Skyworth Group Limited — Capital/Financing Update 2021

Jul 28, 2021

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.

SKYWORTH GROUP LIMITED 創維集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 00751)

MAJOR TRANSACTION

DISPOSAL OF EQUITY INTEREST IN THE TARGET

THE DISPOSAL

The Board is pleased to announce that on 28 July 2021, Skyworth RGB, an indirect wholly-owned subsidiary of the Company, entered into the Disposal Agreement with the Purchaser, pursuant to which Skyworth RGB has agreed to sell, and the Purchaser has agreed to acquire, the Sale Shares, which represents 10% of the equity interest in the Target, at a cash consideration of RMB83 million.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal, when aggregated with the Previous Disposals, is more than 25% but all of them are less than 75%, the Disposal constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules.

THE SGM

The SGM will be held for Shareholders to consider and, if thought fit, approve the Disposal Agreement and the transactions contemplated thereunder. A circular containing, among other things, further details of the Disposal together with a notice to convene the SGM and the accompanying proxy form, is expected to be despatched to the Shareholders on or before 18 August 2021.

Shareholders and potential investors of the Company should be aware that the Disposal Agreement is conditional upon, among other things, the Shareholders’ approval at the SGM and consequently, the transactions contemplated under the Disposal Agreement may or may not proceed. Accordingly, Shareholders and potential investors of the Company are advised to exercise caution when they deal in the Shares or other securities of the Company.

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THE DISPOSAL

The Board is pleased to announce that on 28 July 2021, Skyworth RGB, an indirect wholly-owned subsidiary of the Company, entered into the Disposal Agreement with the Purchaser, pursuant to which Skyworth RGB has agreed to sell, and the Purchaser has agreed to acquire, the Sale Shares, which represents 10% of the equity interest in the Target, at a cash consideration of RMB83 million.

The principal terms of the Disposal Agreement are set out as follows:

Date: 28 July 2021 Vendor: Skyworth RGB, an indirect wholly-owned subsidiary of the Company. Purchaser: 科學城（廣州）投資集團有限公司 (Science City (Guangzhou) Investment Group Co. Ltd.), a company established under the laws of the PRC which is wholly-owned by 廣州經濟技術開發區管理委員 會 (Guangzhou Hi-Tech Industry Development Zone Administration Committee), an organisation under the PRC government. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owners are Independent Third Parties. Subject matter: 10% equity interest in the Target, namely 廣州創維平面顯示科技有 限公司 (Guangzhou Flat Display Technology Co., Ltd.) which is a company established under the laws of the PRC, the principal business of which is the leasing of the factory premises owned by it. As at the date of this announcement, the Target owns a total of 15 industrial premises located at 中國廣州開發區開達路99號 (No. 99 Kaida Road, Guangzhou City Development Zone, the PRC) with lot number KXC-K1-3, with a total area of approximately 172,404 square meters including public utilities and facilities.

Pursuant to the Disposal Agreement, the application for change in shareholders in the Target is required to be made with the relevant administration for industry and commerce within 10 days after the date on which the Condition is satisfied.

Upon Completion, the Company will cease to hold any equity interest in the Target.

The audited net asset value of the Target as at 31 December 2020 amounted to approximately RMB244.0 million. The audited carrying value of the Target’s land and buildings and land use right as at 31 December 2020 amounted to approximately RMB173.8 million and RMB58.0 million respectively, and approximately RMB231.8 million in total.

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The net profit before and after taxation of the Target for the years ended 31 December 2019 and 31 December 2020 are as follows:-

	Financial	year ended
	31 December	31 December
	2020	2019
	Approx.	Approx.
	RMB million	RMB million
	(audited)	(audited)
Net profit before taxation	121.0	39.50
Net profit after taxation	100.1	38.10

Condition precedent:

Consideration:

Completion under the Disposal Agreement is conditional upon compliance by the Company with the relevant requirements under the Listing Rules in relation to the Disposal, including the obtaining of the requisite shareholders’ approval at the SGM.

The Consideration of RMB83 million under Disposal Agreement is to be paid in cash in two instalments as follows:-

• (i) Approximately RMB42.3 million, representing 51% of the Consideration, is payable by the Purchaser upon satisfaction of the condition precedent as stated above and within 10 business days after the relevant administration for industry and commerce in the PRC acknowledging receipt of application regarding the change of ownership in the Sale Shares; and

• (ii) Approximately RMB40.7 million, representing 49% of the Consideration is payable by the Purchaser within 10 business days after the date of Completion (being the date on which the transfer of the Sale Shares is approved by the relevant administration for industry and commerce in the PRC).

The Consideration underlying the Disposal Agreement has been negotiated between Skyworth RGB and the Purchaser on an arm’s length basis taking into account primarily the net asset value of the Target as at 31 December 2020 and its financial performance for the year ended 31 December 2020.

Security:

Skyworth RGB’s obligations under the Disposal Agreement will also be guaranteed by the Guarantor, which is an indirect wholly-owned subsidiary of the Company, by way of a separate corporate guarantee.

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INFORMATION ON THE PURCHASER

The Purchaser, namely 科學城（廣州）投資集團有限公司 (Science City (Guangzhou) Investment Group Co. Ltd.), is a company established under the laws of the PRC which is wholly-owned by 廣州經濟技 術開發區管理委員會 (Guangzhou Hi-Tech Industry Development Zone Administration Committee), an organisation of the PRC government.

