Colour Life Services : (1) SUBSCRIPTION OF SHARES IN THE COMPANY AND (2) CONNECTED TRANSACTION - SUBSCRIPTION OF SHARES BY A CONNECTED PERSON

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 any securities of the Company.

COLOUR LIFE SERVICES GROUP CO., LIMITED

彩 生 活 服 務 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1778)

1. SUBSCRIPTION OF SHARES IN THE COMPANY AND
2. 1. CONNECTED TRANSACTION - SUBSCRIPTION OF SHARES BY A CONNECTED PERSON

THE FIRST SUBSCRIPTION

On 19 July 2019, the Company entered into the First Subscription Agreement with the First Subscriber pursuant to which the First Subscriber has agreed to subscribe 71,149,000 new Shares at the Subscription Price of HK$5.22 per Share. The First Subscription Shares represent approximately 5.36% of the existing issued share capital of the Company and approximately 5.08% of the Company's issued share capital as enlarged by the issue of the First Subscription Shares.

The First Subscription Shares will be issued under the General Mandate and the First Subscription is conditional upon the Stock Exchange granting the listing of, and permission to deal in, the First Subscription Shares.

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THE SECOND SUBSCRIPTION

On 19 July 2019, the Company entered into the Second Subscription Agreement with the Second Subscriber pursuant to which the Second Subscriber has agreed to subscribe 22,956,000 new Shares at the Subscription Price of HK$5.22 per Share. The Second Subscription Shares represent approximately 1.73% of the existing issued share capital of the Company and approximately 1.70% of the Company's issued share capital as enlarged by the issue of the Second Subscription Shares or approximately 1.61% of the Company's issued share capital as enlarged by the issue of the First Subscription Shares and the Second Subscription Shares.

As the Second Subscriber is a company controlled by Mr. Zhou Hongyi, a non-executive Director, the Second Subscription constitutes a connected transaction for the Company and is subject to the approval by the Independent Shareholders at the EGM to be convened to approve the Second Subscription.

The Independent Board Committee comprising all the independent non-executive Directors will be formed to advise the Shareholders on the terms of the Second Subscription. Gram Capital will be appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The circular containing, among other things, further details about the Second Subscription Agreement, a letter of advice from the Independent Board Committee to the Independent Shareholders, a letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders in relation to the Second Subscription Agreement is expected to be despatched by the Company to the Shareholders on or before 9 August 2019.

THE FIRST SUBSCRIPTION

On 19 July 2019, the Company and the First Subscriber entered into the First Subscription Agreement in respect of the subscription of the First Subscription Shares.

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Details of the First Subscription Agreement are set out below:

First Subscription Shares

71,149,000 new Shares, representing approximately 5.36% of the existing issued share capital of the Company, and approximately 5.08% of the issued share capital of the Company as enlarged by issue of the First Subscription Shares or approximately 5.00% of the issued share capital of the Company as enlarged by the issue of the First Subscription Shares and the Second Subscription Shares.

Subscription Price

The Subscription Price of HK$5.22 per Share was arrived at after arm's length negotiation between the First Subscriber and the Company and after having considered the recent market price of the Shares.

The Subscription Price represents:

1. a discount of approximately 4.22% to the closing price of HK$5.45 per Share as quoted on the Stock Exchange on the date of the Subscription Agreement;
2. a discount of approximately 3.51% to the closing price of HK$5.41 per Share as quoted on the Stock Exchange on 18 July 2019, the last trading day immediately preceding the date of the Subscription Agreement;
3. a discount of approximately 6.95% to the average closing price of HK$5.61 per Share as quoted on the Stock Exchange for the last five trading days up to and including 18 July 2019; and
4. a discount of approximately 5.67% to the average closing price of HK$5.534 per Share as quoted on the Stock Exchange for the last ten trading days up to and including 18 July 2019.

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Given that the Subscription Price was set with reference to the recent market price of the Shares, the Directors consider that the Subscription Price is fair and reasonable under the current market conditions. The Directors are also of the view that the First Subscription is in the interest of the Company and the Shareholders as a whole.

The First Subscription Shares have a nominal value of HK$7,114,900 and a market value of HK$387,762,050, based on the closing price of HK$5.45 per Share on the date of the First Subscription Agreement. After deducting expenses relating to the First Subscription, the net price per First Subscription Share is approximately HK$5.20.

Conditions of the First Subscription Agreement

Completion of the First Subscription is conditional upon:

1. the listing of and permission to deal in the First Subscription Shares being granted by the Listing Committee of the Stock Exchange (and such permission and listing not subsequently being revoked prior to the delivery of definitive share certificate(s) representing the First Subscription Shares to the First Subscriber or its nominee);
2. the warranties under the First Subscription Agreement remaining and continuing to be true and correct and not misleading as of the completion date;
3. the Shares remaining listed on the Main Board of the Stock Exchange at all times from the date of the First Subscription Agreement, save for (i) any suspension in trading not exceeding five consecutive trading days, and (ii) any suspension for the purpose of clearing any announcement regarding the First Subscription and the First Subscription Agreement, or such longer period as the First Subscriber may accept in writing; and
4. no material adverse effect on the Group companies having occurred since the date of the First Subscription Agreement.

In the event that the conditions to the First Subscription are not fulfilled on or prior to one month after the date of the First Subscription Agreement (or such later date as may be agreed between the parties), the First Subscription Agreement and all rights and obligations thereunder will cease and terminate.

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Application for Listing

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the First Subscription Shares.

General Mandate to Issue Shares

No shareholders' approval is required for the First Subscription and the First Subscription Shares will be issued and allotted by the Company pursuant to the general mandate granted to the Directors to issue Shares (the "General Mandate") at the annual general meeting held on 22 May 2019. At that annual general meeting, the Shareholders have granted to the Directors, among others, the General Mandate to issue up to 265,726,242 Shares, representing 20% of the issued share capital of the Company of 1,328,631,210 Shares as at the date of the passing of the resolution. As at the date of this announcement, no Shares have been issued pursuant to the General Mandate. Upon completion of the First Subscription, the Company will have unused General Mandate to issue up to 194,577,242 Shares.

Ranking of the First Subscription Shares and Lock-up

The First Subscription Shares, when fully paid, will rank pari passu in all respects with the Shares in issue on the completion date of the First Subscription, including the right to any dividends or distribution declared on or after the date of completion of the First Subscription.

Pursuant to the terms of the First Subscription Agreement, the First Subscriber has undertaken not to dispose of the First Subscription Shares for a period of 6 months from completion of the First Subscription.

Completion of the First Subscription

Subject to fulfillment of the conditions of the First Subscription Agreement, completion of the First Subscription will take place on the third Business Day (or such later date as the parties may agree in writing) after the date when the conditions to the First Subscription Agreement are satisfied.

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