China Display Optoelectrncs Tech Hld : (1) RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS MASTER FINANCIAL SERVICES (2020 RENEWAL) AGREEMENT AND (2) MAJOR TRANSACTION AND ADVANCE TO AN ENTITY IN RESPECT OF THE DEPOSIT SERVICES UNDER THE MASTER FINANCIAL SERVICES (2020 RENEWAL) AGREEMENT

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China Display Optoelectronics Technology Holdings Limited

華顯光電技術控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 334)

(1) RENEWAL OF

EXISTING CONTINUING CONNECTED TRANSACTIONS

MASTER FINANCIAL SERVICES

(2020 RENEWAL) AGREEMENT

AND

1. MAJOR TRANSACTION AND ADVANCE TO AN ENTITY IN RESPECT OF THE DEPOSIT SERVICES

UNDER THE MASTER FINANCIAL SERVICES

(2020 RENEWAL) AGREEMENT

MASTER FINANCIAL SERVICES (2020 RENEWAL) AGREEMENT

The Board is pleased to announce that the Company, TCL Corporation and Finance Company had on 2 December 2019 entered into the Master Financial Services (2020 Renewal) Agreement for a term, subject to Shareholders' approval, commencing from 1 January 2020 to 31 December 2022, which are on substantially similar terms of the existing Master Financial Services (2017 Renewal) Agreement with a few amendments to continue the existing continuing connected transactions thereunder.

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LISTING RULES IMPLICATIONS

TCL Corporation, the ultimate controlling Shareholder of the Company, currently indirectly holds approximately 64.21% of the number of issued Shares of the Company, and is a connected person of the Company under the Listing Rules. Finance Company, being a Subsidiary of TCL Corporation, is also a connected person of the Company. Therefore, the transactions contemplated under the Master Financial Services (2020 Renewal) Agreement constitute continuing connected transactions of the Company.

Notwithstanding the respective interest and/or roles of certain Directors in TCL Corp Group, in particular (i) Mr. Liao Qian who also holds various positions in TCL Corp Group, namely an executive director, the chief of staff, a vice president and the secretary of the board of directors of TCL Corporation; (ii) Mr. Zhao Jun who is also a director and the general manager of Wuhan China Star Optoelectronics Technology Co., Ltd*（武漢 華星光電技術有限公司）, the senior vice president, the general manager of large-size business group and the general manager of TV division of CSOT, and the vice president of TCL Corporation, and (iii) and Mr. Ouyang Hongping who is interested in 26,600 shares in TCL Corporation (representing approximately 0.0002% of the issued share capital of TCL Corporation), as each of their respective direct interest in TCL Corp Group is either by virtue of common directorship/senior management role (in the case of Mr. Liao Qian and Mr. Zhao Jun) or the immaterial interest in shares of TCL Corp Group (in the case of Mr. Ouyang Hongping), their respective direct or indirect interests in TCL Corp Group are insignificant and that none of the TCL Associates are associates of any of the Directors, none of them is considered as having a material interest in the transactions contemplated under the Master Financial Services (2020 Renewal) Agreement, therefore all Directors are entitled to vote on the Board resolution for considering and approving the Master Financial Services (2020 Renewal) Agreement pursuant to the Company's bye-laws.

As one or more of the applicable percentage ratios (other than the profits ratio) with reference to the annual caps of the Master Financial Service (2020 Renewal) Agreement exceed 5%, the continuing connected transactions contemplated thereunder are subject to the reporting, announcement, Shareholders' approval and annual review requirements under Chapter 14A of the Listing Rules.

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As one or more of the applicable percentage ratios in relation to the Deposit Services under the Master Financial Services (2020 Renewal) Agreement exceed 25% and the assets ratio of the Deposit Services exceeds 8%, in addition to being continuing connected transactions, the Deposit Services also constitute major transactions of the Company and are subject to the relevant major transaction requirements under Chapter 14 of the Listing Rules; and the Deposit Services further constitute advances to an entity and are subject to the relevant disclosure requirements under Chapter 13 of the Listing Rules.

An Independent Board Committee has been established to advise the Shareholders on the terms of and the proposed annual caps of the Master Financial Services (2020 Renewal) Agreement. The Company has appointed the Independent Financial Adviser to advise the Independent Board Committee and the Shareholders in this regard. A circular containing, among other things, further details of the Master Financial Services (2020 Renewal) Agreement, letters from Independent Board Committee and the Independent Financial Adviser, a notice convening the SGM and other information as required under the Listing Rules, will be despatched to the Shareholders on or before 9 December 2019.

High Value Ventures Limited, an indirect Subsidiary of TCL Corporation is directly interested in 1,357,439,806 Shares, representing approximately 64.21% of the number of issued Shares of the Company. Hence, High Value Ventures Limited, being a TCL Associate and holder of 1,357,439,806 Shares, will abstain from voting on the resolution in respect of the Master Financial Services (2020 Renewal) Agreement to be put forward at the SGM. Save as the aforesaid, the Directors are not aware of any other Shareholders who are required to abstain from voting on the resolution in respect of the Master Financial Services (2020 Renewal) Agreement to be put forward at the SGM.

MASTER FINANCIAL SERVICES (2020 RENEWAL) AGREEMENT

The Company had entered into the Master Financial Services (2017 Renewal) Agreement on 18 August 2017, which will expire on 31 December 2019. As the Company wishes to continue the continuing connected transactions contemplated thereunder with certain modifications, on 2 December 2019 the Company entered into the Master Financial Services (2020 Renewal) Agreement, which is substantially similar in nature as the Master Financial Services (2017 Renewal) Agreement with certain amendments.

