C&D International Investment : 2020-12-23 Announcements and Notices - CONTINUING CONNECTED TRANSACTIONS IN RELATION TO (1) THE BUSINESS FRAMEWORK AGREEMENT; AND (2) THE LEASE FRAMEWORK AGREEMENT

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.

C&D INTERNATIONAL INVESTMENT GROUP LIMITED

建 發 國 際 投 資 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(STOCK CODE: 1908)

CONTINUING CONNECTED TRANSACTIONS IN RELATION TO

1. THE BUSINESS FRAMEWORK AGREEMENT; AND
2. THE LEASE FRAMEWORK AGREEMENT

Reference is made to the announcement of the Company dated 30 September 2020 in relation to, among other things, the Spin-off.

BUSINESS FRAMEWORK AGREEMENT

The Board is pleased to announce that, on 23 December 2020, C&D Real Estate, the Company and C&D Property entered into the Business Framework Agreement, pursuant to which, among other things, C&D Property Group shall provide certain services to (i) the Remaining Xiamen C&D Group; and (ii) the Remaining Group, for the period from the Listing Date until 31 December 2022.

LEASE FRAMEWORK AGREEMENT

The Board is also pleased to announce that, on 23 December 2020, Xiamen C&D and C&D Property entered into the Lease Framework Agreement, pursuant to which, among other things, Xiamen C&D and its subsidiaries and joint ventures (but not including the Remaining Group and C&D Property Group) shall lease to C&D Property Group (excluding its connected subsidiaries) (i) certain properties for operational use; and (ii) the car parking spaces located at C&D International Building for business use, for the period from the Listing Date until 31 December 2022.

LISTING RULES IMPLICATIONS

Xiamen C&D and C&D Real Estate are controlling shareholders of the Company and therefore, connected persons of the Company. As at the date of this announcement, C&D Property is a wholly-owned subsidiary of the Company. Upon completion of the Spin-off, C&D Property will cease to be a subsidiary of the Company and will become a subsidiary of Well Land, a controlling shareholder of the Company. As such, C&D Property will become an associate of the Company and therefore, a connected person of the Company upon completion of the Spin-off.

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Business Framework Agreement

As at the date of the announcement, as C&D Property is a wholly-owned subsidiary of the Company, the transactions contemplated under the Business Framework Agreement with C&D Real Estate constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As the Business Framework Agreement will only become effective on the Listing Date and C&D Property will become a connected person of the Company on the Listing Date, the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group will constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules on the Listing Date.

As the highest applicable percentage ratio in respect of the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group exceeds 0.1% but is less than 5%, the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group are subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Lease Framework Agreement

As at the date of this announcement, as C&D Property is a wholly-owned subsidiary of the Company, the transactions contemplated under the Lease Framework Agreement between C&D Property and Xiamen C&D constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As the Lease Framework Agreement will only become effective on the Listing Date and C&D Property will cease to be a subsidiary of the Company on the Listing Date, the transactions contemplated under the Lease Framework Agreement will not constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules on the Listing Date.

Reference is made to the announcement of the Company dated 30 September 2020 in relation to, among other things, the Spin-off.

BUSINESS FRAMEWORK AGREEMENT

The Board is pleased to announce that, on 23 December 2020, C&D Real Estate, the Company and C&D Property entered into the Business Framework Agreement, pursuant to which, among other things, C&D Property Group shall provide certain services to (i) the Remaining Xiamen C&D Group; and (ii) the Remaining Group, for the period from the Listing Date to 31 December 2022. The principal terms of the Business Framework Agreement are set out as follows:

Date

23 December 2020

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Parties

1. C&D Real Estate
2. the Company; and
3. C&D Property

Term

From the Listing Date until 31 December 2022

Services

C&D Property Group shall provide the following services to (i) the Remaining Xiamen C&D Group; and (ii) the Remaining Group:

1. Property management services, mainly including greening, gardening and order maintenance for public areas, cleaning, security, parking management, repair and maintenance services for public facilities, etc. to unsold and sold but undelivered commodity housing and office properties;
2. Community value-added and synergy services, mainly including (i) home living services; (ii) home beauty services; (iii) real estate brokerage and asset management services; (iv) value-added services for public areas; (v) elderly-care & health value- added services; and (vi) smart community services; and
3. Value-addedservices to non-property owners, mainly including (i) consultancy services to property developers during the property development and construction phases; and
4. 1. reception, order maintenance, cleaning and security and maintenance services to property developers during both pre-sales and post-sales phases.

