Joy City Property : CONTINUING CONNECTED TRANSACTIONS - RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS AGREEMENTS

December 30, 2019 at 05:31 am EST

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.

JOY CITY PROPERTY LIMITED

大悅城地產有限公司

(incorporated in Bermuda with limited liability)

(Stock code: 207)

CONTINUING CONNECTED TRANSACTIONS

RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS

AGREEMENTS

CONTINUING CONNECTED TRANSACTIONS

As the CCT Agreements will expire on 31 December 2019, the Board announced that on 30 December 2019, the Company renewed the CCT Agreements each for a term of three years from 1 January 2020 to 31 December 2022.

THE CONNECTED PERSONS

COFCO Corporation was the ultimate controlling shareholder of the Company as at the date of this announcement. Therefore, COFCO Corporation, together with other members of the COFCO Group and their respective associates, are the Company's connected persons under Chapter 14A of the Listing Rules.

LISTING RULES IMPLICATIONS

Pursuant to Rule 14A.54 of the Listing Rules, if the Company proposes to renew the CCT Agreements, the Company is required to re-comply with the announcement and shareholders' approval requirements of the Listing Rules applicable to the relevant continuing connected transactions.

As one or more of the applicable percentage ratios calculated based on the annual caps for each of the CCT Agreements exceeds 0.1% but are less than 5%, the renewal of the CCT Agreements and the transactions contemplated thereunder are subject to the reporting, annual review and announcement requirements but are exempted from the independent shareholders' approval requirement.

The Company refers to the circular dated 5 November 2014 (the "Circular") and the announcement dated 21 December 2016 (the "2016 Announcement") in relation to, among other things, the continuing connected transactions. Unless otherwise indicated herein, capitalised terms defined in the Circular shall have the same meanings when used herein.

As the CCT Agreements will expire on 31 December 2019, the Board announces that on 30 December 2019, the Company renewed each of the CCT Agreements for a term of three years from 1 January 2020 to 31 December 2022.

CONTINUING CONNECTED TRANSACTIONS

Master Lease Agreement
The Company entered into the Master Lease Agreement with COFCO Corporation to govern the terms of the lease of property by the Group to the COFCO Group.
Major terms and pricing of the Master Lease Agreement
As at the date of this announcement, certain members of the Group entered into various lease agreements for the leasing of commercial premises to COFCO Group. These leased properties are generally occupied by relevant members of the COFCO Group as their headquarters, offices, sales offices or for other commercial uses. The lease agreements entered into by the Group and the COFCO Group will be subject to the terms and conditions of the Master Lease Agreement, which has, by a further supplemental agreement thereto, extended its term to 31 December 2022. Pursuant to the Master Lease Agreement, the rent and management fees payable by the COFCO Group are subject to the general pricing terms therein which provides that the rent and service fees are to be agreed and determined on an arm's length basis and shall be comparable to, or no less favourable to the Group than, the fair market rents or market prices for similar products and services offered by the Group to independent third parties, and are to be agreed between the relevant members of the Group and the COFCO Group having regard to the quality and nature of the relevant property, its location, neighbourhood area and ancillary infrastructure facilities, and based on the rents payable under leases in the same building as those with tenants which are independent third parties and the prevailing market rents for similar premises in the vicinity of the relevant property.
The Master Lease Agreement also provides that before the entering into a lease agreement, the relevant member of the Group shall:
1. when the price is the sole determining factor: (i) obtain quotations from not less than two independent third parties in relation to leasing of similar premises; or (ii) obtain from COFCO Group not less than two lease records of similar properties leased to it by other lessors, and in such case the rent payable by COFCO Group and other relevant conditions under such lease agreement shall not be less favourable from the Group's perspective than those quotations or lease records (as the case may be); or
2. when the price is one of the determining factors, conduct negotiations and, if necessary, obtain relevant quotation and/or pricing record to determine the overall terms of the transaction on an arm's length basis.

