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.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code : 2018)
CONNECTED TRANSACTIONS
AND
CONTINUING CONNECTED TRANSACTIONS
BACKGROUND OF THE RENEWED AGREEMENTS
Reference is made to the announcements dated 16 December 2016 and 10 November 2017 in relation to the 2017 Master Lease Agreements and 2017 Master Purchase Agreements. The 2017 Master Lease Agreements and the 2017 Master Purchase Agreements will expire on 31 December 2019.
Having considered the commercial operating interests of the Company and the fair terms for renewing the four existing leases and three purchase agreements of the 2017 Master Lease Agreements and 2017 Master Purchase Agreements, the Board is pleased to announce that the Company has entered into the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements with its connected persons on 20 December 2019.
The 2020 Master Lease Agreements include:
- the 2020 Shenzhen Yuanyu Master Lease Agreement, which renews the existing leases of the Shenzhen Yuanyu Nanda Premises;
- the 2020 Changzhou LFY Master Lease Agreement, which renews the existing lease of the Changzhou LFY Gang Qiao Premises;
- the 2020 Jiangsu Yuanyu Master Lease Agreement, which renews the existing lease of the Jiangsu Yuanyu Technologies Buildings Premises; and
- the 2020 HVPC Master Lease Agreement, which renews the existing lease of the HVPC Premises.
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The 2020 Master Purchase Agreements include:
- the 2020 Changzhou Lingdi and HVPC Master Purchase Agreement, which renews the existing purchasing arrangement with HGCJ in Vietnam through its wholly-owned subsidiary HVPC, and establishing a purchasing arrangement with Changzhou Lingdi, which will assume the production facilities, production know-how and employees of HGCJ in the PRC with effect from 1 January 2020;
- the 2020 Changzhou Yousheng Master Purchase Agreement, which renews the existing purchasing arrangement with Changzhou Yousheng; and
- the 2020 YDL Materials Master Purchase Agreement, which renews the existing purchasing arrangement with Chengdu ZKLP (currently known as YDL Materials).
LISTING RULES IMPLICATIONS
The counterparties under the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements are all companies that are majority controlled by family members of Mr. Benjamin Pan and Ms. Ingrid Wu (together the "Interested Directors"). Mr. Benjamin Pan and Ms. Ingrid Wu are Directors and controlling Shareholders of the Company. Therefore the said counterparties are connected persons of the Company by virtue of them being associates of the Interested Directors under Chapter 14A of the Listing Rules, and the leases contemplated under the 2020 Master Lease Agreements constitute connected transactions and the transactions contemplated under the 2020 Master Purchase Agreements constitute continuing connected transactions of the Company.
As one or more of the applicable percentage ratio(s) as defined under Rule 14.07 of the Listing Rules in respect of the value of the right-of-use assets (unaudited) of the leased premises under the 2020 Master Lease Agreements and the maximum annual caps for the transactions contemplated under the 2020 Master Purchase Agreements exceed(s) 0.1% but all of them are less than 5%, the lease transactions contemplated under the 2020 Master Lease Agreements and the transactions contemplated under the 2020 Master Purchase Agreements are therefore subject to the reporting and announcement requirements but are exempt from circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
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BACKGROUND
Reference is made to the announcements dated 16 December 2016 and 10 November 2017 in relation to the 2017 Master Lease Agreements and 2017 Master Purchase Agreements. As previously disclosed, the 2017 Master Lease Agreements and the 2017 Master Purchase Agreements will expire on 31 December 2019. To ensure that the Group can continue its production and operating activities at the current locations, which are either currently being used as the Group's operational premises or are located in close proximity to the Group's other premises, and to ensure that the Group can continue purchasing the materials and products that comply with the specifications and requirements of the Group, the Company entered into the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements on 20 December 2019 with its connected persons. Details of the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements are set out below.
- THE 2020 MASTER LEASE AGREEMENTS
1. The 2020 Shenzhen Yuanyu Master Lease Agreement
The Company and Shenzhen Yuanyu, a company wholly-owned by Wu's Mother, entered into the 2017 Shenzhen Yuanyu Master Lease Agreement on 16 December 2016, pursuant to which Shenzhen Yuanyu agreed to lease certain premises located at Nanda Buildings, Nanshan, Shenzhen, the PRC (the "Shenzhen Yuanyu Nanda Premises") to the Group for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.
Historical figures
The annual caps under the 2017 Shenzhen Yuanyu Master Lease Agreement, the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps | 12,168,000 | 12,168,000 | 12,168,000 |
Annual rent paid or payable | 12,167,000 | 12,167,000 | 12,168,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
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Key terms of the renewed lease
The Group will continue to lease the Shenzhen Yuanyu Nanda Premises after the expiry of the 2017 Shenzhen Yuanyu Master Lease Agreement and will lease additional space at the Shenzhen Yuanyu Nanda Premises. On 20 December 2019, the Company and Shenzhen Yuanyu entered into the 2020 Shenzhen Yuanyu Master Lease Agreement, pursuant to which Shenzhen Yuanyu agreed to lease certain premises located at the Shenzhen Yuanyu Nanda Premises to the Group for a period of three years commencing from 1 January 2020 and ending on 31 December 2022, and the key terms are set out below:
Property | : The Shenzhen Yuanyu Nanda Premises. The |
total leased floor area is approximately | |
10,540.96 sq.m. | |
Usage | : Offices |
Rent (inclusive of VAT) | : RMB105.0 per sq.m. per month for the years |
ending 31 December 2020 and 2021 and | |
RMB111.3 per sq.m. for the year ending 31 | |
December 2022. The expected annual rents | |
payable for the years ending on 31 December | |
2020, 2021 and 2022 are RMB13,282,000, | |
RMB13,282,000 and RMB14,079,000 |
Value of right-of-use assets
The Group has applied IFRS 16 in respect to its leases. The leases contemplated under the 2020 Master Lease Agreements will be recognised as right-of-use assets by the Company. Based on a preliminary assessment by the management of the Company pursuant to IFRS 16, which has not been reviewed or audited by the auditors of the Company, the value of the right-of-use assets (unaudited) for the Shenzhen Yuanyu Nanda Premises to be leased by the Group would be approximately RMB36,422,000.