Pricing Basis

1. Property management services

Property management fees shall be determined after arm's length negotiations by the parties after taking into account a number of factors, including: (i) the types of the properties, such as residential and non-residential, and the location of the projects such as the tier of city; (ii) the scope and quality of the services provided; (iii) the expected operational costs (including, among other things, staff costs, material costs, sub- contracting costs and operational administrative expenses); (iv) the target profit margins of C&D Property; (v) profiles of the property owners and residents; (vi) the local government's guidance price on property management fees (where applicable); and (vii) the property management fees for similar services and similar types of projects in the market. Pursuant to the property management services contracts, the property management fees are calculated based on area multiplied by unit price. The specific unit price is calculated based on the prevailing market price in the location of the projects and approved by the relevant local authorities, as the case may be.

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1. Community value-added and synergy services
   The service fees shall be determined after arm's length negotiations with reference to the prevailing market prices of similar services in the open market and historical charges for each of the three years ended 31 December 2019 and the six months ended 30 June 2020.
2. Value-addedservices to non-property owners
   The service fees shall be determined after arm's length negotiations based on the calculation of ''cost (calculated in accordance with the actual costs incurred, such as materials and labour) + indirect management fee (calculated by tax-exclusive income x 10-15%) + taxes''. The abovementioned tax will be subject to adjustment in accordance with relevant rules and regulations.

Historical transaction amounts

The historical transaction amounts of service fees paid to C&D Property Group by the Remaining Group for each of the three years ended 31 December 2019 and the six months ended 30 June 2020 are as follows:

							For the six
							months
							ended
	For the year ended 31 December	30 June
	2017	2018	2019	2020
	RMB'000		RMB'000	RMB'000	RMB'000
Service fees paid to C&D Property Group:
Property management services	-	797	3,301	3,503
Community value-added and synergy services	431	1,765	1,196	1,162
Value-added services to non-property owners	26,109		70,975	124,919	90,099
Total	26,540		73,537	129,416	94,764

The historical transaction amounts of service fees paid to C&D Property Group by the Remaining Xiamen C&D Group for each of the three years ended 31 December 2019 and the six months ended 30 June 2020 are RMB115.2 million, RMB113.5 million, RMB125.3 million and RMB42.7 million, respectively.

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Proposed Annual Caps

The proposed annual caps of the service fees payable to C&D Property Group by the Remaining Group under the Business Framework Agreement for each of the three years ending 31 December 2022 are RMB270.0 million, RMB345.0 million and RMB455.0 million, respectively. The breakdown of the proposed annual caps by types of services are as follows:

			For the year ending 31 December
	2020		2021		2022
	RMB			RMB			RMB
	million	%	million	%		million	%
Service fees payable to C&D Property
Group:
Property management services	6.0		2.2		9.0		2.6	12.0			2.6
Community value-added and synergy
services	4.0		1.5		6.0		1.7	8.0			1.8
Value-added services to non-property
owners	260.0		96.3		330.0		95.7	435.0			95.6
Total	270.0		100.0		345.0		100.0	455.0			100.0

The proposed annual caps of the service fees payable to C&D Property Group by the Remaining Xiamen C&D Group under the Business Framework Agreement for each of the three years ending 31 December 2022 are RMB100.0 million, RMB95.0 million and RMB95.0 million, respectively.

