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.
HUIYIN HOUSEHOLD APPLIANCES (HOLDINGS) CO., LTD.(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1280) CONTINUING CONNECTED TRANSACTION TENANCY AGREEMENTS
The board of Directors of the Company announces that on 18 January 2013, Mr. Cao Kuanping, the Chairman and an executive Director of the Company, as landlord entered into the Huiyin Tenancy Agreement with Jiangsu Huiyin as tenant and the Huide Tenancy Agreement with Yangzhou Huide as tenant.
Mr. Cao, who is the Chairman and an executive Director of the Company, is a connected person of the Company, and accordingly, the Tenancy Agreements constitute continuing connected transactions of the Company under the Listing Rules.
As the applicable percentage ratios on an annual basis calculated with reference to the aggregate annual rents payable by the Group to Mr. Cao under the Tenancy Agreements are more than 0.1% but less than 5% and the aggregate annual rents payable are more than HK$1,000,000, under Rule 14A.34 of the Listing Rules, the Tenancy Agreements are subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules, the annual review requirements set out in Rules 14A.37 to 14A.40 and the requirements set out in Rules 14A.35(1) to 14A.35 (2) but is exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
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The board of Directors of the Company announces that on 18 January 2013, Mr. Cao Kuanping, the Chairman and an executive Director of the Company, as landlord entered into the Huiyin Tenancy Agreement with Jiangsu Huiyin as tenant and the Huide Tenancy Agreement with Yangzhou Huide as tenant.
Jiangsu Huiyin and Yangzhou Huide used to lease the Properties from Mr. Cao for office use since December 2008. As disclosed in the announcement of the Company dated 25 October 2012, a retail store of the Group in Yangzhou, which comprised four storeys with an aggregate floor area of 4,100 square meters, was burnt in a fire. The Group will open a new retail store in the New Properties, which are in the same building the Properties are located at. Therefore Jiangsu Huiyin and Yangzhou Huide entered into the Tenancy Agreements with Mr. Cao in respect of the tenancy of the Properties and the New Properties.
Landlord: Mr. Cao
Tenant: Jiangsu Huiyin
Property: Level 1 (Spindle 1 - 6), Level 2 (Spindle 1 - 6), Level 3 (Spindle 1 - 6), Level 4 (Spindle 1 - 6), Level 5 (Spindle
1 - 6) (excluding the 70 m2 portion leased to Yangzhou
Houde), Level 6 (Spindle 1 - 6) and Level 7 (Spindle 1 -
6) of Huiyin Building, at No. 277 Wenchang Zhong Road, Yangzhou City, Jiangsu Province, the PRC
The above property has a total construction area of approximately 3,611 m2.
Usage: Levels 1 to 3 - for retail shop use
Levels 4 to 7 - for office use
Term: 3 years from 20 January 2013 to 19 January 2016
Rent: RMB904,500 per quarter, exclusive of management fees and all other outgoings, payable quarterly in advance
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Landlord: Mr. Cao
Tenant: Yangzhou Huide
Property: portion of Level 5 (Spindle 1 - 6) of Huiyin Building, at No. 277 Wenchang Zhong Road, Yangzhou City, Jiangsu Province, the PRC
The above property has a total construction area of approximately 70 m2.
Usage: for office use
Term: 3 years from 20 January 2013 to 19 January 2016
Rent: RMB8,000 per quarter, exclusive of management fees and all other outgoings, payable quarterly in advance
The aggregate annual rents payable by the Group to Mr. Cao under the Tenancy Agreements for each of the three years ending 31 December 2013, 2014 and 2015 will be RMB3,650,000.
REASONS AND BENEFITS FOR THE TENANCY AGREEMENTS
As disclosed in the announcement of the Company dated 25 October 2012, a retail store of the Group in Yangzhou, which comprised four storeys with an aggregate floor area of 4,100 square meters, was burnt in a fire. Since the building burnt in the fire will be rebuilt and the retail store may not be re-opened at the same premises, the Group will open a new retail store in the New Properties, which are in the same building the Properties are located at. Therefore Jiangsu Huiyin and Yangzhou Huide entered into the Tenancy Agreements with Mr. Cao, who holds the Properties and the New Properties as investment properties for rental income.
The Tenancy Agreements primarily serve to enter into the tenancy of the New Properties for the Group's new retail store in Yangzhou. The board of Directors considers that the tenancy of the New Properties enables the Group to open a new retail store with a floor area comparable to the floor area of the store burnt in a fire. Moreover as the Group has rented the Properties for office use for more than 4 years, and the rents payable by the Group under the Tenancy Agreements are comparable and in line with the prevailing market rents, the Group intends to continue to rent the Properties for a term of three years from 20 January 2013 to 19 January 2016.
