Pricing Policy. The pricing and payment terms of specific transactions under the Strategic Cooperation Framework Agreement shall be determined by arm’s length negotiations between Honghua Investment and its subsidiaries and ASIFL, and be determined based on normal commercial terms with reference to: (i) the prices of the same or similar equipment and products provided by Honghua Investment and its subsidiaries to Independent Third Parties over the same period for orders with comparable quantity and quality; (ii) where there are no such comparable orders, the prevailing market prices that are fair and reasonable for the same or similar equipment and products; and (iii) where there are neither comparable orders nor prevailing market prices mentioned above, the historical prices provided by Honghua Investment and its subsidiaries to Independent Third Parties for the same or similar equipment and products in the previous year. Honghua Investment and its subsidiaries will comply with its relevant internal pricing policies in the negotiation with ASIFL. In any event, the prices offered by Honghua Investment and its subsidiaries to ASIFL under the Strategic Cooperation Framework Agreement shall be no less favourable to the Group than the prices offered by Honghua Investment and its subsidiaries to Independent Third Parties. Honghua Investment and its subsidiaries will take the following measures to reach this end: (i) in the pre-sales quotation stage, the sales staff will refer to all relevant contracts signed by Honghua Investment and its subsidiaries with Independent Third Parties in the previous year to determine the quotations to ASIFL; (ii) during the contract review process, the finance department, technology department, legal department and related business departments will strictly review the pricing to ensure compliance with the pricing policy of the Strategic Cooperation Framework Agreement; and (iii) the prices and payment terms offered to ASIFL by Honghua Investment and its subsidiaries will be monitored on regular basis through quarterly assessments of the average prices and payment terms offered by Honghua Investment and its subsidiaries to Independent Third Parties under similar sales terms and conditions, and the market prices of the same or similar equipment and products. The following table sets out the relevant historical amount of the purchase made by ASIFL from Honghua Investment and its subsidiaries during the three years ended 31 December 2019 and the three months ended 31 March 2020: Unit: RMB10,000 For the year ended 31 December For the year ended31 December For the year ended 31 December For the three months ended 31 March Equipment and products 29,922 60,000 0 0 Annual Caps Proposed annual caps for the three years ending 31 December 2022 Unit: RMB10,000 For the year ending 31 December 2020 For the year ending 31 December 2021 For the year ending 31 December 2022 Equipment and products 40,000 30,000 30,000 The annual caps under the Strategic Cooperation Framework Agreement were determined by arm’s length negotiations between Honghua Investment and ASIFL based on the amount of historical transactions, and the Group’s operation and business needs, analysis of market demand, and business opportunities under discussion and project progress, which, in particular, include: (i) an overall analysis of the demand for drilling and exploiting equipment in the oil and gas industry under the current international oil price trends, domestic and international economic environment and the guidance of domestic shale gas development policies; (ii) the overall planning ideas and implementation plan based on the current and future principal business development of the Group; and (iii) the business development status and opportunities under discussion of the Group and ASIFL and ASIFL’s demands, etc. In the year ended 31 December 2017, ASIFL purchased equipment and products of RMB299.22 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2018, ASIFL purchased equipment and products of RMB600 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2019, considering its investment in the oil and gas industry, capital planning, rhythm control and other factors, ASIFL did not launch oil and gas industry-related projects and did not purchase equipment or products from Honghua Investment and its subsidiaries. Commencing from the year ending 31 December 2020, ASIFL will resume its purchase from Honghua Investment and its subsidiaries. The proposed annual cap for the year ending 31 December 2020 is based on the equipment needs of the end users of ASIFL with which ASIFL is under current or potential negotiations, Honghua Investment’s and its subsidiaries’ negotiation with ASIFL, ASIFL’s business plan with regard to the oil and gas industry, and the amount of intentional transactions between Honghua Investment and its subsidiaries as the sellers and ASIFL as the purchaser, being approximately RMB382.5 million. In the two years ending 31 December 2022, taking into account the favourable national policy for shale gas development, the market demands for drilling and exploiting equipment in the oil and gas industry are expected to be relatively stable. Due to the nature of its business and to control the potential risks arising from concentration on oil and gas industry, ASIFL plans to reduce the amount of its purchase from Honghua Investment and its subsidiaries in the two years ending 31 December 2022 by approximately 25%. The proposed annual caps for the two years ending 31 December 2022 were determined accordingly.
