China Overseas Property : Announcements and Notices - Continuing Connected Transactions - Supplemental Agreement to Entrusted Management Agreement

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C H I N A O V E R S E A S P R O P E R T Y H O L D I N G S L I M I T E D

中 海 物 業 集 團 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2669)

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO ENTRUSTED MANAGEMENT AGREEMENT

Reference is made to the Announcement of the Company dated 18 October 2016 in relation to the Entrusted Management Agreement entered into between the Company and HRL, a wholly owned subsidiary of COLI, pursuant to which HRL agreed to entrust the Company to manage the Entrusted Companies in respect of their business operation and administration for a term of one year commencing from 15 September 2016 and ending on 14 September 2017.

On 13 September 2017, the Company and HRL entered into a Supplemental Agreement to extend the term of the Entrusted Management Agreement for one year commencing from 15 September 2017 and ending 14 September 2018. Save for the aforementioned, all other terms and conditions of the Entrusted Management Agreement remain unchanged.

COHL is the controlling shareholder of the Company. HRL is a wholly owned subsidiary of COLI, which is in turn a subsidiary of COHL. Hence, HRL is a connected person of the Company and transactions contemplated under the Supplemental Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Since the applicable percentage ratio as defined under the Listing Rules calculated for the Company in respect of the Entrusted Management Fee is 0.1% or above but less than 5%, the Supplemental Agreement and the transactions contemplated thereunder are subject to the annual review, reporting and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

THE ENTRUSTED MANAGEMENT AGREEMENT

Reference is made to the Announcement of the Company dated 18 October 2016 in relation to the Entrusted Management Agreement entered into between the Company and HRL, a wholly owned subsidiary of COLI, pursuant to which HRL agreed to entrust the Company to manage the Entrusted Companies in respect of their business operation and administration for a term of one year commencing from 15 September 2016 and ending on 14 September 2017.

THE SUPPLEMENTAL AGREEMENT

On 13 September 2017, the Company and HRL entered into a Supplemental Agreement to extend the term of the Entrusted Management Agreement for one year commencing from 15 September 2017 and ending 14 September 2018.

Save for the aforementioned, all other terms and conditions of the Entrusted Management Agreement remain unchanged.

The principal terms of the Entrusted Management Agreement are set out below:

Scope of Entrusted Management:

The Company shall manage the Entrusted Companies, including the carrying out of the following matters as manager of the Entrusted Companies:

1. daily management, including staff management;

2. formulating business strategy, annual business plan and annual financial budget of the Entrusted Companies;

3. allocation of personnel of the existing management teams of the Entrusted Companies;

4. borrowing of material loans, provision of material guarantees and resolving material litigation matters of the Entrusted Companies;

5. deciding on the pricing policy, operational and extraordinary expenses of the Entrusted Companies;

6. development of the daily business of the Entrusted Companies using the Company's brands and intellectual properties after the expiry of licensing of the Entrusted Companies' existing brands and intellectual properties; and

7. other relevant management matters in relation to the above.

In fulfilling the Company's obligations under the Entrusted Management Agreement, a management team for managing the Entrusted Companies has been formed by the Company's employees and the Entrusted Companies' employees. The salaries and the other expenses of such management team shall be borne by the Entrusted Companies.

Where necessary, each of the Entrusted Companies may, pursuant to the principles of the Entrusted Management Agreement, enter into specific agreements with designated subsidiaries of the Company in respect of the management of the Entrusted Companies.

Entrusted Management Fee:

The management fee under the Supplemental Agreement to Entrusted Management Agreement (the ''Entrusted Management Fee'') is RMB500,000 (equivalent to approximately HK$590,000) per month and the full monthly fee is chargeable for any period that is less than a month. The Entrusted Management Fee shall be payable quarterly

by HRL to the Company or its designated wholly-owned subsidiary(ies) within ten days of the end of each quarter.

Accordingly, the Entrusted Management Fee for the year ending 31 December 2017 shall not exceed RMB1,750,000 (equivalent to approximately HK$2,065,000) and the Entrusted Management Fee for the year ending 31 December 2018 shall not exceed RMB4,250,000 (equivalent to approximately HK$5,015,000).

The Entrusted Management Fee is determined after arm's length negotiation between the Company and HRL and on terms no more favourable than those provided to the independent third party of the Group with reference to the estimated cost of the Company to provide high level guidance and supervision by the Company and the added-value to be brought to the Entrusted Companies for enhancement of the business operation and administration of the relevant Entrusted Companies. In calculating the above, the Company has taken into account the cost of around 2 to 3 experienced staff for allocation to each of the 10 main locations of the Entrusted Companies, and that the Entrusted Management Fee to be received by the Company will provide a similar or higher profit margin on a cost-plus basis compared with that generated by other business operations of the Group.

INFORMATION ABOUT THE ENTRUSTED COMPANIES

The Entrusted Companies comprise companies established in the PRC which principally engage in property management businesses, located in Beijing, Tianjin, Dalian, Changsha, Guangzhou, Shenzhen, Dongguan, Huizhou, Shantou and Foshan.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SUPPLEMENTAL AGREEMENT

The Group is one of the leading property management companies in the PRC with operations also covering Hong Kong and Macau and is principally engaged in property management services and value-added services. The Group believes that the management of the Entrusted Companies can continue to leverage its leading brand name for expansion of its business coverage and consolidation of its geographical reach.

HRL is principally engaged in the investment holding business. COLI is principally engaged in the property development and investment and other operations.

The Directors (including the Independent Non-executive Directors) consider that the Supplemental Agreement is entered into in the ordinary and usual course of business of the Group after arm's length negotiation between the parties and the terms of the Supplemental Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

GENERAL

COHL is the controlling shareholder of the Company. HRL is a wholly owned subsidiary of COLI, which is in turn a subsidiary of COHL. Hence, HRL is a connected person of the Company and transactions contemplated under the Supplemental Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Since the applicable percentage ratio as defined under the Listing Rules calculated for the Company in respect of the Entrusted Management Fee is 0.1% or above but less than 5%, the Supplemental

Agreement and the transactions contemplated thereunder are subject to the annual review, reporting and announcement requirements, but exempt from the independent shareholders' approval

requirement under Chapter 14A of the Listing Rules.

As none of the Directors has any material interest in the Supplemental Agreement or the transactions contemplated thereunder, none of them is required to abstain from voting on the resolutions passed by the Board to approve the Supplemental Agreement and the transactions contemplated thereunder.

DEFINITIONS

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

"Announcement"	the announcement of the Company dated 18 October 2016 in relation to the Entrusted Management Agreement;
"Board"	the board of Directors;
"Company"	China Overseas Property Holdings Limited, a company incorporated in the Cayman Islands with limited liability and whose shares are listed on the Main Board of the Stock Exchange (stock code: 2669);
"connected person(s)", "controlling shareholder", "subsidiary(ies)"	each has the meaning ascribed to it in the Listing Rules;
"COHL"	China Overseas Holdings Limited, a company incorporated in Hong Kong with limited liability, and the controlling shareholder of the Company;
"COLI"	China Overseas Land & Investment Limited, a company incorporated in Hong Kong with limited liability and whose shares are listed on the Main Board of the Stock Exchange (stock code: 688);
"Director(s)"	the director(s) of the Company;
"Entrusted Companies"	the companies established in the PRC owned by COLI, further details of which are set out in the paragraph headed ''Information about the Entrusted Companies'' in this announcement;
"Entrusted Management Agreement"	the entrusted management agreement dated 18 October 2016 between the Company and HRL in respect of management of the Entrusted Companies by the Company for a term of one year;