TPV TECHNOLOGY LIMITED

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. TPV TECHNOLOGY LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 903) (I) RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS; (II) ENTERING INTO OF NEW CONTINUING CONNECTED TRANSACTIONS; AND (III) ENTERING INTO OF CONNECTED TRANSACTION Independent financial adviser to the Independent Board Committee and the Independent Shareholders SOMERLEY CAPITAL LIMITED (1) THE RENEWED NANJING WALLY PROCUREMENT AGREEMENT, THE RENEWED PANDA LCD PROCUREMENT AGREEMENT AND THE RENEWED SZIT PROCUREMENT AGREEMENT Reference is made to the circulars of the Company dated 9 October 2015 regarding the Existing Nanjing Wally Procurement Agreement and dated 19 January 2015 regarding the Existing Panda LCD Procurement Agreement and the Existing SZIT Procurement Agreement. As the aforesaid agreements will expire on 31 December 2017, the Board announces that Top Victory and Nanjing Wally, Panda LCD and SZIT renewed the respective agreements on 19 December Pursuant to the respective renewed agreements, the Top Victory Group will continue to procure the Nanjing Wally Products, the Panda LCD Products and the SZIT Products from the Nanjing Wally Group, the Panda LCD Group and the SZIT Group respectively. 1

2 (2) THE XYCL PROCUREMENT AGREEMENT AND THE CEZZ PROCUREMENT AGREEMENT The Board announces that Top Victory and XYCL and CEZZ entered into the XYCL Procurement Agreement and the CEZZ Procurement Agreement on 19 December 2017 respectively. Pursuant to the XYCL Procurement Agreement and the CEZZ Procurement Agreement, the Top Victory Group will procure the XYCL Products from the XYCL Group and the CEZZ Products from the CEZZ Group respectively. (3) THE SUPPLY AGREEMENT The Board announces that the Company and CGT entered into the Supply Agreement on 19 December Pursuant to the Supply Agreement, the Group may supply, and the CGT Group may procure, the AOC Products. (4) THE RENEWED TENANCY AGREEMENT Reference is made to the announcement of the Company dated 5 June 2015 regarding the Existing Tenancy Agreement. As the Existing Tenancy Agreement will expire on 31 December 2017, the Board announces that Sang Fei and SZSED renewed the Existing Tenancy Agreement on 19 December 2017 and Sang Fei will continue to rent certain office premises owned by SZSED in Nanshan District, Shenzhen, the PRC. (5) THE EQUIPMENT PROCUREMENT AGREEMENT The Board announces that TPV Xianyang and CEC Jiutian entered into the Equipment Procurement Agreement on 19 December Pursuant to the Equipment Procurement Agreement, CEC Jiutian agreed to supply and TPV Xianyang agreed to procure the equipment and the corresponding installation services in relation to the new production lines at the manufacturing plant of TPV Xianyang in Xianyang City, Shaanxi Province, the PRC. 2

3 (6) IMPLICATIONS UNDER THE LISTING RULES CEC is a connected person of the Company under the Listing Rules by virtue of it being the ultimate controlling shareholder of the Company. Each of Nanjing Wally, Panda LCD, SZIT, XYCL, CEZZ, CGT, SZSED and CEC Jiutian is connected person of the Company under the Listing Rules by virtue of each of them being a subsidiary or an associate of CEC. As one of the applicable percentage ratios (other than the profits ratio) as defined under the Listing Rules in respect of the Annual Caps, when aggregated, exceeds 5%, each of the Continuing Connected Transactions (including the Annual Caps) is subject to the announcement, independent shareholders approval, annual review and reporting requirements under the Listing Rules. As the highest applicable percentage ratio as defined under the Listing Rules in respect of the Tenancy Annual Caps exceeds 0.1% but all applicable percentage ratios are less than 5%, the Tenancy Continuing Connected Transaction is subject to the announcement, annual review and reporting requirements but exempt from independent shareholders approval requirement under the Listing Rules. As the highest applicable percentage ratio as defined under the Listing Rules in respect of the Equipment Procurement Agreement exceeds 0.1% but all applicable percentage ratios are less than 5%, the entering into the Equipment Procurement Agreement is subject to the announcement and reporting requirements but exempt from independent shareholders approval requirement under the Listing Rules. (7) GENERAL The Company will convene the SGM for the purpose of considering and approving each of the Continuing Connected Transactions (including the Annual Caps). A circular containing, among other things, (i) details of each of the Continuing Connected Transactions (including the Annual Caps); (ii) a letter from the Independent Board Committee; (iii) a letter of advice from Somerley; and (iv) a notice convening the SGM, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules, which is currently expected to be on or before 12 January

4 (A) THE RENEWED NANJING WALLY PROCUREMENT AGREEMENT 1. Introduction Reference is made to the circular of the Company dated 9 October 2015 regarding the Existing Nanjing Wally Procurement Agreement. As the Existing Nanjing Wally Procurement Agreement will expire on 31 December 2017, the Board announces that Top Victory and Nanjing Wally renewed the Existing Nanjing Wally Procurement Agreement on 19 December Pursuant to the Renewed Nanjing Wally Procurement Agreement, the Top Victory Group will continue to procure the Nanjing Wally Products from the Nanjing Wally Group. Details of the Renewed Procurement Agreement are set out below. 2. Date 19 December Parties (i) Top Victory (as buyer); and (ii) Nanjing Wally (as seller) 4. Subject matter Pursuant to the Renewed Nanjing Wally Procurement Agreement, the Top Victory Group may procure the Nanjing Wally Products from the Nanjing Wally Group. 5. Pricing basis The procurement of the Nanjing Wally Products by the Top Victory Group from the Nanjing Wally Group will be by way of purchase order, which will set out the quality, model type, specifications, pricing and payment terms of the Nanjing Wally Products. The pricing and payment terms of the Nanjing Wally Products shall be determined as fair and reasonable based on normal commercial terms with reference to the cost of the raw materials and core components and prevailing market prices. In any event, such terms shall be no less favourable to the Top Victory Group than those offered by independent third party suppliers. 4

