AEON STORES (HONG KONG) CO., 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.
AEON STORES (HONG KONG) CO., LIMITED
永 旺（ 香 港 ）百 貨 有 限 公 司
(Incorporated in Hong Kong with limited liability)
(Stock Code: 984)
ANNOUNCEMENT
CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE RENEWED ROYALTY AGREEMENT
Reference is made to the announcements dated 12 December 2006, 3 April 2007, 16 April 2010 and 28 December 2012 respectively of the Company in relation to the Royalty Agreement.
The Board is pleased to announce that on 29 December 2015 the Company entered into a renewal agreement to renew the Royalty Agreement with the Adviser on substantially the same terms.
The duration of the Renewed Royalty Agreement shall be three years, thereafter extendable by successive three year periods if the parties so agree and subject to compliance with the Listing Rules. The Cap for the three years ended 31 December 2018 shall be HK$49 million.
The Adviser is a connected person of the Company by virtue of its being a controlling shareholder of the Company. Given that the Cap for each of the three years ending 31 December 2018 represents less than 5% of the applicable percentage ratios as defined in the Listing Rules, the Transaction is subject to annual review and the applicable disclosure requirements under chapter 14A of the Listing Rules and are exempt from shareholders' approval requirements under chapter 14A of the Listing Rules.
INTRODUCTION
Reference is made to the announcements dated 12 December 2006, 3 April 2007, 16 April 2010 and 28 December 2012 of the Company in relation to the Royalty Agreement. The Royalty Agreement was entered into to govern the provision of certain technical assistance by the Adviser to the Company and will be expired on 31 December 2015 pursuant to its terms.
The Board is pleased to announce that on 29 December 2015 the Company entered into a renewal agreement to renew the Royalty Agreement with the Adviser on substantially the same terms other than the fees payable by the Company to the Adviser thereunder which have been reduced from a flat rate of 0.4% to the rates disclosed in the section headed ''Fees and Payment'' below.
TERMS OF THE RENEWED ROYALTY AGREEMENT Duration
The term of the Renewed Royalty Agreement shall be a period of three years expiring on 31 December 2018, provided that the Renewed Royalty Agreement shall continue to be of effect for a further three year period (and for each successive three year period) if the parties so agree and that the continuation for a further three year period shall be subject to compliance with the Listing Rules.
Fees and Payment
The Company shall pay to the Adviser a fee in respect of each financial year of the Company: (a) an amount representing 0.2% of the audited consolidated Total of Revenue of the Company and its Affiliates for that financial year; and (b) an amount representing 0.05% of the audited Total of Revenue of the Company and its Affiliates in respect of the Business in the Territory for the relevant financial year.
The fee payable by the Company to the Adviser shall be paid within 30 days after the Company's annual general meeting (or its adjourned meeting(s)) which approve the Company's consolidated financial results of each Financial Year.
Trademarks
Pursuant to the Renewed Royalty Agreement, the Company and its Affiliates (through the Company) are granted:
exclusive right to use the Hong Kong Trade Marks and the Macau Trade Marks in relation to the Business within the Territory;
non-exclusive right to use the PRC Trade Marks in relation to the Business within the PRC; and
non-exclusive right to use the Trade Marks in relation to the following businesses in the Territory and the PRC:
the provision of retail services;
the operation of Shopping Centres; and
catering services, food-court with seating and restaurants.
Technical Assistance
The Adviser shall disclose full particulars of the Know-How to the Company and grant the Company the non-exclusive right to use the Know-How in relation to the Business in the Territory and the PRC.
Non-competition
The Adviser undertakes that, except with the prior written consent of the Company, neither the Adviser nor any of its Affiliates will, either solely or jointly with any person, be engaged in or participate in the ownership or operation of retail business in the style of Multiple Category Stores and/or Special Supermarket Stores within the Territory.
