Sino-Ocean Service Holding Limited - Proxy Solicitation & Information Statement 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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CONTINUING CONNECTED TRANSACTION IN RELATION TO

MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT AND

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser

to the Independent Board Committee and the Independent Shareholders

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VMS Securities Limited

A letter from the Board is set out on pages 4 to 15 of this circular. A letter from the Independent Board Committee is set out on page 16 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 17 to 37 of this circular.

A form of proxy for use at the EGM is enclosed to this circular and is also published on the websites of the Stock Exchange and the Company. If you intend to appoint a proxy to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong share registrar, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM (i.e., not later than 9:00 a.m. on Wednesday, 4 August 2021 (Hong Kong Time)), or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

PRECAUTIONARY MEASURES FOR THE EGM

To safeguard the health and safety of the Shareholders and to prevent the spreading of the COVID-19 pandemic, the following precautionary measures will be implemented at the EGM:

(1) Compulsory temperature screening/checks

(2) Wearing of surgical face mask

Attendees who do not comply with the precautionary measures above may be denied entry to the EGM venue.

For the health and safety of the Shareholders, the Company would like to encourage the Shareholders to exercise their right to vote at the EGM by appointing the Chairman of the EGM as their proxy instead of attending the EGM in person. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting in person at the EGM or any adjournment thereof should they so wish.

21 July 2021

Sino-Ocean Service Holding Limited

Stock Code : 06677

(Incorporated in the Cayman Islands with limited liability)

PRECAUTIONARY MEASURES FOR THE EGM

To safeguard the health and safety of the Shareholders and to prevent the spreading of the COVID-19 pandemic, the following precautionary measures will be implemented at the EGM:

(1) Compulsory temperature screening/checks will be carried out on every attendee at the entrance of the EGM venue.
(2) Every attendee will be required to wear a surgical face mask throughout the EGM and sit at a distance from other attendees.

Attendees are requested to observe and practise good personal hygiene at all times at the EGM venue.

To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue so as to ensure the health and safety of the attendees at the EGM.

Due to the constantly evolving COVID-19 pandemic situation, the Company may be required to change the EGM arrangements when at appropriate. Shareholders should check the Company’s website and/or the Stock Exchange’s website for future announcements and updates on the EGM arrangements.

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	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . .	16
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . .	17
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44

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DEFINITIONS

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

‘‘Abstained Directors’’
Mr. Cui Hongjie and Mr. Zhu Xiaoxing
‘‘Annual Caps’’ has the meaning ascribed to it under the paragraphs headed ‘‘The Master Commercial Operational Services Agreement — Annual caps and basis’’ in the ‘‘Letter from the Board’’ of this circular
‘‘Board’’ the board of Directors
‘‘Company’’ Sino-Ocean Service Holding Limited (遠洋服務控股有限公司), an exempted company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Main Board of the Stock Exchange (stock code: 06677)
‘‘Deed of Non-competition’’ has the meaning ascribed to it under the paragraphs headed ‘‘Reasons for and benefits of entering into the Master Commercial Operational Services Agreement’’ in the ‘‘Letter from the Board’’ of this circular
‘‘Director(s)’’ the director(s) of the Company
‘‘EBITDA’’ earnings before interest, taxes, depreciation and amortization
‘‘EGM’’

the extraordinary general meeting of the Company to be held at Meeting Room, 31st Floor, Tower A, Ocean International Center, 56 Dongsihuanzhonglu, Chaoyang District, Beijing, PRC on Friday, 6 August 2021 at 9:00 a.m. for the Independent Shareholders to consider and, if thought fit, approve the Master Commercial Operational Services Agreement and the Annual Caps

‘‘GFA’’ gross floor area
‘‘Group’’ the Company and its subsidiaries
‘‘HKD’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC

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DEFINITIONS

‘‘Independent Board Committee’’ an independent board committee of the Board, comprising all the independent non-executive Directors, namely Dr. Guo Jie, Dr. Xue Jun and Mr. Zhu Lin, established for the purpose of advising the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps
‘‘Independent Financial Adviser’’ VMS Securities Limited, a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps
‘‘Independent Shareholders’’ the Shareholders other than Shine Wind and its close associates
‘‘Latest Practicable Date’’ 16 July 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Master Commercial Operational an agreement dated 14 June 2021 entered into between the Services Agreement’’ Company and Sino-Ocean Group in relation to the provision of commercial operational services by the Group to the SinoOcean Connected Persons
‘‘Model Code’’
the Model Code for Securities Transactions by Directors of Listed Issuers as set forth in Appendix 10 to the Listing Rules
‘‘PRC’’
the People’s Republic of China, which for the purpose of this circular only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘SFO’’ the Securities and Futures Ordinance (Cap 571 of the Laws of Hong Kong)
‘‘Share(s)’’ ordinary share(s) of HKD0.1 each in the share capital of the Company

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DEFINITIONS

‘‘Shareholder(s)’’

holder(s) of Shares

‘‘Shine Wind’’

Shine Wind Development Limited (耀勝發展有限公司), a company with limited liability incorporated under the laws of the British Virgin Islands, a direct wholly-owned subsidiary of Sino-Ocean Group and a controlling shareholder of the Company

‘‘Sino-Ocean Connected Persons’’ Sino-Ocean Group and its associates, excluding, for the avoidance of doubt, the Group
‘‘Sino-Ocean Group’’ Sino-Ocean Group Holding Limited (遠洋集團控股有限公司), a company with limited liability incorporated under the laws of Hong Kong and the shares of which are listed on the Main Board of the Stock Exchange (stock code: 3377), a controlling shareholder of the Company
‘‘sq.m.’’ square meter
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘%’’ per cent

In this circular, unless the context otherwise requires, the terms ‘‘associate(s)’’, ‘‘close associate(s)’’, ‘‘connected person(s)’’, ‘‘connected transaction(s)’’, ‘‘continuing connected transaction(s)’’, ‘‘controlling shareholder(s)’’, ‘‘subsidiary(ies)’’ and ‘‘substantial shareholder(s)’’ shall have the meanings given to such terms in the Listing Rules, as modified by the Stock Exchange from time to time.

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LETTER FROM THE BOARD

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Executive Directors: Mr. Yang Deyong Ms. Zhu Geying

Registered office: Cricket Square, Hutchins Drive PO Box 2681, Grand Cayman KY1-1111, Cayman Islands

Non-executive Directors:

Mr. Cui Hongjie Mr. Zhu Xiaoxing

Independent non-executive Directors: Dr. Guo Jie Dr. Xue Jun Mr. Zhu Lin

Headquarters in the PRC: 2nd Floor, Tower A No. A518 East Road of Chaoyang Sports Center Chaoyang District Beijing, PRC

Principal place of business in Hong Kong: Suite 601, One Pacific Place 88 Queensway Hong Kong

21 July 2021

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION IN RELATION TO

MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT AND

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 14 June 2021. On 14 June 2021, the Company (on behalf of each member of the Group) entered into the Master Commercial Operational Services Agreement with Sino-Ocean Group (on behalf of each Sino-Ocean Connected Person), pursuant to which the Company (on behalf of each member of the Group) has agreed to provide commercial operational services to the Sino-Ocean Connected Persons for their commercial properties (including shopping malls and office buildings).

Sino-Ocean Service Holding Limited

Stock Code : 06677

(Incorporated in the Cayman Islands with limited liability)

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) the principal terms of the Master Commercial Operational Services Agreement and the transactions contemplated thereunder (including the Annual Caps); (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps; and (iv) a notice of the EGM together with a form of proxy.

THE MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

Set out below are the major terms of the Master Commercial Operational Services Agreement:

Date

14 June 2021

Parties

(i) the Company (on behalf of each member of the Group), as the service provider; and
(ii) Sino-Ocean Group (on behalf of each Sino-Ocean Connected Person), as the service recipient.

Term

The Master Commercial Operational Services Agreement shall have an initial fixed term commencing from the date of the Master Commercial Operational Services Agreement and ending on 31 December 2021 which, subject to the approval of the Independent Shareholders at the EGM, shall be automatically extended for two years until 31 December 2023.

The Master Commercial Operational Services Agreement may be terminated during its term by a party by giving the other party a 30-day prior written notice.

