China Overseas Grand Oceans : CONTINUING CONNECTED TRANSACTIONS WITH HUA YI DESIGN CONSULTANTS LIMITED

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.

(incorporated in Hong Kong with limited liability)

(Stock Code: 81)

CONTINUING CONNECTED TRANSACTIONS

WITH

HUA YI DESIGN CONSULTANTS LIMITED

On 27 February 2020, the Company and Huayi Design (a subsidiary of COLI) entered into the Framework Agreement for a term of period commencing from 1 March 2020 and ending on 31 December 2022, whereby the Group may, subject to the Caps, engage the Huayi Design Group to provide Services to the Group's property development projects in PRC upon successful tender awarded to the Huayi Design Group.

As at the date of this announcement, COLI is the controlling shareholder of the Company by virtue of being interested in approximately 38.32% of the issued share capital of the Company. Accordingly, Huayi Design, being a subsidiary of COLI, is a connected person of the Company. The transactions contemplated under the Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios as defined under the Listing Rules calculated for the Company in respect of the Caps are 0.1% or more but less than 5%, the Continuing Connected Transactions are only subject to reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval under Chapter 14A of the Listing Rules.

The Directors (including the independent non-executiveDirectors) are of the view that as far as the Shareholders are concerned, the Framework Agreement (together with the Caps) has been entered into in the ordinary course of business of the Company, and on normal commercial terms after arm's length negotiations between the parties, and the terms of the Framework Agreement and the Continuing Connected Transactions (together with the Caps) are fair and reasonable and in the best interests of the Company and its Shareholders as a whole.

CONTINUING CONNECTED TRANSACTIONS

On 27 February 2020, the Company and Huayi Design entered into the Framework Agreement for a term of period commencing from 1 March 2020 and ending on 31 December 2022.

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FRAMEWORK AGREEMENT

Date

27 February 2020

Parties

1. The Company; and
2. Huayi Design

Subject Matter

The parties agreed that, for a term of period commencing from 1 March 2020 and ending on 31 December 2022:

1. the Huayi Design Group may participate in competitive tenders for the provision of Services to the Group's property development projects in PRC in accordance with the tendering procedures of the Group which may be varied, amended, replaced or supplemented from time to time and on the same and normal terms as offered to other independent third party service providers;
2. if any contract is granted in favour of the Huayi Design Group as a result of the above tenders, the Group may engage the Huayi Design Group to provide Services to the Group's property development projects in PRC based on the terms of the successful tenders provided that the maximum total contract sum that may be awarded by the Group to the Huayi Design Group shall not exceed the corresponding Caps as set out below:

For the period between	For the year ending	For the year ending
1 March 2020 and	31 December 2021	31 December 2022
31 December 2020
RMB30 million	RMB40 million	RMB50 million

1. the fees payable for the Services by the Group to the Huayi Design Group will be settled pursuant to the payment terms set out in the Service contracts.

Pricing Basis

As a general principle, the prices and terms of the contracts shall be determined in the ordinary course of business, on normal commercial terms, negotiated on an arm's length basis and at prices and on terms no more favourable than those awarded to the independent third party service providers of the Group.

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The Group will normally invite service providers to participate in competitive tenders for the provision of Services to the Group's property development projects in PRC in accordance with its tendering procedures.

In conducting the Group's invitations to tender, review of tenders and tender selection, the participation of the members of the Huayi Design Group in the tender process shall not in any way affect the Group's tendering procedures, contract terms and selection principles. The members of the Huayi Design Group shall be treated in the same way as independent third parties.

The price and terms of the tenders awarded by the Group to the Huayi Design Group are subject to the standard and systematic tender procedures maintained by the Group, which apply to tenders submitted by both connected persons and independent third parties to ensure that the price and terms of the tender awarded by the Group to the Huayi Design Group are no more favourable than those awarded to independent third parties.