5 6. Conditions precedent The Renewed Nanjing Wally Procurement Agreement is conditional upon the fulfilment of the following conditions: (i) receiving the approval by the Board and passing of an ordinary resolution by the Independent Shareholders at the SGM by way of a poll to approve the Renewed Nanjing Wally Procurement Agreement (including the Nanjing Wally Procurement Annual Caps); (ii) receiving the approval by the board of directors of Nanjing Huadong and receiving the approval by the shareholders of Nanjing Huadong at a general meeting (if necessary); and (iii) compliance of all other relevant regulation(s) in relation to the Renewed Nanjing Wally Procurement Agreement. 7. Term and renewal Subject to fulfillment of the conditions precedent, the Renewed Nanjing Wally Procurement Agreement shall become effective on 1 January 2018 and shall continue in force until 31 December Subject to compliance with the requirements of the Listing Rules, Top Victory and Nanjing Wally may agree to renew or extend the term of the Renewed Nanjing Wally Procurement Agreement for subsequent three-year periods. The renewal or extension of the Renewed Nanjing Wally Procurement Agreement will be subject to the relevant approval procedures in accordance with the Listing Rules. 8. Termination Unless otherwise specified in the Renewed Nanjing Wally Procurement Agreement, Top Victory has a right to terminate the Renewed Nanjing Wally Procurement Agreement if, among other things, (i) Nanjing Wally commits a material breach of the Renewed Nanjing Wally Procurement Agreement and fails to remedy that breach after giving a 30-day written notice; (ii) the Nanjing Wally Group cease to be connected persons of the Company; and (iii) any of the parties to the Renewed Nanjing Wally Procurement Agreement has filed for or being declared bankrupt. 5

6 9. The Nanjing Wally Procurement Annual Caps Set out below are the Nanjing Wally Procurement Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The Nanjing Wally Procurement Annual Caps 75, , ,390 The Nanjing Wally Procurement Annual Caps are determined by reference to a number of factors, particularly (i) the historical amount of procurement of the Nanjing Wally Products by the Group of approximately US$14,700,000, US$17,100,000 and US$15,600,000 for the two years ended 31 December 2015 and 2016 and the eleven months ended 30 November 2017 respectively; (ii) the demand forecast of advanced touch modules (the Advanced Touch Modules ) for the three years ending 31 December 2020 provided by a customer; (iii) the projected average purchase prices of the Nanjing Wally Products during the Cap Period, with reference to the prevailing market price and the historical decreasing trend in the price of touch panels and other components; and (iv) a buffer of 10% to accommodate the abrupt changes in procurement quantity of the Nanjing Wally Products. (B) THE RENEWED PANDA LCD PROCUREMENT AGREEMENT 1. Introduction Reference is made to the circular of the Company dated 19 January 2015 regarding the Existing Panda LCD Procurement Agreement. As the Existing Panda LCD Procurement Agreement will expire on 31 December 2017, the Board announces that Top Victory and Panda LCD renewed the Existing Panda LCD Procurement Agreement on 19 December Pursuant to the Renewed Panda LCD Procurement Agreement, the Top Victory Group may continue to procure the Panda LCD Products from the Panda LCD Group. Details of the Renewed Panda LCD Procurement Agreement are set out below. 2. Date 19 December Parties (i) Top Victory (as buyer); and (ii) Panda LCD (as seller) 6

7 4. Subject matter Pursuant to the Renewed Panda LCD Procurement Agreement, the Top Victory Group may procure the Panda LCD Products from the Panda LCD Group. 5. Pricing basis The procurement of the Panda LCD Products by the Top Victory Group from the Panda LCD Group will be by way of purchase order, which will set out the quality, model type, specifications, pricing and payment terms of the Panda LCD Products. The pricing and the payment terms of the Panda LCD Products shall be determined as fair and reasonable based on normal commercial terms with reference to prevailing market prices. In any event, such terms shall be no less favorable to the Top Victory Group than that offered by independent third party suppliers. 6. Production planning and warehousing To assist the Panda LCD Group with an orderly planning of adequate supplies, production and stock levels, the Top Victory Group will, on a monthly basis, provide a three-month rolling forecast to the Panda LCD Group. In the event of any changes in delivery of the Panda LCD Products, the Panda LCD Group will use its best endeavour to store the relevant Panda LCD Products in its own warehouse facilities. Furthermore, the Panda LCD Group will maintain a onemonth safety stock level of the Panda LCD Products to meet the Top Victory Group s production needs. During the term of the Renewed Panda LCD Procurement Agreement, both parties to the Renewed Panda LCD Procurement Agreement are committed to conduct quarterly review of production planning road maps, in order to facilitate new Panda LCD Products research and development as well as the launch of new Panda LCD Products. 7. Quality and services requirements The Top Victory Group and the Panda LCD Group should confirm technical specifications and product acceptance specifications of the Panda LCD Products before the bulk delivery of the relevant Panda LCD Products. 8. Conditions precedent The Renewed Panda LCD Procurement Agreement is conditional upon, if applicable, (i) the approval by the Independent Shareholders by way of a poll at the SGM to approve the Panda LCD Procurement Continuing Connected Transaction (including the Panda LCD Procurement Annual Caps); and (ii) the approval under all relevant regulations in relation to the Renewed Panda LCD Procurement Agreement. 7

