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 any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. TARGET INSURANCE (HOLDINGS) LIMITED 泰加保險 ( 控股 ) 有限公司 (Incorporated in Hong Kong with limited liability) (Stock code : 06161) DISCLOSEABLE TRANSACTION IN RESPECT OF THE ACQUISITION OF THE SPV The Board announces that on 29 August 2016 (after trading hours), Target, the Vendor and the Guarantor entered into the Agreement in relation to the acquisition of the entire equity interest of the SPV, pursuant to which, Target conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the Sale Shares and the Loan Advance at a consideration of HK$263,000,000 in cash. The Consideration will be satisfied by the internal financial resources of the Group and/or possible banking facilities available to the Group. As the applicable percentage ratios in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company pursuant to Rule 14.06(2) of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules. As the Acquisition is conditional on the satisfaction of the condition, it may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the shares of the Company. Reference is made to the Announcements in respect of the entering into of the Letter of Intent for the possible acquisition of the SPV. The Board announces that on 29 August 2016 (after trading hours), Target, the Vendor and the Guarantor entered into the Agreement in relation to the Acquisition, pursuant to which, Target conditionally agreed to purchase, and the Vendor conditionally agreed to sell the Sale Shares and the Loan Advance at a consideration of HK$263,000,000 in cash. The Consideration will be satisfied by the internal financial resources of the Group and/or possible banking facilities available to the Group. - 1 -
THE AGREEMENT Set out below are the major terms of the Agreement: Date: 29 August 2016 Parties involved: (1) Target, a wholly-owned subsidiary of the Company, as purchaser; (2) East Pearl Assets Limited as Vendor; and (3) Ming Fai International Holdings Limited as Guarantor To the best of the knowledge, information, and belief of the Directors, having made all reasonable enquiries, as at the date of this announcement, the Vendor, the Guarantor and their ultimate beneficial owners are Independent Third Parties. Subject Matter The Sale Shares represent all the issued shares of the SPV, and the Loan Advance represents all the aggregate amount owing by the SPV to the Vendor. As at the date of the Agreement, the Loan Advance amounted to approximately HK$105,347,432. Upon completion of the Acquisition, the SPV will become a wholly-owned subsidiary of the Company and its financial results will be consolidated into the financial statements of the Group. Condition Completion of the sale and purchase of the Sale Shares and the Loan Advance is conditional upon (if required), the Guarantor, being the Guarantor of the Vendor under the Agreement and being also the ultimate beneficial owner of the Vendor, having obtained (a) the approval of its shareholders on the sale of the Sale Shares and the Loan Advance and the provision of the Guarantee by way of ordinary resolution at its general meeting or written shareholders approval (as the case may be) in accordance with the applicable rules and regulations (including, without limitation, the Listing Rules) on or before the Completion Date and (b) any other necessary approval from the Stock Exchange, on or before the Completion Date. If the above condition shall not have been fulfilled prior to Completion, the Agreement shall become null and void and of no further effect and the Vendor shall return the Deposits to the Purchaser within seven (7) Business Days after the Completion Date without any interest and none of the parties shall have any claim against the other for costs, damages, compensation or otherwise, save for any claim by the relevant party against the other party arising from an antecedent breach of the Agreement by the other part. - 2 -
Consideration The Consideration was determined after taking into account the preliminary valuation of the Property of HK$271,000,000 as at 30 June 2016. The Consideration shall be satisfied in the following manner: (1) upon signing of the Letter of Intent, the Initial Deposit in the amount of HK$10,000,000 has been paid by Target to the Vendor s solicitor; (2) the Further Deposit in the amount of HK$16,300,000 has been paid by Target to the Vendor s solicitor upon execution of the Agreement; and (3) the balance of the Consideration shall be paid to the Vendor upon Completion. Guarantee The Guarantor, by entering into the Agreement, agreed to guarantee the performance of all obligations of the Vendor under the Agreement. POSSIBLE FINANCIAL EFFECTS OF THE ACQUISITION Based on the estimation of the Directors, the Acquisition would not lead to significant impact on the financial position of the Group. The working capital of the Group would be reduced as a result of the payment of the Consideration and the gearing level of the Company may increase as a result of the utilisation of possible banking facilities available to the Group. INFORMATION ON THE VENDOR The Vendor is a company incorporated in the British Virgin Islands and is a wholly-owned subsidiary of the Guarantor. The Guarantor and its subsidiaries are principally engaged in manufacturing and distribution of amenity products and distribution and retail business of cosmetics and fashion accessories. INFORMATION ON THE SPV The SPV is a wholly owned subsidiary of the Vendor and is a special purpose vehicle company whose major asset comprises the Property. As of 30 June 2016, the unaudited net asset value of the SPV was HK$121,663,588, and as per the statutory audited accounts of the SPV, its audited financial results for the two years immediately preceding the date of the Agreement were as follows: - 3 -
