Poly Property Services : CONTINUING CONNECTED TRANSACTIONS EXCEEDING OF THE 2020 ANNUAL CAP AND ENTERING INTO THE 2021-2023 FRAMEWORK AGREEMENTS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited LR14.58(1)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.

LR13.52

POLY PROPERTY SERVICES CO., LTD.

ڭлيุ؂ਕٰ΅Ϟࠢʮ̡

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 06049)

LR13.51A

CONTINUING CONNECTED TRANSACTIONS EXCEEDING OF THE 2020 ANNUAL CAP AND ENTERING INTO THE 2021-2023 FRAMEWORK AGREEMENTS

EXCEEDING OF THE 2020 ANNUAL CAP AND ENTERING INTO THE 2021-2023 FRAMEWORK AGREEMENTS

During the course of reviewing and verifying the data on the amounts of connected transactions of the Group, the Board noted that the actual transaction amount in respect of other value-added services transactions under the 2019 Framework Agreements for the year ended 31 December 2020 exceeded the original annual cap. Save for that, the transaction amounts in respect of all other transactions under the 2019 Framework Agreements did not exceed the original annual caps.

Due to business development needs, the Group has reasonably rearranged the relevant businesses and made adjustments accordingly. The Company entered into the following 2021-2023 Framework Agreements with the relevant parties on 24 March 2021 (after trading hours) to replace and renew the provisions with respect to certain transactions contemplated under the 2019 Framework Agreements:

• (i) 2021-2023 Property Leasing Framework Agreement;

• (ii) 2021-2023 Hardware Procurement and Maintenance Services Framework Agreement;

• (iii) 2021-2023 Property Management Services Framework Agreements;

• (iv) 2021-2023 Pre-delivery Services Framework Agreement; and

• (v) 2021-2023 Other Value-added Services Framework Agreement.

The 2021-2023 Framework Agreements will supersede the relevant provisions with respect to transactions (other than technology development and support services) under the 2019 Framework Agreements upon their becoming effective, and the relevant provisions under the 2019 Framework Agreements will be automatically terminated. In view of the adjustment on its informatisation business development plans, the Group does not plan to procure technology development and support services from Poly Developments and Holdings Group in 2021 and therefore the relevant terms under the 2019 Framework Agreements will also be terminated. The Company will closely monitor its business development and will comply with the approval and disclosure procedures in a timely manner in accordance with the requirements of the Listing Rules.

LISTING RULES IMPLICATIONS

As the actual transaction amount of 2020 for other value-added services under the 2019 Framework Agreements exceeded the original annual cap, pursuant to Rule 14A.54 of the Listing Rules, the Company is required to re-comply with the applicable requirements under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio calculated in accordance with the Listing Rules on an annual basis in respect of the actual transaction amount of 2020 is more than 5%, other value-added services transactions under the 2019 Framework Agreements are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under the Listing Rules.

As at the date of this announcement, Poly Developments and Holdings is interested in an aggregate of 72.289% of the total issued share capital of the Company and is a controlling shareholder of the Company, thus is a connected person of the Company under the Listing Rules. Poly Southern is one of the controlling shareholders of the Company, while both Guangdong Poly Auction and Poly Changda Overseas are subsidiaries of China Poly Group, a controlling shareholder of the Company. Therefore, Poly Southern, Guangdong Poly Auction and Poly Changda Overseas are connected persons of the Company under the Listing Rules. As such, the transactions contemplated under the 2021-2023 Framework Agreements will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. The Directors are of the view that the continuing connected transactions contemplated under the 2021-2023 Poly Developments and Holdings Property Management Services Framework Agreement and the 2021-2023

Other Property Management Services Framework Agreement are of the same nature, and are entered into between the Group and parties who are connected or associated with China Poly Group, and should therefore be aggregated pursuant to Rules 14A.81 and 14A.82(1) of the Listing Rules.

As the highest applicable percentage ratio in respect of the 2021-2023 Partially-exempt Framework Agreements is more than 0.1% but less than 5%, such transactions are only subject to the reporting, announcement and annual review requirements but is exempt from the Independent Shareholders' approval requirement pursuant to Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the 2021-2023 Non-exempt Framework Agreements exceeds 5%, such transactions are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of (i) the Ratification Matter and (ii) the transactions contemplated under the 2021-2023 Non-exempt Framework Agreements, and its advice and recommendations will be set out in the circular to be despatched by the Company. An Independent Financial Adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

A circular containing, among other things, (i) details of the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements; (ii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements; (iii) a letter of recommendation from the Independent Board Committee in relation to the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements; and (iv) a notice of the General Meeting, will be dispatched to the Shareholders. The Company expects to dispatch the circular to the Shareholders on or before 19 April 2021.

1. BACKGROUND

Reference is made to the Connected Transactions sections in both of the Prospectus and the 2019 Annual Report in relation to, among other things, the 2019 Framework Agreements with Poly Developments and Holdings, Poly Southern, Guangdong Poly Auction and Poly Changda Overseas. The terms of the 2019 Framework Agreements are from the Listing Date to 31 December 2021, pursuant to which the Group has entered into the following transactions with Poly Developments and Holdings Group, Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries) in respect of: (1) leasing of properties owned by the latter; (2) procurement of hardware and hardware maintenance services from the latter; (3) procurement of technology development and supporting services from the latter; (4) provision of property management services to the latter; (5) provision of pre-delivery services to the latter; and (6) provision of other value-added services to the latter.

