Joy Spreader Group Inc. - Proxy Solicitation & Information Statement 2020

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in AGTech Holdings Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licenced securities dealer or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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**AGTech Holdings Limited 亞博科技控股有限公司[*]**

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

(1) CONTINUING CONNECTED TRANSACTIONS AND

(2) NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 4 to 14 of this circular.

A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages IBC-1 to IBC-2 of this circular.

A letter from Platinum Securities Company Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages IFA-1 to IFA-16 of this circular.

A notice convening the SGM to be held at 11:00 a.m. on Friday, 21 February 2020 at Holiday Inn Express Hong Kong Causeway Bay, meeting room I & II, 7/F, 33 Sharp Street East, Causeway Bay, Hong Kong is set out on pages SGM-1 to SGM-2 of this circular. Whether or not shareholders of the Company are able to attend the SGM, they are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and deposit it with the Company’s Hong Kong branch share registrar, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM (or any adjournment thereof). Completion and return of the form of proxy will not preclude shareholders of the Company from attending and voting in person at the SGM (or any adjournment thereof) should they so desire.

This circular will remain at www.hkgem.com on the “Latest Listed Company Information” page of the GEM website for at least 7 days from the date of its posting and will be published on the website of the Company at http://www.agtech.com.

* For identification purpose only

5 February 2020

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC-1
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFA-1
Appendix – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SGM-1

DEFINITIONS

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

“associate(s)”, “connected person(s)”, each has the meaning ascribed to it under GEM Listing Rules “controlling shareholder(s)” and “subsidiary(ies)”
“Ali Fortune” Ali Fortune Investment Holding Limited, a company incorporated under the laws of the British Virgin Islands
“Alibaba Affiliates” Alibaba China and its affiliated companies
“Alibaba China” Alibaba (China) Technology Co. Ltd* (阿里巴巴(中國)網路技術有限公司), a company incorporated in the PRC and an indirect wholly-owned subsidiary of Alibaba Holding
“Alibaba Cooperation the business cooperation framework agreement dated 11 December Framework Agreement” 2019 entered into between Beijing GOT and Alibaba China
“Alibaba Group” a group of companies comprising Alibaba Holding and its subsidiaries, including Alibaba China
“Alibaba Holding” Alibaba Group Holding Limited, a company incorporated in the Cayman Islands, with its American depository shares, each representing eight ordinary shares, listed on the New York Stock Exchange (Stock Symbol: BABA) and its ordinary shares listed on the Main Board of the Stock Exchange (Stock Code: 9988)
“Announcement” the announcement of the Company dated 11 December 2019 in respect of the Transactions
“Annual Cap(s)” the annual cap amount(s) under the Alibaba Cooperation Framework Agreement
“Ant Financial” 浙江螞蟻小微金融服務集團股份有限公司 (Ant Small and Micro Financial Services Group Co., Ltd.) (formerly known as 浙江螞蟻小微金融服務集團有限公司 (Zhejiang Ant Small and Micro Financial Services Group Co., Ltd.)), a company incorporated in the PRC
“Ant Financial Group” Ant Financial and its subsidiaries

“Beijing GOT” Beijing GOT Technology Co., Ltd* (北京亞博高騰科技有限公司), a company incorporated in the PRC with limited liability and a wholly-owned subsidiary of the Company

“Board”

the board of Directors

DEFINITIONS

“Company”	AGTech Holdings Limited, a company incorporated in Bermuda
	with limited liability, the shares of which are listed on the GEM
	of the Stock Exchange (Stock Code: 8279)
“Director(s)”	the director(s) of the Company
“Effective Date”	the effective date of the Alibaba Cooperation Framework
	Agreement, being the date of approval of the Alibaba Cooperation
	Framework Agreement by the Independent Shareholders at the
	SGM
“FMCG”	fast-moving consumer goods
“GEM”	GEM of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“Group”	the Company and each of its subsidiaries from time to time
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“Independent Board	an independent board committee of the Board (comprising all the
Committee”	independent non-executive Directors, namely Ms. Monica Maria
	Nunes, Mr. Feng Qing and Dr. Gao Jack Qunyao) to advise the
	Independent Shareholders as to the fairness and reasonableness of
	the Alibaba Cooperation Framework Agreement, the Transactions
	and the Annual Caps and as to voting
“Independent Financial	Platinum Securities Company Limited, a licensed corporation to
Advisor”	carry out Type 1 (dealing in securities) and Type 6 (advising on
	corporate finance) regulated activities under the SFO, being
	appointed as the independent financial adviser to advise the
	Independent Board Committee and the Independent Shareholders
	in respect of the Alibaba Cooperation Framework Agreement, the
	Transactions and the Annual Caps
“Independent Shareholders”	the shareholders of the Company, other than those who are
	required to abstain from voting at the SGM
“Latest Practicable Date”	30 January 2020, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein

DEFINITIONS

“Lingshoutong”	Lingshoutong (零售通), a digital sourcing platform for retailers
	that connects FMCG brand manufacturers and their distributors
	directly to local mom-and-pop stores in the PRC
“PRC”	the People’s Republic of China
“SFO”	The Securities and Futures Ordinance (Cap. 571 of the Laws of
	Hong Kong)
“SGM”	the special general meeting of the Company to be convened for
	the Independent Shareholders to consider and vote on the Alibaba
	Cooperation Framework Agreement, the Transactions and the
	Annual Caps
“Share(s)”	ordinary shares of HK$0.002 each in the capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Sports Lottery”	the national sports lottery of the PRC
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Transactions”	the transactions contemplated under the Alibaba Cooperation
	Framework Agreement
“Welfare Lottery”	the national welfare lottery of the PRC
%	per cent

For identification purposes only

LETTER FROM THE BOARD

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**AGTech Holdings Limited 亞博科技控股有限公司[*]**

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

Executive Directors: Mr. Sun Ho (Chairman & CEO) Ms. Hu Taoye

Non-executive Directors:

Mr. Yang Guang Mr. Li Faguang Mr. Ji Gang Mr. Zou Liang

Independent non-executive Directors:

Ms. Monica Maria Nunes Mr. Feng Qing Dr. Gao Jack Qunyao

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business: Unit 3912, 39th Floor, Tower Two Times Square Causeway Bay Hong Kong

5 February 2020

To the Shareholders

Dear Sir or Madam,

(1) CONTINUING CONNECTED TRANSACTIONS AND (2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement in which it was disclosed that on 11 December 2019, Beijing GOT, being a wholly-owned subsidiary of the Company, entered into the Alibaba Cooperation Framework Agreement with Alibaba China, pursuant to which the Group may supply, and Alibaba Affiliates may procure, smart hardware and ancillary equipment and related aftersales maintenance services, subject to the Annual Caps for a term commencing from the Effective Date and ending on 31 December 2021.

* For identification purpose only

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further information on the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions; (ii) the recommendations from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) the notice for convening the SGM.

On 11 December 2019, Beijing GOT, being a wholly-owned subsidiary of the Company, entered into the Alibaba Cooperation Framework Agreement with Alibaba China, pursuant to which the Group may supply, and Alibaba Affiliates may procure, smart hardware and ancillary equipment and related aftersales maintenance services, subject to the Annual Caps for a term commencing from the Effective Date and ending on 31 December 2021.

The principal terms of the Alibaba Cooperation Framework Agreement are set out below.

ALIBABA COOPERATION FRAMEWORK AGREEMENT

Date

11 December 2019

Parties

Beijing GOT; and
Alibaba China.

Duration

Subject to the approval by the Independent Shareholders at the SGM, the Alibaba Cooperation Framework Agreement will commence from the Effective Date and end on 31 December 2021.

LETTER FROM THE BOARD

Equipment and services to be provided

Pursuant to the Alibaba Cooperation Framework Agreement, the Group may supply, and Alibaba Affiliates may procure, smart hardware and ancillary equipment (the “ Alibaba Smart Equipment ”) and related aftersales maintenance services (the “ Alibaba Equipment and Maintenance Services ”). The Alibaba Cooperation Framework Agreement provides that such smart hardware and equipment include, but are not limited to, point-of-sales (POS) terminals, which may be applied to offline retail sales and lottery sales, and face recognition payment equipment.

As at the Latest Practicable Date, the Group had plans to supply POS terminals to Alibaba Affiliates under the Alibaba Cooperation Framework Agreement. Apart from the POS terminals, the Group envisions that the Alibaba Smart Equipment that may be supplied by the Group under the Alibaba Cooperation Framework Agreement could include face recognition payment equipment and other ancillary equipment such as printers for printing out sales receipts upon purchase by individuals for offline retail sales or display monitors for showing advertisements at point-of-sales. Based on the Group’s past sales experience with the Sports Lottery, such sales and payment related ancillary equipment may or may not be supplied by the Group together with the POS terminals as a bundle, depending on the specific requirements of the customers. The terms of the Alibaba Cooperation Framework Agreement therefore provide the Group with the flexibility to also supply such sales and payment related ancillary equipment to satisfy the specific procurement requirements of the respective Alibaba Affiliates from time to time.

