HAIER ELECTRONICS GROUP CO., LTD. 海爾電器集團有限公司 *

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities. INTRODUCTION HAIER ELECTRONICS GROUP CO., LTD. 海爾電器集團有限公司 * (Incorporated in Bermuda with limited liability) (Stock Code: 1169) CONNECTED TRANSACTION AND SHARE TRANSACTIONS The Board is pleased to announce that with a view to motivate the joint venture partners to meet the challenging performance targets and, if appropriate, to facilitate the Group to further increase its current shareholding in an existing joint venture company and its proposed shareholding in a proposed joint venture company following its establishment, the Company has, on 15 June 2011, entered into the Suzhou Agreement and the Hunan Agreement with Suzhou Joint Venture Partner and Hunan Joint Venture Partner respectively, pursuant to which the Company proposed to grant, subject to the Suzhou Agreement becoming effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein, Suzhou Option to Suzhou Joint Venture Partner, and, Hunan Option to Hunan Joint Venture Partner respectively. Should the Suzhou Agreement become effective, then subject to the fulfillments of the prescribed financial and operational performance targets by Suzhou Joint Venture Partner, it is proposed that Suzhou Joint Venture Partner could sell up to a maximum of 30% interest in Suzhou Goodaymart to the Company in accordance with the terms of the Suzhou Agreement and part or the whole of such considerations for such acquisitions may, at the Company s sole discretion, be settled in cash or, by the issue and allotment of new Shares. Similarly, under the Hunan Agreement, subject to the fulfillments of the prescribed financial and operational performance targets by Hunan Joint Venture Partner, Hunan Joint Venture Partner could sell up to a maximum of 30% interest in Hunan Goodaymart in accordance with the terms of the Hunan Agreement and part or the whole of such considerations for such acquisitions may, at the Company s sole discretion, be settledincashor,bytheissueandallotmentof new Shares. Under both arrangements, following the Company s exercise of its discretion to issue and allot new Shares, Suzhou Joint Venture Partner and Hunan Joint Venture Partner would become Shareholders. 1

2 IMPLICATIONS OF THE LISTING RULES Suzhou Agreement As each of the applicable percentage ratios in respect of the transaction contemplated under the Suzhou Agreement is less than 5%, the transaction contemplated under the Suzhou Agreement constitutes a share transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. Hunan Agreement As Hunan Joint Venture Partner is a substantial shareholder of Hunan Goodaymart, Hunan Joint Venture Partner is a connected person of the Company, and the transaction contemplated under the Hunan Agreement constitutes a connected transaction of the Company under the Listing Rules. As each of the applicable percentage ratios in respect of the transaction contemplated under the Hunan Agreement is less than 5%, the transaction contemplated under the Hunan Agreement constitutes a share transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. It is however exempt from the reporting, announcement and independent Shareholders approval requirements under Chapter 14A of the Listing Rules since the requirements under Rule 14A.31(9) of the Listing Rules are met. INTRODUCTION The Board is pleased to announce that with a view to motivate the joint venture partners to meet the challenging performance targets and, if appropriate, to facilitate the Group to further increase its current shareholding in an existing joint venture company and its proposed shareholding in a proposed joint venture company following its establishment, the Company has, on 15 June 2011, entered into the Suzhou Agreement and the Hunan Agreement with Suzhou Joint Venture Partner and Hunan Joint Venture Partner respectively, pursuant to which the Company proposed to grant, subject to the Suzhou Agreement becoming effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein, Suzhou Option to Suzhou Joint Venture Partner, and, Hunan Option to Hunan Joint Venture Partner respectively. Should the Suzhou Agreement become effective, then subject to the fulfillments of the prescribed financial and operational performance targets by Suzhou Joint Venture Partner, it is proposed that Suzhou Joint Venture Partner could sell up to a maximum of 30% interest in Suzhou Goodaymart to the Company in accordance with the terms of the Suzhou Agreement and part or the whole of such considerations for such acquisitions may, at the Company s sole discretion, be settled in cash or, by the issue and allotment of new Shares. Similarly, under the Hunan Agreement, subject to the fulfillments of the prescribed financial and operational performance targets by Hunan Joint Venture Partner, Hunan Joint Venture Partner could sell up to a maximum of 30% interest in Hunan Goodaymart in accordance with the terms of the Hunan Agreement and part or the whole of such considerations for such acquisitions may, at the Company s sole discretion, be settled in cash or, by the issue and allotment of new Shares. Under both arrangements, following the Company s exercise of its discretion to issue and allot new Shares, Suzhou Joint Venture Partner and Hunan Joint Venture Partner would become Shareholders. 2