2. The 2020 Changzhou LFY Master Lease Agreement
The Company and Changzhou LFY, a company owned as to 50% by each of Pan's Father and Pan's Mother, entered into the 2017 Changzhou LFY Master Lease Agreement on 16 December 2016, pursuant to which Changzhou LFY agreed to lease certain premises located at Gang Qiao, Nanxiashu Town, Wujing District, Changzhou, Jiangsu Province, the PRC (the "Changzhou LFY Gang Qiao Premises") to the Group for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.
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Historical figures
The annual caps under the 2017 Changzhou LFY Master Lease Agreement, the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps | 2,357,000 | 2,357,000 | 2,395,000 |
Annual rent paid or payable | 2,159,000 | 2,159,000 | 2,194,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
Key terms of the renewed lease
The Group will continue to lease the Changzhou LFY Gang Qiao Premises after the expiry of the 2017 Changzhou LFY Master Lease Agreement with a reduced leased floor area. On 20 December 2019, the Company and Changzhou LFY entered into the 2020 Changzhou LFY Master Lease Agreement, pursuant to which Changzhou LFY agreed to lease certain premises located at the Changzhou LFY Gang Qiao Premises to the Group for a period of three years commencing from 1 January 2020 and ending on 31 December 2022, and the key terms are set out below:
Property | : The Changzhou LFY Gang Qiao Premises. |
The total leased floor area and ancillary areas | |
is approximately 13,369 sq.m. | |
Usage | : Factory and warehouse |
Rent (inclusive of VAT) | : For the factory floor areas leased, RMB26.71, |
RMB27.25 and RMB28.34 per sq.m. per | |
month for the years ending 31 December | |
2020, 2021, and 2022, respectively | |
For the ancillary areas leased, RMB1.09 per | |
sq.m. per month for the years ending 31 | |
December 2020, 2021 and 2022, respectively | |
The expected annual rents payable for the | |
years ending 31 December 2020, 2021 and | |
2022 are RMB1,918,000, RMB1,955,000 and | |
RMB2,029,000, respectively |
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Value of right-of-use assets
Based on a preliminary assessment by the management of the Company pursuant to IFRS 16, which has not been reviewed or audited by the auditors of the Company, the value of the right-of-use assets (unaudited) for the Changzhou LFY Gang Qiao Premises to be leased by the Group would be approximately RMB5,063,000.
3. The 2020 Jiangsu Yuanyu Master Lease Agreement
The Company and Jiangsu Yuanyu, a company indirectly owned as to 50% by Pan's Father and Pan's Mother, respectively, entered into the 2017 Jiangsu Yuanyu Master Lease Agreement on 16 December 2016, pursuant to which Jiangsu Yuanyu agreed to lease certain premises located at Yuanyu Technologies Building, Science & Education Mega Centre, Wujin District, Changzhou, Jiangsu Province, the PRC (the "Jiangsu Yuanyu Technologies Buildings Premises") to the Group for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.
Historical figures
The annual caps under the 2017 Jiangsu Yuanyu Master Lease Agreement, the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps | 10,607,000 | 10,607,000 | 10,716,000 |
Annual rent paid or payable | 10,534,000 | 10,534,000 | 10,571,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
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Key terms of the renewed lease
The Group will continue to lease the Jiangsu Yuanyu Technologies Buildings Premises after the expiry of the 2017 Jiangsu Yuanyu Master Lease Agreement. On 20 December 2019, the Company and Jiangsu Yuanyu entered into the 2020 Jiangsu Yuanyu Master Lease Agreement, pursuant to which Jiangsu Yuanyu agreed to lease certain premises located at the Jiangsu Yuanyu Technologies Buildings Premises to the Group for a period of three years commencing from 1 January 2020 and ending on 31 December 2022, and the key terms are set out below:
Property | : The Jiangsu Yuanyu Technologies Buildings |
Premises. The total leased floor area and | |
ancillary land area is approximately 29,736 | |
sq.m. | |
Usage | : Factory and offices |
Rent (inclusive of VAT) | : For the factory and office floor areas leased, |
RMB32.70, RMB34.34 and RMB35.97 per | |
sq.m. per month for the years ending 31 | |
D e c e m b e r 2 0 2 0 , 2 0 2 1 , a n d 2 0 2 2 , | |
respectively | |
For the ancillary land areas leased, RMB1.09 | |
per sq.m. per month for the years ending 31 | |
December 2020, 2021 and 2022, respectively | |
The expected annual rents payable for the | |
years ending 31 December 2020, 2021 and | |
2022 are RMB10,556,000, RMB11,082,000 | |
and RMB11,608,000, respectively |
Value of right-of-use assets
Based on a preliminary assessment by the management of the Company pursuant to IFRS 16, which has not been reviewed or audited by the auditors of the Company, the value of the right-of-use assets (unaudited) for the Jiangsu Yuanyu Technologies Building Premises to be leased by the Group would be approximately RMB28,507,000.
