Skyworth : CONTINUING CONNECTED TRANSACTION REGARDING SALE OF ELECTRONIC PRODUCTS UNDER THE FRAMEWORK AGREEMENT

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(Incorporated in Bermuda with limited liability)

(Stock Code: 00751)

CONTINUING CONNECTED TRANSACTION REGARDING SALE OF ELECTRONIC PRODUCTS UNDER THE FRAMEWORK AGREEMENT

THE FRAMEWORK AGREEMENTS

The Board announces that on 16 April 2021, SSDT, an indirect non wholly-owned subsidiary of the Company, entered into the Framework Agreement with Xiaopai, pursuant to which SSDT will supply products manufactured by it, pursuant to the terms of the Framework Agreement for a term of one year.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Xiaopai is indirectly controlled by the spouse of Mr. Shi Chi (an executive Director) and is therefore an associate of Mr. Shi Chi and a connected person of the Company under the Listing Rules. Accordingly, the Framework Agreement and the transaction contemplated thereunder constitute connected transaction of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratio(s) (as defined in the Listing Rules) in respect of the annual cap under the Framework Agreement exceed 0.1% but are less than 5%, the Framework Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements, but are exempted from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

The Board announces that on 16 April 2021, SSDT, an indirect non wholly-owned subsidiary of the Company, entered into the Framework Agreement with Xiaopai, pursuant to which SSDT will supply to Xiaopai products manufactured by it. The terms of the Framework Agreement are summarised as follows.

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The Framework Agreement

Date	:	16 April 2021
Parties	:	(i) Xiaopai (as purchaser)
		(ii) SSDT (as vendor)
Subject Matter	: Pursuant to the Framework Agreement, SSDT will, upon receipt of
		a purchase order from Xiaopai, manufacture and sell to Xiaopai
		electronic products including webcam modules and set-top boxes,
		which are branded for onward sale under Skyworth or Xiaopai's
		own brands.
		The name and quantity, product specifications, terms of delivery
		of the specific products ordered are to be set out in Xiaopai's
		purchase order(s) from time to time. SSDT may decide whether or
		not to accept such order within 3 days upon receipt of each
		purchase order from Xiaopai.
Pricing structure	:		The pricing of products sold pursuant to purchase orders given
			under the Framework Agreement is determined on a "cost plus"
			basis by reference to SSDT's manufacturing costs, and adding to it
			a pre-determined profit margin as follows:-
			Product Type		Profit Margin
			Webcam modules		2%
			Set-top boxes and other		5%
			products
		SSDT's actual manufacturing costs will be reviewed on a quarterly
		basis and the updated costs will form the pricing basis for the
		purchase orders under the Framework Agreement for the next
		quarter. It is also a term under the Framework Agreement that the
		price must be determined on normal commercial terms (or better
		to SSDT).
Term	: The Framework Agreement has a term of one year running from 1
		January 2021 to 31 December 2021 and there is no option to
		renew the Framework Agreement.
Annual Cap	:		The annual cap in respect of the sale of products by SSDT to
			Xiaopai under the Framework Agreement for the year ending 31
			December 2021 is RMB195 million, which is determined
			primarily by reference to indications in writing by Xiaopai in
			respect of the volume of orders it intends to place with SSDT
			under the Framework Agreement. There	was no historical

transaction between SSDT and Xiaopai in respect of the subject products under the Framework Agreement.

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INFORMATION ON SSDT

SSDT is a company established under the laws of the PRC and an indirect wholly-owned subsidiary of the Company. It is principally engaged in research, development, production, sales and after-sales service of smart terminals such as digital set-top boxes, broadband network connection equipment, commercial displays, and systems and platforms.

INFORMATION ON XIAOPAI

Xiaopai is a company established under the laws of the PRC and it is principally engaged in research, development and sales of smart hardware products. It is owned as to 60% by 深圳知 馬科技合伙企業(有限合伙) (Shenzhen Zhima Technology Partnership (LLP)*), as to 30% by 深圳小湃科技管理合伙企業(有限合伙)(Shenzhen Xiaopai Technology Management Partnership (LLP)*), and as to 10% by Mr. Wang Xiaohui.

