Haichang Ocean Park : CONTINUING CONNECTED TRANSACTIONS PROPERTY LEASING AGREEMENTS

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HAICHANG OCEAN PARK HOLDINGS LTD.

海昌海洋公園控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2255)

CONTINUING CONNECTED TRANSACTIONS

PROPERTY LEASING AGREEMENTS

The Board would like to announce that, on 9 September 2019 and 21 November 2019, the Group entered into two Property Leasing Agreements with each of the Connected Counterparties, pursuant to which certain ancillary commercial properties owned by the Group in Dalian, PRC, are leased by the Group to the Connected Counterparties for a term from 19 September 2019 to 18 September 2020 and from 1 January 2020 to 31 December 2020, respectively.

Mr. Qu, a non-executive Director and a controlling shareholder of the Company, holds approximately 62.27% and 60% equity interests in Haichang Corporation Development and Haichang Group Co, respectively. As East Water City is an indirect wholly-owned subsidiary of Haichang Corporation Development and Haichang Corporation Development is a wholly-owned subsidiary of Haichang Group Co, each of the Connected Counterparties is an associate of Mr. Qu and thus a connected person of the Company. Accordingly, the transactions contemplated under the Property Leasing Agreements constitute continuing connected transactions for the Company under Rule 14A.31 of the Listing Rules.

Since the Existing Leases and the Property Leasing Agreements are similar in nature, the Existing Leases and the Property Leasing Agreements are aggregated for the purpose of classification of connected transactions in accordance with Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratio, as defined under the Listing Rules, in aggregate for the transactions under the Existing Leases and the Property Leasing Agreements is more than 0.1% but less than 5% on an annual basis and the highest annual cap is more than HK$3,000,000, the Property Leasing Agreements are subject to reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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DETAILS OF THE PROPERTY LEASING AGREEMENTS

The Board would like to announce that, on 9 September 2019 and 21 November 2019, the Group entered into two Property Leasing Agreements with each of the Connected Counterparties, pursuant to which certain ancillary commercial properties owned by the Group in Dalian, PRC, had been and will be leased by the Group to the Connected Counterparties for a term commencing from 19 September 2019 to 18 September 2020 and from 1 January 2020 to 31 December 2020, respectively. The details of the Property Leasing Agreements are as follows:

1.	Agreement One
	Date:	9 September 2019
	Parties:	(1)	Haichang China, as lessor; and
		(2)	East Water City, as lessee.
	Leased Properties:	Shop No. 701 in Dalian Laohutan Fishermen's Wharf, Zhongshan
		District, Dalian, with a GFA of approximately 1,717.25 sq.m.
	Term:	For a term of one year commencing from 19 September 2019 to
		18 September 2020.
		East Water City may, by giving Haichang China a written notice
		not later than six months before the expiry of the term of the
		agreement, request renewal of the lease. If the renewal is agreed
		upon, Haichang China and East Water City shall enter into a new
		property leasing agreement for the renewal within one month
		from the date of the written notice.
	Usage:	Office. The leased properties shall not be subleased or assigned to
		any other third party.
	Rental:	RMB4.41 per sq.m. per day (exclusive of property management
		fee and utilities). Accordingly, the monthly rental payable is
		approximately RMB230,347.58.
		Payable annually in advance and shall be paid on the forty-fifth
		day prior to the due date.
	Rental Free Period:	Nil.
	Property Management	Payable to Haichang China or a property management company
	Fee:	outside the Group to be appointed by Haichang China, subject to
		entering into a property management agreement.
	Deposit:	RMB210,000 and shall be refunded with no interest to East Water
		City within three months upon the expiry of the term of the
		agreement.

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2. Agreement Two
Date:	21 November 2019
Parties:	(1) Haichang China, as lessor; and
	(2) Haichang Corporation Development, as lessee.
Leased Properties:	The property located at No. 137 Huale Street, Zhongshan District,
	Dalian, with a GFA of approximately 6,365.07 sq.m.
Term:	For a term of one year commencing from 1 January 2020 to 31
	December 2020.
Usage:	Office. The leased properties shall not be used for other purposes
	without authorisation, or be subleased to any other third party.
Rental:	The monthly rental is RMB400,000 (exclusive of property
	management fee and utilities).
Rental Free Period:	Nil.

