China Electronics Optics Valley Union : CONNECTED TRANSACTION LANDSCAPE CONSTRUCTION CONTRACT IN RELATION TO THE GROUP’S INDUSTRIAL PARK

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China Electronics Optics Valley Union Holding Company Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 798)

CONNECTED TRANSACTION

LANDSCAPE CONSTRUCTION CONTRACT IN RELATION TO

THE GROUP'S INDUSTRIAL PARK

LANDSCAPE CONSTRUCTION CONTRACT

The Board is pleased to announce that on 29 April 2022, Western Zhigu, an indirect non-wholly owned subsidiary of the Company entered into the Landscape Construction Contract with the Contractor, pursuant to which the Contractor is engaged to provide certain landscape engineering and construction works to Western Zhigu in respect of the Landscape Construction Project at a consideration of RMB4,836,164.32 (equivalent to approximately HK$5,734,240.03) (subject to adjustments).

LISTING RULES IMPLICATIONS

As at the date of this announcement, CEC indirectly holds 2,550,000,000 Shares (representing approximately 33.67% of the issued share capital of the Company). Therefore, CEC is a substantial shareholder of the Company. The Contractor, being a subsidiary of CEC, is therefore a connected person of the Company under the Rule 14A.07(4) of the Listing Rules. Therefore, the entering into of the Landscape Construction Contract constitutes a connected transaction under Chapter 14A of the Listing Rules.

Since the highest applicable percentage ratio calculated in accordance with the Listing Rules in respect of the Landscape Construction Contract exceeds 0.1% but all of them are less than 5%, the entering into of the Landscape Construction Contract is subject to reporting and announcement requirements but exempt from shareholders' approval and circular requirements under Rule 14A.76(2) of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 29 April 2022, Western Zhigu, an indirect non-wholly owned subsidiary of the Company entered into the Landscape Construction Contract with the Contractor, pursuant to which the Contractor is engaged to provide certain landscape engineering and construction works to Western Zhigu in respect of the Landscape Construction Project.

THE LANDSCAPE CONSTRUCTION CONTRACT

A summary of the salient terms of the Landscape Construction Contract is set out below:

Date:

29 April 2022

Parties:

• (a) Western Zhigu, as the principal

• (b) the Contractor, as the contractor

Subject matter

Pursuant to the Landscape Construction Contract, Western Zhigu appointed the Contractor as its contractor to carry out certain landscape engineering and construction works under a landscape construction project (the "Landscape Construction Project"), which works includes greening, installation of public utility facilities and paving of outdoor car parking spaces for Phase I.II of the Western Zhigu Park Project.

Western Zhigu Park Project is one of the Group's large-scale projects under development located in the National Xianyang Hi-Tech Industrial Development Zone, Xiangyang, the PRC. It is positioned as a concentration of nation-level display device industry players with strategic emerging industries such as electronic information and intelligent manufacturing as the leading industries. Phase I.II of the Western Zhigu Park Project has a gross floor area of 50,000 sq.m.

Construction period

The Landscape Construction Project is expected to be completed by the Contractor according to the following stages, unless otherwise agreed by Western Zhigu:

• (i) in respect of Block C3 of Phase I.II of the Western Zhigu Park Project, the relevant works shall be completed within fifteen calendar days from the commencement date as notified by Western Zhigu;

• (ii) in respect of Blocks C9 and C10 of Phase I.II of the Western Zhigu Park Project, the relevant works shall be completed within 30 calendar days from the commencement date as notified by Western Zhigu; and

(iii) in respect of all other blocks of Phase I.II of the Western Zhigu Park Project, the relevant works shall be completed within 60 calendar days from the commencement date as notified by Western Zhigu.

In the event that the Contractor fails to comply with the above agreed construction period, a compensation fee of RMB10,000 per delayed calendar day shall be paid by the Contractor to Western Zhigu. Western Zhigu shall further be entitled to terminate the Landscape Construction Contract if any such delay exceeds 15 days in aggregate.

Consideration

Pursuant to the Landscape Construction Contract, the contract price (the "Contract Price") payable by Western Zhigu to the Contractor is RMB4,836,164.32 (equivalent to approximately HK$5,734,240.03), which is inclusive of a 9% value-added tax amounting to RMB399,316.32, and is subject to customary adjustments (if any) as set out below.

Adjustment for the Consideration

The Consideration is the Contract Price as adjusted based on the applicable value-added tax rate and the actual construction works undertaken in the manner as detailed below:

• (i) Value-added tax rate

  In the event of any adjustment to the applicable value-added tax rate according to the PRC government policies and laws, the amount of value-added tax payable by Western Zhigu to the Contractor shall be adjusted accordingly.

• (ii) Adjustment based on the actual design and construction works undertaken

  If there is any adjustment to the design, and/or scope of construction works undertaken under the Landscape Construction Project, the Consideration shall be adjusted with reference to the pricing policy as adopted when determining the contract price under the Landscape Construction Contract, or, if certain additional works actually undertaken were of a unique nature and not catered for in the Landscape Construction Contract, the relevant fees shall be agreed between the Contractor and Western Zhigu with reference to benchmarks or regulations issued by the relevant official departments of the PRC and the prevailing market prices.

