Guangdong Investment : Continuing Connected Transaction and Revision of Annual Caps for Tenancy Agreement

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 00270)

CONTINUING CONNECTED TRANSACTION

AND

REVISION OF ANNUAL CAPS FOR TENANCY AGREEMENTS

Reference is made to the Previous Announcement in relation to the continuing connected transactions of the Company and the revision of annual caps for the tenancy agreements in respect of the office premises situate at Teem Tower.

On 4 July 2019, Guangdong Teem and Guangdong Holdings entered into the New 20F Teem Tower Tenancy in respect of the Premises for a fixed term of three years from 1 August 2019 to 31 July 2022 (both days inclusive).

Save for the New 20F Teem Tower Tenancy, Guangdong Teem had also entered into the Existing 35F Teem Tower Tenancy with GDH Finance and the Existing 42F and 45F Teem Tower Tenancy with Guangdong Holdings. A summary of the particulars of the Tenancy Agreements is set out in this announcement.

Guangdong Holdings is a connected person (as defined in the Listing Rules) of the Company. GDH Finance (being a subsidiary and thus an associate of Guangdong Holdings as defined in the Listing Rules) is also a connected person of the Company. Therefore, each of the transactions contemplated under the Tenancy Agreements constitutes a continuing connected transaction of the Company under the Listing Rules.

As all the applicable percentage ratios of the Listing Rules in respect of the annual revenue income to be received by the Group under the New 20F Teem Tower Tenancy are less than 0.1%, the transaction as contemplated under the New 20F Teem Tower Tenancy is exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under Rule 14A.76(1) of the Listing Rules.

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The aggregate annual revenue income received and to be received for the years of 2018, 2019, 2020 and 2021 as disclosed in the Previous Announcement amounted to approximately RMB16,452,185, RMB16,484,614, RMB13,413,800 and RMB1,796,224, respectively. The aggregate annual revenue income received and to be received by the Group under the Tenancy Agreements for the years ending 31 December 2019, 2020, 2021 and 2022 will be revised to approximately RMB17,440,189, RMB16,596,098, RMB4,978,522 and RMB1,671,149, respectively. The annual caps for the aforementioned continuing connected transactions for the years ending 31 December 2019, 2020, 2021 and 2022 will be revised to RMB18,000,000, RMB17,000,000, RMB5,000,000 and RMB2,000,000, respectively. The highest annual cap for the aforementioned four calendar years, which is estimated to be RMB18,000,000 (equivalent to approximately HK$20,462,400), exceeds 0.1% but is less than 5% of the applicable percentage ratios pursuant to Rule 14.07 of the Listing Rules. Accordingly, the transactions as contemplated under the Tenancy Agreements in aggregate are subject to the reporting and announcement requirements, but are exempt from the independent shareholders' approval requirement under Rule 14A.76(2) of the Listing Rules.

The Company will comply with the annual review requirements under Rules 14A.55 to 14A.57 of the Listing Rules in relation to the Tenancy Agreements.

NEW TENANCY AGREEMENT

On 4 July 2019, Guangdong Teem entered into the New 20F Teem Tower Tenancy with Guangdong Holdings whereby Guangdong Teem has agreed to let and Guangdong Holdings has agreed to rent the Premises for office use at a monthly rent of RMB185,191.50 for a fixed term of three years commencing on 1 August 2019 and expiring on 31 July 2022 (both days inclusive). The rent shall be payable in cash within the first 7 days of each calendar month. Guangdong Holdings is also required to pay management fees and other expenses in relation to the Premises to a wholly-owned subsidiary of Guangdong Teem which provides property management services to the Premises.

EXISTING TENANCY AGREEMENTS

Existing 35F Teem Tower Tenancy

Pursuant to the Existing 35F Teem Tower Tenancy, Guangdong Teem lets and GDH Finance rents the office premises situate at the units 01, 02A, 07B and 08 of 35th Floor of Teem Tower at the monthly rent of RMB161,332.95 for a fixed term expiring on 20 July 2021. The tenant is also required to pay management fees and other expenses in relation to the above premises to a wholly-owned subsidiary of Guangdong Teem which provides property management services to the above premises.

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Existing 42F and 45F Teem Tower Tenancy

Pursuant to the Existing 42F and 45F Teem Tower Tenancy, Guangdong Teem lets and Guangdong Holdings rents the office premises situate at the whole of 42nd and 45th Floors of Teem Tower for a fixed term expiring on 30 September 2020. The monthly rent of the first two months of the lease term (i.e. from 1 October 2017 to 30 November 2017) was RMB442,583.05 and the monthly rent for the rest of the lease term shall be RMB885,166.10. Guangdong Holdings is also required to pay management fees and other expenses in relation to the above premises to a wholly-owned subsidiary of Guangdong Teem which provides property management services to the above premises.

BASIS AND REASONS FOR THE TRANSACTION AND THE ANNUAL CAPS

The entering into of the New 20F Teem Tower Tenancy is in the ordinary and usual course of business of the Group. The terms of the New 20F Teem Tower Tenancy are on normal commercial terms or better and were negotiated on an arm's length basis between the parties with reference to the current market rent of the Premises as opined by an independent property valuer having taken into account of the prevailing market conditions.

