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On September 26, 2008, the company (for itself and on behalf of its subsidiaries) provided construction and project management services to the members of the Group for the relevant Jinan project for a period of 2008 From September 26 to December 31, 2009, a construction service agreement was signed with Jinan Engineering.
Jinan Engineering is indirectly wholly-owned by China National Heavy Truck Group Co., Ltd. and China National Heavy Truck Group Co., Ltd. holds the entire issued share capital of Sinotruk (BVI) Limited, the controlling shareholder of the Company. Therefore, according to the Listing Rules, Jinan Engineering is a connected person of the Company and the transaction under the Construction Services Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As more than 0.1% but less than 2.5% of each of the applicable percentage ratios (other than the profit rate) of the transactions under the Construction Services Agreement, the transaction under the Construction Services Agreement is a transaction as defined in Rule 14A.34 of the Listing Rules, Therefore, it is necessary to comply with the reporting and announcement requirements but it is not necessary for independent shareholders to approve it.
Construction Services Agreement
date
September 26, 2008
Contracting party
(1) The company; and
(2) Jinan Engineering, a wholly-owned subsidiary of China National Heavy Truck Group Co., Ltd., and China National Heavy-duty Truck Group Co., Ltd. holds the entire issued share capital of Sinotruk (BVI) Limited, the controlling shareholder of the Company, and accordingly The rules are connected persons of the company.
Terms
The term of the construction service agreement will be from September 26, 2008 to December 31, 2009. Pursuant to the Construction Services Agreement, the parties agreed that Jinan Engineering will provide construction and project management services to the members of the Group. The scope of services includes, among others, project management of land construction, renovation, installation and network architecture, foundation engineering, structure and installation of various support facilities, and other projects that may be assigned by the Group's member companies.
Pricing
Jinan Engineering will provide construction and project management services to members of the Group on terms no less favourable than those provided by Jinan Engineering to independent third parties. The specific terms of the construction and project management services will be further determined by the parties in a separate agreement on a case by case basis. In general, construction and project management services payments must be paid according to the progress of specific construction projects. The consideration will be paid in cash and bills of exchange and funds will be disbursed from the Group's internal resources.
The consideration for the transaction under the Construction Services Agreement is based on (a) the price set by the relevant PRC country; or (b) if the transaction under the Construction Services Agreement does not have to follow the PRC national pricing, then the market price; or (c ) If the contracting parties fail to determine the market price of circulation, then a reasonable rate of profit is added at cost. The market price is determined by reference to, among other things, the price of an independent third party charged by Jinan Engineering for similar services. If the transaction prices under the Construction Services Agreements are to be followed by the prices of the relevant PRC countries, the parties shall adopt the prices set by the PRC countries when determining the consideration for the transactions under the Construction Services Agreement.
Upper limit
The proposed annual caps for the transactions under the Construction Services Agreement for each of the two years ending December 31, 2009 are RMB253,440,000 and RMB330,000,000, respectively. The proposed annual caps are based on the estimated construction projects to be carried out in consideration of the Group's overall technology improvement and production capacity enhancement projects, with particular reference to the estimated construction period, material costs and labour costs of the specific construction projects under the construction services agreement. . The Company will closely monitor the continuing connected transactions under the Construction Services Agreement and make timely adjustments in accordance with the Group's operations and development.
Reasons for signing a construction service agreement
The Construction Services Agreement was entered into by the Company as a master agreement to supervise and govern the construction works to be carried out in accordance with the Group's overall technological upgrading and capacity enhancement projects. The related construction projects carried out under these overall projects will be carried out by the manufacturers of various subsidiary companies of the Group, including Jinan Power, Jinan Bridge Box and Jinan Commercial Vehicle.
Jinan Power specializes in the development, production and sale of engines and parts; external measurement training and assessment; provision of kinetic energy (wind, hydro, electricity, steam, but only for supply rather than production); land and house leasing; logistics and storage services ( Does not include hazardous chemicals). Jinan Bridge Box specializes in the production and sale of automotive bridges and parts; mechanical processing; maintenance of machine tools and equipment; automobile production, technical consultation and after-sales services (except for projects requiring special licenses). Jinan Commercial Vehicle specializes in the research, development, manufacture and sale of automotive parts and components, industrial and construction machinery, agricultural vehicles, motorcycle parts, and plastic products; machining, forging, and car modification; refurbishment, leasing, wholesale, and retail machinery and equipment , hardware, electronic products and after-sales technical services; import and export (except for projects that require special licenses).
It is expected that the relevant construction projects under the Construction Services Agreement will benefit the Group through the implementation of technology enhancements and production capacity enhancements in its major subsidiaries, and the Group will be able to increase the production and sales of its heavy vehicles and further cater to the market. Demand, expanding market share and maintaining sustainable development.
