By Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 00121)
CONTINUING CONNECTED TRANSACTIONS CONTINUING CONNECTED TRANSACTIONS
Reference is made to the announcement issued by the Company
dated 19 October 2010 in relation to the 2011 SLS Sub-Lease
and the 2011 CP Lotus Consulting Agreement. As the terms of
the
2011 SLS Sub-Lease and the 2011 CP Lotus Consulting Agreement
have expired on 31 December
2011, in order to continue the sub-lease of Property A and
Property B by SLS to CTCREM and its
subsidiary and the provision of consultancy services by
CTCREM to the Group, on
20 January 2012, the following agreements were entered
into:
(i) the 2012 SLS Sub-Lease; and
(ii) the 2012 CP Lotus Consulting Agreement.
Pursuant to the 2012 SLS Sub-Lease, SLS shall sublet to
CTCREM the property located at No.
2128 Yang Gao Zhong Lu, Pudong New District, Shanghai, the
PRC, with a total floor area of
approximately 6,527 square meters, and to Shanghai ZDSH the
property located at Level 1, No. 541
Tian Shan Xi Lu, Chang Ning District, Shanghai, the PRC, with
a total floor area of approximately
8,600 square meters, respectively.
Pursuant to the 2012 CP Lotus Consulting Agreement, CTCREM shall provide to SLS, Beijing Lotus, Zhengzhou Lotus and Xuzhou Lotus consultancy services including market research, merchandise position, store layout, merchandise composition and other operational matters to various Stores in Eastern China and Northern China.
LISTING RULES IMPLICATIONSThe Chearavanont Shareholders, through CPG, a company in which they have a combined 51.31% shareholding interest, are interested in approximately 75% in aggregate of the issued share capital of the Company, and are therefore collectively the controlling shareholders of the Company. As the Chearavanont Shareholders and their associates, on an aggregate basis, are collectively also the controlling shareholders of CTCREM, CTCREM is an associate and a connected person of the Company for the purposes of the Listing Rules.
1
In view of the above, each of the 2012 SLS Sub-Lease and the
2012 CP Lotus Consulting
Agreement constitutes a continuing connected transaction
under the Listing Rules.
Given that each of the relevant percentage ratios (other than
the profits ratio) for the Continuing Connected Transactions
is on an annual basis less than 5%, the Continuing Connected
Transactions constitute continuing connected transactions
exempt from independent shareholders' approval and is subject
to reporting and announcement requirements only under the
Listing Rules.
Reference is made to the announcement issued by the Company
dated 19 October 2010 in relation to the 2011 SLS Sub-Lease
and the 2011 CP Lotus Consulting Agreement. As the terms of
the
2011 SLS Sub-Lease and the 2011 CP Lotus Consulting Agreement
have expired on 31 December
2011, in order to continue the sub-lease of Property A and
Property B by SLS to CTCREM and its
subsidiary and the provision of consultancy services by
CTCREM to the Group, the 2012 SLS Sub-
Lease and the 2012 CP Lotus Consulting Agreement were entered
into on 20 January 2012.
(a) Date
20 January 2012 (b) Parties
(i) SLS (as the sub-lessor); and
(ii) CTCREM (as the sub-lessee) (on behalf of itself and
Shanghai ZDSH).
(c) Properties
(i) Shanghai ZDSH as the occupier:
Level 1, No. 541 Tian Shan Xi Lu, Chang Ning District,
Shanghai, the PRC, with a
total floor area of approximately 8,600 square meters
(Property A).
(ii) CTCREM as the occupier:
No. 2128 Yang Gao Zhong Lu, Pudong New District, Shanghai,
the PRC, with a
total floor area of approximately 6,527 square meters
(Property B). Property B has
been and will continue to be used as a shopping mall by
CTCREM.
(d) Term
From 1 January 2012 to 31 December 2012
2
(e) Rental
A monthly rental of RMB1,364,000 (approximately HK$1,679,000)
for the period from 1
January 2012 to 30 April 2012 and RMB1,389,000 (approximately
HK$1,710,000) for the
period from 1 May 2012 to 31 December 2012, equivalent to an
annual rental of
RMB16,568,000 (approximately HK$20,400,000), plus (i) a
commission of 5% on the
excess of subletting rental income received by CTCREM and/or
Shanghai ZDSH over the
rental receivable by SLS under the 2012 SLS Sub-Lease; (ii) a
commission of 15% on the
advertising and promotion income received by Shanghai ZDSH
derived from Property A;
and (iii) a commission of 15% on the advertising and
promotion income received by
CTCREM derived from Property B.