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The major differences between the Master Financial Services (2020 Renewal) Agreement and the Master Financial Services (2017 Renewal) Agreement are that under the Master Financial Services (2020 Renewal) Agreement (as compared to the Master Financial Services (2017 Renewal) Agreement):

1. Finance Company (HK) is no longer a party to the Master Financial Services (2020 Renewal) Agreement; and
2. China Display Qualified Members may deposit money with Finance Company but not with Finance Company (HK).

As the Group no longer intends to deposit money with Finance Company (HK), Finance Company (HK) was not made a party to the Master Financial Services (2020 Renewal) Agreement. In any event, Finance Company (HK) ceased to be a connected person of the Company after the completion of the restructuring ("Restructuring") carried out by TCL Corporation was completed on 31 March 2019. The Restructuring involved the spin off, among others, of all the equity interests held by TCL Corporation in TCL Industries, together with those equity interests in various associates (including Finance Company (HK)) to TCL Holdings, which is not a connected person of the Company.

China Star Optoelectronics International (HK) Limited and TCL Technology Investments Limited are TCL Financial Services Associates that provide Financing Services outside the PRC.

Set out below are major terms of the Master Financial Services (2020 Renewal) Agreement:

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1. for deposits made outside the PRC, not be lower than the highest of:
2. 1. the interest rates for the same type of deposits offered by major commercial banks located in the place where the relevant China Display Qualified Member is located; and
   2. the interest rates for the same type of deposits offered by the Finance Company to any other members of the TCL Corp Group (including the Group); and

other terms and conditions offered by Finance Company as a whole shall also not be less favourable than those offered by major commercial banks located in the place where the relevant China Display Qualified Member is located (see Note 1) and the Finance Company to any other members of the TCL Corp Group (including the Group) and shall be on normal commercial terms.

TCL Corporation undertakes and will procure all its TCL Financial Services Associates to jointly and severally with TCL Corporation undertake with the Group that at any time during the term of the Master Financial Services (2020 Renewal) Agreement, the maximum amount of loans, financing and guarantees available under the facility line under the Master Financial Services (2020 Renewal) Agreement provided by TCL Financial Services Associates to China Display Qualified Members shall not be less than the total amount of deposits (including normal cash deposit and deposit of cash or bank instruments as security) placed by the China Display Qualified Members with Finance Company. (see Note 2)

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If any China Display Qualified Member demands repayment of any money deposited by it with Finance Company in accordance with the relevant terms and procedures and Finance Company fails to follow the repayment demand, such China Display Qualified Member shall then have the right to:

1. offset the relevant outstanding deposit amount against up to the same amount of any outstanding loans owed by it and/ or any financing provided to it by TCL Financial Services Associates and/or TCL Corporation; and/or
2. transfer the right mentioned in (a) above to other China Display Qualified Members, so that other China Display Qualified Members have the right to offset the relevant outstanding deposit amount against up to the same amount of any outstanding loans owed by them and/or any financing provided to them by TCL Financial Services Associates and/ or TCL Corporation; and/or
3. request TCL Corporation to repay the outstanding deposit amount on behalf of Finance Company in full.

Upon enquiry from any China Display Qualified Member, Finance Company shall within one business day provide an offer specifying the interest rates and terms of Deposit Services (including but not limited to whether the deposit can be withdrawn before its maturity, as well as the notice period of such withdrawal).

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Financing Services (see Note 3)

Any China Display Qualified Member may from time to time and in its absolute discretion request any Financing Services (including bills discounting services) from TCL Financial Services Associates.

If any of the TCL Financial Services Associates decides to provide any Financing Services to a China Display Qualified Member within the PRC, the interest rates charged by such TCL Financial Services Associate shall not be higher than the lowest of:

1. the maximum interest rates promulgated by the PBOC from time to time in respect of same type of financing services;
2. the interest rates offered by major commercial banks of the PRC for same type of financing services; and
3. the interest rates for same type of financing services provided by such TCL Financial Services Associate to any other members of the TCL Corp Group (including the Group) with the same credit rating, and the other terms and conditions offered by such TCL Financial Services Associate in respect of the Financing Services as a whole shall not be less favourable than those offered by other major commercial banks and by TCL Financial Services Associates to any other members of the TCL Corp Group (including the Group) with the same credit rating in respect of same type of financing services and shall be on normal commercial terms.

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If any of the TCL Financial Services Associates decides to provide any Financing Services to a China Display Qualified Member outside the PRC, the interest rates charged by such TCL Financial Services Associate shall not be higher than the lower of

1. the interest rates offered by major commercial banks located in the place where the relevant China Display Qualified Member is located for same type of financing services; and
2. the interest rates for same type of financing services provided by such TCL Financial Services Associate to any other members of the TCL Corp Group (including the Group) with the same credit rating, and the other terms and conditions offered by such TCL Financial Services Associate in respect of the Financing Services as a whole shall be on normal commercial terms and shall not be less favourable than those offered by such TCL Financial Services Associate to any other members of the TCL Corp Group (including the Group) with the same credit rating and major commercial banks located in the place where the relevant China Display Qualified Member is located in respect of same type of financing services.

Upon enquiry from any China Display Qualified Member, the respective TCL Financial Services Associate shall within three business days provide an offer specifying the interest rates and terms of Financing Services. TCL Financial Services Associates and the relevant China Display Qualified Members may enter into specific agreements in compliance with the Listing Rules in respect of any Financing Services to be provided with a view to setting out the detailed terms of the transactions as long as such terms comply with the requirements of the Listing Rules and the Master Financial Services (2020 Renewal) Agreement. TCL Financial Services Associates may request China Display Qualified Member(s) to provide security to TCL Financial Services Associates in respect of the Financing Services provided by Finance Company.