8 9. Term and renewal Subject to fulfillment of the conditions precedent, the Renewed Panda LCD Procurement Agreement shall become effective on 1 January 2018 and shall continue in force until 31 December Subject to compliance with the requirements of the Listing Rules, Top Victory and Panda LCD may agree to renew or extend the term of the Renewed Panda LCD Procurement Agreement for subsequent three-year periods. The renewal or extension of the Renewed Panda LCD Procurement Agreement will be subject to the approval procedures in accordance with the Listing Rules. 10. Termination Unless otherwise specified in the Renewed Panda LCD Procurement Agreement, any of the parties to the Renewed Panda LCD Procurement Agreement has a right to terminate the Renewed Panda LCD Procurement Agreement if, among other things, (i) the other party who commits a material breach of the Renewed Panda LCD Procurement Agreement and fails to remedy that breach after giving a 30-day written notice or (ii) the other party enters into liquidation. 11. The Panda LCD Procurement Annual Caps Set out below are the Panda LCD Procurement Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The Panda LCD Procurement Annual Caps 756,000 1,358,000 1,877,000 The Panda LCD Procurement Annual Caps are determined by reference to a number of factors, particularly (i) the historical amount of procurement of the Panda LCD Products by the Group of approximately US$146,500,000, US$29,700,000 and US$120,700,000 for the two years ended 31 December 2015 and 2016 and the ten months ended 31 October 2017; (ii) the projected demand for the LCD panels and other related products by the Top Victory Group and the relevant quantity to be procured at the Top Victory Group s own discretion; (iii) the management s plan to increase the proportion of purchase of LCD panels, particularly those for the production of tablets and in larger sizes for production of TVs, from the Panda LCD Group after the recent expansion of the production capacity of LCD panels and other related products of the Panda LCD Group; (iv) the projected production capacity of the Panda LCD Group for production of the Panda LCD Products during the term of the 8

9 Renewed Panda LCD Procurement Agreement; and (v) the projected purchase prices of the Panda LCD Products during the term of the Renewed Panda LCD Procurement Agreement. (C) THE RENEWED SZIT PROCUREMENT AGREEMENT 1. Introduction Reference is made to the circular of the Company dated 19 January 2015 regarding the Existing SZIT Procurement Agreement. As the Existing SZIT Procurement Agreement will expire on 31 December 2017, the Board announces that Top Victory and SZIT renewed the Existing SZIT Procurement Agreement on 19 December Pursuant to the Renewed SZIT Procurement Agreement, the Top Victory Group may continue to procure the SZIT Products from the SZIT Group. Details of the Renewed SZIT Procurement Agreement are set out below. 2. Date 19 December Parties (i) Top Victory (as buyer); and (ii) SZIT (as seller) 4. Subject matter Pursuant to the Renewed SZIT Procurement Agreement, the Top Victory Group may procure the SZIT Products from the SZIT Group. 5. Pricing basis The procurement of the SZIT Products by the Top Victory Group from the SZIT Group will be by way of purchase order, which will set out the quality, model type, specifications, pricing and payment terms of the SZIT Products. The pricing and payment terms of the SZIT Products shall be determined as fair and reasonable based on normal commercial terms with reference to the costs of the raw materials and core components, as well as prevailing market prices. Payment term shall be 120 days from end of the month. In any event, such terms shall be no less favourable to the Top Victory Group than those offered by independent third party vendors. 9

10 6. Safety stock level The SZIT Group guarantees the Top Victory Group that there will not be any stock shortage throughout the term of the Renewed SZIT Procurement Agreement. 7. Conditions precedent The Renewed SZIT Procurement Agreement is conditional upon, if applicable, (i) the approval by the Independent Shareholders by way of a poll at the SGM to approve the SZIT Procurement Continuing Connected Transaction (including the SZIT Procurement Annual Caps); and (ii) the approval under all relevant regulations in relation to the Renewed SZIT Procurement Agreement. 8. Term and renewal Subject to fulfillment of the conditions precedent, the Renewed SZIT Procurement Agreement shall become effective on 1 January 2018 and continue in force until 31 December Subject to compliance with the requirements of the Listing Rules, Top Victory and SZIT may agree to renew or extend the term of the Renewed SZIT Procurement Agreement for subsequent three-year periods. The renewal or extension of the Renewed SZIT Procurement Agreement will be subject to the approval procedures in accordance with the Listing Rules. 9. Termination Unless otherwise specified in the Renewed SZIT Procurement Agreement, Top VictoryhasarighttoterminatetheRenewed SZIT Procurement Agreement if, among other things, SZIT commits a material breach of the Renewed SZIT Procurement Agreement and fails to remedy that breach after giving a 30-day written notice. 10

