Kingdee International Software : Announcements and Notices - Continuing Connected Transaction ...

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KINGDEE INTERNATIONAL SOFTWARE GROUP COMPANY LIMITED ږሁ਷ყழ΁ණྠϞࠢʮ̡

(incorporated in the Cayman Islands with limited liability)

(Stock code: 268)

CONTINUING CONNECTED TRANSACTIONS

References are made to the announcements of the Company dated 10 March 2017, 30 June 2017 and 2 January 2018 in respect of certain continuing connected transactions under (a) the Existing Cooperation Framework Agreements entered into between Kingdee China (a wholly-owned subsidiary of the Company) and Shenzhen CloudHub; and (b) the Existing Lease Agreement between Kingdee China and Suishou Technology.

As the Existing Cooperation Framework Agreements expired on 31 December 2018 and the transactions under the Existing Cooperation Framework Agreements shall continue to be entered into on a recurring basis, on 1 January 2019, Kingdee China and Shenzhen CloudHub entered into the 2019 Strategic Cooperation Framework Agreement and 2019 Product Promotion Cooperation Framework Agreement, pursuant to which the parties agreed to continue the existing cooperation with each other for a term of one year commencing from 1 January 2019.

On 1 January 2019, Kingdee China and Suishou Technology also entered into the 2019 Suishou Technology Lease Agreement, pursuant to which Kingdee China agreed to lease an additional office to Suishou Technology for a term of three years commencing from 1 January 2019.

Implications under the Listing Rules

As each of Shenzhen Cloudhub and Suishou Technology is a company controlled by Mr. Xu, who is an executive Director, the Chairman of the Board and the controlling shareholder of the Company, each of Shenzhen CloudHub and Suishou Technology is an associate of Mr. Xu and is therefore a connected person of the Company pursuant to the Listing Rules. The transactions contemplated under the New Agreements constitute continuing connected transactions of the Company.

As the applicable percentage ratios (as defined under the Listing Rules) in respect of the transactions contemplated under each of the 2019 Strategic Cooperation Framework Agreement, the 2019 Product Promotion Cooperation Framework Agreement and the Lease Agreements (on an aggregate basis) are more than 0.1% and less than 5%, the transactions contemplated under each of the New Agreements are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

References are made to the announcements of the Company dated 10 March 2017, 30 June 2017 and 2 January 2018 in respect of certain continuing connected transaction under (a) the Existing Cooperation Framework Agreements entered into between Kingdee China (a wholly-owned subsidiary of the Company) and Shenzhen CloudHub; and (b) the Existing Lease Agreement between Kingdee China and Suishou Technology.

2019 STRATEGIC COOPERATION FRAMEWORK AGREEMENT AND 2019 PRODUCT PROMOTION COOPERATION FRAMEWORK AGREEMENT

As the Existing Cooperation Framework Agreements expired on 31 December 2018 and the transactions under the Existing Cooperation Framework Agreements shall continue to be entered into by Kingdee China on a recurring basis, Kingdee China and Shenzhen CloudHub entered into the following 2019 Strategic Cooperation Framework Agreement and 2019 Product Promotion Cooperation Framework Agreement to renew the same.

(a)

2019 Strategic Cooperation Framework Agreement

Date:

• 1 January 2019

  Parties:

• (1) Kingdee China, a company established under the laws of the PRC with limited liability and a wholly-owned subsidiary of the Company, is principally engaged in the business of corporate management software and Internet services markets; and

• (2) Shenzhen CloudHub, a company established under the laws of the PRC with limited liability and is owned as to 9.1286% by the Group through Hongjin Investment and 51.7285% by Diechuang Holdings (a company owned as to 99% by Mr. Xu, the executive Director, the Chairman of the Board and the controlling shareholder of the Company), is principally engaged in the provision of mobile Internet enterprise services through a mobile office platform offered to registered enterprises and organizations

Term:

One year commencing from 1 January 2019

Subject matter:

The parties agreed to continue the cooperation in the following areas:

• (1) Shenzhen CloudHub appoints Kingdee China as a distributor for Kingdee China to purchase its products (including but not limited to the PrivateCloud Products and the PublicCloud Products) from Shenzhen CloudHub and further distribution in the PRC (including Hong Kong) (the "CloudHub Products Distributorship"); and

• (2) Shenzhen CloudHub agrees to use the strengths of its mobile office platform to provide sales support, business consultation and other services for the sale of Kingdee collaborative office software in consideration for a service fee payable by Kingdee China to Shenzhen CloudHub (the "Kingdee Products Sales Support Services").

