China Overseas Grand Oceans : CONNECTED TRANSACTION - FORMATION OF JOINT VENTURE

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: 81)

CONNECTED TRANSACTION

FORMATION OF JOINT VENTURE

FORMATION OF JOINT VENTURE

The Board is pleased to announce that on 27 February 2020, CGOSIL (an indirect wholly- owned subsidiary of the Company), Shenzhen Chuangying and the Project Company (a direct wholly-owned subsidiary of Shenzhen Chuangying) have entered into the Cooperation Agreement pursuant to which, among other things, (a) CGOSIL will provide the Initial Shareholders Loan of RMB1,257,317,100 to the Project Company, of which RMB720,000,000 will be converted into the registered capital of the Project Company, and upon completion of filing with the relevant authorities, the registered capital of the Project Company will be owned as to 60% and 40% by CGOSIL and Shenzhen Chuangying respectively; (b) CGOSIL will subsequently provide the Additional Shareholders Loan of RMB300,000,000 to the Project Company, comprising of shareholders' loan from CGOSIL in proportion to its equity interest in the Project Company and additional advance to the Project Company which is interest bearing; and (c) CGOSIL and Shenzhen Chuangying will, through the Project Company, jointly develop the Project on the Land located in Huizhou City, the PRC.

Pursuant to the Cooperation Agreement, the Project Company will finance the development of the Project by bank borrowings and shareholders' loans. It is expected that the consideration of the Land and related taxes and the funding requirements for the development of the Project, without taking into account of any bank borrowings, is an aggregate amount up to RMB2,400,000,000, which will be borne by the shareholders of the Project Company on a pro-rata basis to their respective equity interests in the Project Company. Accordingly, CGOSIL's commitment on pro-rata basis to its equity interest in the Project Company is an aggregate amount up to RMB1,440,000,000, which will comprise of the contributions to the registered capital of the Project Company and shareholders' loans to be provided to the Project Company by CGOSIL.

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LISTING RULES IMPLICATIONS

As (a) the sole purpose of the Project Company is to develop the Project on the Land, which is a project of a revenue nature in the ordinary and usual course of business of the Company;

1. the transactions contemplated under the Cooperation Agreement are on an arm's length basis and on normal commercial terms; and (c) the Project Company, may not, without the unanimous consent of its shareholders, change the nature and scope of its business or enter into any transactions which are not on an arm's length basis, the transactions contemplated under the Cooperation Agreement do not constitute notifiable transactions of the Company pursuant to Rule 14.04(1)(f) of the Listing Rules.

As at the date of this announcement, the immediate holding company of Shenzhen Chuangying, Shenzhen Anchuang, is a substantial shareholder of Shenzhen Chuangshi Enterprise Management Co., Ltd.* (深圳市創史企業管理有限公司), a non wholly-owned

subsidiary of the Company. Shenzhen Anchuang is a connected person of the Company at subsidiary level and each of Shenzhen Chuangying and the Project Company, a wholly- owned subsidiary of Shenzhen Chuangying, is an associate of Shenzhen Anchuang under Rule 14A.13 of the Listing Rules and a connected person of the Company at the subsidiary level. Accordingly, the JV Formation under the Cooperation Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

The Directors (including the independent non-executive Directors) have approved the Cooperation Agreement and the transactions contemplated thereunder and the Directors (including the independent non-executive Directors) have confirmed that the terms of the Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole. Accordingly, pursuant to Rule 14A.101 of the Listing Rules, the Cooperation Agreement and the transactions contemplated thereunder will be subject only to the reporting and announcement requirements, but exempt from the circular, independent financial advice and shareholders' approval requirements under Chapter 14A of the Listing Rules.

None of the Directors has any material interest in the Cooperation Agreement and the transactions contemplated thereunder, and none of the Directors has abstained from voting on the Board resolution approving the Cooperation Agreement and the transactions contemplated thereunder.

INTRODUCTION

On 27 February 2020, CGOSIL, Shenzhen Chuangying and the Project Company entered into the Cooperation Agreement, the principal terms of which are set out below.

THE COOPERATION AGREEMENT

Date

27 February 2020

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Parties

1. CGOSIL, an indirect wholly-owned subsidiary of the Company;
2. Shenzhen Chuangying; and
3. the Project Company, a direct wholly-owned subsidiary of Shenzhen Chuangying.

