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 MASTER PURCHASE AGREEMENT
The Group has, in the ordinary and usual course of its business, been engaged in certain merchandise transactions with the Merchandise Providers, all of which are subsidiaries of AEON Co.
The Board is pleased to announce that on 31 March 2016, the Company entered into the Master Purchase Agreement with TopV HK and TopV China, to better regulate the purchase of merchandise by the Group from the TopV Group going forward.
The Company is also currently in discussions with COX and G Foot, with a view to entering into similar master agreements. Further announcement(s) will be made by the Company as and when appropriate pursuant to the Listing Rules.
As at the date of this announcement, each of the Merchandise Providers is a connected person of the Company by virtue of its being a subsidiary of AEON Co, the controlling shareholder of the Company. Accordingly, the transactions contemplated under the Master Purchase Agreement and the Proposed Master Agreements constitute/will constitute continuing connected transactions of the Company under the Listing Rules.
As the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules in respect of the proposed annual caps under the Master Purchase Agreement and the Proposed Master Agreements are more than 5%, the transactions thereunder are subject to the reporting, announcement, annual review and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Company will convene the GM to seek approval from the Independent Shareholders in respect of the transactions contemplated under the Master Purchase Agreement and the Proposed Master Agreements (if entered into) and the proposed annual caps. In view of AEON Co's interests in the Master Purchase Agreement and the Proposed Master Agreements (if entered into), AEON Co and its associates are required to abstain from voting on the relevant resolutions at the GM.
An Independent Board Committee of the Company will be formed to advise the Independent Shareholders in respect of the transactions contemplated under the Master Purchase Agreement and the Proposed Master Agreements (if entered into) and the proposed annual caps. An independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.
A circular containing, among other things, details of the Master Purchase Agreement and the Proposed Master Agreements (if entered into), a letter from the Independent Board Committee, a letter from the independent financial adviser, and a notice to convene the GM will be dispatched to the shareholders of the Company on or about 21 April 2016 in compliance with the Listing Rules.
INTRODUCTION
The Group has, in the ordinary and usual course of its business, been engaged in certain merchandise transactions with the Merchandise Providers, all of which are subsidiaries of AEON Co.
The Board is pleased to announce that on 31 March 2016, the Company entered into the Master Purchase Agreement with TopV HK and TopV China, to better regulate the purchase of merchandise by the Group from the TopV Group going forward.
The Company is also currently in discussions with COX and G Foot, with a view to entering into similar master agreements. Further announcement(s) will be made by the Company as and when appropriate pursuant to the Listing Rules.
TERMS OF THE MASTER PURCHASE AGREEMENT Date
31 March 2016
Parties
the Company;
TopV HK; and
TopV China.
THE CAP AMOUNT
The historical amounts of the transactions between members of the Group and the Merchandise Providers for the 3 years ended 31 December 2015 were approximately HK$278,000,000, HK$260,000,000 and HK$294,000,000 respectively, of which transactions with the TopV Group accounted for approximately 98% and transactions with COX and G Foot accounted for approximately 2%.
Given the similarity in nature of the transactions under the Master Purchase Agreement and the Proposed Master Agreements, and that the Merchandise Providers are all subsidiaries of AEON Co, the Proposed Master Agreements, if entered into, would have to be aggregated with the Master Purchase Agreement.
Accordingly, the proposed annual caps for the continuing connected transactions under the Master Purchase Agreement and the Proposed Master Agreements for 3 years ending 31 December 2018 shall be as follows:
Period Proposed annual cap (HK$)
For the year ending 31 December 2016 402 million
For the year ending 31 December 2017 590 million
For the year ending 31 December 2018 815 million
In arriving at the proposed annual caps, the Directors have taken into account various factors including the historical transaction amounts between the Group and Merchandise Suppliers, historical growth in the retail business of the Group, expected business growth of the Group, possible further increase in purchases of the Group in light of the expected opening of new stores by the Group in the coming 3 years (depending on its business expansion plans, operational needs), and the fluctuation in foreign exchange rate(s).
REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS
Nature of Transactions
The Purchasers (i.e. the Company and any of its subsidiaries) will purchase a variety of merchandise from the TopV Group, including but not limited to AEON Co's ''Topvalu'' products, an in-house brand developed by AEON Co, and other branded products sourced by the TopV Group. Such merchandise covers a wide range of categories, such as fashion, food and household, and would then be sold to retail customers by the Group at its general merchandise stores and supermarket stores.
Pricing
The sale and purchase of merchandise between the parties will be charged on a cost-plus basis, representing all costs incurred in relation to the supply of the merchandise, including direct costs such as merchandises costs, freight costs, operational costs and other indirect or common costs allocated on a revenue or other equitable basis, plus a mark-up rate of not more than 15% of such costs. Subject to compliance with the Listing Rules, the parties may review and amend such mark-up rate on an annual basis by mutual consent.
The prices offered by the TopV Group shall be no less favourable than (i) prices available in the market for similar merchandises and (ii) prices offered by the TopV Group to their other purchaser(s), if any, save and except certain variance arising out of differences in relative location and actual freight costs applicable to a purchasing party.
Rebates
The TopV Group may, taking into account factors such as purchase volume, promotions from manufacturers, its budget, results and profits, grant rebates to the Purchaser(s) (as agreed mutually between the relevant parties) from time to time.
Purchase Contracts
The Purchaser(s) shall enter into specific purchase contracts with TopV HK and/or TopV china, which adopt the terms and conditions set out in the Master Purchase Agreement and the standard terms and conditions of the relevant Purchaser prevailing at the time of execution of such purchase contract. The purchase contracts will set out detailed terms (e.g. the payment terms) of the sale and purchase of merchandise.
Further Assistance
For the purposes of facilitating the Group's sourcing of merchandises, which would enable the Group to efficiently provide its general merchandise stores and supermarket stores with required types and amounts of merchandise and maintain the competitiveness of its business, the Purchasers and the TopV Group shall, as may be practicable in the circumstances, share with each other (on a strictly need-to-know basis) information relating to the purchasing, selling, stocking, pricing and specifications of each other's merchandises. The TopV Group shall, upon request by members of the Group and within a reasonable period of time, further provide such market information and data as may be required. Both the Company and the TopV Group have undertaken to keep all such information and data received or exchanged confidential.
In addition, the Purchasers shall have the right to audit, cross-check and verify the books, records, financial practice, business and operational flow and practice, electronic/ computer system(s) of the TopV Group.
Term
The term of the Master Purchase Agreement shall be a period of 3 years ending 31 December 2018, provided that the parties to the Master Purchase Agreement may, subject to compliance with the Listing Rules, renew the Master Purchase Agreement. The Master Purchase Agreement shall take effect as of 1 January 2016.
Termination
The Master Purchase Agreement may be terminated by 3 month's prior written notice by either party. On termination, each purchase contract then in force shall nevertheless continue in full force and effect for the remainder of the term of such purchase contract, unless terminated in accordance with the terms of such purchase contract.
As mentioned above, the Group has been engaged in merchandise transactions with the Merchandise Providers in its ordinary and usual course of business. Whereas the Group purchases a variety of merchandise from the TopV Group (or their predecessors) and COX, a consignment arrangement is in place between the Company's subsidiaries and G Foot whereby G Foot (as consignor) provides the Company's subsidiaries (as consignee) with merchandise for sale at its general merchandise stores in the PRC.
In view of the Group's strategy to continue and enhance co-operation with the Merchandise Providers and the Group's further expansion plans in China, going forward, the Company has entered into the Master Purchase Agreement with the TopV Group and intends to enter into the Proposed Master Agreements with COX and G Foot
AEON Stores (Hong Kong) Co. Limited issued this content on 31 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 31 March 2016 14:05:26 UTC
Original Document: http://www.aeonstores.com.hk/announcement/download?id=223&q[id_eq]=223&f=file_en