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4. The 2020 HVPC Master Lease Agreement
The Company and HVPC, a wholly-owned subsidiary of HGCJ, which in turn is wholly-owned by Wu's Mother, entered into the 2017 HVPC Master Lease Agreement on 16 December 2016, pursuant to which HVPC agreed to lease certain premises located at Lot E3-3, Que Vo IP, Van Duong Commune, Bac Ninh City, Bac Ninh Province, Vietnam (the "HVPC Premises") to the Group for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.
Historical figures
The annual caps under the 2017 HVPC Master Lease Agreement, the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December
2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
USD | USD | USD | |
Annual caps | 232,512 | 232,512 | 232,512 |
Annual rent paid or payable | 225,000 | 184,000 | 184,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
Key terms of the renewed lease
The Group will continue to lease the HVPC Premises after the expiry of the 2017 HVPC Master Lease Agreement. On 20 December 2019, the Company and HVPC entered into the 2020 HVPC Master Lease Agreement, pursuant to which HVPC agreed to lease certain premises located at the HVPC Premises to the Group for a period of three years commencing from 1 January 2020 and ending on 31 December 2022, and the key terms are set out below:
Property | : The HVPC Premises. The total leased floor |
area is approximately 3,344 sq.m. | |
Usage | : Warehouse |
Rent | : USD4.0 per sq.m. per month for each of the |
years ending 31 December 2022. The expected | |
annual rents payable for the years ending 31 | |
D e c e m b e r 2 0 2 0 , 2 0 2 1 a n d 2 0 2 2 a r e | |
USD160,600, USD160,600 and USD160,600, | |
respectively |
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Value of right-of-use assets
Based on a preliminary assessment by the management of the Company pursuant to IFRS 16, which has not been reviewed or audited by the auditors of the Company, the value of the right-of-use assets (unaudited) for the HVPC Premises to be leased by the Group would be approximately USD455,000.
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THE 2020 MASTER PURCHASE AGREEMENTS
5. The 2020 Changzhou Lingdi and HVPC Master Purchase Agreement
The Company and HGCJ, a company wholly-owned by Wu's Mother, entered into the 2017 HGCJ Master Purchase Agreement on 16 December 2016, pursuant to which the Group agreed to purchase from the HGCJ Group certain materials and products including but not limited to foam blocks, calcium plastic boards, load plates, carrier bands, plastic plates and plastic trays. On 10 November 2017, the Company entered into the Supplemental 2017 HGCJ Master Purchase Agreement, which amended certain terms and increased the annual caps under the 2017 HGCJ Master Purchase Agreement.
Historical figures
The annual caps under the 2017 HGCJ Master Purchase Agreement (subsequently amended by the Supplemental 2017 HGCJ Master Purchase Agreement), the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps (as amended by | |||
the Supplemental 2017 HGCJ | |||
Master Purchase Agreement) | 67,760,000 | 94,864,000 | 119,025,000 |
Amount paid or payable | 57,660,000 | 75,397,000 | 94,220,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
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The 2017 HGCJ Master Purchase Agreement (as amended by the Supplemental 2017 HGCJ Master Purchase Agreement) will expire on 31 December 2019. The Company has been notified by HGCJ that with effect from 1 January 2020, HGCJ will no longer be producing the materials and products that were previously provided to the Group, and the relevant production facilities, production know-how and employees of HGCJ will be assumed by Changzhou Lingdi. On the other hand, HVPC (a wholly-owned subsidiary of HGCJ) will continue to provide materials and products to the Group in Vietnam. For the Group to continue to purchase materials and products that were previously procured under the 2017 HGCJ Master Purchase Agreement, on 20 December 2019, the Company, Changzhou Lingdi, a company owned as to 51% by Wu's Mother and 49% by Wu's Sister, and HVPC entered into the 2020 Changzhou Lingdi and HVPC Master Purchase Agreement, pursuant to which the Group agreed to purchase certain materials and products including but not limited to foam blocks, calcium plastic boards, load plates, carrier bands, plastic plates and plastic trays from Changzhou Lingdi and HVPC for a period of three years commencing from 1 January 2020 and ending on 31 December 2022.
Annual caps
The Board expects that the business of the Group will expand and the level of purchases from Changzhou Lingdi and HVPC may increase to cope with the Group's production plans. The annual caps in respect of the purchase amounts under the 2020 Changzhou Lingdi and HVPC Master Purchase Agreement for t h e y e a r s e n d i n g 3 1 D e c e m b e r 2 0 2 0 , 2 0 2 1 a n d 2 0 2 2 w i l l b e RMB120,000,000, RMB130,000,000 and RMB140,000,000, respectively.
The annual caps were determined with reference to (a) previous amount of purchases made by the Group from the HGCJ Group during the two years ended 31 December 2018 and up to the date of this announcement, (b) the estimated market rates of the materials and products to be acquired and the expected level of purchases by the Group for its estimated production needs and demands from its customers after taking into account the Group's projected sales volumes, (c) the expected completion of the Group's research and development in relation to its products, and (d) the anticipated growth of the Group's production capacity.
