Joy Spreader Group Inc. — Regulatory Filings 2019

Dec 11, 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

==> picture [126 x 39] intentionally omitted <==

AGTech Holdings Limited 亞博科技控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

CONTINUING CONNECTED TRANSACTIONS ALIBABA COOPERATION FRAMEWORK AGREEMENT

On 11 December 2019, Beijing GOT, being a wholly-owned subsidiary of the Company, entered into the Alibaba Cooperation Framework Agreement with Alibaba China.

Ali Fortune, the controlling shareholder of the Company, is indirectly held as to 60% by Alibaba Holding. Accordingly, Alibaba China, being an indirect non-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.

1

The Company will convene the SGM for the purpose of seeking approval from the Independent Shareholders on, among other things, the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps. Voting at the SGM will be conducted by poll. Ali Fortune and its associates will abstain from voting at the SGM. The Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders in respect of the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this connection.

A circular containing, among other things, further particulars of the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps, together with the recommendations of the Independent Board Committee, a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, and a notice convening the SGM, is expected to be dispatched to the Shareholders on or before 16 January 2020, as additional time will be required to finalise certain information to be included in the circular.

On 11 December 2019, Beijing GOT, being a wholly-owned subsidiary of the Company, entered into the Alibaba Cooperation Framework Agreement with Alibaba China.

ALIBABA COOPERATION FRAMEWORK AGREEMENT

Date

11 December 2019

Parties

1. Beijing GOT; and

2. 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.

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 ”). 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.

2

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 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 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.

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 will commence 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 Alibaba Smart Equipment to be supplied by the Group to the Alibaba Affiliates; and (ii) the Group’s projections on the unit price and average 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 while giving due consideration to the prevailing price levels for similar products in the market.

3

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;

• (ii) the pricing level and mechanism underlying each tender submission or commercial negotiation with an Alibaba Affiliate;

• (iii) pricing level and mechanism for similar products and services offered by the Group to independent third party customers at comparable scale, where applicable;

• (iv) information on prevailing market prices for similar products and services, where applicable; and

• (v) any other factors to justify the pricing level and mechanism in the absence of the above information, where applicable.

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.

4

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 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, 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.

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.

5

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 digitalised 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 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.

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.

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 a 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.

6

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.

GENERAL

The Company will convene the SGM for the purpose of seeking approval from the Independent Shareholders on, among other things, the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps. Voting at the SGM will be conducted by poll. Ali Fortune and its associates will abstain from voting at the SGM. The Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders in respect of the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this connection.

A circular containing, among other things, further particulars of the Alibaba Cooperation Framework Agreement, the Transactions and the Annual Caps, together with the recommendations of the Independent Board Committee, a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, and a notice convening the SGM, is expected to be dispatched to the Shareholders on or before 16 January 2020, as additional time will be required to finalise certain information to be included in the circular.

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.

7

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.

DEFINITIONS

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

• “associate(s)”, “connected each has the meaning ascribed to it under the GEM person(s)”, “controlling Listing Rules 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 Framework Agreement” 11 December 2019 entered into between Beijing GOT and Alibaba China

8

• “Alibaba Group”

• “Alibaba Holding”

• “Annual Cap(s)”

• “Ant Financial”

• “Ant Financial Group”

• “Beijing GOT”

• “Board”

• “Company”

• “Director(s)”

• “Effective Date”

• “GEM Listing Rules”

• “Group”

• a group of companies comprising Alibaba Holding and its subsidiaries, including Alibaba China

• Alibaba Group Holding Limited, 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)

• the annual cap amount(s) under the Alibaba Cooperation Framework Agreement

• 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 and its subsidiaries

• 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

• the board of Directors

• 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)

• the director(s) of the Company

• 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

• the Rules Governing the Listing of Securities on GEM

• the Company and each of its subsidiaries from time to time

9

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

• an independent board committee of the Board (comprising all the 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 Adviser”

• Platinum Securities Company Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong), 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

• “PRC”

• the People’s Republic of China

• “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

10

“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

By order of the Board AGTech Holdings Limited Sun Ho Chairman & CEO

Hong Kong, 11 December 2019

As at the date of this announcement, 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.

This announcement, 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 announcement 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 announcement misleading.

This announcement will remain on the “Latest Listed Company Information” page of the GEM website operated by the Stock Exchange at www.hkgem.com for at least seven days from the day of its posting and will be published on the website of the Company at www.agtech.com.

11