Beijing North Star : CONNECTED TRANSACTION IN RELATION TO ENTERING INTO GENERAL CONSTRUCTION CONTRACT AND TEMPORARY WORK CONSTRUCTION CONTRACT

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CONNECTED TRANSACTION IN RELATION TO

ENTERING INTO GENERAL CONSTRUCTION CONTRACT AND TEMPORARY WORK CONSTRUCTION CONTRACT

On 10 December 2019, Changsha Binchen, a subsidiary of the Company (as the principal) entered into the General Construction Contract with CCSEB (as the contractor) in respect of the construction of the Changsha Project, pursuant to which CCSEB agreed to undertake the construction of the Changsha Project, be responsible for the civil works, installation and construction, water supply and drainage, fire protection, electrical engineering and other works of each segment under the Changsha Project.

On 25 October 2019, Changsha Binchen (as the principal) entered into the Temporary Work Construction Contract with CCSEB First Company (as the contractor) in respect of the construction of the real estate sales center of the Changsha Project, pursuant to which CCSEB First Company agreed to undertake the construction of the Temporary Work of the real estate sales center of the Changsha Project, and be responsible for the civil works, installation and construction, water supply and drainage, fire protection, electrical engineering and other works under the Temporary Work.

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IMPLICATIONS UNDER THE LISTING RULES

CCSEB is a substantial shareholder of Hangzhou North Star, a subsidiary of the Company, and CCSEB First Company is a wholly-owned subsidiary of CCSEB. Therefore, CCSEB and CCSEB First Company are connected persons at subsidiary level of the Company. Accordingly, the transactions contemplated under the General Construction Contract and the Temporary Work Construction Contract constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios calculated on an aggregated basis pursuant to Rule 14.07 of the Listing Rules exceed 1% but are less than 5%, the transactions contemplated under the General Construction Contract and the Temporary Work Construction Contract are subject to the reporting and announcement requirements but exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.76 of the Listing Rules.

1. GENERAL CONSTRUCTION CONTRACT

On 10 December 2019, Changsha Binchen, a subsidiary of the Company, entered into the General Construction Contract with CCSEB in respect of the construction of the Changsha Project. The principal terms of the General Construction Contract are summarised as follows:

Date:	10 December 2019
Parties:	(i) Changsha Binchen, as the principal
	(ii) CCSEB, as the contractor
Project scope:	Pursuant to the requirements under the General
	Construction Contract, CCSEB is responsible for
	the civil works, installation and construction, water
	supply and drainage, fire protection, electrical
	engineering and other works of each segment under
	the Changsha Project, with a GFA of 145,405.38
	square meters.
Contract period:	1,000 days

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Construction contract price:	T h e G r o u p i n v i t e d p u b l i c t e n d e r f o r t h e
	construction works under the General Construction
	Contract, and selected CCSEB as the tender winner
	after conducting relevant evaluation procedures
	and taking into consideration of various factors,
	including technical experience, professional
	qualifications, business reputation, project
	management abilities of all the tenderers, total
	expenses and other relevant factors.
	The total contract price under the General
	C o n s t r u c t i o n C o n t r a c t w a s a p p r o x i m a t e l y
	RMB383,068,637.59, which was determined
	on arm's length basis after considering (i) all
	services required by Changsha Binchen in respect
	of the Changsha Project and (ii) relevant design,
	procurement and prevailing market conditions of
	each construction project. The Board is of the view
	that the total contract price is fair and reasonable.
	The total contract price will be funded by internal
	resources of the Group.
Payment terms:	The total contract price shall be payable on a
	monthly basis based on construction progress.
	However, after the construction project is
	completed, accepted and settled, the payment
	made by Changsha Binchen to CCSEB shall not
	exceed 97% of the total settlement amount, and the
	remaining 3%, being the quality guarantee deposit,
	shall be paid upon expiry of the defect liability
	period.
Performance guarantee:	Within seven days after entering into the General
	Construction Contract, CCSEB shall submit to
	Changsha Binchen a bank performance guarantee
	in an aggregate amount equivalent to 10% of
	the contract price and in the form as required by
	Changsha Binchen.

