GOME RETAIL HOLDINGS 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.
GOME ELECTRICAL APPLIANCES HOLDING LIMITED*
(Incorporated in Bermuda with limited liability)
(Stock Code: 493) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS Lease Agreements
On 17 November 2014, GOME Appliance and GOME-on-line entered into (1) the 2015 Pengrun Lease Agreements with respect to the continuous use by the Group of certain properties at the Pengrun Building, and (2) the 2015 Xibahe Lease Agreement with respect to the continuous use by the Group of the Xibahe Property.
As the lessors of both the Pengrun Building and the Xibahe Property are owned by the Controlling Shareholder and his associates, each of Beijing Pengrun Property and Beijing GOME are connected persons of the Company under the Listing Rules. Accordingly, the transactions contemplated under the 2015 Pengrun Lease Agreements and the 2015 Xibahe Lease Agreement constitute continuing connected transactions for the Company under Chapter
14A of the Listing Rules.
As each of the applicable percentage ratios (other than the profits ratio) in respect of the transactions under the Lease Agreements on an aggregated basis is expected to be more than
0.1% and less than 5% on an annual basis, the transactions contemplated thereunder will be subject to the reporting and announcement requirements and exempt from the independent shareholders' approval requirement as set out in Rule 14A.76(2) of the Listing Rules.
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Reference is made to the announcements of the Company dated 18 March 2011, 6 January 2012,
25 May 2012, 17 December 2012, 6 December 2013 and 25 August 2014 in relation to the leasing by the Group of certain properties at the Pengrun Building and the Xibahe Property. As those leases are due to expire on 31 December 2014, the Group has entered into the 2015 Pengrun Lease Agreements and the 2015 Xibahe Lease Agreement to renew the leases for the said properties.
Date of the agreement:
17 November 2014
Parties to the First Pengrun Agreement:
(i) Lessee: GOME Appliance, a wholly-owned subsidiary of the Company; and
(ii) Lessor: Beijing Pengrun Property, which is a property development company owned by the Controlling Shareholder and his associates. Accordingly, Beijing Pengrun Property is a connected person of the Company and the transactions under the First Pengrun Agreement constitute continuing connected transactions for the Company under Chapter
14A of the Listing Rules.
Terms of the First Pengrun Agreement
Pursuant to the terms of the First Pengrun Agreement, GOME Appliance will lease from Beijing Pengrun Property certain office units at the Pengrun Building with an aggregate GFA of approximately 21,680.59 square meters for use by the Group as its office in Beijing. The First Pengrun Agreement has a term of 1 year commencing from 1 January 2015 to 31
December 2015.
The rent, including management fee, payable under the First Pengrun Agreement is RMB300.00 (equivalent to approximately HK$377.58) per square meter per month, which was determined after arm's length negotiations with reference to the prevailing market rent of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer. A deposit equivalent to 2 months' rent and management fee is payable by GOME Appliance to Beijing Pengrun Property under the First Pengrun Agreement before 25 December 2014 to guarantee the obligations of GOME Appliance thereunder. Beijing Pengrun Property reserves the right to forfeit such deposit payment in full or in part in the event that GOME Applicable fails to perform its obligations under the First Pengrun Agreement. An initial payment covering the rent and management fee for the three- month period from 1 January 2015 to 31 March 2015 is payable by GOME Appliance to Beijing Pengrun Property before 25 December 2014, and thereafter the rent and management fee will be payable by GOME Appliance on a quarterly basis in advance before the 25th day of the last month of the relevant quarter.
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Date of the agreement:
17 November 2014
Parties to the Second Pengrun Agreement:
(i) Lessee: GOME Appliance, a wholly-owned subsidiary of the Company; and
(ii) Lessor: Beijing Pengrun Property, which is a property development company owned by the Controlling Shareholder and his associates. Accordingly, Beijing Pengrun Property is a connected person of the Company and the transactions under the Second Pengrun Agreement constitute continuing connected transactions for the Company under Chapter
14A of the Listing Rules.
Terms of the Second Pengrun Agreement
Pursuant to the terms of the Second Pengrun Agreement, GOME Appliance will lease from Beijing Pengrun Property certain office units at basement level 2 of the Pengrun Building with an aggregate GFA of approximately 491.49 square meters for use by the Group as its office in Beijing. The Second Pengrun Agreement has a term of 1 year commencing from 1
January 2015 to 31 December 2015.
