VIETNAM MANUFACTURING AND EXPORT PROCESSING (HOLDINGS) 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.
越 南 製 造 加 工 出 口（ 控 股 ）有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 422) CONTINUING CONNECTED TRANSACTIONS AND REVISION OF 2015 ANNUAL CAP FOR RESEARCH AND DEVELOPMENT AND TECHNICAL SUPPORT SERVICES AGREEMENTReference is made to the announcements of the Company dated 9 November 2009, 28 March 2011 and 9 November 2012 in relation to, among other things, the Continuing Connected Transactions entered into between the Group and the Sanyang Group.
As the existing agreements relating to the Continuing Connected Transactions (except for the Technology Licence Agreement) will expire on 31 December 2015, the Company had, on 8 December 2015, entered into new agreements in relation to the Continuing Connected Transactions (except for the Technology Licence Agreement) each with a term of three years ending on 31 December 2018. The Board also proposes the Annual Caps for all Continuing Connected Transactions (including transactions under the Technology Licence Agreement) for the three years ending on 31 December 2018.
The Continuing Connected Transactions will be conducted between members of the Group and members of the Sanyang Group. As at the date of this announcement, Sanyang, through its wholly-owned subsidiary, SYI, held approximately 67.02% of the issued share capital of the Company and thus, is an indirect controlling shareholder of the Company.
As Sanyang is an indirect controlling shareholder of the Company and thus a connected person of the Company by virtue of Rule 14A.07(1) of the Listing Rules, members of the Sanyang Group are also connected persons of the Company. Accordingly, the Continuing Connected Transactions constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the Annual Caps for each of the Group 1 Transactions exceed 5%, the Group 1 Transactions are subject to the reporting, annual review, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules. Hence, the terms of the Group 1 Transactions, their
respective agreements (except for the Technology Licence Agreement) and their respective Annual Caps are conditional on approval by the Independent Shareholders being obtained at the extraordinary general meeting of the Company.
As one or more of the applicable percentage ratios in respect of the Annual Caps for each of the Group 2 Transactions exceed 0.1% but all the applicable percentage ratios are less than 5%, the Group 2 Transactions are exempt from the Independent Shareholders' approval requirement but subject to the reporting, annual review and announcement requirements under Chapter 14A of the Listing Rules.
On 9 November 2012, the Company and Sanyang entered into the Research and Development and Technical Support Services Agreement, pursuant to which Sanyang provides research and development and technical support services to the Group. The Research and Development and Technical Support Services Agreement is for a term of three years from 1 January 2013 to 31 December 2015.
The Board expects that the Original 2015 Annual Cap will not be sufficient for the expected support services received by the Group for the financial year ending 31 December 2015. The Board therefore proposes to revise the Original 2015 Annual Cap in relation to the provision of research and development and technical support services by the Sanyang Group to the Revised 2015 Annual Cap in an amount of US$1,686,000.
Pursuant to Rule 14A.54 of the Listing Rules, the Company should re-comply with the applicable requirements under Chapter 14A of the Listing Rules when the proposed annual cap is exceeded. As one or more of the applicable percentage ratios in respect of the Revised 2015 Annual Cap exceed 0.1% but all the applicable percentage ratios are less than 5%, the Research and Development and Technical Support Services Agreement and the Revised 2015 Annual Cap are exempt from the Independent Shareholders' approval requirement but subject to the reporting, annual review and announcement requirements under Chapter 14A of the Listing Rules.
An extraordinary general meeting will be convened by the Company with a view to seeking approval of the Group 1 Transactions, their respective agreements (except for the Technology Licence Agreement) and the respective Annual Caps from the Independent Shareholders in accordance with the requirements of the Listing Rules. As Sanyang, either itself or its associates, being the counterparty to the agreements relating to the Group 1 Transaction, is materially interested in those transactions, Sanyang and its associates will abstain from voting in the resolutions to be proposed at the extraordinary general meeting to be convened for approving the above matters.
An independent board committee has been established to consider the Group 1 Transactions and the related Annual Caps. Altus Capital Limited has been appointed by the Company as its independent financial adviser to advise the independent board committee and the Independent Shareholders in respect of the above matters.
A circular containing, among other things, further details of the Group 1 Transactions and the related Annual Caps, a letter from the independent board committee to the Independent Shareholders in respect of the Group 1 Transactions and the related Annual Caps, a letter from the independent financial adviser to the independent board committee and the Independent
Shareholders in respect of the Group 1 Transactions and the related Annual Caps, and a notice convening the extraordinary general meeting, will be dispatched to the Shareholders as soon as practicable on or before 30 December 2015 in accordance with the requirements of the Listing Rules.
Reference is made to the announcements of the Company dated 9 November 2009, 28 March 2011 and 9 November 2012 in relation to, among other things, the Continuing Connected Transactions entered into between the Group and the Sanyang Group.
As the existing agreements relating to the Continuing Connected Transactions (except for the Technology Licence Agreement) will expire on 31 December 2015, the Company had, on 8 December 2015, entered into new agreements in relation to the Continuing Connected Transactions (except for the Technology Licence Agreement) each with a term of three years ending on 31 December 2018. The Board also proposes the Annual Caps for all Continuing Connected Transactions (including transactions under the Technology Licence Agreement) for the three years ending on 31 December 2018.
