GOLDIN FINANCIAL HOLDINGS LIMITED * (Incorporated in Bermuda with limited liability) (Stock Code: 530)

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1 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. GOLDIN FINANCIAL HOLDINGS LIMITED * (Incorporated in Bermuda with limited liability) (Stock Code: 530) CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE ENTERING INTO OF A DOMESTIC FACTORING AGREEMENT CONTINUING CONNECTED TRANSACTIONS On 13 December 2012, Goldin Factoring China, a wholly-owned subsidiary of the Company, entered into the Domestic Factoring Agreement with Matsunichi Digital in respect of the provision of non-recourse factoring services by Goldin Factoring China for a fixed term commencing from the Effective Date to 30 June As at the date of this announcement, Matsunichi Digital is beneficially owned by Mr. Pan. Mr. Pan is a nonexecutive Director, the Chairman of the Board and the controlling shareholder of the Company and therefore a connected person of the Company and Matsunichi Digital is an associate of Mr. Pan and is therefore an associate of a connected person of the Company within the meaning of the Listing Rules. In addition, Mr. Zhou is a common director of Matsunichi Digital and the Company and is therefore a connected person of the Company. The transactions contemplated under the Domestic Factoring Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. As all applicable percentage ratios (other than profits ratio) in respect of the transactions contemplated under the Domestic Factoring Agreement for each of the three financial years ending 30 June 2015 is more than 5% as calculated pursuant to Rule of the Listing Rules, the Continuing Connected Transactions and the Annual Caps are subject to the reporting, announcement and Independent Shareholders approval requirements pursuant to Rule 14A.35 of the Listing Rules. Given that Mr. Pan and Mr. Zhou are connected persons of the Company and have material interests in the Continuing Connected Transactions, Mr. Pan and his associates, which together holds 4,897,940,634 Shares, representing approximately 70.22% of the issued share capital of the Company and Mr. Zhou, who holds 1,000,000 Shares, representing approximately 0.01% of the issued share capital of the Company as at the date of this announcement respectively, will abstain from voting at the SGM for approving the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps. 1

2 GENERAL A circular containing, inter alia, (a) further information of the Domestic Factoring Agreement and the Continuing Connected Transactions (including the Annual Caps); (b) the letter of recommendation from the Independent Board Committee to the Independent Shareholders; (c) the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders; and (d) a notice convening the SGM, will be despatched to the Shareholders on or before 8 January INTRODUCTION On 13 December 2012, Goldin Factoring China, a wholly-owned subsidiary of the Company, entered into the Domestic Factoring Agreement with Matsunichi Digital in respect of the provision of non-recourse factoring services by Goldin Factoring China for a fixed term commencing from the Effective Date to 30 June Details of the Domestic Factoring Agreement are set out below: PRINCIPAL TERMS OF THE DOMESTIC FACTORING AGREEMENT Date of agreement : 13 December 2012 Parties : Goldin Factoring China Matsunichi Digital Subject matter : Subject to Goldin Factoring China satisfying with the relevant due diligence assessment in respect of each Account Receivable, Goldin Factoring China will acquire from Matsunichi Digital and Matsunichi Digital will assign to Goldin Factoring China the Account Receivable and Goldin Factoring China will, after deducting the factoring handling fee, prepay Matsunichi Digital before the invoiced due date an amount equivalent to the face invoiced amount of the Account Receivable multiplied by the agreed prepayment ratio to which the Account Receivable relates. Due diligence assessment procedures : Prior to the acquisition of each Account Receivable, Goldin Factoring China will conduct a series of due diligence assessment procedures including but not limited to the following: (1) the application made by Matsunichi Digital in respect of the non-recourse factoring services for each Account Receivable in form satisfactory to Goldin Factoring China; (2) the acceptance in form satisfactory to Goldin Factoring China by Matsunichi Digital of the confirmation letter issued by Goldin Factoring China in respect of the acquisition of the Account Receivable; (3) the provision of the assignment of the Account Receivable by Matsunichi Digital in form satisfactory to Goldin Factoring China after the acceptance as mentioned in procedure (2) above; 2