2. EXCEEDING OF THE 2020 ANNUAL CAP

During the course of reviewing and verifying the data on the amounts of connected transactions of the Group, the Board noted that the actual transaction amount in respect of the provision of other value-added services transactions under the 2019 Framework Agreements for the year ended 31 December 2020 exceeded the original annual cap. Save for that, the transaction amounts in respect of all other transactions under the 2019 Framework Agreements did not exceed the original annual caps. The table below sets out the actual transaction amount and the approved annual cap for the year ended 31 December 2020 in respect of the provision of other value-added services by the Group to Poly Developments and Holdings Group under the 2019 Framework Agreements:

Actual transaction	Approved annual
amount for the	cap for the
year ended	year ended
31 December 2020	31 December 2020
(RMB million)	(RMB million)
Other value-added services	399.5	215.0
Reasons for Exceeding the 2020 Annual Cap

The actual transaction amount exceeded the original annual cap for the year ended 31

December 2020 because projects' demand for other value-added services increased significantly in 2020 as a result of the outbreak of COVID-19.

In order to meet the demand for pandemic prevention and control and the actual needs of the projects, the Group had to further enhance the provision of services in respect of construction maintenance and renovation and delivery of repossession services while implementing measures that are compliant with anti-pandemic requirements during the year.

The outbreak of the COVID-19 pandemic in Mainland China, especially in Northern China, aggravated upon the arrival of winter. As a result, the fees incurred for the provision of other value-added services by the Group under the 2019 Framework Agreements increased significantly, which in turn resulted in its actual transaction amount for the year exceeding the original annual cap for the year ended 31 December 2020.

Listing Rules Implications

As the actual transaction amount of 2020 for other value-added services under the 2019 Framework Agreements exceeded the original annual cap, pursuant to Rule 14A.54 of the Listing Rules, the Company is required to re-comply with the applicable requirements under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio calculated in accordance with the Listing Rules on an annual basis in respect of the actual transaction amount of 2020 is more than 5%, other value-added services transactions under the 2019 Framework Agreements are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under the Listing Rules.

The Directors (including independent non-executive Directors) are of the view that the terms of the other value-added services transactions under the 2019 Framework Agreements are on normal commercial terms, fair and reasonable, and the transactions with respect to the provision of other value-added services under the 2019 Framework Agreements are entered into in the ordinary and usual course of business of the Group, and are in the interests of the Group and the Shareholders of the Company as a whole.

3. ENTERING INTO THE 2021-2023 FRAMEWORK AGREEMENTS

Due to business development needs, the Group has reasonably rearranged the relevant LR14.58(3) businesses and made adjustments accordingly. The Company entered into the following 2021-2023 Framework Agreements with the relevant parties on 24 March 2021 (after trading hours) to replace and renew the provisions with respect to certain transactions contemplated under the 2019 Framework Agreements:

• (i) 2021-2023 Property Leasing Framework Agreement;

• (ii) 2021-2023 Hardware Procurement and Maintenance Services Framework Agreement;

• (iii) 2021-2023 Property Management Services Framework Agreements;

• (iv) 2021-2023 Pre-delivery Services Framework Agreement; and

• (v) 2021-2023 Other Value-added Services Framework Agreement.

The 2021-2023 Framework Agreements will supersede the relevant provisions with respect to transactions (other than technology development and support services) under the 2019 Framework Agreements upon their becoming effective, and the relevant provisions under the 2019 Framework Agreements will be automatically terminated. In view of the adjustment on its informatisation business development plans, the Group does not plan to procure technology development and support services from Poly Developments and Holdings Group in 2021 and therefore the relevant terms under the 2019 Framework Agreements will also be terminated. The Company will closely monitor its business development and will comply with the approval and disclosure procedures in a timely manner in accordance with the requirements of the Listing Rules.

The 2021-2023 Non-exempt Framework Agreements are subject to approval of the Independent Shareholders at the General Meeting.

2021-2023 Partially-Exempt Framework Agreements

2021-2023 Property Leasing Framework Agreement

(a) Principal terms

The principal terms of the 2021-2023 Property Leasing Framework Agreement are as follows:

(b)

Date:	24 March 2021
Parties:	(i) the Company; and
(ii) Poly Developments and Holdings
Term:	From 24 March 2021 to 31 December 2023
Subject matter:	The Group will lease properties owned by Poly Developments
and Holdings Group.
Pricing policy

LR14.60(1)

The rent will be determined after arm's length negotiations, with reference to the historical transaction amounts and the prevailing market rent of similar properties located in similar areas.

Based on the principles under the framework agreement of the connected transactions, the relevant subsidiaries and associates of the parties will enter into separate leasing agreements which shall set out specific terms and conditions. The Group will review the relevant transaction data and terms (including comparing with similar agreements entered into between the Group and Independent Third Parties) to ensure that the rent payable under the leasing agreements will not be less favourable than that offered by Independent Third Parties.

