ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONS RENEWAL OF TENANCY AGREEMENTS

Transcription

1 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. (Incorporated in Hong Kong with limited liability) (Stock Code: 01828) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONS RENEWAL OF TENANCY AGREEMENTS Reference is made to the announcement of the Company dated 31 May 2012 regarding, among other things, the leasing of certain properties in Hong Kong by the Company from the respective Landlords. The Company intends to renew the tenancy for such properties (other than a portion of the ground floor of the Ap Lei Chau Building). Accordingly, the Company and the respective Landlords entered into the New Tenancy Agreements dated 29 May 2015, to govern the terms of the leasing of the Properties to the Company upon the expiry of the Previous Tenancy Agreements for a further term of three years commencing 1 June 2015 and ending on 31 May The Landlords are indirect wholly-owned subsidiaries of CITIC Limited, a controlling shareholder of the Company, and are therefore connected persons of the Company. Accordingly, the transactions contemplated under the New Tenancy Agreements constitute continuing connected transactions of the Company under the Listing Rules. As the relevant percentage ratios in respect of the Annual Caps exceed 0.1% but are less than 5%, the transactions contemplated under the New Tenancy Agreements are subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders approval requirement under the Listing Rules

2 INTRODUCTION Reference is made to the announcement of the Company dated 31 May 2012 regarding, among other things, the leasing of certain properties in Hong Kong by the Company from the respective Landlords. The Company intends to renew the tenancy for such properties (other than a portion of the ground floor of the Ap Lei Chau Building). The Company and the respective Landlords had on 29 May 2015 entered into the New Tenancy Agreements to govern the terms of the leasing of the Properties to the Company upon the expiry of the Previous Tenancy Agreements, the principal terms of which are set out below. THE NEW TENANCY AGREEMENTS Date 29 May 2015 Parties (1) the Company, being the tenant of the Properties (2) the respective Landlords (all being indirect wholly-owned subsidiaries of CITIC Limited), being the respective landlords of the Properties Term The term of the tenancy for each of the Properties is three years commencing 1 June 2015 and ending on 31 May Description of the Properties and Monthly Rentals Set out below are the details of the Properties and the corresponding monthly rentals under each of the relevant New Tenancy Agreement: Location 7/F-12/F, CITIC Telecom Tower, 93 Kwai Fuk Road, Kwai Chung, New Territories, Hong Kong Block C of Yee Lim Industrial Centre, Nos. 2-6 Kwai Hei Street and Nos Kwai Lok Street, Kwai Chung, New Territories, Hong Kong Factory Unit A (also known as Factory Unit 1) on G/F (including loading and unloading platform) and Car Parking Space No. 112 on G/F of Tsuen Wan Industrial Centre, Nos Texaco Road, Tsuen Wan, New Territories, Hong Kong Monthly Rental HK$ 1,283,507 2,350, ,

3 Location Unit A on G/F, Units 1A, 1B and 1C on 1/F, Portion on 1/F, 2/F, Storeroom on 7/F and Portion on 8/F and Unit C on 12/F of No. 111 Lee Nam Road, Ap Lei Chau, Hong Kong DCH Building, No. 20 Kai Cheung Road, Kowloon, Hong Kong Monthly Rental HK$ 1,772,697 11,610,688 For the financial years ended 31 December 2012, 2013 and 2014, the aggregate rentals, management fees and other outgoings (other than those which are collected by the Landlords from the Company for payment to independent third parties) paid by the Company to the Landlords in respect of the leasing of the Properties and a portion of the ground floor of the Ap Lei Chau Building were approximately HK$93.3 million, HK$160.9 million and HK$169.7 million, respectively. The rentals payable under the New Tenancy Agreements for the Properties were negotiated on an arms length basis and are determined with reference to the current rental for the Properties under the Previous Tenancy Agreements and prevailing market rates for similar properties in the vicinity. Annual Caps The expected maximum amounts (including rentals, management fees and other outgoings (other than those which are collected by the Landlords from the Company for payment to independent third parties)) payable under the New Tenancy Agreements for the financial years ending 31 December 2015, 2016, 2017 and 2018 will be approximately HK$137.8 million, HK$236.3 million, HK$247.1 million and HK$102.9 million, respectively. The Annual Caps were determined with reference to the rentals paid by the Company for the relevant period under the Previous Tenancy Agreements, the rentals stipulated in the New Tenancy Agreements, the historical and currently payable management fees, the expected increment to the management fees over the term of the New Tenancy Agreements, and the estimated outgoings in respect of the Properties. The amount paid under the Previous Tenancy Agreements by the Company to the Landlords for the period from 1 January 2015 to 31 May 2015 was HK$73.0 million. GENERAL The Group is a business conglomerate with strong foothold in the consumer market in the Greater China, Singapore and Japan. It has a diversified business portfolio with core businesses in motor and motor related business, as well as food and consumer products business which are supported by the logistics services. The principal business activity of the Landlords is property investment. CITIC Limited is China s largest conglomerate. Its businesses include financial services, resources and energy, manufacturing, real estate and infrastructure, engineering contracting, and other businesses in China and overseas