11 10. The SZIT Procurement Annual Caps Set out below are the SZIT Procurement Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The SZIT Procurement Annual Caps 30,145 38,570 45,670 The SZIT Procurement Annual Caps are determined by reference to a number of factors, particularly (i) the historical amount of procurement of the SZIT Products by the Group of approximately US$500,000, US$5,800,000 and US$4,800,000 for the two years ended 31 December 2015 and 2016 and for the ten months ended 31 October 2017 respectively; (ii) the historical procurement of the electronic components or semi-conductors and other related products from SZIT and other suppliers; (iii) the projected growth in demand for the electronic components or semi-conductors and other related products during the term of the Renewed SZIT Procurement Agreement; (iv) the management s plan to increase the proportion of purchase of electronic components or semi-conductors and other related products from the SZIT Group; and (v) the projected purchase prices of the SZIT Products during the term of the Renewed SZIT Procurement Agreement with reference to the latest average market prices of the SZIT Products in the third quarter of (D) THE XYCL PROCUREMENT AGREEMENT 1. Introduction The Board announces that Top Victory and XYCL entered into the XYCL Procurement Agreement on 19 December Pursuant to the XYCL Procurement Agreement, the Top Victory Group will procure the XYCL Products from the XYCL Group. Details of the XYCL Procurement Agreement are set out below. 2. Date 19 December Parties (i) Top Victory (as buyer); and (ii) XYCL (as seller) 11

12 4. Subject matter Pursuant to the XYCL Procurement Agreement, the Top Victory Group may procure the XYCL Products from the XYCL Group. 5. Pricing basis The procurement of the XYCL Products by the Top Victory Group from the XYCL Group will be by way of purchase order, which will set out the quality, model type, specifications, pricing and payment terms of the XYCL Products. The pricing and payment terms of the XYCL Products shall be determined as fair and reasonable based on normal commercial terms with reference to the costs of the raw materials and core components, as well as prevailing market prices. In any event, such terms shall be no less favourable to the Top Victory Group than those offered by independent third party vendors. 6. Safety stock level The XYCL Group guarantees the Top Victory Group that there will not be any stock shortage throughout the term of the XYCL Procurement Agreement. 7. Conditions precedent The XYCL Procurement Agreement is conditional upon, if applicable, (i) the approval by the Independent Shareholders by way of a poll at the SGM to approve the XYCL Procurement Continuing Connected Transaction (including the XYCL Procurement Annual Caps); and (ii) the approval under all relevant regulations in relation to the XYCL Procurement Agreement. 8. Term and renewal Subject to fulfillment of the conditions precedent, the XYCL Procurement Agreement shall become effective on 1 January 2018 and continue in force until 31 December Subject to compliance with the requirements of the Listing Rules, Top Victory and XYCL may agree to renew or extend the term of the XYCL Procurement Agreement for subsequent three-year periods. The renewal or extension of the XYCL Procurement Agreement will be subject to the approval procedures in accordance with the Listing Rules. 12

13 9. Termination Unless otherwise specified in the XYCL Procurement Agreement, Top Victory has a right to terminate the XYCL Procurement Agreement if, among other things, XYCL commits a material breach of the XYCL Procurement Agreement and fails to remedy that breach after giving a 30-day written notice. 10. The XYCL Procurement Annual Caps Set out below are the XYCL Procurement Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The XYCL Procurement Annual Caps 1,200 1,800 2,550 The XYCL Procurement Annual Caps are determined by reference to a number of factors, particularly (i) the estimated total amount of packaging materials required by the Xianyang factory of the TPV Group during the term of the XYCL Procurement Agreement; (ii) the expected allocation of procurement of packaging materials by the Xianyang factory of the TPV Group from XYCL; and (iii) the projected purchase prices of the XYCL Products during the term of the XYCL Procurement Agreement with reference to the latest average market prices of the packaging materials and related products. (E) THE CEZZ PROCUREMENT AGREEMENT 1. Introduction The Board announces that Top Victory and CEZZ entered into the CEZZ Procurement Agreement on 19 December Pursuant to the CEZZ Procurement Agreement, the Top Victory Group will procure the CEZZ Products from the CEZZ Group. Details of the CEZZ Procurement Agreement are set out below. 2. Date 19 December Parties (i) Top Victory (as buyer); and (ii) CEZZ (as seller) 13

14 4. Subject matter Pursuant to the CEZZ Procurement Agreement, the Top Victory Group may procure the CEZZ Products from the CEZZ Group. 5. Pricing basis The procurement of the CEZZ Products by the Top Victory Group from the CEZZ Group will be by way of purchase order, which will set out the quality, model type, specifications, pricing and payment terms of the CEZZ Products. The pricing and payment terms of the CEZZ Products shall be determined as fair and reasonable based on normal commercial terms with reference to the costs of the raw materials and core components, as well as prevailing market prices. In any event, such terms shall be no less favourable to the Top Victory Group than those offered by independent third party vendors. 6. Safety stock level The CEZZ Group guarantees the Top Victory Group that there will not be any stock shortage throughout the term of the CEZZ Procurement Agreement. 7. Conditions precedent The CEZZ Procurement Agreement is conditional upon, if applicable, (i) the approval by the Independent Shareholders by way of a poll at the SGM to approve the CEZZ Procurement Continuing Connected Transaction (including the CEZZ Procurement Annual Caps); and (ii) the approval under all relevant regulations in relation to the CEZZ Procurement Agreement. 8. Term and renewal Subject to fulfillment of the conditions precedent, the CEZZ Procurement Agreement shall become effective on 1 January 2018 and continue in force until 31 December Subject to compliance with the requirements of the Listing Rules, Top Victory and CEZZ may agree to renew or extend the term of the CEZZ Procurement Agreement for subsequent three-year periods. The renewal or extension of the CEZZ Procurement Agreement will be subject to the approval procedures in accordance with the Listing Rules. 14