Appears in 1 contract
Sources: Purchase Framework Agreement
Pricing Policy. The pricing Charter and payment terms of specific transactions under the Strategic Cooperation Framework Agreement Related Fees shall be determined by arm’s length negotiations between Honghua Investment the parties at the time of placing the order with reference to the Charter and its subsidiaries Related Fees charged by Independent Third Party freight services providers of comparable services. All expenses related to cargo terminal operations (“Cargo Terminal Expenses”) at departure and ASIFLdestination airport are to be paid by the Group, and in the event that the relevant cargo terminal requested such expenses to be determined based directly settled by the relevant YTO Express Members, the relevant YTO Express Members will settle such amount on normal commercial terms with reference to: (i) the prices behalf of the same or similar equipment Group and products provided by Honghua Investment the Group will fully reimburse the relevant YTO Express Members for such expenses and its subsidiaries pay a handling fee, which is equivalent to Independent Third Parties over 5% of the same period for orders with comparable quantity and quality; (ii) where there are no such comparable orders, Cargo Terminal Expenses to the prevailing market prices that are fair and reasonable for relevant YTO Express Members. The relevant member of the same or similar equipment and products; and (iii) where there are neither comparable orders nor prevailing market prices mentioned above, Group which procure the historical prices provided by Honghua Investment and its subsidiaries to Independent Third Parties for the same or similar equipment and products in the previous year. Honghua Investment and its subsidiaries will comply with its relevant internal pricing policies in the negotiation with ASIFL. In any event, the prices offered by Honghua Investment and its subsidiaries to ASIFL services under the Strategic Cooperation Framework Master Charter Agreement shall be no less favourable to settle by ways of telegraphic transfer the Group than charter fee on a weekly basis, and the prices offered by Honghua Investment and its subsidiaries to Independent Third Partiesother related fees (including fuel surcharges) within five working days after the issuance of the relevant electronic bill. Honghua Investment and its subsidiaries will take the following measures to reach this end: (i) in the pre-sales quotation stage, the sales staff will refer to all relevant contracts signed by Honghua Investment and its subsidiaries with Independent Third Parties in the previous year to determine the quotations to ASIFL; (ii) during the contract review process, the finance department, technology department, legal department and related business departments will strictly review the pricing to ensure compliance with Under the pricing policy of the Strategic Cooperation Framework AgreementGroup, the Group will obtain quotation from at least one (or such other number as shall be determined by the majority of the independent non-executive Directors from time to time) Independent Third Party freight services providers and compare it with the terms offered by the relevant YTO Express Members for the provision of air freight charter services. The Group from time to time will assess the type of flight carrier needed including but not limited to model, size and maximum loading capacity of aircraft. Owning to the above prerequisites to fulfill the Group’s demand and need, there may be occasions whereby only one other air freight charter services provider offers the same air freight charter services as offered by the YTO Express Members for a particular route. As such, under such circumstances, the Group will at least obtain the quotation available in the market as comparison with the terms offered by the relevant YTO Express Members. For such exceptional circumstances, the Board is of the view that one quotation is sufficient in determining the Charter and Related Fees as such would be the only quotation available in the market at the material time. Under the prerequisites mentioned above, where more than one air freight charter services provider is available for a particular route, the Group will generally obtain quotation from at least two to three Independent Third Party freight services providers for comparison. The Group will also compare the track record and reputation of such Independent Third Party freight services provider against the relevant YTO Express Members’ track record and reputation. The Charter and Related Fees shall be determined by using the lower of (i) the Charter and Related Fees offered by the relevant YTO Express Members; and (iiiii) the prices and payment terms offered to ASIFL by Honghua Investment and its subsidiaries will be monitored on regular basis through quarterly assessments of the average prices and payment terms offered by Honghua Investment and its subsidiaries to quotation from Independent Third Parties under similar sales terms and conditions, and the market prices Party freight services providers of the same or similar equipment and products. The following table sets out the relevant historical amount of the purchase made by