THE CAP AMOUNT Historical figures
The historical transaction amounts in respect of the Royalty Agreement for the two years ended 31 December 2014 and the six months ended 30 June 2015 were as follows:
Period Annual cap
Fees payable by the Company to
the Adviser under
the Royalty Agreement
HK$'000,000 HK$'000,000
Year ended 31 December 2013 108 48
Year ended 31 December 2014 108 50
Six months ended 30 June 2015 108 25
The Cap Amount
The Cap for each of the three years ended 31 December 2018 shall be HK$49 million. In arriving at the Cap, the Directors have taken into account various factors including the historical transaction amounts and the historical growth in retail sales of the Group's department stores and the supermarket chain stores, the expected business growth of the Group in Hong Kong and the PRC in the coming three years and the addition of buffer to allow flexibility for the further increase in sales of the Group in light of the expected opening of new stores by the Group in the coming three years depending on the Group's business expansion plans and operational needs, and the possibility that RMB will appreciate.
REASONS FOR AND BENEFITS OF THE TRANSACTION
The Directors have noted that the Trade Marks, which are well known in Hong Kong, Macau and the Guangdong Province of the PRC, are essential to the operations and success of the Group. In addition, the Know-How which comprises information and knowhow used, employed or developed by the Adviser for the management and operation of retail stores, wholesale business and related supporting facilities can also benefit the operations of the Group. The Directors therefore consider that the use of the Trade Marks by the Group would continue to benefit the business development and expansion of the Group in Hong Kong, Macau and the PRC. The Directors are of the view that the entering into of the Renewed Royalty Agreement would secure the use of the Trade Marks and the Know-How on terms reasonable to the Company.
The terms of the Renewed Royalty Agreement have been reached after arm's length negotiations between the Company and the Adviser. The Directors (including the independent non-executive Directors) are of the view that (i) entering into of the Transaction is in the ordinary and usual course of business of the Group; (ii) the terms of the Transaction are on normal commercial terms; and (iii) the terms of the Transaction and the Cap are fair and reasonable and in the interests of the Company and its shareholders as a whole.
At a Board meeting convened to consider the Renewed Royalty Agreement, Mr. Yoshiaki Mizushima, Mr. Hideaki Yajima, Ms. Yuki Habu and Mr. Shinya Wako were regarded as potentially having a material interest in the Renewed Royalty Agreement and accordingly abstained from voting on the relevant resolutions.
INFORMATION ON THE PARTIES
The Group is principally engaged in the operation of general merchandise stores in Hong Kong, Macau and PRC.
The Adviser is a public limited company incorporated in Japan and listed on the Tokyo Stock Exchange. The Adviser's subsidiaries and associated companies are principally engaged in the operation of general merchandise stores, the operation of specialty stores, the development of shopping centres as well as service and other operations in Japan and other Asian countries.
LISTING RULES IMPLICATIONS
As at the date of this announcement, the Adviser is a connected person of the Company by virtue of its being a controlling shareholder of the Company. Given that the Cap for each of the three years ending 31 December 2018 represents less than 5% of the applicable percentage ratios as defined in the Listing Rules, the Transaction is subject to annual review and the applicable disclosure requirements under chapter 14A of the Listing Rules and are exempt from shareholders' approval requirements under chapter 14A of the Listing Rules.
DEFINITIONS
In this announcement, the following expressions have the respective meanings set out below unless the context requires otherwise:
''Adviser'' AEON Co., Ltd., a company incorporated in Japan with limited liability and the issued shares of which are listed on the Tokyo Stock Exchange
''Affiliates'' with respect to a party, means all companies, firms, corporations or other entities which are either directly or indirectly controlling, controlled by or under common control with that party, provided that this term when referring to the Company and its Affiliates shall not include the Adviser and companies owned or controlled by the Adviser other than the Company and companies directly or indirectly controlled by the Company and, when referring to the Adviser and its Affiliates, shall not include the Company and companies owned or directly or indirectly controlled by the Company
''Amendment Agreement''
the amendment agreement entered into between the Company and the Adviser on 12 December 2006
''associates'' has the meaning ascribed thereto under the Listing Rules ''Board'' the board of Directors of the Company
AEON Stores (Hong Kong) Co. Limited issued this content on 2015-12-29 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2015-12-29 11:02:52 UTC
Original Document: http://www.aeonstores.com.hk/announcement/download?id=204&q[id_eq]=204&f=file_en