Pricing:

The pricing for the transactions under the CloudHub Products Distributorship and the Kingdee Products Sales Support Services should be determined by reference to market prices offered to any independent third party by Shenzhen CloudHub and/or Kingdee China (as the case may be) for the distribution of similar products and provision of similar services and will be settled by the Group's internal resources.

Historical amounts:

For the period from 28 July 2016 to 31 December 2016, for the year ended 31 December 2017 and for the eleven months ended 30 November 2018, the aggregate amounts paid by Kingdee China to Shenzhen CloudHub regarding the CloudHub Products Distributorship and the Kingdee Products Sales Support Services were approximately RMB13,808,000 (audited), approximately RMB29,340,000 (audited) and approximately RMB17,806,000 (unaudited), respectively.

Annual cap:

The Directors estimated that for the year ending 31 December 2019, the maximum aggregate amount payable by Kingdee China to Shenzhen CloudHub regarding the CloudHub Products Distributorship and the Kingdee Products Sales Support Services will be approximately RMB60,000,000.

Basis for determination of the annual cap:

In arriving at the above annual cap, the Directors have taken into consideration the historical amounts paid by Kingdee China to Shenzhen CloudHub under the Existing Strategic Cooperation Framework Agreement, the business target and plan as agreed by both parties and the expected increase in demand from customers for Shenzhen CloudHub's products which will be distributed by Kingdee China.

(b)

2019 Product Promotion Cooperation Framework Agreement

Date:

1 January 2019

Parties:

• (1) Kingdee China; and

• (2) Shenzhen CloudHub

Term:

One year commencing from 1 January 2019

Subject matter:

Kingdee China agreed to use its channels and networks to promote the PublicCloud Products of Shenzhen CloudHub in consideration for a promotion fee payable by Shenzhen CloudHub to Kingdee China.

Pricing:

The pricing for the transactions under the 2019 Product Promotion Cooperation Framework Agreement should be determined by reference to the amount of fees offered to any independent third party by Shenzhen CloudHub for the provision of similar promotional services.

Historical amounts:

For the period from 28 July 2016 to 31 December 2016, for the year ended 31 December 2017 and for the eleven months ended 30 November 2018, the amount of fees paid by Shenzhen CloudHub to Kingdee China regarding the promotion of the PublicCloud Products were approximately RMB9,389,000, RMB17,596,000 (audited) and approximately RMB10,326,000 (unaudited), respectively.

Annual cap:

The Directors estimated that for the year ending 31 December 2019, the maximum amount of fees to be paid by Shenzhen CloudHub to Kingdee China regarding the promotion of PublicCloud Products will be approximately RMB30,000,000.

Basis for determination of the annual cap:

In arriving at the above annual cap, the Directors have taken into consideration the historical amounts paid by Shenzhen CloudHub to Kingdee China under the Existing Product Promotion Cooperation Framework Agreement regarding the promotion of PublicCloud Products and the business expansion plan of Shenzhen CloudHub.

2019 SUISHOU TECHNOLOGY LEASE AGREEMENT

On 1 January 2019, Kingdee China and Suishou Technology entered into the following 2019 Suishou Technology Lease Agreement relating to the lease of an additional office to Suishou Technology.

Date:

• 1 January 2019

  Parties:

• (1) Lessor: Kingdee China; and

• (2) Lessee: Suishou Technology, a company established under the laws of the PRC with limited liability and is indirectly controlled by Mr. Xu (an executive Director, the Chairman of the Board and the controlling shareholder of the Company), is principally engaged in providing financial services application for individuals

Term:

Three years commencing from 1 January 2019

Subject matter:

Kingdee China shall lease the B5 Office to Suishou Technology as office usage.

Rental and charges:

RMB203,750 per month, inclusive of facilities usage charges and exclusive of management fees, other utilities charges and tax, which were determined between the parties on an arm's length basis with reference to the prevailing market rent of comparable properties

Historical amounts:

The historical rental paid by Suishou Technology to the Group for the three years ended 31 December 2016, 2017 and 2018 were RMB2,514,426.20 (audited), RMB5,135,000.00 (audited) and RMB13,015,228.75 (unaudited), respectively.

Annual caps and the basis:

The aggregate annual caps for the continuing connected transactions contemplated under the Lease Agreements (being the aggregate of the annual rentals and charges) shall be RMB14,327,900 for each of the years ending 31 December 2019, 2020 and 2021 based on the monthly rentals and charges as contemplated under the relevant Lease Agreements.