THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about any of the contents of this circular or as to what action to take in relation to this circular, you should consult appropriate independent advisers to obtain independent professional advice.

If you have sold or transferred all your shares in S-Enjoy Service Group Co., Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1755)

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

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

==> picture [168 x 33] intentionally omitted <==

A letter from the Board is set out on pages 4 to 25 of this circular. A letter from the Independent Board Committee is set out on pages 26 to 27 of this circular. A letter from Gram Capital, the independent financial adviser, containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 28 to 48 of this circular.

A notice convening the EGM of the Company to be held at Room 1211, 12th Floor, Seazen Holdings Tower B, No. 5, Lane 388, Zhongjiang Road, Putuo, Shanghai on Thursday, 16 January 2020 at 10 a.m. is set out on page EGM-1 of this circular.

27 December 2019

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . .	26
LETTER FROM GRAM CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .	49
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

In this circular (other than those set out in the Notice of EGM), unless the context otherwise requires, the following expressions shall have the following meanings:

“2019 Services Framework Agreement”
the services framework agreement dated 12 December 2018 entered into between Tibet Xinchengyue and Mr. Wang in relation to the provision of certain property related services to Mr. Wang’s Associated Companies
“2020 Services Framework Agreement”
the services framework agreement dated 25 November 2019 entered into between Tibet Xinchengyue and Mr. Wang Xiaosong (as attorney for and on behalf of Mr. Wang) in relation to the provision of certain property related services to Mr. Wang’s Associated Companies
“Annual Cap”
the annual cap of RMB1,300 million for the service fees payable by Mr. Wang’s Associated Companies to the Group for the year ending 31 December 2020 under the 2020 Services Framework Agreement
“associates” has the meaning ascribed to it in the Listing Rules
“Board” the board of Directors
“Company”
S-Enjoy Service Group Co., Limited, a company incorporated in the Cayman Islands with limited liability whose Shares are listed on the Stock Exchange
“connected person(s)”
has the meaning ascribed to it under the Listing Rules
“controlling shareholder” has the meaning ascribed to it under the Listing Rules
“Director(s)” director(s) of the Company
“EGM”

the extraordinary general meeting of the Company to be convened and held at Room 1211, 12th Floor, Seazen Holdings Tower B, No. 5, Lane 388, Zhongjiang Road, Putuo, Shanghai on Thursday, 16 January 2020 at 10 a.m. for the Independent Shareholders to consider and, if thought fit, to approve the resolution in relation to the 2020 Services Framework Agreement and the transactions contemplated thereunder and the Annual Cap

“GFA”

gross floor area

“Group”

the Company and its subsidiaries

– 1 –

DEFINITIONS

“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser” or “Gram Capital”
“Independent Shareholders”
“Latest Practicable Date”
“Listing Rules”
“Mr. Wang”
“Mr. Wang’s Associated Companies”
“Notice of EGM”
“PRC”
“RMB”
the Hong Kong Special Administrative Region of the PRC
a board of committee, comprising the independent nonexecutive Directors, established to advise the Independent Shareholders in respect of the continuing connected transactions contemplated under the 2020 Services Framework Agreement and the Annual Cap
Gram Capital Limited, a licensed corporation to carry on Type 6 (advising on corporate finance) regulated activity under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the continuing connected transactions contemplated under the 2020 Services Framework Agreement
the Shareholders, other than Mr. Wang and his associates, and all other Shareholders interested in the 2020 Services Framework Agreement
18 December 2019, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
The Rules Governing the Listing of Securities on the Stock Exchange
Mr. Wang Zhenhua, the founder and a controlling shareholder of the Company
companies (including the Seazen Group) in which Mr. Wang can exercise or control the exercise of 30% or more of the voting power at their general meetings and their subsidiaries
the notice convening the EGM as set out on pages EGM-1 of this circular
The People’s Republic of China
Renminbi, the lawful currency of the PRC

– 2 –

DEFINITIONS

“Seazen”	Seazen Group Limited (新城發展控股有限公司)
	(formerly known as Future Land Development Holdings
	Limited新城發展控股有限公司), a company listed on the
	Stock Exchange (HKEX stock code: 1030)
“Seazen Group”	Seazen and its subsidiaries
“Seazen Holdings”	Seazen Holdings Co., Ltd. (新城控股集團股份有限公司)
	(formerly known as Future Land Holdings Co., Ltd.), a
	subsidiary of Seazen with its A shares listed on the
	Shanghai Stock Exchange (stock code: 601155)
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong), as amended, supplemented or
	otherwise modified from time to time
“Share(s)”	ordinary share(s) in the share capital of the Company
	with a par value of US$0.01 each
“Shareholder(s)”	the holder(s) of the shares of the Company
“sq.m.”	the measurement unit of square meters
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tibet Xinchengyue”	Tibet Xinchengyue Property Services Co., Ltd. (西藏新城
	悅物業服務股份有限公司), a company incorporated in
	the PRC, and the principal operating subsidiary of the
	Group
“%”	per cent.

– 3 –

LETTER FROM THE BOARD

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1755)

Directors:

Executive Directors: Qi Xiaoming (Chairman and Chief Executive Officer) Wu Qianqian Lan Ziyong

Registered office in Cayman Islands: PO Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Non-executive Directors: Wang Xiaosong Lv Xiaoping Lu Zhongming

Independent Non-executive Directors: Zhang Yan Zhu Wei Xu Xinmin

Headquarters in the PRC: 12th Floor, Seazen Holdings Tower B No. 5, Lane 388 Zhongjiang Road Putuo, Shanghai

Principal Place of Business in Hong Kong: 31/F, Tower Two Times Square 1 Matheson Street Causeway Bay Hong Kong

27 December 2019

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

Reference is made to: (i) the announcement of the Company dated 25 November 2019 in relation to the proposed continuing connected transactions under the 2020 Services Framework Agreement for one year ending 31 December 2020; and (ii) the notice of the EGM.

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LETTER FROM THE BOARD

The main purpose of this circular is, among other things, to provide the Shareholders with the following information, so that the Shareholders can make properly informed decisions on the resolution proposed at the EGM:

details of the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap);
the opinion and recommendation of the Independent Board Committee on the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap); and
a letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders containing its opinion and recommendation on the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap).

II. 2020 SERVICES FRAMEWORK AGREEMENT

1. Background

The 2020 Services Framework Agreement was entered into between Tibet Xinchengyue and Mr. Wang Xiaosong (as attorney for and on behalf of Mr. Wang) on 25 November 2019 (after trading hours) in relation to provision of certain property related services to Mr. Wang’s Associated Companies (including the Seazen Group), for a term of one year from 1 January 2020 to 31 December 2020 subject to the Annual Cap.

2. The principal terms of the 2020 Services Framework Agreement are set out below:

Date: 25 November 2019

Parties: (i) Tibet Xinchengyue; and (ii) Mr. Wang Xiaosong (as attorney for and on behalf of Mr. Wang)

Term: The 2020 Services Framework Agreement shall be effective from 1 January 2020 to 31 December 2020 (both dates inclusive).

Condition: For the provision of the property management services and value-added services contemplated under the 2020 Services Framework Agreement with an aggregate service fees payable by Mr. Wang’s Associated Companies RMB57,000,000 or below of the proposed Annual Cap, this shall take effect immediately from 1 January 2020.

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LETTER FROM THE BOARD

For the provision of the property management services and value-added services contemplated under the 2020 Services Framework Agreement with an aggregate service fees payable by Mr. Wang’s Associated Companies above RMB57,000,000 of the proposed Annual Cap, this is conditional upon the approval by the Independent Shareholders at the extraordinary general meeting to be convened by the Company.

Property Management Services:

Tibet Xinchengyue is responsible for providing Mr. Wang’s Associated Companies with a wide range of property management services, including property and equipment maintenance, security services, cleaning services, gardening services, public area maintenance and other property management related services.

Value-added Services:

The value-added property management services provided by Tibet Xinchengyue to Mr. Wang’s Associated Companies entail:

(a) provision of engineering and maintenance services of intelligent security equipment, e.g., surveillance system, access control system and parking system for properties developed by Mr. Wang’s Associated Companies;
(b) provision of on-site sales assistance services, including on-site and sample room cleaning, reception and customer services at the sale offices, exhibition halls, showrooms and clubhouses in the development projects;
(c) provision of property inspection services for development projects, including properties, facilities and security systems, in accordance with the acceptance standards of Mr. Wang’s Associated Companies and provision of feedbacks;
(d) provision of property consultancy services including advising in the preliminary stage of property development, such as property design; and assisting in the preparation for the delivery of properties;
(e) provision of parking lots sales agency services for the parking lots developed by Mr. Wang’s Associated Companies after the delivery of such parking lots;

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LETTER FROM THE BOARD

(f) project management services for the property maintenance works during the warranty period after the delivery of the property developed by Mr. Wang’s Associated Companies; and
(g) provision of ad hoc services ancillary to the property management services and value-added services provided by Tibet Xinchengyue to Mr. Wang’s Associated Companies for properties developed by Mr. Wang’s Associated Companies, e.g., organising social events for residents of such properties.

Pricing policy:

The pricing policies under each of the different type of services to be offered by Tibet Xinchengyue are as follows:

The service fees shall be determined principally by arm’s length commercial negotiations according to the principles of fairness and reasonableness by taking into account factors including the type of the development projects, the prevailing market rate, the guidance price of such services for similar type of development projects issued by the local government (if applicable) and the fees charged to the third party customers independent of the Group, the operational costs (including labor costs, material costs and administrative costs) to be incurred in the course of the provision of the services plus a profit margin and the anticipated increase in such costs due to inflation and economic and social development. The service fees shall not be higher than the standard fees approved by the state pricing regulatory authorities (if available) in any event.

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LETTER FROM THE BOARD

(a) For property management services, the Group generally prices by taking into account a number of factors, including (i) the type and location of properties, (ii) the Group’s budgeted costs, (iii) the contracted scope of services and standard, (iv) the Group’s brand recognition in the cities, (v) local government policies and pricing guidance (if applicable), (vi) the property management fee charged by preceding property management service providers if applicable, and (vii) future profitability after taking into consideration the increase in labor cost in the foreseeable future. In particular, the fees charged by property management companies nationwide are regulated by the price administration department and construction administration department of the State Council. The price administration department of the local people’s governments above the county level and the competent property administration departments at the same level are responsible for regulating the fees charged by property management companies in their respective administrative regions. Therefore, different administrative regions may have different government guidance prices for different types of properties and service standards and local government policies and pricing guidance apply to most of the preliminary property management service agreements entered into between the property developers and the Group at the preliminary stage. As of 31 December 2018 and 31 October 2019, the average property management fee charged to Mr. Wang’s Associated Companies (as owners of completed but unsold properties) for the residential properties under the Group’s management was RMB1.92 and RMB2.12 per sq.m. per month, respectively, which (i) are identical to the average property management fee charged to other property owners for the same residential properties under the Group’s management at either the preliminary stage or property owners’ associations stage, and (ii) are generally in line with the average property management fees charged to property developers other than Mr. Wang’s Associated Companies (as owners of completed but unsold properties) for similar types of properties and service standards.

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LETTER FROM THE BOARD

(b) For valued-added services, the Group generally prices by taking into account a number of factors, including the services required, period of agreement, cost of sales, the local market conditions and the nature and requirements of individual properties.

