China First Capital : MAJOR TRANSACTION - ACQUISITION OF SHARES IN SJW INTERNATIONAL AND ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE

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CHINA FIRST CAPITAL GROUP LIMITED

中國首控集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1269) MAJOR TRANSACTION - ACQUISITION OF SHARES IN SJW INTERNATIONAL AND ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE ACQUISITION OF SHARES IN SJW INTERNATIONAL

The Board announces that on 28 July 2017 (after trading hours), the Company entered into the Share Purchase Agreements, pursuant to which the Company has conditionally agreed to purchase and the Sellers have conditionally agreed to sell, in aggregate, 2,700 Target Shares, representing 54% of the total issued shares of SJW International at the maximum Consideration of US$134.86 million (equivalent to approximately HK$1,051.91 million). The Consideration will be satisfied partly by cash and partly by the allotment and issue of the Consideration Shares.

CONSIDERATION SHARES

The Consideration Shares will be issued at the Issue Price, being HK$2.88, which was determined after arm's length negotiations between the Company and the First Seller with reference to the average closing price of the Shares for the 20 consecutive trading days immediately prior to the date of the First Share Purchase Agreement. Based on the maximum Consideration payable by the Company (including the maximum reward payment) of US$134.86 million, 274,380,000 new Shares will be allotted and issued as the Consideration Shares.

The Consideration Shares will be allotted and issued pursuant to a specific mandate to be sought by the Company at the EGM. The Consideration Shares, when allotted and issued, will rank pari passu in all respects among themselves and with the Shares in issue. An application will be made by the Company to the Stock Exchange for the approval for the listing of, and permission to deal in, the Consideration Shares.

LISTING RULES IMPLICATIONS

Since certain applicable percentage ratios for the Acquisition, as aggregated pursuant to Rule 14.22 of the Listing Rules, exceed 25% but are less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules.

EGM

The EGM will be held to consider and if thought fit, to approve the Acquisition, the Transaction Agreements and the transactions contemplated thereunder (including the allotment and issue of the Consideration Shares). To the best knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholders have any material interest in the Acquisition. Accordingly, no Shareholders will be required to abstain from voting on the relevant resolution to be proposed at the EGM to approve the Acquisition, the Transaction Agreements and the transactions contemplated thereunder.

GENERAL

A circular containing, among other things, further information regarding the Acquisition, the Transaction Agreements and the transactions contemplated thereunder, and SJW International together with a notice of the EGM will be despatched to the Shareholders as soon as practicable.

Closing of the Acquisition shall be subject to the satisfaction of the conditions precedent set forth in the Share Purchase Agreements which are disclosed in the section headed "Share Purchase Agreements - Conditions precedent" of this announcement. There is no assurance that any of the conditions precedent set forth in the Share Purchase Agreements will be fulfilled. Therefore, the Acquisition may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company. ACQUISITION OF SHARES IN SJW INTERNATIONAL

The Board announces that on 28 July 2017 (after trading hours), the Company entered into the Share Purchase Agreements, pursuant to which the Company has conditionally agreed to purchase and the Sellers have conditionally agreed to sell, in aggregate, 2,700 Target Shares, representing 54% of the total issued shares of SJW International at the maximum Consideration of US$134.86 million (equivalent to approximately HK$1,051.91 million). The Consideration will be satisfied partly by cash and partly by the allotment and issue of the Consideration Shares.

THE SHARE PURCHASE AGREEMENTS

Principal terms of the Share Purchase Agreements are set out below:

Date : 28 July 2017 Parties : The First Share Purchase Agreement

1. the Company as purchaser; and

2. the First Seller as seller.

The Second Share Purchase Agreement

1. the Company as purchaser; and

2. the Second Seller as seller.

Subject matter

The First Share Purchase Agreement

The Company has conditionally agreed to purchase and the First Seller has conditionally agreed to sell 2,600 Target Shares, representing 52% of the total issued shares of SJW International.

