Yantai North Andre Juice : REVISION OF THE ANNUAL CAPS UNDER THE 2015 PECTIN PRODUCT PURCHASE FRAMEWORK AGREEMENT; AND CONTINUING CONNECTED TRANSACTIONS

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烟台北方安德利果汁股份有限公司

Yantai North Andre Juice Co., Ltd.*

ANDRE

(a joint stock limited company incorporated in the People's Republic of China)

(Stock code : 02218)

REVISION OF THE ANNUAL CAPS UNDER THE 2015 PECTIN PRODUCT PURCHASE FRAMEWORK AGREEMENT; AND CONTINUING CONNECTED TRANSACTIONS

REVISION OF THE ANNUAL CAPS UNDER THE 2015 PECTIN PRODUCT PURCHASE FRAMEWORK AGREEMENT

Reference is made to the announcement of the Company dated 29 September 2015 in relation to, among other things, the renewal of the 2012 Pectin Product Purchase Framework Agreement.

On 19 January 2016, the Company entered into the Supplemental Agreement with Andre Pectin to revise the annual caps for 2016, 2017 and 2018 under the 2015 Pectin Product Purchase Framework Agreement to RMB41,000,000, RMB41,000,000 and RMB41,000,000, respectively.

In entering into the Supplemental Agreement and arriving at such proposed revised annual caps, the Directors have considered the following factors: (i) the estimation of a significant increase in the output of pomace products of the Group as a result of the sufficiency in raw materials; and (ii) the prospective output of pomace products of a newly-acquired subsidiary of the Company.

CONTINUING CONNECTED TRANSACTIONS

On 19 January 2016, the Company entered into the Hengtong Product Purchase Framework Agreement with Yantai Hengtong, pursuant to which the Group has agreed to purchase and Yantai Hengtong has agreed to supply products (including but not limited to electricity and steam) to regulate the product purchase between the Group and Yantai Hengtong for the three years ending 31 December 2018.

LISTING RULES IMPLICATIONS

Andre Group is a substantial Shareholder holding 54,658,540 domestic shares of the Company, representing approximately 14.35% of the total issued share capital of the Company as at the date of this announcement. Andre Group is therefore a connected person of the Company.

Since Andre Group has 47.37% equity interest in Andre Pectin, Andre Pectin is an associate of Andre Group and is also a connected person of the Company under the Listing Rules. Therefore, the transactions contemplated under the 2015 Pectin Product Purchase Framework Agreement as amended by the Supplemental Agreement between the Company and Andre Pectin constitute continuing connected transactions of the Company under the Listing Rules.

As Yantai Hengtong is wholly owned by Andre Group, Yantai Hengtong is an associate of Andre Group and is also a connected person of the Company under the Listing Rules. Therefore, the transactions contemplated under the Hengtong Product Purchase Framework Agreement between the Company and Yantai Hengtong constitute continuing connected transactions of the Company under the Listing Rules.

Since the applicable percentage ratios (other than the profit ratio) for the proposed revised annual caps as well as the proposed annual caps for each of the three years ending 31 December 2018 for the continuing connected transactions under the 2015 Pectin Product Purchase Framework Agreement as amended by the Supplemental Agreement and the Hengtong Product Purchase Framework Agreement, respectively, are more than 0.1% but less than 5%, in accordance with Chapter 14A of the Listing Rules, the continuing connected transactions under each of the 2015 Pectin Product Purchase Framework Agreement as amended by the Supplemental Agreement and the Hengtong Product Purchase Framework Agreement are only subject to the reporting, announcement and annual review requirements under Chapter 14A of the Listing Rules and are exempted from the independent Shareholders' approval requirement.

Mr. Wang An has abstained from voting on the Board resolutions approving the Supplemental Agreement and the Hengtong Product Purchase Framework Agreement since he is the controlling shareholder of Andre Pectin and Yantai Hengtong. Save as mentioned above, no other Director has a material interest in the transactions and hence no other Director has abstained from voting on such Board resolutions.

1. REVISION OF THE ANNUAL CAPS UNDER THE 2015 PECTIN PRODUCT PURCHASE FRAMEWORK AGREEMENT

   
   
2. Background

   
   

   Reference is made to the announcement of the Company dated 29 September 2015 in relation to, among other things, the renewal of the 2012 Pectin Product Purchase Framework Agreement.