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2. TEMPORARY WORK CONSTRUCTION CONTRACT

On 25 October 2019, Changsha Binchen entered into the Temporary Work Construction Contract with CCSEB First Company in respect of the construction of the real estate sales center of the Changsha Project. The principal terms of the Temporary Work Construction Contract are summarised as follows:

Date:	25 October 2019
Parties:	(i) Changsha Binchen, as the principal
	(ii) CCSEB First Company, as the contractor
Project scope:	Pursuant to the requirements under the Temporary
	Work Construction Contract, CCSEB First
	Company shall undertake the construction of the
	Temporary Work of the real estate sales center of
	the Changsha Project, and be responsible for the
	civil works, installation and construction, water
	supply and drainage, fire protection, electrical
	engineering and other works under the Temporary
	Work, with a GFA of 771.98 square meters.
Contract period:	25 days

Construction contract price: After conducting internal selection procedures and taking into consideration of various factors including technical experience, professional qualifications, business reputation and project management competence of all the candidates, total expenses and other relevant factors, the Group selected CCSEB First Company as the constructor of the Temporary Work.

The contract price under the Temporary Work C o n s t r u c t i o n C o n t r a c t w a s a p p r o x i m a t e l y RMB2,169,900.00, which was determined on arm's length basis after considering (i) all services required by Changsha Binchen in respect of the Temporary Work and (ii) prevailing market conditions of the construction project involved in the Temporary Work. The Board is of the view that the contract price is fair and reasonable.

The contract price will be funded by internal resources of the Group.

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Payment terms:	The contract price shall be payable based on
	construction progress . However, after the
	construction project is completed, accepted and
	settled, the payment made by Changsha Binchen
	to CCSEB First Company shall not exceed 97% of
	the total settlement amount, and the remaining 3%,
	being the quality guarantee deposit, shall be paid
	upon expiry of the defect liability period.

3. REASONS FOR AND BENEFITS OF ENTERING INTO OF THE GENERAL CONSTRUCTION CONTRACT AND THE TEMPORARY WORK CONSTRUCTION CONTRACT

It is within the ordinary course of business of the Group to further the construction of the Changsha Project and develop properties and build the supporting real estate sales center on the Changsha Land Lot. The abovementioned General Construction Contract is mainly in relation to the property development of the Changsha Project and the relevant properties will be offered for sale upon completion. After due and careful consideration and comprehensive evaluation of the tenderers in terms of project quotation, qualification, experience and project quality, the Group selected CCSEB as the general contractor of the Changsha Project in accordance with relevant laws; while the Temporary Work Construction Contract is mainly in relation to the construction of the real estate sales center of the Changsha Project and will offer a suitable sales premise for the abovementioned properties. After prudent internal selection process, the Company selected CCSEB First Company as the constructor of the Temporary Work of the real estate sales center on the Changsha Land Lot. As wholly-owned subsidiaries of CSCEC (one of the top 500 enterprises in the world), both CCSEB and CCSEB First Company possess special-grade qualification as general contractor for construction of housing projects issued by the Ministry of Housing and Urban-Rural Development of the People's Republic of China. The Group is of the view that, entering into of the General Construction Contract and the Temporary Work Construction Contract is vital to the advancement of the Changsha Project and enables the Company to benefit from the development of its principal business.

The Directors, including independent non-executive Directors, have confirmed that the terms of the General Construction Contract and the Temporary Work Construction Contract are fair and reasonable, and the transactions contemplated thereunder are on normal commercial terms or better in the ordinary and usual course of business of the Group, and in the interests of the Company and its shareholders as a whole.

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No Director has any material interest in the transactions contemplated under the General Construction Contract and the Temporary Work Construction Contract.

1. IMPLICATIONS UNDER THE LISTING RULES
   CCSEB is a substantial shareholder of Hangzhou North Star, a subsidiary of the Company, and CCSEB First Company is a wholly-owned subsidiary of CCSEB. Therefore, CCSEB and CCSEB First Company are connected persons at subsidiary level of the Company. Accordingly, the transactions contemplated under the General Construction Contract and the Temporary Work Construction Contract constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios calculated on an aggregated basis pursuant to Rule 14.07 of the Listing Rules exceed 1% but are less than 5%, the transactions contemplated under the General Construction Contract and the Temporary Work Construction Contract are subject to the reporting and announcement requirements but exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.76 of the Listing Rules.
2. GENERAL INFORMATION
   The Company is principally engaged in development properties and investment properties (including hotels). Changsha Binchen is principally engaged in the development of properties in Changsha, the PRC.
   CCSEB is principally engaged in businesses such as general contracting of housing construction, infrastructure, industrial installation and engineering design.
   CCSEB First Company is principally engaged in businesses such as fabrication of steel structure, steel template, steel plate, metal movable house and fabrication of concrete components; contracting of various general industrial and civil engineering construction and installation; undertaking municipal engineering, decoration engineering; elevator installation; metal doors and windows and radiators; technical consulting; general contracting, construction, installation, technical consulting and project management of overseas construction and civil engineering.