Pursuant to the 2020 Services Framework Agreement and as confirmed by the Directors, detailed pricing policies for transactions contemplated under the 2020 Services Framework Agreement will be as follows:

(i) Engineering and maintenance services

Tibet Xinchengyue will deploy appropriate equipment with relevant materials based on the request of Mr. Wang’s Associated Companies, and make a bid/quotation after taking into account factors including the manpower required for construction. Such price shall be the service fee for intelligent construction services upon Mr. Wang’s Associated Companies and Tibet Xinchengyue reaching an agreement in respect of such price;

(ii) On-site sales assistance services

the service fee shall be determined by arm’s length negotiation between Mr. Wang’s Associated Companies and Tibet Xinchengyue with reference to various factors including the market prices and Tibet Xinchengyue’s costs of services (including but not limited to labour costs and material costs) plus reasonable management fees. In determining the market price in a particular region, the Group will take into account (a) the level of fees charged by the Group for other projects in the same region of similar scale, (b) the number of staff members needed, (c) whether the staff is required to have any specific skill or qualification, (d) the applicable minimum wage in the same region, and (e) the costs of deploying local staff members of the Group;

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LETTER FROM THE BOARD

(iii) Property inspection services for development projects

the service fee shall be determined by arm’s length negotiation between Mr. Wang’s Associated Companies and Tibet Xinchengyue with reference to various factors including the market prices and Tibet Xinchengyue’s costs of services (including but not limited to labour costs and material costs) plus reasonable management fees. In particular, the Group will make reference to the prices charged by other medium to large scale property management companies listed on the Stock Exchange for similar projects, which are obtained from industry experts and the business development department of the Group, the number of staff members required to complete the projects as well as the facilities required to be inspected;

(iv) Property consultancy services

the service fee shall be determined by arm’s length negotiation between Mr. Wang’s Associated Companies and Tibet Xinchengyue with reference to various factors including the market prices and Tibet Xinchengyue’s costs of services. In particular, the Group will make reference to the prices charged by other medium to large scale property management companies listed on the Stock Exchange for similar projects, which are obtained from industry experts and the business development department of the Group and the number of staff members needed and whether the staff is required to have any specific qualification such as graduated from any specific faculty;

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LETTER FROM THE BOARD

(v) Parking lots sales agency services

the Group obtains new parking space sales projects from Mr. Wang’s Associated Companies through either a process of tendering or a process of appointment through agreement. There are generally two approaches for settlement, being (i) sales commission and (ii) exclusive distribution[#] by the Group. Under both settlement approaches, the fees are charged on a commission basis. For the ten months ended 31 October 2019, 100% of the revenue derived from the provision of the parking lots sales agency services were based on the sales commission approach.

During 2019, the commission charged by the Group for provision of parking lots sales agency services ranged from 16% to 30% of the sales amount (the “ 2019 Commission Range ”). For 2020, it is expected that the commission to be charged by the Group will be similar to those charged in the previous years, and such range is in line with the market practice.

Regarding the price determination for exclusive distribution approach, the Group will take into account the 2019 Commission Range and may make adjustments to it subject to arm’s length negotiation with the parties.

The parties shall negotiate the approaches for settlement of the parking space sales agency services based on the then market conditions of local parking space sales agency services. The adoption of sales commission approach or exclusive distribution approach depends on arm’s length negotiation between the parties. From the perspective of the Group, the Group often prefers an approach which brings greater profit to the Group, while the counter party is often more cost conscious. For appointment through a process of tendering, the counter parties will usually include their preferred approach in the tender documents. If the Group considers the profitability of such particular project is comparatively low, the Group will not participate in the tender;

Exclusive distribution is an agreement between the Group and the relevant customer, whereby an exclusive right to sell all parking lots of a particular project is granted to the Group.

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LETTER FROM THE BOARD

(vi) Project management services for the property maintenance works during the warranty period

service fee shall be determined by arm’s negotiation between both parties after taking into account various factors including the costs of staff deployed by Tibet Xinchengyue and reasonable management costs; and

(vii) Provision of ad hoc services ancillary to the property management services and valueadded services

service fee shall be determined by arm’s length negotiation between both parties after taking into account various factors including the market prices and Tibet Xinchengyue’s costs of services (including but not limited to labour costs and material costs) plus reasonable management costs. In determining the market price in a particular region, the Group will take into account (a) the level of fees charged by the Group for other projects of similar scale in the same region, (b) the number of staff members needed, (c) whether the staff is required to have any specific skill or qualification, (d) the applicable minimum wage in the same region and (e) the costs of deploying local staff members of the Group.

The Group has a unified system for the pricing of services under which the pricing policies are uniformly formulated by the headquarter of the Group. Prior to the determination of any price(s) of the services to be provided to Mr. Wang’s Associated Companies, the project management personnel, procurement management personnel, and programme management personnel of the local branches of the Group will obtain and assess, among other things, (a) the prices charged by other medium to large scale property management companies listed on the Stock Exchange for similar projects from industry experts and the business development department of the headquarter of the Group and (b) the level of fees charged by the Group for other projects in the same region of similar scale (including the fees of at least 3 projects from customers other than Mr. Wang’s Associated Companies). The relevant personnel will proceed to plan and budget for a particular subsidiary service agreement and then produce a suggested price. The managers of the local branches of the Group are authorised to approve and determine the price(s) for a particular service agreement in accordance with the applicable pricing policies.

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LETTER FROM THE BOARD

As confirmed by the Directors, the terms offered by the Group to Mr. Wang’s Associated Companies should not be more favourable than those offered to other parties for similar services.

There is no exclusivity between Mr. Wang’s Associated Companies and the Group. As such, the customer network of the Company is not affected by the transactions contemplated under the 2020 Services Framework Agreement.

Subsidiary agreement(s):

For each development project of Mr. Wang’s Associated Companies which requires the property management services under the 2020 Services Framework Agreement, the relevant Mr. Wang’s Associated Company and Tibet Xinchengyue or its subsidiaries will enter into a subsidiary agreement setting out the specific scope of services required and amount of fees payable in conformity with the principles (including the pricing policy mentioned above) set out in the 2020 Services Framework Agreement.

All transactions contemplated under the 2020 Services Framework Agreement shall be conducted on normal commercial terms and negotiated on arm’s length basis.

3. Annual Cap and its Basis

The maximum annual service fees payable to the Group by Mr. Wang’s Associated Companies for the property management services and value-added services contemplated under the 2020 Services Framework Agreement for the year ending 31 December 2020 shall not exceed RMB1,300 million. For reasons set out below and in the section headed “Reasons for and Benefits of the 2020 Services Framework Agreement”, the estimated allocation of the Annual Cap to the property management services and value-added services is as follows: (i) RMB76,360,000 will be allocated to the property management services; (ii) RMB339,633,000 will be allocated to the provision of engineering and maintenance services of intelligent security equipment; (iii) RMB495,353,000 will be allocated to the provision of on-site sales assistance services; (iv) RMB124,800,000 will be allocated to the provision of property inspection services for development projects; (v) RMB106,500,000 will be allocated to the provision of property consultancy services; (vi) RMB31,800,000 will be allocated to the provision of parking lots sales agency services; and (vii) RMB4,500,000 will be allocated to the provision of project management services for the property maintenance works during the warranty period. The remaining portion represents approximately 10%-buffer for all categories of services to be provided by the Group to Mr. Wang’s Associated Companies, including ad hoc services ancillary to property management services and value-added services, in order to accommodate any unexpected increase in demand for any of the Group’s services and/or unexpected increase in the cost of supply of such services during 2020.

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LETTER FROM THE BOARD

In determining the above Annual Cap, the Directors have considered, among other factors:

(a) the aggregate amount of approximately RMB770.52 million settled by Mr. Wang’s Associated Companies for property management services and value-added services for the ten months ended 31 October 2019;
(b) the increase in the estimated demand of Mr. Wang’s Associated Companies for property management services and value-added services for the year ending 31 December 2020[1] ;

As set out in the 2019 interim report of Seazen, as at 30 June 2019, the total land bank of the Seazen Group was approximately 134,015,751 sq.m., covering a total of 103 cities, and it had around 339 property projects which were under development or under proposed development with a total construction area of approximately 88,493,991 sq.m. As set out in an announcement published by Seazen on 4 November 2019, the aggregate contracted sales of January to October 2019 of the Seazen Group represented an increase of 22.63% over the corresponding period of 2018. The aggregate sales area of January to October 2019 also increased by approximately 35.50% over the corresponding period of 2018. The aforesaid data is referred to as the “ Seazen Group Data ” below. Based on such growth rate of the Seazen Group in 2019, it is expected that the demand of Mr. Wang’s Associated Companies for our property management services and value-added services (including intelligent construction service) will increase for the year ending 31 December 2020.

Based on the above, it is expected that:

(i) for property management services, since the service fee is to be calculated based on the sq.m under management, the increasing contracted GFA has a positive and direct impact on the revenue of the Group. Based on the growth rate of the Seazen Group in 2019 and the increasing contracted GFA from properties developed by Mr. Wang’s Associated Companies during the two years ended 31 December 2018, namely approximately 38,243,300 sq.m and approximately 74,259,300 sq.m., respectively, it is expected that the service fee to be derived from the property management services provided to the Seazen Group’s completed but unsold properties will increase and as such, an amount of RMB76,360,000 from the Annual Cap has been allocated for this service;

1 In normal business cycle, the property inspection and consultancy services, and the intelligent security equipment installation services will be deployed during the property construction stage, followed by the on-site sales assistance services during the sale stage. The property management services, maintenance services and parking lots sales agency services will be deployed after the properties are sold and delivered to the property owners.

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LETTER FROM THE BOARD

(ii) for engineering and maintenance services of intelligent security equipment, the increasing land bank of the Seazen Group has a positive and direct impact on the number of property projects that the Seazen Group will launch in 2020. In the ten months ended 31 October 2019, the Company participated in all of the 215 tenders for intelligent security equipment projects of the Seazen Group and successfully secured 200 projects. As at 31 October 2019, the Group has been working on 75 projects which are yet to be completed and 152 projects are expected to start in 2020, which generated an unaudited revenue of approximately RMB171,069,000. In light of (a) the business plan of the Group to further expand its engineering and maintenance service of intelligent security equipment in 2020, (b) the number of existing projects that the Group has been working on since 2019 (but yet to be completed till now) or will start to work on in 2020, and (c) the Group will continue to participate in all tenders for intelligent security equipment projects of the Seazen Group in 2020, which is expected to be around 200 projects (such expectation is based on the Seazen Group Data), an amount of RMB339,633,000 from the Annual Cap has therefore been allocated for this service;
(iii) for on-site sales assistance services, the increasing land bank of the Seazen Group has a positive and direct impact on the number of property projects that the Seazen Group will sell in 2020 and the subsequent years. In the ten months ended 31 October 2019, the Company provided on-site sales assistance services to 282 projects, which generated an unaudited revenue of approximately RMB382,302,000. In light of (a) the number of existing property projects that the Group has been working on since 2019 but yet to be completed till now, being 216 projects, and (b) the number of property projects that the Group expects it will be engaged by the Seazen Group (being approximately 274 projects) to provide on-site sales assistance services in 2020 based on the Seazen Group Data, an amount of RMB495,353,000 from the Annual Cap has therefore been allocated for this service; and
(iv) for property inspection services, property consultancy services, parking lots sales agency services and project management services for the property maintenance works during the warranty period, the increasing land bank of the Seazen Group has a positive and direct impact on the number of property projects that the Seazen Group will sell and deliver to property owners in 2020 and subsequent years. In light of the Group’s expectation that the number of property projects that the Seazen Group will sell and deliver to property owners in 2020 will increase (such expectation is based on the Seazen Group Data), an amount of RMB124,800,000, RMB106,500,000, RMB31,800,000 and RMB4,500,000, respectively, from the Annual Cap has therefore been allocated for each of these services;
(c) the historical amounts for property management services and value-added services for the two years ended 31 December 2018 settled between the parties; and
(d) other factors such as our Group’s business plans and inflation.