AGGREGATE ANNUAL CAPS AND THE BASIS FOR DETERMINATION

Reference is made to the Announcements. As disclosed in the Announcements, Haichang China as lessor and Haichang Corporation Development as lessee on 15 December 2018 entered into the Existing Lease A for a term from 1 January 2019 to 31 December 2019; Yantai Fishermen as lessor and Yantai Tourism Development as lessee on 22 September 2017 entered into the Existing Lease B for a term from 19 September 2017 to 18 September 2020; and Haichang China as lessor and East Water City as lessee entered into the Existing Lease C for a term from 19 September 2018 to

18 September 2019. Details of which are set out as follows:

				Monthly
Date of Agreement	Parties	Location	GFA	Rental
			(sq.m.)	(RMB)
Existing Lease A	Haichang China, as lessor	Dalian	approximately	400,000
15 December 2018	Haichang Corporation		6,365.07
	Development, as lessee
Existing Lease B	Yantai Fishermen, as lessor	Yantai	approximately	approximately
22 September 2017	Yantai Tourism		1,373.58	120,743 (first year)
	Development, as lessee			approximately
				127,010 (second year)
				approximately
				133,277 (third year)
Existing Lease C	Haichang China, as lessor	Dalian	approximately	approximately
21 December 2018	East Water City, as lessee		1,717.25	230,347.6

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Since the Existing Leases and the Property Leasing Agreements are similar in nature and each of the Connected Counterparties is an associate of Mr. Qu, the transactions contemplated under the Existing Leases and the Property Leasing Agreements are aggregated pursuant to Rule 14A.81 of the Listing Rules. The aggregate annual caps for the Existing Leases and the Property Leasing Agreements are set out as follows:

	For the year ending		For the year ending
	31 December 2019		31 December 2020
Property Leasing Agreements	RMB800,000		RMB6,900,000
	(equivalent to		(equivalent to
	approximately		approximately
	HK$892,000)		HK$7,693,500)
Existing Leases	RMB8,500,000		RMB1,200,000
	(equivalent to		(equivalent to
	approximately		approximately
	HK$9,477,500)		HK$1,338,000)
Total	RMB9,300,000		RMB8,100,000
	(equivalent to		(equivalent to
	approximately		approximately
	HK$10,369,500)		HK$9,031,500)

The annual caps are determined by the Directors with reference to the rental amounts to be received by the Group pursuant to the Property Leasing Agreements and the Existing Leases. The rental amounts under the Property Leasing Agreements are determined with reference to the prevailing market rates of rentals for comparable properties in the PRC close to the date of the relevant agreements. The Directors, including the independent non-executive Directors, considered that the annual caps are fair and reasonable and in the interests of the Group and its shareholders as a whole.

REASONS AND BENEFITS FOR ENTERING INTO THE PROPERTY LEASING AGREEMENTS

In addition to the operation of theme parks in the PRC, the Group also derives its revenue from leasing out certain of its ancillary commercial properties as part of its business. In order to better utilise the Group's assets and to generate revenue for the Group, the Group would put its ancillary commercial properties for lease in the market. The Directors considered that the Property Leasing Agreements will allow the Group to utilise its ancillary commercial properties to create an additional source of income and thus will increase its revenue and enhance its profitability. Based on the above, the Directors are of the view that entering into the Property Leasing Agreements is beneficial to the Group's business development and is thus in the interest of the Group.

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The terms of the Property Leasing Agreements are determined after arm's length negotiations between Haichang China and the Connected Counterparties. The rental amounts under the Property Leasing Agreements are determined with reference to the prevailing market rates of rentals for comparable properties in the PRC close to the date of the Property Leasing Agreements. The Directors, including the independent non-executive Directors, are of the view that the Property Leasing Agreements are entered into in the ordinary and usual course of business of the Group and that the terms of the Property Leasing Agreements are on normal commercial terms or better, fair and reasonable, and in the interests of the Company and its shareholders as a whole.

INFORMATION ON THE GROUP AND THE CONNECTED COUNTERPARTIES

The Group is principally engaged in development and operation of theme parks and ancillary commercial properties in the PRC. Haichang China is an indirect wholly-owned subsidiary of the Company, which is also principally engaged in development and operation of theme parks and ancillary commercial properties in the PRC.

East Water City is principally engaged in real estate development and holding in the PRC, and is an indirect wholly-owned subsidiary of Haichang Corporation Development.

Haichang Corporation Development is principally engaged in real estate development in the PRC.

IMPLICATIONS UNDER THE LISTING RULES

Mr. Qu, a non-executive Director and a controlling shareholder of the Company, holds approximately 62.27% and 60% equity interests in Haichang Corporation Development and Haichang Group Co, respectively. As East Water City is an indirect wholly-owned subsidiary of Haichang Corporation Development and Haichang Corporation Development is a wholly-owned subsidiary of Haichang Group Co, each of the Connected Counterparties is an associate of Mr. Qu and thus a connected person of the Company. Accordingly, the transactions contemplated under the Property Leasing Agreements constitute continuing connected transactions for the Company under Rule 14A.31 of the Listing Rules.

Since the Existing Leases and the Property Leasing Agreements are similar in nature, the Existing Leases and the Property Leasing Agreements are aggregated for the purpose of classification of connected transactions in accordance with Rule 14A.81 of the Listing Rules. As the highest applicable percentage ratio, as defined under the Listing Rules, in aggregate for the transactions under the Existing Leases and the Property Leasing Agreements is more than 0.1% but less than 5% on an annual basis and the highest annual cap is more than HK$3,000,000, the Property Leasing Agreements are subject to reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Mr. Qu, a non-executive Director and a controlling shareholder of the Company, has material interests in the transactions contemplated under the Property Leasing Agreements and has abstained from voting on the Board resolutions approving the Property Leasing Agreements and the transactions contemplated thereunder. Furthermore, Mr. Wang Xuguang, an executive Director, has also abstained from voting on the above resolutions as he is a non-executive director of Haichang Group Co and a non-executive director and general manager of Haichang Corporation Development.