深圳知馬科技合伙企業(有限合伙) (Shenzhen Zhima Technology Partnership (LLP)*) is owned as to 99% by Ms. Tang Yan as its general partner. Ms. Tang is the spouse of Mr. Shi Chi, an executive Director. 深圳小湃科技管理合伙企業(有限合伙)(Shenzhen Xiaopai Technology Management Partnership (LLP)*) is also controlled by Ms. Tang and Mr. Wang Xiaohui as its general partners who owns in aggregate 61.5% of its equity interest. Accordingly, Xiaopai is an associate of Mr. Shi Chi and is therefore a connected person of the Company.

REASONS FOR AND BENEFITS OF THE FRAMEWORK AGREEMENT

The Company is an investment holding company and the Group is principally engaged in manufacturing and selling smart TV systems, home access systems, smart white appliances, internet value-added services, property development and property holding.

The Directors (including the independent non-executive Directors) consider that:-

1. the transaction contemplated under the Framework Agreement is in the ordinary and usual course of business of SSDT;
2. the transaction under the Framework Agreement is on normal commercial terms. Specifically, the profit margins underlying the products to be sold by SSDT to Xiaopai under the Framework Agreement no less favourable to those that SSDT can achieve by selling similar products to independent third parties through SSDT's usual distribution channels; and
3. given the absence of historical transaction between SSDT and Xiaopai in respect of the subject products underlying the Framework Agreement and taking into account the production capacity of SSDT, the proposed annual cap which is set by reference to written indication by Xiaopai of its purchase volume is fair and reasonable.

Taking into account the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Framework Agreement and the transaction contemplated thereunder are fair and reasonable, and are in the interest of the Company and its Shareholders as a whole.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, Xiaopai is indirectly controlled by the spouse of Mr. Shi Chi (an executive Director) and is therefore an associate of Mr. Shi Chi and a connected person of the Company under the Listing Rules. Accordingly, the Framework Agreement and the transaction contemplated thereunder constitute connected transaction of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratio(s) (as defined in the Listing Rules) in respect of the annual cap under the Framework Agreement exceed 0.1% but are less than 5%, the Framework Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements, but are exempted from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Since Xiaopai is an associate of Mr. Shi Chi, he has abstained from voting on the resolutions passed by the Board to approve the Framework Agreement for the purpose of bye-law 103(3) of the Company's bye-laws. Save as disclosed, none of the Directors has a material interest in the Framework Agreement or is required to abstain from voting on the relevant board resolutions to approve the Framework Agreement under the bye-laws of the Company or the Listing Rules.

DEFINITIONS

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

"associate"	has the meaning ascribed to it under the Listing Rules;
"Board"	the board of Directors;
"Company"	Skyworth Group Limited, a company incorporated in
	Bermuda with limited liability, the Shares of which are
	listed on the main board of the Stock Exchange (Stock
	Code: 00751);
"connected person"	has the meaning ascribed to it under the Listing Rules;
"Director(s)"	the director(s) of the Company;
"Framework Agreement"	the framework agreement dated 16 April 2021 entered into
	between Xiaopai and SSDT in relation to the sale by SSDT
	of electronic products manufactured by it pursuant to the
	terms and conditions thereto;
"Group"	the Company and its subsidiaries from time to time, and
	"Group Company" shall be construed accordingly;
"Hong Kong"	the Hong Kong Special Administrative Region of the
	People's Republic of China;
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong;

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"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange as amended from time to time;
"PRC"	the People's Republic of China;
"RMB"	Renminbi, the lawful currency of the PRC;
"Share(s)"	ordinary share(s) of HK$0.10 each in the share capital of
	the Company;
"SSDT"	Shenzhen Skyworth Digital Technology Co., Ltd., a
	company established under the laws of the PRC and an
	indirect non wholly-owned subsidiary of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Xiaopai"	深圳小湃科技有限公司 (Shenzhen Xiaopai Technology
	Co., Ltd.*), a company established under the laws of the
	PRC; and
"%"	per cent.
	By order of the Board
	Skyworth Group Limited
	Lai Weide
	Chairman of the Board
Hong Kong, 16 April 2021

As at the date of this announcement, the Board of the Company comprises Mr. Lai Weide as the Chairman of the Board; Mr. Liu Tangzhi as executive Director and the chief executive officer; Ms. Lin Wei Ping, Mr. Shi Chi, Mr. Lin Jin and Mr. Lam Shing Choi, Eric as executive Directors; and Mr. Li Weibin, Mr. Cheong Ying Chew, Henry and Mr. Hung Ka Hai, Clement as independent non-executive Directors.

* For identification purpose only

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