Further to the announcement of Hock Heng Stone Industries Bhd. ("Hock Heng" or "the Company") made on 28 June 2010 in respect of the recurrent related party transactions ("RRPT"), the Board of Directors of Hock Heng wishes to announce that the Company, through its wholly owned subsidiary companies ("the Group") have entered into RRPT, for its day-to-day operations with related parties as disclosed in Table 1 below, whereby the total consideration of the RRPT aggregated from the period from 1 January 2010 to 4 October 2010 is more than RM1 million and the percentage ratio of such RRPT is 2.16%, pursuant to Paragraph 10.09(1)(b) of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad ("the LR").
2. Details of the RRPT
The RRPT between the subsidiary companies and the related parties are in the ordinary course of business of the Group as set out in Table 1 below.
3. Information on LBS and Eternal
LBS Realty Sdn. Bhd. ("LBS") is a company incorporated in Malaysia on 4 September 2003 and has authorised share capital of RM500,000 comprising 500,000 ordinary shares of RM1 each and issued and paid up capital of RM500,000 comprising 500,000 ordinary shares of RM1 each. Its principal activities are property and investment holding.
Eternal Memorial Park Sdn. Bhd. ("Eternal") is a company incorporated in Malaysia on 9 June 2006 and is 70% equity interest owned by LBS. The authorised share capital of Eternal is RM100,000 comprising 100,000 ordinary shares of RM1 each and issued and paid up capital of RM10,000 comprising 10,000 ordinary shares of RM1 each. The principal activity of Eternal is as developer of memorial parks.
The RRPT entered into by the Group are of a revenue or trading nature which are necessary for the day-to-day operations and within the ordinary course of business of the Group. The RRPT are made on arm's length basis and on the Group's normal commercial terms and are on terms not more favourable to the related parties than those generally made available to the public and are not detrimental to the minority shareholders of the Company.
5. Interest of directors, major shareholders and persons connected with them
Mr. Low Kim Hock, Mr. Low Kim Joo and Mr. Low Kim Chung, Directors and substantial shareholders of Hock Heng, are deemed interested in the RRPT by virtue of their directorships and substantial shareholdings in LBS, which owns 70% equity interest in Eternal. Mr. Low Kim Hock, Mr. Low Kim Joo and Mr. Low Kim Chung, who have direct and indirect interests in the RRPT have abstained and will abstain from all Board deliberations and voting.
Mr. Low Kim Ong, a substantial shareholder of Hock Heng, is also deemed interested in the RRPT by virtue of his directorship and substantial shareholdings in LBS. Mr. Low Kim Ong, who has direct and indirect interest in the RRPT has abstained and will abstain from all Board deliberations and voting.
Save as disclosed above, none of the other Directors, Major Shareholders and/or persons connected with the Directors and/or Major Shareholders of Hock Heng, have any interest, direct or indirect, in the above transaction. The above transactions do not require the approval of the shareholders.
6. Financial effects
The RRPT do not have any effect on the issued and paid up share capital of the Company and does not have any material effect on net assets and earning per share or gearing of the Group.
7. Statement by the Audit Committee
The Audit Committee has reviewed the terms of the RRPT and is satisfied that the terms are:
(i) based on ordinary commercial terms in accordance with the Group's business practices and policies;
(ii) have been agreed on an arm's length basis;
(iii) not on terms which are more favourable to the related party than those generally available to the public;
(iv) not detrimental to the interests of the Company's minority shareholders; and
(v) in the best interest of the Group.
The Audit Committee is of the view that Hock Heng Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner, and such procedures and processes would be reviewed on a yearly basis or whenever the need arises.
8. Statement by the Directors
The Board of Directors of Hock Heng has taken into consideration all aspects of the RRPT and is of the opinion that the RRPT is in the best interest of the Group.
This announcement is dated 5 October 2010