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LETTER FROM THE BOARD

4. General Information

Mr. Wang is a controlling shareholder of the Company. Mr. Wang has been involved in property development and property investment in the PRC via the Seazen Group. For further details of Mr. Wang, please refer to the section headed “Directors and Senior Management – Board of Directors – Non-executive Directors” in the prospectus of the Company dated 24 October 2018 (the “ Prospectus ”).

5. Reasons for and Benefits of the 2020 Services Framework Agreement

The Board is of the view that the entering into of the 2020 Services Framework Agreement is essential to the normal operations of, and beneficial to, the Company. In forming such view, the Board has taken into account the following factors:

(1) Long established business relationship between the Group and Mr. Wang’s Associated Companies

The Company is an experienced property management services provider in the PRC engaging in the provision of property management services, such as property and equipment maintenance, security services, cleaning services, gardening services, public area maintenances, whereas Mr. Wang has been involved in property development and property investment in the PRC via the Seazen Group. The Company has been providing such property management services to Mr. Wang’s Associated Companies since 1996 and the Directors believe such services are of great assistance to Mr. Wang’s Associated Companies, as well as providing a steady stream of income to the Company. The 2020 Services Framework Agreement hence represents a stable and trustworthy business relationship which the Group can leverage to achieve its business objectives.

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LETTER FROM THE BOARD

(2) Low risk on potential reliance on the Seazen Group

Reference is made to the section headed “Summary – Our Relationship with Future Land Group” in the Prospectus.

In light of the reasons below, the Directors are of the view that the risk of potential reliance on the Seazen Group is low:

(a) The table below sets forth a breakdown of the Group’s revenue from Mr. Wang’s Associated Companies (including the Seazen Group) and customers other than Mr. Wang’s Associated Companies for the periods indicated:

					For the
	For the year	ended	For the year ended		ten months ended
	31 December 2017		31 December	2018	31 October 2019
					(unaudited)
	RMB	%	RMB	%	RMB	%
		(in thousands, except for percentages)
Revenue from Mr. Wang’s
Associated Companies
Property management services2
Property management services fee in
respect of completed but
unsold properties	37,076	4.3	33,393	2.9	13,339	0.8
Property management services fees
in respect of the office buildings
of Future Land Holdings	9,345	1.1	9,781	0.9	8,938	0.6
Subtotal	46,421	5.4	43,174	3.8	22,277	1.4
Value-added Services
Provision of engineering and
maintenance service of intelligent
security equipment	14,123	1.6	25,758	2.2	171,069	10.9
Provision of on-site sales
assistance services	116,247	13.4	218,410	19.0	382,302	24.2
Provision of property
inspection services for
development projects	6,512	0.7	17,789	1.6	79,814	5.1
Provision of property
consultancy services	34,676	4.0	32,166	2.8	73,948	4.7
Provision of parking lots sales
agency services	4,125	0.5	8,332	0.7	41,109	2.6
Provision of project management
services for the property
maintenance works during the
warranty period	–	–	–	–	–	–
Subtotal	222,104	25.6	345,629	30.1	770,519	48.9

2 The revenue from Mr. Wang’s Associated Companies for the provision of property management services was derived from property management services fees collected from Mr. Wang’s Associated Companies in respect of (i) completed but unsold properties and (ii) office buildings of Seazen Holdings.

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LETTER FROM THE BOARD

Revenue from customers other than Mr. Wang’s Associated Companies Property management services Property management services fees derived from properties developed by Mr. Wang’s Associated Companies Property management services fees derived from properties developed by other property developers Subtotal Value-added Services3, 4 Provision of engineering and maintenance service of intelligent security equipment Provision of on-site sales assistance services Provision of property inspection services for development projects Provision of property consultancy services Provision of parking lots sales agency services Provision of project management services for the property maintenance works during the warranty period Community-related services Subtotal Total	For the year ended 31 December 2017 For the year ended 31 December 2018 For the ten months ended 31 October 2019 (unaudited) RMB % RMB % RMB % (in thousands, except for percentages) 408,736 47.2 537,964 46.8 488,972 31.0 112,020 12.9 150,887 13.1 141,792 9.0 520,756 60.1 688,851 59.9 630,764 40.0 66,269 7.6 47,530 4.1 53,900 3.4 11,739 1.4 22,973 2.0 21,393 1.4 655 0.1 1,999 0.2 3,343 0.2 1,144 0.1 3,409 0.3 4,910 0.3 399 0.1 – – – – – – – – – – 43,304 5.0 39,558 3.4 91,351 5.8 644,266 74.4 804,320 69.9 805,661 51.1 866,370 100 1,149,949 100 1,576,180 100	For the year ended 31 December 2017 For the year ended 31 December 2018 For the ten months ended 31 October 2019 (unaudited) RMB % RMB % RMB % (in thousands, except for percentages) 408,736 47.2 537,964 46.8 488,972 31.0 112,020 12.9 150,887 13.1 141,792 9.0 520,756 60.1 688,851 59.9 630,764 40.0 66,269 7.6 47,530 4.1 53,900 3.4 11,739 1.4 22,973 2.0 21,393 1.4 655 0.1 1,999 0.2 3,343 0.2 1,144 0.1 3,409 0.3 4,910 0.3 399 0.1 – – – – – – – – – – 43,304 5.0 39,558 3.4 91,351 5.8 644,266 74.4 804,320 69.9 805,661 51.1 866,370 100 1,149,949 100 1,576,180 100
		100

3 The number of customers (which is not one of Mr. Wang’s Associated Companies) for value-added services for the two years ended 31 December 2017 and 2018 and the ten months ended 31 October 2019 is 10, 26 and 36, respectively. For the two years ended 31 December 2017 and 2018 and the ten months ended 31 October 2019, the revenue derived from the five largest customers (which exclude Mr. Wang’s Associated Companies) accounted for approximately 1.1%, 1.3% and 1.1%, respectively, of our total revenue and the services provided to them include provision of engineering and maintenance service of intelligent security equipment, provision of on-site sales assistance services, and community-related services. The aforesaid customers are mainly property developers based in the PRC.
4 The number of projects (which is not one of Mr. Wang’s Associated Companies) for value-added services for the two years ended 31 December 2017 and 2018 and the ten months ended 31 October 2019 is 10, 26 and 36, respectively.

While it is the Company’s intention to increase the number of independent customers and projects in 2020, the Company expects that the number of independent customers and projects for 2019 shall more or less be maintained, absent any unforeseeable factors or events.

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LETTER FROM THE BOARD

Both the revenue derived from Mr. Wang’s Associated Companies and customers other than Mr. Wang’s Associated Companies for the ten months ended 31 October 2019 has increased. The percentage for revenue derived from Mr. Wang’s Associated Companies over the total revenue of the Group for the ten months ended 31 October 2019 has increased at a higher rate due to recent expansion and business development of Seazen Group. As indicated in various announcements published by Seazen throughout 2019, the land bank, aggregate contracted sales and aggregate sales area of the Seazen Group has continuously increased, which results in the increase in its demand for our property management services and value-added services (including intelligent construction service).

(b) The percentage for revenue derived from our property management services for customers other than Mr. Wang’s Associated Companies over the total revenue of the Group for the ten months ended 31 October 2019 has decreased, which is mainly due to the Group’s voluntary withdrawal from providing property management services to certain projects with GFA under management of approximately 1.14 million sq.m. after internal evaluation of economic costs and benefits.

Throughout 2019, the Group has continued its effort in developing its relationship with other independent customers. In 2018, the Group participated in 24 tenders. The Group participated in 43 tenders in the ten months ended 31 October 2019, representing a 79.2% increase from the total number of tenders participated by the Group for the year ended 31 December 2018. The tender success rate for securing property management projects of developers other than Mr. Wang’s Associated Companies for 2018 is 70.8% and for the ten months ended 31 October 2019 is 72.1%. This results in the increase of contracted GFA for property management services of approximately 6.3 million sq.m. and GFA under management for property management services of approximately 2.7 million sq.m. The term of the property management agreements newly entered into with customers other than Mr. Wang’s Associated Companies varies. For the ten months ended 31 October 2019, out of the 38 property management agreements newly signed with customers other than Mr. Wang’s Associated Companies, 71.1% does not have a fixed term[5] , and 28.9% will expire in the year ending 31 December 2022.

In recent years, the Group has maintained a high customer retention rate, i.e. the property owners have continued to select the Group as their property management service provider at the property owners’ association stage[6] . For the ten months ended 31 October 2019, the Group has achieved 100% customer

5 Such agreements terminate upon the establishment of property owners’ associations and remain effective and binding until the property owners’ associations are formed and new property management agreements are entered into, according to relevant PRC laws.

6 The property owner’s association stage will commence when the property owner’s association is formed. However, there is not legal requirement on timing as to when a property owners’ association has to be formed.

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LETTER FROM THE BOARD

retention rate at the property owners’ association stage at which property owners could freely select their property management service provider and decide whether to enter into a property management services agreement with the Group on a case by case basis. For the ten months ended 31 October 2019, among the revenue from the provision of property management services to customers other than Mr. Wang’s Associated Companies of RMB488,972,000, RMB306,262,000 is derived from provision of property management services pursuant to agreements at the preliminary stage[7] , and RMB182,710,000 is derived from provision of property management services pursuant to agreements at the property owners’ associations stage[8] .

Also, the Company has been successful in exploring market opportunities to diversify its property management portfolio and service offerings with a wide source of revenue. In 2019, the contracted GFA for property management services from customers other than Mr. Wang’s Associated Companies has increased by approximately 6.3 million sq.m., which results in the increase of the total contracted GFA for property management services from customers other than Mr. Wang’s Associated Companies from approximately 24.5 million sq.m. as at 31 December 2018 to approximately 29.7 million sq.m. as at 31 October 2019 (after deducting the contracted GFA of the voluntarily withdrawn projects of approximately 1.14 million sq.m.). As a result of which, the contracted GFA of the Group with customers other than Mr. Wang’s Associated Companies has increased from approximately 16.1 million sq.m. as of 31 December 2017 to approximately 29.7 million sq.m. as of 31 October 2019, recording a CAGR of 39.7%. The growth of such records indicates the Company’s capability in market expansion with third-party property developers, property owners’ associations and individual property owners.

(c) In 2020, the Company will continue to participate in tenders for projects of property developers other than Mr. Wang’s Associated Companies which are expected to be no less than 60. As at 31 October 2019, among the contracted GFA of 29.7 million sq.m. signed with customers other than Mr. Wang’s Associated Companies, only approximately 14.3 million sq.m. has been delivered and under management, which generated a revenue of RMB141.8 million for the ten months ended 31 October 2019. The Group expects that approximately 5 million sq.m. out of 15.4 million sq.m. will be delivered in 2020 and will start to generate revenue in 2020, which will further increase the revenue from customers other than Mr. Wang’s Associated Companies in 2020.

7 Preliminary stage refers to the period starting from the date when the property management services agreement with the property developer becomes effective and ending on the date when such agreement expires/terminates and the property management services agreement with owners’ association becomes effective.