Reasons and benefits for the Master Lease Agreement

The Company considers that the leasing of the commercial premises by the Group to the COFCO Group is conducted in the Group's ordinary and usual course of business based on the commercial needs of the Group and the COFCO Group. The Group will obtain stable income from COFCO Group

pursuant to the leasing arrangements. It is expected that the Group will continue to lease the commercial premises to the COFCO Group pursuant to the existing lease arrangements and may renew the same after they expire, or enter into new lease agreements with other members of the COFCO Group.

Annual caps

The aggregate rent and management fees related to the leased premises paid by the COFCO Group to the Group for the two years ended 31 December 2017 and 2018 and the period ended 30 November 2019, and the annual caps for the transactions under the Master Lease Agreement are set as follows:

Historical transaction amounts between the Group and the COFCO	RMB'000
Group (financial year / period ended):
31	December 2017		162,928
31	December 2018		165,982
30	November 2019		160,481
		Historical annual caps	Annual caps
		(financial year ended/ending)	(financial year ending)
		RMB'000	RMB'000
31	December 2017	203,000	-
31	December 2018	223,000	-
31	December 2019	245,000	-
31	December 2020	-	250,000
31	December 2021	-	255,000
31	December 2022	-	260,000

Master Property Management Agreement
The Company entered into the Master Property Management Agreement with COFCO Corporation to govern the terms of the provision of hotel and property management services by the COFCO Group to the Group.
Major terms and pricing of the Master Property Management Agreement
As at the date of this announcement, certain members of the COFCO Group provided hotel and property management services to the property projects developed by the Group. The property management agreements entered into by the Group and the COFCO Group will be subject to the terms and conditions of the Master Property Management Agreement, which has, by a further supplemental agreement thereto, extended its terms to 31 December 2022. Pursuant to the Master Property Management Agreement, the service fees for the project consultation, hotel and property management services are subject to the general pricing terms therein which provides that the service fees are to be agreed and determined on an arm's length basis and shall be comparable to, or no less favourable to the Group than the fair market prices for similar services offered by independent third

parties to the Group. Detailed terms of the hotel and property management services to be provided by the COFCO Group and the pricing terms shall be set out in the specific management service contracts to be entered into between the relevant members of the Group and the COFCO Group which are ancillary to and subject to the terms and conditions of the Master Property Management Agreement.

Pursuant to the Master Property Management Agreement, the consideration to be paid by the respective members of the Group shall be agreed between the relevant members of the Group and the COFCO Group having regard to various factors such as the nature and scope of the services to be provided, the costs of providing such services and the market rate for similar services offered

by other independent third party suppliers, or based on a prescribed fee schedule or charging rate as agreed between the relevant parties from time to time.

The Master Property Management Agreement also provides that before entering into a hotel or property management agreement, the relevant member of the Group shall:

when the price is the sole determining factor: (i) obtain quotations from not less than two independent third party service providers of similar hotel or property management services; or
1. obtain from COFCO Group not less than two records of similar hotel or property management services provided by it to other clients, and in such case the service fees payable by the Group and other relevant conditions under such hotel or property management agreement shall not be less favourable from the Group's perspective than those quotations or records (as the case may be); or
when the price is one of the determining factors, conduct negotiations and, if necessary, obtain relevant quotation and/or pricing record to determine the overall terms of the transaction on an arm's length basis.

Reasons and benefits for the Master Property Management Agreement

The Company considers that the provision of the property management services by the COFCO Group to the Group is conducted in the Group's ordinary and usual course of business based on the commercial needs of the Group and the COFCO Group. The Group will obtain stable and better quality assurance of hotel and property management services for its property projects from the COFCO Group. It is expected that the COFCO Group will continue to provide hotel and property management services to Group pursuant to the existing hotel and property management agreements and may renew the same after they expire, or enter into new property management agreements with other members of the Group.