Service fees, pricing terms and payment terms

Pursuant to the Alibaba Cooperation Framework Agreement, Alibaba Affiliates may procure the Alibaba Equipment and Maintenance Services by way of, without limitation, tender-offer processes (which may be in the form of open tender or by way of invitation to offer) and commercial negotiations, and the Group may participate in such tender-offer processes and commercial negotiations. Where any Alibaba Affiliate and the Group conclude any such procurement through tender-offer processes, commercial negotiation or otherwise, the parties shall enter into further definitive agreements for the supply and provision of specific Alibaba Equipment and Maintenance Services to detail the pricing and payment terms for specific equipment and services accordingly. In any case, the parties agreed that:

(i) the pricing and other terms of the provision of Alibaba Equipment and Maintenance Services shall be determined based on normal commercial terms;
(ii) Alibaba Affiliates shall not cause the Group to offer the Alibaba Equipment and Maintenance Services at prices and terms that are more favourable to Alibaba Affiliates than those offered to independent third parties; and
(iii) payments can be made by Alibaba Affiliates in lump sums or by instalments.

LETTER FROM THE BOARD

Pricing Policy

Prior to making any tender submission and/or entering into any definitive agreement with Alibaba Affiliate for the supply of any Alibaba Equipment and Maintenance Services, the Group will undertake the following procedures to ensure the pricing terms to be offered to any such Alibaba Affiliate will be on normal commercial terms, the relevant business team of the Group will:

(i) make projections on the costs of rendering the relevant Alibaba Equipment and Maintenance Services based on the specification set out by the relevant Alibaba Affiliate;
(ii) gather the pricing information relating to the supply of comparable products and services to independent third-party customers in the preceding 12 months to ascertain the highest and lowest mark-up margins applied in the pricing of such products and services (the “ Historical Third-party Mark-up Range ”); and
(iii) determine the mark-up margin applicable for pricing the Alibaba Equipment and Maintenance Services (the “ Relevant Mark-up Margin ”) based on:
the scale of the procurement;
the pricing level and mechanism for comparable products and services offered by the Group to independent third-party customers at comparable scale, where applicable;
information on prevailing market price level for similar products and services, where applicable; and
any long-term strategic benefits and market penetration concerns for pricing at a certain level for winning a particular tender or securing a particular purchase order,

provided always that:

(a) the Relevant Mark-up Margin should not be lower than the low end of the Historical Third-party Mark-up Range; and
(b) in the event that there were no comparable products or services offered by the Group to independent third party customers in the preceding 12 months, the management of the Group will endeavour to collate information on prevailing market price level for the same and ensure that the unit price will be within and not fall below the low end of the range of such prevailing market prices so collated by the Group, and that the Group will remain competitive against other competitors’ pricing.

By adhering to the aforesaid pricing procedures, any Relevant Mark-up Margin will fall within the range of mark-up margin applied for the supply of comparable products and services to independent third-party customers or that the unit price will be at least in line with the prevailing market prices based on information collated from the market, as the case may be. Correspondingly, the pricing terms for transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement will not be more favourable to Alibaba Affiliates than the pricing offered by the Group to independent third-party customers.

LETTER FROM THE BOARD

As set out in the paragraph headed “Internal Control Measures for Pricing and Utilisation of the Annual Caps” in this letter, the relevant business team of the Group is required to report to and accordingly seek approval from the senior management of the Group on, among other things, the pricing level and mechanism underlying each tender submission or commercial negotiation with the relevant Alibaba Affiliate, and the particulars as to how the aforesaid pricing procedures are being adhered.

Based on the above, the Directors are of the view that the supply of the Alibaba Equipment and Maintenance Services under the Alibaba Cooperation Framework Agreement will be conducted on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

In addition, the payment terms will be determined on a case-by-case basis with reference to, for instance, the terms and conditions of the tender-invitation and the order quantity as determined by Alibaba Affiliates. For instance but without limitation, for relatively sizeable orders, payments could be settled by an upfront payment of 30% upon signing of definitive agreements, to be followed by a payment of 60% upon delivery of the particular Alibaba Smart Equipment under the definitive agreement signed, and the remaining 10% at the end of the warranty period (which may range from one to two years after delivery), if any. The Group may agree to lump sum payment upon delivery for orders of smaller quantities where capital requirements are not intensive. Such payment arrangements are in line with the Company’s sales of hardware and equipment to independent third parties.

BASIS FOR DETERMINING THE ANNUAL CAP AMOUNTS

The table below sets forth the Annual Caps for the Alibaba Cooperation Framework Agreement for the period from the Effective Date and ending on 31 December 2020, and for the year ending on 31 December 2021.

	For the period
	commencing from the Effective Date	For the year ending
	and ending on 31 December 2020Note	31 December 2021
	(HKD)	(HKD)
Annual Caps	70,000,000	70,000,000

Note: No Transactions commenced in 2019, and the Effective Date is expected to take place in 2020.

There were no historical transactions between the Group and Alibaba Affiliates that are similar to those set out in the Alibaba Cooperation Framework Agreement.

The Annual Caps were calculated with reference to:

(i) the estimated quantities of the Alibaba Smart Equipment to be supplied by the Group to Alibaba Affiliates; and
(ii) the Group’s projections on the unit price and expected maintenance fees for the Alibaba Smart Equipment, which were computed in accordance with the Group’s pricing policy, includes primarily, cost-plus pricing computations.

LETTER FROM THE BOARD

Despite there were no historical transactions in relation to the provision of the Alibaba Smart Equipment and Maintenance Services by the Group to Alibaba Affiliates, in making the aforesaid estimations and projections, the Directors had:

considered the historical annual demand of POS terminals by Lingshoutong as reported in the media to expect that Alibaba Affiliates shall instigate several tender-offers every year in respect of the procurement of the Alibaba Smart Equipment, and that there will be approximately 30,000 units to 40,000 units of POS terminals per procurement by Lingshoutong. The Group assumed that it could win at least one of the aforesaid tender-offers every year during the term of the Alibaba Cooperation Framework Agreement. For the avoidance of doubt, the aforesaid quantities of POS terminals were derived from historical figures for reference and calculation of the Annual Caps only, but shall not be construed as any guaranteed, actual or indicative quantity of the Alibaba Smart Equipment to be procured by Lingshoutong under any of its future tender-offers pursuant to the Alibaba Cooperation Framework Agreement, which shall be beyond the control of the Group;
considered the specification of a POS terminal to estimate the cost of rendering the Alibaba Equipment and Maintenance Services; and
made cost-plus pricing computations using an assumed mark-up margin which is consistent with and within the Historical Third-party Mark-up Range as at the date of the Alibaba Cooperation Framework Agreement. This is to ensure that the pricing so computed will not be more favourable to Alibaba Affiliates than the pricing offered to independent third party customers.

The Annual Caps were estimated primarily based on the Group’s plans to supply POS terminals to Alibaba Affiliates as at the date of the Alibaba Cooperation Framework Agreement. As set out in the paragraph headed “Alibaba Cooperation Framework Agreement – Equipment and services to be provided” in this letter, although the Group envisions that it could provide face recognition payment equipment and other ancillary equipment such as sales receipts printers or POS advertisements display monitors to Alibaba Affiliates, the Directors believe that it is unlikely for such face recognition payment equipment, printers and display monitors to constitute a significant portion of the overall sales under the Alibaba Cooperation Framework Agreement. Accordingly, the Directors did not consider it necessary to include any significant buffer in the Annual Caps for such sales and payment related ancillary equipment. In the event that the accumulated transaction amounts under the Alibaba Cooperation Framework Agreement are expected to be higher than the level envisaged at the time of entry of such agreement so that the Annual Caps may not be sufficient, the Group will re-comply with the announcement and Independent Shareholders’ approval requirements before the Annual Caps are exceeded, in accordance with Rule 20.52 of the GEM Listing Rules.

LETTER FROM THE BOARD

INTERNAL CONTROL MEASURES FOR PRICING AND UTILISATION OF THE ANNUAL CAPS

As a general principle, the pricing and other terms of the definitive agreements with respect to the provision of the Alibaba Equipment and Maintenance Services shall be determined in the ordinary and usual course of business on normal commercial terms (as defined under the GEM Listing Rules). Subject to such general principle, where the Group participates in a tender with other bidders in the market or in commercial negotiations with any Alibaba Affiliate, the relevant business team of the Group shall, in preparing for the submission of a tender or any business proposal to any Alibaba Affiliate, report the following information to and accordingly seek approval from the senior management of the Group:

(i) a thorough analysis of the specifications and the cost of rendering the Alibaba Equipment and Maintenance Services to be provided; and
(ii) how the pricing level and mechanism underlying each tender submission or commercial negotiation with Alibaba Affiliate strictly adheres with the pricing principles and processes set out in the paragraph headed “Alibaba Cooperation Framework Agreement – Pricing policy” in this letter.

These measures and procedures are designed to ensure that the pricing and other terms of any equipment and services to be provided by the Group to any Alibaba Affiliate are, having taken into account all circumstances, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and are adhered to by the Group consistently.

