Future Bright : A VERY SUBSTANTIAL DISPOSAL RELATING TO THE SALE OF THE ENTIRE EQUITY INTERESTS AND SHAREHOLDER LOANS IN BRIGHT SUCCESS - PROPERTY AGENCY COMPANY LIMITED

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Future Bright Holdings Limited

佳景集團有限公司*

(Incorporated in Bermuda with limited liability)

(Stock Code: 703)

A VERY SUBSTANTIAL DISPOSAL

RELATING TO THE SALE OF THE ENTIRE EQUITY INTERESTS

AND SHAREHOLDER LOANS IN

BRIGHT SUCCESS - PROPERTY AGENCY COMPANY LIMITED

The Board is pleased to announce that on 28 October 2019, the Vendors - Bright Rich and Gain Success (both wholly-owned subsidiaries of the Company as vendors), the Company (as vendors' guarantor), the Purchaser (as purchaser), Bright Success and HQ Company (as target companies) entered into the Disposal Agreement, pursuant to which the Purchaser agreed, subject to obtaining the approval from the Shareholders, to purchase 100% equity interest in Bright Success, the existing sole shareholder of HQ Company, together with the related shareholder loans at the Consideration of RMB300 million (approximately HK$329.3 million) in cash.

Bright Success holds a wholly-owned subsidiary incorporated in Mainland China - HQ Company which sole asset is the Property.

Mr. Chan and his associates together have an equity interest of approximately 41.31% in the Company as at the date of this announcement, and have indicated that they will vote in favour of the Disposal if and when the Disposal is put forward for the approval by the Shareholders at the SGM.

The Disposal constitutes a very substantial disposal of the Group and is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules as one of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Disposal is more than 75%. A circular containing, among other things, further information of the Disposal and other information as required under the Listing Rules and the notice convening the SGM will be despatched to the Shareholders on or before 29 November 2019 in order to allow the Company sufficient time to prepare the necessary information for inclusion in the circular.

• For identification purpose only

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Completion of the Disposal is subject to the fulfilment of the condition set out in the section headed "Condition to the Disposal Agreement" in this announcement. Accordingly, Shareholders and potential investors of the Company should note that the Disposal may or may not materialize. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.

1. INTRODUCTION
   The Board is pleased to announce that on 28 October 2019, Bright Rich and Gain Success (both wholly-owned subsidiaries of the Company as vendors), the Company (as vendors' guarantor), the Purchaser (as purchaser), Bright Success and HQ Company (as target companies) entered into the Disposal Agreement, pursuant to which the Purchaser agreed, subject to obtaining the approval from the Shareholders, to purchase 100% equity interest in Bright Success, the existing sole shareholder of HQ Company, together with the related shareholder loans at the Consideration of RMB300 million (approximately HK$329.3 million) in cash.
   A summary of the major terms of the Disposal Agreement is set out below:
2. THE DISPOSAL AGREEMENT Date
   28 October 2019
   Parties
3. 1. Vendors: Bright Rich and Gain Success
   2. Vendors' guarantor: the Company
   3. Purchaser: Zhou Luohong
   4. Target company 1: Bright Success
   5. Target company 2: HQ Company

The Company entered into the Disposal Agreement to guarantee the performance of the obligations of the Vendors thereunder.

Bright Success

Bright Success owns a wholly-owned subsidiary in Mainland China - HQ Company which sole asset is the Property which is located within the Guangdong-Macao Cooperation Industrial Park in Hengqin New Area. The Property spans from Huandao East Road in the east to Ziqi South Road in the west and from Xiangjiang Road in the south to Haojiang Road in the north. The Property has a site area of approximately 19,939.94 sq.m. and a total buildable gross floor area of approximately 49,849.85 sq.m.

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Summary of progress of development of the Property with updates

The Property has been designed to become an international food plaza with an intent that most of the units would on completion of its development be rented out, while a small portion of the units would be retained for self-use. The piling works and about 80% of the foundation works at the Property have been completed while the remaining 20% of the foundation works has to be done in line with some early construction works for the upper structure of the building and has been suspended for the reasons set out below.