The New 20F Teem Tower Tenancy will provide the Group with a stable rental income and will maintain the high occupancy rate of Teem Tower. The annual caps for the aggregate annual revenue income (comprising the above rental income, fees and expenses) receivable by the Group under the Tenancy Agreements for the years ending

31 December 2019, 2020, 2021 and 2022 are revised as follows:

			Estimated Total Revenue Income
	2019	2020	2021	2022
		(RMB)	(RMB)	(RMB)	(RMB)
New 20F Teem Tower Tenancy	955,575	3,182,298	3,182,298	1,671,149
35F, 42F and 45F	16,484,614	13,413,800	1,796,224	-
Teem Tower Existing Tenancies
Total:	17,440,189	16,596,098	4,978,522	1,671,149
Annual Caps (each an	18,000,000	17,000,000	5,000,000	2,000,000
"Annual Cap")

The above estimated total revenue income and the related Annual Caps are calculated based on the total rental income, management fees and the estimated total expenses expected to be received under the Tenancy Agreements, of which the total expenses are calculated by reference to the latest charging rates and current consumption level for the various services used by Guangdong Holdings and GDH Finance in connection with their occupation of the respective premises and the estimated inflation of both the charging rates and consumption level under each of the Tenancy Agreements in the future financial years.

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The Directors (including the independent non-executive Directors) are of the view that the Tenancy Agreements were entered into in the ordinary and usual course of business of the Group and on normal commercial terms or better and that the terms of the Tenancy Agreements (including the respective maximum annual revenue income for the four years from 2019 to 2022 under the New 20F Teem Tower Tenancy and the respective Annual Caps under the Tenancy Agreements) are fair and reasonable under the then prevailing market conditions and are in the interests of the Company and its shareholders as a whole.

Mr. HOU Wailin and Mr. CAI Yong, Directors of the Company, are also directors of Guangdong Holdings. The abovenamed two Directors were not counted in the quorum and did not vote on the Directors' resolutions approving, inter alia, the entering into of the New 20F Teem Tower Tenancy and the Annual Caps of the aggregate annual revenue income of the Group under the Tenancy Agreements for the four years from 2019 to 2022. Save as disclosed above, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, no other Directors had any material interest in the Tenancy Agreements and as such they were not required to abstain from voting on the board resolution approving the entering into of the New 20F Teem Tower Tenancy and the Annual Caps.

CONNECTED PERSONS

Guangdong Holdings is the ultimate controlling shareholder of the Company, which holds the entire issued share capital of GDH. GDH in turn is the immediate controlling shareholder of the Company, holding approximately 56.49% of the issued shares of the Company as at the date of this announcement.

Accordingly, Guangdong Holdings is a connected person (as defined in the Listing Rules) of the Company. GDH Finance (being a subsidiary and thus an associate of Guangdong Holdings as defined in the Listing Rules) is also a connected person of the Company. Therefore, each of the transactions contemplated under the Tenancy Agreements constitutes a continuing connected transaction of the Company under the Listing Rules.

LISTING RULES IMPLICATIONS

As all the applicable percentage ratios of the Listing Rules in respect of the annual revenue income to be received by the Group under the New 20F Teem Tower Tenancy are less than 0.1%, pursuant to Rule 14A.76(1) of the Listing Rules, the transaction as contemplated under the New 20F Teem Tower Tenancy is exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under the Listing Rules.

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The aggregate annual revenue income received and to be received for the years of 2018, 2019, 2020 and 2021 disclosed in the Previous Announcement amounted to approximately RMB16,452,185, RMB16,484,614, RMB13,413,800 and RMB1,796,224, respectively. The aggregate annual revenue income received and to be received by the Group under the Tenancy Agreements for the years ending 31 December 2019, 2020, 2021 and 2022 will be revised to approximately RMB17,440,189, RMB16,596,098, RMB4,978,522 and RMB1,671,149, respectively. The annual caps for the aforementioned continuing connected transactions for the years ending 31 December 2019, 2020, 2021 and 2022 will be revised to RMB18,000,000, RMB17,000,000, RMB5,000,000 and RMB2,000,000, respectively. The highest annual cap for the aforementioned four calendar years, which is estimated to be RMB18,000,000 (equivalent to approximately HK$20,462,400), exceeds 0.1% but is less than 5% of the applicable percentage ratios pursuant to Rule 14.07 of the Listing Rules. Accordingly, the transactions as contemplated under the Tenancy Agreements in aggregate are subject to the reporting and announcement requirements, but are exempt from the independent shareholders' approval requirement under Rule 14A.76(2) of the Listing Rules.

The Company will comply with the annual review requirements under Rules 14A.55 to 14A.57 of the Listing Rules in relation to the Tenancy Agreements.

PRINCIPAL BUSINESS OF THE COMPANY AND THE CONNECTED PERSONS

The Group is principally engaged in investment holding, water resources, property investment and development, department store operation, hotel ownership, operation and management, investment in energy projects and road and bridge operation.

Guangdong Holdings is principally engaged in investment holding.

DEFINITIONS

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

"associate "	has the meaning ascribed to it under the Listing Rules;
"Company"	Guangdong Investment Limited (粤海投資有限公司), a
	company incorporated in Hong Kong with limited liability and
	the shares of which are listed on the Main Board of the Stock
	Exchange;
"Director(s)"	the director(s) of the Company;

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