3 (4) the provision of the list of authorised persons to sign the relevant documents under the Domestic Factoring Agreement by Matsunichi Digital and their signature samples; (5) the provision of the relevant commercial documents and invoices by Matsunichi Digital including but not limited to the sales contracts, value-added tax invoices, delivery note (if any), Insurance Contract and other documents for Goldin Factoring China s assessment; (6) the entering into of the Insurance Contract for the Account Receivable and the payment of the insurance fee thereto by Matsunichi Digital; and (7) the transfer of benefit of the Insurance Contract to Goldin Factoring China by Matsunichi Digital by way of the signing of a transfer agreement among Goldin Factoring China, Matsunichi Digital and the Insurance Company. Prepayment ratio : An agreed percentage of the face invoiced amount of each Account Receivable to be determined on a case-by-case basis which will be used for the determination of the amount of prepayment in respect of each Account Receivable to be made by Goldin Factoring China to Matsunichi Digital. Prepayment period : The prepayment period of the Account Receivable refers to the period commencing from the date on which the prepayment of the Account Receivable is made to Matsunichi Digital by Goldin Factoring China until the expiry of the agreed grace period after the invoice due date. Discounting charge : The discounting charge as a prepayment finance fee charged by Goldin Factoring China will be calculated as follows: A: Discounting charge B: Face invoiced amount of the Account Receivable C: Prepayment ratio (%) D: Standard rate promulgated by the People s Bank of China from time to time for RMB loans with corresponding prepayment period as at the date on which the prepayment of the Account Receivable is made, and with a floating upward or downward rate to such standard rate to be fixed after Goldin Factoring China s assessment (%) 3

4 E: Number of days of the prepayment period A = B x C x D x E 360 Factoring handling fee : An agreed service charge payable by Matsunichi Digital to Goldin Factoring China for the provision of the factoring service to be determined on a case-by-case basis which will represent a percentage of the face invoiced amount of the Account Receivable Term : Commencing from the Effective Date and, unless otherwise early terminated by the parties, up to 30 June 2015 (both days inclusive) Recovery and re-assignment clauses : If the Account Receivable or any part of it still remains outstanding after the expiry of the prepayment period, Matsunichi Digital shall take all actions at its best effort to assist Goldin Factoring China in recovering the Account Receivable including but not limited to the making of any claim under the Insurance Contract to which the Account Receivable relates. If the Buyer settles the Account Receivables on or before the expiry of the prepayment period, the balance (if any) of the Account Receivables, after deducting the discounting charge, factoring handling fee and any other applicable fees, shall belong to Matsunichi Digital. Goldin Factoring China has the rights to re-assign all or part of the acquired Account Receivable to Matsunichi Digital and require Matsunichi Digital to pay the relevant discounting charge and factoring handling fee upon the occurrence of the following: (1) any breach by Matsunichi Digital of sales contract, or any dispute or controversy under the sales contract leading to failure of payment by the Buyer on the invoiced due date; (2) any breach by Matsunichi Digital of Insurance Contract, the transfer agreement for transferring the benefit of the Insurance Contract or other formal agreements entered into among Goldin Factoring China, Matsunichi Digital and the Insurance Company leading to failure of obtaining the claim under the Insurance Contract by Goldin Factoring China; (3) any court preserving measure, seize or freeze by competent authority or administrative or executive order with similar level of authority leading to failure of obtaining the claim by Goldin Factoring China; (4) any fraud by Matsunichi Digital that the Account Receivable assigned to Goldin Factoring China is not incurred from transaction conducted properly; 4

5 (5) the Account Receivable assigned to Goldin Factoring China is not a Qualified Account Receivable; (6) the failure of Matsunichi Digital to perform contractual obligations or any breach by Matsunichi Digital in its representations and undertakings; (7) any charges by the Insurance Company incurred in insurance claim settlement; and (8) the failure to receive claim from Insurance Company due to insurance exceptions. The terms of the Domestic Factoring Agreement including the prepayment ratio offered to and the discounting charge and the factoring handling fee charged by Goldin Factoring China to Matsunichi Digital, which will be determined after due diligence assessment by Goldin Factoring China based on various factors including but not limited to the background, the financial position and the credit standing of the Buyer, and insurance cover taken out by Matsunichi Digital in respect of relevant Account Receivable, will be no more favourable than those available to other independent third parties with Account Receivable of similar nature with insurance coverage and Buyer of similar rating. ANNUAL CAPS AND BASIS OF DETERMINATION The table below sets out the proposed Annual Caps under the Domestic Factoring Agreement for period from the Effective Date to 30 June 2013 and each of the two full financial years ending 30 June For the period from the Effective For the year For the year Date to 30 June ending 30 June ending 30 June (RMB billion) (RMB billion) (RMB billion) Annual Caps (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$6.2 billion) HK$14.9 billion) HK$14.9 billion) The proposed Annual Caps have been worked out with reference to (i) the historical revenue of Matsunichi Digital for the year ended 31 December 2011 and over the past nine months since January 2012; (ii) Matsunichi Digital s sales forecast in the coming years; (iii) the potential growth of electronics market in the PRC for development the factoring business of Goldin Factoring China; (iv) the availability of capital funding for the factoring business of Goldin Factoring China. In order to ensure the amount of transactions contemplated under the Domestic Factoring Agreement will not exceed the proposed Annual Caps, the Group will periodically monitor the total transaction amount and estimating the amount of transactions that may possibly be incurred in the coming months in respect of nonrecourse factoring services under the Domestic Factoring Agreement. 5