In determining the proposed annual caps under the Business Framework Agreement, the following factors have been taken into consideration:

1. the historical transaction amounts paid to C&D Property Group in respect of each of the property management services, the community value-added and synergy services, and the value-added services to non-property owners by the Remaining Group for such services;
2. the proportion of historical transaction amounts in respect of each of the property management services, the community value-added and synergy services, and the value- added services to non-property owners paid by the Remaining Group to C&D Property Group and the pace of increment of the historical transaction amounts paid by the Remaining Group to C&D Property Group;
3. the expected scope of services to be received from C&D Property Group;
4. the expected fees to be charged by C&D Property Group with reference to the historical and comparable market levels;
5. the expected expansion in geographical coverage by C&D Property Group and the Remaining Group, where from 1 July 2020 to 19 December 2020, for example, the geographical coverage of properties developed by the Remaining Group increased by

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five (i.e., Foshan* (佛山), Bengbu* (蚌埠 ), Jinan* (濟南), Zhuji* (諸暨) and Huai'an* (淮安)) to 38 and the contract sales of the Remaining Group for the nine months ended

1. 30 September 2020 realised a period-on-period growth rate of 81%; and

2. any potential increment of the demands for the services to be provided by C&D Property Group based on the above expected expansion in geographical coverage of the Remaining Group and the expected growth in the property development services business (as measured by the growth in the contract sales) of the Remaining Group in the future.

LEASE FRAMEWORK AGREEMENT

The Board is also pleased to announce that, on 23 December 2020, Xiamen C&D and C&D Property entered into the Lease Framework Agreement, pursuant to which, among other things, Xiamen C&D and its subsidiaries and joint ventures (but not including the Remaining Group and C&D Property Group) shall lease to C&D Property Group (excluding its connected subsidiaries) (i) certain properties for operational use; and (ii) the car parking spaces located at C&D International Building for business use, for the period from the Listing Date until 31 December 2022.

For each of the three years ended 31 December 2019 and the six months ended 30 June 2020, the historical transactions amounts of rent paid by the C&D Property Group to Xiamen C&D were RMB1.7 million, RMB2.9 million, RMB3.8 million and RMB2.0 million, respectively. The proposed annual caps of the rent payable by C&D Property Group under the Lease Framework Agreement for each of the three years ending 31 December 2022 are RMB4.75 million, RMB5.50 million and RMB6.25 million, respectively. For details of the Lease Framework Agreement, please refer to the listing document of C&D Property which is expected to be despatched on or around Monday, 28 December 2020.

INFORMATION ABOUT PARTIES TO THE BUSINESS FRAMEWORK AGREEMENT AND THE LEASE FRAMEWORK AGREEMENT

The Company is a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the businesses of real estate development, real estate industry chain investment services and investment in emerging industries in the PRC.

C&D Real Estate is a company established with limited liability in the PRC, and is a controlling shareholder of the Company indirectly holding 757,054,106 issued Shares, representing approximately 64.34% of the issued share capital of the Company as at the date of this announcement. It is principally engaged in the businesses of real estate development, commercial operation, property management and investment, etc.. As at the date of this announcement, C&D Real Estate was owned by Xiamen C&D Inc.* (廈門建發股份有限公 司) (''C&D Inc.''), the shares of which are listed on the Shanghai Stock Exchange (stock code: 600153) and Xiamen C&D as to 54.65% and 45.35% respectively. C&D Inc. was owned by its public shareholders and Xiamen C&D as to 52.15% and 47.85%, respectively. The State-owned Assets Supervision and Administration Commission of Xiamen Municipal People's Government (廈門市人民政府國有資產監督管理委員會) is the ultimate shareholder of C&D Real Estate. C&D Inc. is principally engaged in supply chain operation, real estate development and industrial investment, etc..

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C&D Property is a company established with limited liability in the BVI and principally engaged in the businesses of property management services, community value-added and synergy services and value-added services to non-property owners in the PRC. As at the date of this announcement, C&D Property is a wholly-owned subsidiary of the Group. Upon completion of the Spin-off, C&D Property will cease to be a subsidiary of the Company and will become a subsidiary of Well Land, a controlling shareholder of the Company. As such, C&D Property will become an associate of the Company. As at the date of this announcement, Well Land is wholly-owned by Well Honour International Limited (益鴻國 際有限公司) (''Well Honour''), a company incorporated in Hong Kong with limited liability. Well Honour is wholly-owned by C&D Real Estate.

