CECEP COSTIN NEW MATERIALS GROUP LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
中國節能海東青新材料集團有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 2228)As the 2013 CECEP Framework Agreement has expired on 31 December 2015, on 11 January 2016, the PRC Subsidiaries entered into the CECEP Framework Agreement with CECEP to renew the terms and conditions of the transactions contemplated thereunder. Pursuant to the CECEP Framework Agreement, the PRC Subsidiaries agreed to sell to the CECEP Group, and CECEP agreed to procure the CECEP Group to purchase from the PRC Subsidiaries, non-woven materials, filtration materials and recycled chemical fibres, for a term of three years from 1 January 2016 to 31 December 2018. No transaction contemplated under the CECEP Framework Agreement had been entered into for the period from 1 January 2016 up to the date of this announcement. The annual cap for the transactions contemplated under the CECEP Framework Agreement is RMB10,000,000 for each of the three financial years ending 31 December 2016, 2017 and 2018, respectively.
As at the date of this announcement, Hong Kong Rong An is a controlling shareholder of the Company entitled to exercise or control the exercise of approximately 68.7% of the voting rights at general meetings of the Company and thus a connected person of the Company pursuant to the Listing Rules. CECEP is the holding company of Hong Kong Rong An. Therefore, CECEP is an associate of Hong Kong Rong An and a connected person of the Company pursuant to the Listing Rules. Accordingly, the transactions contemplated under the CECEP Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As disclosed in the Company's announcement dated 21 December 2015, on 21 December 2015, the PRC Subsidiaries entered into the Billion Framework Agreement with Billion Fujian, pursuant to which (a) the PRC Subsidiaries agreed to purchase from Billion Fujian, and Billion Fujian agreed to sell to the PRC Subsidiaries, polyester filament yarns and waste polyester filament
yarns; and (b) Billion Fujian agreed to purchase from the PRC Subsidiaries, and the PRC Subsidiaries agreed to sell to Billion Fujian, non-woven materials, for a term of three years from 1 January 2016 to 31 December 2018. Hong Kong Rong An is a controlling shareholder of Billion Industrial, which is the holding company of Billion Fujian. Therefore, Billion Fujian is an associate of Hong Kong Rong An and a connected person of the Company pursuant to the Listing Rules.
As CECEP and Billion Fujian are parties connected with one another and the transactions under the CECEP Framework Agreement and the Billion Framework Agreement are of similar nature, the transactions under the CECEP Framework Agreement and the Billion Framework Agreement are required to be aggregated for the purpose of assessing the compliance obligations under Chapter 14A of the Listing Rules. Since the applicable percentage ratios (as defined in the Listing Rules) in respect of the transactions contemplated under the CECEP Framework Agreement and the Billion Framework Agreement (in aggregate) on an annual basis are greater than 0.1% but less than 5%, the transactions under the CECEP Framework Agreement and the Billion Framework Agreement are only 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.
Reference is made to the announcement of the Company dated 6 March 2013 in relation to the 2013 CECEP Framework Agreement. As the 2013 CECEP Framework Agreement has expired on 31 December 2015, on 11 January 2016, the PRC Subsidiaries entered into the CECEP Framework Agreement with CECEP to renew the terms and conditions of the transactions contemplated thereunder.
THE CECEP FRAMEWORK AGREEMENT
Date
11 January 2016
Parties
CECEP, as purchaser
Xinhua Co., Gerfalcon Fujian and Gerfalcon Jinjiang, as sellers
Term
For a period commencing from 1 January 2016 and ending on 31 December 2018 (both days inclusive). No transaction contemplated under the CECEP Framework Agreement had been entered into for the period from 1 January 2016 up to the date of this announcement.
Nature of the transactionsPursuant to the CECEP Framework Agreement, the PRC Subsidiaries agreed to sell to the CECEP Group, and CECEP agreed to procure the CECEP Group to purchase from the PRC Subsidiaries, non- woven materials, filtration materials and recycled chemical fibres.
