Qingdao International : Update announcement on discloseable transaction Formation of joint venture and acquisition of design patents

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QINGDAO HOLDINGS INTERNATIONAL LIMITED 青島控股國際有限公司*

(Incorporated in Bermuda with limited liability)

(Stock Code: 00499)

UPDATE ANNOUNCEMENT ON DISCLOSEABLE TRANSACTION FORMATION OF JOINT VENTURE

AND

ACQUISITION OF DESIGN PATENTS

Reference is made to (i) the announcement of Qingdao Holdings International Limited (the "Company") dated 11 August 2017 in respect of the memorandum of understanding entered into between Qifeng and Mr. Lv for the formation of the Joint Venture; (ii) the announcement of the Company dated 2 November 2017 in respect of the formation of the Joint Venture and the acquisition of the Design Patents; and (iii) the announcement of the Company dated 23 November 2017 in respect of the profit forecast in relation to the formation of the Joint Venture (the "Announcements"). Unless the context requires otherwise, capitalised terms used in this announcement shall have the same meanings as those defined in the Announcements.

Formation of Joint Venture

The Board is pleased to announce that Joint Venture was established on 29 December 2017. As at the date of this announcement, all of the condition precedents set out in the Joint Venture Agreement have been satisfied and the formation of the Joint Venture in accordance with the Joint Venture Agreement has been completed.

As additional time is required for the completion of the registration procedures with the relevant authorities in relation to the capital contribution, on 2 January 2018 (after trading hours), the Company and the JV Partner entered into a supplemental agreement to the Joint Venture Agreement to extend the deadline of capital injection by the shareholders of the Joint Venture. Specifically, (i) the JV Partner shall make the capital contribution of RMB35,720,000 (equivalent to approximately HK$41,792,000) by way of injection of assets (being the Business IP) on or before 31 March 2018; and (ii) HKHanhe shall make the capital contribution of (a) RMB34,900,000 (equivalent to approximately HK$40,833,000) in cash on or before 31 January 2018; and (b) RMB2,280,000 (equivalent to approximately HK$2,667,000) by way of injection of assets (being the Design Patents) on or before 31 December 2018. In addition, all applicable capital contribution timetable under the Joint Venture Agreement, including but not limited to the respective joint undertakings made by the Company, HK Hanhe, Mr. Lv and the JV Partner to complete their respective capital contribution obligations, shall be amended accordingly. The supplemental agreement to the Joint Venture Agreement shall take effect from 31 December 2017. The Company and the JV Partner also agreed that any distribution of profits of the Joint Venture will be made in proportion to the respective equity interest of HK Hanhe and the JV Partner in the Joint Venture.

The Formal Joint Venture Agreement and the articles of association of the Joint Venture shall be amended to reflect the above changes as set out in the supplemental agreement to the Joint Venture Agreement.

Save as the above, all the other terms of the Joint Venture Agreement, the Formal Joint Venture Agreement and the articles of association of the Joint Venture remain unchanged, and in full force and effect.

Acquisition of Design Patents

As the Joint Venture was newly formed and additional time is required for the completion of the registration procedures with the relevant authorities in relation to the transfer of the Design Patents, on 2 January 2018 (after trading hours), HK Hanhe and Ms. Li entered into a supplemental agreement to the Acquisition Agreement pursuant to which the parties agreed to extend the payment date of the first instalment of the Purchase Price in the amount of RMB1,140,000 (equivalent to approximately HK$1,333,800) to on or before 15 February 2018. The supplemental agreement to the Acquisition Agreement shall take effect from 14 December 2017.

Save as above, all the other terms of the Acquisition Agreement remain unchanged, and in full force and effect.

As the Joint Venture will use the Business IP and the Design Patents under the respective exclusive licence arrangement (without charges) prior to the completion of the transfer of the Business IP and the Design Patents to the Joint Venture, the postponement of the deadline of capital injection (by way of injection of assets, being the Business IP and the Design Patents) by the JV Partner and HK Hanhe, respectively will not have any material adverse effect on the business operation of the Joint Venture.

The Board considers that the terms of each of (i) the supplemental agreement to the Joint Venture Agreement; and (ii) the supplemental agreement to the Acquisition Agreement will not have material adverse effect on the Group and are fair and reasonable, and in the interest of the Company and the Shareholders as a whole.

By order of the Board

Qingdao Holdings International Limited

Jiang Yi

Executive Director and Chief Executive Officer

Hong Kong, 2 January 2018

As at the date of this announcement, the Executive Directors are Mr. Xing Luzheng (Chairman), Mr. Chen Mingdong (Vice-chairman), Mr. Jiang Yi (Chief Executive Officer), Mr. Wang Yimei and Mr. Yuan Zhi; and the Independent Non-executive Directors are Mr. Yin Tek Shing, Paul, Mr. Wong Tin Kit, Ms. Zhao Meiran and Mr. Li Xue.

For the purposes of this announcement, the exchange rate of RMB1.00 = HK$1.17 has been used, where applicable, for illustrative purposes only and does not constitute a representation that any amount has been, could have been or may be exchanged at such rate or any other rate or at all on the date or dates in question or any other date.

*

For identification purposes only