1. Invitations to Tender
2. 1. The Group has established its own list of approved service providers (which is subject to periodic review and update by its management). All service providers invited to submit tenders for the Group's projects are selected from such list. Service providers in the list include those service providers with or without prior working history with the Group. Service providers with working history with the Group will be subject to suitability assessment following completion of their works in the Group's project. A service provider can be retained in the list if the result of such assessment is satisfactory to the Group. The Group will remove a service provider from the list if it fails to meet the minimum criteria for retention. If a service provider has no prior working history with the Group, the service provider will be subject to qualification evaluation and review to ascertain if it is suitable for including the service provider in the list.
   2. The number of tenders to be invited: for every tender for provision of Services for the Group's projects in PRC, not less than three tenders will be invited.
   3. Selection of service providers to be invited to tender: the suitability of a service provider is assessed with reference to selection criteria including but not limited to the service provider's qualification grade, technical capability, cooperation record, project management ability, quality of design and business management capability. Depending on the estimated value of the relevant Service contract and the compatibility of the project and the supplier, the person in charge and line managers of the regional office shall conduct the vetting process to ascertain certain service providers to be invited to tender, following which the letter of invitation to tender will be issued.
3. Tendering and Selection of Bids
4. 1. Tendering: the tender submissions with price quotations shall be sealed and submitted in a manner as prescribed by the Group. The Group will collect all tender submissions submitted and make registration.

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1. Opening of tenders: tenders submitted will be opened in the presence of an officer from the financial department of the regional office. The supervising officer will execute the tender-opening documents which will be confirmed and signed by all parties present at the opening. In general, there will be three departments participating in the tender-opening jointly.
2. Selection of tenders: based on the Group's established system of tendering, the winning bid will usually be the one conforming to the technical requirements with a reasonable and minimum price offered. The selection of tender is determined collectively by the decision-making body in a meeting where contents of the proposed tender, the service provider's capability and risk of default are given full consideration. The relevant letter of award will be issued once the final decision is made in the meeting of the decision-making body based on the final tender amount.

Tendering Procedure

Preparation of tender invitation

documents

Review of tender invitation documents and

ascertaining service providers to be invited to tender

All service providers invited to tender

are selected from the list of Invitation to tender approved service providers

Submission of tenders with price quotation

Opening of tenders

Preparation of evaluation report

Selection of tender

Issuance of letter of award

In the event that the expected contract amount involved is relatively small or no tenderer is available, and it will not be appropriate for the Group to go through the above tendering procedures, the Group will seek quotations from at least three different service providers, among which the lowest quotation will be selected on the condition that the selected service provider also satisfies the selection criteria as described above. If the price and terms offered by a member of the Huayi Group are equal to or better than those offered by independent third party service providers, such member of the Group may probably accept the quotation from such member of the Huayi Group.

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Calculation of the Caps

The Caps are calculated with reference to the following factors:

1. the total contract sum of Services of the Group's new property development projects in PRC in each of the three preceding financial years ended 31 December 2019 of approximately RMB259.91 million, RMB347.10 million and RMB646.83 million respectively;
2. the total consideration of RMB5,314,140 under various de minimis transactions entered into between the Group and the Huayi Design Group in relation to the provision of Services to the Group in PRC during the period from 7 August 2019 to 13 October 2019;
3. the estimated total contract sum of Services of the Group's potential new property development projects in PRC for the period commencing from 1 March 2020 and ending on 31 December 2022, with reference to the Group's future growth and expansion in its land reserves in PRC for such period;
4. the estimated total contract sum of the Services in PRC for which the Group will invite the Huayi Design Group to participate in competitive tenders from time to time; and
5. the prevailing market prices of Service fees in the three-year period commencing from 2020 to 2022 with reference to the inflation rate of 2.9% in PRC in 2019.

REASONS FOR ENTERING INTO THE FRAMEWORK AGREEMENT

The Group is principally engaged in business of property investment and development, property leasing and investment holding in PRC.

CSCEC is the ultimate holding company of COLI by virtue of being interested in approximately 55.99% of the issued share capital of COLI. The CSCEC Group is a conglomerate principally engaged in building construction, international contracting, real estate development and investment, infrastructure construction and investment and design and prospecting; whereas the COLI Group is principally engaged in property development and investment, and treasury operations.

The Huayi Design Group is mainly engaged in public and civil building engineering design, urban design, residential planning, interior design, preliminary consulting, architectural planning and research.

Huayi Design possesses extensive experiences in construction design. The entering into of the Framework Agreement provides the Company with the option to engage the Huayi Design Group (upon successful tender awarded to the Huayi Design Group) to provide Services to the Group's property development projects in PRC and the quality of the construction design could also be assured.

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The Directors (including the independent non-executive Directors) are of the view that as far as the Shareholders are concerned, the Framework Agreement (together with the Caps) has been entered into in the ordinary course of business of the Company, and on normal commercial terms after arm's length negotiations between the parties, and the terms of the Framework Agreement and the Continuing Connected Transactions (together with the Caps) are fair and reasonable and in the best interests of the Company and its Shareholders as a whole.

