CIRCULAR DATED 9 MARCH 2017 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. IFYOU ARE IN ANY DOUBT AS TO THE ACTIONYOU SHOULD TAKE, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, TAX ADVISER OR OTHER PROFESSIONAL ADVISER IMMEDIATELY. Unless otherwise stated, capitalised terms on this cover are defined in this Circular under the section entitled “Definitions”. If you have sold or transferred all your ordinary shares in the capital of Zhongmin Baihui Retail Group Ltd. (the “Company”), you should immediately forward this Circular, the enclosed Notice of Extraordinary General Meeting and the accompanying Proxy Form to the purchaser or the transferee, or to the bank, stockbroker or agent through whom the sale or the transfer was effected for onward transmission to the purchaser or the transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Circular. ZHONGMIN BAIHUI RETAIL GROUP LTD. (Incorporated in the Republic of Singapore) (Company Registration Number: 200411929C) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED ACQUISITION OF THE LEASED PREMISES OF THE CHENGNAN STORE WHICH CONSTITUTES AN INTERESTED PERSON TRANSACTION IMPORTANT DATES AND TIMES: Last date of time for lodgement of Proxy Form : 22 March 2017 at 10.00 a.m. Date and time of Extraordinary General Meeting : 24 March 2017 at 10.00 a.m. Place of Extraordinary General Meeting : Peach Garden 65 Chulia Street #33-01, OCBC Centre Singapore 049513
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ZHONGMIN BAIHUI RETAIL GROUP LTD....To: The Shareholders of Zhongmin Baihui Retail Group Ltd Dear Sir/Madam 1 INTRODUCTION 1.1 The Proposed Acquisition On 28 September 2016, the Company
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CIRCULAR DATED 9 MARCH 2017
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ ITCAREFULLY. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULDCONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, TAX ADVISER OROTHER PROFESSIONAL ADVISER IMMEDIATELY.
Unless otherwise stated, capitalised terms on this cover are defined in this Circular under the sectionentitled “Definitions”.
If you have sold or transferred all your ordinary shares in the capital of Zhongmin Baihui Retail Group Ltd.(the “Company”), you should immediately forward this Circular, the enclosed Notice of ExtraordinaryGeneral Meeting and the accompanying Proxy Form to the purchaser or the transferee, or to the bank,stockbroker or agent through whom the sale or the transfer was effected for onward transmission to thepurchaser or the transferee.
The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of anyof the statements made, opinions expressed or reports contained in this Circular.
ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)
(Company Registration Number: 200411929C)
CIRCULAR TO SHAREHOLDERS
IN RELATION TO
THE PROPOSED ACQUISITION OF THE LEASED PREMISES OF THE CHENGNAN STOREWHICH CONSTITUTES AN INTERESTED PERSON TRANSACTION
IMPORTANT DATES AND TIMES:
Last date of time for lodgement of Proxy Form : 22 March 2017 at 10.00 a.m.
Date and time of Extraordinary General Meeting : 24 March 2017 at 10.00 a.m.
Place of Extraordinary General Meeting : Peach Garden65 Chulia Street#33-01, OCBC CentreSingapore 049513
13 DOCUMENTS AVAILABLE FOR INSPECTION ........................................................................ 22
APPENDIX A – TOTAL RENTAL EXPENSES .................................................................................... 23
APPENDIX B – PROFILE OF INDEPENDENT VALUER.................................................................... 24
APPENDIX C – VALUATION REPORT .............................................................................................. 25
NOTICE OF EXTRAORDINARY GENERAL MEETING...................................................................... 57
PROXY FORM
CONTENTS
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For the purpose of this Circular, the following definitions apply throughout except where the contextotherwise requires or otherwise stated:
1st Supplemental Lease : The supplemental agreement to the Original Lease Agreement Agreement” entered into between QZM and Hui’an Hongyi on 25 November
2014
2nd Supplemental Lease : The supplemental agreement to (i) the Original Lease Agreement Agreement; and (ii) the 1st Supplemental Lease Agreement,
entered into between QZM and Hui’an Hongyi on 27 September2016, concurrently with the execution of the S&P Agreements
“Aggregate Consideration” : The aggregate consideration of RMB122,236,128 payable byQZM to Hui’an Hongyi for the purchase of the Premises
“Audit Committee” : The audit committee of the Company as at the date of thiscircular, comprising Mr Koh Lian Huat, Dr Ong Seh Hong andMs Xu Ruyu
“Board” : The board of Directors of the Company for the time being
“CDP” : The Central Depository (Pte) Limited
“Chengnan Store” : The department store currently operated by QZM at thePremises
“Circular” : This circular to Shareholders dated 9 March 2017
“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended,modified or supplemented from time to time
“Company” : Zhongmin Baihui Retail Group Ltd.
“controlling shareholder” : A person who:
(a) holds directly or indirectly 15% or more of the totalnumber of issued Shares excluding treasury shares in theCompany. The SGX-ST may determine that a person whosatisfies this is not a controlling shareholder; or
(b) in fact exercises control over the Company.
“Director” : A director of the Company as at the date of this Circular or atany or the relevant time (as the case may be), and “Directors”shall be construed accordingly
“EGM” or “Extraordinary General : The extraordinary general meeting of the Company to be Meeting” convened on 24 March 2017, notice of which is set out on
pages 57 and 58 of this Circular
“Fujian Hongyi” : Fujian Hongyi Real Estate Group Co., Ltd.(福建宏毅集团有限公司)
“FY” : Financial year ended or, as the case may be, ending 31December
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DEFINITIONS
“Group” : The Company and its subsidiaries
“Group NTA” : Has the meaning ascribed to it in Section 5.2 of this Circular
“Hui’an Hongyi” : Hui’an Hongyi Property Development Co., Ltd.(惠安宏毅置业发展有限公司)
“Hongyi Baihui Centre” : A middle to high-end commercial and leisure centre developedby Hui’an Hongyi and located at the junction of HuichongHighway and 324 National Road, Hui’an County, Quanzhou City,Fujian Province, the PRC
“Independent Valuer” : Quanzhou Real Estate Appraisal Co., Ltd. (泉州名城资产评估房地产估价有限公司) (comprising certified practising valuers SuMaosheng (Licence No. 3520140075) and Liang Lizheng(Licence No. 3520120014)), whose profile is annexed hereto asAppendix B
“Latest Practicable Date” : 28 February 2017, being the latest practicable date prior to theprinting of this Circular
“Lease Agreement” : The Original Lease Agreement, the 1st Supplemental LeaseAgreement and the 2nd Supplemental Lease Agreement
“Listing Manual” : The rules of the Listing Manual applicable to entities listed onthe SGX-ST Main Board, as amended, modified orsupplemented from time to time
“Notice of EGM” : Notice of the EGM set out on pages 57 and 58 of this Circular
“NTA” : Net tangible assets
“Original Lease Agreement” : The lease agreement entered into between QZM and Hui’anHongyi on 1 April 2013 in respect of the lease of the Premises
“PRC” : People’s Republic of China
“Premises” : Retail premises located within Hongyi Baihui Centre at Hui’anCounty, Quanxiu Street, Quanzhou City, Fujian Province, thePRC
“Property Operation Agreement” : The property operation agreement entered into between QZMand Hui’an Hongyi on 1 April 2013 in respect of the right tooperate designated areas within Hongyi Baihui Centre(excluding the leased Premises)
“Proposed Acquisition” : The proposed acquisition of the Premises by QZM from Hui’anHongyi in accordance with the terms and conditions of the S&PAgreements, further details of which are provided under Section1.1 of the Circular
“Relevant Reduction” : Has the meaning ascribed to it in Section 2.2(c) of this Circular
“S&P Agreements” : The five (5) sale and purchase agreements, each entered intobetween QZM and Hui’an Hongyi on 27 September 2016, inrespect of the Proposed Acquisition
DEFINITIONS
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“SGX-ST” : The Singapore Exchange Securities Trading Limited
“Share” : An ordinary share in the share capital of the company, and“Shares” shall be construed accordingly.