8 Property owners’ associations stage starts from the date when the property owners’ association has been established and has, in their capacity as agent for all the property owners, entered into a property management service agreement with the Group.

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LETTER FROM THE BOARD

At the same time, the Group will strive to maintain a high customer retention rate, i.e. it is expected that the property owners will continue to select the Group as their property management service provider at the property owners’ association stage. Also, the Company intends to procure additional independent third parties for the provision of the value-added services, in particular, the engineering and maintenance service of intelligent security equipment.

In addition, if appropriate targets could be identified, the Group may consider expanding its business through merger and acquisitions. As at 31 October 2019, the Group has established three joint venture companies with independent property developers. The three joint venture companies are established by the Group with three different independent property developers located in three different regions of the PRC. Each of the joint venture companies has a registered capital of RMB1 million, which is owned as to 51%, 51% and 70% by the Group, respectively. Through the establishment of the joint venture companies with influential independent local property developers, the Group forms strategic alliances with them, whereby such property developers will engage the Group to provide value-added and property management services for their newly developed properties, and the Group, through the provision of such services, would be able to increase its revenue from customers other than Mr. Wang’s Associated Companies. Since the amount of registered capital contributed by the Group for each joint venture company is less than RMB1 million, the establishment of each joint venture company does not constitute notifiable transaction under Chapter 14 of the Listing Rules. The revenue generated for the provision of property management services and value-added services from such cooperation will contribute positively to the revenue from customers other than Mr. Wang’s Associated Companies. Also, the merger and acquisitions of independent companies providing property management services will increase the Group’s revenue from customers other than Mr. Wang’s Associated Companies. As at the Latest Practicable Date, the Group has been in negotiations with four different companies for potential equity investments, namely, (i) a property management company in Yangtze River Delta region[9] with a GFA under management for residential properties of approximately 3 million sq.m., (ii) a property management company in Central China region[9] with a GFA under management for residential properties of approximately 15 million sq.m., (iii) a property management company in Southern China region[9] with a GFA under management for non-residential properties of approximately 4 million sq.m., and (iv) a property management company in Southern China region[9] with a GFA under management for non-residential properties of approximately 2 million sq.m. If any transaction materialised and constitutes a notifiable

9 In respect of the categorisation of the regions, please refer to page 134 of the Prospectus.

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LETTER FROM THE BOARD

transaction under Chapter 14 of the Listing Rules, the Company will comply with the relevant requirements thereunder as and when appropriate. As such, the Directors are of the view that the revenue derived from services provided to customers other than Mr. Wang’s Associated Companies will continue to increase in 2020.

In light of the disclosure above, namely, the continual increase in revenue from customers other than Mr. Wang’s Associated Companies, and continual increase in the number of customers, which is not one of Mr. Wang’s Associated Companies, the Directors consider that the risk on reliance on the Seazen Group is low and the existing measures in addressing the potential reliance issue are effective.

In light of the above, each of the Directors is of the view that the 2020 Services Framework Agreement is entered into on an arm’s length basis, on normal commercial terms, in the usual and ordinary course of business of the Group. The terms of the 2020 Services Framework Agreement and the transactions contemplated under the 2020 Services Framework Agreement (including the Annual Cap) are fair and reasonable and are in the interest of the Company and the Shareholders as a whole.

6. Internal control measures

In order to ensure that the transactions contemplated under the 2020 Services Framework Agreement will be on normal commercial terms, and that the relevant fees will not fall below the prevailing market rate, the guidance price of such services for similar type of development projects issued by the local government (if applicable) and the fees charged to the third party customers independent of the Group, the Group will continue to apply the following measures adopted by the Group for the performance of the 2019 Services Framework Agreement:

(i) the finance department of the Group, will be responsible for regular monitoring of the continuing connected transactions contemplated under the 2020 Services Framework Agreement to ensure that the Annual Cap will not be exceeded, in particular, the Group will cease to enter into any new subsidiary agreement if such will cause the total contractual income to exceed the Annual Cap for that financial year;
(ii) internal review will be conducted by the finance department of the Group to assess, on a monthly basis, whether the provision of property management services and value-added services have been made in accordance with the terms of the 2020 Services Framework Agreement and in accordance with the aforesaid pricing policy;
(iii) prior to entering into any subsidiary agreements, the personnel of various departments including the legal department, finance department and operation department of the Company will review and assess the specific terms and conditions of the transactions to ensure their consistency with the 2020 Service Framework

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LETTER FROM THE BOARD

Agreement. During such internal review process, the relevant personnel will examine, among others, (a) information of the parties; (b) the term of the agreement; (c) the type and scope of services to be provided by the Group thereunder; and (d) whether the contract price is in line with the aforesaid pricing policy, in order to ensure comments (if any) from various departments of the Group will be properly addressed;

(iv) the Company will engage its auditors to conduct an annual review of the continuing connected transactions to be conducted pursuant to the 2020 Services Framework Agreement; and
(v) the independent non-executive Directors will review the continuing connected transactions to be conducted pursuant to the 2020 Services Framework Agreement on an annual basis and confirm in the annual report of the Company for the year ending 31 December 2020 whether such continuing connected transactions have been entered into in the ordinary and usual course of business of the Group, on normal commercial terms or better, and in accordance with the 2020 Services Framework Agreement on terms that are fair and reasonable and in the interests of the Shareholders as a whole.

The Directors consider that the personnel authorised to execute the above internal control measures possess relevant experience and expertise in relation thereto, and the above internal control measures can ensure that the continuing connected transactions contemplated under the 2020 Services Framework Agreement will be conducted on normal commercial terms in a manner not prejudicial to the interests of the Company and its Shareholders.

7. Implications under the Listing Rules

As at the Latest Practicable Date, Mr. Wang is the controlling Shareholder of the Company, and thus is a connected person of the Company under the Listing Rules. Therefore, the transactions contemplated under the 2020 Services Framework Agreement constitute continuing connected transactions for the Company.

As the applicable ratios for the Annual Cap for the 2020 Services Framework Agreement are more than 5%, the 2020 Services Framework Agreement and the Annual Cap are subject to the announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As at the date of the Board meeting, Mr. Wang Xiaosong, a non-executive Director and the son of Mr. Wang, was considered to have a material interest in the transactions under the 2020 Services Framework Agreement. As such, he has abstained from voting on the Board resolutions approving the relevant agreement and the transactions contemplated thereunder

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LETTER FROM THE BOARD

(including the proposed Annual Cap). Save as mentioned above, none of the other Directors have a material interest in the transactions contemplated under the 2020 Services Framework Agreement, and therefore, no Director has abstained from voting on approval of the relevant resolutions.

III. EGM

An EGM will be convened for the Independent Shareholders to consider and, if appropriate, to approve the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap).

Mr. Wang and Mr. Wang’s Associated Companies, which directly hold 600,000,000 Ordinary Shares, representing an aggregate of approximately 73.34% of the issued share capital of the Company as at the Latest Practicable Date, will be required to abstain from voting at the EGM on the resolution in relation to the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap). Save as disclosed above, there is no other Shareholder who has any material interest in the transactions contemplated under the 2020 Services Framework Agreement. As such, no other Shareholder is required to abstain from voting at the EGM on the resolution in relation to the 2020 Services Framework Agreement and the transactions contemplated thereunder.

The Independent Board Committee has been formed in accordance with the Listing Rules to advise the Independent Shareholders on the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap). In this connection, Gram Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap).

IV. RECOMMENDATIONS

The Directors (including the independent non-executive Directors) are of the view that the terms of continuing connected transactions contemplated under the 2020 Services Framework Agreement are fair and reasonable, the relevant continuing connected transactions (including the proposed Annual Cap) are on normal commercial terms and in the ordinary and usual course of business of the Company, and are in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors recommend the Shareholders to vote in favour of all the resolutions to be proposed at the EGM.

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LETTER FROM THE BOARD

V. ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 26 to 27 of this circular containing the recommendations from the Independent Board Committee to the Independent Shareholders in respect of the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap). The advice from Gram Capital to the Independent Board Committee and the Independent Shareholders, on the fairness and reasonableness of the terms of the continuing connected transactions contemplated under the 2020 Services Framework Agreement (including the respective proposed Annual Cap) is set out on pages 28 to 48 of this circular.

Your attention is also drawn to the information set out in the appendix to this circular.

As the Company is still in the process of finalising its annual results for the year ending 31 December 2019, the financial information for the ten months ended 31 October 2019 is only based on the preliminary assessment by the Board on the management accounts of the Group and information currently available to the Group, which has not been audited or reviewed by the auditors and/or audit committee of the Company and may be subject to amendments or adjustments. Shareholders and potential investors are advised to refer to detailed financial information to be disclosed in the Company’s announcement in respect of the annual results for the year ending 31 December 2019 to be published later. In addition, the proposed allocation of the Annual Cap as set out in the section headed “II. 2020 Services Framework Agreement – 3. Annual Cap and its Basis” in this Circular is yet to be realised and subject to change.

By order of the Board S-Enjoy Service Group Co., Limited Qi Xiaoming

Chairman

Executive Director Chief Executive Officer

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1755)

27 December 2019

CONTINUING CONNECTED TRANSACTION

To the Independent Shareholders

Dear Sir or Madam,

We refer to the circular of the Company dated 27 December 2019 (the “ Circular ”), of which this letter forms a part. Terms defined therein shall have the same meanings as those defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise you as to whether in our opinion, the terms of the 2020 Services Framework Agreement (including the proposed Annual Cap) are fair and reasonable so far as the Independent Shareholders are concerned, the relevant continuing connected transactions (including the proposed Annual Cap) are on normal commercial terms and in the ordinary and usual course of business of the Company, and are in the interests of the Company and the Shareholders as a whole.

Gram Capital has been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee on the fairness and reasonableness of the terms of the continuing connected transactions contemplated under the 2020 Services Framework Agreement (including the proposed Annual Cap). Details of the advice from Gram Capital, together with the principal factors taken into consideration in arriving at such advice, are set out in its letter on pages 28 to 48 of the Circular.

We wish to draw your attention to the letter from the Board set out on pages 4 to 25 of the Circular. Having considered the information contained in the letter from the Board, the interests of the Independent Shareholders and the advice and recommendations given by Gram Capital, we consider that the terms of continuing connected transactions contemplated under the 2020 Services Framework Agreement (including the proposed Annual Cap) are on normal commercial terms, fair and reasonable, and in the ordinary and usual course of business of the Company, and are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend that the Independent Shareholders vote in favour of the resolution regarding the 2020 Services Framework Agreement and the transactions contemplated thereunder (including the proposed Annual Cap) to be proposed at the EGM.

Yours faithfully,

Zhang Yan Zhu Wei Xu Xinmin Independent non-executive Independent non-executive Independent non-executive Director Director Director

Independent Board Committee of S-Enjoy Service Group Co., Limited

– 27 –

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions for the purpose of inclusion in this circular.

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

27 December 2019

To: The independent board committee and the independent shareholders of S-Enjoy Service Group Co., Limited

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of providing certain property management services contemplated under the 2020 Services Framework Agreement (the “ Transactions ”), details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 27 December 2019 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 25 November 2019 (after trading hours), Tibet Xinchengyue entered into the 2020 Services Framework Agreement with Mr. Wang, pursuant to which Tibet Xinchengyue has conditionally agreed to provide or procure the subsidiaries of the Group to provide certain property related services to Mr. Wang’s Associated Companies (including the Seazen Group) for a term of one year expiring on 31 December 2020.