According to information available to the Company, the Purchaser is principally engaged in the provision of services in project investments and construction and infrastructure.

FINANCIAL IMPACT OF THE DISPOSAL

Based on (i) the unaudited carrying value of the Target in the Company’s consolidated management accounts as at 30 June 2021 of approximately RMB83 million and (ii) the consideration under the Disposal Agreement, it is expected that the Company will not record any gain or loss in respect of the Disposal, subject to audit. The net proceeds from the Disposal are expected to be approximately RMB80 million, which are expected to be applied towards funding the Group’s other investments in its ordinary course of business.

Upon Completion, the Company will cease to have any equity interest in the Target.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Company and the Guarantor are investment holding companies, and Skyworth RGB is principally engaged in the manufacture and sales of consumer products.

The Disposal represents a complete divestment by the Group of its investment in the Target as part of the Group’s continual effort in optimising its investment asset portfolio. The Directors are of the view that a divestment from the Target will allow the Group to redeploy the proceeds from the Disposal to enhance the Group’s liquidity position and provide funding for the Group’s other investments (including a manufacturing plant of the Group based in Guangzhou, the PRC).

Accordingly, the Directors are of the view that the Disposal is in the interests of the Company and the Shareholders as a whole, and that the terms of the Disposal Agreement are fair and reasonable.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal, when aggregated with the Previous Disposals, is more than 25% but all of them are less than 75%, the Disposal constitutes a major transaction for the Company and is therefore subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules.

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THE SGM

The SGM will be held for Shareholders to consider and, if thought fit, approve the Disposal Agreement and the transactions contemplated thereunder.

A circular containing, among other things, further details of the Disposal together with a notice to convene the SGM and the accompanying proxy form, is expected to be despatched to the Shareholders on or before 18 August 2021. Mr. Wong Wang Sang, Stephen, the controlling shareholder of the Company (within the meanings of the Listing Rules), has stated to the Company his intention to vote (by himself and through entity controlled by him) in favour of the Disposal at the SGM and has confirmed the same in writing.

Shareholders and potential investors of the Company should be aware that the Disposal Agreement is conditional upon, among other things, the Shareholders’ approval at the SGM and consequently, the transactions contemplated under the Disposal Agreement may or may not proceed. Accordingly, Shareholders and potential investors of the Company are advised to exercise caution when they deal in the Shares or other securities of the Company.

DEFINITIONS

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

• “Board” the board of Directors; “Company” Skyworth Group Limited, a company incorporated in Bermuda with limited liability and the ordinary shares of which are listed on the main board of the Stock Exchange (stock code: 00751);

• “Completion” the completion of the Disposal pursuant to the terms and conditions of the Disposal Agreement;

• “connected person” has the meaning ascribed to it under the Listing Rules; “Consideration” the consideration for the sale and purchase of the Sale Shares pursuant to the terms of the Disposal Agreement;

• “Directors” the directors of the Company; “Disposal” the disposal of the Sale Shares in the Target by Skyworth RGB as contemplated under the Disposal Agreement;

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“Disposal Agreement”	the sale and purchase agreement dated 28 July 2021 entered into
	between Skyworth RGB and the Purchaser in respect of the sale and
	purchase of Sale Shares;
“Group”	the Company and its subsidiaries;
“Guarantor”	創維集團有限公司(Chuangwei Group Co., Ltd.*), an indirect wholly-
	owned subsidiary of the Company established under the laws of the
	PRC and is the guarantor in respect of Skyworth RGB’s obligations
	under the Disposal Agreement;
“Independent Third Party(ies)”	person(s) who are independent from the Company and its connected
	persons;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange;
“PRC”	the People’s Republic of China;
“Previous Disposals”	the disposals to the Purchaser (i) by an indirect wholly-owned
	subsidiary of the Company of the entire equity interests in廣州創維電
	子有限公司(Guangzhou Skyworth Electronics Co., Ltd.*), a company
	established under the laws of the PRC; and (ii) by Skyworth RGB of
	the 90% equity interest held by it in the Target, details of which are set
	out in the Company’s announcements dated 12 June 2020 and 16 April
	2021, respectively;
“Purchaser”	科學城（廣州）投資集團有限公司(Science City (Guangzhou)
	Investment Group Co. Ltd.*), a company established under the laws of
	the PRC and is an Independent Third Party;
“RMB”	Renminbi, the lawful currency of the PRC;
“Sale Shares”	10% equity interest in the Target as held by Skyworth RGB, being the
	subject of the transactions underlying the Disposal Agreement;
“SGM”	a special general meeting of the Shareholders scheduled to be held for
	the purpose of considering, and if thought fit, approving, among other
	things, the Disposal;

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“Shareholders”

shareholders of the Company;

“Skyworth RGB” 深圳創維-RGB 電子有限公司 (Shenzhen Chuangwei-RGB Electronics Co., Ltd.*), a company established under the laws of the PRC and an indirect wholly-owned subsidiary of the Company, which is the vendor of the Sale Shares under the Disposal Agreement;

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited;

“Target” 廣州創維平面顯示科技有限公司 (Guangzhou Flat Display Technology Co., Ltd.*), a company established under the laws of the PRC and in which Skyworth RGB holds as to 10% of its equity interest as of the date of this announcement; and

“%” per cent.

By order of the Board Skyworth Group Limited Lai Weide Chairman of the Board

Hong Kong, 28 July 2021

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

• For identification purposes only

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