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.
SCUD GROUP LIMITED
*
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 01399)
CONTINUING CONNECTED TRANSACTIONS
RENEWAL OF LEASES FROM SCUD STOCK
FIRST LEASE AGREEMENT AND SECOND LEASE AGREEMENT
On 30 December 2019 (after trading hours), the Group entered into the First Lease Agreement and the Second Lease Agreement with Scud Stock to renew the existing leases of premises owned by Scud Stock. Scud Electronics and Scud Stock agreed in the First Lease Agreement that the First Premises will be leased by Scud Stock to Scud Electronics for the period commencing from 1 January 2020 and ending on 31 December 2020. The annual rental will be RMB10,361,765.64 (equivalent to approximately HK$11,564,500). Under the Second Lease Agreement, the Second Premises will be leased by Scud Stock to Scud Battery for the period commencing from 1 January 2020 and ending on 31 December 2020. The annual rental will be RMB3,598,194.24 (equivalent to approximately HK$4,015,800).
LISTING RULE IMPLICATIONS
As at the date of this announcement, Scud Stock is owned as to 70% by Mr. Fang, the controlling Shareholder. Scud Stock is therefore a connected person of the Company under the Listing Rules and accordingly, the Leases under the Lease Agreements constitute continuing connected transactions of the Company and, in light of the size of the annual cap, are only subject to the reporting, announcement and annual review requirements under Chapter 14A of Listing Rules.
* For identification purpose only
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INTRODUCTION
Reference is made to the announcement of the Company dated 30 December 2016 in relation to the lease agreements entered into by Scud Stock, a connected person of the Company, with Scud Electronics and Scud Battery respectively, both of which are indirect wholly-owned subsidiaries of the Company, for the rental of premises for a period of three years. Such lease agreements will expire on 31 December 2019.
On 30 December 2019 (after trading hours), the Group entered into the First Lease Agreement and the Second Lease Agreement with Scud Stock to renew the existing leases of premises owned by Scud Stock. Scud Electronics and Scud Stock agreed in the First Lease Agreement that the First Premises will be leased by Scud Stock to Scud Electronics for the period commencing from 1 January 2020 and ending on 31 December 2020. The annual rental will be RMB10,361,765.64 (equivalent to approximately HK$11,564,500). Under the Second Lease Agreement, the Second Premises will be leased by Scud Stock to Scud Battery for the period commencing from 1 January 2020 and ending on 31 December 2020. The annual rental will be RMB3,598,194.24 (equivalent to approximately HK$4,015,800).
A summary of the principal terms of the Lease Agreements is set out below.
FIRST LEASE AGREEMENT
The principal terms of the First Lease Agreement are as follows:
Date: | 30 December 2019 (after trading hours) | |
Parties: | (i) | Scud Electronics as lessee |
(ii) | Scud Stock as lessor | |
First Premises: | Land lot numbers 39-2 and 44-2, Kuai An Extension Area, Mawei | |
District, Fuzhou, Fujian Province, PRC (中國福建省福州市馬尾區 | ||
快安延伸區第39-2、44-2地) comprising: | ||
(i) | rental area of approximately 31,155 square metres in 4 blocks | |
of factories with a total construction area of approximately | ||
40,627.68 square metres; | ||
(ii) | rental area of approximately 7,826 square metres in 1 office | |
building with a total construction area of approximately | ||
13,268.80 square metres; and |
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(iii) | rental area of approximately 11,250 square metres in 1 | |
warehouse building with a total construction area of | ||
approximately 11,250 square metres. | ||
Total rental area: | approximately 50,231 square metres | |
Term of lease: | 1 January 2020 to 31 December 2020 | |
Rental: | RMB863,480.47 (equivalent to approximately HK$963,700) per | |
month, i.e. RMB10,361,765.64 (equivalent to approximately | ||
HK$11,564,500) per year | ||
Usage of the First Premises: | (i) | Factory |
(ii) | Office for administration use for the Group | |
(iii) | Warehouse for storage of stocks |
SECOND LEASE AGREEMENT
The principal terms of the Second Lease Agreement are as follows:
Date: | 30 December 2019 (after trading hours) | |
Parties: | (i) | Scud Battery as lessee |
(ii) | Scud Stock as lessor | |
Second Premises: | Land lot numbers 39-2 and 44-2, Kuai An Extension Area, Mawei | |
District, Fuzhou, Fujian Province, PRC (中國福建省福州市馬尾區 | ||
快安延伸區第39-2、44-2地) comprising: | ||
(i) | rental area of approximately 9,472 square metres in 4 blocks | |
of factories with a total construction area of approximately | ||
40,627.68 square metres; and | ||
(ii) | rental area of approximately 5,443 square metres in 1 office | |
building with a total construction area of approximately | ||
13,268.80 square metres. | ||
Total rental area: | approximately 14,915 square metres | |
Term of lease: | 1 January 2020 to 31 December 2020 |
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Rental: | RMB299,849.52 (equivalent to approximately HK$334,700) per |
month, i.e. RMB3,598,194.24 (equivalent to approximately | |
HK$4,015,800) per year | |
Usage of the Second | (i) Factory |
Premises: | |
(ii) Office for administration use for the Group |
The rental payable under the Lease Agreements are payable in cash on a monthly basis and were determined after arm's length negotiation between Scud Electronics, Scud Battery and Scud Stock with reference to a market valuation on the rental carried out by an independent professional valuer using the market comparison methodology, the market rental for similar properties nearby in the PRC and having taken into account the availability of similar premises nearby and the cost of relocation.
