THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Overseas Chinese Town (Asia) Holdings Limited (the “ Company ”), you should hand this circular together with the accompanying proxy form at once to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

VERY SUBSTANTIAL ACQUISITION AND

CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Capitalised terms used in this cover page shall bear the same meanings as those defined in the section headed “Definitions” in this circular.

A notice convening the EGM to be held at Victoria IV, Level 2, Four Seasons Hotel Hong Kong, 8 Finance Street, Central, Hong Kong on Wednesday, 19 June 2019 at 11:30 a.m. is set out on pages EGM-1 to EGM-3 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you plan to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

24 May 2019

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from Halcyon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix I – Financial Information of the Group . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“Annual Cap(s)”

the maximum transaction amounts in aggregate for all the Financial Services contemplated under all Implementation Agreements which are to be executed within the Effective Period

“associate(s)”
has the meaning ascribed to it under the Listing Rules
“Board”
the board of Directors
“Company”
Overseas Chinese Town (Asia) Holdings Limited (華僑城 (亞洲)控股有限公司), an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange
“connected person(s)”
has the meaning ascribed to it under the Listing Rules
“continuing connected transaction(s)”
has the meaning ascribed to it under the Listing Rules
“Controlling Shareholder(s)”
has the meaning ascribed to it under the Listing Rules
“Director(s)”
the director(s) of the Company
“Effective Period”

one year from the date of approval of the Finance Lease and Factoring Framework Agreements by Independent Shareholders at the EGM

“EGM”

the extraordinary general meeting of the Company to be convened for approving, among other things, the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder

“Finance Lease and Factoring Framework Agreements”

OCT Group Agreement and OCT Ltd. Agreement

“Financial Services”

OCT Financial Leasing’s facilitation of finance leases and/or factoring services to Lessees pursuant to Implementation Agreements

“Group”

the Company and its subsidiaries

– 1 –

DEFINITIONS

“Halcyon” or “Independent Financial Adviser”
“HK$”
“Hong Kong”
“Independent Board Committee”
“Independent Shareholders”
“Implementation Agreement(s)”
“Latest Practicable Date”
“Leased Asset(s)”
“Lessee(s)”
“Listing Rules”

Halcyon Capital Limited, a corporation licensed to carry out and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps

Hong Kong dollar(s), the lawful currency of Hong Kong
the Hong Kong Special Administrative Region of the People’s Republic of China
the independent committee of the Board, comprising the independent non-executive Directors, Mr. Lu Gong, Ms. Wong Wai Ling, and Mr. Lam Sing Kwong Simon, established for the purpose of making recommendations to the Independent Shareholders in respect of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps
the Shareholders other than Pacific Climax and its associates who are not required to abstain from voting on resolutions approving the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps
separate implementation agreement for each finance lease and/or factoring arrangement to be entered into between relevant member of Lessees
22 May 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
the equipment to be leased pursuant to Implementation Agreements
OCT Group and/or OCT Ltd. and/or their subsidiaries
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

– 2 –

DEFINITIONS

“PBOC”
“OCT (HK)”
“OCT Financial Leasing”
“OCT Group”
“OCT Group Agreement”
“OCT Ltd.”
“OCT Ltd. Agreement”
“Pacific Climax”
“PRC”
“RMB” or “Renminbi”
“SFO”
“Shareholder(s)”

the People’s Bank of China

Overseas Chinese Town (HK) Company Limited, a company incorporated in Hong Kong with limited liability and wholly owned by OCT Ltd.
OCT Financial Leasing Co., Ltd. (華僑城融資租賃有限公司), a company established in the PRC and is a direct wholly-owned subsidiary of the Company
Overseas Chinese Town Company Limited (華僑城集團有限公司), a PRC state-owned company established in the PRC, and the holding company of OCT Ltd.
the finance lease and factoring framework agreement entered into between OCT Financial Leasing and OCT Group on 7 May 2019
Shenzhen Overseas Chinese Town Company Limited (深圳華僑城股份有限公司), a company established in the PRC, the shares of which are listed on the Shenzhen Stock Exchange
the finance lease and factoring framework agreement entered into between OCT Financial Leasing and OCT Ltd. on 7 May 2019
Pacific Climax Limited, a company incorporated in the British Virgin Islands with limited liability, is a Controlling Shareholder and is wholly-owned by OCT (HK)
the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan
the lawful currency of the PRC
Securities and Futures Ordinance (Chapter 571) of the Laws of Hong Kong

the shareholder(s) of the Company

– 3 –

DEFINITIONS

“subsidiary(ies)” has the meaning ascribed to it under the Listing Rules “US$” United States Dollar, the lawful currency of the United States of America “%” percent

In this circular, amounts in HK$ and US$ are converted into RMB on the basis of: HK$1.00 to RMB0.8945 and US$1.00 to RMB6.937 as at 31 December 2016, HK$1.00 to RMB0.83591 and US$1.00 to RMB6.5342 as at 31 December 2017, HK$1.00 to RMB0.8762 and US$1.00 to RMB6.8632 as at 31 December 2018. The exchange rates have been used, where applicable, for the purposes of illustration only and do not constitute a representation that any amounts in HK$, US$ or RMB were or may have been exchanged at this or any other rates or at all.

In this circular, the English names of the PRC entities or enterprises are translations of their Chinese names. In the event of any inconsistency, the Chinese names shall prevail.

– 4 –

LETTER FROM THE BOARD

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

Executive Directors: Mr. He Haibin (Chairman) Ms. Xie Mei (Chief Executive Officer) Mr. Lin Kaihua

Non-executive Director:

Mr. Zhang Jing

Registered Office: Clifton House 75 Fort Street PO Box 1350 GT George Town Grand Cayman Cayman Islands

Independent Non-executive Directors:

Mr. Lu Gong Ms. Wong Wai Ling Professor Lam Sing Kwong Simon

Head office and principal place of business in Hong Kong: 59/F., Bank of China Tower 1 Garden Road Hong Kong

24 May 2019

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION AND

CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

INTRODUCTION

References are made to the announcement of the Company dated 7 May 2019 in relation to, among others, the entering into of the Finance Lease and Factoring Framework Agreements in respect of the provision of finance lease and factoring services to OCT Group and OCT Ltd., respectively.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is, among other things, (i) to provide you with further details of the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder, (ii) a letter from the Independent Board Committee containing its advice and recommendation to the Independent Shareholders in respect of the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder and the Annual Caps; and (iii) a letter from Halcyon to the Independent Board Committee containing its advice in respect of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps.

FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

The Board is pleased to announce that on 7 May 2019, OCT Financial Leasing, a direct wholly-owned subsidiary of the Company, entered into (1) the OCT Group Agreement with OCT Group and (2) the OCT Ltd. Agreement with OCT Ltd., pursuant to which OCT Financial Leasing agreed to provide finance lease and factoring services to OCT Group and OCT Ltd., respectively. Each of the Finance Lease and Factoring Framework Agreements shall be effective for one year from the date of approval of the Finance Lease and Factoring Framework Agreements by the Independent Shareholders at the EGM.

(1) OCT Group Agreement

Date:

7 May 2019

Parties:

(i) OCT Financial Leasing
(ii) OCT Group (including its direct and indirect subsidiaries save and except OCT Ltd. and its subsidiaries)

(2) OCT Ltd. Agreement

Date:

7 May 2019

Parties:

(i) OCT Financial Leasing
(ii) OCT Ltd. (including its direct and indirect subsidiaries)

– 6 –

LETTER FROM THE BOARD

The principal terms of the Finance Lease and Factoring Framework Agreements are set out below:

Duration:

Each of the Finance Lease and Factoring Framework Agreements shall be effective for one year upon the Independent Shareholders’ approval of the respective Finance Lease and Factoring Framework Agreements at the EGM.

The effectiveness of the Finance Lease and Factoring Framework Agreements are conditional upon the Independent Shareholders’ approval of the respective Finance Lease and Factoring Framework Agreements. If OCT Financial Leasing could no longer perform, or shall delay the performance of, the obligations under the Finance Lease and Factoring Framework Agreements due to requirements of the Stock Exchange or any applicable laws and regulations (including but not limited to the Companies Ordinance of Hong Kong and the Listing Rules), the parties agreed to amend the Finance Lease and Factoring Framework Agreement, or alter or cancel relevant transactions according to the relevant requirements. Lessees agreed not to claim any liabilities against OCT Financial Leasing and the Company.

Separate Contracts

With respect to each finance lease and/or factoring arrangement, OCT Financial Leasing and the relevant Lessee(s) will enter into separate Implementation Agreement and the transactions contemplated thereunder shall be conducted on normal commercial terms or better.

Contract Period

The contract periods of the Implementation Agreements with respect to finance lease service are expected to range from three to five years, depending on the type of Leased Assets involved, while the contract periods of the Implementation Agreements with respect to factoring service are expected to be less than three years, depending on the settlement schedule of the relevant accounts. In any event, the Implementation Agreements may have contract periods longer than the one-year contract period (i.e. the Effective Period) of the Finance Lease and Factoring Framework Agreements, Implementation Agreements duly executed shall remain to have full force and effect for their respective contract periods even if the Finance Lease and Factoring Framework Agreement is expired or terminated and is not renewed. For the avoidance of doubt, the Finance Lease and Factoring Framework Agreement will not be renewed simply for the purpose of covering the entire period of Financial Services.

– 7 –

LETTER FROM THE BOARD

It has to be stressed that although the contract periods of the Implementation Agreements are likely to be longer than the Effective Period of the Finance Lease and Factoring Framework Agreements, the Annual Caps to be approved by Independent Shareholders will act as a limit to the aggregated consideration transaction amounts contemplated under all Implementation Agreements that can only be signed within the Effective Period of the Finance Lease and Factoring Framework Agreement.

Please see the section below headed “ANNUAL CAPS AND BASIS OF DETERMINATION” for what the Annual Caps entail and the basis of determination.

Interests and Fees

The interest rate and relevant fees to be agreed in an Implementation Agreement for the Financial Services shall be on normal commercial terms or better and the interest rate determined thereby must not be lower than the benchmark lending rates published by PBOC at the time of entering into of the relevant Implementation Agreement. In particular, the effective interest rate of the relevant Implementation Agreement shall not be lower than (1) the secured lending rate for the borrowings granted to Lessee(s) by financial institutions; (2) if OCT Financial Leasing is unable to reasonably obtain the information required under (1) for reference, the capital costs incurred by OCT Financial Leasing at the time of entering into of the relevant Implementation Agreement, which may be adjusted according to the adjustment of the benchmark lending rates published by PBOC for the same period.

To determine the effective interest rate applicable to the Financial Services and ensure the interest rate so determined is fair and reasonable and on normal commercial terms, the Board and OCT Financial Leasing take into account the following, if applicable, factors: (1) the benchmark lending rates published by PBOC; (2) the capital cost of the Company, which shall be the source of fund of OCT Financial Leasing; (3) in the case of finance lease, the interest spreads disclosed by other finance lease companies listed in Stock Exchange within one year of the date of the respective Implementation Agreement(s); (4) in the case of factoring service, the financial position of the debtor and the settlement schedule; and (5) the commercial interest rate of a sizable loan comparable to a contemplated finance lease and/or factoring arrangement.

The Board emphasizes as at the Latest Practicable Date, (1) the PBOC benchmark term loan interest rates (ranging from 4.35% to 4.9% per annum); (2) the Group’s bank loans interest rates range from one month HIBOR + 0.90%, to 4.99% per annum); (3) the interest spread enjoyed by a number of finance lease companies or groups listed in the Stock Exchange is approximately 2% for the financial year 2018; (4) the Group has access to adequate loan capital from independent third parties and/or its direct/indirect controlling shareholders to support the Finance

– 8 –

LETTER FROM THE BOARD

Lease by lending the loan capital obtained to OCT Financial Leasing as shareholder loans; and (5) the Group is financially sound to provide corporate guarantee should OCT Financial Leasing take loans from independent third parties and/or its direct/indirect controlling shareholders.

Preliminary studies on and discussions with various Lessees reveal that their bank loans generally carry interest rates ranging from approximately 4% to 6% per annum. The Group estimated that the interest rate of finance lease together with the handling fee and guarantee deposit is approximately 7.5% per annum, being the internal rate of return (IRR) of OCT Financial Lease calculated based on the contemplated net cash inflows, which consist of the periodic rental/interest income and handling fees given the respective lease and a total initial investment costs. Such rate is above the benchmark lending rates published by PBOC and carries an interest spread more than 2%.

For an Implementation Agreement with respect to finance lease, an effective interest rate contemplated thereunder will be regarded as fair and reasonable largely if such rate is higher than the benchmark lending rates published by PBOC and if such rate is at least equal to or greater than the sum of the capital cost of the Company and an interest spread of approximately 2% to 3%. As to an Implementation Agreement with respect to factoring service, whether an effective interest rate is fair and reasonable depends on the financial position and settlement schedule of the factorized accounts and can only be determined on a case by case basis by the management of OCT Financial Leasing.

Guarantees

Pursuant to the Finance Lease and Factoring Framework Agreements, each of OCT Group and OCT Ltd. agreed to provide guarantees to OCT Financial Leasing in respect of contractual obligations under all the Implementation Agreements to be entered into between the respective Lessee and OCT Financial Leasing, including but not limited to all payments and/or compensation. Further, OCT Financial Leasing shall have the right to require Lessees to provide additional guarantees or collaterals for the finance lease and/or factoring arrangement based on the actual circumstances at the time when Lessees apply for a finance lease and/or a factoring. Only if an Implementation Agreement carries the abovementioned arrangements would it be regarded as fair and reasonable by OCT Financial Leasing.

– 9 –

LETTER FROM THE BOARD

Finance Lease

Lease methods

Under the direct leasing arrangement, OCT Financial Leasing will purchase the Leased Assets from the relevant supplier, and then OCT Financial Leasing will lease such Leased Assets to Lessees for an agreed term and will receive the rental fees and handling fees on a periodic basis.

Under sale and lease back arrangement, OCT Financial Leasing will purchase the Leased Assets from Lessees, and then OCT Financial Leasing will lease such Leased Assets back to Lessees for an agreed term and will receive the rental fees and handling fees on a periodic basis.