6. The 2020 Changzhou Yousheng Master Purchase Agreement
The Company and Changzhou Yousheng, a company owned as to 30% by Pan's Mother and 70% by Pan's Sister, entered into the 2017 Changzhou Yousheng Master Purchase Agreement on 16 December 2016, pursuant to which the Group agreed to purchase certain materials such as foam, adhesives, mesh, domes, ear cushions, insulation mats and resistance neeb for use in acoustic components from Changzhou Yousheng for a period of three years commencing from 1 January 2017 to 31 December 2019.
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Historical figures
The annual caps for under the 2017 Changzhou Yousheng Master Purchase Agreement, the actual amounts paid by the Group for the years ended 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps | 76,050,000 | 91,260,000 | 100,620,000 |
Amount paid or payable | 52,350,000 | 43,391,000 | 34,968,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
The Group will continue to purchase certain materials from Changzhou Yousheng after the expiry of the 2017 Changzhou Yousheng Master Purchase Agreement. On 20 December 2019, the Company and Changzhou Yousheng entered into the 2020 Changzhou Yousheng Master Purchase Agreement, pursuant to which the Group agreed to purchase certain materials such as foam, adhesives, mesh, domes, ear cushions, insulation mats and resistance neeb for use in acoustic and optical components from Changzhou Yousheng for a period of three years commencing from 1 January 2020 and ending on 31 December 2022.
Annual caps
The Board expects that business of the Group will continue to expand, and the level of purchases of materials from Changzhou Yousheng may increase to cope with the Group's increased production plans. The annual caps in respect of the purchase amounts under the 2020 Changzhou Yousheng Master Purchase Agreement for the years ending 31 December 2020, 2021 and 2022 will be RMB60,000,000, RMB80,000,000 and RMB90,000,000, respectively.
The annual caps were determined with reference to (a) previous amount of purchases made by the Group from the Changzhou Yousheng Group during the two years ended 31 December 2018 and up to the date of this announcement, (b) the estimated market rates of the materials and products to be acquired and the expected level of purchases by the Group for its estimated production needs and demands from its customers after taking into account the Group's projected sales volumes, (c) the expected completion of the Group's research and development in relation to its products, and (d) the anticipated growth of the Group's production capacity.
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7. The 2020 YDL Materials Master Purchase Agreement
The Company and Chengdu ZKLP (currently known as YDL Materials), a subsidiary of Jiangsu Yuanyu and an associate of Ms. Wu, entered into the 2017 Chengdu ZKLP Master Purchase Agreement on 16 December 2016, pursuant to which the Group agreed to purchase certain materials including but not limited to chemical materials, from the Chengdu ZKLP for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.
Historical figures
The annual caps under the 2017 Chengdu ZKLP Master Purchase Agreement, the actual amounts paid by the Group for the years ending 31 December 2017 and 2018, and the expected amount paid and payable for the year ending 31 December 2019 are set out below:
For the year ended | For the year ending | ||
31 December 2017 | 31 December 2018 | 31 December 2019 | |
(expected) | |||
RMB | RMB | RMB | |
Annual caps | 35,100,000 | 58,500,000 | 93,600,000 |
Amount paid or payable | 1,216,000 | 2,891,000 | 484,000 |
None of the aforesaid transaction amounts have exceeded or will exceed their applicable annual caps.
The Group will continue to purchase certain materials from YDL Material after the expiry of the 2017 Chengdu ZKLP Master Purchase Agreement. On 20 December 2019, the Company and YDL Materials entered into the 2020 YDL Materials Master Purchase Agreement, pursuant to which the Group agreed to purchase certain materials including but not limited to chemical adhesives that are used by the Group in its research and development of new materials and products for use in new types of mobile phones from YDL Materials for a period of three years commencing from 1 January 2020 and ending on 31 December 2022.
Annual caps
The Board expects that business of the Group will continue to expand and the level of purchase of materials from YDL Material may increase to cope with the Group's production plans. The annual caps in respect of the purchase amounts under the 2020 YDL Materials Master Purchase Agreement for the years ending 31 December 2020, 2021 and 2022 will be RMB20,000,000, RMB25,000,000 and RMB30,000,000, respectively.
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The annual caps were determined with reference to (a) previous amount of purchases made by the Group from Chengdu ZKLP (currently known as YDL Materials) during the two years ended 31 December 2018 and up to the date of this announcement, (b) the planned application of the new adhesives in products of the Group for new handset applications that may be launched in the near future, which is expected to generate significant demands for raw materials supplied by YDL Materials, (c) the estimated market rates of the materials to be acquired and the expected level of purchases by the Group for its estimated production needs and demands from its customers after taking into account the Group's projected sales volumes, (d) the expected completion of the Group's research and development in relation to its products, and (e) the anticipated growth of the Group's demand of materials that may be purchased from YDL Materials in the production of new products.
IV. REASONS FOR AND BENEFITS OF ENTERING INTO OF THE 2020 MASTER LEASE AGREEMENTS AND THE 2020 MASTER PURCHASE AGREEMENTS
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The 2020 Master Lease Agreements
The 2020 Master Lease Agreements were entered into by the Group in its ordinary and usual course of business. The Company had obtained comparable quotes for market rentals for premises situated close to the Group's production and operational premises, which the Directors consider are comparable to those that will continue to be leased by the Group under the 2020 Master Lease Agreements, and are of the view that the terms offered to the Group under the 2020 Master Lease Agreements are no less favourable than the terms offered by other independent third parties.
