China International Capital Corporation Limited(601995)
About Guangdong Provincial Expressway Development Co.Ltd(000429)
Verification opinions on related party transactions with Guangdong Communications Group Finance Co., Ltd
China International Capital Corporation Limited(601995) (hereinafter referred to as ” China International Capital Corporation Limited(601995) ” or “the independent financial adviser”) as an independent financial adviser for the purchase of major assets and related party transactions of Guangdong Provincial Expressway Development Co.Ltd(000429) (hereinafter referred to as “Guangdong Expressway“, “company” or “listed company”), In accordance with the provisions of relevant laws, regulations and normative documents such as the stock listing rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and connected transactions, during the continuous supervision period, The independent financial consultant has carefully verified the financial service agreement and related party transactions signed between the company and Guangdong Communications Group Finance Co., Ltd. (hereinafter referred to as “the finance company”), and the verification results and opinions are as follows:
1、 Overview of related party transactions
In order to improve the efficiency of capital use, reduce financing costs and risks, and improve the ability of risk control, the company renewed the financial service agreement with the finance company with the approval of the second extraordinary general meeting of shareholders in 2020 held on November 25, 2020. The finance company provided deposit services, loan services and For settlement services and other businesses that can be engaged with the approval of Bank Of China Limited(601988) Insurance Regulatory Commission, it is agreed that the total daily balance of deposits absorbed by the finance company from Guangdong Expressway and its affiliated enterprises shall not exceed RMB 1 billion, and the total daily balance of credit business from Guangdong Expressway and its affiliated enterprises shall not exceed RMB 2 billion. The financial services agreement is valid for three years and will expire on November 25, 2023.
With the approval of the company’s first extraordinary general meeting of shareholders in 2021 held on February 3, 2021, the company signed a supplementary agreement to the financial services agreement with the finance company. During the validity of the agreement, Guangdong Guanghui Expressway Co., Ltd. will be regarded as a subordinate affiliated enterprise of the company, and the deposit and loan limit of the financial company will be increased. It is agreed that the total daily balance of deposits absorbed by the company and its affiliated enterprises will not exceed RMB 3 billion, and the daily balance of credit business to the company and its affiliated enterprises will not exceed RMB 4 billion.
The finance company is a wholly-owned subsidiary of Guangdong Communications Group Co., Ltd. (hereinafter referred to as “Guangjiao group”), the controlling shareholder of the company. According to the provisions of the stock listing rules of Shenzhen Stock Exchange, the finance company is the related party of the company, and the signing of the financial service agreement and the supplementary agreement to the Financial Service Agreement constitute related party transactions.
The signing of the financial service agreement and the supplementary agreement to the financial service agreement between the company and the financial company does not constitute a major asset reorganization or listing under the measures for the administration of major asset reorganization of listed companies, nor does it need to be approved by relevant departments.
2、 Basic information of related parties
(I) introduction to related parties
Guangdong Communications Group Finance Co., Ltd. is a limited liability company (wholly owned by legal person) invested and established by Guangdong Communications Group Co., Ltd. and was approved by the Guangdong regulatory bureau of Bank Of China Limited(601988) Industry Regulatory Commission on December 9, 2014, On December 10, 2014, it obtained the financial license issued by the Guangdong regulatory bureau of Bank Of China Limited(601988) Industry Regulatory Commission with the organization code of l0204h244010001 and the business license issued by the Guangdong Administration for Industry and commerce with the unified social credit code of 9144 Shenzhen Sed Industry Co.Ltd(000032) 4816292g.
The registered capital of the company is RMB 2 billion, all of which are contributed by the shareholder Guangdong Communications Group Co., Ltd. in currency. The contribution has been verified by the capital verification report “Ruihua Yue Yan Zi [2014] No. 44030002” issued by Ruihua Certified Public Accountants (special general partnership) Guangdong branch.
Registered address: unit 04, 43 / F, Litong Plaza, No. 32, Zhujiang East Road, Tianhe District, Guangzhou, Guangdong
Legal representative: Chen Dili
With the approval of the former CBRC, the business scope of the company includes: handling financial and financing consulting, credit assurance and related consulting and agency business for member units; Assist member units to realize transaction payment; Approved insurance agency business; Provide guarantee to member units; Handle entrusted loans and entrusted investment between member units; Handle bill acceptance and discount for member companies; Handle the internal transfer settlement between member units and the corresponding settlement and clearing scheme design; Absorbing deposits from member units; Loans and financial leases to member units; Engage in interbank lending; Underwriting corporate bonds of member units; Portfolio investment (except stock investment). (for projects subject to approval according to law, business activities can be carried out only after approval by relevant departments). The business scope of the finance company has not changed in 2021.
