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SCMP GROUP LIMITED (0583)

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SCMP Group Limited : Continuing Connected Transaction

02/06/2013 | 06:51am US/Eastern
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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.


CONTINUING CONNECTED TRANSACTION

SCMPP, a wholly-owned subsidiary of the Company, signed a written agreement with Kerry Holdings on 6 February 2013 for the provision of advertising services to Kerry Holdings and other companies in the Kerry Group for the period from 1 January 2013 to 31 December 2013.
Kerry Holdings is a subsidiary of Kerry Group Limited. As Kerry Group Limited is a connected person of the Company, the transaction under the advertising service agreement with Kerry Holdings constitutes a continuing connected transaction and is subject to the reporting, announcement and annual review requirements under Chapter
14A of the Listing Rules, but does not require the approval of the Company's independent shareholders.
ADVERTISING SERVICE AGREEMENT
SCMPP, a wholly-owned subsidiary of the Company, signed a written agreement with Kerry Holdings on 6 February 2013 for the provision of advertising services to Kerry Holdings and other companies in the Kerry Group for the period from 1 January 2013 to
31 December 2013.
The service fee shall be based on the advertising services provided by reference to the prevailing commercial rates charged by SCMPP of other customers and are no more favourable to Kerry Holdings than those available to independent third party customers. The service fees payable pursuant to the above agreement are payable in cash or by cheque by the end of the month following the month in which SCMPP issued invoices.
ANNUAL CAP
Total advertising service fees received or receivable for advertising services provided to
Kerry Holdings and other companies in the Kerry Group in the financial years ended 31
December 2009, 2010, 2011 and 2012 are HK$2,255,926, HK$3,737,688, HK$1,392,999 and HK$1,619,371, respectively. The aggregate amount of advertising service fees
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received or receivable for advertising services provided to Kerry Holdings and other companies in the Kerry Group for the financial year ended 31 December 2012 does not exceed the annual cap of HK$7 million as stated in the Company's announcement dated
17 January 2012.
The Company expects that the maximum aggregate amount of service fees receivable under the above advertising service agreement will be HK$7 million for the financial year ending 31 December 2013. Such maximum aggregate amount is estimated based on the advertising expenditure of the relevant subsidiaries of Kerry Holdings and other companies in the Kerry Group in the financial years ended 31 December 2010, 2011 and
2012, respectively.
In accordance with Rule 14A.36 of the Listing Rules, the Company will re-comply with Rules 14A.35(3) and (4) of the Listing Rules if the HK$7 million cap is exceeded or when the above agreement is renewed or there is a material change to the terms of the agreement. Details of the agreement will be disclosed in the Company's next published annual report and accounts in accordance with Rule 14A.46 of the Listing Rules.
COMPLIANCE WITH LISTING RULES
Kerry Group Limited is the ultimate holding company of the Company. As at the date of this announcement, Kerry Group Limited (through its subsidiaries and controlled corporations) was interested in 1,155,061,308 Shares (which comprise both the interests in 930,061,308 Shares and the interests in 225,000,000 Shares from equity derivatives), representing approximately 74% of the Company's issued share capital. Kerry Holdings is a subsidiary of Kerry Group Limited. Accordingly, Kerry Group Limited and Kerry Holdings are connected persons (as defined in the Listing Rules) of the Company.
As one or more of the relevant percentage ratios as defined under Rule 14.07 of the Listing Rules (other than the profits ratio) in respect of the transaction entered into pursuant to the above advertising service agreement will be more than 0.1% but less than
5%, the entering into of the advertising service agreement will constitute a continuing connected transaction for the Company under Rule 14A.34(1) of the Listing Rules and therefore is subject to the reporting, announcement and annual review requirements under Chapter 14A of the Listing Rules.
OPINION OF THE DIRECTORS
The terms of the advertising service agreement were arrived at after arm's length negotiations between the parties. The Directors, including independent non-executive Directors of the Company, are of the view that the above transaction is and will be conducted on normal commercial terms that are no less favourable to the Group than terms available to or from independent third party customers, is fair and reasonable so far as the Company and the shareholders of the Company are concerned and is in the interests of the Company and the shareholders of the Company as a whole. The Directors, including independent non-executive Directors of the Company, are of the view that the Company's said estimation of the maximum aggregate amount of HK$7 million, being advertising service fees receivable under the above advertising service agreement, is fair and reasonable.
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INFORMATION ABOUT THE GROUP AND KERRY HOLDINGS
The Company is an investment holding company. The principal activities of the Group consist of the publishing, printing and distribution of the South China Morning Post, Sunday Morning Post and other print and digital publications. The Group is also involved in property investment through its subsidiaries.
SCMPP, a wholly-owned subsidiary of the Company, is in the newspaper and magazine publishing business. Publications include the South China Morning Post, Sunday Morning Post and other print and digital publications in Hong Kong.
Kerry Holdings is an investment holding company and is a subsidiary of Kerry Group Limited. Kerry Group Limited is an investment holding company. The principal activities of other companies in the Kerry Group which are involved in the above transaction consist of property development, investment and management; logistics, freight and warehouse ownership and operations; infrastructure-related investments; ownership and operation of hotels and associated properties and provision of hotel management and related services.
REASONS FOR ENTERING INTO THE TRANSACTION
The provision of advertising services is in the ordinary and usual course of business of the Group. The terms of the advertising service agreement were arrived at after arm's length negotiations between the parties. The Directors, including the independent non-executive Directors, consider that the above transaction is and will be conducted on normal commercial terms and is beneficial to the business of the Company and the interests of the shareholders of the Company as a whole.
OTHER INFORMATION
The Board has taken note that Ms. Kuok Hui Kwong, an Executive Director of the Company, had abstained from voting on the resolutions of the Board approving the transaction under the advertising service agreement with reference to the relevant requirements under the Bye-Laws of the Company and the Listing Rules.
DEFINITIONS
"Board" the board of directors of the Company including independent non-executive Directors
"Bye-Laws" The Bye-Laws adopted by the Company on 4 November 1996 as amended, supplemented or modified from time to time.
"Company" SCMP Group Limited, a company incorporated in Bermuda with limited liability, whose shares are listed on the Main Board of the Hong Kong Stock Exchange
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"Directors" Directors of the Company including independent non-executive
Directors
"Group" Company and its subsidiaries
"Hong Kong" Hong Kong Special Administrative Region of the People's
Republic of China
"Kerry Group" Kerry Group Limited, a substantial shareholder of the Company (as defined in the Listing Rules) and its subsidiaries and associates (as defined in the Listing Rules)
"Kerry Holdings" Kerry Holdings Limited, a subsidiary of Kerry Group Limited
"Listing Rules" Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
"SCMPP" South China Morning Post Publishers Limited, a wholly-owned subsidiary of the Company
"Share(s)" the ordinary share(s) of HK$0.10 each in the share capital of the
Company
By Order of the Board Vera Leung Company Secretary
Hong Kong, 6 February 2013
As at the date hereof, the Board comprises: Non-executive Directors
Dr. David J. Pang (Chairman), Mr. Roberto V. Ongpin (Deputy Chairman)
and Tan Sri Dr. Khoo Kay Peng
Independent Non-executive Directors
Mr. Ronald J. Arculli, Dr. Fred Hu Zu Liu, Dr. the Hon. Sir David Li Kwok Po and Mr. Wong Kai Man
Executive Director
Ms. Kuok Hui Kwong

* For identification purpose only

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