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 TRANSACTIONS
PROPOSED ANNUAL CAPS
FOR THE THREE YEARS ENDING 31 DECEMBER 2023
Reference is made to the announcements of the Company dated 20 November 2019 and 24 December 2019 and the circular of the Company dated 31 December 2019 in respect of the continuing connected transactions with Yuen Tai and SZ Kingworld Lifeshine contemplated under the 2020 Yuen Tai Master Distribution Agreement and the 2020 SZ Kingworld Lifeshine Master Distribution Agreement, respectively.
2021 YUEN TAI MASTER DISTRIBUTION AGREEMENT AND 2021 SZ KINGWORLD LIFESHINE MASTER DISTRIBUTION AGREEMENT
Due to the increase in demand in Imada Red Flower Oil by our independent sub-distributor and consequently additional orders are expected to be placed with SZ Kingworld Lifeshine by our Group in the second half of 2021, the Board anticipates that the proposed annual caps for the transactions contemplated under the 2020 Master Distribution Agreements will exceed the existing annual caps for the two years ending 31 December 2022 under the 2020 Master Distribution Agreements. In addition, taking into account the expected market demand of the Yuen Tai Products under the current market condition, the Board evaluated the proposed annual caps for the transactions contemplated under the 2020 Yuen Tai Master Distribution Agreement and the term of the 2020 Yuen Tai Master Distribution Agreement. Therefore, on 1 April 2021 (after trading hours) (1) HK Kingworld, a wholly-owned subsidiary of the Company, entered into the 2021 Yuen Tai Master Distribution Agreement with Yuen Tai for the purchase of the Yuen Tai Products for a term commencing from 27 May 2021 or the date on which the 2021 Yuen Tai Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive); and (2) SZ Kingworld, a wholly-owned subsidiary of the Company, entered into the 2021 SZ Kingworld Lifeshine Master Distribution Agreement with SZ Kingworld Lifeshine for the purchase of the SZ Kingworld Lifeshine Products for a term commencing from 27 May 2021 or the date on which the 2021 SZ Kingworld Lifeshine Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive).
1
TERMINATION OF THE 2020 YUEN TAI MASTER DISTRIBUTION AGREEMENT AND 2020 SZ KINGWORLD LIFESHINE MASTER DISTRIBUTION AGREEMENT
Upon the commencement of the term of each of the 2021 Master Distribution Agreements, each of the 2020 Master Distribution Agreements shall be terminated with immediate effect.
IMPLICATIONS UNDER THE LISTING RULES
Both Yuen Tai and SZ Kingworld Lifeshine are companies wholly-owned by Morning Gold, which is in turn 51% held by Mr. Zhao and 49% held by Ms. Chan, respectively. Both of Mr. Zhao and Ms. Chan are executive Directors and Controlling Shareholders of the Company. Therefore, each of Yuen Tai and SZ Kingworld Lifeshine is a connected person of the Company and the transactions under each of the 2021 Master Distribution Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
Given that the transactions contemplated under the 2021 Master Distribution Agreements are to be made with Yuen Tai and SZ Kingworld Lifeshine, and these two companies are indirectly wholly-owned by Mr. Zhao and Ms. Chan, such transactions shall be aggregated in accordance with Rule 14A.81 of the Listing Rules.
Reference is made to the announcement of the Company dated 30 December 2020 inspect of the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement. Given that the transactions contemplated under the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement are also to be made with SZ Kingworld Lifeshine, the transactions under the 2021 Master Distribution Agreements, the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement shall be aggregated in accordance with Rule 14A.81 of the Listing Rules.
Since one or more of the applicable percentage ratios in respect of the aggregate of the proposed annual caps for the transactions contemplated under the 2021 Master Distribution Agreements, the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement is/are expected to exceed 5%, the transactions under the 2021 Master Distribution Agreements are subject to the reporting, announcement, annual review, circular and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders, and the Independent Board Committee has been established to advise the Independent Shareholders in respect of the transactions under each of the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023.
2
A circular containing, among other things, (i) details of the transactions under each of the 2021 Master Distribution Agreements as set out in this announcement and the proposed annual caps thereof; (ii) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its advice on the 2021 Master Distribution Agreements and the proposed annual caps thereof; (iii) recommendation of the Independent Board Committee to the Independent Shareholders; and (iv) the notice convening the EGM will be despatched to the Shareholders on or before 27 April 2021, which is within 15 Business Days after the publication of this announcement.