(II) main financial indicators of related parties
According to the financial statements of the financial company in 2021 (Unaudited), as of December 31, 2021, the total assets of the financial company were 24009342900 yuan; From January to December 2021, the operating income was 341343900 yuan; The net profit was 216412600 yuan.
(III) description of association relationship
Both the financial company and the listed company belong to the holding subsidiary of Guangjiao group. According to paragraph (II) of article 6.3.3 of the Listing Rules of Shenzhen Stock Exchange, the financial company is the affiliated legal person of the company. (IV) others
After inquiry, the financial company is not a dishonest person, its business is in good condition, and all businesses can be carried out in strict accordance with the internal control system and process, without major risks; The business operation is legal and compliant, the management system is sound, the risk management is effective, and the performance ability is good.
3、 Pricing of related party transactions
In this transaction, the service price shall be negotiated and determined by both parties in accordance with the principles of fairness, fairness, autonomy and voluntariness, and meet the following standards at the same time:
1. With regard to deposit business: the interest rate of demand deposits shall not be lower than the benchmark interest rate of deposits of the same grade published by the people’s Bank of China by 20%, and the interest rate of time deposits and agreed deposits shall not be lower than the benchmark interest rate of deposits of the same grade published by the people’s Bank of China by 30%, And not lower than the maximum interest rate applicable to commercial banks in China to provide the same kind of deposit business to Guangdong Expressway and its affiliated enterprises at that time. If the people’s Bank of China no longer publishes the benchmark deposit interest rate, the benchmark interest rate shall be the deposit interest rate recognized or usual by the banks on the adjustment date, unless otherwise agreed by both parties.
2. About settlement business: the finance company provides free settlement business (including its affiliated services) for Guangdong Expressway and its affiliated enterprises.
3. About credit business: the loan and discount interest rate shall not be higher than the benchmark interest rate of loans of the same grade published by the people’s Bank of China, and shall not be higher than the interest rate applicable to commercial banks in China to provide the same kind of loan business to Guangdong Expressway and its affiliated enterprises at that time. Except for the loan and discount interest rate, the rate of other credit businesses shall not be higher than the rate applicable to commercial banks in China to provide the same kind of credit business to Guangdong Expressway and its affiliated enterprises at that time.
4. Other businesses: when the finance company handles other financial services approved by the Bank Of China Limited(601988) Industry Regulatory Commission for Guangdong Expressway and its affiliated enterprises, it shall implement the most preferential rate or interest rate for other financial institutions to provide the same kind of services to Guangdong Expressway and its affiliated enterprises.
4、 Main contents of related party transaction agreement
(I) agreement subject
Party A: Guangdong Provincial Expressway Development Co.Ltd(000429)
Party B: Guangdong Communications Group Finance Co., Ltd
(II) contents of financial services
1. Deposit business: Party B provides deposit services to Party A and its affiliated enterprises, and unconditionally meets the payment requirements of Party A and its affiliated enterprises according to the principle of “freedom of money”.
2. Settlement business: during the term of this agreement, Party B shall provide legal and compliant settlement business for Party A and its affiliated enterprises.
3. Fund concentration business: during the term of this agreement, Party B will assist Party A in the centralized management of the funds of its affiliated enterprises, so as to revitalize the stock funds of Party A and its affiliated enterprises and improve the efficiency of fund use.
4. Credit business: during the term of this agreement, upon the application of Party A and its affiliated enterprises, Party B may decide to provide credit business to Party A and its affiliated enterprises. Credit business includes: loan, letter of guarantee (or guarantee), letter of credit, bill acceptance and discount, financial leasing and other services provided by Party B with funds or credit. Party A and its affiliated enterprises do not need to use assets as collateral for the credit services provided by Party B.
5. Other services: in order to meet the needs of Party A and its affiliated enterprises, Party B provides other financial services including but not limited to bond issuance and underwriting, guarantee, financial and financing consulting and consulting services. Party B shall sign a separate agreement for the above services provided by Party A and its affiliated enterprises.
(III) trading limit
1. Deposit service: during the term of this agreement, the total daily balance of deposits absorbed by Party B from Party A and its affiliated enterprises shall not exceed RMB 3 billion only (￥ 30000000000).
2. Credit business: during the term of this agreement, the maximum daily balance of credit business from Party B to Party A and its affiliated enterprises shall not exceed RMB 4 billion (￥ 4000000000000). (III) liability for breach of contract
If either party fails to perform the agreement, it will constitute a breach of contract, and the observant party has the right to terminate the contract. The breaching party shall compensate the observant party for all losses caused to the observant party.