Formation of Joint Venture

Shenzhen Chuangying had successfully bid for the Land in November 2019 and the consideration for the Land together with the relevant taxes amounted to RMB2,095,528,500, which payment was funded by Shenzhen Chuangying through shareholders' loans to the Project Company.

Pursuant to the Cooperation Agreement, (a) CGOSIL will provide the Initial Shareholders Loan of RMB1,257,317,100 to the Project Company, representing 60% of the consideration for the Land and the relevant taxes and considered as an advance to the Project Company by Shenzhen Chuangying with a reasonable interest charged thereupon, which shall be applied by the Project Company to repay Shenzhen Chuangying for the relevant portion of the consideration for the Land and relevant taxes to be borne by CGOSIL; and (b) CGOSIL will subsequently provide the Additional Shareholders Loan of RMB300,000,000 to the Project Company, comprising of a shareholders' loan from CGOSIL in proportion to its equity interest in the Project Company and additional advance to the Project Company upon which a reasonable interest will be charged. Among the shareholders' loans provided by CGOSIL and Shenzhen Chuangying, a total amount of RMB1,200,000,000 will be converted into the registered capital of the Project Company, of which RMB720,000,000 and RMB480,000,000 represent the contributions by CGOSIL and Shenzhen Chuangying respectively.

Upon completion of filing with the relevant authorities, the registered capital of the Project Company will be owned as to 60% and 40% by CGOSIL and Shenzhen Chuangying respectively, and accordingly, the Project Company will be accounted for as a subsidiary of the Company and its financial results will be consolidated into the Group's consolidated financial statements.

CGOSIL and Shenzhen Chuangying will, through the Project Company, jointly develop the Project on the Land located in Huizhou City, PRC pursuant to the Cooperation Agreement.

Shareholders' commitment

Pursuant to the Cooperation Agreement, the Project Company will finance the development of the Project by bank borrowings and shareholders' loans. It is expected that the consideration of the Land and related taxes and the funding requirements for the development of the Project without taking into account of any bank borrowings is an aggregate amount up to RMB2,400,000,000, which will be borne by the shareholders of the Project Company on a pro-rata basis to their respective equity interests in the Project Company. Accordingly, CGOSIL's commitment on pro-rata basis to its equity interest in the Project Company is an aggregate amount up to RMB1,440,000,000, which will comprise of the contributions to the registered capital of the Project Company and shareholders' loans to be provided to the Project Company by CGOSIL.

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The shareholders' loans will be provided by CGOSIL and Shenzhen Chuangying to the Project Company in accordance with the terms and conditions of the Cooperation Agreement and an interest rate of 8% per annum will be generally charged.

In addition, the shareholders of the Project Company may draw on the surplus of the funds available of the Project Company after taking into account of the costs payable, funding requirements and working capital and on a pro-rata basis to their respective equity interests in the Project Company. Such funds will be repaid to the Project Company based on the funding needs of the Project Company.

Management of the Project Company

Pursuant to the Cooperation Agreement, the board of directors of the Project Company shall consist of five members, of which CGOSIL shall have the right to nominate four directors and Shenzhen Chuangying shall have the right to nominate one director. The chairman of the Project Company, who shall also be the legal representative of the Company, shall be a director nominated by CGOSIL. The board of directors of the Project Company will govern the overall management and strategic planning of the Project Company.

The Project Company will also have a management team comprising of a general manager, a financial controller and a director nominated by CGOSIL; and a deputy financial controller and a director nominated by Shenzhen Chuangying. The management team will oversee the day to day operations of the Project Company.

Distributions

The Project Company may make distributions to its shareholders on a pro-rata basis to their respective equity interests in the Project Company after the repayment of all bank borrowing by the Project Company.

Exit mechanism for Shenzhen Chuangying

In the event that 95% of the saleable floor area has been sold and the relevant sales contracts have been filed with the relevant authorities, Shenzhen Chuangying will be entitled to exit from the joint venture in accordance with the terms and conditions of the Cooperation Agreement, which includes the transfer of the equity interest owned by Shenzhen Chuangying to CGOSIL and Shenzhen Chuangying will receive its share of the distributable reserves of the Project Company and unsold properties of the Project Company based on the proportion of its equity interest in the Project Company.

