As disclosed in the Prospectus, on February 12, 2019, Zhejiang New Century Hotel Management Co., Ltd. entered into the Framework Agreement with New Century Tourism and New Century Holdings for the provision of full service hotel management services, including but not limited to integrated hotel technical and operational management services which consist of market research, development planning, construction advisory, hotel opening preparation and hotel operation management services, staff training services, room reservation services and IT services for a term commencing from 11 March 2019 until 31 December 2021. It came to the attention of the Company, in the course of preparing the consolidated annual results of the Group for the year ended 31 December 2019, that for the year ended 31 December 2019, the actual fee payable by the New Century Group in relation to the services provided by the Group under the Framework Agreement amounted to approximately RMB 50.3 million and thereby exceeded the annual cap for the continuing connected transactions under the Framework Agreement for the year ended 31 December 2019 in the amount of RMB 43.0 million. The Directors (including the independent non-executive Directors) are of the view that the transactions under the Framework Agreement were conducted in the ordinary and usual course of business of the Group and on normal commercial terms, which were fair and reasonable, and in the interests of the Company and the Shareholders as a whole. The provision of hotel management services is the core business of the Group and the New Century Group is one of the hotel owners which the Group worked with. The transaction amount has exceeded the annual cap for the continuing connected transactions under the Framework Agreement for the year ended 31 December 2019 due to: (i) the high occupancy rate for the company newly opened upscale resort hotel, Xianghu New Century Senbo, which had exceeded the Group's financial performance forecast of Xianghu New Century Senbo; and (ii) the entering into of full services management agreements between the Group and the New Century Group for the opening of five additional hotels towards the final quarter of 2019 constituting the provision of pre-opening consultation services and full service hotel management services to these hotels led to a substantial increase in revenue from the services provided by the Group to the New Century Group under the Framework Agreement. In order to ensure strict compliance with Chapter 14A of the Listing Rules and to avoid occurrence of similar events in the future, the Group will adopt the following measures: (i) conduct additional compliance training on connected transactions for Directors, senior management and the relevant personnel of the Company; and (ii) strengthen the reporting and monitoring procedures for the annual caps of the existing connected transactions entered into by the Group and improve the process and frequency of data collection and cross-check to ensure the transaction amounts does not exceed the annual caps. New Century Tourism is a controlling shareholder of the Company and therefore is a connected person of the Company under the Listing Rules. New Century Holdings is owned as to 85.2% by Mr. Chen Miaolin, a non-executive Director and a controlling shareholder and therefore is an associate of Mr. Chen Miaolin and hence a connected person of the Company under the Listing Rules. Accordingly, the transactions under the Framework Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. As the annual cap for the continuing connected transactions under the Framework Agreement for the year ended 31 December 2019 was exceeded, pursuant to Rule 14A.54(1) of the Listing Rules, the Company is required to re-comply with the reporting and announcement requirements under Chapter 14A of the Listing Rules. Since the applicable percentage ratios in respect of the actual transaction amount under the Framework Agreement exceed 0.1% but are less than 5%, such transaction amount under the Framework Agreement is subject to the reporting, annual review and announcement requirements but exempt from the independent shareholders' approval requirement.