Hopson Development : CONTINUING CONNECTED TRANSACTIONS - LEASE AGREEMENTS (in PDF)

43022-01A 1..7

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: 754)

Website: http://www.irasia.com/listco/hk/hopson

CONTINUING CONNECTED TRANSACTIONS LEASE AGREEMENTS

The Board announces that on 18 January 2016, Hopson Beifang, an indirect wholly- owned subsidiary of the Company, entered into (i) the Lease Agreement One with Zhujiang Life for the lease of Premises One; and (ii) the Lease Agreement Two with Zhujiang Real Estate for the lease of Premises Two, by Hopson Beifang to Zhujiang Life and Zhujiang Real Estate, respectively, for a period of three years from 18 January 2016 to 17 January 2019.

As at the date of this announcement, Zhujiang Life is majority-controlled company, held indirectly, by the family members and relative of Mr. Chu and Ms. Chu together, namely Mr. Chu Yat Hong and Mr. Chu Wai Hong (the sons of Mr. Chu and the brothers of Ms. Chu), Mr. Zhu La Yi (a brother of Mr. Chu and an uncle of Ms. Chu) and Mr. Xie Bing Zhao (the brother-in-law of Mr. Chu and an uncle of Ms. Chu). Mr. Chu Yat Hong, being a substantial shareholder of the Company who indirectly owns approximately 17.69% of the Shares, is a connected person of the Company. Zhujiang Life is also a 30%-controlled company held indirectly by Mr. Chu Yat Hong. Zhujiang Real Estate is majority-controlled company, held indirectly by Mr. Chu Wai Hong (a son of Mr. Chu and a brother of Ms. Chu). Accordingly, each of Zhujiang Life and Zhujiang Real Estate is a connected person of the Company under the Listing Rules and the Lease Agreements and the Leases constitute continuing connected transactions of the Company under the Listing Rules.

As certain applicable percentage ratios of each of the Annual Caps exceed 0.1% but is less than 5%, the Lease Agreements and the Leases are subject to reporting and announcement requirements but are exempt from circular and shareholders' approval requirements under Chapter 14A of the Listing Rules.

LEASE AGREEMENTS

On 18 January 2016, Hopson Beifang, an indirect wholly-owned subsidiary of the Company, entered into (i) the Lease Agreement One with Zhujiang Life for the lease of Premises One; and (ii) the Lease Agreement Two with Zhujiang Real Estate for the lease of Premises Two, by Hopson Beifang to Zhujiang Life and Zhujiang Real Estate, respectively, for a period of three years from 18 January 2016 to 17 January 2019.

The principal terms of the Lease Agreements are set out below:

Lease Agreement One Lease Agreement Two

Date: 18 January 2016 18 January 2016

Lessor: Hopson Beifang Hopson Beifang

Lessee: Zhujiang Life Zhujiang Real Estate

Term: 18 January 2016 to

17 January 2019

18 January 2016 to

17 January 2019

Leased Property: Premises One Premises Two

Gross Floor Area of the Premises:

Approximately 1,720 square metres

Approximately 5,240.30 square metres

Monthly Rental (exclusive of property management and utility fees) for the

Premises:

For year 2016:

RMB215 (equivalent to

approximately HK$255.85) per square metre

For year 2017:

RMB215 (equivalent to

approximately HK$255.85) per square metre

For year 2018:

RMB225.75 (equivalent to

approximately HK$268.64) per square metre

For year 2016:

RMB230.91 (equivalent to

approximately HK$274.78) per square metre

For year 2017:

RMB230.91 (equivalent to

approximately HK$274.78) per square metre

For year 2018:

RMB242.46 (equivalent to

approximately HK$288.53) per square metre

Lease Agreement One Lease Agreement Two

Rent Free Period: (i) The renovation period which is the first 30 days in the first year of the lease; and

1. The renovation period which is the first 30 days in the first year of the lease; and

   
   

2. The last 30 days in the first year of the lease

(ii) The last 30 days in the first year of the lease

Management fees: RMB32 (equivalent to

approximately HK$38.08) per square metre per month, with

additional fees to be charged for

air conditioning services provided outside normal office hours

RMB32 (equivalent to

approximately HK$38.08) per square metre per month, with

additional fees to be charged for

air conditioning services provided outside normal office hours

Use of the Premises: Office Office

The rental and the other terms of the Lease Agreements are determined with reference to the prevailing market rents of premises of similar type and size and similar grading in the proximity and the terms of leases of other premises in the same building leased by the Group to other tenants who are Independent Third Parties.

ANNUAL CAPS

The Annual Cap for the Leases for each of the three financial years ending 31 December 2018 under the Lease Agreements shall be RMB18,471,132 (equivalent to approximately HK$21,980,647), RMB21,630,807 (equivalent to approximately HK$25,741,660) and RMB22,578,993 (equivalent to approximately HK$26,869,000), respectively. The Annual Caps are determined based on the aggregate annual amount receivable by Hopson Beifang from both Zhujiang Life and Zhujiang Real Estate under the Lease Agreements which includes annual rental and annual property management fees.

INFORMATION ABOUT THE GROUP AND THE PARTIES TO THE LEASE AGREEMENTS

The Group is principally engaged in the development of residential properties in the mainland China. The Group is also involved in property investment, hotel operations and property management. Hopson Beifang is principally engaged in property development in the PRC.

Zhujiang Life is principally engaged in the business of insurance provider.

Zhujiang Real Estate is principally engaged in property development and sale.

REASONS FOR, AND BENEFITS OF, ENTERING INTO THE LEASE AGREEMENTS

The Group had been using Hopson Fortune Plaza for its hotel operations. Due to the change in operation strategy, the Group decided to gradually cease its hotel operations in Hopson Fortune Plaza in mid 2015 and to lease the entire building of Hopson Fortune Plaza out for use as office. The Directors believe that the Leases will bring forth additional stable income to the Group after the cessation of hotel operations in such building.

The Directors (including the independent non-executive Directors) consider that the Lease Agreements and the Leases are entered into in the ordinary and usual course of business of the Group and on normal commercial terms so far as the Group is concerned. The Directors (including the independent non-executive Directors), having considered the bases for determining the rental and other terms of the Lease Agreements, consider the terms of the Lease Agreements, the Leases and the Annual Caps to be fair and reasonable and are in the interest of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Zhujiang Life is majority-controlled company, held indirectly, by the family members and relative of Mr. Chu and Ms. Chu together, namely Mr. Chu Yat Hong and Mr. Chu Wai Hong (the sons of Mr. Chu and the brothers of Ms. Chu), Mr. Zhu La Yi (a brother of Mr. Chu and an uncle of Ms. Chu) and Mr. Xie Bing Zhao (the brother-in-law of Mr. Chu and an uncle of Ms. Chu). Mr. Chu Yat Hong, being a substantial shareholder of the Company who indirectly owns approximately 17.69% of the Shares, is a connected person of the Company. Zhujiang Life is also a 30%-controlled company held indirectly by Mr. Chu Yat Hong. Zhujiang Real Estate is majority-controlled company, held indirectly by Mr. Chu Wai Hong (a son of Mr. Chu and a brother of Ms. Chu). Accordingly, each of Zhujiang Life and Zhujiang Real Estate is a connected person of the Company under the Listing Rules and the Lease Agreements and the Leases constitute continuing connected transactions of the Company under the Listing Rules.

As certain applicable percentage ratios of each of the Annual Caps exceed 0.1% but is less than 5%, the Lease Agreements and the Leases are subject to reporting and announcement requirements but are exempt from circular and shareholders' approval requirements under Chapter 14A of the Listing Rules.