Subject matter

The commercial operational services to be provided by the Group to the Sino-Ocean Connected Persons include (i) pre-opening management services (such as positioning and design management services, and tenant sourcing and management services); and (ii) operation management services (such as opening preparation services, business plan management services, tenant coaching services, consumer management services and marketing services).

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LETTER FROM THE BOARD

Commercial Operational Services Agreement. The provision of commercial operational services by the Group to the Sino-Ocean Connected Persons will be carried out in accordance with such specific agreements to be entered into between the Group and the Sino-Ocean Connected Persons from time to time.

Pricing

The fees payable by the Sino-Ocean Connected Persons to the Group under the Master Commercial Operational Services Agreement and the specific agreements will be determined on arm’s length basis with reference to (i) the nature, size, location and branding of the relevant properties; (ii) the scope of the commercial operational services; (iii) the expected operational costs (including, among others, labor costs, material costs and administrative costs) in relation to the provision of the commercial operational services; and (iv) available information in relation to the fees charged by other commercial operational service providers for similar services in respect of similar types of properties in the market based on, among others, prospectuses of and independent research reports on other major listed market players, industry reports and communications between the Group and its business partners.

In particular, set forth below are the pricing models in respect of different major service fees to be charged by the Group:

Service fees Pricing model Construction consultancy fee 1% to 3% of the total fees charged by service providers during the construction period of the relevant properties Operation management fee 2% to 4% of the total rental income plus 2.5% to 8% of the EBITDA of the relevant properties Tenant sourcing fee 1 to 3 months’ rent of the relevant properties Sub-management fee 1% to 3% of the total rental income of the relevant properties Profit sharing fee 20% of such portion of the actual EBITDA which exceeds the EBITDA before engagement of the Group for the services under the Master Commercial Operational Services Agreement in respect of the relevant properties

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LETTER FROM THE BOARD

Each of the above pricing models in respect of the respective types of service fees (including the percentages and ranges stated above) are determined with reference to the pricing models adopted by other commercial operational service providers in the market, based on, among others, prospectuses of and independent research reports on other major listed market players, industry reports and communications between the Group and its business partners, and are applicable to both the Sino-Ocean Connected Persons and independent customers of the Group. The specific fee level for individual property projects will be fixed within the said ranges based on various factors, including the type, location, positioning and size of the relevant properties, the level of complexity of the architectural plans involved, the profile of the tenants sourced and the length of the lease terms secured.

The terms offered by the Group to the Sino-Ocean Connected Persons shall not be less favourable to the Group than terms offered by the Group to its independent customers for the same or similar type and scope of commercial operational services, where applicable. The Group would make reference to two to three contemporaneous transactions with its independent customers for the same or similar type and scope of commercial operational services, where available, to determine if the prices and terms offered by the Group to the Sino-Ocean Connected Persons are fair and reasonable and comparable to those offered to independent customers. In the event that no such contemporaneous transactions with independent customers for the same or similar type and scope of commercial operational services are available for comparison, the Group would make sure that the prices offered by the Group to the Sino-Ocean Connected Persons would be fair and reasonable in that such prices (i) would be determined in accordance with the relevant pricing models set out above, which are comparable to the pricing models adopted by other commercial operational service providers in the market and applicable to both the Sino-Ocean Connected Persons and independent customers of the Group; and (ii) would not be lower than the historical average fee level charged by the Group to the Sino-Ocean Connected Persons for the relevant services.

Payment terms

Unless otherwise agreed between the parties, the fees payable for the services provided under the Master Commercial Operational Services Agreement must be settled in RMB. The detailed payment terms will be agreed between the relevant member of the Group and the relevant SinoOcean Connected Person in the specific agreements on the principles of fairness and reasonableness. Generally, in line with market practice and the arrangements with independent customers of the Group on the principles of fairness and reasonableness, the Group will issue bill to the relevant Sino-Ocean Connected Person on a regular basis, either quarterly or annually depending on the types of service fees, with a credit term of up to one month.

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LETTER FROM THE BOARD

Annual caps and basis

The maximum aggregate transaction amounts under the Master Commercial Operational Services Agreement for the period commencing from the date of the Master Commercial Operational Services Agreement and ending on 31 December 2021 and the years ending 31 December 2022 and 2023 shall not exceed the following caps (the ‘‘Annual Caps’’):

RMB (’000)

Cap for the period commencing from the date of the Master Commercial
Operational Services Agreement and ending on 31 December 2021	100,000
Cap for the year ending 31 December 2022	220,000
Cap for the year ending 31 December 2023	300,000

In determining the above caps, the Company has considered the following factors:

(i) the number and size of property projects of the Sino-Ocean Connected Persons for which the Group will provide commercial operational services, including (a) 11 office buildings with total GFA of approximately 966,000 sq.m.; and (b) 11 commercial properties with total GFA of approximately 905,000 sq.m., and the timetable of completion of construction and commencement of operation thereof;
(ii) the expected increase in the operational costs incurred by the Group, in particular the expected increase in labor costs by 5% to 10%, with reference to the budgeted increase in the number of staff employed by the Group for the provision of commercial operational services and the increasing trend in the average salary of urban employees in the leasing and business service sector in the PRC at a compound annual growth rate of 4.7% from 2016 to 2019 (according to data from the National Bureau of Statistics of the PRC);
(iii) the market charge rates in respect of similar types and scope of commercial operational services;
(iv) the historical and expected financial performance of the property projects of the SinoOcean Connected Persons for which the Group will provide commercial operational services, given that certain service fees will be calculated based on the income and EBITDA of the relevant property projects (details of which are set out under the paragraphs headed ‘‘The Master Commercial Operational Services Agreement — Pricing’’ above); and

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LETTER FROM THE BOARD

(v) the expected increase in demand for commercial operational services from the SinoOcean Connected Persons, with reference to the expected increase in GFA of commercial properties of Sino-Ocean Group and its subsidiaries, joint ventures and associates for which the Group will provide property management services. Based on the business development and operation plans and estimated delivery schedules of Sino-Ocean Group and its subsidiaries, joint ventures and associates and the Company’s estimation on the services which the Group may be engaged to provide, the Company expects that the Group’s GFA under management of commercial properties developed by Sino-Ocean Group and its subsidiaries, joint ventures and associates will be approximately 2.9 to 3.5 million sq.m., 3.4 to 4.2 million sq.m. and 4.3 to 5.3 million sq.m. as of 31 December 2021, 2022 and 2023, respectively, representing an overall growth rate of 50% from 2021 to 2023 (calculated using the mid-points of the aforesaid ranges).

The Group will commence the transactions contemplated under the Master Commercial Operational Services Agreement after the Master Commercial Operational Services Agreement and the Annual Caps have been approved by the Independent Shareholders at the EGM. As at the Latest Practicable Date, no transaction has occurred under the Master Commercial Operational Services Agreement.

INTERNAL CONTROL MEASURES

In order to ensure that the terms (including the pricing principles and the Annual Caps) contained in the Master Commercial Operational Services Agreement are fair and reasonable and will be complied with, the Company has adopted the following internal control and corporate governance measures:

(i) the Board (including the independent non-executive Directors) will be responsible for reviewing and evaluating the terms of the Master Commercial Operational Services Agreement, in particular the pricing principles and the Annual Caps, to ensure that such terms are fair and reasonable to the Group and compliant with relevant laws and regulations, internal policies of the Group and the Listing Rules;
(ii) the terms offered by the Group to the Sino-Ocean Connected Persons under the specific agreements will not be less favourable to the Group than terms offered by the Group to its independent customers for the same or similar type and scope of commercial operational services, where applicable;
(iii) the specific agreements, together with relevant information, will be submitted to the business department, finance department, legal department and the management of the Group for approval before signing and execution;