The Board does not expect that the above adjustment, if any, to be material and will result in a change in the classification of the transactions contemplated under Landscape Construction Contract under Chapter 14 or 14A of the Listing Rules.

The Consideration was determined by the parties to the Landscape Construction Contract after arm's length negotiation with reference to (i) the standard and quality of the landscape engineering and construction works under the Landscape Construction Project as required by Western Zhigu; (ii) thefees charged by other Independent Third Parties in respect of the provision of similar landscape engineering and construction works to the Group; and (iii) the recent fee quotations obtained by the Group for similar services provided by other contractors that are Independent Third Parties in the PRC.

The Consideration is expected to be funded by the internal funds of the Group.

Payment terms

The Consideration shall be payable by Western Zhigu to the Contractor in tranches based on different stages of the Landscape Construction Project in the following manner:

(i) in respect of the construction work(s) completed in a particular month (which is assessed and confirmed as qualified work(s)), 65% of the contract price in respect of such work(s) shall be payable by Western Zhigu to the Contractor in the following month;

• (ii) upon the completion of Landscape Construction Project, the successful handover of the worksite, and the completion inspection (the "Completion Inspection") having been accepted by Western Zhigu and the independent qualified supervisor, a sum shall be payable by Western Zhigu to the Contractor in the following month, such that in aggregate with the payment(s) made pursuant to sub-paragraph (i) above, 75% of the Contract Price under the Landscape Construction Contract would have been paid;

• (iii) upon the provision of the all settlement information by the Contractor as requested by Western Zhigu, and the completion of assessment for settlement of work in respect to the Landscape Construction Project (the "Settlement Assessment"), a sum shall be payable by Western Zhigu to the Contractor in the following month, such that in aggregate with the payments made pursuant to sub-paragraphs (i) and (ii) above, 90% of the Consideration (which amount is confirmed by the relevant assessment) would have been paid;

• (iv) six months after the completion of the Settlement Assessment, a further sum shall be payable by Western Zhigu to the Contractor, such that in aggregate with the payments made pursuant to sub-paragraphs (i), (ii) and (iii) above, 97% of the Consideration (after deducting a fee for plantation maintenance (the "Plantation Maintenance Fee") in the amount of RMB530,0000 (equivalent to approximately HK$628,421)) would have been paid; and

• (v) the remaining 3% of the Consideration (after deducting the Plantation Maintenance Fee), being a work quality bond, shall be payable, after deduction of the relevant fees for repair work (if any), upon the expiration of works quality warranty period of two years from the date of completion of the Settlement Assessment; and the amount equivalent to 50% of the Plantation Maintenance Fee shall be payable on each of the first anniversary and the second anniversary from the date of the passing of the Completion Inspection.

Performance guarantee

For the purpose of securing the obligations of the Contractor under the Landscape Construction Contract, the Contractor shall, within 10 business days after the date of the Landscape Construction Contract, pay Western Zhigu a sum equivalent to 5% of the Contract Price as a performance guarantee. Such performance guarantee amount shall be returned to the Contractor after the passing of the Completion Inspection. Alternatively, such performance guarantee may be provided by way of a bank guarantee.

REASONS FOR AND BENEFITS OF THE LANDSCAPE CONSTRUCTION CONTRACT

The Group is an industrial park integrated operation service provider in the PRC. The Western Zhigu Park Project is an exemplary industrial park of the Group for promoting the PRC's strategic emerging industries such as electric information and intelligent manufacturing. The construction permit of Phase I.II of the Western Zhigu Park Project was obtained in May 2021, the relevant main civil construction has been completed, and the renovation and installation works is under progress. Accordingly, the Group has a demand for quality services in relation to the landscape engineering and construction works which are expected to be integrated with the overall renovation and installation work for Phase I.II of the Western Zhigu Park Project.

Given that the Contractor has solid and extensive experience in the provision of services in relation to landscape engineering and construction in the PRC and also has a deep understanding of the requirements and positioning of the industrial parks of the Group, the Board believes that the Contractor will be able to provide efficient, quality and reliable services under the Landscape Construction Contract, which will, in turn, be beneficial to the Group's development of Phase I.II of the Western Zhigu Park Project and will help enhance the Group's reputation and image in the industry.

In light of the above and considering the basis of determination of the Consideration as set out in the section headed "The Landscape Construction Contract - Consideration", the Directors (including the independent non-executive Directors) consider that the Landscape Construction Contract has been negotiated on arm's length basis and the terms of the Landscape Construction Contract are fair and reasonable, on normal commercial terms and in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole.

INFORMATION ON WESTERN ZHIGU

Western Zhigu is a company incorporated in the PRC with limited liability and is an indirect non-wholly owned subsidiary of the Company. It is principally engaged in developing and designing industrial parks, such as the Western Zhigu Park Project and providing property management services in the PRC.