In addition, the Directors (including the independent non-executive Directors but excluding the Interested Directors, who have abstained from voting in respect of the relevant Board resolutions) are of the view that the entering into of leases under the 2020 Master Lease Agreements would allow the Group to continue its production and operating activities at the current locations, which are either currently being used as the Group's operational premises or are located in close proximity to the Group's other premises would support the Group's operations.
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-
The 2020 Master Purchase Agreements
The purchases under the 2020 Master Purchase Agreements are entered into by the Group in its ordinary and usual course of business. The Directors (including the independent non-executive Directors but excluding the Interested Directors, who have abstained from voting in respect of the relevant Board resolutions) are of the view that the entering into of transactions under the 2020 Master Purchase Agreements would allow the Group to continue purchasing the materials and products that comply with the specifications and requirements of the Group, or which may be included in the Group's new products, all of which are essential to the Group's production and operations, and such purchases would be on terms that are no less favourable as terms offered by other independent third party suppliers.
The Directors also believes the purchase of good quality and stable supply of processing materials from manufacturers located in close proximity to the Group's production facilities is beneficial to the timely satisfaction of the expanding production and development needs of the Group.
-
The 2020 Master Purchase Agreements
- INFORMATION OF THE GROUP AND THE COUNTERPARTIES
The Group is the world's leading solutions provider for smart devices with cutting-edge technologies in materials research, simulation, algorithms, design, automation and process development in Acoustics, Optics, Electromagnetic Drives and Precision Mechanics, Micro-electromechanical systems, Radio Frequency and Antenna, providing advanced miniaturized and proprietary technology solutions. Our goal is to "Lead Innovation & Enhance User Experience". In delivering high-performance and superior quality products, the Group will continue to create value for customers with innovative user experience.
Shenzhen Yuanyu is principally engaged in the research and development and sales of mobile acoustic design software, the leasing of self-owned properties, and the development, sales and provision of technical consulting services of computer software.
Changzhou LFY is principally engaged in the supply and sale of industrial manufacturing commodities, the leasing of self-owned properties and the leasing of self-owned equipment.
Jiangsu Yuanyu is principally engaged in the investment, research and development, provision of consulting services and the transfer of know-how in the area of electronic technologies, the leasing of self-owned properties and the leasing of self-owned equipment.
Changzhou Lingdi is principally engaged in the manufacturing of plastic products, stamping parts and packing materials, including the manufacturing and processing of plastic trays, fasteners and cartons for storing mobile phone components.
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HGCJ (including its wholly-owned subsidiary, HVPC) is principally engaged in the manufacture and processing of packaging materials and stamping and plastic products.
Changzhou Yousheng is principally engaged in the research and development, manufacture and sale of electronic components, solar power components, sports equipment and crafts and the importation and exportation of the relevant products and technologies in the PRC.
Chengdu ZKLP (currently known as YDL Materials) is principally engaged in the research and development, production, processing, sales and related support, consultation and trading in know-how and foreign and export trading of products and know-how, in respect of materials including but not limited to lithium ion battery separators.
VI. LISTING RULES IMPLICATIONS
The counterparties of the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements are all companies that are majority controlled by family members of Mr. Benjamin Pan and Ms. Ingrid Wu. Mr. Benjamin Pan and Ms. Ingrid Wu are Directors and controlling Shareholders of the Company. Therefore the counterparties of the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements are connected persons of the Company by virtue of them being associates of the Interested Directors under Chapter 14A of the Listing Rules, and the leases contemplated under the 2020 Master Lease Agreements constitute connected transactions and the transactions contemplated under the 2020 Master Purchase Agreements constitute continuing connected transactions of the Company.
As the Interested Directors are regarded as having a material interest in the leases contemplated under the 2020 Master Lease Agreements and the transactions contemplated under the 2020 Master Purchase Agreements, they have abstained from voting on the relevant Board resolutions in approving them.
-
The 2020 Master Lease Agreements
The Group will pay the rental amounts payable under the leases through its internal resources.
The 2020 Master Lease Agreements were all entered into within a twelve-month period and these leases are related because they are entered into with parties who are connected with one another. Pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, the Company must comply with the applicable connected transaction requirements based on the classification of the 2020 Master Lease Agreements when aggregated.
The aggregate value of the right-of-use assets (unaudited) under the 2020 Master Lease Agreements would be approximately RMB73,200,000 as of 1 January 2020, being the date of commencement of all the 2020 Master Lease Agreements.
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As one or more of the applicable percentage ratio(s) as defined under Rule
- of the Listing Rules in respect of the aggregate value of the right-of-use assets (unaudited) exceed(s) 0.1% but all of them are less than 5%, the leases contemplated under all the 2020 Master Lease Agreements are subject to the reporting and announcement requirements but are exempt from circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
- The 2020 Master Purchase Agreements
The Group will fund the consideration payable for its purchases under the 2020 Master Purchase Agreements through its internal resources.
The aggregate annual amount payable by the Company to the connected persons under all the 2020 Master Purchase Agreements will not exceed RMB200,000,000, RMB235,000,000 and RMB260,000,000 for the years ending 31 December 2020, 2021 and 2022, respectively.
