MAJOR TRANSACTION:RENEWAL OF FINANCIAL GUARANTEE

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(incorporated in Cayman Islands with limited liability)

(Stock code: 8331)

MAJOR TRANSACTION:

RENEWAL OF FINANCIAL GUARANTEE

RENEWAL OF FINANCIAL GUARANTEE

Reference is made to the announcements of the Company dated 30 July 2018, 29 July 2019, 24 July 2020 and 28 July 2021 in relation to the provision of financial guarantee services by the Company via the Wuhu Subsidiary to the Borrower.

On 28 July 2022 (after trading hours), the Wuhu Subsidiary entered into the Renewal Agreement to renew the 2021 Agreement, pursuant to which, the Wuhu Subsidiary has agreed to provide financial guarantee to the Borrower by means of pledging its deposit in the sum of RMB20 million for procuring the Borrower to obtain the loan of RMB19 million provided by the lending bank. In return, the Wuhu Subsidiary shall receive a guarantee fee of 6% of the amount of deposit pledged by the Wuhu Subsidiary.

GEM LISTING RULES IMPLICATIONS

As the highest applicable percentage ratios calculated in accordance with the GEM Listing Rules in respect of the Renewal Agreement exceed 25%, the Renewal Agreement constitutes a major transaction on the part of the Company and is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 19 of the GEM Listing Rules.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no Shareholder or any of its close associates has any material interest in the Renewal Agreement and the transactions contemplated thereunder, and therefore no Shareholder is required to abstain from voting under the GEM Listing Rules if the Company were to convene a general meeting for the approval of the Renewal Agreement.

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WRITTEN SHAREHOLDERS' APPROVAL

As at the date of this announcement, P.B. Asia holds 80,925,690 Shares, representing approximately 50.86% of the total number of issued Shares of the Company. In addition, Dr. Chan, being the co-Chairman and executive Director, directly holds 6,682,000 Shares, representing approximately 4.2% of the total number of issued Shares of the Company. Accordingly, P.B. Asia and Dr. Chan are interested in an aggregate of 87,607,690 Shares, representing approximately 55.06% of the total number of issued Shares of the Company.

In accordance with Rule 19.44 of the GEM Listing Rules, a written Shareholders' approval from Dr. Chan and P.B. Asia has been obtained and accepted in lieu of holding a general meeting of the Company to approve the terms of, and the transactions contemplated, under the Renewal Agreement. As such, no general meeting of the Company will be convened.

GENERAL

A circular of the Company containing, among other matters, details of the Renewal Agreement and the transactions contemplated thereunder, and other information as required under Rule 19.41(a) of the GEM Listing Rules, is expected to be despatched to the Shareholders on or before 18 August 2022.

On 28 July 2022 (after trading hours), the Wuhu Subsidiary entered into the Renewal Agreement to renew the 2021 Agreement, pursuant to which the Wuhu Subsidiary has agreed to provide financial guarantee to the Borrower by means of pledging its deposit in the sum of RMB20 million for procuring the Borrower to obtain the loan of RMB19 million provided by the lending bank. Salient terms of the Renewal Agreement are as follows:

THE RENEWAL AGREEMENT

Date:	28 July 2022
Parties:	(1)	Wuhu Feishang Non-metal Material Co., Limited*（蕪湖飛尚非金屬材
		料有限公司）, a wholly-owned subsidiary of the Company; and
	(2)	Wuhu Haiyuan Copper Industrial Co., Ltd.*（蕪湖市海源銅業有限責任
		公司）as the Borrower

To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, the Borrower is a company established in the PRC in 1996 with a registered capital of RMB32 million principally engaged in manufacture and subcontracting of nonferrous metals in the PRC and its main products are copper rod, copper busbar, high frequency resistance welding copper wire and other copper materials. To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, the Borrower and its ultimate beneficial owner, namely, Zhou Tianliang are Independent Third Parties.

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Subject matter

Pursuant to the terms of the Renewal Agreement, the Company has agreed to provide financial guarantee to the Borrower for procuring it to obtain the loan provided by the lending bank in the PRC with principal amount of RMB19 million (equivalent to approximately HK$22.1 million) by means of entering into a guarantee contract for the pledge of its deposit in the sum of RMB20 million (equivalent to approximately HK$23.3 million) with the lending bank, which is an Independent Third Party.

Terms of the Guarantee

The Guarantee shall be for a term of one year commencing from 29 July 2022 to 29 July 2023 (subject to the terms of the guarantee contract to be entered into between the Wuhu Subsidiary and the lending bank upon expiry of the existing guarantee contract). The Wuhu Subsidiary shall charge the Borrower an annual guarantee fee of 6% of the amount of deposit pledged by the Wuhu Subsidiary (i.e. RMB20 million) payable annually in arrears.

Security

The Borrower shall provide security of its main products comprising electrolytic copper, copper rod and copper busbar with market value of not less than RMB20 million during the term of the Guarantee. In the event that the market value of the security falls below RMB20 million at any time during the term of the Guarantee, the Borrower shall provide additional security to meet the shortfall upon request by the Wuhu Subsidiary.

