Details of the CCT Agreements are set out below:
Supply Agreement
Date: February 28, 2011
Parties: NEC and NEC Embedded Products, Ltd. (“NECP”) (formerly known as NEC Personal Products, Ltd.), a wholly owned subsidiary of NEC (whose rights and obligations were transferred to NEC Personal Computers, Ltd. (“NECPC”), a member of the JVCo Group, on and following the Closing Date)
Services provided/received: The supply of certain “NEC” branded personal computer products to NEC.
Term: For a period of five years commencing from the Closing Date or until the date on which NEC no longer holds any shares in JVCo, whichever the earlier.
Annual cap(Note 1): 1/7/2011 – 31/3/2012: JPY65,018 million (US$786,717,800) 1/4/2012 – 31/3/2013: JPY88,132 million (US$1,066,397,200) Revised annual cap(Note 2): 1/4/2013 – 31/3/2014: JPY140,000 million (US$1,372,000,000)
1/4/2014 – 31/3/2015: JPY140,000 million (US$1,372,000,000) 1/4/2015 – 31/3/2016: JPY140,000 million (US$1,372,000,000) 1/4/2016 – 1/7/2016: JPY35,000 million (US$343,000,000)
Transitional Services Agreement
Date: May 30, 2011
Parties: The Company and NEC
Services provided/received: Services to be provided by NEC Group to JVCo Group and vice versa including business infrastructure related services, development & production services, sales related services, maintenance & support services, real estate services and information technology services. Term: For a period of five years commencing from the Closing Date or until the mutual agreement of
the parties to early terminate the agreement, whichever the earlier.
Annual cap(Note 1): Annual fees for services provided to JVCo Group by NEC Group (payable to NEC): 1/7/2011 – 31/3/2012: JPY23,793 million (US$287,895,300)
1/4/2012 – 31/3/2013: JPY32,351 million (US$391,447,100) 1/4/2013 – 31/3/2014: JPY32,791 million (US$396,771,100) 1/4/2014 – 31/3/2015: JPY33,220 million (US$401,962,000) 1/4/2015 – 31/3/2016: JPY33,660 million (US$407,286,000) 1/4/2016 – 1/7/2016: JPY8,415 million (US$101,821,500)
Annual fees for services provided to NEC Group by the JVCo Group (payable from NEC): 1/7/2011 – 31/3/2012: JPY7,070 million (US$85,547,000)
1/4/2012 – 31/3/2013: JPY9,504 million (US$114,998,400) 1/4/2013 – 31/3/2014: JPY9,592 million (US$116,063,200) 1/4/2014 – 31/3/2015: JPY9,691 million (US$117,261,100) 1/4/2015 – 31/3/2016: JPY9,790 million (US$118,459,000) 1/4/2016 – 1/7/2016: JPY2,448 million (US$29,620,800)
DIRECTORS’ REPORT
CONTINUING CONNECTED TRANSACTIONS
(continued)NEC Fielding Agreement
Date: January 15, 2004
Parties: NEC Fielding Ltd., a subsidiary of NEC, and NECP (whose rights and obligations were transferred to NECPC, a member of the JVCo Group, on and following the Closing Date) Services provided/received: NEC Fielding Ltd. agreed to provide maintenance and other ancillary services for certain
equipments sold by the JVCo Group following the Closing Date.
Term: The initial term ended on March 31, 2004 and is automatically renewed for additional one-year term unless either party gives prior termination notice.
Annual cap(Note 1): 1/7/2011 – 31/3/2012: JPY2,665 million (US$32,246,500) 1/4/2012 – 31/3/2013: JPY3,553 million (US$42,991,300) 1/4/2013 – 31/3/2014: JPY3,553 million (US$42,991,300) 1/4/2014 – 31/3/2015: JPY3,553 million (US$42,991,300) 1/4/2015 – 31/3/2016: JPY3,553 million (US$42,991,300) 1/4/2016 – 1/7/2016: JPY888 million (US$10,744,800)
NESIC Agreement
Date: August 18, 2003
Parties: NEC Networks & System Integration Corporation (“NESIC”), an associate of NEC, and NECP (whose rights and obligations were transferred to NECPC, a member of the JVCo Group, on and following the Closing Date)
Services provided/received: NESIC agreed to provide NECPC with operation and maintenance services for intranet and other internal communication systems of NECPC following the Closing Date.