In addition, the Group has internal controls in place to monitor the utilisation of the Annual Caps which require, among other things, the submission of monthly reports on the accumulated amounts of the Transactions by the business and finance team to the Company’s chief financial officer, the company secretary and the internal auditor. The company secretary shall promptly liaise with the business team as and when the Annual Cap has been 70% utilised to agree and implement measures to control and avoid exceeding any of the Annual Caps. The Alibaba Cooperation Framework Agreement includes a customary provision pursuant to which Alibaba Affiliates shall generally allow the Company and its auditors access to information necessary to report on the non-exempt continuing connected transactions. The Alibaba Cooperation Framework Agreement also provides that both parties agree that they must abide by the GEM Listing Rules when fulfilling their obligations under any of the terms of such agreement, including but not limited to the Annual Caps. If Beijing GOT is unable to perform its contractual obligations under the Alibaba Cooperation Framework Agreement due to the aforesaid provision, both parties agree that Beijing GOT shall temporarily suspend the performance of its relevant contractual obligations specified in such agreement until it is able to comply with the GEM Listing Rules (including obtaining a revised annual cap for the Transactions), and such suspension shall not constitute a violation of any provisions of the Alibaba Cooperation Framework Agreement by Beijing GOT.

As part of the overall monitoring of the continuing connected transactions of the Group, sample checks will be conducted by the Group’s internal audit department at least annually on, among other things, the pricing, payment terms and the utilisation of the Annual Caps.

LETTER FROM THE BOARD

ANNUAL REVIEW BY AUDITOR AND INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company’s auditors will review the continuing connected transactions under the Alibaba Cooperation Framework Agreement annually to check and confirm, among others, whether the pricing terms have been adhered to and whether the relevant Annual Caps have been exceeded. The independent non-executive Directors will review the continuing connected transactions under the Alibaba Cooperation Framework Agreement annually to check and confirm whether such continuing connected transactions have been conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, in accordance with the Alibaba Cooperation Framework Agreement governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole, and whether the internal control procedures put in place by the Company are adequate and effective to ensure that such continuing connected transactions are conducted in accordance with the pricing policies set out under the Alibaba Cooperation Framework Agreement.

REASONS FOR AND BENEFITS FOR ENTERING INTO THE CONTINUING CONNECTED TRANSACTIONS

The Group’s hardware business has been a critical component of the Group’s business. The Group supplies the Sports Lottery and the Welfare Lottery and has lottery hardware deployed in multiple provinces, cities and municipalities across the PRC, making the Group one of the leading manufacturers and suppliers of lottery terminals and other hardware in the PRC. In 2018, the Group won 19 lottery hardware tenders, accounting for over 41% of the overall Sports Lottery terminal tenders in the PRC during the same period, calculated by the number of terminals. The Group did especially well in new Android sports lottery terminals tenders in the PRC, winning over 67% of such tenders in 2018, calculated by the number of terminals in such tenders.

As stated in the Group’s 2018 annual report, looking forward, the Group intends to continue to focus on research and development in order to broaden and improve its product spectrum and develop new hardware ranges. Among other things, the Group believes that Alibaba Group’s new retail initiatives present a great opportunity for the further development of the Group’s hardware business.

Alibaba Group, which includes Alibaba Affiliates, has introduced new retail initiatives to innovate models for retail businesses and reengineer and transform the fundamentals of traditional retail operations. Such new retail initiatives represent the convergence of online and offline retail by leveraging digitalised operating systems, in-store technology, supply chain systems, consumer insights and mobile ecosystem to provide a seamless shopping experience for consumers. In particular, new retail initiatives require the supply of an enormous amount of hardware supplies, such as POS terminals, and payment and settlement devices. Many of these hardware supplies share similar designs, technologies and components that underlie the lottery hardware products supplied by the Group throughout the years. For instance, the Group has been supplying POS terminals for Sports Lottery retail outlets for a number of years.

The primary purpose of the Alibaba Cooperation Framework Agreement is to provide the Group with an opportunity to supply the Alibaba Equipment and Maintenance Services (including, but are not limited to, POS terminals and face recognition payment equipment) to Alibaba Affiliates. The Group currently expects to supply the Alibaba Equipment and Maintenance Services to mainly Lingshoutong, a digital sourcing platform for retailers.

LETTER FROM THE BOARD

In addition, the Alibaba Cooperation Framework Agreement presents direct opportunities for the further development of the Group’s domain expertise of lottery technology and services. The Group has been collaborating with Alibaba Group’s retail ecosystem including Lingshoutong to enhance on lottery distribution models. Through supplying the Alibaba Equipment and Maintenance Services to Alibaba Affiliates which currently include mainly Lingshoutong, the Group is able to bring lottery opportunities and resources to more customers through Alibaba Group’s physical new retail distribution channel and networks.

Based on the above, the Directors (other than the independent non-executive Directors whose opinion will be provided after reviewing the advice of the Independent Financial Adviser) consider that the Transactions contemplated under the Alibaba Cooperation Framework Agreement are expected to be entered into in the ordinary and usual course of business of the Group, on normal commercial terms, and the terms of the Alibaba Cooperation Framework Agreement and the Transactions, together with the Annual Caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION ABOUT THE PARTIES

The Company, the Group and Beijing GOT

The Company was incorporated in Bermuda and its shares are listed on GEM of the Stock Exchange. The Group is an integrated technology and services company engaged in the lottery and mobile games and entertainment market with a focus on China and selected international markets. A member of the Alibaba Group with around 360 employees, the Group is the exclusive lottery platform of Alibaba Group and Ant Financial Group.

Beijing GOT, a limited liability company incorporated in the PRC and a wholly-owned subsidiary of the Company, is a PRC National High-tech Enterprise engaged in the innovation, development, manufacturing and sale of hardware products such as lottery terminals. Beijing GOT is a leading manufacturer and supplier of lottery terminals in China.

Alibaba China, Alibaba Holding and Alibaba Group

Alibaba China is a company incorporated in the PRC and primarily engaged in the operation of Alibaba Holding’s wholesale marketplace, including Lingshoutong, a digital sourcing platform for retailers.

Alibaba Holding is a company incorporated in the Cayman Islands, with its American depositary shares, each representing eight ordinary shares, listed on the New York Stock Exchange (Stock Symbol: BABA), and its ordinary shares listed on the Main Board of the Stock Exchange (Stock Code: 9988).

Alibaba Group’s mission is to make it easy to do business anywhere. Alibaba Group aims to build the future infrastructure of commerce and envisions that its customers will meet, work and live at Alibaba, and that it will be a company that lasts at least 102 years. Alibaba Group’s businesses are comprised of core commerce, cloud computing, digital media and entertainment and innovation initiatives.

LETTER FROM THE BOARD

GEM LISTING RULES IMPLICATIONS

Ali Fortune, the controlling shareholder of the Company, is indirectly held as to 60% by Alibaba Holding. Accordingly, Alibaba China, being an indirect wholly-owned subsidiary of Alibaba Holding, is an associate of Ali Fortune. Hence, Alibaba China is a connected person of the Company. The Alibaba Cooperation Framework Agreement and the Transactions thus constitute continuing connected transactions of the Company under Chapter 20 of the GEM Listing Rules.

Since at least one of the applicable percentage ratios as defined in the GEM Listing Rules calculated with reference to the Annual Caps in respect of the Alibaba Cooperation Framework Agreement exceeds 5%, the Alibaba Cooperation Framework Agreement and the Transactions are subject to the annual review, reporting, announcement and Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

As Ms. Hu Taoye, Mr. Yang Guang, Mr. Li Faguang and Mr. Zou Liang are employees of Alibaba Holding or its subsidiaries, each of these Directors is deemed or may be perceived to have a material interest in the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps. Accordingly, they abstained from voting on the resolutions passed by the Board in relation thereto. Save for the aforesaid Directors, none of the other Directors had a material interest in the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps related thereto, and therefore none of them abstained from voting on the resolutions passed by the Board in relation thereto.

For the avoidance of doubt, the POS terminals supplied by the Group to Alibaba Affiliates may be potentially used by Alibaba Affiliates or the merchants on their platforms for lottery sales, and any lottery sales (whether conducted through these POS terminals or not) also constitute continuing connected transactions between the Group and Alibaba Affiliates. The Company has entered into separate agreements with the relevant Alibaba Affiliates in respect of such sales transactions and will comply with the annual reporting, announcement and independent shareholders’ approval requirements related thereto separately pursuant to Chapter 20 of the GEM Listing Rules if any such requirements become applicable.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Ms. Monica Maria Nunes, Mr. Feng Qing and Dr. Gao Jack Qunyao, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders in respect of the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this connection.

THE SGM

The SGM will be convened and held at 11:00 a.m. on Friday, 21 February 2020 at Holiday Inn Express Hong Kong Causeway Bay, meeting room I & II, 7/F, 33 Sharp Street East, Causeway Bay, Hong Kong for the Shareholders to consider and, if thought fit, pass the resolution to approve the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions. Any Shareholder with a material interest in the Transactions under the Alibaba Cooperation Framweork Agreement and his/her/its

LETTER FROM THE BOARD

associates shall abstain from voting on the resolutions approving the same. To the best knowledge, belief and information of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, Ali Fortune holds a total of 6,502,723,993 Shares, representing approximately 55.71% of the issued share Capital of the Company. Ali Fortune and its associates will abstain from voting in relation to the ordinary resolutions to be put forward at the SGM. Save as disclosed above, no other Shareholder is required to abstain from voting on the above resolutions.

