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Jingrui Holdings Limited — Proxy Solicitation & Information Statement 2016
Apr 22, 2016
50224_rns_2016-04-21_c41467a3-de56-4d47-b40c-d9a16782b837.pdf
Proxy Solicitation & Information Statement
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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in doubt as to any aspect of this circular, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Jingrui Holdings Limited, you should at once hand this circular to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.
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JINGRUI HOLDINGS LIMITED 景瑞控股有限公司[*]
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 01862)
MAJOR TRANSACTION
ACQUISITION OF LAND USE RIGHTS IN SUZHOU, THE PRC
- For identification purpose only
April 22, 2016
CONTENTS
| Page | |
|---|---|
| DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1 |
| LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4 |
| APPENDIX I – FINANCIAL INFORMATION OF THE GROUP. . . . . . . |
13 |
| APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . |
16 |
– i –
DEFINITIONS
In this circular, the following expressions have the following meanings unless the context requires otherwise:
-
“Acquisition”
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the acquisition of land use rights of the Land through public bidding process at the Auction
-
“associates”
-
has the meaning ascribed to it under the Listing Rules
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“Auction”
-
the public auction held by Suzhou Municipal Bureau of Land and Resources at which the Land was offered for sale
-
“Auction Confirmation”
-
the auction confirmation notice (國有建設用地使用權掛 牌競買成交通知書) dated April 7, 2016 issued by Suzhou Municipal Bureau of Land and Resources to Shanghai Xiaopin Investment, confirming the successful bidding at the Auction
-
“Board”
-
the board of Directors
-
“Company”
-
Jingrui Holdings Limited (景瑞控股有限公司*), a company incorporated in the Cayman Islands with limited liability, whose Shares are listed on the Main Board of the Stock Exchange
-
“connected person(s)” has the meaning ascribed to it under the Listing Rules
-
“Directors” the directors of the Company
-
“Group” the Company and its subsidiaries
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“HK$” Hong Kong dollars
-
“Hong Kong”
-
the Hong Kong Special Administrative Region of the PRC
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“Independent Third Party(ies)”
an individual(s) or a company(ies) who or which is (are) independent of and not connected with (within the meaning of the Listing Rules) any Directors, chief executive or substantial shareholders, of the Company, its subsidiaries or any of their respective associate(s)
– 1 –
DEFINITIONS
-
“Land”
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a piece of land located east of Fuchunjiang Road and north of Wuyishan Road, Technology Town, Gaoxin District, Suzhou, the PRC (中國蘇州市高新區科技城武 夷山路北、富春江路東) with a total land area of 77,909.9 sq.m.
-
“Land Use Rights Grant Contract”
-
the land use rights grant contract (國有建設用地使用權出 讓合同) to be entered into on or about May 16, 2016 between Suzhou Municipal Bureau of Land and Resources and Shanghai Xiaopin Investment pursuant to the Auction Confirmation
-
“Latest Practicable Date” April 18, 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
-
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
-
“percentage ratios”
-
has the same meaning ascribed to them under the Listing Rules
-
“PRC” The People’s Republic of China, which for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan
-
“RMB” Renminbi, the lawful currency of the PRC
-
“SFO”
-
the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
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“Shanghai Xiaopin Investment”
-
Shanghai Xiaopin Investment Co. Ltd.* (上海驍品投資有 限公司), a company established in the PRC and an indirect wholly-owned subsidiary of the Company
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“Share(s)” the ordinary share(s) of US$0.01 each of the Company
-
“Shareholder(s)” holders of the Shares
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“sq.m.” square metre(s)
-
“Stock Exchange” The Stock Exchange of Hong Kong Limited
– 2 –
DEFINITIONS
“Suzhou Municipal Bureau of Suzhou Municipal Bureau of Land and Resources (蘇州 Land and Resources” 市國土資源局) “%” per cent.
For illustrative purpose only, RMB is converted into HK$ at an exchange rate of RMB1=HK$1.1968 in this circular.
- For identification purpose only
– 3 –
LETTER FROM THE BOARD
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JINGRUI HOLDINGS LIMITED 景瑞控股有限公司[*]
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 01862)
Executive Directors: Mr. YAN Hao (Co-chairmen) Mr. CHEN Xin Ge (Co-chairmen) Mr. YANG Tie Jun Mr. XU Chao Hui
Independent non-executive Directors: Mr. HAN Jiong Dr. QIAN Shi Zheng Dr. LO Wing Yan, William
Registered Office: 190 Elgin Avenue George Town Grand Cayman KY1-9005 Cayman Islands
Principal place of business in Hong Kong: Room 09, 43/F China Resources Building 26 Harbour Road Hong Kong
April 22, 2016
To the Shareholders
Dear Sir or Madam,
MAJOR TRANSACTION
ACQUISITION OF LAND USE RIGHTS IN SUZHOU, THE PRC
1. INTRODUCTION
Reference is made to the announcement of the Company dated April 8, 2016 in relation to the Acquisition. The purpose of this circular is to provide you with further details of the Acquisition.