3 The details of above transactions are set out below. The Suzhou Agreement On 15 June 2011, the Company entered into the Suzhou Agreement with Suzhou Joint Venture Partner pursuant to which, subject to the Suzhou Agreement becoming effective in accordance with the terms set out therein, Suzhou Joint Venture Partner agreed to meet the prescribed financial and operational performance targets of Suzhou Goodaymart laid down by the Company and the Company agreed to grant the Suzhou Option to Suzhou Joint Venture Partner. In accordance with the terms of the Suzhou Agreement and subject to the fulfillment of the prescribed financial and operational performance targets (to a high extent the fulfillment of which is associated with Suzhou Joint Venture Partner s contribution) at the relevant financial year ends during the Suzhou Option Period, Suzhou Joint Venture Partner would be entitled to exercise the options to require the Company to purchase part or the whole of the Suzhou Interest at a price to be determined based on the agreed formulae. The consideration payable by the Company in respect of the transactions contemplated under the Suzhou Agreement may be settled in each relevant year of the Suzhou Option Period, from 30 April 2013 to 29 April 2018 (both days inclusive), wholly or partly by, at the sole discretion of the Company, cash or by the issue and allotment of new Shares (i.e. Suzhou Consideration Shares) at the Suzhou Issue Price. The Suzhou Agreement and the terms contained therein shall become effective only following the completion of the procedures for establishing Suzhou Goodaymart within 14 business days (or such longer period as may be agreed between the Company and the Suzhou Joint Venture Partner) following the date of the Suzhou Agreement. The Company shall make a further announcement as necessary should such stipulated period expire prior to the completion of such procedures together with details regarding any agreed extension of such period. The Board considers that should the Suzhou Agreement become effective, these proposed arrangements would encourage Suzhou Joint Venture Partner as a joint venture partner to meet or exceed the requisite targets at the relevant assessment period during the Suzhou Option Period, and it shall ultimately result in enhancement in the value of Suzhou Goodaymart. Pursuant to the Suzhou Agreement, following it becoming effective, in the event that the Suzhou Goodaymart is not able to attain the minimum financial and operational performance targets for three successive years, the Company has the right to terminate the Suzhou Agreement and the joint venture relationship with Suzhou Joint Venture Partner. 3

4 The Hunan Agreement On 15 June 2011, the Company further entered into the Hunan Agreement with Hunan Joint Venture Partner pursuant to which Hunan Joint Venture Partner agreed to meet the prescribed financial and operational performance targets of Hunan Goodaymart laid down by the Company and the Company agreed to grant the Hunan Option to Hunan Joint Venture Partner. In accordance with the terms of the Hunan Agreement and subject to the fulfillment of the prescribed financial and operational performance targets (to a high extent the fulfillment of which is associated with Hunan Joint Venture Partner s contribution) at the relevant financial year ends during the Hunan Option Period, Hunan Joint Venture Partner would be entitled to exercise the options to require the Company to purchase part or the whole of the Hunan Interest at a price to be determined based on the agreed formulae. The consideration payable by the Company in respect of the transactions contemplated under the Hunan Agreement may be settled in each relevant year of the Hunan Option Period, from 30 April 2014 to 29 April 2019 (both days inclusive), wholly or partly by, at the sole discretion of the Company, cash or by the issue and allotment of new Shares (i.e. Hunan Consideration Shares) at the Hunan Issue Price. The Board considers that these arrangements would encourage Hunan Joint Venture Partner as a joint venture partner to meet or exceed the requisite targets at the relevant assessment period during the Hunan Option Period, and it shall ultimately result in enhancement in the value of Hunan Goodaymart. Pursuant to the Hunan Agreement, in the event that Hunan Goodaymart is not able to attain the minimum financial and operational performance targets for three successive years, the Company has the right to terminate the Hunan Agreement and the joint venture relationship with Hunan Joint Venture Partner. INFORMATION ON THE TARGET COMPANIES 1. Suzhou Goodaymart Summary of business The principal business of the proposed Suzhou Goodaymart will be the wholesaling of household electric and electronic appliances primarily in the Jiangsu province of the PRC. Suzhou Goodaymart is being established as a limited liability company in the PRC. The registered capital of Suzhou Goodaymart following its establishment shall be RMB10 million. Upon its establishment, Suzhou Goodaymart will be owned as to approximately 51% by Chongqing Goodaymart and the remaining of approximately 49% by Suzhou Joint Venture Partner. The proposed Suzhou Goodaymart would act as a sales and distribution channel for various home appliances in the Jiangsu province including refrigerators, washing machines, televisions, water heaters, air conditioners, computers and other household products. 4