(c) Historical transaction amounts

The table below sets out the total historical rents and the approved annual caps for the properties leased by the Group from Poly Developments and Holdings Group:

For the year ended 31 December 2018 2019 2020 (RMB million) (RMB million) (RMB million)

Property leasing
- Historical rents	11.0	15.9	39.0
- Approved annual cap	-	18.7	46.8

(d)Proposed annual caps and basis of determination

The table below sets out the proposed annual caps for the properties to be leased by the Group from Poly Developments and Holdings Group under the 2021-2023 Property Leasing Framework Agreement:

For the year ending 31 December 2021 2022

(RMB million) (RMB million)

2023

(RMB million)

LR14A.68(4)

Property leasing - Proposed annual cap

Note:

(1)

21.5(1)

25.8

The original annual cap for the year ending 31 December 2021 was RMB21.5 million.

The above annual caps are determined after consideration of the following:

31.0

• (i) the historical amounts of the leasing agreements the Group entered into with Poly Developments and Holdings Group;

• (ii) the leasing agreements already entered into, and the expected rent to be paid to Poly Developments and Holdings Group pursuant to the relevant leasing agreements; and

• (iii) the expected increase of approximately 20% in the demand for leased properties of the Group for its business in the future.

2021-2023 Hardware Procurement and Maintenance Services Framework Agreement

(a)Principal terms

The principal terms of the 2021-2023 Hardware Procurement and Maintenance Services Framework Agreement are as follows:

Date:

24 March 2021

Parties:

• (i) the Company; and

• (ii) Poly Developments and Holdings

Term:

From 24 March 2021 to 31 December 2023

Subject matter:

The Group will procure hardware and maintenance LR14.60(1) services, i.e. (i) hardware equipment procurement; and (ii) maintenance services for the hardware procured, from Poly Developments and Holdings Group.

• (b) Pricing policy

  The fees charged for the hardware and maintenance services will be determined after arm's length negotiations, with reference to the historical transaction amounts and the prevailing market rate charged for similar hardware and maintenance services.

  Based on the principles under the framework agreement of the connected transactions, the relevant subsidiaries and associates of the parties will enter into separate agreements in relation to the hardware procurement and maintenance services which shall set out specific terms and conditions.

• (c) Historical transaction amounts

  The table below sets out the fees incurred by the Group and the approved annual caps for the hardware and maintenance services procured from Poly Developments and Holdings Group:

  For the year ended 31 December

  2018	2019	2020
  (RMB million)	(RMB million)	(RMB million)
  Hardware procurement and
  maintenance services
  - Historical fees	-	0.5	1.1
  - Approved annual cap	-	3.0	5.0

• (d) Proposed annual caps and basis of determination

  LR14A.68(4)

  The table below sets out the proposed annual caps of the fees to be incurred for the hardware and maintenance services to be procured by the Group from Poly Developments and Holdings Group under the 2021-2023 Hardware Procurement and Maintenance Services Framework Agreement:

For the year ending 31 December 2021 2022 2023 (RMB million) (RMB million) (RMB million)

Hardware procurement and maintenance services - Proposed annual cap

20.0(1)

20.0

20.0

Note:

(1) The original annual cap for the year ending 31 December 2021 was RMB6.0 million.

The above annual caps are determined after consideration of the following:

• (i) the procurement standard for the hardware procurement and maintenance agreements the Group entered into with Poly Developments and Holdings Group;

• (ii) the hardware procurement and maintenance agreements already entered into, and the fees paid for the hardware procured and maintenance services pursuant to the relevant agreements;

• (iii) the Company's plan to upgrade its digitization and smart management systems which involves accelerating the construction of smart terminal infrastructure and Internet of Things platforms, upgrading internal information sharing platforms and databases, which is expected to incur substantially higher cost of hardware as compared to those of previous years; and

(iv) the hardware procurement and maintenance services will remain stable for the projected years ending 31 December 2021 to 2023, after taking into account, among other things, the Group's furtherance of upgrades of its digital and smart management system from 2021 to 2023.

2021-2023 Non-Exempt Framework Agreements

2021-2023 Property Management Services Framework Agreements

On 24 March 2021, the Company has entered into property management services framework agreements in respect of property management services with each of (i) Poly Developments and Holdings; (ii) Poly Southern; (iii) Guangdong Poly Auction; and (iv) Poly Changda Overseas, respectively.

(a) Principal terms

The principal terms of the 2021-2023 Poly Developments and Holdings Property Management Services Framework Agreements are as follows:

Date:	24 March 2021
Parties:	(i) the Company; and
(ii) Poly Developments and Holdings
Term:	From the date on which the 2021-2023 Poly Developments
and Holdings Property Management Services Framework
Agreement is approved by the Independent Shareholders at
the General Meeting to 31 December 2023

Subject matter:The Group will provide property management services to the LR14.60(1) following types of properties related to Poly Developments and Holdings Group: (1) property units being used by Poly Developments and Holdings Group; (2) property units of Poly Developments and Holdings Group which are completed but not yet sold and/or property units which are completed and sold before the delivery date as agreed between Poly Developments and Holdings/its associates and the buyers of such property units; and (3) property units which have been delivered by Poly Developments and Holdings Group and for which, the property management fees required to be paid by the owners will be reduced by way of reductions or reliefs, gifts or other marketing offers and for which, the property management fees will be paid to us fully by Poly Developments and Holdings and/or its associates pursuant to the benefits arranged for and made available to the owners.