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LETTER FROM THE BOARD

(iv) pursuant to the Corporate Governance Code in Appendix 14 to the Listing Rules, the Directors (including the independent non-executive Directors) will be able to seek independent professional advice in respect of the transactions contemplated under the Master Commercial Operational Services Agreement from external parties in appropriate circumstances;
(v) the actual transaction amounts under the Master Commercial Operational Services Agreement will be reported to appropriate management team regularly and the finance department of the Company will be responsible for reviewing and monitoring the actual transaction amounts to ensure that the Annual Caps will not be exceeded;
(vi) various internal departments of the Company (including but not limited to the finance department, capital market department and company secretarial department) will regularly monitor the implementation of the transactions under the Master Commercial Operational Services Agreement and keep track of the aggregate transaction amounts thereof to ensure that the pricing principles and the Annual Caps contained therein are complied with;
(vii) the Company has adopted relevant reporting and record-keeping procedures to allow the independent non-executive Directors and the auditors of the Company to perform annual review of the transactions contemplated under the Master Commercial Operational Services Agreement and provide annual confirmations in accordance with the Listing Rules; and
(viii) the Company will duly disclose in its annual report the continuing connected transactions conducted during the relevant financial year, together with the conclusion drawn by the independent non-executive Directors on whether the transactions are conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, and according to the relevant framework agreements on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF ENTERING INTO THE MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

The Group is a comprehensive property management service provider with extensive geographic coverage in the PRC and is primarily engaged in the provision of (i) property management services; (ii) community value-added services; and (iii) value-added services to nonproperty owners. To further expand the business scale and diversify the service offerings of the Group and as part of the organic growth of the Group’s business, the Company has established a commercial asset management platform which will engage in the provision of commercial operational services, mainly for shopping malls, office buildings and other types of investment properties, starting from the second half of 2021.

Commercial operational services can be regarded as an extension of and complementary to traditional property management services. The provision of both traditional property management services and commercial operational services by the same service provider would enable more effective use of existing resources (including personnel and equipment), promote execution efficiency, improve service quality and create synergies between the management of different types of properties. In particular, synergies between traditional property management services and commercial operational services can be achieved by the sharing of customer resources among various types of properties including residential communities, office buildings and commercial properties. The large number of residents from residential communities would provide a stable customer base for shopping malls and office buildings, and at the same time a convenient and pleasant shopping and workplace experience for the residents would enhance their customer experience, satisfaction and loyalty. The experience in and professional knowledge of the provision of traditional property management services and commercial operational services can be considered as complementary and integrative to each other.

The Group possesses professional teams with years of experience in providing different types of services to different customers for different properties, and has the capabilities of providing commercial operational services. In the implementation of the Group’s business strategy to expand into commercial operational services, the Group will provide high-quality commercial operational services for shopping malls, office buildings and other investment properties developed or held by the Sino-Ocean Connected Persons, independent third-party developers and other property management companies. The Group and the Sino-Ocean Connected Persons have established a long-standing business relationship and mutual understanding of the standards, requirements and specific needs of each other. The Company believes that the entering into of the Master Commercial Operational Services Agreement and the transactions contemplated thereunder with the Sino-Ocean Connected Persons would strengthen the synergies between the Group and the SinoOcean Connected Persons and assist the Group in developing strong capabilities in commercial asset management and operations, and thereby accelerate the expansion of business scale and increase the market share of the Group.

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LETTER FROM THE BOARD

As disclosed in the prospectus of the Company dated 7 December 2020, each of Sino-Ocean Group and Shine Wind (as controlling shareholders of the Company) executed a deed of noncompetition (the ‘‘Deed of Non-competition’’) dated 30 November 2020 in favor of the Company (for itself and as trustee for each member of the Group), pursuant to which each of Sino-Ocean Group and Shine Wind has undertaken that it shall not, and shall use its best endeavors to procure that its close associates (excluding the Group) shall not, carry on, engage in or make any investment in the provision of property management services, value-added services to non-property owners and community value-added services. For the avoidance of doubt, the Deed of Noncompetition does not cover the provision of commercial operational services. On the basis that (i) Sino-Ocean Group has indicated to the Company that it intends to engage the Group to manage the operation of substantially all of its commercial properties and has no intention to engage in the provision of commercial operational services; and (ii) as at the Latest Practicable Date, the Group’s commercial operational service business was still at its initial stage of development and did not constitute a major revenue generator and thus principal business for the Group as a whole, the Board considers that there is no business competition issue between Sino-Ocean Group and the Group in respect of the provision of commercial operational services and therefore the existing scope of the undertaking given by Sino-Ocean Group and Shine Wind under the Deed of Noncompetition provides sufficient protection to the Group.

INFORMATION ON THE COMPANY AND THE GROUP

The Company is an investment holding company and the Group is a comprehensive property management service provider with extensive geographic coverage in the PRC. The Group’s property management services cover a wide range of property types, including residential communities, commercial properties (such as office buildings, shopping malls and hotels) and public and other properties (such as hospitals, public service facilities, government buildings and schools). In addition to property management services, the Group provides a variety of community value-added services to property owners and residents of the properties under its management, including community asset value-added services, community living services and property brokerage services, and value-added services to non-property owners, including pre-delivery services, consultancy services and property engineering services to property developers and other property management companies.

INFORMATION ON SINO-OCEAN GROUP

Sino-Ocean Group is a company incorporated under the laws of Hong Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. It is a leading large-scale property developer with developments in key economic regions in the PRC, including the Beijing Region, the Bohai Rim Region, the Eastern Region, the Southern Region, the Central Region and the Western Region. Sino-Ocean Group’s core businesses include development of residential property, investment property development and operation, customer service and product construction, while its non-core businesses cover real estate financing, logistics property, internet data center, senior living service, etc..

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LETTER FROM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

While one or more of the applicable percentage ratios (excluding the profits ratio) under the Listing Rules in respect of the Annual Cap for the period commencing from the date of the Master Commercial Operational Services Agreement and ending on 31 December 2021 exceed(s) 0.1% but are all less than 5%, one or more of the applicable percentage ratios (excluding the profits ratio) under the Listing Rules in respect of each of the respective Annual Caps for the years ending 31 December 2022 and 2023 exceed(s) 5%. To achieve the highest standards of corporate governance and compliance with the Listing Rules and to enhance the Shareholders’ participation in the Group’s affairs, the Company will (i) comply with the reporting, annual review, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules in respect of the transactions contemplated under the Master Commercial Operational Services Agreement as a whole; and (ii) commence the transactions contemplated under the Master Commercial Operational Services Agreement after the Master Commercial Operational Services Agreement and the Annual Caps have been approved by the Independent Shareholders at the EGM.

GENERAL

A notice convening the EGM to be held at Meeting Room, 31st Floor, Tower A, Ocean International Center, 56 Dongsihuanzhonglu, Chaoyang District, Beijing, PRC on Friday, 6 August 2021 at 9:00 a.m. is set out on pages 44 to 45 of this circular. At the EGM, ordinary resolution(s) will be proposed for the Independent Shareholders to consider and, if thought fit, to approve the Master Commercial Operational Services Agreement and the Annual Caps by way of poll. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, save for Shine Wind and its close associates (which held 800,000,000 Shares as at the Latest Practicable Date), none of the other Shareholders has a material interest in the Master Commercial Operational Services Agreement and the transactions contemplated thereunder and is required to abstain from voting on the relevant resolution(s) in the EGM.

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LETTER FROM THE BOARD

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps. VMS Securities Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Master Commercial Operational Services Agreement and the Annual Caps.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of the Directors was in any way materially interested in the Master Commercial Operational Services Agreement and the transactions contemplated thereunder. Nevertheless, the Abstained Directors (namely Mr. Cui Hongjie and Mr. Zhu Xiaoxing) have abstained from voting on the Board resolutions approving the Master Commercial Operational Services Agreement by virtue of their directorship and/or senior positions in Sino-Ocean Group.

RECOMMENDATION

The Directors (including the independent non-executive Directors but excluding the Abstained Directors) consider that the Master Commercial Operational Services Agreement was entered into in the ordinary and usual course of business of the Company, and the terms of the Master Commercial Operational Services Agreement, which were determined after arm’s length negotiations between the parties thereto, are normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors (including the independent non-executive Directors but excluding the Abstained Directors) recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Master Commercial Operational Services Agreement and the Annual Caps.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee; (ii) the letter from the Independent Financial Adviser; and (iii) the additional information set out in the appendix to this circular.

