CHINA ALL ACCESS (HOLDINGS) LIMITED 
By 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.
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CHINA ALL ACCESS (HOLDINGS) LIMITED(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 633) CONTINUING CONNECTED TRANSACTIONS: PROCUREMENT FRAMEWORK AGREEMENTS IN RELATION TO PURCHASE OF PRODUCTION MATERIALS BY THE TARGET GROUP FROM THE ZTE GROUP AND THE ZX GROUP PURCHASE OF PRODUCTION MATERIALS BY THE TARGET GROUP FROM THE ZTE GROUP AND THE ZX GROUP
Reference is made to the announcements of the Company dated 16 November 2012,
21 December 2012 and 3 January 2013 and the circular of the Company dated 4
December 2012 in relation to, inter alia, the Acquisition. The Acquisition
Completion took place on 26 December 2012.
The Target Group has, in the ordinary and usual course of its business, purchased the Procurement Materials from the ZTE Group and the ZX Group for the production use of the Target Group from time to time. Upon the Acquisition Completion, each of ZTE, ZX and ZXD becomes a connected person of the Company by virtue of holding over 10% equity interest in members of the Target Group, and any transaction between the Target Group and the ZTE Group or the ZX Group will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
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On 28 December 2012 and 11 January 2013, the Target Company (for itself and for the benefit of other members of the Target Group) entered into the ZTE Procurement Framework Agreement with ZTE (for itself and for the benefit of the ZTE Group) and the ZX Procurement Framework Agreement with ZX (for itself and for the benefit of the ZX Group) to regulate the continuing purchases of the relevant Procurement Materials by the Target Group from the ZTE Group and the ZX Group, respectively, for a term of three years.
As the annual consideration payable to the ZTE Group and the ZX Group under the Procurement Framework Agreements, on an aggregated basis, for the two years ending 31 December 2014 are expected to represent more than 1% but less than 5% of the applicable percentage ratios under the Listing Rules and are expected to exceed HK$1 million, the transactions contemplated under the Procurement Framework Agreements and the related annual caps, on an aggregated basis, are subject to the reporting and announcement requirements but exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
Reference is made to the announcements of the Company dated 16 November 2012,
21 December 2012 and 3 January 2013 and the circular of the Company dated 4
December 2012 in relation to, inter alia, the Acquisition. The Acquisition Completion took place on 26 December 2012.
The Target Group has, in the ordinary and usual course of its business, purchased the Procurement Materials from the ZTE Group and the ZX Group for the production use of the Target Group from time to time. Upon the Acquisition Completion, each of ZTE, ZX and ZXD becomes a connected person of the Company at the level of subsidiaries by virtue of holding over 10% equity interest in relevant members of the Target Group, and any transaction between the Target Group and the ZTE Group or the ZX Group will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
The Target Company (for itself and for the benefit of other members of the Target Group) has entered into the ZTE Procurement Framework Agreement with ZTE (for itself and for the benefit of the ZTE Group) and the ZX Procurement Framework Agreement with ZX (for itself and for the benefit of the ZX Group) to regulate the continuing purchases of the relevant Procurement Materials by the Target Group from the ZTE Group and the ZX Group, respectively, for a term of three years.
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Details of the ZTE Procurement Framework Agreement and the ZX Procurement
Framework Agreement are set out below.
28 December 2012
Parties
(1) Target Company; and
(2) ZTE
Pursuant to the ZTE Procurement Framework Agreement, the Target Group shall purchase the ZTE Procurement Materials from the ZTE Group from time to time on such terms and conditions and at such prices to be determined by the parties on a case-by-case basis after tendering processes of the Target Group (or in any other manner as may be agreed between the parties to the ZTE Procurement Framework Agreement). Each sales and purchase transaction under the ZTE Procurement Framework Agreement shall be reduced into separate contract, as agreed upon between the relevant member of the Target Group and that of the ZTE Group, provided that such sales shall be on normal commercial terms.
The ZTE Procurement Framework Agreement is for a term of three years commencing from the date of the Acquisition Completion.
For each of the years ended 31 December 2009, 2010 and 2011 and the six months ended 30 June 2012, the aggregate amount of purchases by the Target Group from the ZTE Group was approximately RMB3,000, nil, RMB20 million and RMB16.8 million, respectively. The Directors expect that the aggregate annual consideration payable by the Target Group to the ZTE Group for the purchases of the ZTE Procurement Materials for the two years ending 31 December 2014 will not exceed RMB50.5 million and RMB74 million, respectively.
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The above proposed annual caps are determined by the Directors based on the following major factors:
(1) the historical amount of purchases of the ZTE Procurement Materials by the
Target Group from the ZTE Group for each of the three years ended 31 December
2011 and the six months ended 30 June 2012; and
(2) estimated demand for the ZTE Procurement Materials of the Target Group for the two years ending 31 December 2014 taking into account the anticipated business growth and production capacity of the Target Group, the anticipated demand of the ZTE Procurement Materials by the Target Group, and the availability of alternative suppliers for similar materials.
