Q TECHNOLOGY (GROUP) COMPANY LIMITED 丘鈦 …...Lease Agreement for the lease of the Fourth Floor of the Factory Building and the Dormitories for a term commenced from 1 July 2016

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Hong Kong Exchanges and Clearing Limited and the Stock Exchange 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.

Q TECHNOLOGY (GROUP) COMPANY LIMITED丘鈦科技（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1478)

(1) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

AND

(2) NEW CONTINUING CONNECTED TRANSACTIONS


Reference is made to the prospectus of the Company dated 20 November 2014 and the

announcement of the Company dated 29 December 2014 in relation to certain continuing

connected transactions entered into by the Group. As most of the terms of the Existing

Agreements are due to expire on 31 December 2016, the following Renewed Agreements

have been entered into by the Group for the renewal or extension of the terms of the

Existing Agreements:

(a) The Renewed Chengdu CK Sub-Lease Agreement

As the term of the Existing Chengdu CK Sub-Lease Agreement will expire on 31

December 2016, on 16 December 2016, Chengdu QT (an indirect wholly-owned

subsidiary of the Company) and Chengdu CK renewed the Existing Chengdu CK Sub-

Lease Agreement by entering into the Renewed Chengdu CK Sub-Lease Agreement

for a further term of three years commencing from 1 January 2017 and expiring on 31

December 2019.

(b) The Renewed Van Telecom PRC Purchase Agreement

As the term of the Existing Van Telecom PRC Purchase Agreement will expire on 31

December 2016, on 16 December 2016, the Company (for itself and on behalf of its

Subsidiaries) and Van Telecom PRC renewed the Existing Van Telecom PRC Purchase

Agreement by entering into the Renewed Van Telecom PRC Purchase Agreement for

a further term of three years commencing from 1 January 2017 and expiring on 31

December 2019.

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(c) The Renewed C-Flex Electronic Purchase Agreement

As the term of the Existing C-Flex Electronic Purchase Agreement will expire on 31


Subsidiaries) and C-Flex Electronic renewed the Existing C-Flex Electronic Purchase

Agreement by entering into the Renewed C-Flex Electronic Purchase Agreement for

a further term of three years commencing from 1 January 2017 and expiring on 31

December 2019.

(d) The Renewed Heyuan CK Supply Agreement

As the term of the Existing Heyuan CK Supply Agreement will expire on 31


Subsidiaries) and Heyuan CK renewed the Existing Heyuan CK Supply Agreement by

entering into the Renewed Heyuan CK Supply Agreement for a further term of three

years commencing from 1 January 2017 and expiring on 31 December 2019.

(e) The Renewed Van Telecom PRC Property Lease Agreement

On 23 June 2016, Kunshan QT (an indirect wholly-owned subsidiary of the Company)

(as tenant) and Van Telecom PRC (as landlord) entered into the First Kunshan QT

Lease Agreement for the lease of the Fourth Floor of the Factory Building and the

Dormitories for a term commenced from 1 July 2016 and expiring on 31 December

2018. Further, on 16 September 2016, Kunshan QT (as tenant) and Van Telecom PRC

(as landlord) entered into the Second Kunshan QT Lease Agreement for the lease of

the Second Floor and Third Floor the Factory Building for a term commenced from

8 October 2016 and expiring on 31 December 2018. As all the applicable percentage

ratios for the annual rent of each of the First Kunshan QT Lease Agreement, the

Second Kunshan QT Lease Agreement and the aggregated annual rent of the First

Kunshan QT Lease Agreement and the Second Kunshan QT Lease Agreement are less

than 0.1%, the continuing connected transactions under the First Kunshan QT Lease

Agreement and the Second Kunshan QT Lease Agreement are fully exempted from

the reporting, annual review, announcement and independent shareholders’ approval

requirements under Chapter 14A of the Listing Rules.

On 16 December 2016, Kunshan QT (as tenant) and Van Telecom PRC (as landlord)

entered into the Renewed Van Telecom PRC Property Lease Agreement in respect of

the lease of the Second Floor, Third Floor and Fourth Floor of the Factory Building,

the Dormitories and the Additional Leased Property from Van Telecom PRC to

Kunshan QT for a term of three years commencing from 1 January 2017 and expiring

on 31 December 2019. The First Kunshan QT Lease Agreement and the Second

Kunshan QT Lease Agreement will be terminated on 31 December 2016.


On 16 December 2016, the Company (for itself and on behalf of its Subsidiaries) and

Huizhou Youhua (for itself and on behalf of its Subsidiaries) entered into the Huizhou

Youhua Purchase Agreement in respect of the supply of voice coil motors and linear motors

by Huizhou Youhua to the Group for a term of three years commencing from 1 January

2017 and expiring on 31 December 2019.

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LISTING RULES IMPLICATIONS AND AGGREGATION OF ANNUAL CAPS

Chengdu CK is wholly-owned by Shenzhen CK, which in turn is owned as to 90% by Mr. He, the

chairman, an executive Director and the Controlling Shareholder of the Company, and as to 10%

by Mr. Wang, the chief executive officer and an executive Director of the Company. Accordingly,

Chengdu CK is a connected person of the Company under the Listing Rules.

Van Telecom PRC is wholly-owned by CK Telecom, which in turn is wholly-owned by Mr. He.

Accordingly, Van Telecom PRC is a connected person of the Company under the Listing Rules.

C-Flex Electronic is wholly-owned by Shenzhen Handi, a wholly-owned subsidiary of Shenzhen

CK, which in turn is owned as to 90% by Mr. He and as to 10% by Mr. Wang. Accordingly,

C-Flex Electronic is a connected person of the Company under the Listing Rules.

Heyuan CK is wholly-owned by CK Telecom, which in turn is wholly-owned by Mr. He.

Accordingly, Heyuan CK is a connected person of the Company under the Listing Rules.

Huizhou Youhua is owned as to 0.392% by Mr. Hu, an executive Director of the Company, and

as to 54.04% by Shenzhen Handi, a wholly-owned subsidiary of Shenzhen CK, which in turn

is owned as to 90% by Mr. He and as to 10% by Mr. Wang. Accordingly, Huizhou Youhua is a

connected person of the Company under the Listing Rules.

Each of the transactions contemplated under the Agreements constitute continuing connected

transactions (“Continuing Connected Transactions”) of the Company under Chapter 14A of the

Listing Rules.

As all of the applicable percentage ratios of the annual caps under each of the Renewed Chengdu

CK Sub-Lease Agreement and the Renewed Van Telecom PRC Purchase Agreement are less

than 0.1%, the Continuing Connected Transactions contemplated under each of the Renewed

Chengdu CK Sub-Lease Agreement and the Renewed Van Telecom PRC Purchase Agreement are

fully exempted from the reporting, annual review, announcement and independent shareholder’s

approval requirements under Chapter 14A of the Listing Rules.

