CONNECTED TRANSACTION DISPOSAL OF THE ENTIRE INTEREST IN CADICOL MANAGEMENT CONSULTANTS LIMITED

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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. (Incorporated in Hong Kong with limited liability) (Stock Code: 420) CONNECTED TRANSACTION DISPOSAL OF THE ENTIRE INTEREST IN CADICOL MANAGEMENT CONSULTANTS LIMITED The Board announces that on 25 June 2014, the Company entered into the Disposal Agreement with the Purchaser, in respect of the disposal of the entire interest in Cadicol, at a consideration of HK$1,673,000. Mr. Ha is a connected person of the Company under the Listing Rules as Mr. Ha is the Vice-Chairman and an Executive Director of the Company. The Disposal therefore constitutes a connected transaction of the Company. As one of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal shall exceed 0.1% but are all less than 5%, the Disposal is subject to the reporting and announcement requirements but exempt from the independent shareholders approval requirement under Chapter 14Aof the Listing Rules. 1

2 THE DISPOSAL AGREEMENT DATED 25 JUNE 2014 Parties Vendor: Purchaser: The Company Mr. Ha, Vice-Chairman and an Executive Director of the Company Assets to be disposed of 10,000 ordinary shares, being the entire issued share capital of Cadicol. Consideration The Consideration shall be paid by the Purchaser to the Vendor within 7 Business Days after signing the Disposal Agreement. The consideration for the Disposal was determined after arm s length negotiations between the Vendor and the Purchaser with reference to, among others, the unaudited pro forma balance sheet and income statement of Cadicol as at the Completion Date, with the net value of the Membership of HK$1,673,000 determined by reference to the recent transactions of similar memberships. Completion Completion shall take place within 3 Business Days upon satisfaction of the conditions set out in the section headed Condition Precedent below. Condition Precedent Completion is conditional upon fulfillment of the following condition: (i) the Vendor having complied with the applicable requirements of the Listing Rules in respect of the entering into and performance of the Disposal Agreement. 2

3 INFORMATION OF CADICOL AND THE MEMBERSHIP Cadicol is a company incorporated in Hong Kong with limited liability and has an issued share capital of 10,000 ordinary shares, all of which being owned by the Company. As at the date of this announcement, other than being the holder of the Membership, Cadicol has no other business operations. The audited net profits (both before and after income tax) of Cadicol as accounted for in the audited consolidated income statement of the Company is as follows: For the financial year ended 31 December (HK$ 000) (HK$ 000) Net profit before income tax 0 0 Net profit after income tax 0 0 No revenue were generated from the above-mentioned periods. The Membership being owned by Cadicol since 5 August 1989, which the then acquisition cost was HK$195,000. INFORMATION OF THE PARTIES The Company is an investment holding company incorporated in Hong Kong. The principal business activities of the Group include manufacturing and sale of knitted fabric, as well as manufacturing and sale of dyed yarns, sewing threads and garments. Mr. Ha is a Hong Kong resident, who is currently acting as the Vice-Chairman and an Executive Director of the Company. He is also the director of various subsidiaries of the group. As at the date of this announcement, 103,085,096 Company s shares which representing approximately 8.57% of the issued share capital of the Company, are registered under his and his wife name. 3

4 REASONS FOR AND THE BENEFITS OF ENTERING INTO THE DISPOSAL AGREEMENT Given that Cadicol no longer holds any assets, other than the Membership, or operates any business under the Group, the Disposal will allow the Group to rationalize its group structure by disposing of Cadicol, which no longer forms any part of its core businesses and to realize its investment in the Cadicol. The Board considers that the Disposal Agreement has been entered into on normal commercial terms and the terms of which are fair and reasonable and in the interests of its own company and shareholders as a whole. FINANCIAL EFFECTS OF THE DISPOSAL Upon Completion, the Company will cease to have any equity interest in Cadicol and Cadicol will cease to be a subsidiary of the Company. The Company will record a book gain of approximately HK$1,478,000 as a result of the Disposal, being the difference between the consideration and the net assets value of Cadicol as at Completion. LISTING RULES IMPLICATIONS FOR THE DISPOSAL Mr. Ha is a connected person of the Company under the Listing Rules as Mr. Ha is the Vice-chairman and an executive director of the Company. The Disposal therefore constitutes a connected transaction of the Company. Mr. Ha has a material interest in the Disposal. At the respective board meeting of the Company approving the Disposal, Mr. Ha has abstained from voting on the resolutions of the Board approving the Disposal. As one of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal shall exceed 0.1% but are all less than 5%, the Disposal is subject to the reporting and announcement requirements but exempt from the independent shareholders approval requirement under Chapter 14Aof the Listing Rules. 4

5 DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: Board the board of Directors Business Day(s) day(s) (other than Saturday, Sunday and public holidays) on which banks in Hong Kong are generally open for normal banking business Cadicol Company or Vendor Completion Cadicol Management Consultants Limited, a company established in Hong Kong with limited liability and a wholly-owned subsidiary of the Company Fountain Set (Holdings) Limited ( 福 田 實 業 ( 集 團 ) 有 限 公 司 ), a company incorporated in Hong Kong with limited liability and the securities of which are listed on the main board of the Stock Exchange (stock code: 420), being the vendor under the Disposal Agreement the completion of the Disposal pursuant to the Disposal Agreement Completion Date within 3 Business Day upon fulfillment the condition precedent in the Disposal Agreement Connected person(s) has the meaning ascribed thereto in the Listing Rules Director(s) the director(s) of the Company Disposal the proposed disposal of the entire issued share capital of Cadicol by the Vendor to the Purchaser pursuant to the Disposal Agreement Disposal Agreement the conditional sale and purchase agreement entered into on 25 June 2014 (entered into after the close of trading hours of the Stock Exchange) between the Company as vendor and Mr. Ha as purchaser in relation to the Disposal Group the Company and its subsidiaries HK$ Hong Kong dollars, the lawful currency of Hong Kong 5

6 Hong Kong the Hong Kong Special Administrative Region of the People s Republic of China Listing Rules the Rules Governing the Listing of Securities on the Stock Exchange Membership membership in Aberdeen Marina Club Mr. Ha or Purchaser Mr. Ha Kam On, Victor, the Vice-chairman and an executive director of the Company, being the purchaser under the Agreement Stock Exchange The Stock Exchange of Hong Kong Limited % per cent. On behalf of the Board Fountain Set (Holdings) Limited Li Lan Chairman and Chief Executive Director Hong Kong, 25 June 2014 As at the date hereof, the Board comprises four executive directors, namely, Madam Li Lan, Mr. Ha Kam On, Victor, Mr. Gong Zhengyi and Mr. Zhao Yao; two non-executive directors, namely, Dr. Yen Gordon and Mr. Zhang Chong; and three independent non-executive directors, namely, Mr. Ng Kwok Tung, Mr. Chow Wing Kin, Anthony, SBS, JP, and Mr. Yang Shibin. 6