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.
Lanzhou Zhuangyuan Pasture Co., Ltd.*
(A joint stock limited liability company incorporated in the People’s Republic of China)
(Stock code: 1533)
CONTINUING CONNECTED TRANSACTIONS
MASTER PURCHASE AGREEMENT
Independent Financial Adviser to the Independent Board Committee and
the Independent Shareholders
THE MASTER PURCHASE AGREEMENT
Reference is made to the Announcement in which the Board announced that at the Board meeting
held on 15 January 2021, the Board passed the resolution for approving the estimation of ordinary
connected transactions of the Company for 2021, agreeing to the transaction with Tianmu Dairy.
On 9 February 2021, the Company entered into the Master Purchase Agreement with Tianmu
Dairy in relation to the possible purchase of Raw Milk from Tianmu Dairy for the year ending 31
December 2021.
LISTING RULES IMPLICATIONS
As set out in the announcement of the Company dated 22 December 2020 in relation to, among
others, the non-public issuance of A Shares, Gansu Nongken Asset subscribed for 37,931,665
A Shares, representing approximately 19.1% and 16.2% of (i) the total issued A Shares; and (ii)
the total issued A Shares and H Shares, respectively. Tianmu Dairy is a fellow subsidiary of
the holding company of Gansu Nongken Asset. Accordingly, Tianmu Dairy is an associate of
a connected person of the Company under Chapter 14A of the Listing Rules. The transactions
contemplated under the Master Purchase Agreement constitute continuing connected transactions
of the Company under Chapter 14A of the Listing Rules.
–1–
As one or more of the applicable percentage ratios in respect of the Annual Purchase Cap under
the Master Purchase Agreement exceeds 5%, the continuing connected transactions contemplated
under the Master Purchase Agreement are subject to the reporting, announcement and the
Independent Shareholders’ approval requirements pursuant to Chapter 14A of the Listing Rules.
A circular containing, among other things, (i) details of the Master Purchase Agreement; (ii) the
letter of recommendation from the Independent Board Committee; (iii) the letter of advice from
the Independent Financial Adviser to the Independent Board Committee and the Independent
Shareholders; and (iv) a notice of the EGM, will be despatched to the Shareholders on or before 2
March 2021 in accordance with the Listing Rules.
Reference is made to the Announcement in which the Board announced that at the Board meeting of
the Company held on 15 January 2021, the Board passed the resolution for approving the estimation
of ordinary connected transactions of the Company for 2021, agreeing to the transaction with
Tianmu Dairy. On 9 February 2021, the Company entered into the Master Purchase Agreement with
Tianmu Dairy in relation to the possible purchase of Raw Milk from Tianmu Dairy for the year
ending 31 December 2021. Set out below are the salient terms of the Master Purchase Agreement:
THE MASTER PURCHASE AGREEMENT
Date : 9 February 2021
Parties : (1) the Company (for itself and on behalf of its subsidiaries; and
(2) Tianmu Dairy
Term : From 9 February 2021 to 31 December 2021.
Condition precedent : The obtaining of approval from the Independent Shareholders at the
EGM
Subject matter : The Master Purchase Agreement is a master agreement which governs
the purchase of Raw Milk by the Group from Tianmu Dairy. Pursuant
to the Master Purchase Agreement, the Group agreed to purchase Raw
Milk from Tianmu Dairy, and Tianmu Dairy agreed to sell Raw Milk to
the Group.
The Group and Tianmu Dairy will enter into separate purchase order
for each purchase on a quarterly basis, which shall stipulate the price as
well as quantity for each purchase, provided that the terms of such order
are consistent with the Master Purchase Agreement.
–2–
Pricing policy : The price of Raw Milk shall be based on the prevailing market price
determined by (i) comparing the price obtained with at least three
Independent Third Party suppliers of same or similar products during
the same period; and (ii) regularly conducting market review on the
market price of long term raw milk supply charged by other industry
participants in Gansu province and Ningxia region taking into account
the supply of raw milk in the industry.
