Cogobuy : CONTINUING CONNECTED TRANSACTIONS - PROPERTY LEASING AND COMPLEMENTARY SERVICES FRAMEWORK AGREEMENT

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COGOBUY GROUP

科 通 芯 城 集 團

(a company incorporated under the laws of the Cayman Islands with limited liability)

(Stock code: 400)

CONTINUING CONNECTED TRANSACTIONS

PROPERTY LEASING AND COMPLEMENTARY SERVICES

FRAMEWORK AGREEMENT

On 23 December 2019, the Company and Comtech China entered into the Property Leasing and Complementary Services Framework Agreement, pursuant to which Comtech China has agreed, and will procure its subsidiaries to agree, to provide property leasing and complementary property management services to the Group.

Comtech China is indirectly wholly-owned by Mr. KANG Jingwei, Jeffrey, the Chairman, Chief Executive Officer and Executive Director of the Company and the Company's controlling shareholder. Comtech China is therefore an associate of a connected person of the Company. Pursuant to Chapter 14A of the Listing Rules, the transactions contemplated under the Property Leasing and Complementary Services Framework Agreement will constitute continuing connected transactions of the Company.

Given that the highest applicable percentage ratios in respect of the proposed Annual Caps under the Property Leasing and Complementary Services Framework Agreement exceed 0.1% but are less than 5%, the Transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular and independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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BACKGROUND INFORMATION

On 23 December 2019, the Company and Comtech China entered into the Property Leasing and Complementary Services Framework Agreement, pursuant to which Comtech China has agreed, and will procure its subsidiaries to agree, to provide property leasing and complementary property management services to the Group.

PROPERTY LEASING AND COMPLEMENTARY SERVICES FRAMEWORK AGREEMENT

The principal terms of the Property Leasing and Complementary Services Framework Agreement are set out below:

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The Company currently expects the Group to enter into leases amounting to an estimated GFA of approximately 4,000 to 6,000 sq.m. in 2020.

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HISTORICAL AMOUNTS

The Company has entered into an agreement with Comtech China on 20 March 2018 in respect of the provision of property leasing and property management services, access to car parking and other facilities, car services, and other miscellaneous services by Comtech China and its subsidiary to the Group (the ''2018 Agreement''), which will expire on 31 December 2019. The historical amount payable by the Group pursuant to the transactions contemplated under the 2018 Agreement for each of the two years ended 31 December 2019 were approximately RMB3.0 million and RMB4.2 million respectively. Given that the highest applicable percentage ratios in respect of the proposed annual caps under the 2018 Agreement did not exceed 0.1%, the transactions were exempt from the reporting, announcement, annual review, circular and independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

ANNUAL CAPS FOR THE THREE YEARS ENDING 31 DECEMBER 2022

The Annual Caps, being the total rent and complementary services fees payable by the Group to Comtech China and/or its subsidiaries under the Property Leasing and Complementary Services Framework and Complementary Agreement, for each of the three years ending 31 December 2022 is RMB15.0 million.

Basis of the Annual Caps

The Annual Caps for the transactions contemplated under the Property Leasing and Complementary Services Framework Agreement were determined by the Directors with reference to expected increases in the GFA leased to accommodate the business growth of the Group during the three years ending 31 December 2022.

REASONS FOR AND BENEFITS OF ENTERING INTO THE PROPERTY LEASING AND COMPLEMENTARY SERVICES FRAMEWORK AGREEMENT

By entering into the Property Leasing and Complementary Services Framework Agreement, the Group will secure a stable source of properties for the operation and growth of the Group while improving its corporate image and Comtech China will better utilise its assets, creating an additional source of income that will increase its revenue and enhance its profitability.

The terms of the Property Leasing and Complementary Services Framework Agreement, including the monthly rent and management fees payable by the Group, are arrived at after arm's length negotiations between the parties involved, taking into account the market rent and management fees of comparable properties in Shenzhen, China.

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By virtue of his ownership of Comtech China, Mr. KANG Jingwei, Jeffrey is considered to have a material interest in the entering into of the Property Leasing and Complementary Services Framework Agreement, and has abstained from voting on the resolutions approving the Property Leasing and Complementary Services Framework Agreement. Save as disclosed above, none of the Directors has a material interest in the transactions contemplated under the Property Leasing and Complementary Services Framework Agreement.

INFORMATION ABOUT THE PARTIES

The Company is principally engaged in operating an e-commerce platform to serve the electronics manufacturing industry in China. The Company provides customers with comprehensive online and offline services across pre-sale, sale and post-sale stages through its e-commerce platform, including a direct sales platform, an online marketplace and a dedicated team of technical consultants and professional sales representatives. The Company also engages in the provision of financial services.

Comtech China is principally engaged in investment, property development and related businesses and its ultimate beneficial owner is Mr. KANG Jingwei, Jeffrey.

CONFIRMATION FROM THE DIRECTORS

The terms of the Property Leasing and Complementary Services Framework Agreement were agreed upon after arm's length negotiations between the Company and Comtech China. The Directors (including independent non-executive Directors) consider that the terms of the Property Leasing and Complementary Services Framework Agreement and the Annual Caps are fair and reasonable, that the Property Leasing and Complementary Services Framework Agreement was entered into on normal commercial terms or better and in the ordinary and usual course of business of the Company, and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

Comtech China is indirectly wholly-owned by Mr. KANG Jingwei, Jeffrey, the Chairman, Chief Executive Office and Executive Director of the Company and the Company's controlling shareholder. Comtech China is therefore a connected person of the Company. Pursuant to Chapter 14A of the Listing Rules, the transactions contemplated under the Property Leasing and Complementary Services Framework Agreement will constitute continuing connected transactions of the Company. Given that the highest applicable percentage ratios in respect of the proposed Annual Caps under the Property Leasing and Complementary Services Framework Agreement exceed 0.1% but are less than 5%, the Transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular and independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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DEFINITIONS

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

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Hong Kong, 23 December 2019

As at the date of this announcement: the executive Directors of the Company are Mr. KANG Jingwei, Jeffrey, Mr. WU Lun Cheung Allen and Ms. NI Hong, Hope; and the independent non-executive Directors of the Company are Mr. YE Xin, Dr. MA Qiyuan and Mr. HAO Chunyi, Charlie.

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