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 liabilities whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Time Watch Investments Limited (Incorporated in the Cayman Islands with limited liability) (Stock code: 2033) CONTINUING CONNECTED TRANSACTIONS (1) EXTENSION OF THE 2016 WATCH MOVEMENT SUPPLY AGREEMENT; (2) EXTENSION OF THE 2016 EXPORT AND IMPORT AGENCY AGREEMENT; AND (3) EXTENSION OF THE 2016 SALES AGENCY AGREEMENT EXTENSION OF THE 2016 WATCH MOVEMENT SUPPLY AGREEMENT Pursuant to the 2016 Watch Movement Supply Agreement, Win Source has been supplying watch movements to members of the ILG Group on an on-going basis. The 2016 Watch Movement Supply Agreement has expired on 30 June 2018. To ensure the continual supply of watch movements by Win Source to members of the ILG Group after the expiry of the 2016 Watch Movement Supply Agreement, Win Source and ILG entered into the 2018 Watch Movement Supply Agreement on 3 July 2018 for a term of three years commencing from 1 July 2018 to 30 June 2021 (both dates inclusive). It is expected that the aggregate transaction amount for the sale and purchase under the 2018 Watch Movement Supply Agreement for the three years ending 30 June 2021 will not exceed the annual caps of HK$15.0 million, HK$15.8 million and HK$16.5 million respectively. 1
EXTENSION OF THE 2016 EXPORT AND IMPORT AGREEMENT Pursuant to the 2016 E&I Agreement, the Group has been providing export and import services of multi-brand watches and accessories between Hong Kong and the PRC to members of the ILG Group on an on-going basis. The 2016 E&I Agreement has expired on 30 June 2018. To ensure the continual provision of such export and import services by the Group to members of the ILG Group after the expiry of the 2016 E&I Agreement, Win Source and ILG entered into the 2018 E&I Agreement on 3 July 2018 for a term of three years commencing from 1 July 2018 to 30 June 2021 (both dates inclusive) unless terminated earlier by a party serving three months notice in writing on the other party. It is expected that the aggregate transaction amount for the provision of export and import services under the 2018 E&I Agreement for the three years ending 30 June 2021 will not exceed the annual caps of HK$0.15 million, HK$0.16 million and HK$0.17 million respectively. EXTENSION OF THE 2016 SALES AGENCY AGREEMENT Pursuant to the 2016 Sales Agency Agreement, Fortune Concept has been acting as exclusive agent for TWB in relation to the sale of watch(es) which carry(ies) the trademarks of Kenneth Cole or (as the case may be) Ted Baker to airline for an on-going basis. The 2016 Sales Agency Agreement has expired on 30 June 2018. To ensure the continual provision of the such agency arrangement after the expiry of the 2016 Sales Agency Agreement, Fortune Concept and TWB entered into the 2018 Sales Agency Agreement on 3 July 2018 for a term of eight months commencing from 1 July 2018 to 28 February 2019 (both dates inclusive). It is expected that the aggregate sales commission for obtaining the agency services under the 2018 Sales Agency Agreement for the year ending 30 June 2019 will not exceed the annual cap of HK$1.56 million. 2
IMPLICATION UNDER THE LISTING RULES As (i) ILG is owned as to approximately 60.34% by Mr. Chainani and his brother; (ii) Mr. Chainani is the sole shareholder of IWG which in turn holds 49% of issued share capital of TWB; and (iii) Fortune Concept is wholly owned by ILG, each of ILG and other members of the ILG Group (including Fortune Concept) is a connected person of the Company at the subsidiary level. As such, the transactions under each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. By virtue of Rule 14A.101 of the Listing Rules, as (i) each of ILG and other members of the ILG Group (including Fortune Concept) is a connected person of the Company at the subsidiary level; (ii) the respective terms of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement are on normal commercial terms; (iii) the Board (including all the independent non-executive Directors) has approved the respective transactions and confirmed that each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement is on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole, the transactions under each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement are subject to the reporting and announcement requirements but are exempted from the circular, independent financial advice and shareholders approval requirements under Chapter 14A of the Listing Rules. EXTENSION OF THE 2016 WATCH MOVEMENT SUPPLY AGREEMENT Reference is made to the Previous Announcement in relation to, among others, the 2016 Watch Movement Supply Agreement. Pursuant to the 2016 Watch Movement Supply Agreement, Win Source has been supplying watch movements to members of the ILG Group on an on-going basis. The 2016 Watch Movement Supply Agreement has expired on 30 June 2018. To ensure the continual supply of watch movements by Win Source to members of the ILG Group after the expiry of the 2016 Watch Movement Supply Agreement, Win Source and ILG entered into the 2018 Watch Movement Supply Agreement on 3 July 2018. 3