Leased Assets

The Leased Assets to be leased under the Finance Lease and Factoring Framework Agreements will be the equipment relating to the construction and/or operation of the tourist attractions either owned by or to be purchased by Lessees at its request, which include:

(1) amusement facilities such as ferris wheel, roller coaster and ropeway; and
(2) other movable equipment (such as scenic transportation vehicle and intelligent operation systems and other manufacturing equipments).

Under both direct leasing and sale and lease back arrangement, the ownership of the Leased Assets will be vested in OCT Financial Leasing throughout the lease period.

As long as the type of proposed Leased Asset falls under the category set out above, OCT Financial Leasing would have the discretion to decide whether the proposed Leased Asset is acceptable. When considering whether the proposed Leased Asset is acceptable, OCT Financial Leasing would consider the proposed terms of the finance lease as a whole. The key procedures and mechanisms in making such decision are set out in the paragraph headed “Internal Control Measures” below.

– 10 –

LETTER FROM THE BOARD

Factoring services

Factoring methods

Pursuant to the Finance Lease and Factoring Framework Agreements, OCT Financial Leasing will provide factoring services to Lessees by way of direct factoring and reverse factoring arrangements.

Factoring assets

The receivables to be factorized are those arisen from the ordinary and usual course of business or the purchase or sale of the assets of the Lessees.

Under direct factoring arrangement, the factorized receivables to be settled by the debtor of Lessees will be assigned to OCT Financial Leasing. Under reverse factoring arrangement, the factorized receivables to be settled by Lessees will be assigned to OCT Financial Leasing.

When considering whether the proposed factoring accounts are acceptable, OCT Financial Leasing would consider the proposed terms of the factoring arrangement and the credit rating of the debtors and creditors involved as a whole. The key procedures and mechanisms in making such decision are set out in the paragraph headed “Internal Control Measures” below.

ANNUAL CAPS AND BASIS OF DETERMINATION

The table below shows the Annual Cap(s) for the Effective Period under the Finance Lease and Factoring Framework Agreement:

	Annual Cap(s)
	(RMB’000)
OCT Group Agreement	1,000,000
Principal	890,000
Interest and handing fee	110,000
OCT Ltd. Agreement	2,500,000
Principal	2,225,000
Interest and handing fee	275,000
Total:	3,500,000

Note: the split between the principal amount and the interest and handling fee is only the best estimate of the Group as at the Latest Practicable Date and will be subject to the then finance lease and factoring terms agreed with OCT Group and OCT Ltd but in any event will not exceed RMB1,000 million and RMB2,500 million (the Annual Caps amount) for each of the company respectively.

– 11 –

LETTER FROM THE BOARD

The funds shall only be applied for the actual needs for production and operation of Lessee.

The Annual Caps include but not limited to the aggregated principal amounts granted to be utilised pursuant to the Implementation Agreements entered into during the Effective Period, the interest, management fees, and handling fees thereunder, the exercise price of the purchase option of the Lessees by the end of leasing period, the consideration for the factoring of the receivables and the related interests and fees.

For the avoidance of doubt, the drawdown or utilization period for each Implementation Agreement will not be limited by the Effective Period, provided that OCT Financial Leasing shall have the right to approve each drawdown in terms of its use and fund flow and the drawdown and transaction contemplated thereunder will not cause the aggregated transaction amounts under all Implementation Agreements to exceed the Annual Caps.

The Group has not previously conducted any similar transaction with Lessees.

REASONS FOR AND BENEFITS OF ENTERING INTO THE FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENT

The Company is an investment holding company. The Group is principally engaged in the comprehensive development business and investment in the urbanization industrial ecosphere.

OCT Financial Leasing is a direct wholly-owned subsidiary of the Company established in the PRC in October 2017 and is primarily engaged in financial leasing business for culture and tourism and paper packaging equipment and facilities.

OCT Financial Leasing is the first financial leasing company of OCT Group, which has recruited people working in sizable financial leasing companies who possess over 5 years of experience and are familiar with equipment purchasing. The provision of finance lease services by OCT Financial Leasing to Lessees is in line with the aim for OCT Financial Leasing to develop the financial leasing business for culture and tourism and paper packaging equipment and facilities.

OCT Group is a large cross-border and cross-industry corporation directly under the central government of PRC. It principally engages in tourism and related cultural industrial management, electronics and product packaging manufacturing, real estate and hotel development. OCT Group belongs in the the first batch of enterprises in the cultural industrial industry. It is also China’s top 30 cultural enterprises and China’s top 20 tourism enterprises. It has received an A grade from the State-owned Assets Supervision and Administrative Commission of the State Council for 8 consecutive years. OCT Ltd. is primarily engaged in integrated tourism and real estate businesses. OCT Ltd. possesses a large amount of movable equipment such as amusement facilities of Happy Valley (歡樂谷). Each of OCT Group and OCT Ltd. has a well-established internal control system and good credibility.

– 12 –

LETTER FROM THE BOARD

By entering into the Finance Lease and Factoring Framework Agreements with OCT Group and OCT Ltd., it can provide a stable revenue and cashflow stream to the Group. Further, OCT Financial Leasing as a new financial leasing company can also leverage the resources and experience of OCT Group and OCT Ltd. to expand its market share and build up its track records in financial leasing business for culture and tourism industries in a more efficient and faster way.

OCT Ltd. is a public company listed on the Shenzhen Stock Exchange, and is governed by the Rules Governing Listing of Stocks on the Shenzhen Stock Exchange and the relevant rules and regulations in the PRC. OCT Group is the holding company of OCT Ltd. In order to evaluate the risks faced by the Group when conducting the finance lease, the Group has taken into account the financial performance and position of OCT Group and OCT Ltd., as well as the credit rating attached to OCT Group and OCT Ltd. detailed below:-

(i) Financial performance and position of OCT Group

The operating income of OCT Group has shown an increasing trend for the years ended 31 December 2016 and 2017. The operating income of OCT Group for the year ended 31 December 2018 was also higher than in 2017. The net profit attributable to the shareholders of OCT Group increased from approximately RMB4.2 billion in 2016 to approximately RMB5.9 billion in 2017. The net profit attributable to the shareholders of OCT Group for the year ended 31 December 2018 was approximately RMB4.4 billion. The total equity of OCT Group increased from approximately RMB55.8 billion as at 31 December 2016 to approximately RMB105.7 billion as at 31 December 2017, and further increased to approximately RMB139.3 billion as at 31 December 2018. The current asset of OCT Group amounted to RMB310.8 billion as at 31 December 2018.

(ii) Financial performance and position of OCT Ltd.

The operating income of OCT Ltd. has shown an increasing trend in the past three years. Also, the net profit attributable to the shareholders of OCT Ltd. increased from approximately RMB6.89 billion in 2016 to approximately RMB8.6 billion in 2017, and further increased to approximately RMB10.6 billion in 2018. The total equity of OCT Ltd. increased from approximately RMB48.1 billion as at 31 December 2016 to approximately RMB65.5 billion as at 31 December 2017, and further increased to approximately RMB77.2 billion as at 31 December 2018. The current asset of OCT Ltd. amounted to RMB234.3 billion as at 31 December 2018.

(iii) Credit ratings

According to the credit rating reports issued by United Credit Ratings Co., Ltd. (“ UCR ”) in 2018, both credit ratings of OCT Group and OCT Ltd. were AAA, the highest rating under UCR’s credit rating scale which implies strong debt repayment capacity, remote default risk and an ability to withstand certain negative economic environment scenarios.

– 13 –

LETTER FROM THE BOARD

Based on the above and assuming no material change to OCT Group’s and OCT Ltd.’s financial performance and position, the Company considers that OCT Group and OCT Ltd., which agreed to provide guarantees to OCT Financial Leasing in respect of obligations under all Financial Services including but not limited to all payments and/or compensation, has a substantial net asset base and liquidity to satisfy the relevant liability if required.

The Company forms the view that the risk exposure associated with the maximum outstanding principal under the Finance Lease and Factoring Framework Agreements is justified and acceptable to the Group as (1) throughout the year concerned, Lessees shall make rental/interest payment or repayment to the Group and the Group shall collect certain receivables under factoring arrangements; (2) OCT Group and OCT Ltd. have agreed to provide guarantees to OCT Financial Leasing in respect of their respective subsidiaries’ (in the case of OCT Group, excluding OCT Ltd. and its subsidiaries) obligations under all the Implementation Agreements including but not limited to all payments and/or compensation; (3) OCT Group and OCT Ltd. has a substantial net asset base and liquidity to satisfy the relevant liability of Lessees in its entirety if required; and (4) Lessees shall be required to provide OCT Financial Leasing with security deposit in the amount ranging from 2% to 10% of the relevant principal amount, reducing the actual risk exposure as to the size of the outstanding principal in relation to finance lease.

The Directors (excluding the independent non-executive Directors who will form their view after considering the advice of the Independent Financial Adviser) considers that the terms under the Finance Lease and Factoring Framework Agreements on normal commercial terms, and the transactions contemplated under the Finance Lease and Factoring Framework Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 14 –

LETTER FROM THE BOARD

INTERNAL CONTROL MEASURES

The Group has adopted the following risk management measures and policies in relation to its finance lease and factoring businesses to maintain the fairness of the terms and price of the transactions:

1. Assessment of the profile of Lessees

The procurement team shall carry out due diligence on Lessee concerned including its background, industry, market share, competitiveness, industry ranking, scale of operation, rate of return, credit rating, compliance records, loan repayment records and financial conditions, the purpose of use of the proceeds and source of funding for repayment before providing any Financial Service according to a set of guidelines adopted by OCT Financial Leasing. The team members shall have at least 3 years of experience in finance lease and factoring business and possess professional knowledge to assess the value and risk relating to the leased equipment and the accounts.

2. Review and approval of the Financial Services

A committee comprising three members including vice president and general manager of the Group will be formed to consider and approve Financial Services transactions. Subject to the approval of the committee, each of the Financial Services transaction shall be submitted to the president and chairman of OCT Financial Leasing for final approval.

For finance lease, to be considered as an acceptable Leased Asset, the asset must be legally tradable, has clear title and validly exist. For factoring arrangement, to be considered as an acceptable accounts to be factorized, the trades give rise to such accounts must be legal and genuine and the accounts have to be transferrable.

3. Principal and interest rate determination

For direct leasing, the purchase price of the Leased Assets will be determined by OCT Financial Leasing, Lessees and the supplier after arm’s length negotiation between the parties, which shall be within the regular price range in the industry.

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LETTER FROM THE BOARD

For sale and lease back arrangement, the purchase price shall be reasonable and in compliance with applicable accounting principles, and shall not be more than the net book value of the Leased Asset.

The interest rate of the Financial Services under any individual Implementation Agreement shall be determined according to the following principles: (1) the interest rate shall not be lower than the benchmark RMB lending rate published by PBOC from time to time; and (2) the interest rate shall not be less favourable than the sum of the Group’s finance costs in RMB and the relevant interest spread and such interest spread shall fall within the range of the interest difference offered by finance lease companies which are listed in Hong Kong.

4. Monitoring continuing connected transactions

The risk management and compliance department of the Company will review the actual amount utilized in respect of the Annual Cap every six months. If it is expected that the value of any Implementation Agreements, in aggregate, will exceed the Annual Cap, the Company will take steps in order to comply with the relevant requirement of the Listing Rules.

The risk management and compliance department of the Company will review its internal control procedures annually, and compile and submit the annual internal control report to the Board for review and approval.

The independent non-executive Directors will conduct an annual review of the implementation of the continuing connected transactions in respect of the individual Implementation Agreements.

Therefore, the Company is of the view that the Group has adequate mechanism, internal control procedures and external supervision measures to ensure the continuing connected transactions to be complied with and strictly in accordance with the terms of the Finance Lease and Factoring Framework Agreements and the Listing Rules.

– 16 –

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE FINANCE LEASE TRANSACTIONS ON THE GROUP

Earnings

From the date on which the Implementation Agreement becomes effective, the Group would be entitled to recognize interest income and handling fee income from the Lessee(s), which would provide additional income contribution to the Group.

Net assets and gearing

Upon implementation of transactions contemplated under the Implementation Agreement, the Directors consider that there will be no significant immediate change to the Group’s net asset value given the assets will increase pursuant to the value of assets acquired under each finance lease while offset by the payment of proceeds to the Lessee(s).

Since the Group will be financing the Finance Lease via banking facilities, upon implementation of transactions contemplated under the Implementation Agreements, the Group’s gearing will increase accordingly.

Liquidity

Given the Group intended to finance the Finance Lease via banking facilities, the payment of sales proceeds to the Lessee(s) by drawing down the Group’s banking facilities will have no significant impact towards the Group’s liquidity.

LISTING RULES IMPLICATION

The transactions contemplated under the Finance Lease and Factoring Framework Agreements will constitute transactions under Chapter 14 of the Listing Rules. As one or more applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) calculated in accordance with the Listing Rules in respect of the Finance Lease and Factoring Framework Agreements exceeds 100%, the transactions contemplated thereunder constitute a very substantial acquisition of the Company subject to the relevant reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Pacific Climax is a Controlling Shareholder of the Company, which, as at the Latest Practicable Date, held approximately 70.94% of the total issued share capital of the Company, and is directly wholly-owned by OCT (HK). As OCT Ltd. held 100% equity interest in OCT (HK) and OCT Group is the holding company of OCT Ltd., each of OCT Group, OCT Ltd. and their subsidiaries are connected persons of the Company pursuant to Chapter 14A of the Listing Rules. Accordingly, the Finance Lease and Factoring Framework Agreements also constitute continuing connected transactions of the Company. As one or more of the applicable ratios of the Annual Caps, in aggregate, on an annual basis is more than 5%, the transactions contemplated thereunder are subject to the relevant reporting, announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

In addition, pursuant to Rule 14A.52 of the Listing Rules, as the term of the individual Implementation Agreement in relation to finance lease to be entered into pursuant to the Finance Lease and Factoring Framework Agreements may exceed three years, the Company shall appoint an independent financial advisor to explain why the said Implementation Agreement in relation to finance lease require a longer period and to confirm that it is a normal business practice for agreements of this type to be of such duration.

CONFIRMATIONS OF THE BOARD

None of the Directors has a material interest in the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder, and hence no Director has abstained from voting on the Board resolution approving the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising of all the independent non-executive Directors, including Mr. Lu Gong, Ms. Wong Wai Ling, and Mr. Lam Sing Kwong Simon, has been established to advise the Independent Shareholders in relation to the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps. Halcyon has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on this regard.

