TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
112
LETTER TO SHAREHOLDERS
(d)
Receipt of services from Interested Persons
The receipt of the following services by T&T, being the Entity at Risk, from the TYJ Group and its associated
companies (other than T&T):
(i)
Delivery of goods and documents and sub-contracting of labour such as financial bookkeeping; and
(ii)
Laboratory test services for food products, and logistics services for food storage and delivery.
4.5 Rationale for and benefits of the IPT Mandate
The Entities at Risk and the Interested Persons are in related businesses, and have been transacting with each other, in
the ordinary course of business. The Entities at Risk and the Interested Persons intend to continue with such recurrent
transactions (the “
Recurrent IPTs
”)
in the future.
Accordingly, the IPT Mandate is to enable the Entities at Risk to enter into the Recurrent IPTs with the Interested Persons
in the ordinary course of business, provided such transactions will be carried out on normal commercial terms and are
not prejudicial to the interests of the Company and its minority Shareholders.
The Directors believe that the IPT Mandate is in the interests of the Group for the following reasons:
(a)
It will be beneficial to the Group to allow the IPTs, provided that they are carried out on normal commercial terms,
and are not prejudicial to the interests of the Company and/or its minority Shareholders. The IPTs will improve
synergies between the Group and its associated companies and the TYJ Group and its associated companies
by enhancing the ability of the Group and its associated companies to utilise the resources available to the TYJ
Group and its associated companies and will allow the Group and its associated companies to enjoy economies
of scale in the manufacturing of food products (where relevant) and the procurement of materials and services;
and
(b)
The Recurrent IPTs will occur frequently at differing intervals. The IPT Mandate and any subsequent renewals
of the same on an annual basis is intended to facilitate the IPTs in the day-to-day transactions of the Group
and will eliminate the need to prepare and make announcements and/or convene separate general meetings
on a continual basis to seek prior approval for the entry into these transactions, which will serve to improve
operational efficiency in a cost-effective manner. Furthermore, the IPT Mandate will give the Entities at Risk and
the Interested Persons the flexibility to conduct the Recurrent IPTs in the ordinary course of business, thereby
reducing the time and expenses which would otherwise be incurred to convene general meetings on an
ad hoc
basis, and allow such resources and time to be channeled towards the management of the Group’s business.
4.6 Guidelines and review procedures for the Recurrent IPTs under the IPT Mandate
The IPT Mandate incorporates the following guidelines and review procedures for the following IPTs:
(a)
Purchase of raw materials, semi-processed products or certain finished products from Interested Persons
The purchase of raw materials, semi-processed products or certain finished products from the Interested Persons
will be carried out on terms comparable or more favourable to the relevant Entity at Risk than those offered by
unrelated third-party suppliers to the Entities at Risk.