11 January 2013
Parties
(1) Target Company; and
(2) ZX
Pursuant to the ZX Procurement Framework Agreement, the Target Group shall purchase the ZX Procurement Materials from the ZX Group from time to time on such terms and conditions and at such prices to be determined by the parties on a case-by-case basis after tendering processes of the Target Group (or in any other manner as may be agreed between the parties to the ZX Procurement Framework Agreement). Each sales and purchase transaction under the ZX Procurement Framework Agreement shall be reduced into separate contract, as agreed upon between the relevant member of the Target Group and that of the ZX Group, provided that such sales shall be on normal commercial terms.
The ZX Procurement Framework Agreement is for a term of three years commencing from the date of the ZX Procurement Framework Agreement.
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For each of the years ended 31 December 2009, 2010 and 2011 and the six months ended 30 June 2012, the aggregate amount of purchases by the Target Group from the ZX Group was approximately RMB0.9 million, RMB4.9 million, RMB5.8 million and RMB8.3 million, respectively. The Directors expect that the aggregate annual consideration payable by the Target Group to the ZX Group for the purchases of the ZX Procurement Materials for the two years ending 31 December 2014 will not exceed RMB18 million and RMB26 million, respectively.
The above proposed annual caps are determined by the Directors based on the following major factors:
(1) the historical amount of purchases of the ZX Procurement Materials by the
Target Group from the ZX Group for each of the three years ended 31 December
2011 and the six months ended 30 June 2012; and
(2) estimated demand for the ZX Procurement Materials of the Target Group for the two years ending 31 December 2014 taking into account the anticipated business growth and production capacity of the Target Group, the anticipated demand of the ZX Procurement Materials by the Target Group, and the availability of alternative suppliers for similar materials.
The Target Group has, in the ordinary and usual course of its business, purchased the Procurement Materials from the ZTE Group and the ZX Group for the production use of the Target Group from time to time. While there are alternative suppliers of similar materials available to the Target Group, it is expected that the Target Group will continue to purchase the Procurement Materials from the ZTE Group and the ZX Group following the Acquisition Completion as they have a proven track record as the Target Group's suppliers and the Target Group can secure a reliable supply of production materials with consistent quality.
On the above basis, the Directors (including the independent non-executive Directors) consider that the Enlarged Group (following the Acquisition Completion) will benefit from each of the ZTE Procurement Framework Agreement and the ZX Procurement Framework Agreement and the transactions contemplated thereunder.
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The terms and conditions of each of the ZTE Procurement Framework Agreement and the ZX Procurement Framework Agreement were negotiated between the parties on an arm's length basis. The Directors (including the independent non-executive Directors) are of the view that the terms and conditions of each of the ZTE Procurement Framework Agreement and the ZX Procurement Framework Agreement are on normal commercial terms that are fair and reasonable and the continuing connected transactions under each of the ZTE Procurement Framework Agreement and the ZX Procurement Framework Agreement will be conducted in the ordinary and usual course of business of the Enlarged Group and in the interests of the Company and the Shareholders as a whole.
The Directors (including the independent non-executive Directors) are also of the view that the proposed annual caps for the continuing connected transactions under each of the ZTE Procurement Framework Agreement and the ZX Procurement Framework Agreement for the two years ending 31 December 2014 are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
The Group is principally engaged in provision of integrated information communication application solution and application services. The Group designs and develops information communication application solutions for customers. The Group's application solutions include wireless data communication application solutions and services, satellite communication application solutions and services, and call centre application solutions and services.
The Target Company is the holding company of the Target Group and is principally engaged in investment holding. The Target Group is principally engaged in research and development and production of a wide spectrum of products and parts in the supply chain of various types of mobile terminals. Major products of the Target Group are mobile terminals and display panels. The Target Group also manufactures and sells various parts (such as chargers, keypads, casings, batteries and power adaptors) which are widely applicable in mobile phones and other types of mobile terminals.
ZTE is a company established in the PRC whose H shares are listed on the main board of the Stock Exchange, and whose A shares are listed on the Shenzhen Stock Exchange. The ZTE Group is principally engaged in the design, development, production, distribution and installation of a broad range of advanced telecommunications systems and equipment, including carriers' networks, terminals, and telecommunications software systems and other products.
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Based on publicly available information, ZX is a limited company established in the PRC and is the controlling shareholder of ZTE holding about 30.76% of the issued shares of ZTE. The scope of business of ZX include: production of programmed switchboard cabinets, telephones and related components, electronic products; import and export operations (in accordance with the requirements under document Shen Mao Guan Shen Zheng Zi No. 727); treatment of waste water, toxic fumes and noise and related technical services, research and technical development of environmental protection equipment; production of continuous monitoring smoke systems; manufacturing of mining equipment; manufacturing of power transmission and distribution and control equipment; computer systems integration; development of digital processing system technologies and technological research and development for related technical services. The ZX Group is a supplier to ZTE Group of raw materials and components comprising primarily telecommunications cabinets, cases and racks, distribution frames and shelters.
