Hong Kong Exchanges and Clearing : CONTINUING CONNECTED TRANSACTIONS WITH CG HOLDINGS -(I)ADVERTISING AND DOMESTIC SERVICES FRAMEWORK AGREEMENT AND (II) MERCHANDISE PROCUREMENT FRAMEWORK AGREEMENT

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COUNTRY GARDEN SERVICES HOLDINGS COMPANY LIMITED

碧 桂 園 服 務 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6098)

CONTINUING CONNECTED TRANSACTIONS WITH

CG HOLDINGS -

1. 1. ADVERTISING AND DOMESTIC SERVICES FRAMEWORK AGREEMENT
   2. 1. 
         AND
      2. MERCHANDISE PROCUREMENT FRAMEWORK AGREEMENT
2. ADVERTISING AND DOMESTIC SERVICES FRAMEWORK AGREEMENT

On 23 August 2019, the Company entered into the Advertising and Domestic Services Framework Agreement with CG Holdings, which sets out the principal terms for the provision of services, including but not limited to the Advertising Services and the Domestic Services, by the Group to CGH Group for a term commencing on 23 August 2019 until 31 December 2020.

II. MERCHANDISE PROCUREMENT FRAMEWORK AGREEMENT

On 23 August 2019, the Company also entered into the Merchandise Procurement Framework Agreement with CG Holdings, which sets out the principal terms for the sale of various kinds of goods, including but not limited to home appliances and food products, by the Group to CGH Group for a term commencing on 23 August 2019 until 31 December 2020.

LISTING RULES IMPLICATIONS

Since CG Holdings is a 30%-controlled company indirectly held by Ms. YANG Huiyan, a non- executive Director and the controlling shareholder of the Company, it is an associate of Ms. YANG Huiyan and thus a connected person of the Company. Transactions contemplated under the Advertising and Domestic Services Framework Agreement and the Merchandise Procurement Framework Agreement therefore constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

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Advertising and Domestic Services Framework Agreement

The annual caps for transactions of the Advertising Services contemplated under the Advertising and Domestic Services Framework Agreement are RMB2 million and RMB4 million respectively for the two years ending 31 December 2020, whereas the annual caps for transactions of the Domestic Services contemplated under the Advertising and Domestic Services Framework Agreement are RMB9 million and RMB18 million respectively for the two years ending 31 December 2020.

The applicable percentage ratios under the Listing Rules in respect of the highest annual cap of the Advertising Services, when calculated on a standalone basis, are all less than 0.1%; while one or more of the applicable percentage ratios in respect of the highest annual cap of the Domestic Services, when calculated on a standalone basis, exceed 0.1% but all of them are below 5%. Whereas if the Advertising Services, the Domestic Services and the Consultancy and Other Services are required to be aggregated together pursuant to Rule 14A.84 of the Listing Rules, one or more of the applicable percentage ratios would exceed 5%. Nonetheless, as (i) the Company had already complied with all the connected transactions requirements (including independent shareholders' approval requirement) for the Consultancy and Other Services for the three years ending 31 December 2020 (for details, please refer to the announcement of the Company dated 18 September 2018 and the circular of the Company dated 5 November 2018) and the Company is thus not required to aggregate the Advertising Services and the Domestic Services with those Consultancy and Other Services; and (ii) one or more of the applicable percentage ratios for the annual caps of the Domestic Services and the Advertising Services (when aggregated together) would exceed 0.1% but all of them would be less than 5%, the Advertising and Domestic Services Framework Agreement and the transactions contemplated thereunder are subject to the reporting and announcement requirements but exempt from the requirement of independent shareholders' approval under Chapter 14A of the Listing Rules.

Merchandise Procurement Framework Agreement

The annual caps for transactions contemplated under the Merchandise Procurement Framework Agreement are RMB25 million and RMB50 million respectively for the two years ending 31 December 2020.

As one or more of the applicable percentage ratios under the Listing Rules calculated based on the highest annual cap exceeds 0.1% but all of them are less than 5%, the Merchandise Procurement Framework Agreement and the transactions contemplated thereunder are subject to the reporting and announcement requirements but exempt from the requirement of independent shareholders' approval under Chapter 14A of the Listing Rules.