The monthly rental in respect of the sub-lease is payable by
Shanghai ZDSH in advance of the relevant month and by CTCREM
in arrears of the relevant month. The commissions are payable
quarterly in arrears following the relevant quarter.
(f) Annual cap and historical figures
For the year ended 31 December 2011, the aggregate annual
rental and commissions received by SLS under the 2011 SLS
Sub-Lease amounted to approximately RMB17,710,000
(approximately HK$21,806,000).
The annual cap for the aggregate of the annual rental and
commissions due under the 2012
SLS Sub-Lease during its term is set at RMB18,200,000
(approximately HK$22,410,000).
The annual cap for the 2012 SLS Sub-Lease represented by the
annual rentals and commissions has been determined by
reference to historical rental and commissions received by
SLS and the market rental of other similar properties in the
neighboring area in Shanghai. In view of the potential
growth, it is a term of the 2012 SLS Sub-Lease that SLS
charges a subletting commission on the subletting rental
income received by CTCREM and Shanghai ZDSH and this is not
an uncommon practice in the retail business to charge such
subletting commissions.
(a) Date
20 January 2012 (b) Parties
(i) the Company (on behalf of SLS, Beijing Lotus, Zhengzhou
Lotus and Xuzhou
Lotus); and
(ii) CTCREM.
(c) Service and Service Fee
Provision by CTCREM to SLS, Beijing Lotus, Zhengzhou Lotus
and Xuzhou Lotus of consultancy services including market
research, merchandise position, store layout, merchandise
composition and other operational matters in relation to:
(i) 20 Stores operated by SLS in Shanghai, including one
expected to be opened in
October 2012;
(ii) 2 Stores operated by Beijing Lotus in Beijing;
(iii) 1 Store operated by Zhengzhou Lotus in Zhengzhou;
and
(iv) 1 Store operated by Xuzhou Lotus in Xuzhou.
3
The Company shall pay (or procure to be paid) to CTCREM a
monthly service fee of no more than RMB713,000 (approximately
HK$878,000) determined by reference to the personnel and
administrative costs incurred by CTCREM to provide the
services. This monthly service fee shall be payable before
the 25th day of the relevant calendar month by way of bank
transfer.
(d) Term
(i) with respect to the 20 Stores operated by SLS in Shanghai
- from 1 January 2012 to
31 December 2012;
(ii) with respect to the 2 Stores operated by Beijing Lotus
in Beijing - from 1 January
2012 to 31 December 2012;
(iii) with respect to the 1 Store operated by Zhengzhou Lotus
in Zhengzhou - from
January 2012 to 31 December 2012; and
(iv) with respect to the 1 Store operated by Xuzhou Lotus in
Xuzhou - from 1 January
2012 to 30 September 2012.
(e) Annual cap and historical figures
For the year ended 31 December 2011, the aggregate annual
services fees under the 2011 CP Lotus Consulting Agreement
amounted to approximately RMB5,664,000 (approximately
HK$6,974,000).
The annual cap for the payments under the 2012 CP Lotus
Consulting Agreement for the financial year ending 31
December 2012 is set at RMB6,400,000 (approximately
HK$7,880,000). The annual cap has been determined by
reference to the aggregate payments payable by SLS, Beijing
Lotus, Zhengzhou Lotus and Xuzhou Lotus under the
2012 CP Lotus Consulting Agreement.
The Company is an investment holding company whose
subsidiaries are engaged in the operation of large scale
hypermarket stores in the PRC.
CTCREM is a company established in the PRC with limited
liability and is principally engaged in the leasing and
redevelopment of retail stores in the PRC, provision of
management consultancy services and sales of goods.
SLS, a wholly-owned subsidiary of the Company, is engaged in
the business of the operation of large scale hypermarket
stores in the eastern region of the PRC.
The Directors consider that, by renewing the 2011 SLS Sub-Lease, SLS can continue to maximize usage of Property A and Property B which it has leased from Independent Third Parties under head leases and SLS can also increase the variety of merchandise available in the vicinity of the hypermarket stores operated by SLS at such properties. Moreover, the 2012 SLS Sub-Lease has been entered into based on similar commercial terms as the 2011 SLS Sub-Lease. Taking into account that the 2012 SLS Sub-Lease provides SLS with a steady source of revenue from one tenant for two premises, the Directors are of the view that the 2012 SLS Sub-Lease is beneficial to the Company.
