China Display Optoelectrncs Tech Hld : CONTINUING CONNECTED TRANSACTIONS MASTER IMPORT AGENCY AND LOGISTICS SERVICES AGREEMENT

About this update from China Display Optoelectronics Technology Holdings Ltd

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. 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) CONTINUING CONNECTED TRANSACTIONS MASTER IMPORT AGENCY AND LOGISTICS SERVICES AGREEMENT MASTER IMPORT AGENCY AND LOGISTICS SERVICES AGREEMENT The Board is pleased to announce that the Company had on 18 December 2019 entered into the Master Import Agency and Logistics Services Agreement with Qianhai Sailing, which consolidates and is on substantially similar terms as the existing Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement. 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 therefore is a connected person of the Company under the Listing Rules. Qianhai Sailing is owned as to 40% by TCL Corporation. Accordingly, Qianhai Sailing is a connected person of the Company under Chapter 14A of the Listing Rules. Hence, the transactions contemplated under the Master Import Agency and Logistics Services Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. 1 As one or more of the applicable percentage ratios (other than the profits ratio) with reference to the proposed annual caps of the Master Import Agency and Logistics Services Agreement exceed 0.1% but all are less than 5%, the continuing connected transactions contemplated under the Master Import Agency and Logistics Services Agreement are subject to the reporting, announcement and annual review but are exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules. Notwithstanding the respective roles and/or interest of certain Directors in TCL Corp Group, none of the Directors is considered as having a material interest in the transactions contemplated under the Master Import Agency and Logistics Services Agreement. Therefore, all the Directors are entitled to vote on the Board resolution for considering and approving the Master Import Agency and Logistics Services Agreement pursuant to the Company's bye-laws. MASTER IMPORT AGENCY AND LOGISTICS SERVICES AGREEMENT The Company has entered into the existing Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement respectively with Qianhai Sailing on 6 November 2018. For further details, please refer to the Company's announcement dated 6 November 2018. In order to consolidate and continue the continuing connected transactions thereunder, the Company has on 18 December 2019 entered into the Master Import Agency and Logistics Services Agreement with Qianhai Sailing, which consolidates and is on substantially similar terms as the existing Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement. The major difference between the Master Import Agency and Logistics Services Agreement and the existing Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement is the revised formula for determining the relevant Agency Fees and Logistics Fees respectively. Upon the coming effect of the Master Import Agency and Logistics Services Agreement, each of the Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement would be terminated. 2 Set out below are major terms of the Master Import Agency and Logistics Services Agreement: Date: 18 December 2019 Parties: (1) the Company (on behalf of itself and its Subsidiaries) (2) Qianhai Sailing Duration: Subject to compliance with the Listing Rules by the Company in relation to the entering into of the Master Import Agency and Logistics Services Agreement and the transactions contemplated thereunder, including but not limited to obtaining Shareholders' approval at the Company's special general meeting (if required), the Master Import Agency and Logistics Services Agreement shall become effective from the Shareholders' approval date (if any) or 18 December 2019 (whichever is later) up to 31 December 2021 (both dates inclusive). Major terms: Import Agency Services (1) The Group appoints Qianhai Sailing as its non-exclusive import handling agent to import and deliver Overseas Materials, which are sourced and ordered by the Group from overseas suppliers, from Hong Kong to a place in PRC designated by the relevant member of the Group. Qianhai Sailing shall handle all customs clearance and import logistics procedures for entry of the Overseas Materials into the PRC. (2) The ownership of any Overseas Materials handled by Qianhai Sailing pursuant to the Master Import Agency and Logistics Services Agreement shall be mutually determined by the relevant member of the Group and the relevant overseas suppliers. Qianhai Sailing shall not be entitled to any ownership or proprietary interests in the relevant Overseas Materials at any time under the Master Import Agency and Logistics Services Agreement and the transactions contemplated thereunder. 