ASIFL from Honghua Investment and its subsidiaries during the three years ended 31 December 2019 and the three months ended 31 March 2020: Unit: RMB10,000 For the year ended 31 December For the year ended31 December For the year ended 31 December For the three months ended 31 March Equipment and products 29,922 60,000 0 0 Annual Caps Proposed annual caps for the three years ending 31 December 2022 Unit: RMB10,000 For the year ending 31 December 2020 For the year ending 31 December 2021 For the year ending 31 December 2022 Equipment and products 40,000 30,000 30,000 The annual caps under the Strategic Cooperation Framework Agreement were determined by arm’s length negotiations between Honghua Investment and ASIFL based on the amount of historical transactions, and the Group’s operation and business needs, analysis of market demand, and business opportunities under discussion and project progress, which, in particular, include: (i) an overall analysis of the demand for drilling and exploiting equipment in the oil and gas industry under the current international oil price trends, domestic and international economic environment and the guidance of domestic shale gas development policies; (ii) the overall planning ideas and implementation plan based on the current and future principal business development of the Group; and (iii) the business development status and opportunities under discussion of the Group and ASIFL and ASIFL’s demands, etc. In the year ended 31 December 2017, ASIFL purchased equipment and products of RMB299.22 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2018, ASIFL purchased equipment and products of RMB600 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2019, considering its investment in the oil and gas industry, capital planning, rhythm control and other factors, ASIFL did not launch oil and gas industry-related projects and did not purchase equipment or products from Honghua Investment and its subsidiaries. Commencing from the year ending 31 December 2020, ASIFL will resume its purchase from Honghua Investment and its subsidiaries. The proposed annual cap for the year ending 31 December 2020 is based on the equipment needs of the end users of ASIFL with which ASIFL is under current or potential negotiations, Honghua Investment’s and its subsidiaries’ negotiation with ASIFL, ASIFL’s business plan with regard to the oil and gas industry, and the amount of intentional transactions between Honghua Investment and its subsidiaries as the sellers and ASIFL as the purchaser, being approximately RMB382.5 million. In the two years ending 31 December 2022, taking into account the favourable national policy for shale gas development, the market demands for drilling and exploiting equipment in the oil and gas industry are expected to be relatively stable. Due to the nature of its business and to control the potential risks arising from concentration on oil and gas industry, ASIFL plans to reduce the amount of its purchase from Honghua Investment and its subsidiaries in the two years ending 31 December 2022 by approximately 25%. The proposed annual caps for the two years ending 31 December 2022 were determined accordinglycomparable services.
Appears in 1 contract
Sources: Master Service Agreement, Master Charter Agreement, Master It Services Agreement
Pricing Policy. Before placing a purchase order with the Buying Agents or the Vendors (as the case may be), the Group’s procurement department will compare the purchase price payable to the relevant Buying Agent or the Vendor for each purchase against prices for recovered paper or the Products (as the case may be) of comparable specifications quoted by at least two independent third party suppliers. The pricing Group will also take into account prices of recovered paper and payment pulp published by RISI in order to determine the purchase cost of recovered paper or the Products (as the case may be). Based on this, the Group will prepare price tables on a daily basis setting out the maximum allowable purchase price of recovered paper or the Products (as the case may be) at a particular time. The above price information will be gathered by the Group’s procurement department and will be approved by the head of procurement of the Group. The procurement department will place an order with the Buying Agent or the Vendor (as the case maybe) only if the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) for a specified specification of recovered paper or the Products under the terms of specific the Buying Agent Agreement or the Pulp Purchase Agreement (as the case may be) is no less favourable than those which are available from independent third party suppliers for relevant delivery dates. If the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) falls below the relevant maximum allowable price as set out in the price tables, the Group will proceed with such purchase. The relevant personnel of the business department of the Company will conduct regular checks on a monthly basis to review and assess whether the continuing connected transactions under the Strategic Cooperation Framework Buying Agent Agreement and the Pulp Purchase Agreement are conducted in accordance with the terms of the Buying Agent Agreement and the Pulp