Finet : DISCLOSEABLE TRANSACTIONS THE SUBSCRIPTIONS AND THE DISPOSAL OF LISTED SECURITIES

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FINET GROUP LIMITED

財 華 社 集 團 有 限 公 司

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 8317)

DISCLOSEABLE TRANSACTIONS

THE SUBSCRIPTIONS AND THE DISPOSAL OF LISTED SECURITIES

On 20 July 2016, the Group, through its directly wholly-owned subsidiary, subscribed a total of 8,000,000 Prosper Construction Shares through placing, which represented approximately 1.0% of the total issued share capital of Prosper Construction, for an aggregate consideration of HK$8,000,000 (excluding the transaction costs), at HK$1 per Prosper Construction Share.

For the period from 20 July 2016 to 25 July 2016, the Group, through its directly wholly- owned subsidiary, disposed all of the 8,000,000 Prosper Construction Shares at an aggregate consideration of approximately HK$8,299,000 (excluding the transaction costs), which represented approximately HK$1.04 per Prosper Construction Share.

On 20 March 2017, the Group, through its directly wholly-owned subsidiary, subscribed a total of 20,000,000 Daisho Shares through placing, which represented approximately 3.47% of the total issued share capital of Daisho after its placing was completed, for an aggregate consideration of HK$10,000,000 (excluding the transaction costs), at HK$0.5 per Daisho Share.

As the applicable percentage ratios in respect of the transactions contemplated under the Subscriptions and the Disposal A separately exceed 5% but are less than 25% and therefore constitute discloseable transactions under Chapter 19 of the GEM Listing Rules, the Subscriptions and the Disposal A are subject to the reporting and announcement requirements but are exempted from the independent shareholders' approval requirement under Chapter 19 of the GEM Listing Rules.

Due to the misunderstanding of which the Subscriptions and the Disposal A were conducted in the ordinary and usual course of business of the Group under the GEM Listing Rules, the Subscriptions and the Disposal A were not treated as discloseable transactions under the GEM Listing Rules and thereby led to failure to notify the Stock Exchange and make proper announcement(s) in relation to the Subscriptions and the Disposal A as required under Chapter 19 of the GEM Listing Rules, which constitutes non-compliance with Rule

19.34 of the GEM Listing Rules.

In order to fulfil the Company's disclosure obligation under the GEM Listing Rules and prevent the reoccurrence of similar incidents in the future, the Board has recommended the Company to implement reporting and monitoring procedures for any securities dealing which may constitute notifiable transactions, connected transactions and/or other transactions required to be disclosed under the GEM Listing Rules. The Board has suggested all members of the transaction team to report to the finance department upon execution of such transactions by the Company. The finance department will then notify the Board and arrange proper and timely disclosure as required under the GEM Listing Rules.

THE SUBSCRIPTION A

On 20 July 2016, the Group, through its directly wholly-owned subsidiary, subscribed a total of 8,000,000 Prosper Construction Shares through placing, which represented approximately 1.0% of the total issued share capital of Prosper Construction, for an aggregate consideration of HK$8,000,000 (excluding the transaction costs), at HK$1 per Prosper Construction Share.

As the interest of the Group in Prosper Construction was approximately 1.0%, Prosper Construction would not become the subsidiary or associate of the Company and the financial result of the Prosper Construction would not be consolidated into the financial result of the Group.

Prosper Construction, to the best of the Directors' knowledge, is an Independent Third Party of the Company.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION A

The Subscription A was made for pure investment purpose and the Board is of the view that the Subscription A was fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

THE DISPOSAL A

For the period from 20 July 2016 to 25 July 2016, the Group, through its directly wholly- owned subsidiary, disposed all of the 8,000,000 Prosper Construction Shares at an aggregate consideration of approximately HK$8,299,000 (excluding the transaction costs), which represented approximately HK$1.04 per Prosper Construction Share.

The Group disposed all of the 8,000,000 Prosper Construction Shares in the public market during the financial year ended 31 March 2017. On 20 July 2016, the Group disposed of 996,000 Prosper Construction Shares for a consideration of approximately HK$1,127,000 (excluding transaction costs), at approximately HK$1.13 per Prosper Construction Share. On

21 July 2016, the Group disposed of 1,340,000 Prosper Construction Shares for a consideration of approximately HK$1,450,000 (excluding transaction costs), at approximately HK$1.08 per Prosper Construction Share. On 22 July 2016, the Group disposed of 964,000 Prosper Construction Shares for a consideration of approximately HK$996,000 (excluding transaction costs), at approximately HK$1.03 per Prosper Construction Share. On 25 July 2016, the Group disposed of 4,700,000 Prosper Construction Shares for a consideration of approximately HK$4,726,000 (excluding transaction costs), at approximately HK$1.01 per Prosper Construction Share.