The rent, including management fee, payable under the Second Pengrun Agreement is RMB100.00 (equivalent to approximately HK$125.86) per square meter per month, which was determined after arm's length negotiations with reference to the prevailing market rent of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer. Despite the office units under the First Pengrun Agreement, the Second Pengrun Agreement and the Third Pengrun Agreement all located within the Pengrun Building, the rent per square meter for the properties under the Second Pengrun Agreement is significantly lower than that of the First Pengrun Agreement and the Third Pengrun Agreement as the relevant units under the Second Pengrun Agreement are basement units located at basement level 2 of the Pengrun Building. A deposit equivalent to 2 months' rent and management fee is payable by GOME Appliance to Beijing Pengrun Property under the Second Pengrun Agreement before 25 December 2014 to guarantee the obligations of GOME Appliance thereunder. Beijing Pengrun Property reserves the right to forfeit such deposit payment in full or in part in the event that GOME Appliance fails to perform its obligations under the Second Pengrun Agreement. An initial payment covering the rent and management fee for the three-month period from 1 January 2015 to 31 March 2015 is payable by GOME Appliance to Beijing Pengrun Property before 25 December 2014, and thereafter the rent and management fee will be payable by GOME Appliance on a quarterly basis in advance before the 25th day of the last month of the relevant quarter.
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Date of the agreement:
17 November 2014
Parties to the Third Pengrun Agreement:
(i) Lessee: GOME-on-line, a non-wholly owned subsidiary of the Company; and
(ii) Lessor: Beijing Pengrun Property, which is a property development company owned by the Controlling Shareholder and his associates. Accordingly, Beijing Pengrun Property is a connected person of the Company and the transactions under the Third Pengrun Agreement constitute continuing connected transactions for the Company under Chapter
14A of the Listing Rules.
Terms of the Third Pengrun Agreement
Pursuant to the terms of Third Pengrun Agreement, GOME-on-line will lease from Beijing Pengrun Property certain office units located at the Pengrun Building with an aggregate GFA of approximately 10,653.44 square meters for use by the Group as its office in Beijing. The Third Pengrun Agreement has a term of 1 year commencing from 1 January 2015 to 31
December 2015.
The rent, including management fee, payable under the Third Pengrun Agreement is RMB300.00 (equivalent to approximately HK$377.58) per square meter per month, which was determined after arm's length negotiations with reference to the prevailing market rent of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer. A deposit equivalent to 2 months' rent and management fee is payable by GOME-on-line to Beijing Pengrun Property under the Third Pengrun Agreement before 25 December 2014 to guarantee the obligations of GOME-on-line thereunder. Beijing Pengrun Property reserves the right to forfeit such deposit payment in full or in part in the event that GOME-on-line fails to perform its obligations under the Third Pengrun Agreement. An initial payment covering the rent and management fee for the three-month period from 1
January 2015 to 31 March 2015 is payable by GOME-on-line to Beijing Pengrun Property before 25 December 2014, and thereafter the rent and management fee will be payable by GOME-on-line on a quarterly basis in advance before the 25th day of the last month of the relevant quarter.
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Historical transaction amounts related to the leases at the Pengrun Building
The historical transaction amounts under the leases at the Pengrun Building for the three years ended 31 December 2011, 2012 and 2013, and the nine months ended 30 September
2014 were as follows:
RMB(HK$)' RMB(HK$)' RMB(HK$)' RMB(HK$)'
million million million million
Annual caps in relation to the leases
at the Pengrun Building 35.72 (44.96) 46.08 (58.00) 78.63 (98.96) 84.48 (106.33)
(Note)
Rents paid by the Group in relation to
the leases at the Pengrun Building 35.34 (44.48) 46.07 (57.98) 74.96 (94.34) 59.84 (75.31)
Note: For the entire year ending 31 December 2014
Annual cap for the 2015 Pengrun Lease Agreements
Pursuant to the terms of the 2015 Pengrun Lease Agreements, the annual rent (including management fee) payable by the Group for the one year ending 31 December 2015 would be a sum of approximately RMB116,993,000 (equivalent to approximately HK$147,246,000), which was determined with reference to the historical transaction amount with Beijing Pengrun Property as well as the prevailing market rent of comparable properties in Beijing.
