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.
(Stock Code: 599)
CONTINUING CONNECTED TRANSACTIONS
IN RELATION TO LEASE OF PROPERTY
Reference is made to the Company's announcement dated 22 March 2018 regarding the Previous Tenancy Agreement in respect of the Premises as warehouse expiring on 31 March 2021. The Board hereby announces that the Subsidiary on 31 March 2021 entered into the New Tenancy Agreement for a term of one year commencing on 1 April 2021 with the Landlord.
The Landlord is considered as a connected person of the Company within the meaning of Chapter 14A of the Listing Rules. As such, the transactions contemplated under the New Tenancy Agreement constitute continuing connected transactions for the Company under the Listing Rules.
As the annual cap under the New Tenancy Agreement is less than 5% of all the applicable percentage ratios to continuing connected transactions as required under Rule 14A.78 of the Listing Rules and the annual consideration is less than HK$10,000,000 but is/are greater than 0.1%, the entering into the New Tenancy Agreement is therefore exempt from the independent shareholders' approval requirement, but is subject to the announcement, reporting and annual review requirements according to Rule 14A.76(2) of the Listing Rules.
Reference is made to the Company's announcement dated 22 March 2018 regarding the Previous Tenancy Agreement entered into between the Subsidiary and the Landlord in respect of the Premises as warehouse for a term of three years commencing from 1 April 2018 and expiring on 31 March 2021. After negotiation, the Subsidiary on 31 March 2021 entered into the New Tenancy Agreement for a term of one year commencing on 1 April 2021 with the Landlord.
DETAILS OF NEW TENANCY AGREEMENT
The principal terms of the New Tenancy Agreement are as follows:
Date
31 March 2021
Parties
Tenant: E. Bon Building Materials Company Limited; and
Landlord: Negotiator Consultants Limited
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Premises location
Factory Units A-D on 12th-14th Floor (inclusive) of E. Tat Factory Building, No. 4 Heung Yip Road, Wong Chuk Hang, Hong Kong and Car Parking Spaces Nos. 3 and 28 of the same building
Lease term
1 year commencing from 1 April 2021 and expiring on 31 March 2022 (both days inclusive). No provision for early termination
Monthly rent
HK$400,000 exclusive of the management fee, government rates and other outgoings
Deposit
HK$1,200,000 representing three months' rental and is payable upon the signing of the New Tenancy Agreement by the Subsidiary
Annual rent payable
HK$4,800,000
Aggregate value of consideration over the entire lease term
HK$4,800,000
Rent-free period
No rent-free period
Annual cap
The annual rental payment by the Group under the New Tenancy Agreement for the year ending 31 March 2022 is expected to be no more than HK$4,800,000
Historical figures
For each of the years ended 31 March 2019 and 31 March 2020 and for the year ending 31 March 2021, the total sum of rental paid and payable by the Group to the Landlord amounted to HK$4,032,000 per year
LISTING RULES IMPLICATIONS
The Landlord is a company wholly owned by Bache Hill Group Limited. Fast Way Management Limited, Happy Voice Ltd., New Happy Times Ltd. and Universal Star Group Ltd. are holding totally 76.43% of the issued share capital of Bache Hill Group Limited.
The Company's executive Director Mr. Tse Sun Fat, Henry is a director/shareholder of Fast Way Management Limited, Mr. Tse Sun Po, Tony is a director of New Happy Times Ltd., Mr. Tse Sun Wai, Albert and Mr. Tse Hon Kit, Kevin are directors/shareholders of Universal Star Group Ltd.
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It is further noted that Fast Way Management Limited, Happy Voice Ltd., New Happy Times Ltd. and Universal Star Group Ltd. are substantial shareholders of the Company, holding 43.75% of the issued share capital of the Company.
Therefore, the Landlord is considered as a connected person of the Company within the meaning of Chapter 14A of the Listing Rules.
Pursuant to HKFRS 16 "Leases", the Company will recognise leases that having a lease term of 12 months or less as short-term leases. Accordingly, the rental payment to be made by the Group under the New Tenancy Agreement will be recognised as expenses in the consolidated statement of profit or loss of the Group. As such, the transactions contemplated under the New Tenancy Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.
The annual cap for the financial year ending 31 March 2022 is expected to be HK$4,800,000 which is less than 5% of all the applicable percentage ratios to continuing connected transactions as required under Rule 14A.78 of the Listing Rules and the annual consideration is less than HK$10,000,000 but is/are greater than 0.1%, the entering into the New Tenancy Agreement is therefore exempt from the independent shareholders' approval requirement but is subject to the announcement, reporting and annual review requirements according to Rule 14A.76(2) of the Listing Rules.
It is noted that Mr. Tse Sun Fat, Henry, Mr. Tse Sun Wai, Albert, Mr. Tse Sun Po, Tony and Mr. Tse Hon Kit, Kevin have interests in Negotiator Consultants Limited, having declared their interests in respect thereof, all of them abstained from voting on the board resolution.
REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS
Since March 2000, the Landlord has been leasing the Premises to the Company and its subsidiaries as warehouse. The Previous Tenancy Agreement, at a monthly rent of HK$336,000, will expire on 31 March 2021, details of which were included in the announcement of the Company dated 22 March 2018. The Company considers it to be commercially necessary and beneficial to renew the tenancy by entering into the New Tenancy Agreement so that the Company and its subsidiaries can continue to use the Premises as warehouses.
The rent was agreed after arm's length negotiations by referring to (i) the market rate for similar premises in the vicinity based on the report from Memfus Wong Surveyors Limited dated 22 March 2021; and (ii) the previous rental payment made by the Group for renting the Premises. Memfus Wong Surveyors Limited, an independent qualified valuer appointed by the Company, has provided the Company with the current rental opinion in respect of the Premises based on market rental information of comparable properties.
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The Board, (except Mr. Tse Sun Fat, Henry, Mr. Tse Sun Wai, Albert, Mr. Tse Sun Po, Tony and Mr. Tse Hon Kit, Kevin, being the only directors having material interests in the transactions, who had abstained from voting), noted that nothing has come to the attention that caused them to believe that the continuing connected transactions have not been entered into, in all material respects, in accordance with the existing policies of the Company and the relevant rules governing such continuing connected transactions; and that the terms of New Tenancy Agreement are (a) on normal commercial terms, (b) at 10.3% discount with reference to the market rate, (c) fair and reasonable, and (d) in the interest of the Company and its shareholders as a whole; it recommended that the Company be entered into the New Tenancy Agreement.
The rent will be paid by the Subsidiary from its internal resources.
THE VIEWS OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS
Having considered the terms and conditions of the New Tenancy Agreement and the views of the Board, the Independent Non-executive Directors, in a board meeting held on 31 March 2021, opined that as nothing has come to their attention that caused them to believe that the continuing connected transactions have not been entered into, in all material respects, in accordance with the existing policies of the Company and relevant rules governing such continuing connected transactions and that based on the valuation report from Memfus Wong Surveyors Limited dated 22 March 2021, they have come to agree with the Board's recommendation that the New Tenancy Agreement is an arm's length transaction which is entered into on normal commercial terms and in the ordinary and usual course of business of the Group. They considered that the New Tenancy Agreement is fair and reasonable and of the terms no less favourable to the Group than those available from independent third parties and that it is in the interests of the Company and of the shareholders of the Company as a whole to enter into the continuing connected transactions.
GENERAL
The principal business activities of the Group are importing, wholesale, retail and installation of architectural builders' hardware, bathroom, kitchen collections and furniture in Hong Kong and the People's Republic of China.
The Landlord is engaged in investment and property holding activities.
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DEFINITIONS | |
"Board" | The Board of Directors of the Company; |
"Company" | E. Bon Holdings Limited; |
"Directors" | The directors of the Company; |
"Group" | The Company and its subsidiaries; |
"HKFRS" | Hong Kong Financial Reporting Standards issued by the Hong |
Kong Institute of Certified Public Accountants; | |
"Hong Kong" | Hong Kong Special Administrative Region of the People's |
Republic of China; | |
"Landlord" | Negotiator Consultants Limited, a wholly-owned subsidiary of |
Bache Hill Group Limited; | |
"Listing Rules" | The Rules Governing the Listing of Securities on the Stock |
Exchange; | |
"New Tenancy | The tenancy agreement dated 31 March 2021 entered into |
Agreement" | between the Subsidiary and the Landlord in respect of the |
Premises for the period of 1 year expiring on 31 March 2022; | |
"Premises" | Factory Units A-D on 12th-14th Floor (inclusive) of E. Tat |
Factory Building, No. 4 Heung Yip Road, Wong Chuk Hang, | |
Hong Kong and Car Parking Spaces Nos. 3 and 28 of the same | |
building; | |
"Previous Tenancy | The tenancy agreement dated 22 March 2018 entered into |
Agreement" | between the Subsidiary and the Landlord in respect of the |
Premises for the period of 3 years expiring on 31 March 2021; | |
"Subsidiary" | E. Bon Building Materials Company Limited, an indirect |
wholly-owned subsidiary of the Company; | |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited; and |
"HK$" | Hong Kong dollars, the lawful currency of Hong Kong. |
By Order of the Board
E. Bon Holdings Limited
Lau Shiu Sun
Executive Director
Hong Kong, 31 March 2021
As at the date of this announcement, the Board of Directors comprises eight Directors, of which five are executive Directors, namely Mr. TSE Sun Fat, Henry, Mr. TSE Sun Wai, Albert, Mr. TSE Sun Po, Tony, Mr. TSE Hon Kit, Kevin and Mr. LAU Shiu Sun and three are independent non-executive Directors, namely Mr. WONG Wah, Dominic, Mr. WAN Sze Chung and Dr. LUK Wang Kwong.
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E.bon Holdings Ltd. published this content on 31 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2021 10:45:06 UTC.