-
BACKGROUND
Reference is made to the announcements of the Company dated 20 November 2019 and 24 December 2019 and the circular of the Company dated 31 December 2019 in respect of the continuing connected transactions with Yuen Tai and SZ Kingworld Lifeshine contemplated under the 2020 Yuen Tai Master Distribution Agreement and the 2020 SZ Kingworld Lifeshine Master Distribution Agreement, respectively.
Due to the increase in demand in Imada Red Flower Oil by our independent sub-distributor and consequently additional orders are expected to be placed with SZ Kingworld Lifeshine by our Group in the second half of 2021, the Board anticipates that the proposed annual caps for the transactions contemplated under the 2020 Master Distribution Agreements will exceed the existing annual caps for the two years ending 31 December 2022 under the 2020 Master Distribution Agreements. In addition, taking into account the expected market demand of the Yuen Tai Products under the current market condition, the Board evaluated the proposed annual caps for the transactions contemplated under the 2020 Yuen Tai Master Distribution Agreement and the term of the 2020 Yuen Tai Master Distribution Agreement. Therefore, on 1 April 2021 (after trading hours) (1) HK Kingworld, a wholly-owned subsidiary of the Company, entered into the 2021 Yuen Tai Master Distribution Agreement with Yuen Tai for the purchase of the Yuen Tai Products for a term commencing from 27 May 2021 or the date on which the 2021 Yuen Tai Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive); and (2) SZ Kingworld, a wholly-owned subsidiary of the Company, entered into the 2021 SZ Kingworld Lifeshine Master Distribution Agreement with SZ Kingworld Lifeshine for the purchase of the SZ Kingworld Lifeshine Products for a term commencing from 27 May 2021 or the date on which the 2021 SZ Kingworld Lifeshine Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive).
Details of the 2021 Master Distribution Agreements are as follows:
3
- 2021 YUEN TAI MASTER DISTRIBUTION AGREEMENT
- Date: 1 April 2021
- Parties:
- HK Kingworld, a wholly-owned subsidiary of the Company
- Yuen Tai
-
Description of the transactions:
Pursuant to the 2021 Yuen Tai Master Distribution Agreement, HK Kingworld or a wholly-owned subsidiary of the Company shall purchase the Yuen Tai Products from Yuen Tai and HK Kingworld shall act as the exclusive distributor for distribution of the Yuen Tai Products in the Greater China. - Condition precedent:
The 2021 Yuen Tai Master Distribution Agreement shall take effect subject to and conditional upon obtaining the Independent Shareholders' approval in respect of the 2021 Yuen Tai Master Distribution Agreement and the proposed annual caps for the transactions under the agreement. - Term:
The 2021 Yuen Tai Master Distribution Agreement is for a term commencing from 27 May 2021 or the date on which the 2021 Yuen Tai Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive). - Pricing and payment terms:
The 2021 Yuen Tai Master Distribution Agreement was negotiated and entered into on an arm's length basis and on normal commercial terms. The terms and conditions (including but not limited to the prices) on which the Yuen Tai Products are to be purchased by the Group should be on normal commercial terms and no less favourable than those obtained from independent third parties by the Group. The Group will satisfy the consideration of such purchases by its internal resources.
4
The prices of the Yuen Tai Products to be purchased by the Group will be based on the prevailing market prices of similar products and the unit prices of the Yuen Tai Products from time to time and will be no less favourable to the Group than those terms offered by other independent third parties suppliers, where there is comparable product available in the market.
The actual amounts, types, unit prices, delivery dates and methods of delivery of the Yuen Tai Products to the Group will be subject to individual orders placed by the Group and accepted by Yuen Tai. To the extent that a comparison can be made (subject to similar nature, quality, quantity of purchase and conditions of the products and/ or services), the Company and/or HK Kingworld shall use its best efforts to obtain price quotations from at least two independent third parties for comparison purposes (if applicable), to determine whether the prices and/or terms offered by Yuen Tai are fair and reasonable, and are similar to or more favourable than those offered by the independent third party(ies). The Group shall have the right to terminate or cancel the transactions if the terms and conditions are less favourable to the Group than those offered by other independent third parties suppliers.