2018 Watch Movement Supply Agreement Date and parties Date: 3 July 2018 Parties (1) Win Source, as supplier; and (2) ILG, as purchaser. Principal terms of the 2018 Watch Movement Supply Agreement During the term of the 2018 Watch Movement Supply Agreement, any member of the ILG Group may from time to time seek the latest quotation from Win Source for the purchase of watch movements and place orders with Win Source for the purchase of watch movements for delivery to the ILG Group s designated location by way of purchase orders, which shall specify, among other matters, the quantity, specifications, time and place of delivery of such watch movements ordered thereunder and other terms for sale and purchase of the watch movements. Win Source shall indicate to the ILG Group as to whether it accepts such purchase orders so placed by the ILG Group together with the purchase price per unit of watch movements so purchased within one business day from the date of delivery of such purchase orders. The pricing of watch movements varies and is not subject to any laws or government regulations, and there is no published reference price by any authority. Pursuant to the 2018 Watch Movement Supply Agreement, the purchase price per unit of watch movements so purchased shall be such unit price quoted by Win Source on the date of which the purchase order is placed, provided that, in any event, the purchase price of each watch movement and other terms and conditions of sales offered by Win Source to the ILG Group shall not be more favourable than that then offered by Win Source to its other customers who are Independent Third Parties for similar watch movements and sales volume. Win Source shall from time to time maintain and update a price list for each type of watch movements Win Source offers to its customers (including its Independent Third Party customers), and the quotation given by Win Source to the ILG Group shall be made in accordance with such price list. As such, the unit purchase price of the watch movements to be sold pursuant to the 2018 Watch Movement Supply Agreement shall represent the latest unit price offered by the Group to its Independent Third Party customers. The Directors (including the independent non-executive Directors) considered that the above methods and procedures can ensure that the transactions contemplated under the 2018 Watch Movement Supply Agreement will be conducted on normal commercial terms and not prejudicial to the interests of the Company and its minority shareholders. 4
The 2018 Watch Movement Supply Agreement shall have a term of three years commencing from 1 July 2018 to 30 June 2021 (both dates inclusive). Proposed annual caps for the three years ending 30 June 2021 The aggregate revenue from sale of watch movements by the Group to the ILG Group for each of the two years ended 30 June 2017 and the eleven months ended 31 May 2018 was approximately HK$8.6 million, HK$13.9 million and HK$11.9 million respectively. The Directors expect that the aggregate transaction amount for the sale and purchase under the 2018 Watch Movement Supply Agreement for the three years ending 30 June 2021 will not exceed the annual caps of HK$15.0 million, HK$15.8 million and HK$16.5 million respectively. The proposed annual caps are determined by the Directors by reference to the aggregate actual sales amount of watch movements by the Group to the ILG Group during the eleven months ended 31 May 2018, the expected increase in demand of watch movements of the Group by the ILG Group for the outsourced design and production of certain owned and licensed international brands of watches by the Group and the estimated inflation rate and increase in costs of production of an aggregate of 5% every year. 5
Reasons for and benefits in the 2018 Watch Movement Supply Agreement As set out in the Previous Announcement, ILG is the holding company of the ILG Group which is principally engaged in, among other business, the original equipment manufacturing and original design manufacturing of different brands of watches, and the global distribution of multi-brand watches. The ILG Group has been one of the principal customers of the Group s watch movements, and has business relationship with the Group for more than five years. Therefore, entering into of the 2018 Watch Movement Supply Agreement can facilitate stable business relationship between the Group and the ILG Group, and enhance the Group s revenue from this upstream product. The Directors (including the independent non-executive Directors) considered the terms of the 2018 Watch Movement Supply Agreement and the related annual caps are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. EXTENSION OF THE 2016 EXPORT AND IMPORT AGREEMENT Reference is made to the Previous Announcement in relation to, among others, the 2016 E&I Agreement. Pursuant to the 2016 E&I Agreement, the Group has been providing export and import services of multi-brand watches and accessories between Hong Kong and the PRC to members of the ILG Group on an on-going basis. The 2016 E&I Agreement has expired on 30 June 2018. To ensure the continual provision of such export and import services by the Group to members of the ILG Group after the expiry of the 2016 E&I Agreement, Win Source and ILG entered into the 2018 E&I Agreement on 3 July 2018. The principal terms and conditions of the 2018 E&I Agreement are set out below: Date and parties Date: 3 July 2018 Parties: (1) ILG, as principal; and (2) Win Source, as agent. 6