3 The Group has no obligation to engage Qianhai Sailing as its import handling agent. The Group has the absolute discretion (but is not obliged to do so) to engage Qianhai Sailing for the Import Agency Services if and only if the terms of the services to be provided by Qianhai Sailing as a whole (including fees and payment terms) are no less favourable than the terms of comparable services (i) offered by Qianhai Sailing to Independent Third Parties and (ii) offered by Independent Third Parties to the Group. Terms offered by Qianhai Sailing to the Group shall be on normal commercial terms (or better from the perspective of the Group) and in the respective interests of each party. Logistics Services Upon each purchase of Overseas Materials from overseas suppliers by the Group, the Group may direct such Overseas Materials to be delivered to Qianhai Sailing's designated warehouse in Hong Kong. Qianhai Sailing shall then provide appropriate logistics services and any other relevant services (including but not limited to custom clearance) required by the Group to deliver the Overseas Materials to a place designated by the relevant member of the Group. The relevant member of the Group shall issue an import products customs list setting out the necessary information for Qianhai Sailing to arrange for logistics services and relevant procedures. Upon receiving a notice of delivery from the relevant member of the Group, Qianhai Sailing shall arrange to deliver the Overseas Materials to a place designated by the relevant member of the Group after the Overseas Materials are packed for delivery. 4 The ownership of any Overseas Materials stored and/ or delivered pursuant to the Master Import Agency and Logistics Services Agreement shall be determined mutually by the relevant member of the Group and the relevant overseas suppliers. Qianhai Sailing shall not be entitled to any ownership or proprietary interests in the Overseas Materials at any time under the Master Import Agency and Logistics Services Agreement and the transactions contemplated thereunder. The Group has no obligation to engage Qianhai Sailing as its import export logistics agent. The Group has the absolute discretion (but is not obliged to do so) to engage Qianhai Sailing for the Logistics Services if and only if the terms of the Logistics Services to be provided by Qianhai Sailing as a whole (including fees and payment terms) are no less favourable than the terms of comparable services (i) offered by Qianhai Sailing to Independent Third Parties and (ii) offered by Independent Third Parties to the Group. Terms offered by Qianhai Sailing to the Group shall be on normal commercial terms (or better from the perspective of the Group) and in the respective interests of each parties. Fees and payment terms: Import Agency Services Qianhai Sailing will charge the Group an Agency Fee for the Import Agency Services, which is inclusive of all relevant disbursements and expenses. The Agency Fee shall be calculated using the formula below: (service fee + disbursements not covered by the service fee but reasonably incurred by Qianhai Sailing in association with the Import Agency Services) x 1.06 The service fee shall be 0.25% of the Import Price (before tax) of the Overseas Materials, which is inclusive of certain disbursements incurred by Qianhai Sailing in association with the Import Agency Services, and the minimum service fee shall be RMB800 (before tax). 5 Qianhai Sailing and the Group shall confirm and sign on the monthly bill of the Import Agency Services before the 5th day of the following month. The Group shall settle the monthly bill before the last day of the following month. The Group shall be responsible for, and shall reimburse Qianhai Sailing (if applicable) for all out-of-pocket expenses and relevant fees incurred by Qianhai Sailing in this connection including any Import Price paid by Qianhai Sailing on behalf of the Group. Logistics Services Qianhai Sailing shall charge the Group Logistics Fees for the Logistics Services, which is inclusive of all relevant disbursements and expenses. The Logistics Fees shall be calculated using the below formula: (service fee + disbursements not covered by the service fee but reasonably incurred by Qianhai Sailing in association with the Logistics Services) x 1.06 The service fee shall be 0.25% of the Import Price (before tax) of the Overseas Materials, which is inclusive of certain disbursements incurred by Qianhai Sailing in association with the Logistics Services, and the minimum service fee shall be RMB800 (before tax). Qianhai Sailing and the Group shall confirm and sign on the monthly bill of the Logistics Services before the 5th day of the following month. The Group shall settle the monthly bill before the last day of the following month. 6 The parties acknowledged that as at the date of the Master Import Agency and Logistics Services Agreement, the Group had not yet settled the fees charged for the relevant service under the Logistics Services (2018 Renewal) Agreement provided by Qianhai Sailing to the Group during the period from 1 August 2019 to the date of termination of the Logistics Services (2018 Renewal) Agreement (both dates inclusive). Qianhai Sailing agreed to (i) extend the payment period in respect of the aforesaid unsettled fees to 15 business days from the effective date of the Master Import Agency and Logistics Services Agreement or the effective date of the relevant agreement entered into thereunder (whichever is later); and (ii) adjust the aforesaid unsettled fees, such that the fees would be calculated according to the formula under the Master Import Agency and Logistics Services Agreement. Pricing policy and internal control measures in respect of the Master Import Agency and Logistics Services Agreement Where Qianhai Sailing offers to provide Import Agency Services or Logistics Services to the Group at terms no less favourable to the Group than (i) those offered by Qianhai Sailing to other Independent Third Parties and/or (ii) those offered by other Independent Third Parties to the Group, the Company shall procure its Subsidiaries to actively consider using the services provided by Qianhai Sailing. However, the Group is not restricted and is entitled to use the Import Agency Services or Logistics Services provided by other Independent Third Party service providers if it considers desirable to do so. The Group would conduct regular review on the terms offered by Qianhai Sailing as compared to other Independent Third Party service providers regarding comparable Import Agency Services or Logistics Services, including but not limiting to obtaining quotations from Qianhai Sailing and other Independent Third Parties for comparable Import Agency Services or Logistics Services on a periodic basis and making comparisons. If there are no comparable terms offered to the Group by other Independent Third Parties, the terms of the Import Agency Services or Logistics Services to be provided by Qianhai Sailing to the Group shall then be determined after arm's length negotiations between the parties and shall be on normal commercial terms or better. 