The principal terms of the 2021-2023 Other Property Management Services Framework Agreement are as follows:

Date:

24 March 2021

Parties:

(i)the Company; and

(i)the Company; (i) and

the Company; and

(ii) Poly Southern (ii) Guangdong

Poly Auction

(ii) Poly Changda

OverseasTerm:

From the date on which the 2021-2023 Other Property Management Services Framework Agreement is approved by the Independent Shareholders at the General Meeting to 31 December 2023

LR14.60(1)

Subject matter:The Group will provide property management services LR14A.68(4) to Poly Southern (and its subsidiaries), Guangdong Poly

Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries), respectively.

• (b) Pricing policy

  The property management fees will be determined after arm's length negotiations, taking into account the location of the projects, the expected operational costs (including, amongst others, labour costs, material costs and administrative costs) with reference to the property management fees for similar services and similar types of projects in the market. The property management fees shall be on normal commercial terms.

  Based on the principles under the framework agreement of the connected transactions, the relevant subsidiaries and associates of the parties will enter into property management services agreements which shall set out specific terms and conditions. The Group will review the relevant transaction data and terms (including comparing with similar agreements entered into between the Group and Independent Third Parties) to ensure that the property management fees shall be at prices no more favourable than those offered to the Group's customers who are Independent Third Parties.

• (c) Historical transaction amounts

  The table below sets out the service fees and the approved annual caps for the property management services provided by the Group to Poly Developments and Holdings Group, Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries):

  For the year ended 31 December 2018 2019 2020

  (RMB million) (RMB million) (RMB million)

  Property management services
  - Historical service fees	145.1	147.0	180.4
  - Approved annual cap	-	156.2	188.0

• (d) Proposed annual caps and basis of determination

  LR14A.68(4)

  The table below sets out the proposed annual caps of the service fees for the property management services to be provided by the Group to Poly Developments and Holdings Group, Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries) under the 2021-2023 Property Management Services Framework Agreements:

For the year ending 31 December 2021 2022 2023

(RMB million) (RMB million) (RMB million)

Property management services - Proposed annual cap

243.9(1)

329.3

444.5

Note:

(1) The original annual cap for the year ending 31 December 2021 was RMB224.9 million.

The above annual caps are determined after consideration of the following:

(i) the historical transaction amounts under the property management service agreements entered into between the Group and Poly Developments and Holdings and property management agreements that were already entered into;

• (ii) the expected annual growth of approximately 35.0% of the property management fees to be received by the Group from Poly Developments and Holdings Group for the years ending 31 December 2021 to 2023, which has already taken into account the increase in the Group's aggregate income from property management business at a CAGR of approximately 30.4% from 2018 to 2020 and the following factors: (1) the increase in the number of property units used by Poly Developments and Holdings Group as a result of its business growth and expansion, thereby increasing the area that the Group provides property management services to and the corresponding property management fees; (2) the increase in the number of completed but unsold property units of Poly Developments and Holdings Group, after due consideration of the outlook of the future real estate market in the PRC, which may lead to more unsold properties and hence a larger sum of property management fees payable by Poly Developments and Holdings Group; (3) the increase in property management fees payable by Poly Developments and Holdings Group on behalf of property owners, as Poly Developments and Holdings Group will enhance its marketing effort after considering the upcoming real estate market in the PRC and its current marketing effort; and

• (iii) (1) the historical transaction amounts under the property management service agreements entered into between the Group and Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries), respectively, and the property management service agreements already entered into; and (2) the increase in the number of property units used by Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries) as a result of their business growth and expansion, thereby increasing the area that the Group provides property management services to and the corresponding property management fees.

2021-2023 Pre-delivery Services Framework Agreement

(a) Principal terms

The principal terms of the 2021-2023 Pre-delivery Services Framework Agreement are as follows:

Date: 24 March 2021

Parties: (i) the Company; and

• (ii) Poly Developments and Holdings

Term:

From the date on which the 2021-2023 Pre-delivery Services Framework Agreement is approved by the Independent Shareholders at the General Meeting to 31 December 2023

Subject matter:

The Group will provide pre-delivery services to Poly LR14.60(1) Developments and Holdings Group, for the purposes of assisting in property sale activities, which include visitor reception, cleaning, security inspection, maintenance and other customer related services.

• (b) Pricing policy

  The fees to be charged for pre-delivery services will be determined by taking into account the prevailing market rate for similar services in the open market and the historical charging rates after negotiations on arm's length basis. The pre-delivery services fees shall be on normal commercial terms.

  Based on the principles under the framework agreement of the connected transactions, the relevant subsidiaries and associates of the parties will enter into pre-delivery services agreements which shall set out specific terms and conditions. The Group will review the relevant transaction data and terms (including comparing with similar agreements entered into between the Group and Independent Third Parties) to ensure that the pre-delivery services fees shall be at prices no more favourable than those provided to customers who are Independent Third Parties.

• (c) Historical transaction amounts

  The table below sets out the service fees and the approved annual caps for the pre-delivery services provided by the Group to Poly Developments and Holdings Group:

For the year ended 31 December

2018	2019	2020
(RMB million)	(RMB million)	(RMB million)
Pre-delivery services
- Historical service fees	509.5	682.9	826.0
- Approved annual cap	-	688.5	826.2

(d) Proposed annual caps and basis of determination

LR14A.68(4)

The table below sets out the proposed annual caps of the service fees for the pre-delivery services to be provided by the Group to Poly Developments and Holdings Group under the 2021-2023 Pre-delivery Services Framework Agreement:

For the year ending 31 December 2021 2022 2023 (RMB million) (RMB million) (RMB million)

Pre-delivery services - Proposed annual cap

1,073.4(1)

1,341.7

1,677.1

Note:

(1) The original annual cap for the year ending 31 December 2021 was RMB991.5 million.

