Nameson : CONTINUING CONNECTED TRANSACTION - RENEWAL OF RAW MATERIALS PURCHASE AGREEMENT

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1982)

CONTINUING CONNECTED TRANSACTION - RENEWAL OF RAW MATERIALS PURCHASE AGREEMENT

2021 RAW MATERIALS PURCHASE AGREEMENT

Reference is made to the announcement of the Company dated 27 March 2020 in respect of the 2020 Raw Materials Purchase Agreement.

The term of the 2020 Raw Materials Purchase Agreement and the relevant annual cap thereunder will expire on 31 March 2021.

On 29 March 2021, Hebei Yuteng and the Purchasers (being subsidiaries of the Company) entered into the 2021 Raw Materials Purchase Agreement in respect of the purchase of cashmere and other raw materials by the Purchasers from Hebei Yuteng for a term of one year from 1 April 2021 to 31 March 2022.

LISTING RULES IMPLICATIONS

Nanguan Tech is a non-wholly owned subsidiary of the Company and Hebei Yuteng, a substantial shareholder of Nanguan Tech, is a connected person of the Company at the subsidiary level under the Listing Rules and the transactions contemplated under the 2021 Raw Materials Purchase Agreement constitute a continuing connected transaction of the Company under the Listing Rules that is exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

2021 RAW MATERIALS PURCHASE AGREEMENT

Reference is made to the announcement of the Company dated 27 March 2020 in respect of the 2020 Raw Materials Purchase Agreement.

The term of the 2020 Raw Materials Purchase Agreement and the relevant annual cap thereunder will expire on 31 March 2021.

On 29 March 2021, Hebei Yuteng and the Purchasers (being subsidiaries of the Company) entered into the 2021 Raw Materials Purchase Agreement in respect of the purchase of cashmere and other raw materials by the Purchasers from Hebei Yuteng for a term of one year from 1 April 2021 to 31 March 2022.

The principal terms of the 2021 Raw Materials Purchase Agreement are set out as follows:

Date: 29 March 2021

Parties: (1) Hebei Yuteng as seller; and

• (2) Each of Nanguan Tech, Huizhou Nanxuan and Huizhou Nanguan as purchasers

Subject matter:

Each of the Purchasers agreed to purchase, and Hebei Yuteng agreed to sell, cashmere and other raw materials pursuant to orders placed from time to time.

Term: Effective from 1 April 2021 and ending on 31 March 2022.

Pricing of cashmere and other raw materials:

Hebei Yuteng agreed to ensure that the price for cashmere and other raw materials it charges the Purchasers will not be higher than (i) the market price, which is the price offered to the Purchasers by independent third parties for the same or similar cashmere and other raw materials; or (ii) the price it offers to its other customers. For the avoidance of doubt, such pricing mechanism should apply to any orders issued during the term of the 2021 Raw Materials Purchase Agreement.

Delivery and payment of cashmere and other raw materials:

Hebei Yuteng should deliver the cashmere and other raw materials to the Purchasers at the designated time and place in accordance with the written order forms placed by the Purchasers. If the Purchasers are satisfied with the quality of the cashmere and other raw materials delivered, they should issue a delivery note to Hubei Yuteng. Within five days from the issuance of the delivery note, Hebei Yuteng should issue an invoice to the Purchasers for the transaction amount of each batch of cashmere and other raw materials delivered by Hebei Yuteng to the Purchasers. The Purchasers should then arrange for payment in accordance with the payment terms as set out in the order forms.

Annual cap:

The annual cap in respect of the purchase of cashmere and other raw materials from Hebei Yuteng by the Purchasers under the 2021 Raw Materials Purchase Agreement for the financial year ending 31 March 2022 is RMB650.0 million (equivalent to approximately HK$764.7 million). The above annual cap was determined after taking into account the following factors:

(i) the average unit price for cashmere and other raw materials purchased from the Group's existing suppliers during the 10-month period from 1 April 2020 to 31 January 2021;

(ii) the current market price of cashmere and other raw materials;

• (iii) the volume of cashmere and other raw materials purchased from Hebei Yuteng by the Group during the 10-month period from 1 April 2020 to 31 January 2021; and

• (iv) the expected volume of cashmere and other raw materials required by the Group for production during the term of the 2021 Raw Materials Purchase Agreement based on the Group's sales forecasts and the expected roll out of the Purchasers' production capacity.