15 9. Termination Unless otherwise specified in the CEZZ Procurement Agreement, Top Victory has a right to terminate the CEZZ Procurement Agreement if, among other things, CEZZ commits a material breach of the CEZZ Procurement Agreement and fails to remedy that breach after giving a 30-day written notice. 10. The CEZZ Procurement Annual Caps Set out below are the CEZZ Procurement Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The CEZZ Procurement Annual Caps 1,000 1,500 2,000 The CEZZ Procurement Annual Caps are determined by reference to a number of factors, particularly (i) the estimated total amount of light bar materials required by the Xiamen factory of the TPV Group during the term of the CEZZ Procurement Agreement; (ii) the expected allocation of procurement of light bar materials by the Xiamen factory of the TPV Group from CEZZ; and (iii) the projected purchase prices of the CEZZ Products during the term of the CEZZ Procurement Agreement with reference to the latest average market prices of the light bar materials and other related products. (F) THE SUPPLY AGREEMENT 1. Introduction The Board announces that the Company and CGT entered into the Supply Agreement on 19 December Pursuant to the Supply Agreement, the Group may supply, and the CGT Group may purchase, the AOC Products. Details of the Supply Agreement are set out below. 2. Date 19 December Parties (i) the Company (as seller); and (ii) CGT (as buyer) 15

16 4. Subject matter Pursuant to the Supply Agreement, the Group may supply, and the CGT Group may purchase, the AOC Products. 5. Pricing basis Pursuant to the Supply Agreement, the Group shall sell the AOC Products to the CGT Group on a purchase-by-purchase basis. The price and specifications of the AOC Products shall be specified in a purchase order to be issued by the CGT Group to the Group. The price and other terms of the AOC Products shall be (i) on normal commercial terms; (ii) determined after arm s length negotiation; and (iii) in any event, on normal commercial terms or no less favourable than prevailing reasonable market price and terms to both of the parties to the Supply Agreement. 6. Conditions precedent The Supply Agreement is conditional upon the fulfilment of the following conditions: (i) receiving the approval by the Board and passing of an ordinary resolution by the Independent Shareholders at the SGM by way of a poll to approve the Supply Agreement (including the Supply Annual Caps); (ii) receiving the approval by the board of CGT and passing of an ordinary resolution by the independent shareholders of CGT at the general meeting by way of poll to approve the Supply Agreement (including the Supply Annual Caps); and (iii) compliance of all other relevant regulation(s) in relation to the Supply Agreement. 7. Term and renewal Subject to fulfillment of the conditions precedent, the Supply Agreement shall commence on 1 January 2018 and continue in force until 31 December Termination The Supply Agreement can be terminated upon the mutual consent by either party in writing to the other party if, among other things, the other party who commits a breach of the Supply Agreement and fails to remedy that breach after giving a 7-day written notice. 16

17 9. The Supply Annual Caps Set out below are the Supply Annual Caps for the Cap Period. For the year ending 31 December US$ 000 US$ 000 US$ 000 The Supply Annual Caps 19,500 24,500 28,000 The Supply Annual Caps are determined by reference to a number of factors, particularly (i) the procurement order forecast on the Monitors for the year ending 31 December 2018 provided by CGT; (ii) the projected growth in demand for the Monitors to be used in new products during the terms of the Supply Agreement; and (iii) the projected average selling prices of the Monitors, after benchmarking with the market prices of the similar products sold by independent third-party vendors, during the terms of the Supply Agreement. (G) PRICING POLICIES FOR THE PROCUREMENTS OF THE NANJING WALLY PRODUCTS, THE PANDA LCD PRODUCTS, THE SZIT PRODUCTS, THE XYCL PRODUCTS, THE CEZZ PRODUCTS AND THE SUPPLY OF THE AOC PRODUCTS Set out below are the pricing policies of the Group for the procurements of the Nanjing Wally Products, the Panda LCD Products, the SZIT Products, the XYCL Products and the CEZZ Products and the supply of the AOC Products. In the course of the procurements of the Nanjing Wally Products, the Panda LCD Products, the SZIT Products, the XYCL Products or the CEZZ Products, the relevant member of the Nanjing Wally Group, the Panda LCD Group, the SZIT Group, the XYCL Group or the CEZZ Group (the Seller Group ) shall sell the relevant products to members of the Top Victory Group on a purchase-by-purchase basis. The price and specifications of the relevant products shall be specified in a purchase order to be issued by members of the Top Victory Group to members of the Seller Group. Prior to the issue of the purchase order, the procurement officer of the Top Victory Group will obtain price quotation from the Seller Group through a request for quotation. The price quotation is subject to a tendering process by the Top Victory Group, in which price quotations provided by at least two independent third party suppliers will be benchmarked. The procurement officer will select the price quotations obtained from independent third party suppliers with products that resemble most closely with specifications of the relevant products and compare with the price quotation issued by the Seller Group. Afterwards, the procurement officer will present the request for quotation and the relevant supporting documents of the tendering process (including the reasons for the chosen independent third party price 17

