Hailan : DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE FORMATION OF JOINT VENTURE AND THE PROJECT AGREEMENT

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Hailan Holdings Limited

海 藍 控 股 有 限 公 司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 2278)

DISCLOSEABLE AND CONNECTED TRANSACTION

IN RELATION TO THE FORMATION OF JOINT VENTURE AND

THE PROJECT AGREEMENT

THE PROJECT AGREEMENT

The Board announces that on 14 August 2020, the newly formed joint venture company, Jinzhong Real Estate (which is owned as to 49% by Hailan Industrial, an indirect non- wholly subsidiary of the Company, and 51% by Zhongtou Zhiye), entered into the Project Agreement. Under the Project Agreement, Jinzhong Real Estate, by way of equity investment, will acquire Project Land A and pay for the land premium of Project Land B through Datong Investment, and will obtain 49% equity interest in Datong Investment. The maximum investment of the Project Land Parcel to be contributed by Jinzhong Real Estate will be approximately RMB135,240,000.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under Chapter 14 of the Listing Rules in respect of the formation of Jinzhong Real Estate and the capital contribution by the Group to Jinzhong Real Estate in relation to the Project Agreement are more than 5% but all applicable percentage ratios are less than 25%, the transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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Zhongtou Zhiye is a substantial shareholder of Hailan Jinzhong, an indirect non-wholly subsidiary of the Company. As Zhongtou Zhiye is a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules, the formation of Jinzhong Real Estate constitutes a connected transaction of the Company. The Board has approved the formation of Jinzhong Real Estate, and the Directors (including the independent non- executive Directors) are of the view that the terms for the formation of Jinzhong Real Estate are on normal commercial terms and fair and reasonable and is in the interests of the Company and its Shareholders as a whole. Therefore, the formation of Jinzhong Real Estate is exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

THE PROJECT AGREEMENT

The Board announces that on 14 August 2020, the newly formed joint venture company, Jinzhong Real Estate (which is owned as to 49% by Hailan Industrial, an indirect non- wholly subsidiary of the Company, and 51% by Zhongtou Zhiye), entered into the Project Agreement. Under the Project Agreement, Jinzhong Real Estate, by way of equity investment, will acquire Project Land A and pay for the land premium of Project Land B through Datong Investment, and will obtain 49% equity interest in Datong Investment. The maximum investment of the Project Land Parcel to be contributed by Jinzhong Real Estate will be approximately RMB135,240,000.

The principal terms of the Project Agreement are set out as follows:

Date: 14 August 2020

Parties:

1. Jinzhong Real Estate
2. Datong Investment
3. Mr. Zeng
4. Mr. Zhi
5. Guangzhou Shenhua
6. Qinzhou Taihui

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, Datong Investment, Mr. Zeng, Mr. Zhi, Guangzhou Shenhua and Qinzhou Taihui and their respective ultimate beneficial owner(s) are third parties independent of and not connected with the Company and its connected person(s).

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Land Premium for the Project Land Parcel

The maximum contribution payable for the Project Land Parcel payable by Jinzhong Real Estate will be RMB276,000,000, which was determined with reference to the listing price of the Project Land Parcel (subject to increase during bidding) as follows:

1. The maximum contribution by Jinzhong Real Estate for the acquisition of Project Land A is RMB3,000,000 per mu; and
2. The maximum contribution by Jinzhong Real Estate for the land premium of Project Land B is RMB3,000,000 per mu.

The Group will contribute RMB135,240,000 to Jinzhong Real Estate in relation to the maximum consideration payable by Jinzhong Real Estate according to the Group's proportionate interest in Jinzhong Real Estate. If necessary, Datong Investment shall be responsible for paying the amounts in excess of RMB3,000,000 per mu for both Project Land A and Project Land B.

Capital increase in Datong Investment

Pursuant to the Project Agreement, Datong Investment shall be the project company for the Project Land Parcel. The parties agreed that the maximum contribution payable by Jinzhong Real Estate will become the capital increase for 49% equity interest in Datong Investment. As such, Datong Investment will be owned as to 49% by Jinzhong Real Estate and as to 51% by the Original Shareholders.

Board of directors

The board of directors of Guangxi Datong comprises three directors, Jinzhong Real Estate and Datong Investment are entitled to nominate one director and two directors, respectively.