As one or more of the applicable percentage ratio(s) as defined under Rule- of the Listing Rules in respect of the maximum annual cap for transactions contemplated under all the 2020 Master Purchase Agreements exceed(s) 0.1% but all of them are less than 5%, the transactions contemplated under the 2020 Master Purchase Agreements are subject to the reporting and announcement requirements but are exempt from circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
VII. DIRECTORS' VIEWS
As the Interested Directors are regarded as having a material interests under the 2020 Master Lease Agreements and the 2020 Master Purchase Agreements, they have abstained from voting on the relevant Board resolutions in approving them.
The Directors (including the independent non-executive Directors, but excluding the Interested Directors, who had abstained from voting in respect of the relevant Board resolutions) are of the view that the leases contemplated under the 2020 Master Lease Agreements and the transactions contemplated under the 2020 Master Purchase Agreements were entered into in the ordinary and usual course of business of the Group, on normal commercial terms or better, the terms thereof (including the relevant annual caps with respect to the 2020 Master Purchase Agreements) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole after taking into account the factors stated in this announcement.
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VIII. DEFINITIONS | |
"16 December 2016 | the announcement of the Company dated 16 December |
Announcement" | 2016 |
"10 November 2017 | the announcement of the Company dated 10 November |
Announcement" | 2 0 1 7 i n r e l a t i o n t o t h e e n t e r i n g i n t o o f t h e |
Supplemental 2017 HGCJ Master Purchase Agreement | |
"2017 Changzhou LFY | the master lease agreement entered into between |
Master Lease | Changzhou LFY and the Company, details of which are |
Agreement" | set out in the section headed "2017 CHANGZHOU |
L F Y M A S T E R L E A S E A G R E E M E N T " o f t h e | |
16 December 2016 Announcement | |
"2017 Changzhou Model | the master purchase agreement entered into between |
Master Purchase | Changzhou Model and the Company, details of which |
Agreement" | are set out in the section headed "2017 CHANGZHOU |
MODEL MASTER PURCHASE AGREEMENT" of | |
the 16 December 2016 Announcement | |
"2017 Changzhou | the master purchase agreement entered into between |
Yousheng Master | Changzhou Yousheng and the Company, details of |
Purchase Agreement" | which are set out in the section headed "2017 |
CHANGZHOU YOUSHENG MASTER PURCHASE | |
A G R E E M E N T " o f t h e 1 6 D e c e m b e r 2 0 1 6 | |
Announcement | |
"2017 Chengdu ZKLP | the master purchase agreement entered into between |
Master Purchase | Chengdu ZKLP and the Company, details of which are |
Agreement" | set out in the section headed "2017 CHENGDU ZKLP |
M A S T E R P U R C H A S E A G R E E M E N T " o f t h e | |
16 December 2016 Announcement | |
"2017 HGCJ Master | the master purchase agreement entered into between |
Purchase Agreement" | HGCJ and the Company, details of which are set out in |
the section headed "2017 HGCJ MASTER PURCHASE | |
A G R E E M E N T " o f t h e 1 6 D e c e m b e r 2 0 1 6 | |
Announcement | |
"2017 HVPC Master | the master lease agreement entered into between HVPC |
Lease Agreement" | and the Company, details of which are set out in the |
section headed "2017 HVPC MASTER LEASE | |
A G R E E M E N T " o f t h e 1 6 D e c e m b e r 2 0 1 6 | |
Announcement |
17
"2017 Jiangsu Yuanyu | the master lease agreement entered into between |
Master Lease | Jiangsu Yuanyu and the Company, details of which are |
Agreement" | set out in the section headed "2017 JIANGSU |
YUANYU MASTER LEASE AGREEMENT" of the 16 | |
December 2016 Announcement" | |
"2017 Shenzhen | the master lease agreement entered into between |
Yuanyu Master Lease | Shenzhen Yuanyu and the Company, details of which |
Agreement" | are set out in the section headed "2017 SHENZHEN |
YUANYU MASTER LEASE AGREEMENT" of the 16 | |
December 2016 Announcement | |
"2017 Master Lease | the 2017 Shenzhen Yuanyu Master Lease Agreement, |
Agreements" | the 2017 Changzhou LFY Master Lease Agreement, the |
2017 Jiangsu Yuanyu Master Lease Agreement and the | |
2017 HVPC Master Lease Agreement | |
"2017 Master Purchase | the 2017 HGCJ Master Purchase Agreement, the 2017 |
Agreements" | Changzhou Yousheng Master Purchase Agreement, the |
2017 Changzhou Model Master Purchase Agreement | |
and the 2017 Chengdu ZKLP Master Purchase | |
Agreement | |
"2020 Changzhou LFY | the master lease agreement entered into between |
Master Lease | Changzhou LFY and the Company, details of which are |
Agreement" | set out in the section headed "II. The 2020 Master |
Lease Agreements - 2. The 2020 Changzhou LFY | |
Master Lease Agreement" of this announcement | |
"2020 Changzhou Lingdi | the master purchase agreement entered into among |
and HVPC Master | Changzhou Lingdi, HVPC and the Company, details of |
