Telecom Digital : Continuing Connected Transaction - Tenancy Agreement

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Telecom Digital Holdings Limited

電 訊 數 碼 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6033)

CONTINUING CONNECTED TRANSACTION

TENANCY AGREEMENT

On 3 August 2020, CKK Central Kitchen as tenant entered into the Tenancy Agreement with CKK Properties as landlord in relation to the tenancy of the Property.

CKK Central Kitchen is an indirect wholly-owned subsidiary of Sun Asia. Sun Asia is indirectly owned by the Cheung Brothers who are the beneficiary of the Cheung Family Trust which indirectly holds 54.49% of the shares of the Company in issue. As such, each of CKK Central Kitchen and Sun Asia is a connected person of the Company under the Listing Rules. Accordingly, the Tenancy Agreement constitutes continuing connected transaction for the Company.

Pursuant to Rule 14A.81 of the Listing Rules, the transaction contemplated under the Tenancy Agreement is required to be aggregated with the transactions under the Existing Transactions with Sun Asia Group (which are also continuing connected transactions for the Company).

As all applicable percentage ratios (other than the profits ratio) in respect of the aggregate annual fee for the transactions under the Tenancy Agreement and the Existing Transactions with Sun Asia Group for the year ended 31 March 2021 are less than 5% but aggregate annual fee is more than HK$3,000,000, the aggregate annual fee and the transactions under the Tenancy Agreement and the Existing Transactions with Sun Asia Group are subject to the announcement, annual review and reporting requirements, but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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On 3 August 2020, CKK Central Kitchen as tenant entered into the Tenancy Agreement with CKK Properties as landlord in relation to the tenancy of the Property.

TENANCY AGREEMENT

The principal terms of the Tenancy Agreement are set out below:-

REVISED AGGREGATE ANNUAL CAP FOR TENANCY AGREEMENT AND EXISTING TRANSACTIONS WITH SUN ASIA GROUP

Reference is made to the announcement of the Company dated 31 March 2020 in relation to the continuing connected transactions of the Company. The annual cap for the Existing Transactions with Sun Asia Group was HK$3,225,000 for the year ending 31 March 2021.

After entering into the Tenancy Agreement, it is expected that the aggregate annual fee to be received/receivable for respective transactions by the Group from the Sun Asia Group under the Tenancy Agreement and the Existing Transactions with Sun Asia Group for year ending 31 March 2021 will not exceed HK$3,334,900. For the purpose of compliance with the Listing Rules, the aggregate annual fee is treated as the annual cap of the transactions with Sun Asia Group. The annual cap for the transaction under the Tenancy Agreement will be HK$109,900 for the year ending 31 March 2021.

EXISTING TRANSACTIONS WITH SUN ASIA GROUP

The Group is conducting various transactions with Sun Asia Group for a term of one year commencing on 1 April 2020 and the scope of transactions includes of (i) leasing of a property by CTL to TDKS; (ii) provision of steaming real-time quote service by TDD to TDKS; and (iii) provision of IT support services by TDS to TDKS and TDKC.

1. Leasing of a property by CTL to TDKS
   CTL is leasing of property 16 to TDKS as its office commencing from 1 April 2020 for a term of one year. The rental was determined with reference to the prevailing market rent of similar properties in nearby location. The principle terms of the tenancy are set out below:

1. Provision of steaming real-time quote services by TDD to TDKS
   TDD provides steaming real-time quote services via mobile applications to TDKS. In consideration for such services, TDD received subscription fees charged on a per-user basis with reference to the current market rate of similar services. The amount for such services fees paid by TDKS to TDD for the year ended 31 March 2020 was approximately HK$1,097,000.
2. Provision of IT support services by TDS to TDKS and TDKC
   TDS assists TDKS and TDKC to develop software applications and provide related information technology support. In consideration for such services, TDS receive a fixed monthly service fee determined with reference to the cost of the relevant personnel. The monthly service fees of HK$50,000 would be received from each of TDKS and TDKC for such services.

REASONS AND BENEFITS FOR ENTERING INTO THE TENANCY AGREEMENT

The Property will be rented by CKK Central Kitchen for the use of food factory. CKK Central Kitchen considers that the Property is suitable for their business.

The Tenancy Agreement is arrived at after arm's length negotiation and is on normal commercial terms. The rental under the Tenancy Agreement was determined with reference to the prevailing market rent of similar properties in the nearby locations. The Directors (except the Cheung Brothers who have material interest in the Tenancy Agreement and who abstained from participating in the approval of the relevant Board resolutions due to conflict of interests), including the independent non-executive Directors, are of the view that the Tenancy Agreement is in the ordinary and usual course of business of the Company, and that the Tenancy Agreement including the aggregate annual cap are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.

IMPLICATIONS UNDER LISTING RULES

CKK Central Kitchen is an indirect wholly-owned subsidiary of Sun Asia. Sun Asia is indirectly owned by the Cheung Brothers who are the beneficiary of the Cheung Family Trust which indirectly holds 54.49% of the shares of the Company in issue. As such, each of CKK Central Kitchen and Sun Asia is a connected person of the Company under the Listing Rules. Accordingly, the Tenancy Agreement constitutes continuing connected transaction for the Company.

Pursuant to Rule 14A.81 of the Listing Rules, the transaction contemplated under the Tenancy Agreement is required to be aggregated with the transactions under the Existing Transactions with Sun Asia Group (which are also continuing connected transactions for the Company).

As all applicable percentage ratios (other than the profits ratio) in respect of the aggregate annual fee for the transactions under the Tenancy Agreement and the Existing Transactions with Sun Asia Group for the year ended 31 March 2021 are less than 5% but aggregate annual fee is more than HK$3,000,000, the aggregate annual fee and the transactions under the Tenancy Agreement and the Existing Transactions with Sun Asia Group are subject to the announcement, annual review and reporting requirements, but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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GENERAL INFORMATION

The Company is listed on Main Board of the Stock Exchange. The Group is principally engaged in the telecommunications and related business in Hong Kong, including (i) retail sales of mobile phones and pre-paid SIM cards and related services; (ii) distribution of mobile phones and related services; (iii) provision of paging and other telecommunications services; and (iv) provision of operation services to Sun Mobile Limited, an associate owned as to 40% by the Group and as to 60% by HKT Limited.

Sun Asia, an investment holding company, is indirectly owned by the Cheung Brothers who are the beneficiary of the Cheung Family Trust which indirectly holds 54.49% of the issued share capital of the Company. Therefore, Sun Asia is a connected person of the Company.

DEFINITIONS

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

Certain amounts and percentage figures included in this announcement have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them.

By Order of the Board

Telecom Digital Holdings Limited

Cheung King Shek

Chairman

Hong Kong, 3 August 2020

As at the date of this announcement, the executive Directors are Mr. Cheung King Shek, Mr. Cheung King Shan, Mr. Cheung King Chuen Bobby, Mr. Cheung King Fung Sunny, Mr. Wong Wai Man and Ms. Mok Ngan Chu, and the independent non-executive Directors are Mr. Lam Yu Lung, Mr. Lau Hing Wah and Mr. Chan Yuk Ming.

The English text of this announcement shall prevail over the Chinese text in case of inconsistencies.

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