Reasons for the transactions
The Group has occupied the Pengrun Building and located its headquarter operation there since 2004. Given that the Pengrun Building is located in the Chaoyang District, the central business district of Beijing, the Directors (including the independent non-executive Directors) are of the view that it is in the interest of the Company to continue to occupy Pengrun Building as its office and renew the leases. As the rent was determined after arm's length negotiations with reference to the prevailing market rate of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer, the Directors (including the independent non-executive Directors) are of the view that the 2015
Pengrun Lease Agreements were entered into in the ordinary and usual course of business of the Group, on normal commercial terms, and that the respective terms and conditions of the
2015 Pengrun Lease Agreements, including the annual cap, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
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Date of the agreement:
17 November 2014
Parties to the 2015 Xibahe Lease Agreement:
(i) Lessee: GOME Appliance, a wholly-owned subsidiary of the Company; and
(ii) Lessor: Beijing GOME, a company owned by the Controlling Shareholder and his associates, which is principally engaged in the business of investment holding. Accordingly, Beijing GOME is a connected person of the Company and the transactions under the 2015 Xibahe Lease Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.
Terms of the 2015 Xibahe Lease Agreement
Pursuant to the terms of the 2015 Xibahe Lease Agreement, GOME Appliance will lease the Xibahe Property from Beijing GOME for use as a retail store of the Group. 2015 Xibahe Lease Agreement has a term of one year commencing from 1 January 2015 to 31 December
2015.
The rent payable under the 2015 Xibahe Lease Agreement is RMB1,314,000 (equivalent to approximately HK$1,654,000) per month on the basis of RMB4.80 (equivalent to approximately HK$6.04) per square meter per day, which was determined after arm's length negotiations with reference to the prevailing market rent of comparable properties in Beijing as determined by a valuation report prepared by an independent professional valuer. The rent for the period from 1 January 2015 to 31 December 2015, equivalent to RMB15,768,000 (equivalent to approximately HK$19,845,000) is payable in full before 31 March 2015.
Historical transaction amounts related to the lease of the Xibahe Property
The historical transaction amounts in relation to the lease of the Xibahe Property for the three years ended 31 December 2011, 2012 and 2013, and the nine months ended 30 September
2014 were as follows:
RMB(HK$)' RMB(HK$)' RMB(HK$)' RMB(HK$)'
million million million million
Annual caps in relation to the lease of
the Xibahe Property 13.14 (16.54) 14.45 (18.19) 14.45(18.19) 15.77 (19.85)
(Note)
Rents paid by the Group in relation to
the lease of the Xibahe Property 13.14 (16.54) 14.45 (18.19) 14.45(18.19) 11.83 (14.89)
Note: For the entire year ending 31 December 2014
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Annual cap for the 2015 Xibahe Lease Agreement
Pursuant to the terms of the 2015 Xibahe Lease Agreement, the annual rent payable by the Group would be RMB15,768,000 (equivalent to approximately HK$19,845,000) for the one year ending 31 December 2015, which was determined with reference to the historical transaction amount with Beijing GOME in respect of the Xibahe Property as well as the prevailing market rent of comparable properties in Beijing.
Reasons for the transactions
The Company is principally engaged in the retailing of electrical appliances and consumer electronics products in the PRC. The Xibahe Property is located at the heart of the Chaoyang District, the central business district in Beijing, and is one of the key retail outlets of the Group in the city centre of Beijing. The Company has been using the Xibahe Property as a retail outlet since 2005 and it has been one of the most profitable stores of the Group in Beijing. Therefore, the Directors (including the independent non-executive Directors) are of the view that it is in the interest of the Company to continue to use the Xibahe Property as a retail outlet of the Group. As the rent for the Xibahe Property was determined after arm's length negotiations with reference to the prevailing market rate of comparable properties in Beijing, the Directors (including the independent non-executive Directors) are of the view that the 2015 Xibahe Lease Agreement was entered into in the ordinary and usual course of business of the Group, on normal commercial terms, and that the respective terms and conditions of the 2015 Xibahe Lease Agreement, including the annual cap, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
LISTING RULES IMPLICATIONS
As the lessors of both the Pengrun Building and the Xibahe Property are owned by the Controlling Shareholder and his associates, each of Beijing Pengrun Property and Beijing GOME are connected persons of the Company under the Listing Rules. Accordingly, the transactions contemplated under the 2015 Pengrun Lease Agreements and the 2015 Xibahe Lease Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.
As each of the applicable percentage ratios (other than the profits ratio) in respect of the transactions under the Lease Agreements on an aggregated basis is expected to be more than 0.1% and less than 5% on an annual basis, the transactions contemplated thereunder will be subject to the reporting and announcement requirements and exempt from the independent shareholders' approval requirement as set out in Rule 14A.76(2) of the Listing Rules.
At the Board meeting held to approve the Lease Agreements, Mr. Zou Xiao Chun, who was nominated by Shinning Crown Holdings Inc. ("Shinning Crown"), a company wholly-owned by the Controlling Shareholder, as a Director, was considered to be interested in the transactions contemplated under the Lease Agreements and have abstained from voting in respect of the resolutions proposed to approve the Lease Agreements. Save for Mr. Zou Xiao Chun, who has abstained from voting for the resolutions because of his interests in the transactions, the Directors, including all the independent non-executive Directors, have unanimously voted in favour of the resolutions proposed to approve the Lease Agreements.