As all of the applicable percentage ratios of the annual caps under each of the Renewed C-Flex

Electronic Purchase Agreement, the Renewed Heyuan CK Supply Agreement, the Renewed

Van Telecom PRC Property Lease Agreement and the Huizhou Youhua Purchase Agreement

exceed 0.1% but are less than 5%, the Continuing Connected Transactions contemplated under

each of the Renewed C-Flex Electronic Purchase Agreement, the Renewed Heyuan CK Supply

Agreement, the Renewed Van Telecom PRC Property Lease Agreement and the Huizhou Youhua

Purchase Agreement are subject to the reporting, annual review and announcement requirements

but are exempted from the independent shareholders’ approval requirement under Chapter 14A of

the Listing Rules.

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In considering the Company’s compliance obligation under the Listing Rules, the Continuing

Connected Transactions have been considered by the Company on aggregate basis for the purpose

of classification in accordance with Rule 14A.81, Rule 14A.82 and Rule 14A.83 of the Listing

Rules (“Classification”) as follows:

(i) the annual caps of the Continuing Connected Transactions contemplated under the Renewed

Chengdu CK Sub-Lease Agreement and the Renewed Van Telecom PRC Property Lease

Agreement are considered on aggregate basis for the purpose of the Classification. As one

or more of the applicable percentage ratios of the aggregated annual caps for the Renewed


Agreement exceed 0.1% but are less than 5%, the Continuing Connected Transactions

contemplated thereunder are subject to the reporting, annual review and announcement

requirements but are exempted from the independent shareholders’ approval requirement

under Chapter 14A of the Listing Rules;

(ii) the annual caps of the Continuing Connected Transactions entered into by the Group

with Van Telecom PRC, i.e. the Continuing Connected Transactions contemplated under

the Renewed Van Telecom PRC Purchase Agreement and the Renewed Van Telecom

PRC Property Lease Agreement are considered on aggregate basis for the purpose of

the Classification. As one or more of the applicable percentage ratios of the aggregated

annual caps for the Renewed Van Telecom PRC Purchase Agreement and the Renewed Van

Telecom PRC Property Lease Agreement exceed 0.1% but are less than 5%, the Continuing

Connected Transactions contemplated thereunder are subject to the reporting, annual review

and announcement requirements but are exempted from the independent shareholders’

approval requirement under Chapter 14A of the Listing Rules;

(iii) the annual caps of the Continuing Connected Transactions of trade nature, i.e. the

Continuing Connected Transactions contemplated under the Renewed Van Telecom PRC

Purchase Agreement, the Renewed C-Flex Electronic Purchase Agreement, the Renewed

Heyuan CK Supply Agreement and the Huizhou Youhua Purchase Agreement are considered

on aggregate basis for the purpose of the Classification. As all of the applicable percentage

ratios of the aggregated annual caps for the Renewed Van Telecom PRC Purchase

Agreement, the Renewed C-Flex Electronic Purchase Agreement, the Renewed Heyuan CK

Supply Agreement and the Huizhou Youhua Purchase Agreement exceed 0.1% but are less

than 5%, the Continuing Connected Transactions contemplated thereunder are subject to

the reporting, annual review and announcement requirements but are exempted from the

independent shareholders’ approval requirement under Chapter 14A of the Listing Rules;

and

(iv) the annual caps of all of the Continuing Connected Transactions contemplated under the

Agreements are also considered on aggregate basis for the purpose of the Classification. As

all of the applicable percentage ratios of the aggregated annual caps of all of the Continuing

Connected Transactions exceed 0.1% but are less than 5%, the Continuing Connected

Transactions contemplated thereunder are subject to the reporting, annual review and

announcement requirements but are exempted from the independent shareholders’ approval

requirement under Chapter 14A of the Listing Rules.

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As Mr. He, Mr. Wang and Mr. Hu are interested in the Continuing Connected Transactions due

to their respective shareholdings in Chengdu CK, Van Telecom PRC, C-Flex Electronic, Heyuan

CK and/or Huizhou Youhua, Mr. He, Mr. Wang and Mr. Hu had abstained from voting on the

resolutions passed by the Board to approve the Agreements, the transactions contemplated under

the Agreements and the respective annual caps. Save as disclosed, none of the Directors has a

material interest in the Continuing Connected Transactions or is required to abstain from voting

on the Board resolutions in relation to the Agreements, the transactions contemplated under the

Agreements and the respective annual caps.


Reference is made to the prospectus of the Company dated 20 November 2014 and the

announcement of the Company dated 29 December 2014 in relation to certain continuing

connected transactions entered into by the Group. As most of the terms of the Existing

Agreements are due to expire on 31 December 2016, the following Renewed Agreements

have been entered into by the Group for the renewal or extension of the terms of the Existing

Agreements:

(a) The Renewed Chengdu CK Sub-Lease Agreement

Date: 16 December 2016

Parties: (i) Chengdu CK (as sublessor)

(ii) Chengdu QT (an indirect wholly-owned subsidiary of

the Company) (as sublessee)

Sub-leased period: 1 January 2017 to 31 December 2019

Sub-leased premises: certain portion of the premises situated on the 6th floor,

Block 12, Zone C, Tianfu Software Park, No. 219 Tianhua Er

Road, Gaoxin District, Chengdu, the PRC（中國成都市高新區天華二路219號天府軟件園C區12棟6層）, with total

gross area sub-leased by Chengdu QT of approximately 242

sq.m. (“Chengdu Premises”)

Rent: a monthly rent of RMB45 per sq.m. (inclusive of utilities

and management fees), equivalent to an annual rent of

RMB130,680, which shall be payable quarterly by Chengdu

QT to Chengdu CK upon receipt of invoice issued by

Chengdu CK during the term of the Sub-leased period

Usage: research and development and office

The landlord of Chengdu CK is an Independent Third Party (“Landlord”), the sub-lease

to Chengdu QT has been approved by the Landlord.

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Annual caps

It is expected that the maximum amount of the annual rent payable by Chengdu QT to

Chengdu CK under the Renewed Chengdu CK Sub-Lease Agreement for each of the year

ending 31 December 2017, 31 December 2018 and 31 December 2019 shall not exceed

RMB130,680.

The rent payable by Chengdu QT was determined with reference to:

(i) the historical rent paid by Chengdu QT under the Existing Chengdu CK Sub-Lease

Agreement for each of the year ended 31 December 2014 and 31 December 2015

and the ten months ended 31 October 2016;

(ii) the prevailing market rent for similar premises in the vicinity; and

(iii) the rent, utilities and management fees payable by Chengdu CK under the tenancy

agreement entered into with the Landlord.

Existing annual caps and historical rent

The existing annual caps and the historical rent under the Existing Chengdu CK Sub-

Lease Agreement for each of the year ended 31 December 2014 and 31 December 2015

and the ten months ended 31 October 2016 were as follows:

For the year ended

31 December 2014

For the year ended

31 December 2015

For the ten months ended

31 October 2016

(RMB) (RMB) (RMB)

Existing annual cap 130,680 130,680 130,680

(Note 1)

Historical rent 76,000

(Note 2)

130,680 108,900

Notes:

1. Annual cap for the entire year of 2016.

2. Rent calculation commenced from 6 June 2014 i.e. the commencement date of the Existing

Chengdu CK Sub-Lease Agreement.

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Reasons for entering into the Renewed Chengdu CK Sub-Lease Agreement

The Group has been using the Chengdu Premises as the research and development centre

of the Group since June 2014. In order to avoid possible disruption to its business due to

relocation, the Group intends to continue to lease the Chengdu Premises following the

expiration of the Existing Chengdu CK Sub-Lease Agreement on 31 December 2016.