INFORMATION OF THE PROJECT LAND PARCEL

The Project Land Parcel is located at the southeast of Huange Road, Wuming District, Nanning City, Guangxi Province, PRC, which comprises Project Land A and Project Land B with a total area of approximately 92 mu.

1. The area of Project Land A is approximately 48 mu, due to the limited conditions set by the Wuming District Government, only Datong Investment can participate in the bidding for Project Land A and the land use rights certificate of which shall be issued to Datong Investment.
2. The area of Project Land B is approximately 44 mu. Wuming District Government has agreed that Datong Investment can change the permitted use of Project Land B from commercial uses to commercial and residential uses by paying land premium for the exchange of land use rights certificate.

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FORMATION OF JOINT VENTURE

Hailan Industrial, an indirect non-wholly owned subsidiary of the Company, and Zhongtou Zhiye established Jinzhong Real Estate.

Jinzhong Real Estate will be principally engaged in real estate development and management, real estate intermediary services, real estate consulting services, real estate investment, landscaping, landscape engineering design and construction.

The registered capital of Jinzhong Real Estate is RMB20,000,000. Hailan Industrial and Zhongtou Zhiye will contribute RMB9,800,000 and RMB10,200,000, representing 49% and 51% of the registered capital of Jinzhong Real Estate, respectively. The amount of capital contribution was determined after arm's length negotiations among the Parties and having taken into account the expected capital requirements of Jinzhong Real Estate. The board of directors of Jinzhong Real Estate consists of five directors, two of which were nominated by Hailan Industrial and three of which were nominated by Zhongtou Zhiye, respectively.

Jinzhong Real Estate is not a subsidiary of the Company and its financial statements will not be consolidated into the financial statements of the Group.

REASONS FOR FORMATION OF THE JOINT VENTURE AND ENTERING INTO THE PROJECT AGREEMENT

The purpose of capital increase in Datong Investment is to jointly develop the Project Land Parcel, which will be beneficial to the parties to effectively utilise resources and supplement advantages of each other, and allow the Company to improve its influence and recognition in Guangxi Province. Meanwhile, investment in the Project Land Parcel is an opportunity for the Group to diverse its business risk. The Company believes that the transactions under the Project Agreement will allow the Group to tap into the real estate industry in the Guangxi Province which will provide a new source of income to the Group.

The terms of the Project Agreement were negotiated on an arm's length basis between the parties to the Project Agreement. The Company believes that the transactions contemplated under the Project Agreement are beneficial to the Company and the Shareholders as a whole.

The Directors, including the independent non-executive Directors, having considered the terms and conditions of the Project Agreement, are of the view that the terms and conditions are on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE PARTIES TO THE PROJECT AGREEMENT

Information of the Group

The Group is principally engaged in development and sales and lease of residential properties in the PRC.

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Information of Jinzhong Real Estate

Jinzhong Real Estate is a company established in the PRC with limited liability and is owned as to 49% by Hailan Industrial and 51% by Zhongtou Zhiye. It is principally engaged in real estate development and management, real estate intermediary services, real estate consulting services, real estate investment, landscaping, landscape engineering design and construction.

Information of Datong Investment

Datong Investment is a company established in the PRC with limited liability and is principally engaged in, among other things, development of properties, investment in cultural industry and investment consultancy and management services. It is owned as to 55%, 16.5%, 16.5% and 12% by Guangzhou Shenhua, Mr. Zhi, Mr. Zeng and Qinzhou Taihui respectively as at the date of this announcement. The ultimate beneficial owner of Guangzhou Shenhua and Qinzhou Taihui is Mr. Law Yau Hung (羅有雄先生).

Information of Guangzhou Shenhua, Qinzhou Taihui, Mr. Zeng and Mr. Zhi

Guangzhou Shenhua is a company established in the PRC with limited liability. It is principally engaged in investment consultancy services, pension industry investment and development and sports investment and management.

Qinzhou Taihui is a company established in the PRC with limited liability. It is principally engaged in real estate development and investment consultancy services.

