Yee Hop : DISCLOSEABLE TRANSACTION IN RELATION TO THE COOPERATION AGREEMENT

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YEE HOP

Yee Hop Holdings Limited

່ΥછٰϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1662)

DISCLOSEABLE TRANSACTION IN RELATION TO THE

COOPERATION AGREEMENT

THE COOPERATION AGREEMENT

The Board is pleased to announce that on 25 March 2021, Qingchuang Tiandi (an indirect non wholly-owned subsidiary of the Company) and Guangzhou Healthy Town entered into the Cooperation Agreement in respect of the Premises for a term of 132 months from the date of delivery of the Premises to Qingchuang Tiandi, which is on 25 March 2021, to 24 March 2032.

LISTING RULES IMPLICATIONS

The Cooperation Agreement is, in essence, a lease agreement involving the acquisition of right-of-use assets. Pursuant to HKFRS 16, the Group, if entering into a lease transaction as a lessee, should recognise the right-of-use assets on the consolidated statement of financial position of the Group according to HKFRS 16. Under the Listing Rules, the entering into a lease transaction by the Group as a lessee will be regarded as an acquisition of an asset under the definition of transaction in Rule 14.04(1)(a) of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the lease transaction contemplated under the Cooperation Agreement exceed 5% but are less than 25%, such transaction constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

The Board is pleased to announce that on 25 March 2021, Qingchuang Tiandi (an indirect non wholly-owned subsidiary of the Company) and Guangzhou Healthy Town entered into the Cooperation Agreement in respect of the Premises for a term of 132 months from the date of delivery of the Premises to Qingchuang Tiandi, which is on 25 March 2021, to 24 March 2032.

KEY TERMS OF THE COOPERATION AGREEMENT

Date:

25 March 2021

Parties:

• (i) Guangzhou Healthy Town; and

• (ii) Qingchuang Tiandi (an indirect non wholly-owned subsidiary of the Company).

Subject matter:

Qingchuang Tiandi shall lease the Premises from Guangzhou Healthy Town for subleasing and Qingchuang Tiandi shall be responsible for managing the subleasing matter.

Premises:

No. 218, Qiaotou Street, Haizhu District, Guangzhou City, Guangdong Province, PRC* (ʕ਷ᄿ؇޲ᄿψ̹ऎमਜ዗ ᎘ɽ൑218໮يุ) (with a gross floor area of approximately 8,483 square meters).

Lease term:

132 months commencing from the date of delivery of the Premises to Qingchuang Tiandi, which is on 25 March 2021, to 24 March 2032.

Monthly Rent:

The monthly rent (inclusive of management fees and value added tax but exclusive of utility charges and other outgoings) payable by Qingchuang Tiandi to Guangzhou Healthy Town is as follows:

RMB520,143 from 25 August 2021 to 24 March 2022

RMB550,462 from 25 March 2022 to 24 March 2023

RMB566,976 from 25 March 2023 to 24 March 2024

RMB583,985 from 25 March 2024 to 24 March 2025

RMB601,505 from 25 March 2025 to 24 March 2026

RMB619,550 from 25 March 2026 to 24 March 2027

RMB638,137 from 25 March 2027 to 24 March 2028

RMB657,281 from 25 March 2028 to 24 March 2029

RMB676,999 from 25 March 2029 to 24 March 2030

RMB697,309 from 25 March 2030 to 24 March 2031

RMB718,228 from 25 March 2031 to 24 March 2032

The rent under the Cooperation Agreement was determined after arm's length negotiations between Qingchuang Tiandi and Guangzhou Healthy Town and with reference to the prevailing market rent of comparable properties, the renovation cost of the Premises and the expected profit in subleasing of the Premises.

Renovation:

Qingchuang Tiandi shall be responsible for renovation of the Premises. The total renovation cost shall be borne by Qingchuang Tiandi.

Renovation period:

Five months' renovation period commencing from the date of delivery of the Premises to Qingchuang Tiandi, which is on 25 March 2021, to 24 August 2021. Qingchuang Tiandi shall pay a fixed monthly rent of RMB20,000 during such renovation period.

Security deposit:Total consideration payable:A sum of RMB1,603,287, equivalent to three times of the average monthly rent in the first year, was paid by Qingchuang Tiandi to Guangzhou Healthy Town upon signing of the Cooperation Agreement.

The security deposit shall be refunded to Qingchuang Tiandi by Guangzhou Healthy Town without interest within 15 business days upon delivery of the Premises to Guangzhou Healthy Town, the cancellation or variation of the relevant licenses or permits and settlement of outstanding fees (if any).