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The terms of the Tenancy Agreements are arrived at after arm's length negotiation and are on normal commercial terms. The rents payable by the Group to Mr. Cao under the Tenancy Agreements were determined with reference to the prevailing market rent of comparable properties of similar size, type and location. An independent property valuer appointed by Group has confirmed that the annual rents payable thereunder are at the prevailing rates. The Directors (including the independent non-executive Directors) consider that the Tenancy Agreements are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interests of the Company and its shareholders as a whole. Mr. Cao, the Chairman and an executive Director of the Company, did abstain from voting at the board meeting of the Company in view of his interests in the transactions.
Jiangsu Huiyin and Yangzhou Huide are wholly owned subsidiaries of the Company and are principally engaged in retail and bulk distribution of home appliances and consumer electronic products.
Mr. Cao, who is the Chairman and an executive Director of the Company, is a connected person of the Company, and accordingly, the Tenancy Agreements constitute continuing connected transactions of the Company under the Listing Rules.
Before the Group entered into the Tenancy Agreements, it used to lease only the
Properties from Mr. Cao for office use on normal commercial terms since December
2008. The shares of the Company were listed on the Stock Exchange in March 2010. For the years ended 31 December 2010, 2011 and 2012, the rents paid by the Group to Mr. Cao in respect of the tenancy of the Properties were RMB800,000, RMB837,000 and RMB810,000, respectively. As the applicable percentage ratios on an annual basis calculated with reference to the aggregate annual rents paid by the Group to Mr. Cao for the three years ended 31 December 2010, 2011 and 2012 were less than 0.1%; or less than 5% and the aggregate annual rents paid were less than HK$1,000,000, the tenancy of the Properties for the years ended 31 December 2010,
2011 and 2012 was exempted from the reporting, annual review, announcement and independent shareholders' approval requirements under Rule 14A.33 of the Listing Rules.
The annual cap for the aggregate rents payable by the Group to Mr. Cao under the
Tenancy Agreements for each of the three years ending 31 December 2013, 2014 and
2015 will be RMB3,650,000. As the applicable percentage ratios on an annual basis calculated with reference to the aggregate annual rents payable by the Group to Mr. Cao under the Tenancy Agreements are more than 0.1% but less than 5% and the aggregate annual rents payable are more than HK$1,000,000, under Rule 14A.34 of
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the Listing Rules, the Tenancy Agreements are subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules, the annual review requirements set out in Rules 14A.37 to 14A.40 and the requirements set out in Rules 14A.35(1) to 14A.35 (2) but is exempted from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
"Company" Huiyin Household Appliances (Holdings) Co., Ltd. "Director" a director of the Company
"Group" the Company and its subsidiaries
"Huide Tenancy
Agreement"
the tenancy agreement dated 18 January 2013 entered
into between Yangzhou Huide and Mr. Cao
"Huiyin Tenancy
Agreement"
the tenancy agreement dated 18 January 2013 entered
into between Jiangsu Huiyin and Mr. Cao
"Jiangsu Huiyin" (Jiangsu Huiyin Electronics Chain-Stores Co. Ltd.), a limited liability company established in the PRC and a wholly-owned subsidiary of the Company
"Listing Rules" the Rules Governing the Listing of Securities on the
Stock Exchange
"Mr. Cao" Mr. Cao Kuamping, the Chairman and an executive
Director of the Company
"New Properties" Level 1 (Spindle 1 - 6), Level 2 (Spindle 1 - 6) and
Level 3 (Spindle 1 - 6) of Huiyin Building, at No. 277
Wenchang Zhong Road, Yangzhou City, Jiangsu
Province, the PRC
"PRC" the People's Republic of China
"Properties" Level 4 (Spindle 1 - 6), Level 5 (Spindle 1 - 6), Level
6 (Spindle 1 - 6) and Level 7 (Spindle 1 - 6) of Huiyin Building, at No. 277 Wenchang Zhong Road, Yangzhou City, Jiangsu Province, the PRC
"Stock Exchange" The Stock Exchange of Hong Kong Limited
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"Tenancy Agreements" the Huide Tenancy Agreement and the Huiyin Tenancy
Agreement
"Yangzhou Huide" (Yangzhou Huide Electronics Distribution Co., Ltd.), a wholly-foreign owned enterprise established in the PRC with limited liability and a wholly-owned subsidiary of the Company
"m2" square meters
"RMB" Renminbi, the lawful of the PRC "%" per cent.
Yangzhou, PRC
18 January 2013
By order of the Board
Chairman
As at the date of this announcement, the Board of Directors of the Company comprises five executive Directors, namely Mr. Cao Kuanping, Mr. Mo Chihe, Mr. Mao Shanxin, Mr. Wang Zhijin, and Mr. Lu Chaolin, and three independent non-executive Directors, namely Mr. Zhou Shuiwen, Mr. Tam Chun Chung and Mr. Tan Bien Kiat.
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