Term: The term ended on March 31, 2004 and is automatically renewed for additional one-year terms unless either party gives prior termination notice.
Annual cap(Note 1): 1/7/2011 – 31/3/2012: JPY58 million (US$701,800) 1/4/2012 – 31/3/2013: JPY77 million (US$931,700) 1/4/2013 – 31/3/2014: JPY77 million (US$931,700) 1/4/2014 – 31/3/2015: JPY77 million (US$931,700) 1/4/2015 – 31/3/2016: JPY77 million (US$931,700) 1/4/2016 – 1/7/2016: JPY19 million (US$229,900)
NEC Patent Licence Agreement
Date: The Closing Date
Parties: NEC and NECPC (a member of the JVCo Group on and following the Closing Date)
Services provided/received: NEC agreed to grant a licence of certain patents used in connection with the operation of NEC’s personal computer business in Japan to NECPC at a royalty of 0.03% of gross sales of certain products and/or services of NEC’s personal computer business in Japan bearing the “NEC”. Term: For a period of five years commencing from Closing Date expiring upon the earlier of (i) the
fifth anniversary of the Closing Date, and (ii) expiration of the last to expire of the patents licensed under the NEC Patent License Agreement. The NEC Patent License Agreement will automatically renew for a further period not terminating after the expiration of the last to expire of the patents licensed under the NEC Patent License Agreement.
Annual cap(Note 1): 1/7/2011 – 31/3/2012: JPY50 million (US$605,000) 1/4/2012 – 31/3/2013: JPY66 million (US$798,600) Revised annual cap(Note 2): 1/4/2013 – 31/3/2014: JPY79 million (US$774,200) 1/4/2014 – 31/3/2015: JPY79 million (US$774,200) 1/4/2015 – 31/3/2016: JPY79 million (US$774,200) 1/4/2016 – 1/7/2016: JPY20 million (US$196,000)
CONTINUING CONNECTED TRANSACTIONS
(continued)NEC Newco Brand Licence Agreement
Date: The Closing Date
Parties: NEC and NECPC (a member of the JVCo Group on and following the Closing Date)
Services provided/received: NEC agreed to grant NECPC a licence to use certain rights in connection with the letters and the mark “NEC” at royalty payable to NEC by NECPC.
Revised Term: Commence on the Closing Date to June 30, 2018 and shall automatically extend for an additional term of one year to a date no later than June 30, 2026 pursuant to the amendment agreement dated October 7, 2014.
Annual cap(Note 1): 1/7/2011 – 31/3/2012: JPY512 million (US$6,195,200) 1/4/2012 – 31/3/2013: JPY682 million (US$8,252,200) 1/4/2013 – 31/3/2014: JPY682 million (US$8,252,200) 1/4/2014 – 31/3/2015: JPY682 million (US$8,252,200) 1/4/2015 – 31/3/2016: JPY682 million (US$8,252,200) 1/4/2016 – 1/7/2016: JPY170 million (US$2,057,000)
In accordance with rule 14A.55 of the Listing Rules, the independent non-executive directors of the Company reviewed the continuing connected transactions in the paragraph above and confirmed that the transactions were entered into:
(i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms or better; and
(iii) according to the relevant agreement governing them on terms that are fair and reasonable and in the interests of the shareholders of the Group as a whole.
Pursuant to rule 14A.56 of the Listing Rules, the Company’s auditor was engaged to report on the Group’s continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” Issued by the Hong Kong Institute of Certified Public Accountants. The auditor has issued an unqualified letter containing findings and conclusions in respect of the continuing connected transactions disclosed by the Group in the paragraph above in accordance with rule 14A.56 of the Listing Rules. A copy of the auditor’s letter has been provided by the Company to the Stock Exchange.
Note 1: The translation of Japanese yen into United States dollars is based on the exchange rate of JPY1.00 to US$0.0121 for information purposes only.
Note 2: The translation of Japanese yen into United States dollars is based on the exchange rate of JPY1.00 to US$0.0098 for information purposes only.
AUDITOR
The financial statements for the year have been audited by PricewaterhouseCoopers who retire and, being eligible, offer themselves for re-appointment.