Both Mr. Zeng and Mr. Zhi are PRC residents.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under Chapter 14 of the Listing Rules in respect of the formation of Jinzhong Real Estate and the capital contribution by the Group to Jinzhong Real Estate in relation to the Project Agreement are more than 5% but all applicable percentage ratios are less than 25%, the transaction constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

Zhongtou Zhiye is a substantial shareholder of Hailan Jinzhong, an indirect non-wholly subsidiary of the Company. As Zhongtou Zhiye is a connected person of the Company at the subsidiary level under Chapter 14A of the Listing Rules, the formation of Jinzhong Real Estate constitutes a connected transaction of the Company. The Board has approved the formation of Jinzhong Real Estate, and the Directors (including the independent non- executive Directors) are of the view that the terms for the formation of Jinzhong Real Estate are on normal commercial terms and fair and reasonable and is in the interests of the Company and its Shareholders as a whole. Therefore, the formation of Jinzhong Real Estate is exempt from the circular, independent financial advice and shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

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DEFINITIONS

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

''Board''	the board of Directors
''Company''	Hailan Holdings Limited (海藍控股有限公司), a company
	incorporated under the laws of the Cayman Islands with
	limited liability, the shares of which are listed on the main
	board of the Stock Exchange (Stock code: 2278)
''connected person(s)''	has the meaning ascribed under the Listing Rules
''Datong Investment''	廣西大通投資置業有限公司 (Guangxi Datong Investment
	Property Co,. Ltd.*), a company a company established in
	the PRC with limited liability
''Director(s)''	the director(s) of the Company
''Guangzhou Shenhua''	廣州紳華投資諮詢有限公司 (Guangzhou Shenhua Investment
	Consultancy Co., Ltd.*), a company established in the PRC
	with limited liability and a shareholder of Datong
	Investment
''Hailan Industrial''	海藍實業（廣州）有限公司 (Hailan Industrial (Guangzhou)
	Co., Ltd.*), a company established in the PRC with limited
	liability and is indirectly owned as to 65% by the Company
''HK$''	Hong Kong dollars, the lawful currency of Hong Kong
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''Jinzhong Real Estate''	廣西海藍金鐘房地產有限公司 (Guangxi Hailan Jinzhong
	Real Estate Co., Ltd.*), a company established in the PRC
	with limited liability on 16 July 2020 and is indirectly
	owned as to 49% by the Company
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange
''Mr. Zeng''	Zeng Shaohong (曾少洪), a PRC resident and a shareholder
	of Datong Investment
''Mr. Zhi''	Zhi Kesheng (支克勝), a PRC resident and a shareholder of
	Datong Investment
''Original Shareholders''	the original shareholders of Guangxi Datong, namely, Mr.
	Zeng, Mr. Zhi, Guangzhou Shenhua and Qinzhou Taihui

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''PRC''

''Project Agreement''

''Project Land A''

''Project Land B''

''Project Land Parcel'' ''Qinzhou Taihui''

''RMB''

''Shareholder(s)'' ''Shares'' ''Stock Exchange'' ''Zhongtou Zhiye''

''%''

The PRC, 14 August 2020

the People's Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People's Republic of China and Taiwan

the project agreement dated 14 August 2020 entered into among Jinzhong Real Estate, Datong Investment, Mr. Zeng, Mr. Zhi, Guangzhou Shenhua and Qinzhou Taihui

undeveloped construction land with an area of approximately 48 mu

undeveloped construction land with an area of approximately 44 mu

collectively, Project Land A and Project Land B

欽州泰匯投資有限公司 (Qinzhou Taihui Investment Co., Ltd.*), a company established in the PRC with limited liability and a shareholder of Datong Investment

Renminbi, the lawful currency of the PRC

holder(s) of the Shares

the shares of the Company

the Stock Exchange of Hong Kong Limited

中投置業(廣州)有限公司 (Zhongtou Zhiye (Guangzhou) Co., Ltd.*), a company established in the PRC with limited liability

per cent

By order of the Board

Hailan Holdings Limited

Zhou Li

Chairperson

As at the date of this announcement, the executive Directors are Ms. Zhou Li, Ms. Fan Wenyi, Mr. Chen Zhonghua and Mr. Zhang Yu; and the independent non-executive Directors are Mr. Li Yong, Dr. Zhao Guoqing and Mr. Deng Shaochao.

• for identification purpose only

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