5 The proposed Suzhou Goodaymart will conduct its business through distribution centers situated in the Jiangsu province which will cover Changzhou, Suzhou, Wuxi,Nanjing, the cities of South of Jiangsu Province. Description of management and staff The management of Suzhou Goodaymart will consist of seasoned and experienced personnel in marketing and sales of consumer goods. Mr. Xu, the general manager of Suzhou Goodaymart, will be responsible for the suppliers relationships, sales and marketing and customer relationships and has been working in the consumer and household appliances and electronic appliances industry in the PRC for approximately 18 years. Past financial track record summary Given Suzhou Goodaymart has yet to be established and has yet to commence business, there was no revenue generated for the year ended 31 December Hunan Goodaymart Summary of business The principal business of Hunan Goodaymart is the wholesaling of household electric and electronic appliances primarily in the Hunan province of the PRC. Hunan Goodaymart is a limited liability company in the PRC. The registered capital of Hunan Goodaymart was RMB10 million. As at the date of this announcement, it is owned as to approximately 51 % by Chongqing Goodaymart and the remaining of approximately 49% by Hunan Joint Venture Partner. Hunan Goodaymart currently acts as a sales and distribution channel for various home appliances in the Hunan Province including refrigerators, washing machines, televisions, air conditioners, water heaters, computers and other household appliances. Hunan Goodaymart now conducts its business through 60 distribution centers situated in the Changsha, Zhuzhou, Xiangtan, Yiyang, Yueyang, Changde cities of North of Hunan province. Description of management and staff The management of Hunan Goodaymart consists of seasoned and experienced personnel in marketing and sales of consumer goods. Hunan Goodaymart currently has 20 staff as at the date of this announcement. Mr. Chen, general manager of Hunan Goodaymart, is responsible for the suppliers relationship, marketing and customer relationships of the joint venture company. He has been working in the consumer and household appliances and electronic appliances industry in the PRC for over 12 years. Past financial track record summary The net asset value of Hunan Goodaymart as of 31 May 2011 was RMB9,924,983. Given Hunan Goodaymart was established on 21 March 2011 and commenced the business since May 2011, there was no revenue generated for the year ended 31 December

6 STRATEGIC REASONS FOR THE TRANSACTIONS As noted in the Chairman s letter as presented in the annual results announcement of the Group for the year ended 31 December 2010, the Group aims to continue to achieve business growth in 2011 by extending the distribution platform/network for non-haier brand and nonwhite goods products, a key step for its implementation and development of the integrated channel services business. Accordingly, the Board is pleased to announce that the Company has, on 15 June 2011, entered into the Suzhou Agreement and the Hunan Agreement with Suzhou Joint Venture Partner and Hunan Joint Venture Partner respectively, pursuant to which the Company proposed to grant, subject to the Suzhou Agreement becoming effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein, Suzhou Option to Suzhou Joint Venture Partner, and, Hunan Option to Hunan Joint Venture Partner respectively. On 29 December 2010, the Company issued an announcement in relation to the acquisitions of Yantai Goodaymart and Shandong Goodaymart as an important strategic path to develop the Group s integrated channels service business. The Company issued a further announcement on 27 April 2011 reaffirming this strategy implementation following the acquisitions of Hefei Goodaymart and Fujian Goodaymart. The integration process of Hefei Goodaymart and the business development of Hefei Goodaymart and Fujian Goodaymart has been satisfactory. In particular, with shareholders supports, Hefei Goodaymart expanded its sales network as well as enriched the distribution brand portfolio. For example, two large new distribution centers opened in Fuyang city and more and more town level distributor in Bozhou City joined Hefei Goodaymart. Besides, Hefei Goodaymart had significantly enhanced the gross margin through effectively collecting and combining orders, and custom-made mass production. As the Subject Companies are or will be engaged in the sales and distribution of household appliance products with extensive sales and distribution network in the Jiangsu and Hunan provinces, the Transactions could (i) enhance the sales and distribution network of the Subject Companies and further expand the existing distribution network of the Group; (ii) facilitate the Group in selling more home appliance products of different brands and thereby offering more choices for customers; and (iii) achieve the growth of the Company by integration of the resources in respect of logistics delivery and after-sales services and management experience of the Group. The Directors consider that, the Transactions, together with the logistics business previously acquired, and the after-sales service networks which may be acquired from Haier Group, could provide benefit for the Group to establish an integrated distribution service platform, so that the Group could enhance its strength in distribution network as well as its operational and financial performances to create more value to the Shareholders. DETAILS OF AGREEMENTS UNDER THE TRANSACTIONS 1. Suzhou Agreement Date 15 June 2011 Parties (i) the Company; and (ii) Suzhou Joint Venture Partner 6

