Success Universe : Continuing Connected Transactions - Renewal of Tenancy Agreements

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(Incorporated in Bermuda with limited liability)

(Stock Code: 00487)

CONTINUING CONNECTED TRANSACTIONS

RENEWAL OF TENANCY AGREEMENTS

The Board wishes to announce that on 25 June 2019 after trading hours, the Landlords, Powerful Concept, Good Sun and Famous Capital, all indirect wholly-owned subsidiaries of the Company, entered into the respective Tenancy Agreements with the Tenant, SIMSL, in respect of the renewal of leasing of the Properties.

Since the Tenant is indirect wholly and beneficially owned by Mr. Yeung, who is the Chairman of the Board and an executive Director as well as a controlling shareholder of the Company, the Tenant is a connected person of the Company and the entering into of the Tenancy Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the largest Annual Cap in respect of the aggregate amounts payable by the Tenant to the Landlords under the Tenancy Agreements for each of the three financial years ending 31 December 2021 exceeds HK$3,000,000 but all the applicable percentage ratios calculated on an annual basis pursuant to Rule 14.07 of the Listing Rules are less than 5%, the entering into of the Tenancy Agreements are subject to the reporting, announcement and annual review requirements but are exempt from the circular (including independent financial advice) and the independent shareholders' approval requirements pursuant to Rule 14A.76(2) of the Listing Rules.

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INTRODUCTION

Reference is made to the announcements of the Company dated 26 June 2017, 13 February 2018 and 29 March 2018 respectively as well as the circular of the Company dated 6 April 2018 in respect of, among others, the Existing Tenancy Agreements, all of which will expire on 1 July 2019.

The Board wishes to announce that on 25 June 2019 after trading hours, the respective Landlords entered into the Tenancy Agreements with the Tenant to renew the Existing Tenancy Agreements for a further term of two years, the principal terms of which are set out below.

THE TENANCY AGREEMENTS

Unit 1001A Tenancy Agreement

Date of agreement	:	25 June 2019
Landlord	:	Powerful Concept
Tenant	:	SIMSL
Property	:	Office Unit No. 1001A on the 10th Floor of Tower 1 of Admiralty
		Centre, No. 18 Harcourt Road, Hong Kong
Tenancy term	:	Two (2) years commencing from 2 July 2019 and expiring on 1
		July 2021 (both dates inclusive) with an option on the Tenant to
		renew for a further term of two (2) years at the then open market
		rent
Rental	:	HK$93,600 per month (exclusive of government rates, air-
		conditioning charges and management fees and all other
		outgoings)
Deposit	:	HK$200,918, representing two months' rental and two months'
		air-conditioning charges and management fees

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Units 1003 & 4A Tenancy Agreement

Date of agreement	:	25 June 2019
Landlord	:	Good Sun
Tenant	:	SIMSL
Property	:	Office Units Nos. 1003 and 1004A on the 10th Floor of Tower 1
		of Admiralty Centre, No. 18 Harcourt Road, Hong Kong
Tenancy term	:	Two (2) years commencing from 2 July 2019 and expiring on 1
		July 2021 (both dates inclusive) with an option on the Tenant to
		renew for a further term of two (2) years at the then open market
		rent
Rental	:	HK$584,400 per month (exclusive of government rates, air-
		conditioning charges and management fees and all other
		outgoings)
Deposit	:	HK$1,241,590, representing two months' rental and two months'
		air-conditioning charges and management fees
Unit 1004B Tenancy Agreement
Date of agreement	:	25 June 2019
Landlord	:	Famous Capital
Tenant	:	SIMSL
Property	:	Office Unit No. 1004B on the 10th Floor of Tower 1 of Admiralty
		Centre, No. 18 Harcourt Road, Hong Kong
Tenancy term	:	Two (2) years commencing from 2 July 2019 and expiring on 1
		July 2021 (both dates inclusive) with an option on the Tenant to
		renew for a further term of two (2) years at the then open market
		rent
Rental	:	HK$204,900 per month (exclusive of government rates, air-
		conditioning charges and management fees and all other
		outgoings)
Deposit	:	HK$433,904, representing two months' rental and two months'
		air-conditioning charges and management fees

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The terms under the Tenancy Agreements were negotiated on an arms' length basis and the rentals payable thereunder were determined based on the valuation of the market rental of the Properties in June 2019 conducted by an independent valuer.

ANNUAL CAPS

For the financial years ended 31 December 2017 and 2018, the aggregate amount paid by the Tenant to the Group under the Existing Tenancy Agreements were approximately HK$1,846,000 and HK$7,457,000 respectively.

The Annual Cap(s) for the aggregate amount payable by the Tenant to the Landlords were determined with reference to (i) the rentals under the Tenancy Agreements and the Existing Tenancy Agreements for the financial year ending 31 December 2019; and (ii) the rentals stipulated in the Tenancy Agreements for each of the two financial years ending 31 December

2021 and are calculated as follows:

		For the		For the		For the
		year ending		year ending		year ending
	31 December	31 December	31 December
Annual Cap(s)	2019	2020	2021
		(HK$'000)		(HK$'000)		(HK$'000)
Rental income from leasing of Unit 1001A	1,007	1,124	565
Rental income from leasing of Units 1003 & 4A	6,296	7,013	3,526
Rental income from leasing of Unit 1004B	2,211	2,459	1,237
Total	9,514	10,596	5,328

Based on the monthly rentals under the Tenancy Agreements, the Directors (including the independent non-executive Directors) consider the Annual Caps to be fair and reasonable.

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REASONS FOR AND BENEFITS OF ENTERING INTO THE TENANCY AGREEMENTS

As disclosed in the annual report of the Company for the year ended 31 December 2018, the Properties were classified as investment properties and being held for long-term capital growth and rental purposes. The Directors (including the independent non-executive Directors) believe that the Tenancy Agreements would generate steady recurring rental income and strengthen income base of the Group, and considered that the Tenancy Agreements and the terms thereof are fair and reasonable and on normal commercial terms, and the transactions under the Tenancy Agreements are in the ordinary and usual course of business of the Group and in the interests of the Company and its shareholders as a whole.

By virtue of the connection between Mr. Yeung, the Chairman of the Board and an executive Director as well as a controlling shareholder of the Company, and the Tenant, Mr. Yeung is considered to have a material interest in the transactions contemplated under the Tenancy Agreements. Further, Dr. Ma Ho Man, Hoffman, the Deputy Chairman of the Board and an executive Director, is the nephew of Mr. Yeung. Both of them have abstained from voting on the resolutions of the Board approving the Tenancy Agreements and the transactions contemplated thereunder.

INFORMATION ON THE GROUP, THE LANDLORDS AND THE TENANT

The principal businesses and investments of the Group include travel-related business, property investment business and the investment project of Ponte 16, a world-class integrated casino-entertainment resort located in Macau.

The Landlords are all indirect wholly-owned subsidiaries of the Company and their principal business is property investment.

The Tenant is indirect wholly and beneficially owned by Mr. Yeung. To the best of the Directors' knowledge, information and belief having made reasonable enquiries, the principal business of the Tenant is provision of management services.

LISTING RULES IMPLICATION

Since the Tenant is indirect wholly and beneficially owned by Mr. Yeung, who is the Chairman of the Board and an executive Director as well as a controlling shareholder of the Company, the Tenant is a connected person of the Company and the entering into of the Tenancy Agreements constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

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