Singamas Container : CONTINUING CONNECTED TRANSACTIONS

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勝 獅 貨 櫃 企 業 有 限 公 司

SINGAMAS CONTAINER HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock code: 716) CONTINUING CONNECTED TRANSACTIONS CONTINUING CONNECTED TRANSACTIONS

Reference is made to the announcement of the Company dated 6 October 2014 in relation to the Master Purchase Contract 2015 entered into among the Company (for and on behalf of the Group) and PIL (for and on behalf of PIL Group) for the sales of Equipment to PIL Group. The Master Purchase Contract 2015 will expire on 31 December 2017. On 30 October 2017, the Company (for and on behalf of the Group) entered into the Master Purchase Contract 2018 with PIL (for and on behalf of PIL Group), pursuant to which the Group will sell the Equipment to PIL Group. The Master Purchase Contract 2018 is subject to the approval of the Shareholders and will take effect from 1 January 2018 and expire on 31 December 2020.

In view that PIL is the controlling Shareholder of the Company, as defined under the Listing Rules, PIL is a connected person of the Company. The Master Purchase Contract 2018 involves transactions, which will occur on a recurring basis over a period of time; accordingly, the Transactions will constitute continuing connected transactions of the Company.

The proposed Annual Caps of the Transactions during the three financial years ending 31 December 2018, 2019 and 2020 would not exceed US$145,000,000, US$150,000,000 and US$155,000,000 (equivalent to approximately HK$1,131,000,000, HK$1,170,000,000 and HK$1,209,000,000) respectively.

Each of the applicable percentage ratios (other than profit ratio) calculated pursuant to Rule 14.07 of the Listing Rules in respect of the proposed Annual Caps for the Transactions exceeds 5%.

Accordingly, the Transactions contemplated under the Master Purchase Contract 2018 are subject to annual reporting, announcement, annual review and Shareholders' approval under Chapter 14A of the Listing Rules. Each of (i) PIL and its associates; and (ii) Messrs. Teo Siong Seng, Teo Tiou Seng, Kuan Kim Kin and Tan Chor Kee (as directors of both PIL and the Company), will abstain from voting on the resolution in respect of the Transactions at the General Meeting.

An Independent Board Committee has been set up to advise the Shareholders in connection with the Transactions. An independent financial adviser, Lego Corporate Finance Limited has been appointed for the purpose of providing independent advice to the Independent Board Committee and the Shareholders in connection with the Transactions.

A circular containing information regarding the Transactions, the notice of the General Meeting, the advice of the independent financial adviser and the recommendation of the Independent Board Committee is expected to be dispatched to the Shareholders on or before 17 November 2017.

CONTINUING CONNECTED TRANSACTIONS

BACKGROUND

Reference is made to the announcement of the Company dated 6 October 2014 in relation to the Master Purchase Contract 2015 entered into between the Company (for and on behalf of the Group) and PIL (for and on behalf of PIL Group) for the sales of Equipment to PIL Group. The Master Purchase Contract 2015 will expire on 31 December 2017. On 30 October 2017, the Company (for and on behalf of the Group) entered into the Master Purchase Contract 2018 with PIL (for and on behalf of PIL Group), pursuant to which the Group will sell the Equipment to PIL Group. The Master Purchase Contract 2018 is subject to the approval of the Shareholders and will take effect from 1 January 2018 and expire on 31 December 2020.

Each of the applicable percentage ratios (other than profit ratio) calculated pursuant to Rule 14.07 of the Listing Rules in respect of the proposed Annual Caps for the Transactions exceeds 5%. Accordingly, the Transactions contemplated under the Master Purchase Contract 2018 are subject to annual reporting, announcement, annual review and Shareholders' approval under Chapter 14A of the Listing Rules. Each of (i) PIL and its associates; and (ii) Messrs. Teo Siong Seng, Teo Tiou Seng, Kuan Kim Kin and Tan Chor Kee (as directors of both PIL and the Company), will abstain from voting on the resolution in respect of the Transactions at the General Meeting.

CONDITIONAL MASTER PURCHASE CONTRACT 2018

The salient terms and conditions of the Master Purchase Contract 2018 are described below.

