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[27 December 2017, Hong Kong] Differ Group Holding Company Limited (“DFH” or “Company”, Stock code: 6878) together with its subsidiaries (“Group”), a leading provider of short- to medium-term financing and financing-related solutions in the PRC, issued a circular for the major acquisition of the entire issued share capital of Differ Cultural Tourism Development Company Limited (“Differ Cultural Tourism Development”).

This circular is subsequence to the announcement on 21 November 2017 (after trading hours) that Differ Asset Development Limited (“Differ Asset”), a wholly-owned subsidiary of the Company, will acquire the entire issued share capital of Differ Cultural Tourism Development at the consideration of RMB375 million. Upon the completion of acquisition, Differ Cultural Tourism Development will become the indirect non-wholly owned subsidiary of the Company and its financial results of will be consolidated into the financial results of the Group.

The acquisition is intended to expand DFH’s asset management business coverage from non-performing assets to value-assets. Through its subsidiaries, Differ Cultural Tourism Development currently has two value-assets in its portfolio, namely Differ Sky Realm (鼎豐天境) and Chu Zhou Fu Cheng (處州府城) in the city of Lishui in Zhejiang Province of the PRC. The combined gross floor area Is approximately 471,679.1 sq.m. Among which, residential properties account for approximately 83.25% of the overall usage of the gross floor area. Upon the completion of the abovementioned acquisition, it is anticipated that the acquisition will offer an attractive return on investment to the Group through sales / lease of properties under the two residential and commercial property projects. Differ Sky Realm is scheduled to be completed in phases between 2018 and 2021. The first phase is expected to be delivered by the second quarter of 2018 while the sale of the fourth phase is expected to commence in the first quarter of 2018. On the other hand, Target Group (“Differ Cultural Tourism Development and its subsidiaries”) is also planning to have Chu Zhou Fu Cheng developed into a commercial and cultural tourism project which is expected to be completed by the end of 2018. Chu Zhou Fu Cheng will be leased out for shops for a short-term (approximately 3 years) or a long term (approximately 20 years). According to the valuation report, as at 30 September 2017, the current market value of Differ Sky Realm as a property under construction amounted to RMB800 million while the market value on a completion basis amounted to RMB2,140 million. The current market value of Chu Zhou Fu Cheng as a property under construction amounted to RMB428 million while the market value on a completion basis amounted to RMB977 million.

In recent years, the Chinese government has formulated a series of policies and measures to support Lishui in the tourism area and real estate investment development. It is believed that new investment opportunity and bright industry outlook will further attract investors. It is evidenced that the Lishui’s government will continue to allocate resources to propel local real estate investment and development. According to the official data provided by Lishui Municipal Commission of Housing and Urban-Rural Development, Lishui is witnessing strong market demand in both residential and commercial properties. The Board of Directors believes that subsequent to the construction and delivery of the above two value asset projects, it should reward the Group with significant investment returns.

Assets management business is the growth driver and one of the core businesses of the Group. Based on the 2016 annual report, income from assets management business for the year ended on 31 December 2016 grew significantly to RMB93.2 million or 343.85% as compared with such income of RMB21.0 million for the year ended on 31 December 2015. The acquisition will benefit the Group in diversifying its business, further extend its business scope from non-performing asset business to value asset investment area. In addition, the acquisition will also broaden the Group’s asset base and let it enjoy the capital appreciation. Based on the unaudited pro forma financial information of the Enlarged Group, the total assets of the Group would increase approximately 49.9% from approximately RMB1,927.3 million to approximately RMB2,888.9 million. In the first nine months of 2017, Target Group has recorded a net profit attributable to owners of the company of approximately RMB19.4 million.

Mr. Ng Chi Chung, executive director and CEO of DFH stated, “In recent years, the Group strived to develop its assets management business and actively sought quality assets with high return potentials. This acquisition has demonstrated that the Group’s is able to accommodate a more diversified asset classes and be able to further extend our geographical coverage from Fujian Province to Zhejiang Province. In view of the favorable economy and policies, rich experience in property development business by Target Group, as well as the capital appreciation potential of the properties, we believe that this acquisition will reward our shareholder with high investment returns. Moreover, due to the property projects  currently under construction, we are expecting to book the sale and commence rental income commencing 2018, it is expected that income generated from property sale and leasing will improve the Group’s cash flow and significantly enhance the development of the Group in the future. Looking forward, we will strive to expand our non-performing assets management business, and at the same time, we will further seek value-asset opportunities with high return potentials. Leveraging our experience in a business model of “Financing + Property” in recent years, we will strive to develop a professional value-investment platform by combining our abilities in “investment, financing, assets management, execution and exit” and our comprehensive and effective risk management system, we are confident that we are in a good position to protect our shareholders’ investments and maximize our shareholders’ returns.”

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About Differ Group Holding Company Limited (stock code: 6878)

Headquartered in Xiamen, Differ Group Holding Company Limited mainly provides short- to medium-term financing and financing-related solutions for SMEs. The Group mainly offers five types of financing and financing-related solutions, including 1) Finance Lease Services; 2) Asset Management Services; 3) Express Loan Services; 4) Financial Guarantee Services; and 5) Financial Consultant Services. DFH has continued to achieve remarkable business results and is seeking to develop new businesses to broaden its income streams. In December 2016, the Group announced the formation of a joint venture for providing commercial factoring related services in the PRC. DFH was listed on the GEM Board of the Hong Kong Stock Exchange on 9 December 2013 and has since transferred its listing to the Main Board on 6 July 2015. The Group was selected as a constituent stock of the MSCI Small Cap Indices – China Index in May 2015 and entered the Hang Seng Composite Index in March 2016. For details, please visit its website: www.dinghuodaojia.com