HMV Digital China Group Limited H M V 數碼中國集團有限公司 (Incorporated in Bermuda with limited liability) (Stock Code: 8078)

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1 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. This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company. HMV Digital China Group Limited H M V 數碼中國集團有限公司 (Incorporated in Bermuda with limited liability) (Stock Code: 8078) DISCLOSEABLE TRANSACTION IN RELATION TO THE ACQUISITION OF PANORAMA CORPORATION AND PARKWAY LICENSING AND INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE THE PANORAMA ACQUISITION The Board is pleased to announce that on 9 January 2017 (after trading hours), the Purchaser (a wholly-owned subsidiary of the Company) and the Company entered into the Panorama Agreement with the Panorama Vendor, pursuant to which the Panorama Vendor have conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Panorama Sale Shares, representing approximately 70% of the issued share capital of Panorama Corporation at consideration of HK$31,500,000, which shall be satisfied by the issue and allotment of 43,448,275 Panorama Consideration Shares in accordance with the terms and conditions of the Panorama Agreement. THE PARKWAY ACQUISITION The Board is also pleased to announce that on 9 January 2017 (after trading hours), the Purchaser and the Company entered into the Parkway Agreement with the Parkway Vendors, pursuant to which the Parkway Vendors have conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Parkway Sale Shares, representing approximately 70% of the issued share capital of Parkway Licensing at a consideration of HK$7,000,000 which shall be satisfied by cash and issue and allotment of 8,275,861 Parkway Consideration Shares. 1

2 LISTING RULES IMPLICATION As the applicable percentage ratios under Chapter 19 of GEM Listing Rules for the Panorama Acquisition and the Parkway Acquisition in aggregate exceeds 5% but below 25%, the Acquisitions constitutes a discloseable transaction of the Company under the GEM Listing Rules and is subject to the notification and announcement requirements but exempted from the circular, Shareholders approval and accountant s report requirements under the GEM Listing Rules. GENERAL A circular containing, among other things, (i) further details of the Panorama Agreement and the Parkway Agreement and the Panorama Specific Mandate and the Parkway Specific Mandate; and (ii) a notice convening the SGM, is expected to be despatched to the Shareholders by the Company on or before 27 January THE PANORAMA AGREEMENT Date 9 January 2017 (after trading hours) Parties (i) Fung Yu Hing Allan, as the Panorama Vendor (ii) Digital Joyful Limited, as the Purchaser (iii) HMV Digital China Group Limited To the best of the Directors knowledge, information and belief having made all reasonable enquires, the Panorama Vendor and its ultimate beneficial owners are third parties independent of each of the Company, the Purchaser and its connected persons (as defined in the GEM Listing Rules). Assets to be acquired Pursuant to the Panorama Agreement, the Panorama Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Panorama Sale Shares, representing approximately 70% of the issued share capital of Panorama Corporation free from all Encumbrances and together with all dividends, interest, benefits and other rights made on or after the date of the Panorama Agreement. Consideration The consideration of HK$31,500,000 payable by the Purchaser to the Panorama Vendor for the Panorama Sale Shares shall be satisfied by allotment and issue of aggregate 43,448,275 Panorama Consideration Shares to the Panorama Vendor or its nominee at an issue price of HK$0.725 per Panorama Consideration Share at the Panorama Completion. In the event the allotment and issue of the Panorama Consideration Shares is on or after the ex-entitlement date of the Bonus Issue, the Company shall allot and issue 86,896,550 Panorama Consideration Shares at the price of HK$ per Panorama Consideration Shares to the Panorama Vendor at the Panorama Completion. 2