18 quotations) for further review and approval by a manager and the director of procurement department of the Top Victory Group to ensure the supplier offering the lowest price is selected given the other terms are equivalent. The final price and other terms of the purchase order are determined on normal commercial terms and subject to mutual agreement by the management of both parties after arm s length negotiations. In respect of the pricing of the AOC Products, the Group will primarily calculate a base price of the AOC Products based on the costs of components, together with the logistic costs, taxes and other relevant costs. The base price is subject to benchmarking to at least two or more of the following prevailing market prices as available: (i) price quotations to independent third party customers of comparable products; (ii) price quotations provided from independent third party vendors if the orders are outsourced; and (iii) prices offered by independent third party suppliers in the market for comparable products. The final price quotation shall be at a price in line with the prevailing market price determined by benchmarking the abovementioned quotations and, in any event, not lower than the price quotations of comparable products provided to independent third party customers by the Group. After computing the final price quotation as above, the relevant sales officer of the Group will present the price quotation, other relevant terms of price quotation and the relevant supporting documents of the benchmarking (including the reasons for the chosen independent third party price quotations and the verified cost data) for final review and approval by the head of sales of the Group. (H) THE RENEWED TENANCY AGREEMENT 1. Introduction Reference is made to the announcement of the Company dated 5 June 2015 regarding the Existing Tenancy Agreement. As the Existing Tenancy Agreement will expire on 31 December 2017, the Board announces that Sang Fei and SZSED renewed the Existing Tenancy Agreement on 19 December 2017 and Sang Fei will continue to rent certain office premises owned by SZSED in Nanshan District, Shenzhen, the PRC. Details of the Renewed Tenancy Agreement are set out below. 2. Date 19 December Parties (i) Sang Fei (as lessee); and (ii) SZSED (as lessor) 18

19 4. Principal terms Subject properties Office premises occupying the 6th and 7th floor of 11 Science Park Road, Hi-tech Park, Nanshan District, Shenzhen, the PRC ( 中國深圳市南山區科技園科技路 11 號 6 7 樓 ) Term 1 January 2018 to 31 December 2019 Monthly rent RMB199,428 (equivalent to approximately US$30,216) for the period from 1 January 2018 to 31 December 2018; and RMB210,223 (equivalent to approximately US$31,852) for the period from 1 January 2019 to 31 December 2019 Total rentable space Approximately 3,261.3 square meters 5. The Tenancy Annual Caps Set out below are the Tenancy Annual Caps for the two years ending 31 December For the year ending 31 December US$ 000 US$ 000 The Tenancy Annual Caps The Tenancy Annual Caps are determined by reference to a number of factors, particularly (i) the monthly rent as agreed in the Renewed Tenancy Agreement; (ii) the duration of the Renewed Tenancy Agreement; and (iii) a buffer of 10% to accommodate the potential miscellaneous charges incident to the lease and potential change in the exchange rate of RMB to US$. (I) THE EQUIPMENT PROCUREMENT AGREEMENT 1. Introduction The Board announces that TPV Xianyang and CEC Jiutian entered into the Equipment Procurement Agreement on 19 December Pursuant to the Equipment Procurement Agreement, CEC Jiutian agreed to supply and TPV Xianyang agreed to procure the equipment and the corresponding installation 19

20 services in relation to the new production lines at the manufacturing plant of TPV Xianyang in Xianyang City, Shaanxi Province, the PRC. Details of the Equipment Procurement Agreement are set out below. 2. Date 19 December Parties (i) TPV Xianyang (as purchaser); and (ii) CEC Jiutian (as supplier) 4. Subject matter Pursuant to the Equipment Procurement Agreement, CEC Jiutian agreed to supply, and TPV Xianyang agreed to purchase the equipment and the corresponding installation services in relation to the new production lines at the manufacturing plant of TPV Xianyang. 5. Consideration and payment terms The total consideration for the procurement of equipment and the corresponding installation services pursuant to the Equipment Procurement Agreement shall be RMB44,460,000 (equivalent to approximately US$6,700,000) (tax inclusive). The Equipment Consideration shall be settled in cash by TPV Xianyang to CEC Jiutian as follows: (i) 20% of the Equipment Consideration or RMB8,892,000 (equivalent to approximately US$1,300,000) upon the signing of the Equipment Procurement Agreement; (ii) 20% of the Equipment Consideration or RMB8,892,000 (equivalent to approximately US$1,300,000) upon the preliminary inspection of the equipment and the inspection results are satisfactory to TPV Xianyang; (iii) 55% of the Equipment Consideration or RMB24,453,000 (equivalent to approximately US$3,700,000) upon the final inspection of equipment and meeting the relevant technical standards and layout standards; and (iv) 5% of the Equipment Consideration or RMB2,223,000 (equivalent to approximately US$300,000) upon two years from the date of fulfilment of item (iii) above. The Equipment Consideration has been determined through open tender procedures conducted by TPV Xianyang. 20

