Shoucheng : CONNECTED TRANSACTION IN RELATION TO PROJECT OPERATION AND MAINTENANCE ENTRUSTMENT CONTRACT AND ADDITIONAL INFORMATION IN RELATION TO CONTINUING CONNECTED TRANSACTIONS

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CONNECTED TRANSACTION

IN RELATION TO

PROJECT OPERATION AND MAINTENANCE

ENTRUSTMENT CONTRACT

AND

ADDITIONAL INFORMATION IN RELATION TO

CONTINUING CONNECTED TRANSACTIONS

PROJECT OPERATION AND MAINTENANCE ENTRUSTMENT CONTRACT

On 27 May 2021, Shouzhong Parking, a subsidiary of the Company, entered into the Project Operation and Maintenance Entrustment Contract with Shougang Automation IT under the Project Tender. Pursuant to the Contract, Shouzhong Parking agreed to entrust the provision of the Operation and Maintenance Services under the Project to Shougang Automation IT at the bid-winning price of RMB2,838,736.63.

IMPLICATIONS UNDER THE LISTING RULES

As at the date hereof, Shougang Group indirectly holds approximately 34.91% of the issued Shares and is a substantial shareholder of the Company. Shougang Automation IT is a 49%- owned associated corporation of Shougang Group and is therefore a connected person of the Company under Chapter 14A of the Listing Rules.

Therefore, the entering into of the Project Operation and Maintenance Entrustment Contract between Shouzhong Parking and Shougang Automation IT and the transactions contemplated thereunder constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. Given that one or more of the applicable percentage ratios are more than 0.1% but all are less than 5%, the connected transaction is subject to announcement and reporting requirements but is exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

PROJECT OPERATION AND MAINTENANCE ENTRUSTMENT CONTRACT

On 27 May 2021, Shouzhong Parking, a subsidiary of the Company, entered into the Project Operation and Maintenance Entrustment Contract with Shougang Automation IT under the

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Project Tender. Pursuant to the Contract, Shouzhong Parking agreed to entrust the provision of the Operation and Maintenance Services under the Project to Shougang Automation IT at the bid-winning price of RMB2,838,736.63.

The principal terms of the Project Operation and Maintenance Entrustment Contract are set out below:

Date	27 May 2021
Parties	Shouzhong Parking; and
	Shougang Automation IT.
Scope of service	Shouzhong Parking shall entrust the provision of the Operation
	and Maintenance Services under the Project to Shougang
	Automation IT to ensure the normal operation of the parking
	building. Shougang Automation IT shall be responsible for the
	implementation of the overall daily management of the Project
	under the supervision, inspection, assessment and guidance of
	specified personnel assigned by Shouzhong Parking pursuant
	to the terms of the Contract.
Contract sum	Shouzhong Parking shall pay a total sum of RMB2,838,736.63,
	being the bid-winning price, to Shougang Automation IT for
	the provision of the Operation and Maintenance Services under
	the Contract.
	The total contract sum was arrived at by a public tendering
	process pursuant to the Project Tender, under which Shougang
	Automation IT was selected by an assessment committee,
	which consisted of four external experts and one internal staff,
	as the tender winner having considered various factors,
	including but not limited to (i) credentials, response to business
	conditions, and project management abilities of all the
	tenderers; and (ii) fee quotations.
Term of service	The term of service is 12 months commencing from 1 June
	2021 to 31 May 2022 (the "Contract Term").
	In addition,
	(i)	the period from 1 June 2021 to 31 July 2021 will be
		the performance evaluation period of Shougang
		Automation IT; in the case where Shougang
		Automation IT has failed the relevant performance
		evaluation, Shouzhong Parking has the right to
		terminate the Contract;
	(ii)	if, during the Contract Term, Shougang Automation
		IT has attained excellent results from the
		performance evaluation thrice, priority to renew the

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	Contract will be granted by Shouzhong Parking by
	issuing written notification of Contract renewal
	negotiation to Shougang Automation IT 30 days
	prior to the expiration of the Contract.
Payment terms	Shouzhong Parking shall pay the contract sum to Shougang
	Automation IT on a monthly basis. Each monthly payment
	shall be paid within one month after the end of each month
	during the Contract Term; while the payment for the last month
	of the Contract Term shall be paid within one month after
	Shougang Automation IT has completed the handover work
	with the new supplier. The contract sum will be funded by
	Shouzhong Parking's internal resources.

REASONS FOR AND BENEFITS OF THE CONTRACT

Electromechanical installation systems are the basic elements of normal and efficient operation of parking building. High quality operation and maintenance service is indispensable to improve the operation efficiency and service quality of parking building.

In terms of service concept, Shougang Automation IT is determined to become a leading smart city integrated service provider in the PRC, which complements the Company's commitment to providing users with efficient and comfortable service experience through standardized and large-scale operation mode. Having such consistent concept will strengthen the cooperation between Shougang Automation IT and the Company, and therefore promote a smooth development in parking building operation and maintenance services.

In terms of service capability, Shougang Automation IT is a high-tech enterprise integrating information planning and implementation, automation system design, system integration and technical services. It has excellent capabilities in intelligent building operation and maintenance, intelligent building weak current system integration and communication infrastructure construction etc., which lays a solid foundation for providing high-quality operation and maintenance services for the Company.

