On June 21st, Geelong announced that in order to implement the work arrangements of the Beijing Municipal Party Committee and the Municipal Government on deepening the unified supervision of operating state-owned assets, according to the Beijing Municipal Government's overall plan for promoting the transfer of entrusted supervision enterprises of municipal organs and institutions to direct supervision of the SASAC and the requirements of the relevant meeting minutes of the city's state-owned assets regulatory system, some equity of the wholly-owned property and logistics enterprises ("target companies") of the municipal organs and institutions will be transferred to Beijing Urban Construction Group Co., Ltd. ("Urban Construction Group") free of charge. Urban Construction Group has newly established Beijing University Logistics Service Co., Ltd. (a wholly-owned subsidiary directly under Urban Construction Group) ("Logistics Service Platform Enterprise"), which will serve as the implementation subject to receive some equity of the target companies for integration. As of the announcement date, the remaining 75% equity of 14 target companies has been clearly included in the scope of this free transfer. After the completion of this free transfer, Urban Construction Group will indirectly hold some equity of multiple target companies through the Logistics Service Platform Enterprise. As the relevant work advances and in accordance with the requirements of the superior government departments and relevant regulatory agencies, in addition to the 14 target companies mentioned above, the partial equity of other target companies may also be included in this free transfer in the future, and the company will issue an announcement in a timely manner in compliance with relevant laws, regulations and rules. As of the announcement date, this free transfer has not been completed yet.
After the completion of this free transfer, Urban Construction Group will indirectly hold some equity of multiple target companies through the Logistics Service Platform Enterprise. Considering that the main business of the Logistics Service Platform Enterprise will include unit logistics management services, which is somewhat similar to the Group's main business, there is a certain degree of competition between the Logistics Service Platform Enterprise and the Group's main business. However, due to the smaller scale of the Logistics Service Platform Enterprise and its engagement only in relatively single logistics management services for Beijing Municipal government organs and institutions, while the Group's main business includes (i) property management services; (ii) non-landlord value-added services; and (iii) community value-added services. The degree of competition between the Logistics Service Platform Enterprise and the Group's main business is limited. In addition, considering the commitment letter issued by Urban Construction Group to resolve and avoid peer competition as described below, it is expected that this free transfer will not have a significant impact on the Group's business.
