SINOTRANS SHIPPING LIMITED 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.
CONTINUING CONNECTED TRANSACTIONS - SUPPLEMENTAL HOI TUNG MASTER SERVICES AGREEMENT & CMG ENERGY SERVICE AGREEMENTReference is made to the Announcement and Circular in respect of the Hoi Tung Master Services Agreement. Unless otherwise specified, terms used in this announcement shall have the same meanings as defined in the Circular.
SUPPLEMENTAL HOI TUNG MASTER SERVICES AGREEMENTOn 11 April 2017, HK Hoi Tung entered into the Supplemental Hoi Tung Master Services Agreement with the Company pursuant to which the Hoi Tung Group agreed to provide the Refuelling Services to the Group.
CMG ENERGY SERVICE AGREEMENTOn 11 April 2017, China Merchants Energy entered into the CMG Energy Service Agreement with the Company pursuant to which the CMG Energy Group agreed to provide the Shipping Agency Service to the Group.
LISTING RULES IMPLICATIONSGiven the Parent Company has been administratively allocated (for no consideration) into and become a wholly-owned subsidiary of CMG after completion of the Reorganisation effective from 10 April 2017, CMG directly holds the Parent Company and becomes an indirect controlling shareholder of the Company and a connected person of the Company under the Listing Rules. Each of HK Hoi Tung and China Merchants Energy, which is an indirect wholly-owned subsidiary of CMG, is an associate of the Company under the Listing Rules, and therefore a connected person of the Company under the Listing Rules. Accordingly, the transactions under the Supplemental Hoi Tung Master Services Agreement and the CMG Energy Service Agreement are continuing connected transactions of the
Company under Chapter 14A of the Listing Rules.
As all of the applicable percentage ratios (other than the profit ratio) in respect of the provision of the Refuelling Services and the Shipping Agency Service (when aggregated with the Terminal Services and the Tug Services) are expected to be more than 0.1% but less than 5%, the transactions contemplated under the Supplemental Hoi Tung Master Services Agreement and the CMG Energy Service Agreement will be subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
Reference is made to the Announcement and Circular in respect of the Hoi Tung Master Services Agreement. Unless otherwise specified, terms used in this announcement shall have the same meanings as defined in the Circular.
SUPPLEMENTAL HOI TUNG MASTER SERVICES AGREEMENTOn 11 April 2017, HK Hoi Tung entered into the Supplemental Hoi Tung Master Services Agreement with the Company pursuant to which the Hoi Tung Group agreed to provide the Refuelling Services to the Group.
Term of the Supplemental Hoi Tung Master Services AgreementThe term of the Supplemental Hoi Tung Master Services Agreement has been commenced from 1 January 2017 and will expire on 31 December 2018.
Payment TermsPursuant to the Supplemental Hoi Tung Master Services Agreement, payment of the Refuelling Services fee will be made by the Group to the Hoi Tung Group in accordance with the payment method as agreed between the relevant parties in individual agreements.
Historical transaction valuesProvision of the Refuelling Services by the Hoi Tung Group to the Group
Historical figures for the year ended 31 December | |||||
2014 (US$'000) | 2015 (US$'000) | 2016 (US$'000) | |||
Provision of the Refuelling Services | nil | nil | 3,035 | ||
Total: | nil | nil | 3,035 | ||
It is expected that the proposed annual cap for each of the two years ending 31 December 2018 in respect of the provision of the Refuelling Services by the Hoi Tung Group to the Group will be US$27,662,000 and US$28,367,000, respectively. Accordingly, the proposed annual cap for each of the two years ending 31 December 2018 in respect of the provision of the general shipping services as contemplated under the Hoi Tung Master Services Agreement and the Refuelling Services by the Hoi Tung Group to the Group will be US$32,654,000 and US$33,796,000, respectively. Such proposed annual caps were determined based on the estimated demand for such services in the coming years due to the estimated growth in fleet size of 30% per year and the anticipated increase in the fuel charged, as well as the reference rates obtained from the Independent Third Parties offering similar services.
CMG ENERGY SERVICE AGREEMENTOn 11 April 2017, China Merchants Energy entered into the CMG Energy Service Agreement with the Company pursuant to which the CMG Energy Group agreed to provide the Shipping Agency Service to the Group.
Term of the CMG Energy Service AgreementThe term of the CMG Energy Service Agreement has been commenced from 1 January 2017 and will expire on 31 December 2018.
Payment TermsPursuant to the CMG Energy Service Agreement, payment of the Shipping Agency Service fee will be made by the Group to the CMG Energy Group in accordance with the payment method as agreed between the relevant parties in individual agreements.
Historical transaction valuesProvision of the Shipping Agency Service by the CMG Energy Group to the Group
Historical figures for the year ended 31 December | |||||
2014 (US$'000) | 2015 (US$'000) | 2016 (US$'000) | |||
Provision of the Shipping Agency Service | nil | nil | 6 | ||
Total: | nil | nil | 6 | ||
It is expected that the proposed annual cap for each of the two years ending 31
December 2018 in respect of the provision of the provision of Shipping Agency Service by the CMG Energy Group to the Group will be US$500,000 and US$600,000, respectively. Such proposed annual caps were determined based on the estimated demand for the shipping agency service in the coming years due to the estimated growth in fleet size of 30% per year as well as the reference rates obtained from the Independent Third Parties offering similar services.
GENERAL PRICING PRINCIPLES APPLICABLE TO THE DETERMINATION OF SERVICES FEES PAYABLE UNDER THE SUPPLEMENTAL HOI TUNG MASTER SERVICES AGREEMENT AND THE CMG ENERGY SERVICE AGREEMENTThe pricing principles of the services fees as contemplated under the Supplemental Hoi Tung Master Services Agreement and the CMG Energy Service Agreement are determined (i) at market prices depending on the supply and demand for such services and benchmarking against similar services offered by at least two other independent comparable suppliers of similar operational size and scale in the market by comparing the terms of their quotations and passing to the management of the services team of the Company for approval; and (ii) on terms no less favourable than those offered by and no more favourable than those offered to Independent Third Parties for the relevant transactions.
The finance department of the Company monitors the actual transaction amounts against any excess of the approved annual caps, and the Company engages the auditors of the Company to conduct an annual review of the continuing connected transactions of the Company to assess whether such transactions have been carried out in accordance with the relevant terms of the agreement entered into by the Company. The independent non-executive Directors conducts an annual review of the implementation and enforcement of the continuing connected transactions.
LISTING RULES IMPLICATIONSGiven the Parent Company has been administratively allocated (for no consideration) into and become a wholly-owned subsidiary of CMG after completion of the Reorganisation effective from 10 April 2017, CMG directly holds the Parent Company and becomes an indirect controlling shareholder of the Company and a connected person of the Company under the Listing Rules. Each of HK Hoi Tung and China Merchants Energy, which is an indirect wholly-owned subsidiary of CMG, is an associate of the Company under the Listing Rules, and therefore a connected person of the Company under the Listing Rules. Accordingly, the transactions under the Supplemental Hoi Tung Master Services Agreement and the CMG Energy Service Agreement are continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As all of the applicable percentage ratios (other than the profit ratio) in respect of the provision of the Refuelling Services and the Shipping Agency Service (when aggregated with the Terminal Services and the Tug Services) are expected to be more than 0.1% but less than 5%, the transactions contemplated under the Supplemental Hoi Tung Master Services Agreement and the CMG Energy Service Agreement will be subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval
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