PRICING POLICY OF THE GROUP. The Group will need to go through the tender process before being appointed to provide the Services to the relevant members of NWD Group in respect of NWD Group’s construction projects in Hong Kong. Generally speaking, consultancy or project management activities are charged as a percentage of the project cost, and main/sub-contractor activities would, depending on the requirements of the employer, be at a fixed sum with or without a variable element. General pricing policy In pricing each tender, regardless of the nature of services required and of whether the transaction is to be entered into with connected persons of the Group or independent third parties, the Group will:
PRICING POLICY OF THE GROUP. In pricing each tender or quotation for sales of Concrete or aggregates by the Group, regardless of whether the transaction is to be entered into with connected persons of the Group or independent third parties, the sales department of the Group will estimate the potential costs of production (which includes, among other things, the material costs, the production capacity, the cost of delivery, the pricing variables and price adjustment structures specified by the customers), and provide for a potential margin within an acceptable industry range based on the Group’s experience. The definitive terms of sale of Concrete or aggregates require the approval of senior management of the construction materials/quarrying division of the Group after reviewing the pricing proposal of the sales department together with the underlying estimates and payment structure, business and market risk assessment and the perceived competitiveness of the tender/quotation price. To monitor the annual caps, the finance and accounts department of the Group will prepare a monthly report containing information on ongoing projects and completed projects with Xxxx Xxxx, dates of quotation/agreement, durations of supply, actual year-to-date sales amount, forecasted sales amounts for the remaining year and for the whole year of individual projects, and the forecasted total annual sales amount. HISTORICAL FIGURES The following table sets out the annual caps for and the value of, Concrete and aggregates supplied by members of the Group to Xxxx Xxxx under the 2019 Framework Agreement for the three years ended 31st December, 2021: Financial year ended 31st December, 2019 2020 2021 HK$ HK$ HK$ Aggregate annual caps for Concrete and aggregates 104,000,000 177,000,000 184,000,000 Actual (for Concrete) 32,734,000 85,833,000 37,282,000 ANNUAL CAPS The Framework Agreement provides for the annual caps for the sale of Concrete by the Group to Xxxx Xxxx for the financial years ending 31st December, 2022, 31st December, 2023 and 31st December, 2024 at HK$42 million, HK$43 million and HK$52 million respectively, and the annual caps for the sale of aggregates by the Group to Xxxx Xxxx for the financial years ending 31st December, 2022, 31st December, 2023 and 31st December, 2024 at HK$1 million, HK$2 million and HK$2 million respectively. The annual caps were determined by the Company having taken into account the following:
PRICING POLICY OF THE GROUP. Generally speaking, consultancy or project management activities are charged as a percentage of the project cost, and main/sub-contractor activities would, depending on the requirements of the employer, be at a fixed sum with or without a variable element. General pricing policy In pricing each tender, regardless of the nature of services required and of whether the transaction is to be entered into with connected persons of the Group or independent third parties, the Group will:
PRICING POLICY OF THE GROUP. The senior management of the construction materials division of the Group monitors the demand for Concrete (and the related specifications) from each of its customer’s existing projects and potential future projects to determine whether or not the Group (i) has the production capacity to satisfy demands; (ii) can secure supply from other Concrete suppliers on terms that are beneficial to the Group relative to the Group’s costs and certainty of production and delivery; and (iii) has back-up supply having regard to the need to manage changes to the Group’s customers construction schedules and/or additional or ad hoc demand that may be commercially attractive. If and to the extent that the Group needs to secure additional Concrete supplies, in accordance with its internal procedures, the Group will generally invite tenders/quotations from at least three suppliers from its pre-approved list of Concrete suppliers (which includes Xxxx Xxxx) for Concrete with the relevant specifications and other requirements that may be relevant to the project and its choice will be based on the pricing for Concrete and associated logistics and reliability of the supply as specified. If the Group receives less than three quotations from the suppliers, the Group will review the quotations and compare the quotations available against the Concrete prices offered by other back-up Concrete suppliers in respect of other projects in which the Group is involved and/or its in-house production and logistics costs for the supply of Concrete on comparable specifications and other requirements to determine if the prices and terms offered are fair and reasonable. After receipt of quotations, the sales department who manages customer requirements will then review all quotations submitted and engage the lowest bidder. The senior management of the construction materials division of the Group will also review all the quotations submitted to ensure the above procedures are being adhered to. Internal control The Group has established internal control procedures in place to ensure the pricing mechanism for the Concrete is in line with the pricing policy of the Group as detailed above and to monitor compliance with the annual caps for its Transactions with Xxxx Xxxx. The measures include the following:
PRICING POLICY OF THE GROUP. In pricing each tender or quotation for sales of Concrete or aggregates by the Group, regardless of whether the transaction is to be entered into with connected persons of the Group or independent third parties, the sales department of the Group will estimate the potential costs of production which includes, among other things the material costs and the cost of delivery, the pricing variables and price adjustment structures specified in each tender invitation document or by the customers, availability of the resources to the Group (including the capacity of production facilities and project cashflow); and estimate a potential margin (taking into account production costs and other fixed costs including labour cost, rent and rates, depreciation of production facilities and administrative expenses contributing to the production) within the range of what the Group would in its experience in the industry charge for similar products of Concrete or aggregates for independent third parties. After having the potential production costs and the proposed tender/quotation price estimated by the sales department, the senior management of the construction materials/quarrying division of the Group will review the potential production costs estimate, any potential margin and the proposed tender/quotation price, and determine whether or not the tender/quotation price (including the pricing structure) should be modified having regard to various factors including the specification of the products, the potential risks associated with the sales of Concrete or aggregates, general business environment and the perceived competitiveness of the tender/quotation price. Generally quotations from the relevant member(s) of the Group to Xxxx Xxxx would contain the terms and conditions of the relevant transactions, which upon acceptance by Xxxx Xxxx would constitute binding agreement between the parties. To monitor the annual caps, the finance and accounts department of the Group will prepare a monthly report containing information on the ongoing projects and the completed projects with Xxxx Xxxx, dates of quotation/agreement, durations of supply, actual year-to-date sales amount, forecasted sales amounts for the remaining year and for the whole year of individual projects, the forecasted total annual sales amount. ANNUAL CAPS The annual caps for the sale of Concrete and aggregates by the Group to Xxxx Xxxx for each period are as follows: Financial year ending 31st December, 2019 2020 202...
