued shares of Healthy Bedding. Each of GDJM and Healthy Bedding currently does not have business operation. The principal assets of GDJM are the Land and Properties, of which a workshop, an office building and a dormitory erected thereon are currently leased to the Group at a monthly rental of RMB57,246 for a term of five years from 1 June 2015 to 31 May 2020. Such lease arrangement is expected to continue after Completion.

Set out below is a summary of certain unaudited consolidated financial information of the Target for the years ended 31 March 2016 and 2017:

For the year ended

31 March 2016

HK$'000

(approximately)

For the year ended

31 March 2017

HK$'000

(approximately)

Turnover 36,984 -

Net loss before taxation 16,253 9,073

Net loss after taxation 16,253 9,491

The unaudited consolidated total asset value and net asset value of the Target as at 31 May 2017 were approximately HK$40,774,000 and approximately HK$38,821,000 respectively.

INFORMATION ABOUT THE GROUP

The Group is principally engaged in (i) design, manufacture and sale of mattress and soft bed products in the PRC and export mattress to overseas markets; (ii) securities investment in Hong Kong; (iii) property investment in Hong Kong; and (iv) money lending in Hong Kong.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Directors are aware of the rapid capital appreciation of the Land and Properties and consider that the Disposal represents a good opportunity for the Group to realise its investment in the Target Group.

The Group expects to recognise an unaudited accounting gain of approximately HK$18,719,000 from the Disposal, being the difference between the Consideration and the aggregate of the estimated unaudited consolidated net asset value of the Target recorded in the Target's consolidated financial statements as at the Completion Date and the estimated expenses in connection with the Disposal. The actual gain or loss in connection with the Disposal will be assessed after Completion and is subject to audit.

The Directors expect that the net proceeds from the Disposal, after deducting the expenses directly attributable thereto, will be approximately HK$25,027,000, which will be used for financing future potential investment opportunities and/or working capital of the Group.

The Directors (including the independent non-executive Directors) are of the view that the terms of the SP Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.