As previously announced, the development of the Property has since its acquisition in January 2015 suffered serious delay for various reasons beyond its control including unexpected soft soil treatment, the 10 months' long obtainment of approval for its building development and design plan for the Property and the suspension of its foundation treatment work caused by improper construction works of its adjacent site. The construction works have only been able to resume in January 2017, then got suspended again in March 2017, and resumed in February 2018, and got suspended again in May 2018 for 40 days, while extension for meeting the various development milestones under the Land Contract was granted in November 2017 after an idle land investigation by Hengqin Island Land Authority (橫琴新區管理委員會規劃國土局) in May 2017. During that period, the economy of Macau has experienced a substantial downturn since 2015 with gradual improvement in 2016, and the economy of Hengqin Island performed much slower than expected. And the Group's business has sustained losses since then and has since May 2016 started to review its resources as well as its benefits (short and long terms), capital commitment, plan and work schedule for the development of the Property with all options and alternatives open for consideration. Since then, the Group has looked for joint venture partners and undertaken negotiations with potential buyers without success where many potential joint venture partners and potential buyers have indicated that the Property would have better marketability if some of its use could be to include commercial serviced apartments. In view of such indication, HQ Company has pursued to apply for a change of the use of the Property to include commercial serviced apartments and to suspend its construction works while keeping its ongoing negotiations with potential joint venture partners and buyers.

As previously disclosed in the announcement of the Company dated 5 June 2019, the Company's 2019 interim report of 26 August 2019 and the announcement of the Company dated 4 September 2019, Hengqin Island Land Authority has then issued a letter to HQ Company reminding it to progress with the construction works at the Property on a timely basis to meet the next development milestone of completing the foundation and basement works (建設標高±0.00) by 31 July 2019, failing which HQ Company may face a daily penalty of some RMB0.628 million. And the construction works at the Property have been delayed due to various reasons which include (i) a suspension of construction works for over 40 days from May to June 2018 at the request of Hengqin Island Land Authority for improving site safety as previously announced,

1. a longer time for preparing the invitation for tender for the upper structure of this development project, (iii) the ongoing negotiation for the disposal of this development project to potential buyer, (iv) the heavy capital commitment involved for building the

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upper structure of this development project and the difficulty in obtaining a construction loan to finance the building of the upper structure of this development project under the current tight capital environment, and (v) the current and anticipated weak demand for commercial shop spaces in Hengqin Island in the next few years and hence the likely resulting operational losses after completion of this development project. It has been estimated that the remaining construction works to meet the next development milestone of completion of the foundation and basement works (建設標高±0.00) would take some 6-9 months to do.

To enhance the marketability of the Property, HQ Company has in mid - June 2019, submitted an application to Hengqin Island Land Authority seeking for its approval for (i) a further extension of the remaining development milestones under the Land Contract, and (ii) a change of use of some parts of this development project as serviced apartments and/or residential use. Management has in August 2019 held meetings with representatives of Hengqin Island Land Authority to discuss such application, during which it has been given to understand that a partial change of the land use of the Property to include commercial serviced apartments falls within the permitted land use right for commercial use, but not to include residential use. In September 2019, HQ Company received a reply letter from Hengqin Island Land Authority informing HQ Company that

1. it did not support such application of 18 June 2019; (ii) HQ Company has seemingly stopped its construction works and might possibly be in breach of the Land Contract; and

1. HQ Company may face a daily penalty of some RMB0.628 million for any delay to meet the development milestone without good justifications, where any delay due to force majeure or government actions are considered as good justifications under the Land Contract. Management has since then been revising its application to Hengqin Island Land Authority again seeking for its support for a partial change of the land use of the Property to include commercial serviced apartments without any residential use, and its related building milestone extension under the Land Contract. And negotiations with potential joint venture partners and buyers have also been ongoing until the Disposal Agreement has been signed.

Major Terms

It has been agreed under the Disposal Agreement that:

1. the Vendors will sell 100% equity interest in Bright Success together with the related shareholder loans to the Purchaser at the total consideration of RMB300 million (approximately HK$329.3 million) in cash;
2. the Purchaser has paid a deposit of RMB150 million (approximately HK$164.65 million) to the Vendors upon signing of the Disposal Agreement; and
3. the balance of the Consideration will be paid by the Purchaser on completion which shall take place within 6 business days after the Disposal Agreement is approved by the Shareholders at the SGM to be held in accordance with the requirements of Chapter 14 of the Listing Rules.

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The Consideration was determined after arm's length negotiations between the Vendors and the Purchaser and with reference to the prevailing property market value of the Property as at 30 June 2019. The Vendors and the Company shall bear their respective non-resident income tax of 10% under the Non-Resident Income Tax Rule, while the Purchaser will bear all the stamp duty and other taxes arising out of or in connection with the Disposal.

The Property (in its existing state) was valued at HK$450.2 million (equivalent to approximately RMB396 million) as at 30 June 2019 by JLL, an independent property valuer appointed by the Group. In valuing the Property, JLL has assumed that the Property will be developed and completed in accordance with the latest development proposal provided to JLL by the Group. In arriving at its opinion of value, JLL adopted the market approach by making reference to comparable land sales transactions as available in the relevant market and has also taken into account the accrued construction cost and professional fees relevant to the stage of construction as at the valuation date. JLL has relied on the accrued construction cost and professional fees information provided by the Group according to the different stages of construction of the Property as at the valuation date and JLL did not find any material inconsistency from those of other similar developments. A more up-to-date valuation of the Property will be prepared and included in the circular to the Shareholders.