Xiamen C&D is a company established with limited liability in the PRC, and is a controlling shareholder of the Company indirectly holding 757,054,106 issued Shares, representing approximately 64.34% of the issued share capital of the Company as at the date of this announcement. Xiamen C&D is principally engaged in supply chain operation, real estate development, tourism and hotels, exhibitions, medical and health care, urban public services, investment, etc.. The State-owned Assets Supervision and Administration Commission of Xiamen Municipal People's Government (廈門市人民政府國有資產監督管理委員會) is the ultimate shareholder of Xiamen C&D.

APPROVAL BY THE BOARD

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Directors had material interest in the transactions contemplated under each of the Business Framework Agreement and the Lease Framework Agreement, and accordingly none of them was required to abstain from voting on the Board resolutions for considering and approving the transactions contemplated under the Business Framework Agreement and the Lease Framework Agreement.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS CONTEMPLATED UNDER THE BUSINESS FRAMEWORK AGREEMENT AND THE LEASE FRAMEWORK AGREEMENT

The transactions contemplated under the Business Framework Agreement have been occurring within the Group for a long time. Such transactions, which are in the ordinary and usual course of business of the Remaining Group and C&D Property Group, are expected to continue after the Listing Date. The Business Framework Agreement regulates such transactions, provides flexibility for the entering into of individual agreements in respect of such continuing transactions, and is of administrative convenience for the purpose of compliance with Chapter 14A of the Listing Rules. As C&D Property Group has solid and extensive experience in the property management industry in the PRC, the Directors (including the independent non-executive Directors) consider that it is beneficial to the business of the Remaining Group to continue to engage C&D Property Group to provide property management services, community value-added and synergy services and value- added services to non-property owners in terms of efficiency and reliability in the provision of such services.

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Further, C&D Property has previously leased the relevant properties for operational and business use from Xiamen C&D. The entering into of the Lease Framework Agreement for leasing certain properties by C&D Property is for the purpose of running the day-to-day operation and meeting the normal operation needs of C&D Property. As such, the Directors (including the independent non-executive Directors) consider that it is beneficial for C&D Property to continue to lease certain properties for operational and business use.

The Directors (including the independent non-executive Directors) consider that the terms of each of the Business Framework Agreement and the Lease Framework Agreement are on normal commercial terms, fair and reasonable, in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

Xiamen C&D and C&D Real Estate are controlling shareholders of the Company and therefore, connected persons of the Company. As at the date of this announcement, C&D Property is a wholly-owned subsidiary of the Company. Upon completion of the Spin-off, C&D Property will cease to be a subsidiary of the Company and will become a subsidiary of Well Land, a controlling shareholder of the Company. As such, C&D Property will become an associate of the Company and therefore, a connected person of the Company upon completion of the Spin-off.

Business Framework Agreement

As at the date of the announcement, as C&D Property is a wholly-owned subsidiary of the Company, the transactions contemplated under the Business Framework Agreement with C&D Real Estate constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As the Business Framework Agreement will only become effective on the Listing Date and C&D Property will become a connected person of the Company on the Listing Date, the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group will constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules on the Listing Date.

As the highest applicable percentage ratio in respect of the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group exceeds 0.1% but is less than 5%, the transactions contemplated under the Business Framework Agreement between the Remaining Group and C&D Property Group are subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Lease Framework Agreement

As at the date of this announcement, as C&D Property is a wholly-owned subsidiary of the Company, the transactions contemplated under the Lease Framework Agreement between C&D Property and Xiamen C&D constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules. As the Lease Framework Agreement will only become effective on the Listing Date and C&D Property will cease to be a subsidiary

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of the Company on the Listing Date, the transactions contemplated under the Lease Framework Agreement will not constitute a continuing connected transaction of the Company under Chapter 14A of the Listing Rules on the Listing Date.