Yours faithfully,

By order of the Board Sino-Ocean Service Holding Limited Yang Deyong Joint Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

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21 July 2021

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION IN RELATION TO MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

We refer to the circular of the Company dated 21 July 2021 (the ‘‘Circular’’) of which this letter forms a part. Terms defined in the Circular shall bear the same meanings herein unless the context otherwise requires.

We have been appointed by the Board as the members of the Independent Board Committee to advise you in respect of the Master Commercial Operational Services Agreement and the Annual Caps. VMS Securities Limited has been appointed as the Independent Financial Adviser to advise us and the Independent Shareholders in this regard.

Having taken into account the advice of the Independent Financial Adviser, we are of the opinion that the Master Commercial Operational Services Agreement was entered into in the ordinary and usual course of business of the Company and is on normal commercial terms, and the Master Commercial Operational Services Agreement and the Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Master Commercial Operational Services Agreement and the Annual Caps.

We also draw the attention of the Independent Shareholders to (i) the letter from the Board, (ii) the letter from the Independent Financial Adviser, and (iii) the additional information set out in the appendix to the Circular.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Dr. Guo Jie Dr. Xue Jun Mr. Zhu Lin Independent non-executive Independent non-executive Independent non-executive Director Director Director

Sino-Ocean Service Holding Limited

(Incorporated in the Cayman Islands with limited liability)

Stock Code : 06677

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of the letter of advice from VMS Securities Limited to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this circular.

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VMS Securities Limited 49/F, One Exchange Square 8 Connaught Place, Central Hong Kong

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21 July 2021

To: The Independent Board Committee and The Independent Shareholders

Dear Sirs and Madams,

CONTINUING CONNECTED TRANSACTION IN RELATION TO MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders on the Master Commercial Operational Services Agreement and the Annual Caps, in respect of which the Independent Shareholders’ approval will be sought at the EGM. Details of the Master Commercial Operational Services Agreement and the Annual Caps are set out in the ‘‘Letter from the Board’’ (the ‘‘Letter’’) contained in the circular of the Company dated 21 July 2021 (the ‘‘Circular’’), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined herein.

On 14 June 2021, the Company (on behalf of each member of the Group) entered into the Master Commercial Operational Services Agreement with Sino-Ocean Group (on behalf of each Sino-Ocean Connected Person), pursuant to which the Company (on behalf of each member of the Group) has agreed to provide commercial operational services to the Sino-Ocean Connected Persons for their commercial properties (including shopping malls and office buildings).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

IMPLICATIONS ON THE LISTING RULES

As at the Latest Practicable Date, the Company was owned as to approximately 67.57% by Sino-Ocean Group through its wholly-owned subsidiary Shine Wind. Therefore, Sino-Ocean Group is a controlling shareholder and thus a connected person of the Company. Accordingly, the entering into of the Master Commercial Operational Services Agreement and the transactions contemplated thereunder constitute continuing connected transaction of the Company under Chapter 14A of the Listing Rules. In view of Shine Wind’s interests in the transactions contemplated under the Master Commercial Operational Services Agreement, Shine Wind and its close associates (which held 800,000,000 Shares as at the Latest Practicable Date), will be required to abstain from voting on the relevant resolution in the EGM. To the best knowledge, information and belief of the Directors having made all reasonable enquiries, save for Shine Wind and its close associates, none of the other Shareholders has a material interest in the Master Commercial Operational Services Agreement and the transactions contemplated thereunder and is required to abstain from voting on the relevant resolution in the EGM.

As (i) Mr. Cui Hongjie, a non-executive Director of the Company, is also concurrently an executive director, executive president and general manager of product construction center of SinoOcean Group; and (ii) Mr. Zhu Xiaoxing, a non-executive Director of the Company, is also concurrently the general manager of the investment and finance business center of Sino-Ocean Group, they have abstained from voting on the relevant Board resolution(s) for approving the Master Commercial Operational Services Agreement and the transactions contemplated thereunder to avoid any conflict of interest. Save for the above, to the best knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Directors has material interest or conflict of interest in the Master Commercial Operational Services Agreement and the transactions contemplated thereunder and none of them is required to abstain from voting on the relevant Board resolution(s).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

THE INDEPENDENT BOARD COMMITTEE

The independent board committee comprising all the independent non-executive Directors, namely Dr. Guo Jie, Dr. Xue Jun and Mr. Zhu Lin, has been appointed to advise the Independent Shareholders on (i) whether the transactions contemplated under the Master Commercial Operational Services Agreement and the Annual Caps are fair and reasonable, on normal commercial terms and in the ordinary and usual course of business of the Company, and in the interest of the Company and the Shareholders as a whole; and (ii) the voting action should be taken by the Independent Shareholders. We, VMS Securities Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these respects and to give our opinion in relation to the Master Commercial Operational Services Agreement and the Annual Caps, for the Independent Board Committee’s consideration when making their recommendation to the Independent Shareholders.

As at the Latest Practicable Date, we were independent from and not connected with the Group and any other parties involved in the Master Commercial Operational Services Agreement pursuant to Rule 13.84 of the Listing Rules, and accordingly, qualified to give independent advice to the Independent Board Committee and the Shareholders regarding the Master Commercial Operational Services Agreement and the transactions contemplated thereunder of the Company. No arrangement exists whereby affects our independence in relation to our appointment as the Independent Financial Adviser. In the previous two years, we have not acted as an independent financial adviser to the Company under the Listing Rules for any other transaction. Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, no arrangement exists whereby we had received or will receive any other fees or benefits from the Company or any other parties to the transactions that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent pursuant to the Listing Rules.

BASIS OF OUR OPINION

In formulating our advice, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Group and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Group and/or the Directors and/or its senior management staff (the ‘‘Management’’) and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations made or provided by the Directors and/or the Management contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or the Directors and/or the Management that no material facts have been omitted from the information provided and referred to in the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group and/or the Directors and/or the Management and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Company and Sino-Ocean Group and/or their respective associated persons.

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion regarding the Master Commercial Operational Services Agreement, we have taken into consideration the following principal factors.

I. Background information

Information on the Group

Information on Sino-Ocean Group

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Background information on the property management industry in the PRC

Pursuant to the Thirteenth Five-Year Plan* (十三五規劃) set out by the PRC government, the target annual growth in gross domestic product (‘‘GDP’’) for the subsequent five years from 2016 was approximately 6.5%. As set out on the website of the National Bureau of Statistics of the PRC (http://data.stats.gov.cn), the year-on-year growth in GDP for the PRC in 2020 was significantly lower at approximately 2.3% (2019: 6.0%), mainly due to the ongoing development and impact of the COVID-19 outbreak, which is expected to be temporary in nature.

Despite the short-term challenging environment, the PRC economy is expected to achieve positive growth for 2021. As stated in the Thirteenth Five-Year Plan, the PRC government targets to, among others, (i) accelerate the agricultural population urbanisation (加快農業轉移人口市民化) by implementing three main strategies, namely further reform of the household registration system (深化戶籍制度改革), implementation of the residence permit system (實施居住證制度) and improvement on the system for promoting urbanisation of agricultural population (健全促進農業轉移人口市民化的機制); and (ii) optimise urbanisation layout (優化城鎮化佈局和形態) by implementing three main strategies, namely the acceleration of the construction and advancement of urban agglomeration (加快城市群建設發展), enhance the drive of activities by central cities (增強中心城市輻射帶動功能) and speeding up of the development of small and medium-sized cities and characteristical towns (加快發展中小城市和特色鎮). Accordingly, it is expected that rapid urbanisation in the PRC as well as growth in per capita disposable income shall continue to drive growth for the PRC property management industry, as the Management expects consumers will continue to demand for better living conditions and higher quality property management services.