6 CONDITIONS PRECEDENT TO THE DOMESTIC FACTORING AGREEMENT The Domestic Factoring Agreement is conditional upon the fulfillment of the following conditions: (a) (b) (c) the Company having obtaining of the Independent Shareholders approval at the SGM in respect of the Domestic Factoring Agreement, Continuing Connected Transactions and the Annual Caps; Matsunichi Digital having provided the copy of board resolution of Matsunichi Digital approving the Domestic Factoring Agreement and the transactions contemplated thereunder to Goldin Factoring China; and Matsunichi Digital having provided the relevant documents relating to its establishment including but not limited to its memorandum and articles of association, business licence, organisation code certificate and the certificate of identity of legal representative to Goldin Factoring China. The above conditions must be fulfilled and are incapable of being waived. REASONS FOR AND BENEFITS OF ENTERING INTO THE DOMESTIC FACTORING AGREEMENT The Company is an investment holding company and its subsidiaries are engaged in factoring business, financial investments and related activities, wine business and property development and investment. Matsunichi Digital is principally engaged in manufacturing, research and development of advanced electronic products in Hong Kong and the PRC. As stated in the annual report of the Company for the year ended 30 June 2012, the Group planned to devote more resources to its China factoring business by increasing the capital base of Goldin Factoring China, being the factoring arm of the Group, as the existing registered capital of Goldin Factoring China has almost been fully applied in the factoring business, which limited the Group to provide further advances to its existing and potential customers and therefore restricted its business growth. Upon completion of the Rights Issue, part of the cash proceeds of approximately HK$1,550 million therefrom will be used for capital contribution to increase the registered capital of Goldin Factoring China, further expanding the factoring business of the Group in the PRC. Given the capital-intensive nature of factoring business, the Group will raise further financing for its factoring operation through various ways including but not limited to bank and other borrowings and/or make further factoring arrangements with financial institutions in order to enhance the financial flexibility of the Group. As at the date of this announcement, the Company has liased with various financial institutions in respect of these funding alternatives. In 2011, China s international and domestic factoring business volume totaled approximately US$356 billion, which ranked first in the world. In addition, the positive early response of the trial scheme allowing the establishment of factors in the thriving Shanghai Pudong and Tianjin Binhai New Areas, as well as the increasing difficulty for small to medium-sized enterprises to obtain financing as a result of the tightening of credit lines by PRC major banks, are expected to bring positive impacts to the factoring industry in the PRC. In view of the growing activities of the factoring market in the PRC, the Directors are optimistic about the prospect of the factoring industry in the PRC and consider that the entering into of the Domestic Factoring Agreement allows the Group to capture the growth in the factoring business. The Directors are of the view that the provision of the factoring services to Matsunichi Digital under the Domestic Factoring Agreement would also broaden the Group s business horizon and diversify its income stream. 6

7 Given that the terms of the Continuing Connected Transactions are based on normal commercial terms which are made on an arm s length basis, the Directors (excluding Mr. Pan and Mr. Zhou who have abstained from voting on the relevant board resolutions) are of the view that the entering into of the Domestic Factoring Agreement is in the ordinary and usual course of business of the Company, on normal commercial terms which are made on an arm s length basis and that the Domestic Factoring Agreement and the Continuing Connected Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole. LISTING RULES IMPLICATIONS As at the date of this announcement, Matsunichi Digital is beneficially owned by Mr. Pan. Mr. Pan is a non-executive Director, the Chairman of the Board and the controlling shareholder of the Company and therefore a connected person of the Company and Matsunichi Digital is an associate of Mr. Pan and is therefore an associate of a connected person of the Company within the meaning of the Listing Rules. In addition, Mr. Zhou is a common director of Matsunichi Digital and the Company and is therefore a connected person of the Company. The transactions contemplated under the Domestic Factoring Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. As all applicable percentage ratios (other than profits ratio) in respect of the transactions contemplated under the Domestic Factoring Agreement for each of the three financial years ending 30 June 2015 is more than 5% as calculated pursuant to Rule of the Listing Rules, the Continuing Connected Transactions and the Annual Caps are subject to the reporting, announcement and Independent Shareholders approval requirements pursuant to Rule 14A.35 of the Listing Rules. Given that Mr. Pan is a connected person of the Company and has a material interest in the Continuing Connected Transactions, Mr. Pan and his associates, which together holds 4,897,940,634 Shares, representing approximately 70.22% of the issued share capital of the Company and Mr. Zhou, who holds 1,000,000 Shares, representing approximately 0.01% of the issued share capital of the Company as at the date of this announcement, will abstain from voting at the SGM for approving the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps. An Independent Board Committee will be established to advise the Independent Shareholders regarding the terms of the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps. An independent financial adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. None of the members of the Independent Board Committee has a material interest in the Continuing Connected Transactions. GENERAL A circular containing, inter alia, (a) further information of the Domestic Factoring Agreement and the Continuing Connected Transactions (including the Annual Caps); (b) the letter of recommendation from the Independent Board Committee to the Independent Shareholders; (c) the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders; and (d) a notice convening the SGM, will be despatched to the Shareholders on or before 8 January

