Guangdong Investment : Continuing Connected Transactions - Revision of Annual Caps for Property Management 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.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00270)

CONTINUING CONNECTED TRANSACTIONS

REVISION OFANNUAL CAPS FOR PROPERTY MANAGEMENT AGREEMENTS

The Laurel House 2019 Sales Centre Property Services Agreement will expire on 31 December 2019. On 31 December 2019, Guangdong Property Development and Yuehai Property Management entered into the Laurel House 2020 Sales Centre Property Services Agreement, pursuant to which Yuehai Property Management has agreed to continue to provide certain property services in respect of the sales facility of the Laurel House Project (formerly known as the Zhuguanglu Project) to Guangdong Property Development for one year from 1 January 2020 to 31 December 2020 (both days inclusive).

Besides the Laurel House 2020 Sales Centre Property Services Agreement, Guangdong Property Development and Yuehai Property Management had also entered into the Laurel House Project Existing Agreements in respect of the Laurel House Project, details of which are set out in the GD Land Announcement.

In addition, Wanye and Yuehai Property Management had also entered into the Panyu Project Agreements, details of which are set out in the announcement of the Company dated 31 May 2019.

Each of the transactions contemplated under the Agreements and the Laurel House 2020 Sales Centre Property Services Agreement constitutes a continuing connected transaction of the Company under the Listing Rules. As all the applicable percentage ratios of the Listing Rules in respect of the annual cap under the Laurel House 2020 Sales Centre Property Services Agreement are less than 0.1%, the transaction as contemplated under the Laurel House 2020 Sales Centre Property Services Agreement is fully exempt from shareholders' approval, annual review and all disclosure requirements under Rule 14A.76(1) of the Listing Rules.

The Laurel House 2020 Sales Centre Property Services Agreement and the Agreements have been aggregated for the Listing Rules purposes on the basis that they all relate to the property management and/or related services provided by Yuehai Property Management to the Group.

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The aggregate annual caps for the Transactions together with the transaction under the Laurel House 2020 Sales Centre Property Services Agreement for the years of 2019, 2020, 2021 and 2022 will be revised to RMB17,354,400, RMB29,500,000, RMB9,000,000 and RMB2,100,000, respectively. Since the highest annual cap (when aggregated) is estimated to be RMB29,500,000 (equivalent to approximately HK$32,930,850), which exceeds 0.1% but is less than 5% of one of the applicable percentage ratios for the purpose of Chapter 14A of the Listing Rules, the Transactions and the transaction under the Laurel House 2020 Sales Centre Property Services Agreement (when aggregated) are subject to the reporting and announcement requirements, but are exempt from the independent shareholders' approval requirement under Rule 14A.76(2) of the Listing Rules.

This announcement sets out, amongst other things, the details concerning the Laurel House 2020 Sales Centre Property Services Agreement, including the background and the reasons for entering into the same, the historical transaction values (where applicable), the revised annual caps and how these were determined.

BACKGROUND

Reference is made to the announcement of the Company dated 30 August 2019 in relation to the continuing connected transactions on property management agreements.

On 31 December 2019, Guangdong Property Development and Yuehai Property Management entered into the Laurel House 2020 Sales Centre Property Services Agreement, pursuant to which Yuehai Property Management has agreed to continue to provide certain property services in respect of the sales facility of the Laurel House Project (formerly known as the Zhuguanglu Project) to Guangdong Property Development.

THE LAUREL HOUSE 2020 SALES CENTRE PROPERTY SERVICES AGREEMENT

A summary of the salient terms of the Laurel House 2020 Sales Centre Property Services Agreement is as follows:-

Parties : Guangdong Property Development

Yuehai Property Management

Term	: One year,from 1 January 2020 to 31 December 2020 (both days inclusive)

Services : Yuehai Property Management shall continue to provide certain property services to Guangdong Property Development in respect of the sales facility (including sales centre and sample units, etc.) of the Laurel House Project, including cleaning, greening, pest control, and daily customer entertaining and security services of the staff who are responsible for the customer services, facility maintenance and order maintenance in respect of the said sales facility.

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Service Fees : The service fees for the abovementioned services shall be calculated on the basis of the salary and fringe benefits of the labour incurred for providing such services, the one-off investment cost for supplies and on-site consumables at the sales facility, which shall be settled on a monthly basis.

