Jinke Smart Services Group Co., Ltd. — Capital/Financing Update 2021

Dec 27, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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Jinke Smart Services Group Co., Ltd. 金科智慧服務集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 9666)

CONNECTED TRANSACTION ACQUISITION OF THE ENTIRE EQUITY INTEREST IN A TARGET COMPANY

THE ACQUISITION

The Board is pleased to announce that on 27 December 2021 (after trading hours), Jinxiao Xinyue entered into the Agreement with Jinke Enterprise for the sale and purchase of the Sale Equity, representing the entire registered capital of the Target Company, and the Sale Debt for a total consideration of RMB312,342,435, subject to the terms and conditions as set out in the Agreement.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group has been providing property management and community value-added services. In accordance with the Group’s future development strategy, the Group has set up new local living services with a focus on the development of group catering services. Through the Acquisition, the Group can successfully integrate high-quality group catering resources, expand medium to high-end group catering projects, optimise the local supply chain system and lay out the hotel operation management segment to further improve the strength of value-added services in high-density areas. Meanwhile, the acquisition of a well-organised and experienced team in group catering, hotel management and operation will help the Group expand its group catering project market and rapidly enhance the Group’s local life service operation and management capabilities. In addition, the Acquisition is conducive to generating synergies from the Group’s property management services, community value-added services and local life services to provide more comprehensive and high-quality value-added service experiences such as travel, group meals for owners and customers, so as to enhance the loyalty of owners of the Group.

The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

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LISTING RULES IMPLICATION

As at the date of this announcement, Jinke Enterprise is a wholly-owned subsidiary of Jinke Property. As Jinke Property is the controlling shareholder of the Company, Jinke Enterprise is therefore a connected person of the Company. Thus the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one of the applicable percentage ratios in respect of the Acquisition exceeds 0.1% but is less than 5%, the Acquisition is only subject to the reporting and announcement and is exempted from the circular, independent financial advice and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 27 December 2021 (after trading hours), Jinxiao Xinyue entered into the Agreement with Jinke Enterprise for the sale and purchase of the Sale Equity, representing the entire registered capital of the Target Company, and the Sale Debt, for the Consideration in the amount of RMB312,342,435, subject to the terms and conditions as set out in the Agreement.

THE ACQUISITION

Principal terms of the Agreement are summarised as follows:

Date:

27 December 2021

Parties:

• (1) Jinke Enterprise as vendor; and

• (2) Jinxiao Xinyue as purchaser.

Subject matter

Pursuant to the Agreement, Jinke Enterprise has conditionally agreed to sell, and Jinxiao Xinyue has conditionally agreed to purchase, the Sale Equity, representing the entire registered capital of the Target Company, and the Sale Debt.

Consideration

Consideration is RMB312,342,435, which comprise (i) RMB261,000,000 for the Sale Equity; and (ii) RMB51,342,435 for the Sale Debt.

The Consideration was determined after arm’s length negotiations between Jinxiao Xinyue and Jinke Enterprise with reference to, among others, (i) the appraised market value of the Sale Equity of approximately RMB261,000,000 valued by an independent and qualified valuer using market approach as at 30 September 2021 on the assumption that the Internal Reorganisation having been completed; and (ii) the cash amount of the Sale Debt on a dollar-to-dollar basis.The Consideration will be financed by the internal resources of the Group.

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Effectiveness

The terms of the Agreement shall become effective upon the satisfaction of the following conditions:

• (i) the Agreement having been duly signed and sealed with common seal by Jinxiao Xinyue and Jinke Enterprise; and

• (ii) the transactions contemplated under the Agreement and the change of the composition of the board of directors of the Target Company having been approved by Jinke Enterprise by way of shareholder’s resolution of the Target Company.

Payment manner

RMB291,842,435 of the Consideration shall be payable in cash within three days after the Agreement having become effective.

As at the date of this announcement, the Target Company has provided a corporate guarantee in favour of the debts owed by Jinke Enterprise in the amount of RMB20,500,000. Pursuant to the Agreement, Jinxiao Xinyue shall retain an equivalent amount of RMB20,500,000 of the remaining portion of the Consideration (the “ Retention Money ”) subject to the release of such corporate guarantee. Upon full or partial release of such corporate guarantee (as the case may be), Jinxiao Xinyue shall settle the Retention Money with reference to the released portion of such corporate guarantee on a dollar-to-dollar basis within three days upon such release.

Guarantee

Pursuant to the Agreement, Jinke Enterprise warrants and guarantees to Jinxiao Xinyue that the actual earnings before interest, taxes, depreciation and amortization of the Target Company for the year ending 31 December 2022 (the “ EBITDA ”) shall not be less than RMB30,000,000 (the “ Guaranteed EBITDA ”).