3 Basis of Consideration The Consideration payable in respect of the Panorama Sale Shares has been arrived at after arm s length negotiations between the Purchaser and the Panorama Vendor and was determined having reference to (i) the historical operating and financial performance of the Panorama Corporation; and (ii) the business prospects and the synergies that may be derived from the business of the Panorama Corporation. The issue price of HK$0.725 per Consideration Share represents: (i) (ii) a discount of approximately 4.61% to the closing price of HK$0.76 per Share as quoted on the Stock Exchange on 9 January 2017, the date of the Panorama Agreement; a discount of approximately 5.35% over the average closing price of approximately HK$0.766 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days immediately prior to the date of the Panorama Agreement; and (iii) a discount of approximately 3.72% over the average closing price of approximately HK$0.753 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days immediately prior to the date of the Panorama Agreement. The issue price of HK$0.725 per Panorama Consideration Share was arrived at after arm s length negotiation between the parties with reference to the recent trading price of the Shares and current market conditions. The Directors consider that the issue price is in the interests of the Company and the Shareholders as whole. THE PARKWAY AGREEMENT Date Parties 9 January 2017 (after trading hours) (i) Mr. Fung Yu Hing Allan, as the Parkway Vendor I (ii) Mr. Wong Wing Kwong Kelvin, as the Parkway Vendor II (iii) Ingate International Company Limited, as the Parkway Vendor III (iv) Digital Joyful Limited, as the Purchaser (v) HMV Digital China Group Limited (Parkway Vendor I, Parkway Vendor II and Parkway Vendor III collectively be referred to as Parkway Vendors) To the best of the Directors knowledge, information and belief having made all reasonable enquires, the Parkway Vendors and their respective ultimate beneficial owners are third parties independent of each of the Company, the Purchaser and its connected persons (as defined in the GEM Listing Rules). 3

4 Assets to be acquired Pursuant to the Parkway Agreement, the Parkway Vendors have conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sale Shares III, representing in aggregate of approximately 70% of the issued share capital of Parkway Licensing free from all Encumbrances and together with all dividends, interest, benefits and other rights made on or after the date of the Parkway Agreement. Consideration The consideration of HK$7,000,000 payable by the Purchaser to the Parkway Vendors for the Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sale Shares III shall be satisfied by the following manner: Parkway Consideration I: The Parkway Consideration I, being the consideration payable by the Purchaser to the Parkway Vendor I for the Parkway Sale Shares I, in the total amount of HK$3,600,000, shall be settled by issue of 4,965,517 Parkway Consideration Shares to Parkway Vendor I or its nominee at an issue price of HK$0.725 per Parkway Consideration Share at Completion. In the event the allotment and issue of the Parkway Consideration Shares I is on or after the ex-entitlement date of the Bonus Issue, the Company shall allot and issue 9,931,034 Parkway Consideration Shares I at the price of HK$ per Parkway Consideration Shares I to the Parkway Vendor I at the Parkway Completion. Parkway Consideration II: The Parkway Consideration II, being the consideration payable by the Purchaser to the Parkway Vendor II for the Parkway Sale Shares II, in the total amount of HK$600,000, shall be satisfied in following manner: (a) (b) on Completion, an amount of HK$200,000, shall be settled by way of cash payable by the Purchaser to Parkway Vendor II; an amount of HK$400,000, shall be settled by issue of 551,724 Parkway Consideration Shares by the Purchaser to Parkway Vendor II at an issue price of HK$0.725 per Consideration Share. In the event the allotment and issue of the Parkway Consideration Shares II is on or after the ex-entitlement date of the Bonus Issue, the Company shall allot and issue 1,103,448 Parkway Consideration Shares II at the price of HK$ per Parkway Consideration Shares II to the Parkway Vendor II at the Parkway Completion. 4

