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.

SHENZHOU INTERNATIONAL GROUP HOLDINGS LIMITED

（申 洲 國 際 集 團 控 股 有 限 公 司 * ）

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2313)

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

Reference is made to the announcement of the Company dated 16 December 2016 in relation to the renewal of continuing connected transactions. The agreements referred to in the said announcement (including the annual caps thereof) will expire on 31 December 2019.

The Board announces that, on 24 December 2019, the Principal Lease Agreement was renewed whereby Shenzhou Properties agreed to lease the Apparel Production Properties to Shenzhou Knitting, a wholly-owned subsidiary of the Company. The Principal Lease Agreement is for a term of three years commencing on 1 January 2020 and expiring on 31 December 2022.

The Board also announces that, on 24 December 2019, Shenzhou Knitting entered into the New Lease Agreement with Shenzhou Properties under which Shenzhou Properties agreed to lease the New Properties to Shenzhou Knitting from the Date of Completion and Delivery to 31 December 2022.

Shenzhou Properties is a connected person of the Company. Accordingly, the transactions contemplated under the Principal Lease Agreement and the New Lease Agreement constitute continuing connected transactions of the Company under the Listing Rules.

  • for identification purposes only

1

As the Principal Lease Agreement and the New Lease Agreement are of a similar nature and entered into with Shenzhou Properties, they shall be aggregated under Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratios of the annual caps in respect of each of the Principal Lease Agreement and the New Lease Agreement, on an aggregated basis, are less than 5% under the Listing Rules, the transactions contemplated thereunder are exempt under Rule 14A.76(2) of the Listing Rules and are only subject to reporting and announcement requirements in accordance with Chapter 14A of the Listing Rules.

INTRODUCTION

Reference is made to the announcement of the Company dated 16 December 2016 in relation to the renewal of continuing connected transactions. The agreements referred to in the said announcement (including the annual caps thereof) will expire on 31 December 2019.

The Board announces that, on 24 December 2019, the Principal Lease Agreement was renewed whereby Shenzhou Properties agreed to lease the Apparel Production Properties to Shenzhou Knitting, a wholly-owned subsidiary of the Company. The Principal Lease Agreement is for a term of three years commencing on 1 January 2020 and expiring on 31 December 2022.

The Board also announces that, on 24 December 2019, Shenzhou Knitting entered into the New Lease Agreement with Shenzhou Properties under which Shenzhou Properties agreed to lease the New Properties to Shenzhou Knitting from the Date of Completion and Delivery to 31 December 2022.

Details of each of the Principal Lease Agreement and New Lease Agreement are set out below.

2

CONTINUING CONNECTED TRANSACTIONS

  1. Principal Lease Agreement

Terms

Date

:

24 December 2019

Parties

:

(1)

Shenzhou Knitting

(2)

Shenzhou Properties

Subject

:

Pursuant to the Principal Lease Agreement, Shenzhou

Properties agreed to lease the Apparel Production

Properties to the Group.

Term

:

Three years commencing on 1 January 2020 and

expiring on 31 December 2022 with a right of renewal

exercisable by Shenzhou Knitting for a further term of

three years at or below the then market rate subject to

compliance with the then applicable Listing Rules by

the Company.

Pricing basis

:

The pricing of rents for the Apparel Production

Properties shall be determined in accordance with the

following principles in ascending order:

(1)

market price; and

(2)

cost incurred for renting out the relevant property

plus a 5% profit.

Payment for the rent will be satisfied by the internal resources of the Group.

The Principal Lease Agreement is terminable by Shenzhou Knitting during the three-year contract period by giving no less than three months' notice to Shenzhou Properties.

3

Rents

Total land/

building

Properties leased under the

floor area

Principal Lease Agreement

(square

("Apparel Production Properties")

metres)

Annual Rents

(RMB;

including

5% value-

added tax)

Industrial towers A and B situated at Fengyang Road

Two, Dagang Industrial City, Ningbo Economic and

Technical Development Zone, Xinqi Town, Beilun

District, Ningbo City, Zhejiang Province, the PRC

28,117.12

6,471,864

Industrial towers C and D situated at Fengyang Road

Two, Dagang Industrial City, Ningbo Economic and

Technical Development Zone, Xinqi Town, Beilun

District, Ningbo City, Zhejiang Province, the PRC

12,982.44

2,804,208

Industrial tower G situated at Fengyang Road Three,

Dagang Industrial City, Ningbo Economic and

Technical Development Zone, Xinqi Town, Beilun

District, Ningbo City, Zhejiang Province, the PRC

17,982.68

3,884,256

Total

59,082.24

13,160,328

The above rents chargeable by Shenzhou Properties for the Apparel Production Properties are determined with reference to market rates for leasing similar properties and production facilities from independent third parties under normal commercial terms in the ordinary course of their businesses in Ningbo, the PRC and with reference to the Valuation Report. The independent valuer has also confirmed in the Valuation Report that the above rents are fair and reasonable. The aforesaid rents included 5% value- added tax.