The above annual caps are determined after consideration of the followings:

(i) the historical transaction amounts for the pre-delivery services agreements the Group entered into with Poly Developments and Holdings Group;

• (ii) the pre-delivery services agreements already entered into;

• (iii) the existing on-going projects with Poly Developments and Holdings Group to the knowledge of the Group, and the expected growth in the pre-delivery services to be provided to Poly Developments and Holdings Group by the Group in 2021; and

• (iv) the expected annual growth of 25.0% in the pre-delivery services fees to be received by the Group from Poly Developments and Holdings Group for the years ending 31 December 2021 to 2023, which has already taken into account the CAGR of approximately 27.3% for the historical transaction amounts between 2018 to 2020, and the following factors: (1) the expected increase in Poly Developments and Holdings Group's demand for pre-delivery services as a result of the projected growth in the estimated new area under construction and/or saleable area of Poly Developments and Holdings Group and the growth in number of pre-delivery projects; and (2) the expected annual increase in the Group's pre-delivery services fees with reference to the historical fees charged by the Group and the expected increase in the relevant labor and operating costs as well as the market price for such services in the forthcoming years.

2021-2023 Other Value-added Services Framework Agreement

• (a) Principal terms

  The principal terms of the 2021-2023 Other Value-added Services Framework Agreement are as follows:

  Date: 24 March 2021

  Parties: (i) the Company; and

  • (ii) Poly Developments and Holdings

  Term:

  From the date on which the 2021-2023 Other Value-added Services Framework Agreement is approved by the Independent Shareholders at the General Meeting to 31 December 2023

  Subject matter:

  The Group will provide other value-added services, i.e. (i) LR14.60(1) other value-added services to non-property owners, such as consultancy, inspection, delivery and commercial operation services; and (ii) community value-added services, to Poly Developments and Holdings Group.

• (b) Pricing policy

  The service fees to be charged for other value-added services will be determined by taking into account the prevailing market rate for similar services in the open market and the historical charging rates after negotiations on arm's length. The provision of other value-added services shall be on normal commercial terms.

  Based on the principles under the framework agreement of the connected transactions, the relevant subsidiaries and associates of the parties will enter into other value-added services agreements which shall set out specific terms and conditions. The Group will review the relevant transaction data and terms (including comparing with similar agreements entered into between the Group and Independent Third Parties) to ensure that the provision of other value-added services shall be at prices no more favourable than those provided to customers who are Independent Third Parties.

• (c) Historical transaction amounts

  The table below sets out the service fees and the approved annual caps for the other value-added services provided by the Group to Poly Developments and Holdings Group:

  2018	2019	2020
  (RMB million)	(RMB million)	(RMB million)
  Other value-added services
  - Historical service fees	119.3	177.0	399.5
  - Approved annual cap	-	179.2	215.0

• (d) Proposed annual caps and basis of determination

  LR14A.68(4)

• For the year ended 31 December

• The table below sets out the proposed annual caps of the service fees for the other value-added services to be provided by the Group to Poly Developments and Holdings Group under the 2021-2023 Other Value-added Services Framework Agreement:

For the year ending 31 December 2021 2022 2023 (RMB million) (RMB million) (RMB million)

Other value-added services - Proposed annual cap

550.9(1)

716.1

931.0

Note:

(1) The original annual cap for the year ending 31 December 2021 was RMB258.0 million.

The above annual caps are determined after consideration of the followings:

(i) the historical transaction amounts for other value-added services the Group provided to Poly Developments and Holdings Group;

• (ii) the other value-added services agreements already entered into;

• (iii) the increase in historical transaction amounts for the year ended 31 December 2020, which has increased by over 125.7% as compared to that of the year ended 31 December 2019 as a result of the outbreak of COVID-19;

• (iv) the existing on-going projects with Poly Developments and Holdings Group to the knowledge of the Group, potential demand arising from anti-pandemic concerns and the expected growth in the other value-added services to be provided to Poly Developments and Holdings Group by the Group in 2021; and

(v) the expected annual growth of 30.0% of the other value-added service fees to be received by the Group from Poly Developments and Holdings Group for the years ending 31 December 2021 to 2023, which has already taken into account the following factors: (1) the estimated new area under construction and/or saleable area by Poly Developments and Holdings Group; (2) a CAGR of approximately 25.4% in the area under construction of Poly Developments and Holdings Group from 30 June 2018 to 30 June 2020; (3) the fact that the Group will deepen its understanding of the needs of the projects and further develop the types and contents of services that revolve around Poly Developments and Holdings Group in the areas of property development, delivery and sales from its existing scope of inspective services so as to create more opportunities for growth; and (4) the expected annual increase in the fees of the Group's other value-added services with reference to the historical fees charged by the Group and the expected increase in the relevant cost and market price for such services, and taking into account, amongst others, the increase in the labour cost for the relevant services in the forthcoming years.