The total consideration payable by Qingchuang Tiandi under the Cooperation Agreement is RMB80,066,185 during the lease term, being the sum of aggregate monthly rental (which will be recognised as right-of-use assets on the consolidated statement of financial position of the Group) and fees for obtaining necessary licenses, certificates of approval or permits in accordance with the regulatory requirements (which will be recognised as expenditure in consolidated statement of profit or loss and other comprehensive income of the Group).

Manner of payment:

RMB2,137,716, being the sum of the security deposit and the average monthly rent in the first year, was paid upon signing of the Cooperation Agreement.

The monthly rent is payable by Qingchuang Tiandi to Guangzhou Healthy Town five days in advance of each month (or the next business day if the day is a statutory holiday).

Pre-emptive right of renewal: Qingchuang Tiandi shall have pre-emptive right of renewal of the tenancy of the Premises. Qingchuang Tiandi shall notify Guangzhou Healthy Town in writing of its intention to exercise the right three months before the expiry of the Cooperation Agreement.

The monthly rent, security deposit and other relevant expenses were paid/will be paid through the Group's internal source of funding.

RIGHT-OF-USE ASSETS

The value of the right-of-use asset to be recognised by the Company under the Cooperation Agreement is estimated to be approximately RMB58.5 million (unaudited), being the present value of the aggregate lease payments using the rate applicable at the commencement date of the Cooperation Agreement in accordance with HKFRS 16. The discount rate of approximately 5.32% is applied to compute the present value of the aggregate lease payments under the Cooperation Agreement.

REASONS FOR AND BENEFITS OF ENTERING INTO THE COOPERATION AGREEMENT

As disclosed in the 2019/20 annual report of the Company, the Group has been diversifying the business of the Group and will continue its strategic strategy to diversify the business spectrum and to broaden the revenue base of the Group. As disclosed in the announcement of the Company dated 19 September 2017, the Group entered into the subscription agreement to participate in the investment and development of a property situate at Windmill Street, Birmingham, the United Kingdom. Leveraging on the previous experience of the Group in property investment and development, the Directors consider that the Cooperation Agreement provides the Group with an opportunity to further diversify and participate in the properties related business in the PRC and broaden its assets and earning base. The Group intends to engage in the sub-leasing business by entering into the Cooperation Agreement which the Premises is situated in Guangzhou, a first-tier city in the PRC, with stable lease market and lower business risk. To maintain the stability of the sub-leasing business and attract long-term tenants, Guangzhou Healthy Town and Qingchuang Tiandi agreed to a lease term of at least 10 years.

Based on the aforesaid, the Board considers that the terms of the Cooperation Agreement and the transactions contemplated thereunder are on normal commercial terms following arm's length negotiations between the parties and that the terms are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE PARTIES

The Company

The Company is incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in (i) the provision of foundation (including the construction of mini-piles, rock-socketed steel H-piles and driven steel H piles) and other civil works (including site formation works, and road and pavement works) and tunneling works (including pipe jacking, hand dig tunnel and cut-and-cover tunnel works) in Hong Kong and overseas, and (ii) research and development and breeding, sales and trading of aquatic products in the PRC. The Company also intends to use genetic modification for biosynthetic exploration to provide new solutions to tackle the bottleneck of drug sources, expend resources on research and development of marine functional products and marine innovative drugs through its non-wholly owned subsidiary, Shenzhen BGI Fisheries Sci & Tech Co., Ltd.

Qingchuang Tiandi

Qingchuang Tiandi is a company established in the PRC with limited liability which is principally engaged in business servicing including leasing of properties and provision of property management service. It is an indirect non wholly-owned subsidiary of the Company and is owned as to 10% by Mr. Mo Qihang (an Independent Third Party save for his shareholding in Qingchuang Tiandi and 90% by YH Qing Chuang, which is in turn owned as to 70% by the Company and 30% by HKS. HKS is a company owned as to 35% by Mr. Yeung Ka Sing, 35% by Mr. Wei Ao Ting and remaining 30% by three individuals, who are Independent Third Parties.