The Directors (including the independent non-executive Directors) considered it to be in

the interests of the Company and the Shareholders as a whole to enter into the Renewed

Chengdu CK Sub-Lease Agreement to continue the use of the Chengdu Premises to

avoid relocation and refurbishment costs.

(b) The Renewed Van Telecom PRC Purchase Agreement


Parties: (i) the Company (for itself and on behalf of its Subsidiaries)

(as purchaser)

(ii) Van Telecom PRC (as supplier)

Contract Period: 1 January 2017 to 31 December 2019

Subject: The Company agreed to purchase, or procure its Subsidiaries

to purchase, and Van Telecom PRC agreed to supply to the

Company and/or its Subsidiaries precise connectors during the

contract period.

Price determination: Price for the precise connectors will be determined with

reference to the price at which comparable types of precise

connectors sold to the Group by suppliers which are

Independent Third Parties under normal commercial terms

in the ordinary and usual course of business, and such price

shall be no less favourable to the Group than is available from

suppliers which are Independent Third Parties.

Annual caps

The annual caps of the transactions contemplated under the Renewed Van Telecom PRC

Purchase Agreement for the relevant periods are set out below:

1 January 2017 to 31 December 2017



(RMB) (RMB) (RMB)

Annual caps 300,000 300,000 300,000

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The annual caps for the transactions under the Renewed Van Telecom PRC Purchase

Agreement for each of the year ending 31 December 2017, 31 December 2018 and 31

December 2019 were determined with reference to:

(i) the projected demand of precise connectors that the Group would purchase from

Van Telecom PRC for the production of camera modules for each of the year

ending 31 December 2017, 31 December 2018 and 31 December 2019;

(ii) the prevailing market rates of such precise connectors in the open market of the

PRC;

(iii) the historical transaction amounts under the Existing Van Telecom PRC Purchase


and the ten months ended 31 October 2016; and

(iv) the expected changes in demand for the Group’s camera modules.

Such projection is assumed solely for determining the annual caps for the transactions

contemplated under the Renewed Van Telecom PRC Purchase Agreement and shall

not be regarded as any indication directly or indirectly as to the respective revenue,

profitability or trading prospects of the Group and/or Van Telecom PRC.

Existing annual caps and historical transaction amounts

The existing annual caps and the historical transaction amounts under the Existing Van

Telecom PRC Purchase Agreement for each of the year ended 31 December 2014 and 31

December 2015 and the ten months ended 31 October 2016 were as follows:

For the year ended

31 December 2014

For the year ended

31 December 2015


31 October 2016

(RMB) (RMB) (RMB)

Existing annual caps 300,000 300,000 300,000

(Note)

Historical transaction

amount

64,000 0 0

Note: Annual cap for the entire year of 2016

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Reasons for entering into the Renewed Van Telecom PRC Purchase Agreement

The Directors (including the independent non-executive Directors) considered that it is

in the interest of the Group to continue the purchases from Van Telecom PRC pursuant to

the Renewed Van Telecom PRC Purchase Agreement for the following reasons:

(i) the purchases from Van Telecom PRC will be at competitive prices not less

favourable than those that the Group can purchase from suppliers which are

Independent Third Parties;

(ii) Van Telecom PRC is familiar with the Group’s product specifications, standards

and requirements and the Group has confidence in the quality of the precise

connectors supplied by Van Telecom PRC;

(iii) the Directors considered that it is crucial for the Group to maintain the stability in

supply and quality of the precise connectors for the Group’s existing and future

production needs. In view of the Group’s past purchasing experience with Van

Telecom PRC, the Directors are of the view that Van Telecom PRC can effectively

fulfill the Group’s requirements of supply stability as well as product quality; and

(iv) Van Telecom PRC has provided the Group more favourable terms such as more

flexible delivery terms of the precise connectors purchased by the Group.

In considering whether to purchase from Van Telecom PRC, the Group will seek

quotations from at least two suppliers which are Independent Third Parties offering the

same or comparable products. The Group will purchase the precise connectors from Van

Telecom PRC if the price and quality of the products offered are comparable to or more

favourable to the Group than those offered by such Independent Third Parties for the

same or comparable products. The Renewed Van Telecom PRC Purchase Agreement will

therefore give the Group flexibility to purchase the precise connectors it requires from

Van Telecom PRC if it so wishes at competitive market prices.

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(c) The Renewed C-Flex Electronic Purchase Agreement


Parties: (i) the Company (for itself and on behalf of its Subsidiaries) (as

purchaser)

(ii) C-Flex Electronic (as supplier)


Subject: The Company agreed to purchase, or procure its Subsidiaries

to purchase, and C-Flex Electronic agreed to supply to the

Company and/or its Subsidiaries flexible printed circuits

(“FPCs”) and rigid-flex printed circuit boards (“Rigid-Flex PCBs”) during the contract period.

Price determination: Prices for the FPCs and Rigid-Flex PCBs will be determined

with reference to the price at which comparable types of FPCs

and Rigid-Flex PCBs sold to the Group by suppliers which

are Independent Third Parties under normal commercial terms

in the ordinary and usual course of business, and such price

shall be no less favourable to the Group than is available from

suppliers which are Independent Third Parties.

Annual caps

The annual caps of the transactions contemplated under the Renewed C-Flex Electronic

Purchase Agreement for the relevant periods are set out below:




(RMB) (RMB) (RMB)

Annual caps 40,000,000 40,000,000 40,000,000

The annual caps for the transactions under the Renewed C-Flex Electronic Purchase

Agreement for each of the year ending 31 December 2017, 31 December 2018 and 31

December 2019 were determined with reference to:

(i) the projected demand of the FPCs and Rigid-Flex PCBs that the Group would

purchase from C-Flex Electronic for the production of camera modules and

fingerprint recognition modules for each of the year ending 31 December 2017, 31

December 2018 and 31 December 2019;

(ii) the prevailing market rates and historical price fluctuations of such raw materials;

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(iii) the historical transaction amounts under the Existing C-Flex Electronic Purchase


and the ten months ended 31 October 2016; and

(iv) the expected growth in demand for the camera modules and fingerprint recognition

modules of the Group, taking into account of the launch of new products and the

resulting future increases in the purchases of FPCs and Rigid-Flex PCBs to be

made by the Group from C-Flex Electronic for the Group’s production.


contemplated under the Renewed C-Flex Electronic Purchase Agreement and shall

not be regarded as any indication directly or indirectly as to the respective revenue,

profitability or trading prospects of the Group and/or C-Flex Electronic.