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6. DEFINITIONS
"Board"	the board of Directors of the Company;
"CCSEB"	China Construction Second Engineering Bureau
	Ltd., a company incorporated in the PRC;
"CCSEB First Company"	CCSEB First Construction Engineering Co., Ltd.
	( 中 建 二 局 第 一 建 築 工 程 有 限 公 司), a
	company established in the PRC and a wholly-
	owned subsidiary of CCSEB;
"Changsha Binchen"	Changsha Binchen Real Estate Co. Limited ( 長 沙
	濱 辰 置 業 有 限 公 司), a company established
	in the PRC and a wholly-owned subsidiary of the
	Company;
"Changsha Land Lot"	the land lot No. 077 located at the southeast corner
	of the intersection of Changwang Road and Yuehua
	Road, Yuelu District, Changsha City;
"Changsha Project"	the construction and installation works on
	Changsha Land Lot; and
"Company"	Beijing North Star Company Limited ( 北 京 北
	辰 實 業 股 份 有 限 公 司), a sino-foreign joint
	venture joint stock limited company incorporated
	in the PRC, whose A shares and H shares are listed
	and traded on the Shanghai Stock Exchange and
	the Stock Exchange respectively;
"connected person(s)"	has the meaning ascribed to it under the Listing
	Rules;
"Director(s)"	the directors of the Company;
"General Construction	t h e G e n e r a l C o n t r a c t i o n C o n t r a c t o n t h e
Contract"	Construction and Installation Works on the Land
	Lot No. 077 《( 077 號 地 塊 項 目 建 安 工 程 施 工
	總 承 包 合 同 》) entered into between Changsha
	Binchen (as principal) and CCSEB (as contractor)
	in respect of the Changsha Project dated 10
	December 2019, the details of which are set out
	in the section headed "General Construction
	Contract" in this announcement;

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"Group"	the Company and its subsidiaries;
"Hangzhou North Star"	Hangzhou North Star Real Estate Co., Limited ( 杭
	州 北 辰 置 業 有 限 公 司), a company established
	in the PRC and a wholly-owned subsidiary of the
	Company;
"Hong Kong"	the Hong Kong Special Administrative Region of
	the PRC;
"Listing Rules"	the Rules Governing the Listing of Securities on
	the Stock Exchange;
"PRC"	the People's Republic of China, which for the
	purpose of this announcement excludes Hong
	Kong, the Macau Special Administrative Region
	and Taiwan;
"RMB"	Renminbi, the lawful currency of the PRC;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Temporary Work"	the temporary work of the real estate sales center
	of the Changsha Project at the southeast corner of
	the intersection of Changwang Road and Yuehua
	Road, Yuelu District, Changsha City;
"Temporary Work	the Contract on the Temporary Work of the Real
Construction Contract"	Estate Sales Center of the Project at the Land Lot
	No. 077 《( 077 號 地 塊 項 目 售 樓 部 臨 建 工
	程 施 工 合 同 》) entered into between Changsha
	Binchen (as principal) and CCSEB First Company
	(as contractor) in respect of the Temporary Work
	dated 25 October 2019, the details of which are
	set out in the section headed "Temporary Work
	Construction Contract" in this announcement;
"%"	Percentage.
	By order of the Board
	BEIJING NORTH STAR COMPANY LIMITED
	GUO Chuan
	Executive Director and Company Secretary

Beijing, the PRC, 10 December 2019

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As at the date of this announcement, the Board comprises nine directors, of whom six are executive directors, namely, Mr. HE Jiang-Chuan, Mr. LI Wei-Dong, Ms. LI Yun, Mr. CHEN De-Qi, Ms. ZHANG Wen-Lei and Mr. GUO Chuan and three are independent non-executive directors, namely, Mr. FU Yiu-Man, Mr. DONG An-Sheng and Mr. WU Ge.

Should there be any differences between the Chinese and English versions of this announcement, the Chinese version shall prevail.

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