For the year ended 31 December (audited) 2014 2015 HK$ HK$ Profit before tax 1,732,287 1,963,776 Profit after tax 1,571,788 1,819,492 INFORMATION ON THE PROPERTY The Property is the office units 501, 502, 503, 505 and 506 on the 5 th Floor of the Low Block, Grand Millennium Plaza, No.181 Queen s Road Central, Hong Kong and car parking spaces nos. 331 and 332 on the 3 rd Floor of the High Block, Grand Millennium Plaza, No.183 Queen s Road Central, No. 33 Wing Lok Street, Hong Kong. REASONS FOR THE ACQUISITION The Group is principally engaged in writing motor insurance in Hong Kong with leading market position on insurance for taxi and public light buses. Target, a wholly-owned subsidiary of the Company, was incorporated in 1977, is one of the largest motor insurance companies in Hong Kong. Target offers high quality and professional insurance plans for our customers on taxi, public light buses, private cars, goods carrying vehicles and motorcycles, etc. The Directors considered that the Acquisition provides an excellent opportunity for the Group to acquire a permanent head office and hence to (i) reduce ongoing rental expenses for the Group s head office; (ii) avoid the possible increase in rents for the head office upon expiration of its existing tenancy agreements. The Directors considered that the Agreement is on normal commercial terms, fair and reasonable, and the Acquisition is in the interests of the Company and the Shareholders as a whole. LISTING RULES IMPLICATIONS As the applicable percentage ratios in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction of the Company pursuant to Rule 14.06(2) of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules. As the Acquisition is conditional on the satisfaction of the condition, it may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the shares of the Company. - 4 -
DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: Acquisition Agreement the proposed purchase of the Sale Shares and the Loan Advance in respect of the SPV as contemplated under the Agreement the sale and purchase agreement dated 29 August 2016 entered into between Target, the Vendor and the Guarantor in relation to the Acquisition Announcements the announcements of the Company dated 1 August 2016 and 2 August 2016 relating to the entering into the Letter of Intent for the Acquisition Board Business Day Company Completion Completion Date connected person(s) Consideration Deposits Directors Further Deposit the board of Directors a day on which banks in Hong Kong are open for business (except a Saturday, Sunday and public holiday as defined under Interpretation and General Clauses Ordinance (Cap.1) or a day on which a typhoon signal No. 8 or above or black rainstorm warning is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) Target Insurance (Holdings) Limited, a company incorporated in Hong Kong with limited liability, whose shares are listed on the main board of the Stock Exchange the completion of the Acquisition 30 November 2016 or such other date as the parties may mutually agree in writing. has the meaning ascribed to it under the Listing Rules being HK$263,000,000 collectively, the Initial Deposit and the Further Deposit the directors of the Company the further deposit in the amount of HK$16,300,000 paid by Target to the Vendor upon signing of the Agreement - 5 -
Group the Company and its subsidiaries Guarantor Ming Fai International Holdings Limited, a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the main board of the Stock Exchange (stock code: 3828) Hong Kong Independent Third Party(ies) Initial Deposit Letter of Intent Listing Rules Loan Advance Loan Consideration Property PRC Sale Shares Share Consideration Share(s) Shareholder(s) the Hong Kong Special Administrative Region of the PRC person(s) and/or company(ies) who/which is (are) independent of the Company and its connected persons (as defined in the Listing Rules) the initial deposit in the amount of HK$10,000,000 paid by Target to the Vendor pursuant to the Letter of Intent the letter of intent dated 1 August 2016 entered into between Target and the Vendor in respect of the Acquisition the Rules Governing the Listing of Securities on the Stock Exchange the amount owing by the SPV to the Vendor being the Loan Advance as at the Completion Date the property situated at office units 501, 502, 503, 505 and 506 on the 5th Floor of the Low Block, Grand Millennium Plaza, No.181 Queen s Road Central, Hong Kong and car parking spaces nos. 331 and 332 on the 3rd Floor of the High Block, Grand Millennium Plaza, No.183 Queen s Road Central, No. 33 Wing Lok Street, Hong Kong the People s Republic of China, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purpose of this announcement 100,000 ordinary shares in the share capital of the SPV, being the entire issued shares of the SPV being the Consideration less the Loan Advance ordinary share(s) in the share capital of the Company holder(s) of Share(s) - 6 -
SPV Stock Exchange Target Vendor HK$ Chartered Properties Limited, a company incorporated in Hong Kong with limited liability, and the special purpose vehicle whose major assets comprises the Property The Stock Exchange of Hong Kong Limited Target Insurance Company, Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company East Pearl Assets Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of the Guarantor Hong Kong dollars, the lawful currency of Hong Kong % per cent. By Order of the Board Target Insurance (Holdings) Limited Company Secretary Tse Kam Fai Hong Kong, 29 August 2016 As at the date of this announcement, the Board comprises six executive Directors, namely Dr. Cheung Haywood (Chairman), Mr. Lai Bing Leung, Mr. Chiu Sun Ting, Dr. Choi Chiu Fai Stanley, Mr. Muk Wang Lit, Jimmy (Chief Executive Officer) and Mr. Chan Hok Ching, and four independent non-executive Directors, namely Mr. Wan Kam To, Mr. Wong Shiu Hoi, Peter, Mr. Szeto Wai Sun and Mr. Yuen Tak Tim Anthony. - 7 -