Annual Report 2016
89
Report of the Directors
Connected Transactions
(continued)
(12) On 24 August 2015, an agreement (the “Dragon Merchant Agreement”) was entered into between Catchy Investments
Limited (“Catchy”, a wholly owned subsidiary of the Company) and FSE Management pursuant to which Catchy agreed to
sell and assign, and FSE Management agreed to purchase and accept the assignment of, the entire issued share capital of
Dragon Merchant Limited (“Dragon Merchant”) and the entire amount of the unsecured and non-interest bearing
shareholder’s loan owing from Dragon Merchant to Catchy as at the date of completion of the Dragon Merchant Agreement
(“Completion”) at an aggregate cash consideration of HK$258.0 million (subject to adjustment).
The main asset of Dragon Merchant and its subsidiary is the property situate at 8th Floor, Chevalier Commercial Centre, 8
Wang Hoi Road, Kowloon Bay, Kowloon, Hong Kong. Details of the Dragon Merchant Agreement were set out in the
announcement of the Company dated 24 August 2015. Completion took place upon signing of the Dragon Merchant
Agreement and thereafter, Dragon Merchant and its subsidiary ceased to be subsidiaries of the Company. The consideration
was adjusted to approximately HK$255.3 million by reference to the unaudited consolidated net tangible assets value of
Dragon Merchant as at the date of Completion.
As FSE Management is a majority-controlled company (as defined in the Listing Rules) of Mr. Doo, FSE Management is
therefore a connected person of the Company and the disposal contemplated under the Dragon Merchant Agreement
constitutes a connected transaction for the Company under the Listing Rules.
(13) On 25 August 2015, a joint venture agreement (the “JV Agreement”) was entered into among Startley Limited (“Startley”, a
wholly owned subsidiary of CTF), Risma Limited (“Risma”, a wholly owned subsidiary of the Company),
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(Chow Tai Fook Jewellery (Shenzhen) Co. Ltd.) (“CTFJ Shenzhen”, an indirect wholly owned subsidiary of CTFJ)
and Chow Tai Fook Qianhai Investments Company Limited (“CTF Qianhai”, a wholly owned subsidiary of CTF as at the date
of the JV Agreement) regarding the formation of two joint venture entities, namely CTF Qianhai and
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(Shenzhen Qianhai Chow Tai Fook Hong Kong Goods Centre Co., Ltd.) (the “PRC JV Company”), to develop and
operate a high-end luxurious shopping complex in Qianhai, Shenzhen, the PRC. Completion of the JV Agreement took place
on 7 September 2015.
After completion of the JV Agreement:
(a)
CTF Qianhai is owned as to approximately 71.4% by Startley and approximately 28.6% by Risma; and
(b)
the PRC JV Company is owned as to 70.0% by CTF Qianhai and 30.0% by CTFJ Shenzhen.
The effective interest in the PRC JV Company held by Startley, CTFJ Shenzhen and Risma is 50.0%, 30.0% and 20.0%,
respectively.
The total investment in the PRC JV Company will be RMB350.0 million (equivalent to approximately HK$409.5 million), of
which RMB120.0 million (equivalent to approximately HK$140.4 million) will be its registered capital. CTF Qianhai will
contribute RMB245.0 million (equivalent to approximately HK$286.7 million) (of which RMB175.0 million (equivalent to
approximately HK$204.8 million) and RMB70.0 million (equivalent to approximately HK$81.9 million) will be contributed by
Startley and Risma, respectively, through CTF Qianhai) and CTFJ Shenzhen will contribute RMB105.0 million (equivalent to
approximately HK$122.9 million) as funding for the total investment. Details of the JV Agreement were set out in the
announcement of the Company dated 25 August 2015.
For the reasons stated above, CTF and CTFJ are connected persons of the Company and the entering into of the JV
Agreement therefore constitutes a connected transaction for the Company under the Listing Rules.