“Shareholders” : Registered holders of Shares in the Register of Members,except that where the registered holder is the CDP, the term“Shareholders” shall, in relation to such Shares and where thecontext admits, mean the Depositors in the Depository Registerand whose Securities Accounts maintained with CDP arecredited with those Shares
“Substantial Shareholder” : A person who has an interest (directly or indirectly) in one ormore voting shares in the Company and the total votes attachedto that share, or those shares, is not less than 5% of the totalvotes attached to all the voting shares of the Company
“Supplemental S&P Agreement” : The supplemental agreement to the S&P Agreements, enteredinto between QZM and Hui’an Hongyi on 5 January 2017, inrespect of the Proposed Acquisition
“Valuation Report” : The valuation report dated 6 September 2016 issued by theIndependent Valuer in respect of the Premises, translated intothe English language by Elite Translations Asia, which isannexed hereto as Appendix C
“Quanzhou XJD” : Quanzhou Xinjiada Container Transport Co., Ltd.(泉州市新嘉达集装箱运输有限公司)
“QZM” : Zhongmin Baihui (Quanzhou) Commercial Management Co.,Ltd., a wholly-owned subsidiary of the Company(中闽百汇(泉州)商贸管理有限公司)
Currencies, Units of Measurements and Others
“RMB” : Renminbi, the lawful currency of the PRC
“S$” and “cents” : Singapore dollar and cents respectively, the lawful currency ofthe Republic of Singapore
“sq m” : Square metre
“%” or “per cent” : Per centum or percentage
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meaningsascribed to them respectively in Section 81SF of the Securities and Futures Act (Chapter 289) ofSingapore. The term “subsidiary” shall have the meaning ascribed to it in Section 5 of the CompaniesAct.
Words importing the singular shall, where applicable, include the plural and vice versa. Words importingthe masculine gender shall, where applicable, include the feminine and neuter genders and vice versa.
References to persons shall, where applicable, include corporations and unincorporated associations.
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DEFINITIONS
Any reference in this Circular to any statute or enactment or the Listing Manual is a reference to thatstatute or enactment or the Listing Manual as for the time being amended or re-enacted. Any worddefined under the Companies Act or the Listing Manual or any amendment thereof, and used in thisCircular shall, where applicable, have the meaning ascribed to it under the Companies Act or the ListingManual or such amendment thereof, as the case may be, unless otherwise provided.
Any reference to a time of day in this Circular is made by reference to Singapore time unless otherwisestated.
Any discrepancies in the tables in this Circular between the sum of listed amounts and the totals thereofshown are due to rounding. Accordingly, figures shown as totals in certain tables may not be anaggregation of the figures that precede them.
DEFINITIONS
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All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as“seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” andsimilar expressions or future or conditional verbs such as “will”, “if”, “would”, “should”, “could”, “may” and“might”. These statements reflect the Company’s current expectations, beliefs, hopes, intentions orstrategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknownrisks and uncertainties. Accordingly, actual results may differ materially from those described in suchforward-looking statements. Shareholders should not place undue reliance on such forward-lookingstatements, and the Company assumes no obligation to update publicly or revise any forward-lookingstatement.
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)(Company Registration No. 200411929C)
Directors Registered Office:
Lee Swee Keng (Executive Chairman) 143 Cecil Street Chen Kaitong (Chief Executive Officer and Executive Director) Level Ten GB BuildingSu Jianli (Deputy Chief Executive Officer and Executive Director) Singapore 069542Andrew Lim Kok-Kin (Executive Director)Su Caiye (Non-Executive Director)Dr Ong Seh Hong (Independent Director) Koh Lian Huat (Independent Director)Xu Ruyu (Independent Director)
9 March 2017
To: The Shareholders of Zhongmin Baihui Retail Group Ltd
Dear Sir/Madam
1 INTRODUCTION
1.1 The Proposed Acquisition
On 28 September 2016, the Company announced that its wholly-owned subsidiary, ZhongminBaihui (Quanzhou) Commercial Management Co., Ltd. (“QZM”) had on 27 September 2016entered into the S&P Agreements with Hui’an Hongyi Property Development Co., Ltd. (“Hui’anHongyi”), pursuant to which QZM shall purchase from Hui’an Hongyi certain premises (comprisingfive (5) levels (namely, the basement, first to fourth floor)) of the Hongyi Baihui Centre located atHuichong Highway, Hui’an County, Quanzhou City, Fujian Province, the PRC, with an aggregategross floor area of approximately 25,466 square meters (the “Premises”), for an aggregateconsideration of RMB122,236,128 (approximately S$24,877,608 at the exchange rate of S$1 :RMB4.9135 on 26 September 2016 being the close of the market date preceding the date of theS&P Agreements) (“Aggregate Consideration”) (the “Proposed Acquisition”).
On 6 January 2017, the Company further announced that QZM had on 5 January 2017 enteredinto the Supplemental S&P Agreement with Hui’an Hongyi, pursuant to which the due date of thefirst instalment of the Aggregate Consideration has been amended.
The Premises is currently leased to QZM for its operation of the Chengnan Store pursuant to alease agreement entered into between QZM with Hui’an Hongyi on 1 April 2013 (the “OriginalLease Agreement”), and amended pursuant to a supplemental lease agreement dated 25November 2014 (the “1st Supplemental Lease Agreement”). The tenure of the lease is for a periodof twenty (20) years. The Company had, through QZM, also entered into a property operationagreement with Hui’an Hongyi on 1 April 2013 (the “Property Operation Agreement”), pursuant towhich QZM was granted the right to operate designated areas within Hongyi Baihui Centre(excluding the leased Premises). The Original Lease Agreement and the Property OperationAgreement were previously approved by independent shareholders at an extraordinary generalmeeting held on 13 May 2013.
Please refer to Section 2 of this Circular for further information.
LETTER TO SHAREHOLDERS
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1.2 The Proposed Acquisition as an Interested Person Transaction
Mr Chen Kaitong, Mr Su Caiye and Mr Su Jianli are Directors of the Company and shareholderswith shareholding interests of 61.70%, 30.85% and 7.45% respectively in Quanzhou ZhongminBaihui Shopping Co., Ltd. (“Quanzhou ZMBH”), which in turn holds 30.0% shareholding in Hui’anHongyi. Pursuant to Section 7 of the Companies Act, Mr Chen Kaitong and Mr Su Caiye aredeemed to be interested in the 30.0% shareholding in Hui’an Hongyi. By virtue of their deemedinterest, Hui’an Hongyi is deemed as an associate of Mr Chen Kaitong and Mr Su Caiye, and aninterested person, whereas QZM is regarded as an entity-at-risk in respect of the ProposedAcquisition. Accordingly, the Proposed Acquisition constitutes an interested person transactionunder Chapter 9 of the Listing Manual. Please refer to Section 2.1 of the Circular for furtherinformation on the parties to the Proposed Acquisition.
In accordance with Rule 906(1) of the Listing Manual, the value of the Proposed Acquisitionexceeds 5.0% of the latest consolidated NTA of the Group. Accordingly, the Proposed Acquisition issubject to the approval of the Shareholders.
Please refer to Section of 5 this Circular for further information on the Proposed Acquisition as aninterested person transaction.
1.3 The Proposed Acquisition as a Discloseable Transaction
The Proposed Acquisition constitutes a discloseable transaction under Chapter 10 of the ListingManual.