7 The aforesaid mechanisms would ensure the Group to obtain comparable Import Agency Services or Logistics Services at terms no less favourable than (i) those offered by Qianhai Sailing to other Independent Third Parties and/or (ii) those offered by other Independent Third Parties to the Group. The Directors (including the independent non-executive Directors) confirmed that the terms for the continuing connected transactions above are fair and reasonable, on normal commercial terms or better and are in the interests of the Company and the Shareholders as a whole. HISTORICAL FIGURES The following table sets out the respective historical figures of the existing Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement for the three years ending 31 December 2021: For the year ending 31 December 2019 (for original annual caps only)/For the nine months ended 30 September For the For the 2019 year ending year ending (for actual 31 December 31 December figures only) 2020 2021 RMB'000 RMB'000 RMB'000 Import Agency (2018 Renewal) Agreement - Original annual caps 200 200 200 - Actual Nil N/A N/A Logistics Services (2018 Renewal) Agreement - Original annual caps 2,500 2,800 3,000 - Actual 975 N/A N/A 8 PROPOSED ANNUAL CAPS The following table sets out the proposed annual caps of the continuing connected transactions under the Master Import Agency and Logistics Services Agreement for the 3 years ending 31 December 2021: For the year For the year For the year ending ending ending 31 December 31 December 31 December 2019 2020 2021 RMB'000 RMB'000 RMB'000 Master Import Agency and Logistics Services Agreement 2,700 3,000 3,200 DETERMINATION OF THE PROPOSED ANNUAL CAPS In determining the proposed annual caps under the Master Import Agency and Logistics Services Agreement, the Directors have taken into account, among others, the historical amount of the fees paid by the Group under the Import Agency (2018 Renewal) Agreement and Logistics Services (2018 Renewal) Agreement; and the Import Agency Services and/or Logistics Services required by the Group under the Master Import Agency and Logistics Services Agreement is expected to grow for the three years ending 31 December 2021 as a result of increasing demand for Overseas Materials driven by anticipated growth in the business of the Group. 9 REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS Qianhai Sailing has been one of the import agency service and logistics service providers of the Group since 27 January 2016 and has proven to be an efficient and reliable service provider. As such the Group can benefit from the experience and expertise of Qianhai Sailing in handling custom clearance and import logistics, as opposed to establishing its own customs department to handle import and customs clearance related matters. In order to streamline the cost structure and operations of the Group, the Company considers it is beneficial to continue to outsource the logistics services to specialised service units. Further, as there are specific and professional departments of Qianhai Sailing responsible for the custom clearance and import logistic of sourcing various overseas materials, such arrangement of custom clearance and import logistic in bulk can achieve economies of scale and thus increase the flexibility and efficiency and decrease the marginal costs involved and can provide custom clearance service at a more competitive price than other service providers. Further, the Company believes that given its close relationship with TCL Corp Group, Qianhai Sailing is a more reliable business partner than other Independent Third Parties in performing such custom clearance and import logistic function. Further, the Group will be in a better position to monitor the services to be provided by Qianhai Sailing under the Master Import Agency and Logistics Services Agreement than by other outside service providers. In view of the above, the Directors (including the independent non-executive Directors) consider that the Master Import Agency and Logistics Services Agreement is entered into in the ordinary and usual course of business of the Group, the terms of the Master Import Agency and Logistics Services Agreement and the transactions contemplated thereunder are on normal commercial terms or better and the terms thereunder together with the annual caps thereof are fair and reasonable, and it is in the interests of the Company and the Shareholders as a whole to enter into the Master Import Agency and Logistics Services Agreement and the transactions contemplated thereunder. 10 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 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). Qianhai Sailing is owned as to 40% by Shenzhen Feima International Supply Chain Co., Ltd* （深圳市飛馬國際供應鏈股份有限公司） , a company established under the laws of the PRC whose shares are listed on the Shenzhen Stock Exchange (stock code: 002210), and as to 40% by TCL Corporation. Qianhai Sailing is principally engaged in provision of logistics services and supply chain management. 