With reference to the Board Letter, the Transactions constitute continuing connected transactions of the Company and shall be subject to announcement, annual review and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising Ms. Zhang Yan, Mr. Zhu Wei, and Mr. Xu Xinmin has been established to advise the Independent Shareholders on (i) whether the terms of the Transactions are on normal commercial terms and are fair and reasonable; (ii) whether the Transactions are in the interests of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Transactions at the EGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

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LETTER FROM GRAM CAPITAL

INDEPENDENCE

During the past two years immediately preceding the Latest Practicable Date, Mr. Graham Lam was the person signing off the opinion letter from the independent financial adviser contained in the Company’s circular (the “ Previous Circular ”) dated 18 January 2019 in respect of the 2019 Services Framework Agreement.

Notwithstanding the aforesaid past engagement, as at the Latest Practicable Date, we were not aware of any relationships or interests between Gram Capital and the Company or any other parties that could be reasonably regarded as hindrance to Gram Capital’s independence as defined under Rule 13.84 of the Listing Rules to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions.

Besides, apart from the advisory fee and expenses payable to us in connection with our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Transactions. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

The 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,

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LETTER FROM GRAM CAPITAL

and there are no other matters the omission of which would make any statement as contained in the Circular or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, Mr. Wang, Mr. Wang’s Associated Companies and each of their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Transactions. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Transactions, we have taken into consideration the following principal factors and reasons:

Information on the Company

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LETTER FROM GRAM CAPITAL

Set out below are the financial information of the Group for the six months ended 30 June 2019 and the two years ended 31 December 2018 as extracted from the Company’s interim report for the six months ended 30 June 2019 (the “ 2019 Interim Report ”) and the Company’s annual report for the two years ended 31 December 2018 (the “ 2018 Annual Report ”), respectively:

	For the
	six months	For the	For the
	ended	year ended	year ended	Change
	30 June	31 December	31 December	from 2017 to
	2019	2018	2017	2018
	RMB’000	RMB’000	RMB’000	%
	(unaudited)	(audited)	(audited)
Revenue	856,251	1,149,949	866,370	32.73
– Property management
service	397,535	732,025	567,177	29.06
– Value-added services	458,716	417,924	299,193	39.68
Gross profit	249,901	338,976	242,246	39.93
Profit attributable to
owners of the Company	117,245	150,397	73,406	104.88

As depicted from the table above, the Group’s revenue for the year ended 31 December 2018 (“ FY2018 ”) amounted to approximately RMB1,149.95 million, representing an increase of approximately 32.73% as compared to that for the year ended 31 December 2017 (“ FY2017 ”). Revenue derived from property management services and value-added services for FY2018 amounted to approximately RMB732.03 million and RMB567.18 million respectively, representing increases of approximately 29.06% and 39.68% respectively as compared to those for FY2017. The Group also recorded an increase of approximately 39.93% in gross profit for FY2018 as compared to that for FY2017.

Information on Mr. Wang

With reference to the Board Letter, Mr. Wang is a controlling Shareholder of the Company. Mr. Wang has been involved in property development and property investment in the PRC via the Seazen Group.

Reasons for and benefits of the Transactions

With reference to the Board Letter, the Company is an experienced property management services provider in the PRC engaging in the provision of property management services, such as property and equipment maintenance, security services, cleaning services, gardening services, public area maintenances, whereas Mr. Wang has been involved in property development and property investment in the PRC via the Seazen Group. The Company has been providing such property management services to Mr. Wang’s Associated Companies (including

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LETTER FROM GRAM CAPITAL

the Seazen Group) since 1996 and the Directors believe such services are of great assistance to Mr. Wang’s Associated Companies (including the Seazen Group), as well as providing a steady stream of income to the Company. The 2020 Services Framework Agreement hence represents a stable and trustworthy business relationship which the Group can leverage to achieve its business objectives.

Furthermore, as confirmed by the Directors, the 2020 Services Framework Agreement is entered into in the ordinary and usual course of business of the Group and on a frequent and regular basis. As such, it would be costly and impracticable to make regular disclosure of each of the relevant transactions and obtain the prior approval from the Independent Shareholders, as required by the Listing Rules, if necessary. Accordingly, the Directors are of the view that the entering into of the 2020 Services Framework Agreement will be beneficial to the Company and the Shareholders as a whole.

Having considered the above factors, we consider the transactions contemplated under the Transactions are in the interest of the Company and the Shareholders as a whole and are conducted in the ordinary and usual course of business of the Group.

With reference to the Board Letter, the Directors are of the view that the risk of potential reliance on the Seazen Group is low.

As stated in the Previous Circular, in recent years, the Company has been successful in exploring market opportunities to diversify its property management portfolio and service offerings with a wide source of revenue. In 2019, the Company will strive to participate in more tenders for projects of property developers other than Mr. Wang’s Associated Companies (the “ Measure ”).

With reference to the Board Letter, the number of customers (which is not one of the Mr. Wang’s Associated Companies) for value-added services for the two years ended 31 December 2017 and 2018 and the ten months ended 31 October 2019 were 10, 26 and 36, respectively. In respect of the property management services, the Group participated in over 43 tenders in the ten months ended 31 October 2019, representing an increase of approximately 79.2% as compared to the total number of tenders participated by the Group for the year ended 31 December 2018, which results in the increase of contracted GFA for property management services of approximately 6.3 million sq.m. and GFA under management for property management services of approximately 2.7 million sq.m.. Based on the aforesaid data, it indicated that the Measure was in place.

With reference to the Board Letter, both the revenue derived from Mr. Wang’s Associated Companies and customers other than Mr. Wang’s Associated Companies for the 10 months ended 31 October 2019 has increased. However, the percentage for revenue derived from Mr. Wang’s Associated Companies over the total revenue of the Group for the 10 months ended 31 October 2019 has increased at a higher rate due to recent expansion and business development of the Seazen Group. As indicated in various announcements published by Seazen

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LETTER FROM GRAM CAPITAL

throughout 2019, the land bank, aggregate contracted sales and aggregate sales area of the Seazen Group has continuously increased, which results in the increase in its demand for the Group’s property management service and value-added services.

With reference to the Board Letter, in 2020, the Company will continue to participate in tenders for projects of property developers other than Mr. Wang’s Associated Companies and strive to maintain a high customer retention rate i.e. it is expected that the property owners will continue to select the Group as their property management service provider at the property owners’ association stage. Also, if appropriate targets could be identified, the Group proposes to expand its business through merger and acquisitions.

Based on the above, we are of the view that the portion of revenue derived from services provided to customers other than Mr. Wang’s Associated Companies may increase in 2020, assuming the revenue derived from services provided to Mr. Wang’s Associated Companies remains unchanged in 2020.

Principal terms of the Transactions

Set out below are the summaries of the 2020 Services Framework Agreement. Details of the 2020 Services Framework Agreement are set out under the section headed “The 2020 Services Framework Agreement” of the Board Letter.

Date: 25 November 2019 Parties: Tibet Xinchengyue; and Mr. Wang Term: The 2020 Services Framework Agreement shall be effective from 1 January 2020 to 31 December 2020 (both dates inclusive).

Nature of transactions: Tibet Xinchengyue has conditionally agreed to provide or procure the subsidiaries of the Group to provide certain property related services (i.e. property management services and value-added services) to Mr. Wang’s Associated Companies (including the Seazen Group).

Property management services: a wide range of property management services, including property and equipment maintenance, security services, cleaning services, gardening services, public area maintenance and other property management related services.

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Value-added services: (i) provision of engineering and maintenance services of intelligent security equipment; (ii) provision of on-site sales assistance service; (iii) provision of property inspection services for development projects; (iv) provision of property consultancy services; (v) provision of parking lots sales agency services for the parking lots developed by Mr. Wang’s Associated Companies after the delivery of such parking lots; (vi) project management services for the property maintenance works during the warranty period after the delivery of the property developed by Mr. Wang’s Associated Companies; and (vii) provision of ad hoc services ancillary to the property management services and value-added services.

As confirmed by the Directors, the terms offered by the Group to Mr. Wang’s Associated Companies should not be more favourable than those offered to other parties for similar services.

Pricing policy

The pricing policies under each of the different type of services to be offered by Tibet Xinchengyue are summarised as follows:

Upon our further request, we obtained six preliminary property management contracts in total regarding the provision of property management services by the Group to (i) Mr. Wang’s Associated Companies; and (ii) proposed individual property owners (being independent third parties). The aforesaid preliminary property management services were provided by the Group in three different cities of the PRC. We noted from the aforesaid contracts that the service fees for same properties for same services charged by the Group to Mr. Wang’s Associated Companies were the same as those charged by the Group to proposed individual property owners (being independent third parties).

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As stated in the Board Letter, the fees charged by property management companies nationwide are regulated by the price administration department and construction administration department of the State Council. The price administration department of the local people’s governments above the county level and the competent property administration departments at the same level are responsible for regulating the fees charged by property management companies in their respective administrative regions. Therefore, different administrative regions may have different government guidance prices for different types of properties and service standards and local government policies and pricing guidance apply to most of the preliminary property management service agreements entered into between the property developers and the Group at the preliminary stage. We also obtained documents showing the aforesaid contracts conducted record-filing (備案) procedures.

Among the six preliminary property management contracts, services under two contracts were provided by the Group in city A (one for independent third party and one for Mr. Wang’s Associated Companies), where the local development and reform commission is located; and local bureau of housing and urban-rural development jointly issued a notice for strengthening of regulation in property management fee in 2019. We noted from the aforesaid notice that the fee for parking management services (being one of the property management services) was clearly stated in the notice (i.e. a fixed amount per month). The parking management fees as stated in the two contracts were of the same amounts per month as the guided parking management fees as stated in the notice. The notice also (i) guided the base prices for different types of services for residential properties (e.g. comprehensive management services (綜合管理服務), order maintenance services for public area (公共區域持續維護服務), cleaning services for public area (公共區域清潔衛生服務), etc.) under the property management services in city A; and (ii) stated that property management fee could be upward adjusted of not more than 30% on the base prices, subject to the scope of works, quality of works. As the base prices for same types of services were also different due to different scope of work under the same types of services, we could not simply calculate the property management fee (being the sum of base prices for different types of services for residential properties with an upward adjustment of not more than 30%). Upon our request, the Directors advised that before the record-filing procedures of preliminary property management contracts, staff(s) of relevant subsidiaries will enquiry into officer(s) of relevant local people’s governments regarding the guided property management fee. In respect of services under two contracts provided by the Group in city A, the Directors provided us the guided base price for residential property management, which was advised by staff of relevant local people’s government. We noted that (i) the service fees for residential property management were the same under the aforesaid two contracts; and (ii) the service fees were not higher than the guided base price for residential property management with the maximum upward adjustment of 30%.

