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.
The Board wishes to announce that on 11 March 2016, Daphne Investment (an indirect wholly-owned subsidiary of the Company) entered into (i) the TV Programme Co- operation Agreement with Zhejiang Television and Xuan Feng; and (ii) the Co- Investment Agreement with Xuan Feng in relation to the Transactions. The production of the Lady Bees Television Programme commenced before the signing of these agreements according to the production schedule of the Lady Bees Television Programme.
As at the date of this announcement, Mr. Chen Ying-Chieh, the chairman and chief executive officer of the Company, indirectly controls more than 30% of the voting rights in Xuan Feng through intermediate holding companies, therefore, Xuan Feng is a connected person of the Company under the Listing Rules. Accordingly, each of the Transactions constitutes a connected transaction for the Company under the Listing Rules.
As the applicable percentage ratios in respect of each of the Transactions is more than 0.1% but less than 5%, each of the Transactions is subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
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THE TV PROGRAMME CO-OPERATION AGREEMENT
On 11 March 2016, the Company entered into the TV Programme Co-operation Agreement with Zhejiang Television and Xuan Feng, pursuant to which the parties agreed to produce the Lady Bees Television Programme for broadcasting on Zhejiang TV Channel. The production of the Lady Bees Television Programme commenced before the signing of the TV Programme Co-operation Agreement and the Co-Investment Agreement according to the production schedule of the Lady Bees Television Programme.
* for identification purposes only
1
The principal terms of the TV Programme Co-operation Agreement are as follows:
Date:11 March 2016
Parties:Key terms:(1) Zhejiang Television, as party A
(2) Daphne Investment and Xuan Feng, as party B
(1) Zhejiang Television, Daphne Investment and Xuan Feng shall co-operate in the production of a 12-episode television feature programme named "Lady Bees* (蜜
蜂少女隊)" with Daphne Investment and Xuan Feng being responsible for all the production, filming, promotion and other costs for such television feature programme;
(2) A designated television programme production house shall be appointed by Daphne Investment and Xuan Feng for the screening and production of the Lady Bees Television Programme;
(3) Zhejiang Television shall ensure that the Lady Bees Television Programme is broadcasted on Zhejiang TV Channel on a weekly basis on Saturdays at a time agreed between Daphne Investment and Xuan Feng pursuant to the TV Programme Co-operation Agreement during the period of March 2016 to May 2016;
(4) The net income derived from the advertisements during the broadcasting of the Lady Bees Television Programme and the distribution rights of such television feature programme on the internet, terrestrial channels within the PRC or outside the PRC shall be split based on the agreed percentage between (i) Zhejiang Television and (ii) Daphne Investment and Xuan Feng; and
(5) Xuan Feng shall pay Zhejiang Television RMB5,000,000 for the purpose of purchasing the derivative intellectual property rights to produce magazines, DVDs, CDs and computer games etc. of the Lady Bees Television Programme.
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THE CO-INVESTMENT AGREEMENT
On 11 March 2016, the Company entered into the Co-investment Agreement with Xuan Feng in relation to the joint-investment of the production of the Lady Bees Television Programme and the Disposal.
The principal terms of the Co-Investment Agreement are as follows:
Date:11 March 2016
Parties:Key terms:(1) Daphne Investment, as party A
(2) Xuan Feng, as party B
(1) The aggregate amount in respect of the production, filming, promotion and other costs for the Lady Bees Television Programme of RMB180,000,000 with Daphne Investment's contribution being 30% of the total investment amount of not exceeding RMB54,000,000 and Xuan Feng's contribution being 70% of the total investment amount of RMB126,000,000;
(2) Xuan Feng has the right to transfer its portion of investment under the Co-Investment Agreement to another investor provided that such transfer shall not affect the rights and obligations between Daphne Investment and Xuan Feng under the TV Programme Co-operation Agreement and the Co-Investment Agreement;
(3) The net income derived from the advertisements during the broadcasting of the Lady Bees Television Programme and the distribution rights of such television feature programme on the internet, terrestrial channels within the PRC or outside the PRC after Zhejiang Television has taken its share shall be split between (i) Daphne Investment and (ii) Xuan Feng on a 30% and 70% basis; and
(4) Daphne Investment shall receive a consideration in the amount of approximately RMB2,790,000 from Xuan Feng for the disposal of its portion of derivative intellectual property rights to produce magazines, DVDs, CDs and computer games etc. of the Lady Bees Television Programme to Xuan Feng.
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FINANCIAL IMPACT OF THE DISPOSAL AND INTENDED USE OF PROCEEDS
Based on the currently available information and preliminary assessment, it is expected that a gain of approximately RMB2,790,000 would have been recognised in the consolidated financial statements of the Company upon completion of the Disposal. The Company intends to apply the sale proceeds for its daily operations and general corporate purpose.
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CONNECTED TRANSCTION AND IMPLICATIONS UNDER THE LISTING RULES
As at the date of this announcement, Mr. Chen Ying-Chieh, the chairman and chief executive officer of the Company, indirectly controls more than 30% of the voting rights in Xuan Feng through intermediate holding companies, therefore, Xuan Feng is a connected person of the Company under the Listing Rules. Accordingly, each of the Transactions constitutes a connected transaction for the Company under the Listing Rules.
As the applicable percentage ratios in respect of each of the Transactions is more than 0.1% but less than 5%, each of the Transactions is subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
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REASONS FOR AND BENEFITS OF ENTERING INTO THE TV PROGRAMME CO-OPERATION AGREEMENTAND THE CO- INVESTMENT AGREEMENT
The Lady Bees Television Programme will be broadcasted on Zhejiang TV Channel, a popular television channel in the PRC, on a weekly basis on Saturdays. Through Zhejiang TV Channel, such television feature programme will be able to reach audience in most provinces and cities in the PRC, and this represents the Company's effort in revitalizing, ramping up and diversifying the Company's marketing activities to promote the Group's "Daphne" brand image and enhance its competitiveness.
The terms of the TV Programme Co-operation Agreement and the Co-Investment Agreement are determined after arm's length negotiations between the parties and the consideration for the Disposal is determined after arm's length negotiations on the basis of the amount of consideration payable by Xuan Feng to Zhejiang Television, the percentage which Zhejiang Television is entitled to share under the TV Programme Co-operation Agreement and the co- investment percentage of Daphne Investment in the TV Programme Production. The Directors (including the independent non-executive Directors but excluding Mr. Chen Ying- Chieh who has abstained from voting on the TV Programme Co-operation Agreement and the Co-Investment Agreement due to his interests involved) consider that the terms of the TV Programme Co-operation Agreement and the Co-Investment Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.
To the best of the Board's knowledge, information and belief having made all reasonable enquiries, the counterparties to the TV Programme Co-operation Agreement and the Co- Investment Agreement and their ultimate beneficial owners (except Xuan Feng and Chen Ying-Chieh) are third parties independent of the Company and its connected persons (as defined in the Listing Rules).
- INFORMATION ON THE GROUP
The Group is a leading footwear retailer group in the PRC and is principally engaged in the retailing, distribution, manufacturing, processing of footwear and accessories.