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 therefore is a connected person of the Company under the Listing Rules. Qianhai Sailing is owned as to 40% by TCL Corporation. Accordingly, Qianhai Sailing is a connected person of the Company under Chapter 14A of the Listing Rules. Hence, the transactions contemplated under the Master Import Agency and Logistics Services Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios (other than the profits ratio) with reference to the proposed annual caps of the Master Import Agency and Logistics Services Agreement exceed 0.1% but all are less than 5%, the continuing connected transactions contemplated under the Master Import Agency and Logistics Services Agreement are subject to the reporting, announcement and annual review but are exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules. 11 Notwithstanding the respective roles and/or interest of certain Directors in TCL Corp Group, none of the Directors is considered as having a material interest in the transactions contemplated under the Master Import Agency and Logistics Services Agreement. Therefore, all the Directors are entitled to vote on the Board resolution for considering and approving the Master Import Agency and Logistics Services Agreement pursuant to the Company's bye- laws. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms have the following meanings when used herein: "Agency Fee(s)" "associate(s)" "Board" "Company" "connected person(s)" "Director(s)" "Group" "Hong Kong" "Import Agency (2018 Renewal) Agreement" the fee(s) to be charged by Qianhai Sailing for the Import Agency Services provided to the Group pursuant to the Master Import Agency and Logistics Services Agreement has the meaning ascribed to it under the Listing Rules the board of Directors China Display Optoelectronics Technology Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (stock code: 334) has the meaning ascribed to it under the Listing Rules the director(s) of the Company the Company and its Subsidiaries Hong Kong Special Administrative Region of the PRC the import agency (2018 renewal) agreement dated 6 November 2018 entered into between Qianhai Sailing and the Company 12 "Import Agency Services" the import agency services provided by Qianhai Sailing as non-exclusive import handling agent to the Group importing and delivering Overseas Materials, and handling all customs clearance and import logistics procedures for entry of the Overseas Materials into the PRC, from time to time pursuant to the Master Import Agency and Logistics Services Agreement "Import Price" the purchase price paid or to be paid by the Group to overseas Independent Third Party suppliers for the purchase of the Overseas Materials "Independent Third a person(s) or company(ies) which is/are independent of Party(ies)" and not connected with any directors, chief executives, controlling shareholders and substantial shareholders of the Company or any of its Subsidiaries and their respective associates "LCD module" "Listing Rules" "Logistics Fee(s)" the integrated module of liquid crystal display, integrated circuit, connector and other structural components the Rules Governing the Listing of Securities on the Stock Exchange the fee(s) to be charged by Qianhai Sailing for the Logistics Services provided to the Group pursuant to the Master Import Agency and Logistics Services Agreement "Logistic Services" the logistics services to be provided by Qianhai Sailing to the Group from time to time pursuant to the Master Import Agency and Logistics Services Agreement "Logistics Services (2018 the logistics services (2018 renewal) agreement dated 6 Renewal) Agreement" November 2018 entered into between Qianhai Sailing and the Company 13 "Master Import Agency the master import agency and logistics services agreement and Logistics Services dated 18 December 2019 entered into between Qianhai Agreement" Sailing and the Company "Overseas Materials" the articles, things, parts or components manufactured or produced in areas other than the PRC which are required for the manufacture or production of the Products "PRC" the People's Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purpose of this announcement "Products" products including but not limited to LCD modules manufactured, produced or otherwise sold or distributed by the Group "Qianhai Sailing" Shenzhen Qianhai Sailing Supply Chain Management Co. Ltd.* （深圳前海啟航供應鏈管理有限公司） , a company established in the PRC with limited liability "RMB" Renminbi, the lawful currency of the PRC "Shareholder(s)" holder(s) of share(s) of the Company "Stock Exchange" The Stock Exchange of Hong Kong Limited "Subsidiary"/ any entity within the meaning of the term "subsidiary" as "Subsidiaries" defined in the Listing Rules and the term "Subsidiaries" shall be construed accordingly "TCL Corp Group" TCL Corporation, its Subsidiaries and associates excluding the Group for the purpose of this announcement 14 "TCL Corporation" TCL Corporation (TCL 集團股份有限公司） , a joint stock company established under the laws of the PRC, the ultimate controlling Shareholder of the Company, the shares of which are listed on the Shenzhen Stock Exchange (stock code: 000100) "%" per cent On behalf of the Board LIAO Qian Chairman Hong Kong, 18 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. 15

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