Purchase Agreement" | which are set out in the section headed "III. The 2020 |
Master Purchase Agreements - 5. 2020 Changzhou | |
Lingdi and HVPC Master Purchase Agreement" of this | |
announcement | |
"2020 Changzhou | the master purchase agreement entered into between |
Yousheng Master | Changzhou Yousheng and the Company, details of |
Purchase Agreement" | which are set out in the section headed "III. The 2020 |
Master Purchase Agreements - 6. The 2020 Changzhou | |
Yousheng Master Purchase Agreement" of this | |
announcement |
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"2020 HVPC Master | the master lease agreement entered into between HVPC |
Lease Agreement" | and the Company, details of which are set out in the |
section headed "II. The 2020 Master Lease Agreements | |
- 4. The 2020 HVPC Master Lease Agreement" of this | |
announcement | |
"2020 Jiangsu Yuanyu | the master lease agreement entered into between |
Master Lease | Jiangsu Yuanyu and the Company, details of which are |
Agreement" | set out in the section headed "II. The 2020 Master |
Lease Agreements - 3. The 2020 Jiangsu Yuanyu Master | |
Lease Agreement" of this announcement | |
"2020 Shenzhen | the master lease agreement entered into between |
Yuanyu Master Lease | Shenzhen Yuanyu and the Company, details of which |
Agreement" | are set out in the section headed "II. The 2020 Master |
Lease Agreements - 1. The 2020 Shenzhen Yuanyu | |
Master Lease Agreement" of this announcement | |
"2020 Master Lease | the 2020 Shenzhen Yuanyu Master Lease Agreement, |
Agreement(s)" | the 2020 Changzhou LFY Master Lease Agreement, the |
2020 Jiangsu Yuanyu Master Lease Agreement and the | |
2020 HVPC Master Lease Agreement, and each a | |
"2020 Master Lease Agreement" | |
"2020 Master Purchase | the 2020 Changzhou Lingdi and HVPC Master |
Agreement(s)" | Purchase Agreement, the 2020 Changzhou Yousheng |
Master Purchase Agreement and the 2020 YDL | |
Materials Master Purchase Agreement, and each a | |
"2020 Master Purchase Agreement" | |
"2020 YDL Materials | the master purchase agreement entered into between |
Master Purchase | YDL Materials and the Company, details of which are |
Agreement" | set out in the section headed "III. The 2020 Master |
Purchase Agreements - 7. The 2020 YDL Materials | |
Master Purchase Agreement" of this announcement | |
"associate(s)" | has the meaning ascribed to it under the Listing Rules |
"Board" | the board of Directors |
"Changzhou LFY" | Changzhou Laifangyuan Electronics Co., Ltd.* (常州 |
市來方圓電子有限公司), which is beneficially owned | |
as to 50% by each of Pan's Father and Pan's Mother |
19
"Changzhou LFY | Changzhou LFY and its subsidiaries, its shareholders, |
Group" | its holding company and subsidiaries of such holding |
company from time to time | |
"Changzhou LFY Gang | has the meaning ascribed to it under the section headed |
Qiao Premises" | "II. The 2020 Master Lease Agreements - 2. The 2020 |
Changzhou LFY Master Lease Agreement" of this | |
announcement | |
"Changzhou Lingdi" | Changzhou Lingdi Electronics Technologies Co., |
Ltd.*(常州凌迪電子科技有限公司), a company that is | |
jointly held as to 51% by Wu's Mother and 49% by | |
Wu's Sister | |
"Changzhou Model" | Changzhou Yuanyu Precise Model Manufacturing Co., |
Ltd.* (常州遠宇精密模具製造有限公司), a company | |
indirectly and wholly-owned by Pan's Father | |
"Changzhou Model | Changzhou Model and its subsidiaries, its shareholders, |
Group" | its holding company and subsidiaries of such holding |
company from time to time | |
"Changzhou Yousheng" | Changzhou Yousheng Electronics Co., Ltd.* (常州巿友 |
晟電子有限公司), which is beneficially owned as to | |
30% by Pan's Mother and 70% by Pan's Sister | |
"Changzhou Yousheng | Changzhou Yousheng and its subsidiaries, its |
Group" | shareholders, its holding company and subsidiaries of |
such holding company from time to time | |
"Changzhou ZKLP" | Changzhou Zhongke Laifang Power Development Co., |
Ltd.* (常州中科來方能源發展有限公司), which is | |
wholly-owned by Jiangsu Yuanyu | |
"Chengdu ZKLP" | Chengdu Zhongke Laifang Power Science and |
Technology Development Co., Ltd.* (成都中科來方能 | |
源科技有限公司), a subsidiary of Jiangsu Yuanyu and | |
also a connected person of the Company | |
"Chengdu ZKLP Group" | Chengdu ZKLP and its subsidiaries, its shareholders, |
its holding company and subsidiaries of such holding | |
company from time to time |
20
"Company" | AAC Technologies Holdings Inc . , a company |
incorporated in the Cayman Islands as an exempted | |
company with limited liability on 4 December 2003, | |
whose shares are listed on the Main Board of the Stock | |
Exchange | |
"connected person(s)" | has the meaning ascribed to it under the Listing Rules |
"controlling | has the meaning ascribed to it under the Listing Rules |
shareholder(s)" | |
"Director(s)" | the director(s) of the Company |
"Group" | the Company and its subsidiaries from time to time |
"HGCJ" | Wujin Hutang Hejia Hongguang Stamping Factory* (常 |
州市武進湖塘何家紅光沖件廠 ), a company directly | |
wholly-owned by Wu's Mother | |