As a general principle, the terms (including the price and payment
terms) of each purchase order shall be agreed between the Group and
Tianmu Dairy based on normal commercial terms after arm’s length
negotiations, which shall be no less favourable to the Group than those
offered to the Group by the Independent Third Parties of same or similar
products.
Payment terms : As set out in the quarterly purchase order entered into between the
Group and Tianmu Dairy.
Historical Amount
The transactions for the purchase of Raw Milk by the Group from Tianmu Dairy started in
September 2020, prior to which the Company had no transaction with Tianmu Dairy. For the four
months ended 31 December 2020, the historical amounts of purchase of Raw Milk by the Group
from Tianmu Dairy were set out below:
For the four
months ended
31 December
2020
RMB’000
(unaudited)
Historical transaction amounts 11,989
Annual Purchase Cap and basis of determination
The table below sets out the proposed annual cap for the price payable by the Group to Tianmu
Dairy for purchase of Raw Milk for the year ending 31 December 2021:
Year ending
31 December
2021
RMB’000
Annual Purchase Cap 200,000
–3–
In determining the Annual Purchase Cap, the Directors have considered generally:
(a) the historical amount of the purchase of Raw Milk;
(b) the prevailing market price of Raw Milk; and
(c) the anticipated market demand of the Group on Raw Milk during the term of the Master
Purchase Agreement for the year ending 31 December 2021, taking into account the increased
demand of the Group due to the completion of the reconstruction and expansion project of 600
tons of liquid milk per day which commenced operation in May 2020.
REASONS FOR AND BENEFITS OF THE TRANSACTIONS UNDER THE
MASTER PURCHASE AGREEMENT
As set out in the announcement of the Company dated 22 December 2020 in relation to, among
others, the non-public issuance of A Shares, Gansu Nongken Asset subscribed for 37,931,665
A Shares, representing approximately 19.1% and 16.2% of the total issued A Shares and the
total issued A Shares and H Shares, respectively. Accordingly, Gansu Nongken Asset became a
substantial Shareholder. As a substantial Shareholder, Gansu Nongken Asset has accorded priority
to fulfill the demand for quality raw milk from the Group. Since the completion of the expansion
project for processing 600 tons of liquid milk per day of the Company pursuant to the Company’s
announcement dated 15 May 2020, the production capacity of the Group’s milk products has
increased and the demand for raw milk has increased accordingly. The transactions contemplated
under the Master Purchase Agreement will contribute to the business of the Group by providing a
stable source of quality raw milk required in the production process and operations of the Group. As
a result of the increase in production, the Group’s revenue and net profit is expected to increase.
The Company considers that the purchase of Raw Milk from Tianmu Dairy by the Group are
conducted in the Group’s ordinary and usual course of business based on the commercial needs of
the Group.
Based on the above, the Directors consider that the entering into of the Master Purchase Agreement
together with the transactions contemplated thereunder (including the Annual Purchase Cap) are
in the ordinary and usual course of business of the Group and the terms are on normal commercial
terms which have been arrived at after arm’s length negotiations between the parties thereto, and
that the terms thereof and the Annual Purchase Cap are fair and reasonable, and that the entering
into of the Master Purchase Agreement is in the interests of the Company and the Independent
Shareholders as a whole.
