Summit Ascent Holdings Limited (incorporated in Bermuda with limited liability) (Stock Code: 102)

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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. Summit Ascent Holdings Limited (incorporated in Bermuda with limited liability) (Stock Code: 102) (1) CONTINUING CONNECTED TRANSACTIONS MANAGEMENT SERVICES AGREEMENT IN RELATION TO THE GAMING AND RESORT DEVELOPMENT PROJECT IN RUSSIA (2) CONNECTED TRANSACTION EQUIPMENT PURCHASE AGREEMENT IN RELATION TO THE GAMING AND RESORT DEVELOPMENT PROJECT IN RUSSIA The Board is pleased to announce that on 20 January 2015: (a) (b) Oriental Regent, a subsidiary of the Company, and TGI entered into a management services agreement, pursuant to which Oriental Regent has agreed to receive from TGI certain services for the casino and resort complex on Lot 9 within the Integrated Entertainment Zone of the Primorye Region, Russia, details of which are set out in this announcement; and FGCE, a wholly owned subsidiary of Oriental Regent, and Tiga Rus, a wholly owned subsidiary of TGI, entered into an equipment purchase agreement, pursuant to which FGCE has agreed to acquire from Tiga Rus certain gaming equipment, details of which are set out in this announcement, for a total cash consideration of US$3,218,500 (equivalent to approximately HK$24,943,000). As at the date of this announcement, the Company, through its wholly owned subsidiary SARL, owns 60% of the issued share capital of Oriental Regent, which owns 100% of the equity interest in FGCE. Therefore, both Oriental Regent and FGCE are subsidiaries of the Company. Firich, which owns 25% of the issued share capital of Oriental Regent, is a substantial shareholder of Oriental Regent and hence is a connected person of the Company. Firich is a wholly owned subsidiary of FEC. TGI is owned by FEC as to 74.91%, and Tiga Rus is a wholly owned subsidiary of TGI. Therefore, both TGI and Tiga Rus are connected persons of the Company at the subsidiary level of the Company. As such, the transactions contemplated under the Management Services Agreement constitute continuing connected transactions of the Company, and the transaction contemplated under the Tiga Equipment Purchase Agreement constitutes a connected transaction of the Company, under Chapter 14A of the Listing Rules. Since TGI and Tiga Rus are connected persons only at the subsidiary 1

2 level of the Company, the Transactions are subject only to reporting and announcement requirements but exempt from circular (including independent financial adviser) and independent shareholders approval requirements pursuant to Rule 14A.101 of the Listing Rules. (A) INTRODUCTION The Board is pleased to announce that on 20 January 2015: (a) (b) (B) Oriental Regent, a subsidiary of the Company, and TGI entered into the Management Services Agreement, pursuant to which Oriental Regent has agreed to receive from TGI certain services for the Casino, details of which are set out in this announcement; and FGCE, a wholly owned subsidiary of Oriental Regent, and Tiga Rus, a wholly owned subsidiary of TGI, entered into the Tiga Equipment Purchase Agreement, pursuant to which FGCE has agreed to acquire from Tiga Rus certain gaming equipment, details of which are set out in this announcement, for a total cash consideration of US$3,218,500 (equivalent to approximately HK$24,943,000). MANAGEMENT SERVICES AGREEMENT The principal terms of the Management Services Agreement are set out below: Date : 20 January 2015 Parties : (1) Oriental Regent as service recipient (2) TGI as service provider Term : Three (3) years commencing on 20 January 2015, which shall be automatically extended for further periods of three (3) years each, under the same terms and conditions as set forth in the Management Services Agreement, unless TGI has materially breached one or more provisions of the Management Services Agreement and has not cured such breach within thirty (30) calendar days after receiving written notice from Oriental Regent during the original term of the Management Services Agreement. Services : (1) TGI shall instruct Tiga Rus to supply, and Oriental Regent shall agree to accept, install and operate in the Casino the Tiga Equipment. (2) TGI shall furnish Oriental Regent with EUR396,300 (equivalent to approximately HK$3,630,000) for the procurement by FGCE of the Other Equipment. (3) TGI shall provide the Services to assist FGCE as needed during the term of the Management Services Agreement, including but not limited to the following: (a) regular review and analysis of the floor performance of the Equipment; 2