2. ACQUISITION OF LAND USE RIGHTS
Shanghai Xiaopin Investment, an indirect wholly-owned subsidiary of the Company, succeeded in the public auction to acquire the land use rights of a land parcel at Lot 2016-WG-14, Suzhou, the PRC (中國蘇州2016-WG-14號地塊) (the “ Land ”) for a total consideration of RMB1,550,700,000 (equivalent to approximately HK$1,855,877,760) (the
– 4 –
LETTER FROM THE BOARD
“ Consideration ”) on April 7, 2016. The Land was provided for public auction by Suzhou Municipal Bureau of Land and Resources. The Auction Confirmation was issued by Suzhou Municipal Bureau of Land and Resources on April 7, 2016. The Land Use Rights Grant Contract in relation to the Acquisition is expected to be entered into on or about May 16, 2016.
Principal terms of the Auction Confirmation
Date of the Auction : April 7, 2016 Confirmation Parties of the Auction : Suzhou Municipal Bureau of Land and Resources and Confirmation Shanghai Xiaopin Investment Code of the Land : Land Suzhou 2016-WG-14 (蘇州2016-WG-14號地塊) Location of the Land : East of Fuchunjiang Road and north of Wuyishan Road, Technology Town, Gaoxin District, Suzhou, the PRC (中國 蘇州市高新區科技城武夷山路北、富春江路東) Total site area : 77,909.9 sq.m. Planned gross floor area and : 78,689 sq.m. and 1.01 plot ratio Nature of the land use : Residential rights Consideration : RMB1,550,700,000 (equivalent to approximately HK$1,855,877,760)
Consideration
The Consideration was arrived at after bidding at the Auction held by Suzhou Municipal Bureau of Land and Resources, based on the Company’s assessment of the recent market value of comparable commercial developments in the Yangtze River Delta region. The Consideration is expected to be paid according to the following payment schedule:
-
first payment of RMB775,350,000 to be paid on or before May 16, 2016; and
-
second and final payment of RMB775,350,000 to be paid on or before July 8, 2016.
As of the Latest Practicable Date, an amount of RMB74,020,000 has been paid as part of the first payment, and the Company will pay the remaining amount of the first payment on or before May 16, 2016.
– 5 –
LETTER FROM THE BOARD
There are no conditions precedent to the completion. The Acquisition will be considered completed upon full payment of the Consideration on July 8, 2016, the date of the second and final payment of the Consideration. The Board currently expects that the Consideration for the Acquisition will be financed by the Group’s internal resources. Depending on the Company’s strategic plans, the Company may work with strategic third party partners to develop the Land, but at this point, the Company does not anticipate that the Group will have any specific fund raising needs in connection with the Acquisition and development of the Land in the near future.
Information on Suzhou Municipal Bureau of Land and Resources
Suzhou Municipal Bureau of Land and Resources is a PRC governmental authority and the seller of the Land. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Suzhou Municipal Bureau of Land and Resources is an Independent Third Party.
Reasons for the Acquisition
The Group is principally engaged in the property development business in the Yangtze River Delta region, which includes Suzhou, and the Acquisition is conducted in the ordinary and usual course of business of the Group.
The Land is intended to be developed as a residential project which will be sold. The Land has a planned gross floor area of 78,689 sq.m. and a plot ratio of 1.01. The Company plans to develop the residential project in one phase, of approximately 717 saleable units, with no supporting communal and supporting facilities. The Company expects to commence construction in the second half of 2016 and complete construction in the second half of 2017. Pre-sales of units in the residential project is expected to commence in the second half of 2016.
The Board believes that the Acquisition provides an excellent investment opportunity for the Group to further establish its position in the property market in the Yangtze River Delta region and in particular, Suzhou, the PRC. The Directors consider that the Acquisition is in the interests of the Company and the Shareholders as a whole and the terms thereof are on normal commercial terms, which are fair and reasonable.
Listing Rules Implications
On the basis that the consideration ratio of the Acquisition is greater than 25% while all the ratios are less than 100% for the purposes of Rule 14.07 of the Listing Rules, the Acquisition constitutes a major transaction for the Company under the Listing Rules. Pursuant to Rule 14.33A of the Listing Rules, the Acquisition is subject to the reporting, announcement and circular requirements but is exempt from Shareholders’ approval as the Board had confirmed that it is in the Company’s ordinary and usual course of business, and all the conditions as referred to in Rule 14.33A of the Listing Rules are satisfied; and that the Acquisition is on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.
– 6 –
LETTER FROM THE BOARD
The Acquisition is regarded as a Qualified Property Acquisition under Rule 14.04(10C) of the Listing Rules as the Land is a piece of governmental land in the PRC acquired by the Group from Suzhou Municipal Bureau of Land and Resources, a PRC Governmental Body through a tender, auction or listing-for-sale governed by PRC law (as defined under Rule 19A.04 of the Listing Rules). Therefore, valuation of the Land is not required under Rule 5.02A(2) of the Listing Rules.
