CIFI : CONNECTED TRANSACTION FORMATION OF JOINT VENTURE IN RELATION TO A RESIDENTIAL DEVELOPMENT PROJECT IN HEFEI, THE PRC

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CIFI Holdings (Group) Co. Ltd.

旭 輝 控 股（ 集 團 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00884)

CONNECTED TRANSACTION

FORMATION OF JOINT VENTURE IN RELATION TO

A RESIDENTIAL DEVELOPMENT PROJECT IN HEFEI, THE PRC

BINHU COOPERATION AGREEMENT

On 25 June 2019, the Company, together with its subsidiaries, namely Xu Sheng BVI, Xu Sen BVI, Xu Sen HK, Hefei Xuqi and Binhu Project Company entered into the Binhu Cooperation Agreement with Henderson China and Henderson BVI for the formation of joint venture to develop the Binhu Site located at the west side of Baohe Road and the south side of Nanjing Road, Binhu District, Hefei, Anhui Province, the PRC (中國安徽省 合肥市濱湖區包河大道以西，南京路以南). As at the date of this announcement, Binhu Project Company is directly held as to 50% by Xu Sen HK and 50% by Hefei Xuqi. Xu Sen HK is a wholly-owned subsidiary of Xu Sen BVI, which is in turn wholly-owned by Xu Sheng BVI, being a direct wholly-owned subsidiary of the Company. Hefei Xuqi is a limited liability company incorporated in the PRC and an onshore subsidiary controlled by the Company. Xu Sen HK and Hefei Xuqi succeeded in the bidding of the Binhu Site with a total planned gross floor area of 118,954.7 sq.m. at land consideration of approximately RMB1,731 million.

Pursuant to the Binhu Cooperation Agreement, Henderson BVI proposes to acquire the entire issued share capital of Xu Sen BVI from Xu Sheng BVI. Upon the completion of the Binhu Cooperation Agreement, the Binhu Project Company will be the sino-foreign equity joint venture owned as to 50% by Henderson China (through Xu Sen HK) and 50% by the Company (through Hefei Xuqi) which will be consolidated into the financial statements of the Group and Binhu Project Company will undertake the development of the Binhu Site.

The average land cost of the Binhu Site is approximately RMB14,549 per sq.m. The aggregate capital commitment currently intended to be payable by the Group for the transactions contemplated under the Binhu Cooperation Agreement is estimated to be RMB895,000,000 (equivalent to approximately HK$1,020,300,000).

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LISTING RULES IMPLICATIONS

As at the date of this announcement, Henderson China indirectly holds 50% interest in Xu An, a subsidiary of the Company, which does not fall within the ambit of insignificant subsidiary under Rule 14A.09(1) of the Listing Rules. Accordingly, Henderson China is a connected person of the Company at its subsidiary level. The transactions contemplated under the Binhu Cooperation Agreement therefore constitute connected transaction of the Company under Chapter 14A of the Listing Rules. The Board has approved the Binhu Cooperation Agreement and the transactions thereunder. None of the Directors have any material interest in the transactions contemplated under the Binhu Cooperation Agreement and as such no Directors have abstained from voting on the resolutions of the Board approving such transactions. The Directors (including the independent non-executive Directors) are of the view that the Binhu Cooperation Agreement is on normal commercial terms, and the terms and conditions of the Binhu Cooperation Agreement, including the consideration thereof, are fair and reasonable and in the ordinary and usual course of business of the Company and that such transactions are in the interests of the Company and the Shareholders as a whole.

The highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Binhu Cooperation Agreement exceeds 1% but is less than 5%. As Henderson China is a connected person of the Company only because of its connection with the Company's subsidiary, namely Xu An, the transactions contemplated under the Binhu Cooperation Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but are exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

BINHU COOPERATION AGREEMENT

Date:	25 June 2019
Parties:	(i)	Henderson China
	(ii)	Henderson BVI, being a subsidiary of Henderson China
	(iii)	the Company
	(iv)	Xu Sheng BVI, being a direct wholly-owned subsidiary of the Company
	(v)	Xu Sen BVI, being a direct wholly-owned subsidiary of Xu Sheng BVI as
		at date of this announcement
	(vi)	Xu Sen HK, being a direct wholly-owned subsidiary of Xu Sen BVI
	(vii)	Hefei Xuqi, being an onshore subsidiary controlled by the Company
	(viii)	Binhu Project Company, which is directly held as to 50% by Xu Sen HK
		and 50% by Hefei Xuqi

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Subject Matter

As at the date of this announcement, Xu Sheng BVI, being a direct wholly-owned subsidiary of the Company, directly holds one share in Xu Sen BVI, representing the entire issued share capital of Xu Sen BVI. Xu Sen BVI in turn wholly owns the entire issued share capital of Xu Sen HK. Hefei Xuqi is an onshore subsidiary controlled by the Company. Xu Sen HK and Hefei Xuqi succeeded in the bidding of the land use rights in respect of the Binhu Site offered for sale by Hefei Municipal Bureau of National Land and Resource (合肥市國土資源局) in April 2019 and the Land Use Rights Grant Contract in respect of the Binhu Site has been entered into. The Binhu Project Company was set up on 15 May 2019 in the PRC, in which each of Xu Sen HK and Hefei Xuqi holds 50% equity interest for the future development of the Binhu Site. Other than holding the interest in the Binhu Site, Xu Sen BVI and Xu Sen HK have no other assets nor conducted any other business operation as at the date of this announcement.