The SGM Notice is set out on pages SGM-1 to SGM-2 of this circular. A form of proxy for the SGM is enclosed with this circular. Whether or not you intend to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and deposit it with the Company’s share registrar, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM (or any adjournment thereof). Completion and return of a form of proxy will not preclude you from attending and voting in person at the SGM (or any adjournment thereof) should you so desire. The voting in respect of the resolution contained in the SGM Notice will be conducted by way of a poll at the SGM prescribed under the GEM Listing Rules. An announcement on the poll results will be made by the Company after the SGM.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee which contains the recommendation of the Independent Board Committee to the Independent Shareholders regarding the resolution to approve the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions, and the letter of advice from the Independent Financial Adviser which contains its advice to the Independent Board Committee and the Independent Shareholders regarding the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions.

The Directors (including the independent non-executive Directors whose opinion has been set out in this circular after taking into consideration the advice of the Independent Financial Adviser) are of the view that the Transactions contemplated under the Alibaba Cooperation Framework Agreement are expected to be entered into in the ordinary and usual course of business of the Group, on normal commercial terms after arm’s length negotiations between the parties, and the terms of the Transactions together with the Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and recommend that the Independent Shareholders to vote in favour of the resolution relating thereto at the SGM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular and the SGM Notice.

Yours faithfully,

By order of the Board AGTech Holdings Limited Sun Ho

Chairman & CEO

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter of advice from the Independent Board Committee setting out its recommendation to the Independent Shareholders for the purpose of inclusion in this circular.

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**AGTech Holdings Limited 亞博科技控股有限公司[*]**

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

5 February 2020

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular dated 5 February 2020 of the Company (the “ Circular ”) of which this letter forms part.

Capitalised terms used in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to form the Independent Board Committee to advise you in connection with the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions, details of which are set out in the letter from the Board in the Circular.

Platinum Securities Company Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Alibaba Cooperation Framework Agreement is fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and is in the interests of the Company and the Shareholders as a whole.

* For identification purpose only

IBC-1

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 14 of the Circular, and the letter of advice from the Independent Financial Adviser, as set out on pages IFA-1 to IFA-16 of the Circular. Having considered the terms of the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions and the advice given by the Independent Financial Adviser and the principal factors and reasons taken into consideration by it in arriving at its advice, we are of the opinion that the Transactions are expected to be entered into in the ordinary and usual course of business of the Group, on normal commercial terms after arm’s length negotiations between the parties, and the terms of the Transactions together with the Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole as far as the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve, among other things, the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions.

Yours faithfully Independent Board Committee Ms. Monica Maria Nunes Mr. Feng Qing Independent non-executive Independent non-executive Director Director

Dr. Gao Jack Qunyao Independent non-executive Director

IBC-2

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of incorporation into this circular.

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PLATINUM SECURITIES COMPANY LIMITED

21st Floor LHT Tower 31 Queen’s Road Central Hong Kong

5 February 2020

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Transactions. Details of the Transactions are contained in the circular of the Company dated 5 February 2020 (the “ Circular ”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

In our capacity as the Independent Financial Adviser, our role is to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Alibaba Cooperation Framework Agreement are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and the Shareholders as a whole and to give independent advice to the Independent Board Committee and the Independent Shareholders.

In formulating our opinion, we have relied on the information and facts supplied to us by the Directors and/or management of the Company. We have reviewed, among other things:

(i) the Alibaba Cooperation Framework Agreement;
(ii) the announcement of the Company dated 11 December 2019;
(iii) the annual report of the Company for the financial year ended 31 December 2018 (“ 2018 Annual Report ”);
(iv) the interim report of the Company for the six months ended 30 June 2019 (“ 2019 Interim Report ”); and
(v) the internal control manual of the Group.

IFA-1

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have assumed that all information, facts, opinions and representations contained in the Circular and all information, statements and representations provided to us by the Directors and/or the management of the Company, which we have relied on, are true, complete and accurate and not misleading in all material respects as at the date hereof. The Directors have confirmed that they take full responsibility for the contents of the Circular and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us. The information referred to in the Circular will continue to be true, accurate and complete as at the date of the SGM, while the Company will notify the Shareholders of any material changes of information contained in the Circular as soon as possible.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other matters not contained in the Circular, the omission of which would make any statement in the Circular misleading or deceptive.

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Directors and/or management of the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Directors and/or management of the Company which have been provided to us. In line with normal practice, we have not conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and affairs of the Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Transactions.

Platinum Securities Company Limited had no past engagement with the Group in the last two years from the date of the Circular. As at the Latest Practicable Date, we were independent from, and were not associated with the Company or any other party to the Transactions, or their respective substantial shareholder(s) or connected person(s), as defined under the GEM Listing Rules and accordingly, are considered eligible to give independent advice on the Transactions. We will receive a fee from the Company for our role as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Transactions. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the Transactions or their respective substantial shareholder(s) or connected person(s), as defined under the GEM Listing Rules.

The Independent Board Committee, comprising Ms. Monica Maria Nunes, Mr. Feng Qing and Dr. Gao Jack Qunyao, has been formed to advise the Independent Shareholders as to whether the terms of the Alibaba Cooperation Framework Agreement are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and its Shareholders as a whole.

IFA-2

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have taken into account the following principal factors:

1. Background of the Alibaba Cooperation Framework Agreement

2. Information about the parties

Information on the Company, the Group and Beijing GOT

The Company was incorporated in Bermuda and its shares are listed on the GEM of the Stock Exchange. The Group is an integrated technology and services company engaged in the lottery, mobile games and entertainment market with a focus on the PRC and selected international markets. A member of the Alibaba Group with around 360 employees, the Group is the exclusive lottery platform of Alibaba Group and Ant Financial Group.

IFA-3

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Information on Alibaba China, Alibaba Holding and Alibaba Group

Alibaba Holding is a company incorporated in the Cayman Islands, with its American depositary shares, each representing eight ordinary shares, listed on the New York Stock Exchange (Stock Symbol: BABA) and its ordinary shares listed on the Main Board of the Stock Exchange (Stock Code: 9988).

3. Principal terms of the Alibaba Cooperation Framework Agreement

The principal terms of the Alibaba Cooperation Framework Agreement are set out as follows:

Date

11 December 2019

Parties

Beijing GOT; and
Alibaba China.

Duration

Subject to the approval by the Independent Shareholders at the SGM, the Alibaba Cooperation Framework Agreement will commence from the Effective Date and end on 31 December 2021.

IFA-4

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Equipment and services to be provided

Pursuant to the Alibaba Cooperation Framework Agreement, the Group may supply, and Alibaba Affiliates may procure Alibaba Smart Equipment and Alibaba Equipment and Maintenance Services. The Alibaba Cooperation Framework Agreement provides that such smart hardware and equipment include, but are not limited to, point-of-sales (POS) terminals, which may be applied to offline retail sales and lottery sales, and face recognition payment equipment.

As at the Latest Practicable Date, the Group has plans to supply POS terminals to Alibaba Affiliates under the Alibaba Cooperation Framework Agreement. Apart from the POS terminals, the Group envisions that the Alibaba Smart Equipment that may be supplied by the Group under the Alibaba Cooperation Framework Agreement could include face recognition payment equipment and other ancillary equipment such as printers for printing out sales receipts upon purchase by individuals for offline retail sales or display monitors for showing advertisements at point-of-sales. Based on the Group’s past sales experience with the Sports Lottery, such sales and payment related ancillary equipment may or may not be supplied by the Group together with the POS terminals as a bundle, depending on the specific requirements of the customers. The terms of the Alibaba Cooperation Framework Agreement therefore provide the Group with the flexibility to also supply such sales and payment related ancillary equipment to satisfy the specific procurement requirements of the respective Alibaba Affiliates from time to time.

Service fees, pricing terms and payment terms

Pursuant to the Alibaba Cooperation Framework Agreement, the Alibaba Affiliates may procure the Alibaba Equipment and Maintenance Services by way of, without limitation, tender-offer processes (which may be in the form of open tender or by way of invitation to offer) and commercial negotiations, and the Group may participate in such tender-offer processes and commercial negotiations. Where any Alibaba Affiliates and the Group conclude any such procurement through tender-offer processes, commercial negotiations or otherwise, the parties shall enter into further definitive agreements for the supply and provision of specific Alibaba Equipment and Maintenance Services to detail the pricing and payment terms for specific equipment and services accordingly. In any case, the parties agreed that:

(i) the pricing and other terms of the provision of Alibaba Equipment and Maintenance Services shall be determined based on normal commercial terms;
(ii) Alibaba Affiliates shall not cause the Group to offer the Alibaba Equipment and Maintenance Services at prices and terms that are more favourable to the Alibaba Affiliates than those offered to independent third parties; and
(iii) payments can be made by the Alibaba Affiliates in lump sums or by instalments;

IFA-5

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pricing Policy

(i) make projections on the costs of rendering the relevant Alibaba Equipment and Maintenance Services based on the specification set out by the relevant Alibaba Affiliate;
(ii) gather the pricing information relating to the supply of comparable products and services to independent third-party customers in the preceding 12 months to ascertain the Historical Third-party Mark-up Range; and
(iii) determine the Relevant Mark-up Margin based on:
the scale of the procurement;
the pricing level and mechanism for comparable products and services offered by the Group to independent third-party customers at comparable scale, where applicable;
information on prevailing market price level for similar products and services, where applicable; and
any long-term strategic benefits and market penetration concerns for pricing at a certain level for winning a particular tender or securing a particular purchase order,

provided always that:

(a) the Relevant Mark-up Margin should not be lower than the low end of the Historical Third-party Mark-up Range; and
(b) in the event that there were no comparable products or services offered by the Group to independent third party customers in the preceding 12 months, the management of the Group will endeavor to collate information on prevailing market price level for the same and ensure that the unit price will be within and not fall below the low end of the range of such prevailing market prices so collated by the Group, and that the Group will remain competitive against other competitors’ pricing.