7 To the best of the Directors knowledge, information and belief having made all reasonable enquiries, Suzhou Joint Venture Partner and its ultimate beneficial owners are third parties independent of the Company and its connected persons. Subject matter In accordance with the terms of the Suzhou Agreement, subject to the Suzhou Agreement becoming effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein, the Company proposed to grant the Suzhou Option to Suzhou Joint Venture Partner pursuant to which, and subject to the achievement of the financial and operational performances against prescribed assessment benchmarks at the relevant financial year ends during the Suzhou Option Period, Suzhou Joint Venture Partner would be entitled to exercise the options to require the Company to purchase part or the whole of the Suzhou Interest. Subject to the Suzhou Agreement becoming effective, the Suzhou Option would be granted to Suzhou Joint Venture Partner at nil consideration. Pursuant to the Suzhou Agreement, following it becoming effective, in the event that Suzhou Goodaymart is unable to attain the minimum financial and operational performance targets for all of three successive years, the Company has the right to terminate the Suzhou Agreement and joint venture relationship with Suzhou Joint Venture Partner. The Suzhou Agreement and the terms contained therein shall become effective only following the completion of the procedures for establishing Suzhou Goodaymart within 14 business days (or such longer period as may be agreed between the Company and the Suzhou Joint Venture Partner) following the date of the Suzhou Agreement. The Company shall make a further announcement as necessary should such stipulated period expire prior to the completion of such procedures together with details regarding any agreedextensionofsuchperiod. Option Period Subject to the Suzhou Agreement becoming effective, the options under the Suzhou Option shall be exercisable on an annual basis from 30 April 2013 to 29 April 2018 (both days inclusive). 7

8 Consideration and payment In accordance with the terms of the Suzhou Agreement, subject to it becoming effective, the aggregate consideration, which was determined after arm s length negotiations between the parties, shall be payable by the Company over the course of the Suzhou Option Period. The consideration shall be determined annually in accordance with the following formula: the net profit of Suzhou Goodaymart (excluding non-ordinary business items) X thepercentageofthe Suzhou Interest to be transferred to the Company within the agreed range for the relevant year X a price earnings multiple within the agreed range In accordance with the terms of the Suzhou Agreement, subject to it becoming effective, in order to determine the annual consideration payable by the Company subject to the fulfillment of the prescribed financial and operational performance targets agreed by the Company and Suzhou Joint Venture Partner, Suzhou Joint Venture Partner agreed that no matter how far Suzhou Goodaymart manages to exceed the prescribed financial and operational performance targets with its performance, the consideration payable by the Company in respect of the transactions contemplated under the Suzhou Agreement shall not exceed RMB170 million. Should the Suzhou Agreement become effective, the performance of Suzhou Goodaymart shall be assessed by the Company in each of the financial years until the end of the Suzhou Option Period. The annual financial and operational performances of the Suzhou Goodaymart in each financial year will be measured by the Company in accordance with prescribed financial and operational performance targets in terms of revenue, net cash flow from operating activites and operational performances. Such annual assessment result will then provide the basis for determining the price earning multiple within the agreed range applicable to that financial year. Should the Suzhou Agreement become effective, if in each year of the Suzhou Option Period, the options under the Suzhou Option are exercised, Suzhou Joint Venture Partner would receive an annual consideration payable by the Company, at the Company s sole discretion, by way of either (i) wholly by the issue and allotment of the Suzhou Consideration Shares at the Suzhou Issue Price; or (ii) partly by Suzhou Consideration Shares and partly by cash. Such annual consideration under the Suzhou Agreement will be payable within 30 days following the date of the annual assessment result of Suzhou Goodaymart for the relevant financial year end as approved by the Group during the Suzhou Option Period. The Directors are of the view that, should the Suzhou Agreement become effective, the above mechanism should encourage Suzhou Joint Venture Partner such that if Suzhou Goodaymart is well-managed and achieves the prescribed financial and operational performance targets during the Suzhou Option Period, the Group and the Shareholders as a whole will benefit in turn. 8