5 Parkway Consideration III: The Parkway Consideration III, being the consideration payable by the Purchaser to the Parkway Vendor III for the Parkway Sale Shares III, in the total amount of HK$2,800,000, shall be satisfied in following manner: (a) (b) on Completion, an amount of HK$800,000, shall be settled by way of cash payable by the Purchaser to Parkway Vendor III; an amount of HK$2,000,000, shall be settled by issue of 2,758,620 Parkway Consideration Shares by the Purchaser to Parkway Vendor III at an issue price of HK$0.725 per Parkway Consideration Share. In the event the allotment and issue of the Parkway Consideration Shares III is on or after the ex-entitlement date of the Bonus Issue, the Company shall allot and issue 5,517,240 Parkway Consideration Shares III at the price of HK$ per Parkway Consideration Shares III to the Parkway Vendor III at the Parkway Completion. Basis of Consideration The Parkway Consideration payable in respect of the Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sale Shares III has been arrived at after arm s length negotiations between the Purchaser and Parkway Vendors and was determined having reference to (i) the historical operating and financial performance of Parkway Licensing; and (ii) the business prospects and the synergies that may be derived from the business of the Parkway Licensing. The issue price of HK$0.725 per Parkway Consideration Share represents: (i) (ii) a discount of approximately 4.61% to the closing price of HK$0.76 per Share as quoted on the Stock Exchange on 9 January 2017, the date of the Parkway Agreement; a discount of approximately 5.35% over the average closing price of approximately HK$0.766 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days immediately prior to the date of the Parkway Agreement; and (iii) a discount of approximately 3.72% over the average closing price of approximately HK$0.753 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days immediately prior to the date of the Parkway Agreement. The issue price of HK$0.725 per Parkway Consideration Share was arrived at after arm s length negotiation between the parties with reference to the recent trading price of the Shares and current market conditions. The Directors consider that the issue price is in the interests of the Company and the Shareholders as whole. 5

6 Consideration Shares and lock-up undertaking The Panorama Consideration Shares will be issued under the Panorama Specific Mandate to be approved by the Shareholders at the SGM. The Panorama Consideration Shares represents approximately 0.8% of the issued share capital of the Company as at the date of this announcement and approximately 0.79% of the issued share capital of the Company as enlarged by the Panorama Consideration Shares. The Consideration Shares will, upon issue and credited as fully paid, rank pari passu in all respect with all the existing shares of the Company then in issue. Application for the listing of, and permission to deal in, the Panorama Consideration Shares will be made by the Company to the Stock Exchange. Pursuant to the Panorama Agreement, the Panorama Vendor undertakes that it shall not, and shall procure that its nominee(s) shall not offer, sell, contract to sell, transfer, pledge, create any Encumbrance over or otherwise dispose of, directly or indirectly, the Panorama Consideration Shares issued to the Panorama Vendor or its nominee(s), enter into transaction(s) which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Panorama Consideration Shares for a period of thirty (30) months commencing immediately after the Panorama Completion Date; provided, however, that the foregoing restriction shall cease to apply with respect to 50% of the Consideration Shares from and after the 18-month anniversary of the Panorama Completion Date. The Parkway Consideration Shares will be issued under the Parkway Specific Mandate to be approved by the Shareholders at the SGM. The Parkway Consideration Shares represents approximately 0.15% of the issued share capital of the Company as at the date of this announcement and approximately 0.15% of the issued share capital of the Company as enlarged by the Parkway Consideration Shares. The Parkway Consideration Shares will, upon issue and credited as fully paid, rank pari passu in all respect with all the existing shares of the Company then in issue. Application for the listing of, and permission to deal in, the Parkway Consideration Shares will be made by the Company to the Stock Exchange. Pursuant to the Parkway Agreement, each of the Parkway Vendors undertakes that it shall not, and shall procure that its nominee(s) shall not offer, sell, contract to sell, transfer, pledge, create any Encumbrance over or otherwise dispose of, directly or indirectly, the Consideration Shares issued to the Parkway Vendors or its nominee(s), enter into transaction(s) which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Parkway Consideration Shares for a period of thirty (30) months commencing immediately after the Parkway Completion Date; provided, however, that the foregoing restriction shall cease to apply with respect to 50% of the Parkway Consideration Shares from and after the 18-month anniversary of the Parkway Completion Date. 6