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In respect of the value-added services, as confirmed by the Directors, the Group did not provide project management services for the property maintenance works during the warranty period to both independent third parties and Mr. Wang’s Associated Companies for 2017, 2018 and 10 months ended 31 October 2019. Upon our request, we obtained the following documents:

more than 10 contracts in total regarding the provision of (i) on-site sales assistance services; (ii) property inspection services; (iii) property consultancy services by the Group to (a) Mr. Wang’s Associated Companies; and (b) independent third parties. We noted from the aforesaid contracts that the service fees/costs for same services in same/similar area charged by the Group to Mr. Wang’s Associated Companies were not lower than those charged by the Group to independent third parties. For instance, based on the aforesaid contracts and for information purpose only, the Group charged/applied/quoted (i) a higher monthly cost for staff who was in charge of the site (案場主管) (being the sum of (a) labour cost (e.g. basic salary, food allowance, residential allowance, etc.); and (b) material cost (i.e. clothing cost (服裝費)) to a connected person than to an independent third party in respect of on-site sales assistance services; (ii) same unit charge of inspection fees to a connected person and an independent third party in respect of property inspection services for same targets (e.g. undecorated room (毛坯房) and decorated room (精裝房)); and (iii) same unit charge of consultation fees to a connected person and an independent third party in respect of property consultancy services for same targets (e.g. residential properties, car park, ancillary facilities).
one tender document regarding the provision of engineering and maintenance services of intelligent security equipment, which the Group was selected as service supplier to Mr. Wang’s Associated Companies. We noted that the Group won the bidding for such project. In addition, we also selected two items to be provided by the Group to Mr. Wang’s Associated Companies as contained in the tender document. Based on the market prices of the same items as provided by the Directors, we noted that the prices of items to be provided by the Group to Mr. Wang’s Associated Companies were not lower than such market prices.
two parking lots sales agency services contracts entered into between the Group and (a) an independent third party during 2019; and (ii) one of Mr. Wang’s Associated Companies during 2019. Based on the contracts and as confirmed by the Directors, (i) sales commission approach was applied as settlement approach; (ii) same sales commission were charged by the Group to both independent third party and Mr. Wang’s Associated Company. In addition, as also advised by the Directors, there were no settlement approach of exclusive distribution being applied during 2019.

We understood that in order to ensure that the transactions contemplated under the 2020 Services Framework Agreement will be on normal commercial terms, and that the relevant fees will not fall below the prevailing market rate, the guidance price of such services for similar type of development projects issued by the local government (if applicable) and the fees charged to the third party customers independent of the Group, the Group adopted certain measures, details of which are set out under the section headed “Internal control measures” of the Board Letter. Having considered the internal control measures, in particular, prior to

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entering into any subsidiary agreements, personnel of the Group’s various departments will be involved in the review and assess specific terms and conditions of the transactions (including the contract price), we are of the view that the effective implementation of the internal control mechanism would help to ensure fair pricing of the 2020 Services Framework Agreement according to the pricing policy.

With reference to Rule 14A.56 of the Listing Rules, among other things, the auditors of the Company must provide a letter to the Board confirming whether anything has come to their attention that causes them to believe that the continuing connected transactions were not, in all material respects, in accordance with the pricing policies of the listed issuer’s group if the transactions involve the provision of goods or services by the listed issuer’s group. We obtained the letter from the Company’s auditors, showing their confirmation that, among other things, nothing has come to their attention that causes them to believe that the Transactions for the year ended 31 December 2018 were not, in all material respects, in accordance with the pricing policies of Group.

For our due diligence purpose, we discussed with senior management of the Company, staff of Company’s relevant departments/subsidiaries and understood that the Company’s senior management and staff of the Company’s relevant departments/subsidiaries were aware of the internal control measures as mentioned above and would comply with such measures when conducting the transactions contemplated under the 2020 Services Framework Agreement. Having considered our discussion with relevant staffs and the auditors’ confirmation as mentioned above, we do not doubt the effectiveness of the implementation of the internal control procedures as mentioned above.

In light of the above, we are of the view that the terms of the Transactions are on normal commercial terms and are fair and reasonable.

The proposed annual caps under the Transactions

Set out below are (i) the historical amounts in respect of the provision of Property Management Services and Value-added Services (the “ Provision of Services ”) for the ten months ended 31 October 2019 with existing annual cap for the year ending 31 December 2019; and (iii) the proposed annual cap under the 2020 Services Framework Agreement for the year ending 31 December 2020 (the “ Services Cap ”):

	For the year ending 31 December 2019
	RMB’000
Historical amounts	770,519 (Note 1)
Existing annual cap	1,180,000
	For the year ending 31 December 2020
	RMB’000
Services Cap	1,300,000

Note: The figure was for the ten months ended 31 October 2019.

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The basis for determining Services Cap for the year ending 31 December 2020 are set out in sub-section headed “Annual cap and its basis” of the Board Letter.

As depicted from the table above, we note that the historical amounts for the 10 months ended 30 October 2019 represented approximately 65.3% of the existing annual cap for the year ending 31 December 2019.

To assess the fairness and reasonableness of the Services Cap for the year ending 31 December 2020, we conducted the following analysis. For our due diligence purpose, we obtained a list, showing the estimated amounts of the Provision of Services for the year ending 31 December 2020 (the “ List ”).

According to the List, the Directors estimated the possible demand of Property Management Services and Value-added Services for the year ending 31 December 2020 (the “ Total Estimated Demands ”) in eight aspects, i.e. (i) property management service; (ii) engineering and maintenance services of intelligent security equipment; (iii) on-site sales assistance service; (iv) property inspection service; (v) property consultancy service;(vi) parking lots sales agency service; (vii) project management services for the property maintenance works during the warranty period; and (viii) provision of ad hoc services ancillary to the property management services and value-added services. Details of the Total Estimated Demands with historical figures as extracted from the Board Letter are set out below:

			For the
	For the	For the	ten months	For the
	year ended	year ended	ended	year ending
	31 December	31 December	31 October	31 December
	2017	2018	2019	2020
	RMB’000	RMB’000	RMB’000	RMB’000
Total demand/estimated	222,104	345,629	770,519	1,178,946
demand				(Note)
– property management services	46,421	43,174	22,277	76,360
– engineering and maintenance
services of intelligent
security equipment	14,123	25,758	171,069	339,633
– on-site sales assistance
service	116,247	218,410	382,303	495,353
– property inspection service	6,512	17,789	79,814	124,800
– property consultancy services	34,676	32,166	73,948	106,500
– parking lots sales agency
services	4,125	8,332	41,109	31,800
– project management services
for the property maintenance
works during the warranty
period	Nil	Nil	Nil	4,500

Note: The estimated demand on the ad hoc services ancillary to the property management services and valueadded services was included in the buffer.

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The implied increase in the Total Estimated Demands for the year ending 31 December 2020 as compared to the annualised total demand of Property Management Services and Value-added Services for the year ending 31 December 2019 was approximately 27.5%. Such increase was mainly due to the increase in estimated demand on-site sales assistance service and engineering and maintenance services of intelligent security equipment for the year ending 31 December 2020, which represented approximately 42.0% and 28.8% to the Total Estimated Demands, being the first two largest portion to the Total Estimated Demands.

On-site sales assistance service

As advised by the Directors, services under the on-site sales assistance service mainly includes cleaning, and customer services at the sale offices, show rooms and clubhouses in the development projects.

The Group recorded revenue generated from provision of on-site sales assistance services amounted to approximately RMB382.3 million for the ten months ended 31 October 2019. According to the list, the estimated demand on on-site sales assistance service for the year ending 31 December 2020 represented an increase of approximately 8.0% as compared to the annualized amounts of on-site sales assistance service for the year ending 31 December 2019.

As advised by the Directors, such implied increase was mainly due to (i) the previous increase in demand of such services; (ii) the Group’s performance for the ten months ended 2019; (iii) Seazen’s performance, being a major member of Mr. Wang’s Associated Companies, for the ten months ended 2019.

Based on the historical amounts of on-site sales assistance services, the Group recorded increases of approximately 65.5% and 87.9% in actual demand of on-site sales assistance services for 2017 and 2018 as compared to those of 2016 and 2017 respectively. In addition, the Group also recorded an increase of approximately 75.0% in actual demand of on-site sales assistance services for the ten months ended 31 October 2019 as compared to that for FY2018.

With reference to the 2018 Annual Report, the Company is a rapidly growing provider of property management service in the PRC. It has been providing property management services in the PRC for more than 23 years. According to China Index Academy (中國指數研究院) (“ CIA ”), the Company was ranked No. 7 on the list of China’s top 100 property management services in 2018 in terms of growth, which marked its fourth consecutive year of being ranked among the top 10 property management service providers in terms of growth, and was ranked No. 6 among the 2018 China Top 100 Chinese property management services enterprises in the PRC in terms of total gross floor area (“ GFA ”) under management in the Yangtze River Delta Region. The Company was ranked No. 16 among the 2018 China Top 100 Property Management Companies research report (2018年中國物業服務百強企業研究報告), as published by CIA.

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We noted an announcement published by Seazen on 3 December 2019 that Seazen Group’s aggregate contracted sales from January to November 2019 represented an increase of 24.17% over the corresponding period of 2018. The aggregate sales area from January to November 2019 also increased by approximately 37.50% over the corresponding period of 2018. We also noted from the Seazen Group’s annual report for FY2018 and interim report for the six months ended 30 June 2019 that the total land bank of the Seazen Group was approximately 109,520,929 sq.m. as at 31 December 2018 and approximately 134,015,751 sq.m. as at 30 June 2019, representing an increase of approximately 22.37%.

As advised by the Directors, the performance of the Group’s on-site sales assistance service mainly linked with the performance of properties sales by the service receiver. Based on the recent growth on the Seazen Group’s aggregated contracted sales and aggregated sales area, the Directors assumed that there would be a substantial increase in demand on on-site sales assistance service by Mr. Wang’s Associated Companies.

The Directors further provided us a list, showing (i) existing property projects that the Group has been working and expected to continue to work during 2020; and (ii) proposed property projects that the Group expected to work on starting from 2020, with expected on-site sales assistance service fees for each of the projects to be received in 2020. As advised by the Directors, the aforesaid list was prepared by the Company based on information obtained from Mr. Wang’s Associated Companies. Based on the aforesaid information, we noted the following matters:

(i) estimated on-site sales assistance service fees of existing property projects for 2020 was determined with reference to (a) monthly on-site sales assistance service fees for such existing projects; (b) expected number of months for provision on-site sales assistance service for such existing property projects in 2020;

We further obtained two contracts of on-site sales assistance service for existing property projects, which were expected to continue to work during 2020. We noted that the expected monthly on-site sales assistance service fees were in line with or lower than the on-site sales assistance service fees as shown in the contracts;

As advised by the Directors, the duration of such services were normally 12 months to 18 months, which were summarized based on the Group’s experience in provision of on-site sales assistance service. In addition, as the on-site sales assistance service contracts were signed on a calendar year basis so that there was no contract for provision of on-site sales assistance service for 2020 being signed;

(ii) estimated on-site sales assistance service fees of existing property projects to be recorded in 2020 represented over 75% of the total estimated on-site sales assistance service fees to be recorded in 2020; and

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(iii) estimated on-site sales assistance service fees of proposed property projects to be recorded in 2020 represented approximately 25% of the total estimated on-site sales assistance service fees to be recorded in 2020 and was estimated based on (a) number of property projects in different areas; (b) monthly on-site sales assistance service fees for such proposed projects (which fall within the range of monthly on-site sales assistance service fees for existing property projects); and (c) expected number of months for provision of on-site sales assistance service for such proposed property projects in 2020.

Having considered the above, we consider that the estimated demand on on-site sales assistance service for the year ending 31 December 2020 (including underlying assumptions adopted in preparing the estimation) to be acceptable.

Engineering and maintenance services of intelligent security equipment

As advised by the Directors, services under the intelligent security equipment engineering and maintenance services include intelligent engineering services to the property intelligent system, e.g., surveillance system, access control system and parking system, of the properties developed by Mr. Wang’s Associated Companies.

