China Communications Construction : 20201029-Announcement-Continuing Connected Transactions w...

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中國交通建設股份有限公司

CHINA COMMUNICATIONS CONSTRUCTION COMPANY LIMITED

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1800)

ANNOUNCEMENT

CONTINUING CONNECTED TRANSACTIONS WITH

1. 1. INTELLIGENCE TRANSPORTATION
2. ENTERING INTO THE FINANCIAL SERVICES FRAMEWORK AGREEMENT; AND
3. ENTERING INTO THE PROJECT CONTRACTING FRAMEWORK AGREEMENT

On 29 October 2020, CCCC Finance (being the subsidiary of the Company) and CCCC Intelligence Transportation entered into the Financial Services Framework Agreement, pursuant to which CCCC Finance agreed to provide deposit services and loan services to

1. Intelligence Transportation Group during the period from 29 October 2020 to 31 December 2021. On the same day, the Company and CCCC Intelligence Transportation entered into the Project Contracting Framework Agreement, pursuant to which the Group agreed to provide project contracting services to CCCC Intelligence Transportation Group during the year ending 31 December 2021.

The Company has effective control over CCCC Intelligence Transportation and the financial results of which are consolidated into that of the Group, and therefore CCCC Intelligence Transportation is a subsidiary of the Company. As at the date of this announcement, CCCG (the controlling Shareholder of the Company holding approximately 57.99% equity interests in the issued ordinary shares of the Company) holds more than 10% equity interests in CCCC Intelligence Transportation. Therefore, CCCC Intelligence Transportation is a connected subsidiary of the Company pursuant to Rule 14A.16 of the Hong Kong Listing Rules. As such, the Financial Services Framework Agreement and the Project Contracting Framework Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

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The provision of deposit services by CCCC Finance to CCCC Intelligence Transportation Group is to be made on normal commercial terms or more favourable terms which are in the Group's interests, and no assets of the Group are to be pledged as security for such deposit services in favour of CCCC Intelligence Transportation Group. Therefore, pursuant to Rule 14A.90 of the Hong Kong Listing Rules, the provision of deposit services by CCCC Finance to

1. Intelligence Transportation Group under the Financial Services Framework Agreement is exempt from the announcement, annual review and independent Shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules.

As the highest applicable percentage ratio of the proposed annual caps for the transactions contemplated under the Financial Services Framework Agreement (for the loan services only) and the Project Contracting Framework Agreement exceeds 0.1% but is less than 5%, the transactions contemplated thereunder and the proposed annual caps are subject to the reporting, announcement and annual review requirements, but are exempt from the independent Shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

1. ENTERING INTO THE FINANCIAL SERVICES FRAMEWORK AGREEMENT
2. 1. Background
      On 29 October 2020, CCCC Finance (being the subsidiary of the Company) and CCCC Intelligence Transportation entered into the Financial Services Framework Agreement, pursuant to which CCCC Finance agreed to provide deposit services and loan services to CCCC Intelligence Transportation Group during the period from 29 October 2020 to 31 December 2021.
   2. Financial Services Framework Agreement
      The principal terms of the Financial Services Framework Agreement are set out as follows:

Date

29 October 2020

Parties

1. CCCC Finance; and
2. CCCC Intelligence Transportation

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Term

29 October 2020 to 31 December 2021

Principal Services

Pursuant to the Financial Services Framework Agreement, CCCC Finance agreed to provide deposit services and loan services to CCCC Intelligence Transportation Group according to the principal terms as below.

1. Deposit Services
2. 1. Finance will provide deposit services to CCCC Intelligence Transportation Group. The deposit interest rates shall be determined through negotiation on an arm's length basis between the parties in accordance with market principles for their own interests and in compliance with interest rate requirements of the PBOC on such type of deposits. The cap and floor deposit rates shall be determined in accordance with requirements of the PBOC on deposits of the same term and same category and shall not be higher than the interest rates applicable to deposit services of the same term and same category provided by major domestic commercial banks.
3. Loan Services
4. 1. Finance will provide loan services to CCCC Intelligence Transportation Group. The lending interest rates shall be determined through negotiation on an arm's length basis between the parties in accordance with market principles for their own interests and with reference to the interest rates of loans quoted in the market. The lending rates shall not be lower than the interest rates applicable to loan services of the same term and same category provided by major domestic commercial banks.

3. Proposed Annual Cap and Basis of Determination

After taking account of the following factors, the Company estimates that the annual cap on the daily maximum balance of loans to be provided by CCCC Finance to CCCC Intelligence Transportation Group (including the interests accrued thereon) for the period ending 31 December 2020 and the year ending 31 December 2021 will be RMB240 million and RMB460 million, respectively: (i) relevant guidelines and regulations of the PBOC; (ii) the development plan of CCCC Intelligence Transportation Group and its estimated financial needs for loan services; and (iii) the credit scale of CCCC Finance.

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The Company confirms that, as at the date of this announcement, CCCC Finance has not yet provided loans to CCCC Intelligence Transportation Group.

4. Internal Control and Corporate Governance Measures

To safeguard the rights and interests of the Shareholders, the Company and CCCC Finance have adopted the following internal control procedures and corporate governance measures in relation to the continuing connected transactions under the Financial Services Framework Agreement and their annual caps:

1. CCCC Finance has formulated certain internal rules and policies related to management and control of operational risks and credit risks in accordance with relevant PRC laws and regulations on financial services, with a relatively sound internal control system already in place;
2. CCCC Finance has established a systematic corporate governance structure to ensure effective internal control, including implementation of the general manager accountability system under the leadership of its board of directors, establishment of its institutional structure based on the decision-making, execution and monitoring systems, and formulation of different work procedures and risk control systems based on different job duties;
3. CCCC Finance has adopted centralized management and safe and sound business systems so as to monitor transactions in a timely manner;
4. CCCC Finance will submit to the Company reports on its provision of deposit services and loan services to CCCC Intelligence Transportation Group on a monthly basis, its financial statements on a quarterly basis, and copies of its regulatory reports submitted to the China Banking and Insurance Regulatory Commission; and
5. The independent non-executive Directors and auditors of the Company will conduct annual review on the continuing connected transactions under the Financial Services Framework Agreement.

The Board believes that the internal control procedures and corporate governance measures above are appropriate and can give the Shareholders an adequate assurance that the continuing connected transactions under the Financial Services Framework Agreement will be under the proper supervision of the Company.

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