• 4. REASONS FOR AND BENEFITS OF THE TRANSACTIONS

  LR14.58(8)

  Poly Developments and Holdings Group, Poly Southern (and its subsidiaries), Guangdong Poly Auction (and its subsidiaries) and Poly Changda Overseas (and its subsidiaries) have maintained long-term and stable cooperative relationships with the Group. In particular, providing them with property management services, pre-delivery services and other value-added services brings a stable source of income to the Group. In addition, Poly Developments and Holdings Group has been providing high quality leased properties as well as hardware procurement and maintenance services to the Group. Entering into the 2021-2023 Framework Agreements will provide ample support to the Group in furtherance of its "Comprehensive Property" strategy, capitalising on its advantages brought forth by its systems and resources and tapping into the strengths of the demand and business potential for the integration of property management services, value-added services to non-property owners and community value-added services, and hence contribute revenue and profit to the Group.

• 5. OPINION OF THE BOARD

  In light of the above reasons and benefits, on the basis that the transactions contemplated LR14A.68(3) under the 2021-2023 Framework Agreements are conducted in the ordinary and usual course of business of the Company and on normal commercial terms or better, the Board (including the independent non-executive Directors) considers that the terms of the 2021-2023 Framework Agreements are 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.

None of the Directors has any material interest in the transactions contemplated under the 2021-2023 Framework Agreements. Taking into account that Mr. Huang Hai is the secretary of the board and office of the board of directors of Poly Developments and Holdings, Mr. Liu Ping is a director and the general manager of Poly Developments and Holdings, and Mr. Hu Zaixin is the deputy secretary of the committee of the Communist Party of China of Poly Developments and Holdings, they have abstained from voting on the Board resolution approving the 2021-2023 Framework Agreements.

LR14A.68(8)

6. INTERNAL CONTROL MEASURES FOR THE CONTINUING CONNECTED TRANSACTIONS

The Company has adopted relevant internal policies and measures to ensure that the continuing connected transactions of the Group are conducted in accordance with the relevant framework agreements. Further, the Directors consider the fact that the transactions under the 2019 Framework Agreements exceeded the original annual cap for 2020 was an isolated event. In order to prevent the recurrence of any similar incidents in the future, the Company has taken necessary and additional measures to strengthen the Group's internal control measures on continuing connected transactions, such as reporting and filing system. The policies and measures adopted by the Company include:

(i) Transaction data is provided periodically (as one of the items in the management accounts) to the management of the Company for reviewing and monitoring the continuing connected transactions of the Group;

• (ii) The pricing of each transaction under the framework agreements is examined periodically, including reviewing the transaction records about the Company's provision of similar services to and procurement of similar services from (as the case may be) Independent Third Parties, and ensure that the continuing connected transactions under the relevant framework agreements are conducted in accordance with their pricing policies and that the prices obtained from or offered to the Group are no less favourable than those offered to or obtained from other Independent Third Parties for the same type of services or products;

• (iii) The finance and compliance departments of the Company will hold regular meetings to discuss issues found in transactions under the relevant framework agreements and the solutions. Independent non-executive Directors and the auditor of the Company will also conduct annual reviews on the framework agreements and the relevant annual caps and provide confirmation in the annual reports of the Company;

• (iv) While reviewing the total transaction amounts of the continuing connected transactions, the Company will verify the estimated transaction amounts of the continuing connected transactions with the finance department. If the actual transaction amount reaches a certain percentage of the proposed annual cap of the relevant continuing connected transaction at any time, advice shall be sought from the audit committee of the Company and the Board on appropriate measures, including but not limited to revising the relevant proposed annual cap (if necessary) in accordance with the Listing Rules, in order to avoid exceeding the approved annual cap of the continuing connected transaction;

• (v) The data collection and cross-checking process within the Group is accelerated to ensure compliance with all necessary requirements under the Listing Rules, including that before updating the existing business and/or entering into a new form of business with any connected person, the relevant business operation department shall first report to the finance department and compliance department, and the senior management shall assess whether the scope of the existing continuing connected transactions and the relevant proposed annual caps should be revised and/or whether new framework agreements should be entered into for such new transactions;

• (vi) Additional trainings on continuing connected transactions are provided to all management personnel and relevant employees to enhance their familiarity with the Listing Rules and their awareness of compliance with the relevant internal control procedures in connection with the continuing connected transactions of the Group, so that the Company may comply with the Listing Rules in a timely manner; and

• (vii) If it is necessary to adjust the annual caps for business development needs or other reasons, arrangements will be made in advance and the relevant requirements of the Listing Rules will be strictly complied with.

The Board is of the view that the above methods and procedures can ensure that the pricing and other contractual terms of the continuing connected transactions of the Group are on normal commercial terms, fair and reasonable and in the interests of the Company and its Shareholders, and that the continuing connected transactions are conducted as agreed in the relevant framework agreements and in compliance with the requirements under Chapter 14A of the Listing Rules.

