Softpower International : Continuing Connected Transaction - Consultancy Services Agreement

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: 00380)

CONTINUING CONNECTED TRANSACTION

CONSULTANCY SERVICES AGREEMENT

Reference is made to the announcement of the Company dated 1 April 2020 in relation to the Previous Consultancy Services Agreement. The Previous Consultancy Services Agreement expired on 31 March 2021.

The Board announces that on 1 April 2021, the Consultancy Services Agreement was entered into between the Company and BCL on substantially the same terms as the Previous Consultancy Services Agreement, pursuant to which the Company agreed to appoint BCL for the provision of certain consultancy services.

As at the date of this announcement, Mr. Lai Guanglin ("Mr. Lai") indirectly holds approximately 32.82% of the issued share capital of the Company, is the controlling shareholder of the Company. As BCL is directly wholly-owned by Mr. Lai, BCL is an associate of Mr. Lai and therefore, is an associate of the connected person of the Company under Rule 14A.13(3) of the Listing Rules. As such, the provision of services by BCL under the Consultancy Services Agreement constitutes continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

As one or more of the relevant applicable percentage ratios (as defined in the Listing Rules) in respect of the annual consultancy fees payable by the Company under the Consultancy Services Agreement is more than 0.1% but less than 5%, the said continuing connected transaction is subject to the reporting, announcement and annual review requirements but is exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

-1-

INTRODUCTION

Reference is made to the announcement of the Company dated 1 April 2020 in relation to the Previous Consultancy Services Agreement. The Previous Consultancy Services Agreement expired on 31 March 2021.

The Board announces that on 1 April 2021, the Consultancy Services Agreement was entered into between the Company and BCL on substantially the same terms as the Previous Consultancy Services Agreement, pursuant to which the Company agreed to appoint BCL for the provision of certain consultancy services. The details of the Consultancy Services Agreement are set out below:

THE PRINCIPAL TERMS OF THE CONSULTANCY SERVICES AGREEMENT

ANNUAL CAPS

Historical figures

The historical transaction amounts in respect of the Previous Consultancy Services Agreement for the year ended 31 December 2020 and the three months ended 31 March 2021 are as follows:

• Inclusive of the historical transaction amount in respect of both the Previous Consultancy Services Agreement for the period from 1 April 2020 to 31 December 2020 and a consultancy services agreement for the period from 1 January 2020 to 31 March 2020.

-2-

New Annual Caps

The annual cap of the consultancy fee payable by the Company under the Consultancy Services Agreement is as follows:

In arriving at the above annual cap, the Directors have taken into account the annual maximum fee and the semi-annual payment to be paid from the Company to BCL under the Consultancy Services Agreement.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, Mr. Lai Guanglin ("Mr. Lai") indirectly holds approximately 32.82% of the issued share capital of the Company, is the controlling shareholder of the Company. As BCL is directly wholly-owned by Mr. Lai, BCL is an associate of Mr. Lai and therefore, is an associate of the connected person of the Company under Rule 14A.13(3) of the Listing Rules. As such, the provision of services by BCL under the Consultancy Services Agreement constitutes continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

As one or more of the relevant applicable percentage ratios (as defined in the Listing Rules) in respect of the annual consultancy fees payable by the Company under the Consultancy Services Agreement is more than 0.1% but less than 5%, the said continuing connected transaction is subject to the reporting, announcement and annual review requirements but is exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

At a Board meeting convened to consider the Consultancy Services Agreement, Mr. Lai Fulin an executive Director and the Chairman of the Company, being the younger brother of Mr. Lai, regarded as potentially having a material interest in the Consultancy Services Agreement and accordingly abstained from voting on the relevant resolutions.

REASONS FOR THE TRANSACTION

The principal activity of BCL is investment holding and consultancy services, and its sole director, Mr. Lai, acted as an executive director and the chairman of the Board for the period from 2009 to 2018, has extensive experience and knowledge in managing the Group's business development and corporate strategy. The Directors believe that BCL's personnel can assist the Company in the investment aspect and new business development.

As the consultancy fees payable by the Company under the Consultancy Services Agreement were determined after arm's length negotiations between the Parties having regard to (i) the services to be provided by BCL under the Consultancy Services Agreement and that the

-3-

entering into of the Consultancy Services Agreement is in the ordinary and usual course of business of the Company; (ii) the extensive experience and expertise of the relevant personnel of BCL; and (iii) the current market situation, the Directors (including the Independent Non-Executive Directors) believe that the terms of the Consultancy Services Agreement (including the consultancy fee thereunder) are on normal commercial terms and fair and reasonable, and are also in the interests of the Company and the Shareholders as a whole.

INFORMATION ABOUT THE PARTIES

BCL is a limited company incorporated in the British Virgin Islands and principally engaged in investment holding and consultancy services. BCL is directly wholly-owned by Mr. Lai.

The Company is incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange. The principal business of the Group is engaged in trading of construction materials, mainly pipes and fittings in Hong Kong and Macau.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms or expressions shall have the following meanings:

"Listing Rules"the Rules Governing the Listing of Securities on the Stock Exchange

"Previous Consultancy the consultancy services agreement entered into between the

Services Agreements" Company and BCL on 1 April 2020

"Shareholder(s)"holder(s) of the shares in the share capital of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

By order of the Board

Softpower International Limited

Lai Fulin

Chairman

Hong Kong, 1 April 2021

As at the date of this announcement, the Board consists of Mr. Lai Fulin and Mr. Yu Ben Ansheng as executive directors; and Mr. Wong Yee Shuen, Wilson, Mr. Chen Wei Wen and Mr. Guan Zhiqiang as independent non-executive directors.

-5-