3 (b) (c) (d) (e) (f) (g) (h) recommendations on game mix, configuration and floor location of the Equipment; planning and execution of promotional events, programs, or campaigns to increase the GGR generated from the Equipment; fine-tuning, revision and updates of the gaming content of the Equipment; non-warranty repairs and maintenance of the Equipment; replacement in part or in whole of any portion of the Equipment that have been damaged to the extent where repair is not cost-effective or is unfeasible; implementation of modifications to the Equipment upon specific requests from FGCE; and field trial of new products from TGI. Participation Fees For any given month after the Casino has commenced operation where the average daily GGR generated per unit of the Equipment for such month exceeds the Baseline GGR in effect for that month, TGI shall be entitled to claim from Oriental Regent a fee ( Fee ) based on the following table: Average daily GGR per unit of the Equipment Under Baseline GGR Within US$100 over Baseline GGR More than US$100 over Baseline GGR Gross amount due TGI per unit of the Equipment None 100% of amount over Baseline GGR US$ % of amount over (Baseline GGR + US$100) The average daily GGR per unit of the Equipment for a given month shall be calculated as the GGR generated by the Equipment as a whole during the month, divided by the number of effective machine-days of the month, which shall be the number of days of such month that the Casino is open for business multiplied by the number of units of the Equipment. If any unit of the Equipment is out of service as a result of Oriental Regent contravening the provisions of the Management Services Agreement during such month, the duration, rounded to the nearest number of days, shall be deducted from the effective machine-days. The gross amount due TGI per unit of the Equipment is determined each month from the average daily GGR per unit of the Equipment for that month in accordance with the table set out above. 3

4 The gross amount due TGI each month shall be calculated in the following manner: Gross amount due TGI per unit of the Equipment X Number of days in such month that the Casino is open for business X Number of units of the Equipment in operation Notwithstanding the above, the Fee payable to TGI shall be the gross amount due TGI net of the monthly direct costs of US$136 (equivalent to approximately HK$1,000) per unit of the Equipment, subject to review by reference to the actual costs. The Fee payable to TGI as calculated in accordance with the above shall be inclusive of the Tiga Equipment payment to be made by FGCE to Tiga Rus set out in Part (C) below and the repayment to be made by Oriental Regent to TGI for the purchase price of the Other Equipment in the amount of EUR396,300 (equivalent to approximately HK$3,630,000) (collectively, the Equipment Payment ). FGCE and Oriental Regent shall make the Equipment Payment after the commencement of operation of the Casino in 12 equal monthly installments. During the 12- month installment period of the Equipment Payment: (a) (b) (c) for any given month where the amount of the Fee payable to TGI exceeds that of the monthly installment Equipment Payment, Oriental Regent shall pay the Fee payable to TGI after deducting the monthly installment Equipment Payment of the same month; for any given month where the amount of the monthly installment Equipment Payment exceeds that of the Fee payable to TGI, Oriental Regent shall receive from TGI an amount equal to the difference between the monthly Equipment Payment and the Fee for that month; and for any given month where Oriental Regent is entitled to receive the Guaranteed Win (as defined below), Oriental Regent shall receive from TGI the amount of the Guaranteed Win together with the monthly installment Equipment Payment already made for that month. After the aforementioned 12-month Equipment Payment period, Oriental Regent shall pay the full amount of the Fee payable to TGI or receive only the Guaranteed Win, if applicable. In addition, TGI shall pay Oriental Regent for the one-off cost sharing of the casino system for the Equipment in the amount of US$1,456,290 (equivalent to approximately HK$11,286,000) upon the commencement of operation of the Equipment. TGI shall also pay Oriental Regent the casino system maintenance fees for the Equipment in the amount of US$105,270 (equivalent to approximately HK$816,000) per year, by quarterly payments. Guaranteed Win For any given month after the Casino has commenced operation where the average daily GGR per unit of the Equipment for such month is less than the Baseline GGR in effect for that month, TGI shall be liable for making a guaranteed win payment to Oriental Regent (the Guaranteed Win ) of an amount equal to: 4