The existing annual caps and the historical transaction amounts under the Existing

C-Flex Electronic Purchase Agreement for each of the year ended 31 December 2014

and 31 December 2015 and the ten months ended 31 October 2016 were as follows:

For the year ended

31 December 2014

For the year ended

31 December 2015


31 October 2016

(RMB) (RMB) (RMB)

Existing annual caps 3,000,000 4,500,000 6,500,000

(Note)


amount

2,990,000 1,701,000 6,000,000


Reasons for entering into the Renewed C-Flex Electronic Purchase Agreement

The Directors (including the independent non-executive Directors) considered that it is

in the interest of the Group to continue the purchases from C-Flex Electronic pursuant to

the Renewed C-Flex Electronic Purchase Agreement for the following reasons:

(i) the purchases from C-Flex Electronic will be at competitive prices not less

favourable than those that the Group can purchase from Independent Third Parties;

(ii) C-Flex Electronic is familiar with the Group’s product specifications, standards

and requirements and the Group has confidence in the quality of the FPCs and

Rigid-Flex PCBs supplied by C-Flex Electronic; and

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(iii) the Directors considered that it is crucial for the Group to maintain the quality

of the FPCs and Rigid-Flex PCBs for the Group’s existing and future production

needs. In view of the Group’s past purchasing experience with C-Flex Electronic,

the Directors are of the view that C-Flex Electronic can effectively fulfill the

Group’s requirements of product quality.

In considering whether to purchase from C-Flex Electronic, the Group will seek

quotations from at least two suppliers which are Independent Third Parties offering the

same or comparable products. The Group will purchase the FPCs and Rigid-Flex PCBs

from C-Flex Electronic if the price and quality of the products offered are comparable

to or more favourable to the Group than those offered by such Independent Third

Parties for the same or comparable products. The Renewed C-Flex Electronic Purchase

Agreement will therefore give the Group flexibility to purchase the FPCs and Rigid-Flex

PCBs it requires from C-Flex Electronic if it so wishes at competitive market prices.

(d) The Renewed Heyuan CK Supply Agreement



(as supplier)

(ii) Heyuan CK (as purchaser)


Subject: The Company agreed to supply, or procure its Subsidiaries to

supply, and Heyuan CK agreed to purchase from the Company

and/or its Subsidiaries camera modules and fingerprint

recognition modules during the contract period. The parties

agreed that Heyuan CK may, by writing, appoint a designated

agent acting for Heyuan CK in respect of the transactions

contemplated under the Renewed Heyuan CK Supply

Agreement and Heyuan CK shall be fully responsible for all

matters and actions carried out by such designated agent.

Price determination: Price for the camera modules and fingerprint recognition

modules to be supplied by the Group will be determined

with reference to the raw material costs and production costs

of the Group and the profit margin, which is expected to be

comparable with the level of profit derived from the Group’s

sales to customers which are Independent Third Parties, subject

to adjustments arising from the expected quantity, quality,

delivery schedule, specifications and market competition.

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Annual caps

The annual caps of the transactions contemplated under the Renewed Heyuan CK Supply

Agreement for the relevant periods are set out below:




(RMB) (RMB) (RMB)

Annual caps 30,000,000 30,000,000 30,000,000

The annual caps for the transactions under the Renewed Heyuan CK Supply Agreement

for each of the year ending 31 December 2017, 31 December 2018 and 31 December

2019 were determined with reference to:

(i) the projected purchases of camera modules and fingerprint recognition modules

that Heyuan CK would purchase from the Group for the production of its products

based on preliminary discussion with Heyuan CK;

(ii) the prevailing market price for camera modules and fingerprint recognition

modules in the open market of the PRC; and

(iii) the historical transaction amounts under the Existing Heyuan CK Supply


and the ten months ended 31 October 2016.


contemplated under the Renewed Heyuan CK Supply Agreement and shall not be

regarded as any indication directly or indirectly as to the respective revenue, profitability

or trading prospects of the Group and/or Heyuan CK.

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The existing annual caps and the historical transaction amounts under the Existing

Heyuan CK Supply Agreement for each of the year ended 31 December 2014 and 31

December 2015 and the ten months ended 31 October 2016 were as follows:

For the year ended

31 December 2014

For the year ended

31 December 2015


31 October 2016

(RMB) (RMB) (RMB)

Existing annual caps 70,500,000 70,500,000 70,500,000

(Note)


amount

70,200,000 69,158,000 65,486,000


Reasons for entering into the Renewed Heyuan CK Supply Agreement

The Group has maintained a stable and amicable business relationship with Heyuan

CK in the past. As the Existing Heyuan CK Supply Agreement is due to expire on 31

December 2016, the Directors (including the independent non-executive Directors)

considered that to continue the sales of camera modules and fingerprint recognition

modules by the Group to Heyuan CK would benefit the Group as the sales revenue

received by the Group from Heyuan CK under the Renewed Heyuan CK Supply

Agreement will provide an additional, reliable and stable source of income for the

Group. Barring unforeseen circumstances, the profit margin for the sale of camera

modules and fingerprint recognition modules to Heyuan which is comparable with the

level of profit derived from the Group’s sales to customers which are Independent Third

Parties can be maintained in the forthcoming years and is expected to bring the Group

both of sales revenue and profits.

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(e) The Renewed Van Telecom PRC Property Lease Agreement

Transaction Background

On 23 June 2016, Kunshan QT (as tenant) entered into a factory building lease

agreement (“First Kunshan QT Lease Agreement”) with Van Telecom PRC (as

landlord) for the lease of (i) the fourth floor (“Fourth Floor”) (with gross floor area

of approximately 4,185 sq.m.) of a factory building situated on No. 1999 Hanpu Road,

Kunshan, Jiangsu Province, the PRC（中國江蘇省昆山市漢浦路1999號）(“Factory Building”) and (ii) 98 units of worker’s dormitories and 3 units of officer’s dormitories

located at No. 1999 Hanpu Road, Kunshan, Jiangsu Province, the PRC（中國江蘇省昆山市漢浦路1999號）(“Dormitories”) for a term commenced from 1 July 2016 and

expiring on 31 December 2018 at an annual rent cap of RMB839,460 for each of the

year ending 31 December 2016, 31 December 2017 and 31 December 2018. Further,

on 16 September 2016, Kunshan QT (as tenant) entered into another factory building

lease agreement (“Second Kunshan QT Lease Agreement”) with Van Telecom PRC

(as landlord) for the lease of the second floor (“Second Floor”) and third floor (“Third Floor”) (with total gross floor area of approximately 8,370 sq.m.) of the Factory

Building for a term commenced from 8 October 2016 and expiring on 31 December

2018 at an annual rent cap of RMB904,865 for each of the year ending 31 December

2016, 31 December 2017 and 31 December 2018.