Pursuant to the CECEP Framework Agreement, the PRC Subsidiaries and the relevant CECEP Group company shall enter into a separate agreement for each purchase order to set out the transaction details. The terms of the separate agreements shall be on normal commercial terms and no less favourable than those available from independent third parties of the Group. The price of products shall be determined by arm's length negotiation between the relevant parties, with reference to the prevailing market price at the time when the separate agreement is entered into. The prevailing market price means the price of the same or similar products the PRC subsidiaries sell to independent third parties during the ordinary course of business on normal commercial terms. The PRC Subsidiaries shall make reference to comparable deals with independent third parties for the same period when determining the market price for any product transaction under the CECEP Framework Agreement.
To ensure that the prices and payment terms of relevant products under the CECEP Framework Agreement are not less favourable than those offered to independent third parties, the Group will generally monitor the prices and payment terms of the relevant products offered by the PRC Subsidiaries to its independent third-party customers on a regular basis.
The parties agreed that the sale and purchase of the products under the CECEP Framework Agreement shall be conducted in compliance with the applicable laws and regulations, the parties' business needs and their own approval conditions and procedures and on an arm's length basis. Therefore, the PRC Subsidiaries shall not be obliged to accept any order from the CECEP Group for the products on terms and conditions that are less favourable to the Group than those agreed between the Group and its other independent third-party customers.
The historical transaction amounts between the PRC Subsidiaries and the CECEP Group in respect of the sales of products pursuant to the 2013 CECEP Framework Agreement were as follows:
For the financial year ended 31 December 2013 Approximately RMB787,000 RMB150,000,000 For the financial year ended 31 December 2014 Approximately RMB349,000 RMB220,000,000 For the financial year ended 31 December 2015 Nil RMB260,000,000
Annual capsThe annual cap under the CECEP Framework Agreement is RMB10,000,000 for each of the three financial years ending 31 December 2016, 2017 and 2018, respectively.
The annual caps for the transactions contemplated under the CECEP Framework Agreement were determined based on (a) the historical sale and purchase quantities between the parties; (b) the current market price of the products to be sold by the PRC Subsidiaries; (c) the expected increase in the average market price of the relevant products to be sold during the term of the CECEP Framework Agreement; and (d) the estimated demand of the CECEP Group for the products during the term of the CECEP Framework Agreement.
The Group's principal activities are the manufacturing and sales of non-woven materials, filtration materials, and recycled chemical fibres. The entering into of the CECEP Framework Agreement will enable the Group to expand its customer base and enhance its revenue and profits. Further, this will also enhance business cooperation between the Group and the CECEP Group.
As at the date of this announcement, Hong Kong Rong An is a controlling shareholder of the Company entitled to exercise or control the exercise of approximately 68.7% of the voting rights at general meetings of the Company and thus a connected person of the Company pursuant to the Listing Rules. CECEP is the holding company of Hong Kong Rong An. Therefore, CECEP is an associate of Hong Kong Rong An and a connected person of the Company pursuant to the Listing Rules. Accordingly, the transactions contemplated under the CECEP Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As disclosed in the Company's announcement dated 21 December 2015, on 21 December 2015, the PRC Subsidiaries entered into the Billion Framework Agreement with Billion Fujian, pursuant to which (a) the PRC Subsidiaries agreed to purchase from Billion Fujian, and Billion Fujian agreed to sell to the PRC Subsidiaries, polyester filament yarns and waste polyester filament yarns; and (b) Billion Fujian agreed to purchase from the PRC Subsidiaries, and the PRC Subsidiaries agreed to sell to Billion Fujian, non-woven materials, for a term of three years from 1 January 2016 to 31 December 2018. Hong Kong Rong An is a controlling shareholder of Billion Industrial, which is the holding company of Billion Fujian. Therefore, Billion Fujian is an associate of Hong Kong Rong An and a connected person of the Company pursuant to the Listing Rules.
As CECEP and Billion Fujian are parties connected with one another and the transactions under the CECEP Framework Agreement and the Billion Framework Agreement are of similar nature, the transactions under the CECEP Framework Agreement and the Billion Framework Agreement are required to be aggregated for the purpose of assessing the compliance obligations under Chapter 14A of the Listing Rules. Since the applicable percentage ratios (as defined in the Listing Rules) in respect
CECEP COSTIN New Materials Group Limited issued this content on 2016-01-11 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-11 11:33:21 UTC
Original Document: http://www.ir.costingroup.com/attachment/2016011119170100002409134_en.pdf
