Shanghai Jin Jiang Capital : CONTINUING CONNECTED TRANSACTIONS LOAN SERVICES FRAMEWORK AGREEMENT

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Shanghai Jin Jiang Capital Company Limited *

上 海 錦 江 資 本 股 份 有 限 公 司

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

(Stock Code: 02006)

CONTINUING CONNECTED TRANSACTIONS

LOAN SERVICES FRAMEWORK AGREEMENT

Reference is made to the announcement of continuing connected transactions of the Company dated 7 May 2020. On 10 May 2021, Finance Company, a subsidiary of the Company, renewed the Loan Services Framework Agreement with Parent Company, pursuant to which Finance Company shall continue to provide the Parent Group with loan services.

Parent Company is the controlling shareholder of the Company, and is therefore a connected person of the Company under Chapter 14A of the Listing Rules. The provision of loan services by Finance Company to the Parent Group under the Loan Services Framework Agreement constitutes continuing connected transactions of the Company. The highest applicable percentage ratio for the transactions under such agreement is more than 0.1% but less than 5% on an annual basis. Therefore, such transactions (together with their annual caps for the period commencing on 7 May 2021 and ending on 6 May 2024) are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

1. BACKGROUND
   Reference is made to the announcement of the Company dated 7 May 2020 in relation to continuing connected transactions under a loan services framework agreement.

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On 10 May 2021, Finance Company, a subsidiary of the Company, renewed the Loan Services Framework Agreement with Parent Company, pursuant to which Finance Company shall continue to provide the Parent Group with loan services.

1. LOAN SERVICES FRAMEWORK AGREEMENT
2. 1. Term
      The Loan Services Framework Agreement will be effective for an initial term of three years commencing on 7 May 2021 and ending on 6 May 2024, unless either party terminates the Loan Services Framework Agreement by three months' prior written notice to the other party. The term of the Loan Services Framework Agreement can be extended upon expiry with the mutual agreement of Parent Company and Finance Company subject to compliance with relevant laws, regulations and/or the Listing Rules.
   2. Pricing policies
      Finance Company shall provide loan services to the Parent Group at interest rates determined through arm's length negotiations between the two parties with reference to quotations of independent third-party financial institutions in accordance with market-based principles and by reference to the loan prime rate (LPR) (published by the National Interbank Funding Centre (the designated publisher) as authorised by PBC). Like independent third-party financial institutions, Finance Company sets different interest rates for the provision of loan services to different customers after taking into account major factors (including the LPR, the credit status of the customer and the amount of funds available for loans). In the meantime, Finance Company also makes reference to the interest rates for the loan services obtained by the Parent Group from independent third-party financial institutions in the market before determining the interest rates applicable to the Parent Group. The Directors believe that such interest rates offered by Finance Company to the Parent Group are comparable to those provided by independent third-party financial institutions in the market, are on normal commercial terms and are in the interests of the shareholders and the Company as a whole. In order to ensure that the transactions will be conducted on normal commercial terms and not prejudicial to the interests of the Company and its minority shareholders, before providing the loan services to the Parent Group, Finance Company will compare the interest rates of the same type of loan offered by two or more independent commercial banks which are able to offer such type of loan and have business relationship with the Parent Group. Finance Company may collect information about the interest rates by making direct enquiries with the relevant party if necessary.

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1. ANNUAL CAPS AND THEIR BASIS
   The Board has set the annual caps for the period ending 31 December 2021, two years ending 31 December 2022 and 2023 and the period ending 6 May 2024 for the continuing connected transactions under the Loan Services Framework Agreement as follows:

	Annual caps for the relevant period
	Period	Twelve months	Twelve months	Period
	ending	ending	ending	ending
	31 December	31 December	31 December	6 May
	2021	2022	2023	2024
	(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)
Maximum daily balance of loans to
be provided by Finance Company
to the Parent Group under the
Loan Services Framework
Agreement	400,000	400,000	400,000	400,000

In arriving at such annual caps, the Directors have considered the following primary factors: (i) the maximum daily balance of loans provided by Finance Company to the Parent Group under the Previous Loan Services Framework Agreements for the three years ended 31 December 2020; (ii) the aggregate interest charged by Finance Company for the provision of loan services to the Parent Group under the Previous Loan Services Framework Agreements for the three years ended 31 December 2020; and (iii) the expected financing demands of the Parent Group for the period from 7 May 2021 to 6 May 2024 :