40% of the purchase price shall be paid in advance by the Group within three days after the Group has placed an order for each batch of products and the remaining balance of the purchase price shall be paid upon delivery of the products and the passing of the product inspection.
7. Historical transaction amounts:
Set out below are the historical transaction amounts between the Group and Yuen Tai in respect of the purchase and distribution of Yuen Tai Products under the 2018 Yuen Tai Master Distribution Agreement for the year ended 31 December 2018, under the 2019 Yuen Tai Master Distribution Agreement for the year ended 31 December 2019, under the 2020 Yuen Tai Master Distribution Agreement for the year ended 31 December 2020 and the annual cap under the 2018 Yuen Tai Master Distribution Agreement for the year ended 31 December 2018, under the 2019 Yuen Tai Master Distribution Agreement for the year ended 31 December 2019 and the annual cap under the 2020 Yuen Tai Master Distribution Agreement for the year ended 31 December 2020:
Audited | Audited | Audited | ||||
transaction | Annual | transaction | Annual | transaction | Annual | |
amount for the | cap for the | amount for the | cap for the | amount for the | cap for the | |
year ended | year ended | year ended | year ended | year ended | year ended | |
31 December | 31 December | 31 December | 31 December | 31 December | 31 December | |
2018 | 2018 | 2019 | 2019 | 2020 | 2020 | |
Purchase of Yuen Tai | ||||||
Products | HK$15,000 | HK$8,900,000 | HK$nil | HK$3,670,000 | HK$1,824,000 | HK$4,740,000 |
(equivalent to approximately) | ||||||
RMB13,000 | RMB7,556,000 | RMBnil | RMB3,233,000 | RMB1,623,000 | RMB4,242,000 |
5
8. Proposed annual caps:
Set out below are the proposed annual caps under the 2021 Yuen Tai Master Distribution Agreement for the three years ending 31 December 2023:
Annual | Annual | Annual |
cap for the | cap for the | cap for the |
year ending | year ending | year ending |
31 December | 31 December | 31 December |
2021 | 2022 | 2023 |
Purchase of
Yuen Tai Products HK$5,620,000 HK$10,700,000 HK$11,770,000
(equivalent to approximately) RMB4,734,000 RMB9,014,000 RMB9,915,000
In arriving at the above proposed annual caps, the Directors have taken into account the following factors:
- the historical figures of the actual transaction amounts of the transactions under the 2018 Yuen Tai Master Distribution Agreement for the year ended 31 December 2018, under the 2019 Yuen Tai Master Distribution Agreement for the year ended 31 December 2019, under the 2020 Yuen Tai Master Distribution Agreement for the year ended 31 December 2020 and (unaudited actual transaction amount) for the two months ended 28 February 2021. The Directors are of the view that there was no transaction under the 2019 Yuen Tai Master Distribution Agreement for the year ended 31 December 2019 due to the delay in obtaining production certification by Yuen Tai for the supply of the Yuen Tai Products, which was an uncontrollable one-off incident. The related production certification was obtained in early November 2019 and is valid till 29 November 2023. The Directors do not foresee any delay in obtaining/renewing the production certificate upon the expiry of the existing production certificate; and
- the expected demand for different pharmaceutical and healthcare products from customers.
The proposed annual caps are calculated by multiplying the planned purchase amount by the estimated unit price of the products.
9. Termination of the 2020 Yuen Tai Master Distribution Agreement:
Upon the commencement of the term of the 2021 Yuen Tai Master Distribution Agreement, the 2020 Yuen Tai Master Distribution Agreement shall be terminated with immediate effect.
6
- 2021 SZ KINGWORLD LIFESHINE MASTER DISTRIBUTION AGREEMENT
- Date: 1 April 2021
- Parties:
- SZ Kingworld, a wholly-owned subsidiary of the Company
- SZ Kingworld Lifeshine
-
Description of the transactions:
Pursuant to the 2021 SZ Kingworld Lifeshine Master Distribution Agreement, SZ Kingworld or a wholly-owned subsidiary of the Company shall purchase the SZ Kingworld Lifeshine Products from SZ Kingworld Lifeshine and SZ Kingworld shall act as the exclusive distributor for distribution of the SZ Kingworld Lifeshine Products in the Greater China. - Condition precedent:
The 2021 SZ Kingworld Lifeshine Master Distribution Agreement shall take effect subject to and conditional upon obtaining the Independent Shareholders' approval in respect of the 2021 SZ Kingworld Lifeshine Master Distribution Agreement and the proposed annual caps for the transactions under the agreement. - Term:
The 2021 SZ Kingworld Lifeshine Master Distribution Agreement is for a term commencing from 27 May 2021 or the date on which the 2021 Yuen Tai Master Distribution Agreement and the proposed annual caps for the transactions under the agreement are approved by the Independent Shareholders (whichever is later) and ending on 31 December 2023 (both days inclusive).