Principal terms of the 2018 E&I Agreement During the term of the 2018 E&I Agreement, any member of the ILG Group may from time to time deliver services notice (the E&I Services Notice ) in writing to the Group which shall specify, among other matters, (i) such multi-brand watches and/or accessories to be purchased and taken delivery by a member of the Group in the PRC (where such watches and/ or accessories are to be imported into the PRC) or Hong Kong (where such watches and/or accessories are to be imported into Hong Kong) (the Import Agent ) from the ILG Group at the designated address in Hong Kong or (as the case may be) the PRC, which would in turn be sold by the Group to another member of the ILG Group in the PRC (where such Products are to be imported into the PRC) or Hong Kong (where such Products are to be imported into Hong Kong) (the Receiving Principal ) and be delivered from the relevant importing port to the location of delivery as specified in the E&I Services Notice; and (ii) the aggregate purchase price of the watches and/or accessories ordered and purchased. The Group shall indicate to the ILG Group whether it accepts the request for the export and import services as specified in such E&I Services Notice within two days after the date of such E&I Services Notice. Subject to acceptance as aforesaid, the Group shall provide the export and import services to the ILG Group by the Import Agent entering into the contracts with the relevant member of the ILG Group for the purchase of such watches and/or accessories at such purchase price as specified in the E&I Services Notice, and such member of the ILG Group shall procure the Receiving Principal to purchase such watches and/or accessories at the selling price (the Selling Price ) which is equal to the aggregate of (i) the purchase price paid by the Import Agent for such watches and/or accessories; (ii) custom duty; (iii) value-added tax; and (iv) other taxation and levy payable or paid by the Import Agent for the purpose of the export and import of such watches and/or accessories from Hong Kong into the PRC or (as the case may be) from the PRC into Hong Kong. In consideration of the export and import services performed by the Group in respect of each sale and purchase contract, ILG shall pay the Group a services fee amounting to the higher of (i) 2.5% of the Selling Price, and (ii) HK$16,000. The services fee has been determined among the parties after arm s length negotiation, taken into account the expected costs and expenses to be incurred by the Group, such as transportation and insurance costs, in providing such export and import exercises. 7
The 2018 E&I Agreement shall have a term of three years commencing from 1 July 2018 to 30 June 2021 (both dates inclusive) unless terminated earlier by a party serving three months notice in writing on the other party. Proposed annual caps for the three years ending 30 June 2021 The aggregate service fees derived from provision of export and import services of watches and accessories of the ILG Group by the Group to the ILG Group for each of the two years ended 30 June 2017 and the eleven months ended 31 May 2018 was approximately HK$236,000, HK$26,000 and HK$40,000 respectively. The Directors expect that the aggregate transaction amount for the provision of export and import services under the 2018 E&I Agreement for the three years ending 30 June 2021 will not exceed the annual caps of HK$0.15 million, HK$0.16 million and HK$0.17 million respectively. respectively. The proposed annual caps are determined by the Directors by reference to the expected increase in export and import services required from the Group for the three years ending 30 June 2021, the prevailing market price of such services, the applicable rate of taxation and levy payable for the purpose of the export and import of watches and accessories between Hong Kong and the PRC, and the estimated inflation rate and increase in costs of services of an aggregate of 5% every year. Reasons for and benefits in the 2018 E&I Agreement As set out in the Previous Announcement, the Group has been having business relationship with the ILG Group for more than five years and has the requisite right to export and import watches and accessories between Hong Kong and the PRC. The entering into of the 2018 E&I Agreement can facilitate stable and ongoing business relationship between the Group and the ILG Group, and provide an additional source of revenue for the Group. The Directors (including the independent non-executive Directors) considered the terms of the 2018 E&I Agreement and the related annual caps are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. 8