In accordance with Rule 1010, as the relative figure computed on the basis set out in Rule 1006(c)exceeds 5% but does not exceed 20%, the Proposed Acquisition constitutes a discloseabletransaction.
Please refer to Section 6 of this Circular for further information on the Proposed Acquisition as adiscloseable transaction.
1.4 Purpose of this Circular
The purpose of this Circular is to provide Shareholders with information relating to, and thereasons for, the Proposed Acquisition and to seek their approval for the same at the EGM, inaccordance with Chapter 9 of the Listing Manual.
2 THE PROPOSED ACQUISITION
2.1 Information on the Parties
(a) QZM
QZM, a wholly-owned subsidiary of the Company, is principally engaged in the business ofownership, operation and management of a chain of department stores.
(b) Hui’an Hongyi
Hui’an Hongyi is a joint venture company incorporated in the PRC on 19 August 2011. As atthe date of this Circular, Hui’an Hongyi is jointly owned by Fujian Hongyi Real Estate GroupCo., Ltd. (福建宏毅集团) (“Fujian Hongyi”), Quanzhou Xinjiada Container Transport Co., Ltd(泉州市新嘉达集装箱运输有限公司) (“Quanzhou XJD”) and Quanzhou Zhongmin BaihuiShopping Co., Ltd. (“Quanzhou ZMBH”) with shareholding interests of 30.0%, 40.0% and30.0%, respectively. Hui’an Hongyi is engaged in the business of property development,operation and management.
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LETTER TO SHAREHOLDERS
The shareholding structure of Hui’an Hongyi is set out as below:
(c) Fujian Hongyi
Fujian Hongyi, being a 30.0% shareholder of Hui’an Hongyi, is engaged in the business ofproperty development, operation and management. Fujian Hongyi was incorporated in thePRC. As at the date of this Circular, none of the directors, chief executives or controllingshareholders or their associates of the Company has any interest in Fujian Hongyi.
(d) Quanzhou XJD
Quanzhou XJD, being a 40.0% shareholder of Hui’an Hongyi, is engaged in the business oflogistics. Quanzhou XJD was incorporated in the PRC. As at the date of this Circular, noneof the directors, chief executives or controlling shareholders or their associates of theCompany has any interest in Quanzhou XJD.
(e) Quanzhou ZMBH
Quanzhou ZMBH, being a 30.0% shareholder of Hui’an Hongyi, is principally engaged in theownership and operation of a chain of department stores in Quanzhou and Zhangzhou,Fujian Province, the PRC. Quanzhou ZMBH was incorporated in the PRC on 22 March1999.
As at the Latest Practicable Date, the shareholders of Quanzhou ZMBH are three (3) of theCompany’s directors, namely Mr Chen Kaitong, Mr Su Caiye and Mr Su Jianli. The legalrepresentative and sole director of Quanzhou ZMBH is Mr Su Caiye.
As at the Latest Practicable Date, each of the three (3) directors’ shareholding interests inthe Company and Quanzhou ZMBH are set out as below:
Position in the Shareholding Shareholding Director Company (Company) (Quanzhou ZMBH)
Chen Kaitong Chief Executive Officer and Executive Director 24.25% 61.70%
Su Caiye Non-Executive Director 12.30% 30.85%
Su Jianli Deputy Chief Executive Officer 3.16% 7.45%and Executive Director
By virtue of Section 7 of the Companies Act, Mr Chen Kaitong and Mr Su Caiye shall bedeemed to have an interest in the 30.0% shareholding in Hui’an Hongyi.
In view of the above and pursuant to Chapter 9 of the Listing Manual, QZM is regarded asan entity-at-risk, whereas Hui’an Hongyi is deemed as an associate of Mr Chen Kaitong andMr Su Caiye, and an interested person in respect of the Proposed Acquisition. Accordingly,the Proposed Acquisition will constitute an interested person transaction.
30.0% 40.0%
7.45% 30.85% 61.70%
30.0%
Quanzhou XJDFu ian Hongyi j Quanzhou ZMBH
Chen Kaitong Su Caiye Su Jianli
Hui’an Hongyi
LETTER TO SHAREHOLDERS
10
2.2 Information on the Premises
(a) The Premises
The Premises consists of five (5) levels (i.e., the basement and the 1st to 4th floors) of theHongyi Baihui Centre, with an aggregate gross floor area of 25,465.86 sq m. The Premisesare currently leased to QZM for its operation of the Chengnan Store pursuant to the LeaseAgreement.
(b) Rental Charge and Facility Charge under the Original Lease Agreement
As disclosed in the Company’s shareholders circular dated 26 April 2013, the annual cost ofthe lease of the Premises under the Original Lease Agreement was RMB10,948,911 foreach of the first two (2) years, comprising a rental charge of RMB16.90 per sq m per monthand a facility charge of RMB19 per sq m per month, calculated based on the aggregate floorarea of the Premises of 25,415.3 sq m (being the estimated aggregate gross floor area ofthe Premises under the Original Lease Agreement).
The rental charge for the first two (2) years shall remain and the subsequent charge for theremainder of the lease period will be adjusted and will increase at a rate ranging between11.2% and 17.0% every two (2) years. The facility charge will remain for the entire 20-yearlease period. Accordingly, the annual costs of the lease of the Premises (comprising thevariable rental charge and the fixed facility charge) effectively increases by 8% every two (2)years.
(c) Adjustment to Rental Charge and Facility Charge pursuant to the 1st SupplementalLease Agreement
However, upon resurvey of the Premises upon completion of the construction of thePremises, pursuant to the 1st Supplemental Lease Agreement, the aggregate gross floorarea was amended to 25,465.86 sq m, and as the Group has not occupied the 4th floor (witha floor area of 4,555.98 sq m) since the commencement of the lease of the Premises1, thechargeable area is only 20,909.88 sq m. QZM and Hui’an Hongyi also agreed that the rentalcharge was also further reduced for eight (8) years of the lease of the Premises, with theinitial reduction rate of RMB5 per sq m per month for the first two (2) years, which shallincrease at a rate of 8% for every two (2) years (the “Relevant Reduction”). The facilitycharge remains at RMB19 per sq m per month throughout the 20-year lease period.
As such, the annual cost for each of the first two (2) years has been revised toRMB7,753,384, comprising a rental charge of RMB11.90 per sq m per month and a facilitycharge of RMB19 per sq m per month. Accordingly, pursuant to the 1st Supplemental LeaseAgreement, the effective increase in the annual costs of the lease of the Premises(comprising the variable rental charge and the fixed facility charge) shall be at 8% every two(2) years, save for the change in annual costs from Year 8 to Year 9 of the lease period whichshall be an increase of 20.3%, given that the Relevant Reduction would no longer applycommencing Year 9.
Please refer to Appendix A of this Circular for further information in relation to theadjustment to rental charge pursuant to the 1st Supplemental Lease Agreement.
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LETTER TO SHAREHOLDERS
1 The estimated commencement date was stated as 1 January 2014 in the lease agreement dated 1 April 2013. However, theGroup commenced actual operations only on 28 November 2014 and the tenure of 20 years accordingly commenced on 28November 2014.
(d) Hongyi Baihui Centre
The Hongyi Baihui Centre is part of a mixed property development project developed byHui’an Hongyi. Designed as a middle to high-end commercial and leisure centre, the HongyiBaihui Centre has, amongst others, a department store, cinema complex, supermarket,electronic stores, food and beverage outlets and various retail stores.
The Hongyi Baihui Centre has an aggregate gross floor area of approximately 67,900 sq mand is located at the junction of Huichong Highway and 324 National Road, Hui’an County,Quanzhou City, Fujian Province, the PRC.