Pursuant to the terms of the Binhu Cooperation Agreement, Henderson BVI shall acquire from Xu Sheng BVI one share in Xu Sen BVI, representing the entire issued share capital of Xu Sen BVI at the consideration of US$1 and the undertaking given by Henderson China to contribute 50% of the capital proposed to be injected into the Binhu Project Company by way of provision of shareholder's loan and/or registered share capital. Pursuant to the Binhu Cooperation Agreement, the total amount of capital to be injected by the joint venture partners into the Binhu Project Company will be RMB1,790,000,000 (equivalent to approximately HK$2,040,600,000), out of which the Group and Henderson China will bear on 50%: 50% such that RMB895,000,000 (equivalent to approximately HK$1,020,300,000) will be contributed by way of provision of shareholder's loan and/or registered share capital by each of the Group and Henderson China, in proportion to their respective attributable interest in the Binhu Project Company. It is intended that the capital commitment payable by the Group under the Binhu Cooperation Agreement would be financed by internal resources of the Group. Upon completion of the aforesaid transfer of the share capital of Xu Sen BVI, it will cease to be a subsidiary of the Group, and the Binhu Project Company will then be the joint venture owned as to 50% by Henderson China (through Xu Sen HK) and 50% by the Company (through Hefei Xuqi).

The capital commitment was determined after arm's length negotiation between the parties to the Binhu Cooperation Agreement with reference to the land premium payable and the development cost, interest, related government charges and expenses and possible loan facilities from banks in relation to the Binhu Site.

Information of Xu Sen BVI

Since Xu Sen BVI and Xu Sen HK are investment holding companies and do not own any assets nor conduct any business operation other than holding the interest in the Binhu Site which is held for future development, they have not recorded any revenue or profit since their establishment to the date of this announcement.

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Information of the Binhu Site
Site location:	Located at the west side of Baohe Road and the south side
	of Nanjing Road, Binhu District, Hefei, Anhui Province, the
	PRC (中國安徽省合肥市濱湖區包河大道以西，南京路以南)
Site area:	50,603.5 sq.m.
Planned gross floor area:	118,954.7 sq.m.
Term of land use rights:	70 years for residential
Land premium:	Land consideration of approximately RMB1,731 million
	(comprising land premium and related government charges).
	The average land cost is approximately RMB14,549 per sq.m.

Composition of the board of directors of Binhu Project Company

The board of directors of Binhu Project Company will comprise 5 directors, 3 of whom will be nominated by the Group and the remaining 2 of whom will be nominated by Henderson China. In addition, each of the Group and Henderson China shall be entitled to appoint 1 supervisor, while the Group has the right to nominate 1 general manager in the Binhu Project Company. The board of the directors of the Binhu Project Company shall decide on all matters by simple majority.

Profit and loss sharing

The Company and Henderson China will be entitled to share the profit or bear the loss of Binhu Project Company in proportion to their respective equity interest subject to applicable adjustments with reference to investment return from the development project agreed among the parties.

It is intended that Binhu Project Company will still be accounted for as subsidiary of the Group and it is agreed between the parties to the Binhu Cooperation Agreement that the accounts of Binhu Project Company will still be consolidated into the financial statements of the Group.

INFORMATION OF HENDERSON CHINA AND HENDERSON BVI

Henderson China is a company incorporated in Hong Kong and indirectly wholly-owned by Henderson Land. Henderson Land is an investment holding company and its subsidiaries are principally engaged in the businesses of property development and investment, construction, hotel operation, finance, department store operation, project management, investment holding and property management.

To the best knowledge of the Company based on information available to it, Henderson BVI is a company incorporated in the British Virgin Islands with limited liability. Henderson BVI is a wholly-owned subsidiary of Henderson China as at the date of this announcement and is principally engaged in investment holding.

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REASONS FOR AND BENEFIT OF THE BINHU COOPERATION AGREEMENT

The Group is principally engaged in the property development and property investment in the PRC. It has been the strategy of the Group to cooperate with renowned property developers for development of particular project so as to achieve synergy benefits and diversify its financial exposure. Henderson China is a trusted and long-term strategic partner of the Group.

The Binhu Cooperation Agreement enables the Group to further strengthen its cooperation with Henderson China and to enjoy the economic benefits of the property development project in Hefei, the PRC, by leveraging the synergies of the cooperation.

The Directors consider that the Binhu Cooperation Agreement has been entered into on normal commercial terms, and the terms and conditions therein are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Henderson China indirectly holds 50% interest in Xu An, a subsidiary of the Company, which does not fall within the ambit of insignificant subsidiary under Rule 14A.09(1) of the Listing Rules. Accordingly, Henderson China is a connected person of the Company at its subsidiary level. The Binhu Cooperation Agreement therefore constitutes connected transaction of the Company under Chapter 14A of the Listing Rules. The Board has approved the Binhu Cooperation Agreement and the transactions thereunder. None of the Directors have any material interest in the transactions contemplated under the Binhu Cooperation Agreement and as such no Directors have abstained from voting on the resolutions of the Board approving such transactions. The Directors (including the independent non-executive Directors) are of the view that the Binhu Cooperation Agreement is on normal commercial terms, and the terms and conditions of the Binhu Cooperation Agreement, including the consideration thereof, are fair and reasonable and in the ordinary and usual course of business of the Company and that such transactions are in the interests of the Company and the Shareholders as a whole.

The highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Binhu Cooperation Agreement exceeds 1% but is less than 5%. As Henderson China is a connected person of the Company only because of its connection with the Company's subsidiary, namely Xu An, the transactions contemplated under the Binhu Cooperation Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules but are exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

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