7
6. Pricing and payment terms:
The 2021 SZ Kingworld Lifeshine Master Distribution Agreement was negotiated and entered into on an arm's length basis and on normal commercial terms. The terms and conditions (including but not limited to the prices) on which the SZ Kingworld Lifeshine Products are to be purchased by the Group should be on normal commercial terms and no less favourable than those obtained from independent third parties by the Group. The Group will satisfy the consideration of such purchases by its internal resources.
The prices of the SZ Kingworld Lifeshine Products to be purchased by the Group will be based on the prevailing market prices of similar products and the unit prices of the SZ Kingworld Lifeshine Products as from time to time and will be no less favourable to the Group than those terms offered by other independent third parties suppliers, where there is comparable product available in the market.
The actual amounts, types, unit prices, delivery dates and methods of delivery of the SZ Kingworld Lifeshine Products to the Group will be subject to individual orders placed by the Group and accepted by SZ Kingworld Lifeshine. To the extent that a comparison can be made (subject to similar nature, quality, quantity of purchase and conditions of the products and/or services), the Company and/or SZ Kingworld shall use its best efforts to obtain price quotations from at least two independent third parties for comparison purposes (if applicable), to determine whether the prices and/or terms offered by SZ Kingworld Lifeshine are fair and reasonable, and are similar to or more favourable than those offered by the independent third party(ies). The Group shall have the right to terminate or cancel the transactions if the terms and conditions are less favourable to the Group than those offered by other independent third parties suppliers.
40% of the purchase price shall be paid in advance by the Group within three days after the Group has placed an order for each batch of products and the remaining balance of the purchase price shall be paid upon delivery of the products and the passing of the product inspection.
8
7. Historical transaction amounts:
Set out below are the historical transaction amounts between the Group and SZ Kingworld Lifeshine in respect of the purchase and distribution of SZ Kingworld Lifeshine Products under the 2018 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2018, under the 2019 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2019 and under the 2020 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2020, the annual caps under the 2018 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2018, under the 2019 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2019 and under the 2020 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2020:
Audited | Audited | Audited | ||||
transaction | Annual | transaction | Annual | transaction | Annual | |
amount for the | cap for the | amount for the | cap for the | amount for the | cap for the | |
year ended | year ended | year ended | year ended | year ended | year ended | |
31 December | 31 December | 31 December | 31 December | 31 December | 31 December | |
2018 | 2018 | 2019 | 2019 | 2020 | 2020 | |
Purchase of SZ | ||||||
Kingworld Lifeshine Products | RMB11,664,000 | RMB21,910,000 RMB10,839,000 | RMB20,400,000 RMB22,170,000 RMB22,271,000 | |||
(equivalent to approximately) | ||||||
HK$13,817,000 | HK$25,807,000 | HK$12,232,000 | HK$23,156,000 | HK$24,914,000 | HK$24,884,000 |
8. Proposed annual caps:
Set out below are the proposed annual caps under the 2021 SZ Kingworld Lifeshine Master Distribution Agreement for the three years ending 31 December 2023:
Annual | Annual | Annual |
cap for the | cap for the | cap for the |
year ending | year ending | year ending |
31 December | 31 December | 31 December |
2021 | 2022 | 2023 |
Purchase of SZ
Kingworld Lifeshine Products RMB39,180,000 RMB44,280,000 RMB52,280,000
(equivalent to approximately)
HK$46,510,000 HK$52,564,000 HK$62,061,000
9
In arriving at the above proposed annual caps, the Directors have taken into account the following factors:
- the historical figures of the actual transaction amounts of the transactions under the 2018 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2018, under the 2019 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2019 and under the 2020 SZ Kingworld Lifeshine Master Distribution Agreement for the year ended 31 December 2020 and (unaudited actual transaction amount) for the two months ended 28 February 2021; and
- the expected demand for different pharmaceutical and healthcare products from customers.