EXTENSION OF THE 2016 SALES AGENCY AGREEMENT Reference is made to the Previous Announcement, in relation to, among others, the 2016 Sales Agency Agreement. Pursuant to the Previous Announcement, Fortune Concept has been acting as exclusive agent for TWB in relation to the sale of watch(es) which carry(ies) the trademarks of Kenneth Cole or (as the case may be) Ted Baker to airline for an on-going basis. The 2016 Sales Agency Agreement has expired on 30 June 2018. To ensure the continual provision of the such agency arrangement after the expiry of the 2016 Sales Agency Agreement, Fortune Concept and TWB entered into the 2018 Sales Agency Agreement on 3 July 2018 for a term of eight months commencing from 1 July 2018 to 28 February 2019 (both dates inclusive). The principal terms and conditions of the 2018 Sales Agency Agreement are set out below: 2018 Sales Agency Agreement Date and parties Date: 3 July 2018 Parties: (1) TWB, as principal; and (2) Fortune Concept, as agent. Principal terms of the 2018 Sales Agency Agreement Pursuant to the 2018 Sales Agency Agreement, TWB has appointed Fortune Concept as exclusive agent for the sale of the KC/TB Watches to airlines pursuant to the terms and conditions thereof. During the term of the 2018 Sales Agency Agreement, Fortune Concept shall from time to time provide the latest market information of the KC/TB Watches, including the prevailing market price, to TWB, and shall submit proposals as to the sales price of such watches and of the terms and conditions of sale applying to sales of such watches for approval by TWB. Pursuant to the 2018 Sales Agency Agreement, Fortune Concept shall not offer the KC/TB Watches to prospective customers at less than the sales price as approved by TWB without its prior written consent. 9
Pursuant to the 2018 Sales Agency Agreement, Fortune Concept shall use its best endeavours to promote the sale and marketing of and solicit order for the KC/TB Watches to airlines on a consignment basis. TWB shall reimburse Fortune Concept for its costs for the performance of its obligations under the 2018 Sales Agency Agreement on a monthly basis. In consideration of the agency services provided by Fortune Concept, TWB shall pay Fortune Concept a sales commission amounting to 15% of the aggregate sales price of the KC/TB Watches delivered by TWB to Fortune Concept for the sale of such KC/TB Watches to the relevant airlines each month pursuant to the 2018 Sales Agency Agreement, provided that, in any event, the terms and conditions for obtaining the agency services by TWB from Fortune Concept pursuant to the 2018 Sales Agency Agreement shall be no more favourable as those offered by the Group to agents who are Independent Third Parties for comparable services. During the term of the 2018 Sales Agency Agreement, upon request made by the airlines or TWB (or Fortune Concept on behalf of TWB) for return and refund of KC/TB Watches (the Delisted KC/TB Watches ) sold to the airlines but are subsequently removed from sale by such airlines in accordance with the sale and purchase agreements and/or orders entered into with such airlines, Fortune Concept shall arrange for the return and refund of the Delisted KC/TB Watches and the sales commission in respect of such Delisted KC/TB Watches paid by TWB to Fortune Concept shall be refunded to TWB in accordance with the terms and conditions of the 2018 Sales Agency Agreement. There is no restriction under the 2018 Sales Agency Agreement that restricts TWB to supply the KC/TB Watches to other members of the Group for their own purpose or to sell or supply the KC/TB Watches to customers of the Group directly. The 2018 Sales Agency Agreement shall have a term of eight months commencing from 1 July 2018 to 28 February 2019 (both dates inclusive). Proposed annual caps for the year ending 30 June 2019 The aggregate sales commission paid by TWB to Fortune Concept for the year ended 30 June 2017 and the eleven months ended 31 May 2018 was approximately HK$0.81 million and HK$0.87 million. The Directors expect that the aggregate sales commission for obtaining the agency services under the 2018 Sales Agency Agreement for the year ending 30 June 2019 will not exceed the annual caps of HK$1.56 million. The proposed annual caps are determined by the Directors by reference to the aggregate sales commission paid by TWB to Fortune Concept during the eleven months ended 31 May 2018, the expected demands of the KC/TB Watches among the airlines during the term thereof, the prevailing recommended retail price of the KC/TB Watches and the prevailing discount. 10
Reasons for and benefits in the 2018 Sales Agency Agreement Fortune Concept has 13 years of experience in carrying on the business of sales of watches to airlines. The entering into of the 2018 Sales Agency Agreement can reinforce the Group s strategy to diversify the distribution network of the Group and expand the sales network of the Group into the airlines customers which can potentially bring additional revenue to the Group. The Directors (including the independent non-executive Directors) considered the terms of the 2018 Sales Agency Agreement and the related annual caps are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. IMPLICATION UNDER THE LISTING RULES As (i) ILG is owned as to approximately 60.34% by Mr. Chainani and his brother; (ii) Mr. Chainani is the sole shareholder of IWG which in turn holds 49% of issued share capital of TWB; and (iii) Fortune Concept is wholly owned by ILG, each of ILG and other members of the ILG Group (including Fortune Concept) is a connected person of the Company at the subsidiary level. As such, the transactions under each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement, the 2018 E&I Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. By virtue of Rule 14A.101 of the Listing Rules, as (i) each of ILG and other members of the ILG Group (including Fortune Concept) is a connected person of the Company at the subsidiary level; (ii) the