DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 51% EQUITY INTERESTS OF A NON-WHOLLY OWNED SUBSIDIARY

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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 the Cayman Islands with limited liability) (Stock code: 395) DISCLOSEABLE AND CONNECTED TRANSACTION DISPOSAL OF 51% EQUITY INTERESTS OF A NON-WHOLLY OWNED SUBSIDIARY The Company is pleased to announce that after arm s length negotiations between the relevant parties, 5 January 2017, the Vendor, a non-wholly owned subsidiary of the Company, entered into the Agreement with the Purchaser in relation to the Possible Disposal. After Completion, the Target Company will cease to be a non-wholly owned subsidiary of the Company. The consideration for the Possible Disposal will be paid by the Purchaser in cash to the Vendor. The entering into of the Agreement constitutes a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. As the Vendor, a non-wholly owned subsidiary of the Company, is the registered holder of 51% of the issued shares of the Target Company and the Purchaser is a director and the registered holder of 49% of the issued shares of the Target Company, the Purchaser is a Connected Person of the Company at the subsidiary level and the entering into of the Agreement and the transactions contemplated thereunder will also constitute connected transaction on the part of the Company under Chapter 14A of the Listing Rules. As the Board have approved the Agreement and the transactions contemplated thereunder and the independent non-executive Directors have confirmed that the terms of the Agreement are fair and reasonable and the transactions contemplated thereunder is on normal commercial terms and in the interests of the Company and the Shareholders as a whole, given that the Purchaser is a Connected Person at the subsidiary level only, the Agreement and the transactions contemplated thereunder is exempt from the circular, independent financial advice and independent Shareholders approval requirements pursuant to Rule 14A.101 of the Listing Rules. 1

2 The Company is pleased to announce that after arm s length negotiations between the relevant parties, on 5 January 2017, the Vendor (a non-wholly owned subsidiary of the Company) entered into of the Agreement with the Purchaser in relation to the Possible Disposal. The entering into of the Agreement and the transactions contemplated thereunder constitute a discloseable and connected transaction on the part of the Company under Chapters 14 and 14A of the Listing Rules. Set out below are the principal terms of the Agreement. THE AGREEMENT Date 5 January 2017 (after trading hours) Parties (i) (ii) the Vendor, a company incorporated under the laws Hong Kong with limited liability, a non-wholly owned subsidiary of the Company, and the legal and beneficial owner of 51% equity interests of the Target Company. the Purchaser, an individual, a director and the legal and beneficial owner of 49% equity interests of the Target Company. As the Target Company is a non-wholly owned subsidiary of the Company immediately prior to the entering into of the Agreement, and the Vendor is the registered holder of 51% of the issued shares of the Target Company and that the Purchaser is a director and the registered holder of 49% of the issued shares of the Target Company, the Purchaser is a Connected Person of the Company at the subsidiary level. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, save for his interests in the Target Company, the Purchaser is an Independent Third Party. The Possible Disposal Pursuant to the Agreement, it was agreed that the Purchaser shall acquire and the Vendor shall sell the Sale Capital. The Sale Capital represents 51% of the issued share capital of the Target Company. It was agreed after arm s length negotiations between the parties to the Agreement that the Possible Disposal shall be conducted by way of sale of the Sale Capital. After Completion, the Target Company shall cease to be a non-wholly owned subsidiary of the Company. Consideration The total consideration for the Possible Disposal is HK$3,950,000 and shall be settled and paid in cash by the Purchaser to the Vendor on the following dates: 2

3 (a) HK$791,152 shall be paid by the Purchaser to the Vendor by 27 January 2017, or at Purchaser s sole discretion, earlier ( First Instalment ). Upon payment of the First Instalment, the Vendor shall transfer 2,550 shares to the Purchaser; (b) HK$394,856 shall be paid by the Purchaser to the Vendor on or before 15 February 2017, or at Purchaser s sole discretion, earlier ( Second Instalment ); (c) HK$394,856 shall be paid by the Purchaser to the Vendor on or before 15 March 2017, or at Purchaser s sole discretion, earlier ( Third Instalment ); (d) HK$394,856 shall be paid by the Purchaser to the Vendor on or before 13 April 2017, or at Purchaser s sole discretion, earlier ( Fourth Instalment ). Upon payment of the Fourth Instalment, the Vendor shall transfer 1,275 shares to the Purchaser; (e) HK$282,040 shall be paid by the Purchaser to the Vendor on or before 15 May 2017, or at Purchaser s sole discretion, earlier ( Fifth Instalment ); (f) HK$282,040 shall be paid by the Purchaser to the Vendor on or before 15 June 2017, or at Purchaser s sole discretion, earlier ( Sixth Instalment ); (g) HK$282,040 shall be paid by the Purchaser to the Vendor on or before 14 July 2017, or at Purchaser s sole discretion, earlier ( Seventh Instalment ); (h) HK$225,632 shall be paid by the Purchaser to the Vendor on or before 15 August 2017, or at Purchaser s sole discretion, earlier ( Eighth Instalment ); (i) HK$225,632 shall be paid by the Purchaser to the Vendor on or before 15 September 2017, or at Purchaser s sole discretion, earlier ( Ninth Instalment ); (j) HK$225,632 shall be paid by the Purchaser to the Vendor on or before 13 October 2017, or at Purchaser s sole discretion, earlier ( Tenth Instalment ); (k) HK$225,632 shall be paid by the Purchaser to the Vendor on or before 15 November 2017, or at Purchaser s sole discretion, earlier ( Eleventh Instalment ); and (l) HK$225,632 shall be paid by the Purchaser to the Vendor on or before 15 December 2017, or at Purchaser s sole discretion, earlier ( Twelfth 3

