Dexin China : CONTINUING CONNECTED TRANSACTIONS IN RELATION TO LEASE AGREEMENTS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

DEXIN CHINA HOLDINGS COMPANY LIMITED

德 信 中 国 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2019)

CONTINUING CONNECTED TRANSACTIONS

IN RELATION TO LEASE AGREEMENTS

The Board announces that on 7 August 2020 (after trading hours), Hangzhou Wuhe (a non-wholly owned subsidiary of the Company) as lessor and each of Hangzhou Changyu and Hangzhou Kangyu as lessee entered into the Lease Agreements for a term of three years from 15 December 2020 to 14 December 2023.

As at the date of this announcement, each of Hangzhou Changyu and Hangzhou Kangyu is owned as to 100% by Hangzhou Suiyu, which is owned as to 58.0% by Dexin Holding. Dexin Holding is owned as to 91.61% by Mr. Hu Yiping (an executive Director and a controlling Shareholder) and 8.39% by Ms. Wei Peifen (the wife of Mr. Hu Yiping and a controlling Shareholder). Therefore, each of Hangzhou Changyu and Hangzhou Kangyu constitutes a connected person of the Company. Accordingly, the entering into of the Lease Agreements and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the annual caps for the three years commencing from 15 December 2020 to 14 December 2023 for the transactions contemplated under the Lease Agreements, on an aggregated basis, exceed 0.1% but are less than 5%, such transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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INTRODUCTION

The Board announces that on 7 August 2020 (after trading hours), Hangzhou Wuhe (a non-wholly owned subsidiary of the Company) as lessor and each of Hangzhou Changyu and Hangzhou Kangyu as lessee entered into the Lease Agreements for a term of three years from 15 December 2020 to 14 December 2023.

THE LEASE AGREEMENTS

Changyu Lease Agreement

The principal terms of the Changyu Lease Agreement are set out below:

Date : 7 August 2020

Parties : (1) Hangzhou Wuhe (as lessor); and

(2) Hangzhou Changyu (as lessee).

Term : From 15 December 2020 to 14 December 2023

Property : 8th Floor to 11th Floor, No. 4 Building, Dexin Hangzhou One, which is located in the region to the south of Liangyun Street of Liangzhu Road and to the west of Chuyun Road, Yuhang District, Hangzhou, the PRC

Area : Gross floor area of 5,046.42 square meters

Rent : RMB920,971.65 per quarter (of which the first quarter, being 15 December 2020 to 14 March 2021, shall be rent-free

The first installment of rent shall be payable within 10 business days before the expiry of the rent-free period. Each of the remaining installments of the rent shall be payable every three months.

Usage : Serviced apartments

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Kangyu Lease Agreement

Date : 7 August 2020

Parties : (1) Hangzhou Wuhe (as lessor); and

		(2) Hangzhou Kangyu (as lessee).
Term	:	From 15 December 2020 to 14 December 2023
Property	:	2nd Floor to 7th Floor, No. 4 Building, Dexin Hangzhou One, which is located in
		the region to the south of Liangyun Street of Liangzhu Road and to the west of
		Chuyun Road, Yuhang District, Hangzhou, the PRC
Area	:	Gross floor area of 7,766.57 square meters
Rent	:	RMB1,417,399.03 per quarter (of which the first quarter, being 15 December 2020
		to 14 March 2021, shall be rent-free
		The first installment of the rent shall be payable within 10 business days before the
		expiry of the rent-free period. Each of the remaining installments shall be payable
		every three months.

Usage : Serviced apartments

Proposed Annual Caps

Set out below are the proposed aggregated annual caps under the Lease Agreements:

			Proposed Annual
			Caps
			(RMB)
For the year ending	For the year ending	For the year ending	For the year ending
31 December 2020	31 December 2021	31 December 2022	31 December 2023
-	7,404,800	9,353,500	8,963,800

The proposed annual caps were determined based on aggregated rent payable by Hangzhou Changyu and Hangzhou Kangyu to the Group for the period from 15 December 2020 to 14 December 2023 under the Lease Agreements. The rent under each of the Lease Agreements was determined after arm's length negotiations between parties to each of the Lease Agreements with reference to the prevailing market rent for comparable premises per square meter in the vicinity.

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INFORMATION ON THE RELEVANT PARTIES

Information on the Hangzhou Wuhe

Hangzhou Wuhe is a company established under the laws of the PRC with limited liability and is a non-wholly owned subsidiary of the Company, the equity interest of which is held as to 92% by Zhejiang Dexin and 8% by a limited partnership (which is in turn held as to 7.59% by Zhejiang Dexin, 53.57% by Ms. Shen Weiping, 17.86% by Mr. Sheng Xingjun and the remaining 20.98% by nine other individuals (each of these individuals are independent third parties)). Zhejiang Dexin is held as to 70% by Dexin Real Estate, an indirect wholly-owned subsidiary of the Company, and 30% by Mr. Hu Yuegen, the brother of Mr. Hu Yiping (an executive Director and a controlling Shareholder). Hangzhou Wuhe is principally engaged in property development and investment.