DEFINITIONS

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

''associate(s)''	has the meaning ascribed to it under the Listing Rules
''Business Framework	the business framework agreement entered into among C&D
Agreement''	Real Estate, the Company and C&D Property on 23
	December 2020, pursuant to which, among other things,
	C&D Property Group shall provide certain services to (i) the
	Remaining Xiamen C&D Group; and (ii) the Remaining
	Group
''Board''	the board of Directors
''BVI''	the British Virgin Islands
''C&D Property''	C&D Property Management Group Co., Ltd 建發物業管理
	集團有限公司 (formerly known as Li Chi International
	Limited 利馳國際有限公司 and C&D Property Development
	Group Co., Ltd 建發物業發展集團有限公司), a BVI
	business company incorporated in the BVI with limited
	liability on 4 May 2016
''C&D Property Group''	C&D Property, its subsidiaries and joint ventures
''C&D Property Share(s)''	the ordinary share(s) with a par value of HK$0.01 each of
	C&D Property
''C&D Real Estate''	C&D Real Estate Corporation Limited* (建發房地產集團有
	限公司), a company established in the PRC with limited
	liability and a controlling shareholder of the Company
	which is interested in approximately 64.34% of the issued
	share capital of the Company as at the date of this
	announcement
''Company''	C&D International Investment Group Limited (建發國際投
	資集團有限公司), a company incorporated in the Cayman
	Islands with limited liability and the 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
''connected subsidiary(ies)''	has the meaning ascribed to it under the Listing Rules
''controlling shareholder(s)''	has the meaning ascribed to it under the Listing Rules

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''Lease Framework	the lease framework agreement entered into between
Agreement''	Xiamen C&D and C&D Property on 23 December 2020,
	pursuant to which, among other things, Xiamen C&D and its
	subsidiaries and joint ventures (but not including the
	Remaining Group and C&D Property Group) shall lease to
	C&D Property Group (excluding its connected subsidiaries)
	(i) certain properties for operational use; and (ii) the car
	parking spaces located at C&D International Building for
	business use
''Group''	the Company and its subsidiaries
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''Listing Date''	the date on which the C&D Property Shares are first listed
	and from which dealings in the C&D Property Shares first
	commence on the Main Board of the Stock Exchange,
	expected to be on or around Thursday, 31 December 2020
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange
''PRC''	the People's Republic of China, which for the purpose of
	this announcement, excludes Hong Kong, the Macau Special
	Administrative Region and Taiwan
''Remaining Group''	the Company and its subsidiaries (excluding C&D Property
	Group) and, where the context so requires, includes its
	associates and joint ventures
''Remaining Xiamen C&D	Xiamen C&D and its subsidiaries, (excluding the Remaining
Group''	Group and C&D Property Group) and, where the context so
	requires includes their joint ventures and associates
''Share(s)''	the ordinary share(s) of HK$0.1 each of the Company
''Shareholder(s)''	holder(s) of the Share(s)
''Spin-off''	the spin-off of C&D Property Group by way of distribution
	and the separate listing of the C&D Property Shares on the
	Main Board of the Stock Exchange
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''subsidiary(ies)''	has the meaning ascribed to it under the Listing Rules

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''Well Land''	Well Land International Limited (益能國際有限公司), a
	BVI business company incorporated in the BVI with limited
	liability and a controlling shareholder of the Company
	directly holding approximately 64.34% shareholding of the
	Company
''Xiamen C&D''	Xiamen C&D Corporation Limited* (廈門建發集團有限公
	司), a company established in the PRC with limited liability
	and a controlling shareholder of the Company which is
	interested in approximately 64.34% of the issued share
	capital of the Company as at the date of this announcement
''%''	per cent.
	For and on behalf of
	C&D International Investment Group Limited
	Zhuang Yuekai
	Chairman and Executive Director

Hong Kong, 23 December 2020

As at the date of this announcement, the executive Directors are Mr. Zhuang Yuekai (Chairman), Ms. Zhao Chengmin and Mr. Lin Weiguo (Chief Executive Officer); the non- executive Directors are Mr. Huang Wenzhou, Ms. Ye Yanliu and Mr. Wang Wenhuai; and the independent non-executive Directors are Mr. Wong Chi Wai, Mr. Wong Tat Yan, Paul and Mr. Chan Chun Yee.

* for identification purpose only

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