EGM

At the EGM, resolutions will be proposed by the Company to seek the Independent Shareholders’ approval on the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps. Pacific Climax and its associates, which in aggregate, held 530,894,000 shares of the Company, being approximately 70.94% of its total issued share capital as at the Latest Practicable Date, will abstain from voting for the resolutions regarding the Finance Lease and Factoring Framework Agreements at the EGM. The proposed resolutions will be passed by way of ordinary resolutions and voted on by way of poll in accordance with the requirement of the Listing Rules.

RECOMMENDATION

The Board believes that the terms of the Finance Lease and Factoring Framework Agreements are fair and reasonable and the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the resolutions in relation to the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps to be proposed at the EGM.

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LETTER FROM THE BOARD

Your attention is drawn to the letters from the Independent Board Committee and Halcyon which set out their recommendations in respect of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps and the principal factors considered by them in arriving at their recommendations.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

By order of the Board Overseas Chinese Town (Asia) Holdings Limited He Haibin Chairman

– 19 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

24 May 2019

To the Independent Shareholders,

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION AND CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

We refer to the circular dated 24 May 2019 (the “ Circular ”) issued by the Company of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the terms of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps and to advise you as to whether, in our opinion, the terms of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned. Halcyon has been appointed as the Independent Financial Adviser to advise the Independent Board Committee in respect of the terms of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps.

We also wish to draw your attention to (i) the letter from the Board; (ii) the letter from Halcyon; and (iii) the additional information set out in the appendices to this circular.

Having considered the terms of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps, and having taken into account the opinion of Halcyon and, in particular, the factors, reasons and recommendations as set out in the letter from Halcyon on pages 22 to 43 of this circular, we consider that the terms of the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps are fair and reasonable so far as the Company and the

– 20 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Independent Shareholders are concerned, and the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps are on normal commercial terms or better, in the Company’s ordinary and usual course of business and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolutions which will be proposed at the EGM to approve the Finance Lease and Factoring Framework Agreements, the transactions contemplated thereunder and the Annual Caps.

Yours faithfully, For and on behalf of the Independent Board Committee Lu Gong Wong Wai Ling Lam Sing Kwong Simon Independent non-executive Directors

– 21 –

LETTER FROM HALCYON

The following is the full text of the letter of advice from Halcyon Capital Limited to the Independent Board Committee and the Independent Shareholders which has been prepared for the purpose of the inclusion in this circular.

11/F, 8 Wyndham Street Central Hong Kong 24 May 2019

To: the Independent Board Committee and the Independent Shareholders,

Dear Sirs,

VERY SUBSTANTIAL ACQUISITION AND CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the entering into the Finance Lease and Factoring Framework Agreements, pursuant to which OCT Financial Leasing agreed to provide finance lease and factoring services to OCT Group and OCT Ltd., respectively (the “Transactions”). Details of the Finance Lease and Factoring Framework Agreements and the respective annual caps (the “Annual Caps”) of the transactions contemplated thereunder are set out in the letter from the Board contained in the circular of the Company to the Shareholders dated 24 May 2019 (the “Circular”), of which this letter forms part. Unless the context otherwise requires, capitalized terms used in this letter shall have the same meaning as those defined in the Circular.

Pacific Climax is the Controlling Shareholder of the Company, which, as at the Latest Practicable Date, held approximately 70.94% of the total issued share capital of the Company, and is directly wholly-owned by OCT (HK). As OCT Ltd. held 100% equity interest in OCT (HK) and OCT Group is the holding company of OCT Ltd., each of OCT Group, OCT Ltd. and their subsidiaries are connected persons of the Company pursuant to Chapter 14A of the Listing Rules. Accordingly, the Finance Lease and Factoring Framework Agreements also constitute continuing connected transactions of the Company.

As one or more of the applicable ratios of the Annual Caps, in aggregate, on an annual basis is more than 5%, the transactions contemplated thereunder are subject to the relevant reporting, announcement, annual review, and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

– 22 –

LETTER FROM HALCYON

In addition, pursuant to Rule 14A.52 of the Listing Rules, as the term of the underlying individual Implementation Agreement in relation to finance lease to be entered into pursuant to the Finance Lease and Factoring Framework Agreements may exceed three years, the Company shall appoint an independent financial advisor to explain why the said individual Implementation Agreements in relation to finance lease require a longer period and to confirm that it is a normal business practice for agreements of this type to be of such duration.

In the last two years from the date of our appointment, we have not acted as the financial adviser to the Group or independent financial adviser to the independent board committee and the Independent Shareholders of the Company for any transaction. Apart from normal professional fees paid or payable to us in connection with this appointment as the independent financial adviser, no arrangements exist whereby we had received or will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we are hence independent from the Company pursuant to Rule 13.84 of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the information, financial information and facts supplied to us and representations expressed by the Directors and/or the management of the Company and have assumed that all such information, financial information and facts and any representations made to us or referred to in the announcement of the Company dated 7 May 2019 and the Circular, for which they are fully responsible, are true, accurate and complete as at the time they were made and as at the date hereof and made after due and careful inquiry by the Directors and/or management of the Company. We have been advised by the Directors and/or the management of the Company that all relevant information has been supplied to us and that no material facts have been omitted from the information supplied and representations expressed to us. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. We have no reason to doubt the completeness, truth or accuracy of the information and facts provided and we are not aware of any facts or circumstances which would render such information provided and representations made to us untrue, inaccurate or misleading.

Our review and analyses were based upon, among others, the information provided by the Company including the Finance Lease and Factoring Framework Agreements and certain published information from the public domain. We have also discussed with the Directors and/or the management of the Company with respect to the terms of and reasons for the transactions contemplated under the into the Finance Lease and Factoring Framework

– 23 –

LETTER FROM HALCYON

Agreements (including the Annual Caps), and considered that we have reviewed sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information nor have we conducted any form of in-depth investigation into the businesses, affairs, legality, financial position or prospects of the Group (including OCT Financial Leasing), OCT Group, OCT (HK), OCT Ltd and each of their respective associates, and the parties involved in the transactions contemplated under the Finance Lease and Factoring Framework Agreements.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendations in respect of the transactions contemplated under the Finance Lease and Factoring Framework Agreements (including the Annual Caps), we have considered the following principal factors and reasons:

1. Background to and reasons for the entering into of the Finance Lease and Factoring Framework Agreements

The Company is an investment holding company. The Group is principally engaged in the comprehensive development business and investment in the urbanization industrial ecosphere.

Financial performance of the Group

Set out below is a summary of the Group’s audited consolidated financial performance of the Group:

	For the	For the
	year ended	year ended
	31 December	31 December
	2017	2018
	RMB’000	RMB’000
Revenue from continuing operations	4,109,462	1,584,694
Gross profit	1,547,625	558,588
Finance costs on continuing operations	187,942	175,061
Profit attributable to equity holders of the
Company	1,106,804	798,702

During the year ended 31 December 2018, the continuing operations of the Group recorded a revenue of approximately RMB1.58 billion, representing a year-on-year decrease of approximately 61.6%, mainly due to the decrease in revenue from the Shanghai Suhewan Project among the comprehensive development business. The Group’s gross profit margin from the continuing operations was approximately 35.2% for the year ended 31 December 2018 as compared to approximately 37.7% in 2017, representing a decrease of 2.5 percentage points over the same period of 2017, of which, the gross profit margin of the comprehensive development business was approximately 34.7%,

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LETTER FROM HALCYON

representing a decrease of 3.0 percentage points over the same period of 2017, mainly due to the increase in unit cost of sales, while the Group achieved a gross profit margin of the finance lease business of approximately 81.0% in 2018, the first year of commencement of the Group’s finance lease business.

Profit attributable to equity holders of the Company amounted to RMB798.70 million for the year ended 31 December 2018, representing a year-on-year decrease of approximately 27.8% as compared to that of in 2017 mainly due to the decrease in profit attributable to comprehensive development business in 2018 and the increase in profit attributable to the holders of perpetual capital securities.

Financial position of the Group

Set out below is a summary of the Group’s audited consolidated financial position of the Group:

	As at
	31 December
	2018
	RMB’000
Non-current assets	13,512,534
Finance lease receivables	230,870
Current assets	11,566,273
Cash at bank and on hand	3,222,953
Finance lease receivables	65,342
Current liabilities	10,567,865
Non-current liabilities	1,605,285
NET ASSETS	12,905,657
Total equity attributable to equity holders of the Company	9,466,242
Non-controlling interests	3,439,415

The Group had commenced its’ finance lease operation in 2018 and revenue generated from the Group’s finance lease operation only accounted for less than 1% of the Group’s revenue for the year ended 31 December 2018 and the finance lease receivables only accounted for approximately 1% of the Group’s total assets. Cash at bank and on hand balances accounted for 12.9% of the Group’s total assets as at 31 December 2018.

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LETTER FROM HALCYON

Outlook of the Group

In 2019, the Board expected that the downward pressure on the macro economy will continue to persist. The pace of economic growth may slow down slightly due to the weak domestic and external demand. The Group is cautiously optimistic about the real estate industry in 2019. In order to control the risk of house price fluctuations and the implicit debt expansion of local governments, the possibility of a substantial relaxation of real estate policies is relatively low, and various control policies will continue to be stability-oriented. However, with the anticipation of a loose monetary environment and the rebound of market confidence, the overall opportunities in the industry outweigh the challenges. In view of such, the Group will actively exploit the domestic and foreign capital markets and financial products to optimize its direct investment and investment in industrial funds, and financial leasing, and explore other new investment opportunities.

OCT Financial Leasing

OCT Financial Leasing is a direct wholly-owned subsidiary of the Company established in the PRC in October 2017 and is primarily engaged in the finance lease business in sectors such as theme parks and the manufacturing industry with a primary focus on customer base such as large to midscale state-owned enterprises and high-quality listed companies.

As the principal business operation of OCT Financial Leasing is the provision of financial leasing services, since 2018 OCT Financial Leasing has been entering into finance lease arrangements with independent third parties. In view of (i) the substantial gross profit margin achieved by the finance lease business in 2018; (ii) the Group’s outlook and strategy to invest in the finance lease operation; and (iii) to continue to expand OCT Financial Leasing’s business, on 7 May 2019, OCT Financial Leasing entered into the Finance Lease and Factoring Framework Agreements with OCT Group and OCT Ltd, pursuant to which OCT Financial Leasing agreed to provide finance lease and factoring services to OCT Group and OCT Ltd., respectively.

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LETTER FROM HALCYON

2. Information of OCT Group and OCT Ltd.

OCT Group

OCT Group is a large cross-border and cross-industry corporation directly under the central government of PRC. It principally engages in tourism and related cultural industrial management, electronics and product packaging manufacturing, real estate and hotel development. OCT Group belongs in one of the first batch of enterprises in the cultural industrial industry in China. It is also one of China’s top 30 cultural enterprise and China’s top 20 tourism enterprise. It has received an A grade accreditation from the State-owned Assets Supervision and Administrative Commission of the State Council for 8 consecutive years.

The operating income of OCT Group has shown an increasing trend for the years ended 31 December 2016 and 2017. The operating income of OCT Group for the year ended 31 December 2018 was also higher than in 2017. The net profit attributable to the shareholders of OCT Group increased from approximately RMB4.2 billion in 2016 to approximately RMB5.9 billion in 2017. The net profit attributable to the shareholders of OCT Group for the year ended 31 December 2018 was approximately RMB4.4 billion. The total equity of OCT Group increased from approximately RMB55.8 billion in 2016 to approximately RMB105.7 billion in 2017, and further increased to approximately RMB139.3 billion as at 31 December 2018. The current asset of OCT Group amounted to RMB310.8 billion as at 31 December 2018.

According to the credit rating reports issued by United Credit Ratings Co., Ltd. (“UCR”) in 2018, credit ratings of OCT Group was AAA, the highest rating under UCR’s credit rating scale which implies strong debt repayment capacity, remote default risk and an ability to withstand certain negative economic environment scenarios.

OCT Ltd.

OCT Ltd. is primarily engaged in integrated tourism and real estate businesses and is a public company listed on the Shenzhen Stock Exchange, and is governed by the Rules Governing Listing of Stocks on the Shenzhen Stock Exchange and the relevant rules and regulations in the PRC. OCT Ltd. possesses with a large amount of movable equipment such as amusement facilities of Happy Valley (歡樂谷). According to the Directors, each of OCT Group and OTC Ltd have a well-established internal control system with good credibility.

The operating income of OCT Ltd. has shown an increasing trend in the past three years. Also, the net profit attributable to the shareholders of OCT Ltd. increased from approximately RMB6.89 billion in 2016 to approximately RMB8.64 billion in 2017, and further increased to approximately RMB10.59 billion in 2018. The total equity of OCT Ltd. increased from approximately RMB48.1 billion as at 31 December 2016 to approximately RMB65.5 billion as at 31 December 2017, and further increased to approximately RMB77.2 billion as at 31 December 2018. The current asset of OCT Ltd. amounted to RMB234.32 billion as at 31 December 2018.

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LETTER FROM HALCYON

According to the credit rating reports issued by UCR in 2018, credit ratings of OCT Ltd. was also AAA, the highest rating under UCR’s credit rating scale which implies strong debt repayment capacity, remote default risk and an ability to withstand certain negative economic environment scenarios.

The Directors considered that the Finance Lease and Factoring Framework Agreements provide flexibility, but not an obligation, to OCT Financial Leasing or to OCT Group or to OCT Ltd to engage each other in their respective business operation whenever their respective management consider appropriate. The provision of finance lease services by OCT Financial Leasing to the OCT Group and OCT Ltd are in line with the aim for OCT Financial Leasing to develop into the culture and tourism equipment and facilities financing business. Furthermore, by entering into the Finance Lease and Factoring Framework Agreements with OCT Ltd., it can provide a stable revenue and cash flow stream to the Group. Further, OCT Financial Leasing as a new financial leasing company at the entity level can also leverage the resources and experience of OCT Ltd. to expand its market share and build up its track records in financial leasing business for culture and tourism industries in a more efficient and effective way.

Having considered that the transactions contemplated under the Finance Lease and Factoring Framework Agreements have been and will be carried out in their respective ordinary and usual course of business of OCT Financial Leasing, OCT Group and OCT Ltd, we consider that the entering into of the Finance Lease and Factoring Framework Agreements is in the ordinary and usual course of business of the Group and is in the interests of the Company and Shareholders as a whole.