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Other Financial Services

Any China Display Qualified Member may from time to time and in its absolute discretion request TCL Financial Services Associates to provide Other Financial Services, including, among other things, financial advisory services, settlement advisory services, insurance agency services, agency lending and borrowings and any other services approved by relevant regulatory authority.

The fees charged by TCL Financial Services Associates in respect of provision of Other Financial Services within the PRC shall not be higher than the lowest of:

1. the fees promulgated by PBOC (if applicable) for relevant services from time to time;
2. the fees charged by major commercial banks of the PRC in respect of relevant services; and
3. the fees charged for the relevant services offered by TCL Financial Services Associates to any other members of the TCL Corp Group (including the Group) with the same credit rating. Other terms and conditions of the Other Financial Services offered by TCL Financial Services Associates within the PRC shall not be less favourable than those offered by PBOC, major commercial banks of the PRC and by TCL Financial Services Associates to any other members of the TCL Corp Group (including the Group) with the same credit rating for the relevant services and shall be on normal commercial terms.

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The fees charged by TCL Financial Services Associates in respect of provision of Other Financial Services outside the PRC shall not be higher than the lower of:

1. the fees promulgated by the major commercial banks located in the place where the relevant China Display Qualified Member is located for relevant services; and
2. the fees charged for the relevant services offered by TCL Financial Services Associates to any other members of the TCL Corp Group (including the Group) with the same credit rating. Other terms and conditions of the Other Financial Services offered by TCL Financial Services Associates outside the PRC shall not be less favourable than those offered by the major commercial banks located in the place where the relevant China Display Qualified Member is located and by TCL Financial Services Associates to any other members of the TCL Corp Group (including the Group) with the same credit rating for the relevant services and shall be on normal commercial terms.

The relevant China Display Qualified Member may from time to time determine in its absolute discretion to use Other Financial Services provided by TCL Financial Services Associates or any other independent financial institutions.

The relevant China Display Qualified Member may enter into separate written agreements with TCL Financial Services Associates in relation to the provision of the specific services under Other Financial Services with a view to setting out the detailed terms of the transactions, as long as such terms comply with the requirements of the Listing Rules and the Master Financial Services (2020 Renewal) Agreement.

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Promotion Services

Any member of the Group may from time to time and in its absolute discretion provide Promotion Services to and receive Promotion Fee from TCL Financial Services Associates in accordance with the Listing Rules and the Master Financial Services (2020 Renewal) Agreement.

TCL Financial Services Associates and the relevant member(s) of the Group may enter into specific agreements in respect of any Promotion Services to be provided and Promotion Fee to be received with a view to setting out the detailed terms of the transactions, as long as such terms comply with the requirements of the Listing Rules and the Master Financial Services (2020 Renewal) Agreement.

Promotion Fee offered by members of the Group in respect of the Promotion Services to be provided shall not be less favourable than those offered by members of the Group to any other Independent Third Party in respect of same type of services and those offered by any other members of the TCL Corp Group to TCL Financial Services Associates in respect of same type of services and shall be on normal commercial terms.

TCL Corporation's TCL Corporation undertakes with the Company, among others,

undertakings: that:

1. it will procure TCL Financial Services Associates to perform its obligations under the Master Financial Services (2020 Renewal) Agreement; and
2. in case TCL Financial Services Associates experience any financial difficulties, TCL Corporation will, subject to internal approvals and the applicable rules and regulations, inject capital to TCL Financial Services Associates based on the needs of TCL Financial Services Associates.

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Notes:

1. The major commercial banks of PRC include (but not limited to) Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank. The major commercial banks located in the place where the relevant China Display Qualified Member is located include (but not limited to), in the case of Hong Kong, Bank of China (Hong Kong), The Hongkong and Shanghai Banking Corporation and China Construction Bank (Asia).
2. With this undertaking, China Display Qualified Members could be assured that facilities available to them under the Master Financial Services (2020 Renewal) Agreement could be of at least the amount of deposits they maintain with Finance Company.
3. Whilst it is not a term of the Master Financial Services (2020 Renewal) Agreement, the Group has no intention to obtain secured loans, financing and guarantees involving pledge of the Group's assets as security under the Master Financial Services (2020 Renewal) Agreement.

General Settlement Terms of Services

Deposit Services

Generally, the agreed deposit account maintained by China Display Qualified Member(s) with Finance Company is akin to a current account, such that China Display Qualified Member(s) will make deposit and withdrawal from such account on a daily basis (provided that the deposit terms offered by Finance Company to the Group are no less favourable than those offered by Independent Third Parties). Interest for the period starting on the 22nd day of the previous month to the 21st day of the current month will be settled on the 21st day of each month.

Financing Services

Bills generally have a credit period of 30 to 90 days. Cash to be received by China Display Qualified Members on discounting the bill will normally be settled on the same day or the next business day.

Other Financial Services

Letters of credit are normally issued upon the supplier having submitted all requisite documents to the relevant TCL Financial Services Associate.

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Nature of Promotion Services

The Promotion Services to be provided by the members of the Group are primarily introducing, promoting to and/or recommending its suppliers and customers who have sold/ purchased products to/from the Group to make use of the financing services of TCL Financial Services Associates and, in the process, assisting TCL Financial Services Associates to verify the authenticity of the client information and financing related materials provided by the suppliers and customers with the consent of such suppliers and customers. By way of example, relevant members of the Group may promote its suppliers who have sold products to the Group to engage TCL Financial Services Associates for provision of factoring services of the receivables they have against the Group.