The term of the Property Operation Agreement was for a period of three (3) yearscommencing from 1 October 2013 to 30 September 2016. Accordingly, the PropertyOperation Agreement has expired as of 30 September 2016. The designated areas underthe Property Agreement are currently under the management of Hui’an Hongyi, and there isno conflict of interest with the operations of the Chengnan Store by QZM, considering suchrelevant areas are beyond the areas of the Premises.
2.3 Independent Valuation
In connection with the Proposed Acquisition, QZM has engaged an independentvaluer, Quanzhou Real Estate Appraisal Co., Ltd (泉州名城资产评估房地产估价有限公司)(comprising certified practising valuers Su Maosheng (Licence No. 3520140075) and LiangLizheng (Licence No. 3520120014)) (collectively, the “Independent Valuer”, whose profile isannexed hereto as Appendix B), to assess and determine the market value of the Premises.
Based on the Valuation Report (annexed hereto as Appendix C), the market value ofeach level of the Premises is as follows:
Level Area (sq m) Market Value (RMB)
Basement 1 6,574.12 29,984,600
1st floor 4,531.27 41,334,200
2nd floor 5,496.08 30,080,000
3rd floor 4,308.41 17,686,000
4th floor 4,555.98 18,702,300
Total 25,465.86 137,787,100
The Independent Valuer adopted the market value basis in arriving at the valuation of thePremises. Market value refers to the estimated amount for which the subject property shouldexchange on the date of valuation between a willing buyer and a willing seller in an arm’s lengthtransaction after marketing wherein the parties had each acted knowledgeably, prudently andwithout compulsion. Valuation of the subject property includes the valuation of the premises andvaluation of the land (including the initial purchase price of the land use right). The Valuation Reportwas prepared in accordance with the PRC national Code for Real Estate Appraisal《房地产估价规范》 (GB/T 50291-2015) and the Standard for Basic Terminology of Real EstateAppraisal 《房地产估价基本术语标准》 (GB/T 50899-2013). The comparable method has beenadopted by the Independent Valuer, wherein comparison is made between a certain number ofactual cases and the subject property to determine the valuation of the subject property afterconsidering the possible differences. Please refer to the Valuation Report at Appendix C for furtherdetails.
LETTER TO SHAREHOLDERS
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2.4 Salient Terms of the Proposed Acquisition
(a) Aggregate Consideration
Pursuant to the S&P Agreements, the consideration for the sale and purchase of each levelof the Premises will be based on the individual floor area of each level and calculated at therate of RMB4,800 per square meter, details as follows:
Level Area (sq m) Consideration (RMB)
Basement 1 6,574.12 31,555,776
1st floor 4,531.27 21,750,096
2nd floor 5,496.08 26,381,184
3rd floor 4,308.41 20,680,368
4th floor 4,555.98 21,868,704
Total 25,465.86 122,236,128
Accordingly, the aggregate consideration payable by QZM to Hui’an Hongyi in respect of theProposed Acquisition is RMB122,236,128, calculated at RMB4,800 per square meter(approximately S$24,877,608 at the exchange rate of S$1 : RMB4.9135 on 26 September2016 being the close of the market date preceding the date of the S&P Agreements)(“Aggregate Consideration”).
In arriving at the Aggregate Consideration, the Group has considered certain relevantfactors, including:
(i) the price agreed under the S&P Agreements (namely RMB4,800 per square meter) islower than the average market price per square meter of the Premises based on theValuation Report (namely RMB5,411 per square meter); and
(ii) the rationale for the Proposed Acquisition as set out in Section 3 below.
In addition, the Company will be required to make payment of the requisite stamp duty feesand deed tax for real property transactions in the PRC, amounting to approximatelyRMB3,728,202.
The Company intends to use internal sources of funds to finance the Proposed Acquisition.
(b) Terms of Payment
Pursuant to the S&P Agreements and the Supplemental S&P Agreement, the AggregateConsideration will be paid by QZM to Hui’an Hongyi in three (3) instalments as follows:
Percentage of Payment Aggregate
Instalment Due date Consideration Amount (RMB)
1st instalment 31 March 20172 40% 48,894,451
2nd instalment 1 June 2017 40% 48,894,451
3rd instalment 31 March 2018 20% 24,447,226
Total 100% 122,236,128
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LETTER TO SHAREHOLDERS
2 Pursuant to the Supplemental S&P Agreement, the payment due date for the 1st instalment has been amended from 31December 2016 to 31 March 2017. Please refer to the Company’s announcement dated 6 January 2017.
(c) Conditions Precedent
Pursuant to the S&P Agreements and the Supplemental S&P Agreement, the ProposedAcquisition is conditional upon the approval of the Shareholders having been obtained at anextraordinary general meeting of the Company. No regulatory approval is required in thePRC for the Proposed Acquisition.
(d) Other Salient Terms
(i) Completion. Completion shall take place within thirty (30) business days from the dateof full settlement of all payments due and outstanding under the S&P Agreements.Hui’an Hongyi shall assist QZM in the registration application for the transfer of thePremises within thirty (30) business days from the date of full settlement of allpayments due and outstanding under the S&P Agreements.
(ii) Termination by Hui’an Hongyi. In the event that any instalment mentioned in Section2.4(b) above remains unpaid by QZM for more than thirty (30) days and Hui’an Hongyihas given fifteen (15) days’ written notice thereof, Hui’an Hongyi shall have the optionto either (a) terminate the S&P Agreements3; or (b) continue the performance of theS&P Agreements, pursuant to which QZM shall be liable to pay liquidated damages of0.03%4 of the aggregate amount due and payable per day, until such amount has beenduly paid in full.
(iii) Termination by QZM. In the event that Hui’an Hongyi fails to handover the Premises inaccordance with the S&P Agreements for more than 180 days, QZM shall have theright to terminate the S&P Agreements. In that event, Hui’an Hongyi shall return allmonies paid to it by QZM within thirty (30) days of written notice from QZM, and shallbe liable to pay liquidated damages of 1% of the aggregate amount of the monieswhich had been paid to it by QZM. Where QZM elects to continue the performance ofthe S&P Agreements, Hui’an Hongyi shall be liable to pay liquidated damages of0.03% of the aggregate amount paid by QZM per day, such liquidated damages to becalculated from the day after the stipulated date of handover up to the actual date ofhandover.
2.5 2nd Supplemental Lease Agreement
QZM has also entered into, with Hui’an Hongyi, a second supplemental lease on 27 September2016 (“2nd Supplemental Lease Agreement”), pursuant to which the rental expenses payable byQZM will be reduced proportionally in accordance with the instalment payment plan throughout theinstalment period commencing from 1 April 2017 (being the date immediately after the firstinstalment payment due date) until 31 March 2018 (being the last instalment payment due date):-
LETTER TO SHAREHOLDERS
14
3 In this regard, the Company wishes to clarify that in such event, Hui’an Hongyi shall have the option to terminate the S&PAgreements but shall not be entitled to any liquidated damages of 20% of the aggregate amount due and payable (as statedin paragraph 3.2.4(ii) of the Company’s announcement dated 28 September 2016).
4 In this regard, the Company wishes to clarify that in such event, the liquidated damages payable by the Company shall be0.03% of the aggregate amount due and payable per day until such amount has been duly paid in full, instead of 3.0% asstated in paragraph 3.2.4(ii) of the Company’s announcement dated 28 September 2016.