BASIS AND REASONS FOR THE LAUREL HOUSE 2020 SALES CENTRE PROPERTY SERVICES AGREEMENT AND THE ANNUAL CAP

Historical transaction amounts of the Laurel House 2019 Sales Centre Property Services Agreement

The table below summarises the actual transaction amount of the relevant service fees under the Laurel House 2019 Sales Centre Property Services Agreement:

January to November 2019 (RMB)

Actual transaction amount (Note)

1,114,405

Note: The annual cap of the transactions under the Laurel House 2019 Sales Centre Property Services Agreement (being RMB1,354,400) as disclosed in the announcement of the Company dated 30 August 2019 covers the period from 1 January 2019 to 31 December 2019, and the relevant transaction amount did not exceed the cap amount.

Annual Cap

Pursuant to the Laurel House 2020 Sales Centre Property Services Agreement, the annual cap for the year of 2020 is set as follow:

2020

(RMB)

Annual Cap

4,500,000

Basis and Reasons

The abovementioned annual cap in respect of the estimated service fee payable is determined after arm's length negotiation and based on (1) historical transaction amounts; (2) the number of staff required to provide the services under the Laurel House 2020 Sales Centre Property Services Agreement (taking into account services of the staff required); (3) the basic salary, floating salary, overtime charges, benefits, subsidies, union fees, etc. of such staff; (4) the one-off payment for various supplies including staff uniforms and work equipment, etc.; and (5) the costs of various consumables (including food and daily necessities).

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Yuehai Property Management is a national Grade-A property management company and has ample experience in property management and a high-quality and professional working team. It has received many national, provincial and municipal honours as the best property managers for the properties it has managed. In order to better manage the Laurel House Properties, Guangdong Property Development has decided to work with Yuehai Property Management.

In addition, since October 2016, Yuehai Property Management has been providing property services for the Laurel House Project. Yuehai Property Management's brand and standard of service have been recognized by the owners who had taken possession of or resided in the properties. It is also of high importance for establishing the brand image of the Laurel House Project to maintain a stable property management. The Directors consider that the charging rates of Yuehai Property Management for the management services of the Laurel House Project are reasonable.

Having taken into account the above factors, the Directors (including the independent non-executive Directors) are of the view that the Laurel House 2020 Sales Centre Property Services Agreement was entered into in the ordinary and usual course of business of the Group and on normal commercial terms or better, and that the terms of the Laurel House 2020 Sales Centre Property Services Agreement are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

Mr. HOU Wailin and Mr. CAI Yong, Directors of the Company, are also directors of both GDH and Guangdong Holdings. Both of the abovementioned Directors present at the Board meeting of the Company were not counted in the quorum and did not vote on the Directors' resolutions approving, among others, (i) the entering into of the Laurel House 2020 Sales Centre Property Services Agreement; and (ii) the aggregate annual caps for the Agreements and the Laurel House 2020 Sales Centre Property Services Agreement. Save as disclosed above, to the best knowledge, information and belief of the Directors and having made all reasonable enquiries, no other Directors have any material interest in the transaction contemplated under the Laurel House 2020 Sales Centre Property Services Agreement.

AGGREGATE ANNUAL CAPS

As disclosed in the announcement of the Company dated 30 August 2019, the Transactions have been aggregated, for the Listing Rules purpose, on the basis that these are agreements where Yuehai Property Management provides property management and/or related services to the Group. The aggregate annual caps under the Agreements together with the Laurel House 2020 Sales Centre Property Services Agreement for the years of 2019, 2020, 2021 and 2022 are revised as follows:

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			Annual Cap
	2019	2020	2021	2022
	(RMB)		(RMB)		(RMB)		(RMB)
Laurel House Property	7,040,000		－		－		－
Management Agreement
Laurel House 2019 Sales Centre	1,354,400		－		－		－
Property Services Agreement
Laurel House Supplemental	2,960,000	6,000,000		－		－
Agreement
Laurel House Project Existing	11,354,400	6,000,000		－		－
Agreements
Panyu Project Agreements	6,000,000	19,000,000	9,000,000	2,100,000
Aggregate Annual Cap (disclosed)	17,354,400	25,000,000	9,000,000	2,100,000
Laurel House 2020 Sales Centre	－	4,500,000		－		－
Property Services Agreement
Aggregate Annual Cap (revised)	17,354,400	29,500,000	9,000,000	2,100,000
CONNECTED PERSONS

GDH is holding approximately 56.49% of the issued shares of the Company. By virtue of this shareholding interest, GDH is a controlling shareholder and thus a connected person of the Company. Yuehai Property Management (being a subsidiary and thus an associate of GDH as defined in the Listing Rules) is also a connected person of the Company. Guangdong Holdings is the ultimate controlling shareholder of the Company. Guangdong Property Development (being an indirect wholly-owned subsidiary of GD Land) and Wayne are subsidiaries of the Company. Therefore, each of the transactions contemplated under the Agreements and the Laurel House 2020 Sales Centre Property Services Agreement constitutes a continuing connected transaction of the Company under the Listing Rules.

