Phancy Group Co., Ltd. (PHANCY) reported that its wholly owned subsidiary, Phancy Beijing, signed a sale-and-leaseback agreement on 7 August 2026 with Huaxia Financial Leasing for newly purchased servers and accessories.

The assets, carrying an unaudited net book value of approximately RMB700 million as of 31 July 2026, will be transferred to Huaxia Financial Leasing for RMB691.88 million. Payment is due on or before 17 January 2027, subject to customary conditions precedent, including delivery of title documents, completion of registration, and finalisation of guarantee arrangements.

Under the 60-month lease term, Phancy Beijing will lease back the equipment in 20 equal instalments beginning 30 November 2026. The lease principal equals the transfer price of RMB691.88 million, while interest is set at the five-year Loan Prime Rate plus 10 basis points, currently 3.60%. If this rate remains unchanged, total lease payments would reach approximately RMB761.84 million over the contract period. The interest rate resets annually in line with prevailing LPR quotations.

PHANCY will provide a joint-and-several guarantee, and Phancy Beijing will pledge accounts receivable generated from the leased assets. Ownership of the servers transfers to the lessor upon payment and will revert to Phancy Beijing at lease expiry for a nominal repurchase price of RMB1.

In accordance with IFRS 16, the transaction will be accounted for as a financing arrangement; no gain or loss on disposal of the assets is expected. Proceeds will supplement the group’s working capital, enhancing liquidity without disrupting operational use of the servers.

The transaction’s highest applicable percentage ratio exceeds 5% but is below 25%, classifying it as a discloseable transaction under Chapter 14 of the Hong Kong Listing Rules. Accordingly, it is subject to reporting and announcement requirements but does not require shareholder approval.