7 Conditions Precedent Panorama Acquisition Panorama Completion is conditional upon fulfilment or waiver (as the case may be) of the following conditions: (i) (ii) the completion of the due diligence review and investigation by the Purchaser; the passing of the resolution by the Shareholders of the Company in the SGM approving the Panorama Specific Mandate, the Panorama Agreement and the transactions contemplated thereunder; (iii) the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Panorama Consideration Shares, which has not been revoked as at Panorama Completion; and (iv) the warranties given by the Panorama Vender under the Panorama Agreement remaining true and accurate in all respects and not misleading in any respect as of the Completion Date. In the event that the conditions shall not be fulfilled or waived in writing by the Purchaser by the Long Stop Date, then the Panorama Vendors and the Purchaser shall not be bound to proceed with the transactions contemplated under the Sale and Purchase Panorama Agreement. Panorama Completion Subject to the various conditions precedents and terms of the Sale and Purchase Agreement having been fulfilled or waived, Completion shall take place on the fifth Business Day immediately after fulfilment (or waiver) of the conditions precedent under the Sale and Purchase Agreement or such other date as the Vendors and the Purchaser may agree in writing. Upon Completion, the Panorama Group will become indirectly owned subsidiaries of the Company and the financial results of Panorama Group will be consolidated into the consolidated financial statements of the Group in accordance with the Group s accounting policies. Upon Completion of the acquisition of Panorama Sale Shares by the Purchaser, Panorama Vendor still owns 30% of the issued share capital Panorama Corporation. Conditions Precedents Parkway Acquisition Parkway Completion is conditional upon fulfilment or waiver (as the case may be) of the following conditions: (i) (ii) the completion of the due diligence review and investigation by the Purchaser; the passing of the resolution by the Shareholders of the Company in the SGM approving the Parkway Specific Mandate, the Parkway Agreement and the transactions contemplated thereunder; 7

8 (iii) the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Parkway Consideration Shares, which has not been revoked as at Parkway Completion; and (iv) the Warranties given by the Parkway Vendors under the Parkway Agreement remaining true and accurate in all respects and not misleading in any respect as of the Parkway Completion Date. In the event that the conditions shall not be fulfilled or waived in writing by the Purchaser by Parkway the Long Stop Date, then the Parkway Vendor and the Purchaser shall not be bound to proceed with the transactions contemplated under the Parkway Agreement. Parkway Completion Subject to the various conditions precedents and terms of the Parkway Agreement having been fulfilled or waived, Parkway Completion shall take place on the fifth Business Day immediately after fulfilment (or waiver) of the conditions precedent under the Parkway Agreement or such other date as the Parkway Vendors and the Purchaser may agree in writing. Upon Completion, Parkway Licensing will become indirectly owned subsidiary of the Company and the financial results of Parkway Licensing will be consolidated into the consolidated financial statements of the Group in accordance with the Group s accounting policies. Upon Completion of the acquisition of Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sale Shares III, Parkway Vendor I still own 15% of the issued share capital of Parkway Licensing; Parkway Vendor II still owns 3% of the issued share capital of Parkway Licensing and Parkway Vendor III still owns 12% of the issued share capital of Parkway Licensing. The Panorama Completion and the Parkway Completion are not conditional upon each others. 8

9 EFFECT OF THE ACQUISITIONS ON THE SHAREHOLDING STRUCTURE The shareholding structure of the Company (i) as at the date of this announcement (ii) immediately after the issue and allotment of Panorama Consideration Shares upon Panorama Completion: immediately after the issue and allotment of Panorama Consideration As at the date of Shares upon Panorama Shareholders this announcement Completion No. of Approx. No. of Approx. Shares % Shares % Panorama Vendor 43,448, Shiu Stephen Junior (note) 141, ,920 0 Other public Shareholders 5,461,586, ,461,586, ,461,728, ,505,034, Note: 1. Mr. Shiu Stephen Junior is the Chairman and executive Director of the Company. The shareholding structure of the Company (i) as at the date of this announcement (ii) immediately after the issue and allotment of Parkway Consideration Shares upon Parkway Completion; immediately after the issue and allotment of Parkway Consideration As at the date of Shares upon Parkway Shareholders this announcement Completion No. of Approx. No. of Approx. Shares % Shares % Vendor I 4,965, Vendor II 551, Vendor III 2,758, Shiu Stephen Junior (note) 141, ,920 0 Other public Shareholders 5,461,586, ,461,586, ,461,728, ,470,004, Note: 1. Mr. Shiu Stephen Junior is the Chairman and executive Director of the Company. 9