4 REASONS FOR AND BENEFITS OF THE NEW TENANCY AGREEMENTS The Properties under the New Tenancy Agreements are for the operations of the Company s business in Hong Kong and is primarily used for, including but not limited to, motor vehicle services, workshops, showrooms, warehouses, ancillary offices and processing operations of the Company. The Directors (including the independent non-executive Directors) consider that (i) the terms of the transactions contemplated under the New Tenancy Agreements are in the ordinary and usual course of the business of the Company on normal commercial terms, which are arrived at after arm s length negotiations and by reference to open market rental of properties of comparable size and location, and (ii) the terms contained in the New Tenancy Agreements and the Annual Caps are fair and reasonable and in the interests of the Company and its shareholders as a whole. As none of the Directors has any material interest in the New Tenancy Agreements, no Director was required to abstain from voting on the Board resolutions passed to approve the New Tenancy Agreements. LISTING RULES IMPLICATIONS The Landlords are indirect wholly-owned subsidiaries of CITIC Limited, a controlling shareholder of the Company, and are therefore connected persons of the Company. Accordingly, the transactions contemplated under the New Tenancy Agreements constitute continuing connected transactions of the Company under the Listing Rules. As the relevant percentage ratios in respect of the Annual Caps exceed 0.1% but are less than 5%, the transactions contemplated under the New Tenancy Agreements are subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders approval requirement under the Listing Rules. OTHER LICENSING ARRANGEMENTS The Company has also entered into certain licensing arrangements in respect of car parking spaces and signages with the relevant Landlords at CITIC Telecom Tower and the Ap Lei Chau Building, and the expected maximum amounts payable under these licensing arrangements for the financial years ending 31 December 2015, 2016 and 2017 are approximately HK$3.4 million, HK$3.7 million and HK$4.0 million, respectively. Such licensing arrangements fall within the de minimis exemption under Rule 14A.76 of the Listing Rules. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms have the following meanings: Annual Caps the expected maximum amounts (including rentals, management fees and other outgoings (other than those which are collected by the Landlords from the Company for payment to independent third parties)) payable under the New Tenancy Agreements for the financial years ending 31 December 2015, 2016, 2017 and 2018; - 4 -

5 Ap Lei Chau Building connected person ; continuing connected transaction ; controlling shareholder ; and subsidiary Board CITIC Limited CITIC Telecom Tower Company Directors Group HK$ Hong Kong Landlords Listing Rules New Tenancy Agreements the building situated at No. 111 Lee Nam Road, Ap Lei Chau, Hong Kong; each has the meaning ascribed to it by the Listing Rules; the board of Directors; CITIC Limited ( 中國中信股份有限公司 ), formerly known as CITIC Pacific Limited, a company incorporated in Hong Kong with limited liability with its shares listed on the Stock Exchange (Stock Code: 00267); CITIC Telecom Tower situated at 93 Kwai Fuk Road, Kwai Chung, New Territories, Hong Kong; Dah Chong Hong Holdings Limited ( 大昌行集團有限公司 ), a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange (stock code: 01828), and a non-wholly owned subsidiary of CITIC Limited; the directors of the Company; the Company and its subsidiaries; Hong Kong dollars, the lawful currency of Hong Kong; the Hong Kong Special Administrative Region of the People s Republic of China; Borgia Limited, Tendo Limited, Neostar Investment Limited, Glenridge Company Limited and Hamborex Company, Limited, all being indirect wholly-owned subsidiaries of CITIC Limited; the Rules Governing the Listing of Securities on the Stock Exchange; the tenancy agreements in respect of the Properties entered into between the Company and the respective Landlords on 29 May 2015 for a further term of three years commencing 1 June 2015 and ending on 31 May 2018, and each a New Tenancy Agreement ; - 5 -

6 Previous Tenancy Agreements Properties Stock Exchange the tenancy agreements governing the terms of the tenancies in respect of the Properties and a portion of the ground floor of the Ap Lei Chau Building, entered into between the Company and the respective Landlords on 31 May 2012 for a term of three years commencing 1 June 2012 and ending on 31 May 2015, and supplemented by a surrender agreement dated 26 February 2013, pursuant to which the Company surrendered a portion of the ground floor of the Ap Lei Chau Building to the landlord; the properties in Hong Kong leased to the Company by the respective Landlords under the New Tenancy Agreements, the details of which are set out in the table in the section headed Description of the Properties and Monthly Rentals in this announcement; The Stock Exchange of Hong Kong Limited; and % per cent. By order of the board Dah Chong Hong Holdings Limited Tso Mun Wai Company Secretary Hong Kong, 29 May 2015 As at the date of this announcement, the Directors are: Executive directors: Yip Moon Tong, Lau Sei Keung, Glenn Robert Sturrock Smith and Wai King Fai, Francis Non-executive directors: Zhang Jijing (Chairman), Kwok Man Leung and Fei Yiping Independent non-executive directors: Cheung Kin Piu, Valiant, Hsu Hsung, Adolf, Yeung Yue Man and Chan Kay Cheung - 6 -