The proposed annual caps are calculated by multiplying the planned purchase amount by the estimated unit price of the products.
9. Termination of the 2020 SZ Kingworld Lifeshine Master Distribution Agreement:
Upon the commencement of the term of the 2021 SZ Kingworld Lifeshine Master Distribution Agreement, the 2020 SZ Kingworld Lifeshine Master Distribution Agreement shall be terminated with immediate effect.
-
REASONS FOR AND BENEFITS IN ENTERING INTO THE 2021 MASTER DISTRIBUTION AGREEMENTS
The Group is principally engaged in the distribution of pharmaceutical and healthcare products in the PRC. The pharmaceutical and healthcare products distributed by the Group are supplied by various suppliers including Yuen Tai and SZ Kingworld Lifeshine. The Directors consider that a long term and steady relationship with these suppliers are of importance to the Group as it enables stability in the supply to the Group which in turn avoids any unnecessary disruption to the Group's business and guarantees a smooth operation of the Group.
Due to the increase in demand in Imada Red Flower Oil by our independent sub-distributor and consequently additional orders are expected to be placed with SZ Kingworld Lifeshine by our Group in the second half of 2021, the Board anticipates that the proposed annual caps for the transactions contemplated under the 2020 Master Distribution Agreements will exceed the existing annual caps for the two years ending 31 December 2022 under the 2020 Master Distribution Agreements. In addition, taking into account the expected market demand of the Yuen Tai Products under the current market condition, the Board evaluated the proposed annual caps for the transactions contemplated under the 2020 Yuen Tai Master Distribution Agreement and the term of the 2020 Yuen Tai Master Distribution Agreement. Therefore,
(1) HK Kingworld entered into the 2021 Yuen Tai Master Distribution Agreement with Yuen Tai; and (2) SZ Kingworld entered into the 2021 SZ Kingworld Lifeshare Master Distribution Agreement with SZ Kingworld Lifeshine.
By entering into the 2021 Master Distribution Agreements, the Group can maintain long term relationships with Yuen Tai and SZ Kingworld Lifeshine.
10
Pursuant to the 2021 Master Distribution Agreements, the products to be purchased by the Group are on an exclusive basis and the prices of such products should be on normal commercial terms and no less favourable than those obtained from independent third parties. As such, the Group may gain competitive advantage in terms of costs. As the Group will act as the exclusive distributor for distribution of such products in the Greater China, the Group may avoid competition with other distributors with respect to the same products in the market.
In light of the above factors, the Directors (excluding Mr. Zhao and Ms. Chan, who have abstained from voting on the relevant board resolutions due to their interest in the 2021 Master Distribution Agreements and the independent non-executive Directors) consider that the terms under each of the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023 are fair and reasonable and in the interests of the Shareholders as a whole. The opinion of the independent non-executive Directors will be formed after taking into account the advice to be provided by the Independent Financial Adviser, which will be set out in the circular to be despatched to the Shareholders on or before 27 April 2021.
-
GENERAL INFORMATION
1. Principal Business Activities - The Group
The Group is principally engaged in the distribution of pharmaceutical and healthcare products in the PRC and Hong Kong.
- Yuen Tai
Yuen Tai is principally engaged in the manufacturing of pharmaceutical and healthcare products.
- SZ Kingworld Lifeshine
SZ Kingworld Lifeshine is principally engaged in the manufacturing of pharmaceutical and healthcare products.
11
- SZ Kingworld
SZ Kingworld is principally engaged in the distribution of imported branded pharmaceutical and healthcare products in the PRC. As at 31 December 2020, SZ Kingworld managed a portfolio of eleven categories, which include more than 60 products, including pharmaceutical products, healthcare products, general foodstuffs and medical products from suppliers or manufacturers from Japan, the United States, Canada, Hong Kong, Taiwan, Thailand and the PRC. The products distributed by SZ Kingworld include Nin Jiom Chuan Bei Pei Pa Koa, Taiko Seirogan, Imada Red Flower Oil, Lifeline Care maternal and infant fish oil nutrient product series and CARMEX lipstick series.
- HK Kingworld
HK Kingworld is principally engaged in the distribution of imported branded healthcare products in Hong Kong and Macao, including the Culturelle (康萃樂) probiotics product series from the United States, which is a leading brand in the probiotics product market in the United States and the probiotics product brand for children most recommended by pediatricians in the United States.