7. LISTING RULES IMPLICATIONS

As at the date of this announcement, Poly Developments and Holdings is interested LR14.58(3)in an aggregate of 72.289% of the total issued share capital of the Company and is a controlling shareholder of the Company, thus is a connected person of the Company under the Listing Rules. Poly Southern is one of the controlling shareholders of the Company, while both Guangdong Poly Auction and Poly Changda Overseas are subsidiaries of China Poly Group, a controlling shareholder of the Company, therefore, Poly Southern, Guangdong Poly Auction and Poly Changda Overseas are connected persons of the Company under the Listing Rules. As such, the transactions contemplated under the 2021-2023 Framework Agreements will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. The Directors are of the view that the continuing connected transactions contemplated under the 2021-2023 Poly Developments and Holdings Property Management Services Framework Agreement and the 2021-2023 Other Property Management Services Framework Agreement are of the same nature and are entered into between the Group and parties who are connected or associated with China Poly Group, and should therefore be aggregated pursuant to Rules 14A.81 and 14A.82(1) of the Listing Rules.

LR14A.68(1A)

As the highest applicable percentage ratio in respect of the 2021-2023 Partially-exempt LR14A.68(9) Framework Agreements is more than 0.1% but less than 5%, such transactions are only subject to the reporting, announcement and annual review requirements but is exempt from the Independent Shareholders' approval requirement pursuant to Chapter 14A of the Listing Rules. As the highest applicable percentage ratio in respect of the 2021-2023 Non-exempt Framework Agreements exceeds 5%, such transactions are subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

8. INFORMATION ON THE PARTIES

LR14.58(2)

LR14A.68(1A)

Information of the Group

The Company is a joint stock company with limited liability established in the PRC on 26 June 1996. The Group is a leading comprehensive property management service provider in the PRC with extensive property management scale and state-owned background, and is mainly engaged in providing property management services, value-added services to non-property owners and community value-added services.

Information of Poly Developments and Holdings

Poly Developments and Holdings, whose shares are listed on the main board of Shanghai Stock Exchange, is a joint stock company established in the PRC with limited liability on 14 September 1992. Poly Developments and Holdings focuses on the business of real estate development and operation, and builds an ecological development platform of real estate, which is driven by the real estate investment and development business as its core, with integrated services and real estate finance business as two supplementary businesses.

Information of Poly Southern

Poly Southern is a company established in the PRC with limited liability on 9 July 1992. It is principally engaged in real estate development and operation, property management, real estate agency services, investment and management of its own funds, corporate management services, wholesale and retail trading (except for state-controlled or franchised commodities) through its holding companies.

Information of Guangdong Poly Auction

Guangdong Poly Auction is a company established in the PRC with limited liability on 20 November 2003. It is principally engaged in auction business activities.

Information of Poly Changda Overseas

Poly Changda Overseas is a company established in the PRC with limited liability on 23 March 2010. It is principally engaged in contracting highway engineering and road maintenance work; investing in engineering projects; manufacturing, processing, and installing machinery and metal components; importing and exporting goods, technologies and providing the relevant consulting and technical services; and selling construction materials, metal and electrical equipment.

• 9. SHAREHOLDERS' APPROVAL

  The Independent Board Committee, comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of (i) the Ratification Matter and (ii) the transactions under the 2021-2023 Non-exempt Framework Agreements, and its advice and recommendation will be set out in the circular to be despatched by the Company. An Independent Financial Adviser will be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

  A circular containing, among other things, (i) details of the Ratification Matter and LR14A.68(11) of the 2021-2023 Non-exempt Framework Agreements; (ii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements; (iii) a letter of recommendation from the Independent Board Committee in relation to the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements; and (iv) a notice of the General Meeting, will be dispatched to the Shareholders. The Company expects to dispatch the circular to the Shareholders on

• or before 19 April 2021.

• 10. DEFINITIONS

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

"2019 Annual Report"	the annual report of the Company for the year ended 31
December 2019
"2019 Framework	the respective connected transaction framework
Agreements"	agreements dated 29 November 2019 entered into
between the Company and each of Poly Developments
and Holdings, Poly Southern, Guangdong Poly Auction
and Poly Changda Overseas
"2021-2023 Framework	the 2021-2023 Partially-exempt Framework
Agreements"	Agreements and the 2021-2023 Non-exempt
Framework Agreements
"2021-2023 Hardware	the hardware procurement and maintenance services
Procurement and	framework agreement dated 24 March 2021 entered
Maintenance Services	into between the Company and Poly Developments and
Framework Agreement"	Holdings
"2021-2023 Non-exempt	the 2021-2023 Property Management Services
Framework Agreements"	Framework Agreements, the 2021-2023 Pre-delivery
Services Framework Agreement and the 2021-2023
Other Value-added Services Framework Agreement
- 21 -