The Purchaser acknowledges that there has been substantial delay in the construction works of the Property as mentioned above and agrees, upon signing of the Disposal Agreement, to bear any liabilities and penalties (including any delay penalty and idle land penalty) which may be imposed by the relevant authorities in connection with such delay and suspension of the construction works. The Vendors shall be responsible for the other liabilities of Bright Success and HQ Company incurred prior to the signing of the Disposal Agreement. The Bank Loan shall be fully repaid by the Vendors three days prior to the completion of the Disposal.

To meet the current development milestone as required under the Land Contract and to avoid any possible further liabilities from delay in meeting such current development milestone, the Vendors and the Purchaser shall after the signing of the Disposal Agreement jointly control and keep carrying on the construction works of the Property (including but not limited to the remaining 20% foundation work and (if so required) applying for change of use of the Property to include use as serviced apartments), and the Vendors shall make available for use the documents and seals relating to the Property for such purpose. The Purchaser agrees to bear all the costs for the construction works to be carried on at the Property after the signing of the Disposal Agreement. However, if completion of the Disposal Agreement does not take place, the Vendors will have to bear all such construction costs incurred after the signing of the Disposal Agreement. The Vendors shall deposit with the Purchaser's lawyer at signing of the Disposal Agreement the originals of land title documents relating to the Property for their safe keeping, and all these documents shall be returned to the Vendors if the Disposal Agreement is terminated.

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Condition to the Disposal Agreement

Completion of the Disposal Agreement will be conditional on the Disposal being approved by the Shareholders at the SGM to be held in accordance with the requirements of Chapter 14 of the Listing Rules. If the Shareholders' approval is not obtained within 90 days of signing of the Disposal Agreement, the Disposal Agreement shall be terminated without further liabilities to any parties and the Deposit with interest thereon will be returned to the Purchaser unless the parties agree to extend such 90 days' period. The above condition cannot be waived by either the Vendors or the Purchaser.

Completion

Completion of the Disposal will take place within 6 business days after the Disposal is approved by the Shareholders in the manner as mentioned above. If the Company fails to obtain the approval of the Disposal by its Shareholders within 90 days from the date of the Disposal Agreement, the Vendors shall refund the Deposit with interest thereon to the Purchaser and reimburse the Purchaser for expenses paid by him (if any) for the development of the Property, and the parties shall have no further liabilities to each other. If the Vendors breach or fail to perform their obligations under the Disposal Agreement after signing the Disposal Agreement, the Vendors are required to refund the Deposit with interest thereon and pay a penalty of RMB150 million to the Purchaser, where no such penalty is payable if the Vendors are unable to perform their obligations under the Disposal Agreement due to (i) the Company failing to obtain the approval of the Shareholders, (ii) the occurrence of a force majeure event , (iii) a breach of the Disposal Agreement by the Purchaser or (iv) government action or requirement of any governmental authority. When the Deposit is required to be refunded, the interest payable thereon shall be calculated from the date on which the Purchaser paid the Deposit until the date of refund, at the rate of 24% per annum. The abovementioned penalty of RMB150 million shall also carry interest at the rate of 24% per annum from the date when it is due and payable.

If completion of the Disposal is delayed as a result of the fault or default of the Purchaser, the Purchaser shall pay to the Vendors damages at the rate of 24% per annum on the amount payable to the Vendors under the Disposal Agreement, and if the delay continues for more than 20 days, the Vendors may terminate the Disposal Agreement and the Deposit paid by the Purchaser shall be forfeited by the Vendors without further liabilities on the Vendors.

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3. REASONS FOR AND BENEFITS OF THE DISPOSAL

As mentioned above, Macau's economy has since mid 2014 experienced a substantial downward adjustment for over two years with gradual improvement since 2016. The Group has been subject to tough and challenging operating environment recording losses since 2015. The US and China trade dispute and the current civil unrest in Hong Kong have also materially and adversely affected the business performance of the Group. The development of the Property has since its acquisition in January 2015 suffered serious delay and has been suspended for the reasons mentioned above. And the Group has since May 2016 looked for joint venture partners and undertaken negotiations with potential buyers for the development of the Property, while it has in June 2019 pursued to apply for a change of the use of the Property to include commercial serviced apartments and to suspend its construction works.