-
IMPLICATIONS UNDER THE LISTING RULES
Both Yuen Tai and SZ Kingworld Lifeshine are companies wholly-owned by Morning Gold, which is in turn 51% held by Mr. Zhao and 49% held by Ms. Chan, respectively. Both of Mr. Zhao and Ms. Chan are executive Directors and Controlling Shareholders of the Company. Therefore, each of Yuen Tai and SZ Kingworld Lifeshine is a connected person of the Company and the transactions under each of the 2021 Master Distribution Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
Given that the transactions contemplated under the 2021 Master Distribution Agreements are to be made with Yuen Tai and SZ Kingworld Lifeshine, and these two companies are indirectly wholly-owned by Mr. Zhao and Ms. Chan, such transactions shall be aggregated in accordance with Rule 14A.81 of the Listing Rules.
12
Reference is made to the announcement of the Company dated 30 December 2020 inspect of the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement. Given that the transactions contemplated under the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement are also to be made with SZ Kingworld Lifeshine, the transactions under the 2021 Master Distribution Agreements, the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement shall be aggregated in accordance with Rule 14A.81 of the Listing Rules.
Since one or more of the applicable percentage ratios in respect of the aggregate of the proposed annual caps for the transactions contemplated under the 2021 Master Distribution Agreements, the 2021 Medical Masks Distribution Agreement and the 2021 Medical Masks Service Agreement is/are expected to exceed 5%, the transactions under the 2021 Master Distribution Agreements are subject to the reporting, announcement, annual review, circular and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Company confirms that the transactions contemplated under the 2021 Master Distribution Agreements are of a revenue nature in the ordinary and usual course of business of the Company and therefore are exempted from the requirements under Chapter 14 of the Listing Rules.
As Mr. Zhao and Ms. Chan have a material interest in the 2021 Master Distribution Agreements and the transactions contemplated thereunder, Mr. Zhao and Ms. Chan and their associates are required under the Listing Rules to abstain from voting on the relevant resolutions at the EGM in respect of the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023. Other than Mr. Zhao and Ms. Chan, no Director is materially interested in the transactions under each of the 2021 Master Distribution Agreements and is required to abstain from voting on the Board resolutions to approve such agreements.
The Company will convene the EGM to obtain the approval from the Independent Shareholders in respect of the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023.
13
The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders, and the Independent Board Committee has been established to advise the Independent Shareholders in respect of the transactions under each of the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023.
A circular containing, among other things, (i) details of the transactions under each of the 2021 Master Distribution Agreements as set out in this announcement and the proposed annual caps thereof; (ii) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its advice on the 2021 Master Distribution Agreements and the proposed annual caps thereof; (iii) recommendation of the Independent Board Committee to the Independent Shareholders; and (iv) the notice convening the EGM will be despatched to the Shareholders on or before 27 April 2021, which is within 15 Business Days after the publication of this announcement.
-
DEFINITIONS
In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:
"2018 SZ Kingworld | the master distribution agreement dated 14 December 2017 |
Lifeshine Master | entered into between SZ Kingworld and SZ Kingworld |
Distribution Agreement" | Lifeshine for the purchase of the SZ Kingworld Lifeshine |
Products for the year ended 31 December 2018 | |
"2018 Yuen Tai Master | the master distribution agreement dated 14 December 2017 |
Distribution Agreement" | entered into between HK Kingworld and Yuen Tai for the |
purchase of the Yuen Tai Products for the year ended 31 | |
December 2018 | |
"2019 SZ Kingworld | the master distribution agreement dated 11 December 2018 |
Lifeshine Master | entered into between SZ Kingworld and SZ Kingworld |
