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CAPINFO COMPANY LIMITED*首都信息發展股份有限公司
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 1075) CONTINUING CONNECTED TRANSACTIONS- THE REVISED 2017 ANNUAL CAP; AND
- THE 2017 SUPPLEMENTAL AGREEMENT
Reference is made to the announcements (the "Announcements") of the Company (i) dated 21 March 2011 in relation to the entering into of the Original Services Agreement with BJCA; (ii) dated 27 March 2014 in relation to the entering into the 2014 Services Agreement with BJCA; and (iii) dated 7 February 2017 in relation to the entering into the 2017 Services Agreement with BJCA.
Capinfo Technology, the subsidiary of the Company and Beijing Anxintianxing, the subsidiary of BJCA expect to enter into a software and hardware procurement contract (the "Procurement Contract") on or after 30 August 2017, pursuant to which Beijing Anxintianxing agreed to provide security products listed in the Procurement Contract and related services to Capinfo Technology at a consideration of approximately RMB40 million. Due to the large amount of consideration under the Procurement Contract, the Board expects that the 2017 Annual Cap will not be sufficient, and further review and revision to such annual cap will be required.
On 30 August 2017, the Company and BJCA entered into a supplemental agreement to the 2017 Services Agreement (the "2017 Supplemental Agreement") under which the Group agreed to provide service on network system establishment, system integration, network design, consultancy and related technical services and products to BJCA and its subsidiaries for a term commencing from 1 January 2017 to 31 December 2019 and the relevant service fees payable by BJCA and its subsidiaries to the Group will be determined on normal commercial terms with reference to the prevailing market rates.
BJCA is owned as to approximately 26.24% by the Company and approximately 26.24% by BSAM. Thus, BJCA is a subsidiary of BSAM. Since BJCA is a subsidiary of BSAM (the controlling shareholder of the Company), BJCA is a connected person of the Company and the
* For identification purpose only
transactions contemplated under the Existing Framework Agreement as supplemented by the 2017 Supplemental Agreement constitute continuing connected transaction of the Company under the Listing Rules.
As the applicable percentage ratios (as defined under the Listing Rules) in respect of the Revised 2017 Annual Cap for the transactions involving the provision of network security system development and related technical services by BJCA to the Group are more than 5%, such transactions are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
As the applicable percentage ratios (as defined under the Listing Rules) in respect of the BJCA Annual Caps for the transactions involving the provision of service on network system establishment, system integration, network design, consultancy and related technical services and products by our Group to BJCA and its subsidiaries are more than 0.1% but less than 5%, such transactions are subject to the reporting, announcement, annual review requirements and are exempted from the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
The Company will seek approval from the Independent Shareholders in respect of the Revised 2017 Annual Cap at the forthcoming extraordinary general meeting. A circular containing, among others, details on the Revised 2017 Annual Cap, a letter of recommendation from the Independent Board Committee to the Independent Shareholders, and a letter of advice from the independent financial advisor to the Independent Board Committee and the Independent Shareholders will be dispatched to shareholders on or before 20 September 2017. In view of BSAM's interests in the Revised 2017 Annual Cap for the transactions involving the provision of network security system development and related technical services by BJCA to the Group, BSAM and its associates will abstain from voting to approve the Revised 2017 Annual Cap at the extraordinary general meeting.
BACKGROUND INFORMATION
Reference is made to the announcements (the "Announcements") of the Company (i) dated 21 March 2011 in relation to the entering into of the Original Services Agreement with BJCA; (ii) dated 27 March 2014 in relation to the entering into the 2014 Services Agreement with BJCA; and (iii) dated 7 February 2017 in relation to the entering into the 2017 Services Agreement with BJCA.
Pursuant to the Existing Framework Agreement, BJCA agreed to provide network security system development and related technical services to the Group for a term commencing from 1 January 2017 to 31 December 2019 and the relevant service fees payable by the Group to BJCA will be determined on normal commercial terms with reference to the prevailing market rates. As disclosed in the Announcements, the Existing Annual Caps for the three years ending 31 December 2019 are determined based on (i) the historical service fees paid by the Group to
BJCA for the network security system development and related technical services; (ii) the projected expenditure for developing and maintaining the network security system of the Group for the three years ending 31 December 2019; and (iii) the overall service standard of BJCA. The Existing Annual Caps for the three years ending 31 December 2019 are as follows:
For the year ending 31 December 2017 For the year ending 31 December 2018 For the year ending 31 December 2019RMB'000 RMB'000 RMB'000
Existing Annual Caps 15,000 10,000 9,000
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REVISION OF THE 2017 ANNUAL CAP
Capinfo Technology, the subsidiary of the Company and Beijing Anxintianxing, the subsidiary of BJCA expect to enter into a software and hardware procurement contract (the "Procurement Contract") on or after 30 August 2017, pursuant to which Beijing Anxintianxing agreed to provide security products listed in the Procurement Contract and related services to Capinfo Technology at a consideration of approximately RMB40 million.
Due to the large amount of consideration under the Procurement Contract, the Board expects that the 2017 Annual Cap will not be sufficient, and further review and revision to such annual cap will be required. In response to the expected increase in 2017 annual cap, the annual cap for the transaction contemplated under the 2017 Services Agreement for the year ending 31 December 2017 is revised as RMB55 million (the "Revised 2017 Annual Cap"), calculated based on the existing 2017 annual cap (RMB15 million) plus the consideration under the Procurement Contract.
- THE 2017 SUPPLEMENTAL AGREEMENT Date: 30 August 2017
On 30 August 2017, the Company and BJCA entered into a supplemental agreement to the 2017 Services Agreement (the "2017 Supplemental Agreement") under which the Group agreed to provide service on network system establishment, system integration, network design, consultancy and related technical services and products to BJCA and its subsidiaries for a term commencing from 1 January 2017 to 31 December 2019 and the relevant service fees payable by BJCA and its subsidiaries to the Group will be determined on normal commercial terms with reference to the prevailing market rates.
The BJCA Annual Caps:For the three years ending 31 December 2019, the Annual Caps of BJCA are determined based on (i) the historical service fees paid by BJCA and its subsidiaries to the Group for the provision of service on network system establishment, system integration, network design, consultancy and related technical service and products; (ii) the expected expenditure of BJCA on network technology services and products for the three years ending 31 December 2019; and
(iii) the Group's consolidated service standards.
The historical service fees paid by BJCA and its subsidiaries to the Group for the period from 1 January 2015 to 30 August 2017 are as follows:
For the year ended 31 December 2015 For the year ended 31 December 2016 From 1 January 2017 to 30 August 2017RMB RMB RMB
Historical service fees 405,415.09 nil 166,500
The BJCA Annual Caps for the period from 31 August 2017 to 31 December 2019 are as follows:
From 31 August 2017 to 31 December 2017 For the year ending 31 December 2018 For the year ending 31 December 2019RMB RMB RMB
BJCA Annual Caps 5,833,500 6,000,000 6,000,000
Save as disclosed above, all terms and conditions under the 2017 Services Agreement remain unchanged.
Pricing PolicyThe pricing and payment terms of service on network system establishment, system integration, network design, consultancy and related technical services and products shall be negotiated on an arm's length basis between the Group and BJCA and be determined based on normal commercial terms with reference to prevailing market prices that are fair and reasonable and in any event shall be no less favorable to the prices offered by the Group to its independent third parties.