Since the listing of the Company’s Shares on the Stock Exchange on October 31, 2013, the Company has been actively participating in land auctions held by governmental bodies in the PRC and has succeeded in acquiring two parcels of land in Taicang, Jiangsu on December 9, 2013, a parcel of land in Ningbo, Zhejiang on December 24, 2013, a parcel of land in Shaoxing, Zhejiang on December 25, 2013, two parcels of land in Hangzhou, Zhejiang on January 7, 2014, a parcel of land in Ningbo, Zhejiang on January 30, 2015, two parcels of land in Hongkou District, Shanghai and Jiulongpo District, Chongqing on June 17, 2015, a parcel of land in Nantong, Jiangsu on July 24, 2015, a parcel of land in Ningbo, Zhejiang on January 26, 2016, a parcel of land in Wujiang Economic and Technological Development Zone, Suzhou on February 3, 2016, and a parcel of land in Ningbo, Zhejiang on March 10, 2016 before the Acquisition (details of which are set out in the announcements of the Company dated December 10, 2013, December 26, 2013, January 10, 2014, January 8, 2014, February 1, 2015, June 18, 2015, July 27, 2015, January 27, 2016, February 3, 2016, and March 11, 2016 respectively).
The Company had also invested in a fund for the acquisition of Hua’ao Resort (東海南 山苑「華傲度假村」(Donghai Nanshanyuan – “Hua’ao Resort”*)) in the Pudong New District, Shanghai in September 2015, details of which are set out in the announcement of the Company dated September 8, 2015.
The following table sets out the existing projects of the Group’s property development and property investment businesses as of December 31, 2015:
| Gross floor | Gross floor | |||
|---|---|---|---|---|
| Expected | area (sq.m.) – | area (sq.m.) – | ||
| date of | under | pending | ||
| Location/Project name | Development status | completion | construction | construction |
| Property development | ||||
| Qingpu District, Shanghai/ | Mixed used | December | 183,638 | |
| Shanghai Fengxiang | development/ | 2017 | ||
| PHASE III (上海鳳翔項目三 | Pending | |||
| 期) | construction | |||
| Baoshan District, Shanghai/ | Commercial | June 2016 | 6,076 | |
| Shanghai Baoshan (上海高鏡 | development/ | |||
| 寶山) | Under construction |
– 7 –
LETTER FROM THE BOARD
| Gross floor | Gross floor | |||
|---|---|---|---|---|
| Expected | area (sq.m.) – | area (sq.m.) – | ||
| date of | under | pending | ||
| Location/Project name | Development status | completion | construction | construction |
| Hongkou District, Shanghai/ | Residential/ | June 2017 | 28,139 | |
| Shanghai Hongkou | Pending | |||
| (上海虹口) | construction | |||
| Baodi District, Tianjin/ | Residential/ | 440,800 | ||
| Tianjin Jingrui Yingjun | Pending | |||
| (天津景瑞• 英郡) | construction | |||
| PHASE II (二期) | October 2017 | 84,700 | ||
| PHASE III (三期) | October 2017 | 173,800 | ||
| PHASE IV (四期) | October 2018 | 182,300 | ||
| Jiulongpo District, Chongqing/ | Mixed used | December | 39,368 | |
| Chongqing Jiulongpo (重慶九 | development/ | 2017 | ||
| 龍坡) | Pending | |||
| construction | ||||
| Yuhang District, Hangzhou/ | Residential/ | March 2016 | 49,813 | |
| Hangzhou Jingrui Royal Bay | Under construction | |||
| PHASE II (杭州景瑞• 御藍灣 | ||||
| 二期) | ||||
| Yuhang New Town, Hangzhou/ | Residential/ | June 2016 | 212,489 | |
| Hangzhou Jingrui Royal | Under construction | |||
| Mansion (杭州景瑞• 御華府) | ||||
| Gongshu District, Hangzhou/ | Residential/ | 191,359 | ||
| Hangzhou Jingrui Shenhua | Under construction | |||
| No. One (杭州景瑞• 申花壹 | ||||
| 號院) | ||||
| PHASE I (一期) | November | 91,751 | ||
| 2016 | ||||
| PHASE II (二期) | July 2017 | 99,608 | ||
| Yinzhou District, Ningbo/ | Residential/ | June 2016 | 130,980 | |
| Ningbo Jingrui The Mansion | Under construction | |||
| (寧波景瑞• 上府) |
– 8 –
LETTER FROM THE BOARD
| Gross floor | Gross floor | |||
|---|---|---|---|---|
| Expected | area (sq.m.) – | area (sq.m.) – | ||
| date of | under | pending | ||
| Location/Project name | Development status | completion | construction | construction |
| Yinzhou District, Ningbo/ | Residential/ | December | 117,192 | |
| Ningbo Majestic Mansion | Under construction | 2017 | ||
| (寧波紅翎台項目) | ||||
| Putuo District, Zhoushan/ | Residential/ | December | 63,659 | |
| Zhoushan Jingrui Haobusika | Pending | 2017 | ||
| PHASE III (舟山景瑞• 豪布 | construction | |||
| 斯卡三期) | ||||
| Keqiao District, Shaoxing/ | Residential/ | December | ||
| Shaoxing Jingrui Dignity | Pending | 2016 | ||
| Mansion (紹興景瑞• 望府) | construction/ | |||
| PHASE IV (四期) | Under construction | 120,370 | ||
| PHASE V (五期) | 63,000 | |||
| Zhuji, Shaoxing/Shaoxing | Residential/ | 172,826 | ||
| Jingrui Nobility Mansion | Under construction | |||
| (紹興景瑞• 御江山) | ||||
| PHASE I (一期) | March 2016 | 101,374 | ||
| PHASE II (二期) | December | 71,452 | ||
| 2016 | ||||
| Yuecheng District, Shaoxing/ | Residential/ | December | 271,215 | |
| Shaoxing Jingrui Lake of | Under construction | 2016 | ||
| Dawn (紹興景瑞• 曦之湖) | ||||
| Luqiao District, Taizhou/ | Residential/ | June 2016 | 82,422 | |
| Taizhou Dignity Mansion | Under construction | |||
| (台州• 望府) | ||||
| Taicang, Suzhou/Suzhou Jingrui | Residential/ | December | 28,242 | 60,149 |