21 The original acquisition cost of the said equipment paid by CEC Jiutian was approximately RMB42,237,000 (tax inclusive) (equivalent to approximately US$6,400,000). 6. Warranty period The warranty period will commence two years immediately from the date of the final inspection of the equipment. 7. Delivery schedule Pursuant to the Equipment Procurement Agreement, CEC Jiutian shall deliver the equipment in March and April (J) REASONS FOR AND BENEFITS OF ENTERING INTO OF THE CONTINUING CONNECTED TRANSACTIONS, THE RENEWED TENANCY AGREEMENT AND THE EQUIPMENT PROCUREMENT AGREEMENT The procurements of the Nanjing Wally Products, the Panda LCD Products, the SZIT Products, the XYCL Products and the CEZZ Products by the Top Victory Group from the Nanjing Wally Group, the Panda LCD Group, the SZIT Group, the XYCL Group and the CEZZ Group respectively, the supply of the AOC Products by the Group to the CGT Group and the entering into of the Renewed Tenancy Agreement are considered an integral part of the ordinary and usual course of business of the Group and will be conducted on normal commercial terms and on an arm s length basis. The entering into of the Equipment Procurement Agreement is considered an integral part of the ordinary and usual course of business of the Group and is conducted on normal commercial terms and on an arm s length basis. The Directors (excluding the independent non-executive Directors, whose views will be rendered in a circular to be despatched to the Shareholders after considering the recommendations from Somerley) consider that: 1. the Renewed Nanjing Wally Procurement Agreement will enable the Group to (i) secure stable supply of a range of touch modules, panels and components with different sizes from reputable suppliers within the CEC Group; (ii) fulfill the growing demand for customised touch modules and panels; (iii) support the upcoming new project development; and (iv) command better bargaining power in future negotiations with other touch modules, panels and components suppliers. 2. the Panda LCD Procurement Continuing Connected Transaction will enable the Group to (i) secure stable LCD panel supplies from a reputable supplier within the CEC Group; and (ii) command better bargaining power in future negotiations with other LCD panel suppliers; 21

22 3. the SZIT Procurement Continuing Connected Transaction will enable the Group to (i) optimise its electronic components procurement channels; (ii) bring in the latest electronic components product resources to the Top Victory Group; and (iii) generate a certain degree of cost savings from economics of bulk purchasing and one-stop procurement of logistics services; 4. the XYCL Procurement Continuing Connected Transaction will enable the Group to (i) optimise its packaging materials procurement channels; and (ii) generate a certain degree of cost savings; 5. the CEZZ Procurement Continuing Connected Transaction will enable the Group to (i) optimise its light bar materials procurement channels; (ii) generate a certain degree of cost savings; and (iii) command better bargaining power in future negotiations with other suppliers; 6. the Supply Continuing Connected Transaction may provide the Group with additional access to potential customer and may allow the Group to increase the utilisation of its production capability; 7. the entering into of the Renewed Tenancy Agreement will enable the Group to (i) save relocation cost; and (ii) continue to rent an office space at an appropriate location with reasonable rent; and 8. the entering into of the Equipment Procurement Agreement will enable the Group to expand its production capacity in the new factory in Xianyang at a competitive cost. The Directors (excluding the independent non-executive Directors, whose views will be rendered in a circular to be despatched to the Shareholders after considering the recommendations from Somerley) consider the entering into of the Continuing Connected Transactions (including the Annual Caps) are in the interests of the Company and the Shareholders as a whole and the terms of the Continuing Connected Transactions are on normal commercial terms and fair and reasonable. The Directors consider the entering into the Renewed Tenancy Agreement (including the Tenancy Annual Caps) and the Equipment Procurement Agreement are in the interests of the Company and the Shareholders as a whole and the terms of Renewed Tenancy Agreement and the Equipment Procurement Agreement are on normal commercial terms and fair and reasonable. (K) INFORMATION ON THE PARTIES 1. The Company TPV is an internationally-renowned monitor and TV manufacturer. It has been listed on both the Hong Kong and Singapore stock exchanges since

23 TPV has enjoyed significant growth over the last two decades by successfully leveraging its core competencies in manufacturing, operational efficiency, research and development as well as its exceptional commitment to quality. TPV serves as an original design manufacturer for some of the best-known TV and PC brands and also distributes its own brands AOC, Envision and licensed Philips monitors, TVs, mobile phones and tablets products in most regions worldwide. 2. Top Victory Top Victory is a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company. The principal activities are the trading of monitors, TVs, mobile phones and tablets products and the sourcing of raw materials for the production of monitors, TVs, mobile phones and tablets products. 3. Sang Fei Sang Fei is a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company. Sang Fei is a well-known domestic mobile communication enterprise with an advanced research and development centre and a global marketing service system. Its main business includes the selling and distribution of mobile phone. 4. TPV Xianyang TPV Xianyang is a company established in the PRC with limited liability and an indirectly wholly-owned subsidiary of TPV. TPV Xianyang is principally engaged in the research and development, design, production and after-sales service of computers and computing peripheral equipments, TFT-LCD flat panel display, mold, new flat panel display, digital TV, communication terminal, monitor, other display products and its semi-finished products, kits, modules and spare parts; the wholesale, import and export of display and the above similar products, as well as the quality inspection technical services of the above. 5. Nanjing Wally Nanjing Wally is a company established in the PRC with limited liability and a non wholly-owned subsidiary of CEC. Nanjing Wally is a non wholly-owned subsidiary of Nanjing Huadong, whose A-shares are listed on the Shenzhen Stock Exchange in the PRC (stock code: ). It is principally engaged in research and development, manufacturing and marketing of a number of electronic products including touch modules and panels. 23

