Hevol Services : DISCLOSEABLE TRANSACTION SALE AND PURCHASE AGREEMENT IN RELATION TO THE ACQUISITION OF 51% EQUITY INTEREST OF A PROPERTY MANAGEMENT COMPANY

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 and loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6093)

DISCLOSEABLE TRANSACTION

SALE AND PURCHASE AGREEMENT IN RELATION TO

THE ACQUISITION OF 51% EQUITY INTEREST OF

A PROPERTY MANAGEMENT COMPANY

THE ACQUISITION

The Board is pleased to announce that on 28 April 2021, the Purchaser, an indirect wholly-owned subsidiary of the Company, entered into the Agreement with the Seller, pursuant to which the Purchaser conditionally agreed to acquire and the Seller conditionally agreed to sell 51% equity interest of the Target Company at a total consideration of RMB18,360,000.

After the Acquisition, the total contracted GFA of the Group will be increased from approximately

22.5 million square meters at the beginning of 2021 to approximately 35.2 million square meters as at the date of this announcement, representing an increase of approximately 56.4%. At the same time, the total GFA of the Group under management will be increased from approximately 17.9 million square meters at the beginning of 2021 to approximately 27.2 million square meters as at the date of this announcement, representing an increase of approximately 52.0%.

LISTING RULES IMPLICATIONS

As one of or more of the applicable percentage ratios (set out in Rule 14.07 of the Listing Rules) in respect of the Acquisition is more than 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is subject to the notification and announcement requirements but is exempt from Shareholders' approval requirement under the Listing Rules.

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THE ACQUISITION

The principal terms of the Agreement are set out below:

Date:	28 April 2021 (after trading hours)
Parties:	(i)	Purchaser, an indirect wholly-owned subsidiary of the Company
	(ii)	Seller (which owns 51% of the Target Company)

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, the Seller and its ultimate beneficial owner are independent third parties of the Company and their connected persons (as defined under the Listing Rules).

Assets to be acquired

Pursuant to the Agreement, the Purchaser has conditionally agreed to acquire, and the Seller has conditionally agreed to sell, 51% of the total equity interest of the Target Company.

Following the Acquisition, the Purchaser and Ms. Yu will own 51% and 49% of the total equity interest of the Target Company respectively in the following manner:

	Percentage of		Percentage of
	equity interest		equity interest
	before the		after the
	Acquisition		Acquisition
The Purchaser	-	51.00%
Seller	51.00%		-
Ms. Yu	49.00%	49.00%
Total
100.00%	100.00%
Consideration

The total consideration for the Acquisition (the "Consideration") of RMB18,360,000 was determined based on the arm's length negotiation between the Purchaser and the Seller, with reference to the Target Company's net profit for the 12 months ended 31 December 2020.

First Installment

RMB8,262,000, or 45% of the Consideration, shall be payable by the Purchaser to the Seller within 10 Business Days after the signing of the Agreement.

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Second Installment

RMB8,262,000, or 45% of the Consideration shall be payable by the Purchaser to the Seller within 10 Business Days after the date of Completion upon all conditions precedents of the Agreement being satisfied.

Third Installment

RMB1,836,000, or 10% of the Consideration shall be payable by the Purchaser to the Seller within 10 Business Days after the Purchaser has taken actual management and control over the Target Company for 30 days.

Conditions precedent

Completion is conditional upon each of the following conditions (the "Conditions") being satisfied or waived in writing by the Purchaser in the following aspects:

1. the Seller and the Target Company have completed all internal procedures and obtained all approvals required for the signing of the Agreement in relation to the Acquisition, and there shall exist no circumstances that would compromise the Acquisition;
2. all transactions between the Target Company, its related parties and other parties stipulated under the Agreement are terminated and/or settled with no amounts due;
3. the representations and warranties provided by the Seller in respect of itself and the Target Company are true, complete, accurate and not misleading;
4. the Target Company is not undergoing any outstanding or potential litigation claims from the PRC governmental authorities or otherwise which may render the Acquisition void or prevent the Completion;
5. the Target Company has restructured the board of directors and the management as stipulated under the Agreement;
6. the Target Company has not experienced any material adverse change as stipulated under the Agreement, and
7. the Target Company has completed the relevant business registration to reflect that the Purchaser is the legal and beneficial owner of the Target Company.

Completion

The date of Completion shall fall on a date within 10 days after the date of the signing of the Agreement. Completion shall take place when the Target Company has satisfied all condition precedents above including the production of documents and evidence showing that the Purchaser is the legal and beneficial owner of the Target Company.

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Upon Completion, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its respective results will be consolidated into the consolidated financial statements of the Group.

Termination

If Completion fails to take place within 30 days after the signing of the Agreement and the satisfaction of any condition precedent(s) is not agreed to be waived or extended by the Purchaser, the Purchaser shall have the right to terminate the Agreement and demand for return of all monies paid.