Information on the Group

The Group is principally engaged in the property development and construction services, property investment and hotel operations in the PRC.

Information on Hangzhou Changyu

Hangzhou Changyu is a company established under the laws of the PRC with limited liability and is principally engaged in leasing out of serviced apartments.

As at the date of this announcement, Hangzhou Changyu is owned as to 100% by Hangzhou Suiyu, which is owned as to 58.0% by Dexin Holding, 24% by a limited partnership (which is in turn

owned as to 33.33% by Mr. Fei Zhongmin, an executive Director, and 66.67% by 3 individuals who are independent third parties), 10% by Wan Xiang Trust Co. Ltd.* (萬向信託股份有限公司)

(an independent third party) and 8.0% by a limited partnership (which is in turn owned as to 20% by Dexin Holding and 80% by an independent third party individual). Dexin Holding is owned as to 91.61% by Mr. Hu Yiping (an executive Director and a controlling Shareholder) and 8.39% by Ms. Wei Peifen (the wife of Mr. Hu Yiping and a controlling Shareholder).

Information on Hangzhou Kangyu

Hangzhou Kangyu is a company established under the laws of the PRC with limited liability and is principally engaged in leasing out of serviced apartments.

As at the date of this announcement, Hangzhou Kangyu is owned as to 100% by Hangzhou Suiyu, which is owned as to 58.0% by Dexin Holding, 24% by a limited partnership (which is in turn

owned as to 33.33% by Mr. Fei Zhongmin, an executive Director, and 66.67% by 3 individuals who are independent third parties), 10% by Wan Xiang Trust Co. Ltd.* (萬向信託股份有限公司)

(an independent third party) and 8.0% by a limited partnership (which is in turn owned as to 20% by Dexin Holding and 80% by an independent third party individual). Dexin Holding is owned as to 91.61% by Mr. Hu Yiping (an executive Director and a controlling Shareholder) and 8.39% by Ms. Wei Peifen (the wife of Mr. Hu Yiping and a controlling Shareholder) respectively.

REASONS FOR AND BENEFITS OF ENTERING INTO THE LEASE AGREEMENTS

The Group is a leading comprehensive property developer based in Zhejiang Province in the PRC. The Company is of the view that entering into the Lease Agreements would allow the Group to increase the occupancy rate and make efficient use of its investment properties and increase its revenue from leasing.

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The Directors (including the independent non-executive Directors) are of the view that the Lease Agreements were entered into in the usual and ordinary course of business of the Group, and the terms of the Lease Agreements are fair and reasonable and on normal commercial terms. Accordingly, the Lease Agreements and the transactions contemplated thereunder and the proposed annual caps are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

INTERNAL CONTROL PROCEDURES

In addition to the annual review by the auditors and independent non-executive Directors pursuant to the requirements of Chapter 14A of the Listing Rules, as part of the Group's internal control systems to ensure that the transactions between the Group and its connected persons are conducted in accordance with the pricing policy and other terms of the Lease Agreements, the Company will implement the following internal control arrangements:

1. The finance department of the Company is responsible for overseeing the connected transactions of the Group. The finance department of the Company will monitor and collect detailed information on the connected transactions on a regular basis, including but not limited to the implementation of pricing policies, payment arrangements and actual transaction amounts to ensure that the connected transactions are conducted in accordance with the Lease Agreements. In addition, the finance department of the Company is responsible for monitoring and reviewing the balance amount of the annual cap for the continuing connected transactions on a monthly basis.
2. The independent internal control consultant of the Company is responsible for performing regular assessment on the internal control procedures of the Group, including but not limited to the relevant information on the management of the continuing connected transactions.
3. The senior management of the Company is responsible for supervising and monitoring the adoption of internal control procedures of the Group, so as to ensure the implementation of pricing policies is in compliance with the Lease Agreements and the actual transaction amounts are controlled within its respective annual caps. The senior management of the Company also reviews the implementation of pricing policies and the monitoring of annual caps annually.

The Board is of the view that the implementation of the above methods and procedures can ensure that the pricing and other contract terms for the Group's continuing connected transactions are on normal commercial terms no less favourable to the Company than terms available to independent third parties of the Company, fair and reasonable and in the interests of the Company and its shareholders and that the continuing connected transactions are conducted as agreed in the relevant Lease Agreements and in compliance with Chapter 14A of the Listing Rules.