4

Historical figures

For each of the two years ended 31 December 2017 and 2018, rents excluding 5% value-added tax paid by the Group to Shenzhou Properties in respect of the Apparel Production Properties was approximately RMB9,624,000 (including 5% value-added tax was approximately RMB10,105,000), while rents excluding 5% value-added tax paid and to be paid by the Group to Shenzhou Properties in respect of the Apparel Production Properties for the year ending 31 December 2019 are estimated to amount to approximately RMB9,624,000 (including 5% value-added tax was approximately RMB10,105,000).

  1. New Lease Agreement

Terms

Date

:

24 December 2019

Parties

:

(1)

Shenzhou Knitting

(2)

Shenzhou Properties

Subject

:

Pursuant to the New Lease Agreement, Shenzhou

Properties agreed to lease the New Properties to the

Group.

Term

:

From the Date of Completion and Delivery to 31

December 2022 with a right of renewal exercisable by

Shenzhou Knitting for a further term of three years at

or below the then market rate subject to compliance

with the then applicable Listing Rules by the Company.

Pricing basis

:

The pricing of rents for the New Properties shall be

determined in accordance with the following principles

in ascending order:

(1)

market price; and

(2)

cost incurred for renting out the relevant property

plus a 5% profit.

Payment for the rent will be satisfied by the internal resources of the Group.

The New Lease Agreement is terminable by Shenzhou Knitting during the three-year contract period by giving no less than three months' notice to Shenzhou Properties.

5

Rents

Total land/

building

New properties under construction to be leased

floor area

under the New Lease Agreement

(square

("New Properties")

metres)

Annual Rents

(RMB;

including

5% value-

added tax)

Factory buildings under construction and expected to

be completed in January 2020 at the east side of

industrial towers C and D, and at the east-side empty

sites of industrial towers A and B situated at Fengyang

Road Two, Dagang Industrial City, Ningbo Economic

and Technical Development Zone, Xinqi Town, Beilun

District, Ningbo City, Zhejiang Province, the PRC

25,235.18

6,056,436

Staff quarters under construction and expected to

be completed in December 2020 at the original

sites of industrial towers E and F situated at No.

51 Dagang Middle Road, Dagang Industrial City,

Ningbo Economic and Technical Development Zone,

Xinqi Town, Beilun District, Ningbo City, Zhejiang

Province, the PRC

68,563.72

18,100,824

Total

93,798.90

24,157,260

The above rents chargeable by Shenzhou Properties for the New Properties are determined with reference to market rates for leasing similar properties and production facilities from independent third parties under normal commercial terms in the ordinary course of their businesses in Ningbo, the PRC and with reference to the Valuation Report. The independent valuer has also confirmed in the Valuation Report that the above rents are fair and reasonable.

6

REASONS FOR ENTERING INTO THE PRINCIPAL LEASE AGREEMENT AND THE NEW LEASE AGREEMENT

The reason for entering into the Principal Lease Agreement and the New Lease Agreement is to enable the Group to continue to carry out its apparel production and provide staff accommodation at the above premises, which is currently owned by Shenzhou Properties, at a fair market price and to avoid unnecessary cost, time and effort and interruption of the Group's business caused by relocation.

LISTING RULES IMPLICATIONS

Shenzhou Properties is owned as to 80% by Mr. Ma Jianrong, the Chairman and an executive Director of the Company, and as to 20% by Rongrong Industrial, an associate of Mr. Ma Jianrong under the Listing Rules. As such, Shenzhou Properties is a connected person pursuant to Rule 14A.07 of the Listing Rules by virtue of being an associate of Mr. Ma Jianrong.

As the Principal Lease Agreement and the New Lease Agreement are of a similar nature and entered into with Shenzhou Properties, they shall be aggregated under Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratios of the annual caps in respect of each of the Principal Lease Agreement and the New Lease Agreement, on an aggregated basis, are less than 5% under the Listing Rules, the transactions contemplated thereunder are exempt under Rule 14A.76(2) of the Listing Rules and are only subject to reporting and announcement requirements in accordance with Chapter 14A of the Listing Rules.

The Directors, including the independent non-executive Directors but excluding (i) Mr. Ma Jianrong, (ii) Mr. Ma Renhe, being a concert party of Mr. Ma Jianrong, and (iii) Mr. Huang Guanlin, being a concert party of Mr. Ma Jianrong and pursuant to his interest in Rongrong Industrial, who abstained from voting due to their material interest in the Principal Lease Agreement and the New Lease Agreement, consider that the Principal Lease Agreement and the New Lease Agreement have been entered into on normal commercial terms and in the ordinary course of business of the Company and the terms of the Principal Lease Agreement and the New Lease Agreement (including the annual rents for the Apparel Production Properties and the New Properties) are fair and reasonable and in the interests of the Shareholders as a whole.

7

INFORMATION ON THE COMPANY AND SHENZHOU PROPERTIES

The Company is a vertically integrated knitwear manufacturer in the PRC and is also engaged in the sale of knitwear products. Shenzhou Knitting is the principal subsidiary of the Company engaged in fabric knitting and weaving, dyeing and finishing, embroidery and cutting and sewing of knitwear products.