	Historical figures for the relevant period
	2018	2019	2020
	(RMB'000)	(RMB'000)	(RMB'000)
Maximum daily balance of loans
provided by Finance Company to
the Parent Group under the
Previous Loan Services Framework
Agreements	650,000	450,000	350,000

1. REASONS FOR AND BENEFITS OF THE TRANSACTIONS
   The terms under the Loan Services Framework Agreement are no less favourable to the Group than those provided by independent third parties to the Parent Group, or those provided by Finance Company to independent third parties.

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Furthermore, the provision of loan services to the Parent Group can optimise the utilisation of the surplus fund of Finance Company, which in turn would benefit the Group as a whole. In order to utilise more effectively the surplus cash available and allow for more efficient allocation of financial resources, the provision of loan services to the Parent Group would benefit Finance Company, and in turn, the Company, by re-allocating the resources and providing interest income to the Group, which would otherwise be paid by the Parent Group to commercial banks.

In light of the above factors, the Board (including the independent non-executive Directors) considers that the transactions under the Loan Services Framework Agreement are conducted on normal commercial terms or on terms no less favourable to the Company than those available to independent third parties, and are entered into on a continuing or recurring basis in the ordinary course of business of the Company, and are fair and reasonable and in the interests of the Company and its shareholders as a whole. As Ms. Guo Lijuan, Mr. Chen Liming, Mr. Ma Mingju, Ms. Zhou Wei and Mr. Sun Yu also hold positions in the Parent Company, they have abstained from voting on the relevant Board resolution.

The Board (including the independent non-executive Directors) considers that the annual caps for the transactions under the Loan Services Framework Agreement for the period commencing on 7 May 2021 and ending on 6 May 2024 are fair and reasonable.

1. IMPLICATIONS UNDER THE LISTING RULES
   Parent Company is the controlling shareholder of the Company, and is therefore a connected person of the Company under Chapter 14A of the Listing Rules. The provision of loan services by Finance Company to the Parent Group under the Loan Services Framework Agreement constitutes continuing connected transactions of the Company. The highest applicable percentage ratio for the transactions under such agreement is more than 0.1% but less than 5% on an annual basis. Therefore, such transactions (together with their annual caps for the period commencing on 7 May 2021 and ending on 6 May 2024) are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.
2. GENERAL INFORMATION
   The Group is principally engaged in full service hotel operation and management, select service hotel operation and franchising, restaurant operation, passenger transport logistics, travel agency and other related businesses.

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Finance Company is a subsidiary of the Company. It is principally engaged in the provision of financial services to member units of Jin Jiang, including the settlement of transaction amounts; entrusted loans and entrusted investment services; and acceptance of deposits and the provision of loans, etc. As at the date of this announcement, Finance Company is owned as to 90.5% by the Group and 9.5% by the Parent Company.

Parent Group is one of the largest hotel and tourism conglomerates in terms of scale in the PRC and is 100% held by Shanghai State-owned Assets Supervision and Administration Commission.

1. DEFINITIONS
   Unless the context otherwise requires, the terms used in this announcement shall have the following meanings:

''associates''	has the meaning ascribed to it under the Listing Rules
''Board''	the board of directors of the Company
''Company''	上海錦江資本股份有限公司 (Shanghai Jin Jiang Capital
	Company Limited*), a joint stock limited company
	established in the PRC, the H shares of which are listed
	on the Stock Exchange
''connected	has the meaning ascribed to it under the Listing Rules
person(s)''
''Directors''	the directors of the Company
''Finance Company''	錦江國際集團財務有限責任公司 (Jin Jiang International
	Finance Company Limited), a subsidiary of the Company
	as at the date of the announcement, which is owned as to
	90.5% by the Group and 9.5% by the Parent Company as at
	the date of the announcement
''Group''	the Company and its subsidiaries
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange
''Loan Services	the loan services framework agreement dated 10 May 2021
Framework	renewed between Finance Company and Parent Company,
Agreement''	pursuant to which Finance Company shall provide the
	Parent Group with loan services
''LPR''	Loan Prime Rate

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