| Jade Bay | Pending | 2017 | ||
| PHASE IV (蘇州景瑞• 翡翠 | construction/ | |||
| 灣四期) | Under construction |
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LETTER FROM THE BOARD
| Gross floor | Gross floor | |||
|---|---|---|---|---|
| Expected | area (sq.m.) – | area (sq.m.) – | ||
| date of | under | pending | ||
| Location/Project name | Development status | completion | construction | construction |
| Wuzhong Economic | Residential/ | 179,471 | 21,724 | |
| Development Area, Suzhou/ | Pending | |||
| Suzhou Jingrui Nobility | construction/ | |||
| Mansion (蘇州景瑞• 御江山) | Under construction | |||
| PHASE I NORTH (一期北) | June 2017 | 57,140 | ||
| PHASE II (二期) | September | 77,772 | ||
| 2016 | ||||
| PHASE III (三期) | October 2017 | 44,559 | ||
| PHASE IV (四期) | June 2018 | 21,724 | ||
| Taicang, Suzhou/ | Residential/ | 124,236 | 68,079 | |
| Suzhou Jingrui Dignity | Pending | |||
| Mansion (蘇州景瑞• 望府) | construction/ | |||
| PHASE III (三期) | Under construction | June 2016 | 73,406 | |
| PHASE IV (四期) | September | 50,830 | ||
| 2016 | ||||
| PHASE V (五期) | December | 68,079 | ||
| 2017 | ||||
| Xidong New Town, Wuxi/ | Residential/ | December | 182,391 | |
| Wuxi Jingrui Dignity Mansion | Under construction | 2016 | ||
| PHASE II (無錫景瑞• 望府二 | ||||
| 期) | ||||
| Tianning District, Changzhou/ | Residential/ | December | 113,266 | |
| Changzhou Jingrui Dignity | Pending | 2017 | ||
| Mansion PHASE III (常州景 | construction | |||
| 瑞• 望府三期) | ||||
| Haimen City, Nantong/ | Residential/ | March 2016 | 175,202 | |
| Nantong Jingrui Nobility | Under construction | |||
| Mansion (南通景瑞• 御江山) |
– 10 –
LETTER FROM THE BOARD
| Gross floor | Gross floor | |||
|---|---|---|---|---|
| Expected | area (sq.m.) – | area (sq.m.) – | ||
| date of | under | pending | ||
| Location/Project name | Development status | completion | construction | construction |
| Tongfu Road West, Nantong/ | Residential/ | 344,452 | ||
| Nantong Jingrui Royal | Under construction | |||
| Mansion (南通景瑞• 御府) | ||||
| PHASE I (一期) | October 2017 | 155,237 | ||
| PHASE II (二期) | December | 189,215 | ||
| 2018 | ||||
| Property development and investment | ||||
| Yinzhou District, Ningbo/ | Commercial | May 2016 | 132,344 (of | |
| Ningbo Jingrui Harbour City | development/ | which, 37,222 | ||
| (寧波景瑞• 海港城) | Under construction | sq.m. | ||
| comprises | ||||
| property | ||||
| investment and | ||||
| 95,122 sq.m. | ||||
| comprises | ||||
| property | ||||
| development) | ||||
| Total | 2,521,079 | 1,081,822 |
The Directors have considered that the Company is actively engaged in property development as a principal business activity. Based on the Company’s latest published financial statements, being the financial statements for the year ended December 31, 2015, the Directors confirm that, and if the Company was requested to prepare and publish its financial statements as at the date of the circular, the Directors would also be able to confirm that:
-
a. there would be clear disclosure of property development activity as a current and continuing principal business activity in the Directors’ Report of its published financial statements;
-
b. the property development activity would be reported as a separate and continuing segment in its published financial statements; and
-
c. its format for reporting segmental information and its published financial statements would have fully complied with the requirements of relevant accounting standards adopted for the preparation of its published financial statements on reporting of segment revenue and segment expense.
As such, the Company considers itself to be a Qualified Issuer pursuant to Rule 14.04(10B) of the Listing Rules.
– 11 –
LETTER FROM THE BOARD
3. GENERAL
Your attention is also drawn to the financial information of the Group and general information set out in the appendices to this circular.
Yours faithfully,
By Order of the Board Jingrui Holdings Limited Yan Hao Chen Xin Ge Co-chairmen
– 12 –
FINANCIAL INFORMATION OF THE GROUP
APPENDIX I
1. CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP
Details of the financial information of the Group for each of the financial years ended December 31, 2013, December 31, 2014 and December 31, 2015 are available on the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (http://www.jingruis.com) in the following documents:
-
(i) for the year ended December 31, 2015, on pages 2 to 16 of the annual results announcement of the Company for the year ended December 31, 2015 released on March 30, 2016 at http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0331/ LTN20160331163.pdf;
-
(ii) for the year ended December 31, 2014, on pages 54 to 147 of the annual report of the Company for the year ended December 31, 2014 released on April 8, 2015 at http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0408/LTN20150408796.pdf; and
-
(iii) for the year ended December 31, 2013, on pages 48 to 125 of the annual report of the Company for the year ended December 31, 2013 released on March 21, 2014 at http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0321/LTN201403211230.pdf.