Since carrying on with the remaining 20% of the foundation works will need to be in line with the progress of some early construction works for the upper structure of the building, the continuous development of the Property shall require heavy capital commitment of no less than RMB600 million to complete the development of the Property from the Group, and the Group has experienced difficulties in obtaining construction loans from banks to finance the continuous development of the Property due to the tight credit control for property development in Mainland China. Also as mentioned above, HQ Company may face a daily penalty of some RMB0.628 million for delay to meet the current development milestone under the Land Contract. In view of such circumstances, with its limited capital resources, and the failure of obtaining any construction loans from banks or finding a joint venture partner soon, the Group will have financial difficulties to continue the development of the Property, and has to look for alternative options. It is therefore more beneficial to dispose of the Property even though the Consideration of RMB300 million under the Disposal is some 20% discount to the above valuation of RMB396 million by JLL. The Directors are of the view that the Disposal enables the Group to dispose of the Property now, instead of waiting for a better offer. The Directors are also of the view that despite of a considerable loss to be sustained from the Disposal, the Disposal would, upon its completion, generate substantial cash inflow to the Group and relieve the Group from further capital commitment on the development of the Property. With substantial cash inflow upon completion of the Disposal, the Group would be able to reduce its bank borrowings, and to use such cash inflow to finance its food and catering business which shall continue to focus on its existing markets without any plan now to tap on the food and catering market of Hengqin Island as the economic growth of Hengqin Island is much slower than expected. As the Purchaser has agreed to bear any liabilities and penalties which may be imposed by the relevant authorities in connection with delay and suspension of the development of the Property under the Disposal Agreement, the Directors (including the independent non-executive Directors) therefore consider that the terms of the Disposal Agreement are on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole.

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The audited consolidated (loss)/profit before and after tax of Bright Success for each of the years ended 31 December 2017 and 2018 are as follows:

Note: For the years ended 31 December 2017 and 2018, (loss)/profit before income tax of Bright Success were derived almost entirely from fair value (loss)/gain of the Property.

The unaudited consolidated total asset value of Bright Success as at 30 September 2019 was approximately HK$471.52 million (equivalent to approximately MOP485.66 million) and the unaudited consolidated total liability value of Bright Success as at 30 September 2019 was approximately HK$479.78 million (equivalent to approximately MOP494.17 million). The unaudited consolidated net liability value of Bright Success as at 30 September 2019 was approximately HK$8.26 million (equivalent to approximately MOP8.51 million).

Information of the Purchaser

The Purchaser is at the age of 55 and is a local resident of Macau. He has more than 20 years of experience in property investment and investment holding in Macau and many cities in Mainland China. He is the controlling shareholder and director of a company (常州市金壇區翔峰房地產開發有限公司) in Changzhou City, Jiangsu which has since 2003 been engaged in property development in Mainland China.

To the best of the Directors' knowledge, information and belief after all reasonable enquiries were made, the Purchaser is a third party independent of the Group and its connected persons (as defined in the Listing Rules).

6. LISTING RULES IMPLICATIONS

The Disposal constitutes a very substantial disposal of the Group and is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules as one of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Disposal is more than 75%. A circular containing, among other things, further information of the Disposal and other information as required under the Listing Rules and the notice convening the SGM will be despatched to the Shareholders on or before 29 November 2019 in order to allow the Company sufficient time to prepare the necessary information for inclusion in the circular.

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1. GENERAL INFORMATION
   Mr. Chan and his associates together have an equity interest of approximately 41.31% in the Company as at the date of this announcement, and have indicated that they will vote in favour of the Disposal if and when the Disposal is put forward for the approval by the Shareholders at the SGM.
2. DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meaning:

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Completion of the Disposal is subject to the fulfilment of the condition set out in the section headed "Condition to the Disposal Agreement" in this announcement. Accordingly, Shareholders and potential investors of the Company should note that the Disposal may or may not materialize. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.

By order of the Board of

Future Bright Holdings Limited

Chan Chak Mo

Managing Director

Hong Kong, 28 October 2019

As at the date hereof, the Board comprises (i) Mr. Chan Chak Mo, the Managing Director and an executive Director, (ii) Mr. Chan See Kit, Johnny, the Chairman and an executive Director,

1. Mr. Lai King Hung, the Deputy Chairman and an executive Director, (iv) Ms. Leong In Ian, an executive Director and (v) Mr. Cheung Hon Kit, Mr. Yu Kam Yuen, Lincoln and Mr. Chan Pak Cheong Afonso, the independent non-executive Directors.

For the purpose of illustration only and unless otherwise stated, conversion of RMB into HK$ and HK$ into MOP in this announcement is based on the exchange rate of RMB1.00 = HK$1.0977 and HK$1.00 = MOP1.03 respectively. Such conversion should not be constructed as a representation that any amount has been, could have been, or may be, exchanged at such or any other rate.

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