TAO HEUNG HOLDINGS LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
稻香控股有限公司*
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 573) CONTINUING CONNECTED TRANSACTION IN RELATION TO SUPPLY OF PRODUCTS FROM AND TO NON-WHOLLY OWNED SUBSIDIARYThe Directors would like to announce that on 20 November 2015 (after trading hours) the Master Supply Agreement has been entered into whereby the Parties have agreed, subject to the terms and conditions therein contained, to supply or procure to supply the Products with each other at such prices based on the actual costs plus a mark-up of no more than 30%. The Master Supply Agreement will commence from 21 November 2015 to 31
December 2017.
Baker is a non-wholly owned subsidiary of the Company and is a connected person of the Company as the associate of director of the Company would hold 40% of the issued share capital of Baker as at the commencement date of the Master Supply Agreement. The transactions contemplated under the Master Supply Agreement therefore constitute continuing connected transactions (as such term is defined under the Listing Rules) for the Company.
As at the commencement date of the Master Supply Agreement, the associate of a director of the Company would own 40% of the equity interest in Baker Limited and thus Baker Limited and its wholly owned subsidiary are connected persons of the Company. Pursuant to the Listing Rules, the entering into of the Master Supply Agreement constitutes continuing connected transaction of the Company.
Based on the Annual Cap, the applicable percentage ratios will be on an annual basis less than 5%. Accordingly, the transactions contemplated under the Master Supply Agreement will be subject to the reporting and announcement but are exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
* For identification purpose only
INTRODUCTIONThe Directors would like to announce that Master Supply Agreement has been entered into whereby the Company has agreed, subject to the terms and conditions therein contained, to supply or procure to supply the Products to and from Baker and its wholly owned subsidiary at such prices based on the actual costs plus a mark-up of no more than 30%. The Master Supply Agreement will be effective from 21 November 2015 to 31 December 2017.
Particulars of the Master Supply Agreement are set forth below:
Baker and its wholly owned subsidiary, ACT Foods
With the Group's food processing and logistics centre in Dongguan, the PRC and in Tai Po, Hong Kong together with the bakery factory in Shenzhen, the PRC which is operated by ACT Foods, the Group is able to streamline and centralize various procurement and production functions for the Group's restaurants and bakery shops which will result in improving the cost effectiveness of the Group's operation. In addition, such arrangement would enhance the quality on the food and services provided by the restaurants and the bakery shops of the Group. Hence, the Directors consider that the transactions contemplated under the Master Supply Agreement are beneficial to the business development of the Group as a whole.
The food processing and logistics centres are supplying the relevant Products to the Parties. However, because Baker and ACT Foods are connected persons of the Company, the transactions contemplated under Master Supply Agreement will constitute continuing connected transactions for the Company.
The terms of the Master Supply Agreement and in particular, the pricing basis of the Products, are no less favourable to the supply of the same (i) to other restaurants and bakery shops operated by the Group; and (ii) by other independent suppliers. On this basis, the Directors (including the independent non-executive Directors) consider that the terms of the Master Supply Agreement and the Annual Cap are fair and reasonable and in the interests of the shareholders as a whole.
HISTORICAL TRANSACTION AMOUNTSThe following is a summary of the approximate amounts of transactions in respect of the sale and purchases of Products between the Group and the Baker Group for the financial years ended 31 December 2013, 31 December 2014 and the nine months ended 30 September 2015:
HK$'000 HK$'000 HK$'000
(unaudited)
Purchases from Baker Group 7,232 8,660 9,804
Sale to Baker Group 511 703 950
ANNUAL CAPS OF THE SALE AND PURCHASES OF THE PRODUCTSThe proposed purchase caps and the sale caps of the continuing connected transactions for the period from 21 November 2015 to 31 December 2015 and each of the two years ending 31 December 2016 and 2017 of the Group are set out below:
HK$'000 HK$'000 HK$'000
Purchases from Baker Group 1,500 15,700 18,840
Sale to Baker Group 143 1,600 2,160
The Annual Cap is based on various considerations, including but not limited to (i) the historical purchases of the Products by the Parties from other suppliers; (ii) the anticipated increase in the purchases by the Parties; and (iii) the purchase amount of similar products by other entities of the Group with similar scale of operation.
If the transactions contemplated under the Master Supply Agreement for any of the above years exceed the relevant Annual Cap, the Parties will comply with the relevant requirements stipulated under Chapter 14A of the Listing Rules.
LISTING RULES IMPLICATIONSBaker and ACT Foods are non-wholly owned subsidiaries of the Company and are connected persons of the Company as the associate of a director of the Company holds 40% of the issued share capital of Baker at the commencement date of the Master Supply Agreement. The transactions contemplated under the Master Supply Agreement therefore constitute continuing connected transactions (as such term is defined under the Listing Rules) for the Company.
Based on the Annual Cap, the applicable percentage ratios will be on an annual basis less than 5%. Accordingly, the transactions contemplated under the Master Supply Agreement will be subject to the reporting and announcement but are exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
The Group is principally involved in the restaurant and bakery operations, provision of food catering services, production, sale and distribution of food products related to restaurant operations and poultry farm operations.
Baker is indirectly owned as to 60% by the Company and 40% by the associate of the director of the Company at the commencement date of the Master Supply Agreement. Baker is an investment holding company with its wholly-owned subsidiary operating bakery factory and bakery shops in Mainland China.
Unless the context requires otherwise, the capitalised terms used in this announcement shall have the following meanings:
'ACT Foods' means ACT Foods (Shenzhen) Company Limited, a wholly owned subsidiary of Baker whose 60% shareholdings held by the Company indirectly and the remaining 40% held by the associate of the director of the Company. Hence, ACT Foods is a connected person of the Company;
'Annual Cap' means the anticipated aggregate annual value of the proposed transactions contemplated under the Master Supply Agreement for the period from the commencement date of the Master Supply Agreement to 31 December 2015 and for each of the two years ending 31 December 2017;
'associate' has the meaning ascribed to it by the Listing Rules;
'Baker' means Baker Limited, a company incorporated in Hong Kong with limited liability;
'Baker Group' means Baker and its subsidiary;
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