Distribution Agreement" | Lifeshine for the purchase of the SZ Kingworld Lifeshine |
Products for the year ended 31 December 2019 | |
"2019 Yuen Tai Master | the master distribution agreement dated 11 December 2018 |
Distribution Agreement" | entered into between HK Kingworld and Yuen Tai for the |
purchase of the Yuen Tai Products for the year ended 31 | |
December 2019 |
14
"2020 Master Distribution | collectively, (i) the 2020 Yuen Tai Master Distribution |
Agreements" | Agreement; and (ii) the 2020 SZ Kingworld Lifeshine |
Master Distribution Agreement | |
"2020 SZ Kingworld | the master distribution agreement dated 20 November 2019 |
Lifeshine Master | entered into between SZ Kingworld and SZ Kingworld |
Distribution Agreement" | Lifeshine for the purchase of the SZ Kingworld Lifeshine |
Products for the three years ending 31 December 2022 (as | |
amended and supplemented by the 2020 SZ Kingworld | |
Lifeshine Supplemental Agreement) | |
"2020 SZ Kingworld | the supplemental agreement to the 2020 SZ Kingworld |
Lifeshine Supplemental | Lifeshine Master Distribution Agreement dated 24 |
Agreement" | December 2019 entered into between SZ Kingworld and |
SZ Kingworld Lifeshine to revise the term and the party | |
who may purchase the SZ Kingworld Lifeshine Products | |
under the 2020 SZ Kingworld Lifeshine Master Distribution | |
Agreement | |
"2020 Yuen Tai Master | the master distribution agreement dated 20 November 2019 |
Distribution Agreement" | entered into between HK Kingworld and Yuen Tai for the |
purchase of the Yuen Tai Products for the three years ending | |
31 December 2022 (as amended and supplemented by the | |
2020 Yuen Tai Supplemental Agreement) | |
"2020 Yuen Tai | the supplemental agreement to the 2020 Yuen Tai Master |
Supplemental Agreement" | Distribution Agreement dated 24 December 2019 entered |
into between HK Kingworld and Yuen Tai to revise the | |
term and the party who may purchase the Yuen Tai Products | |
under the 2020 Yuen Tai Master Distribution Agreement | |
"2021 Master Distribution | collectively, (i) the 2021 Yuen Tai Master Distribution |
Agreements" | Agreement; and (ii) the 2021 SZ Kingworld Lifeshine |
Master Distribution Agreement | |
"2021 Medical Masks | the master distribution agreement dated 30 December 2020 |
Distribution Agreement" | entered into between SZ Kingworld and SZ Kingworld |
Lifeshine for the purchase of medical masks for the period | |
from 1 January 2021 to 31 December 2021 | |
"2021 Medical Masks | the service agreement dated 30 December 2020 entered into |
Service Agreement" | between the Company and SZ Kingworld Lifeshine for the |
sales coordination and market research services in relation to | |
the direct sales of medical masks by SZ Kingworld Lifeshine | |
for the period from 1 January 2021 to 31 December 2021 |
15
"2021 SZ Kingworld | the master distribution agreement dated 1 April 2021 entered |
Lifeshine Master | into between SZ Kingworld and SZ Kingworld Lifeshine for |
Distribution Agreement" | the purchase of the SZ Kingworld Lifeshine Products |
"2021 Yuen Tai Master | the master distribution agreement dated 1 April 2021 entered |
Distribution Agreement" | into between HK Kingworld and Yuen Tai for the purchase |
of the Yuen Tai Products | |
"associate" | has the meaning ascribed to it under the Listing Rules |
"Board" | the board of directors of the Company |
"Business Day(s)" | a day other than a Saturday, Sunday or public holiday (or a |
day on which a tropical cyclone No.8 or above or a "black" | |
rainstorm warning is hoisted in Hong Kong at any time | |
between 9:00 a.m. and 5:00 p.m. on weekdays) on which | |
banks are open in Hong Kong to the general public for | |
business | |
"Company" | Kingworld Medicines Group Limited (金活醫藥集團有限 |
公司), a company incorporated in the Cayman Islands with | |
limited liability, the shares of which are listed on the Main | |
Board of the Stock Exchange |
"connected person(s)"
"Controlling Shareholder(s)"
"Director(s)"
"Dual-Specification"
has the meaning ascribed to it under the Listing Rules
has the meaning ascribed to it under the Listing Rules
the director(s) of the Company
a classification of pharmaceutical product which can be sold pursuant to the requirement as for either prescription or OTC pharmaceutical products
"EGM"
"Fengbao Jianfu Capsule"
an extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving the 2021 Master Distribution Agreements and their respective proposed annual caps for the three years ending 31 December 2023