If the EBITDA is less than the Guaranteed EBITDA, Jinke Enterprise shall compensate to the Jinxiao Xinyue an amount calculated as follows:

A = (Guaranteed EBITDA – EBITDA) x 8.7

In such event, Jinke Enterprise shall compensate to Jinxiao Xinyue a sum equivalent to “A” within 30 days after the issue of the consolidated audited accounts of the Target Group for the year ending 31 December 2022.

Jinke Property and Jinxiao Xinyue shall jointly nominate auditors to complete the consolidated audited accounts of the Target Group for the year ending 31 December 2022 on or before 31 March 2023.

Completion

Completion of the Acquisition shall take place within 10 days upon the Agreement having become effective and fulfillment of the following conditions:–

• (i) Jinke Enterprise having confirmed in writing the assignment of the Sale Debt to Jinxiao Xinyue;

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• (ii) the hotel management contracts as stipulated in the Agreement having been executed and delivered to Jinxiao Xinyue; and

• (iii) the Internal Reorganisation having been completed

Upon completion of Acquisition, the Target Company will become an indirect wholly-owned subsidiary of the Company and the financial results of the Target Group will be consolidated into the financial statements of the Group.

INFORMATION ABOUT THE PARTIES AND THE TARGET COMPANY

The Group and Jinxiao Xinyue

The Group is primarily engaged in the provision of property management services, value-added services to non-property owners, community value-added services and smart living technology solutions in the PRC.

Jinxiao Xinyue is a company established in the PRC with limited liability and is wholly owned by the Company. As at the date of this announcement, it is principally engaged in the group catering service.

Jinke Property and Jinke Enterprise

Jinke Property is a joint stock company established in the PRC with limited liability, the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 000656.SZ). It was established in 1998. After more than two decades of innovative development, it has become a large conglomerate featuring an overall concept of four-in-one with coordinated development of ecosystem: giving priority to real estate, strengthening smart service, improving technology industry, and boosting commerce, cultural tourism and health care, to further integrate the industrial chain ecosystem. It is a leading “service provider for wonderful life” with strong comprehensive competitiveness contributing to urban development.

Jinke Enterprise is a company established in the PRC with limited liability and is wholly owned by Jinke Property. Jinke Enterprise is principally engaged in the business of construction work, corporate management, technology consultation, etc.

The Target Company

The Target Company is a company established in the PRC with limited liability and is principally engaged in the high-end catering, group catering and hotel management services in the PRC.

As a condition precedent to the completion of the Acquisition, the Target Group shall undergo a series of internal reorganisation. Upon completion of the Internal Reorganisation, the Target Company will have 13 wholly-owned subsidiaries and the details of which are set out below:

• (i) Chongqing Jinling Catering Co., Ltd.*（重慶金瓴餐飲有限公司）is a company established in the PRC with limited liability and is principally engaged in catering service;

• (ii) Chongqing Jinke Liangpin Food Co., Ltd.*（重慶金科良品食品有限公司）is a company established in the PRC with limited liability and is principally engaged in food production and retails;

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• (iii) Chongqing Kehua Shengjia Hotel Management Co., Ltd.*（重慶科華聖嘉酒店管理有限公 司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (iv) Hangzhou Kerui Ruijing Hotel Management Co., Ltd.*（杭州科睿瑞晶酒店管理有限公司） is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (v) Chengdu Kejing Ruijing Hotel Management Co., Ltd.*（成都科晶瑞晶酒店管理有限公司） is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (vi) Chongqing Duke Shengjia Hotel Management Co., Ltd.*（重慶都科聖嘉酒店管理有限公司） is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (vii) Guiyang Kejin Ruijing Hotel Management Co., Ltd.*（貴陽科金瑞晶酒店管理有限公司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (viii) Chongqing Yongchuan Kemao Ruijing Hotel Management Co., Ltd.*（重慶市永川區科茂 瑞晶酒店管理有限公司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (ix) Chongqing Kezhen Hotel Management Co., Ltd.*（重慶科振酒店管理有限公司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (x) Chongqing Kaizhou Zhenke Hotel Management Co., Ltd.*（重慶市開州區臻科酒店管理有限 公司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (xi) Suzhou Kerui Hotel Management Co., Ltd.*（蘇州科睿酒店管理有限公司）is a company established in the PRC with limited liability and is principally engaged in hotel management;

• (xii) Wuxi Kebo Hotel Management Co., Ltd.*（無錫科博酒店管理有限公司）is a company established in the PRC with limited liability and is principally engaged in hotel management; and

• (xiii) Chengdu Shike Hotel Management Co., Ltd.*（成都世科酒店管理有限公司））is a company established in the PRC with limited liability and is principally engaged in hotel management.

