THE HONGKONG AND SHANGHAI HOTELS, 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.
THE HONGKONG AND SHANGHAI HOTELS, LIMITED
(Incorporated in Hong Kong with limited liability)
The Board announces that on 21 March 2016, HMS, an indirect wholly owned subsidiary of the Company, entered into First New Tenancy Agreement and Second New Tenancy Agreement with Kadoorie Estates to renew the existing leases of First Office Premises and Second Office Premises.
Kadoorie Estates acts as the agent of Cobalt (the registered owner of the Office Premises) to manage the Office Premises. Cobalt is a trustee of a unit trust, the units of which are ultimately held by discretionary trusts of which members of the Kadoorie family are discretionary objects. Kadoorie Estates is wholly owned by Harneys Trustees. As at 21 March 2016, Harneys Trustees indirectly held 41.57% interest in the issued share capital of the Company. As such, Kadoorie Estates is a connected person of the Company under the Listing Rules. Accordingly, the entering into the New Tenancy Agreements constitutes continuing connected transactions of the Company under Rule 14A.31 of the Listing Rules and is subject to announcement, annual review and annual reporting requirements but is exempt from circular (including independent financial advice) and Shareholders' approval requirements under Chapter 14A of the Listing Rules.
Parties: (i) Kadoorie Estates, as agent
(ii) HMS, as tenant
Date: 21 March 2016
First Office Premises: 7th and 8th Floors of St. George's Building, 2 Ice House Street, Central, Hong Kong
Lettable Area: approximately 18,786 square feet
Term: Three years commencing from 1 April 2016 to 31 March 2019 (both days inclusive)
Rent: HK$1,655,000 per month, representing an average rent of HK$88.1 per square foot (exclusive of service charges), payable monthly in advance
Service Charges: HK$216,039 per month, representing a service charge of HK$11.5 per square foot (subject to adjustments), payable monthly in advance
Parties: (i) Kadoorie Estates, as agent
(ii) HMS, as tenant
Date: 21 March 2016
Second Office Premises: Room 408 of St. George's Building, 2 Ice House Street, Central, Hong Kong
Lettable Area: approximately 1,362 square feet
Term: Three years commencing from 1 April 2016 to 31 March 2019 (both days inclusive)
Rent: HK$120,000 per month, representing an average rent of HK$88.1 per square foot (exclusive of service charges), payable monthly in advance
Service Charges: HK$15,663 per month, representing a service charge of HK$11.5 per square foot (subject to adjustments), payable monthly in advance
Based on the monthly rent payable under the First New Tenancy Agreement and Second New Tenancy Agreement, as well as the possible adjustment to be made by Kadoorie Estates in the level of service charges payable, the maximum aggregate annual consideration payable by HMS under the New Tenancy Agreements for the financial years ending 31 December 2016, 2017, 2018 and 2019 will not exceed HK$19 million, HK$25 million, HK$25 million and HK$7 million respectively.
Historical figures in respect of the existing leasesThe actual rental expenses and service charges incurred under the First Previous Tenancy Agreement for the financial years ended 31 December 2013, 2014, 2015 and 2016 did not exceed the maximum aggregate annual consideration disclosed in the previous announcment dated 22 March 2013. They are set out below.
HK$m | 2013 | 2014 | 2015 | 2016 |
First Previous Tenancy Agreement | 14.7 | 19.8 | 19.9 | 5 |
The actual rental expenses and service charges incurred under the Second Previous Tenancy Agreement for the financial years ended 31 December 2013, 2014, 2015 and 2016 are set out below.
HK$m | 2013 | 2014 | 2015 | 2016 |
Second Previous Tenancy Agreement | 0.5 | 1.5 | 1.5 | 0.4 |
The aggregate annual consideration under the Second Previous Tenancy Agreement was less than 0.1% of the applicable percentage ratios of the Company and was a de minimis continuing connected transaction under Rule 14A.76. The aggregate annual consideration of the First Previous Tenancy Agreement and Second Previous Tenancy Agreement was more than 0.1% but less than 5%. Since the First Previous Tenancy Agreement has already been announced on 22 March 2013, consequently the Company was exempt from any reporting requirments for the Second Previous Tenancy Agreement.