INFORMATION ON THE LAND AND THE PROJECT

The Land

The Land is a piece of land with the lot no. LJL-38-10-01 located in Maan Urban Centre, Huicheng District, Huizhou City, the PRC* ( 惠州市惠城區馬安中心區 ). The Land is planned for residential and commercial use, with a total site area of approximately 123,000 sq.m., a plot ratio of not more than 3 and a term of 70 years for residential purpose and 40 years for commercial purpose.

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The Project

The Project will involve the development and sale of residential properties with a gross floor area of approximately 348,000 sq.m. and commercial properties with a gross floor area of approximately 12,400 sq.m. on the Land by the Project Company. The construction of the properties on the Land is expected to commence in March 2020 and to be completed in August 2022. Further, the pre-sale of the properties on the Land is expected to commence in August 2020 and to be delivered to the relevant purchasers in December 2022.

As Shenzhen Chuangying had successfully bid for the Land in November 2019 and the Project Company was established by Shenzhen Chuangying in December 2019, therefore the Project Company had no material business operations as at the date of this announcement.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS CONTEMPLATED UNDER THE COOPERATION AGREEMENT

The Group is one of the leading property developers that focus its development strategy in third tier cities in the PRC and the JV Formation would be in line with the Group's development. The parties would benefit from the JV Formation through leveraging on the Group's property development expertise whilst exploiting the opportunity resulting from the successful bid of the Land located in a prime area by Shenzhen Chuangying, reducing the risk exposure for the parties and improving returns to the Company's shareholders. The terms of the Cooperation Agreement have been arrived at after arm's length negotiations between CGOSIL and Shenzhen Chuangying.

The Directors (including the independent non-executive Directors) have approved the Cooperation Agreement and the transactions contemplated thereunder and the Directors (including the independent non-executive Directors) have confirmed that the terms of the Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

None of the Directors has any material interest in the Cooperation Agreement and the transactions contemplated thereunder, and none of the Directors has abstained from voting on the board resolution approving the Cooperation Agreement and the transactions contemplated thereunder.

INFORMATION OF THE PARTIES

The Group and CGOSIL

The Company is a company incorporated in Hong Kong with limited liability and whose shares are listed on the Main Board of the Stock Exchange. The Group is principally engaged in property investment and development, property leasing and investment holding in PRC.

CGOSIL is a company established in the PRC with limited liability and is an indirect wholly- owned subsidiary of the Company. CGOSIL is principally engaged in investment holding.

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Shenzhen Chuangying

Shenzhen Chuangying is a company established in the PRC with limited liability and whose indirect controlling shareholder is Ping An Real Estate Co., Ltd.* (平安不動產有限公司). Shenzhen Chuangying is principally engaged in investment advisory, sales agency and property management services in the PRC and is indirectly held by Ping An Real Estate Co., Ltd.* (平安不動產有限公司) for financial investment purpose.

The Project Company

The Project Company is a company established in the PRC with limited liability and a direct wholly-owned subsidiary of Shenzhen Chuangying as at the date of this announcement. The Project Company is principally engaged in the development of the Land.

LISTING RULES IMPLICATIONS

As (a) the sole purpose of the Project Company is to develop the Project on the Land, which is a project of a revenue nature in the ordinary and usual course of business of the Company;

1. the transactions contemplated under the Cooperation Agreement are on an arm's length basis and on normal commercial terms; and (c) the Project Company, may not, without the unanimous consent of its shareholders, change the nature and scope of its business or enter into any transactions which are not on an arm's length basis, the transactions contemplated under the Cooperation Agreement do not constitute notifiable transactions of the Company pursuant to Rule 14.04(1)(f) of the Listing Rules.

As at the date of this announcement, the immediate holding company of Shenzhen Chuangying, Shenzhen Anchuang, is a substantial shareholder of Shenzhen Chuangshi Enterprise Co., Ltd.* (深圳市創史企業管理有限公司), a non wholly-owned subsidiary of

the Company. Shenzhen Anchuang is a connected person of the Company at subsidiary level and each of Shenzhen Chuangying and the Project Company, a wholly-owned subsidiary of Shenzhen Chuangying, is an associate of Shenzhen Anchuang under Rule 14A.13 of the Listing Rules and a connected person of the Company at the subsidiary level. Accordingly, the JV Formation under the Cooperation Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

The Directors (including the independent non-executive Directors) have approved the Cooperation Agreement and the transactions contemplated thereunder and the Directors (including the independent non-executive Directors) have confirmed that the terms of the Cooperation Agreement and the transactions contemplated thereunder are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole. The relevant percentage ratios in relation to the Commitments under the JV Formation exceed 5% and based on the above, pursuant to Rule 14A.101 of the Listing Rules, the Cooperation Agreement and the transactions contemplated thereunder will be subject only to the reporting and announcement requirements, but exempt from the circular, independent financial advice and shareholders' approval requirements under Chapter 14A of the Listing Rules.