II. Reasons for and benefits of entering into the Master Commercial Operational Services Agreement

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As disclosed in the prospectus of the Company dated 7 December 2020 (the ‘‘Prospectus’’), each of Sino-Ocean Group and Shine Wind (as controlling shareholders of the Company) executed a deed of non-competition (the ‘‘Deed of Non-competition’’) dated 30 November 2020 in favor of the Company (for itself and as trustee for each member of the Group), pursuant to which each of Sino-Ocean Group and Shine Wind has undertaken that it shall not, and shall use its best endeavors to procure that its close associates (excluding the Group) shall not, carry on, engage in or make any investment in the provision of property management services, value-added services to non-property owners and community value-added services. For the avoidance of doubt, the Deed of Noncompetition does not cover the provision of commercial operational services. On the basis that (i) Sino-Ocean Group has indicated to the Company that it intends to engage the Group to manage the operation of substantially all of its commercial properties and has no intention to engage in the provision of commercial operational services; and (ii) as at the Latest Practicable Date, the Group’s commercial operational service business was still at its initial stage of development and did not constitute a major revenue generator and thus principal business for the Group as a whole, the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Board considers that there is no business competition issue between Sino-Ocean Group and the Group in respect of the provision of commercial operational services and therefore the existing scope of the undertaking given by Sino-Ocean Group and Shine Wind under the Deed of Noncompetition provides sufficient protection to the Group.

In assessing the reasons for and benefits of the entering into of the Master Commercial Operational Services Agreement, we have reviewed the Prospectus and the Company’s 2020 annual report, and noted that the Group has been continuously diversifying the types of properties managed and expanding the property management portfolio to cover non-residential properties, including commercial properties such as office buildings and shopping malls and public and other properties such as hospitals, public service facilities, government buildings and schools. Therefore, the Master Commercial Operational Services Agreement, which focuses on the provision of operational services to commercial properties, is considered in line with the overall business development plan of the Group. Moreover, we have also reviewed the latest development plan set out by the PRC government and the statistics of the PRC economy that is expected to affect the PRC property management market, which have been stated under the above paragraphs headed ‘‘Background information on the property management industry in the PRC’’, following the Thirteenth Five-Year Plan as abovementioned, we are of the view that the expansion and diversification of the Group’s services to cover non-residential properties will support and align with the government’s plan to promote urbanisation in the PRC.

We also noted that on 27 November 2020, the Company has entered into a number of agreements with Sino-Ocean Group, including, among others, (i) the Master Property Management Services Agreement for the provision of property management services (such as security, cleaning, greening, gardening and repair and maintenance services); (ii) the Master Pre-delivery Services Agreement for the provision of pre-delivery services (such as on-site cleaning, security inspection, repair and maintenance, parking management and other customer related services); and (iii) the Master Consultancy and Other Value-added Services Agreement for the provision of consultancy services such as advisory services on overall project design and planning and coordination of presale activities, as well as property engineering and repair and maintenance services, which demonstrated the Group’s capability, expertise and experience in the provision of property management related services. Given the Group was recently spun off from Sino-Ocean Group on 17 December 2020 and the two parties have established long-standing business relationship since incorporation in 1999, their mutual understanding of the standards, requirements and specific needs of each other will be beneficial to the growth and development of both parties. The Management is of the view that the entering into of the Master Commercial Operational Services Agreement will further enhance the cooperation and synergies between the two parties, and the Group will be able to increase its market share through leveraging on the sharing of resources.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the business competition between Sino-Ocean Group and the Group in respect of the provision of commercial operation services, we have reviewed the 2020 annual reports of SinoOcean Group and the Company, and noted that Sino-Ocean Group (for the avoidance of doubt, excluding the Group) mainly focuses on development of residential property, investment property development and operation, customer service and product construction, whereas the Group focuses on property management related business including property management services, community value-added services and value-added services to non-property owners and the Group’s property management services cover a wide range of property types, including residential communities, commercial properties (such as office buildings, shopping malls and hotels) and public and other properties (such as hospitals, public service facilities, government buildings and schools). In addition, we have reviewed the Deed of Non-competition disclosed in the Prospectus, we noted that each of Sino-Ocean Group and Shine Wind has undertaken that it shall not, and shall use its best endeavors to procure that its close associates (excluding the Group) shall not, carry on, engage in or make any investment in the provision of property management services, value-added services to non-property owners and community value-added services. For the avoidance of doubt, the Deed of Non-competition does not cover the provision of commercial operational services. Given that (i) Sino-Ocean Group has indicated to the Company that it intends to engage the Group to manage the operation of substantially all of its commercial properties and has no intention to engage in the provision of commercial operational services; and (ii) as at the Latest Practicable Date, the Group’s commercial operational service business was still at its initial stage of development and did not constitute a major revenue generator and thus principal business for the Group as a whole, we concur the view of the Board that there is no business competition issue between Sino-Ocean Group and the Group in respect of the provision of commercial operational services and therefore the existing scope of the undertaking given by Sino-Ocean Group and Shine Wind under the Deed of Non-competition provides sufficient protection to the Group.

Having considered that (i) the Master Commercial Operational Services Agreement is in line with the overall business plan of the Group; (ii) the Master Commercial Operational Services Agreement is in line with development plan of the government to promote urbanisation in the PRC; (iii) the Group and Sino-Ocean Group have maintained a long-term business relationship; (iv) the Group has the capability and experience in the provision of similar services; (v) Sino-Ocean Group has indicated to the Company that it intends to engage the Group to manage the operation of substantially all of its commercial properties and has no intention to engage in the provision of commercial operational business, and there is no business competition issue between Sino-Ocean Group and the Group in respect of the provision of commercial operational services; and (vi) the existing scope of the undertaking given by Sino-Ocean Group and Shine Wind under the Deed of Non-competition provides sufficient protection to the Group, we concur with the view of the Board that the Master Commercial Operational Services Agreement was entered into in the ordinary and usual course of business of the Company, and the terms of the Master Commercial Operational Services Agreement, which were determined after arm’s length negotiations between the parties thereto, are normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

III. Terms of the Master Commercial Operational Services Agreement

Set out below is a summary of the principal terms of the Master Commercial Operational Services Agreement. Details of the conditions and principal terms of the Master Commercial Operational Services Agreement are referred to the section heading ‘‘The Master Commercial Operational Services Agreement’’ in the Letter.

Date: 14 June 2021

Parties: (i) the Company (on behalf of each member of the Group), as the service provider; and
(ii) Sino-Ocean Group (on behalf of each Sino-Ocean Connected Person), as the service recipient.

Term:

The Master Commercial Operational Services Agreement may be terminated during its term by a party by giving the other party a 30day prior written notice.

Subject matter: The commercial operational services to be provided by the Group to the Sino-Ocean Connected Persons include (i) pre-opening management services (such as positioning and design management services and tenant sourcing and management services); and (ii) operation management services (such as opening preparation services, business plan management services, tenant coaching services, consumer management services and marketing services).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Master Commercial Operational Services Agreement is a framework agreement which contains the principles, mechanisms and terms and conditions upon which the parties thereto are to carry out the transactions contemplated thereunder. The Group and the SinoOcean Connected Persons may from time to time enter into specific agreements, provided that the terms and conditions of such specific agreements shall not be inconsistent with the terms of the Master Commercial Operational Services Agreement. The provision of commercial operational services by the Group to the Sino-Ocean Connected Persons will be carried out in accordance with such specific agreements to be entered into between the Group and the Sino-Ocean Connected Persons from time to time.

Pricing:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In particular, set forth below are the pricing models in respect of different major service fees to be charged by the Group:

Service fees	Pricing model
Construction consultancy	1% to 3% of the total fees charged by
fee	service providers during the construction
	period of the relevant properties
Operation management	2% to 4% of the total rental income plus
fee	2.5% to 8% of the EBITDA of the
	relevant properties
Tenant sourcing fee	1 to 3 months’ rent of the relevant
	properties
Sub-management fee	1% to 3% of the total rental income of
	the relevant properties
Profit sharing fee	20% of such portion of the actual
	EBITDA which exceeds the EBITDA
	before engagement of the Group for the
	services under the Master Commercial
	Operational Services Agreement in
	respect of the relevant properties

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The terms offered by the Group to the Sino-Ocean Connected Persons shall not be less favourable to the Group than terms offered by the Group to its independent customers for the same or similar type and scope of commercial operational services, where applicable. The Group would make reference to two to three contemporaneous transactions with its independent customers for the same or similar type and scope of commercial operational services, where available, to determine if the prices and terms offered by the Group to the SinoOcean Connected Persons are fair and reasonable and comparable to those offered to independent customers. In the event that no such contemporaneous transactions with independent customers for the same or similar type and scope of commercial operational services are available for comparison, the Group would make sure that the prices offered by the Group to the Sino-Ocean Connected Persons would be fair and reasonable in that such prices (i) would be determined in accordance with the relevant pricing models set out above, which are comparable to the pricing models adopted by other commercial operational service providers in the market and applicable to both the Sino-Ocean Connected Persons and independent customers of the Group; and (ii) would not be lower than the historical average fee level charged by the Group to the Sino-Ocean Connected Persons for the relevant services.