"HGCJ Group" | HGCJ and its subsidiaries, its shareholders, its holding |
company and subsidiaries of such holding company | |
from time to time | |
"Hong Kong" | Hong Kong Special Administrative Region of the PRC |
"HVPC" | Hongguang Viet Nam Plastic Company Limited* (紅光 |
(越南)塑業有限公司)*, a company incorporated in | |
Vietnam, a wholly-owned subsidiary of HGCJ | |
"HVPC Group" | HVPC and its subsidiaries, its shareholders, its holding |
company and subsidiaries of such holding company | |
from time to time | |
"HVPC Premises" | has the meaning ascribed to it under the section headed |
"II. The 2020 Master Lease Agreements - 4. The 2020 | |
HVPC Master Lease Agreement" of this announcement | |
"IFRS 16" | International Financial Reporting Standard 16 - Leases |
"independent third | any party who is not connected (within the meaning of |
parties" | the Listing Rules) with any Director, chief executive or |
substantial shareholder of the Company or any of their | |
respective subsidiaries or an associate of any of them |
21
"Interested Directors" | Mr. Benjamin Pan and Ms. Ingrid Wu |
"Jiangsu Yuanyu" | Jiangsu Yuanyu Electronics Investment Group Co., |
Ltd.* (江蘇遠宇電子投資集團有限公司), a connected | |
p e r s o n o f t h e C o m p a n y , w h i c h i s u l t i m a t e l y | |
beneficially owned as to 50% by Pan's Father and 50% | |
by Pan's Mother | |
"Jiangsu Yuanyu | has the meaning ascribed to it under the section headed |
Technologies | "II. The 2020 Master Lease Agreements - 3. The 2020 |
Buildings Premises" | Jiangsu Yuanyu Master Lease Agreement" of this |
announcement | |
"Listing Rules" | the Rule Governing the Listing of Securities on the |
Stock Exchange | |
"Mr. Benjamin Pan" | Mr. Benjamin Zhengmin Pan, an executive Director |
and the chief executive officer of the Company | |
"Ms. Ingrid Wu" | Ms. Wu Ingrid Chun Yuan, a non-executive Director |
and the spouse of Mr. Benjamin Pan | |
"Pan's Father" | Mr. Pan Zhonglai, father of Mr. Benjamin Pan |
"Pan's Mother" | Ms. Xie Yufang, mother of Mr. Benjamin Pan |
"Pan's Sister" | Ms. Pan Lijun, sister of Mr. Benjamin Pan |
"PRC" | the People's Republic of China and for the purpose of |
this announcement only, excluding Hong Kong the | |
Macau Special Administrative Region and Taiwan | |
"Purchase Agreements" | the specific purchase agreement(s) that may be entered |
into between members of the Group and members of | |
the HVPC Group, Changzhou Lingdi, Changzhou | |
Yousheng Group and YDL Materials from time to time | |
during the validity of the 2020 Master Purchase | |
Agreements in respect of the purchasing transaction(s) | |
contemplated thereunder | |
"RMB" | Renminbi, the lawful currency of the PRC |
"Shareholder(s)" | the holder(s) of share(s) of the Company |
22
"Shenzhen Yuanyu" | Shenzhen Yuanyu Industrial Development Co., Ltd.* |
( 深圳市遠宇實業發展有限公司) , a c o m p a n y | |
wholly-owned by Wu's Mother | |
"Shenzhen Yuanyu | Shenzhen Yuanyu and its subsidiaries, its shareholders, |
Group" | its holding company and subsidiaries of such holding |
company from time to time | |
"Shenzhen Yuanyu | has the meaning ascribed to it under the section headed |
Nanda Premises" | "II. The 2020 Master Lease Agreements - 1. The 2020 |
Shenzhen Yuanyu Master Lease Agreement" of this | |
announcement | |
"Supplemental 2017 | the supplemental master purchase agreement entered |
HGCJ Master | into between HGCJ and the Company, details of which |
Purchase Agreement" | are set out in section headed "II. The Supplemental |
2017 HGCJ Master Purchase Agreement" in the 10 | |
November 2017 Announcement | |
"sq.m." | square meters |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited |
"USD" | United States Dollars, the lawful currency of the United |
States of America | |
"Wu's Mother" | Ms. Ye Huamei, mother of Ms. Ingrid Wu |
"Wu's Sister" | Ms. Wu Yayuan, sister of Ms. Ingrid Wu |
"YDL Materials" or | Sichuan Yindile Materials Technology Group Co., Ltd.* |
"Chengdu ZKLP" | (四川茵地樂材料科技集團有限公司) (previously |
known as Chengdu Zhongke Laifang Power Science & | |
Technology Co., Ltd.* (成都中科來方能源科技有限公 | |
司), a subsidiary of Jiangsu Yuanyu, and which is also | |
indirectly held as to 30% by Ms. Ingrid Wu |
- For identification purposes only
By order of the Board
AAC Technologies Holdings Inc.
Mok Joe Kuen Richard
Executive Director
Hong Kong, 20 December 2019
23
(Incorporated in the Cayman Islands with limited liability)
(Stock Code : 2018)
The directors of the Company as at the date of this announcement are:
Executive Directors: | Mr. Pan Benjamin Zhengmin |
Mr. Mok Joe Kuen Richard | |
Independent Non-executive Directors: | Mr. Koh Boon Hwee |
Mr. Au Siu Cheung Albert | |
Mr. Zhang Hongjiang | |
Mr. Poon Chung Yin Joseph | |
Mr. Kwok Lam Kwong Larry | |
Mr. Peng Zhiyuan | |
Non-executive Director: | Ms. Wu Ingrid Chun Yuan |
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AAC Technologies Holdings Inc. published this content on 20 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 December 2019 09:00:02 UTC