4 Instalment ). Upon payment of the Twelfth Instalment, completion of the Agreement shall take place ( Completion Date ) and the Vendor shall transfer 1,275 shares to the Purchaser. The consideration for the Sale Capital was determined after arm s length negotiations between the Vendor and the Purchaser after considering various factors, including the nature of business of the Target Company and the Subsidiary and the unaudited net asset values of the Target Company and the Subsidiary as at 30 June The Directors (including the independent non-executive Directors) consider that the consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole. Conditions precedent Completion is subject to the following conditions having been fulfilled or waived (as the case may be): 1. the consents and approvals have all been obtained in respect of all requirements, rules, regulations and Agreement pursuant to relevant laws, Hong Kong Stock Exchange and Securities and Futures Commission, or on sale or purchase of the Sale Capital pursuant to the Memorandum and Articles of Association of the Target Company, or the Memorandum and Articles of Association of the Vendor or the Memorandum and Articles of Association of the Purchaser (if required by Stock Exchange or the Listing Rules, the consent and approval from the Independent Shareholders of the Vendor s holding company). 2. All requisitions raised by the Hong Kong Stock Exchange and Securities and Futures Commission in respect of the transaction contemplated herein have been answered satisfactorily. The conditions stated above cannot be waived by the parties to the Agreement. If the conditions are not fulfilled on or before 12 January 2017 (or such later date as the parties to the Agreement may agree (but not later than 19 January 2017)), the Agreement shall cease and terminate and thereafter except otherwise provided under the Agreement, neither party to the Agreement shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches thereof. Completion Completion shall take place on the date falling the first Business Day after all the conditions of the Agreement have been fulfilled or waived, if applicable. INFORMATION OF THE COMPANY, VENDOR AND PURCHASER Information of the Company The Company is principally engaged in (i) development and sales of software and provision of online to offline ( O2O ) consultation service; and (ii) provision of digital advertising platform and related solutions. 4

5 Information of the Vendor The Vendor, a non-wholly owned subsidiary of the Company, is a company incorporated under the laws of Hong Kong with limited liability and is principally engaging in investment holding. The Vendor holds 51% equity interest of the authorized, issued and fully paid-up share capital of the Target Company. Information of the Purchaser The Purchaser, an individual, is a director and the registered holder of 49% of the issued shares of the Target Company and has over 20 years' experience in brand management, business development and new media operation and management. INFORMATION OF THE TARGET COMPANY AND ITS WHOLLY OWNED SUBSIDIARY The Target Company is a company incorporated in Hong Kong with limited liability and is the holding company of the Subsidiary. The Subsidiary is a wholly owned subsidiary of the Target Company which was incorporated in PRC with limited liability. The subsidiary is principally engaging in the provision of recruitment consulting and information technology services in big data management. FINANCIAL INFORMATION OF THE TARGET COMPANY AND ITS WHOLLY OWNED SUBSIDIARY For the year ended 31 December 2015, the audited total assets and net assets of the Target Company are HK$1,729,000 and HK$1,421,000 respectively. The unaudited net asset value of the Target Company as at 30 June 2016 was approximately HK$1,213,000. Set out below is the net profit/(loss) (before and after tax) of the Target Company for the financial years ended 31 December of 2014 and 2015: For the year ended 31 December 2014 (Audited) HK$ For the year ended 31 December 2015 (Audited) HK$ Net profit/(loss) (before tax) 1,021,000 (485,000) Net profit/(loss) (after tax) 891,000 (465,000) For the year ended 31 December 2015, the audited total assets and net assets of the Subsidiary are RMB3,356,000 and RMB1,073,000 respectively. The unaudited net asset value of the Subsidiary as at 30 June 2016 was approximately RMB258,000. Set out below is the net profit (before and after tax) of the Subsidiary for the financial years ended 31 December of 2014 and 2015: 5