9 Suzhou Consideration Shares and Suzhou Issue Price In accordance with the Suzhou Agreement, should it become effective, a maximum of 25,497,960 new Shares (i.e. Suzhou Consideration Shares) may, at the Company s sole discretion, be issued and allotted by the Company to Suzhou Joint Venture Partner. 25,497,960 Suzhou Consideration Shares would represent approximately 1.10% of the existing issued share capital of the Company of 2,312,808,905 Shares as at the date of this announcement and approximately 1.09% of the enlarged issued share capital of the Company following the issue of the Suzhou Consideration Shares. The Suzhou Issue Price shall be arrived at after applying a certain 5% to 15% discount adjustment to the basis price wherein the specific discount factor shall depend on the annual assessment result of Suzhou Goodaymart in the prescribed financial year, and such basis price shall be arrived at the higher of (i) the average closing price in the 5 consecutive trading days immediately before the date of issue of the Suzhou Consideration Shares or (ii) the closing price of the Shares on the date of issue and allotment of the Suzhou Consideration Shares, subject to as referred earlier that the total consideration under the Suzhou Agreement would not exceed RMB170 million. The Suzhou Consideration Shares, if so considered to be issued and allotted by the Company, would be allotted and issued pursuant to the General Mandate. The Suzhou Agreement is not subject to the approval of the independent Shareholders. Should the Suzhou Agreement become effective, an application will be made to the Stock Exchange for the listing of and permission to deal in the Suzhou Consideration Shares. The Directors consider that the consideration under the Suzhou Agreement and the Suzhou Issue Price are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Restriction on disposal of the Suzhou Consideration Shares In accordance with the terms of the Suzhou Agreement, if the agreement becomes effective, Suzhou Joint Venture Partner can only dispose of the Suzhou Consideration Shares so issued and allotted by the Company, according to the following schedules: (i) 30% of such shares can be disposed within 12 months from the date of issue of the Suzhou Consideration Shares; (ii) 60% of such shares can be disposed within 24 months from the date of issue of the Suzhou Consideration Shares; and (iii) 100% of such shares can be disposed within 36 months from the date of issue of the Suzhou Consideration Shares. Completion If the Suzhou Agreement becomes effective, upon the full exercise of the Suzhou Option, the Group s interest in Suzhou Goodaymart will be increased to not more than 81% interest in Suzhou Goodaymart. 9

10 2. Hunan Agreement Date 15 June 2011 Parties (i) the Company; and (ii) Hunan Joint Venture Partner. As Hunan Joint Venture Partner is a substantial shareholder of Hunan Goodaymart, Hunan Joint Venture Partner is a connected person of the Company. Subject matter In accordance with the terms of the Hunan Agreement, the Company granted the Hunan Option to Hunan Joint Venture Partner pursuant to which, and subject to the achievement of financial and operational performances against prescribed assessment benchmarks at the relevant financial year ends during the Hunan Option Period, Hunan Joint Venture Partner would be entitled to exercise the options to require the Company to purchase part or the whole of the Hunan Interest. The Hunan Option is granted to Hunan Joint Venture Partner at nil consideration. Pursuant to the Hunan Agreement, in the event that Hunan Goodaymart is unable to attain the minimum financial and operational performance targets for all of three successive years, the Company has the right to terminate the Hunan Agreement and joint venture relationship with Hunan Joint Venture Partner. Option Period The options under the Hunan Option are exercisable on an annual basis from 30 April 2014 to 29 April 2019 (both days inclusive). Consideration and payment In accordance with the terms of the Hunan Agreement, the aggregate consideration, which was determined after arm s length negotiations between the parties, shall be payable by the Company over the course of the Hunan Option Period. The consideration shall be determined annually in accordance with the following formula: the net profit of Hunan Goodaymart (excluding non-ordinary business items) X thepercentageofthe Hunan Interest to be transferred to the Company within the agreed range for the relevant year X a price earnings multiple within the agreed range In accordance with the terms of the Hunan Agreement and in order to determine the annual consideration payable by the Company subject to the fulfillment of the prescribed financial and operational performance targets agreed by the Company and Hunan Joint Venture Partner, Hunan Joint Venture Partner agreed that no matter how far Hunan Goodaymart manages to exceed the prescribed financial and operational performance 10

11 targets with its performance, the consideration payable by the Company in respect of the transactions contemplated under the Hunan Agreement would not be exceed RMB140 million. The performance of Hunan Goodaymart shall be assessed by the Company in each of the financial years until the end of the Hunan Option Period. The annual financial and operational performances of Hunan Goodaymart in each financial year will be measured by the Company in accordance with prescribed financial and operational performance targets in terms of revenue, net cash flow from operating activites and operational performances. Such annual assessment result will then provide the basis for determining the price earning multiple within the agreed range applicable to that financial year. If, in each year of the Hunan Option Period, the options under the Hunan Option are exercised, Hunan Joint Venture Partner would receive an annual consideration payable by the Company, at the Company s sole discretion, by way of either (i) wholly by the issue and allotment of the Hunan Consideration Shares at the Hunan Issue Price; or (ii) partly by Hunan Consideration Shares and partly by cash. Such annual consideration under Hunan Agreement will be payable within 30 days following the date of the annual assessment result of Hunan Goodaymart for the relevant financial year end as approved by the Group during the Hunan Option Period. The Directors are of the view that the above mechanism encourages Hunan Joint Venture Partner such that if Hunan Goodaymart is well-managed and achieves the prescribed financial and operational performance targets during the Hunan Option Period, the Group and the Shareholders as a whole will benefit in turn. Hunan Consideration Shares and Hunan Issue Price In accordance with the Hunan Agreement a maximum of 20,998,320 new Shares, (i.e. Hunan Consideration Shares) may, at the Company s sole discretion, be issued and allotted by the Company to Hunan Joint Venture Partner. 20,998,320 Hunan Consideration Shares represent approximately 0.91% of the existing issued share capital of the Company of 2,312,808,905 Shares as at the date of this announcement and approximately 0.90% of the enlarged issued share capital of the Company following the issue of the Hunan Consideration Shares. The Hunan Issue Price shall be arrived at after applying a certain 5% to 15% discount adjustment to the basis price wherein the specific discount factor shall depend on the annual assessment result of Hunan Goodaymart in the prescribed financial year, and such basis price shall be arrived at the higher of (i) the average closing price in the 5 consecutive trading days immediately before the date of issue of the Hunan Consideration Shares or (ii) the closing price of the Shares on the date of issue and allotment of the Hunan Consideration Shares, subject to as referred earlier that the total consideration under the Hunan Agreement shall not exceed RMB140 million. The Hunan Consideration Shares, if so considered to be issued and allotted by the Company, will be allotted and issued pursuant to the General Mandate. The Hunan Agreement is not subject to the approval of the independent Shareholders. An application will be made to the Stock Exchange for the listing of and permission to deal in the Hunan Consideration Shares. 11