As all the applicable percentage ratios for the annual rent of each of the First Kunshan

QT Lease Agreement, the Second Kunshan QT Lease Agreement and the aggregated

annual rent of the First Kunshan QT Lease Agreement and the Second Kunshan QT

Lease Agreement are less than 0.1%, the Continuing Connected Transactions under the

First Kunshan QT Lease Agreement and the Second Kunshan QT Lease Agreement are

fully exempted from the reporting, annual review, announcement and the independent

shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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On 16 December 2016, Kunshan QT and Van Telecom PRC entered into the Renewed

Van Telecom PRC Property Lease Agreement in respect of (i) the lease of the Second

Floor, Third Floor and Fourth Floor of the Factory Building (the “Factories”); (ii) the

lease of the second floor of a factory building situated on Building No. 3, 1999 Hanpu

Road, Kunshan, Jiangsu Province, the PRC（中國江蘇省昆山市漢浦路1999號3號房）(“Additional Factory”); and (iii) the option to lease all or any part or parts of the

Dormitories and an additional 49 units of worker’s dormitories and additional 3 units

of officer’s dormitories (“Additional Dormitories”) located at No. 1999 Hanpu Road,

Kunshan, Jiangsu Province, the PRC（中國江蘇省昆山市漢浦路1999號）which rent

will be paid in accordance with the actual amount of occupation of such dormitories,

with the following principal terms:


Parties: (i) Van Telecom PRC (as landlord)

(ii) Kunshan QT (an indirect wholly-owned subsidiary of the

Company) (as tenant)

Term of Lease: 1 January 2017 to 31 December 2019

Property: (i) the Factories, with total gross area of approximately 12,555

sq.m.;

(ii) t he Add i t i ona l Fac to ry, w i th t o t a l g ro s s a r ea o f

approximately 4,050 sq.m.;

(iii) the option to lease all or any part or parts of the Dormitories

and the Additional Dormitories which rent will be paid in

accordance with the actual amount of occupation of such

dormitories;

(the Additional Factory and the Additional Dormitories

are collectively referred to as the “Additional Leased Properties”)

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Rent: (i) a monthly rent of RMB10 per sq.m. (inclusive of property

management fees and tax) for the Second Floor, Third Floor

and Fourth Floor of the Factory Building and the Additional

Factory; and

(ii) a monthly rent of RMB350 each (inclusive of property

management fees and tax) for the total of the 147 units of

worker’s dormitories, and a monthly rent of RMB500 each

(inclusive of property management fees and tax) for the total

of the 6 units of officer’s dormitories

the monthly rent shall be payable quarterly by Kunshan QT to Van

Telecom PRC.

Usage: (i) usage for the Factories and the Additional Factory shall be

production factories of Kunshan QT; and

(ii) usage for the Dormitories and Additional Dormitories shall

be dormitories for employees of Kunshan QT

Rent-free period: there will be a one-month rent free period for the Additional

Leased Properties commencing from 1 January 2017 and expiring

on 31 January 2017;

Early termination: Kunshan QT has the right to early termination of the Renewed

Van Telecom PRC Property Lease Agreement by giving one month

prior written notice to Van Telecom PRC

Other Terms: (i) the parties agreed that the actual amount of rent payable

in relation to the Dormitories and Additional Dormitories

shall be calculated in accordance with the actual amount of

occupation of such dormitories;

(ii) the utilities fees for the Factories, the Additional Factory,

the Dormitories and Additional Dormitories (including

electr ic i ty, water and te lecommunicat ions) wil l be

paid by Kunshan QT separately to Van Telecom PRC

according to the reading of the separate electricity, water

and telecommunications meters installed monthly which

prices are regulated by the relevant electricity, water and

telecommunications authorities, and such utilities fees shall

be directed to the relevant utility authorities by Van Telecom

PRC;

(iii) The First Kunshan QT Lease Agreement and the Second

Kunshan QT Lease Agreement wi l l be te rminated

simultaneously on 31 December 2016.

18

Annual caps

It is expected that the maximum amount of the annual rent payable by Kunshan QT to

Van Telecom PRC under the Renewed Van Telecom PRC Property Lease Agreement for

each of the year ending 31 December 2017, 31 December 2018 and 31 December 2019

shall not exceed RMB2,646,000.

The rent payable by Kunshan QT was determined with reference to:

(i) the rentable area leased by Kunshan QT;

(ii) the prevailing market rent for similar premises in the vicinity; and

(iii) the risk of delay payment from Kunshan QT to Van Telecom PRC is relatively low.

Existing annual cap and historical rent

The existing annual cap under the First Kunshan QT Lease Agreement and the Second

Kunshan QT Lease Agreement for the year ending 31 December 2016 and the historical

rent paid for the ten months ended October 2016 were as follows:


31 October 2016

(RMB)

Existing annual cap under the First Kunshan QT

Lease Agreement

839,460

(Note 1)

Existing annual cap under the Second Kunshan QT

Lease Agreement

904,850

(Note 1)

Historical rent 394,000

(Note 2)

Notes:

1. Annual cap for the entire year of 2016.

2. The total rent paid under the First Kunshan QT Lease Agreement and the Second Kunshan QT

Lease Agreement.

19

Reasons for entering into the Renewed Van Telecom PRC Property Lease Agreement

The Group was in urgent need to expand its manufacturing capacities due to (i)

unexpected rapid growth in customers’ demand since the beginning of 2016 and (ii)

the increase in market share of the Group’s major customers which led to the increase

of orders from such major customers since mid-2016. However, a relatively long

construction period would be required to build new factories in the Group’s existing

manufacturing base, which might bring adverse effect to the Group’s relationship with

its customers. In order to shorten the period required for expansion of manufacturing

capacities, the rent of suitable premises which required minimal time for renovation and

decoration will be in the interest of the Group. As Van Telecom PRC is the registered

owner of the Factory Building, the Dormitories and the Additional Leased Properties

which was available for rent, the Directors (including the independent non-executive

Directors) considered it in the interests of the Company and the Shareholders as a whole

to rent the Factories, the Dormitories and the Additional Lease Properties from Van

Telecom PRC which would allow the Group to expand its manufacturing capacities in a

short period of time and avoid possible disruption to its business.


On 16 December 2016, the Company and Huizhou Youhua entered into the Huizhou Youhua

Purchase Agreement in respect of the supply of voice coil motors and linear motors by

Huizhou Youhua to the Group with the following principal terms:

The Huizhou Youhua Purchase Agreement



(as purchaser)

(ii) Huizhou Youhua (for itself and on behalf of its Subsidiaries)

(as supplier)


Subject: The Company agreed to purchase, or procure its Subsidiaries to

purchase, and Huizhou Youhua and/or its Subsidiaries agreed to

supply to the Company and/or its Subsidiaries voice coil motors

(“VCM”) and linear motors (“LM”) during the contract period.

Price determination: Prices for the VCM and LM will be determined with reference to

the price at which comparable types of VCM and LM sold to the

Group by suppliers which are Independent Third Parties under

normal commercial terms in the ordinary and usual course of

business, and such prices shall be no less favourable to the Group

than is available from suppliers which are Independent Third

Parties.

20

Annual caps

The annual caps of the transactions contemplated under the Huizhou Youhua Purchase

Agreement for the relevant periods are set out below:




(RMB) (RMB) (RMB)

Annual caps 37,000,000 37,000,000 37,000,000

The annual caps for the transactions under the Huizhou Youhua Purchase Agreement for

each of the year ending 31 December 2017, 31 December 2018 and 31 December 2019 were

determined with reference to:

(i) the projected demand of VCM and LM that the Group would purchase from Huizhou

Youhua for the production of camera modules for each of the year ending 31 December

2017, 31 December 2018 and 31 December 2019;

(ii) the prevailing market rates and historical price fluctuations of such electronic

components;

(iii) the historical transaction amounts for each of the year ended 31 December 2014 and 31

December 2015 and the ten months ended 31 October 2016; and

(iv) the expected growth in demand for the camera modules of the Group, taking into account

of the launch of new products and the resulting future increases in the purchases of VCM

and LM to be made by the Group from Huizhou Youhua for the Group’s production.


contemplated under the Huizhou Youhua Electronic Purchase Agreement and shall not be

regarded as any indication directly or indirectly as to the respective revenue, profitability or

trading prospects of the Group and/or Huizhou Youhua.