3. Principal terms of the Finance Lease and Factoring Framework Agreements

On 7 May 2019, OCT Financial Leasing entered into the Finance Lease and Factoring Framework Agreements with OCT Group and OCT Ltd, pursuant to which OCT Financial Leasing agreed to provide finance lease and factoring services to OCT Group and OCT Ltd., respectively. Set out below are the principal terms of the Finance Lease and Factoring Framework Agreements:

Duration

Conditions

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LETTER FROM HALCYON

Factoring Framework Agreements due to requirements of the Stock Exchange or any applicable laws and regulations (including but not limited to the Companies Ordinance of Hong Kong and the Listing Rules), the parties agreed to amend the Finance Lease and Factoring Framework Agreement, or alter or cancel relevant transactions according to the relevant requirements. Lessees agreed not to claim any liabilities against OCT Financial Leasing and the Company.

Separate Contracts

Contract Period

Interests and Fees

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LETTER FROM HALCYON

information required under (1) for reference, the capital costs incurred by OCT Financial Leasing at the time of entering into of the relevant Implementation Agreement, which may be adjusted according to the adjustment of the benchmark lending rates published by PBOC for the same period.

In addition to the above, as long as (1) the contemplated effective interest rate (i) is higher than the interest rate of the Lessees’ sizable borrowings and (ii) carries a contemplated interest spread and surplus over PBOC benchmark lending rates at par with or better than those enjoyed by a number of finance lease companies or groups listed in the Stock Exchange providing services similar to Financial Services, and (2) the contractual obligations of the Lessees under the Implementation Agreements, including but not limited to the repayment obligation, are to be guaranteed by OCT Ltd., OCT Group or other financially competent entities like commercial banks, the Group will consider and we concur the Financial Services to be contemplated under an Implementation Agreement as fair and reasonable and in the interest of the Company and Shareholders as a whole.

Handling fees are expected to range from nil to 3% of the principal amount. Such fees are regarded as rental/interest income for the purpose of calculating the finance lease’s effective interest rate.

Guarantees

– 30 –

LETTER FROM HALCYON

Finance lease specific terms

(i) Lease methods

Pursuant to the Finance Lease and Factoring Framework Agreements, OCT Financial Leasing will provide finance lease services to Lessees in relation to the Leased Assets by way of, including but not limited to, direct leasing and sale and lease back arrangement. Under the direct leasing arrangement, OCT Financial Leasing will purchase the Leased Assets from the relevant supplier, and then OCT Financial Leasing will lease such Leased Assets to Lessees for an agreed term and will receive the rental fees and handling fees on a periodic basis. Under sale and lease back arrangement, OCT Financial Leasing will purchase the Leased Assets from Lessees, and then OCT Financial Leasing will lease such Leased Assets back to Lessees for an agreed term and will receive the rental fees and handling fees on a periodic basis.

(ii) Leased Assets

(1) amusement facilities such as ferris wheel, roller coaster and ropeway; and
(2) other movable equipment (such as scenic transportation vehicle and intelligent operation systems and other manufacturing equipment).

Under both direct leasing and sale and lease back arrangement, the ownership of the Leased Assets will be vested in OCT Financial Leasing throughout the lease period.

(iii) Lease period

The lease period under individual Implementation Agreement is expected to be three to five years which may last beyond the expiry date of the Finance Lease and Factoring Framework Agreements. These individual finance lease agreements shall remain to have full force and effect for their respective term regardless of whether or not the Company will renew or enter into a new finance lease framework agreement upon expiry of the Finance Lease and Factoring Framework Agreements. For the avoidance of

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LETTER FROM HALCYON

doubt, even after the Finance Lease and Factoring Framework Agreements expire, OCT Financial Leasing will still be bound by the individual unexpired finance lease agreements and may approve utilization requests made by the lessees thereunder. The Company will not renew the Finance Lease and Factoring Framework Agreements or annual caps for the purpose of covering the utilization that may occur after the Effective Period. Yet the fact that the period of the individual finance lease agreements may exceed the period of the Finance Lease and Factoring Framework Agreements would not result in a situation that any finance lease agreement not being limited by the Annual Caps. This is because the Annual Caps to be approved by the Shareholders are referring to, among others, the aggregate principal amounts contracted by OCT Financial Leasing to be utilized or to be utilized by the Lessees pursuant to the individual finance lease agreements entered into during the Effective Period instead of the aggregated outstanding principals at a particular time during or after the term of the Finance Lease and Factoring Framework Agreements. Utilizations that occur after the Effective Period are still subject to such contracted amounts of which in aggregate are still subject to the Annual Caps.

(iv) Assessing the duration of the finance lease

The term of the finance lease will be up to 5 years. We have discussed with the management of the Company the rationale for such duration. As advised by the management of the Company, as the underlying assets subject to the finance lease will be amusement facilities such as ferris wheel, roller coaster and ropeway; and other movable equipment (such as scenic transportation vehicle and intelligent operation systems) which may have an useful life of up to 10 years, it is thus consider reasonable to have a finance lease term of up to 5 years.

In assessing the duration of the finance lease provided by OCT Financial Leasing to the Lessee, we have conducted research on the website of the Stock Exchange to identify and review the announcements of a number of finance lease agreements entered into by companies listed on the Stock Exchange (the “Comparable Transactions”) in the past six months before the date of the Announcement with principal amount of more than HK$1 billion. We are of the view that the half-year review period provides a good indication of the recent terms agreed under finance lease. Details of the Comparable Transactions are set out below:

						Principal	Asset subject to
Announcement	date	Stock	code	Company name	Term	amount	finance lease
						HK$ billion
30-Apr-19		1606		CDB LEASING	8 years	1.20	Equipment and facilities of
							a sports center
27-Apr-19		1606		CDB LEASING	5 years	2.50	Equipment of
							semiconductor products

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LETTER FROM HALCYON

						Principal	Asset subject to
Announcement	date	Stock	code	Company name	Term	amount	finance lease
						HK$ billion
28-Mar-19		1606		CDB LEASING	5 years	1.76	Indemnificatory apartments
							in Kunming City,
							Yunnan Province
23-Mar-19		3966		CH BAOFENG	11 years	2.81	Photovoltaic power
				INTL			generation equipment
28-Feb-19		966		CHINA	1 year	5.00	Equipment
				TAIPING
28-Dec-18		1606		CDB LEASING	3 years	2.85	Several vehicle assets
26-Dec-18		1606		CDB LEASING	4 years	1.71	Several engineering
							machinery equipment
							assets
25-Dec-18		1606		CDB LEASING	12 years	1.88	Photovoltaic power station
							located in Yulin, Shaanxi
							Province

As illustrated in the table above, during the period under review, terms of finance leases ranged from 1 year to 12 years with an average term of 6.1 years. In view of such, we consider that it is reasonable for the finance lease to have duration of up to five years and such duration is not uncommon in the market.

Factoring Services specific terms

(i) Factoring method

Pursuant to the Finance Lease and Factoring Framework Agreements, OCT Financial Leasing will provide factoring services to Lessees by way of direct factoring and reverse factoring arrangements.

(ii) Factoring assets

The receivables to be factorized are those arisen from the ordinary and usual course of business or the purchase or sale of the assets of the Lessees. Under direct factoring arrangement, the factorized receivables to be settled by the debtor of Lessees will be assigned to OCT Financial Leasing. Under reverse factoring arrangement, the factorized receivables to be settled by Lessees will be assigned to OCT Financial Leasing. When considering whether the proposed factoring accounts are acceptable, OCT Financial Leasing would consider the proposed terms of the factoring arrangement and the credit rating of the debtors and creditors involved as a whole. The key procedures and mechanisms in making such decision are set out in the paragraph headed “Internal Control Measures” below.

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LETTER FROM HALCYON

(iii) Factoring period

The factoring periods under Implementation Agreements are to be determined by the nature and original contract terms of the relevant accounts payable or receivable which may last beyond the expiry date of the Finance Lease and Factoring Framework Agreements. The factoring period shall not be more than three years in relation to factoring in any event. These Implementation Agreements shall remain to have full force and effect for their respective term regardless of whether or not the Company will renew or enter into a new framework agreement upon expiry of the Finance Lease and Factoring Framework Agreements. For the avoidance of doubt, even after the Finance Lease and Factoring Framework Agreements expire, OCT Financial Leasing will still be bound by the individual Implementation Agreements. The Company will not renew the Finance Lease and Factoring Framework Agreements or annual caps just for the purpose of covering the payment or receipt of funds to be occurred under the factorizing arrangement that may occur after the Effective Period. Yet the fact that the period of the individual Implementation Agreements may exceed the period of the Finance Lease and Factoring Framework Agreements would not result in a situation that any factoring arrangement not being accounted for and limited by the Annual Caps. This is because the Annual Caps to be approved by the Shareholders are referring to, among others, the aggregate amounts contracted by OCT Financial Leasing to receive or to pay in relation to the accounts of the Lessees pursuant to the individual Implementation Agreement entered into during the Effective Period. Factorizations that occur after the Effective Period are still subject to such contracted amounts of which in aggregate are still subject to the Annual Caps.

4. Internal control Measures

i. Assessment of the profile of the Lessees

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LETTER FROM HALCYON

ii. Review and approval of the Financial Services

Upon preliminary assessment made by the procurement team, the risk management and compliance department and finance department of the Group shall scrutinize each transaction in relation to Financial Services to identify whether there are any major risks. A committee comprising three members including vice president and general manager of the Group will be formed to consider and approve Financial Services transactions. Subject to the approval of the committee, each of the Financial Services transaction shall be submitted to the president and chairman of OCT Financial Leasing for final approval.

iii. Principal and interest rate determination

In general, the principal amount to be adopted under individual finance lease agreements shall be, in the case of direct leasing, the purchase price of the relevant Leased Asset, or, in the case of sale and lease back arrangement, capped at the net book value of the Leased Asset. For direct leasing, the purchase price of the Leased Assets will be determined by OCT Financial Leasing, Lessees and the supplier after arm’s length negotiation between the parties, which shall be within the regular price range in the industry. For sale and lease back arrangement, the purchase price shall be reasonable and in compliance with applicable accounting principles, and shall not be more than the net book value of the Leased Asset.

For factoring arrangement, factorized amounts, discounts and fees concerned will be determined by OCT Financial Leasing, Lessees and the debtor/creditor after arm’s length negotiation between the parties, which shall be in line with the industry price range. The interest rate of the Financial Services under any individual Implementation Agreement shall be determined according to the following principles: (1) the interest rate shall not be lower than the benchmark RMB lending rate published by PBOC from time to time; and (2) the interest rate shall not be less favourable than the sum of the Group’s finance costs in RMB and the relevant interest spread and such interest spread shall fall within the range of the interest difference offered by finance lease companies which are listed in Hong Kong.

iv. Monitoring continuing connected transactions

The risk management and compliance department, finance department and relevant senior management of the Company are responsible for monitoring connected transactions of the Company, including the transactions under the Finance Lease and Factoring Framework Agreements. The risk management and compliance department of the Company will review the actual amount utilized in respect of the Annual Cap every

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LETTER FROM HALCYON

six months. If it is expected that the value of any Implementation Agreements, in aggregate, will exceed the Annual Cap, the Company will take steps in order to comply with the relevant requirement of the Listing Rules. The risk management and compliance department of the Company will review its internal control procedures annually, and compile and submit the annual internal control report to the Board for review and approval. The independent non-executive Directors will conduct an annual review of the implementation of the continuing connected transactions in respect of the individual Implementation Agreements.

Taking into account the above mentioned internal control measure, we concurred with the Board’s view that adequate mechanism, internal control procedures and external supervision measures are in place to ensure the continuing connected transactions to be complied with and strictly in accordance with the terms of Finance Lease and Factoring Framework Agreements and the Listing Rules.

In light of the above conditions, we are also of the view that appropriate measures are in place to ensure that the Transactions will be conducted on normal commercial terms and to safeguard the interests of the Independent Shareholders.

5. Comparison of terms with independent third parties

Since the Group had yet to enter into any Financial Services with connected person as at the Latest Practicable Date, no Individual Implementation Agreement is available for our review. We have however noted that the interest rate and handling fee factored in estimating the Annual Caps is within the range of the interest rate and handling fee charged by the Group, when entering into other finance lease arrangement with independent third parties in 2018.

The Group had yet to enter into any factoring arrangement as at the Latest Practicable Date, thus we were unable to compare the estimate interest rate in estimating the Annual Caps with factoring arrangement entered into with independent third parties.

6. Overview of the finance lease industry in the PRC

Pursuant to report issued by shanghai leasing trade association in March 2019, the tax reduction measures carried out by the PRC government will consider to be beneficial to the finance lease industry as the relatively high tax rate on finance lease industry was one of the contributing factors for hindering the growth of the finance lease industry in the PRC. The decrease in value added tax by 3% would be encouraging to customers and vendors in entering into equipment finance leasing. The tax reduction for manufacturing and transportation industry would also improve the business environment and reduce credit risk for potential customer of the finance lease industry.

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LETTER FROM HALCYON

7. Basis of the Annual Caps

The transactions contemplated under the Finance Lease and Factoring Framework Agreements are subject to the Listing Rules’ requirements and conditions as further discussed under the section headed “Reporting requirements and conditions of the Transactions” below. In particular, the Transactions are also subject to the Annual Caps as discussed below.

When assessing the reasonableness of the Annual Caps, we have discussed with the management the basis and assumptions underlying the projection of the Annual Caps. Set out below are the Annual Caps being proposed for the transactions contemplated under the Finance Lease and Factoring Framework Agreements for the Effective Period:

OCT Group Agreement Principal Interest and handling fee OCT Ltd Agreement Principal Interest and handling fee	RMB’000 1,000,000
	890,000 110,000 2,500,000
	2,225,000 275,000

Note: The split between the principal amount and the interest and handling fee is only the best estimate of the Group as at the Latest Practicable Date and will be subject to the then finance lease and factoring terms agreed with OCT Group and OCT Ltd but in any event will not exceed RMB1,000 million and RMB2,500 million (the Annual Caps amount) for each of the company respectively.

