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Great Wall Motor Co., Ltd
GREAT WALL MOTOR COMPANY LIMITED*
(a company limited by shares incorporated in the people’s Republic of China)
(Stock Code: 2333)
Notice
Renewal of continuing connected transactions
Reference is made to the announcements of the company dated February 20, 2019, June 19, 2020 and January 15, 2021 regarding certain continuing related party transactions between the group and Great Wall holdings between 2019 and 2021. The group will continue to carry out such transactions from 2022 to 2024. Therefore, the relevant continuous connected transactions must be renewed accordingly in accordance with the Hong Kong listing rules. The board of directors is pleased to announce that on December 31, 2021, the company entered into a framework agreement with great wall holdings, involving a number of continuing connected transactions, including (I) the group’s purchase of products from Great Wall holdings; (II) the group sells products to Great Wall holdings; (III) the group purchases services and services from Great Wall holdings; (I V) the group provides services to Great Wall holdings; And (V) the Group leases from Great Wall holdings. Great Wall holdings is a company in which Mr. Wei Jianjun, chairman of the company, holds 99%. Meanwhile, the controlling shareholder of the company, innovation Great Wall, holds 55.38% of the issued share capital of the company, while great wall holdings holds 62.854% of the equity of innovation Great Wall. Therefore, Great Wall holdings is a connected person of the company (as defined in the Hong Kong Listing Rules). Since one or more applicable percentage ratios (except profit ratio) of sales of products, procurement services, provision of services and leasing (long-term lease and short-term lease) transactions under the framework agreement are higher than 0.1% but lower than 5%, such continuous connected transactions shall comply with the requirements of reporting, announcement and annual review under Chapter 14A of the Hong Kong listing rules, However, it is exempted from the requirements approved by independent shareholders. Since one or more applicable percentage rates (except profit ratio) of the purchased products transactions under the framework agreement are higher than 5%, the purchased products transactions shall comply with the requirements on reporting, annual review, announcement and approval of independent shareholders under Chapter 14A of the Hong Kong listing rules. A committee of independent directors has been established to advise independent shareholders on the transaction of purchased products and its proposed annual ceiling. The company appoints Jialin capital as an independent financial adviser to advise the independent board committee and independent shareholders. A copy containing (a) further details of the procurement transaction and its proposed ceiling; (b) Letter of opinion from the independent financial adviser to the independent board committee and independent shareholders; And (c) the Circular of the recommendation letter from the independent board committee to the independent shareholders is expected to be sent to the shareholders on or before January 21, 2022.
Reference is made to the announcements of the company dated February 20, 2019, June 19, 2020 and January 15, 2021 regarding certain continuing related party transactions between the group and Great Wall holdings between 2019 and 2021. The group will continue to carry out such transactions from 2022 to 2024. Therefore, the relevant continuous connected transactions must be renewed accordingly in accordance with the Hong Kong listing rules. Framework agreement on December 31, 2021, the company and Great Wall holdings entered into a framework agreement on the purchase of products, sales of products, procurement services, provision of services and leasing of the group. The contracting parties are the company (for itself and its subsidiaries) and Great Wall Holdings (for itself and its subsidiaries and contacts). The term of the framework agreement is from January 1, 2022 to December 31, 2024. Transaction content according to the terms of the framework agreement, the company shall conduct the following transactions with great wall Holdings: (I) purchase products from Great Wall Holdings (mainly including power battery assembly, hydropower, materials and steam); (II) sell products to Great Wall Holdings (mainly including complete vehicles, raw materials, equipment, station appliances, welding production line, materials around robots, parts, steam, etc.); (III) procurement services from Great Wall Holdings (mainly including entrusted testing, entrusted processing, hazardous waste disposal, direct power purchase business services, logistics, warehousing services, greening and maintenance services, bidding services, transportation services, software development services, technology development services, management and decoration of the company’s expert building, etc.); (IV) provide services to Great Wall Holdings (mainly including test and inspection, vehicle maintenance, consulting services, operation and maintenance services, expansion and training services, legal services, software development services, technical consulting services, warehousing, transportation and packaging services, logistics and transportation, etc.); And (V) leasing from Great Wall Holdings (leasing houses, equipment, sites, vehicles, etc.).