(IV) application of law and settlement of disputes
The conclusion, validity, interpretation, performance and dispute settlement of the agreement shall be governed by Chinese laws. All disputes, disputes or claims arising from or in connection with the signing and performance of the agreement shall be settled through friendly negotiation; If no settlement can be reached through consultation, either party shall bring a lawsuit to the people’s court where the other party is located.
5、 Notes on financial risk assessment of the company
(I) basic information of internal control of the financial company
1. Control environment
The finance company implements the general manager responsibility system under the leadership of the board of directors. According to the provisions of the articles of association of the finance company, the finance company does not set up a shareholders’ meeting, and the functions and powers of the shareholders’ meeting are exercised by the shareholders of the company, namely Guangdong Communications Group Co., Ltd. According to the financial laws and regulations and the requirements of the regulatory authorities, the financial company has established a governance structure of the board of directors, the board of supervisors and the management. The qualifications of all directors and senior managers have been approved by the Guangdong regulatory bureau of Bank Of China Limited(601988) Insurance Regulatory Commission. The board of directors has three special committees: Audit Committee, risk management committee and budget management committee. The management has credit review meeting and investment review meeting. All governance subjects have established complete and standardized rules of procedure and work responsibilities.
At present, the finance company has set up seven departments: comprehensive and information department, party masses supervision department, settlement management department, credit management department, investment management department, financial management department and risk management department to effectively separate the front, middle and back offices and play a role of mutual checks and balances. Both the party masses supervision and audit department and the risk management department are in the direct charge of the members of the board of directors to ensure the objectivity and independence of their work.
2. Risk identification and assessment
The finance company has formulated a series of risk prevention and control systems with asset safety as the core, such as internal control management measures and compliance risk management measures, and improved the risk management system. Establish a risk management committee responsible to the board of directors, review the risk management policies, plans and systems of the financial company, organize and coordinate the risk management of the financial company, and promote the construction of the risk management system of the financial company. Establish an audit committee responsible to the board of directors to review, evaluate and supervise various internal audits of the finance company. Establish a risk management department, focusing on pre prevention and in-process control, to identify, evaluate, prevent and resolve the company’s credit, market, operation, liquidity, compliance, money laundering and other risks, and carry out comprehensive inspection and feedback on all departments, posts and businesses. Establish the party masses supervision and audit department, formulate internal audit management measures and operating procedures, and conduct internal audit and supervision on the economic activities of the financial company. Each business department of the finance company shall, within the scope of its responsibilities, formulate its own different risk control systems and operation processes according to the different characteristics of each business, strictly implement the relevant systems and regulations, organize supervision and self inspection, timely report the defects in risk control, and organize rectification. Each department shall have reasonable division of labor, clear responsibilities and mutual supervision, Predict, evaluate and control various risks in self operated loan operation.
3. Control activities
Fund management:
According to various rules and regulations stipulated by relevant state departments and the people’s Bank of China, the finance company has formulated business management measures and business operation processes such as settlement business management measures and liquidity management measures, so as to effectively control business risks.
(1) In terms of centralized fund management, the business operation of the finance company strictly follows the requirements for assets and liabilities in the measures for the administration of financial companies of enterprise groups, and ensures the safety, efficiency and liquidity of the funds of the finance company by formulating and implementing systems such as fund allocation, management of the use of large amounts of funds, financial expenditure management, interbank lending business management and liquidity management.
(2) In terms of settlement business, the finance company abides by the principles of abiding by credit, performing payment, who enters who’s account, who controls, and the finance company does not advance money, so as to ensure the safety of the funds of member units and maintain the ownership and independent control of the funds in the collection account, The “white list” payment restriction management shall be implemented for the capital settlement handled through the bank enterprise direct link platform.
Credit business control:
The object of credit business carried out by the finance company is the member units of Guangdong Communications Group Co., Ltd. In accordance with the law of the people’s Republic of China on commercial banks, the measures for the administration of enterprise group financial companies, the measures for the administration of reserve provision of financial enterprises and other relevant laws and the relevant policies of the people’s Bank of China and the Bank Of China Limited(601988) Industry Regulatory Commission, It has formulated business management measures and work specifications such as self operated loan business management measures and loan interest rate pricing operating procedures, and established a complete credit management system before, during and after loan. The finance company strictly implements the loan management system, carries out unified credit rating and credit granting for credit business objects before loan, and carefully investigates the authenticity and legitimacy of credit business trade background and capital demand; After the loan is issued, carry out regular post loan inspection and risk classification, strengthen the management of the use of credit funds, and ensure that the use of credit funds is legal.
Investment business control:
Finance company