There was no qualified opinion issued for the audited financial information of the Group for the last three financial years.
2. INDEBTEDNESS
At the close of business on February 29, 2016, being the latest practicable date for the purpose of the indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of approximately RMB10,862 million, consisting of current borrowings of approximately RMB5,561 million and non-current borrowings of approximately RMB5,301 million. As at February 29, 2016, the Group had un-utilized banking facilities of approximately RMB5,858.7 million.
As at February 29, 2016, the Group had the following debt instruments (comprising the Group’s non-current borrowings):
-
(i) an aggregate US$150 million principal amount of 13.625% guaranteed senior notes due 2019; and
-
(ii) an aggregate US$150 million principal amount of 13.250% guaranteed senior notes due 2018,
which are jointly and severally guaranteed by certain subsidiaries of the Company organized outside the PRC.
Save as disclosed above and apart from intra-group liabilities, the Group did not have any debt securities issued and outstanding or agreed to be issued, bank borrowings or other similar indebtedness, liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities at the close of business on February 29, 2016.
– 13 –
FINANCIAL INFORMATION OF THE GROUP
APPENDIX I
On March 21, 2016, the Group completed the first tranche issue of an aggregate of RMB1.5 billion principal amount of 5.88% unsecured domestic corporate bonds.
3. WORKING CAPITAL
After due and careful consideration, the Directors are of the opinion that, taking into account the completion of the Acquisition, the Group’s internal resources as well as the available facilities from banks and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements for the period of twelve months from the date of this circular.
4. MATERIAL ADVERSE CHANGE
Save for the profit warning announcement released by the Company on March 21, 2016, the Directors confirm that there was no material adverse change in the financial or trading position of the Group since December 31, 2015, being the date to which the latest published audited financial statements of the Company were made up.
5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP
In the coming financial year, the Group will continue to be engaged in property development and property investment in the Yangtze River Delta region in the PRC. The management team has been exploring business opportunities in the area to expand the Group’s operation and enhance its earnings. The management team is actively looking for suitable investments opportunities to diversify its existing business portfolio and to broaden its source of income.
6. LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES
Cash position
The Group had cash and bank balances (including pledged bank deposits) of approximately RMB3,443.5 million and restricted cash of approximately RMB735.0 million as at February 29, 2016.
Gearing ratio
The Group’s net debt-to-equity ratio (total borrowings minus cash and cash equivalents and restricted cash divided by total equity) was approximately 135.5% as at February 29, 2016. The Group’s gearing ratio (net debt, which represents total borrowings less cash and cash equivalents and restricted cash-deposits pledged for borrowings, divided by total capital, which represents total equity plus net debt) was approximately 83.5% as at February 29, 2016. The Group’s current ratio (total current assets divided by total current liabilities) was approximately 1.4 times as at February 29, 2016.
– 14 –
FINANCIAL INFORMATION OF THE GROUP
APPENDIX I
7. FINANCIAL EFFECT OF THE ACQUISITION
Immediately upon the completion of the Acquisition and assuming a total Consideration of RMB1,550,700,000 (approximately HK$1,855,877,760) to be satisfied by the Group’s internal resources, the Company considers that there will be no material impact on the earnings or assets or liabilities of the Group immediately upon the completion of the Acquisition.
– 15 –
GENERAL INFORMATION
APPENDIX II
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS
(a) Interests of the Directors and the Chief Executive of the Company
As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which were required, pursuant to Section 352 of the SFO to be entered in the register referred to therein, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as contained in Appendix 10 to the Listing Rules, were as follows:
| Number of | |||
|---|---|---|---|
| Underlying | Approximate % | ||
| Capacity/Nature of | Shares/ | shareholding | |
| Name of Director | Interest | Debentures(3) | interest |
| Beyond Wisdom Limited | Direct interest | 480,220,613 | 37.19 |
| Yan Hao(1) | Interest in a controlled | 480,220,613 (L) | 37.19 |
| corporation | |||
| Decent King Limited | Direct interest | 427,205,918 | 33.08 |
| Chen Xin Ge(2) | Interest of a controlled | 427,205,918 (L) | 33.08 |
| corporation | |||
| Xu Chao Hui | Beneficial owner | 560,792 | 0.04 |
| Yang Tie Jun | Beneficial owner | 482,675 | 0.04 |
| Yan Hao | Beneficial owner | US$21 million | N/A |
| of the | |||
| Company’s | |||
| senior notes due | |||
| 2018 |
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APPENDIX II
Notes:
-
(1) Mr. Yan owns 100% of Beyond Wisdom Limited. Mr. Yan is therefore deemed to be interested in the 480,220,613 Shares held by Beyond Wisdom Limited. Mr. Yan is the sole director of Beyond Wisdom Limited.