Internal control procedures and pricing policy for conducting transactions under the Master Financial Services (2020 Renewal) Agreement

The Group will follow the following internal control procedures and pricing policies when conducting the transactions under the Master Financial Services (2020 Renewal) Agreement:

Deposit Services

1. If Finance Company decides to accept any amount of cash deposits from a Qualified Member (including current deposits, fixed deposits or any other form of deposits), the interest rates offered by Finance Company will be determined based on rates quoted by major PRC commercial banks such as Bank of China Limited for the same period, and it will not be lower or less favourable than the interest rates offered by major PRC commercial banks from time to time. Other terms and conditions offered by Finance Company as a whole shall also not be less favourable than those offered by other independent financial institutions and shall be on normal commercial terms negotiated on arm's length basis. The Group will also compare from time to time and at least every quarter the interest rates offered by Finance Company against (i) the benchmark interest rates promulgated by the PBOC (in the case of deposit made in PRC), (ii) interest rates quoted by at least three major commercial banks in the relevant jurisdiction and (iii) interest rates for similar deposit service quoted by Finance Company to other members of TCL Corp Group to ensure those offered by Finance Company is no less favourable or better than the said benchmark interest rates.

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1. The Group's finance department will monitor the maximum daily balance of the deposits on a daily basis to ensure that the aggregate deposits do not exceed the applicable annual caps.
2. The Group will also maintain accounts with independent banks. Should the balance at the end of any day exceed the maximum daily balance of deposits, the excess funds will be transferred to the Group's bank accounts with an independent commercial bank.
3. The Group will request Finance Company, TCL Financial Services Associates and TCL Corporation to provide the Group with sufficient information including various financial indicators, such as its asset size, liquidity ratios, operation ratios, level of bad assets and its risk rating assessed by CBIRC (if and when available) at the end of every year as well as annual and interim financial statements to enable the Group to monitor and review the financial condition of the Finance Company and/or TCL Financial Services Associates. Finance Company, TCL Financial Services Associates and TCL Corporation shall notify the Group, subject to compliance with applicable laws and regulations, should it be subject to any judicial, legal or regulatory proceedings or investigations which are reasonably likely to have a material impact on the financial condition of any of them. If the Group considers that there is any material adverse change in the financial condition of Finance Company and/or TCL Financial Services Associates, the Group will take appropriate measures (for example, early uplift of deposits and a moratorium on further deposits) to protect the Group's financial position.

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1. Finance Company and/or TCL Financial Services Associates will also provide the Group with a monthly report on the status of the Group's deposits so as to enable the Group to monitor and ensure that the relevant annual cap under the Master Financial Services (2020 Renewal) Agreement has not been exceeded. Particularly, the Group has in place an internal control system to monitor the usage of annual cap, and Finance Company would monitor the daily ending balance of cash deposited by the Group and would issue a warning to the Group when the balance reaches 90% of the relevant annual cap. Upon receiving the warning, the Group will instruct Finance Company to transfer and deposit such amount in excess with other independent financial institutions as soon as possible within the same day and in any event no later than the next business day. The Group will also conduct a weekly forecast on its level of operating cash to determine the amount to be deposited with Finance Company in the following week, so as to ensure the maximum outstanding daily ending balance of deposits deposited with Finance Company will not exceed the relevant annual cap at any given time. If it is expected that the amount of cash to be generated from Finance Company (e.g. cash received from bills discounting service provided by Finance Company), if deposited with Finance Company, will cause the total balance of cash deposited by the Group with Finance Company exceeding the relevant annual cap, the Group will instruct Finance Company to transfer and deposit such amount in excess with other independent financial institutions in advance so as to ensure the maximum outstanding daily ending balance of deposits deposited with Finance Company will not exceed the relevant annual cap at any given time.
2. The Group will, from time to time at its sole discretion, request for the deposits with Finance Company to be withdrawn (either in full or in part) to assess and ensure the liquidity and safety of the Group's deposits.
3. Pursuant to the Master Financial Services (2020 Renewal) Agreement, TCL Corporation has undertaken that if Finance Company fails to make any repayment in accordance with the relevant terms and procedure, TCL Corporation shall repay any outstanding deposit amount on behalf of Finance Company in full and/or offset the relevant outstanding deposit amount against and up to the same amount of any outstanding loans owed by it to and/or any trade financing provided to it by Finance Company and/or TCL Financial Services Associates and/or TCL Corporation. Such undertaking provides indemnification for the deposits with Finance Company under the Master Financial Services (2020 Renewal) Agreement.

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1. The Company will prepare risk assessment reports and data in respect of the funds deposited with Finance Company every quarter which will be submitted to the Board for consideration. The contents of such risk assessment reports include the total balance and maximum daily balance of the deposits for the reporting period, a summary of the interest rates of the deposits with Finance Company during the reporting period, and the terms thereof. It will also report to the Board every six months with respect to the deposits under the Master Financial Services (2020 Renewal) Agreement including compliance with annual caps and any potential change in the risk profile of Finance Company.

Bills discounting

1. In general, the discount rate offered by TCL Financial Services Associates in respect of the bills discounting service shall not be higher than those charged by other independent financial institutions in the PRC or those offered to other members of the TCL Corp Group. Other terms and conditions offered by TCL Financial Services Associates as a whole shall also not be less favourable than those offered by other independent financial institutions or those offered to other members of the TCL Corp Group, and shall be on normal commercial terms negotiated on arm's length basis. However, in cases where the relevant bills discounting service is not provided by other independent financial institutions (other than TCL Financial Services Associates) for example where the value of the bill is small, the Group will, after taking into account such factor, assess whether the overall terms and conditions offered by TCL Financial Services Associates as a whole are no less favourable to the Group than those terms of general bills discounting services offered by other independent financial institutions or those offered to other members of the TCL Corp Group.
2. The Group will, for every transaction, (i) obtain bill discount rates from at least three major PRC commercial banks such as Bank of China Limited in respect of bills discounting service, and (ii) obtain bill discount rates offered by TCL Financial Services Associates to other members of the TCL Corp Group, and make comparisons with those offered by TCL Financial Services Associates.