Total expenses
which Total rentalwould have expenses(1)
Monthly Monthly been payable to be rental facility for the stated payable for
charge which charge which instalment Percentage the instalmentwould have would have period of rental to period
been payable been payable pursuant be payable pursuant under the 1st under the 1st to the 1st pursuant to the 2nd
Supplemental Supplemental Supplemental to the 2nd SupplementalLease Lease Lease Supplemental Lease
Instalment No. of Agreement Agreement Agreement Lease Agreement period months (RMB) (RMB) (RMB) Agreement (RMB)
1 April 2 300,516.79(2) 397,287.72 1,395,609.02 60% 837,365.402017 – (taking into31 May account 40%
2017 of the Aggregate
Consideration will have been
paid by 31 March 2017)
1 June 7 300,516.79(2) 397,287.72 4,884,631.57 20% 976,926.302017 – (taking into
31 account 80%December of the
2017 Aggregate Consideration will have been paid by 1 June
2017)
1 January 3 300,516.79(2) 397,287.72 2,093,413.53 20% 418,682.702018 – (taking into
31 March account 80%2018 of the
Aggregate Consideration will have been paid by 1 June
2017)
After 1 – 300,516.79(2) 397,287.72 697,804.57 0% 0April 2018 (taking into
account 100% of the
Aggregate Consideration will have been
fully settled by 31 March
2018)
Total 12 2,232,974.40
15
LETTER TO SHAREHOLDERS
Notes:
(1) The total rental expenses comprises both rental charges and facility charges and constitutes the total amountpayable by QZM under the instalment payment plan pursuant to the 2nd Supplemental Lease Agreement.
(2) Please refer to Appendix A of the Circular for information in relation to the computation of the total rental expensesunder the Original Lease Agreement and 1st Supplemental Lease Agreement. In particular, in respect of thecomputation of the monthly rental amounting to RMB300,516.79, please refer to the computation of the rental for“Year 3” and “Year 4” in Appendix A of this Circular.
The instalment payment plan (and the above corresponding reduction in rental expenses) wouldease the cash flow of the Company, as compared to full upfront payment of the AggregateConsideration.
3 RATIONALE OF THE PROPOSED ACQUISITION
The Hongyi Baihui Centre is strategically located adjacent to Luoyang Town Government, Hui’anCounty, Quanzhou City, Fujian Province, the PRC (福建省泉州市惠安县螺阳镇政府) and is locatedat the south of the town area of Hui’an County (惠安县城). Situated in a heavy human traffic areawith a strong economic strength and clear city development plans, the Hongyi Baihui Centre enjoysevident geographical advantages. In addition, there are also good prospects for retail sales inFujian Province, which is one of the richest provinces in the PRC.
The Group is principally engaged in the ownership, operation and management of the “中闽百汇”department stores in the PRC since 1997. The Group’s management team has extensive andsubstantial knowledge of and experience in the retail industry, as well as established businessrelationships with relevant contacts within the retail industry. The Group does not currently own theland use rights of any of its stores.
The Group has been operating the Chengnan Store at the Premises by virtue of the Original LeaseAgreement and 1st Supplemental Lease Agreement since 28 November 20145. The gross salesproceeds of the Chengnan Store increased approximately 22% year-on-year in FY2016.
Currently, QZM’s control, access and right over the operations and management of the Premisesare limited to the scope of the Lease Agreement, including (i) the specified lease period of 20years commencing from 28 November 2014; (ii) restriction against subletting the Premises in itsentirety; (iii) permission to sublet to other parties, subject to QZM remaining liable to fulfil all theobligations under the Lease Agreement; and (iv) restriction against structural modification of thePremises. The Proposed Acquisition will result in QZM having full title and ownership of thePremises, hence allowing the QZM to have full control, access and right over the operations andmanagement of the Premises, as well as all of the economic benefits of the Chengnan Store.
QZM has a right of first refusal in the event that Hui’an Hongyi wishes to sell the Premises. TheProposed Acquisition is accordingly pursuant to the exercise of such right by QZM, further toHui’an Hongyi’s intention to dispose of the Premises as a whole (and not part only). As such, eventhough the 4th floor is currently not occupied by QZM pursuant to the Lease Agreement, theproperty purchased pursuant to the Proposed Acquisition shall be inclusive of the 4th floor. Theusage of the 4th floor will be further deliberated by the Group further to QZM attaining full control,access and right over the operations and management of the Premises following completion of theProposed Acquisition.
LETTER TO SHAREHOLDERS
16
5 The estimated commencement date was stated as 1 January 2014 in the Original Lease Agreement. However, the Groupcommenced actual operations only on 28 November 2014 and the tenure of 20 years accordingly commenced on 28November 2014.
Pursuant to the Original Lease Agreement and the 1st Supplemental Lease Agreement, the totalrental expenses payable by the Group for the 20-year lease will be approximately RMB249,682,551(please refer to Appendix A for the computation of such total rental expense). In contrast, theAggregate Consideration for the Proposed Acquisition is RMB122,236,128 for the remaining termof 32 years of the land use rights. Accordingly, the Proposed Acquisition would result in costsavings of about 51% for the Group, to gain full control, access and right over the Premises for alonger tenure.
In view of the above considerations, as well as the strategic location of the Hongyi Baihui Centreand good prospects for retail sales in Fujian Province, the Directors are confident that the Groupwill be able to continue to profitably operate the Chengnan Store.
4 FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION
The pro forma financial effects of the Proposed Acquisition are for illustration purposes only and donot reflect the actual financial position of the Group after completion of the Proposed Acquisition.The financial effects are based on the latest audited financial statements of the Group for thefinancial year ended 31 December 2015, not taking into account the corporate actions of theCompany, such as share buybacks and dividends paid, during 2016, and are prepared on thefollowing bases and assumptions:
(a) the Proposed Acquisition had been completed (i) for the purposes of the profit and lossaccount, on 1 January 2015, and (ii) for the purposes of the balance sheet, on 31 December2015, being the date to which the latest audited financial statements of the Group, weremade up to, respectively;
(b) the Proposed Acquisition was effected at the sale consideration of approximately RMB122.2million;
Before the After the Proposed Proposed
Acquisition Acquisition
Impact on Group EarningsNet profit after income tax interests (RMB’000) 52,644 59,630 (1)
Number of issued Shares excluding treasury shares (’000) 196,320 196,320Basic earnings per Share (RMB cents) 26.82 30.37
Impact on Group NTANTA (RMB’000) 107,845 111,784 (2)
Weighted average number of issued Shares (’000) 196,320 196,320NTA per Share (RMB cents) 54.93 56.94
Notes:-
(1) This is based on:-(i) the depreciation of the Premises amounting to RMB3,690,000 for FY2015;(ii) the reversal of rental for FY2015 and the step rental provision in the Lease
Agreement for the lease of the Premises for the years up to FY2015 amountingto RMB13,006,000;
(iii) the reversal of deferred tax assets arising from the step rental provision in theLease Agreement amounting to RMB1,313,000; and
(iv) the income tax of RMB1,043,000 on rental and depreciation.
(2) This is based on:-(i) the reversal of the step rental provision in the Lease Agreement amounting to
RMB5,252,000; and(ii) the reversal of deferred tax assets arising from the step rental provision in the
Lease Agreement amounting to RMB1,313,000.
17
LETTER TO SHAREHOLDERS
5 THE PROPOSED ACQUISITION AS AN INTERESTED PERSON TRANSACTION
5.1 Interested Person Transaction under Chapter 9 of the Listing Manual
Chapter 9 of the Listing Manual governs transactions in which a listed company or any of itssubsidiaries or associated companies (known as the “entity at risk”) enters into or proposes toenter into with a party who is an interested person of the listed company. Under Chapter 9 of theListing Manual, an immediate announcement and subsequent shareholders’ approval is required inrespect of a transaction between an entity at risk and its interested persons if the value of thattransaction exceeds 5% of the latest audited NTA value.