10 INFORMATION OF THE VENDORS Panorama Vendor, is the founder of the Panorama Corporation, who set up the Panorama Corporation for an initial aim of distributing quality motion pictures in VHS and LD home video format in Hong Kong. Panorama Vendor has been an experienced and famous film producer and businessman in Hong Kong and responsible for the Panorama Corporation s overall strategic planning, formulation of corporate policies, overall management and acquisition of film rights. The Panorama Vendor is also the Parkway Vendor I, being Mr. Fung Yu Hing, Allan. Parkway Vendor II is now the head of strategic development department and is responsible for overseeing the sales and marketing of the Parkway Licensing. Parkway Vendor III is an investment holding company incorporated in Hong Kong with limited liability. INFORMATION OF PANORAMA GROUP Panorama Corporation is a company incorporated in Hong Kong with limited liability and is wholly-owned by Panorama Vendor. The principal activities of Panorama Corporation is distribution of video products. Panorama Corporation owns, to name but a few, the distribution right of La La Land in Hong Kong. La La Land is an American romantic musical comedy-drama film written and directed by Damien Chazelle and starring Ryan Gosling, Emma Stone, John Legend and Rosemarie DeWitt. The plot follows a musician and an aspiring actress who meet and fall in love in Los Angeles. La La Land makes history by winning more Golden Globes in the 74th Annual Golden Globes than any other movie, which comes out on top in all seven of the categories the musical-comedy was nominated in. INFORMATION OF PARKWAY LICENSING Parkway Licensing is a company incorporated in Hong Kong with limited liability. The principal activities of Parkway Licensing in general trading of movie and comics related toys and figures. 10

11 Financial information of Panorama Corporation Set out below is the audited consolidated financial information for the year ended 31 March 2015 and 31 March 2016 of Panorama Corporation: 11 For the For the year ended year ended 31 March March 2016 HK$ HK$ (audited) (audited) Revenue 34,465,352 19,550,626 Net profit (loss) before tax and extraordinary items 1,248,754 (8,845,103) Net profit (loss) after tax and extraordinary items 1,043,240 (7,389,634) The audited net liabilities of Panorama Corporation as at 31 March 2015 and 2016 was approximately HK$763,390 and approximately HK$8,153,024. Financial information of Parkway Licensing Set out below is the audited consolidated financial information for the period from 25 November 2013 (date of incorporation) to 31 March 2015 and 31 March 2016 of Parkway Licensing: For the period from 25 November 2013 (date of For the incorporation) year ended to 31 March 31 March HK$ HK$ (audited) (audited) Revenue 0 401,159 Net profit (loss) before tax and extraordinary items (129,270) 13,261 Net profit (loss) after tax and extraordinary items (129,270) 13,261 The audited net liabilities of Parkway Licensing as at 31 March 2015 and 2016 was approximately HK$129,170 and approximately HK$16,009, respectively. REASONS FOR AND BENEFITS OF THE ACQUISITIONS The Group is principally engaged in the entertainment business, with a focus in television program and movie production, distribution, distribution licensing, cinema operation and management in both Hong Kong and the PRC, artists management, money lending activities and acquisitions of corporate bonds, preference shares as well as investment in securities.