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Other Financial Services

1. The fees to be charged by Finance Company and/or TCL Financial Services Associates in respect of Other Financial Services shall not be higher than the fees determined by PBOC (if applicable) and the fees charged by other independent financial institutions service providers in respect of such services.
2. The Group will, for every transaction, obtain quotes of fees from at least three independent financial institutions in respect of services similar to the Other Financial Services, and make comparisons to review the fairness and reasonableness of fees charged by Finance Company and/or TCL Financial Services Associates which shall be no less favourable than those offered by Independent Third Parties. Other terms and conditions of Other Financial Services offered by Finance Company and/or TCL Financial Services Associates as a whole shall also be no less favorable than those offered by other independent financial institutions service providers and shall be on normal commercial terms. In case of such market comparable is not available, the fees to be charged by Finance Company and/or TCL Financial Services Associates shall be no less favourable to the Group than the rate charged by Finance Company and/or TCL Financial Services Associates to other members of TCL Corp Group for providing similar services in respect of Other Financial Services.

Promotion Services

1. The Promotion Fee would be charged at a certain percentage of the amount of the average outstanding facility amount that the relevant TCL Financial Services Associates provide to the suppliers and customers of the Group introduced through the Promotion Services. The exact percentage varies depending on the interest rate and exact type of facility provided by TCL Financial Services Associates to the Group's suppliers and customers and shall:
2. 1. be no less than the average figure of the percentage charged by other active market participants in providing similar promotion services, the information of which the Group collects from time to time and at least twice a year, where such market comparable is not available, the Promotion Fee charged by the Group shall be no less favourable than the rate charged by other members of TCL Corp Group for providing similar promotion services to TCL Financial Services Associates;

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1. 1. be able to cover all direct and indirect costs of the Group in providing the Promotion Services; and
   2. be no higher than 10% of the average outstanding facility amount.
2. Every time before reaching out to its suppliers and customers for the provision of a new kind of Promotion Services, the Finance Department of the Group would: (i) discuss in details with the relevant TCL Financial Services Associates the nature of the facility to be promoted; (ii) estimate the costs of the Group, both direct and indirect, in providing the Promotion Services; and (iii) conduct a market research on the prevailing fee charged by at least one active market participant in promoting similar facility.
3. The Finance Director of the Finance Department would assess the minimum percentage which is no less than the average figure of the percentage charged by other active market participant(s) in providing similar promotion services and able to cover all direct and indirect costs of the Group in providing the Promotion Services.
4. With a view to maximise the Promotion Fee as the income to be received by the Group from TCL Financial Services Associates by providing the Promotion Services, the Finance Director of the Finance Department will then negotiate with the relevant TCL Financial Services Associates on arm's length basis for a percentage reasonably obtainable which is close to and, subject to the maximum being 10% of the average outstanding facility amount.
5. In any event, the Promotion Services must be provided on normal commercial terms and on terms no less favourable than terms available to Independent Third Party(ies).

In particular, the Company's audit committee will scrutinize the implementation and enforcement of the transactions under the Master Financial Services (2020 Renewal) Agreement. If the Company's audit committee is of the view that it would be in the Company's interests to reduce the level of deposits and/or other continuing connected transactions with any TCL Financial Services Associates, the Group will take appropriate steps to implement its decision. Any material findings in the risk assessment reports, the views of the Company's audit committee on the deposits and/or other continuing connected transactions under the Master Financial Services (2020 Renewal) Agreement (including its views on how the terms of the Master Financial Services (2020 Renewal) Agreement have been complied with) and its decisions on matters in relation thereto will be disclosed in the Company's annual reports.

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The responsible personnel conducting the above internal control procedures are all employees of the Company who are independent to TCL Corporation, the Finance Company and their associates.

HISTORICAL FIGURES

The following table sets out the actual amounts of the continuing connected transactions under the Master Financial Services (2017 Renewal) Agreement for the years ended 31 December

2017 and 31 December 2018 and for the nine months ended 30 September 2019:

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Notes:

1. The amount excludes the facility amount without cash or bank instruments as security and other unsecured loans, financing and guarantees available under the facility line provided by TCL Financial Services Associates to the China Display Qualified Members since such amount is fully exempt under Rule 14A.90 of the Listing Rules.

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PROPOSED ANNUAL CAPS

The following table sets out the respective proposed annual caps of the continuing connected transactions under the Master Financial Services (2020 Renewal) Agreement for the three years ending 31 December 2022:

Notes:

1. The amount excludes the facility amount without cash or bank instruments as security and other unsecured loans, financing and guarantees available under the facility line provided by TCL Financial Services Associates to the China Display Qualified Members which, if conducted on normal commercial terms or better, are fully exempt connected transactions under Rule 14A.90 of the Listing Rules. The Group has no intention to obtain secured loans, financing and guarantees involving pledge of the Group's assets as security under the Master Financial Services (2020 Renewal) Agreement.