Shenzhou Properties is a property developer based in Ningbo, the PRC whose principal business involves property development and property leasing and management. Shenzhou Properties is owned as to 80% by Mr. Ma Jianrong, the Chairman and an executive Director of the Company, and as to 20% by Rongrong Industrial. Rongrong Industrial is owned as to 90% by Mr. Ma Jianrong and as to 10% by Mr. Huang Guanlin, an executive Director of the Company.

DEFINITIONS

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

"Apparel Production

properties leased under the Principal Lease Agreement

Properties"

including (1) two factory buildings and a newly

constructed industrial tower AB, situated at Dagang

Industrial City, Fengyang Road Two, Xinqi Town,

Ningbo Economic and Technical Development Zone,

Zhejiang Province, the PRC; (2) industrial towers C

and D situated in Dagang Industrial City, Fengyang

Road Two, Xinqi Town, Ningbo Economic and

Technical Development Zone, Ningbo, Zhejiang

Province, the PRC; and (3) industrial tower G situated

at No. 46, Fengyang Road Three, Xinqi Town, Beilun

District, Ningbo, Zhejiang Province, the PRC.

"associates"

has the meaning ascribed thereto in the Listing Rules

"Board"

the board of Directors

8

"Company"

"connected persons"

"Date of Completion

and Delivery"

"Directors" "Group" "Hong Kong"

"Listing Rules"

"New Lease Agreement"

"New Properties"

Shenzhou International Group Holdings Limited （ 申 洲 國 際 集 團 控 股 有 限 公 司* ）, a c o m p a ny incorporated in the Cayman Islands with limited liability whose securities are listed on the Main Board of the Stock Exchange

has the meaning ascribed thereto in the Listing Rules

the date on which Shenzhou Properties delivers the New Properties to Shenzhou Knitting after completion of construction, being the actual commencement date of the New Lease Agreement

the directors of the Company

the Company and its subsidiaries

the Hong Kong Special Administrative Region of the

PRC

the Rules Governing the Listing of Securities on the Stock Exchange

a new lease agreement dated 24 December 2019 between Shenzhou Knitting and Shenzhou Properties

new properties under construction to be leased under the New Lease Agreement including (1) factory buildings under construction and expected to be completed in January 2020 at the east side of industrial towers C and D, and at the east-side empty sites of industrial towers A and B, Dagang Industrial City, Xinqi, Beilun District, Ningbo, Zhejiang Province, the PRC; and (2) staff quarters under construction and expected to be completed in December 2020 at the original sites of industrial towers E and F, No. 51 Dagang Middle Road, Xinqi, Beilun District, Ningbo, Zhejiang Province, the PRC

9

"PRC"

"Principal Lease Agreement"

"RMB"

"Rongrong Industrial"

"Shareholder(s)" "Shares"

"Shenzhou Knitting"

"Shenzhou Properties"

"Stock Exchange"

the People's Republic of China and for the purposes of this announcement shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

a principal lease agreement dated 24 December 2019 between Shenzhou Knitting and Shenzhou Properties

Renminbi, the lawful currency of the PRC

寧波榮榮實業投資有限公司 (Ningbo Rongrong Industrial Investment Co., Ltd*), a limited liability company established in the PRC on 19 December 2000 and is owned as to 90% by Mr. Ma Jianrong, an executive Director of the Company and as to 10% by Mr. Huang Guanlin, an executive Director of the Company

holder(s) of the Shares

shares at par value of HK$0.10 each in the share capital of the Company

寧波申洲針織有限公司 (Ningbo Shenzhou Knitting Co., Ltd.*), a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of the Company

寧波申洲置業有限公司 (Ningbo Shenzhou Properties Co., Ltd.*), a limited liability company established in the PRC on 10 February 2004 and is owned as to 80% by Mr. Ma Jianrong, an executive Director of the Company, and as to 20% by Rongrong Industrial

The Stock Exchange of Hong Kong Limited

10

"subsidiary"

"Valuation Report"

"Valuer"

has the meaning ascribed thereto under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)

the valuation report prepared and issued by the Valuer dated 18 December 2019

RHL Appraisal Limited

By Order of the Board

Shenzhou International Group Holdings Limited

Ma Jianrong

Chairman

Ningbo, the PRC, 24 December 2019

As at the date of this announcement, the five executive Directors are Mr. Ma Jianrong, Mr. Huang Guanlin, Mr. Ma Renhe, Mr. Wang Cunbo and Ms. Chen Zhifen; and the four independent non-executive Directors are Mr. Chen Xu, Mr. Jiang Xianpin, Mr. Qiu Weiguo and Mr. Zhang Bingsheng.

  • for identification purposes only

11

Attachments

  • Original document
  • Permalink

Disclaimer

Shenzhou International Group Holdings Limited published this content on 24 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 December 2019 04:35:09 UTC