2011 - Li & Fung Limited

SUBSIDIARIES
Details of the Company’s principal subsidiaries at 31 December
2011 are set out in Note 41 to the accounts.
ASSOCIATED COMPANIES
Details of the Company’s principal associated companies at
31 December 2011 are set out in Note 41 to the accounts.
MAJOR CUSTOMERS AND SUPPLIERS
During 2011, the Group purchased less than 30% of its goods
and services from its five largest suppliers. The percentage
of sales attributable to the Group’s five largest customers
combined was also less than 30% of its total sales.
During 2010, the Group purchased less than 30% of its goods
and services from its five largest suppliers. The percentage
of sales attributable to the Group’s largest customer and the
five largest customers combined were 14.5% and 32.5%
respectively.
CONNECTED TRANSACTION AND
CONTINUING CONNECTED TRANSACTIONS
During the year, the Group entered into the following connected
transactions which were subject to reporting and announcement
requirements but exempt from the independent shareholders’
approval requirement.
(i) On 30 June 2011, the Group entered into agreements to
dispose of properties in Turkey and Taiwan and the entire
registered capital of a subsidiary incorporated in the PRC to
entities indirectly wholly owned by Dr. William Fung Kwok
Lun and a trust established for the family of Dr. Victor Fung
Kwok King at an aggregate consideration of approximately
US$26,720,000. The considerations for the properties were
determined by reference to valuations of certain independent
professional valuers.
(ii) On the same date, the Group entered into an agreement
to dispose of the Group’s medical equipment businesses
in East Malaysia, Indonesia, Singapore and West Malaysia
to subsidiaries of Li & Fung (Distribution) Limited at an
aggregate consideration of approximately US$57,700,000.
Li & Fung (Distribution) Limited is a wholly owned subsidiary
of LF 1937, which is a substantial shareholder of the
Company.
REPORT OF THE DIRECTORS (CONTINUED)
During the year, the Group also engaged in certain continuing
connected transactions as set out below:
(i) Pursuant to the master agreement for leasing of properties
that the Company entered into with LF 1937 on 13 January
2011, the Group leased certain properties from LF 1937
and its associates for the period from 1 January 2011 to
31 December 2013. As LF 1937 is a substantial shareholder
of the Company, LF 1937 and its associates are connected
persons of the Company and the transactions contemplated
under the master leasing agreement constitute continuing
connected transactions of the Company under the Main
Board Listing Rules. In such respect, the Group paid
rental expenses of US$23,913,000 for the year ended
31 December 2011.
(ii) Integrated Distribution Services Group Limited (“IDS Group”)
became a wholly owned subsidiary of the Company effective
on 29 October 2010. As a result, continuing connected
transactions of IDS Group, such as (a) distribution of
products to; (b) purchase of various products from; and
(c) provision of various logistics services to, LF 1937 and
its associates may become non-fully exempt continuing
connected transactions of the Company. For the year ended
31 December 2011, the applicable percentage ratios of the
Company in respect of each category of these transactions
were less than 0.1%.
Non-exempt continuing connected transactions of the Company
have been reviewed by the Independent Non-executive
Directors of the Company. The Independent Non-executive
Directors confirmed that the aforesaid non-exempt continuing
connected transactions were entered into (a) in the ordinary
and usual course of business of the Group; (b) either on normal
commercial terms or on terms no less favourable to the Group
than terms available to or from independent third parties; and
(c) in accordance with the relevant agreements governing them
on terms that are fair and reasonable and in the interests of the
shareholders of the Company as a whole.
LI & FUNG LIMITED | ANNUAL REPORT 2011
57