The Annual Rental. The adjusted rental is set forth on Appendix A attached hereto.
The Annual Rental. The annual rental payable by the First Tenant to the First Landlord under the First Tenancy Agreement is RMB1,800,000 (approximately HK$1,965,600) and the annual rental payable by the Second Tenant to the Second Landlord under the Second Tenancy Agreement is HK$546,000. The aggregate annual rental payable to the Group under the Tenancy Agreements for each of the financial years ending 31 March 2009, 2010 and 2011 will be subject to the following caps: Year ending 31 March 2009 2010 2011 First Tenancy Agreement RMB1,800,000 (Approximately HK$1,965,600) RMB1,800,000 (Approximately HK$1,965,600) RMB1,800,000 (Approximately HK$1,965,600) Second Tenancy Agreement HK$546,000 HK$546,000 HK$546,000 Total Approximately Approximately Approximately HK$2,511,600 HK$2,511,600 HK$2,511,600 REASONS FOR THE TRANSACTIONS The purpose of entering into each of the Tenancy Agreements was to lease the respective Premises and all fitness equipment situated within to the respective Tenants for the operation of the fitness centers and trading of fitness equipment. The fitness centre business operated by the First Landlord in the First Premises represents the Group’s only remaining interest in this type of business and, by leasing out the First Premises and the fitness equipment situated within, the Group will cease to have any further interest in such business. This is in line with the Group’s previously stated intention to dispose of all its interests in the fitness related services business. The terms of each of the Tenancy Agreements have been negotiated on an arm’s length basis between the respective Landlords and Tenants, and are on normal commercial terms. The rental of each of the Premises has been arrived at by reference to the prevailing market rate of similar leases in comparable locations. The Directors (including the independent non-executive Directors, but excluding Xx. Xxxx) consider that the terms of each of the Tenancy Agreements are in the ordinary and usual course of business of the Company and its subsidiaries, and on normal commercial terms, being not less favourable than terms available from independent third parties, and the same are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