Annual caps

The aggregate service fees for the hotel and property management services paid by the Group to the COFCO Group for the two years ended 31 December 2017 and 2018 and the period ended 30 November 2019 and the annual caps for the transactions under the Master Property Management Agreement are set as follows:

Historical transaction amounts between the Group and the COFCO	RMB'000
Group (financial year / period ended):
31	December 2017	8,447
31	December 2018	23,622
30	November 2019	37,623

	Historical annual caps	Annual caps
	(financial year ended/ending)	(financial year ending)
	RMB'000	RMB'000
31 December 2017	21,000	-
31 December 2018	26,000	-
31 December 2019	90,000	-
31 December 2020	-	100,000
31 December 2021	-	120,000
31 December 2022	-	135,000

The annual caps for the financial years ending 31 December 2020, 2021 and 2022 have been determined based on (a) the historical annual caps for the financial years ended 31 December 2017, 2018 and the financial year ending 31 December 2019; (b) the projected revenue trend of the hotel operation businesses of the Group being one of the factors for the assessment of the management fees payable to the COFCO Group; (c) the historical transaction amounts for the provision of project consultation, hotel and property management services by the COFCO Group to Group during the financial years ended 31 December 2017 and 2018 and the period ended 30 November 2019; (d) the nature of services required under specific contracts signed or agreed between the relevant members of the Group and the COFCO Group; (e) the projected increase in demand for the relevant services in anticipation of the project developments of the Group with the relevant member(s) of the COFCO Group, respectively, for the provision of property management services to the corresponding property projects by the relevant member(s) of the COFCO Group; (f) the projected increase in the average market prices for the similar services due to increased management and labour costs and other factors;

(g) the hotel and property management services expected to be provided by the COFCO Group to the existing project developments of the Group; and (h) an annual growth in the annual cap of approximately 20.00% for the year 2021 (compared to 2020) and approximately 12.50% for the year 2022 (compared to 2021) having taken into account the above factors.
Master Sourcing Agreement
The Company entered into the Master Sourcing Agreement with COFCO Corporation to govern the terms of provision of staple supplies, catering services and other ancillary services by the COFCO Group to the Group.
Major terms and pricing of the Master Sourcing Agreement
The staple supplies, catering services and ancillary services supply arrangements between the Group and the COFCO Group will be subject to the terms and conditions of the Master Sourcing Agreement, which has, by a further supplemental agreement thereto, extended its term to 31 December 2022. Pursuant to the Master Sourcing Agreement, the prices for the staple supplies, catering services and ancillary services are subject to the general pricing terms therein which provides that the purchase price of or service fees are to be agreed and determined on an arm's length basis and shall be comparable to, or no less favourable to the Group than the fair market prices for similar products offered by independent third parties to the Group. Detailed terms of the provision of staple supplies, catering services and ancillary services and the pricing terms shall be set out in the specific service contracts or confirmation orders to be entered into between the relevant members of the Group and the COFCO Group which are ancillary to and subject to the terms and conditions of the Master Sourcing Agreement.
Pursuant to the Master Sourcing Agreement, the prices for the staple supplies, catering services and ancillary services shall be agreed between the relevant members of the Group and the COFCO Group having regard to various factors such as the quantity and quality of the staple supplies, catering services and ancillary services, the market prices for the staple supplies, catering services and ancillary services, the price offered by other independent third party suppliers and the procurement

or manufacturing costs of the relevant members of the COFCO Group, or based on a prescribed fee schedule or purchase price as agreed between the relevant parties from time to time.

The Master Sourcing Agreement also provides that before entering into a service contract or placing a confirmation order, the relevant member of the Group shall:

when the price is the sole determining factor: (i) obtain quotations from not less than two independent third party providers of similar staple supplies, catering services or ancillary services; or (ii) obtain from COFCO Group not less than two records of similar staple supplies, catering services or ancillary services provided by it to other customers, and in such case the price payable by the Group and other relevant conditions under such service contract or confirmation order shall not be less favourable from the Group's perspective than those quotations or records (as the case may be); or
when the price is one of the determining factors, conduct negotiations and, if necessary, obtain relevant quotation and/or pricing record to determine the overall terms of the transaction on an arm's length basis.

Reasons and benefits for the Master Sourcing Agreement

The Company considers that the provision of staple supplies, catering services and ancillary services by the COFCO Group to the Group is conducted in the Group's ordinary and usual course of business based on the commercial needs of the Group and the COFCO Group. The Group is able to maintain stable staple supplies, catering services and ancillary services provided by the COFCO Group. It is expected that the COFCO Group will continue to provide staple supplies and catering services to the Group pursuant to the existing supply arrangements and may renew the same after they expire, or enter into new supply arrangements with other members of the Group.

