Founder : CONTINUING CONNECTED TRANSACTIONS LEASING OF OFFICE PREMISES

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 Bermuda with limited liability)

(Stock Code: 00418)

CONTINUING CONNECTED TRANSACTIONS

LEASING OF OFFICE PREMISES

LEASING OF OFFICE PREMISES

Reference is made to the announcement of the Company on leasing of office premises dated 28 December 2017. Each of Founder Electronics, Founder EasiPrint and Founder Digital Printing entered into a lease agreement and a management agreement with Beida Management to lease certain premises at Shangdi Founder Building from Beida Management. All of those agreements expired on 31 December 2019.

On 31 January 2020, each of Founder Electronics, Founder EasiPrint and Founder Digital Printing entered into a lease agreement and a management agreement with Beida Management respectively to lease certain premises at Shangdi Founder Building from Beida Management. All of the 2020 Lease and Management Agreements will expire on 31 December 2020.

LISTING RULES IMPLICATIONS

Peking Founder is a controlling shareholder of the Company indirectly holding approximately 30.60% of the issued share capital of the Company as at the date of this announcement, and thus a connected person of the Company for the purposes of the Listing Rules. Beida Management is an associate of Peking Founder by virtue of the fact that Beida Management is a subsidiary of a company in which Peking Founder and its holding company own more than 30% equity interest in aggregate. Meanwhile, Founder Electronics, Founder EasiPrint and Founder Digital Printing are wholly-owned subsidiaries of the Company.

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The Group adopted HKFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under HKFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. However, as allowed under HKFRS 16, the Group has elected not to recognise right-of-use assets and lease liabilities for leases that at the commencement date, have a lease term of 12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a straight- line basis over the lease term. Therefore the leases and the property management services received by the Group under the 2020 Lease and Management Agreements will both be continuing connected transactions of the Company.

As the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) for the transactions contemplated under the 2020 Lease and Management Agreements exceeds 0.1% and is less than 5%, the transactions contemplated under the 2020 Lease and Management Agreements are subject to the reporting, annual review and announcement requirements but are exempt from the independent shareholders' approval requirement under the Listing Rules.

INTRODUCTION

Reference is made to the announcement of the Company on leasing of office premises dated 28 December 2017. Each of Founder Electronics, Founder EasiPrint and Founder Digital Printing entered into a lease agreement and a management agreement with Beida Management respectively to lease certain premises at Shangdi Founder Building from Beida Management. All of those agreements expired on 31 December 2019.

On 31 January 2020, each of Founder Electronics, Founder EasiPrint and Founder Digital Printing entered into a lease agreement and a management agreement with Beida Management respectively to lease certain premises at Shangdi Founder Building from Beida Management. All of the 2020 Lease and Management Agreements will expire on 31 December 2020.

PRINCIPAL TERMS OF FOUNDER ELECTRONICS LEASE AGREEMENT AND MANAGEMENT AGREEMENT

Lessee	Founder Electronics
Lessor	Beida Management
Property leased	3rd floor (part) and 4th floor (entire) of Block 1 of Shangdi
	Founder Building
Area	4,965.17 square meters
Rent period	1 February 2020 to 31 December 2020

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Rent-free period	1 January	2020 to 31 January 2020
Total annual rental	R M B 6 , 5	2 4 , 2 3 3 . 4 4 ( e q u i v a l e n t	t o	a p p r o x i m a t e l y
	HK$7,268,000)
Total annual	R M B 1 , 8	1 2 , 2 8 7 . 0 4 ( e q u i v a l e n t	t o	a p p r o x i m a t e l y
management fee	HK$2,019,000)
Other principal terms	The rental and management fee are payable in cash quarterly
and conditions	in advance.

Subject to compliance with the Listing Rules, the lessee shall give at least three-month written notice to the lessor before the expiry of the lease in order to continue to lease the relevant premises from the lessor or terminate the lease when it expires.

Neither party shall terminate the lease in advance without cause unless both parties agree or otherwise permitted in the lease, and prior notice no less than one month before is served. Each of the lessor and lessee will have the right to terminate the lease if the other party fails to comply with the terms and conditions of the agreement.