If there has been a material adverse change to the conditions of the Target Company or breaches/default to any representations or obligations of the Seller before Completion and such breaches/default is not remedied within 10 Business Days, the Purchaser shall have the right to terminate the Agreement, demand for return of all monies paid and seek other relief as appropriate.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Target Company has a number of property management projects in Liaoning province of the PRC. Commitment in continual expansion of management scale is the core development strategy of the Group. The Board is confident that the Acquisition will contribute positively to the Group by bringing in additional source of income from the Acquisition. The Board believes that the Acquisition is a cost-effective way to grow the Group's service offerings and property management portfolio in new geographic markets. The Acquisition can create synergies with the business of the Group by combining the existing strength and experience of the Target Company in property management in the Northeast region of the PRC.

After the Acquisition, the total contracted GFA of the Group will be increased from approximately 22.5 million square meters at the beginning of 2021 to approximately 35.2 million square meters as at the date of this announcement, representing an increase of approximately 56.4%. At the same time, the total GFA of the Group under management will be increased from approximately 17.9 million square meters at the beginning of 2021 to approximately 27.2 million square meters as at the date of this announcement, representing an increase of approximately 52.0%.

Based on the factors as disclosed above, the Directors are of the view that the terms of the Acquisition are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

INFORMATION ON THE TARGET COMPANY

The Target Company is principally engaged in property management business.

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According to the financial statements of the Target Company which are prepared on a basis consistent with CASSBE accounting standards, the unaudited net asset value of the Target Company for the two years ended 31 December 2019 and 31 December 2020 was approximately RMB4,612,546 and RMB8,132,099, respectively. Set out below are the financial information of the Target Company for the two years ended

31 December 2019 and 31 December 2020, respectively:

	For the year ended 31 December
	2019	2020
	unaudited	unaudited
	RMB'000	RMB'000
Net profit/(loss) before tax	4,054	4,335
Net profit/(loss) after tax	3,363	3,520

INFORMATION ON THE PARTIES

The Group

The Group is principally engaged in the business of provision of property management services, community value-added services and value-added services to non-property owners in the PRC.

The Target Company

The Target Company is a company incorporated in the PRC with limited liability. As at the date of this announcement, a total of 8 property management projects are managed by the Target Company with approximately 1.83 million sq.m. of total contracted GFA. The Target Company mainly operates in Liaoning province of the PRC.

The Seller

The Seller is principally engaged in investment holding.

LISTING RULES IMPLICATIONS

As one of or more of the applicable percentage ratios (set out in Rule 14.07 of the Listing Rules) in respect of the Acquisition is more than 5% but all of them are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules, and is subject to the notification and announcement requirements but is exempt from Shareholders' approval requirement under the Listing Rules.

None of the Directors has a material interest in the Agreement and the transactions contemplated thereunder. Accordingly, the Directors are not required to abstain from voting on the relevant Board resolutions for approving the Acquisition.

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DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires.

"Acquisition"	the proposed acquisition of the 51% equity interest in the Target
	Company by the Purchaser
"Agreement"	the sale and purchase agreement in respect of the acquisition of
	51% equity interest in the Target Company entered into between the
	Purchaser, the Seller and the Target Company
"Board"	the board of Directors of the Company
"Business Day"	any day (other than a Saturday, Sunday or a public holiday in the PRC)
"CASSBE"	China Accounting Standards for Small Business Enterprises
"Company"	Hevol Services Group Co. Limited (stock code: 6093), a company
	incorporated in the Cayman Islands with limited liability and the issued
	shares of which are listed on the main board of the Stock Exchange
"Director(s)"	the directors of the Company
"GFA"	gross floor area
"Group"	the Company and all its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange
"Ms. Yu"	Yu Zhihan* ( 于之浛), an ordinary resident of the PRC
"PRC"	the People's Republic of China
"Purchaser"	Guizhou Furuiying Information Consultancy Limited (貴州福瑞盈信息
	諮詢有限公司), a company established as a limited liability company
	under the laws of the PRC, and an indirect wholly-owned subsidiary of
	the Company
"RMB"	Renminbi, the lawful currency of the PRC
"Seller"	Panjin Fuxing Real Estate Development Co., Ltd.* ( 盤錦福興房地產
	開發有限公司), a company established under the laws of the PRC with
	limited liability

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"Shareholder(s)"	holders of the ordinary share(s) of the Company
"sq.m."	square meters
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Target Company"	Panjin Four Seasons City Property Management Co., Ltd.* ( 盤錦四季
	城物業管理有限公司), a company established under the laws of the
	PRC with limited liability
"%"	per cent

By order of the Board

Hevol Services Group Co. Limited

Wang Wenhao

Executive Director

Hong Kong, 28 April 2021

As at the date of this announcement, the Board comprises two executive Directors, namely Ms. Hu Hongfang and Mr. Wang Wenhao, two non-executive Directors, namely Mr. Liu Jiang and Mr. Zhou Wei, and four independent non-executive Directors, namely Dr. Chen Lei, Mr. Fan Chi Chiu, Dr. Li Yongrui and Mr. Qian Hongji.

• For identification purpose only

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