-
(2) Mr. Chen owns 100% of Decent King Limited. Mr. Chen is therefore deemed to be interested in the 427,205,918 Shares held by Decent King Limited. Mr. Chen is the sole director of Decent King Limited.
-
(3) (L) represents long positions in these securities.
(b) Interests in Other Members of the Group
As at the Latest Practicable Date, the following persons (excluding the Company) are directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:
| Registered | Approximate % | ||
|---|---|---|---|
| Name of Subsidiary | Name of Shareholder | Capital | of Interest |
| Hangzhou Jingheng | Huitianfu Capital | RMB100 million | 35% |
| Property Co., Ltd. | Management Co., Ltd. | ||
| Hangzhou Jinghang | Shanghai Jiacan | RMB100 million | 49% |
| Property Co., Ltd. | Investment Co., Ltd. | ||
| Ningbo Jingshang | Shenzhen | RMB50 million | 35% |
| Property Co., Ltd. | Pingandahuahuitong | ||
| Wealth Management | |||
| Co., Ltd. | |||
| Shanghai Fengxiang | Zhang Bei | RMB100 million | 11% |
| Property Development | Gu Jiabin | 9% | |
| Co., Ltd. | |||
| Shanghai Huajiang | Shanghai Liheng | RMB100 million | 15% |
| Construction and | Investment | ||
| Development Co., Ltd. | Management Co., Ltd. | ||
| Shanghai House Industry | 15% | ||
| Co., Ltd. | |||
| Shanghai Zongquan | 2.5% | ||
| Property Co., Ltd. | |||
| Ningbo Jingrui Property | Tran Star Ventures | RMB200 million | 17.8% |
| Co., Ltd. | Limited | ||
| Kunshan Harbour | 35% | ||
| Investment | |||
| Consulting Co., Ltd. |
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APPENDIX II
| Registered | Approximate % | ||
|---|---|---|---|
| Name of Subsidiary | Name of Shareholder | Capital | of Interest |
| Shanghai Jiaguan | Shanghai Honglong | RMB30.5 million | 34.43% |
| Investment Co., Ltd. | Investment Holding Co., | ||
| Ltd. | |||
| Shaoxing Jingming | Riyuecheng Property | RMB300 million | 49% |
| Property Co., Ltd. | Co., Ltd. | ||
| Shanghai Pinzhai | Xiang Chong | RMB10 million | 5% |
| Decoration Technology | Ma Hongjun | 5% | |
| Co., Ltd. | |||
| Shanghai Weishu | Cai Tiansi | RMB100 million | 30% |
| Information Technology | |||
| Co., Ltd. | |||
| Suzhou Ailide Trade | Kunshan Haigang | RMB50 million | 50% |
| Co., Ltd. | Investment and | ||
| Consulting Co., Ltd. | |||
| Taicang Jingshang | Shanghai Jiading District | RMB150 million | 20% |
| Property Co., Ltd. | Real Estate (Group) Co., | ||
| Ltd. | |||
| Shanghai Oasis | 10% | ||
| Investment Holding | |||
| Group Co., Ltd. |
(c) Directors’ Service Contracts
None of the Directors has entered into a service agreement with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).
(d) Directors’ Competing Interests
As at the Latest Practicable Date, none of the Directors are interested in any business apart from the Group’s business which competes or is likely to compete, directly or indirectly, with the business of the Group.
(e) Disclaimers
Save as disclosed in this circular, none of the Directors or chief executive of the Company has any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and
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APPENDIX II
8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Stock Exchange.
Save as disclosed in this circular, so far as is known to any Director or chief executive of the Company, no person has an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.
As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or were proposed to be acquired or disposed of by or leased to any member of the Group since December 31, 2015, being the date to which the latest published financial statements of the Company were made up.
No Director was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Group taken as a whole.
3. MATERIAL CONTRACTS
The following contracts (not being contracts in the ordinary course of business of the Group) have been entered into by members of the Group which is or may be material within the two years immediately preceding the date of this circular:
-
(a) a purchase agreement dated August 1, 2014 entered into between the Company and the Subsidiary Guarantors (as defined therein), and Haitong International Securities Company Limited, UBS AG, Hong Kong Branch, BOCI Asia Limited, CLSA Limited and Guotai Junan Securities (Hong Kong) Limited for the issue and sale of an aggregate of US$150,000,000 principal amount of 13.625% senior notes due 2019;
-
(b) an indenture dated August 1, 2014 entered into between the Company and the Subsidiary Guarantors (as defined therein), and Citicorp International Limited and Citibank, N.A., London Branch in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.625% senior notes due 2019;
-
(c) an equitable share mortgage in respect of shares dated August 8, 2014 entered into between the Company and Natural Apex Limited, and Citicorp International Limited in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.625% senior notes due 2019 and the share mortgage over shares owned by the Company and Natural Apex;
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APPENDIX II
-
(d) a share charge dated August 8, 2014 entered into between Natural Apex Limited, Decent Pillar Limited, Faithful Gem Limited, Gladly Sheen Limited, Joyful Dawn Limited, Model Sheen Limited, Model Wealth Limited, Sound Pillar Limited, Sheeny Blaze Limited and Sheeny Bright Limited (the “ Chargors ”), and Citicorp International Limited in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.625% senior notes due 2019 and the share charge over shares owned by the Chargors;
-