8 DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings when used herein: Account Receivable(s) Annual Caps associate(s) Board Buyer Company connected person(s) Continuing Connected Transactions Director(s) Domestic Factoring Agreement Effective Date Goldin Factoring China Group Hong Kong the account receivable(s) to be assigned by Matsunichi Digital to Goldin Factoring China pursuant to the arrangement set out in the Domestic Factoring Agreement, subject to Goldin Factoring China satisfying with the relevant due diligence assessment the maximum aggregated annual value in respect of the Continuing Connected Transactions for the period from the Effective Date to 30 June 2013 and each of the two financial years ending 30 June 2015 as set out under the section headed ANNUAL CAPS AND BASIS OF DETERMINATION of this announcement has the meaning ascribed to it under the Listing Rules the board of Directors the buyer (and its guarantor, if any) who is obliged to pay Matsunichi Digital for the Account Receivable on the invoiced due date Goldin Financial Holdings Limited, an exempted company incorporated in Bermuda with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange has the meaning ascribed to it under the Listing Rules the transactions contemplated under the Domestic Factoring Agreement the director(s) of the Company the agreement dated 13 December 2012 entered into between Goldin Factoring China and Matsunichi Digital in respect of the provision of non-recourse factoring services the date on which all the conditions precedents as set out under the section headed CONDITIONS PRECEDENT TO THE DOMESTIC FACTORING AGREEMENT of this announcement are fulfilled, including but not limited to the obtaining of the Independent Shareholders approval for the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps (Goldin Factoring (China) Development Limited*), an indirect wholly-owned subsidiary of the Company and a wholly-foreign owned enterprise in the PRC the Company and its subsidiaries Hong Kong Special Administrative Region of the PRC 8

9 Independent Board Committee Independent Shareholders Insurance Contract Insurance Company Listing Rules Matsunichi Digital Mr. Pan Mr. Zhou PRC Qualified Account Receivable Rights Issue SGM Share(s) Shareholder(s) Stock Exchange HK$ an independent board committee of the Board to be established to advise the Independent Shareholders in respect of the terms of the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps all Shareholders other than Mr. Pan and his associates the China credit insurance purchased or to be purchased by Matsunichi Digital for the associated credit risk of Account Receivable from the Insurance Company approved by the Company China Export and Credit Insurance Corporation, a stated-funded policy-oriented company The Rules Governing the Listing of Securities on the Stock Exchange (Matsunichi Digital Development (Shenzhen) Company Limited*), a company established in the PRC with limited liability Mr. Pan Sutong, a non-executive Director, the Chairman of the Board and the controlling shareholder of the Company Mr. Zhou Dengchao, a Shareholder and a common director of Matsunichi Digital and the Company the People s Republic of China the Account Receivable which should not have any underlying liabilities, and upon the time of assignment from Matsunichi Digital to Goldin Factoring China, such Account Receivable should be unexpired, incurred legally, transferrable, meeting the insurance coverage requirements under the Insurance Contract, and should not be mortgaged or pledged to any third party and the legal creditor of which should be Matsunichi Digital the issue of rights shares by the Company on the basis of 11 rights shares for every 10 shares, further details of which are set out in the prospectus of the Company dated 16 November 2012 the special general meeting of the Company to be convened for the purpose of approving the terms of the Domestic Factoring Agreement, the Continuing Connected Transactions and the Annual Caps; and the notice of which will be set out in a circular to be despatched to the Shareholders ordinary share(s) of HK$0.10 each in the share capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited Hong Kong dollars, the lawful currency of Hong Kong 9

10 RMB US$ Renminbi, the lawful currency of the PRC United States dollars, the lawful currency of the United States of America % per cent. By order of the Board of Goldin Financial Holdings Limited Pan Sutong Chairman Hong Kong, 13 December 2012 As at the date of this announcement, Mr. Pan Sutong is the Chairman of the Board and non-executive director of the Company; Mr. Wong Hau Yan, Helvin, Mr. Zhou Dengchao, Ms. Hou Qin, Mr. Lee Chi Chung, Harvey and Professor Huang Xiaojian are the executive directors of the Company; and Mr. Tang Yiu Wing and Ms. Hui Wai Man, Shirley and Ms. Gao Min are the independent non-executive directors of the Company. * for identification purposes only For the purpose of this announcement, unless otherwise specifies, conversion of Renminbi into Hong Kong dollars is based on the approximate exchange rate of RMB1.00 = HK$