12 The Directors consider that the consideration under Hunan Agreement and the Hunan Issue Price are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Restriction on disposal of the Hunan Consideration Shares In accordance with the terms of the Hunan Agreement, Hunan Joint Venture Partner can only dispose of the Hunan Consideration Shares so issued and allotted by the Company according to the following schedules: (i) 30% of such shares can be disposed within 12 months from the date of issue of the Hunan Consideration Shares; (ii) 60% of such shares can be disposed within 24 months from the date of issue of the Hunan Consideration Shares; and (iii) 100% of such shares can be disposed within 36 months from the date of issue of the Hunan Consideration Shares. Completion Upon the full exercise of the Hunan Option, the Group s interest in Hunan Goodaymart will be increased to not more than 81% interest in Hunan Goodaymart. SHAREHOLDERS AGREEMENTS 1. Suzhou Shareholders Agreement The Suzhou Shareholders Agreement and the terms contained therein shall become effective only following the completion of the procedures for establishing Suzhou Goodaymart within 14 business days (or such longer period as may be agreed between the Company and the Suzhou Joint Venture Partner) following the date of the Suzhou Shareholders Agreement. The Company shall make a further announcement as necessary should such stipulated period expire prior to the completion of such procedures together with details regarding any agreed extension of such period. Appointments of the board of directors and senior managements of Suzhou Goodaymart Pursuant to the Suzhou Shareholders Agreement, subject to it becoming effective, the Group will appoint three directors to the board of directors of Suzhou Goodaymart and Suzhou Joint Venture Partner will appoint two directors to the board of directors of Suzhou Goodaymart. The chairman, who is also the legal representative of Suzhou Goodaymart will be appointed by the Group. The general manager of Suzhou Goodaymart will be appointed by Suzhou Joint Venture Partner whilst the vice general manager and financial controller will be appointed by the Group. Restriction on the transfer or pledge of the interest in the Suzhou Goodaymart owned by Suzhou Joint Venture Partner In accordance with the Suzhou Shareholders Agreement, subject to it becoming effective, the interest owned by Suzhou Joint Venture Partner cannot be transferred or pledged, either directly or indirectly, to the independent third parties. 12

13 2. Hunan Shareholders Agreement Appointments of the board of directors and senior managements of Hunan Goodaymart Pursuant to the Hunan Shareholders Agreement, the Group will appoint three directors to the board of directors of Hunan Goodaymart and Hunan Joint Venture Partner will appoint two directors to the board of directors of Hunan Goodaymart. The chairman, who is also the legal representative of Hunan Goodaymart will be appointed by the Group. The general manager of the Hunan Goodaymart will be appointed by Hunan Joint Venture Partner whilst the vice general manager and financial controller will be appointed by the Group. Restriction on the transfer or pledge of the interest in the Hunan Goodaymart owned by Hunan Joint Venture Partner In accordance with the Hunan Shareholders Agreement, the interest owned by Hunan Joint Venture Partner cannot be transferred or pledged, either directly or indirectly, to the independent third parties. BASES AND REASONS FOR THE CONSIDERATIONS UNDER THE TRANSACTIONS The Directors consider that the value in the Subject Companies resides in their healthy balance sheets and future profitabilities, and well-developed distribution networks in the Jiangsu and Hunan provinces, the goodwill of their partnership with the Haier Group and the continuing commitment of its management and staff to the future success of the Subject Companies. Accordingly, the terms under the Suzhou Agreement (if it becomes effective) and the Hunan Agreement recognise these considerations and are set out as follows: Suzhou Agreement Under the terms of the Suzhou Agreement, if it becomes effective, the ability of Suzhou Joint Venture Partner to sell its shareholdings in Suzhou Goodaymart is contingent upon the specific financial and operational performance targets as set out above. In addition, the consideration is based on a price earnings multiple within the agreed range of the relevant net profit of Suzhou Goodaymart and the price earning multiple for the annual consideration under the Suzhou Agreement would be based on the multi-demensional assessment result of Suzhou Goodaymart in terms of the revenue, cash flow, and operational performances during the Suzhou Option Period. The Directors (including the independent non-executive Directors) believe that the terms and consideration under the Suzhou Agreement to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Hunan Agreement As is in the case of the Suzhou Agreement, under the terms of the Hunan Agreement, the ability of Hunan Joint Venture Partner to sell their shareholdings in Hunan Goodaymart is contingent upon the specific financial and operational performance targets as set out above. In addition, the consideration is based on a price earnings multiple within the agreed range of the relevant net profit of Hunan Goodaymart and the price earning multiple for the annual 13