The lessee shall be responsible for the payment of certain other fees, including, among other things, water, electricity and other utility fees according to relevant property management agreement.

PRINCIPAL TERMS OF FOUNDER EASIPRINT LEASE AGREEMENT AND MANAGEMENT AGREEMENT

Lessee	Founder EasiPrint
Lessor	Beida Management
Property leased	1st floor (part), 2nd floor (entire), 3rd floor (part) and 5th
	floor (entire) of Block 1 of Shangdi Founder Building
Area	4,348.28 square meters
Rent period	1	February 2020 to 31 December 2020
Rent-free period	1	January 2020 to 31 January 2020

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Total annual rental	R M B 5 , 7 1 3 , 6 3 9 . 9 2	( e q u i v a l e n t	t o	a p p r o x i m a t e l y
	HK$6,365,000)
Total annual	R M B 1 , 5 8 7 , 1 2 2 . 1 6	( e q u i v a l e n t	t o	a p p r o x i m a t e l y
management fee	HK$1,768,000)
Other principal terms	The rental and management fee are payable in cash quarterly
and conditions	in advance.

Subject to compliance with the Listing Rules, the lessee shall give at least three-month written notice to the lessor before the expiry of the lease in order to continue to lease the relevant premises from the lessor or terminate the lease when it expires.

Neither party shall terminate the lease in advance without cause unless both parties agree or otherwise permitted in the lease, and prior notice no less than one month before is served. Each of the lessor and lessee will have the right to terminate the lease if the other party fails to comply with the terms and conditions of the agreement.

The lessee shall be responsible for the payment of certain other fees, including, among other things, water, electricity and other utility fees according to relevant property management agreement.

PRINCIPAL TERMS OF FOUNDER DIGITAL PRINTING LEASE AGREEMENT AND MANAGEMENT AGREEMENT

Lessee	Founder Digital Printing
Lessor	Beida Management
Property leased	1st floor (part) and basement 1 (part) of Block 1 of Shangdi
	Founder Building; and
	Basement 1 (part) of Block 2 of Shangdi Founder Building
Area	3,961.14 square meters
Rent period	1	February 2020 to 31 December 2020
Rent-free period	1	January 2020 to 31 January 2020

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Total annual rental	RMB127,497.48 (equivalent to approximately HK$142,000)
Total annual	R M B 1 , 4 4 5 , 8 1 6 . 1 6 ( e q u i v a l e n t t o a p p r o x i m a t e l y
management fee	HK$1,611,000)
Other principal terms	The rental and management fee are payable in cash quarterly
and conditions	in advance.
	Subject to compliance with the Listing Rules, the lessee shall
	give at least three-month written notice to the lessor before
	the expiry of the lease in order to continue to lease the
	relevant premises from the lessor or terminate the lease when
	it expires.
	Neither party shall terminate the lease in advance without
	cause unless both parties agree or otherwise permitted in
	the lease, and prior notice no less than one month before is
	served. Each of the lessor and lessee will have the right to
	terminate the lease if the other party fails to comply with the
	terms and conditions of the agreement.
	The lessee shall be responsible for the payment of certain
	other fees, including, among other things, water, electricity
	and other utility fees according to relevant property
	management agreement.

REASONS FOR AND BENEFITS OF THE 2020 LEASE AND MANAGEMENT AGREEMENTS

The Group has been leasing certain premises at Shangdi Founder Building from Peking Founder Group as offices, canteens and staff quarters for over ten years. As previous leases expired on 31 December 2019, the Group entered into the 2020 Lease and Management Agreements to renew the leases for a term ending on 31 December 2020.

The terms of the 2020 Lease and Management Agreements, including the rental and management fees payable by the Group, are arrived at after arm's length negotiations between the parties involved taking into account (i) the market rent and management fees of properties in Shangdi area of Beijing, which have been obtained through the Company's enquiries with estate agents; (ii) the historical transaction amounts in respect of the leasing of office premises between the subsidiaries of the Company and Beida Management; and (iii) the estimated increase in rent and management fees in the coming two years as compared with those of previous years with reference to the increase of rent and management fees in Shangdi area of Beijing in recent years.

