Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
CIFI Holdings (Group) Co. Ltd.
旭 輝 控 股（ 集 團 ）有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 00884)
CONTINUING CONNECTED TRANSACTIONS
IN RELATION TO
THE PREFABRICATED CONSTRUCTION MATERIALS
SUPPLY MASTER AGREEMENT
Reference is made to the announcement of the Company dated 19 January 2017 in relation to the 2017 Prefabricated Construction Materials Supply Agreement made between CIFI (PRC), an indirectly wholly-owned subsidiary of the Company and Shanghai Yipixi relating to supply of prefabricated construction materials and provision of related installation and technical services to the Group by Shanghai Yipixi. The Board announces that in contemplation of the expiry of the 2017 Prefabricated Construction Materials Supply Agreement on 31 December 2019, the Group renewed the continuing connected transactions under the 2017 Prefabricated Construction Materials Supply Agreement for another three years commencing from 1 January 2020 to 31 December 2022 by way of executing the 2019 Renewal Agreement for Prefabricated and Construction Materials Supply between CIFI (PRC) and Shanghai Yipixi on 13 December 2019.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Shanghai Yipixi is a joint venture company being held by CIFI (PRC), an indirect wholly-owned subsidiary of the Company, as to 30% and the associates of Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng as to 70%. Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng are executive Directors and controlling shareholders of the Company. Shanghai Yipixi is therefore a connected person of the Company and the transactions contemplated under the 2019 Renewal Agreement for Prefabricated Construction Materials Supply constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the annual caps are above 0.1% but below 5%, the Continuing Connected Transactions for the 2019 Renewal Agreement for Prefabricated Construction Materials Supply are only subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
- 1 -
BACKGROUND OF THE CONTINUING CONNECTED TRANSACTIONS
The term of the continuing connected transactions under the 2017 Prefabricated Construction Materials Supply Agreement made between CIFI (PRC), an indirectly wholly-owned subsidiary of the Company, and Shanghai Yipixi relating to supply of prefabricated construction materials and provision of related installation and technical services to the Group by Shanghai Yipixi (as disclosed in the announcement of the Company dated 19 January 2017) will expire on 31 December 2019. The Group renewed the continuing connected transactions under the 2017 Prefabricated Construction Materials Supply Agreement for another three years commencing from 1 January 2020 to 31 December 2022 by way of executing the 2019 Renewal Agreement for Prefabricated Construction Materials Supply between CIFI (PRC) and Shanghai Yipixi (being the same signing entities under the 2017 Prefabricated Construction Materials Supply Master Agreement) on 13 December 2019.
The Group (comprising CIFI (PRC)) is principally engaged in the property development and property investment business in the PRC.
The Shanghai Yipixi Group positions itself as a provider of industrialized construction services and is principally engaged in the design, manufacture and supply of prefabricated construction materials as well as the provision of related installation and technical services. The materials and services are purchased from the Shanghai Yipixi Group by the Group for its property development in the ordinary course of business.
THE 2019 RENEWAL AGREEMENT FOR PREFABRICATED CONSTRUCTION MATERIALS SUPPLY
Principal terms
The principal terms of the 2019 Renewal Agreement for Prefabricated Construction Materials Supply are set out below:
Date | : | 13 December 2019 |
Parties | : | (1) CIFI (PRC) (for itself and on behalf of the other |
members of the Group) | ||
(2) Shanghai Yipixi (for itself and on behalf of other | ||
members of the Shanghai Yipixi Group) | ||
Term | : | Effective from 1 January 2020 to 31 December 2022 (both |
days inclusive) | ||
Materials and services | : | The Shanghai Yipixi Group shall supply to the Group |
being purchased by | prefabricated construction materials; and provide the | |
the Group | related installation and technical services. |
- 2 -
Pricing and other terms | : | (a) supply of materials and provision of services to the |
Group by the Shanghai Yipixi Group shall be on | ||
normal commercial terms and determined after arm's | ||
length negotiations; | ||
(b) the detailed terms and conditions, manner of payment, | ||
specification, price, quantity and delivery date in | ||
relation to the supply of prefabricated construction | ||
materials and the provision of related installation and | ||
technical services shall be determined in the specific | ||
agreements to be made between members of the | ||
Group and members of the Shanghai Yipixi Group; | ||
(c) prices of the prefabricated construction materials | ||
and fees for the installation and technical services | ||
to be provided to the Group by the Shanghai Yipixi | ||
Group shall be determined with reference to the | ||
market price and shall not be higher than those | ||
charged by the Independent Third Parties on the | ||
Group for provision of the same or comparable | ||
goods and services; and | ||
(d) the terms and conditions under specific agreements | ||
to be made between members of the Group and | ||
members of the Shanghai Yipixi Group shall be not | ||
less favourable than those being offered to the Group | ||
by the Independent Third Parties for provision of the | ||
same or comparable goods and services. |
Historical transaction amounts
The historical fee paid by the Group to Shanghai Yipixi under the 2017 Prefabricated Construction Materials Supply Master Agreement for (i) the two years ended 31 December
2017 and 2018, and (ii) the six months ended 30 June 2019 were as follows:
For the year ended | For the year ended | For the six months ended |
31 December 2017 | 31 December 2018 | 30 June 2019 |
(RMB'000) | (RMB'000) | (RMB'000) |
1,771 | 3,119 | 4,353 |
- 3 -
Annual caps and their basis
The annual aggregate maximum amounts of fee to be payable by the Group to the Shanghai Yipixi Group for the transactions contemplated under the 2019 Renewal Agreement for Prefabricated Construction Materials Supply for the three financial years ending 31 December
2022 are as follows:
For the year ending | For the year ending | For the year ending |
31 December 2020 | 31 December 2021 | 31 December 2022 |
(RMB'000) | (RMB'000) | (RMB'000) |
100,000 | 150,000 | 200,000 |
The annual caps have been determined with reference to the prevailing market prices for the comparable goods and services and the expected scale of development projects undertaken by the Group. The payments under the 2019 Renewal Agreement for Prefabricated Construction Materials Supply are expected to be financed by the internal resources of the Group.