5 Difference between the Baseline GGR and the average daily GGR per unit of the Equipment X Number of days of such month that the Casino is open for business X Number of units of the Equipment in operation The payment terms under the Management Services Agreement referred to above have been determined in the ordinary course of business on normal commercial terms, negotiated on an arm s length basis and no more favourable to TGI than those available to Oriental Regent from independent third parties. Annual Caps The annual caps in respect of the Services for (a) the year ending 31 December 2015; (b) the year ending 31 December 2016; and (c) the year ending 31 December 2017 are set out below. Year ending 31 December 2015 Year ending 31 December 2016 Year ending 31 December 2017 Annual Cap for the Services HK$29,000,000 HK$70,000,000 HK$95,000,000 The annual caps were determined after taking into account the expected daily GGR of US$200 generated per unit of the Equipment for the year ending 31 December 2015 and are based on the assumptions of an annual growth rate of 15% in GGR and an annual growth rate of 15% in the direct costs during the term of the Management Services Agreement. (C) TIGA EQUIPMENT PURCHASE AGREEMENT The principal terms of the Tiga Equipment Purchase Agreement are set out below: Date : 20 January 2015 Parties : (1) FGCE as purchaser (2) Tiga Rus as vendor Tiga Equipment to be purchased Total consideration : 300 electronic gaming machines manufactured by Tiga Rus and the related accessories : US$3,218,500 (equivalent to approximately HK$24,943,000), including 18% value-added tax Consideration for the Tiga Equipment was determined based on the costs of production, delivery and installation of the Tiga Equipment in the ordinary course of business on normal commercial terms, negotiated on an arm s length basis and no more favourable to Tiga Rus than those available to FGCE from independent third parties. Payment of the consideration for the Tiga Equipment under the Tiga Equipment Purchase Agreement shall be made by FGCE after the commencement of operation of the Casino in 12 equal monthly installments and shall be included in the Fee payable under the Management Services Agreement. It is intended that payment of the consideration for the Tiga Equipment will be entirely funded by the internal 5