Guangzhou Healthy Town

Based on publicly available information, Guangzhou Healthy Town is a company established in the PRC on 20 June 2019 with a registered capital of RMB5 million. The business scope of Guangzhou Healthy Town covers real estate and property management. As at the date of this announcement, Guangzhou Healthy Town is owned as to 60% by Guangzhou Huaxin and 40% by Huaxin Holdings. Guangzhou Huaxin is a company established in the PRC with limited liability which is principally engaged in provision of business consultation service and is owned as to 99.31% by Mr. Feng YaoLiang and remaining 0.69% by two individuals. Huaxin Holdings is a company established in the PRC with limited liability which is principally engaged in real estate development and leasing business and is owned as to 20% by Mr. Feng HanXin and 80% by Guangzhou Huaxin.

To the best of the Directors' knowledge, information and belief having made all reasonable enquires, Guangzhou Healthy Town and its ultimate beneficial owner(s) are Independent Third Parties.

LISTING RULES IMPLICATIONS

The Cooperation Agreement is, in essence, a lease agreement involving the acquisition of right-of-use assets. Pursuant to HKFRS 16, the Group, if entering into a lease transaction as a lessee, should recognise the right-of-use assets on the consolidated statement of financial position of the Group according to HKFRS 16. Under the Listing Rules, the entering into a lease transaction by the Group as a lessee will be regarded as an acquisition of an asset under the definition of transaction in Rule 14.04(1)(a) of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the lease transaction contemplated under the Cooperation Agreement exceed 5% but are less than 25%, such transaction constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

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

"Board"	the board of Directors
"Company"	Yee Hop Holdings Limited, 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 person(s)"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the directors of the Company
"Group"	the Company and its subsidiaries
"Guangzhou Healthy Town"	Guangzhou Healthy Town Industrial Park Co., Ltd.* (ᄿ
ψ਄ੰʃᕄପุ෤Ϟࠢʮ̡), a company established
in the PRC with limited liability
"Guangzhou Huaxin"	Guangzhou Huaxin Group Co.,Ltd.* (ᄿψശอණྠ
Ϟࠢʮ̡), a company established in the PRC with
limited liability
- 6 -

"Huaxin Holdings"

Guangzhou Huaxin Group Holdings Co., Ltd.* (ᄿψ ശอණྠછٰϞࠢʮ̡), a company established in the PRC with limited liability

"Qingchuang Tiandi"

Guangzhou Qingchuang Tiandi Commercial Operation Management Co., Ltd.* (ᄿψڡ௴˂ήਠุ༶ᐄ၍ ଣϞࠢʮ̡), a company established in the PRC with limited liability and an indirect non wholly-owned subsidiary of the Company

"HKFRS 16"

Hong Kong Financial Reporting Standard 16

"HKS"

HKS International Limited, a company incorporated in the British Virgin Islands with limited liability

"Hong Kong"

the Hong Kong Special Administrative Region of the People's Republic of China

"Cooperation Agreement"

the cooperation agreement dated 25 March 2021 entered into between Guangzhou Qingchuang and Guangzhou Healthy Town

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"Independent Third Party(ies)"

any person(s) or companies and their respective ultimate beneficial owner(s) whom, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, is/are third party(ies) independent of the Company and connected persons (as defined under the Listing Rules) of the Company

"Main Board"

the main board of the Stock Exchange

"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

"Premises"

No. 218, Qiaotou Street, Haizhu District, Guangzhou City, Guangdong Province, PRC* (ʕ਷ᄿ؇޲ᄿψ̹ ऎमਜ዗᎘ɽ൑218໮يุ) (with a gross floor area of approximately 8,483 square meters)

"RMB"

Renminbi, the lawful currency of the PRC

"Stock Exchange"	the Stock Exchange of Hong Kong Limited
"subsidiary(ies)"	has the meaning ascribed to it under the Listing Rules
"YH Qing Chuang"	YH Qing Chuang Limited (່Υڡ௴Ϟࠢʮ̡), a
company incorporated in Hong Kong with limited
liability
"%"	per cent.

In this announcement, the English names of the PRC entities marked with "*" are translations of their Chinese names, and are included herein for identification purposes only. In the event of any inconsistency, the Chinese names shall prevail.

By order of the Board Yee Hop Holdings Limited

Jim Yin Kwan Jackin Chairman and Executive Director

Hong Kong, 25 March 2021

As at the date of this announcement, the executive Directors are Mr. Jim Yin Kwan Jackin, Mr. Chui Mo Ming, Mr. Yan Chi Tat, Mr. Leung Hung Kwong Derrick and Mr. Xu JunMin; and the independent non-executive Directors are Mr. Lee Luk Shiu, Mr. Yu Hon Kwan and Mr. Wong Chi Keung Johnny.