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Set out below is the unaudited financial information of the Target Group for the two years ended 31 December 2020 and the nine months ended 30 September 2021 respectively on the assumption that the Internal Reorganisation has been completed on 1 January 2019:

			For the nine
	For the year ended		months ended
	31 December		30 September
	2019	2020	2021
	RMB’000	RMB’000	RMB’000
	(unaudited)	(unaudited)	(unaudited)
	approximately	approximately	approximately
Net profit/(loss) before tax	3,407	4,718	17,256
Net profit/(loss) after tax	574	2,791	14,149

The unaudited total asset of the Target Group was approximately RMB25,720,655 as at 31 December 2020 and RMB62,075,122 as at 30 September 2021.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group has been providing property management and community value-added services. In accordance with the Group’s future development strategy, the Group has set up new local living services with a focus on the development of group catering services. Through the Acquisition, the Group can successfully integrate high-quality group catering resources, expand medium to highend group catering projects, optimise the local supply chain system and lay out the hotel operation management segment to further improve the strength of value-added services in high-density areas. Meanwhile, the acquisition of a well-organised and experienced team in group catering, hotel management and operation will help the Group expand its group catering project market and rapidly enhance the Group’s local life service operation and management capabilities. In addition, the Acquisition is conducive to generating synergies from the Group’s property management services, community value-added services and local life services to provide more comprehensive and high-quality value-added service experiences such as travel, group meals for owners and customers, so as to enhance the loyalty of owners of the Group.

The Directors (including the independent non-executive Directors) consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

BOARD APPROVAL

At the Board meeting held to approve the Agreement, Mr. Luo Licheng and Mr. Liang Zhongtai who also hold management positions in Jinke Property, have abstained from voting on the relevant board resolutions of the Company. Apart from Mr. Luo Licheng and Mr. Liang Zhongtai, none of the Directors has or is deemed to have a material interest in the Agreement and is required to abstain from voting on the relevant Board resolutions approving the Agreement.

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LISTING RULES IMPLICATION

As at the date of this announcement, Jinke Enterprise is a wholly-owned subsidiary of Jinke Property. As Jinke Property is the controlling shareholder of the Company, Jinke Enterprise is therefore a connected person of the Company. Thus the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one of the applicable percentage ratios in respect of the Acquisition exceeds 0.1% but is less than 5%, the Acquisition is only subject to the reporting and announcement requirements and is exempted from the circular, independent financial advice and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

“Acquisition”	the acquisition of the Sale Equity and Sale Debt
“Agreement”	the agreement dated 27 December 2021 entered into between Jinxiao
	Xinyue and Jinke Enterprise in relation to the sale and purchase of the
	Sale Equity and Sale Debt
“associate”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Jinke Smart Services Group Co., Ltd.* (金科智慧服務集團股份有限公
	司), a joint stock company established in the PRC with limited liability
	and the H Shares of which are listed on the Main Board of the Stock
	Exchange (Stock Code: 9666)
“connected person”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the aggregate consideration for the Acquisition, being RMB312,342,435
“Directors”	the directors of the Company
“H Share(s)”	the overseas listed foreign share(s) in the ordinary share capital of the
	Company with a nominal value of RMB1.00 each, which are subscribed
	for and traded in Hong Kong dollars and listed on the Main Board of
	the Stock Exchange
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic
	of China