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DIRECTORS' CONFIRMATION

In light of the interests of Mr. Hu Yiping, Mr. Hu Shihao (the son of Mr. Hu Yiping) and Mr. Fei Zhongmin in Hangzhou Wuhe, Hangzhou Changyu and/or Hangzhou Kangyu as further explained in the section headed "Implications under the Listing Rules" below, each of Mr. Hu Yiping, Mr. Hu Shihao and Mr. Fei Zhongmin has abstained from voting on the resolutions of the Board in respect of the Lease Agreements and the transactions contemplated thereunder pursuant to the articles of association of the Company and requirements under the Listing Rules.

Save as disclosed above, none of the other Directors has a material interest in the Lease Agreements and the transactions contemplated thereunder and hence no other Director has abstained from voting on the relevant resolutions of the Board.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, each of Hangzhou Changyu and Hangzhou Kangyu is owned as to 100% by Hangzhou Suiyu, which is owned as to 58.0% by Dexin Holding. Dexin Holding is owned as to 91.61% by Mr. Hu Yiping (an executive Director and a controlling Shareholder) and 8.39% by Ms. Wei Peifen (the wife of Mr. Hu Yiping and a controlling Shareholder). Therefore, each of Hangzhou Changyu and Hangzhou Kangyu constitutes a connected person of the Company. Accordingly, the entering into of the Lease Agreements and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the annual caps for the three years commencing from 15 December 2020 to 14 December 2023 for the transactions contemplated under the Lease Agreements, on an aggregated basis, exceed 0.1% but are less than 5%, such transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings.

"Board"

"Changyu Lease Agreement"

"Company"

the board of Directors

the lease agreement dated 7 August 2020 entered into between Hangzhou Wuhe as lessor and Hangzhou Changyu as lessee for a term from 15 December 2020 to 14 December 2023

Dexin China Holdings Company Limited (德信中国控股有限 公司), a company incorporated under the laws of the Cayman Islands with limited liability and the shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: 2019)

"connected person(s)" has the meaning ascribed thereto under the Listing Rules

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"Dexin Holding"

"Dexin Real Estate"

"Director(s)" "Group" "Hangzhou Changyu"

"Hangzhou Kangyu"

"Hangzhou Suiyu"

"Hangzhou Wuhe"

"Hong Kong"

"Kangyu Lease Agreement"

"Lease Agreements"

Dexin Holding Group Limited* (德信控股集團有限公司), a limited liability company established in the PRC and is owned as to 91.61% by Mr. Hu Yiping and 8.39% by Ms. Wei Peifen as at the date of this announcement

Dexin Real Estate Group Co., Ltd.* (德信地產集團有限公司), a limited liability company established in the PRC and an indirect wholly-owned subsidiary of the Company

the director(s) of the Company

the Company and its subsidiaries

Hangzhou Changyu Hotel Management Company Limited* (杭州 昶寓酒店管理有限公司), a company established under the laws

of the PRC with limited liability

Hangzhou Kangyu Hotel Management Company Limited* (杭州 康寓酒店管理有限公司), a company established under the laws

of the PRC with limited liability

Hangzhou Suiyu Internet Technology Company Limited* (杭州 隨寓網路科技有限公司), a company established under the laws

of the PRC with limited liability

Hangzhou Wuhe Industrial Company Limited* (杭州五合實業 有限公司), a company established under the laws of the PRC with limited liability and a non-wholly owned subsidiary of the Company

the Hong Kong Special Administrative Region of the PRC

the lease agreement dated 7 August 2020 entered into between Hangzhou Wuhe as lessor and Hangzhou Kangyu as lessee for a term from 15 December 2020 to 14 December 2023

collectively, Changyu Lease Agreement and Kangyu Lease Agreement

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"Listing Rules"

"PRC"

"RMB"

"Share(s)"

"Shareholder(s)"

"%"

"Zhejiang Dexin"

Hong Kong, 7 August 2020

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

the People's Republic of China

Renminbi, the lawful currency of the PRC

the share(s) in the share capital of the Company with par value of US$0.0005 each

holder(s) of the Share(s)

per cent

Zhejiang Dexin Commercial Investment Management Co., Ltd.* (浙江德信商用投資管理有限公司), a company established under

the laws of the PRC with limited liability and an indirect non- wholly owned subsidiary of the Company

By order of the Board

Dexin China Holdings Company Limited

Hu Yiping

Chairman

As of the date of this announcement, the Board of Directors of the Company comprises Mr. Hu Yiping, Mr. Fei Zhongmin and Ms. Feng Xia as executive Directors, Mr. Hu Shihao as non-executive Director, and Dr. Wong Wing Kuen Albert, Mr. Ding Jiangang and Mr. Chen Hengliu as independent non-executive Directors.

• For identification purposes only

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