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The Directors (including the independent non-executive Directors) are of the view that transactions under the 2020 Lease and Management Agreements are fair and reasonable, on normal commercial terms, in the ordinary and usual course of business of the Group and in the interests of the Company and its shareholders as a whole.

INFORMATION OF THE GROUP

The Group is principally engaged in software development and provision of systems integration services relating to the media and non-media industries including financial institutions, enterprises and government departments. The Group purchases information hardware products for its customers in order to establish computer systems. It also provides software and hardware solutions to its customers as well as for use in its software development business.

INFORMATION ON BEIDA MANAGEMENT

Beida Management is an associate of Peking Founder by virtue of the fact that Beida Management is a subsidiary of a company in which Peking Founder and its holding company own more than 30% equity interest in aggregate. Beida Management is principally engaged in property leasing business, providing various property management services and community cultural services covering commercial buildings, leased offices, residential buildings and industrial parks as well as the asset management and operation in real estate developed and owned by Peking Founder.

Peking Founder is a controlling shareholder of the Company indirectly holding approximately 30.60% of the issued share capital of the Company. As at the date of this announcement, according to the information available to the Company from the records of the State

Administration for Market Regulation, the majority shareholder of Peking Founder is Peking University Assets Management Company Limited* (北大資產經營有限公司) with 70%

shareholding and is principally engaged in the business in relation to the acceptance for entrusted operation and management of state-owned assets, technology promotion, technical services, technical consultation, incubation of high-tech enterprises, investment management

and asset management in the PRC. The registered holder of the remaining shareholding of Peking Founder is Beijing Zhaorun Investments Management Co. Ltd.* (北京招潤投資管理 有限公司), while its registered shareholders are Mr Li You, Ms Yu Li, Mr Wei Xin and Mr

Zhang Zhao Dong.

LISTING RULES IMPLICATIONS

Peking Founder is the controlling shareholder of the Company holding approximately 30.60% of the issued share capital of the Company, and therefore a connected person of the Company under the Listing Rules. Beida Management is an associate of Peking Founder by virtue of the fact that Beida Management is a subsidiary of a company in which Peking Founder and its holding company own more than 30% equity interest in aggregate.

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The Group adopted HKFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under HKFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. However, as allowed under HKFRS 16, the Group has elected not to recognise right-of-use assets and lease liabilities for leases that at the commencement date, have a lease term of 12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a straight-line basis over the lease term. Therefore the leases and the property management services received by the Group under the 2020 Lease and Management Agreements will both be continuing connected transactions of the Company.

As the highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) for the transactions contemplated under the 2020 Lease and Management Agreements exceeds 0.1% and is less than 5%, the transactions contemplated under the 2020 Lease and Management Agreements are subject to the reporting, annual review and announcement requirements but are exempt from the independent shareholders' approval requirement under the Listing Rules.

As Mr Cheung Shuen Lung and Professor Xiao Jian Guo are the directors of Peking Founder and therefore are deemed to have a material interest in the 2020 Lease and Management Agreements, Mr Cheung Shuen Lung and Professor Xiao Jian Guo have abstained from voting on the relevant Board resolution approving the transactions contemplated under the 2020 Lease and Management Agreements. Save as disclosed above, to the best knowledge, information and belief of the Directors after having made all reasonable enquiries, no other Director has material interest in the 2020 Lease and Management Agreements and will be required to abstain from voting on the relevant Board resolution approving the 2020 Lease and Management Agreements.