Purchase Agreement and will also regularly obtain updates on the market price of recovered paper and the Products for the purpose of considering if the price for a specific transaction is fair and reasonable and in accordance with the pricing policy. Such updates shall be determined obtained on a daily basis as part of its policy to prescribe the daily purchase price limit of the Group. For recovered paper, the updates would take into account prices for recovered paper of comparable specifications which are (i) published by arm’s length negotiations between Honghua Investment and its subsidiaries and ASIFLindependent third party suppliers, and be determined based on normal commercial terms with reference to: (ii) quoted by at least two independent third party suppliers. For the Products, updates would take into account (i) the prices quoted by independent third party suppliers for the Products; and (ii) the production cost for the Products having considered the prevailing market price of the same or recovered paper and pulp (both onshore and offshore) published by RISI reports. Both the sales team and the marketing team of the Group will on a monthly basis gather market intelligence by way of research and/or investigation to ascertain the quality of the recovered paper as compared to similar equipment products in the market and to ensure that the quality of the Products purchased from the Vendors is not lower than similar products provided by Honghua Investment available on the market. The Company will conduct semi-annual reviews of the transactions conducted under the Buying Agent Agreement and its subsidiaries the Pulp Purchase Agreement (i) to Independent Third Parties over consider effective implementation of the same period for orders with comparable quantity pricing policies and qualitythe payment methods; (ii) where there to identify management weaknesses, and (iii) to recommend improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective. Where any weaknesses are no such comparable ordersidentified, the prevailing market prices Company will take measures to address them as soon as practicable. The Company will conduct semi-annual evaluation of the balances of the Buying Agent Annual Caps and the Pulp Purchase Annual Caps. The independent non-executive Directors will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules. The auditor of the Company will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.56 of the Listing Rules. Considering the pricing policies and internal control measures outlined above, the Directors believe that the price determination procedures outlined above are sufficient to ensure that the transactions contemplated under the Buying Agent Agreement and the Pulp Purchase Agreement will be conducted on normal commercial terms, are fair and reasonable for and not prejudicial to the same or similar equipment interests of the Company and products; its minority shareholders. The Group is principally engaged in the business of large-scale paper manufacturing and (iii) where there are neither comparable orders nor prevailing market prices mentioned abovespecializes in the production of linerboard, corrugating medium and tissue paper. Recovered paper is one of the core raw materials of the Group in its manufacturing activities. In 2018, having balanced the risks associated with establishing its own recovered paper sourcing operations, the historical prices provided by Honghua Investment Group entered into the 2018 Buying Agent Agreement to engage the Buying Agents to source recovered paper from the United States, the United Kingdom and its subsidiaries continental Europe. The Group considered that such arrangement would be most cost-effective to Independent Third Parties for ensure the same or similar equipment and products continued supply of recovered paper. Such recovered paper purchased was imported to the Group’s manufacturing facilities in the previous yearPRC and in Southeast Asia as raw materials. Honghua Investment and its subsidiaries will comply with its relevant internal pricing policies in the negotiation with ASIFL. In any event, the prices offered by Honghua Investment and its subsidiaries to ASIFL under the Strategic Cooperation Framework Agreement shall be no less favourable to the Group than the prices offered by Honghua Investment and its subsidiaries to Independent Third Parties. Honghua Investment and its subsidiaries will take the following measures to reach this end: (i) in the pre-sales quotation stage, the sales staff will refer to all relevant contracts signed by Honghua Investment and its subsidiaries with Independent Third Parties in the previous year to determine the quotations to ASIFL; (ii) during the contract review process, the finance department, technology department, legal department and related business departments will strictly review the pricing to ensure compliance with the pricing policy of the Strategic Cooperation Framework Agreement; and (iii) the prices and payment terms offered to ASIFL by Honghua Investment and its subsidiaries will be monitored on regular basis through quarterly assessments of the average prices and payment terms offered by Honghua Investment and its subsidiaries to Independent Third Parties