C P Pokphand : Connected Transactions - Project Management Contracts

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(Incorporated in Bermuda with limited liability) (Stock Code:43)

CONNECTED TRANSACTIONS

PROJECT MANAGEMENT CONTRACTS

During the period between 10 April 2020 and 24 August 2020, a number of subsidiaries of the Company entered into certain project management contracts with Chia Tai Handing to appoint Chia Tai Handing as the project manager to manage the development projects at food production facilities which are being developed by these subsidiaries in the PRC.

LISTING RULES IMPLICATIONS

As explained in the section headed "Listing Rules Implications" below, the transactions contemplated under the Project Management Contracts are treated as connected transactions of the Company under the Listing Rules and are subject to certain reporting and announcement requirements under the Listing Rules.

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PROJECT MANAGEMENT CONTRACTS

During the period between 10 April 2020 and 24 August 2020, the following subsidiaries of the Company entered into project management contracts with Chia Tai Handing to appoint Chia Tai Handing as the project manager to manage the development projects at their food production facilities which are being developed in the PRC. The amount of the management fee payable under each of such contracts is set out below:

(approximately US$2,743,000)

The project management fee under the respective Project Management Contracts is payable in cash according to the completion progress of that particular project and will be funded by the Group's internal resources. The project management fee payable under each of the Project Management Contracts is equivalent to 3% of the total cost of that particular project.

INFORMATION ON PARTIES

The Company is an investment holding company. The subsidiaries of the Company are principally engaged, in the PRC and Vietnam, in (i) manufacture and sale of animal feed, (ii) breeding, farming and sale of livestock and aqua animals, and (iii) manufacture and sale of food products.

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Each of the subsidiaries of the Company which entered into the Project Management Contracts is principally engaged in the manufacture and sale of food products in the PRC.

Chia Tai Handing is a subsidiary of CPG, principally engaged in the management advisory, project management and technical advisory business for development projects in the PRC. It has past experience in providing project management services to the Group and is familiar with the Group's operational requirements and quality standards.

REASONS FOR AND BENEFITS OF THE PROJECT MANAGEMENT CONTRACTS

It is common practice for PRC companies in the food production industry developing new production facilities to engage an experienced project manager to manage the projects. Many subsidiaries of the Company in the PRC engaged in the food production industry are developing or planning to develop new production facilities at new plants or add new production facilities at existing plants to expand production capacity. For each project, the subsidiary involved will appoint a project manager to carry out project management.

The relevant subsidiaries in the Group conducted public tenders to select the project manager for each project. Bidders were assessed based on their score achieved using a number of selection criteria including price, know-how, capabilities, commitment, personnel and experience. Following the public tender and assessment process, the Project Management Contracts were eventually awarded to Chia Tai Handing. It was selected based on achieving the highest total score among all bidders. The terms of the Project Management Contracts entered into with Chia Tai Handing were no less favourable to the Group than the terms offered by other bidders which were independent third parties.

The Board considered that each of Mr. Soopakij Chearavanont (chairman and an executive director of the Company), Mr. Adirek Sripratak, Mr. Suphachai Chearavanont (each a vice chairman and an executive director of the Company), Mr. Narong Chearavanont and Mrs. Arunee Watcharananan (each an executive director of the Company) who attended the relevant Board meeting had a material interest in the transactions contemplated under the Project Management Contracts in view of their respective shareholdings in CPG, being the holding company of Chia Tai Handing. Accordingly, they abstained from voting on the resolutions relating to the approval of the Longyan Contract and the ratification of the other Project Management Contracts.

Save as disclosed above, none of the other Directors who attended the relevant meeting of the Board had a material interest in the transactions contemplated under the Project Management Contracts, and hence none of the other Directors abstained from voting on the board resolutions for approving and ratifying the Project Management Contracts.

The Directors (including the independent non-executive Directors but excluding those Directors mentioned above who the Board considered to have a material interest in the transactions) believe that each of the Project Management Contracts is on normal commercial terms and has been entered into in the ordinary and usual course of business of the Group, and that the terms of each of the Project Management Contracts are fair and reasonable and that the transactions are in the best interests of the Company and the Shareholders as a whole.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, CPF is interested in approximately 49.7% of the Shares in issue and CPG holds approximately 48.4% of the issued share capital of CPF. Due to CPG's near majority shareholding in CPF, the Company and CPG have agreed to treat CPG as a substantial shareholder of the Company. Accordingly, CPG and its subsidiaries and their respective associates are treated as connected persons of the Company. As Chia Tai Handing is a subsidiary of CPG, each of the transactions contemplated under the Project Management Contracts is treated as a connected transaction of the Company under the Listing Rules.

Each of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Project Management Contracts except the Longyan Contract signed on 24 August 2020 were, on an aggregated basis, less than 0.1% at the time they were entered into between 10 April 2020 to 10 June 2020. Accordingly, the transactions under these contracts were exempt from the reporting, announcement, circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules.

With the signing of the Longyan Contract on 24 August 2020, the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the transactions under both the previously signed Project Management Contracts and the Longyan Contract, on an aggregated basis, more than 0.1% but less than 5%. Accordingly, the transactions under all of the Project Management Contracts are subject to the reporting and announcement requirements but are exempt from the circular (including independent financial advice) and Shareholders' approval requirements under Chapter 14A of the Listing Rules.

DEFINITIONS

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

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"US$"United States dollars, the lawful currency of the United States of America

• For identification purpose only.

By Order of the Board

Arunee Watcharananan

Director

Note: For the purpose of this announcement, the exchange rate for the conversion of

RMB into US$ for indication only is: US$1.0 = RMB7.0.

Hong Kong, 24 August 2020

As at the date of this announcement, the Board comprises eight executive directors, namely, Mr. Soopakij Chearavanont, Mr. Adirek Sripratak, Mr. Suphachai Chearavanont, Mr. Narong Chearavanont, Mr. Bai Shanlin, Mr. Sooksunt Jiumjaiswanglerg, Mrs. Arunee Watcharananan and Mr. Yu Jianping; two non- executive directors, namely, Mr. Meth Jiaravanont and Mr. Yoichi Ikezoe; and five independent non-executive directors, namely, Mr. Vinai Vittavasgarnvej, Mrs. Vatchari Vimooktayon, Mr. Cheng Yuk Wo, Professor Dr. Pongsak Angkasith and General Udomdej Sitabutr.

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