The Group recorded revenue generated from intelligent security equipment engineering and maintenance services amounted to approximately RMB171.1 million for the ten months ended 31 October 2019. According to the List, the estimated demand on engineering and maintenance services of intelligent security equipment for the year ending 31 December 2020 represented an increase of approximately 65.4% as compared to the annualized amounts of engineering and maintenance services of intelligent security equipment for the year ending 31 December 2019.

The Directors further advised us the estimated demand on engineering and maintenance services of intelligent security equipment was determined based on (i) possible contract value of certain intelligent engineering projects; (ii) estimated construction progress for such projects; and (iii) revenue to be recognized in 2020 (as some projects were expected to complete in 2021).

For our further due diligence purpose, we obtained a list from the Company showing, among other things, (i) there would be over 200 possible intelligent engineering projects of Mr. Wang’s Associated Companies in 2020 with total gross floor area; (ii) estimated contract value for each of the projects; (iii) expected time schedule for most of projects with expected delivery of or completion of construction of properties by the end of 2021. We noticed that there were projects in the list showing the delivery or completion of construction of properties took place before 2020. As advised by the Directors, as the installment(s) of services fee as the quality guarantee fee shall be paid after/during the quality guarantee period, those projects with the installment(s) of services fees (i.e. quality guarantee fee) to be expected in 2020 were kept in the list. Upon our request, the Directors provided us one contract regarding the provision of intelligent engineering services by the Group to Mr. Wang’s Associated Companies, which the Directors expected the installment of services fees (i.e. quality guarantee fees) to be settled in

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Based on the contract, we noted that (i) installment of services fees (i.e. quality guarantee fee) is to be settled after quality guarantee period, being a two-year period from the projects completion date; (ii) the implied payment dates will fall in 2020 based on projects completion dates as advised by the Directors and the two-year quality guarantee period; and (iii) the expected amount to be recorded in 2020 for such projects as stated on the list was close to the installment of services fees (i.e. quality guarantee fees) as shown in the contract. As advised by the Directors, the aforesaid difference was mainly due to the change of tax rate in the PRC. As further advised by the Directors, the aforesaid list was prepared by the Company based on information obtained from Mr. Wang’s Associated Companies.

Upon our further request, we obtained two contracts of engineering and maintenance services of intelligent security equipment for existing property projects. We noted that the contract value and expected completion date as stated on the list were in line with those as shown in the contracts. Therefore, we do not doubt the contract value/expected contract value of the possible intelligent engineering projects of Mr. Wang’s Associated Companies in 2020.

We also noted that there was a downward adjustment on total estimated contract value of the possible projects. As certain possible projects was expected to complete after 2020 or certain instalments of such projects will not be settled in 2020, the Directors downward adjusted the total estimated contract value based on estimated construction progress and revenue to be recognized in 2020. Despite the aforesaid downward adjustment, the sum of which represented total estimated amount of engineering and maintenance services of intelligent security equipment for 2020.

We further discussed with the relevant personnel (the “ Relevant Personnel ”), who is general manager of the Company’s subsidiary and will be responsible for intelligent equipment engineering business in respect of the adjustment. The Relevant Personnel has approximately 10 years’ experience in intelligent projects management. During our discussion, we have not identified any major factor which caused us to doubt the reasonableness of the estimated construction progress and revenue to be recognized in 2020. Having considered the experience of Relevant Personnel and our discussion as mentioned above, we consider the estimated construction progress and revenue to be recognized in 2020 to be acceptable.

In light of the above factors and that the estimated demand of engineering and maintenance services of intelligent security equipment was in line with the total estimated amount of engineering and maintenance services of intelligent security equipment based on projects as mentioned above, we consider the estimated demand on engineering and maintenance services of intelligent security equipment for 2020 (including underlying assumptions adopted in preparing the estimation) to be acceptable.

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The remaining services

The remaining services include (i) property management service; (ii) property inspection service; (iii) property consultancy service; (iv) parking lots sales agency service; (v) project management service for the property maintenance works during the warranty period; and (vi) provision of ad hoc services ancillary to the property management services and value-added services.

We noted that estimated demand on project management service for the property maintenance works during the warranty period to be RMB4,500,000 for the year ending 31 December 2020. As advised by the Directors, such arrangement was determined due to the fact that there was no such demand for FY2017 and FY2018, thus the estimated demand remained unchanged. In addition, there was no demand of provision of ad hoc services ancillary to the property management services and value-added services for FY2017 and FY2018. However, in the event that there will be any demand/further demand on such services (i.e. project management service for the property maintenance works during the warranty period and ad hoc services ancillary to the property management services and value-added services), the Directors have reserved a buffer (as discussed below).

Furthermore, we noted from the List and based on our calculation from the Directors’ estimation on demand of (i) property management service; (ii) property inspection service; (iii) property consultancy service; and (iv) parking lots sales agency service, we noted that implied increase rates of aforesaid services in total for the year ending 31 December 2020 as compared to those for the year ending 31 December 2019 (on annualised basis) were approximately 30% in total, which were mainly due to the increase in estimation on demand of (i) property management service; (ii) property inspection service; and (iii) property consultancy service.

We further enquired into the Directors regarding the possible change for each of the remaining services (other than project management service for the property maintenance works during the warranty period) for 2020 as mentioned above. As advised by the Directors, the performance of the Group’s (i) property management service; (ii) property inspection service; (iii) property consultancy service; and (iv) parking lots sales agency service were mainly linked with the performance of properties sales/delivery by the service receiver. In addition, the Directors advised that:

(a) Property management service: the provision of property management service to Mr. Wang’s Associated Companies normally means that the Group provide such services to the unsold properties of Mr. Wang’s Associated Companies. The Directors provided us names of expected property projects (which may require property management service) with location and estimated property management services fees for each of the projects. The total estimated property management service fees for the projects was close to the estimated demand on the Group’s property management service fees for 2020.

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With reference to the Board Letter, since the service fee is calculated based on the sq.m under management, the increasing contracted GFA has a positive and direct impact on the revenue of the Group. Based on the growth rate of the Seazen Group in 2019 and the increasing contracted GFA from properties developed by Mr. Wang’s Associated Companies during the two years ended 31 December 2018, namely approximately 38,243,300 sq.m and approximately 74,259,300 sq.m., respectively, it is expected that the service fee to be derived from the property management services provided to the Seazen Group’s completed but unsold properties will increase.

(b) Property inspection services: Services under the provision of property inspection services for development projects includes properties, facilities and security systems, in accordance with the acceptance standards of Mr. Wang’s Associated Companies and provision of feedbacks. As advised by the Directors, such services will be provided before delivery of such properties, facilities and security systems.

We noted that the demand on property inspection services by Mr. Wang’s Associated Companies from the Group substantially increased in recent years (i.e. 2016-2017: 63.4%, 2017-2018: 173.2%). The Directors also provided us names of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 with location and estimated inspection services fees for each of the projects. The total estimated inspection services fees for all the projects was close to the estimated demand on the Group’s property inspection service for 2020.

The implied increase rates of aforesaid services in total for the year ending 31 December 2020 as compared to those for the year ending 31 December 2019 (on annualised basis) amounted to approximately 30.3%, which was less than both the increase rate of demand of such services during 2016 to 2018 and increase rate of demand for such services during the ten months ended 31 October 2019 as compared to that for full year of 2018.

Based on (i) the increase of demand for such services during the ten months ended 31 October 2019 as compared to that for full year of 2018; and (ii) the Seazen Group’s recent performance as mentioned above, the Directors assumed there would be an increase in such services during 2020 as compared to that for 2019.

Furthermore, we also noted from annual reports of Seazen Holdings Co., Ltd. (新城控股集團股份有限公司) (“ Seazen Holdings* ”), being a subsidiary of Seazen and listed on Shanghai Stock Exchange, that the Seazen Holdings’ estimated construction area (預計開工總建築面積) for projects which were expected to complete in 2020 as contained in Seazen Holdings’ annual reports were more than the GFA of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 as contained in the list, which indicated the possible

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demand of the Group’s property inspection services. Accordingly, we consider the Directors’ estimation on GFA of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 to be justifiable.

We further enquired into the Directors regarding the range of unit price for property inspection services provided by the Group to Mr. Wang’s Associated Companies during 2019. We noted that the range of estimated average unit price for property inspection services as stated on the list did not exceed the range of unit price for property inspection services provided by the Group to Mr. Wang’s Associated Companies during 2019. Accordingly, we consider the Directors’ estimation on average unit price for property inspection services during 2020 to be justifiable.

Based on the above factors and the pricing mechanism of the property inspection services, we consider the estimated demand on the Group’s property inspection services for 2020 to be fair and reasonable.

(c) Property consultancy service: Services under the provision of property consultancy services include advising in the preliminary stage of property development, such as property design; and assisting in the preparation for the delivery of properties. As advised by the Directors, such services will be provided throughout the whole process of property development.

The Directors also provided us names of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 with location and estimated property consultancy service fees for each of the projects. The expected property projects which may require property consultancy service were substantially the same as expected property projects which may require property inspection services. The total estimated property consultancy services fees for all the projects was close to the estimated demand on the Group’s property consultancy service for 2020.

The implied increase rates of aforesaid services in total for the year ending 31 December 2020 as compared to those for the year ending 31 December 2019 (on annualised basis) amounted to approximately 20.0%, which was less than the increase of demand for such services during the ten months ended 31 October 2019 as compared to that for full year of 2018.

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As mentioned above, the Seazen Holdings’ estimated construction area (預計開工總建築面積) for projects which were expected to complete in 2020 as contained in Seazen Holdings’ annual reports were more than the GFA of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 as contained in the list. It indicated the possible demand of the Group’s property consultancy services. Accordingly, we consider the Directors’ estimation on GFA of expected property projects to be delivered by Mr. Wang’s Associated Companies during 2020 to be justifiable.

We further enquired into the Directors regarding the range of unit price for property consultancy services provided by the Group to Mr. Wang’s Associated Companies during 2019. We noted that the range of estimated average unit price for property consultancy services as stated on the list did not exceed the range of unit price for property consultancy services provided by the Group to Mr. Wang’s Associated Companies during 2019. Accordingly, we consider the Directors’ estimation on average unit price for property consultancy services during 2020 to be justifiable.

Based on the above factors and the pricing mechanism of the property consultancy services, we consider the estimated demand on the Group’s property consultancy services for 2020 to be fair and reasonable.

(d) Parking lots sales agency service: the Directors downward adjusted the expected demand of parking lots sales agency service based on the actual demand of parking lots sales agency service for the ten months ended 31 October 2019 for the sake of prudence.
(e) Having considered (i) the recent growth on the aggregated contracted sales and aggregated sales area of the Seazen Group; and (ii) the increasing of the Seazen Group’s land bank (as mentioned above) may have a positive and direct impact on the number of property projects that the Seazen Group will construct and sell in 2019 and subsequent years, the Directors assumed there would also be a substantial increase in demand on remaining services (other than parking lots sales agency service, project management service for the property maintenance works during the warranty period and provision of ad hoc services ancillary to the property management services and value-added services) by Mr. Wang’s Associated Companies.

Based on the above factors, we consider that the estimated demands on remaining services for the year ending 31 December 2020 to be acceptable.

In light of the above factors, we consider that the Total Estimated Demands to be acceptable.