DEFINITIONS

In this announcement, unless the context requires otherwise, the following terms shall have the meanings set out below:

"2020 Lease and	Founder Digital Printing Lease Agreement and Management
Management Agreements"	Agreement, Founder EasiPrint Lease Agreement and
	Management Agreement and Founder Electronics Lease
	Agreement and Management Agreement
"associate(s)"	has the meaning as ascribed thereto under the Listing Rules
"Beida Management"	北京北大資源物業經營管理集團有限公司 ( B e i j i n g
	Peking University Resource Property Management Group
	Co., Ltd.*), a company incorporated in the PRC which is
	principally engaged in property leasing business and an
	associate of Peking Founder

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"Board"	the board of Directors of the Company
"Company"	Founder Holdings Limited (方正控股有限公司*), a company
	incorporated in Bermuda with limited liability, the shares of
	which are listed on the main board of the Stock Exchange
	under the stock code 00418
"connected person(s)"	has the same meaning as ascribed thereto under the Listing
	Rules
"controlling shareholder"	has the same meaning as ascribed thereto under the Listing
	Rules
"Director(s)"	the director(s) of the Company
"Founder Digital Printing"	北京方正數字印刷技術有限公司 (Beijing Founder Digital
	Printing Technology Co., Ltd.*), a company incorporated
	in the PRC and a wholly-owned subsidiary of the Company
	which is principally engaged in software development and
	systems integration
"Founder Digital Printing	the lease agreement and the property management service
Lease Agreement and	agreement, each dated 31 January 2020 and entered into
Management Agreement"	between Founder Digital Printing and Beida Management
	in relation to the lease of certain premises at Shangdi
	Founder Building by Founder Digital Printing from Beida
	Management and the management of such leased properties
	for a term ending on 31 December 2020
"Founder EasiPrint"	北京方正印捷數碼技術有限公司 (Beijing Founder EasiPrint
	Digital Technology Co., Ltd.*), a company incorporated in
	the PRC and a wholly-owned subsidiary of the Company
	which is principally engaged in software development and
	systems integration business
"Founder EasiPrint	the lease agreement and the property management service
Lease Agreement and	agreement, each dated 31 January 2020 and entered into
Management Agreement"	between Founder EasiPrint and Beida Management in
	relation to the lease of certain premises at Shangdi Founder
	Building by Founder EasiPrint from Beida Management and
	the management of such leased properties for a term ending
	on 31 December 2020

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"Founder Electronics"	北京北大方正電子有限公司 (Beijing Founder Electronics
	Co., Ltd.*), a company incorporated in the PRC and
	a wholly-owned subsidiary of the Company which is
	principally engaged in software development and systems
	integration business
"Founder Electronics	the lease agreement and the property management service
Lease Agreement and	agreement, each dated 31 January 2020 and entered into
Management Agreement"	between Founder Electronics and Beida Management in
	relation to the lease of certain premises at Shangdi Founder
	Building by Founder Electronics from Beida Management
	and the management of such leased properties for a term
	ending on 31 December 2020
"Group"	the Company and its subsidiaries
"HKFRS"	Hong Kong Financial Reporting Standards
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"	The Hong Kong Special Administrative Region of the
	People's Republic of China
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited (as amended from time to
	time)
"Peking Founder"	北大方正集團有限公司 (Peking University Founder Group
	Company Limited*), a company incorporated in the PRC
	with limited liability and the controlling shareholder of the
	Company which indirectly holds approximately 30.60% of
	the issued share capital of the Company
"Peking Founder Group"	Peking Founder and its subsidiaries
"PRC"	the People's Republic of China
"RMB"	Renminbi, the lawful currency of the PRC
"Shangdi Founder Building"	上地方正大廈 (Shangdi Founder Building) at No. 9, Shangdi
	5th Street (also known as Shangdi Information Industry
	Base), Haidian District, Beijing, the PRC
"Stock Exchange"	The Stock Exchange of Hong Kong Limited

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"subsidiary"	has the meaning ascribed to it under the Listing Rules
"%"	per cent.
	By Order of the Board
	Founder Holdings Limited
	Cheung Shuen Lung
	Chairman
Hong Kong, 31 January 2020

The exchange rate adopted in this announcement for illustration purpose only is RMB1.00 = HK$1.114.

As at the date of this announcement, the board of directors of the Company comprises executive directors of Mr Cheung Shuen Lung (Chairman), Mr Shao Xing (President), Professor Xiao Jian Guo, Ms Zuo Jin, Mr Hu Bin and Ms Liao Hang, and the independent non-executive directors of Mr Li Fat Chung, Ms Wong Lam Kit Yee and Mr Chan Chung Kik, Lewis.

*  For identification purpose only

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