24 6. Panda LCD Panda LCD is a company established in the PRC with limited liability and a non wholly-owned subsidiary of CEC. It is principally engaged in the manufacture of LCD panels and displays. 7. SZIT SZIT is a company established in the PRC with limited liability and a whollyowned subsidiary of CEC. It is a national electronic components e-commerce platform of CEC focusing on internet information technology, electronic components trading, media community, application innovation, technical support, big data, finance, modern supply chain and distribution services. 8. XYCL XYCL is a company established in the PRC with limited liability and an associate of CEC. It is principally engaged in the production, processing and sale of packaging materials, corrugated boxes, foams and electronic products, as well as the purchasing and sales of raw materials. 9. CEZZ CEZZ is a company established in the PRC with limited liability and an associate of CEC. It is principally engaged in the research and development, design, manufacture and sale of new types of electronic components such as surface-mount LEDs, LED light bars, other optical components, semiconductor components and modules, optoelectronics, sensitive components and sensors, as well as export business of self-produced products and import business of machinery and equipment, spare parts and raw materials required by enterprises. 10. CGT CGT is a company limited by shares established in the PRC, whose A shares are listed on the Shenzhen Stock Exchange in the PRC (stock code: ). CGT is controlled by CEC. CGT mainly specializes in hi-tech electronics, information security systems and solutions, power supply, park and property services and others. 11. SZSED SZSED is a company established in the PRC, the shares of which are listed on the Shenzhen Stock Exchange (stock code: ). It is principally engaged in the research and development, production and sales of communications equipment, communications equipment on transportations, computer and software and office automation equipment etc; the design, development and 24

25 consulting of monitoring system project; and real estate development and management, property management and own property leasing. SZSED is owned as to approximately 49.18% by China Electronics International Information Service Co., Ltd. which is directly wholly-owned by CEC. 12. CEC Jiutian CEC Jiutian is a company established in the PRC with limited liability and an indirectly non wholly-owned subsidiary of CEC. CEC Jiutian is principally engaged in the research and development, promotion, technology transfer and technical services of computer software, hardware and technology; the development and production of electronic product; information system integration; wholesale and retail of goods; the foreign trade deal of the import and export of goods and technologies; house leasing; and enterprise management services. (L) LISTING RULES IMPLICATIONS CEC is a connected person of the Company under the Listing Rules by virtue of it being the ultimate controlling shareholder of the Company. Each of Nanjing Wally, Panda LCD, SZIT, XYCL, CEZZ, CGT, SZSED and CEC Jiutian is connected person of the Company under the Listing Rules by virtue of each of them being a subsidiary or an associate of CEC. As one of the applicable percentage ratios (other than the profits ratio) as defined under the Listing Rules in respect of the Annual Caps, when aggregated, exceeds 5%, each of the Continuing Connected Transactions (including the Annual Caps) is subject to the announcement, independent shareholders approval, annual review and reporting requirements under the Listing Rules. As one or more of the applicable percentage ratios (other than the profits ratio) as defined under the Listing Rules in respect of the Tenancy Annual Caps exceeds 0.1% but all applicable percentage ratios are less than 5%, the Tenancy Continuing Connected Transaction is subject to the announcement, annual review and reporting requirements but exempt from independent shareholders approval requirement under the Listing Rules. As one of the applicable percentage ratios as defined under the Listing Rules in respect of the Equipment Procurement Agreement exceeds 0.1% but all applicable percentage ratios are less than 5%, the entering into the Equipment Procurement Agreement is subject to the announcement and reporting requirements but exempt from independent shareholders approval requirement under the Listing Rules. Save for Mr Yang Jun, Mr Zhu Lifeng, Dr Li Jun, Ms Jia Haiying and Ms Bi Xianghui, who are officers of CEC, none of the Directors had material interest in the transaction contemplated under the Renewed Tenancy Agreement and the 25

26 Equipment Procurement Agreement. As such, Mr Yang Jun, Mr Zhu Lifeng, Dr Li Jun, Ms Jia Haiying and Ms Bi Xianghui had abstained from voting in respect of Board resolutions in relation to the Renewed Tenancy Agreement and the Equipment Procurement Agreement. (M) INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER The Independent Board Committee, comprising all the independent non-executive Directors, has been formed to advise the Independent Shareholders on the terms of the Continuing Connected Transactions (including the Annual Caps). The Company has appointed Somerley as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard. (N) GENERAL The Company will convene the SGM for the purpose of considering and approving each of the Continuing Connected Transactions (including the Annual Caps). A circular containing, among other things, (i) details of each of the Continuing Connected Transactions (including the Annual Caps); (ii) a letter from the Independent Board Committee; (iii) a letter of advice from Somerley; and (iv) a notice convening the SGM, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules, which is currently expected to be on or before 12 January CEC and its associates will abstain from voting on the resolution(s) relating to each of the Continuing Connected Transactions (including the Annual Caps) at the SGM. (O) DEFINITIONS Unless the context requires otherwise, the following terms used in this announcement shall have the meanings as set out below: Annual Caps AOC Products associate(s) Board the Nanjing Wally Procurement Annual Caps, the Panda LCD Procurement Annual Caps, the SZIT Procurement Annual Caps, the XYCL Procurement Annual Caps, the CEZZ Procurement Annual Caps and the Supply Annual Caps AOC brand monitor, public display, television, visual reality and other products and Great Wall brand monitor and other products has the meaning given to it in the Listing Rules the board of Directors 26