Reasons for and Benefits of Entering into the 2019 Renewal Agreement for Prefabricated Construction Materials Supply
It is believed that the Group, as a major real estate developer in the PRC, will be able to derive benefits from the transactions contemplated under the 2019 Renewal Agreement for Prefabricated Construction Materials Supply by meeting its demand for prefabricated construction materials and related installation and technical services in support of its project development plan and capturing the synergic advantages of both the Group and the Shanghai Yipixi Group.
LISTING RULES IMPLICATIONS
As at the date of this announcement, Shanghai Yipixi is a joint venture company being held by CIFI (PRC), an indirect wholly-owned subsidiary of the Company, as to 30% and the associates of Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng as to 70%. Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng are executive Directors and controlling shareholders of the Company. Shanghai Yipixi is therefore a connected person of the Company and the transactions contemplated under the 2019 Renewal Agreement for Prefabricated Construction Materials Supply constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the annual caps are above 0.1% but below 5%, the Continuing Connected Transactions for the 2019 Renewal Agreement for Prefabricated Construction Materials Supply are only subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng, being executive Directors, are considered to have a material interest in the Continuing Connected Transactions and therefore have abstained from voting on the respective Board resolutions of the Company approving the Continuing Connected Transactions. Save as disclosed above, none of the Directors have any material interest in the Continuing Connected Transactions nor is any of them required to abstain from voting in respect of the relevant Board resolutions.
- 4 -
All the independent non-executive Directors, the non-executive Director and the executive Directors (in respect of Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng, who are the executive Directors, they have expressed their views although they have abstained from voting) are of the opinion that the Continuing Connected Transactions are on normal commercial terms and in the ordinary and usual course of business of the Group, and the terms of the Continuing Connected Transactions and the annual caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
DEFINITIONS
In this announcement, unless the context otherwise requires, the following expressions having the following meanings:
"2017 Prefabricated | the master agreement dated 18 January 2017 entered into |
Construction Materials | between CIFI (PRC) and Shanghai Yipixi in relation to supply |
Supply Master | of prefabricated construction materials and provision of related |
Agreement" | installation and technical services to the Group by Shanghai Yipixi |
"2019 Renewal | the renewal agreement of prefabricated construction materials |
Agreement for | supply master agreement dated 13 December 2019 entered into |
Prefabricated | between CIFI (PRC) and Shanghai Yipixi to extend the term of |
Construction | the 2017 Prefabricated Construction Materials Supply Master |
Materials Supply" | Agreement |
"associate(s)" | has the same meaning ascribed to it under the Listing Rules |
"Board" | the board of Directors |
"CIFI (PRC)" | CIFI Group Co., Ltd.* (旭輝集團股份有限公司), a joint stock |
company established in the PRC with limited liability and an | |
indirect wholly-owned subsidiary of the Company | |
"Company" | CIFI Holdings (Group) Co. Ltd. ( 旭 輝 控 股（ 集 團 ）有 限 公 |
司), a company incorporated in the Cayman Islands with limited | |
liability and the shares of which are listed on the Main Board of | |
the Stock Exchange | |
"connected person" | has the same meaning ascribed to it under the Listing Rules |
"Continuing Connected | the continuing connected transactions contemplated under |
Transactions" | the 2019 Renewal Agreement for Prefabricated Constructions |
Materials Supply | |
"controlling shareholder" | has the same meaning ascribed to it under the Listing Rules |
"Directors" | the directors of the Company |
"Group" | the Company and its subsidiaries |
- 5 -
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
"Independent Third | an individual(s) or a company(ies) who or which is (are) |
Party(ies)" | independent of and not connected with (within the meaning of |
the Listing Rules) the Directors, chief executive or substantial | |
shareholders of the Company, its subsidiaries or any of their | |
respective associate(s) | |
"Listing Rules" | the Rules Governing the Listing of Securities on the Stock |
Exchange | |
"percentage ratios" | has the same meaning ascribed to it under the Listing Rules |
"PRC" | the People's Republic of China, which for the purpose of |
this announcement, excludes Hong Kong, the Macao Special | |
Administrative Region and Taiwan | |
"RMB" | Renminbi, the lawful currency of the PRC |
"Shanghai Yipixi" | Shanghai Yipixi Construction Technology Co., Ltd.* (上海毅匹 |
璽建築科技有限公司), a company established in the PRC with | |
limited liability | |
"Shanghai Yipixi Group" | Shanghai Yipixi and its subsidiaries |
"Shareholders" | holders of the ordinary share(s) of HK$0.1 each of the Company |
"Stock Exchange" | The Stock Exchange of Hong Kong Limited |
"substantial shareholders" | has the same meaning ascribed to it under the Listing Rules |
"%" | per cent |
By order of the Board | |
CIFI Holdings (Group) Co. Ltd. | |
LIN Zhong | |
Chairman |
Hong Kong, 13 December 2019
As at the date of this announcement, the Board comprises Mr. LIN Zhong, Mr. LIN Wei, Mr. LIN Feng, Mr. CHEN Dongbiao and Mr.YANG Xin as executive Directors; Mr. WANG Wei as non-executive Director, and Mr. GU Yunchang, Mr. ZHANG Yongyue and Mr. TAN Wee Seng as independent non-executive Directors.
- For identification purposes only
- 6 -