Payment terms

Unless otherwise agreed between the parties, the fees payable for the services provided under the Master Commercial Operational Services Agreement must be settled in RMB. The detailed payment term will be agreed between the relevant member of the Group and the relevant Sino-Ocean Connected Person in the specific agreements on the principles of fairness and reasonableness. Generally, in line with market practice and the arrangements with independent customers of the Group on the principles of fairness and reasonableness, the Group will issue bill to the relevant Sino-Ocean Connected Person on a regular basis, either quarterly or annually depending on the types of service fees, with a credit term of up to one month.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Our view

In assessing the fairness and reasonableness of the Master Commercial Operational Services Agreement, we have reviewed the terms of the Master Property Management Services Agreement, Master Pre-delivery Services Agreement and Master Consultancy and Other Value-added Services Agreement, and understand that substantive provisions of the four agreements remain similar.

We also understand from the Management that each of the specific agreements under Master Commercial Operational Services Agreement will be determined on arm’s length basis following the pricing policies of the Company. The business department of the Company will be responsible for determining the pricing of the project with reference to (i) the nature, size, location and branding of the relevant properties; (ii) the scope of the commercial operational services; (iii) the expected operational costs (including, among others, labor costs, material costs and administrative costs) in relation to the provision of the commercial operational services; and (iv) the fees charged by other commercial operational service providers for similar services in respect of similar types of properties in the market. Each of the specific agreements will then be submitted to mangers of the business department, finance department and legal department, as well as the management of the Group for approval before signing and execution, to ensure the terms offered by the Group to the Sino-Ocean Connected Persons shall not be less favourable to the Group than terms offered by the Group to independent parties.

According to the Letter, we noted that the services fees to be charged under the Master Commercial Operational Services Agreement are mainly categorized into (i) construction consultancy fees; (ii) operation management fees; (iii) tenant sourcing fees; (iv) submanagement fees; and (v) profit sharing fees. The construction consultancy fees will generally be charged at a rate of 1.0% to 3.0% on top of the total fees charged by the service providers during construction period; operation management fees will generally be charged at a rate of 2.0% to 4.0% based on the total rental income along with 2.5% to 8.0% of the EBITDA of the properties; tenant sourcing fees will generally be charged based on 1 to 3 months of rents; sub-management fees will generally be charged at a rate of 1.0% to 3.0% based on total rental income of the properties, while a 20.0% of profit sharing fees will be charged on the exceed amount of EBITDA over the expected EBITDA of the properties before engagement of the Group for the services under the Master Commercial Operational Services Agreement (the ‘‘Original EBITDA’’).

In respect of the payment terms, we understand from the Management that the fees payable for the services provided under the Master Commercial Operational Services Agreement shall be settled in RMB and bills will generally be issued on a regular basis or upon the completion of work with a credit term of up to one month. In particular, construction consultancy fees, operation management fees, sub-management fees and profit sharing fees will usually be billed quarterly or annually subject to the financial performance or the progress of work during the period, and tenant sourcing fees will be billed upon the confirmation of tenant sourcing results.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To the best of our knowledge and information available and on a best effort basis, we have obtained and reviewed the major terms offered by nine similar public and private companies, including China Resources Mixc Lifestyle Services Limited, Powerlong Commercial Management Holdings Limited, E-Star Commercial Management Company Limited, China Resources Land Limited, Central China New Life Limited, SF Real Estate Investment Trust, Hui Xian Real Estate Investment Trust and two other private companies (the ‘‘Comparable Companies’’), which have provided similar operational services to commercial properties in the PRC, including both shopping malls and offices, during the past three years, to understand the payment terms and pricing basis for construction consultancy fees, operation management fees, tenant sourcing fees, sub-management fees and profit sharing fees (the ‘‘Comparable Terms’’). We consider that the Comparable Companies are exhaustive, fair and representative based on the said criteria. Please refer to the following table for the pricing models and payment terms of the Comparable Companies:

	Number of
	Comparable
	Companies	Name of the Comparable			Credit
Type of service fees	considered	Companies	Pricing models	Payment terms	period
Construction	1	China Resources Land Limited	3% of the total fees	The construction	15 days
consultancy fees			charged by service	consultancy fee shall
			providers during the	be billed upon the
			construction period of the	completion of each
			relevant properties	construction phase
Operation	6	China Resources Mixc Lifestyle	2% to 5% of the total	Monthly, quarterly,	10–30 days
management fees		Services Limited, Powerlong	rental income and/or 0% to	semi-annually or
		Commercial Management	10% of the EBITDA of the	annually
		Holdings Limited, E-Star	relevant properties
		Commercial Management
		Company Limited, Central China
		New Life Limited and two
		private companies
Tenant sourcing fees	4	China Resources Mixc Lifestyle	0.5 to 3 months of rent of	One-off payment upon	N/A
		Services Limited, Powerlong	the relevant properties	the successful sourcing
		Commercial Management		of tenants or two
		Holdings Limited, E-Star		installments payable
		Commercial Management		before and after the
		Company Limited and Central		provision of services
		China New Life Limited
Sub-management fees	2	SF Real Estate Investment Trust	2% to 3% of the total	Monthly or semi-	N/A
		and Hui Xian Real Estate	rental income of the	annually
		Investment Trust	relevant properties
Profit sharing fees	6	China Resources Mixc Lifestyle	Nil to 50.0% of profit	Annually	10 days
		Services Limited, Powerlong	sharing fee would be
		Commercial Management	charged based on the
		Holdings Limited, E-Star	exceeded amount over the
		Commercial Management	performance target
		Company Limited, Central China
		New Life Limited and two
		private companies

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted from the Comparable Terms that, (i) construction consultancy fees are generally charged at a rate of 3.0% on top of the total fees charged by the service providers during construction period, and the rate to be charged by the Company will either be the same or lower than the relevant Comparable Terms as the consultancy scope of the relevant comparable, China Resources Land Limited, is broader and more complicated than the construction consultancy scope of the Company, in particular, construction consultancy scope of China Resources Land Limited covers, among others, planning and execution of the project, architectural design, procurement of materials, tender arrangements, budget planning and control, quality control, submission for and completing the relevant approval procedure, property right and title registration, information management, defect management after completion etc., while the construction consultancy scope of the Company mainly focuses on architectural design, soil protection, on site-personnel arrangement and reporting and liaison with government authorities, therefore it is reasonable for the Company to charge a fee of the same or lower given the scope of the Company requires relatively smaller amount of work and cost; (ii) operation management fees are generally charged at a rate of 2.0% to 5.0% based on the total rental income and/or 0% to 10.0% of the operating profit or EBITDA of the properties, and the fees to be charged by the Company are within the range of the relevant Comparable Terms; (iii) tenant sourcing fees are charged based on 0.5 to 3 months of rents, and the fees to be charged by the Company are within the range of the relevant Comparable Terms; (iv) sub-management fees are charged at a rate of 2.0% to 3.0% based on total income of the properties, and the fees to be charged by the Company will either be the same or lower than the relevant Comparable Terms as certain tasks have already been taken up by existing or other property manager, which would in turn limit the workload and work scope of the Company; and (v) nil to 50.0% of profit sharing fees would be charged based on the exceeded amount over the performance target for the provision of operation management services, and the fees to be charged by the Company are within the range of the relevant Comparable Terms. Based on the above, we are of the view that the pricing basis adopted by the Company for each type of the services are generally in line with the market practice, and are considered to be on normal commercial terms, fair and reasonable.