In arriving at the Annual Caps, the Directors have considered a number of factors including: (i) the actual funding requirements of OCT Group and OCT Ltd; (ii) the cost of funds of the Group; and (iii) the recent market interest rate, guarantee deposit and the relevant handling charged by OCT Financial Leasing.

(i) The actual funding requirements of OCT Group and OCT Ltd

According to the Group, when estimating the capital expenditure funding requirement for OCT Group and OCT Ltd, the Group had obtained relevant confirmation from OCT Group and OCT Ltd respectively in relation to the estimated capital expenditure for 2019 and 2020 and noted from their respective audited report, the amount of revenue for 2018. After taking into consideration the funding needs of OCT Group and OCT Ltd, the Group estimated the principal amount of RMB890 million and RMB2,225 million for OCT Group and OCT Ltd respectively, of which the respective Annual Caps amount for finance lease and factoring are below the capital expenditure requirement of OCT Group and OCT Ltd in 2019 and 2020 and well below the revenue amount of both companies (as the case maybe).

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LETTER FROM HALCYON

(ii) The cost of funds

Pursuant to the terms of the Finance Lease and Factoring Framework Agreements, the interest rate shall be no less than (1) the benchmark lending rates published by PBOC; (2) the capital cost of the Company, which shall be the source of fund of OCT Financial Leasing; (3) the interest spreads disclosed by other finance lease companies listed in Stock Exchange within one year of the date of the respective Implementation Agreement(s); and (4) the borrowing costs of the Lessee(s) for a sizable loan comparable to a contemplated finance lease and/or factoring arrangement.

Borrowings of the Group include borrowings from Hong Kong financial institution and PRC financial institutions. According to the Directors, the cost of borrowing to finance lease and/or factoring arrangement will depend on the interest rates offered by Hong Kong financial institution and PRC financial institutions to the Group. Therefore, the Directors consider and we concur the charging of interest rate by taking reference to no less than (1) the benchmark lending rates published by PBOC; (2) the capital cost of the Company, which shall be the source of fund of OCT Financial Leasing; (3) the interest spreads disclosed by other finance lease companies listed in Stock Exchange within one year of the date of the respective Implementation Agreement(s); and (4) the borrowing costs of the Lessee(s) for a sizable loan comparable to a contemplated finance lease and/or factoring arrangement to be appropriate.

Giving the Annual Caps only represent that maximum amount of finance lease and factoring financing OCT Financial Leasing could lend out during the Effective Period, it is not an obligation that OCT Financial Leasing must engage in such amount of financing activities.

For each potential finance lease and/or factoring transaction should OCT Financial Leasing consider entering into (regardless if the customer is a connected person), OCT Financial Leasing will consider (i) the credit risk of each customer and (ii) if OCT Financial Leasing have sufficient internal resources to finance the provision of financial services. Should external borrowing be required, OCT Financial Leasing will consider such cost of borrowing, if such borrowings would not be able to provide an interest spread as comparable to other finance lease companies listed in Stock Exchange within one year of the date of the respective Implementation Agreement(s) as mentioned above, OCT Financial Leasing would not enter into such finance lease/factoring transaction.

The Directors considered that assessment of credit risk and cost of borrowing for each of the finance lease/factoring transaction is one of the standard procedures for any financial institution providing such financial services. It is not uncommon for financial institutions to finance their provision of financial services by way of external borrowing, as such despite the Group may be financing the provision of finance lease and/or factoring services by way of external borrowing, the Finance Lease and Factoring Agreement is therefore still considered in the interest of the Company and its shareholders as a whole.

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LETTER FROM HALCYON

(iii) The recent market interest rate; guarantee deposit and the relevant handling charged by OCT Financial Leasing

Pursuant to the estimation for the Annual Caps, the interest rate to be charged by OCT Financial Leasing may varies but in any event together with the relevant handling fee charged and guarantee deposit to be obtained achieving an internal rate of return of approximately 7.5% for finance lease and 6% for factoring.

We understand from the management of OCT Financial Leasing that, depending on commercial negotiation of the terms of the individual finance lease and factoring transaction, the internal rate of return may varies and depart from approximately 7.5% for finance lease and 6% for factoring, but pursuant to the Finance Lease and Factoring Framework Agreements, in any event shall be on normal commercial terms or better and the interest rate determined thereby must not be lower than the benchmark lending rates published by PBOC at the time of entering into of the relevant Implementation Agreement. In particular, the effective interest rate of the relevant Implementation Agreement shall not be lower than (1) the secured lending rate for the borrowings granted to the Lessee(s) by other financial institutions; or (2) if OCT Financial Leasing is unable to reasonably obtain the information required under (1) for reference, the capital costs incurred by OCT Financial Leasing at the time of entering into of the relevant Implementation Agreement, which may be adjusted according to the adjustment of the benchmark lending rates published by PBOC for the same period.

When estimating the split between the principal amount and the interest and handling fee above, the Group took into consideration (a) an interest rate which could range from 5% to 6% per annum; (b) guarantee deposit ranging from 2.0% to 10.0% of the principal amount (for finance lease); and (c) handling fee of nil to 3% of the principal amount (for finance lease).

(a) Interest rate

As interest rates mentioned above together with relevant handling fee charged and guarantee deposit obtained would result in an internal rate of return of approximately 7.5% for finance lease and 6% for factoring would be (i) above the benchmark lending rates published by PBOC ranging from 4.35% to 4.9% per annum; (ii) above the capital cost of the Group, which shall be the source of fund of OCT Financial Leasing (i.e. the Group’s bank loans interest rates range from one month HIBOR + 0.90%, to 4.99% per annum); and (iii) carries an interest spread ranging more than 2%, which is higher than the interest spread enjoyed by a number of finance lease companies or groups listed in the Stock Exchange of approximately 2% for the financial year 2018.

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LETTER FROM HALCYON

(b) Guarantee deposit

To achieve an internal rate of return of approximately 7.5% for finance lease transaction of the Group, the Group estimated an guarantee deposit ranging from 2.0% to 10.0% of the principal amount depending on the interest rate and handling fee to be charged by OCT Financial Leasing.

We have discussed with the management of the Company, such guarantee deposit will be consistently applied towards all finance lease customers. We understand from management of OCT Financial Leasing that the OCT Financial Leasing obtained guarantee deposit ranging from 2% to 10% of the respective principal amount for finance leases transactions previously entered into with independent third parties, thus the estimated guarantee deposit ranging from 2.0% to 10.0% is comparable to the guarantee deposit obtained from independent third parties in 2018 and thus we considered to be acceptable.

(c) Handling fee

To achieve an internal rate of return of approximately 7.5%, the Group estimated a handling fee ranging from nil to 3% of the principal amount depending on the interest rate and guarantee deposit obtained by OCT Financial Leasing.

We have discussed with the management of the Company and noted that OCT Financial Leasing changed handling fee from nil to 3% to finance leases transactions previously entered into with independent third parties, thus the estimated nil to 3% of handling fee to be charged by OCT Financial Leasing to OCT Group and OCT Ltd is within the range of handling fee changed to independent third parties in 2018 and thus we considered to be acceptable.

In view of (i) the above mentioned internal control measures in assessing the credit worthiness of the potential customer by the Company; (ii) OCT Financial Leasing would not enter into any finance lease/factoring transaction unless an interest spread comparable to other finance lease companies listed in Stock Exchange would be obtained and; (iii) it is not uncommon for financial institution to obtain external financing to finance the provision of financial services, we concur with the Directors that the Finance Lease and Factoring Agreement is in the interest of the Company and its shareholders as a whole.

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LETTER FROM HALCYON

8. Financial Effects

Earnings

From the date on which the Implementation Agreement becomes effective, the Group would be entitle to recognize interest income and handling fee income from the Lessee(s), which would provide additional income contribution to the Group.

Net assets and gearing

Upon implementation of transactions contemplated under the Implementation Agreement, the Directors consider that there will be no significant immediate change to the Group’s net asset value given the assets of the Group will increase pursuant to the value of assets acquired under each finance lease while offset by the payment of proceeds to the Lessee(s).

Since the Group will be financing the Financial Services via external borrowings, upon implementation of transactions contemplated under the Implementation Agreements, the Group’s gearing will increase accordingly should the provision of such Financial Services are financed by external borrowings.

Liquidity

Given the Group intended to finance the Financial Services via external borrowings, the payment of sales proceeds to the Lessee(s) by drawing down the Group’s borrowing facilities will have no significant impact towards the Group’s liquidity.

9. Reporting requirements and conditions of the Transactions

Pursuant to Rules 14A.55 to 14A.59 of the Listing Rules, the Transactions are subject to the following annual review requirements:

(a) each year the independent non-executive Directors must review the Transactions and confirm in the annual report and accounts that Transactions have been entered into:
(i) in the ordinary and usual course of business of the Group;
(ii) on normal commercial terms or better; and
(iii) in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

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LETTER FROM HALCYON

(b) each year the auditors of the Company (currently, KPMG) must provide a letter to the Board (with a copy provided to the Stock Exchange at least ten business days prior to the bulk printing of the Company’s annual report) confirming whether anything has come to the Board’s attention that causes them to believe that the Transactions:
(i) have not received the approval of the Board;
(ii) are not in accordance with the pricing policies of the Group (if applicable);
(iii) have not been entered into in accordance with the relevant agreements governing the Transactions; and
(iv) have exceeded the Annual Caps;
(c) the Company shall allow, and shall procure the relevant counterparties to the Transactions to allow, the Company’s auditors sufficient access to their records for the purpose of the reporting on the Transactions as set out in paragraph (b); and
(d) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (a) and/or (b) respectively. The Stock Exchange may require the Company to re-comply with the announcement and shareholders’ approval requirements and may impose additional conditions.

In light of the reporting requirements attached to the Transactions, in particular, (i) the restriction of the value of the Transactions by way of the Annual Caps; (ii) the internal control measures in place and (iii) the ongoing review by the independent non-executive Directors and auditors of the Company of the terms of the Transactions and the Annual Caps not being exceeded, we are of the view that appropriate measures will be in place to monitor the conduct of the Transactions and assist to safeguard the interests of the Independent Shareholders.

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LETTER FROM HALCYON

RECOMMENDATION

Having considered the above principal factors and reasons, we consider that (i) the terms of the Finance Lease and Factoring Framework Agreements and the transactions contemplated thereunder are in the ordinary and usual course of business of the Group, on normal commercial terms, and in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) the Annual Caps are fair and reasonable so far as the Company and the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; and (iii) it is a normal business practice for finance lease agreements of this type to be of such duration.

Accordingly, we would recommend the Independent Shareholders, and advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution in respect of the Finance Lease and Factoring Framework Agreements (including the Annual Caps) and the transactions contemplated thereunder at the EGM.

Yours faithfully, For and on behalf of HALCYON CAPITAL LIMITED Terry Chu Managing Director

Mr. Terry Chu is a person licensed under the SFO to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and regarded as a responsible officer of Halcyon Capital Limited and has over 19 years of experience in corporate finance industry.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The Company is required to set out in this circular the financial information for the last three financial years with respect to the profits and losses, financial record and position, as a comparative table and the latest published statement of financial position together with the notes on the annual accounts for the last financial year for the Group.

The audited consolidated financial statements of the Group for the year ended 31 December 2016 has been set out in pages 77 to 172 of the 2016 annual report of the Company which was posted on 26 April 2017 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0426/LTN20170426481.pdf). The audited consolidated financial statements of the Group for the year ended 31 December 2017 has been set out in pages 77 to 178 of the 2017 annual report of the Company which was posted on 13 April 2018 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0413/LTN20180413403.pdf). The audited consolidated financial statements of the Group for the year ended 31 December 2018 has been set out in pages 97 to 230 of the 2018 annual report of the Company which was posted on 26 April 2019 on the Stock Exchange’s website (http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0426/LTN201904261057.pdf).

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 March 2019, being the date of this indebtedness statement prior to the printing of this circular, the Group had total borrowings of approximately RMB8,742.28 million, comprising secured and guaranteed bank and related party loans of approximately RMB2,348.49 million, unsecured and unguaranteed bank and related party loans of approximately RMB6,393.79 million.

As at 31 March 2019, the Group’s secured and guaranteed bank loans were secured by pledged deposits with total carrying values of approximately RMB740.69 million, and guarantees provided by Shenzhen Overseas Chinese Town Co., Ltd. and Overseas Chinese Town (HK) Co., Ltd., which are intermediate parents of the Company.

As at 31 March 2019, the Group had outstanding obligations under operating lease with carrying amount of approximately RMB91.86 million.

As at 31 March 2019, save for the guarantees of approximately RMB849.94 million given to financial institutions for mortgage loan facilities granted to purchasers of the Group’s properties, the Group had no other material contingent liabilities.

Foreign currency amounts have been, for the purposes of this indebtedness statement, translated into Renminbi at the approximate rates of exchange applicable at the close of business on 31 March 2019.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as aforesaid and apart from intra-group liabilities and normal trade payables in the ordinary course of business, at the close of business on 31 March 2019, the Group did not have any other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, other similar indebtedness, lease liabilities under finance lease and operating lease or hire purchase lease commitments, liabilities under acceptance or acceptance credit, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that, taking into account the financial resources available to the Group including the internally generated funds and the present available bank facilities, and taking into account the impact of the transactions contemplated under the Finance Lease and Factoring Framework Agreements, the Group will have sufficient working capital for its requirements for at least the next 12 months from the date of this circular.

4. CONTINGENT LIABILITIES

Save as disclosed in this circular, the Group has no other material contingent liabilities. The Group is not involved in any current material legal proceedings, nor is the Group aware of such material legal proceedings. The Group would record any loss contingencies when, based on information then available, it is probable that a loss had been incurred and the amount of the loss can be reasonably estimated. The Group confirms that there has not been any material change in the level of its contingent liabilities since 31 December 2018 up to the Latest Practicable Date.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

For the year ended 31 December 2018, the Group realised revenue from the continuing operations of approximately RMB1,585 million, representing a year-on-year decrease of approximately 61.4%. For the year ended 31 December 2018, profit attributable to equity holders of the Company was approximately RMB798.70 million, representing a year-on-year decrease of approximately 27.8%. For the year ended 31 December 2018, the Group’s gross profit margin from the continuing operations was approximately 35.2%, representing a decrease of 2.5 percentage points over the same period of 2017. As at 31 December 2018, total assets and total equity of the Group amounted to approximately RMB25.08 billion and approximately RMB12.91 billion, representing a year-on-year increase of approximately 5.6% and decrease of approximately 3.1% respectively.