4
2012 CP Lotus Consulting Agreement
The Directors consider that, by renewing the 2011 CP Lotus
Consulting Agreement, SLS and Beijing Lotus can continue, and
Zhengzhou Lotus and Xuzhou Lotus will be able, to gain the
expertise and experience of CTCREM and receive from CTCREM
relevant consultancy services at fees which, the Directors
believe, are comparable to the normal market rate for similar
consultancy services. The Directors also consider that the
consultancy services provided by CTCREM can improve the
vibrancy of the shopping concept and operations of the stores
operated by SLS, Beijing Lotus, Zhengzhou Lotus and Xuzhou
Lotus, which will be able to tap on brandname sub-tenants or
concessionaires which can complement their retail operations.
Through receiving the relevant consultancy services from
CTCREM, the stores of SLS, Beijing Lotus, Zhengzhou Lotus,
and Xuzhou Lotus can achieve a unified nationwide image in
their own respective consignment areas while allowing for
local preferences and tastes. The 2012 CP Lotus Consulting
Agreement has been entered into on similar commercial terms
as the 2011 CP Lotus Consulting Agreement. Taking into
accounts the benefits to be received by the Group under the
2012 CP Lotus Agreement, the Directors are of the view that
the 2012 CP Lotus Consulting Agreement is beneficial to the
Company.
In view of the above, the Directors (including the
independent non-executive Directors) consider that the terms
of the Continuing Connected Transactions are on normal
commercial terms, fair and reasonable and in the interests of
the Company and the Shareholders as a whole.
The Chearavanont Shareholders, through CPG, a company in
which they have a combined 51.31% shareholding interest, are
interested in approximately 75% in aggregate of the issued
share capital of the Company, and are therefore collectively
the controlling shareholders of the Company. As the
Chearavanont Shareholders and their associates, on an
aggregate basis, are collectively also the controlling
shareholders of CTCREM, CTCREM is an associate and connected
person of the Company for the purposes of the Listing
Rules.
In view of the above, each of the 2012 SLS Sub-Lease and the
2012 CP Lotus Consulting
Agreement constitutes a continuing connected transaction of
the Company under the Listing Rules.
Given that each of the relevant percentage ratios (other than
the profits ratio) for the Continuing Connected Transactions
is on an annual basis less than 5%, the Continuing Connected
Transactions constitute continuing connected transactions
exempt from independent shareholders' approval and is subject
to reporting and announcement requirements only under the
Listing Rules. As Mr. Dhanin Chearavanont, the chairman of
the Board, has a controlling interest in CTCREM together with
other Chearavanont Shareholders, the Board considers that Mr.
Dhanin Chearavanont has a material interest in the Continuing
Connected Transactions, and accordingly Mr. Dhanin
Chearavanont has abstained from voting in the relevant Board
resolution(s).
In this announcement, the following expressions have the
meanings set out below unless the context requires
otherwise.
"2011 CP Lotus Consulting
Agreement"
the agreement entered into between the Company and CTCREM
dated 19 October 2010 for the provision of consultancy
services by CTCREM to SLS, Beijing Lotus and Xian Lotus for
various Stores operated by SLS, Beijing Lotus and Xian Lotus
in Eastern China, Northern China and Xian respectively on an
ongoing basis for the period from 1 January
2011 to 31 December 2011
5
"2012 CP Lotus Consulting
Agreement"
the agreement entered into between the Company and CTCREM
dated 20 January 2012 for the provision of consultancy
services by CTCREM to SLS, Beijing Lotus, Zhengzhou Lotus and
Xuzhou Lotus for various Stores operated by SLS, Beijing
Lotus, Zhengzhou Lotus and Xuzhou Lotus in Eastern China and
Northern China respectively on an ongoing basis
"2011 SLS Sub-Lease" the sub-lease dated 19 October 2010
entered into between SLS and CTCREM in relation to Property A
and Property B for the period from 1 January 2011 to 31
December 2011
"2012 SLS Sub-Lease" the sub-lease dated 20 January 2012
entered into between SLS
and CTCREM in relation to Property A and Property B
"associate(s)" has the meaning ascribed to this term in the
Listing Rules
"Beijing Lotus"