(e) a purchase agreement dated April 23, 2015 entered into between the Company and the Subsidiary Guarantors (as defined therein), and BOSC International Company Limited, BNP Paribas, acting through its Hong Kong branch, Guotai Junan Securities (Hong Kong) Limited, Haitong International Securities Company Limited and QILU International Capital Limited, for the issue and sale of an aggregate of US$150,000,000 principal amount of 13.250% senior notes due 2018;
-
(f) an indenture dated April 30, 2015 entered into between the Company and the Subsidiary Guarantors (as defined therein), and Citicorp International Limited and Citibank, N.A., London Branch in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.250% senior notes due 2018;
-
(g) an equitable share mortgage in respect of shares dated April 30, 2015 entered into between the Company and Natural Apex Limited, and Citicorp International Limited in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.250% senior notes due 2018 and the share mortgage over shares owned by the Company and Natural Apex;
-
(h) a share charge dated April 30, 2015 entered into between Natural Apex Limited, Decent Pillar Limited, Faithful Gem Limited, Gladly Sheen Limited, Joyful Dawn Limited, Model Sheen Limited, Model Wealth Limited, Sound Pillar Limited, Sheeny Blaze Limited and Sheeny Bright Limited, and Citicorp International Limited in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.250% senior notes due 2018 and the share charge over shares owned by the Chargors; and
-
(i) an intercreditor agreement dated April 30, 2015 entered into between the Company and the Subsidiary Guarantor Pledgors (as defined therein), and Citicorp International Limited (as 2019 Senior Notes Trustee), Citicorp International Limited (as 2018 Senior Notes Trustee) and Citicorp International Limited (as Collateral Agent) in connection with the issue and sale of an aggregate of US$150,000,000 principal amount of 13.250% senior notes due 2018.
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4. LITIGATION AND CLAIMS
(a) Contractual Arrangements with Contractors
In September 2010, the Company, through its subsidiary, Taicang Jingrui Property Co., Ltd. (太倉景瑞置業有限公司) (“ Taicang Jingrui* ”), entered into a general contractor agreement with Longyuan Construction Group Co., Ltd. (龍元建設集團股份有限公司), or Longyuan Construction. The agreed contract price relating to the contractor work in dispute was approximately RMB170.0 million. Subsequently, Longyuan Construction refused to abide by the initial terms with respect to construction payments as agreed to under the general contractor agreement. In January 2012, the Company and Longyuan Construction entered into an administrative mediation agreement, pursuant to which the Company paid RMB15.0 million of the then outstanding construction consideration to Longyuan Construction and both parties agreed to engage a third party professional construction cost consulting firm to review the contract price. In August 2012, Longyuan Construction brought a lawsuit against Taicang Jingrui with Suzhou Intermediate People’s Court of Jiangsu Province, claiming an amount of approximately RMB97.1 million (being the total outstanding construction consideration and material costs but excluding an aggregate of RMB92.6 million in construction consideration that Taicang Jingrui had previously paid to Longyuan Construction prior to the lawsuit) and other penalty and legal fees in an aggregate amount of approximately RMB4.8 million. Meanwhile, certain residential units under development in Suzhou Jingrui Royal Bay were held in the custody of Suzhou Intermediate People’s Court upon Longyuan Construction’s request. In September 2012, Taicang Jingrui filed a counterclaim against Longyuan Construction for penalties arising under the contractor agreement. Based on the review and evaluation of third party entities appointed by Suzhou Intermediate People’s Court, the evaluated construction consideration was estimated to be approximately RMB136.5 million, but such consideration may not be the final amount. As at December 31, 2012, RMB136.5 million was accrued for the construction costs and reflected in the Company’s consolidated financial statements, of which a total of RMB92.6 million had since been paid. In April 2013, the Company paid an additional RMB10.0 million, after which the custody of the residential units was released back to the Company. Furthermore, Longyuan Construction undertook to us in writing that it would not request custody for any of the Company’s properties. The Company engaged another general contractor shortly after terminating the agreement with Longyuan Construction and the Company did not experience any delay in delivering these properties to its customers. In July 2013, pursuant to the mediation letter issued by Suzhou Intermediate People’s Court, the Company and Longyuan Construction mutually agreed, among other things, that the total construction consideration is determined to be RMB138.0 million and the outstanding amounts payable by the Company to Longyuan Construction are to be comprised of (i) outstanding construction consideration of RMB28.5 million, payable in three installments with RMB10.0 million payable before July 31, 2013, RMB10.0 million before August 31, 2013 and RMB8.5 million before September 30, 2013, and (ii) outstanding warranty deposit of RMB6.8 million, payable in three installments, with RMB2.7 million payable before September 30, 2013, RMB2.7 million before December 31, 2014 and RMB1.4 million before December 31, 2015. As of the the Latest Practicable Date, the Company had paid to Longyuan Construction all of the above outstanding construction consideration and warranty deposits, pursuant to the mediation letter. By accepting the mediation letter, the Company and Longyuan Construction have both waived their rights to appeal. The Company considers this matter settled.