IFA-6

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Our views:

We understand from the management of the Company that no historical transactions have been made between the Company and the Alibaba Affiliates that are similar to that of under the Alibaba Cooperation Framework Agreement. In view of the procurement by way of tender-offer processes, we understand from the management of the Company that it would be only effective with at least three bidders, otherwise the tender-offer processes (either in the form of open tender or by way of invitation to offer) will lapse, and the Company’s decision process as to submitting tenders (including whether or not to submit tenders and the tendering prices and terms) is same as that the Company’s decision process in the tenders conducted by independent third party customers in the PRC e.g. the Sports Lottery. As such, we are of the view that it is a common commercial practice for the Company to participate in the tender-offer processes.

IFA-7

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Furthermore, we understand from the management of the Company that the determination of pricing terms prior to the tender submission and entering into the definitive agreement with Alibaba Affiliates, the Company would consider, to the extent of (i) the current competitive market of the POS machine, (ii) the cost of providing the Alibaba Equipment and Maintenance Services and (iii) the potential benefits that could be brought to the Company from entering into such agreement. Subject to the final pricing and payment terms of which would be arrived based on arm’s length negotiation between the Group and Alibaba Affiliates, the Relevant Mark-up Margin would not be lower than the low end of the Historical Third-party Mark-up Range and any Relevant Mark-up Margin will fall within the range of mark-up margin applied for the supply of comparable products and services to independent third-party customers or that the unit price will be at least in line with the prevailing market prices based on information collated from the market, as the case may be. Correspondingly, the pricing terms for transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement will not be more favourable to Alibaba Affiliates than the pricing offered by the Group to independent third-party customers, we are of the view that the terms of the Alibaba Cooperation Framework Agreement is on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

Regarding the payment terms that payments can be made by the Alibaba Affiliates in lump sums or by instalments, we consider that it is dependent on the related terms and conditions contained in the tendering document on a case-by-case basis with reference to the size of the order quantity and subject to the commercial negotiation with Alibaba Affiliate. We understand from the management of the Company that, for relatively sizeable orders, payments could be settled by installments while the Group may agree to lump sum payment upon delivery for orders of smaller quantities. We have reviewed the historical similar agreements in relation to the sales of hardware and equipment entered between the Company and the independent third party customers and noted that the payment terms in the Alibaba Cooperation Framework Agreement are generally consistent and in line with the historical payment arrangements made by the Group with other independent third party customers. As such, we are of the view that the payment terms of the Alibaba Cooperation Framework Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

4. Basis for determining the annual cap amounts

	For the period
	commencing from the
	Effective Date and ending
	on 31 December 2020	For the year ending
	*(Note)*	31 December 2021
	(HK$)	(HK$)
Annual Caps	70,000,000	70,000,000

Note: No Transactions will be commenced in 2019, and the Effective Date is expected to take place in 2020.

IFA-8

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

There were no historical transactions between the Group and Alibaba Affiliates that are similar to those set out in the Alibaba Cooperation Framework Agreement.

The Annual Caps were calculated with reference to:

(i) the estimated quantities of Alibaba Smart Equipment to be supplied by the Group to the Alibaba Affiliates; and
(ii) the Group’s projections on the unit price and expected maintenance fees for the Alibaba Smart Equipment, which shall be computed in accordance with the Group’s pricing policy, which includes, primarily, cost-plus pricing computations.

considered the historical annual demand of POS terminals by Lingshoutong as reported in the media to expect that Alibaba Affiliates shall instigate several tender-offers every year in respect of the procurement of the Alibaba Smart Equipment, and that there will be approximately 30,000 units to 40,000 units of POS terminals per procurement by Lingshoutong. The Group assumed that it could win at least one of the aforesaid tender-offers every year during the term of the Alibaba Cooperation Framework Agreement. For the avoidance of doubt, the aforesaid quantities of POS terminals were derived from historical figures for reference and calculation of the Annual Caps only, but shall not be construed as any guaranteed, actual or indicative quantity of the Alibaba Smart Equipment to be procured by Lingshoutong under any of its future tender-offers pursuant to the Alibaba Cooperation Framework Agreement, which shall be beyond the control of the Group;
considered the specification of a POS terminal to estimate the cost of rendering for the Alibaba Equipment and Maintenance Services; and
made cost-plus pricing computations using an assumed mark-up margin which is consistent with and within the Historical Third-party Mark-up Range as at the date of the Alibaba Cooperation Framework Agreement. This is to ensure that the pricing so computed will not be more favourable to Alibaba Affiliates than the pricing offered to independent third party customers.

IFA-9

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

for such face recognition payment equipment, printers and display monitors to constitute a significant portion of the overall sales under the Alibaba Cooperation Framework Agreement. Accordingly, the Directors did not consider it necessary to include any significant buffer in the Annual Caps for such sales and payment related ancillary equipment. In the event that the accumulated transaction amounts under the Alibaba Cooperation Framework Agreement are expected to be higher than the level envisaged at the time of entry of such agreement so that the Annual Caps may not be sufficient, the Group will re-comply with the announcement and Independent Shareholders’ approval requirements before the Annual Caps are exceeded, in accordance with Rule 20.52 of the GEM Listing Rules.

Our views:

With reference to calculations of the Annual Caps provided by the Company, the projected transaction amounts under the Alibaba Cooperation Framework Agreement are determined based on (i) the estimated quantities of Alibaba Smart Equipment to be supplied by the Group to the Alibaba Affiliates; and (ii) the Group’s projections in relation to the unit price and expected maintenance fees for the Alibaba Smart Equipment, which were computed in accordance with the Group’s pricing policy, includes primarily, cost-plus pricing computations.

To further elaborate, the estimated quantities of sale of the Alibaba Smart Equipment has been taken into account the recent business development of the Alibaba Group, the launching of the new retail concept - Lingshoutong which is operated under the Alibaba China. As disclosed in the Hong Kong initial public offering prospectus of Alibaba Holding dated 15 November 2019, we note that Lingshoutong is a digital sourcing platform that connects FMCG brand manufacturers and their distributors directly to local mom-and-pop stores in the PRC. It provides digital supply chain services to FMCG brands and their distributors and improves their distribution efficiency by digitalizing offline distribution data through setting up POS systems at the mom-and-pop stores, thereby enabling visibility to data throughout the transaction value chain. With these technologies and data, Lingshoutong also makes it easier for mom-and-pop store owners to do business by digitalizing their operations and offering their customers a broader selection of FMCG products. It is noted that Lingshoutong has become a strategic focus for the business deployment under the Alibaba Group in recent years. In addition, Alibaba Group has set its sights on over six million mom-and-pop stores in the PRC, while its Lingshoutong has reached over one million mom-and-pop stores as of the first half of 2019. We understand from the management of the Company that they had considered the historical annual demand of POS terminals by Lingshoutong as reported in the media to expect that Alibaba Affiliates shall instigate several tender-offers every year in respect of the procurement of the Alibaba Smart Equipment, and that there will be approximately 30,000 to 40,000 units of POS terminals per procurement by Lingshoutong. The Group assumed that it could win at least one of the aforesaid tender-offers every year during the term of the Alibaba Cooperation Framework Agreement. Considering the Company is one of the leading manufacturers and suppliers of lottery terminals and other related hardware including POS terminals, payment and settlement devices in the PRC and many of these hardware supplies share similar designs, technologies and components that underlie the lottery hardware products supplied by the Group, we are of the view that the Company has sufficient expertise required in the provision of the Alibaba Smart Equipment when comparing to other competitors and we are also of the view that the estimated quantities of sales of the Alibaba Smart Equipment is fair and reasonable.

IFA-10

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Regarding the determination of the unit price of the Alibaba Smart Equipment and Maintenance Services, the Company has used a cost-plus pricing mechanism, which is determined based on a cost per unit plus an assumed mark-up margin, which margin is consistent with and within the historical range of mark-up margins for similar products and services previously offered by the Group to independent third party customers during the usual course of its business. Since there were no historical transactions in relation to the provision of the Alibaba Smart Equipment and Maintenance Services of the Company, we have reviewed (i) the retail price of the POS terminals that was quoted on the official mobile app of Lingshoutong, (ii) the unit price of the POS terminals that the Group used to sell to the Sports Lottery, (iii) the retail price of similar POS terminal provided by other competitors of the Group and (iv) other PRC companies that are listed in Hong Kong or the mainland of PRC, who develop smart hardware devices that have disclosed the gross margin range on the sales of such smart hardware devices in their respective published financial reports, for which, as references for us to assess the unit price of the Alibaba Smart Equipment projected by the management of the Company. We consider that the unit price projected by the management of the Company in respect of the Alibaba Smart Equipment is fair and reasonable in that (i) the projected unit price is within the range of the retail price of the POS terminals that was quoted on the mobile app of Lingshoutong and the retail price of similar POS terminals offered by other competitors in the market, (ii) the cost-plus pricing mechanism and the assumed mark-up margin used in the projected unit price are in line with the pricing mechanism and the historical range of mark-up margins for similar products and services previously offered by the Group to independent third party customers, and (iii) the assumed mark-up margin used in the projected unit price by the management of the Company is also within the gross margin range on the sales of smart hardware devices that have been disclosed by other listed companies in Hong Kong and the PRC.