14 consideration under the Hunan Agreement would be based on the multi-demensional assessment result of Hunan Goodaymart in terms of the revenue, cash flow, and operational performances during Hunan Option Period. The Directors (including the independent non-executive Directors) believe that the terms and consideration under the Hunan Agreement to be fair and reasonable and are in the interests of the Company and the Shareholders as a whole. INFORMATION OF THE PARTIES UNDER THE TRANSACTIONS The Group is currently engaged in the research, development, manufacture and sale of washing machines and water heaters in the PRC under the brand name of Haier. The Group also has engaged in the integrated channel services business for other home appliance products such as refrigerators, televisions and air-conditioners. The principal business activity of the Company is investment holding. The Haier Group is one of the world s leading white goods home appliance manufacturer engaging in the research, development, production and sale of a wide variety of household appliances (including the white goods) and consumer goods in the PRC. Suzhou Joint Venture Partner is a limited company established in the PRC and is engaged in sale of household appliance in the Jiangsu province of the PRC. Hunan Joint Venture Partner is a limited company established in the PRC and is engaged in sale of household appliance in the Hunan province of the PRC. IMPLICATIONS OF THE LISTING RULES General Suzhou Agreement As each of the applicable percentage ratios in respect of the transaction contemplated under the Suzhou Agreement is less than 5%, the transaction contemplated under the Suzhou Agreement constitutes a share transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. No Directors have material interests in the transaction contemplated under Suzhou Agreement. Hunan Agreement As Hunan Joint Venture Partner is a substantial shareholder of Hunan Goodaymart, Hunan Joint Venture Partner is a connected person of the Company, and the transaction contemplated under the Hunan Agreement constitutes a connected transaction of the Company under the Listing Rules. As each of the applicable percentage ratios in respect of the transaction contemplated under the Hunan Agreement is less than 5%, the transaction contemplated under the Hunan Agreement constitutes a share transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. It is however exempt from 14

15 the reporting, announcement and independent Shareholders approval requirements under Chapter 14A of the Listing Rules since the requirements under Rule 14A.31(9) of the Listing Rules are met. No Directors have material interests in the transaction contemplated under Hunan Agreement. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings: associates(s) Board Chongqing Goodaymart Company Connected person(s) Directors General Mandate Group Haier Group HK$ Hong Kong Hunan Agreement has the meaning ascribed to it in the Listing Rules the board of Directors 重慶新日日順家電銷售有限公司 (Chongqing New Goodaymart Appliance Sales Co., Ltd*), a wholly owned subsidiary of the Company Haier Electronics Group Co., Ltd., a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange has the meaning ascribed to it in the Listing Rules the directors of the Company the general mandate granted to the Directors pursuant to an ordinary resolution passed at the annual general meeting of the Company held on 8 June 2011 to allot and issue up to 462,561,781 Shares, representing 20% of the aggregate nominal amount of the issued share capital of the Company on such date the Company and its subsidiaries and associates being 海爾集團公司 (Haier Group Corporation*) and 青島海爾投資發展有限公司 (Qingdao Haier Investment and Development Co., Ltd.*) (both of which are companies established in the PRC and are substantial Shareholders) together with their respective subsidiaries and associates but excluding the Group, where appropriate Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC the agreement dated 15 June 2011 entered into between the Company and Hunan Joint Venture Partner in relation to the transactions contemplated under the Hunan Agreement pursuant to which subject to the achievement of prescribed financial performance of Hunan Goodaymart, Hunan Joint Venture Partner would be entitled to exercise the options to require the Company to acquire part or the whole of the Hunan Interest during the Hunan Option Period 15