The terms of the Construction Services Agreement were determined after arm's length negotiations between the Company and Jinan Engineering. The Directors (including the independent non-executive Directors) consider that the terms of the Construction Services Agreement are on normal commercial terms or on terms that are not inferior to those provided by an independent third party on the basis of prevailing local market conditions and are entered into in the ordinary and usual course of business of the Group. It is fair and reasonable and in the interests of the company and its shareholders as a whole.
The meaning of the Listing Rules
As of the date of this announcement, China Heavy-Duty Truck Group Co., Ltd. holds the entire issued share capital of Sinotruk (BVI) Limited, while Sinotruk (Britain Islands) Limited is the controlling shareholder of the company, which holds the The company has issued approximately 63.09% of the shares. Therefore, under the Listing Rules, China Heavy-Duty Truck Group Co., Ltd. is a connected person of the Company. Therefore, Jinan Engineering, a wholly-owned subsidiary of China National Heavy Truck Group Co., Ltd., is also a connected person of the Company. Therefore, the transaction under the Construction Services Agreement constitutes a continuing connected transaction of the company under Chapter 14A of the Listing Rules.
Reference is made to the announcement made by the Company on August 19, 2008 regarding the construction contract between Hong Kong Hao Jinan and Jinan Engineering. Pursuant to Rule 14A.25 of the Listing Rules, as Jinan Engineering is a party to both the Construction Contract and the Construction Services Agreement, and the scope of work under the Construction Contract and the Construction Services Agreement is similar, the construction contract and the Construction Services Agreement The transactions will be aggregated when calculating the relevant percentage rates. As each of the aggregate applicable percentage ratios (other than the profit ratio) for the transactions under the Construction Contract and Construction Services Agreement is more than 0.1% but less than 2.5%, the transactions under the Construction Services Agreement are subject to Rule 14A.34 of the Listing Rules. The scope of the application is therefore subject to the reporting and announcement requirements, but it is not subject to the relevant independent shareholders' approval requirements.
General matters
The Group specializes in researching and manufacturing heavy-duty vehicles and related major parts and components. The main business of Jinan Engineering is construction project management, decoration and construction engineering, installation and network architecture, foundation engineering, structure and installation of various support facilities.
The Construction Services Agreement and the transactions contemplated thereunder were approved by the board of directors on September 26, 2008. Both Mr. Ma Chunji, Mr. Wang Haotao and Mr. Wang Guangxi, the executive directors of the Company and China National Heavy Truck Group Co., Ltd., have abstained from voting.
Interpretation
In this announcement, unless the context otherwise requires, the following terms have the following meanings:
"Contact" means the meaning given by the Listing Rules
“China Heavy-Duty Truck Group Co., Ltd.†China National Heavy-Duty Truck Group Co., Ltd., a state-owned limited liability company formed according to Chinese law
“Company†China National Heavy Duty Truck (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange
“Construction Contract†means the construction contract entered into between Jinan Hong Kong Hao and Jinan Engineering on August 18, 2008. Details are set out in the announcement issued by the Company on August 19, 2008.
"Construction Service Agreement" means the construction engineering and project management service agreement entered into between the Company (for itself and on behalf of its subsidiaries) and Jinan Engineering on September 26, 2008, pursuant to which, Jinan Engineering agreed Provide construction and project management services to members of the Group
"Controlling Shareholders" means having the meaning given by the Listing Rules
"Director" means the director of the company
"The Group" means the Company and its subsidiaries
"Hong Kong" means Hong Kong Special Administrative Region of China
“Jinan Bridge Box†China National Heavy Duty Truck Group Jinan Bridge Box Co., Ltd., a company incorporated in the PRC with limited liability and an indirect non wholly-owned subsidiary of the Company
"Jinan Commercial Vehicle" refers to CNHTC Group Jinan Commercial Vehicle Co., Ltd., a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company.
“Jinan Engineering†China National Heavy Duty Group Jinan Engineering Project Management Co., Ltd., a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of China National Heavy Truck Group Co., Ltd.
“Jinan Ganghao†Jinan Hong Kong Hao Development Co., Ltd., a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company.
“Jinan Power†China National Heavy Duty Truck Group Jinan Power Co., Ltd., a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company.
"Listing Rules" means the Rules Governing the Listing of Securities on the Stock Exchange
"China" means People's Republic of China
"RMB" means the statutory currency of China
“Shares†ordinary shares of HK$0.10 each in the capital of the company
"Shareholder" means the shareholder at the time
"Stock Exchange" means The Stock Exchange of Hong Kong Limited