   
   

   Based on internal estimation on the prospective increase in the output of pomace products by the Group, the Directors are of the view that the annual caps for 2016, 2017 and 2018, which are RMB28,000,000, RMB30,000,000 and RMB32,000,000, respectively, for the transactions contemplated under the 2015 Pectin Product Purchase Framework Agreement will not be sufficient for the Group's prospective requirements.

   
   

   On 19 January 2016, the Company entered into the Supplemental Agreement with Andre Pectin to revise the annual caps for 2016, 2017 and 2018 under the 2015 Pectin Product Purchase Framework Agreement to RMB41,000,000, RMB41,000,000 and RMB41,000,000, respectively.

   Other than the above change, all existing terms and conditions of the 2015 Pectin Product Purchase Framework Agreement have remained unchanged.

   
   

3. Reasons for the Supplemental Agreement

   
   

   In entering into the Supplemental Agreement and arriving at such proposed revised annual caps, the Directors have considered the following factors:

   
   

4. the supply of raw materials in the PRC market has experienced a remarkable increase in the second half of 2015. The sufficiency in raw materials of the Group is expected to result in a significant increase in the amount of pomace produced by the Group; and

   
   

5. the Company has newly acquired a subsidiary in 2015, which is principally engaged in the businesses of production, processing and sales of fruit and vegetable juice, apple juice and pear juice and will produce a substantive amount of pomace products in its ordinary course of business.

   
   

   The Directors (including the independent non-executive Directors) consider that, the proposed revised annual caps for the transactions under the 2015 Pectin Product Purchase Framework Agreement as amended by the Supplemental Agreement for the three years ending 31 December 2018 are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

   
   

6. CONTINUING CONNECTED TRANSACTIONS

   
   
7. Background

   
   

   On 19 January 2016, the Company entered into the Hengtong Product Purchase Framework Agreement with Yantai Hengtong, pursuant to which the Group has agreed to purchase and Yantai Hengtong has agreed to supply products (including but not limited to electricity and steam) to regulate the product purchase between the Group and Yantai Hengtong for the three years ending 31 December 2018.

   
   

8. Hengtong Product Purchase Framework Agreement




Date




19 January 2016




Parties




1. the Group (as purchaser); and

   
   

2. Yantai Hengtong (as supplier)

Product Purchase




Pursuant to the Hengtong Product Purchase Framework Agreement, the Group has agreed to purchase products (including but not limited to electricity and steam) from Yantai Hengtong for the three years ending 31 December 2018.




Yantai Hengtong agreed to sell its products to the Group in first priority in the event that purchase terms are the same as those of third parties (including but not limited to quantity, price and quality).




Yantai Hengtong agreed not to sell the products to the Group on terms less favourable than those offered to third parties for any transactions relating to the sales of products between the Group and Yantai Hengtong.




The Group and Yantai Hengtong agreed that the entering into of the Hengtong Product Purchase Framework Agreement would not affect the selection of trading partners and the conduct of transactions with third parties. The Group is entitled to purchase products from any third parties if a third party can sell the same or similar products at a more favourable price than the price available under the Hengtong Product Purchase Framework Agreement.




In respect of all transactions contemplated under the Hengtong Product Purchase Framework Agreement for the purchase of products, both parties may, within the scope of the Hengtong Product Purchase Framework Agreement, enter into specific product purchase agreements, provided that the terms of the specific product purchase agreements shall not contravene those of the Hengtong Product Purchase Framework Agreement.




Term




The term of the Hengtong Product Purchase Framework Agreement shall commence on 1 January 2016 and expire on 31 December 2018. Such term can be extended or renewed provided that the relevant parties agree to such extension or renewal and the requirements under the relevant laws, regulations and the listing rules of the stock exchange on which the relevant parties' shares are listed are complied with.




Pricing Policy




Prices of products to be purchased by the Group shall be determined according to the Market Price (as defined below).




"Market Price" shall be determined in accordance with the following order: (1) the prevailing price being charged by independent third parties under ordinary course of business for the sales of the same type of products at the selling places or its nearby regions; or (2) the prevailing price being charged by independent third parties under ordinary course of business for the sales of the same type of products in the PRC.