Joy City Property : CONNECTED TRANSACTION EQUITY TRANSFER OF 8.36% EQUITY INTEREST IN THE TARGET COMPANY

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JOY CITY PROPERTY LIMITED

大悅城地產有限公司

(incorporated in Bermuda with limited liability)

(Stock code: 207)

CONNECTED TRANSACTION

EQUITY TRANSFER OF 8.36% EQUITY INTEREST IN

THE TARGET COMPANY

THE EQUITY TRANSFER

The Board is pleased to announce that on 4 August 2020, COFCO (BVI) No.97, an indirect wholly- owned subsidiary of the Company, entered into the Equity Transfer Agreement with COFCO Corporation, pursuant to which COFCO (BVI) No.97 has agreed to acquire, and COFCO Corporation has agreed to sell, 8.36% equity interest in the Target Company at the Consideration of RMB83,699,800. Immediately upon Completion, the Target Company will become wholly owned by COFCO (BVI) No.97 and will become an indirect wholly-owned subsidiary of the Company. The Target Company is principally engaged in the investment in the Waldorf Astoria Beijing Hotel in Beijing, the PRC.

LISTING RULES IMPLICATIONS

As at the date of this announcement, COFCO Corporation is an indirect controlling shareholder of the Company and thus a connected person of the Company under the Listing Rules. As such, the Equity Transfer constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the relevant percentage ratios (as defined under the Listing Rules) in respect of the Equity Transfer exceed 0.1% but are all less than 5%, the Equity Transfer is subject to the reporting, announcement and annual review requirements but are exempt from the circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 4 August 2020, COFCO (BVI) No.97, an indirect wholly- owned subsidiary of the Company, entered into the Equity Transfer Agreement with COFCO Corporation, pursuant to which COFCO (BVI) No.97 has agreed to acquire, and COFCO Corporation has agreed to sell, 8.36% equity interest in the Target Company at the Consideration of RMB83,699,800.

The principal terms of the Equity Transfer Agreement are set out below.

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THE EQUITY TRANSFER AGREEMENT

INFORMATION ON THE TARGET COMPANY

The Target Company is a company established in the PRC with limited liability and as at the date of this announcement, the Target Company was owned as to 91.64% and 8.36% by COFCO (BVI) No.97 and COFCO Corporation, respectively. Immediately upon Completion, the Target Company will be wholly owned by COFCO (BVI) No.97 and will become an indirect wholly owned subsidiary of the Company. The Target Company owns the Waldorf Astoria Beijing Hotel located in the Wangfujing District in Beijing, PRC, which is a luxury hotel with 176 hotel rooms. The Target Company also holds the plot of land with a total site area of approximately 6,149 sq.m. on which the Waldorf Astoria Beijing Hotel is

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situated and the hotel has a total gross floor area of approximately 42,600 sq.m.. The initial investment costs in the Target Company for COFCO Corporation was approximately RMB63,847,849.

Set out below is the audited financial information of the Target Company prepared in accordance with the PRC accounting standards:

The audited total assets and net liabilities of the Target Company as at 29 February 2020 was approximately RMB769,515,000 and approximately RMB153,360,000, respectively.

REASONS FOR AND BENEFITS OF THE EQUITY TRANSFER

The Company considered that the reasons for and benefits of the Equity Transfer are as follows:

1. the Group is one of the leading property developers principally engaged in development, operation, sales, leasing and management of mixed-use complexes and commercial properties in the PRC. Through the Equity Transfer, the Group will own the entire interest in the Target Company principally engaged in the investment in the Waldorf Astoria Beijing Hotel, a luxury hotel with a reputable brand name in Beijing, PRC, which is consistent with the Group's development strategy and investments in hotels;
2. the Waldorf Astoria Beijing Hotel is an established luxury hotel that recorded occupancy rates of over 70% for 2018 and 2019, respectively, and an average income per room of approximately RMB2,154 and approximately RMB2,200 for 2018 and 2019, respectively, which outperformed nearby hotels of the same tier. Further, the Waldorf Astoria Beijing Hotel generated a solid return with an increasing trend in 2018 and 2019 and the Target Company recorded (i) an increase in revenue to approximately RMB154,575,000 for the year ended 31 December 2019 as compared with approximately RMB152,591,000 for the year ended 31 December 2018; (ii) an increase in EBITDA to approximately RMB39,386,000 for the year ended 31 December 2019 as compared with approximately RMB33,103,000 for the year ended 31 December 2018; and (iii) a decrease in net loss after taxation to approximately RMB47,463,000 for the year ended 31 December 2019 as compared with approximately RMB58,337,000 for the year ended 31 December 2018;
3. the Waldorf Astoria Beijing Hotel is located on a plot of land in the prime location of the Wangfujing District in Beijing, PRC, which is owned by the Target Company. The appraised value of the net assets of the Target Company based on the asset based approach was approximately RMB1,001,193,500 as at 29 February 2020, and the relevant proportion of 8.36% thereof amounted to approximately RMB83,699,800; and

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1. the current COVID-19 pandemic environment provided an optimal timing and stronger bargaining power for the negotiations and implementation of the Equity Transfer in the interests of the Company and the Shareholders as a whole.

Therefore, through the Equity Transfer, the Group can consolidate its interests in the Target Company and thus enjoy the full potential of the steadily improving returns from the Target Company and the capital gains for the Target Company.

Based on the reasons above, the Directors consider that the terms of the Equity Transfer Agreement and the transactions contemplated thereunder (including the Consideration) are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

None of the Directors has any material interest in the Equity Transfer Agreement and the transactions contemplated thereunder, and none of the Directors has abstained from voting on the board resolutions approving the Equity Transfer Agreement and the transactions contemplated thereunder.

INFORMATION OF THE PARTIES

The Company and the Group

The Company is an investment holding company incorporated in Bermuda. The Group is principally engaged in development, operation, sales, leasing and management of mixed-use complexes and commercial properties in the PRC. The Group develops, holds and operates various property projects in the PRC and Hong Kong.

COFCO (BVI) No.97

COFCO (BVI) No.97 is a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company. COFCO (BVI) No.97 is principally engaged in investment holding in the PRC.

COFCO Corporation

COFCO Corporation is a state-owned enterprise incorporated in the PRC in September 1952 under the purview of the State-owned Assets Supervision and Administration Commission of the State Council (國 務院國有資產監督管理委員會). COFCO Corporation is the holding company of Grandjoy Holdings Group, which is the direct controlling shareholder of the Company, and thus COFCO Corporation is an indirect controlling shareholder and a connected person of the Company.

LISTING RULES IMPLICATIONS

As at the date of this announcement, COFCO Corporation is an indirect controlling shareholder of the Company and thus a connected person of the Company under the Listing Rules. As such, the Equity Transfer constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the relevant percentage ratios (as defined under the Listing Rules) in respect of the Equity Transfer exceed 0.1% but are all less than 5%, the Equity Transfer is subject to the reporting, announcement and annual review requirements but are exempt from the circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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

* English or Chinese translation, as the case may be, is for identification only.

By order of the Board

JOY CITY PROPERTY LIMITED

ZHOU Zheng

Chairman

The PRC, 4 August 2020

As at the date of this announcement, the Board comprises Mr. ZHOU Zheng and Mr. CAO Ronggen as executive Directors; Mr. ZHU Laibin and Mr. JIANG Yong as non-executive Directors; and Mr. LAU Hon Chuen, Ambrose, GBS, JP, Mr. LAM Kin Ming, Lawrence and Mr. CHAN Fan Shing as independent non-executive Directors.

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