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2. The Promotion Fee to be received above is the income to be received by the Group from TCL Financial Services Associates for provision of Promotion Services by introducing, promoting to and/ or recommending its suppliers and/or customers to make use of the financing services of TCL Financial Services Associates and, in the process, assisting TCL Financial Services Associates to verify the authenticity of the client information and financing related materials provided by the suppliers and/or customers with the consent of such suppliers and/or customers. By way of examples, relevant members of the Group may promote its suppliers and/or customers to engage TCL Financial Services Associates for provision of factoring services of the receivables they have against the Group.

Basis for the Proposed Annual Caps

The proposed annual caps in relation to the Master Financial Services (2020 Renewal) Agreement are determined by reference to the historical amounts of the relevant transactions and taking into account the following factors:

Deposit Services

1. The proposed annual cap of RMB895,000,000 for the year ending 31 December 2020 represents an approximately RMB6,000,000 or 0.67% increase from that of the year ending 31 December 2019, such increase has taken account into:
2. 1. The maximum daily balance of deposit that the Group placed with Finance Company and Finance Company (HK) for the year ended 31 December 2018 was approximately RMB523,302,000, which was approximately 9.1% higher than that of RMB479,556,000 for the year ended 31 December 2017. Whereas the maximum amount of cash which the Group could deposit with Finance Company and Finance Company (HK) for the nine months ended 30 September 2019 amounted to approximately RMB817,000,000, representing approximately 91.9% of the relevant annual cap. Taking into account the Group's internal control measures to keep the maximum deposit amount below 90% of the relevant annual cap (as discussed in paragraph 5 of the sub-section headed "Deposit Services" under the section headed "Internal control procedures and pricing policy for conducting transactions under the Master Financial Services (2020 Renewal) Agreement"), the proposed annual cap for the 3 years ending 31 December 2022 therefore includes a buffer of approximately 10% of the expected maximum deposit amount for the relevant year;

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1. 1. Having been satisfied with the services and the benefits provided by Finance Company such as better interest rates than available from other financial institutions, the Group could to the greatest extent make all its deposits with Finance Company if and when the terms offered by Finance Company are favourable to the Group, hence it is expected the balance of deposits with Finance Company will increase;
   2. It is expected that the business of the Group would expand and as such there will be a growing need for deposit services in the PRC and Hong Kong in the following years and as a result, the capital available for deposit with Finance Company will also increase; and
2. Considering the expansion in the scale of operation of the Group as evidenced by the 52.4% and 78.0% increase in revenue for the year ended 31 December 2018 and the nine months ended 30 September 2019, as compared to the same period last year, the Directors expect that the amount to be deposited with Finance Company will increase correspondingly, and hence it is expected that the proposed annual caps for the three years ending 31 December 2022 would increase at a rate of approximately 10% per annum.

Financing Services

1. As regards Financing Services, given the Group may request TCL Financial Services Associates to provide unsecured financing as and when needed and that such unsecured financing which will be conducted on normal commercial terms or better are fully exempt connected transactions, no proposed annual cap has been set therefor other than bills discounting;
2. While none of the China Display Qualified Members has utilised the bills discounting service under the Master Financial Services (2017 Renewal) Agreement, it is anticipated that the Group will demand for such service from TCL Financial Services Associates under the Master Financial Service (2020 Renewal) Agreement provided that the terms offered by the relevant TCL Financial Services Associates is on normal commercial term or better, as this would allow the Group to flexibly manage its cash flow and credit risks.

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1. The annual caps in respect of bills to be assigned to TCL Financial Services Associates were determined with reference to:
2. 1. The aggregate face value of bills which has been discounted to independent PRC commercial banks by the Group amounted to approximately RMB1,426 million, RMB221 million and RMB1,604 million for the two years ended 31 December 2017 and 2018, and nine months ended 30 September 2019 respectively. The significant drop in aggregate face value of discounted bills for year 2018 was a result of the Group's active measures in controlling overall finance costs to cope with the Group's weaker sales performance in the first half of 2018. With the recovery of the Group's sales performance mainly driven by the orders placed by new first-tier brand customers, it is expected that the demand for bills discounting services will increase.
   2. TCL Financial Services Associates (including Finance Company) has been providing financial services to the Group and has a thorough understanding of the operations, development needs and customers of the Group. Furthermore, the Group may receive commercial bills which are not backed by the PRC commercial banks, and hence are generally not accepted by independent PRC commercial banks for discounting, whereas TCL Financial Services Associates are more flexible in accepting those commercial bills for discounting purpose. Provided that TCL Financial Services Associates can offer bills discounting service to the Group on terms no less favourable than those offered by Independent Third Parties, the Group will gradually shift from other major and independent PRC commercial banks to TCL Financial Services Associates as to the bill discounting services.
   3. The proposed annual cap for the bills discounting services from TCL Financial Services Associates of RMB600 million for the year ending 31 December 2020 equals to approximately 37.4% of the Group's aggregate face value of discounted bills for the nine months ended 30 September 2019. In view of the expansion in Group's business as evidenced by the 52.4% and 78.0% growth in revenue for the year ended 31 December 2018 and the nine months ended 30 September 2019 respectively, it is anticipated that the aggregate face value of bills to be discounted will increase at a rate of 10% per annum for the three years ending 31 December 2022;

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Financial Services Charges for Other Financial Services

1. The proposed annual cap of RMB1,300,000 for the year ending 31 December 2020 is mainly attributable to the service fees in relation to issuance of letters of credit by TCL Financial Services Associates at a rate ranging from 0.03% to 0.08%;
2. The historical amount for the fees in the amount of approximately RMB1,190,000, RMB319,000 and RMB371,000 paid the by the Group to other independent financial institutions for issuance of letters of credit for the two years ended 31 December 2018 and for the nine months ended 30 September 2019 respectively;
3. The anticipated shift from other independent financial institutions to the TCL Financial Services Associates as to the service for issuance of letters of credit subject to the terms to be offered by TCL Financial Services Associates; and
4. It is expected that the business of the Company will expand and there will be a growing need for Other Financial Services in the following years and as a result, the financial services charges payable to Finance Company and/or TCL Financial Services Associates for the three years ending 31 December 2022 is expected to increase at a rate of approximately 15.38% and 6.67% from 2020 to 2021 and from 2021 to 2022 respectively.