The Company has been leasing the First Office Premises and Second Office Premises from Kadoorie Estates as office spaces and the existing leases will expire on 31 March 2016. The Company considers it beneficial to enter into new leases of the Office Premises as the office spaces of the Company in view of the prime location of the Office Premises and the saving of relocation costs.
The terms of the First New Tenancy Agreement and Second New Tenancy Agreement have been determined after arm's length negotiations between the parties with reference to prevailing market rates for comparable office space in Central.
The Board, including the independent non-executive directors, considers that the entering into the First New Tenancy Agreement and Second New Tenancy Agreement is in the ordinary and usual course of business of HMS and that the New Tenancy Agreements are on normal commercial terms with reference to the prevailing market conditions and were negotiated at arm's length, and the terms of the New Tenancy Agreements and maximum aggregate annual consideration are fair and reasonable and in the interests of the Shareholders as a whole. The Hon. Sir Michael Kadoorie, Messrs. Ronald J. McAulay, William E. Mocatta, John A.H. Leigh and Nicholas T.J. Colfer, being directors of Kadoorie Estates, are considered to have an interest or potential conflict of interest in the New Tenancy Agreements by virtue of their direct or indirect interests or directorship in Kadoorie Estates, and Messrs. William E. Mocatta, John A.H. Leigh and Nicholas T.J. Colfer, being present at
the Board meeting, have abstained from voting on the Board resolution of the Company to approve the New Tenancy Agreements.
Kadoorie Estates acts as the agent of Cobalt (the registered owner of the Office Premises) to manage the Office Premises. Cobalt is a trustee of a unit trust, the units of which are ultimately held by discretionary trusts of which members of the Kadoorie family are discretionary objects. Kadoorie Estates is wholly owned by Harneys Trustees. As at 21 March 2016, Harneys Trustees indirectly held 41.57% interest in the issued share capital of the Company. As such, Kadoorie Estates is a connected person of the Company under the Listing Rules.
Accordingly, the entering into the New Tenancy Agreements constitutes continuing connected transactions of the Company under Rule 14A.31 of the Listing Rules. As the highest of relevant percentage ratios as defined under Rule 14.07 of the Listing Rules applicable to the maximum aggregate annual consideration for the Tenancy Agreements is more than 0.1% but less than 5%, the entering into the New Tenancy Agreements is subject to announcement, annual review and annual reporting requirements but is exempt from circular (including independent financial advice) and Shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Company will comply with their continuing obligations under Rules 14A.55-60 of the Listing Rules and will re-comply with the relevant Listing Rules if the maximum aggregate annual consideration is exceeded, when the New Tenancy Agreements are renewed and when there is a material change to its terms.
The principal business activity of Kadoorie Estates is the provision of management services.
HMS is an indirect wholly owned subsidiary of the Company and its principal activities are the provision of management, marketing, rooms reservation, design advisory, consultancy and advertising services.
The Company, through its subsidiaries, joint venture, joint operation and associates, is principally engaged in the ownership, development, and management of prestigious hotels and commercial and residential properties in key locations in Asia, the United States and Europe, as well as the provision of tourism and leisure, club management and other services.
In this announcement, the following expressions have the meanings as set out below unless the context requires otherwise:-
"Board" | the board of Directors |
The Hongkong and Shanghai Hotels Ltd. issued this content on 21 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 March 2016 08:46:06 UTC
Original Document: http://www.hshgroup.com/en/~/media/Files/HSHGroup/Investor_Relations/Corporate_Announcements/2016/20160321_CCT_SGB_EN.ashx