Further to that, we have also obtained and reviewed the calculation basis of income and the corresponding Original EBITDA of five properties based on the type and location of the properties. On this basis, our selection has covered (i) each type of the properties, including three office buildings and two shopping malls; and (ii) major cities in the PRC, including Beijing, Shanghai and Tianjin. Income and EBITDA of these properties were being estimated by the project managers on case by case basis according to the nature, size, location and branding of the properties. We noted that (i) the total fees charged by the service providers during construction period were estimated based on the budgeted total of four construction fees, including the preliminary engineering costs, installation costs, infrastructure costs and ancillary facilities costs of the relevant properties after taking into account the architecture plan, existing contract amounts, market rates and inflation rate; (ii) rental income were estimated based on the size, occupancy rate, average rent and the expected rental growth rate of the properties; and (iii) the Original EBITDA were calculated based on the estimated rental

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

income multiplied by the expected EBITDA margin after taking into account the EBITDA margin over the past three years, latest development of the property and the expected market conditions.

In respect of the payment terms, we noted from the Comparable Terms that operation management fees, sub-management fees and profit sharing fees are usually billed monthly, quarterly, semi-annually or annually, construction consultancy fees are billed upon the completion of each construction phase, and tenant sourcing fees are billed either one-off upon the successful sourcing of tenants or under two installments before and after the provision of services. Credit terms of the Comparable Terms range from 10 to 30 days. Based on the above, we consider that the payment terms offered by the Company are similar to the payment terms offered by independent property management companies, which are fairly and reasonably determined.

Based on the above, we consider that (i) the pricing basis of the Company is in line with the basis adopted by these independent property management companies; (ii) the calculation basis of the income and the Original EBITDA of the properties are fair and reasonable with reference to its historical rates and performance; and (iii) the payment terms offered by the Company are similar to those offered by the Comparable Companies. In addition, we have reviewed the internal control measures adopted by the Group mentioned below. Therefore, we consider the payment terms and pricing basis under the Master Commercial Operational Services Agreement to be (i) on normal commercial terms, fair and reasonable; and/or (ii) no less favourable to the Company than terms available to independent third parties.

IV. The Annual Caps

RMB (’000)

Cap for the period commencing from the date of the Master Commercial
Operational Services Agreement and ending on 31 December 2021	100,000
Cap for the year ending 31 December 2022	220,000
Cap for the year ending 31 December 2023	300,000

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

With reference to the Letter, we understand that the above caps were determined by the Group with reference to factors including the following:

(i) the number and size of property projects of the Sino-Ocean Connected Persons for which the Group will provide commercial operational services, including (a) 11 office buildings with total GFA of approximately 966,000 sq.m.; and (b) 11 commercial properties with total GFA of approximately 905,000 sq.m., and the timetable of completion of construction and commencement of operation thereof;
(ii) the expected increase in the operational costs as incurred by the Group, in particular the expected increase in labor costs by 5% to 10%, with reference to the budgeted increase in the number of staff employed by the Group for the provision of commercial operational services and the increasing trend in the average salary of urban employees in the leasing and business service sector in the PRC at a compound annual growth rate of 4.7% from 2016 to 2019 (according to data from the National Bureau of Statistics of the PRC);
(iii) the market charge rates in respect of similar types and scope of commercial operational services;
(iv) the historical and expected financial performance of the property projects of the SinoOcean Connected Persons for which the Group will provide commercial operational services, given that certain service fees will be calculated based on the income and EBITDA of the relevant property projects (details of which are set out under the paragraphs headed ‘‘The Master Commercial Operational Services Agreement — Pricing’’ in the Letter); and
(v) the expected increase in demand for commercial operational services from the SinoOcean Connected Persons, with reference to the expected increase in GFA of commercial properties of Sino-Ocean Group and its subsidiaries, joint ventures and associates for which the Group will provide property management services. Based on the business development and operation plans and estimated delivery schedules of Sino-Ocean Group and its subsidiaries, joint ventures and associates and the Company’s estimation on the services which the Group may be engaged to provide, the Company expects that the Group’s GFA under management of commercial properties developed by Sino-Ocean Group and its subsidiaries, joint ventures and associates will be approximately 2.9 to 3.5 million sq.m., 3.4 to 4.2 million sq.m. and 4.3 to 5.3 million sq.m. as of 31 December 2021, 2022 and 2023, respectively, representing an overall growth rate of 50% from 2021 to 2023 (calculated using the mid-points of the aforesaid ranges).

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In connection to the above, we have reviewed a schedule prepared by the Management for the years ending 31 December 2021, 2022 and 2023 (the ‘‘Schedule’’), which set out the status, type, location, size, historical income, budget and estimated income of the commercial properties owned by the Sino-Ocean Connected Persons, including 6 properties under development, 11 properties in operation and 5 properties under sub-management. Among the 6 properties under development, there are 3 office buildings that are expected to be completed during 2024 to 2025, and there are 3 shopping malls that are expected to be completed during 2022 to 2023. As discussed with the Management, it is expected that the Company will be able to derive construction consultancy fees from the properties under development, operation management fees and tenant sourcing fees from properties in operation, and sub-management fees from properties under sub-management.

According to the Schedule, the cap of RMB 100.0 million for the period commencing from the date of the Master Commercial Operational Services Agreement and ending on 31 December 2021 was determined based on an estimated income of approximately RMB 98.8 million, including (i) services fees of approximately RMB 85.1 million to be generated from the provision of services under the Master Commercial Operational Services Agreement; and (ii) profit sharing of approximately RMB 13.7 million based on 20% of the exceeded amounts from the Original EBITDA.

In respect of the cap of RMB 220.0 million for the year ending 31 December 2022 was determined based on an estimated income of approximately RMB 215.8 million, including (i) services fees of approximately RMB 159.3 million to be generated from the provision of services under the Master Commercial Operational Services Agreement; (ii) profit sharing of approximately RMB 34.0 million based on 20% of the exceeded amounts from the Original EBITDA; and (iii) services fees of approximately RMB 22.5 million to be generated from projects expected to be engaged during 2022.

In respect of the cap of RMB 300.0 million for the year ending 31 December 2023, it was determined based on an estimated income of approximately RMB 285.8 million, including (i) services fees of approximately RMB 191.5 million to be generated from the provision of services under the Master Commercial Operational Services Agreement; (ii) profit sharing of approximately RMB 56.0 million based on 20% of the exceeded amounts from the Original EBITDA; and (iii) services fees of approximately RMB 38.3 million to be generated from projects expected to be engaged during 2023.

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered that the Annual Caps are determined primarily based on (i) the properties owned by the Sino-Ocean Connected Persons; (ii) a majority of the properties are already in operation with stable income; (iii) rental income and EBITDA of the properties are estimated by the project managers based on the respective sizes, monthly rents, historical occupancy rates, operational costs, latest market conditions and expected growth rates of the properties; (iv) the fees to be charged in respect of the services to be provided under the Master Commercial Operational Services Agreement are in line with the market rates, we consider the basis for determining the Annual Caps under the Master Commercial Operational Services Agreement to be fair and reasonable.

V. Internal control measures

As stated in the Letter, in order to ensure that the terms (including the pricing principles and the Annual Caps) contained in the Master Commercial Operational Services Agreement are fair and reasonable and will be complied with, the Company has adopted the following internal control and corporate governance measures:

(i) the Board (including the independent non-executive Directors) will be responsible for reviewing and evaluating the terms of the Master Commercial Operational Services Agreement, in particular the pricing principles and the Annual Caps, to ensure that such terms are fair and reasonable to the Group and compliant with relevant laws and regulations, internal policies of the Group and the Listing Rules;
(ii) the terms offered by the Group to the Sino-Ocean Connected Persons under the specific agreements will not be less favourable to the Group than terms offered by the Group to its independent customers for the same or similar type and scope of commercial operational services, where applicable;
(iii) the specific agreements, together with relevant information, will be submitted to the business department, finance department, legal department and the management of the Group for approval before signing and execution;
(iv) pursuant to the Corporate Governance Code in Appendix 14 to the Listing Rules, the Directors (including the independent non-executive Directors) will be able to seek independent professional advice in respect of the transactions under the Master Commercial Operational Services Agreement from external parties in appropriate circumstances;
(v) the actual transaction amounts under the Master Commercial Operational Services Agreement will be reported to appropriate management team regularly and the finance department of the Company will be responsible for reviewing and monitoring the actual transaction amounts to ensure that the Annual Caps will not be exceeded;

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(vi) various internal departments of the Company (including but not limited to the finance department, capital market department and company secretarial department) will regularly monitor the implementation of the transactions under the Master Commercial Operational Services Agreement and keep track of the aggregate transaction amounts thereof to ensure that the pricing principles and the Annual Caps contained therein are complied with;
(vii) the Company has adopted relevant reporting and record-keeping procedures to allow the independent non-executive Directors and the auditors of the Company to perform annual review of the transactions under the Master Commercial Operational Services Agreement and provide annual confirmations in accordance with the Listing Rules; and
(viii) the Company will duly disclose in its annual report the continuing connected transactions conducted during the relevant financial year, together with the conclusion drawn by the independent non-executive Directors on whether the transactions are conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, and according to the relevant framework agreements on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

In this connection, we have obtained and reviewed the internal control policies and historical approval records of the Group during 2021, including the connected parties list prepared by the capital market department, the report of the Group’s aggregated continuing connected transactions prepared by the finance department and capital market department, the agreement approval record by various internal departments of the Company (including the finance department, risk management department, procurement department and project management department), the pricing policies of the Company and the reporting and record-keeping procedures of the Company. We noted that relevant reporting, approval and record-keeping procedures complied with the Group’s internal control manual and such ensured terms offered by the Group to the connected parties are not less favourable to the Group than terms offered by the Group to independent parties.