6 resources of the Oriental Regent Group. Details of the payment terms are set out in the section headed Participation Fees in Part (B) above. (D) REASONS FOR AND BENEFITS OF THE TRANSACTIONS TGI and Tiga Rus are subsidiaries of FEC, which is a worldwide leader in the manufacture, installation and maintenance of electronic gaming machines, multi-player gaming terminals, VLT and Lottery POS, with its shares listed on GreTai Securities Market in Taiwan. As mentioned in Parts (B) and (C) above, the Equipment Payment shall be made in 12 equal monthly installments and shall be included in the Fee payable under the Management Services Agreement. This would give the Casino access to quality gaming equipment with the advantage of reduced initial capital outlay. Moreover, the Guaranteed Win enables the Oriental Regent Group to receive guaranteed monthly income in a newly developed gaming market, thereby reducing the operational risks for the Casino. The entering into of the Management Services Agreement also enables the Oriental Regent Group to receive continuing updates of the gaming content of the Equipment and quality maintenance services on a regular and continuing basis. The Board is of the view that the acquisition of Tiga Equipment from Tiga Rus pursuant to the Tiga Equipment Purchase Agreement and the entering into of the Management Services Agreement with TGI can improve the operation efficiency of the Casino, reduce the operation costs, increase the GGR generated from the Equipment and improve the overall competitiveness of the Casino. The Directors (including the independent non-executive Directors) are of the view that the terms of the Transactions (including the annual caps for the Services) are fair and reasonable, the Transactions are on normal commercial terms or better and in the ordinary and usual course of business of Oriental Regent and FGCE and in the interests of the Company and its shareholders as a whole. (E) IMPLICATIONS UNDER THE LISTING RULES As at the date of this announcement, the Company, through its wholly owned subsidiary SARL, owns 60% of the issued share capital of Oriental Regent, which owns 100% of the equity interest in FGCE. Therefore, both Oriental Regent and FGCE are subsidiaries of the Company. Firich, which owns 25% of the issued share capital of Oriental Regent, is a substantial shareholder of Oriental Regent and hence is a connected person of the Company. Firich is a wholly owned subsidiary of FEC. TGI is owned by FEC as to 74.91%, and Tiga Rus is a wholly owned subsidiary of TGI. Therefore, both TGI and Tiga Rus are connected persons of the Company at the subsidiary level of the Company. As such, the transactions contemplated under the Management Services Agreement constitute continuing connected transactions of the Company, and the transaction contemplated under the Tiga Equipment Purchase Agreement constitutes a connected transaction of the Company, under Chapter 14A of the Listing Rules. Since TGI and Tiga Rus are connected persons only at the subsidiary level of the Company, the Transactions are subject only to reporting and announcement requirements but exempt from circular (including independent financial adviser) and independent shareholders approval requirements pursuant to Rule 14A.101 of the Listing Rules. As none of the Directors has a material interest in the Transactions, none of the Directors was required to abstain from voting on the board resolution approving the Transactions. 6

7 (F) INFORMATION IN RESPECT OF THE PARTIES The Company has been engaged in trading of tiles and engineering operations products. SARL is an investment holding company and a wholly-owned subsidiary of the Company. It is a special purpose company which has been established for the purpose of making the investment in the Primorye Gaming Project and does not have any other assets. Oriental Regent is an investment holding company, established under the laws of Hong Kong on 12 August 2010, which currently holds the entire equity interest in FGCE and the Primorye Gaming Project. FGCE holds a gaming license awarded by the Administration of the Primorye Region to conduct gaming activities in the Integrated Entertainment Zone of the Primorye Region, Russia, pursuant to which the Primorye Gaming Project is being developed by FGCE. TGI is an electronic gaming products, solutions and services company owned by FEC as to 74.91%. Tiga Rus is a wholly-owned subsidiary of TGI, being an extension of TGI for sales and marketing, on-site service and support of its gaming products in Russia. FEC is a company listed on GreTai Securities Market in Taiwan. It is primarily engaged in the manufacture, installation and maintenance of electronic gaming machines, multi-player gaming terminals, VLT and Lottery POS. Its products are widely deployed in Macau, Mainland China, Taiwan, Korea, the United States of America and a number of European countries. DEFINITIONS In this announcement, the following expressions shall, unless the context requires otherwise, have the following meanings: Baseline GGR Board baseline gross gaming revenue, which shall be set at US$150 (equivalent to approximately HK$1,000) initially and subject to periodic revisions in accordance with the provisions of the Management Services Agreement starting from 1 January 2016 the board of the Directors from time to time Casino the casino and resort complex on Lot 9 Company connected person Director(s) Equipment Summit Ascent Holdings Limited, a company incorporated in Bermuda with limited liability and having its shares listed on the main board of the Stock Exchange has the meaning ascribed to it under the Listing Rules the director(s) of the Company from time to time collectively, the Tiga Equipment and the Other Equipment 7