Upon the Acquisition Completion, each of ZTE, ZX and ZXD becomes a connected person of the Company at the level of subsidiaries by virtue of holding over 10% equity interest in relevant members of the Target Group, and any transaction between the Target Group and the ZTE Group or the ZX Group will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As the annual consideration payable to the ZTE Group and the ZX Group under the Procurement Framework Agreements, on an aggregated basis, for the two years ending 31 December 2014 are expected to represent more than 1% but less than 5% of the applicable percentage ratios under the Listing Rules and are expected to exceed HK$1 million, the transactions contemplated under the Procurement Framework Agreements and the related annual caps, on an aggregated basis, are subject to the reporting and announcement requirements but exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
None of the Directors had a material interest in, and therefore none of them was required to abstain from voting on the relevant Board resolutions for approving, the Procurement Framework Agreements and the transactions contemplated thereunder (including the proposed annual caps).
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In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:
" Acquisition" the acquisition of the Sale Interest pursuant to the terms and conditions of the Equity Transfer Agreement
"Acquisition
Completion"
the completion of the change of registration of the Sale Interest pursuant to the terms of the Equity Transfer Agreement so that Guangdong All Access becomes the registered holder of the Sale Interest pursuant to the
Acquisition
"associate(s)" has the meaning ascribed thereto in the Listing Rules
"Board" the board of Directors
"Company" China All Access (Holdings) Limited, a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on the main board of the Stock Exchange
"connected person(s)" has the meaning ascribed thereto in the Listing Rules
"Directors" directors of the Company
"Enlarged Group" the Group as enlarged by the Acquisition
"Equity Transfer
Agreement"
the agreement dated 16 November 2012 and entered into between Guangdong All Access and ZTE in respect of
the Acquisition
"Group" the Company and its subsidiaries
"Guangdong All
Access"
(Guangdong All Access Noter Communication Technology Company Limited*), a company established in the PRC and a wholly-owned subsidiary of the Company, being the purchaser of the Sale Interest as named in the Equity
Transfer Agreement
"Hong Kong" the Hong Kong Special Administrative Region of the
PRC
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"Listing Rules" the Rules Governing the Listing of Securities on the
Stock Exchange
"PRC" the People's Republic of China, which for the purpose of this announcement and unless otherwise provided herein, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
"Procurement
Framework
Agreements"
the ZTE Procurement Framework Agreement and the
ZX Procurement Framework Agreement
"Procurement
Materials"
the ZTE Procurement Materials and the ZX
Procurement Materials
"Sale Interest" 51% equity interest in the entire registered capital of the
Target Company
"Shareholder(s)" holder(s) of Shares
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Target Company" (Shenzhen City Changfei Investment Company Limited*), a limited liability company established in the PRC and a 51% owned subsidiary of the Company
"Target Group" the Target Company and its subsidiaries
"ZTE" (ZTE Corporation), a joint stock limited company established in the PRC, whose shares are listed on the main board of the Stock Exchange (stock code: 763) and on the Shenzhen Stock Exchange (stock code: 000063)
"ZTE Group" ZTE and its subsidiaries
"ZTE Procurement
Framework
Agreement"
the agreement dated 28 December 2012 and entered into between the Target Company (for itself and for the benefit of other members of the Target Group) and ZTE (for itself and for the benefit of other members of the ZTE Group) in respect of the purchases of the ZTE Procurement Materials by the Target Group from the ZTE Group for a term of three years commencing on the date of the Acquisition Completion
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"ZTE Procurement
Materials"
the production materials, including but not limited to central processing units (CPUs), antenna parts, random access memories (RAMs), and other electronic parts, units and devices, procured by the Target Group from the ZTE Group
"ZX"
Limited*), a limited company established in the PRC
and the controlling shareholder of ZTE
"ZXD" (Shenzhen Zhongxing Xindi Telecommunications Equipment Company, Limited*) a limited company established in the PRC and a subsidiary of ZX
"ZX Group" ZX and its subsidiaries
"ZX Procurement
Framework
Agreement"
the agreement dated 11 January 2013 and entered into between the Target Company (for itself and for the benefit of other members of the Target Group) and ZX (for itself and for the benefit of other members of the ZX Group) in respect of the purchases of the ZX Procurement Materials by the Target Group from the ZX Group for a term of three years commencing on the date
of the agreement
"ZX Procurement
Materials"
the production materials, including but not limited to display panels, power chargers, keypads and other electronic parts, units and devices, and packaging boxes
procured by the Target Group from the ZX Group
"RMB" Renminbi, the lawful currency of the PRC "%" per cent.
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* The English translation of the Chinese name is for information purposes only, and should not be regarded as the official English translation of such name.
Hong Kong, 14 January 2013
By order of the Board
China All Access (Holdings) Limited Shao Kwok KeungChief Executive Officer
As at the date of this announcement, the executive Directors are Mr. Chan Yuen Ming, Mr. Shao Kwok Keung, Mr. Zhao Qing An and Mr. Xiu Zhi Bao; and the independent non-executive Directors are Mr. Pun Yan Chak, Mr. Wong Che Man Eddy and Mr. Lam Kin Hung Patrick.
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