LISTING RULES IMPLICATIONS

As all the applicable percentage ratios of the Listing Rules in respect of the annual cap under the Laurel House 2020 Sales Centre Property Services Agreement are less than 0.1%, the transaction as contemplated under the Laurel House 2020 Sales Centre Property Services Agreement is fully exempt from shareholders' approval, annual review and all disclosure requirements under Rule 14A.76(1) of the Listing Rules.

The Laurel House 2020 Sales Centre Property Services Agreement and the Agreements have been aggregated for the Listing Rules purposes on the basis that they all relate to the property management and/or related services provided by Yuehai Property Management to the Group.

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As disclosed in the announcement of the Company dated 30 August 2019, the aggregate annual caps under the Transactions for the years of 2019, 2020, 2021 and 2022 were set as RMB17,354,400, RMB25,000,000, RMB9,000,000 and RMB2,100,000, respectively. The aggregate annual caps for the Transactions together with the transaction under the Laurel House 2020 Sales Centre Property Services Agreement for the years of 2019, 2020, 2021 and 2022 will be revised to RMB17,354,400, RMB29,500,000, RMB9,000,000 and RMB2,100,000, respectively. Since the highest annual cap (when aggregated) is estimated to be RMB29,500,000 (equivalent to approximately HK$32,930,850), which exceeds 0.1% but is less than 5% of one of the applicable percentage ratios for the purpose of Chapter 14A of the Listing Rules, the Transactions and the transaction under the Laurel House 2020 Sales Centre Property Services Agreement (when aggregated) are subject to the reporting and announcement requirements, but are exempt from the independent shareholders' approval requirement under Rule 14A.76(2) of the Listing Rules.

The Company will comply with the annual review requirements under Rules 14A.55 to 14A.57 of the Listing Rules in relation to the Agreements and the Laurel House 2020 Sales Centre Property Services Agreement.

PRINCIPAL BUSINESSES OF THE GROUPAND THE CONNECTED PERSONS

The Group is principally engaged in investment holding, water resources, property investment and development, department store operation, hotel ownership, operation and management, investments in energy projects and road and bridge operation.

The principal business of each of Guangdong Holdings and GDH is investment holding.

Yuehai Property Management is principally engaged in property management.

DEFINITIONS

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

"Agreements"	the Laurel House Project Existing Agreements and the Panyu
	Project Agreements;
"associate"	has the meaning ascribed to it under the Listing Rules;
"Board"	the board of Directors;
"Company"	Guangdong Investment Limited ( 粤海投資有限公司), a
	company incorporated in Hong Kong with limited liability and
	the shares of which are listed on the Main Board of the Stock
	Exchange;
"connected person(s)"	has the meaning ascribed to it under the Listing Rules;
"Directors"	the directors of the Company;