GENERAL

As at the date of this announcement, COLI is the controlling shareholder of the Company by virtue of being interested in approximately 38.32% of the issued share capital of the Company. Accordingly, Huayi Design, being a subsidiary of COLI, is a connected person of the Company. The transactions contemplated under the Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios as defined under the Listing Rules calculated for the Company in respect of the Caps are 0.1% or more but less than 5%, the Continuing Connected Transactions are only subject to reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval under Chapter 14A of the Listing Rules.

The Shareholders should note that the Caps represent the best estimates by the Directors of the amount of the relevant transactions based on the information currently available. The Caps bear no direct relationships to, nor should be taken to have any direct bearings to, the Group's financial or potential financial performance. The Group may or may not retain the Huayi Design Group to engage in Services up to the level of the Caps, if at all, as its engagement is subject to tender procedures which are open to other independent third party service providers.

None of the Directors is regarded as having a material interest in the Framework Agreement and the transactions contemplated thereunder. Mr. Yan Jianguo, who is a Non-ExecutiveDirector of the Company, a director of Huayi Design, the chairman and executive director of COLI and the chairman and president of COHL, has voluntarily abstained from voting on the board resolutions approving the Framework Agreement (together with the Caps) and the transactions contemplated thereunder.

DEFINITIONS

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

"Cap(s)"	the maximum total contract sum of the contracts in respect of
	the Services that may be awarded by the Group to the Huayi
	Design Group for each year/period under the Framework
	Agreement;
"COHL"	China Overseas Holdings Limited, a company incorporated in
	Hong Kong with limited liability, and the controlling
	shareholder of each of COLI and the Company;

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"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), being a controlling shareholder of the Company;
"COLI Group"	COLI and its subsidiaries (excluding subsidiary(ies) listed on
	any stock exchange) from time to time;
"Company"	China Overseas Grand Oceans Group 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: 81);
"connected person(s)",	each has the meaning ascribed to it in the Listing Rules;
"subsidiary(ies)" and
"controlling
shareholder"
"Continuing Connected	the transactions contemplated under the Framework Agreement,
Transactions"	as described under the section headed "Continuing Connected
	Transactions" in this announcement;
"CSCEC"	中 國 建 築 集 團 有 限 公 司 (China State Construction
	Engineering Corporation), a state-owned corporation organised
	and existing under the laws of PRC, and the ultimate holding
	company of COLI;
"CSCEC Group"	CSCEC and its subsidiaries (excluding subsidiary(ies) listed on
	any stock exchange) from time to time;
"Director(s)"	the director(s) of the Company;
"Framework Agreement"	the framework agreement entered into between the Company
	and Huayi Design on 27 February 2020 in respect of the
	engagement of the Huayi Design Group for the provision of
	Services to the Group's property development projects in PRC;
"Group"	the Company and its subsidiaries from time to time;
"Hong Kong"	the Hong Kong Special Administrative Region of PRC;
"Huayi Design"	Hua Yi Design Consultants Limited, a company incorporated in
	Hong Kong with limited liability which is a subsidiary of COLI;

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"Huayi Design Group" Huayi Design and its subsidiaries from time to time;

"Listing Rules"The Rules Governing the Listing of Securities on the Stock Exchange;

"Macao"

the Macao Special Administrative Region of PRC;

"PRC"the People's Republic of China, but for the purpose of this announcement excluding Hong Kong, Macao and Taiwan;

"RMB"

Renminbi, the lawful currency of PRC;

"Services"scheme design, preliminary design and construction drawing design services in each construction stage (which include but not limited to the following: general plan design, architectural design, structural design, facilities design, pipe network design, interior design, civil air defense design, and other special items designs; coordinate and cooperate with other designers engaged by the Group for interior design, landscape design and other designs);

"Shareholder(s)"the shareholder(s) of the Company from time to time;

"Stock Exchange"The Stock Exchange of Hong Kong Limited; and

"%"

per cent.

By Order of the Board

CHINA OVERSEAS GRAND OCEANS

GROUP LIMITED

Zhuang Yong

Chairman and Executive Director

Hong Kong, 27 February 2020

As at the date of this announcement, the board of directors of the Company comprises eight Directors, of which three are executive directors, namely Mr. Zhuang Yong, Mr. Yang Lin and Mr. Paul Wang Man Kwan; two non- executive directors, namely Mr. Yan Jianguo and Mr. Billy Yung Kwok Kee, and three independent non-executive directors, namely Dr. Timpson Chung Shui Ming, Mr. Jeffrey Lam Kin Fung and Mr. Dantes Lo Yiu Ching.

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