REASONS FOR AND BENEFITS OF THE RENEWAL AGREEMENT

The Group is principally engaged in (i) bentonite mining; (ii) the production and sales of drilling mud and pelletising clay; and (iii) financial service business, including money lending business and wealth management services in Hong Kong as well as generating financial guarantee fee income in the PRC.

Due to the outbreak of COVID-19 in first half of 2022 and lock-down in some major cities of the PRC, the PRC's economy growth has slowed and are facing challenges ahead. Due to uncertainties brought by the Russo-Ukranian War, international trade conflicts and outbreak of COVID-19, the Board expect competition within the bentonite industry will further intensify and might adversely affect the revenue of the Group. The Board considers that the provision of Guarantee in favour of the Borrower will better utilise the Group's cash in return for a stable interest income (i.e. the annual guarantee fee from the Borrower and the normal bank deposit interest income).

As at the date of this announcement, the annual guarantee fee under the 2021 Agreement in the amount of RMB1.2 million has been duly received by the Group. The Wuhu Subsidiary provided financial guarantee to the Borrower since 2018, timely payments of the annual guarantee fee under the back-to-back guarantee agreements were made by the Borrower to the Group according to the prescribed payment schedule and, to the best knowledge of the Directors, there was no default on the part of the Borrower with the lending bank. With the security provided by the Borrower, being the main products of the Borrower, the Directors consider that its financial exposure has been secured.

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As the Company has a decent understanding of the background of the Borrower and has established a good track record with the Borrower by now, the Directors are of the view that the renewal of the provision of the Guarantee with the Borrower would continue to provide an efficient and cost-effective way to utilise the Group's cash to secure reasonable return for the Company and its Shareholders as a whole.

In view of the foregoing, the Board considers that the annual guarantee fee from the Borrower together with the normal bank deposit interest income under the Renewal Agreement could generate a stable source of revenue for the Group. To the best knowledge, information and belief of the Directors after having made all reasonable enquiries, the use of the renewed loan by the Borrower with the lending bank is for working capital purpose.

The Directors consider that the terms and conditions of the Renewal Agreement are fair and reasonable and on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

GEM LISTING RULES IMPLICATIONS

As the highest applicable percentage ratios calculated in accordance with the GEM Listing Rules in respect of the Renewal Agreement exceed 25%, the Renewal Agreement constitutes a major transaction on the part of the Company and is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 19 of the GEM Listing Rules.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no Shareholder or any of its close associates has any material interest in the Renewal Agreement and the transactions contemplated thereunder, and therefore no Shareholder is required to abstain from voting under the GEM Listing Rules if the Company were to convene a general meeting for the approval of the Renewal Agreement.

WRITTEN SHAREHOLDERS' APPROVAL

As at the date of this announcement, P.B. Asia holds 80,925,690 Shares, representing approximately 50.86% of the total number of issued Shares of the Company. In addition, Dr. Chan, being the Co-chairman and executive Director, directly holds 6,682,000 Shares, representing approximately 4.2% of the total number of issued Shares of the Company. Accordingly, P.B. Asia and Dr. Chan together are interested in an aggregate of 87,607,690 Shares, representing approximately 55.06% of the total number of issued Shares of the Company.

In accordance with Rule 19.44 of the GEM Listing Rules, a written Shareholders' approval from Dr. Chan and P.B. Asia has been obtained and accepted in lieu of holding a general meeting of the Company to approve the terms of, and the transactions contemplated, under the Renewal Agreement. As such, no general meeting of the Company will be convened.

GENERAL

A circular of the Company containing, among other matters, further details of the Renewal Agreement and the transactions contemplated thereunder, and other information as required under Rule 19.41(a) of the GEM Listing Rules, is expected to be despatched to the Shareholders on or before 18 August 2022.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings when used herein:

"2018 Agreement"	the back-to-back guarantee agreement dated 30 July 2018 and
	entered into between the Wuhu Subsidiary and the Borrower,
	details of which were set out in the announcement of the
	Company dated 30 July 2018
"2019 Agreement"	the back-to-back guarantee agreement dated 29 July 2019 and
	entered into between the Wuhu Subsidiary and the Borrower to
	renew the 2018 Agreement, details of which were set out in the
	announcement of the Company dated 29 July 2019

"2020 Agreement"

"2021 Agreement"

"Board"

"Borrower"

"Company"

the back-to-back guarantee agreement dated 24 July 2020 and entered into between the Wuhu Subsidiary and the Borrower to renew the 2019 Agreement, details of which were set out in the announcement of the Company dated 24 July 2020

the back-to-back guarantee agreement dated 28 July 2021 and entered into between the Wuhu Subsidiary and the Borrower to renew the 2020 Agreement, details of which were set out in the announcement of the Company dated 28 July 2021

the board of Directors

Wuhu Haiyuan Copper Industrial Co., Ltd.*（蕪湖市海源銅 業有限責任公司）, a company established in the PRC and an

Independent Third Party

P.B. Group Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM of the Stock Exchange (stock code: 8331)

"connected person(s)"

"Director(s)"

"Dr. Chan"

"GEM Listing Rules"

"Group"

has the same meaning ascribed thereto under the GEM Listing Rules

the director(s) of the Company

Dr. Chan Man Fung, the Co-chairman of the Company and an executive Director

the Rules Governing the Listing of Securities on GEM of the Stock Exchange

the Company and its subsidiaries

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