09:23 DICKSON CONCEPT<00113> - Announcement (2) REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS The Group wholesales merchandise of different brand names including apparel, accessories and watches, of which the Group owns the distribution rights of the respective merchandise in Asia, to the DTG Group. The selling prices of the merchandise to the DTG Group are equal to the standard wholesale prices or with a trade discount ranging from 5 per cent. to 10 per cent. which are no less favourable to the Group than those available to or from (as appropriate) independent third parties. The trade discount is given to the members of the DTG Group in Malaysia and Singapore as promotional and brand building subsidy where the Group does not have a direct presence. The Directors consider that the Continuing Connected Transactions will continue to be conducted in the ordinary and usual course of business of the Group and on a frequent basis. Accordingly, it would be impracticable and too costly for the Group to negotiate with each group company of the DTG Group in respect of the Continuing Connected Transactions, or to make press announcements and/or seek Independent Shareholders' prior approval for the Continuing Connected Transactions as each of the relevant transactions arises, and hence the entering into of the Agreement in the form of a master agreement will be beneficial to the Company and its shareholders as a whole. The Agreement is in line with the principal activity of the sale of luxury goods of the Group and will ensure continuous business growth and contribute to the Group's turnover and profits. The Directors are of the view that the terms of the Agreement are on normal commercial terms which were negotiated at arm's length, in the ordinary and usual course of business, are fair and reasonable and are in the interests of the Company and its shareholders as a whole. LISTING RULES IMPLICATIONS The DTG Group is wholly-owned by Mr. Dickson Poon, a Director and substantial shareholder of the Company, and is deemed to be a connected person for the purpose of the Listing Rules. Accordingly, the Sales of Merchandise under the Agreement constitute continuing connected transactions of the Company under Rule 14A.14 of the Listing Rules, and are therefore subject to reporting, announcement, Independent Shareholders' approval and annual review requirements under Rules 14A.45 to 14A.48 and Rules 14A.37 to 14A.40 of the Listing Rules respectively. The Company will therefore seek the approval of the Agreement and the aforesaid annual caps by the Independent Shareholders in relation to the Continuing Connected Transactions on the following conditions: (a) the annual caps for the Continuing Connected Transactions for the three financial years ending 31st March, 2006, 31st March, 2007 and 31st March, 2008 will be HK$102 million, HK$120 million and HK$157 million respectively; (b) the Continuing Connected Transactions will be entered into: (i) in the ordinary and usual course of business of the Group; (ii) either on normal commercial terms or, if there is no available comparison, on terms no less favourable to the Group than those available to or from (as appropriate) independent third parties; and (iii) in accordance with the Agreement on terms that are fair and reasonable and in the interests of the Company and its shareholders as a whole; (c) the independent non-executive Directors will review the Continuing Connected Transactions annually and confirm in the Company's next and successive annual reports that the Continuing Connected Transactions have been conducted in the manner as stated in paragraphs (a) and (b) above; (d) the auditors of the Company will review the Continuing Connected Transactions annually and confirm in a letter to the Board, a copy of which will be provided to the Stock Exchange, stating whether: (i) the Continuing Connected Transactions have been approved by the Board; (ii) the Continuing Connected Transactions have been entered into in accordance with the pricing policies as stated in the Agreement;