"2021-2023 Other Property	the respective property management services
Management Services	framework agreements dated 24 March 2021 entered
Framework Agreement"	into between the Company and each of Poly Southern,
Guangdong Poly Auction and Poly Changda Overseas
"2021-2023 Other Value-	the other value-added services framework agreement
added Services Framework	dated 24 March 2021 entered into between the
Agreement"	Company and Poly Developments and Holdings
"2021-2023 Partially-exempt	the 2021-2023 Property Leasing Framework Agreement
Framework Agreements"	and the 2021-2023 Hardware Procurement and
Maintenance Services Framework Agreement
"2021-2023 Poly	the property management services framework
Developments and Holdings	agreement dated 24 March 2021 entered into between
Property Management	the Company and Poly Developments and Holdings
Services Framework
Agreement"
"2021-2023 Pre-delivery	the pre-delivery services framework agreement dated
Services Framework	24 March 2021 entered into between the Company and
Agreement"	Poly Developments and Holdings
"2021-2023 Property Leasing	the property leasing framework agreement dated 24
Framework Agreement"	March 2021 entered into between the Company and
Poly Developments and Holdings
"2021-2023 Property	the 2021-2023 Poly Developments and Holdings
Management Services	Property Management Services Framework Agreement
Framework Agreement(s)"	and the 2021-2023 Other Property Management
Services Framework Agreement
"Board"	the board of Directors of the Company
"CAGR"	compound annual growth rate
"China Poly Group"	China Poly Group Corporation Limited (ʕ਷ڭлණྠ
Ϟࠢʮ̡), a wholly state-owned company established
in the PRC on 9 February 1993 and wholly-owned by
the State-owned Assets Supervision and Administration
Commission of the State Council, and a controlling
shareholder of the Company
"Company"	Poly Property Services Co., Ltd., a joint stock company
incorporated in the PRC with limited liability, the H
Shares of which are listed on the Main Board of the
Stock Exchange
- 22 -

"Director(s)"

the director(s) of the Company

"Domestic Share(s)"

ordinary share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and paid up in RMB

"General Meeting"

a general meeting of the Company to be held to consider and, if thought fit, approve the proposed annual caps under the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements

"Group"

the Company and its subsidiaries

"H Shares"

overseas listed foreign shares in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and traded in Hong Kong dollars and listed on the Main Board of the Stock Exchange

"Hong Kong"

the Hong Kong Special Administrative Region of the PRC

"Independent Board

Committee"

the independent committee of the Board, comprising all three independent non-executive Directors, established to advise the Independent Shareholders in respect of the Ratification Matter and the continuing connected transactions under the 2021-2023 Framework Agreements

"Independent Financial

Adviser"

the independent financial adviser to be appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Ratification Matter and the continuing connected transactions under the 2021-2023 Non-exempt Framework Agreements

"Independent Shareholders"

Shareholders who do not have a material interest in the Ratification Matter and the 2021-2023 Non-exempt Framework Agreements

"Independent Third

Party(ies)"

an individual or a company who, as far as the Directors are aware after having made all reasonable enquiries, is not a connected person of the Company

"Listing Date"

19 December 2019, being the date on which the H Shares were first listed, and permitted to deal in, on the Main Board of the Stock Exchange

"Listing Rules"

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

"Guangdong Poly Auction"

Guangdong Poly Auction Co., Ltd. (ᄿ؇ڭлשርϞࠢ ʮ̡), a company established in the PRC with limited liability on 20 November 2003 and a subsidiary of China Poly Group

"Poly Changda Overseas"

Poly Changda Overseas Engineering Co., Ltd. (ڭл ڗɽऎ̮ʈ೻Ϟࠢʮ̡), a company established in the PRC with limited liability on 23 March 2010 and a subsidiary of China Poly Group

"Poly Developments and

Holdings"

Poly Developments and Holdings Group Co., Ltd. (ڭ л೯࢝છٰණྠٰ΅Ϟࠢʮ̡), a joint stock company incorporated in the PRC with limited liability, whose shares are listed on the main board of the Shanghai Stock Exchange (stock code: 600048), and a controlling shareholder of the Company

"Poly Developments and

Holdings Group"

Poly Developments and Holdings and its associates (excluding the Group)

"Poly Southern"

Poly Southern Group Co., Ltd.* (ڭлی˙ණྠϞࠢʮ ̡), formerly known as Poly Southern Co., Ltd.* (ڭл ی˙ᐼʮ̡), a limited liability company established in the PRC on 9 July 1992, being a wholly-owned subsidiary of China Poly Group, and a controlling shareholder of the Company

"Prospectus"

the prospectus issued by the Company on 9 December 2019

"PRC"

the People's Republic of China, but for the purpose of this announcement and for geographical reference only and except where the context requires, references in this announcement to the "PRC" do not include Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

"Ratification Matter"

Ratification of the original annual cap based on the actual transaction amounts arising from other value-added services under the 2019 Framework Agreements for the year ended 31 December 2020

"RMB"

Renminbi, the lawful currency of the PRC

"Share(s)"	ordinary shares in the share capital of the Company
with a nominal value of RMB1.00 each, comprising the
Domestic Shares and the H Shares
"Shareholder(s)"	the holder(s) of the Share(s)
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"%"	per cent

In this announcement, the terms "associate", "connected person", "connected transaction", "continuing connected transaction", "controlling shareholder", "subsidiary" and "applicable percentage ratio" shall have the meanings given to such terms in the Listing Rules, unless the context otherwise requires.

The English names of Chinese entities included in this announcement are unofficial translations of their Chinese names and are included for identification purposes only.

By order of the Board

POLY PROPERTY SERVICES CO., LTD.

Huang Hai

Chairman of the Board and non-executive Director

Guangzhou, PRC, 24 March 2021

As at the date of this announcement, the non-executive Directors of the Company are Mr. LR2.14 Huang Hai, Mr. Liu Ping and Mr. Hu Zaixin; the executive Director of the Company is Ms.

Wu Lanyu; and the independent non-executive Directors of the Company are Mr. Wang Xiaojun, Ms. Tan Yan and Mr. Wang Peng.

*

For identification purpose only