Furthermore, based on our understanding from the management of the Company regarding the calculation of the Annual Caps, it was estimated primarily based on the Group’s plans to supply POS terminals to Alibaba Affiliates as at the date of the Alibaba Cooperation Framework Agreement and the Group has presented intention to supply primarily the POS terminals to Alibaba Affiliates under the Alibaba Cooperation Framework Agreement, we consider it is prudent for the Company not to include all types of other possible smart hardware, i.e. face recognition and other ancillary equipment in its calculation of the Annual Caps for the sake of better safeguard of the interests of the Independent Shareholders. Otherwise, the Annual Caps may be unduly inflated at this early stage of the business cooperation under the Alibaba Cooperation Framework Agreement. In addition, we noted from the management of the Company that it is unlikely for such face recognition payment equipment, printers and display monitors to constitute a significant portion of the overall sales under the Alibaba Cooperation Framework Agreement if such transactions so incurred, therefore we concur with the management of the Company that it is not necessary to include any significant buffer in the Annual Caps for such sales and payment related to ancillary equipment at this early stage. Moreover, in the event that the accumulated transaction amounts under the Alibaba Cooperation Framework Agreement are expected to be higher than the level envisaged at the time of entry of such agreement so that the Annual Caps may not be sufficient, the Group will re-comply with the announcement and Independent Shareholders’ approval requirements before the Annual Caps are exceeded, in accordance with Rule 20.52 of the GEM Listing Rules. We consider that the Annual Caps are prudently calculated and sufficient at this juncture as far as the Independent Shareholders are concerned.

In light of the above, we are of the view that the Annual Caps under the Alibaba Cooperation Framework Agreement are fair and reasonable.

IFA-11

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Reasons for and benefits for entering into the continuing connected transactions

As stated in the “Letter from the Board” contained in the Circular, the Group’s hardware business has been a critical component of the Group’s business. The division supplies the Sports Lottery and the Welfare Lottery and has lottery hardware deployed in multiple provinces, cities and municipalities across the PRC, making the Group one of the leading manufacturers and suppliers of lottery terminals and other hardware in the PRC. In 2018, the Group won 19 lottery hardware tenders, accounting for over 41% of the overall Sports Lottery terminal tenders in the PRC during the same period, calculated by the number of terminals. The Group did especially well in new Android sports lottery terminals tenders in the PRC, winning over 67% of such tenders in 2018, calculated by the number of terminals in such tenders.

As stated in the Group’s 2018 Annual Report, looking forward, the Group intends to continue to focus on research and development in order to broaden and improve its product spectrum and develop new hardware ranges. Among other things, the Group believes that Alibaba Group’s new retail initiatives present a great opportunity for the further development of the Group’s hardware business.

Alibaba Group, which includes the Alibaba Affiliates, has introduced new retail initiatives to innovate models for retail businesses and reengineer and transform the fundamentals of traditional retail operations. Such new retail initiatives represent the convergence of online and offline retail by leveraging digitalized operating systems, in-store technology, supply chain systems, consumer insights and the mobile ecosystem to provide a seamless shopping experience for consumers. In particular, new retail initiatives require the supply of an enormous amount of hardware supplies, such as POS terminals, and payment and settlement devices. Many of these hardware supplies have similar designs, technologies and components that underlie to the lottery hardware products supplied by the Group throughout the years. For instance, the Group has been supplying POS terminals for the Sports Lottery retail outlets for a number of years.

In addition, the Alibaba Cooperation Framework Agreement presents direct opportunities for the further development of the Group’s domain expertise of lottery technology and services. The Group has been collaborating with Alibaba Group’s ecosystem including Lingshoutong to enhance on lottery distribution models. Through supplying the Alibaba Equipment and Maintenance Services to Alibaba Affiliates which currently include mainly Lingshoutong, the Group is able to bring lottery opportunities and resources to customers through Alibaba Group’s physical retail distribution channel and network.

IFA-12

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we concur with the management of the Company that the Transactions contemplated under the Alibaba Cooperation Framework Agreement are in the ordinary and usual course of business of the Group, on normal commercial terms and the terms of Alibaba Cooperation Framework Agreement and the Transactions, together with the Annual Caps, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

6. Internal control measures for pricing and utilization of the Annual Caps

As a general principle, the pricing and other terms of the definitive agreements with respect to the provision of the Alibaba Equipment and Maintenance Services shall be determined in the ordinary and usual course of business on normal commercial terms (as defined under the GEM Listing Rules). Subject to such general principle, where the Group participates in a tender with other bidders in the market or commercial negotiations with any Alibaba Affiliates, the relevant business team of the Group shall, in preparing for the submission of a tender or any business proposal to any Alibaba Affiliates, report the following information to and accordingly seek approval from the senior management of the Group:

(i) a thorough analysis of the specifications and the cost of rendering the Alibaba Equipment and Maintenance Service to be provided; and
(ii) how the pricing level and mechanism underlying each tender submission or commercial negotiation with an Alibaba Affiliate strictly adheres with the pricing principles and processes set out in the paragraph headed “Alibaba Cooperation Framework Agreement – Pricing policy” in this letter;

We consider that the Company has adopted adequate internal control measures that is able to carry out appropriate internal procedures to ensure the pricing mechanism has been implemented to ensure the fairness and reasonableness of the pricing and other terms of any equipment and services to be provided by the Group, which is in the interests of the Company and the Shareholders as a whole.

We have reviewed the internal control policies and related procedures regarding the continuing connected transaction of the Group. Regarding the monitoring of the utilisation of the Annual Caps, which requires, among other things, the submission of monthly reports on the accumulated amounts of the Transactions by the business and finance team to the Company’s chief financial officer, the company secretary and the internal auditor. The company secretary shall promptly liaise with the business team as and when the utilization rate of the Annual Cap has reached 70% to agree and implement measures to control and avoid exceeding any of the Annual Caps. The Alibaba Cooperation Framework Agreement includes a customary provision pursuant to which the Alibaba Affiliates shall generally allow the Company and its auditors access to information necessary to report on the non-exempt continuing connected transactions. The Alibaba Cooperation Framework Agreement also provides that both parties agree that they must abide by the GEM Listing Rules when fulfilling their obligations under any of the terms of such agreement,

IFA-13

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

including but not limited to the Annual Caps. If Beijing GOT is unable to perform its contractual obligations under the Alibaba Cooperation Framework Agreement due to the aforesaid provision, both parties agree that Beijing GOT shall temporarily suspend the performance of its relevant contractual obligations specified in such agreement until it is able to comply with the GEM Listing Rules (including obtaining a revised annual cap for the Transactions), and such suspension shall not constitute a violation of any provisions of the Alibaba Cooperation Framework Agreement by Beijing GOT.

As part of the overall monitoring of the continuing connected transactions of the Group, sample check will be conducted by the Group’s internal audit department at least annually on, among other things, pricing, payment terms and the utilisation of the Annual Caps. As such, we consider that the Company has adequate internal control measures to comply with the GEM Listing Rules requirements with respect to the supervision and monitoring of the Annual Caps of the Transactions.

Annual review of the continuing connected transactions

Pursuant to Rules 20.53 to 20.57 of the GEM Listing Rules, the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement are subject to the following annual review requirements:

(i) each year, the independent non-executive Directors must review the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement and confirm in the annual report whether the transactions to be carried out pursuant to the Framework Agreement have been entered into:
(a) in the ordinary and usual course of business of the Group;
(b) on normal commercial terms or better; and
(c) according to the agreement governing them on terms that are fair and reasonable and in the interests of the Company and Shareholders as a whole;
(ii) each year, the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least 10 business days before the bulk printing of the Company’s annual report), confirming whether anything has come to their attention that causes them to believe that the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement:
(a) have not been approved by the Board;
(b) were not, in all material aspects, in accordance with the pricing policies of the Group if the transactions involve the provision of goods or services by the Group;

IFA-14

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) were not entered into, in all material aspects, in accordance with the relevant agreement governing the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement; and
(d) have exceeded the Annual Caps;
(iii) the Company shall allow, and shall ensure that the counterparties to the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement allow, the Company’s auditors sufficient access to their records for the purpose of reporting on the transactions to be carried out pursuant to the Framework Agreement as set out in paragraph (ii) in the above. The Board must state in the annual report whether the Company’s auditors have confirmed the matters stated in GEM Listing Rule 20.54; and
(iv) the Company shall promptly notify the Stock Exchange and publish an announcement if the independent non-executive Directors and/or the auditors of the Company cannot confirm the matters set out in paragraphs (i) and/or (ii) in the above, respectively.

