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 disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Hilong Holding Limited
海隆控股有限公司*
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1623)
CONTINUING CONNECTED TRANSACTIONS
RENEWAL OF TENANCY AGREEMENTS
References are made to the announcements of the Company dated 1 January 2020 and 4 August 2020 regarding the 2020 Beijing Huashi Tenancy Agreements and 2020 Shine New Material Tenancy Agreement. Since each of the 2020 Beijing Huashi Tenancy Agreements and the 2020 Shine New Material Tenancy Agreement has expired on 31 December 2020, on 29 January 2021, the Group and the relevant counterparties entered into the following renewal agreements:
- 2021 Renewed Beijing Huashi Tenancy Agreements pursuant to which Beijing Huashi Investment agreed to lease and Hilong Oil Service agreed to rent the same office premises under the 2020 Beijing Huashi Tenancy Agreements for a term of one year commencing from 1 January 2021; and
- 2021 Renewed Shine New Material Tenancy Agreement pursuant to which Hilong Pipeline agreed to lease and Hilong Shine New Material agreed to rent the same factory premises under the 2020 Renewed Shine New Material Tenancy Agreement for use as a manufacturing plant for a term of one year commencing from 1 January 2021.
As at the date of this announcement, the counterparties under the 2021 Renewed Beijing Huashi Tenancy Agreements and 2021 Renewed Shine New Material Tenancy Agreement are all companies of which a majority of interests is controlled by Mr. ZHANG Jun, the controlling shareholder and a director of the Company. Therefore the said counterparties are associates of Mr. ZHANG Jun and thus the connected persons of the Company under Chapter 14A of the Listing Rules.
- For identification purposes only
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Given that the 2021 Renewed Beijing Huashi Tenancy Agreements and 2021 Renewed Shine New Material Tenancy Agreement are (i) entered into by the Group and counterparties who are associates of Mr. ZHANG Jun and (ii) continuing connected transactions entered into within a 12-month period, the transactions contemplated under the 2021 Renewed Beijing Huashi Tenancy Agreements and 2021 Renewed Shine New Material Tenancy Agreement would have to be aggregated for the purpose of considering the Company's compliance obligations pursuant to Rule 14A.81 of the Listing Rules.
As the highest applicable percentage ratio in respect of the 2021 Annual Cap for the 2021 Renewed Beijing Huashi Tenancy Agreements and 2021 Renewed Shine New Material Tenancy Agreement, on an aggregated basis, exceeds 0.1% but is less than 5%, the continuing connected transactions contemplated under the 2021 Renewed Beijing Huashi Tenancy Agreements, 2021 Renewed Shine New Material Tenancy Agreement and the 2021 Annual Cap will be exempted from the independent shareholders' approval requirement but is subject to the reporting, announcement and the annual review requirements under Chapter 14A of the Listing Rules.
INTRODUCTION
References are made to the announcements of the Company dated 1 January 2020 and 4 August 2020 regarding the 2020 Beijing Huashi Tenancy Agreements and the 2020 Shine New Material Tenancy Agreement. Since each of the 2020 Beijing Huashi Tenancy Agreements and 2020 Shine New Material Tenancy Agreement has expired on 31 December 2020, on 29 January 2021, the Group and the relevant counterparties entered into the 2021 Renewed Beijing Huashi Tenancy Agreements and 2021 Renewed Shine New Material Tenancy Agreement, in each case, for a term of one year commencing from 1 January 2021.
The major terms of each of the 2021 Renewed Beijing Huashi Tenancy Agreements and the 2021 Renewed Shine New Material Tenancy Agreement are set out below.
