TUNG LOK RESTAURANTS (2000) LTD / Annual Report
2016
114
LETTER TO SHAREHOLDERS
In the event that two (2) quotations from unrelated third parties are not available, the Tung Lok
Representatives will determine the reasonableness of the quote offered by the Interested Person in
accordance with the Group’s usual business practices and pricing policies 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.
(ii)
T&T as an Entity at Risk
In respect of purchases of dim sum by T&T from the TYJ Group and its associated companies (other
than T&T), quotations obtained from the TYJ Group and its associated companies (other than T&T) are
compared to T&T’s cost of producing similar products. T&T shall purchase such dim sum from the TYJ
Group and its Associated Companies (other than T&T) when the quotes provided by the TYJ Group and
its associated companies (other than T&T) are lower than its own cost of production.
(c)
Sale of dim sum and mooncakes to Interested Persons
T&T as one of the Entities at Risk
In respect of the sale of dim sum and mooncakes by the Group and its associated companies to the TYJ Group
and its associated companies (other than T&T), the selling price of agreed items of dim sum and moon cakes
(“
Sale List Items
”)
by the Group and its associated companies to the TYJ Group and its associated companies
(other than T&T) are fixed at a cost plus basis and/or at a predetermined percentage discount to the relevant
market selling price from time to time (the “
Sale Price Formula
”). The Sale Price Formula for sales to the TYJ
Group and its associated companies (other than T&T) is fixed by the T&T Committee or an executive director of
the Company who is independent of the Interested Persons (as the case may be). Any subsequent adjustment
to the Sale Price Formula or the adoption of any new Sales Price Formulas shall be approved by the Tung
Lok Representatives in the T&T Committee or an executive director of the Company who is independent of
the Interested Persons (as the case may be) prior to making any sales to the TYJ Group and its associated
companies (other than T&T). The Tung Lok Representatives or the executive director of the Company who is
independent of the Interested Persons (as the case may be) shall inform the Audit and Risk Committee of any
adjustments to the Sale Price Formula or the adoption of any new Sale Price Formula.
Prior to entering into a sales transaction with the TYJ Group and its associated companies (other than T&T) for
the Sale List Items, the relevant Entity at Risk will take into account pertinent factors (other than price) including,
but not limited to, the strategic reasons for the transaction, volume of the transaction, 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 and whether the sales are designated for export or for local markets.
(d)
Receipt of services from Interested Persons
The receipt of services by T&T, being the Entity at Risk, from the TYJ Group and its associated companies (other
than T&T) will be carried out on terms which are comparable or more favourable to T&T than those offered by
other unrelated third parties.
(i)
The receipt of services such as the delivery of goods and documents and subcontracting of labour such
as financial bookkeeping, provided by the TYJ Group and/or its Associated Companies (other than T&T) to
T&T, are reimbursed on a cost recovery basis. Relevant unrelated third parties invoices or other supporting
documents will be provided to support the amount charged.