As at the Latest Practicable Date, Mr Chen Kaitong and Mr Su Caiye, Directors of the Company,each hold 61.70% and 30.85% in the share capital of Quanzhou ZMBH. According to Section 7 ofthe Companies Act, Mr Chen Kaitong and Mr Su Caiye are deemed to have an interest in the30.0% shareholding of Hui’an Hongyi through Quanzhou ZMBH. As such, QZM, a wholly-ownedsubsidiary of the Company, is regarded as an entity-at risk, whereas Hui’an Hongyi is deemed asan associate of Mr Chen Kaitong and Mr Su Caiye, and an interested person. Accordingly, theProposed Acquisition would constitute an interested person transaction subject to Chapter 9 of theListing Manual.
5.2 Materiality Thresholds under Chapter 9 of the Listing Manual
In accordance with Rule 906(1), where the value of an interested person transaction is equal to orexceeds 5% of the Group’s latest audited net tangible assets, the approval of shareholders isrequired to be obtained either prior to the transaction being entered into, or if the transaction isexpressed to be conditional on such approval, prior to the completion of the transaction, as thecase may be.
Based on the audited financial statements of the Group for FY2015, the audited NTA of the Groupas at 31 December 2015 was RMB107,845,219 (“Group NTA”) and the Aggregate Considerationof the Proposed Acquisition to be paid by the Group to Hui’an Hongyi represents 113.34% of thelatest audited NTA of the Group as at 31 December 2015. As the value of the Proposed Acquisitionexceeds 5% of the Group’s NTA, for the purposes of Chapter 9 of the Listing Manual and inparticular Rule 906(1), the Transaction is therefore subject to the approval of the Shareholders.Accordingly, the Company will be convening the EGM to seek Shareholders’ approval for theProposed Acquisition.
5.3 Other Interested Person Transactions for the Financial Year Ended 31 December 2016
Other than the Proposed Acquisition and the execution of the Supplemental Lease Agreement, theCompany and its entities at risk have not entered into any other interested person transaction withHui’an Hongyi for the financial year ended 31 December 2016 and for the current financial year upto the Latest Practicable Date.
The total value of all interested person transactions entered into by the Company and its entities atrisk (excluding all transactions which are less than S$100,000 and the Proposed Acquisition) forthe financial year ended 31 December 2016 was approximately RMB21,965,131.
Save as disclosed above, there are no other interested person transactions since the beginning ofthe financial year ended 31 December 2016 and for the current financial year up to the LatestPracticable Date.
LETTER TO SHAREHOLDERS
18
6 RELATIVE FIGURES UNDER CHAPTER 10 OF THE LISTING MANUAL
The relative figures for the Proposed Acquisition computed on the applicable bases set out in Rule1006 of the Listing Manual are as follows:
Rule 1006 Relative Figures
(a)
(b)
(c)
(d)
(e)
Notes:
(1) This is based on the Aggregate Consideration of RMB122,236,128 and the Company’s market capitalization ofRMB1,379,404,197.60 (equivalent to approximate S$280,737,600.00 at the exchange rate of S$1 : RMB4.9135 on26 September 2016, being the market day preceding the date of the S&P Agreements).
(2) The abovementioned market capitalization is based on 196,320,000 issued shares in the capital of the Companyand the weighted average share of S$1.43 per share on 15 September 20166, being the market day preceding thedate of the S&P Agreements.
Accordingly, as the relative figure computed on the basis set out in Rule 1006(c) exceeds 5% butdoes not exceed 20%, the Proposed Acquisition will constitute a discloseable transaction underRule 1010 of the Listing Manual.
Not ApplicableAggregate volume or amount of proved and probablereserves to be disposed of, compared with the aggregateof the group’s proved and probable reserves
Not ApplicableNumber of equity securities issued as consideration forthe Transfer, compared with the number of equitysecurities previously issued
8.86%The aggregate value of the consideration given orreceived, compared with the Company’s marketcapitalisation based on the total number of issued sharesexcluding treasury shares
Not Applicable as thePremises will be usedby the Group for itsoperations and noprofits are attributableto the Premises.
Net profits attributable to the assets acquired or disposedof, compared with the Group’s net profits
Not ApplicableNet asset value of the assets to be disposed of,compared with the Group’s net asset value
19
LETTER TO SHAREHOLDERS
6 15 September 2016, being the previous close date preceding the date of the S&P Agreements, has been used as thereference date for purposes of Rule 1006.
7 INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS
As at the Latest Practicable Date, the interests of Directors and substantial shareholders of theCompany in the Shares are as follows:
Direct Interest Deemed InterestNumber of Shares % Number of Shares %
Substantial Shareholders(other than Directors)Lim Kok Tong 18,577,588 9.58 2,200,000 1.13
Save as disclosed in this Circular, to the best of the knowledge of the Directors, none of theDirectors or controlling shareholders of the Company has any interest, direct or indirect, in theProposed Acquisition.
8 ABSTENTION FROM VOTING
Mr. Chen Kaitong, Mr. Su Caiye, Mr Su Jianli and each of their respective associates will abstainfrom voting on the Proposed Acquisition at the EGM. They will also not accept nominations to actas proxy, corporate representative or attorney, unless the shareholder(s) appointing them indicateclearly how votes are to be cast in respect of such resolution.
Notwithstanding Mr Su Jianli’s shareholding interest of 7.45% in Quanzhou ZMBH, Mr Su Jianli isnot deemed to have an interest in the 30.0% shareholding of Quanzhou ZMBH in Hui’an Hongyiunder Section 7 of the Companies Act. Hui’an Hongyi is similarly not deemed as an associate ofMr Su Jianli pursuant to Chapter 9 of the Listing Manual. Notwithstanding the foregoing, Mr SuJianli and his associates have voluntarily abstained from voting on the Proposed Acquisition at theEGM.
9 STATEMENT FROM AUDIT COMMITTEE
9.1 Statement from Audit Committee
The Audit Committee of the Company, comprises Mr Koh Lian Huat, Dr Ong Seh Hong and Ms XuRuyu, all of whom are independent non-executive directors of the Company. The Audit Committeehas considered, inter alia, the terms, rationale for, financial effects and benefits of the ProposedAcquisition, and is of the opinion that the Proposed Acquisition is on normal commercial terms andis not prejudicial to the interests of the Company and its minority shareholders.
9.2 Independent Directors’ Recommendation
Shareholders are urged to read carefully the principal terms and conditions of the ProposedAcquisition, the rationale for the Proposed Acquisition and the financial effects of the ProposedAcquisition as respectively set out in Sections 2, 3 and 4 of this Circular.
LETTER TO SHAREHOLDERS
20
The Independent Directors have considered, inter alia, the terms, rationale for and benefits of theProposed Acquisition, as well as the financial effects of the Proposed Acquisition. The IndependentDirectors are of the view that the financial terms of the Proposed Acquisition are on normalcommercial terms and are not prejudicial to the interests of the Company and its minorityShareholders.
Accordingly, the Independent Directors recommend that minority Shareholders vote in favourof the Ordinary Resolution relating to the Proposed Acquisition at the EGM.
The Independent Directors further recommend that any individual Shareholder who may requirespecific advice to consult his stockbroker, bank manager, accountant or other professional adviser.
9.3 Opinion from Independent Financial Adviser Not Required
Based on Rule 921(4)(b)(ii) of the Listing Manual and the views of the of the Audit Committee ofthe Company as provided above, the Company is not required to appoint an independent financialadviser to advise the independent directors as to whether the Proposed Acquisition is on normalcommercial terms and is not prejudicial to the interests of the Company and its minorityshareholders.
