Reasons for the Transaction Weihai Consulting primarily conducts the provision of human resource management and consulting services business, and is experienced in providing employee recruitment and training for catering business. We have been engaging Weihai Consulting to provide human resource management and consulting service for our Group since its establishment in 2015, and Weihai Consulting has been providing satisfying services at reasonable price. Therefore, our Directors believe that the continuous procurement of such services from Weihai Consulting will be beneficial to our Group. Historical Amounts The following table sets forth the historical amounts of the human resource management and consulting service we obtained from Weihai Consulting: For the Year Ended December 31, For the Six Months Ended June 30, 2015 2016 2017 2018 RMB RMB RMB RMB 979,842 22,920,329 35,972,640 21,842,095 CONNECTED TRANSACTIONS — 231 —
Annual Caps The following table sets forth the proposed annual caps for the service fees under the Master Human Resource Management Service Agreement: Proposed annual cap (RMB) for the year ending December 31, 2018 2019 2020 71,300,000 101,200,000 147,300,000 The proposed annual caps have been estimated based on the following factors: (i) historical human resource management and consulting service fee rate and the expected fluctuation in the rate; and (ii) the estimated increase in our demand of the human resource management and consulting services at a rate of 40% to 50% per annum from 2018 to 2020 along with the increase in the number of new employees as a result of the anticipated expansion of our restaurant network and the potential employee turnover. WAIVER APPLICATION FOR NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS By virtue of Rule 14A.76(2) of the Listing Rules, each of the transactions under the sub-section “— Non-Exempt Continuing Connected Transactions — A. Lease” and “— Non-Exempt Continuing Connected Transactions — B. Technology” will constitute connected transactions which are subject to reporting, annual review and announcement requirements under Chapter 14A of the Listing Rules. Each of the transactions under the sub-section “— Non-Exempt Continuing Connected Transactions — C. Procurement” will constitute connected transactions subject to reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. As the above non-exempt continuing connected transactions are expected to continue on a recurring and continuing basis, our Directors consider that compliance with the above announcement and/or independent shareholders’ approval requirements would be impractical, would add unnecessary administrative costs to us and would be unduly burdensome to us. Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver to us under Rule 14A.105 of the Listing Rules from compliance with the announcement and/or independent shareholders’ approval requirements in respect of the above non-exempt continuing connected transactions. In addition, we confirm that we will comply with the Listing Rules
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