AP Rentals : INSIDE INFORMATION - TERMINATION OF COOPERATION AGREEMENT

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AP RENTALS HOLDINGS LIMITED

亞 積 邦 租 賃 控 股 有 限 公 司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1496)

INSIDE INFORMATION

TERMINATION OF COOPERATION AGREEMENT

This announcement is made by AP Rentals Holdings Limited (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Termination of the Cooperation Agreement

Reference is made to the prospectus of the Company dated 24 March 2016 ("Prospectus"). As disclosed in the Prospectus, on 19 June 2015, AP Rentals Limited ("APRL"), a wholly- owned subsidiary of the Company, entered into a cooperation agreement ("Cooperation Agreement") with Kanamoto (HK) Co., Limited ("Kanamoto HK") and 株式会社カナモト (Kanamoto Co., Ltd.*) ("Kanamoto Japan"), pursuant to which the parties agreed to cooperate commercially in respect of equipment rental and other ancillary matters such as the provision of technical, maintenance, rental, acquisition, disposal and storage support. The Cooperation Agreement took effect from 19 June 2015 and shall continue in full force and effect for an initial term of 5 years ("Initial Term"). Subject to the terms of the Cooperation Agreement, the Cooperation Agreement can be terminated by any party to the Cooperation Agreement on the date of expiration of the Initial Term, provided that a written notice is served on the other parties at least 6 months prior to the date of expiration of the Initial Term.

Kanamoto HK is a wholly-owned subsidiary of Kanamoto Japan. As at the date of this announcement, Kanamoto Japan held approximately 7.5% of the shares of the Company.

On 9 December 2019, APRL received a written notice from Kanamoto Japan, to terminate the Cooperation Agreement on the date of expiration of the Initial Term due to the change of the business and investment strategies of Kanamoto Japan.

• For identification purposes only

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Kanamoto Japan has indicated that they may work with APRL using other approaches in the future.

Effect of termination on the business and operations of the Group

The board of directors of the Company ("Board") considers that the Group will be able to purchase or rent equipment to meet its business needs from a number of alternative suppliers (including but not limited to its largest supplier) without any significant difficulties after the Cooperation Agreement is terminated. Furthermore, notwithstanding the termination of the Cooperation Agreement, the Group may purchase equipment from Kanamoto Japan and/or Kanamoto HK after arm's length negotiations.

As disclosed in the annual report of the Company for the year ended 31 March 2019, the percentage of total purchases of the Group (defined as the sum of (i) the Group's total cost of sales less staff cost and depreciation and (ii) purchases of the Group's owned rental equipment) ("Percentage of Total Purchases") for the year ended 31 March 2019 attributable to the Group's largest supplier was approximately 26.1%.

On the other hand, the Percentage of Total Purchases for the year ended 31 March 2019 attributable to Kanamoto HK was only approximately 18.0% (for the year ended 31 March 2015: 35.8%).

Further, the Group has more than 6 months to alleviate any effects that the termination of the Cooperation Agreement may have on the Group's business and operations. Apart from purchasing or renting equipment from other suppliers, the Group may also utilize its existing equipment fleet to meet its business needs. The size of the Group's equipment fleet, measured in terms of net book value, has been increased by approximately 67.9% as at 31 March 2019 when compared to that as at 31 March 2015.

Based on the reasons set out above, the Board is of the view that the termination of the Cooperation Agreement will not have any material adverse impact on the business and operations of the Group.

By order of the Board

AP Rentals Holdings Limited

Lau Pong Sing

Chairman and Executive Director

Hong Kong, 11 December 2019

As at the date of this announcement, the Board comprises two executive directors, namely Mr. Lau Pong Sing and Ms. Chan Kit Mui, Lina, one non-executive director, namely Mr. Nakazawa Tomokatsu and three independent non-executive directors, namely Mr. Ho Chung Tai, Raymond, Mr. Siu Chak Yu and Mr. Li Ping Chi.

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