The Second Share Purchase Agreement

The Company has conditionally agreed to purchase and the Second Seller has conditionally agreed to sell 100 Target Shares, representing 2% of the total issued shares of SJW International.

Consideration

The Consideration was determined after arm's length negotiations between the Company and the Sellers having considered, among others, historical performance, net asset value, reputation and market position and development plan of SJW International as well as prospects of online education sector, based on the price-to-earnings ratio of 13.32 and calculated as described in the paragraphs "Tranche 1 Payment Price" and "Tranche 2 Payment Price" below.

The maximum Consideration payable by the Company under the First Share Purchase Agreement and the Second Share Purchase Agreement is US$130.40 million (equivalent to approximately HK$1,017.12 million) and US$4.46 million (equivalent to approximately HK$34.79 million), respectively. The Consideration shall be paid in two tranches.

Tranche 1 Payment Price

26% (based on half of the 52% of the total issued shares of SJW International to be transferred pursuant to the First Share Purchase Agreement) and 1% (based on half of the 2% of the total issued shares of SJW International to be transferred pursuant to the Second Share Purchase Agreement) of Equity Value 2017 with respect to the First Share Purchase Agreement and the Second Share Purchase Agreement, respectively. "Equity Value 2017" is equal to the product of multiplying 13.32 by the average of the 2016 Net Income and the estimated 2017 Net Income from Operations.

The Tranche 1 Payment Price under the First Share Purchase Agreement is subject to the following adjustments:

1. Claw-back payment - in the event that the audited 2017 Net Income from Operations is less than US$8 million, the Company is entitled to claw-back a portion of the Tranche 1 Payment Price which equals to 27% of the product of multiplying 13.32 by the difference between US$10 million and the audited 2017 Net Income from Operations. The claw-back payment shall offset against the Tranche 2 Payment Price under the First Share Purchase Agreement, provided that in the event of the Tranche 1 Cancellation, the First Seller shall pay the claw-back payment to the Company within 30 days from the Company's notice of its intention of the Tranche 1 Cancellation.

2. Reward payment - in the event that the audited 2017 Net Income from Operations is greater than US$12 million, the First Seller shall be entitled to an additional reward payment which equals to 27% of the product of multiplying 13.32 by the difference between US$10 million and the audited 2017 Net Income from Operations (which shall be capped at US$14 million). The reward payment shall be added to the Tranche 2 Payment Price under the First Share Purchase Agreement.

Tranche 2 Payment Price

26% (based on half of the 52% of the total issued shares of SJW International to be transferred pursuant to the First Share Purchase Agreement) and 1% (based on half of the 2% of the total issued shares of SJW International to be transferred pursuant to the Second Share Purchase Agreement) of Equity Value 2018 with respect to the First Share Purchase Agreement and the Second Share Purchase Agreement, respectively. "Equity Value 2018" is equal to the product of multiplying 13.32 by the average of the 2017 Net Income from Operations and the 2018 Net Income from Operations, provided that the capped maximum amount of 2017 Net Income from Operations and 2018 Net Income from Operations are US$14 million and US$25 million, respectively.

Payment of the Consideration

The First Share Purchase Agreement

The Company shall satisfy the Tranche 1 Payment Price as set forth below:

1. Within one month from the date of the First Share Purchase Agreement, the Deposit shall be remitted to the bank account of the First Seller; and the Tranche 1 Escrow Amount shall be remitted to the escrow account designated by the First Seller. The Tranche 1 Escrow Amount shall be released to the First Seller upon the Closing Date. Upon its release, the amount of the Deposit and the Tranche 1 Escrow Amount shall be used to offset against the payment of the cash portion of the Tranche 1 Payment Price.

2. At Closing, (a) an amount equivalent to 60% of the Tranche 1 Payment Price minus the Deposit and the Tranche 1 Escrow Amount shall be paid in cash; and (b) the remaining 40% of the Tranche 1 Payment Price shall be settled by allotment and issue of the Tranche 1 Stock at the Issue Price.