The following chairman's address was read out to shareholders at the AGM, and a copy was distributed. I assume the same thing or a version of it will appear on ASX on Monday. My efforts to convert the printed letter into text below might have errors.
Market UpdateXPD Soccer Gear Group Limited ("XPD" or "Company") has requested suspension from trading due to ongoing uncertainty surrounding the transfer of funds from China to Australia. XPD (China) has transferred approximately $520,000 to Australia since the current Australian directors joined the Board to assist with the reinstatement and business of the Company on 29 March 2018. These ongoing transfers, together with personal meetings in China, gave the Board the confidence that there was a genuine desire from the Chinese entity to remain listed in Australia and allowed the Board to continue to endeavour to move forward in a co-operative fashion with the existing management.
Since finalising the full year audit on 28 February 2019 it has become evident that the funds in China, whilst perhaps having some Government restrictions on their transferability, are not currently accessible due to the actions of the Board of the operating company, Jinjiang Chaoda Shoes and Garment Co., Limited ("Chaoda"). This Company's sole shareholder is China Soccer Holdings Co, Ltd, which in turn has as its sole shareholder the Australian entity, XPD. However, both of the subsidiary Boards are controlled by the founder family.
The Australian Board is now seeking additional clarity on the funds in China and has moved to control the Hong Kong intermediary company, China Soccer Holdings Co, Ltd. ("HK Soccer") through the appointment of an additional three Board Members to that entity which was approved by the board of XPD on 30 May 2019. We have immediately, as sole shareholder of Chaoda, demanded financial information including supporting documents, in accordance with our rights as the sole shareholder under China company law.
If Chaoda does not comply with this demand, then China Soccer Holdings will consider its next legal actions which may include a request to secure all assets belonging to Chaoda and to access financial information by court order due to a breach of Chinese Law.
The Australian Board has been assisted in these matters by ACA Partners Pte Ltd of Singapore who control 41,153,621 shares (ASX: "
Change in Substantial Shareholding" 8 June 2017), or 9.4% of the Company's shares.
The outcomes of these actions remain uncertain due to the cross border jurisdictional issues, and accordingly the Company requests ongoing suspension whilst the Board endeavours to work through these issues.
Simon Lill Director
Neil Sheather Director