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DEFINITIONS

Unless otherwise stated, the following words and phrases have the following meanings in this announcement:

"Additional	the subsequent shareholders' loan of RMB 300,000,000 provided by
Shareholders Loan"	CGOSIL to the Project Company in accordance with the
	Cooperation Agreement
"Board"	the board of Directors of the Company
"CGOSIL"	China Overseas Grand Oceans (Shenzhen) Investment Co., Ltd.* (中
	海宏洋（深圳）投資有限公司), a company established in the PRC
	with limited liability and a indirect wholly-owned subsidiary of the
	Company
"Commitments"	the Initial Shareholders Loan and the Additional Shareholders Loan
"Company"	China Overseas Grand Oceans Group Limited (中國海外宏洋集團
	有限公司), a company incorporated in Hong Kong with limited
	liability and whose shares are listed on the Main Board of the Stock
	Exchange (stock code: 81)
"Cooperation	the Cooperation Agreement dated 27 February 2020 entered into
Agreement"	between CGOSIL, Shenzhen Chuangying and the Project Company
	in relation to, among others, the formation of joint venture by
	CGOSIL and Shenzhen Chuangying through the Project Company
"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries from time to time
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Initial Shareholders	the initial shareholders' loan of RMB1,257,317,100 provided by
Loan"	CGOSIL to the Project Company in accordance with the
	Cooperation Agreement
"JV Formation"	the formation of joint venture contemplated under the Cooperation
	Agreement
"Land"	a piece of land with the lot no. LJL-38-10-01 located in Maan Urban
	Centre, Huicheng District, Huizhou City, the PRC* (惠州市惠城區
	馬安中心區)
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange

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"PRC"	the People's Republic of China, and for the purpose of this
	announcement, excluding Hong Kong, Macau and Taiwan
"Project"	the construction and development of the Land by the Project
	Company
"Project Company"	Huizhou City Haiping Real Estate Co., Ltd.* (惠州市海平置業有限
	公司), a company established in the PRC with limited liability and a
	direct wholly-owned subsidiary of Shenzhen Chuangying as at the
	date of this announcement
"RMB"	Renminbi, the lawful currency of the PRC
"Shenzhen Anchuang"	Shenzhen Anchuang Investment Management Co., Ltd.* (深圳安創
	投資管理有限公司), a company established in the PRC with limited
	liability and a substantial shareholder of a non wholly-owned
	subsidiary of the Company, therefore a connected person of the
	Company at the subsidiary level

"Shenzhen Chuangying" Shenzhen City Chuangying Enterprise Management Co., Ltd.* (深圳 市創應企業管理有限公司), a company established in the PRC with limited liability and a connected person of the Company at the subsidiary level

"sq.m."

square metre(s)

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"%"

per cent.

In this announcement, unless the context otherwise requires, the terms "associate", "connected person(s)", "connected transaction(s)", "percentage ratio", "subsidiary(ies)" and "substantial shareholder(s)" shall have the meanings given to such terms in the Listing Rules.

* English or Chinese translation, as the case may be, is for identification only.

By order of the Board

CHINA OVERSEAS GRAND OCEANS

GROUP LIMITED

Zhuang Yong

Chairman and Executive Director

Hong Kong, 27 February 2020

As at the date of this announcement, the Board comprises eight Directors, of which three are executive Directors, namely Mr. Zhuang Yong, Mr. Yang Lin and Mr. Paul Wang Man Kwan; two non-executive Directors, namely Mr. Yan Jianguo and Mr. Billy Yung Kwok Kee, and three independent non- executive Directors, namely Dr. Timpson Chung Shui Ming, Mr. Jeffrey Lam Kin Fung and Mr. Dantes Lo Yiu Ching.

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