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APPENDIX II
In September 2009, the Company, through its subsidiary, Zhoushan Jingrui Property Co., Ltd. (舟山景瑞置業有限公司) (“ Zhoushan Jingrui ”), entered into a general contractor agreement with Hengzun Group Co., Ltd. (恆尊集團有限公司) (“ Hengzun Group* ”), in connection with the construction for part of Zhoushan Jingrui HOPSCA project. The total contract price under the agreement was approximately RMB29.9 million. In July 2012, Hengzun Group filed a lawsuit against Zhoushan Jingrui with the People’s Court of Putuo District, Zhoushan, Zhejiang Province, claiming a total outstanding construction consideration of RMB10.3 million plus related fees. The construction of Zhoushan Jingrui HOPSCA had been substantially completed at that time and the Company had already paid a total RMB18.5 million to Hengzun Group under the general contractor agreement. In October 2012, Hengzun Group withdrew the lawsuit and both parties agreed to engage a third party professional construction cost consulting firm to review the contract price. Due to the delay in delivering the finalized review report by this consulting firm, in March 2013, Hengzun Group filed another lawsuit against Zhoushan Jingrui, claiming a total outstanding construction consideration of RMB10.3 million plus related fees. As of May 19, 2015, the Company and Hengzun Group reached a mediation agreement, pursuant to which Hengzun Group agreed to return RMB250,000 to the Company by no later than May 31, 2015, and upon such payment, both parties agreed they have no further disputes in this case. As of the Latest Practicable Date, Hengzun Group had returned RMB250,000 to the Company.
The construction agreements with Longyuan Construction and Hengzun Group were entered into prior to the full implementation of the Company’s standardized project development procedures. The total contract prices of the agreements with these general construction contractors were fixed without the flexibility for adjustment, and was determined by taking into account the then prevailing market prices and limited estimations of fluctuations as to certain costs, primarily related to raw materials or labor. The Company believes the disputes with these contractors were primarily due to the significant increases in the costs and expenses incurred by them during the relevant construction periods, which led to such contractors becoming unsatisfied as to the original construction agreements and decided not to perform under such agreements. To avoid future disputes, the Company has since amended its standard terms of agreements with general construction contractors, which provide certain adjustment to the total contract price based on the suggested standard salary for construction workers issued periodically by the relevant local labor authority during the contract term. On the other hand, the general contractor agreements provide the price ranges for key raw materials, namely steel and concrete, by referring to the average monthly market prices issued by relevant local authorities during the property construction period. By providing the flexibility to adjust the contract price rather than the agreement being strictly based on a pre-determined fixed total price, the Company believes it is now able to better mitigate the potential risks as to disputes between the Company and its general construction contractors regarding the contract price, while continuing to be able to manage any potential cost fluctuations.
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APPENDIX II
(b) Shanghai Garden City
On December 31, 2012, a claim for the return of a deposit of RMB30,500,000 and land use rights with a carrying value of RMB23,000,000 as at December 31, 2012 was brought by the Education Bureau of Hongkou District, Shanghai (上海市虹口區教育局) (the “ Education Bureau ”) against Shanghai Garden City Real Estate Development Co., Ltd (“ Shanghai Garden City ”), a subsidiary of the Group, in relation to Shanghai Garden City’s failure to construct and deliver a school by May 2007 as agreed pursuant to an agreement (教育配套協 議) signed between Shanghai Garden City and the Education Bureau on June 20, 2005 (the “ Hongkou Case* ”). On July 23, 2013, Hongkou District People’s Court of Shanghai (上海市虹 口區人民法院) delivered a judgment in favor of the Education Bureau, ruling that the Education Bureau is entitled to retain the RMB30,500,000 and to obtain the land use rights in dispute. The Group has filed a petition to appeal the judgement in August 2013. The appeal was dismissed by the Court on December 25, 2015.
Since the Company had transferred 100% of the equity interest in Shanghai Garden City to certain independent third parties on February 4, 2016 pursuant to an equity transfer agreement with such third parties, as set out in the equity transfer agreement, the Company will not be liable for any future potential losses or claims in relation to this litigation upon the completion of the equity transfer, the Company is therefore of the view that the dismissed appeal would not have a material adverse effect on the Company’s business, financial condition and operation results.
The Directors believe that these claims, as set out in sub-paragraphs (a) and (b) above, would not have a material adverse effect on the Company’s business, financial condition and operation results.
Saved as disclosed above, as at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened by or against the Group, that would have a material adverse effect on its business, financial condition or results of operations.
5. GENERAL
The English text of this circular shall prevail over the Chinese text in case of inconsistency.
The joint company secretaries of the Company are Mr. Lee Chian Jie and Ms. Lai Siu Kuen (FCIS, FCS).
The registered office of the Company is situated at 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands and its principal place of business in Hong Kong is situated at Room 09, 43/F, China Resources Building, 26 Harbour Road, Hong Kong.
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GENERAL INFORMATION
APPENDIX II
6. DOCUMENTS AVAILABLE FOR INSPECTION
The following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Room 09, 43/F, China Resources Building, 26 Harbour Road, Hong Kong during normal business hours on any weekday (public holidays excluded) from the date of this circular up to and including May 12, 2016:
-
i. the memorandum and articles of association of the Company;
-
ii. the material contracts referred to in the paragraph “Material Contracts” in this appendix;
-
iii. the annual results announcement of the Company for the year ended December 31, 2015;
-
iv. the annual reports of the Company for the years ended December 31, 2013 and December 31, 2014; and
-
v. this circular.
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