12 The Group intends to continue developing and streamlining its entertainment, movie production and distribution business through the Panorama Acquisition and the Parkway Acquisition whereby the Group will be able to generate a synergistic effect with its existing lines of business, together with the addition of Panorama Corporation and Parkway Licensing business, and to provide better returns for the Shareholders and broaden the sources of income of the Group. Directors of the Company, are of the view that each of the Panorama Acquisition and the Parkway Acquisition is conducted on normal commercial terms and in the ordinary and usual course of its business, is fair and reasonable so far as the Company and the Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. LISTING RULES IMPLICATIONS As the applicable percentage ratios under Chapter 19 of GEM Listing Rules for the Panorama Acquisition and the Parkway Acquisition exceeds 5% but below 25%, the Panorama Acquisition and the Parkway Acquisition constitutes a discloseable transaction of the Company under the GEM Listing Rules and is subject to the notification and announcement requirements but exempted from the circular, Shareholders approval and accountant s report requirements under the GEM Listing Rules. The Panorama Consideration Shares and the Parkway Consideration Shares will be issued under the Panorama Specific Mandate and the Parkway Specific Mandate to be sought at the SGM. Applications will be made by the Company to the Listing Committee of the Stock Exchange for the grant of the listing of, and permission to deal in, the Panorama Consideration Shares and the Parkway Consideration Shares. The SGM will be convened and held for the purpose of considering and, if thought fit, approving, inter alia, the Panorama Agreement and the Parkway Agreement and the transactions contemplated thereunder including the grant of the Panorama Specific Mandate and the Parkway Specific Mandate. A circular containing, among other things, (i) further details of the Panorama Agreement and the Parkway Agreement and the Panorama Specific Mandate and the Parkway Specific Mandate; and (ii) a notice convening the SGM, is expected to be despatched to the Shareholders by the Company on or before 27 January DEFINITIONS In this announcement, unless the context otherwise requires, capitalized terms used shall have the following meanings: Bonus Issue the bonus issue of Shares on the basis of one bonus share for every one share as disclosed in the announcements of the Company dated 12 December 2016 and 30 December

13 Board Business Day(s) Company Director(s) Encumbrances GEM GEM Listing Rules Group Hong Kong Panorama Acquisition Panorama Agreement Panorama Completion Panorama Completion Date the board of Directors a day (other than Saturday and Sunday) on which banks are open for business in Hong Kong HMV Digital China Group Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on GEM Board of the Stock Exchange the director(s) of the Company rights of pre-emption, options, liens, claims, equities, mortgages, charges, encumbrances, defects, adverse interests or third-party rights of any nature the Growth Enterprise Market of the Stock Exchange the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange the Company and its subsidiaries the Hong Kong Special Administrative Region of the People s Republic of China the acquisition of the Panorama Sale Shares by the Purchaser from the Panorama Vendor pursuant to the Panorama Agreement the agreement dated 9 January 2017 entered into between the Vendors, the Purchaser and the Company in relation to the Acquisition completion of the Panorama Acquisition and transactions contemplated under the Panorama Agreement in accordance with its terms subject to the various conditions precedents and terms of the Panorama Agreement having been fulfilled or waived, the fifth Business Day immediately after fulfiment (or waiver) of the conditions precedent under the Panorama Agreement or such other date as the Vendors and the Purchaser may agree in writing 13