under similar sales terms and conditions, and the market prices of the same or similar equipment and products. The following table sets out the relevant historical amount of the purchase made by ASIFL from Honghua Investment and its subsidiaries during the three years ended 31 December 2019 and the three months ended 31 March 2020: Unit: RMB10,000 For the latest financial year ended 31 December 2020, the amount of recovered paper purchased (including agent fee) by the Group pursuant to the 2018 Buying Agent Agreement was approximately US$246 million (equivalent to approximately HK$1,922 million) representing approximately 17% of the Group’s total purchase of recovered paper in 2020, whilst the amount of recovered paper purchased directly from overseas independent suppliers amounted to approximately US$65 million (equivalent to approximately HK$506 million) representing approximately 5% of the Group’s total purchase of recovered paper in 2020. However, due to greater demand and awareness of environment and safety issues, the PRC government has implemented a number of new regulations on importing recovered paper. This has created difficulties for the Group on importing recovered paper from overseas in large volumes to support paper production in the PRC. In order to overcome such difficulties, the Group started using the Products as alternative raw materials in order to reduce the reliance on recovered paper and the Group has entered into the Master Agreement on 30 May 2019. Pursuant to the Master Agreement, each of Best Eternity, Ms. ▇▇▇ ▇▇▇▇▇▇▇ Man ▇▇▇ and ▇▇. ▇▇▇ Man ▇▇▇▇▇ agreed to maintain certain production capacities and/or supply of the Products to enable the Group to secure quality pulp board, pulp roll and related product sources in the market at reasonable price. For the year ended31 December For the latest financial year ended 31 December For the three months ended 31 March Equipment and products 29,922 60,000 0 0 Annual Caps Proposed annual caps for the three years ending 31 December 2022 Unit: RMB10,000 For the year ending 31 December 2020 For the year ending 31 December 2021 For the year ending 31 December 2022 Equipment and products 40,000 30,000 30,000 The annual caps under the Strategic Cooperation Framework Agreement were determined by arm’s length negotiations between Honghua Investment and ASIFL based on 2020, the amount of historical transactionsthe Products purchased by the Group from the Previous Vendors’ Group was approximately US$34 million (equivalent to approximately HK$267 million) representing approximately 36% of the Group’s total purchase of the Products in 2020, whilst the amount of Products purchased directly from independent suppliers amounted to approximately US$60 million (equivalent to approximately HK$472 million) representing approximately 64% of the Group’s total purchase of the Products in 2020. In January 2021, the PRC government implemented full import ban on recovered paper. As a result, the domestic supply of recovered paper in the PRC significantly tightened, driving up the prices of raw materials. In addition, demand for paper products has been further increased by the “replacement of plastic with paper” trend and the recovery of consumer market demand and accelerating industrial protection in the PRC. In response to such changes in the market, the Group continued to consolidate upstream resources and develop a vertical business model covering pulp-making and recovered paper recycling in order to integrate the industrial chain and ensure the supply of raw materials. The Group has also introduced new production capacities in countries such as Malaysia and Indonesia to cater for its business expansion. Since the full import ban, recovered paper purchased under the 2018 Buying Agent Agreement has been supplied to the new production plants in Southeast Asia. In order to maintain a constant supply of raw material for paper production, the Group entered into the Buying Agent Agreement after the expiry of the 2018 Buying Agent Agreement, and Vantage Dragon and the Vendors entered into the Pulp Purchase Agreement after the expiry of the Master Agreement. The Directors (other than the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser, ▇▇▇▇▇▇▇▇) are of the view that the terms of the Buying Agent Agreement and the Pulp Purchase Agreement are fair and reasonable and are on normal commercial terms, and the Group’s operation and business needs, analysis of market demand, and business opportunities under discussion and project progress, which, in particular, include: (i) an overall analysis entering into of the demand for drilling Buying Agent Agreement and exploiting equipment the Pulp Purchase Agreement is in the oil ordinary and gas industry under the current international oil price trends, domestic and international economic environment and the guidance usual course of domestic shale gas development policies; (ii) the overall planning ideas and implementation plan based on the current and future principal business development of the Group; and (iii) the business development status and opportunities under discussion of the Group and ASIFL and ASIFL’s demands, etc. In the year ended 31 December 2017, ASIFL purchased equipment and products of RMB299.22 