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I. ADVERTISING AND DOMESTIC SERVICES FRAMEWORK AGREEMENT

Date	:	23 August 2019
Parties	:	(1)	The Company; and
		(2)	CG Holdings
Term	:	From 23 August 2019 until 31 December 2020
Services to be provided	:	(1)	Advertising Services
			Provision of advertising services (which comprise
			installation, maintenance and dismantling services) by
			the Group to CGH Group in relation to advertisements to
			be displayed at certain advertising spaces located in the
			common areas of the property projects managed by the
			Group (the "Advertising Spaces").
		(2)	Domestic Services
			To improve the level of satisfaction of Property Owners at

the time of delivery, CGH Group will enter into Domestic Services Rights Agreements with the Property Owners pursuant to which the Property Owners will be offered the rights to enjoy Domestic Services provided by the Group subject to certain cash limit.

Fees for the Domestic Services to be provided to the Property Owners pursuant to their rights under the Domestic Services Rights Agreement will be payable to the Group by the CGH Group on behalf of such Property Owners. However, where the relevant cash limit is insufficient to cover the fees for the Domestic Services, the portion in excess shall be paid by the Property Owners to the Group.

The Domestic Services to be provided by the Group include home cleaning, household appliances cleaning, garden maintenance, home maintenance and other domestic services.

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Price

:

(1) Advertising Services

The fees for the provision of the Advertising Services shall be determined after arm's length negotiations taking into account costs involved in provision of the services (including the cost of manpower, raw materials, management and procurement of the Advertising Spaces, having considered the size, location and positioning of the Advertising Spaces), with reference to the prevailing market prices of similar services provided by Independent Third Parties in the open market, as well as (if available) other market reference prices such as prices of similar transactions conducted by other property management companies in the PRC.

1. Domestic Services
   The prices for the Domestic Services provided to the Property Owners pursuant to their rights under the Domestic Services Rights Agreement will be based on the price list of the Group which is the same as that available to Independent Third Parties for the same services.

Payment

:

(1) Advertising Services

Fees for the Advertising Services provided by the Group will be payable no later than three months after provision of such services by one-time payment or instalment payment.

1. Domestic Services
   Fees for the Domestic Services provided by the Group to the Property Owners will be payable by CGH Group on behalf of the Property Owners within three months after the date of the relevant Domestic Services Rights Agreement.

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Annual caps and basis of determination

The approximate historical amounts of fees paid by CGH Group to the Group (excluding tax) for the provision of Advertising Services and Domestic Services for the year ended 31 December 2018 and the six months ended 30 June 2019 were as follows:

	For the year ended	For the six months ended
	31 December 2018	30 June 2019
Advertising Service	-	RMB428,936
	-	(equivalent to approximately
		HK$477,603)
Domestic Service	-	RMB1,122,642
	-	(equivalent to approximately
		HK$1,250,018)

The respective annual caps for fees payable by CGH Group to the Group (excluding tax) for the provision of Advertising Services and Domestic Services for each of the two years ending 31 December 2020 under the Advertising and Domestic Services Framework Agreement are as follows:

	For the year ending	For the year ending
	31 December 2019	31 December 2020
Advertising Services	RMB2,000,000	RMB4,000,000
	(equivalent to approximately	(equivalent to approximately
	HK$2,226,924)	HK$4,453,847)
Domestic Services	RMB9,000,000	RMB18,000,000
	(equivalent to approximately	(equivalent to approximately
	HK$10,021,156)	HK$20,042,312)

Advertising Services

The above proposed annual caps in relation to the Advertising Services were determined after having taken into account (i) the historical amount of fees paid by CGH Group to the Group for the provision of Advertising Services for the six months ended 30 June 2019; (ii) the estimated transaction amount for the provision of Advertising Services by the Group to CGH Group for each of the two years ending 31 December 2020; (iii) the Group's reference to the market rate for the provision of similar services in the same industry; and (iv) the rates of fees to be charged by the Group for the provision of the relevant services.

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