TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
113
LETTER TO SHAREHOLDERS
In this regard, prior to any entry of a transaction with an Interested Person, quotes shall be contemporaneously
obtained (wherever possible or available) from at least two (2) other unrelated third party suppliers for similar
raw materials, semi-processed products or certain finished products, at similar quantities and will be used
for comparison. In determining whether the price and terms offered by the Interested Persons are fair and
reasonable, pertinent factors (other than price) including, but not limited to, delivery schedules, quality of
products, credit terms, customer requirements and specifications, track record of counter-parties, overall services
provided, costs and/or expenses (including,
inter alia,
storage, shipment and transportation) borne by each party,
availability of preferential rates, rebates or discount and cost of freight will be taken into account.
In the event that two (2) quotations from unrelated third parties are not available, the relevant Approval Authority
(as defined below) may at its discretion, determine the reasonableness of the quote offered by the Interested
Person in accordance with the Group’s usual business practices, pricing policies and/or industry norms (as the
case may be), taking into account factors including, but not limited to, the nature of the product, order quantity,
delivery schedules, quality of products, credit terms, customer requirements and specifications, track record of
counter-parties, overall services provided, costs and/or expenses (including,
inter alia,
storage, shipment and
transportation) borne by each party, availability of preferential rates, discounts or rebates and cost of freight. In
respect of purchases made by T&T from the TYJ Group and its associated companies, the “
Approval Authority
”
is any executive director of the Company who is independent of the IPTs. In respect of purchases made by the
Group and its associated companies (other than T&T), the “
Approval Authority
” is the vice president of the
Company’s purchasing department.
(b)
Purchase of dim sum and mooncakes from Interested Persons
The purchase of dim sum and mooncakes 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
Group and its Associated Companies.
(i)
T&T as an Interested Person
In respect of purchases of certain types of dim sum and mooncakes by the Group and its associated
companies (other than T&T) from T&T, the purchase price of these dim sum and mooncakes (“
Purchase
List Items
”)
are based on a cost plus basis (the “
Purchase Price Formula
”). The Purchase Price Formula
is fixed by a committee (the “
T&T Committee
”),
comprising representatives from the Company and TYJ.
The representatives from the Company shall be referred to as the “
Tung Lok Representatives
”.
The
Tung Lok Representatives shall comprise of persons who are independent of the Interested Persons and
approved by the Audit and Risk Committee. Any subsequent adjustment to the Purchase Price Formula or
the adoption of any new Purchase Price Formulas shall be approved by the Tung Lok Representatives in
the T&T Committee prior to making any purchases from T&T. The Tung Lok Representatives shall inform
the Audit and Risk Committee of any adjustments to the Purchase Price Formula or the adoption of any
new Purchase Price Formula.
At least two (2) comparable quotations from unrelated third parties for items similar to those listed on
the Purchase List Items, at similar quantities will be obtained at least half-yearly for comparison with
the quotations from T&T based on the Purchase Price Formula. Prior to entering into a transaction with
T&T for the Purchase List Items, the relevant Entity at Risk will take into account pertinent factors (other
than price) including, but not limited to, delivery schedules, quality of products, credit terms, customer
requirements and specifications, track record of counter-parties, overall services provided, costs and/or
expenses (including,
inter alia,
storage, shipment and transportation) borne by each party, availability of
preferential rates, rebates or discount and cost of freight.