In light of the reporting requirements for the Transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement, in particular, (a) the restriction of the values of the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreements by way of the Annual Caps; and (b) the requirements under the GEM Listing Rules for ongoing review by the independent non-executive Directors and the auditors of the Company of the terms of the transactions to be carried out pursuant to the Alibaba Cooperation Framework Agreement and the Annual Caps, we are of the view that there are appropriate measures available to the Company to supervise the carrying out of the Transactions pursuant to the Alibaba Cooperation Framework Agreement and to safeguard the interests of the Independent Shareholders.

RECOMMENDATION

We have considered the above principal factors and reasons and, in particular, having taken into account the following in arriving at our opinion:

(a) the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned, and entering into the Alibaba Cooperation Framework Agreements is in the interest of the Company and the Shareholders as a whole;
(b) the provision of the Alibaba Equipment and Maintenance Services are squarely within the principal business of the Group and are in the ordinary and usual course of business of the Group, on normal commercial terms and is in the interests of the Company and its Shareholders as a whole; and
(c) the basis of determining the Annual Caps in respect of the Alibaba Cooperation Framework Agreements are fair and reasonable;

IFA-15

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above, we are of the view that the terms the Alibaba Cooperation Framework Agreement are on normal commercial terms or better, fair and reasonable and in the ordinary and usual course of business of the Group, and are in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend the Independent Shareholders to vote in favour of the ordinary resolutions in relation to the Alibaba Cooperation Framework Agreement, the Annual Caps and the Transactions thereunder to be proposed at the SGM.

Yours faithfully, For and on behalf of

Platinum Securities Company Limited Li Lan

Director and Co-head of Corporate Finance

Mr. Li Lan is a licensed person registered with the Securities and Futures Commission and as responsible officer of Platinum Securities Company Limited to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. Mr. Li Lan has over thirteen years of experience in corporate finance industry.

IFA-16

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by directors, to be notified to the Company and the Stock Exchange, were as follows:

(i) Long positions in the Shares

Number of Shares

				Approximate
	Personal	Corporate		percentage
Name of Director	interest	interest	Total	held(Note 1)
Mr. Sun Ho	46,158,000	2,006,250,000	2,052,408,000	17.58%
	(Note 2)	(Note 3)
Ms. Monica Maria Nunes	1,750,000	–	1,750,000	0.015%
Mr. Feng Qing	375,000	–	375,000	0.003%
Dr. Gao Jack Qunyao	750,000	–	750,000	0.006%

Notes:

Based on a total of 11,672,342,235 Shares in issue as at the Latest Practicable Date.
It represents 31,848,000 Shares and 14,310,000 restricted share units granted under the share award scheme of the Company adopted on 17 March 2017 beneficially held by Mr. Sun Ho.
These 2,006,250,000 Shares were held in the name of MAXPROFIT GLOBAL INC. As MAXPROFIT GLOBAL INC is beneficially and wholly-owned by Mr. Sun Ho, the chairman, executive Director and chief executive officer of the Company, Mr. Sun Ho was deemed to be interested in such Shares. Mr. Sun Ho is also a director of MAXPROFIT GLOBAL INC.

A-1

GENERAL INFORMATION

APPENDIX

(ii) Long positions in the underlying Shares in respect of the share options of the Company (which were regarded as unlisted physically settled equity derivatives)

		Exercise		Number of	Approximate
		price per	Exercisable	underlying	percentage
Name of Director	Date of grant	Share	period(Note 2)	Shares	held(Note 1)
		(HK$)
Mr. Feng Qing	1 June 2015	0.8580	1 June 2016 –	375,000	0.003%
			31 May 2020
Dr. Gao Jack Qunyao	1 June 2015	0.8580	1 June 2016 –	375,000	0.003%
			31 May 2020

Notes:

Based on a total of 11,672,342,235 Shares in issue as at the Latest Practicable Date.
A portion of the option representing 25% of the total underlying Shares entitled under such option when it was initially granted shall be vested in the grantee of the option in each year during the exercisable period. If the grantee does not exercise such portion of the option within one year after it has been vested in him/ her, such portion of the option will lapse.
(iii) Long positions in shares and underlying shares of Alibaba Holding, an associated corporation of the Company within the meaning of Part XV of the SFO

		Number of	Percentage of
		shares/	issued shares
		underlying	of Alibaba
Name of Director	Nature of interests	shares held#	Holding
Ms. Hu Taoye	Beneficial and equity	132,056_(Note 1)_	negligible
	derivative interests
Mr. Yang Guang	Beneficial and equity	203,328_(Note 2)_	0.001%
	derivative interests
Mr. Li Faguang	Equity derivative interests	121,000_(Note 3)_	negligible
Mr. Ji Gang	Beneficial and equity	56,912_(Note 4)_	negligible
	derivative interests
Mr. Zou Liang	Beneficial and equity	23,840_(Note 5)_	negligible
	derivative interests

A-2

GENERAL INFORMATION

APPENDIX

Notes:

It represents 88,056 ordinary shares and 44,000 restricted share units beneficially held by Ms. Hu Taoye.
It represents 41,328 ordinary shares and 162,000 restricted share units beneficially held by Mr. Yang Guang.
It represents 121,000 restricted share units beneficially held by Mr. Li Faguang.
It represents 20,512 ordinary shares and 36,400 restricted share units beneficially held by Mr. Ji Gang.
It represents 4,000 ordinary shares and 19,840 restricted share units beneficially held by Mr. Zou Liang.
The shareholders of Alibaba Holding approved an increase in the number of authorized ordinary shares and a one-to-eight share subdivision of Alibaba Holding’s ordinary shares, including all outstanding options, restricted share units and share awards at the annual general meeting held on 15 July 2019 (the “Share Subdivision”). As a result of the Share Subdivision, one American depositary share of Alibaba Holding shall represent eight ordinary shares. The number of shares/underlying shares held by each of the relevant Directors shown above has been adjusted to take into account the effect of the Share Subdivision.
(iv) Long positions in shares and underlying shares of Alibaba Pictures Group Limited (“Ali Pictures”), an associated corporation of the Company within the meaning of Part XV of the SFO:

		Number of	Percentage
		shares of	of issued shares
Name of Director	Nature of interests	Ali Pictures held	of Ali Pictures
Mr. Zou Liang	Beneficial owner	90,000	negligible

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the Shares, underlying Shares (in respect of share options of the Company which were regarded as unlisted physically settled equity derivatives) and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by Directors, to be notified to the Company and the Stock Exchange.

A-3

GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARE, UNDERLYING SHARE AND DEBENTURES

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares, underlying Shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, were directly or indirectly interested in 5% or more of the issued voting shares of any other member of the Group or held any option in respect of such shares and recorded in the register kept by the Company pursuant to section 336 of the SFO:

Long position in the Shares

			Approximate
			percentage of
			issued share
		Number of	capital of the
Name of Shareholder	Capacity	Shares held	Company(Note 1)
Ali Fortune Investment Holding	Beneficial owner	6,502,723,993	55.71%
Limited		(Note 8)
Alibaba Investment	Interest of controlled	6,502,723,993	55.71%
Limited_(Note 2)_	corporation	(Note 8)
API Holdings	Interest of controlled	6,502,723,993	55.71%
Limited_(Note 2)_	corporation	(Note 8)
Alibaba Group Holding	Interest of controlled	6,502,723,993	55.71%
Limited_(Note 3)_	corporation	(Note 8)
API (Hong Kong)	Interest of controlled	6,502,723,993	55.71%
Investment	corporation	(Note 8)
Limited_(Note 4)_
Shanghai Yunju Venture	Interest of controlled	6,502,723,993	55.71%
Capital Investment Co., Ltd.(Note 5)	corporation	(Note 8)
Ant Small and Micro	Interest of controlled	6,502,723,993	55.71%
Financial Services	corporation	(Note 8)
Group Co., Ltd.(Note 6)
Hangzhou Yunbo Investment	Interest of controlled	6,502,723,993	55.71%
Consultancy Co., Ltd.(Note 7)	corporation	(Note 8)
Mr. Ma Yun_(Note 7)_	Interest of controlled	6,502,723,993	55.71%
	corporation	(Note 8)
MAXPROFIT GLOBAL INC_(Note 9)_	Beneficial owner	2,006,250,000	17.19%
		(Note 9)

A-4

GENERAL INFORMATION

APPENDIX

Notes:

Based on a total of 11,672,342,235 Shares in issue as at the Latest Practicable Date.
Alibaba Investment Limited (“ AIL ”) and API Holdings Limited (“ API Holdings ”) hold 60% and 40% of the issued share capital of Ali Fortune Investment Holding Limited (“ Ali Fortune ”), respectively.
Alibaba Group Holding Limited (“ Alibaba Holding ”) holds 100% of the issued share capital of AIL. Ms. Hu Taoyue, Mr. Yang Guang, Mr. Li Faguang and Mr. Zou Liang are the employees of Alibaba Holding or its subsidiaries.
API (Hong Kong) Investment Limited holds 100% of the issued share capital of API Holdings.
Shanghai Yunju Venture Capital Investment Co., Ltd. (formerly known as Shanghai Yunju Investment Management Co., Ltd.) (“ Shanghai Yunju ”) holds 100% of the issued share capital of API (Hong Kong) Investment Limited.
Ant Small and Micro Financial Services Group Co., Ltd. (“ Ant Financial ”) holds 100% of the equity interests in Shanghai Yunju. Hangzhou Junhan Equity Investment Partnership (Limited Partnership) (“ Junhan ”) and Hangzhou Junao Equity Investment Partnership (Limited Partnership) (“ Junao ”) hold approximately 28.45% and 21.53% of the equity interests in Ant Financial, respectively. Mr. Ji Gang, a non-executive Director, is an employee of Ant Financial.
Hangzhou Yunbo Investment Consultancy Co., Ltd. (“ Yunbo ”) is the general partner of both Junhan and Junao, and is wholly-owned by Mr. Ma Yun.
Each of AIL, Alibaba Holding, API Holdings, API (Hong Kong) Investment Limited, Shanghai Yunju, Ant Financial, Junhan, Junao, Yunbo, and Mr. Ma Yun are deemed to be interested in an aggregate of 6,502,723,993 Shares by virtue of Part XV of the SFO.
As disclosed in the section headed “DISCLOSURE OF DIRECTORS’ INTERESTS” above, Mr. Sun Ho was deemed to be interested in these 2,006,250,000 Shares by virtue of his interest in MAXPROFIT GLOBAL INC. Mr. Sun Ho is also a director of MAXPROFIT GLOBAL INC.