In terms of service experience, Shougang Automation IT has provided services for Beijing's sub-city center in Tongzhou district, Shougang Winter Olympic Park and other projects, accumulating extensive technical experience. At the same time, it has participated in the construction of intelligent parking system project of parking building of Beijing Daxing International Airport and has a good understanding of the site conditions and various electromechanical systems, which is conducive to strengthening cooperation with other service suppliers of parking building, and improving the efficiency of on-site work and parking building operation.

The cooperation will strengthen the Group's lean operation in the parking building of Beijing Daxing International Airport through the technological and comprehensive operation and maintenance services provided by Shougang Automation IT, so as to improve the Company's operation management efficiency and customer experience.

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INFORMATION ON THE GROUP AND THE PARTIES

The Group mainly focuses on the parking business and infrastructure and real estate fund management business.

Shouzhong Parking, principally engaged in management of motor vehicle parking, is a company established in the PRC with limited liability. It is held as to 99.18% by the Group and 0.82% by Jingtai Anda.

Jingtai Anda is a limited liability company established in the PRC and is principally engaged in static traffic technology, static traffic investment and financing, static traffic construction and static traffic operation management. It is ultimately owned by 北京市人民政府國有資產 監督管理委員會 (the State-owned Assets Supervision and Administration Commission of Beijing Municipal People's Government*).

Shougang Automation IT is a company established in the PRC with limited liability and is principally engaged in four-level automation system and high-quality production maintenance and system integration technology. It is held as to 49% by Shougang Group and the remaining 51% by Independent Third Parties, being 25.0625% by Mr. Zhang Zongxian, 6.4375% by Mr. She Guoping, 5.8125% by Mr. Liu Yingfeng, 3.5% by Mr. Li Zhenxing, 3.125% by Mr. Jiang Peng, 3.125% by Mr. Hu Pijun, 2.25% by Mr. Liu Tao and 1.6875% by Mr. Li Teng.

To the best of the Directors' knowledge, information and belief and having made all reasonable enquiries, Mr. Zhang Zongxian, Mr. She Guoping, Mr. Liu Yingfeng, Mr. Li Zhenxing, Mr. Jiang Peng, Mr. Hu Pijun, Mr. Liu Tao and Mr. Li Teng are Independent Third Parties.

IMPLICATIONS UNDER THE LISTING RULES

As at the date hereof, Shougang Group indirectly holds approximately 34.91% of the issued Shares and is a substantial shareholder of the Company. Shougang Automation IT is a 49%- owned associated corporation of Shougang Group and is therefore a connected person of the Company under Chapter 14A of the Listing Rules.

Therefore, the entering into of the Project Operation and Maintenance Entrustment Contract between Shouzhong Parking and Shougang Automation IT and the transactions contemplated thereunder constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. Given that one or more of the applicable percentage ratios are more than 0.1% but all are less than 5%, the connected transaction is subject to announcement and reporting requirements but is exempt from independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Mr. Zhao Tianyang and Mr. Xu Liang, by virtue of their connection with Shougang Group, have abstained from voting on the Board resolutions proposed to approve the Contract and the transactions contemplated thereunder. Save as disclosed, none of the Directors has any material interest in the Contract and the transactions contemplated thereunder.

The Directors (including the independent non-executive Directors but excluding the Directors who have abstained from voting on the relevant Board resolutions) consider that the terms of the Contract are fair and reasonable and that the entering into of the Contract is on normal commercial terms and in the ordinary and usual course of business of the Group and in the

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interests of the Company and its shareholders as a whole.

ADDITIONAL INFORMATION IN RELATION TO CONTINUING CONNECTED TRANSACTIONS

Reference is made to the announcement of the Company dated 29 March 2021 (the "Announcement") in relation to the continuing connected transactions pursuant to Rule 14A.60(1) of the Listing Rules. Capitalized terms used herein shall have the same meanings as defined in the Announcement unless the context requires otherwise.

The Company wishes to provide some additional information on the Guangzhou Carpark Sales Agreement, the Foshan Carpark Sales Agreement and the Guangzhou Carpark Management Agreement II (the "Subject Agreements").

The terms of the Subject Agreements:
Basis of consideration	Fixed formula with a fixed
under the agreement as	volume
disclosed in the
Announcement

Guangzhou (i) Annual sales commission

Carpark Sales fee representing 3.6% to

Agreement: 5% (the "Fixed Sales Commission Ratio") of the annual sales revenues generated from the sales of

the carparks; and

1. A fixed amount of monthly operating expenses.

Foshan	Same as above.
Carpark Sales
Agreement:

The number of carpark spaces under the agreement is fixed at 7,727.

The Fixed Sales Commission Ratio, being 3.6%, 4%, 4.5% or 5%, applicable for a particular calendar year is pre-determined in the agreement; and based on the number of carpark spaces sold and sales revenue for a particular calendar year.

The aforementioned number of carpark spaces and sales revenue to determine the Fixed Sales Commission Ratio are fixed and specified in the agreement.

Same as above, except that the number of carpark spaces under the agreement is fixed at 2,067.

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