Promotion Services

1. the estimated need of the services of TCL Financial Services Associates to be promoted to the Group's suppliers and customers based on the Group's preliminary discussion with TCL Financial Services Associates;
2. the estimated Promotion Fee which the Group could earn based on such estimated need, and the preliminary prevailing market rate of service fee of up to approximately 0.8% for similar promotion service; and
3. the Group expects an increase in the number of suppliers and customers, and will gradually extend the promotion of financing services of TCL Financial Services Associates to a wider spectrum of its suppliers and customers, hence it is expected that the Promotion Fee to be received by the Group will grow at a rate of 20% per annum from 2020 onwards.

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Financial Effect of the Deposit Services

Whilst the Company will be able to earn interest income from the deposits made with Finance Company, given such interest income earned from Finance Company and Finance Company (HK) for the year ended 31 December 2018 was only approximately RMB3,443,000 and represented a small proportion of the Company's earnings and net assets, the Company anticipates that the Deposit Services contemplated under the Master Financial Services (2020 Renewal) Agreement will not have any material impact on the Company's earnings, assets and liabilities.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

Master Financial Services (2020 Renewal) Agreement

The Directors (excluding the independent non-executive Directors whose views will be set out in the circular) consider that the terms of the Master Financial Services (2020 Renewal) Agreement and the transactions contemplated thereunder are fair and reasonable, and it is in the interest of the Company and the Shareholders as a whole to enter into the Master Financial Services (2020 Renewal) Agreement and the transactions contemplated thereunder for the following reasons:

1. The Master Financial Services (2020 Renewal) Agreement allows TCL Financial Services Associates to provide cost efficient finance and treasury services to all China Display Qualified Members. The Company believes that TCL Financial Services Associates, which are financial institutions duly established in or outside the PRC and the pricing policies and the operation of which are subject to guidelines issued by the CBIRC or relevant authorities where the financial institutions duly established outside the PRC, may facilitate the China Display Qualified Members to obtain cheaper financing from other financial institutions in or outside the PRC by taking advantage of the inter-bank lending rates which TCL Financial Services Associates may enjoy in respect of their own borrowings from other financial institutions. Since the credit ranking of TCL Corporation is better than that of China Display Qualified Members, TCL Financial Services Associates may obtain better financing options from the financial institutions outside through TCL Corporation by making use of its advantage in credit ranking, and in turn the TCL Financial Services Associates may offer favourable financing options to China Display Qualified Members. It is expected that the inter- bank interest rates are usually lower than the interest rates of other corporate commercial loans.

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1. Further, Finance Company has been providing financial services to the Group and has a thorough understanding of the operations and development needs of the Group. Accordingly, it is expected that TCL Financial Services Associates (including Finance Company) will be more efficient in terms of processing transactions for the Group than other financial institutions given their close relationships.
2. By enabling members of the Group to provide the Promotion Services, the Group would be able to leverage on its relationship with its suppliers and customers to earn the Promotion Fee.

The Directors consider that Deposit Services contemplated under the Master Financial Services (2020 Renewal) Agreement will not result in the Group having excessive reliance on TCL Corp Group for the following reasons:

1. China Display Qualified Members are not obliged to make deposits with Finance Company and any China Display Qualified Member shall only make such deposits if the interest rate offered by Finance Company is no less favourable than those rates offered by other independent financial institutions. And in any event, China Display Qualified Members are at liberty to withdraw any amount deposited with Finance Company pursuant to the terms of the Master Financial Services (2020 Renewal) Agreement;
2. Even if Finance Company fails to provide the best interest rate to China Display Qualified Members, given cash deposit services are widely available, China Display Qualified Members can easily find alternative independent third party service providers;
3. The Company considers that the risk associated with depositing cash with Finance Company is low:
4. 1. to the best knowledge and belief of the Company after making all reasonable enquiries, in order to manage the credit risks, Finance Company would carefully evaluate the operation situation and financial position of the member companies within the Group and TCL Corp Group when receiving loan application from them and only provides loans to such member companies who have sound financial position;
   2. the Finance Company has been conducting its business in compliance with the relevant applicable rules and regulations and every financial indicators of each of Finance Company is normal;

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1. as set out in the articles of association of Finance Company, in the event that Finance Company falls into financial difficulty in payments, TCL Corporation has the obligation to take all necessary steps including injecting capital into Finance Company based on its funding needs, to restore its financial position. Given TCL Corporation, a company listed on the Shenzhen Stock Exchange, is a substantial company, the Company considers that it would be extremely unlikely for Finance Company to fail to restore its financial position.

SGM

The Company will convene the SGM at 8th Floor, Building 22E, Phase Three, Hong Kong Science Park, Pak Shek Kok, New Territories, Hong Kong on 24 December 2019, Tuesday at 2:00 p.m., at which resolutions will be proposed for the purposes of considering and, if thought fit, approving the Master Financial Services (2020 Renewal) Agreement and the proposed annual caps.

RECORD DATE

The record date (being the last date of registration of any transfer of Shares given there will be no closure of register of members) for determining the entitlements of the Shareholders to attend and vote at the SGM is 18 December 2019, Wednesday. In order to qualify to attend and vote at the SGM, all transfers accompanied by the relevant share certificates must be lodged with the Company's branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre 183 Queen's Road East Hong Kong, by no later than 4:30 p.m. on 18 December 2019, Wednesday.