As OCT Group’s only offshore listed platform, the Group’s new development mode will be “comprehensive development + investment in the urbanisation industrial ecosphere”. The Group will develop the comprehensive development business with added vigour and on a larger scale by fully leveraging OCT’s brand equity and financial strength, and by securing high-quality projects from the areas of prime cities and OCT urbanisation projects. The Group

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

will also actively leverage the domestic and overseas capital markets along with financial products, intensifying its project development to seek new investment opportunities through domestic and overseas investments, mergers and acquisitions, industrial funds, financial leasing and others methods.

Comprehensive development business

In 2019, the various control policies will continue to be stability-oriented assuming that such policies ensure the steady development of the real estate market, while the basic keynotes of “houses are built to be inhabited, not for speculation” and “leasing and purchasing” remain unchanged. In order to ensure reasonable housing consumption for the residents, the effects on the consumption of some improved housing arising from preceding control and upgrade may be adjusted subsequently. Meanwhile, the further release on monetary policy is expected to facilitate improvements in the aspect of real estate market demand.

In future, the various comprehensive development projects of the Group are as follows: Shanghai Suhewan Project will push forward the leasing activities for the commercial properties surrounding Bvlgari Hotel in order to consolidate the market benchmark role of Bvlgari Residence. The Chengdu OCT Project will primarily launch high-end apartments and the high-end customised villa in the only eyot of downtown Chengdu, and will continue its sale of boutique community commercial properties with a total saleable area of approximately 189,000 sq.m.. As to the Chongqing Land Project, a new batch of high-rise and multi-storey residential products with a total saleable area of approximately 176,000 sq.m. will be launched. For the OCT (Changshu) Project, the planning and design work is scheduled to be completed and the construction is expected to commence in the first half of 2019, and the project is expected to be released for leasing from 2020. With combined geographical advantages and integrated surrounding resources, the Group will explore and push forward timely planning, development and construction of idle lands for its existing industrial lands.

The Group will also continue to adhere to advanced development philosophy and clear market orientation, pushing forward its comprehensive development business with enhanced strength and size. It will stay on the outlook for diversified investment opportunities, with a view to strengthening the strategic synergy with investment enterprises. Through various ways such as acquisition, cooperation and equity investment, we will acquire high-quality lands at low cost to increase resource reserve for the projects, so as to expand and enhance our comprehensive development business.

Investment in the Urbanisation Industrial Ecosphere Business

In 2019, aiming at key areas including culture, travel, education, healthcare and urbanisation, the investment business of the Group will continuously select high-quality projects that meet our strategic orientation with due care, and strive for new equity investment opportunities, so as to build the urbanisation industrial ecosphere and the industrial cooperation alliance, continuously enriching and expanding the contents and essence of the urbanisation projects. In the future, the Group’s fund management companies will be based in

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Guangdong-Hong Kong-Macao Greater Bay Area, radiating outwards throughout China with its main focus on industries having strong synergy with urbanisation industrial ecosphere so as to reserve high quality resources for the Company.

Finance Lease Business

In 2019, the Group will continuously engage in the finance lease business in sectors such as theme parks and the manufacturing industry with a primary focus on customer base such as large to mid-scale state-owned enterprises and high quality listed companies, improve its risk management and push forward the development of the business in order to achieve stable operating income.

The Board is very confident about the future development prospects of the Group. With the support of OCT Group, the Group will continue to forge ahead with innovative development and endeavour to generate ideal investment returns for Shareholders.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

Set out below are the management discussion and analysis of the Group for each of the three financial years ended 31 December 2016, 2017 and 2018.

For the year ended 31 December 2016

The total equity of the Group as at 31 December 2016 was approximately RMB6.77 billion. As at 31 December 2016, the Group had current assets of approximately RMB14.26 billion and current liabilities of approximately RMB8.46 billion. The current ratio was 1.68 as at 31 December 2016, decreased by 0.85 as compared to that as at 31 December 2015, which was mainly due to the repayment of certain related party loans and the transfer of part of the loans from non-current liabilities to current liabilities during the year ended 31 December 2016. The Group generally finances its operations with internally generated cash flow and credit facilities provided by banks and shareholder’s loan.

As at 31 December 2016, the Group had outstanding bank and other loans of approximately RMB4.28 billion, without any fixed-rate loans. As at 31 December 2016, the interest rates of bank and other loans of the Group ranged from 1.05% to 6.38% per annum. Some of those bank loans were secured by floating charges of certain assets of the Group and corporate guarantees provided by certain subsidiaries of the Company. The Group’s gearing ratio (being the total borrowings including bills payable and loans divided by total assets) was approximately 43.2% as at 31 December 2016, representing a decrease of 5.7 percentage points as compared to approximately 48.9% as at 31 December 2015, which was mainly due to the decrease in the amount of related party loans.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 31 December 2016, approximately 37.3% of the total amount of outstanding bank and other loans of the Group amounting to approximately RMB1.60 billion was in Renminbi(; approximately 50.6% of which amounting to approximately HK$2.42 billion was in Hong Kong Dollars, approximately 12.1% of which amounting to approximately US$74.80 million was in United States Dollars.

As at 31 December 2016, the total cash and cash equivalents of the Group was approximately RMB2.08 billion, of which approximately 89.8% was in Renminbi, approximately 7.8% was in Hong Kong Dollars, and approximately 2.4% was in United States Dollars.

For the year ended 31 December 2017

The total equity of the Group as at 31 December 2017 was approximately RMB13.31 billion. As at 31 December 2017, the Group had current assets of approximately RMB15.77 billion and current liabilities of RMB9.22 billion. The current ratio of the Group was approximately 1.71 as at 31 December 2017, which is substantially the same comparing with that as at 31 December 2016 (31 December 2016: approximately 1.68). The Group generally finances its operations with internally generated cash flow, credit facilities provided by banks and shareholder’s loans.

As at 31 December 2017, the Group had outstanding bank and other loans of approximately RMB5.01 billion, without any fixed-rate loans. As at 31 December 2017, the interest rates of bank and other loans of the Group ranged from 1.28% to 6.38% per annum. Some of those bank loans were secured by floating charges of certain assets of the Group and corporate guarantees provided by certain subsidiaries of the Company. The Group’s gearing ratio (being the total borrowings including bills payable and loans divided by total assets) was approximately 27.0% as at 31 December 2017, representing a decrease of 16.2 percentage points as compared with approximately 43.2% as at 31 December 2016, mainly due to the issue of the Perpetual Capital Securities in the amount of US$800.00 million during the period, which resulted in the decrease in the amount of loans and the increase in liquidity.

As at 31 December 2017, approximately 81.6% of the total amount of outstanding bank and other loans of the Group amounting to approximately HK$4.89 billion was in Hong Kong Dollars; approximately 18.4% of which amounting to approximately RMB920.00 million was in Renminbi; no outstanding bank and other loans were in United States Dollars.

As at 31 December 2017, the total cash and bank balance of the Group was approximately RMB6.93 billion, of which approximately 54.4% was in United States Dollars, approximately 34.4% of which was in Renminbi and approximately 11.2% of which was in Hong Kong Dollars.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2018

The total equity of the Group as at 31 December 2018 was approximately RMB12.91 billion. As at 31 December 2018, the Group had current assets of approximately RMB11.57 billion and current liabilities of approximately RMB10.57 billion. The current ratio was approximately 1.09 as at 31 December 2018, representing a decrease of 0.62 as compared with that as at 31 December 2017 mainly due to inventory of approximately RMB1.96 billion being transferred from current assets to non-current assets and a number of additional long-term equity investment projects during the period. The Group generally finances its operations with internally generated cash flow, credit facilities provided by banks and shareholder’s loans.

As at 31 December 2018, the Group had outstanding bank and other loans of approximately RMB6.39 billion, without any fixed-rate loans. As at 31 December 2018, the interest rates of bank and other loans of the Group ranged from 3.14% to 6.38% per annum. Some of those bank loans were secured by certain assets of the Group and corporate guarantees provided by certain related companies of the Company. The Group’s gearing ratio (being the total borrowings including bills payable and loans divided by total assets) was approximately 33.6% as at 31 December 2018, representing an increase of 6.6 percentage points as compared with approximately 27.0% as at 31 December 2017, mainly due to the increase in the amount of loans as at the end of the period.

As at 31 December 2018, approximately 88.9% of the total amount of outstanding bank and other loans of the Group amounting to approximately RMB5.68 billion was denominated in Hong Kong Dollars and approximately 11.1% of which amounting to approximately RMB708.50 million was denominated in Renminbi.

As at 31 December 2018, the total cash and bank balance of the Group was approximately RMB3.22 billion, of which approximately 67.6% was denominated in United States Dollars, approximately 30.3% was denominated in Renminbi and approximately 2.1% was denominated in Hong Kong Dollars.

Funding and Treasury Policies

The Group adopted prudent funding and treasury policies. Surplus funds are primarily maintained in the form of cash deposits with leading banks.

Acquisition and development of properties are financed partly by internal resources and partly by bank loans. Repayments of bank loans are scheduled to match asset lives and project completion dates. Bank loans are mainly denominated in Hong Kong dollars and Renminbi and bear interest at floating rates.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group considers that exchange rate fluctuations may have some effect on the overall financial performance of the Group but it is still at a manageable level. The Group will continue to monitor the situation and may consider entering into hedging arrangements in order to minimise foreign exchange risks, if and when necessary. As at 31 December 2016, 2017 and 2018, the Group had no material exposure under foreign exchange contracts or any other hedging instruments.

Interest Expense

For the years ended 31 December 2016 and 2017, the interest expenses of the Group were approximately RMB254.78 million and RMB190.96 million. For the years ended 31 December 2018, the Group’s interest expenses from the continuing operations of the Group were approximately RMB175.06 million. A large portion of the interest expenses were incurred as a result of bank borrowings interests obtained by the Group for the development of integrated businesses.

Employees and Remuneration Policy

As at 31 December 2016, 2017 and 2018, the Group employed 2,484, 2,188 and 1,735 full-time employees, respectively. The basic remunerations of the employees of the Group are determined with reference to the industry’s remuneration benchmark, the employees’ experience and their performance, and equal opportunities will be offered to all staff members. Salaries of the employees are maintained at a competitive level and are reviewed annually, with reference to the relevant labour market and economic situation. Directors’ remuneration is determined based on a variety of factors such as market conditions and responsibilities assumed by each Director. Apart from the basic remuneration and statutory benefits, the Group also provides discretionary bonuses based on the Group’s results and the individual performance of the staff.

The Group has not experienced any significant problems with its employees or disruption to its operations due to labour disputes nor has it experienced any difficulty in the recruitment and retention of experienced staffs. The Group maintains a good relationship with its employees. Most members of senior management have been working for the Group for many years.

Under the ordinary resolution passed at the extraordinary general meeting on 15 February 2011, the Board adopted a new share option scheme (the “ New Scheme ”). As at 2 March 2016, all share options granted under the New Scheme have expired, lapsed and cancelled. As at 31 December 2016 no share options were exercised. As at 31 December 2017 and 2018, no share options was granted, exercised, lapsed and cancelled.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent Liabilities

As at 31 December 2016, the Group did not have any significant contingent liabilities.

As at 31 December 2017 and 2018, guarantees given to financial institutions for mortgages facilities granted to buyers of the Group’s properties amounts to approximately RMB427.788 million and RMB823.99 million, respectively.

The Group has entered into agreements with certain banks with respect to mortgage loans provided to buyers of the property units. Pursuant to the mortgage agreements signed between the Group and the banks, the guarantee will be released upon the issuance of the individual property ownership certificate. Should the mortgagors fail to pay the mortgage monthly installment before the issuance of the individual property ownership certificate, the banks can draw down the security deposits up to the amount of outstanding mortgage installments and demand the Group to repay the outstanding balance to the extent that the deposit balance is insufficient.

The amount of guarantee deposits required varies among different banks, but is usually within a range of 0% to 5% of the mortgage loans granted to buyers, with prescribed capped amount.

The management does not consider it probable that the Group will sustain a loss under these guarantees as the bank has the rights to sell the property and recovers the outstanding loan balance from the sale proceeds if the property buyers default payment. The management also considers that the market value of the underlying properties is able to cover the outstanding mortgage loans guaranteed by the Group. No liabilities therefore are recognised in respect of these guarantees.

Significant Investments, Material Acquisitions and Disposals

For the year ended 31 December 2016

Acquisition of Chengdu Baoxin Quansheng

On 7 March 2016, 成都華僑城創盈企業管理有限公司 (Chengdu OCT Chuang Ying Enterprise Management Company Limited) (“ Chengdu Chuang Ying ”) entered into a cooperation agreement with 成都保鑫投資有限公司 (Chengdu Baoxin Investment Company Limited) (“ Chengdu Baoxin Investment ”) to acquire 50% equity interest in 成都市保鑫泉盛房地產開發有限公司 (Chengdu Baoxin Quansheng Real Estate Development Company Limited) (“ Chengdu Baoxin Quansheng ”) held by Chengdu Baoxin Investment at a consideration of RMB25 million. Chengdu Chuang Ying and Chengdu Baoxin Investment should provide shareholders’ loan to Chengdu Baoxin Quansheng in proportion to their respective equity interests in Chengdu Baoxin Quansheng and provide corporate guarantees required for the bank loan(s) to be obtained by Chengdu Baoxin Quansheng, the total amount

– I-8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

of which shall not exceed RMB1.950 billion. Chengdu Baoxin Quansheng owned a land located in Jinniu District, Chengdu City with a total site area of approximately 58,300 sq.m. and total gross floor area not more than 174,900 sq.m..

For further details, please refer to the announcement of the Company dated 7 March 2016.

Investment in Capital Fortune Emerging Industry Funds

On 30 September 2016, Shenzhen Huayou Investment Co., Ltd. (深圳華友投資有限公司) (“ Huayou Investment ”), an indirect wholly-owned subsidiary of the Company, entered into a limited partnership agreement with Shenzhen Capital Fortune Investment Company Limited (深圳市遠致富海投資管理有限公司) (“ Capital Fortune Investment ”) and other several partners to establish Shenzhen Capital Fortune Investment New Industries Investment Enterprise (LLP) (深圳遠致富海新興產業投資企業(有限合夥)) (“ Capital Fortune Emerging Industry Funds* ”) with an aggregate capital of RMB1 billion, of which RMB143 million was contributed by Huayou Investment, representing approximately 14.3% of the interest in the Capital Fortune Emerging Industry Funds. The investment scope of Capital Fortune Emerging Industry Funds covers emerging industries, such as new-energy automobiles, pharmacy and health, mobile internet, energy conservation and environmental protection.