Annual caps

The purchase amounts for staple supplies, catering services and ancillary services paid by the Group to the COFCO Group for the two years ended 31 December 2017 and 2018 and the period ended 30 November 2019 and the annual caps for the transactions under the Master Sourcing Agreement are set out as follows:

Historical transaction amounts between the Group and the COFCO	RMB'000
Group (financial year/period ended)
31	December 2017		5,566
31	December 2018		5,429
30	November 2019		3,673
		Historical annual caps	Annual caps
		(financial year ended/ending)	(financial year ending)
31	December 2017	RMB'000	RMB'000
18,800	-
31	December 2018	21,700	-
31	December 2019	24,900	-
31	December 2020	-	33,000
31	December 2021	-	34,000
31	December 2022	-	37,000

amounts for the staple supplies, catering services and ancillary services provided by the COFCO Group to the Group for the financial years ended 31 December 2017 and 2018 and the period ended 30 November 2019; (c) the market prices for the relevant staple supplies, catering services and ancillary services and the prices offered by independent third party suppliers; (d) the projected demand by the Group for staple supplies, catering services and ancillary services due to marketing and promotional activities for new development projects by the Group; (e) the projected increase in the average market prices for the relevant staple supplies, catering services and ancillary services; and (f) an annual growth in the annual cap of approximately 3.03% for the year 2021 (compared to 2020) and approximately 8.82% for the year 2022 (compared to 2021) having taken into account the above factors.

THE CONNECTED PERSONS

COFCO Corporation, as the controlling shareholder of the Company, is a state-owned enterprise incorporated in the PRC in September 1952 under the purview of State-owned Assets Supervision and Administration Commission of the State Council (國務院國有資產監督管理委員會) and is a world's leading supplier of diversified products and services in the agricultural products and food industry.

INFORMATION ON THE COMPANY AND THE GROUP

The Company is an investment holding company incorporated in Bermuda. The Group is principally engaged in development, operation, sales, leasing and management of mixed-use complexes and commercial properties in the PRC. The Group develops, holds and operates various property projects in the PRC, including Beijing, Shanghai, Tianjin, Sanya, Chengdu and Hong Kong.

LISTING RULES IMPLICATIONS

INTERNAL CONTROL MEASURES

The Company has established internal control measures to ensure that the continuing connected transactions contemplated under the CCT Agreements are in accordance with the pricing policies and the terms of the relevant agreement, and that the terms and conditions of the CCT Agreements are on normal commercial terms and terms no less favourable than those terms offered to the Group by independent third parties for similar products, leases and/or services. Such internal control measures employed by the Group include the following:

finance department of the Company shall obtain and monitor all the quotations and/or pricing
7

records as reference price of the transaction contemplated under the CCT Agreements, and to ensure the terms are in compliance with the relevant agreements under which the transactions are entered into, and in this connection he/she must be satisfied that (i) the pricing policies and internal procedures adopted by the Company have been fully complied with; (ii) the transactions thereunder are on normal commercial terms; (iii) the purchase price or rent of the relevant products, leases and services are no less favourable to the Group than the prices at which such products, leases and services are offered by independent third parties to the Group, before relevant orders are entered into; and

the independent non-executive Directors shall, and the Company shall engage its external auditors to, conduct annual review of the continuing connected transactions in accordance with the Listing Rules requirements.

THE DIRECTORS' VIEWS

None of the Directors has a material interest in the continuing connected transactions contemplated under the CCT Agreements. The Directors (including the independent non-executive Directors) are of the view that (i) the CCT Agreements have been entered into in the ordinary and usual course of business of the Group; (ii) all of the above agreements and the transactions contemplated therein have been negotiated on an arm's length basis, on normal commercial terms or better and are fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (iii) the annual caps for each of the CCT Agreements set out therefrom are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

In view of the nature of the transaction and the quotations and/or pricing records to be obtained and monitored by the finance department of the Group as reference price of the transaction contemplated under the CCT Agreements, the Directors consider that such procedures are sufficient for the purpose of ensuring that the transactions will be conducted on normal commercial terms and not prejudicial to the interests of the Company and the Shareholders. Further details of the CCT Agreement are set out in the section headed "Continuing Connected Transactions" in the Circular and the 2016 Announcement.