7
In this announcement, the following expressions shall have the meanings set out below unless the context otherwise requires:
"2015 Pengrun Lease
Agreements"
the First Pengrun Agreement, the Second Pengrun Agreement and the Third Pengrun Agreement;
"2015 Xibahe Lease
Agreement"
the agreement dated 17 No v ember 2014 between GOME Appliance and Beijing GOME in relation to the lease of the Xibahe Property;
"associate" has the meaning ascribed to it under Chapter 14A of the Listing
Rules;
"Beijing GOME" �]}(��-li::fN0PJ (Beijing GOME Electrical Appliance Co., Ltd.*), a company incorporated with limited liability under the laws of the PRC which is owned by the Controlling Shareholder and his associates;
"Beijing Pengrun Property" �]}( ::fN0PJ (Beijing Pengrun Property Co., Ltd.*), a limited liability company established in the PRC which is owned by the Controlling Shareholder and his associates;
"Board" the board of Directors;
"Company" GOME Electrical Appliances Holding Limited, a company incorporated in Bermuda and whose shares are listed on the main board of the Stock Exchange (stock code: 493);
"Controlling Shareholder" Mr. Wong Kwong Yu (Jì:Jt�%1:), the controlling shareholder of the Company;
"Director(s)" the director(s) of the Company;
"First Pengrun Agreement" the agreement dated 17 No v ember 2014 between GOME Appliance and Beijing Pengrun Property in relation to the lease of certain office units with a GFA of approximately 21,680.59 square meters in the Pengrun Building;
"GFA" gross floor area;
"GOME Appliance" ��-li::fN0PJ (GOME Appliance Company Limited*), an indirect wholly-owned subsidiary of the Company;
8
"GOME-on-line" �� -l ::fN0PJ(GOME-on-line e-Commerce Co., Ltd.*), a limited liability company incorporated in the PRC, a non-wholly owned subsidiary of the Company which is owned as to 60% by the Company and as to 40% by Mr. Wong and his associates;
"Group" the Company and its subsidiaries;
"Hong Kong" the Hong Kong Special Administrative Region of the People's
Republic of China;
"Lease Agreements" the 2015 Pengrun Lease Agreements and the 2015 Xibahe Lease
Agreement;
"Listing Rules" the Rules Governing the Listing of Securities on the Stock
Exchange;
"Pengrun Building" 7cfl. (Pengrun Building*), an office building located at No.
26, Xiaoyun Road, Chaoyang District, Beijing (�]}(1&Y�!!T1t
26);
"percentage ratio" has the meaning ascribed to it under Chapter 14A of the Listing
Rules;
"PRC" the People's Republic of China (for the purposes of this announcement, e xcludes Hong Kong, the Macao Special Administrative Region and Taiwan);
"Second Pengrun Agreement" the agreement dated 17 No v ember 2014 between GOME Appliance and Beijing Pengrun Property in relation to the lease of certain office units with a GFA of approximately 491.49 square meters in the Pengrun Building;
"Shareholders" shareholders of the Company;
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
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"Third Pengrun Agreement" the agreement dated 17 November 2014 between GOME-on-line and Beijing Pengrun Property in relation to the lease of certain office units with a GFA of approximately 10,653.44 square meters in the Pengrun Building; and
"Xibahe Property" the property located at No. A7, North Lane, Xibahe, Chaoyang District, Beijing (�]}(1&Y�!!Ttl!JIru�ll!ftl7 ), with a GFA of approximately 9,000 square meters, together with advertising space.
Translations of HK$ into RMB are made in this announcement for illustration purpose at the rate of HK$1 to RMB0.79454. No representation is made that any amounts in HK$ or RMB could have been or could be converted at that rate or at any other rate or at all.
By Order of the Board
GOME Electrical Appliances Holding Limited Zhang Da ZhongChairman
Hong Kong, 17 November 2014
As at the date of this announcement, the Board of the Company comprises Mr. Zou Xiao Chun as executive director; Mr. Zhang Da Zhong, Mr. Zhu Jia and Ms. Wang Li Hong as non-executive directors; and Mr. Sze Tsai Ping, Michael, Mr. Chan Yuk Sang, Mr. Lee Kong Wai, Conway, Mr. Ng Wai Hung and Ms. Liu Hong Yu as independent non-executive directors.
* For identification purpose only
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