Fengbao Jianfu Capsule ( 鳳寶牌健婦膠囊), a Dual- Specification pharmaceutical product manufactured in Hong Kong and imported from Yuen Tai
16
"Greater China"
"Group"
"HK$"
"HK Kingworld"
t h e P R C , i n c l u d i n g H o n g K o n g , M a c a o S p e c i a l Administrative Region of the PRC and Taiwan
the Company and its subsidiaries
Hong Kong dollars, the lawful currency of Hong Kong
Kingworld Medicine Healthcare Limited (金活藥業健康發 展有限公司), a limited liability company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of the Company
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
"Imada Red Flower Oil" | Imada Red Flower Oil (依馬打正紅花油), a prescribed |
pharmaceutical product distributed by the Group | |
"Independent Board | a committee of the Board comprising all the independent |
Committee" | non-executive Directors, namely, Mr. Duan Jidong, Mr. |
Zhang Jianbin and Mr. Wong Cheuk Lam | |
"Independent Financial | Vinco Capital Limited, a licensed corporation to conduct |
Adviser" or "Vinco Capital" type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the 2021 Yuen Tai Master Distribution Agreement, the 2021 SZ Kingworld Lifeshine Master Distribution Agreement and the proposed annual caps for the transactions under each of these agreements
"Independent Shareholder(s)" the Shareholder(s), other than those required by the Listing Rules to abstain from voting on the resolutions to be proposed at the EGM in relation to the 2021 Master Distribution Agreements and accordingly, the proposed annual caps for the continuing connected transactions contemplated thereunder
17
"Kingworld Product Range"
"Listing Rules"
"Morning Gold"
"Mr. Zhao"
"Ms. Chan"
"OTC"
"PRC" "RMB" "SFO"
"Shareholders"
"Stock Exchange"
"SZ Kingworld"
"SZ Kingworld Lifeshine"
products including but not limited to Kingworld Gan Mao Qing Capsule (金活感冒清膠囊) and products under the
Kingworld American Ginseng series (金活洋參系列)
the Rules Governing the Listing of Securities on the Stock Exchange
Morning Gold Medicine Company Limited (金辰醫藥有限 公司), a limited liability company incorporated under the laws of Hong Kong
Zhao Li Sheng (趙利生), the chairman, an executive Director, a co-founder and Controlling Shareholder of the Company
Chan Lok San (陳樂燊), an executive Director, a co-founder and Controlling Shareholder of the Company
over the counter, a classification of pharmaceutical product which can be obtained without any doctors' prescriptions. In the PRC, OTC products are further classified into "OTC
(A)" and "OTC (B)"
the People's Republic of China
Renminbi, the lawful currency of the PRC
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
the holders of the shares of the Company
The Stock Exchange of Hong Kong Limited
Shenzhen Kingworld Medicine Company Limited* (深圳 市金活醫藥有限公司), a company established in the PRC
with limited liability and a wholly-owned subsidiary of the Company
Shenzhen Kingworld Lifeshine Pharmaceutical Company Limited* ( 深圳金活利生藥業有限公司), a company
established in the PRC with limited liability
18
"SZ Kingworld | c e r t a i n p h a r m a c e u t i c a l a n d h e a l t h c a r e p r o d u c t s |
Lifeshine Products" | manufactured by SZ Kingworld Lifeshine including but not |
limited to the Kingworld Product Range and Imada Red | |
Flower Oil | |
"Yuen Tai" | Yuen Tai Pharmaceuticals Limited (遠大製藥廠有限公司), |
a limited company incorporated under the laws of Hong | |
Kong |
"Yuen Tai Products"certain pharmaceutical and healthcare products purchased or
to be purchased by the Group from Yuen Tai including but not limited to (i) Fengbao Jianfu Capsule (鳳寶牌健婦膠
囊); (ii) Pu Ji Kang Gan Granules (普濟抗感顆粒); and (iii) other products manufactured by Yuen Tai for digestion
"%" | per cent |
The exchange rate adopted in this announcement is for illustration purpose only. Such conversion should not be construed as a representation that the currency could actually be converted at that rate.
By order of the Board
Kingworld Medicines Group Limited
Zhao Li Sheng
Chairman
Hong Kong, 1 April 2021
As at the date of this announcement, the executive Directors are Mr. Zhao Li Sheng, Ms. Chan Lok San, and Mr. Zhou Xuhua, and the independent non-executive Directors are Mr. Duan Jidong, Mr. Zhang Jianbin and Mr. Wong Cheuk Lam.
- For identification purposes only
19
Attachments
- Original document
- Permalink
Disclaimer
Kingworld Medicines Group Ltd. published this content on 01 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2021 13:41:07 UTC.