Save as disclosed above, as at the Latest Practicable Date, the Directors or chief executive of the Company were not aware of any other persons (not being a Director or chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares, underlying Shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or was directly or indirectly interested in 5% or more of the issued voting shares of any other member of the Group or held any option in respect of such shares and recorded in the register kept by the Company pursuant to section 336 of the SFO.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract or a proposed service contract with any member of the Group which is not expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation).

A-5

GENERAL INFORMATION

APPENDIX

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2018, being the date to which the latest published audited accounts of the Company were made up.

6. COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors, controlling Shareholder or their respective close associates had interest in any business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group.

7. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest, either direct or indirect, in any assets which have been, since 31 December 2018 (the date to which the latest published audited accounts of the Group were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors had material interest in any subsisting contract or arrangement which is significant in relation to the business of the Group.

8. QUALIFICATIONS AND CONSENT OF EXPERT

The following is the qualification of the expert who has given opinion or advice contained in this circular:

Name	Qualification
Platinum Securities Company	A licensed corporation to carry out Type 1 (dealing in securities)
Limited (“Platinum”)	and Type 6 (advising on corporate finance) regulated activities
	under the SFO

As at the Latest Practicable Date, Platinum did not have: (a) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and (b) any interest, either direct or indirect, in any assets acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2018 (the date to which the latest published audited accounts of the Group were made up).

The letter from Platinum is given as of the date of this circular for incorporation herein. Platinum has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or references to its name in the form and context in which they respectively appear.

A-6

GENERAL INFORMATION

APPENDIX

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Alibaba Cooperation Framework Agreement is available for inspection at Unit 3912, 39th Floor, Tower Two, Times Square, Causeway Bay, Hong Kong during normal business hours on any business day from the date of this circular up to and including 19 February 2020 (except Saturdays, Sundays and public holidays) and will be available for inspection at the SGM.

A-7

NOTICE OF SPECIAL GENERAL MEETING

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**AGTech Holdings Limited 亞博科技控股有限公司[*]**

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “ SGM ”) of AGTech Holdings Limited (the “ Company ”) will be held at 11:00 a.m. on Friday, 21 February 2020 at Holiday Inn Express Hong Kong Causeway Bay, meeting room I & II, 7/F, 33 Sharp Street East, Causeway Bay, Hong Kong for the purpose of considering and, if thought fit, passing with or without amendment, the following resolution of the Company as ordinary resolution:

ORDINARY RESOLUTION

“ THAT :

(A) (i) the Alibaba Cooperation Framework Agreement (as defined in the circular of the Company dated 5 February 2020 of which this notice forms part (the “ Circular ”)) (a copy of which is tabled at the meeting and marked “A” and initialled by the chairman of the meeting for identification purpose) and the transactions contemplated thereunder and the implementation thereof be and are hereby approved, confirmed and ratified;
(ii) the Annual Caps (as defined in the Circular) for the period commencing from the Effective Date (as defined in the Circular) and ending on 31 December 2020 and for the year ending 31 December 2021 be and are hereby approved; and
(B) any one director of the Company (or any two directors of the Company or one director and the secretary of the Company, in the case of execution of documents under seal) be and is hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him/her to be incidental to, ancillary to or in connection with the matters contemplated in the Alibaba Cooperation Framework Agreement and the transactions contemplated thereunder and the implementation thereof including the affixing of seal thereon.”

By order of the board of directors of the Company AGTech Holdings Limited Sun Ho Chairman & CEO

The Hong Kong Special Administrative Region of the People’s Republic of China, 5 February 2020

* For identification purpose only

SGM-1

NOTICE OF SPECIAL GENERAL MEETING

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business: Unit 3912, 39th Floor, Tower Two Times Square Causeway Bay Hong Kong

Notes:

Any member entitled to attend and vote at the SGM is entitled to appoint one or more proxies to attend and vote in his/her stead in accordance with the bye-laws of the Company. A proxy need not be a member of the Company.
Where there are joint registered holders of any share, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders shall be present at the meeting personally or by proxy, that one of the holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
The form of proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of such power of attorney or authority must be deposited at the Company’s Hong Kong branch share registrar, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time for holding the SGM, and in default the form of proxy shall not be treated as valid. The completion and return of the form of proxy shall not preclude members from attending and voting in person at the SGM (or any adjournment thereof) should they so desire.
The register of members of the Company will be closed from Tuesday, 18 February 2020 to Friday, 21 February 2020 (both dates inclusive). In order to qualify for attending and voting at the SGM, all transfer forms accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration by 4:30 p.m. on Monday, 17 February 2020.

As at the date of this notice, the Board comprises (i) Mr. Sun Ho and Ms. Hu Taoye as executive Directors; (ii) Mr. Yang Guang, Mr. Li Faguang, Mr. Ji Gang and Mr. Zou Liang as non-executive Directors; and (iii) Ms. Monica Maria Nunes, Mr. Feng Qing and Dr. Gao Jack Qunyao as independent non-executive Directors.

SGM-2

AI assistant

Joy Spreader Group Inc. — Proxy Solicitation & Information Statement 2020

51106_rns_2020-02-04_1733dd3c-bea6-41c2-89a7-6c70e7ce46fc.pdf

AGTech Holdings Limited 亞博科技控股有限公司[*]

(1) CONTINUING CONNECTED TRANSACTIONS AND

(2) NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

AGTech Holdings Limited 亞博科技控股有限公司[*]

(1) CONTINUING CONNECTED TRANSACTIONS AND (2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

ALIBABA COOPERATION FRAMEWORK AGREEMENT

Date

Parties

Duration

Equipment and services to be provided

Service fees, pricing terms and payment terms

Pricing Policy

provided always that:

BASIS FOR DETERMINING THE ANNUAL CAP AMOUNTS

INTERNAL CONTROL MEASURES FOR PRICING AND UTILISATION OF THE ANNUAL CAPS

ANNUAL REVIEW BY AUDITOR AND INDEPENDENT NON-EXECUTIVE DIRECTORS

REASONS FOR AND BENEFITS FOR ENTERING INTO THE CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE BOARD

INFORMATION ABOUT THE PARTIES

The Company, the Group and Beijing GOT

Alibaba China, Alibaba Holding and Alibaba Group

GEM LISTING RULES IMPLICATIONS

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

THE SGM

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

AGTech Holdings Limited 亞博科技控股有限公司[*]

CONTINUING CONNECTED TRANSACTIONS

PLATINUM SECURITIES COMPANY LIMITED

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Alibaba Cooperation Framework Agreement

2. Information about the parties

Information on the Company, the Group and Beijing GOT

Information on Alibaba China, Alibaba Holding and Alibaba Group

3. Principal terms of the Alibaba Cooperation Framework Agreement

Date

Parties

Duration

Equipment and services to be provided

Service fees, pricing terms and payment terms

Pricing Policy

Our views:

4. Basis for determining the annual cap amounts

Our views:

5. Reasons for and benefits for entering into the continuing connected transactions

6. Internal control measures for pricing and utilization of the Annual Caps

Annual review of the continuing connected transactions

RECOMMENDATION

Platinum Securities Company Limited Li Lan

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF DIRECTORS’ INTERESTS

(i) Long positions in the Shares

Number of Shares

APPENDIX

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARE, UNDERLYING SHARE AND DEBENTURES

Long position in the Shares

4. SERVICE CONTRACTS

5. MATERIAL ADVERSE CHANGE

6. COMPETING BUSINESS

7. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

8. QUALIFICATIONS AND CONSENT OF EXPERT

9. DOCUMENTS AVAILABLE FOR INSPECTION

AGTech Holdings Limited 亞博科技控股有限公司[*]

ORDINARY RESOLUTION

“ THAT :

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Joy Spreader Group Inc. Proxy Solicitation & Information Statement 2020

**AGTech Holdings Limited 亞博科技控股有限公司[*]**

**AGTech Holdings Limited 亞博科技控股有限公司[*]**

**AGTech Holdings Limited 亞博科技控股有限公司[*]**

**AGTech Holdings Limited 亞博科技控股有限公司[*]**