10 EXTRAORDINARY GENERAL MEETING
The EGM, notice of which is set out on pages 57 and 58 of this Circular, will be held at PeachGarden, 65 Chulia Street, #33-01, OCBC Centre, Singapore 049513 on Friday, 24 March 2017 at10.00 a.m. for the purpose of considering and, if thought fit, passing with or without anymodifications, the ordinary resolution set out in the Notice of EGM.
11 ACTION TO BE TAKEN BY SHAREHOLDERS
11.1 Proxies
If a Shareholder is unable to attend the EGM and wishes to appoint a proxy to attend and vote onhis behalf, he should complete, sign and return the proxy form attached to this Circular inaccordance with the instructions printed thereon as soon as possible and, in any event, so as toreach the registered office of the Company at 143 Cecil Street, Level Ten, GB Building, Singapore069542 not less than 48 hours before the time fixed for the EGM. The completion and lodgement ofthe proxy form by a Shareholder will not prevent him from attending and voting at the EGM inperson if he so wishes.
11.2 Depositors
A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and tospeak and vote thereat unless his name appears on the Depository Register at least 72 hoursbefore the EGM.
12 DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors collectively and individually accept full responsibility for the accuracy of theinformation given in this announcement and confirm after making all reasonable enquiries, that tothe best of their knowledge and belief, this Circular constitutes full and true disclosure of allmaterial facts about the Proposed Acquisition, the Company and its subsidiaries, and the Directorsare not aware of any facts the omission of which would make any statement in this Circularmisleading.
Where information in this Circular has been extracted from published or otherwise publicly availablesources or obtained from a named source, the sole responsibility of the Directors has been toensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Circular in its proper form and context.
21
LETTER TO SHAREHOLDERS
13 DOCUMENTS AVAILABLE FOR INSPECTION
A copy of the S&P Agreements are available for inspection during normal business hours at theregistered office of the Company at 143 Cecil Street, Level Ten, GB Building, Singapore 069542during normal business hours for three (3) months from the date of the announcement.
Yours faithfully
For and on behalf of the Board of Directors ofZhongmin Baihui Retail Group Ltd
Lee Swee KengExecutive Chairman9 March 2017
LETTER TO SHAREHOLDERS
22
Pursuant to the Original Lease Agreement and the 1st Supplemental Lease Agreement, the total rentalexpenses payable for the lease period of 20 years is as follows:
Original EffectiveBase Base
Rent Rate Reduction Rent Rate Monthly TotalTotal rent (per sq m (per sq m (per sq m Monthly Facility Monthly Totalpayable per per per Base Rent(1) Usage Rent per year
month)(2) month)(3) month) (A) (B) (A+B)
Year 1 16.90 5.00 11.90 248,827.57 397,287.72 646,115.29 7,753,383.50 Year 2 16.90 5.00 11.90 248,827.57 397,287.72 646,115.29 7,753,383.50 Year 3 19.77 5.40 14.37 300,516.79 397,287.72 697,804.51 8,373,654.17 Year 4 19.77 5.40 14.37 300,516.79 397,287.72 697,804.51 8,373,654.17 Year 5 22.87 5.83 17.04 356,341.15 397,287.72 753,628.87 9,043,546.50 Year 6 22.87 5.83 17.04 356,341.15 397,287.72 753,628.87 9,043,546.50 Year 7 26.22 6.30 19.93 416,631.47 397,287.72 813,919.19 9,767,030.27 Year 8 26.22 6.30 19.93 416,631.47 397,287.72 813,919.19 9,767,030.27 Year 9(4) 29.84 – 29.84 623,983.31 397,287.72 1,021,271.03 12,255,252.33 Year 10 29.84 – 29.84 623,983.31 397,287.72 1,021,271.03 12,255,252.33 Year 11 33.75 – 33.75 705,684.99 397,287.72 1,102,972.71 13,235,672.52 Year 12 33.75 – 33.75 705,684.99 397,287.72 1,102,972.71 13,235,672.52 Year 13 37.97 – 37.97 793,922.80 397,287.72 1,191,210.52 14,294,526.27 Year 14 37.97 – 37.97 793,922.80 397,287.72 1,191,210.52 14,294,526.27 Year 15 42.53 – 42.53 889,219.65 397,287.72 1,286,507.37 15,438,088.40 Year 16 42.53 – 42.53 889,219.65 397,287.72 1,286,507.37 15,438,088.40 Year 17 47.45 – 47.45 992,140.23 397,287.72 1,389,427.95 16,673,135.45 Year 18 47.45 – 47.45 992,140.23 397,287.72 1,389,427.95 16,673,135.45 Year 19 52.76 – 52.76 1,103,294.47 397,287.72 1,500,582.19 18,006,986.29 Year 20 52.76 – 52.76 1,103,294.47 397,287.72 1,500,582.19 18,006,986.29
Total 249,682,551.41
Notes:
(1) The monthly base rental charge, variable every two (2) years, is computed based on an aggregate floor area of 20,909.88sq m (where the floor area of the 4th floor of the Premises not occupied by QZM has been excluded).
(2) Pursuant to the Original Lease Agreement, the base rental charge shall be adjusted at a rate ranging between 11.2% and17.0% every two (2) years.
(3) Pursuant to the 1st Supplemental Lease Agreement, QZM and Hui’an Hongyi agree that the monthly base rental chargeablewill be reduced for eight (8) years of the lease of the Premises, with the initial reduction rate of RMB5 per sq m per monthfor the first two (2) years, which shall increase at a rate of 8% for every subsequent two (2) years.
(4) From Year 9 onwards, the base rent rate shall revert to the original base rent as agreed in the Original Lease Agreement,and no further reduction shall be applicable.
23
APPENDIX A – TOTAL RENTAL EXPENSES
(1) PROFILE OF QUANZHOU REAL ESTATE APPRAISAL CO., LTD. (泉州名城资产评估房地产估价有限公司)
Quanzhou Real Estate Appraisal Co., Ltd. (“QREA”) was established in June 2003 and is a full-service professional valuation company engaged in the business of, amongst other things, assetvaluation, real property valuation and land valuation.
QREA has provided professional valuation services to a broad clientele, which includesgovernmental departments of various levels in the PRC (such as the State-owned AssetsSupervision and Administration Commission, and the finance, transport and housing authorities),commercial banks, as well as distinguished companies within the Fujian province.
(2) PROFILE OF THE RELEVANT PROFESSIONALS
a. Liang Lizheng (Licence No. 3520120014)Designation: Business Manager
Liang Lizheng obtained his licences for valuation of property and land in 2011. Liang Lizhenghas had a long career in real estate valuation, and is typically a project leader for QREA’svaluation projects.
b. Su Maosheng (Licence No. 3520140075)Designation: Business Manager
Su Maosheng obtained his licence for land valuation in 2011 and his licence for propertyvaluation in 2013. Su Maosheng has had a long career in real estate valuation, and istypically a project leader for QREA’s valuation projects.
APPENDIX B – PROFILE OF INDEPENDENT VALUER
24
25
APPENDIX C – VALUATION REPORT
Real Estate Valuation Report
Project name: Appraisal of level B1 to 4 of retail premises Hongyi Baihui located
along Huichong Road and east of the Hui’an Luoyang government
The value of the subject property was analysed, estimated and determined using the comparable method
performed in line with the objective and basis of the valuation based on the relevant information
provided by the client and obtained by us in accordance with the relevant laws and regulations, policy
documents and valuation standards. The subject property was valued at one hundred and thirty-seven
million seven hundred and eighty-seven thousand and one hundred renminbi (RMB137.7871 million)
as at the date of valuation.