GENERAL INFORMATION AND RELATIONSHIP OF THE PARTIES

Headquartered in the PRC, the Group is principally engaged in the research and development, manufacture, sales and distribution of LCD modules. The Group is also one of the major suppliers of small and medium sized display modules in the PRC. The Group has its manufacturing plant in the PRC and distributes its products in Asia, with focus on Hong Kong and the PRC markets. For more information on the Group, please visit its official website at www.cdoth8.com (the information that appears in this website does not form part of this announcement).

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TCL Corporation is a major PRC conglomerate and is principally engaged in semi-conductor display and material business. For more information on TCL Corporation, please visit its official website at http://www.tcl.com (the information that appears in that website does not form part of this announcement).

Finance Company provides financial services including corporate finance advisory services, credit worthiness verification and related consultancy and agency services, collection and payment services, approved insurance agency services, guarantee services, agency lending and investment services, discounting bills and design of various schemes for settlement and clearing in respect of group fund transfer, and any other services approved by the CBIRC for the Qualified Members.

LISTING RULES IMPLICATIONS

TCL Corporation, the ultimate controlling Shareholder of the Company, currently indirectly holds approximately 64.21% of the number of issued Shares of the Company, and is a connected person of the Company under the Listing Rules. Finance Company, being a Subsidiary of TCL Corporation, is also a connected person of the Company. Therefore, the transactions contemplated under the Master Financial Services (2020 Renewal) Agreement constitute continuing connected transactions of the Company.

Notwithstanding the respective interest and/or roles of certain Directors in TCL Corp Group, in particular (i) Mr. Liao Qian who also holds various positions in TCL Corp Group, namely an executive director, the chief of staff, a vice president and the secretary of the board of directors of TCL Corporation; (ii) Mr. Zhao Jun who is also a director and the general manager of Wuhan China Star Optoelectronics Technology Co., Ltd*（武漢華星光電技術 有限公司）, the senior vice president, the general manager of large-size business group and the general manager of TV division of CSOT, and the vice president of TCL Corporation, and (iii) and Mr. Ouyang Hongping who is interested in 26,600 shares in TCL Corporation (representing approximately 0.0002% of the issued share capital of TCL Corporation), as each of their respective direct interest in TCL Corp Group is either by virtue of common directorship/senior management role (in the case of Mr. Liao Qian and Mr. Zhao Jun) or the immaterial interest in shares of TCL Corp Group (in the case of Mr. Ouyang Hongping), their respective direct or indirect interests in TCL Corp Group are insignificant and that none of the TCL Associates are associates of any of the Directors, none of them is considered as having a material interest in the transactions contemplated under the Master Financial Services (2020 Renewal) Agreement, therefore all Directors are entitled to vote on the Board resolution for considering and approving the Master Financial Services (2020 Renewal) Agreement pursuant to the Company's bye-laws.

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As one or more of the applicable percentage ratios (other than the profits ratio) with reference to the annual caps of the Master Financial Service (2020 Renewal) Agreement exceed 5%, the continuing connected transactions contemplated thereunder are subject to the reporting, announcement, Shareholders' approval and annual review requirements under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios in relation to the Deposit Services under the Master Financial Services (2020 Renewal) Agreement exceed 25% and the assets ratio of the Deposit Services exceeds 8%, in addition to being continuing connected transactions, the Deposit Services also constitute major transactions of the Company and are subject to the relevant major transaction requirements under Chapter 14 of the Listing Rules; and the Deposit Services further constitute advances to an entity and are subject to the relevant disclosure requirements under Chapter 13 of the Listing Rules.

An Independent Board Committee has been established to advise the Shareholders on the terms of and the proposed annual caps of the Master Financial Services (2020 Renewal) Agreement. The Company has appointed the Independent Financial Adviser to advise the Independent Board Committee and the Shareholders in this regard. A circular containing, among other things, further details of the Master Financial Services (2020 Renewal) Agreement, letters from Independent Board Committee and the Independent Financial Adviser, a notice convening the SGM and other information as required under the Listing Rules, will be despatched to the Shareholders on or before 9 December 2019.

High Value Ventures Limited, an indirect Subsidiary of TCL Corporation is directly interested in 1,357,439,806 Shares, representing approximately 64.21% of the number of issued Shares of the Company. Hence, High Value Ventures Limited, being a TCL Associate and holder of 1,357,439,806 Shares, will abstain from voting on the resolution in respect of the Master Financial Services (2020 Renewal) Agreement to be put forward at the SGM. Save as the aforesaid, the Directors are not aware of any other Shareholders who are required to abstain from voting on the resolution in respect of the Master Financial Services (2020 Renewal) Agreement to be put forward at the SGM.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms have the following meanings when used herein:

"Deposit Services"deposit of money by member(s) of the Group which are Qualified Members with Finance Company and/or TCL Financial Services Associates pursuant to the Master Financial Services (2020 Renewal) Agreement

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On behalf of the Board

LIAO Qian

Chairman

Hong Kong, 2 December 2019

The English translation of Chinese names or words in this announcement, where indicated by " *", are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

As at the date of this announcement, the Board comprises Mr. Liao Qian as Chairman and non-executive Director; Mr. Ouyang Hongping, Mr. Wen Xianzhen and Mr. Zhao Jun as executive Directors; and Ms. Hsu Wai Man Helen, Mr. Xu Yan and Mr. Li Yang as independent non-executive Directors.

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