Having considered that (i) the internal procedures in place for a member of the Group to obtain quotations and/or pricing records and/or conduct negotiations to assess and determine the purchase price and/or services fees before it enters into connected transactions; (ii) the reporting, approval and record-keeping procedures in place to ensure the strict compliance with the pricing policy of the connected transactions; and (iii) the internal control procedures to monitor the annual caps, pricing and terms of the connected transactions, the Directors are of the view that the internal control procedures of the Group on continuing connected transactions are sufficient and adequate to ensure the transactions will be conducted on normal commercial terms or better and not prejudicial to the interests of the Company and the Shareholders.

DEFINITIONS

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

"Board"	the board of directors of the Company
"CCT Agreements"	the Master Lease Agreement,	the Master Property Management
	Agreement and the Master Sourcing Agreement
"COFCO Corporation"	中糧集團有限公司 (COFCO	Corporation), a state-owned enterprise
	incorporated in the PRC in September 1952 under the purview of State-owned
	8

	Assets Supervision and Administration Commission of the State Council (國
	務院國有資產監督管理委員會), and the ultimate controlling shareholder
	of the Company
"COFCO Group"	COFCO Corporation and its subsidiaries
"Company"	Joy City Property Limited (大悅城地產有限公司), a company incorporated
	under the laws of Bermuda with limited liability, the ordinary shares of which
	are listed on the Main Board of The Stock Exchange of Hong Kong Limited
	(stock code: 207)
"Directors"	the directors of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"independent third party''	a person or party who is not a connected person (within the meaning of the
	Listing Rules) of the Company
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock Exchange of Hong
	Kong Limited
"Master Lease	the master lease agreement entered into between the Company and COFCO
Agreement"	Corporation on 29 November 2013 (extended and supplemented by the
	supplemental agreements dated 3 November 2014, 21 December 2016 and 30
	December 2019, respectively) for the leasing of properties by the Group to the
	COFCO Group
"Master Property	the master property management agreement entered into between the Company
Management	and COFCO Corporation on 29 November 2013 (extended and supplemented
Agreement"	by the supplemental agreements dated 3 November 2014, 21 December 2016
	and 30 December 2019, respectively) for the provision of project consultation,
	property management and hotel management services

"Master Sourcing

Agreement"

the master sourcing agreement entered into between the Company and COFCO Corporation on 29 November 2013 (extended and supplemented by the supplemental agreements dated 3 November 2014, 21 December 2016 and 30 December 2019, respectively) for the sourcing of staple supplies, catering services and ancillary services by the Group from the COFCO Group

"PRC"	the People's Republic of China, which shall, for the purpose of this
	announcement, exclude Hong Kong, the Macau Special Administrative Region
	of the PRC and Taiwan
"RMB"	Renminbi, the lawful currency of the PRC
"Shareholder(s)"	the shareholder(s) of the Company
"%"	per cent

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

English translations of the names are provided for ease of reference only and they are not official English names of the companies and authority concerned.

By order of the Board

Joy City Property Limited

Zhou Zheng

Chairman

The PRC, 30 December 2019

As at the date of this announcement, the Board comprises Mr. ZHOU Zheng (Chairman) and Mr. CAO Ronggen as executive Directors; Mr. JIANG Yong as non-executive Director; and Mr. LAU Hon Chuen, Ambrose, GBS, JP, Mr. LAM Kin Ming, Lawrence and Mr. WU Kwok Cheung, MH as independent non- executive Directors.

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Joy City Property Limited published this content on 30 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 December 2019 10:30:06 UTC

Market Closed - Hong Kong S.E. Other stock markets 04:08:22 2024-04-29 am EDT			5-day change	1st Jan Change
0.222 ^HKD	0.00%		+6.22%	+3.26%

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Joy City Property Limited

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Real Estate Development & Operations

Joy City Property : CONTINUING CONNECTED TRANSACTIONS - RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS AGREEMENTS

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