–4–
INTERNAL CONTROL
The Company will supervise the continuing connected transactions in accordance with the
procedures set forth in the following internal control measures to ensure that the transactions
contemplated under the Master Purchase Agreement are conducted on normal commercial terms
which are no less favourable than those offered by other Independent Third Parties:
(i) the Company will supervise the continuing connected transactions and shall compare the
price of Raw Milk with the price of the same or similar products obtained from at least
three Independent Third Party suppliers when making purchases under the Master Purchase
Agreement;
(ii) the finance department of the Company shall monitor and ensure that the departments
overseeing the operation of the Company in connection with Master Purchase Agreement
will review and assess on a regular basis whether the transactions thereunder are conducted in
accordance with the terms of the Master Purchase Agreement and the Annual Purchase Cap
are not exceeded;
(iii) staff of audit department responsible for the internal control will check the relevant documents
provided by the purchasing department against the purchase invoices for transactions
contemplated under the Master Purchase Agreement and other relevant documents on a
regular basis; and
(iv) the independent non-executive Directors shall, and the Company shall engage its external
auditors to, conduct annual review of the continuing connected transactions entered into by
the Group and the Annual Purchase Cap in accordance with the requirements of the Listing
Rules.
LISTING RULES IMPLICATIONS
As set out in the announcement of the Company dated 22 December 2020 in relation to, among
others, the non-public issuance of A Shares, Gansu Nongken Asset subscribed for 37,931,665 A
Shares, representing approximately 19.1% and 16.2% of (i) the total issued A Shares; and (ii) the
total issued A Shares and H Shares, respectively. Tianmu Dairy is a fellow subsidiary of the holding
company of Gansu Nongken Asset. Accordingly, Tianmu Dairy is an associate of a connected
person of the Company under Chapter 14A of the Listing Rules. The transactions contemplated
under the Master Purchase Agreement constitute continuing connected transactions of the Company
under Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the Annual Purchase Cap under the
Master Purchase Agreement exceeds 5%, the continuing connected transactions contemplated under
the Master Purchase Agreement are subject to the reporting, announcement and the Independent
Shareholders’ approval requirements pursuant to Chapter 14A of the Listing Rules.
–5–
APPROVAL BY THE BOARD
In the 46th meeting of the third session of the Board on 15 January 2021, the Board has considered
and approved the transactions with Tianmu Dairy and the proposal of the Master Purchase
Agreement. For details of the resolution passed for approving the proposed transactions with
Tianmu Dairy, please refer to the Announcement.
To the best of the Directors’ knowledge, information and belief and having made all reasonable
enquiries, no Director has a material interest in the transactions and therefore no Director is required
to abstain from voting at the board meeting approving the transactions contemplated under the
Master Purchase Agreement.
GENERAL
INFORMATION OF THE GROUP
The Group principally operates two business segments: (i) dairy farming business, under which the
Group produces and sells raw milk; and (ii) dairy products production business, under which the
Group produces and sells dairy products.
INFORMATION OF TIANMU DAIRY
Tianmu Dairy is a fellow subsidiary of Gansu Nongken Asset, a substantial Shareholder, and is
principally engaged in the processing and sales of dairy products, meat products and beverages.
Tianmu Dairy’s registered capital is owned as to 82.04% by Gansu Nongken Group and as to
17.96% by Gansu Nongken Jinchang Farm Company Limited* ( ),
a company principally engaged in the farming, sales and packaging of agricultural, forestry and
animal products. Gansu Nongken Asset is wholly owned by Gansu Nongken Group which is in turn
wholly owned by Gansu National Assets Investment Group Company Limited* (
), a company established in the PRC and whose registered capital is owned
as to 84% by Gansu People's Government Asset Supervisory Management Committee* (
) and as to 16% by Jiuquan Steel (Group) Limited Liability
Company* ( ).
EGM
The EGM will be held by the Company for the Independent Shareholders to consider and, if thought
fit, to approve the Master Purchase Agreement and the transactions contemplated thereunder.
Tianmu Dairy and its associates (including Gansu Nongken Asset) shall abstain from voting at
the EGM to be convened to consider the resolution(s) approving the abovementioned continuing
connected transactions.
For the purpose of the EGM, an Independent Board Committee comprising all independent non-
executive Directors has been formed to advise the Independent Shareholders on the Master Purchase
Agreement and the transactions contemplated thereunder (including the Annual Purchase Cap).