Historical transaction amounts

The historical transaction amounts between the Group and Huizhou Youhua for each of the

year ended 31 December 2014 and 31 December 2015 and for the period from 1 January 2016

to 29 May 2016 were as follows:

For the year ended

31 December 2014

For the year ended

31 December 2015

For the period from

1 January 2016 to 29 May 2016

(RMB) (RMB) (RMB)


amount

1,677,000 13,541,000 7,250,000

(Note)

21

Note: Before 29 May 2016, the transactions between the Group and Huizhou Youhua were not classified as

connected transactions under the Listing Rules as the entire shareholdings of Huizhou Youhua were held

by Independent Third Parties. On 29 May 2016, Shenzhen Handi (which is a wholly-owned subsidiary

of Shenzhen CK which in turn is owned as to 90% by Mr. He and 10% by Mr Wang) acquired the then

70% shareholdings of Huizhou Youhua (“Acquisition”). After the Acquisition, no transaction between the

Group and Huizhou Youhua had occurred up to the date of this announcement.

Reasons for entering into the Huizhou Youhua Purchase Agreement

The Directors (including the independent non-executive Directors) considered that it is in the

interest of the Group to purchase the VCM and LM from Huizhou Youhua pursuant to the

Huizhou Youhua Purchase Agreement for the following reasons:

(i) the purchases from Huizhou Youhua will be at competitive prices not less favourable

than those that the Group can obtain from suppliers which are Independent Third Parties;

(ii) Huizhou Youhua is familiar with the Group’s product specifications, standards and

requirements and the Group has confidence in the quality of the VCM and LM supplied

by Huizhou Youhua; and

(iii) the Directors considered that it is crucial for the Group to maintain the quality of the

VCM and LM for the Group’s existing and future production needs. In view of the

Group’s past purchasing experience with Huizhou Youhua, the Directors are of the view

that Huizhou Youhua can effectively fulfill the Group’s requirements of product quality.

In considering whether to purchase from Huizhou Youhua, the Group will seek quotations

from at least two suppliers which are Independent Third Parties offering the same or

comparable products. The Group will purchase the VCM and LM from Huizhou Youhua if the

price and quality of the products offered are comparable to or more favourable to the Group

than those offered by such Independent Third Parties for the same or comparable products.

The Huizhou Youhua Purchase Agreement will therefore give the Group flexibility to purchase

the VCM and LM it requires from Huizhou Youhua if it so wishes at competitive market

prices.

22

OPINION OF THE BOARD

Given that the terms of each of the Agreements have been negotiated on arm’s length basis and the

Continuing Connected Transactions contemplated thereunder are on normal commercial terms and

in the ordinary and usual course of business of the Group, the Directors (including the independent

non-executive Directors) are of the view that the terms and conditions of each of the Agreements,

each of the Continuing Connected Transactions contemplated under the Agreements and the annual

caps of each of the Continuing Connected Transactions are fair and reasonable and are in the

interests of the Company and the Shareholders as a whole.

As Mr. He, Mr. Wang and Mr. Hu are interested in the Continuing Connected Transactions due

to their respective shareholdings in Chengdu CK, Van Telecom PRC, C-Flex Electronic, Heyuan

CK and/or Huizhou Youhua, Mr. He, Mr. Wang and Mr. Hu had abstained from voting on the

resolutions passed by the Board to approve the Agreements, the transactions contemplated under

the Agreements and the respective annual caps. Save as disclosed, none of the Directors has a

material interest in the Continuing Connected Transactions or is required to abstain from voting

on the Board resolutions in relation to the Agreements, the transactions contemplated under the

Agreements and the respective annual caps.

LISTING RULES IMPLICATIONS AND AGGREGATION OF ANNUAL CAPS

Chengdu CK is wholly-owned by Shenzhen CK, which in turn is owned as to 90% by Mr. He, the

chairman, an executive Director and the Controlling Shareholder of the Company, and as to 10%

by Mr. Wang, the chief executive officer and an executive Director of the Company. Accordingly,

Chengdu CK is a connected person of the Company under the Listing Rules.

Van Telecom PRC is wholly-owned by CK Telecom, which in turn is wholly-owned by Mr. He.

Accordingly, Van Telecom PRC is a connected person of the Company under the Listing Rules.

C-Flex Electronic is wholly-owned by Shenzhen Handi, a wholly-owned subsidiary of Shenzhen

CK, which in turn is owned as to 90% by Mr. He and as to 10% by Mr. Wang. Accordingly, C-Flex

Electronic is a connected person of the Company under the Listing Rules.

Heyuan CK is wholly-owned by CK Telecom, which in turn is wholly-owned by Mr. He.

Accordingly, Heyuan CK is a connected person of the Company under the Listing Rules.

Huizhou Youhua is owned as to 0.392% by Mr. Hu, an executive Director of the Company, and as to

54.04% by Shenzhen Handi, a wholly-owned subsidiary of Shenzhen CK, which in turn is owned as

to 90% by Mr. He and as to 10% by Mr. Wang. Accordingly, Huizhou Youhua is a connected person

of the Company under the Listing Rules.

Each of the transactions contemplated under the Agreements constitute Continuing Connected

Transactions of the Company under Chapter 14A of the Listing Rules.

23

As all of the applicable percentage ratios of the annual caps under each of the Renewed Chengdu

CK Sub-Lease Agreement and the Renewed Van Telecom PRC Purchase Agreement are less than

0.1%, the Continuing Connected Transactions contemplated under each of the Renewed Chengdu

CK Sub-Lease Agreement and the Renewed Van Telecom PRC Purchase Agreement are fully

exempted from the reporting, annual review, announcement and independent shareholder’s approval

requirements under Chapter 14A of the Listing Rules.

As all of the applicable percentage ratios of the annual caps under each of the Renewed C-Flex

Electronic Purchase Agreement, the Renewed Heyuan CK Supply Agreement, the Renewed Van

Telecom PRC Property Lease Agreement and the Huizhou Youhua Purchase Agreement exceed

0.1% but are less than 5%, the Continuing Connected Transactions contemplated under each of

the Renewed C-Flex Electronic Purchase Agreement, the Renewed Heyuan CK Supply Agreement,

the Renewed Van Telecom PRC Property Lease Agreement and the Huizhou Youhua Purchase

Agreement are subject to the reporting, annual review and announcement requirements but are

exempted from the independent shareholders’ approval requirement under Chapter 14A of the

Listing Rules.

