Wasion : Announcements and Notices - Connected Transaction

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3393)

CONNECTED TRANSACTION

On 12 January 2017, Wasion Information Technology, a wholly-owned subsidiary of the Company, entered into two investment agreements with the Investors, pursuant to which, the Investors have agreed to contribute an aggregate of RMB100.44 million to subscribe for RMB40.02 million of the registered capital of Wasion Information Technology, representing an aggregate of 9% of the enlarged equity interest of Wasion Information Technology.

Wasion Information Technology is an indirect wholly-owned subsidiary of the Company which is principally engaged in the research and development, manufacture and sale of data collection terminals. Upon completion of the Capital Increase, Wasion Information Technology will remain as a subsidiary of the Group.

As each of the Investors is a Director and the First Investor is also the controlling shareholder of the Company, the Capital Increase constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Capital Increase is more than 0.1% but less than 5%, the Capital Increase is subject to the reporting and announcement requirements and exempted from the Independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

INTRODUCTION

On 12 January 2017, Wasion Information Technology, a wholly-owned subsidiary of the Company, entered into two investment agreements with the Investors, pursuant to which, the Investors have agreed to inject capital with an aggregate amount of RMB100.44 million to Wasion Information Technology.

THE CAPITAL INCREASE

(1) The First Investment Agreement

Date

12 January 2017

Parties to the First Investment Agreement

1. Wasion Information Technology; and

2. Mr. Ji Wei.

The First Investor is an executive Director and the controlling shareholder of the Company and is a connected person of the Company.

Amount of capital to be contributed under the First Investment Agreement

Pursuant to the terms of the First Investment Agreement, the First Investor will contribute RMB66.96 million to subscribe for RMB26.68 million of the registered capital of Wasion Information Technology, representing 6% of the enlarged equity interest of Wasion Information Technology.

1. The Second Investment Agreement

   Date

   12 January 2017

   Parties to the Second Investment Agreement

2. Wasion Information Technology; and

3. Mr. Kat Chit.

The Second Investor is a non-executive Director and the son of the First Investor and is a connected person of the Company.

Amount of capital to be contributed under the Second Investment Agreement

Pursuant to the terms of the Second Investment Agreement, the Second Investor will contribute RMB33.48 million to subscribe for RMB13.34 million of the registered capital of Wasion Information Technology, representing 3% of the enlarged equity interest of Wasion Information Technology.

OTHER TERMS OF THE INVESTMENT AGREEMENTS

Conditions

Completion of the Capital Increase is conditional upon the satisfaction or waiver of the following conditions:

1. the parties having executed the relevant Investment Agreement and related documents;

2. Wasion Information Technology has obtained its internal approval with respect to the Capital Increase;

3. Wasion Information Technology has obtained the approval of its shareholders on the Capital Increase and its existing shareholders have waived their priority rights to the Capital Increase and other related rights;

4. the parties having signed the joint venture agreement with respect to the Capital Increase of Wasion Information Technology;

5. Wasion Information Technology has completed its registration of the Capital Increase with the Administrative Bureau for Industry and Commerce and the filing of the Capital Increase with the foreign investment supervisory organisation; and

6. the representation and warranties of the parties under the relevant Investment Agreement remaining true, accurate and complete and there has not been any material adverse change, and there had not been any act of breach of any obligations under the relevant Investment Agreement by the parties as at the date of completion of the Capital Increase.

Basis of determining the equity interest attributable to the Investors

The aggregate amount of the Capital Increase is RMB100.44 million, of which RMB40.02 million will be contributed to the registered capital of Wasion Information Technology and RMB60.42 million will be contributed to the capital reserve of Wasion Information Technology.

The amount of Capital Increase was determined with reference to the ex-dividend net asset value of Wasion Information Technology and Weiming Energy (which is a wholly owned subsidiary of the Company and is in the process of being reorganised to become a subsidiary of Wasion Information Technology to enable the data collection terminal, water, gas and heat meter business of the Group to operate more independently and to provide a clearer structure from that of the smart power meter business of the Group) as at 30 June 2016 plus a premium of approximately 10.5%. Using the aggregate net profit of Wasion Information Technology and Weiming Energy for 2015 as reference, the price-to-earning ratio of the Capital Increase is approximately 11.45, which is 29% above the price-to- earning ratio of 8.87 for the Company as at the date of this announcement. The pricing of the Capital Increase was determined based on the expected development potential of Wasion Information Technology and after arm's length negotiations between all parties.

Completion

Upon the satisfaction or waiver of the conditions to the Investment Agreements, Wasion Information Technology will notify the Investors in writing whereupon the Investors will notify Wasion Information Technology (the ''Notice'') within 5 business days of the date for the completion of the Capital Increase to take place, which must be a day that fall within 5 days of the date of the Notice.

INFORMATION ABOUT WASION INFORMATION TECHNOLOGY AND WEIMING ENERGY

Wasion Information Technology is a limited liability company established in the PRC which is principally engaged in the research and development, manufacture and sale of data collection terminals. Weiming Energy is a limited liability company established in the PRC which is principally engaged in the research and development, manufacture and sale of water, gas and heat meters. Weiming Energy is in the process of being reorganised to become a subsidiary of Wasion Information Technology.

According to the unaudited financial statements of Wasion Information Technology, the financial results of Wasion Information Technology for the two years ended 31 December 2014 and 2015 are as follows:

For the year ended 31 December

2014 (unaudited) RMB'000	2015 (unaudited) RMB'000
Net profit before tax	88,990	88,650
Net profit after tax	75,810	76,510

The net asset value of Wasion Information Technology as at 30 June 2016 was RMB861.97 million.

According to the unaudited financial statements of Weiming Energy, the financial results of Weiming Energy for the two years ended 31 December 2014 and 2015 are as follows:

For the year ended 31 December

2014 (unaudited) RMB'000	2015 (unaudited) RMB'000
Net profit before tax	10,660	13,880
Net profit after tax	10,660	12,670

The net asset value of Weiming Energy as at 30 June 2016 was RMB227.45 million.