8 Equipment Payment FEC Fee FGCE Firich Guaranteed Win GGR Hong Kong Listing Rules Lot 8 Lot 9 Lot 10 Management Services Agreement Mauritius Oriental Regent Oriental Regent Group has the meaning set out in Part (B) of this announcement Firich Enterprises Co., Ltd, a company incorporated with limited liability in Taiwan and listed on the GreTai Securities Market in Taiwan has the meaning set out in Part (B) of this announcement First Gambling Company of the East LLC, a limited liability company established in Russia wholly-owned by Oriental Regent Firich Investment Limited, a company incorporated with limited liability in Mauritius and a wholly-owned subsidiary of FEC has the meaning set out in Part (B) of this announcement gross gaming revenue, which shall be converted from RUB to US$ using the prevailing exchange rate as published by the Central Bank of the Russian Federation on the last day of the month the Hong Kong Special Administrative Region of the People s Republic of China the Rules Governing the Listing of Securities on the Stock Exchange a parcel of land identified as Lot 8 within the Integrated Entertainment Zone of the Primorye Region, Russia a parcel of land identified as Lot 9 within the Integrated Entertainment Zone of the Primorye Region, Russia a parcel of land identified as Lot 10 within the Integrated Entertainment Zone of the Primorye Region, Russia the management services agreement dated 20 January 2015 entered into between Oriental Regent and TGI the Republic of Mauritius Oriental Regent Limited, a company incorporated in Hong Kong with limited liability collectively, Oriental Regent and FGCE 8

9 Other Equipment Primorye Gaming Project Russia SARL Services Stock Exchange subsidiary TGI Tiga Equipment Tiga Equipment Purchase Agreement Tiga Rus Transactions EUR HK$ RUB US$ 30 units of electronic gaming machines manufactured by a third party manufacturer to be agreed between TGI and Oriental Regent which FGCE shall procure at the unit price of EUR13,210 (equivalent to approximately HK$121,000) each the gaming and resort project being developed by FGCE in the Primorye Region of the Russian Federation on Lot 8, Lot 9 and Lot 10 the Russian Federation Summit Ascent Russia Limited, a company incorporated in the British Virgin Islands, being a wholly-owned subsidiary of the Company the services provided by TGI to Oriental Regent under the Management Services Agreement The Stock Exchange of Hong Kong Limited has the meaning ascribed to it under the Listing Rules Tiga Gaming Incorporated, a company incorporated in Taiwan owned by FEC as to 74.91% the equipment to be purchased by FGCE from Tiga Rus under the Tiga Equipment Purchase Agreement the equipment purchase agreement dated 20 January 2015 entered into between Tiga Rus and FGCE in relation to the purchase of the Tiga Equipment by FGCE from Tiga Rus Tiga Rus LLC, a limited liability company established in Russia, being a wholly-owned subsidiary of TGI collectively, the continuing connected transactions under the Management Services Agreement and the connected transaction under the Tiga Equipment Purchase Agreement Euro, the lawful currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community (as amended from time to time) Hong Kong dollar(s), the lawful currency of Hong Kong Russian Rouble(s), the lawful currency of Russia American dollar(s), the lawful currency of the United States of America 9

10 % per cent. Unless stated otherwise, translations of quoted currency values are made on an approximate basis and at the rates of US$1 = HK$7.75, EUR1 = HK$9.16 and RUB1 = HK$0.14. Percentages and figures expressed have been rounded. No representation is made that any amounts in US$, RUB, EUR or HK$ can be or could have been converted at the relevant dates at the above or any other rates or at all. Hong Kong, 20 January 2015 By Order of the Board Summit Ascent Holdings Limited Mr. Wang, John Peter Ben Deputy Chairman and Executive Director As at the date of this announcement, the Board comprises Mr. Ho, Lawrence Yau Lung * (Chairman), Mr. Wang, John Peter Ben # (Deputy Chairman), Mr. Tsui Yiu Wa, Alec +, Mr. Pang Hing Chung, Alfred + and Dr. Tyen Kan Hee, Anthony +. # Executive Director * Non-executive Director + Independent Non-executive Director 10