P R I N C I P A L T E R M S O F 2 0 2 1 R E N E W E D B E I J I N G H U A S H I T E N A N C Y AGREEMENTS
Date: | 29 January 2021 | |||
Term: | 1 January 2021 to 31 December 2021 | |||
2021 Renewed | 2021 Renewed | 2021 Renewed | 2021 Renewed | |
Beijing Huashi | Beijing Huashi | Beijing Huashi | Beijing Huashi | |
Tenancy | Tenancy | Tenancy | Tenancy | |
Agreement No. 1 | Agreement No. 2 | Agreement No. 3 | Agreement No. 4 | |
Lessor: | Beijing Huashi | Beijing Huashi | Beijing Huashi | Beijing Huashi |
Investment | Investment | Investment | Investment | |
Lessee: | Hilong Oil | Hilong Oil | Hilong Oil | Hilong Oil |
Service | Service | Service | Service |
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Leased | 20/F., Building 1, | Room 502, 5/F., | Room 503-1, 5/F., | Room 501, 5/F., |
premises: | 13 Workers' | Building 1, | Building 1, | Building 1, |
Stadium North | 13 Workers' | 13 Workers' | 13 Workers' | |
Road, Chaoyang | Stadium North | Stadium North | Stadium North | |
District, Beijing, | Road, Chaoyang | Road, | Road, Chaoyang | |
PRC | District, Beijing, | Chaoyang | District, Beijing, | |
PRC | District, Beijing, | PRC | ||
PRC | ||||
Leased area: | 1,850.32 square | 476.99 square | 126.12 square | 276.74 square |
meters | meters | meters | meters | |
Monthly | RMB644,412.49 | RMB160,608.50 | RMB30,650.84 | RMB93,434.34 |
rental: | per month | per month | per month | per month |
excluding utility | excluding utility | excluding utility | excluding utility | |
fees | fees | fees | fees | |
Rental | RMB1,288,824.98 | RMB321,217.0 | RMB61,301.68 | RMB186,868.68 |
deposits: | ||||
Usage: | Office | Office | Office | Office |
Payment of Annual rental is payable by Hilong Oil Service in two instalments. Hilong
rental: Oil Service is required to pay six months of rental together with the rental deposits on the date of the 2021 Renewed Beijing Huashi Tenancy Agreements. Thereafter, the Group is required to make rental payment every six months.
Renewal of Upon the expiration of the term of the 2021 Renewed Beijing Huashi
leases: Tenancy Agreements, the parties may enter into renewal agreement(s) subject to negotiations of the parties upon Hilong Oil Service's request to renew the 2021 Renewed Beijing Huashi Tenancy Agreements
Basis of consideration
In arriving at the monthly rental, the Directors have considered (i) the historical rental amounts payable by Hilong Oil Service under the 2020 Beijing Huashi Tenancy Agreements for the year ended 31 December 2020; (ii) the prevailing market rents with respect to the leased premises under the 2021 Renewed Beijing Huashi Tenancy Agreements (which is obtainable as public information and after consulting the advice of several reputable local real estate agents for benchmark of assessment of the monthly rental for the year ending 31 December 2021); (iii) rental levels of similar properties in the vicinity of the leased premises (taking into account factors such as leased areas and floor levels); (iv) the conditions of the leased premises; (v) the location of the leased properties; and (vi) the availability of properties with similar sizes and in similar locations.
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Accounting Treatment with respect to the 2021 Renewed Beijing Huashi Tenancy Agreements
According to applicable accounting standards, generally, the Group as the lessee shall recognize a lease as a right-of-use asset in the consolidated statement of financial position of the Group according to HKFRS 16. Since the term of each of the 2021 Renewed Beijing Huashi Tenancy Agreements is no more than 12 months, the Group may elect not to recognize assets and liabilities for the leases contemplated under the 2021 Renewed Beijing Huashi Tenancy Agreements in its consolidated statement of financial position according to HKFRS
16. Accordingly, the rental payable by the Group pursuant to the 2021 Renewed Beijing Huashi Tenancy Agreements will be recognized as expenses in the Group's profit and loss accounts in the period in which they are incurred, and the payment of such rental will be regarded as continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
PRINCIPAL TERMS OF 2021 RENEWED SHINE NEW MATERIAL TENANCY AGREEMENT
Date:
Term:
Landlord:
Tenant:
Premises:
Leased Area:
Monthly Rental:
Payment of rental:
Usage:
Renewal of leases:
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Hilong Holding Limited published this content on 29 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 February 2021 16:10:00 UTC.