ANNUAL CAP
The annual cap for the aggregate rental payable by Scud Electronics and Scud Battery to Scud Stock under the Leases for the year ending 31 December 2020 is RMB13,959,959.88 (equivalent to approximately HK$15,580,300), being the aggregate rental payable under the Leases for the year ending 31 December 2020.
The above annual cap was determined based on the aggregate rental payable under the Leases.
REASONS FOR AND BENEFITS OF ENTERING INTO THE LEASE AGREEMENTS
The Group requires the Premises for its production, administration and storage use. The Directors (including the independent non-executive Directors) are of the view that the Lease Agreements were entered into in the ordinary and usual course of business of the Group and the terms of the Lease Agreements are on normal commercial terms arrived at after arm's length negotiation between the parties and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
None of the Directors have any material interest in the Lease Agreements, and therefore none have abstained from voting on the Board resolutions approving the Lease Agreements.
LISTING RULE IMPLICATIONS
As at the date of this announcement, Scud Stock is owned as to 70% by Mr. Fang, the controlling Shareholder. Scud Stock is therefore a connected person of the Company under the Listing Rules and accordingly, the Leases under the Lease Agreements constitute continuing connected transactions of the Company.
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Based on the annual cap for the year ending 31 December 2020 as set out above, as one or more of the applicable percentage ratios in respect of the Leases are more than 0.1% and less than 5%, the Leases are only subject to the reporting, announcement and annual review requirements and exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
INFORMATION ON THE GROUP AND SCUD STOCK
The Group's principal business is its ODM business which mainly supplies lithium-ion battery modules to manufacturers of well-known telecommunication brands at home and abroad. For more information, please visit the Group's website at www.scudgroup.com.
Scud Stock's principal business is property management.
DEFINITIONS
In this announcement, unless the context otherwise requires, the following expressions have the following meanings:
"Board" | the board of Directors |
"Company" | SCUD Group Limited, a limited liability company incorporated in |
the Cayman Islands, the shares of which are listed on the Main | |
Board of the Stock Exchange | |
"connected person" | has the meaning ascribed to it in the Listing Rules |
"controlling shareholder" | has the meaning ascribed to it in the Listing Rules |
"Director(s)" | the director(s) of the Company |
"First Lease Agreement" | the lease agreement dated 30 December 2019 entered into between |
Scud Electronics as lessee and Scud Stock as lessor in respect of | |
the lease of the First Premises | |
"First Premises" | a total rental area of approximately 50,231 square metres located at |
land lot numbers 39-2 and 44-2, Kuai An Extension Area, Mawei | |
District, Fuzhou, Fujian Province, PRC (中國福建省福州市馬尾區 | |
快安延伸區第39-2、44-2地) | |
"Group" | the Company and its subsidiaries |
"HK$" | Hong Kong dollars, the lawful currency of Hong Kong |
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
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"Lease Agreements" | the First Lease Agreement and the Second Lease Agreement |
"Leases" | the leases under the Lease Agreements |
"Listing Rules" | the Rules Governing the Listing of Securities on the Stock |
Exchange | |
"Mr. Fang" | Mr. Fang Jin, the controlling Shareholder holding approximately |
48.84% of the total issued share capital of the Company as at the | |
date of this announcement | |
"ODM" | original design manufacturing |
"percentage ratios" | the percentage ratios calculated based on the requirements under |
Rule 14.07 of the Listing Rules | |
"PRC" | the People's Republic of China excluding, for the purpose of this |
announcement, Hong Kong, the Macau Special Administrative | |
Region of the People's Republic of China and Taiwan | |
"Premises" | the First Premises and the Second Premises |
"RMB" | Renminbi, the lawful currency of the PRC |
"Scud Battery" | 飛毛腿電池有限公司 (Scud Battery Co., Ltd.*), a wholly foreign- |
owned enterprise established in the PRC and an indirect wholly- | |
owned subsidiary of the Company | |
"Scud Electronics" | 飛毛腿(福建)電子有限公司 (Scud (Fujian) Electronics Co., |
Ltd.*), a wholly foreign-owned enterprise established in the PRC | |
and an indirect wholly-owned subsidiary of the Company | |
"Scud Stock" | 福建飛毛腿股份有限公司 (Scud Stock (Fujian) Co., Ltd.*), a joint |
stock limited company established in the PRC, which is held as to | |
70% by Mr. Fang as at the date of this announcement and is not | |
part of the Group | |
"Second Lease Agreement" | the lease agreement dated 30 December 2019 entered into between |
Scud Battery as lessee and Scud Stock as lessor in respect of the | |
lease of the Second Premises |
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"Second Premises" | a total rental area of approximately 14,915 square metres located at |
land lot numbers 39-2 and 44-2, Kuai An Extension Area, Mawei | |
District, Fuzhou, Fujian Province, PRC (中國福建省福州市馬尾區 | |
快安延伸區第39-2、44-2地) | |
"Share(s)" | ordinary share(s) in the Company with a nominal value of HK$0.10 |
each | |
"Shareholder(s)" | holder(s) of the Shares |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited |
For the purpose of this announcement, unless otherwise indicated, the exchange rate of HK$1=RMB0.896 has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amount has been, could have been or may be exchanged at such rate or at all.
By order of the Board
SCUD GROUP LIMITED
Ho Chung Tai Raymond
Chairman
Hong Kong, 30 December 2019
As at the date of this announcement, the Board comprises Ms. Lian Xiu Qin and Mr. Feng Ming Zhu being the executive Directors, Dr. Ho Chung Tai Raymond and Mr. Hou Li being the non-executive Directors, and Mr. Heng Ja Wei Victor, Mr. Lam Yau Yiu and Dr. Wong Chi Wing being the independent non-executive Directors.
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Disclaimer
Scud Group Limited published this content on 30 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 December 2019 13:15:04 UTC