In considering the Company’s compliance obligation under the Listing Rules, the following

Continuing Connected Transactions have been considered by the Company on aggregate basis for

the purpose of the Classification as follows:

(i) the annual caps of the Continuing Connected Transactions contemplated under the Renewed







requirements but are exempted from the independent shareholder’s approval requirement


(ii) the annual caps of the Continuing Connected Transactions entered into by the Group with Van

Telecom PRC, i.e. the Continuing Connected Transactions contemplated under the Renewed

Van Telecom PRC Purchase Agreement and the Renewed Van Telecom PRC Property Lease



Van Telecom PRC Purchase Agreement and the Renewed Van Telecom PRC Property Lease



requirements but are exempted from the independent shareholders’ approval requirement


24

(iii) the annual caps of the Continuing Connected Transactions of trade nature, i.e. the Continuing

Connected Transactions contemplated under the Renewed Van Telecom PRC Purchase

Agreement, the Renewed C-Flex Electronic Purchase Agreement, the Renewed Heyuan CK

Supply Agreement and the Huizhou Youhua Purchase Agreement are considered on aggregate

basis for the purpose of the Classification. As all of the applicable percentage ratios of the

aggregated annual caps for the Renewed Van Telecom PRC Purchase Agreement, the Renewed

C-Flex Electronic Purchase Agreement, the Renewed Heyuan CK Supply Agreement and

the Huizhou Youhua Purchase Agreement exceed 0.1% but are less than 5%, the Continuing

Connected Transactions contemplated thereunder are subject to the reporting, annual review

and announcement requirements but are exempted from the independent shareholders’

approval requirement under Chapter 14A of the Listing Rules; and

(iv) the annual caps of all of the Continuing Connected Transactions contemplated under the

Agreements are also considered on an aggregate basis for the purpose of the Classification. As

all of the applicable percentage ratios of the aggregated annual caps of all of the Continuing

Connected Transactions exceed 0.1% but are less than 5%, the Continuing Connected

Transactions contemplated thereunder are subject to the reporting, annual review and

announcement requirements but are exempted from the independent shareholders’ approval

requirement under Chapter 14A of the Listing Rules.

INTERNAL CONTROL

The following internal control policies and procedures are adopted by the Company to ensure

that the Continuing Connected Transactions entered into by the Group are conducted on normal

commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders

as whole:

(i) in order to ensure that the transaction amounts of the Continuing Connected Transactions will

not exceed the relevant annual caps, the Company will set up the annual caps in its Enterprise

Resource Planning System. A buffer will be maintained for each Continuing Connected

Transaction to allow the management to monitor and control the actual transaction amount of

each Continuing Connected Transaction;

(ii) the finance department and the legal compliance department of the Company will review all

execution contracts under the Continuing Connected Transactions in order to ensure that (a)

the terms and conditions of the Continuing Connected Transactions are fair and reasonable;

(b) the terms and conditions of the Continuing Connected Transactions are in the interests of

the Company and the Shareholders as whole; (c) the terms and conditions of the Continuing

Connected Transactions are comparable with terms and conditions of transactions with

Independent Third Parties and; (d) the terms and conditions of the Continuing Connected

Transactions are capable of being executed. The finance department and the legal compliance

department of the Company will regularly review (a) the implementation of the agreements

for the Continuing Connected Transactions; and (b) the differences between specific terms

and conditions of the Continuing Connected Transactions with terms and conditions of

transactions for similar products with Independent Third Parties;

25

(iii) the finance department will maintain monthly statistics on the transaction amounts of the

Continuing Connected Transactions, and will communicate with the sales and purchase

department of the Group in time for possible future changes in the maximum amount of each

Continuing Connected Transaction and reasons for such changes. In the event of the need to

revise the annual caps of the Continuing Connected Transactions due to market environment

and business development needs, the finance department will report to the Board immediately

for the Board to consider and arrange the relevant Listing Rules compliance procedures in

time. In the event that any terms or conditions of the Continuing Connected Transactions

(including but not limited to pricing) is discovered to be unfair or not in accordance with

normal commercial terms, the finance department will immediately report to the Board and

the audit committee of the Company for amendment and rectification;

(iv) the independent non-executive Directors of the Company and the external auditor of the

Company will conduct annual review of the Continuing Connected Transactions to ensure

compliance with the Listing Rules;

(v) the audit committee, which comprised of all the independent non-executive Directors

of the Company, and the external auditor of the Company will review and analyze the

implementation of the Continuing Connected Transactions in the annual reports and interim

reports of the Company to ensure that the Continuing Connected Transactions are fair and

reasonable; and

(vi) the Company will arrange compliance trainings by its legal adviser or external auditor for the

Directors, senior management and staff from the relevant departments of the Company from

time to time, primarily focusing on the rules relating to connected transactions under Chapter

14A of the Listing Rules.

INFORMATION OF THE GROUP

The Group is primarily engaged in the design, research, development, manufacture and sales

of camera modules and fingerprint recognition modules with focus on mid to high end camera

and fingerprint recognition module market for Chinese branded smart phone and tablet PC

manufacturers.

INFORMATION OF THE CONNECTED PARTIES

Chengdu CK

Chengdu CK is principally engaged in the development and sales of application software;

information services in Type II value-added telecommunication services.

Van Telecom PRC

Van Telecom PRC is principally engaged in the production of mobile communications (including

GSM, CDMA, DSC1800, DECT, IMT2000) handsets, base stations, exchange facilities and digital

trunking communication system, development and production of high-end router, network switch of

one gigabit or above, parts, auxiliary products and other electronic products. Sales of self-produced

products.

26

C-Flex Electronics

C-Flex Electronics is principally engaged in the production, development and sales of self-produced

handsets, mobile communications systems, communications terminals, digital electronic systems,

portable micro calculators, precision moulds, new electronic components, third generation mobile

communications systems handsets, flexible circuit boards and relevant parts, auxiliary products.

Heyuan CK

Heyuan CK is principally engaged in the production, development and sales of self-produced

handsets, mobile communications systems, communications terminals, digital electronic systems,

portable micro calculators, precision moulds, new electronic components, third generation mobile

communications systems handsets and relevant parts, auxiliary products; provision of financial

management, production management human resources services, information technology systems

management services to related companies in the PRC.

Huizhou Youhua

Huizhou Youhua is principally engaged in the development, production and sales of auto-focusing

voice coil motors, linear motors, precise electronic products, domestic trade, import and export of

good and technologies.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have

the following meanings when used herein:

“Agreements” the Renewed Chengdu CK Sub-Lease Agreement, the Renewed

Van Telecom PRC Purchase Agreement, the Renewed C-Flex

Electronic Purchase Agreement, the Renewed Heyuan CK Supply

Agreement, the Renewed Van Telecom PRC Property Lease

Agreement and the Huizhou Youhua Master Purchase Agreement

“associate(s)” has the meaning ascribed thereto under the Listing Rules

“Board” the board of Directors

“C-Flex Electronic” 河源西普電子有限公司 (transliteration “C-Flex Electronic

(Heyuan) Ltd.”) (formerly known as “西普電子（河源）有限公司”), an enterprise established in the PRC with limited liability

and is wholly-owned by Shenzhen Handi, and accordingly a

connected person of the Company

“CK Telecom” CK Telecom Inc., a company incorporated in the British Virgin

Islands with limited liability and is wholly-owned by Mr. He, and

accordingly a connected person of the Company

27

“Company” Q Technology (Group) Company Limited (stock code: 1478),

a company incorporated in the Cayman Islands with limited

liability, the Shares of which are listed on the main board of the

Stock Exchange

“connected person” has the meaning ascribed thereto under the Listing Rules

“Controlling Shareholder” has the meaning ascribed thereto under the Listing Rules

