Longrun Tea Group Company Limited 龍 潤 茶 集 團 有 限

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Longrun Tea Group Company Limited 龍 潤 茶 集 團 有 限 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Longrun Tea Group Company Limited, you should at once hand this circular and the accompanying form of proxy, to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular. LONGRUN TEA GROUP COMPANY LIMITED 龍潤茶集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 2898) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A letter from the Board is set out on pages 4 to 14 and a letter from the Independent Board Committee is set out on page 15 of this circular. A letter from Goldin Financial containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 31 of this circular. A notice convening the EGM to be held at 11:00 a.m. on Monday, 6 June 2016 at Unit 2201, 22/F., Bank of America Tower, 12 Harcourt Road, Central, Hong Kong is set out on pages 38 and 39 of this circular. A form of proxy for use at the EGM is enclosed with this circular. If you are unable to attend the EGM, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and deposit the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. 17 May 2016 CONTENTS Page Definitions ........................................................ 1 Letter from the Board ............................................... 4 Letter from the Independent Board Committee .......................... 15 Letter from Goldin Financial ......................................... 16 Appendix — General information ................................... 32 Notice of EGM ..................................................... 38 –i– DEFINITIONS In this circular, unless the context otherwise requires, the following terms shall have the following meanings: “Announcement” the announcement of the Company dated 3 March 2016 in relation to the Annual Caps “Annual Caps” the annual caps of the amount of purchase of the Tea Products pursuant to the Purchase Agreement for the three financial years ending 31 March 2019 “associate(s)” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors “Company” LR Tea Group Company Limited 龍潤茶集團有限公 司, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the main board of the Stock Exchange “connected person(s)” has the meaning ascribed thereto in the Listing Rules “Director(s)” the director(s) of the Company “Dr. Chiu” Dr. Chiu Ka Leung, the controlling Shareholder holding approximately 55.59% of the issued share capital of the Company as at the Latest Practicable Date, an executive Director and the chairman of the Company “EGM” the extraordinary general meeting of the Company to be convened for the purpose of considering and, if thought fit, approving, among others, the Annual Caps “Goldin Financial” or Goldin Financial Limited, a corporation licensed to “Independent Financial carry out type 6 (advising on corporate finance) Adviser” regulated activities as defined under the SFO, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the Annual Caps “Group” the Company and its subsidiaries –1– DEFINITIONS “Hong Kong” the Hong Kong Administrative Region of the PRC “Independent Board the independent committee of the Board comprising Committee” all the independent non-executive Directors “Independent Shareholder(s)” Shareholder(s) other than Dr. Chiu and Mr. Jiao and their respective associates “Latest Practicable Date” 13 May 2016, being the latest practicable date prior to the printing of this circular to ascertain certain information contained herein “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “LR Tea Group” 龍潤茶業集團有限公司 (LR Tea Group Limited*), a company incorporated in the PRC with limited liability “Mr. Jiao” Mr. Jiao Shaoliang, an executive Director “PRC” The People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “Purchase Agreement” the exclusive purchase agreement dated 12 May 2009 entered into between Yunnan Longrun Tea and LR Tea Group in relation to the purchase of the Tea Products of LR Tea Group “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholder(s)” holder(s) of the ordinary share(s) in the issued share capital of the Company of HK$0.05 each “Stock Exchange” The Stock Exchange of Hong Kong Limited “Tea Products” the tea products and tea-related food products manufactured by LR Tea Group –2– DEFINITIONS “Transactions” the purchase of the Tea Products as stipulated under the Purchase Agreement “Yunnan Longrun Tea” 雲南龍潤茶科技有限公司 (Yunnan Longrun Tea Technology Company Limited*), a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “%” per cent. * For identification purposes only –3– LETTER FROM THE BOARD LONGRUN TEA GROUP COMPANY LIMITED 龍潤茶集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 2898) Executive Directors: Registered Office: Dr. Chiu Ka Leung (Chairman) Cricket Square Ms. Yeh Shu Ping (Vice-Chairman & Hutchins Drive, P.O. Box 2681 Chief Executive Officer) Grand Cayman KY1-1111 Mr. Jiao Shaoliang Cayman Islands Dr. Lu Pingguo Head Office and Principal Place of Independent Non-executive Directors: Business in Hong Kong: Mr. Lam Siu Hung Room 3007A–B Mr. Guo Guoqing Cable TV Tower Mr. Kwok Hok Lun 9 Hoi Shing Road Dr. Liu Zhonghua Tsuen Wan New Territories Hong Kong 17 May 2016 To the Shareholders Dear Sir or Madam, RENEWAL OF CONTINUING CONNECTED TRANSACTIONS INTRODUCTION Reference is made to the announcement of the Company dated 3 March 2016 regarding the Annual Caps. Reference is made to the announcements of the Company dated 25 May 2009, 15 March 2011 and 27 February 2013 and the circulars of the Company dated 26 June 2009, 28 March 2011 and 15 March 2013 regarding, among others, the Purchase Agreement and the transactions contemplated thereunder. –4– LETTER FROM THE BOARD As the existing annual caps in respect of the transactions contemplated under the Purchase Agreement are going to expire on 31 March 2016, the Company intends to continue the transactions contemplated thereunder and set out the Annual Caps in respect of such transactions for the three financial years ending 31 March 2019. The purpose of this circular is to provide you with, among other things, (i) further details of the Annual Caps; (ii) a letter from Goldin Financial containing its advice to the Independent Board Committee and the Independent Shareholders on the Annual Caps; (iii) recommendation of the Independent Board Committee to the Independent Shareholders; and (iv) the notice of the EGM to the Shareholders. BACKGROUND INFORMATION On 12 May 2009, Yunnan Longrun Tea and LR Tea Group entered into the Purchase Agreement in relation to the purchase of the Tea Products exclusively by the Group from LR Tea Group for a term of 10 years commencing from 12 May 2009, which constitutes continuing connected transactions of the Company under the Listing Rules. The Purchase Agreement and the annual caps in respect of the transactions contemplated under the Purchase Agreement for the three financial years ended 31 March 2012 were approved by the then independent shareholders of the Company on 14 July 2009. On 15 March 2011, the Company announced that the annual caps formerly approved for the two financial years ended 31 March 2011 and 2012 may not be sufficient for the Group’s requirements, and proposed to revise the relevant annual caps for each of the two financial years ended 31 March 2011 and 2012 as well as to set out the annual cap for the financial year ended 31 March 2013, which were subsequently approved by the then independent shareholders of the Company on 13 April 2011. The annual caps in respect of the transactions contemplated under the Purchase Agreement for the three financial years ended 31 March 2016 were approved by the then independent shareholders of the Company on 5 April 2013. LR Tea Group currently has three tea production plants located in Baoshan City (保 山市) and Lincang City (臨滄市) of Yunnan Province where high quality raw materials were produced in local tea farms. All of the abovementioned production plants have obtained QS 生產許可 (QS certifications*) and HACCP (Hazard Analysis and Critical Control Points) certifications. Currently over 90% of the sales of the LR Tea Group are derived from transactions under the Purchase Agreement. The revenue generated from the distribution of tea and other food products accounted for approximately 79.2% and 73.8% of the revenue of the Group for the year ended 31 March 2014 and 2015, respectively.
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