The framework agreement is concluded on general commercial terms. The details of the transactions to be carried out under the framework agreement, such as the specific requirements for purchasing products, selling products, purchasing services, providing services and leasing (including but not limited to specifications, quantity, price, quality standards and guarantees, settlement methods, delivery methods, etc.), will be determined by the relevant parties in the specific agreement to be concluded in accordance with the principles contained in the framework agreement. In addition, according to the framework agreement, the group has the right to choose suppliers by itself. The price payable by the group to Great Wall holdings and its subsidiaries and contacts shall not be higher than the price charged by an independent third party to the group for supplying similar products or services on similar terms. The selling price of products or services will not be lower than the price applicable to the company’s sales of comparable products or services of comparable quality to independent third parties. Pricing principle according to the framework agreement, the pricing principles of the transactions such as purchasing products, selling products, purchasing services, providing services and leasing between the group and Great Wall holdings shall comply with the requirements of relevant laws, regulations and listing rules, With reference to the current market price charged by the company for purchasing or providing similar products and services from independent third parties in the daily business process in accordance with normal commercial terms, it shall be determined according to the principles of fairness and reasonableness and general commercial terms:
Transaction category pricing principle
The group purchases products from Great Wall holdings. If the product has the pricing or guidance price published by the government department, the company will adopt the pricing or guidance price published by the government department when purchasing the product from Great Wall holdings. If there is no government pricing or guidance price for the product, the company will determine the purchase price through public bidding, or the business department of the company will review and compare the quotations of at least two identical or comparable products according to industry standards, market conditions and if feasible, and finally negotiate with great wall holdings to determine the purchase price.
The group sells products to Great Wall holdings. If the product has a pricing or guidance price published by the government department, the sales price will adopt the price. If there is no government pricing or guidance price for the product, the company will determine and negotiate according to the general commercial terms in the interests of the company with reference to the current fair market price of comparable products, and the price at which the company sells the product will not be lower than the above fair market price range.
The terms of the product sales contract (including price, sales policy, etc.) will not be better than those applicable to the company’s sales of comparable products of comparable quality to independent third parties.
Transaction category pricing principle
The group purchases services from Great Wall holdings. The company determines the transaction price through public bidding, or the business department of the company reviews and compares the quotations of at least two identical or comparable products with reference to industry standards, market conditions, the company’s business strategy and, if feasible, negotiate with great wall holdings and finally determine the transaction price.
The group provides services to Great Wall holdings. After referring to the current fair market price of comparable services, the company will determine and negotiate according to the general commercial terms in line with the interests of the company. The price of services provided by the company will not be lower than the above fair market price range.
The Group leases from Great Wall holdings, and the company determines the transaction price through public bidding, or the business department of the company reviews and compares the quotation of at least two identical or comparable products with reference to industry standards, market conditions and the company’s business strategy, if feasible, and negotiates with Changcheng holdings to finally determine the transaction price.
The transactions to be conducted under the framework agreement will be conducted at any time in compliance with and in accordance with the listing rules and the guidelines, rules and regulations of relevant regulatory authorities. Proposed upper limit and historical amount: the following table sets out the proposed annual upper limit of the group and Great Wall holdings for the three years ended December 31, 2024: unit: RMB 10000 for the year ended December 31
Category 2022 2023 2024 purchased products 215456628162620603 sold products 212155318735435928 purchased services 975939076491607 provided services 13780113614770 lease (short term) (note) [91235 [133421 [131076 lease (long term) (note) 12661527691683 note: according to the accounting standards for Business Enterprises No. 21 – lease revised by the Ministry of Finance in 2018 , the group’s leasing transactions under the framework agreement include long-term leasing and short-term leasing. Long term leases refer to leases with a lease term of more than 12 months, while short-term leases refer to leases with a lease term of 12 months or less.
According to the accounting standards for Business Enterprises No. 21 – leasing revised by the Ministry of finance of the people’s Republic of China in 2018, as the lessee of long-term leasing transactions under the framework agreement, the asset lease right within the lease term of the long-term lease shall be recognized as the right to use asset. The group is required to set an annual cap on the value of the right to use assets involved in the long-term lease entered into in the framework agreement.
Unit: RMB 10000 for the year ended December 31
2021 category 2019 January November 2020 purchased products 94089.18175433.75316671.95 sales products 30118.2324438.4145831.32 purchase services