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"GDH"	GDH Limited （粤海控股集團有限公司）, a company
	incorporated in Hong Kong with limited liability and the
	immediate holding company of the Company;
"GD Land"	Guangdong Land Holdings Limited (粤海置地控股有限公司),
	a company incorporated in Bermuda with limited liability and
	the shares of which are listed on the Main Board of the Stock
	Exchange, a subsidiary of the Company;
"GD Land Announcement"	the announcement of GD Land dated 30 August 2019 in respect
	of the continuing connected transactions pursuant to the
	property management agreement;
"Group"	the Company and its subsidiaries;
"Guangdong Holdings"	廣東粤海控股集團有限公司(Guangdong Holdings Limited*), a
	company established in the PRC and the ultimate holding
	company of the Company;
"Guangdong Property	廣東粤海房地產開發有限公司 (Guangdong Yuehai Property
Development"	Development Co., Ltd.*), a company established in the PRC and
	an indirect wholly-owned subsidiary of GD Land;
"HK$"	Hong Kong dollars, the legal currency of Hong Kong;
"Hong Kong"	The Hong Kong Special Administrative Region of the PRC;
"Laurel House 2019 Sales	粤海珠光路項目樣板房及銷售場所物業服務協議 (Yuehai
Centre Property Services	Zhuguanglu Project Sample Units and Sales Centre Property
Agreement"	Services Agreement) dated 31 January 2019 entered into
	between Guangdong Property Development and Yuehai Property
	Management, details of which are set out in the announcement of
	GD Land dated 31 January 2019;
"Laurel House 2020 Sales	粤海拾桂府項目樣板房及銷售場所物業服務協議 (Yuehai
Centre Property Services	Laurel House Project Sample Units and Sales Centre Property
Agreement"	Services Agreement) dated 31 December 2019 entered into
	between Guangdong Property Development and Yuehai Property
	Management;
"Laurel House Project"	the construction and development of the Laurel House Properties
	undertaken by Guangdong Property Development, formerly
	known as the Zhuguanglu Project;
"Laurel House Project	the Laurel House Property Management Agreement, the Laurel
Existing Agreements"	House Supplemental Agreement and the Laurel House 2019
	Sales Centre Property Services Agreement;
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"Laurel House Properties"	the residential and commercial properties located at 43-79
	Zhuguang Road, Yuexiu District（越秀區珠光路 43-79號）in
	Guangzhou, the PRC;
"Laurel House Property	粤海拾桂府（原稱粤海珠光雅舍小區）前期物業管理服務合
Management Agreement"	同 (Preliminary Property Management Services Agreement of
	Yuehai Laurel House (originally known as Yuehai Zhuguang
	Yashe District)) dated 26 October 2016 entered into between
	Guangdong Property Development and Yuehai Property
	Management, details of which are set out in the GD Land
	Announcement;
"Laurel House	the supplemental agreement dated 30 August 2019 entered into
Supplemental	between Guangdong Property Development and Yuehai Property
Agreement"	Management for the purpose of amending the Laurel House
	Property Management Agreement, details of which are set out in
	the GD Land Announcement;
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange, as amended from time to time;
"Panyu New Property Sales	番禺粤海廣場項目營銷示範區物業服務協議 (Panyu Project
and Exhibition Services	Property Sales and Exhibition Services Agreement) dated 31
Agreement"	May 2019 entered into between Wanye and Yuehai Property
	Management, details of which are set out in the announcement of
	the Company dated 31 May 2019;
"Panyu Old Property Sales	番禺粤海廣場項目營銷示範區物業服務協議 (Panyu Project
and Exhibition Services	Property Sales and Exhibition Services Agreement) dated 16
Agreement"	November 2018 entered into between Wanye and Yuehai
	Property Management, details of which are set out in the
	announcement of the Company dated 31 May 2019;
"Panyu Project Agreements"	the Panyu Property Management Agreement, the Panyu Old
	Property Sales and Exhibition Services Agreement and the Panyu
	New Property Sales and Exhibition Services Agreement;
"Panyu Property	番 禺 粤 海廣 場 前期物 業 管 理服 務 合同 (Panyu Project
Management Agreement"	Preliminary Property Management Services Agreement) dated 31
	May 2019 entered into between Wanye and Yuehai Property
	Management, details of which are set out in the announcement of
	the Company dated 31 May 2019;
"PRC"	the People's Republic of China and, for the purpose of this
	announcement, excludes Hong Kong, the Macao Special
	Administrative Region of the PRC and Taiwan;
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"RMB"	Reminbi, the legal currency of the PRC;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Transactions"	the transactions contemplated under the Agreements;
"Wanye"	廣州市萬亞投資管理有限公司(Guangzhou City Wanye
	Investment Management Limited*), a company established in
	the PRC and a subsidiary of the Company;
"Yuehai Property	粤海物業管理有限公司 (Yuehai Property Management Co.,
Management"	Ltd.*), a company established in the PRC and a non-wholly
	owned subsidiary of GDH; and
"%"	per cent.

For the purpose of this announcement, unless otherwise indicated, the exchange rate of RMB1.00=HK$1.1163 has been used, where applicable, for purpose of illustration only and it does not constitute any representation that any amount has been, could have been or may be exchanged at that rate or at any other rate.

• In this announcement, the English name of the PRC entity marked with an asterisk(*) is translation of its Chinese name, and is included herein for identification purposes only. In the event of any inconsistency, the Chinese name shall prevail.

By Order of the Board

TSANG Hon Nam

Director

Hong Kong, 31 December 2019

As at the date of this announcement, the Board of the Company comprises four Executive Directors, namely, Mr. HOU Wailin, Mr. WEN Yinheng, Mrs. HO LAM Lai Ping, Theresa and Mr. TSANG Hon Nam; four Non-Executive Directors, namely, Mr. CAI Yong, Ms. ZHAO Chunxiao, Mr. LAN Runing and Mr. LI Wai Keung; and five Independent Non-Executive Directors, namely, Dr. CHAN Cho Chak, John, Dr. the Honourable LI Kwok Po, David, Mr. FUNG, Daniel R., Dr. the Honourable CHENG Mo Chi, Moses and Mr. WU Ting Yuk, Anthony.

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