(A) Master Purchase Agreement
Date: 8 December 2015
Parties: (a) the Company (on behalf of other members of the Group) as the purchaser; and
(b) Sanyang (for itself and on behalf of other members of the Sanyang Group) as the seller Term: 1 January 2016 to 31 December 2018
Background
The Group has been sourcing certain motorbike parts from Sanyang and other members of the Sanyang Group for its production of motorbikes. As the previous purchase agreement with Sanyang will expire on 31 December 2015, on 8 December 2015, the Company entered into the Master Purchase Agreement with Sanyang, to continue to engage the Sanyang Group to supply motorbike parts to the Group upon expiry of the previous agreement. The relevant suppliers of motorbike parts under the Master Purchase Agreement are members of the Sanyang Group (including direct or indirect, and wholly-owned or non- wholly owned subsidiaries) from time to time, which include but not limited to Sanyang, VTBM, Full Ta, Sanyang Global, Qingzhou Machinery and Xia Shing, which are engaged in manufacturing or sourcing of various motorbike parts in different countries and regions.
Major terms and pricing for the Master Purchase Agreement
Under the Master Purchase Agreement, the Group purchases certain motorbike parts from the Sanyang Group which are either manufactured by the Sanyang Group or sourced by it from independent third parties, for the Group's production of motorbikes. The motorbike parts to be sourced from Sanyang include electronic fuel injection components, engine control units, carburettors, clutchs and cylinder heads, while that to be sourced from other members of the Sanyang Group include fuel tanks, frames and rear shafts manufactured in Vietnam by VTBM and Full Ta, centrifugal clutchs, cam shafts,
pistons, cylinders and gears from Sanyang Global, Qingzhou Machinery and Xia Shing sourced by them from independent third parties in the PRC. The Group may also source other motorbike parts from other members of the Sanyang Group from time to time should it be required by its production process.
The price of sourcing of motorbike parts from members of the Sanyang Group is at a cost plus basis. Sanyang Group charges the Group at the manufacturing cost or purchase cost (as the case may be) of such products plus a margin of 10% (if Vietnam import duty for such product is 20% or more) or of 15% (if Vietnam import duty for such product is less than 20%). The manufacturing cost or purchase cost (as the case may be) will be determined on an annual basis subject to adjustments in any annual period with respect to fluctuations in foreign exchange rates and modifications to model of motorbikes in which the products to be purchased by the Group from Sanyang pursuant to the Master Purchaser Agreement is used.
The Group shall settle the purchase costs under the Master Purchase Agreement in cash within 30 or 60 days (as the case may be) after the date of the invoice unless the relevant parties determined otherwise in the individual purchase orders.
The Master Purchase Agreement is a framework agreement which provides the principles, mechanism and terms and conditions for the Group's purchase of motorbike parts from the Sanyang Group. Individual purchase orders will be entered into between the relevant members of the Group and Sanyang Group from time to time which will specify the types of motorbike parts to be purchased, price, delivery arrangements and any other terms which may be relevant to the supply of the parts to the Group. The individual purchase orders may only contain provisions which are in all material respects consistent with the binding principles, guidelines, terms and conditions set out in the Master Purchase Agreement.
Reasons and benefits for the Master Purchase Agreement
The Group purchases motorbike parts from the Sanyang Group rather than directly from independent third party suppliers because, by centralising and aggregating the Sanyang Group's sourcing of such parts with those of the Group's, the Sanyang Group is in a position to negotiate better purchase price and terms with the suppliers and enjoy benefits of bulk purchase, which also benefits the Group as the Sanyang Group will be able to supply the parts to the Group at lower costs. For motorbike parts which are currently sourced from suppliers outside Vietnam as they are either unavailable or not of acceptable quality or pricing in Vietnam, the Sanyang Group also provides quality testing, packaging, customs clearance and logistics services on the motorbike parts sold to the Group at a lower cost than that for the Group to engage an independent third parties outside Vietnam to provide similar services.
Apart from sourcing from Sanyang, the Group also sources certain motorbike parts from other members of the Sanyang Group (such as Sanyang Global, Qingzhou Machinery and Xia Shing) in the PRC. It enables the Group to secure a cost effective and stable source of supply of motorbike parts as motorbike parts are supplied at a lower cost in the PRC than in other countries due to lower labour costs and production costs in the PRC. Whilst the rising costs of sourcing from the PRC are primarily attributed to the fluctuation of Renminbi, by centralising purchase from/ with the Sanyang Group instead of making separate purchase orders to independent suppliers, the Group is able to mitigate and minimise the impact of the increasing sourcing costs. In sourcing the relevant motorbike parts from the Sanyang Group, the Sanyang Group also assists the Group to conduct surveys and perform quality checks on suppliers which are based in the PRC to ensure that the parts supplied by them meet the requirement and standards of the Group.
Certain production plants of the Sanyang Group are located in the southern and northern parts of Vietnam. The Group also sources motorbike parts from the Sanyang Group (such as VTBM and Full Ta) locally in Vietnam for production in its production plant located near the Group's plants. This will reduce transportation costs and delivery time due to the proximity between the manufacturing plants of
|
distributed by
|