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2018, ASIFL purchased equipment and products of RMB600 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2019, considering its investment is in the oil and gas industry, capital planning, rhythm control and other factors, ASIFL did not launch oil and gas industry-related projects and did not purchase equipment or products from Honghua Investment and its subsidiaries. Commencing from the year ending 31 December 2020, ASIFL will resume its purchase from Honghua Investment and its subsidiaries. The proposed annual cap for the year ending 31 December 2020 is based on the equipment needs best interests of the end users of ASIFL with which ASIFL is under current or potential negotiations, Honghua Investment’s Company and its subsidiaries’ negotiation with ASIFL, ASIFL’s business plan with regard to the oil and gas industry, and the amount of intentional transactions between Honghua Investment and its subsidiaries Shareholders as the sellers and ASIFL as the purchaser, being approximately RMB382.5 million. In the two years ending 31 December 2022, taking into account the favourable national policy for shale gas development, the market demands for drilling and exploiting equipment in the oil and gas industry are expected to be relatively stable. Due to the nature of its business and to control the potential risks arising from concentration on oil and gas industry, ASIFL plans to reduce the amount of its purchase from Honghua Investment and its subsidiaries in the two years ending 31 December 2022 by approximately 25%. The proposed annual caps for the two years ending 31 December 2022 were determined accordinglya whole.
Appears in 1 contract
Sources: Buying Agent Agreement
Pricing Policy. The pricing During the term of the 2021 UCS Property Management Services Master Agreement, the Group shall from time to time enter into the Specific Agreements with the Ultimate Controlling Shareholders and payment their associates (excluding CIFI Group) for the provision of relevant property management services in accordance with the terms of specific transactions the 2021 UCS Property Management Services Master Agreement. The Group adopts the following pricing policy to ensure that the terms offered to the Ultimate Controlling Shareholders and their associates (excluding CIFI Group) under the Strategic Cooperation Framework 2021 UCS Property Management Services Master Agreement shall be determined by arm’s length negotiations between Honghua Investment and its subsidiaries and ASIFL, and be determined based are on normal commercial terms with reference to: (i) the prices of the same or similar equipment and products provided by Honghua Investment and its subsidiaries to Independent Third Parties over the same period for orders with comparable quantity and quality; (ii) where there are no such comparable orders, the prevailing market prices that are fair and reasonable for the same or similar equipment and products; and (iii) where there are neither comparable orders nor prevailing market prices mentioned above, the historical prices provided by Honghua Investment and its subsidiaries to Independent Third Parties for the same or similar equipment and products in the previous year. Honghua Investment and its subsidiaries will comply with its relevant internal pricing policies in the negotiation with ASIFL. In any event, the prices offered by Honghua Investment and its subsidiaries to ASIFL under the Strategic Cooperation Framework Agreement shall not be no less favourable to the Group than the prices offered by Honghua Investment and its subsidiaries to Independent Third Parties. Honghua Investment and its subsidiaries will take the following measures to reach this end: (i) in the pre-sales quotation stage, the sales staff will refer to all relevant contracts signed by Honghua Investment and its subsidiaries with Independent Third Parties in the previous year to determine the quotations to ASIFL; (ii) during the contract review process, the finance department, technology department, legal department and related business departments will strictly review the pricing to ensure compliance with the pricing policy of the Strategic Cooperation Framework Agreement; and (iii) the prices and payment terms offered to ASIFL by Honghua Investment and its subsidiaries will be monitored on regular basis through quarterly assessments of the average prices and payment terms offered by Honghua Investment and its subsidiaries the Group to Independent Third Parties as follows:
(a) for all property management services except for those for unsold properties, car parking lots and the properties owned by the Ultimate Controlling Shareholders and their associates (excluding CIFI Group) under the 2021 UCS Property Management Services Master Agreement, the Group would charge the Ultimate Controlling Shareholders and their associates (excluding CIFI Group) at prices based on a standard price list prepared by the Group which is applicable to the Ultimate Controlling Shareholders and their associates (excluding CIFI Group) as well as Independent Third Parties after taking into account:
(i) the Group’s other contemporaneous transactions of similar sales services (in terms of the scope and conditionsrequirement of services, the location and condition of properties, and level of difficulty of management, etc.) carried out with Independent Third Parties; and
(ii) prices charged by other property management companies in the market prices PRC of the same or similar equipment and productscomparable transactions with independent third parties (if available). The following table sets out the relevant historical amount of the purchase made by ASIFL from Honghua Investment and its subsidiaries during the three years ended 31 December 2019 and the three months ended 31 March 2020: Unit: RMB10,000 For the year ended 31 December For the year ended31 December For the year ended 31 December For the three months ended 31 March Equipment and products 29,922 60,000 0 0 Annual Caps Proposed annual caps for the three years ending 31 December 2022 Unit: RMB10,000 For the year ending 31 December 2020 For the year ending 31 December 2021 For the year ending 31 December 2022 Equipment and products 40,000 30,000 30,000 The annual caps under the Strategic Cooperation Framework Agreement were determined by arm’s length negotiations between Honghua Investment and ASIFL standard price list shall be compiled based on the amount of historical transactionsabove by obtaining at least three transactions for reference by relevant operating departments, and reviewed and approved semi-annually by the heads of relevant operating departments, the chief financial officer and president of the Group to ensure the price list maintained by the Group reflecting the prevailing market conditions.
(b) for property management services for unsold properties, car parking lots and the properties owned by the Ultimate Controlling Shareholders and their associates (excluding CIFI Group), before determining the price for the provision of services, the Group would make reference to:
(i) the Group’s operation other contemporaneous transactions of similar services (in terms of the scope and business needsrequirement of services, analysis the location and condition of market demandproperties, and business opportunities under discussion and project progresslevel of difficulty of management, which, in particular, include: (ietc.) an overall analysis of the demand for drilling and exploiting equipment in the oil and gas industry under the current international oil price trends, domestic and international economic environment and the guidance of domestic shale gas development policies; carried out with Independent Third Parties;
(ii) prices charged by other property management companies in the overall planning ideas and implementation plan based PRC of comparable transactions with independent third parties; and
(iii) guidance prices issued by the government in this connection (if any) depending on the current location of the property project. After the relevant information is collected, the marketing department of the Group would determine a price to be offered to the Ultimate Controlling Shareholders and future principal business development their associates (excluding CIFI Group) which would not be less than the prices offered to Independent Third Parties by the Group. Relevant information together with the Specific Agreement will be submitted to the heads of the marketing department and the accounting department of the Group; , and (iii) the business development status and opportunities under discussion president of the Group and ASIFL and ASIFL’s demands, etc. In the year ended 31 December 2017, ASIFL purchased equipment and products of RMB299.22 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2018, ASIFL purchased equipment and products of RMB600 million from Honghua Investment and its subsidiaries. In the year ended 31 December 2019, considering its investment in the oil and gas industry, capital planning, rhythm control and other factors, ASIFL did not launch oil and gas industry-related projects and did not purchase equipment or products from Honghua Investment and its subsidiaries. Commencing from the year ending 31 December 2020, ASIFL will resume its purchase from Honghua Investment and its subsidiaries. The proposed annual cap for the year ending 31 December 2020 is based on the equipment needs of the end users of ASIFL with which ASIFL is under current or potential negotiations, Honghua Investment’s and its subsidiaries’ negotiation with ASIFL, ASIFL’s business plan with regard to the oil and gas industry, and the amount of intentional transactions between Honghua Investment and its subsidiaries as the sellers and ASIFL as the purchaser, being approximately RMB382.5 million. In the two years ending 31 December 2022, taking into account the favourable national policy for shale gas development, the market demands for drilling and exploiting equipment in the oil and gas industry are expected to be relatively stable. Due to the nature of its business and to control the potential risks arising from concentration on oil and gas industry, ASIFL plans to reduce the amount of its purchase from Honghua Investment and its subsidiaries in the two years ending 31 December 2022 by approximately 25%. The proposed annual caps for the two years ending 31 December 2022 were determined accordinglyapproval.
Appears in 1 contract