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“Independent ThirdParty(ies)”a person, or in the case of a company, the company or its ultimatebeneficial owner(s), who is independent of and not connected with theGroup and its connected persons and their respective ultimate beneficialowner(s) or their respective associates“InternalReorganisation”a series of corporate reorganisation of the Target Group to be undergonepursuant to the terms of the Agreement“Jinke Enterprise”Chongqing Jinke Enterprise Management Group Co., Ltd.* (重慶金科企業管理集團有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of Jinke Property“Jinke Property”Jinke Property Group Co., Ltd.* (金科地產集團股份有限公司), a jointstock company established in the PRC with limited liability, listedon the Shenzhen Stock Exchange (stock code: 000656.SZ) and thecontrolling shareholder of the Company“Jinxiao Xinyue”Chongqing Jinxiao Xinyue Catering Management Co., Ltd.* (重慶金曉心悅餐飲管理有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of the Company“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited“PRC”the People’s Republic of China and for the purpose of this	“Independent ThirdParty(ies)”a person, or in the case of a company, the company or its ultimatebeneficial owner(s), who is independent of and not connected with theGroup and its connected persons and their respective ultimate beneficialowner(s) or their respective associates“InternalReorganisation”a series of corporate reorganisation of the Target Group to be undergonepursuant to the terms of the Agreement“Jinke Enterprise”Chongqing Jinke Enterprise Management Group Co., Ltd.* (重慶金科企業管理集團有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of Jinke Property“Jinke Property”Jinke Property Group Co., Ltd.* (金科地產集團股份有限公司), a jointstock company established in the PRC with limited liability, listedon the Shenzhen Stock Exchange (stock code: 000656.SZ) and thecontrolling shareholder of the Company“Jinxiao Xinyue”Chongqing Jinxiao Xinyue Catering Management Co., Ltd.* (重慶金曉心悅餐飲管理有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of the Company“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited“PRC”the People’s Republic of China and for the purpose of this	“Independent ThirdParty(ies)”a person, or in the case of a company, the company or its ultimatebeneficial owner(s), who is independent of and not connected with theGroup and its connected persons and their respective ultimate beneficialowner(s) or their respective associates“InternalReorganisation”a series of corporate reorganisation of the Target Group to be undergonepursuant to the terms of the Agreement“Jinke Enterprise”Chongqing Jinke Enterprise Management Group Co., Ltd.* (重慶金科企業管理集團有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of Jinke Property“Jinke Property”Jinke Property Group Co., Ltd.* (金科地產集團股份有限公司), a jointstock company established in the PRC with limited liability, listedon the Shenzhen Stock Exchange (stock code: 000656.SZ) and thecontrolling shareholder of the Company“Jinxiao Xinyue”Chongqing Jinxiao Xinyue Catering Management Co., Ltd.* (重慶金曉心悅餐飲管理有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of the Company“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited“PRC”the People’s Republic of China and for the purpose of this	“Independent ThirdParty(ies)”a person, or in the case of a company, the company or its ultimatebeneficial owner(s), who is independent of and not connected with theGroup and its connected persons and their respective ultimate beneficialowner(s) or their respective associates“InternalReorganisation”a series of corporate reorganisation of the Target Group to be undergonepursuant to the terms of the Agreement“Jinke Enterprise”Chongqing Jinke Enterprise Management Group Co., Ltd.* (重慶金科企業管理集團有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of Jinke Property“Jinke Property”Jinke Property Group Co., Ltd.* (金科地產集團股份有限公司), a jointstock company established in the PRC with limited liability, listedon the Shenzhen Stock Exchange (stock code: 000656.SZ) and thecontrolling shareholder of the Company“Jinxiao Xinyue”Chongqing Jinxiao Xinyue Catering Management Co., Ltd.* (重慶金曉心悅餐飲管理有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of the Company“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited“PRC”the People’s Republic of China and for the purpose of this	“Independent ThirdParty(ies)”a person, or in the case of a company, the company or its ultimatebeneficial owner(s), who is independent of and not connected with theGroup and its connected persons and their respective ultimate beneficialowner(s) or their respective associates“InternalReorganisation”a series of corporate reorganisation of the Target Group to be undergonepursuant to the terms of the Agreement“Jinke Enterprise”Chongqing Jinke Enterprise Management Group Co., Ltd.* (重慶金科企業管理集團有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of Jinke Property“Jinke Property”Jinke Property Group Co., Ltd.* (金科地產集團股份有限公司), a jointstock company established in the PRC with limited liability, listedon the Shenzhen Stock Exchange (stock code: 000656.SZ) and thecontrolling shareholder of the Company“Jinxiao Xinyue”Chongqing Jinxiao Xinyue Catering Management Co., Ltd.* (重慶金曉心悅餐飲管理有限公司), a company established in the PRC withlimited liability and is a wholly-owned subsidiary of the Company“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited“PRC”the People’s Republic of China and for the purpose of this
announcement, excludingAdministrative Region and Ta		,Hong Kong, the Macau Special
		wan
“Sale	Debt”the debt owed by the TargetSeptember 2021 in the amount	Company toof RMB51,3	Jinke Enterp42,435	rise as at 30
“Sale	Equity”the entire registered capital oowned by Jinke Enterprise as	f the Targetat the date of t	Company, whhis announce	ich is whollyment
“Shar“Shar	e(s)”share(s) in the share capital oRMB1.00 each, comprising theholders”holder(s) of Share(s)	f the Compane H Shares on	y, with a nomly	inal value of
“Stoc	k Exchange”The Stock Exchange of Hong	Kong Limited
“Targ	et Company”Chongqing Jinke Jinchen Hote酒店管理有限公司), a compaliability and is wholly owned	l Managemenny incorporatby Jinke Enter	t Co., Ltd.* (ed in the PRCprise	重慶金科金辰with limited

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“Target Group”

the Target Company and its subsidiaries

“RMB” Renminbi, the lawful currency of the PRC

“%” per cent

By order of the Board Jinke Smart Services Group Co., Ltd. Xia Shaofei Chairman

Chongqing, 27 December 2021

As at the date of this announcement, the Board comprises Mr. Xia Shaofei, Mr. Luo Chuansong and Mr. Xu Guofu as executive directors, Mr. Luo Licheng, Mr. Liang Zhongtai and Mr. Li Nan as non-executive directors, and Mr. Cao Guohua, Ms. Yuan Lin and Mr. Chan Chi Fung Leo as independent non-executive directors.

• for identification purpose only

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