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As further advised by the Directors, when determining the Services Cap for the year ending 31 December 2020, a buffer of approximately 10% was applied on the Total Estimated Demands so as to accommodate (i) any unexpected increase in the demands on such services and/or unexpected increase in the cost of supply of such services during 2020; (ii) any demand on project management service for the property maintenance works during the warranty period in 2020; or (iii) any demand on ad hoc services ancillary to the property management services and value-added services (e.g., organising social events for residents of such properties). Having considered (i) that the unexpected circumstances may take place during 2020; and (ii) the buffer would provide flexibility in the event that the actual demand was more than the Total Estimated Demands (which was estimated based on various assumptions), we consider that the buffer to be acceptable.

In light of the above factors, we consider that the Services Cap for the year ending 31 December 2020 to be fair and reasonable.

Shareholders should note that as the Services Cap is relating to future events and was estimated based on assumptions which may or may not remain valid for the entire period up to 31 December 2020, and they do not represent forecasts of revenue/cost to be incurred from the Transactions. Consequently, we express no opinion as to how closely the actual revenue/cost to be incurred from the Transactions will correspond with the Services Cap.

Listing Rules implication

The Directors confirmed that the Company shall comply with the requirements of Rules 14A.53 to 14A.59 of the Listing Rules pursuant to which (i) the values of the Transactions must be restricted by their respective proposed annual cap for the period concerned under the 2020 Services Framework Agreement; (ii) the terms of the Transactions (including their respective proposed annual caps) must be reviewed by the independent non-executive Directors annually; and (iii) details of independent non-executive Directors’ annual review on the terms of the Transactions must be included in the Company’s subsequent published annual reports.

Furthermore, it is also required by the Listing Rules that the auditors of the Company must provide a letter to the Board confirming, among other things, whether anything has come to their attention that causes them to believe that the transactions contemplated under the Transactions (i) have not been approved by the Board; (ii) were not, in all material respects, in accordance with the pricing policies of the listed issuer’s group if the transactions involve the provision of goods or services by the listed issuer’s group; (iii) were not entered into, in all material respects, in accordance with the relevant agreement governing the transactions; and (iv) have exceeded the annual caps.

In the event that the total amounts of the transactions contemplated under the Transactions are anticipated to exceed the annual caps, or that there are any proposed material amendment to the terms of the Transactions, as confirmed by the Directors, the Company shall comply with the applicable provisions of the Listing Rules governing continuing connected transactions.

– 47 –

LETTER FROM GRAM CAPITAL

Given the above stipulated requirements for continuing connected transactions pursuant to the Listing Rules, we are of the view that there are adequate measures in place to monitor the Transactions and thus the interest of the Independent Shareholders would be safeguarded.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Transactions (including the Services Cap) are on normal commercial terms and are fair and reasonable; and (ii) the Transactions are conducted in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM to approve the Transactions and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

* For identification purpose only

Note: Mr. Graham Lam is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. He has over 20 years of experience in investment banking industry.

– 48 –

GENERAL INFORMATION

APPENDIX

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. DISCLOSURE OF INTERESTS

As at Latest Practicable Date, the Directors and chief executive of the Company had the following interests in the Shares, underlying Shares and debentures of the Company and any of its associated corporations (within the meaning of the SFO), which are required to be 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 he is taken or deemed to have under such provisions of SFO) or as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules:

Interest in Shares

				Percentage the	Percentage the
Name of	Nature of		Number of	Company’s issued
Director	interest	Class of Shares	Shares	share capital
Qi Xiaoming	Beneficial	Ordinary shares	1,300,000		0.16%
	owner
Lan Ziyong	Beneficial	Ordinary shares	30,000		0.00%
	owner
Wu Qianqian	Beneficial	Ordinary shares	30,000		0.00%
	owner

– 49 –

GENERAL INFORMATION

APPENDIX

Interest in share options

Under the share option scheme of the Company, options may be granted to the Directors and employees and also to certain eligible participants as defined in the share option scheme to subscribe for the Shares. As at the Latest Practicable Date, the following Directors had personal interests in the following share options granted to them to subscribe for Shares:

					Percentage of
			Exercise period of	Exercise price	the Company’s
Name of	Number of	Date of grant of	share options (both	of share options	issued share
Director	share options	share options	dates inclusive)	(in HK$)	capital
			02/09/2019 to
Qi Xiaoming	1,500,000	02/09/2019	19/10/2024	6.180	0.18
			02/09/2019 to
Lan Ziyong	1,000,000	02/09/2019	19/10/2024	6.180	0.12
			02/09/2019 to
Wu Qianqian	1,000,000	02/09/2019	19/10/2024	6.180	0.12

Save as disclosed above, as at the Latest Practicable Date, neither any of the Directors had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or terminable by the employer within a year without payment of any compensation (other than statutory compensation)).

– 50 –

GENERAL INFORMATION

APPENDIX

4. INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date:

(i) none of the Directors had any interest in any assets which have been, since 31 December 2018 (being the date to which the latest published audited 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; and
(ii) save as disclosed above, none of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or, so far as is known to them, any of their respective close associates (as defined in the Listing Rules) was interested in any business (apart from the Group’s business) which competes or is likely to compete either directly or indirectly with the Group’s business (as would be required to be disclosed under Rule 8.10 of the Listing Rules as if each of them was a controlling shareholder).

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, the date to which the latest published audited consolidated financial statements of the Group were made up.

7. QUALIFICATION AND CONSENT OF EXPERT

Gram Capital is a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. Gram Capital has given and has not withdrawn its written consent to the issue of this circular with the reference to its name and its letter in the form and context in which they respectively appear.

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

– 51 –

GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, Gram Capital did not have any interest, direct or indirect, in any assets which since 31 December 2018, the date to which the latest published audited financial statements of the Group were made up, have been 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.

8. LITIGATION

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

9. MISCELLANEOUS

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

10. DOCUMENT AVAILABLE FOR INSPECTION

Copies of the following document will be available for inspection during the normal business hours at the Company’s principal place of business in Hong Kong at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong for a period of 14 days (excluding Saturdays and public holidays) from the date of this circular:

(a) the 2019 Services Framework Agreement;
(b) the 2020 Services Framework Agreement;
(c) the letter from the Independent Board Committee, the text of which is set out in this circular;
(d) the letter from Gram Capital; and
(e) this circular.

– 52 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1755)

NOTICE OF EXTRAORDINARY GENERAL MEETING TO BE HELD ON 16 JANUARY 2020

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of S-Enjoy Service Group Co., Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) will be held at Room 1211, 12th Floor, Seazen Holdings Tower B, No. 5, Lane 388, Zhongjiang Road, Putuo, Shanghai on Thursday, 16 January 2020 at 10 a.m. for the purpose of considering and, if thought fit, with or without amendment, passing the following resolution:

ORDINARY RESOLUTION

1. “ THAT :

(a) the 2020 Services Framework Agreement, a copy of which is tabled at the meeting and marked “A” and initialed by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder, be and are hereby confirmed and approved;
(b) the Annual Cap be and is hereby approved; and
(c) any one Director of the Company be and is hereby authorised for and on behalf of the Company to execute all such other documents, instruments and agreements and to do all such acts or things deemed by him/them to be incidental to, ancillary to or in connection with the matters contemplated in and completion of the 2020 Services Framework Agreement.”

By Order of the Board

S-Enjoy Service Group Co., Limited Qi Xiaoming

Chairman

Executive Director Chief Executive Officer

Hong Kong, 27 December 2019

– EGM-1 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

(1) A member entitled to attend and vote at the EGM is entitled to appoint another person as his proxy to attend and, on a poll, to vote instead of him. A member holding two or more shares may appoint more than one proxy. A proxy need not be a member of the Company, but must attend the EGM in person to represent him.
(2) A white form of proxy for use at the EGM is enclosed with the circular dated 27 December 2019 despatched to members of the Company.
(3) In order to be valid, the white form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a certified copy thereof, must be lodged with the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time for holding the EGM or any adjournment thereof failing which the form of proxy will not be valid. Completion and return of the form of proxy will not preclude a member from attending the EGM and voting in person if he so wishes. In the event that a member attends and votes at the EGM after having lodged his form of proxy, his form of proxy shall be deemed to be revoked.
(4) In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) and, 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 relevant joint holding.

The register of members of the Company will be closed from Monday, 13 January 2020 to Thursday, 16 January 2020 (both days inclusive) and during such period no transfer of shares will be registered. In order to be entitled to attend and vote at the EGM, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, 10 January 2020.

As at the date of this notice, the Board comprises nine members, being Qi Xiaoming ^ (Chairman and Chief Executive Officer), Wu Qianqian ^ , Lan Ziyong ^ , Wang Xiaosong ^^ , Lv Xiaoping ^^ , Lu Zhongming ^^ , Zhang Yan ^^^ , Zhu Wei ^^^ and Xu Xinmin ^^^ .

^ Executive Directors
^^ Non-executive Directors
^^^ Independent Non-executive Director

– EGM-2 –

AI assistant

S-Enjoy Service Group Co., Limited — Proxy Solicitation & Information Statement 2019

50145_rns_2019-12-27_3b76e255-0339-40ec-9f99-80266b2f09ed.pdf

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

CONTINUING CONNECTED TRANSACTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

II. 2020 SERVICES FRAMEWORK AGREEMENT

1. Background

2. The principal terms of the 2020 Services Framework Agreement are set out below:

LETTER FROM THE BOARD

Property Management Services:

Value-added Services:

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(i) Engineering and maintenance services

(ii) On-site sales assistance services

LETTER FROM THE BOARD

(v) Parking lots sales agency services

Exclusive distribution is an agreement between the Group and the relevant customer, whereby an exclusive right to sell all parking lots of a particular project is granted to the Group.

3. Annual Cap and its Basis

4. General Information

5. Reasons for and Benefits of the 2020 Services Framework Agreement

(1) Long established business relationship between the Group and Mr. Wang’s Associated Companies

(2) Low risk on potential reliance on the Seazen Group

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

6. Internal control measures

LETTER FROM THE BOARD

7. Implications under the Listing Rules

III. EGM

IV. RECOMMENDATIONS

V. ADDITIONAL INFORMATION

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

CONTINUING CONNECTED TRANSACTION

CONTINUING CONNECTED TRANSACTIONS

INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

Information on the Company

Information on Mr. Wang

Reasons for and benefits of the Transactions

Principal terms of the Transactions

Pricing policy

The proposed annual caps under the Transactions

On-site sales assistance service

Engineering and maintenance services of intelligent security equipment

LETTER FROM GRAM CAPITAL

The remaining services

LETTER FROM GRAM CAPITAL

Listing Rules implication

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

Interest in Shares

Interest in share options

3. DIRECTORS’ SERVICE CONTRACTS

4. INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

5. COMPETING INTERESTS

6. MATERIAL ADVERSE CHANGE

7. QUALIFICATION AND CONSENT OF EXPERT

8. LITIGATION

9. MISCELLANEOUS

10. DOCUMENT AVAILABLE FOR INSPECTION

S-ENJOY SERVICE GROUP CO., LIMITED 新城 � 服務集團有限公司

(Stock Code: 1755)

NOTICE OF EXTRAORDINARY GENERAL MEETING TO BE HELD ON 16 JANUARY 2020

ORDINARY RESOLUTION

1. “ THAT :

By Order of the Board

S-Enjoy Service Group Co., Limited Qi Xiaoming

More from S-Enjoy Service Group Co., Limited

S-Enjoy Service Group Co., Limited Proxy Solicitation & Information Statement 2019