“Chengdu CK” 成都西可科技有限公司 (transliteration “Chengdu CK Technology

Limited”), an enterprise established in the PRC with limited

liability and is wholly-owned by Shenzhen CK, and accordingly a

connected person of the Company

“Chengdu QT” 成都丘鈦微電子科技有限公司 (transliteration “Chengdu Q

Technology Limited”), an enterprise established in the PRC with

limited liability and an indirect wholly-owned subsidiary of the

Company

“Director(s)” the director(s) of the Company

“Existing Agreements” the Existing Chengdu CK Sub-Lease Agreement, the Existing Van

Telecom PRC Purchase Agreement, the Existing C-Flex Electronic

Purchase Agreement, the Existing Heyuan CK Supply Agreement,

the First Kunshan QT Lease Agreement and the Second Kunshan

QT Lease Agreement

“Existing C-Flex

Electronic Purchase

Agreement”

the purchase agreement dated 13 November 2014 entered into

between the Company and C-Flex Electronic for the term

commenced from 1 January 2014 and expiring on 31 December

2016, details of which are summarized in the prospectus of the

Company dated 20 November 2014

“Existing Chengdu CK

Sub-Lease Agreement”the property lease agreement dated 6 June 2014 entered into

between Chengdu QT and Chengdu CK for the term commenced

from 6 June 2014 and expiring on 31 December 2016, details of

which are summarized in the prospectus of the Company dated 20

November 2014

“Existing Heyuan CK Supply

Agreement”the supply agreement dated 13 November 2014 and the

supplemental supply agreement dated 29 November 2014

entered into between the Company and Heyuan CK for the term



Company dated 20 November 2014 and the announcement of the

Company dated 29 December 2014

28

“Existing Van

Telecom PRC Purchase

Agreement”

the purchase agreement dated 13 November 2014 entered into

between the Company and Van Telecom PRC for the term



Company dated 20 November 2014

“Group” the Company and its Subsidiaries

“Heyuan CK” CK Telecom Limited（西可通信技術設備（河源）有限公司）,

a wholly foreign-owned enterprise established in the PRC and

is wholly-owned by CK Telecom, and accordingly a connected

person of the Company

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Huizhou Youhua” 惠州友華微電子科技有限公司 (transliteration “Huizhou Youhua

Micro Electronic Technology Company Limited”), an enterprise

established in the PRC with limited liability and is owned as to

0.392% by Mr. Hu and as to 54.04% by Shenzhen Handi, and


“Huizhou Youhua Purchase

Agreement”the purchase agreement dated 16 December 2016 entered into

between the Company (for itself and on behalf of its Subsidiaries)

and Huizhou Youhua (for itself and on behalf of its Subsidiaries)

for a term commencing from 1 January 2017 and expiring on 31

December 2019

“Independent

Third Party(ies)”any person(s) or company(ies) and their respective ultimate

beneficial owner(s), whom, to the best of the knowledge,

information and belief of the Directors, having made all

reasonable enquiries, is/are independent of, and not connected

with, the Company, any Director(s), chief executive(s) or

substantial shareholder(s) (as defined in the Listing Rules) of the

Company, any of its Subsidiaries or their respective associates.

“Kunshan QT” 昆山丘鈦微電子科技有限公司 (Kunshan Q Technology Limited),

an enterprise established in the PRC with limited liability and an

indirect wholly-owned subsidiary of the Company

“Listing Rules” The Rules Governing the Listing of Securities on The Stock

Exchange

“Mr. He” Mr. He Ningning, the chairman, an executive Director and

the Controlling Shareholder of the Company interested in

approximately 69.46% of the issued shares of the Company as at

the date of this announcement

29

“Mr. Hu” Mr. Hu Sanmu, an executive Director of the Company

“Mr. Wang” Mr. Wang Jianqiang, the chief executive officer and an executive

Director of the Company

“PRC” the People’s Republic of China

“Renewed Agreements” the Renewed Chengdu CK Sub-Lease Agreement, the Renewed

Van Telecom PRC Purchase Agreement, the Renewed C-Flex

Electronic Purchase Agreement, the Renewed Heyuan CK Supply

Agreement and the Renewed Van Telecom PRC Property Lease

Agreement

“Renewed C-Flex

Electronic Purchase

Agreement”

the purchase agreement dated 16 December 2016 entered into


and C-Flex Electronic for a term commencing from 1 January

2017 and expiring on 31 December 2019

“Renewed Chengdu

CK Sub-Lease

Agreement”

the property lease agreement dated 16 December 2016 entered

into between Chengdu QT and Chengdu CK for a term

commencing from 1 January 2017 and expiring on 31 December

2019

“Renewed Heyuan

CK Supply Agreement”the supply agreement dated 16 December 2016 entered into


and Heyuan CK for a term commencing from 1 January 2017 and

expiring on 31 December 2019

“Renewed Van Telecom

PRC Purchase Agreement”the purchase agreement dated 16 December 2016 entered into


and Van Telecom PRC for a term commencing from 1 January

2017 and expiring on 31 December 2019

“Renewed Van Telecom

PRC Property

Lease Agreement”

the property lease agreement dated 16 December 2016 entered

into between Kunshan QT and Van Telecom PRC for a term

commencing from 1 January 2017 and expiring on 31 December

2019

“Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the

Company

“Shareholder(s)” holder(s) of the Share(s)

“Shenzhen CK” 深圳市西可德信通信技術設備有限公司 ( t rans l i te ra t ion “Shenzhen Xike Dexin Telecom Equipment Co., Ltd.”), an

enterprise established in the PRC with limited liability and is

owned as to 90% by Mr. He and as to 10% by Mr. Wang, and


30

“Shenzhen Handi” 深圳市漢迪創業投資有限公司 (transliteration “Shenzhen

Handi Venture Capital Investment Co., Ltd.”), an enterprise

established in the PRC with limited liability and is wholly-owned

by Shenzhen CK, and accordingly a connected person of the

Company

“subsidiaries” has the same meaning as in Section 15 of the Companies

Ordinance (Cap 622) of the Laws of Hong Kong and if the

context requires, for the purpose of the Listing Rules only, has the

meaning ascribed to it under Rule 1.01 of the Listing Rules

“sq.m.” square meter

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Van Telecom PRC” 唯安科技有限公司 (transliteration “Van Telecom Limited”),

a wholly foreign-owned enterprise established in the PRC and

is wholly-owned by CK Telecom, and accordingly a connected

person of the Company

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

“%” per cent.

By Order of the Board

Q Technology (Group) Company LimitedHe Ningning

Chairman and Executive Director

Hong Kong, 16 December 2016

As at the date of this announcement, the Executive Directors are Mr. He Ningning (Chairman), Mr.

Wang Jianqiang (Chief Executive Officer) and Mr. Hu Sanmu; and the Independent Non-executive

Directors are Mr. Chu Chia-Hsiang, Ms. Chen Jun and Mr. Ng Sui Yin.

Documents

Q TECHNOLOGY (GROUP) COMPANY LIMITED 丘鈦 …...Lease Agreement for the lease of the Fourth Floor of the Factory Building and the Dormitories for a term commenced from 1 July 2016