REASONS FOR AND BENEFITS OF THE DISPOSAL A

The purpose of the Disposal A is to realize the gain from the Subscription A. As a result of the Disposal A, the Group recognized a gain of approximately HK$299,000 which is calculated based on the difference between the acquisition price and the disposal price (excluding the transaction costs). The Group intends to use the proceeds from the Disposal A as general working capital.

The Disposal A was made at market price and the Board is of the view that the Disposal A, was fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

INFORMATION ON PROSPER CONSTRUCTION

Prosper Construction is a limited company incorporated in the Cayman Islands with limited liability and the shares of which are listed and traded on the main board of the Stock Exchange (stock code: 6816). Prosper Construction is principally engaged in the provision of marine construction services and leasing and trading of vessels.

The following information is extracted from the annual report of Prosper Construction:

For the year ended

31 December

2015

For the year ended

31 December

2016

HK$'000 HK$'000

Revenue 572,928 658,860

Net Profit before taxation 110,828 82,085

Net profit after taxation 95,998 69,449

Total assets 375,312 698,951

Net asset value 171,834 464,123

THE SUBSCRIPTION B

On 20 March 2017, the Group, through its directly wholly-owned subsidiary, subscribed a total of 20,000,000 Daisho Shares through placing, which represented approximately 3.47% of the total issued share capital of Daisho after its placing was completed, for an aggregate consideration of HK$10,000,000 (excluding the transaction costs), at HK$0.5 per Daisho Share.

Daisho, to the best of the Directors' knowledge, is an Independent Third Party of the Company.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION B

The Subscription B was made for pure investment purpose and the Board is of the view that the Subscription B was fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

INFORMATION ON DAISHO

Daisho is a limited company incorporated in the Bermuda with limited liability and the shares of which are listed and traded on the main board of the Stock Exchange (stock code: 567). Daisho is principally engaged in investment holding and manufacturing and trading of printed circuit boards.

The following information is extracted from the annual report of Daisho:

For the year ended 31 March

2016

For the year ended 31 March

2017

HK$'000 HK$'000

Revenue 206,940 170,245

Net loss before taxation (60,901) (51,009)

Net loss after taxation (60,901) (51,009)

Total assets 529,752 381,147

Net asset value 230,284 208,365

INFORMATION OF THE GROUP

The Group is principally engaged in (i) media business; (ii) property investment business; (iii) money lending business; (iv) financial information service business; and (v) securities and futures business.

GEM LISTING RULES IMPLICATIONS

As the applicable percentage ratios in respect of the transaction contemplated under the Subscription A, the Subscription B and the Disposal A separately exceed 5% but are less than 25% and constitute discloseable transactions under Chapter 19 of the GEM Listing Rules, the Subscriptions and the Disposal A are subject to the reporting and announcement requirements but are exempted from the independent shareholders' approval requirement under Chapter 19 of the GEM Listing Rules.

Due to the misunderstanding of which the Subscriptions and the Disposal A were conducted in the ordinary and usual course of business of the Group under the GEM Listing Rules, the Subscriptions and the Disposal A were not treated as discloseable transactions under the GEM Listing Rules and thereby led to failure to notify the Stock Exchange and make proper announcement(s) in relation to the Subscriptions and the Disposal A as required under Chapter 19 of the GEM Listing Rules, which constitutes non-compliance with Rule 19.34 of the GEM Listing Rules.

In order to fulfil the Company's disclosure obligation under the GEM Listing Rules and prevent the reoccurrence of similar incidents in the future, the Board has recommended the Company to implement reporting and monitoring procedures for any securities dealing which may constitute notifiable transactions, connected transactions and/or other transactions required to be disclosed under the GEM Listing Rules. The Board have suggested all members of the transaction team to report to the finance department upon execution of such transactions by the Company. The finance department will then notify the Board and arrange proper and timely disclosure as required under the GEM Listing Rules.