Yuzhou Group Holdings (Yuzhou Group) has revealed that it renewed Integrated Services Master Agreements with Xiamen Zongheng Group on 31 December 2019 and 31 December 2022, covering the supply of software products, IT services, intelligent systems design and installation, integrated communication solutions, and related consulting for the period 1 January 2020–31 December 2025.
Transaction scale • Historical payments to Xiamen Zongheng Group and its subsidiaries totaled 46.24 million RMB in 2017, 39.51 million RMB in 2018, 14.02 million RMB in 2019, 39.02 million RMB in 2020, 34.28 million RMB in 2021 and 41.07 million RMB in 2022. • Annual caps were maintained at 50.00 million RMB for each year from 2020 to 2025, determined with reference to historical usage, inflation expectations, and increasing technology requirements across the Group’s property projects. • Service fees are benchmarked against at least two independent quotations to ensure terms are no less favourable than those offered by third-party providers.
Listing Rules implications Xiamen Zongheng Group qualifies as a connected person because its ultimate beneficial owners are close family members of Yuzhou Group’s controlling shareholders. All percentage ratios for the annual caps exceed 0.1 % but remain below 5 %, placing the transactions under the reporting, annual review and announcement requirements of Chapter 14A of the Listing Rules while exempting them from independent shareholders’ approval.
Reasons for non-compliance The agreements were not announced on time owing to: 1) inadequate Listing Rules knowledge by regional compliance staff during contract vetting; 2) workforce disruption amid China’s post-pandemic reopening in December 2022; and 3) a sharp reduction in headcount—down more than 87 % between 2019 and mid-2025—causing gaps in document handover and internal controls.
Remedial measures To prevent recurrence, Yuzhou Group has: • completed a Group-wide review of historical connected transactions; • rolled out mandatory training on Chapter 14A compliance for directors, senior management and relevant staff; and • revamped its connected-transaction workflow to ensure the Risk Control and Information Disclosure departments independently verify every assessment, reducing reliance on individual employees.
Business rationale Management views the agreements as essential for supporting the Group’s core property-development activities. Xiamen Zongheng Group’s long-standing familiarity with Yuzhou Group’s operational needs and its broad portfolio of communication-technology services are expected to enhance efficiency while allowing Yuzhou Group to focus resources on its principal business.
The Board (with interested directors abstaining) concluded that the agreements were executed on normal commercial terms, are fair and reasonable, and align with the interests of all shareholders.