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DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:

"Agreement One"the property leasing agreement dated 9 September 2019 entered into between Haichang China as lessor and East Water City as lessee to renew the tenancy under the Existing Lease C

"Agreement Two"the property leasing agreement dated 21 November 2019 entered into between Haichang China as lessor and Haichang Corporation Development as lessee to renew the tenancy under the Existing Lease A

"Announcements"the announcement of the Company dated 21 December 2018 in relation to Existing Lease A and Existing Lease C; and the announcement of the Company dated 28 November 2017 in relation to Existing Lease B

"associate(s)"

"Board"

"Company"

has the meaning ascribed to it under the Listing Rules

the board of Directors

Haichang Ocean Park Holdings Ltd., a company incorporated in the Cayman Islands with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange

"Connected Counterparties"

"connected person(s)"

"controlling shareholder"

"Director(s)"

"East Water City"

"Existing Lease A"

collectively, East Water City and Haichang Corporation Development

has the meaning ascribed to it under the Listing Rules

has the meaning ascribed to it under the Listing Rules

the director(s) of the Company

大連東方水城發展有限公司 (Dalian East Water City Development Co., Ltd.*), a company established in the PRC

the lease dated 15 December 2018 entered into between Haichang China as lessor and Haichang Corporation Development as lessee in relation to the leasing of premises located at No. 137 Huale Street, Zhongshan District, Dalian, for office use, with a term from 1 January 2019 to 31 December 2019

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"Existing Lease B"

"Existing Lease C"

"Existing Leases"

"GFA" "Group"

"Haichang China"

"Haichang Corporation Development"

"Haichang Group Co"

"HK$"

"Hong Kong" "Listing Rules"

"Mr. Qu"

"PRC"

"Property Leasing

Agreements" "RMB" "sq.m."

"Stock Exchange"

the lease dated 22 September 2017 entered into between Yantai Fishermen as lessor and Yantai Tourism Development as lessee in relation to the leasing of premises located in Yantai for office use, with a term from 19 September 2017 to 18 September 2020

the lease dated 21 December 2018 entered into between Haichang China as lessor and East Water City as lessee in relation to the leasing of premise located in Shop No. 701 in Dalian Laohutan Fishermen's Wharf, Zhongshan District, Dalian for office use, with a term from 19 September 2018 to 18 September 2019

collectively, Existing Lease A, Existing Lease B and Existing Lease C

gross floor area

the Company and its subsidiaries

海昌（中國）有限公司(Haichang (China) Co., Ltd.*), a company established in the PRC and an indirect wholly-owned subsidiary of the Company

大連海昌企業發展有限公司(Dalian Haichang Corporation Development Co., Ltd*), a company established in the PRC

大連海昌集團有限公司(Dalian Haichang (Group) Co., Ltd.*), a company established in the PRC

Hong Kong Dollars, the lawful currency of Hong Kong

the Hong Kong Special Administrative Region of the PRC

the Rules Governing the Listing of Securities on the Stock Exchange

Mr. Qu Naijie, a non-executive Director and a controlling shareholder of the Company

the People's Republic of China, which for the purpose of this announcement excludes Hong Kong, the Macau Special Administrative Region and Taiwan

collectively, Agreement One and Agreement Two

Renminbi, the lawful currency of the PRC

square metres

The Stock Exchange of Hong Kong Limited

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"Yantai Fishermen"	煙台漁人碼頭投資有限公司 (Yantai Fishermen's Wharf Investment
	Co., Ltd.*), a company established in the PRC and an indirect
	wholly-owned subsidiary of the Company
"Yantai Tourism	煙台海昌旅遊發展有限公司 (Yantai Haichang Tourism Development
Development"	Co., Ltd.*), a company established in the PRC, an associate of
	Mr. Qu and hence a connected person of the Company
"%"	per cent.

By Order of the Board

Haichang Ocean Park Holdings Ltd.

Wang Xuguang

Executive Director and Chief Executive Officer

Shanghai, the PRC, 6 December 2019

As at the date of this announcement, the executive Directors are Mr. Wang Xuguang, Mr. Qu Cheng and Mr. Gao Jie; the non-executive Directors are Mr. Qu Naijie, Mr. Li Hao and Mr. Yuan Bing; and the independent non-executive Directors are Mr. Chen Guohui and Ms. Zhang Meng.

In this announcement, RMB has been converted to HK$ at the rate of RMB1 = HK$1.1150 for illustration purpose only. No representation is made that any amounts in RMB or HK$ have been, could have been or could be converted at the above rate or at any other rates or at all.

• For identification purposes only

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