14 Panorama Consideration Panorama Consideration Shares Panorama Corporation Panorama Long Stop Date Panorama Specific Mandate Panorama Sale Shares Panorama Vendor Parkway Acquisition Parkway Completion Parkway Completion Date the sum of HK$31,500,000 to be paid by the Purchaser to the Panorama Vendor for the Panorama Sale Shares in such time, mode and manner as set out in the Panorama Agreement 4 3, 4 4 8, n e w s h a r e s t o b e a l l o t t e d a n d issued by the Company to the Panorama Vendor as fully settlement of the Panorama Consideration pursuant to the Panorama Agreement P a n o r a m a C o r p o r a t i o n L i m i t e d, a c o m p a n y incorporated in Hong Kong with limited liability 28 February 2017 (or such later date as the parties to the Sale and Purchase Agreement may agree in writing) a specific mandate to be granted to the Directors by the Shareholders at the SGM to issue and allot the Panorama Consideration Shares 7,000 ordinary shares of Panorama Corporation, representing 70% of the entire issued share capital in Panorama Corporation prior to Completion Mr. Fung Yu Hing Allan the acquisition of the Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sale Shares III by the Purchaser from the Parkway Vendors pursuant to the Parkway Agreement c o m p l e t i o n o f t h e P a r k w a y A c q u i s i t i o n a n d transactions contemplated under the Parkway Agreement in accordance with its terms subject to the various conditions precedents and terms of the Parkway Agreement having been fulfilled or waived, the fifth Business Day immediately after fulfiment (or waiver) of the conditions precedent under the Parkway Agreement or such other date as the Parkway Vendor and the Purchaser may agree in writing 14

15 Parkway Consideration Parkway Consideration Shares Parkway Long Stop Date Parkway Licensing Parkway Agreement Parkway Sale Shares I Parkway Sale Shares II Parkway Sale Shares III Parkway Specific Mandate Parkway Vendor I Parkway Vendor II Parkway Vendor III the sum of HK$ 7,000,000 to be paid by the Purchaser to the Parkway Vendors for the Parkway Sale Shares I, Parkway Sale Shares II and Parkway Sales Shares III in such time, mode and manner as set out in the Parkway Agreement the aggregate of 8,275,861 new shares to be allotted and issued by the Company to the Parkway Vendors as fully settlement of the Consideration pursuant to the Sale and Purchase Agreement 28 February 2017 (or such later date as the parties to the Parkway Agreement may agree in writing) Parkway Licensing Company Limited, a company incorporated in Hong Kong with limited liability the agreement dated 9 January 2017 entered into between the Parkway Vendors, the Purchaser and the Company in relation to the Parkway Acquisition 36,000 ordinary shares of Parkway Licensing, representing 36% of the entire issued share capital in Parkway Licensing prior to Completion 6,000 ordinary shares of Parkway Licensing, representing 6% of the entire issued share capital in Parkway Licensing prior to Completion 28,000 ordinary shares of Parkway Licensing, representing 28% of the entire issued share capital in Parkway Licensing prior to Completion a specific mandate to be granted to the Directors by the Shareholders at the SGM to issue and allot the Parkway Consideration Shares Mr. Fung Yu Hing Allan Mr. Wong Wing Kwong Kelvin Ingate International Company Limited, a company incorporated in Hong Kong with limited liability 15

16 Purchaser SGM Share(s) Shareholder(s) Stock Exchange Warranties HK$ Digital Joyful Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company the special general meeting of the Company to be convened to consider and, if thought fit, approve the relevant matters mentioned in this announcement ordinary share(s) of HK$0.01 each in the issued share capital of the Company as at the date of this announcement holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited the representations, warranties and undertakings on the part of the Vendors given pursuant to the Sale and Purchase Agreement Hong Kong dollar(s), the lawful currency of Hong Kong % per cent. By Order of the Board HMV Digital China Group Limited Shiu Stephen Junior Chairman Hong Kong, 9 January

17 As at the date hereof, the Board comprises: Executive Directors: Non-executive Directors: Independent Non-executive Directors: Mr. Shiu Stephen Junior (Chairman) Ms. Li Mau (Co-Chairman) Mr. Sun Lap Key, Christopher Mr. Lee Wing Ho, Albert Mr. Ho Gilbert Chi Hang Mr. Wu King Shiu, Kelvin Mr. Chan Chi Ho Mr. Kam Tik Lun Mr. Tam Kwok Ming, Banny This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. This announcement will remain on the GEM website at on the Latest Company Announcements page for seven days from the day of its posting and on the website of the Company at 17