Rainbow Capital has been appointed as the Independent Financial Adviser to advise the Independent
Board Committee and the Independent Shareholders in this regard.
–6–
A circular containing, among other things, (i) details of the Master Purchase Agreement; (ii) the
letter of recommendation from the Independent Board Committee; (iii) the letter of advice from
the Independent Financial Adviser to the Independent Board Committee and the Independent
Shareholders; and (iv) a notice of the EGM, will be despatched to the Shareholders on or before 2
March 2021 in accordance with the Listing Rules.
DEFINITIONS
“Announcement” the overseas regulatory announcement of the Company dated
15 January 2021
“Annual Purchase Cap” the proposed annual purchase cap for the transactions
contemplated under the Master Purchase Agreement during
the year ending 31 December 2021
“associates” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Company” Lanzhou Zhuangyuan Pasture Co., Ltd.*
, a joint stock limited liability company
incorporated in the People’s Republic of China, the issued
H Shares of which are listed on the Main Board of the Stock
Exchange (stock code: 1533) and the A Shares of which are
listed on the Shenzhen Stock Exchange (stock code: 002910)
“connected person(s)” has the meaning ascribed thereto in the Listing Rules
“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules
“Director(s)” the directors of the Company
“EGM” the extraordinary general meeting of the Company to be held
and if thought fit, to approve the Master Purchase Agreement
and the transactions contemplated thereunder (including the
Annual Purchase Cap)
“Gansu Nongken Asset” Gansu Nongken Asset Operation Company Limited*
, a limited liability company
established under the laws of PRC which is a substantial
Shareholder of the Group’s A Shares
“Gansu Nongken Group” Gansu Nongken Group Limited Liability Company*
, a limited liability company
established under the laws of PRC which is a substantial
Shareholder of the Group’s A Shares
–7–
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee” the independent committee of the Board formed to consider
the Master Purchase Agreement and the transactions
contemplated thereunder (including the Annual Purchase Cap)
“Independent Financial Adviser” or Rainbow Capital (HK) Limited, a corporation licensed to carry
“Rainbow Capital” out type 6 (advising on corporate finance) regulated activity
under the SFO, being the independent financial adviser
appointed to advise the Independent Board Committee and the
Independent Shareholders in relation to the Master Purchase
Agreement and the transactions contemplated thereunder
(including the Annual Purchase Cap)
“Independent Shareholders” Shareholders other than Gansu Nongken Asset
“Independent Third Party(ies)” party(ies) which is(are) third party independent of the Group
and its connected persons
“Listing Rules” the Rules Governing the Listing of Securities on the Stock
Exchange
“Master Purchase Agreement” the master purchase agreement dated 9 February 2021 entered
into between the Company and Tianmu Dairy in relation to
the purchase of Raw Milk by the Group from Tianmu Dairy
“PRC” the People’s Republic of China
“Raw Milk” the raw milk to be purchased by the Group from Tianmu Dairy
pursuant to the Master Purchase Agreement
“RMB” Renminbi, the lawful currency of the PRC
“Share(s)” share(s) in the capital of the Company
“Shareholder(s)” holder(s) of the shares of the Company
“Stock Exchange” The Stock Exchange of Hong Kong Limited
–8–
“Tianmu Dairy” Gansu Nongken Tianmu Dairy Company Limited*
, a limited company established under
the laws of the PRC
“%” per cent
By Order of the Board
Lanzhou Zhuangyuan Pasture Co., Ltd.*
Ma Hongfu
Chairman
Lanzhou, the PRC, 9 February 2021
As at the date of this announcement, the executive directors of the Company are Mr. Ma Hongfu,
Mr. Wang Guofu and Ms. Zhang Qianyu; the non-executive director of the Company is Mr. Yap
Kean Chong; and the independent non-executive directors of the Company are Ms. Liu Zhijun, Mr.
Zhao Xinmin and Mr. Wong Cho Hang Stanley.
* For identification purposes only
–9–