For further details, please refer to the announcements of the Company dated 30 September 2016, 11 October 2016 and 24 October 2016 and the circular of the Company dated 27 October 2016.

Investment in Capital Fortune Fund No. 10

On 19 December 2016, Huayou Investment entered into a limited partnership agreement with Capital Fortune Investment and other several partners to establish Shenzhen Capital Fortune Investment No. 10 Investment Enterprise (LLP) (深圳遠致富海十號投資企業(有限合夥)) (“ Capital Fortune Investment No. 10 Fund* ”) in the total capital of RMB206 million, of which RMB100 million was contributed by Huayou Investment. Capital Fortune Fund No. 10 engages in investment in the equity interest in a PRC securities firm. For further details, please refer to the announcement of the Company dated 19 December 2016.

Investment in NCI Fund

On 28 December 2016, City Legend International Limited (華昌國際有限公司) (“ City Legend ”), an indirect wholly-owned subsidiary of the Company has applied for investing in the total amount of US$50 million in the NCI Fund, a segregated Portfolio of New China Innovation Fund SPC. The investment objective of NCI Fund is to invest in equity securities in a high technology company whose operation is based in the PRC and propose to make initial public offering of its securities. For further details, please refer to the announcement of the Company dated 28 December 2016.

– I-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 31 December 2017

Investment in Minsheng Education

On 6 March 2017, City Legend entered into the cornerstone investment agreement with, among others, Minsheng Education Group Company Limited (民生教育集團有限公司) (“ Minsheng Education ”), to subscribe for 332,000,000 shares of Minsheng Education at the offer price as part of the international offering of Minsheng Education Group Company Limited. The primary focus of Minsheng Education is to provide high-quality private formal higher education in the PRC dedicated to nurturing professional talents. This investment is expected to broaden the sources of profits of the Group. The subscription was completed on 21 March 2017 at a total effective subscription price of approximately HK$463 million, representing 8.26% of the total issued share capital of Minsheng Education. For further details, please refer to the announcement of the Company dated 6 March 2017.

Investment in Shanghai Libao Huachen Fund

On 17 March 2017, Huayou Investment entered into the limited partnership agreement with Shanghai Rongzheng Libao Investment Management Co., Ltd. (上海榮正利保投資管理有限公司), Shanghai Rongzheng Investment Advisory Co., Ltd. (上海榮正投資諮詢有限公司), and other several partners to establish Shanghai Libao Huachen Investment Centre (LLP) (上海利保華辰投資中心(有限合夥)) (“ Shanghai Libao Huachen Fund* ”) with an aggregate capital of RMB400 million, among which Huayou Investment invested a total amount of RMB30 million. Shanghai Libao Huachen Fund principally invests in culture industry, including but not limited to segments of video and media, sports and entertainment, leisure and tourism as well as online education segment, and segments of upgrading and reconstruction of such industries through internet and mobile internet.

For further details, please refer to the announcement of the Company dated 17 March 2017.

Disposal of 100% equity interests in Shanghai Huali

On 20 September 2017, Barwin Development Company Limited (“ Barwin Development ”), the sole shareholder of Shanghai Huali Packaging Co., Ltd. (上海華勵包裝有限公司) (“ Shanghai Huali ”) and a wholly-owned subsidiary of the Company, entered into the equity transfer agreement (the “Shanghai Huali Equity Transfer Agreement”) with Shanghai Huiyang Industry Co., Ltd. (上海匯陽實業有限公司) (“ Huiyang Industry ”), the winning bidder in the public tender conducted by the Shanghai United Assets and Equity Exchange. Pursuant to the Shanghai Huali Equity Transfer Agreement, Barwin Development disposed of 100% equity interests in Shanghai Huali to Huiyang Industry at a consideration of RMB164,673,100. The disposal was completed on 30 September 2017.

For further details, please refer to the announcements of the Company dated 7 July 2017, 4 August 2017 and 20 September 2017.

– I-10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Issue of perpetual capital securities in the amount of US$800.00 million

On 11 October 2017, the Company successfully issued the perpetual capital securities (“ Perpetual Capital Securities ”) in an aggregate principal amount of US$800.00 million, which is unconditionally guaranteed by OCT Group. The securities are listed on the Stock Exchange at an initial distribution rate of 4.3%. It represents the most narrowed margin from the guidance price of Perpetual Capital Securities issued in the Hong Kong capital market in 2017, which will serve as a strong capital support for the future development of the Company. The Company may, at its sole discretion, elect to defer a distribution pursuant to the terms of the securities.

For further details, please refer to the announcements of the Company dated 28 September 2017, 29 September 2017 and 11 October 2017.

Disposal of 51% equity interests in Capital Converge

On 9 November 2017, the Company entered into the sale and purchase agreement and the supplemental agreement (the “ Capital Converge Sale and Purchase Agreement ”) with New China OCT Fund SPC (on behalf of New China Fund SP 1) (“ New China Fund ”), pursuant to which the Company disposed of 51% of the total issued share capital of Capital Converge Holdings Limited (“ Capital Converge ”) and 51% of the shareholder’s loan in Capital Converge to New China Fund, at the consideration in the sum equals to the US$ equivalent of approximately RMB1,395 million. Completion of the sale and purchase took place on 29 December 2017. Upon completion of the transaction, the Company indirectly held 49% equity interests in Chongqing OCT Real Estate Limited* (重慶華僑城置地有限公司) through Capital Converge. For further details, please refer to the announcements of the Company dated 13 November 2017, 15 November 2017, 21 December 2017 and 29 December 2017, and the circular of the Company dated 6 December 2017.

For the year ended 31 December 2018

Disposal of Huali Packaging (Huizhou) Co., Ltd.

Following the completion of transfer of 85% equity interest in Huali Packaging (Huizhou) Co., Ltd. (“ Huali Packaging (Huizhou) ”) in April 2018, the Group entered into an equity transfer agreement with the successful bidder in June 2018 to sell 15% equity interest in Huali Packaging (Huizhou) at the consideration of approximately RMB12.92 million. Upon completion of the disposal, the Group no longer held any equity interest in Huali Packaging (Huizhou). For further details, please refer to the announcement of the Company dated 15 June 2018.

– I-11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Acquisition of 5.11% equity interest in Tongcheng-Elong

On 10 May 2018, City Legend, an indirect wholly-owned subsidiary of the Company, and Suzhou Wan Cheng Sheng Da Travel Development Limited (蘇州萬程晟達旅遊發展有限公司) (“ Suzhou Wancheng* ”) entered into equity transfer agreements, pursuant to which City Legend agreed to acquire 5.11% equity interest in Tongcheng-Elong Holdings Limited at the consideration of approximately RMB1.18 billion. For further details, please refer to the announcements of the Company dated 10 May 2018 and 22 June 2018 and the circular of the Company dated 30 August 2018.

Acquisition of Changshu Land

On 25 June 2018, OCT (Changshu) Investment and Development Co., Ltd. (“ OCT Changshu ”), a non wholly-owned subsidiary of the Company, won the bid for the land use rights of a land parcel located in Changshu City at the base bid price of approximately RMB18.78 million. OCT Changshu entered into a land transfer agreement with the Land and Resources Bureau to acquire the Changshu Land at the consideration of approximately RMB18.78 million. For further details, please refer to the announcement of the Company dated 27 June 2018.

Cornerstone Investment in Tianli Education

On 26 June 2018, City Legend entered into a cornerstone investment agreement with Tianli Education International Holdings Limited (“ Tianli Education ”), pursuant to which City Legend agreed to subscribe for the investor shares of Tianli Education at the offer price as part of the international offering. The subscription was completed on 12 July 2018 at a total effective subscription price of approximately HK$268.68 million, representing 4.82% of the issued share capital of Tianli Education after full exercise of over-allotment option. For further details, please refer to the announcement of the Company dated 26 June 2018.

Cornerstone Investment in E-House Enterprise

On 5 July 2018, City Legend entered into a cornerstone investment agreement with E-House (China) Enterprise Holdings Limited (“ E-House Enterprise ”), pursuant to which City Legend agreed to acquire the investor shares of E-House Enterprise at the offer price as part of the international offering. The subscription was completed on 20 July 2018 at a total effective subscription price of approximately HK$1.07 billion, representing 4.99% of the issued share capital of E-House Enterprise. For further details, please refer to the announcement of the Company dated 5 July 2018 and the circular of the Company dated 24 September 2018.

– I-12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Acquisition of 9.98% equity interest in Yuzhou Properties

On 31 August 2018, City Legend entered into a subscription agreement with Yuzhou Properties Company Limited (“ Yuzhou Properties ”), pursuant to which City Legend agreed to subscribe 9.90% of the enlarged issued share capital of Yuzhou Properties, at the aggregate subscription price of approximately HK$1.82 billion. For further details, please refer to the announcement of the Company dated 31 August 2018 and the circular of the Company dated 26 October 2018.

On 16 November 2018, Yuzhou Properties declared a scrip dividend scheme in relation to the interim dividend of 2018, and the Group selected for receiving the interim dividend wholly in new and fully paid shares in lieu of cash. The total shares of Yuzhou Properties held by the Group accounted for 9.98% of Yuzhou Properties’ issued share capital after the scrip dividend scheme.

Sale and Leaseback Arrangement

On 11 September 2018, OCT Financial Leasing entered into an acquisition agreement with Yibin Grace Co., Ltd (“ Yibin Grace ”), pursuant to which OCT Financial Leasing agreed to acquire the equipment and machinery used for manufacturing textile related products (“ Equipment ”) at the consideration of RMB300.00 million.

On the same date, OCT Financial Leasing also entered into a leaseback agreement with Yibin Grace, pursuant to which OCT Financial Leasing agreed to lease the Equipment to Yibin Grace at the interest rate of 5.45% per annum for a term of 60 months. The lease consideration payable by Yibin Grace to OCT Financial Leasing comprises a security deposit of RMB30.00 million, a service fee of RMB9.00 million and the aggregate lease payments amounting to approximately RMB342.90 million. For further details, please refer to the announcement of the Company dated 11 September 2018.

Disposal of 51% equity interest in Chengdu Tianfu OCT Lakeside Business Management Co. Ltd.

On 24 December 2018, Chengdu Tianfu OCT Industry Development Company Limited (成都天府華僑城實業發展有限公司, “ Chengdu OCT ”), Zhongbao Investment Overseas Chinese Town (Shenzhen) Tourism Cultural City Renewal Equity Investment Fund Partnership (Limited Partnership) (中保投華僑城(深圳)旅遊文化城市更新股權投資基金合夥企業(有限合夥), “ Zhongbao Investment Fund ”) and Chengdu Tianfu OCT Lakeside Business Management Co. Ltd. (成都天府華僑城湖濱商業管理有限公司, “ OCT Lakeside ”) (a whollyowned subsidiary of Chengdu OCT) entered into an equity transfer agreement, pursuant to which Chengdu OCT agreed to sell 51% equity interest in OCT Lakeside to Zhongbao Investment Fund at the consideration of approximately RMB60.53 million. For further details, please refer to the announcement of the Company dated 24 December 2018.

– I-13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disposal of 100% equity interest in Zhongshan Huali

On 27 December 2018, Wantex Investment Limited (榮添投資有限公司), an indirectly wholly-owned subsidiary of the Company, entered into an equity transfer agreement with the successful bidders in the public tender to dispose of 100% equity interest in Zhongshan Huali to the successful bidders at the total consideration of approximately RMB150.29 million. The disposal indicated that the Group has fully withdrawn from its paper packaging business. For further details, please refer to the announcements of the Company dated 25 October 2018, 23 November 2018 and 27 December 2018.

Save as disclosed above, as at 31 December 2016, 2017 and 2018, there are no other matters applicable to the Group and required to be disclosed under the requirements of paragraph 32 of Appendix 16 to the Listing Rules.

– I-14 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ INTERESTS

Directors’ and chief executive’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, no interests and short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) were held by the Directors and chief executives of the Company which have been notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of the SFO) or have been entered in the register maintained by the Company pursuant to section 352 of the SFO, or otherwise have been notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “ Model Code ”).

Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, as far as is known to the Directors, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

			Approximate %
			of issued share
Name of Substantial		Number of	capital of the
Shareholder	Capacity/Nature	Shares held	Company
Pacific Climax	Beneficial	530,894,000	70.94%
	owner (note 1)	(long position)
OCT (HK)	Interest of a	530,894,000	70.94%
	controlled	(long position)
	corporation (note 2)

– II-1 –

GENERAL INFORMATION

APPENDIX II

			Approximate %
			of issued share
Name of Substantial		Number of	capital of the
Shareholder	Capacity/Nature	Shares held	Company
OCT Ltd.	Interest of a	530,894,000	70.94%
	controlled	(long position)
	corporation (note 3)
OCT Group	Interest of a	530,894,000	70.94%
	controlled	(long position)
	corporation (note 4)

Notes:

(1) The interests held by Pacific Climax consist of interests (long position) in 530,894,000 Shares. Ms. Xie Mei and Mr. Lin Kaihua, both being executive Directors, and Mr. Zhang Jing, being a non-executive Director, are also directors of Pacific Climax.
(2) OCT (HK) is the beneficial owner of all the issued share capital in Pacific Climax. Therefore, OCT (HK) is deemed, or taken to be interested in all the Shares beneficially held by Pacific Climax for the purpose of the SFO. Mr. He Haibin and Ms. Xie Mei, both being executive Directors, and Mr. Zhang Jing, being a non-executive Director, are also directors of OCT (HK).
(3) OCT Ltd. is the beneficial owner of all the issued share capital of OCT (HK), which is in turn the beneficial owner of all the issued share capital of Pacific Climax. OCT Ltd. is deemed, or taken to be interested in all the Shares which are beneficially owned by OCT (HK) and Pacific Climax pursuant to the SFO. OCT Ltd. is a company incorporated in the PRC, the shares of which are listed on the Shenzhen Stock Exchange. OCT Ltd. is a subsidiary of OCT Group.
(4) OCT Group is the beneficial owner of 46.99% of the issued shares of OCT Ltd., which is the beneficial owner of all the issued shares of OCT (HK) and in turn, the beneficial owner of all the issued share capital of Pacific Climax. Therefore, OCT Group is deemed, or taken to be interested in all the Shares which are beneficially owned by OCT Ltd., OCT (HK) and Pacific Climax for the purpose of the SFO.