16 Hunan Consideration Shares Hunan Goodaymart Hunan Interest Hunan Issue Price(s) Hunan Joint Venture Partner Hunan Option Hunan Option Period Hunan Shareholders Agreement Listing Rules RMB Share(s) Shareholder(s) Stock Exchange Subject Companies maximum of 20,998,320 new Shares which may, subject to the performance of the Hunan Goodaymart and at the sole discretion of the Company, be allotted and issued to Hunan Joint Venture Partner at the Hunan Issue Price Hunan Goodaymart Electric Appliance Co., Ltd ( 湖南日日順電器有限公司 ), a company established in the PRC which is directly held as to 49% by the Hunan Joint Venture Partner and 51% by Chongqing Goodaymart 30% interests in Hunan Goodaymart, being part of the total interests held by Hunan Joint Venture Partner in Hunan Goodaymart as at the date of this announcement issue price(s) of the new Shares (i.e. Hunan Consideration Shares) in accordance with the Hunan Agreement 長沙市海宏電器銷售有限公司 (Changsha City Haihong Electronics Co. Ltd.*), a company established in the PRC which, holds approximately 49% interest in Hunan Goodaymart as at the date of this announcement the rights granted by the Company to Hunan Joint Venture Partner to sell part or the whole of the Hunan Interest to the Company during the Hunan Option Period, subject the annual assessment result of Hunan Goodaymart 30 April 2014 to 29 April 2019 (both days inclusive) the shareholders agreement of Hunan Goodaymart dated 15 June 2011 entered into between Chongqing Goodaymart and Hunan Joint Venture Partner the Rules Governing the Listing of Securities on the Stock Exchange Renminbi, the lawful currency of the PRC ordinary share(s) of HK$0.10 each in the capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited Hunan Goodaymart and the proposed Suzhou Goodaymart (subject to completion of the procedures for its establishment) 16

17 Suzhou Agreement Suzhou Consideration Shares Suzhou Goodaymart Suzhou Interest Suzhou Issue Price(s) Suzhou Joint Venture Partner Suzhou Option Suzhou Option Period Suzhou Shareholders Agreement the agreement dated 15 June 2011 entered into between the Company and Suzhou Joint Venture Partner in relation to the proposed transactions contemplated therein which shall become effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein, and pursuant to which, subject to the achievement of prescribed financial performance of Suzhou Goodaymart, Suzhou Joint Venture Partner would be entitled to exercise the options to require the Company to acquire part or the whole of the Suzhou Interest during the Suzhou Option Period subject to the Suzhou Agreement becoming effective in accordance with the terms set out therein, a maximum of 25,479,960 new Shares which may, subject to the performance of Suzhou Goodaymart and at the sole discretion of the Company, be allotted and issued to Suzhou Joint Venture Partner at the Suzhou Issue Price Suzhou Goodaymart Electric Appliance Co., Ltd ( 蘇州日日順電器有限公司 ), a company proposed to be established in the PRC and which is proposed to be directly held as to 49% by Suzhou Joint Venture Partner and 51% by Chongqing Goodaymart 30% interests in Suzhou Goodaymart, being part of the total interests proposed to be held by Suzhou Joint Venture Partner in Suzhou Goodaymart following its establishment issue price(s) of the new Shares (i.e. Suzhou Consideration Shares) in accordance with the Suzhou Agreement 常熟市交電家電有限責任公司 (Changshu City Jiaodian Home Electronics Co. Ltd.*), a company established in the PRC which is proposing to hold approximately 49% interest in Suzhou Goodaymart subject to the Suzhou Agreement becoming effective in accordance with the terms set out therein, the rights proposed to be granted by the Company to Suzhou Joint Venture Partner to sell part or the whole of the Suzhou Interest to the Company during the Suzhou Option Period, subject the annual assessment result of Suzhou Goodaymart 30 April 2013 to 29 April 2018 (both days inclusive) the shareholders agreement of Suzhou Goodaymart dated 15 June 2011 entered into between Chongqing Goodaymart and the Suzhou Joint Venture Partner which shall become effective following the establishment of Suzhou Goodaymart in accordance with the terms set out therein 17

18 Transactions the proposed transactions contemplated under the Suzhou Agreement following the establishment of Suzhou Goodaymart and the transactions contemplated under the Hunan Agreement By Order of the Board of Haier Electronics Group Co., Ltd. Yang Mian Mian Chairman Hong Kong, 15 June 2011 As at the date of this announcement, the executive Directors are Ms. Yang Mian Mian (Chairman), Mr. Zhou Yun Jie, Mr. Li Hua Gang and Mr. Sun Jing Yan; the non-executive Director are Mr. Wu Ke Song (Deputy Chairman) and Mr. Liang Hai Shan; the independent non-executive Directors are Mr. Wu Yinong, Mr. Yu Hon To, David and Dr. Liu Xiao Feng. For the purpose of this announcement, the exchange rate of RMB1.00 = HK$1.19 has been used for currency translation, where applicable. Such exchange rates are for illustration purposes and do not constitute representations that any amount in RMB or HK$ have been, could have been or may be converted at such rates. * for identification purposes only 18