56
APPENDIX C – VALUATION REPORT
Annexes
I. Copy of valuation agreement (brief)
II. Subject property location diagram
III. Subject property’s internal and external conditions and pictures of surroundings
IV. Copy of subject property’s ownership certificate
V. Copy of valuer’s business licence
VI. Copy of valuer’s qualification
VII. Copies of certified practicing valuers’ licences
NOTICE OF EXTRAORDINARY GENERAL MEETING
57
ZHONGMIN BAIHUI RETAIL GROUP LTD.(Company Registration No. 200411929C)
(Incorporated in the Republic of Singapore on 17 September 2004)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting (the “EGM”) of Zhongmin BaihuiRetail Group Ltd. (the “Company”) will be held at Peach Garden, 65 Chulia Street, #33-01, OCBCCentre, Singapore 049513 on 24 March 2017 at 10.00 a.m., for the purpose of considering and, if thoughtfit, passing with or without any modifications, the following ordinary resolution:
ORDINARY RESOLUTION
THE PROPOSED ACQUISITION OF RETAIL PREMISES OF THE CHENGNAN STORE IN HUI’ANCOUNTY, QUANZHOU CITY, FUJIAN PROVINCE (AN INTERESTED PERSON TRANSACTION ASDEFINED UNDER CHAPTER 9 OF THE LISTING MANUAL)
THAT:-
(a) approval be and is hereby given for the Company, through its wholly-owned subsidiary, ZhongminBaihui (Quanzhou) Commercial Management Co., Ltd. to enter into and give effect to the ProposedAcquisition; and
(b) the Directors be and are hereby authorised to do all such acts and things as they may considernecessary, desirable or expedient to give effect to the Proposed Acquisition contemplated underthe S&P Agreements, including without limitation to the foregoing, to negotiate, sign, execute anddeliver all documents, approve any amendments, alteration or modification to any document(including the S&P Agreements) and to affix the Common Seal of the Company to any suchdocuments, if required.
By Order of the Board
Chia Foon YeowCompany Secretary9 March 2017
Notes:
1. Except for a member who is a Relevant Intermediary as defined under Section 181(6) of the Companies Act (Chapter 50) ofSingapore (the “Act”), a member of the Company entitled to attend and vote at the Extraordinary General Meeting is entitledto appoint not more than two proxies to attend and vote in his stead. A member of the Company, which is a corporation, isentitled to appoint its authorised representative or proxy to vote on its behalf.
2. Pursuant to Section 181(1C) of the Act, a member who is a Relevant Intermediary is entitled to appoint more than twoproxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to adifferent share or shares held by such member. Where such member appoints more than two proxies, the number of classof shares in relation to which each proxy has been appointed shall be specified in the proxy form.
3. Where a member appoints more than one proxy, he shall specify the proportion of the shareholding to be represented byeach proxy in the instrument appointing the proxies.
4. If the member is a corporation, the instrument appointing the proxy must be under its common seal or the hand of itsattorney or a duly authorised officer.
5. The Proxy Form is attached and must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate &Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, not less than 48 hoursbefore the time fixed for holding the Extraordinary General Meeting in order for the proxy to be entitled to attend and vote atthe Extraordinary General Meeting.
6. A Depositor’s name must appear on the Depository Register maintained at The Central Depository (Pte) Limited 72 hoursbefore the time fixed for holding the Extraordinary General Meeting in order for the Depositor to be entitled to attend andvote at the Extraordinary General Meeting.
PERSONAL DATA PRIVACY
Where a member of the Company submits an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and voteat the Extraordinary General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, useand disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administrationby the Company (or its agents) of proxies and representatives appointed for the Extraordinary General Meeting (including anyadjournment thereof) and the preparation and compilation of the attendance lists, proxy lists, minutes and other documents relatingto the Extraordinary General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to complywith any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where themember discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), themember has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by theCompany (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that themember will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of themember’s breach of warranty.
NOTICE OF EXTRAORDINARY GENERAL MEETING
58
ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)(Company Registration No.:200411929C)
PROXY FORMEXTRAORDINARY GENERAL MEETING
I/We, (Name)
of (Address)
being a member/members* of ZHONGMIN BAIHUI RETAIL GROUP LTD. (the “Company”) herebyappoint:
Name Address NRIC/Passport No. Proportion of Shareholding (%)
and/or (delete as appropriate)
Name Address NRIC/Passport No. Proportion of Shareholding (%)
as my/our proxy/proxies to vote for me/us on my/our behalf, at the Extraordinary General Meeting(“EGM”) of the Company, to be held at Peach Garden, 65 Chulia Street, #33-01, OCBC Centre,Singapore 049513 on Friday, 24 March 2017 at 10.00 a.m., and at any adjournment thereof. I/We directmy/our proxy/proxies to vote for or against the Resolution to be proposed at the EGM as indicatedhereunder. If no specific direction as to voting is given or in the event of any other matter arising at theEGM and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/theirdiscretion.
No. of Votes No. of Votes
Ordinary Resolution: For* Against*
To approve the Proposed Acquisition
*Please indicate your vote “For” or “Against” with a tick (�) within the box provided.
Dated this day of 2017.
Signature(s) of Shareholder(s) or Common Seal of Corporate Shareholder
IMPORTATNT: PLEASE READ NOTES OVERLEAF
IMPORTANT1. This Circular is also forwarded to investors who have
used their CPF monies to buy shares in theCompany at the request of their CPF ApprovedNominees, and is sent solely for their informationonly.
2. This Proxy Form is therefore not valid for use by CPFinvestors and shall be ineffective for all intents andpurposes if used or purported to be used by them.
�
TOTAL NUMBER OF SHARES IN :
(a) CDP Register
(b) Register of Members
Notes
1. Except for a member who is a Relevant Intermediary as defined under Section 181(6) of the Companies Act (Chapter 50) ofSingapore (the “Act”), a member of the Company entitled to attend and vote at the Extraordinary General Meeting is entitledto appoint not more than two proxies to attend and vote in his stead. A member of the Company, which is a corporation, isentitled to appoint its authorised representative or proxy to vote on its behalf.
2. Pursuant to Section 181(1C) of the Act, a member who is a Relevant Intermediary is entitled to appoint more than twoproxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to adifferent share or shares held by such member. Where such member appoints more than two proxies, the number of classof shares in relation to which each proxy has been appointed shall be specified in the proxy form.
3. Where a member appoints more than one proxy, he shall specify the proportion of the shareholding to be represented byeach proxy in the instrument appointing the proxies. If no proportion is specified, the Company shall be entitled to treat thefirst named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named orat the Company’s option to treat this proxy form as invalid.
4. A proxy need not be a member of the Company.
5. Please insert the total number of shares held by you. If you have shares entered against your name in the DepositoryRegister (as defined in Section 81SF of the Securities and Futures Act (Chapter 289) of Singapore), you should insert thatnumber of shares. If you have shares registered in your name in the Register of Members of the Company, you shouldinsert that number of shares. If you have shares entered against your name in the Depository Register and registered inyour name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, thisproxy form will be deemed to relate to all the shares held by you.
6. This proxy form must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate & AdvisoryServices Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, not less than 48 hours before thetime set for the Meeting.
7. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy formis executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a dulyauthorised officer.
8. Where this proxy form is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifiedcopy thereof must (failing previous registration with the Company) be lodged with this proxy form, failing which this proxyform shall be treated as invalid.
General
The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the trueintentions of the appointor are not ascertainable from the instructions of the appointor specified on the instrument of proxy. Inaddition, in the case of Shares entered in the Depository Register, the Company may reject an instrument of proxy if the member,being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 72 hours before thetime appointed for holding the meeting, as certified by The Central Depository (Pte) Limited to the Company.
Personal Data Privacy
By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal dataprivacy terms set out in the Notice of Extraordinary General Meeting dated 9 March 2017.