By 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.
(Incorporated in Bermuda with limited liability)
(Stock code: 00336)CONTINUING CONNECTED TRANSACTIONSReference is made to the Announcement of the Company, relating to, amongst other things, the Acquisition of the 100% registered capital of Guangdong Jinye Technology Development and the related shareholding interests owned by it in relevant companies and affiliated companies.
Guangdong Jinke is a non-wholly owned subsidiary of Guangdong Jinye Technology Development. Upon the completion of the Acquisition which took place on 10 January 2011, Guangdong Tobacco and Guangxi Tobacco, being the substantial shareholders of Guangdong Jinke, become connected persons of the Company and the transactions between the Group and each of Guangdong Tobacco and Guangxi Tobacco (together with their respective subsidiaries and associates) therefore constitute connected transactions of the Company within the meaning of the Listing Rules. Long before the Acquisition, the Group has already entered into a framework agreement with each of Guangdong Tobacco and Guangxi Tobacco in respect of the supply of flavours and fragrances, reconstituted tobacco leaves and related technical services in view of its business need. With the completion of the Acquisition, the Transactions contemplated under the framework agreements are then subject to reporting, annual review and disclosure requirements under Rule 14A.41 of the Listing Rules. Upon any variation of renewal of any or both of the agreements, the Company will comply with all applicable reporting, annual review, disclosure and (as the case may be) independent shareholders? approval requirements of Chapter 14A of the Listing Rules.BACkGROUNDReference is made to the discloseable transaction announcement (the ?Announcement?) of Huabao International Holdings Limited (the ?Company?) dated 1 November 2010, relating to, amongst other things, the acquisition (the ?Acquisition?) of the 100% registered capital of Guangdong Province Jinye Reconstituted Tabacco Leaves Technology Development Co., Ltd. (?Guangdong Jinye Technology Development?) and the related shareholding interests owned by it in relevant companies and affiliated companies. For further details of the Acquisition, please refer to the Announcement.
Unless otherwise defined or the context otherwise requires, capitalised terms and expressions referred to herein shall have the meanings ascribed to them in the Announcement.* For identification purposes only
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CONTINUING CONNECTED TRANSACTIONSAs disclosed in the Announcement, Guangdong Jinke Reconstituted Tobacco Leaves Co., Ltd. (?Guangdong Jinke?) is a non-wholly owned subsidiary of Guangdong Jinye Technology D eve l o p m e n t . T h e o t h e r s h a r e h o l d e r s o f G u a n g d o n g J i n ke a r e C h i n a To b a c c o I n d u s t r y Development Centre (3.125%), China National Tobacco (Guangdong Province) Company (12%), China Tobacco Guangdong Industrial Co., Ltd. (?Guangdong Tobacco?) (17.5%) and China Tobacco Guangxi Industrial LLC (?Guangxi Tobacco?) (12%). To the best knowledge and belief of the Company, none of such aforesaid shareholders of Guangdong Jinke hold any interest in the shares of the Company.
Upon the completion of the Acquisition which took place in January 2011 (the ?Completion?), Guangdong Tobacco and Guangxi Tobacco become connected persons of the Company and the transactions between the Company and its subsidiaries (the ?Group?) and each of Guangdong Tobacco and Guangxi Tobacco (together with their respective subsidiaries and associates) therefore constitute connected transactions of the Company within the meaning of the Listing Rules. The Group is mainly engaged in the production, distribution and sales of flavours and fragrances and reconstituted tobacco leaves in the People?s Republic of China. Guangdong Tobacco and Guangxi Tobacco have been and will continue to be the key customers of the Group. As part of the measures to standardize and increase central monitoring of its contractual relationships, the Company has sought to enter into framework agreements with its key customers. As such, long before the Acquisition, the Group entered into framework agreements in respect of the provision of the products and services by the Group and the supply of reconstituted tobacco leaves between the Group and each of Guangdong Tobacco and Guangxi Tobacco. Principal terms of the relevant framework agreements are as follows:(1) Principal terms of the framework agreement with Guangdong Tobacco (?GD FrameworkAgreement?)Date: 28 July 2010
Parties: Huabao Food Flavours & Fragrances (Shanghai) Co Ltd. (a wholly- owned subsidiary of the Company) and Guangdong Tobacco Pricing principle: At market price, i.e. prices payable by independent third parties for the provision of similar products/services under ordinary commercial transactions Payment terms: Payable in cash according to the timeframe as mutually agreed Term: From 1 January 2010 to 31 December 2012(2) Principal terms of the framework agreement with Guangxi Tobacco (?GX FrameworkAgreement?)Date: 20 July 2010
Parties: Huabao Food Flavours & Fragrances (Shanghai) Co Ltd. (a wholly- owned subsidiary of the Company) and Guangxi Tobacco Pricing principle: At market price, i.e. prices payable by independent third parties for the provision of similar products/services under ordinary commercial transactions Payment terms: Payable in cash according to the timeframe as mutually agreed Term: From 1 January 2010 to 31 December 2012 2LISTING RULES ImPLICATIONSFrom the date of the Completion to 31 March 2011, the aggregate transaction amounts with Guangdong Tobacco under the GD Framework Agreement were approximately RMB17,817,000.00 and the aggregate transaction amounts with Guangxi Tobacco under the GX Framework Agreement were approximately RMB4,199,000.00. The above aggregate transaction amounts did not exceed the de minimis threshold and are thus exempt from the reporting, announcement and independent shareholders? approval requirements pursuant to Rule 14A.33(3) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ?Listing Rules?).
Pursuant to the unaudited management accounts for the period from 1 April 2011 to 30 June 2011, the aggregate transaction amounts with Guangdong Tobacco under the GD Framework Agreement amounted to approximately RMB16,868,000.00 and the aggregate transaction amounts with Guangxi Tobacco under the GX Framework Agreement were approximately RMB4,947,000.00. It is anticipated that the aggregate of the transaction amount under each of the framework agreements will exceed 1% of the relevant applicable percentage ratio as calculated pursuant to Rule 14.07 of the Listing Rules. In light of the above and given the framework agreements entered into between the Group and each Guangdong Tobacco and Guangxi Tobacco prior to the Acquisition involving provision of goods on a continuing basis (collectively, the ?Transactions?), upon Completion, the Transactions constitute continuing connected transactions of the Company and are subject to reporting, annual review and disclosure requirements under Rule 14A.41 of the Listing Rules. Pursuant to Rule 14A.45 of the Listing Rules, details of the Transactions will be included in the Company?s next published annual report. Upon any variation of renewal of any or both of the agreements, the Company will comply with all applicable reporting, annual review, disclosure and (as the case may be) independent shareholders? approval requirements of Chapter 14A of the Listing Rules. By Order of the BoardHuabao International Holdings LimitedPOON Chiu kwokExecutive Director
Hong Kong, 22 July 2011
As at the date of this announcement, the Board comprises six Executive Directors, namely Ms. CHU Lam Yiu (Chairman), Messrs. LAU Chi Tak (CEO), POON Chiu Kwok, WANG Guang Yu, XIA Li Qun, XIONG Qing, and three Independent Non-executive Directors, namely Mr. MAK Kin Kwong, Ms. MA Yun Yan and Mr. LEE Luk Shiu.
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