Date:

30 October 2017

Parties:

The Seller:

The Company (on behalf of the Group)

The Buyer:

PIL (on behalf of PIL Group)

Scope/Consideration

Pursuant to the Master Purchase Contract 2018, the Group will enter into individual purchase order agreements with PIL Group for the provision of Equipment by the Group to PIL Group. Each individual purchase order agreement will specify and stipulate the specific terms and the operative provisions, including but not limited to the size and type, unit price, quantity and delivery time and location of the Equipment, which may cover dry freight containers, collapsible flatrack containers, open top containers, bitutainers, refrigerated containers, US domestic containers, tank containers, offshore containers and other specialised containers.

Given that none of the Equipment under the Master Purchase Contract 2018 has a fixed unit price or has a published reference price, the unit price of the Equipment under each individual purchase order agreement will be determined on a cost plus reasonable profits basis (and hence the said pricing policy applies to all such Equipment), which markup (a) will be taken into account, among other things, the market demand and supply dynamics at the time when quotations are made and the selling price of similar nature and values of Equipment charged by competitors of the Group in the market (if available). Such market prices will be obtained through, among other things, recent transactions of the Group and enquiry with other industry players; and (b) is determined on an arm's length basis between the Group and PIL Group provided that the parties may negotiate on a case-by-case basis but in any event will be no less favourable to the Group than those offered to other independent third party customers of the Group for the similar nature and value of the Equipment and the industry practices.

Before determining the unit price for the Equipment under Master Purchase Contract 2018 and signing any individual purchase order agreement, the relevant officers of the Group would also review the terms of purchase orders entered into by independent third party customers with similar quantities, nature and values of the Equipment at the relevant time and calculate the gross profit margins based on such purchase orders. The relevant officers would then compare the gross profit margin that can be achieved by selling the Equipment to PIL and to independent third party customers to ensure that the gross profit margin from the sale of Equipment to PIL is reasonable and ascertain that the gross profit margin is generally in line with industry practices. So far as the Directors are aware, it is an industry practice to adopt a cost-plus pricing model to determine the price as well as the gross profit margin for the Equipment.

The Board considers that the said methods and procedures can ensure that the Transactions be conducted on normal commercial terms and on terms no less favourable to the Group than those offered by the Group to independent third parties and are not prejudicial to the interests of the Company and the Shareholders.

The payment for the Transactions contemplated under the Master Purchase Contract 2018, unless otherwise stipulated in the relevant individual purchase order agreement, shall be on a deferred basis according to normal credit terms within 60 days.

Term

The Master Purchase Contract 2018 will be in force for a period commencing on 1 January 2018 and expiring on 31 December 2020. During the effective period of the Master Purchase Contract 2018, either the Company (on behalf of the Group) or PIL (on behalf of PIL Group) may terminate the Master Purchase Contract 2018 by giving 30 days' written notice to the other party. In the event that neither party terminates the Master Purchase Contract 2018 early, the Company will comply with the relevant requirements of the Listing Rules upon expiry of the term on 31 December 2020.

Historical figures, existing annual caps and proposed Annual Caps

The table below sets out the historical figures for each of the two years ended 31 December 2015 and 2016 and the nine months ended 30 September 2017, the existing annual caps in respect of the transactions contemplated under the Master Purchase Contract 2015 for each of the financial years ended 31 December 2015, 2016 and 2017 and the proposed Annual Caps.

Year ended 31 December 2015		Year ended 31 December 2016		Year 2017 - Based on orders value up to 30 September 2017		Year ending 31 December 2018	Year ending 31 December 2019	Year ending 31 December 2020
Annualcaps	Actualamount	Annualcaps	Actualamount	Annualcaps	Actualamount	Proposed AnnualCaps	Proposed AnnualCaps	Proposed AnnualCaps
US$100,000,000	US$65,622,100	US$125,000,000	US$27,713,510	US$150,000,000	US$46,780,000	US$145,000,000	US$150,000,000	US$155,000,000
(equivalentto	(equivalentto	(equivalentto	(equivalentto	(equivalentto	(equivalentto	(equivalentto	(equivalentto	(equivalentto
approximately	approximately	approximately	approximately	approximately	approximately	approximately	approximately	approximately
HK$780,000,000)	HK$511,852,000)	HK$975,000,000)	HK$216,165,000)	HK$1,170,000,000)	HK$364,884,000)	HK$1,131,000,000)	HK$1,170,000,000)	HK$,1,209,000,000)

The proposed Annual Caps of the Transactions during the three financial years ending 31 December 2018, 2019 and 2020 would not exceed US$145,000,000, US$150,000,000 and US$155,000,000 (equivalent to approximately HK$1,131,000,000, HK$1,170,000,000 and HK$1,209,000,000) respectively.