6 For the year ended 31 December 2014 (Audited) RMB For the year ended 31 December 2015 (Audited) RMB Net profit (before tax) 185,000 1,102,000 Net profit (after tax) 185, ,000 FINANCIAL IMPACT OF THE POSSIBLE DISPOSAL It is expected that the Company will record a book gain of approximately HK$3,483,000 as a result of the Possible Disposal, which represents the difference between the Consideration for the Sale Capital and the unaudited net asset values of the Target Company and the Subsidiary as at 30 June The actual gain or loss in connection with the Possible Disposal will be assessed after Completion and is subject to audit. Upon Completion, the Target Company and the Subsidiary will both cease to be subsidiaries of the Company and their financial results will not be consolidated into the Company s financial statements. REASONS FOR THE POSSIBLE DISPOSAL AND THE USE OF PROCEEDS The Company is principally engaged in (i) development and sales of software and provision of online to offline ( O2O ) consultation service; and (ii) provision of digital advertising platform and related solutions. The Target Company, through the Subsidiary, is principally engaging in the provision of recruitment consulting services and big data management. However, the financial position of the Target Company is unsatisfactory. It is anticipated that further capital injection will be necessary for the future conduct of its business. Furthermore, the big data management business of the Subsidiary overlaps with that of another subsidiary of the Company, Smartac Solutions (Suzhou) Limited. The Board considers that in disposing the Target Company, the Company will be able to avoid incurring further liability in the Target Company, as well as restructuring the Company s business by consolidating all big data management business into Smartac Solutions (Suzhou) Limited. After Completion, the Target Company will cease to be a non-wholly owned subsidiary of the Company. The Directors expect that the net proceeds from the Possible Disposal of approximately HK$3,940,000 will be used by the Company as general working capital. Taking into consideration of the above factors, the Directors (including the independent non-executive Directors) consider that the terms and conditions of the Possible Disposal are fair and reasonable on normal commercial terms and are in the interests of the Company and the Shareholders as a whole. 6

7 LISTING RULES IMPLICATION The entering into of the Agreement constitutes discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. As the Vendor, a non-wholly owned subsidiary of the Company, is the registered holder of 51% of the issued shares of the Target Company and the Purchaser is a director and the registered holder of 49% of the issued shares of the Target Company, the Purchaser is a Connected Person of the Company at the subsidiary level and the entering into of the Agreement and the transactions contemplated thereunder will also constitute connected transaction on the part of the Company under Chapter 14A of the Listing Rules. As the Board have approved the Agreement and the transactions contemplated thereunder and the independent non-executive Directors have confirmed that the terms of the Agreement are fair and reasonable and the transactions contemplated thereunder is on normal commercial terms and in the interests of the Company and the Shareholders as a whole, given that the Purchaser is a Connected Person at the subsidiary level only, the Agreement and the transactions contemplated there under is exempt from the circular, independent financial advice and independent Shareholders approval requirements pursuant to Rule 14A.101 of the Listing Rules. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, no Directors have a material interest in the Agreement and the transactions contemplated thereunder and no Directors have abstained from voting in the board resolutions approving the Agreement and the transactions contemplated thereunder. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the following meanings: Agreement Board Company Completion Completion Date Connected Persons The conditional sale and purchase agreement for the Possible Disposal dated 5 January 2017 entered into between the Purchaser and the Vendor The board of Directors of the Company Smartac Group China Holdings Limited, 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 (Stock Code : 395) Completion of the Possible Disposal pursuant to the terms and conditions of the Agreement Completion of the Agreement shall take place upon payment of the Twelfth Instalment Has the meaning ascribed to this term under the Listing Rules 7

8 Director(s) Hong Kong HK$ Independent Third Party(ies) Listing Rules O2O Parties PRC Purchaser Sale Capital Stock Exchange Subsidiary Target Company Vendor The director(s) of the Company The Hong Kong Special Administrative Region of the People s Republic of China Hong Kong dollar, the lawful currency of Hong Kong Independent third parties who are not connected person(s) of the Company and are independent of and not connected with the Company or Directors, chief executive, or Substantial Shareholders of the Company or any of its subsidiaries or their respective associates The Rules Governing the Listing of Securities on the Stock Exchange Online to offline Parties to the Agreement The People s Republic of China Tsang Anthony Koon Hung, an individual, is a director and the registered holder of 49% of the issued shares of the Target Company The 5,100 ordinary shares (representing 51% issued shares of the Target Company) owned by the Vendor and its respective rights therein The Stock Exchange of Hong Kong Limited 怡峰商務諮詢 ( 上海 ) 有限公司 Evolve Consulting Limited, a company incorporated under the laws of Hong Kong with registration number Smartac International Limited, a company incorporated under the laws of Hong Kong with registration number % Per cent Hong Kong, 5 January 2017 By Order of the Board Smartac Group China Holdings Limited Yang Xin Min Chairman As at the date of this announcement, the Directors are Mr. Yang Xin Min, Mr. Yang Zhen and Mr. Kwan Che Hang Jason as executive Directors, and Dr. Cheng Faat Ting Gary, Mr. Poon Lai Yin Michael and Mr. Yang Wei Qing as independent non-executive Directors. 8