Save as disclosed above, no other interests required to be recorded in the register kept under section 336 of the SFO have been notified to the Company as at the Latest Practicable Date.

3. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective close associates has any interest in any business which competes or is likely to compete with the businesses of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation (other than statutory compensation).

– II-2 –

GENERAL INFORMATION

APPENDIX II

5. INTEREST IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 December 2018 (being the date to which the latest published accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the date of this circular and which is significant in relation to the businesses of the Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2018 (being the date to which the latest published accounts of the Company were made up).

7. EXPERT AND CONSENT

The qualifications of the expert who has been named in this circular or has given opinions or advice which are contained herein are set out below:

Name	Qualification
Halcyon	a corporation licensed to carry out Type 6 (advising
	on corporate finance) regulated activities under the
	SFO

As at the Latest Practicable Date, Halcyon did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Halcyon has given and has not withdrawn its written consent to the issue of this circular, with the inclusion of its letter or references to its name in the form and context in which they are included.

Halcyon did not have any direct or indirect interest in any assets which have been, since 31 December 2018 (being the date to which the latest published audited financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

– II-3 –

GENERAL INFORMATION

APPENDIX II

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business of the Group) had been entered into by members of the Group within the two years immediately preceding the Latest Practicable Date and are or may be material:

(a) the equity transfer agreement dated 20 September 2017 entered into between Barwin Development Company Limited, a wholly-owned subsidiary of the Company, and Shanghai Huiyang Industry Co., Ltd. (上海匯陽實業有限公司) in relation to the disposal of 100% equity interest in Shanghai Huali Packaging Co., Ltd. (上海華勵包裝有限公司) by Barwin Development Company Limited at a consideration of RMB164,673,100;
(b) the sale and purchase agreement (the “ Capital Converge Sale and Purchase Agreement ”) dated 9 November 2017 entered into among the Company, Capital Converge Holdings Limited and New China Fund (on behalf of New China Fund SP 1) in relation to the disposal of 51 shares and 51% of the shareholder’s loan in Capital Converge Holdings Limited by the Company to New China Fund (on behalf of New China Fund SP 1) at a consideration in the sum equals the US$ equivalent of RMB1,395,249,891.13;
(c) the supplemental agreement to the Capital Converge Sale and Purchase Agreement dated 15 November 2017 entered into among the Company, Capital Converge Holdings Limited and New China Fund (on behalf of New China Fund SP 1);
(d) the equity transfer agreements (together with the supplemental agreement thereto) entered into between City Legend International Limited (“ City Legend ”) and Suzhou Wancheng Shengda Travel Development Co., Ltd.* (蘇州萬程晟達旅遊發展有限公司) on 10 May 2018 in relation to the acquisition of 5.11% equity interest in Tongcheng-Elong Holdings Limited by City Legend at a consideration of approximately RMB1.18 billion;
(e) the cornerstone investment agreement entered into between City Legend and Tianli Education International Holdings Limited (“ Tianli Education ”) and China International Capital Corporation Limited on 26 June 2018 in relation to subscription of 4.82% of the issued share capital of Tianli Education at a subscription price of approximately HK$266 million;
(f) the cornerstone investment agreement entered into among City Legend, E-House (China) Enterprise Holdings Limited and China International Capital Corporation Hong Kong Securities Limited on 5 July 2018 in relation to the subscription of 73,371,900 shares in E-House (China) Enterprise Holdings Limited at the subscription price of approximately HK$1,055 million;

– II-4 –

GENERAL INFORMATION

APPENDIX II

(g) the subscription agreement entered into between City Legend and Yuzhou Properties on 31 August 2018 in relation to the subscription of 460,489,606 new shares in Yuzhou Properties at the aggregate subscription price of HK$1,823,538,839.76;
(h) the acquisition agreement and leaseback agreement both dated 11 September 2018 entered into between OCT Financial Leasing Co., Ltd, a wholly-owned subsidiary of the Company, and Yibin Grace Co., Ltd, pursuant to which OCT Financial Leasing Co., Ltd agreed to acquire certain equipment from Yibin Grace Co., Ltd at the consideration of RMB300 million and leaseback such equipment to Yibin Grace Co., Ltd.;
(i) the equity transfer agreement dated 24 December 2018 entered into between Chengdu Tianfu OCT Industry Development Company Limited (成都天府華僑城實業發展有限公司, “ Chengdu OCT ”), a non-wholly owned subsidiary of the Company, Zhongbao Investment Overseas Chinese Town (Shenzhen) Tourism Cultural City Renewal Equity Investment Fund Partnership (Limited Partnership) (中保投華僑城(深圳)旅遊文化城市更新股權投資基金合夥企業(有限合夥), “Zhongbao Investment Fund”) and Chengdu Tianfu OCT Lakeside Business Management Co. Ltd. (成都天府華僑城湖濱商業管理有限公司, “ OCT Lakeside ”) in relation to the disposal of 51% equity interest in OCT Lakeside by Chengdu OCT to Zhongbao Investment Fund at the consideration of approximately RMB60.53 million;
(j) the equity transfer agreement dated 27 December 2018 entered into between Wantex Investment Limited (榮添投資有限公司), an indirectly wholly-owned subsidiary of the Company, and Shenzhen Quande Investment Company Limited (深圳市全德投資有限公司) and Shenzhen Zhijie Investment Company Limited (深圳智捷投資有限公司) in relation to the disposal of 100% equity interest in Zhongshan Huali Packaging Co., Ltd.* (中山華力包裝有限公司) at the total consideration of approximately RMB150.29 million;
(k) the cooperation agreement entered into on 26 March 2019, between Zhuhai Yiyun Real Estate Limited (珠海依雲房地產有限公司) (“ Zhuhai Yiyun ”), Xiamen Yuzhou Grand Future Real Estate Development Company Limited (廈門禹洲鴻圖地產開發有限公司) (“ Xiamen Yuzhou ”), Shenzhen Huajing Investment Limited (深圳市華京投資有限公司) (“ Shenzhen Huajing ”) and Zhongshan Yuhong Real Estate Development Limited (中山禹鴻房地產開發有限公司) (“ Zhongshan Yuhong ”) in relation to the acquisition of 21% of equity interest and debt interest in Zhongshan Yuhong at a total consideration of approximately RMB340,380,433;
(l) the equity transfer agreement dated 26 March 2019 and entered into between Xiamen Yuzhou and Shenzhen Huajing in respect of the acquisition of 21% of equity interest in Zhongshan Yuhong at a total consideration of RMB1,263,447;

– II-5 –

GENERAL INFORMATION

APPENDIX II

(m) the debt transfer agreement dated 26 March 2019 and entered into between Xiamen Yuzhou and Shenzhen Huajing in respect of the acquisition of 21% of debt interest in Zhongshan Yuhong at a total consideration of approximately RMB339,116,986;
(n) OCT Ltd. Agreement; and
(o) OCT Group Agreement.

9. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration or claim of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company or any member of the Group.

10. GENERAL

(a) The company secretary and the qualified accountant of the Company is Mr. Fong Fuk Wai, who is a fellow member of the Hong Kong Institute of Certified Public Accountants.
(b) The Company’s registered office is at Clifton House, 75 Fort Street, PO Box 1350 GT, George Town, Grand Cayman, Cayman Islands. The head office and principal place of business is at 59/F., Bank of China Tower, 1 Garden Road, Hong Kong.
(c) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(d) The English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the following documents are available for inspection during normal business hours except on Saturday, Sunday and public holidays at the office of the Company in Hong Kong at 59/F., Bank of China Tower, 1 Garden Road, Hong Kong from the date of this circular up to and including 7 June 2019:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for the years ended 31 December 2016, 2017 and 2018;
(c) the written consent as referred to under the section headed “Experts and Consents” in this Appendix;

– II-6 –

GENERAL INFORMATION

APPENDIX II

(d) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix;
(e) a copy of each circular issued pursuant to the requirements set out in Chapters 14 and/or 14A of the Listing Rules which has been issued since 31 December 2018 (being the date of which the last published accounts); and
(f) this circular.

– II-7 –

NOTICE OF THE EGM

==> picture [236 x 59] intentionally omitted <==

Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 03366)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Overseas Chinese Town (Asia) Holdings Limited (the “Company”) will be held at Victoria IV, Level 2, Four Seasons Hotel Hong Kong, 8 Finance Street, Central, Hong Kong on Wednesday, 19 June 2019 at 11:30 a.m. or any adjournment of such meeting for the purposes of considering and, if thought fit, passing the following resolutions, with or without modifications, as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT
(a) the finance lease and factoring framework agreement entered into between OCT Financial Leasing Co., Ltd. (華僑城融資租賃有限公司) (“ OCT Financial Leasing ”) and Shenzhen Overseas Chinese Town Company Limited (深圳華僑城股份有限公司) (“ OCT Ltd. ”) dated 7 May 2019 (the “ OCT Ltd. Agreement ”) in relation to the provision of finance lease and factoring services by OCT Financial Leasing to OCT Ltd. for a term of one year from the date of passing of this resolution and the annual cap of RMB2,500,000,000 (a copy of which has been produced to the Meeting marked “A” and initialed by the Chairman of the Meeting for the purpose of identification) and transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and
(b) each of the directors of the Company be and is hereby authorised to do all such further acts and things, negotiate, approve, agree, sign, initial, ratify and/or execute such further documents and take all steps which may be in their opinion necessary, desirable or expedient to implement and/or give effect to the terms of the OCT Ltd. Agreement and the transactions contemplated thereunder.”

– EGM-1 –

NOTICE OF THE EGM

“ THAT
(a) the finance lease and factoring framework agreement entered into between OCT Financial Leasing and Overseas Chinese Town Company Limited (華僑城集團有限公司) (“ OCT Group ”) dated 7 May 2019 (the “ OCT Group Agreement ”) in relation to the provision of finance lease and factoring services by OCT Financial Leasing to OCT Group for a term of one year from the date of passing of this resolution and the annual cap of RMB1,000,000,000 (a copy of which has been produced to the Meeting marked “B” and initialed by the Chairman of the Meeting for the purpose of identification) and transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and
(b) each of the directors of the Company be and is hereby authorised to do all such further acts and things, negotiate, approve, agree, sign, initial, ratify and/or execute such further documents and take all steps which may be in their opinion necessary, desirable or expedient to implement and/or give effect to the terms of the OCT Group Agreement and the transactions contemplated thereunder.”

By order of the Board Overseas Chinese Town (Asia) Holdings Limited He Haibin Chairman

Hong Kong, 24 May 2019

– EGM-2 –

NOTICE OF THE EGM

Notes:

Any member entitled to attend and vote at the EGM (and any adjournment of such meeting) shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares of the Company may appoint more than one proxy to represent him and vote on his behalf at the EGM (and any adjournment of such meeting). A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.
In order to be valid, the proxy form and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power of attorney or authority, must be deposited with the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the EGM (or any adjournment of such meeting) (as the case may be) at which the person named in the instrument proposes to vote.
The transfer books and Register of Members of the Company will be closed from 14 June 2019 to 19 June 2019, both days inclusive. During such period, no share transfers will be effected. In order to qualify for attending the EGM, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Thursday, 13 June 2019.
Completion and return of the proxy form does not preclude a member from attending and voting in person at the EGM (or any adjournment of such meeting) and, in such event, the proxy form shall be deemed to be revoked.
Where there are joint holders of any shares of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders are present at the EGM (and any adjournment of such meeting), the most senior will alone be entitled to vote, whether in person or by proxy. For this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

– EGM-3 –

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RemeGen Co., Ltd. — Proxy Solicitation & Information Statement 2019

51206_rns_2019-05-23_99b1fbbf-b38a-4024-baa2-15e4b24c18a9.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

VERY SUBSTANTIAL ACQUISITION AND

CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

CONTENTS

DEFINITIONS

DEFINITIONS

Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Stock Code: 03366)

VERY SUBSTANTIAL ACQUISITION AND

CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

INTRODUCTION

LETTER FROM THE BOARD

FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

(1) OCT Group Agreement

Parties:

(2) OCT Ltd. Agreement

Parties:

Duration:

Separate Contracts

Contract Period

Interests and Fees

Guarantees

Finance Lease

Lease methods

Leased Assets

Factoring services

Factoring methods

Factoring assets

ANNUAL CAPS AND BASIS OF DETERMINATION

REASONS FOR AND BENEFITS OF ENTERING INTO THE FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENT

(i) Financial performance and position of OCT Group

(ii) Financial performance and position of OCT Ltd.

(iii) Credit ratings

INTERNAL CONTROL MEASURES

1. Assessment of the profile of Lessees

2. Review and approval of the Financial Services

3. Principal and interest rate determination

4. Monitoring continuing connected transactions

FINANCIAL EFFECT OF THE FINANCE LEASE TRANSACTIONS ON THE GROUP

Earnings

Net assets and gearing

Liquidity

LISTING RULES IMPLICATION

CONFIRMATIONS OF THE BOARD

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

VERY SUBSTANTIAL ACQUISITION AND CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

VERY SUBSTANTIAL ACQUISITION AND CONTINUING CONNECTED TRANSACTION: FINANCE LEASE AND FACTORING FRAMEWORK AGREEMENTS

INTRODUCTION

LETTER FROM HALCYON

BASIS OF OUR OPINION

LETTER FROM HALCYON

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background to and reasons for the entering into of the Finance Lease and Factoring Framework Agreements

Financial performance of the Group

Financial position of the Group

Outlook of the Group

OCT Financial Leasing

2. Information of OCT Group and OCT Ltd.

OCT Group

OCT Ltd.

3. Principal terms of the Finance Lease and Factoring Framework Agreements

Duration

Conditions

LETTER FROM HALCYON

Separate Contracts

Contract Period

Interests and Fees

Guarantees

Finance lease specific terms

(i) Lease methods

(ii) Leased Assets

(iii) Lease period

RemeGen Co., Ltd. Proxy Solicitation & Information Statement 2019