respective terms of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement are on normal commercial terms; (iii) the Board (including all the independent non-executive Directors) has approved the respective transactions and confirmed that each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement is on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole, the transactions under each of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement are subject to the reporting and announcement requirements but are exempted from the circular, independent financial advice and shareholders approval requirements under Chapter 14A of the Listing Rules. None of the Directors has a material interest in any of the 2018 Sales Agency Agreement, the 2018 Watch Movement Supply Agreement and the 2018 E&I Agreement or is otherwise required to abstain from voting on the relevant Board resolutions approving these agreements. 11
INFORMATION OF THE GROUP The Group is principally engaged in (i) the manufacture and retail sales of its Tian Wang watches, (ii) the retail sales of its Balco watches; (iii) other brands watches in the PRC; (iv) design, manufacture and global distribution of certain owned and licensed international brands of watches; and (v) the ancillary trading of watch movements business. TERMS USED IN THIS ANNOUNCEMENT In this announcement, unless the context otherwise requires, the following terms shall have the following meanings: Board the board of Directors Company Time Watch Investments Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange Director(s) director(s) of the Company Fortune Concept Fortune Concept Limited, a limited liability company incorporated in Hong Kong which is wholly owned by ILG Group the Company and its subsidiaries ILG ILG of Switzerland Ltd, a limited liability company incorporated in Switzerland which is owned as to approximately 60.34% by Mr. Chainani and his brother ILG Group collectively, ILG and its subsidiaries from time to time Independent Third Party(ies) party or parties which, as far as the Directors are aware of after having made all reasonable enquiries, is/are not connected persons (as defined under the Listing Rules) of the Company 12
IWG International Watch Group Limited, a limited liability company incorporated in Hong Kong and a minority shareholder of TWB which is wholly owned by Mr. Chainani KC/TB Watches watch(es) which carry(ies) the trademarks of Kenneth Cole or (as the case may be) Ted Baker Listing Rules Rules Governing the Listing of Securities on the Stock Exchange Mr. Chainani Mr. Pishu Vashdev Chainani, a United Arab Emirates individual and the sole shareholder of IWG PRC the People s Republic of China Previous Announcement an announcement of the Company dated 17 August 2016 in relation to, among others, the 2016 Sales Agency Agreement, the 2016 Watch Movement Supply Agreement and the 2016 E&I Agreement Stock Exchange The Stock Exchange of Hong Kong Limited TWB TWB Investments Limited, a limited liability company incorporated in Hong Kong and an indirect non-wholly owned subsidiary of the Company which is owned as to 51% by the Group and as to 49% by IWG Win Source Win Source Trading Limited, a limited liability company incorporated in Hong Kong and an indirect wholly-owned subsidiary of the Company 2016 E&I Agreement a services agreement dated 17 August 2016 and entered into between Win Source and ILG in connection with the provision of export and import services of multi-brand watches and accessories between Hong Kong and the PRC by the Group pursuant to the terms and conditions thereof 13
2016 Sales Agency Agreement 2016 Watch Movement Supply Agreement an agency agreement dated 17 August 2016 and entered into between TWB and Fortune Concept in connection with the appointment of Fortune Concept as agent for the sales of KC/TB Watches to airlines pursuant to the terms and conditions thereof a watch movement supply agreement dated 17 August 2016 and entered into between Win Source and ILG in connection with the supply of watch movements by Win Source to the ILG Group pursuant to the terms and conditions thereof 2018 E&I Agreement a services agreement dated 3 July 2018 and entered into between Win Source and ILG in connection with the provision of export and import services of multi-brand watches and accessories between Hong Kong and the PRC by the Group pursuant to the terms and conditions thereof 2018 Sales Agency Agreement 2018 Watch Movement Supply Agreement an agency agreement dated 3 July 2018 and entered into between TWB and Fortune Concept in connection with the appointment of Fortune Concept as agent for the sales of KC/TB Watches to airlines pursuant to the terms and conditions thereof a watch movement supply agreement dated 3 July 2018 and entered into between Win Source and ILG in connection with the supply of watch movements by Win Source to the ILG Group pursuant to the terms and conditions thereof % per cent. By the order of the Board Time Watch Investments Limited Tung Koon Ming Chairman and Executive Director Hong Kong, 3 July 2018 As at the date of this announcement, the executive Directors are Mr. Tung Koon Ming, Mr. Hou Qinghai, Mr. Tung Wai Kit and Mr. Deng Guanglei; and the independent nonexecutive Directors are Mr. Ma Ching Nam, Mr. Wong Wing Keung Meyrick and Mr. Choi Ho Yan. 14