The Group's purchases of cashmere from Hebei Yuteng during the three years ended 31 March 2018, 2019 and 2020 were approximately RMB27.0 million (equivalent to approximately HK$32.0 million), RMB192.6 million (equivalent to approximately HK$227.0 million) and RMB424.4 million (equivalent to approximately HK$499.0 million).

The Group's purchase of cashmere and other raw materials from Hebei Yuteng from 1 April 2020 up to 31 January 2021 was approximately RMB390.4 million (equivalent to approximately HK$459.0 million).

INFORMATION OF THE PARTIES

Hebei Yuteng

Hebei Yuteng is principally engaged in the production of dehaired cashmere and cashmere tops. It is located in Qinghe County, Xingtai City, Hebei Province, the PRC which is a region where high quality cashmere is found. So far as the Directors are aware, Hebei Yuteng is one of the largest cashmere processing factories in Hebei Province and is also well-known for its use of advanced technology used in its production of high quality cashmere.

The Purchasers

Nanguan Tech is a joint venture company owned as to 55% and 45% by the Company and Hebei Yuteng respectively. The principal business of Nanguan Tech is the production of cashmere yarn.

Each of Huizhou Nanxuan and Huizhou Nanguan is a wholly-owned subsidiary of the Company. The principal business of each of Huizhou Nanxuan and Huizhou Nanguan is the manufacture of knitwear products.

REASONS FOR AND BENEFITS OF THE 2021 RAW MATERIALS PURCHASE AGREEMENT

The Group is principally engaged in the manufacture of knitwear products. The Group also produces cashmere yarn for the production of cashmere knitwear. The principal business of Nanguan Tech is the production of cashmere yarn.

The entering into of the 2021 Raw Materials Purchase Agreement provides the Purchasers access to a reliable supply of high quality cashmere and other raw materials on favourable terms and allows the Purchasers to better manage quality control and production lead time for the Group's cashmere knitwear products.

In view of the aforesaid, the Directors (including the independent non-executive Directors) are of the view that the terms of the 2021 Raw Materials Purchase Agreement (including the annual cap thereunder) are fair and reasonable, entered into on normal commercial terms or terms not less favorable than those offered by independent third parties, in the ordinary and usual course of business of the Company, and are in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

Nanguan Tech is a non-wholly owned subsidiary of the Company and Hebei Yuteng, a substantial shareholder of Nanguan Tech, is a connected person of the Company at the subsidiary level under the Listing Rules and the transactions contemplated under the 2021 Raw Materials Purchase Agreement constitute a continuing connected transaction of the Company under the Listing Rules that is exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

The Board has approved the 2021 Raw Materials Purchase Agreement and none of the Directors had a material interest in the transactions contemplated under the 2021 Raw Materials Purchase Agreement (including the annual cap thereunder) or was required to abstain from voting on the relevant board resolutions. Given that the Board has approved the 2021 Raw Materials Purchase Agreement and the independent non-executive Directors have confirmed that the terms of the 2021 Raw Materials Purchase Agreement are fair and reasonable and the transactions contemplated thereunder are on normal commercial terms or better, in the ordinary and usual course of business of the Group and in the interests of the Company and its shareholders as a whole, the transactions contemplated under the 2021 Raw Materials Purchase Agreement are exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise required, the following terms have the following meanings:

For illustration purposes only, HK$ has been translated at HK$1 to RMB0.85.

English translations of company names in Chinese which are marked with ''*'' are for identification purposes only.

By order of the Board of

Nameson Holdings Limited Mr. Wong Ting Chung BBS, JP

Chairman

29 March 2021

As at the date of this announcement, the Board comprises Mr. Wong Ting Chung BBS, JP (Chairman and chief executive officer), Mr. Wong Wai Yue (Vice Chairman), Mr. Wong Ting Chun and Mr. Li Po Sing as executive Directors; Mr. Tam Wai Hung, David and Mr. Wong Ting Kau, as non-executive Directors; Ms. Fan Chiu Fun, Fanny GBM, GBS, JP, Mr. Kan Chung Nin, Tony SBS, JP, Mr. Ong Chor Wei, Mr. Fan Chun Wah, Andrew JP, Ms. Lee Bik Kee, Betty and Mr. Ip Shu Kwan, Stephen GBS, JP, as independent non-executive Directors.