In particular, the independent non-executive Directors shall review the continuing connected transactions annually to ensure (i) the transactions have been entered into under the ordinary and usual course of business of the Group; (ii) the transactions have been conducted on normal commercial terms or better; and (iii) the transactions have been entered into in accordance with the Master Commercial Operational Services Agreement governing them on terms that were fair and reasonable and in the interests of the Shareholders as a whole. Last but not least, the auditor of the Group will also review the continuing connected transactions annually, and confirm the transactions have been approved by the Board; were in all material respects, in accordance with the pricing policies of the Group and the Master Commercial Operational Services Agreement; and have not exceeded the Annual Caps set out above for the respective financial year.

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In light of the abovementioned, we concur with the view of the Management that the effective implementation of these internal control measures are adequate to ensure the transactions contemplated under the Master Commercial Operational Services Agreement will be conducted on normal commercial terms and not prejudicial to the interests of the Company and the Shareholders.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that (i) the terms of the Master Commercial Operational Services Agreement, the transactions contemplated thereunder and the Annual Caps are fair and reasonable; (ii) the Master Commercial Operational Services Agreement and the transactions contemplated thereunder are on normal commercial terms and in the ordinary and usual course of business of the Group; and (iii) the Master Commercial Operational Services Agreement and the transactions contemplated thereunder are in the interest of the Company and the Shareholders as a whole. Accordingly, we would recommend the Independent Board Committee to advise the Independent Shareholders, and we advise the Independent Shareholders, to vote in favour of the ordinary resolution to approve the Master Commercial Operational Services Agreement, the transactions contemplated thereunder and the Annual Caps at the upcoming EGM.

Yours faithfully, For and on behalf of VMS Securities Limited Anderson Wong Managing Director Corporate Finance

Mr. Anderson Wong is a licensed person and a responsible officer of VMS Securities Limited registered with the Securities and Futures Commission to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, and has over ten years of experience in the corporate finance industry.

For identification purpose only

– 37 –

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

(a) Interests of the Directors and chief executive of the Company

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which will be 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 which will be required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which will be required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange were as follows:

(i) Interests in the Company

Nil.

(ii) Interests in an associated corporation of the Company

			Numbers of shares/	Numbers of shares/
			underlying shares interested
						Approximate
				Number of		percentage of
Name of	Name of associated	Nature of	Number of	share options		shareholding
Directors	corporation	interests	shares held(1)	held(2)	Total	interest(3)
Yang Deyong	Sino-Ocean Group	Beneficial owner	118,777	2,000,000	2,118,777	0.028%
Zhu Geying	Sino-Ocean Group	Beneficial owner	38,531	—	38,531	0.0005%
Cui Hongjie	Sino-Ocean Group	Beneficial owner	369,571	2,000,000	2,369,571	0.031%
Zhu Xiaoxing	Sino-Ocean Group	Beneficial owner	249	1,500,000	1,500,249	0.020%
Notes:

(1) All interests stated are long positions.
(2) Such interest was in the form of share options as at the Latest Practicable Date. The share options were granted by Sino-Ocean Group on 24 August 2017 under its share option scheme to subscribe for the corresponding number of shares of Sino-Ocean Group at the exercise price of HKD4.70 per share, exercisable during the exercise period from 24 August 2018 to 23 August 2022.

– 38 –

GENERAL INFORMATION

APPENDIX

(3) The shareholding percentage is calculated (i) assuming full exercise of the relevant options, and (ii) based on the total number of issued shares of 7,616,095,657 of Sino-Ocean Group without taking into account share options granted but not yet exercised, as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest or short position in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which was 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 which was required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which was required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

(b) Interests of the substantial shareholders of the Company

As at the Latest Practicable Date, so far as the Directors were aware, the following persons (other than the Directors or chief executive of the Company) had an interest and/or a short position in the Shares or the underlying Shares which would fall to be disclosed to the Company and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO:

			Approximate
			percentage of
			shareholding
	Capacity and	Number of	in the
Name of Shareholders	nature of interests	Shares held(2)	Company
Sino-Ocean Group	Interest in controlled	800,000,000	67.57%
	corporation(1)
Shine Wind	Beneficial owner	800,000,000	67.57%

Notes:

(1) Shine Wind is a wholly-owned subsidiary of Sino-Ocean Group and therefore Sino-Ocean Group is deemed to be interested in the Shares held by Shine Wind.
(2) All interests stated are long positions.

– 39 –

GENERAL INFORMATION

APPENDIX

(3) As at the Latest Practicable Date, the following Director was a director or an employee of Sino-Ocean Group:

Name of Director

Position(s) held in Sino-Ocean Group

Cui Hongjie Executive director, executive president and general manager of the product construction center of Sino-Ocean Group Zhu Xiaoxing General manager of the investment and finance business center of SinoOcean Group

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than a Director or chief executive of the Company) who had an interest and/or a short position in the Shares or the underlying Shares which would fall to be disclosed to the Company and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

3. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS

None of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which was significant in relation to the business of the Group taken as a whole.

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been, since 31 December 2020 (the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and his or her respective close associates was considered to have an interest in a business apart from the Group’s business which competed or was likely to compete, either directly or indirectly, with the business of the Group.

– 40 –

GENERAL INFORMATION

APPENDIX

5. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given an opinion or advice on the information contained in this circular:

Name

Qualification

VMS Securities Limited a corporation licensed to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they respectively appear herein.

The Independent Financial Adviser confirmed that it did not have any shareholding interest in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities of any member of the Group as at the Latest Practicable Date.

As at the Latest Practicable Date, the Independent Financial Adviser was not interested, directly or indirectly, in any assets which had been, since 31 December 2020 (being the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or which were proposed to be acquired or disposed of by or leased to any member of the Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Company was not aware of any material adverse change in the financial or trading position of the Group since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into any service contract with any member of the Group which was not determinable by the employer within one year without payment of compensation (other than statutory compensation).

– 41 –

GENERAL INFORMATION

APPENDIX

8. LITIGATION

So far as the Company is aware, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and so far as the Directors were aware, no litigation or claims of material importance was pending or threatened by or against the Company or any of its subsidiaries.

9. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Chung Kai Cheong who is a fellow of each of the Hong Kong Institute of Certified Public Accountants, The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute.
(b) The registered office of the Company is at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands.
(c) The headquarters of the Company in the PRC is at 2nd Floor, Tower A, No. A518 East Road of Chaoyang Sports Center, Chaoyang District, Beijing, PRC.
(d) The principal place of business of the Company in Hong Kong is at Suite 601, One Pacific Place, 88 Queensway, Hong Kong.
(e) The principal share registrar and transfer office of the Company is Conyers Trust Company (Cayman) Limited.
(f) The branch share registrar of the Company in Hong Kong is Tricor Investor Services Limited.
(g) The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Suite 601, One Pacific Place, 88 Queensway, Hong Kong during normal business hours, except Saturday and public holiday, from the date of this circular up to the date of the EGM (both days inclusive):

(a) the Master Commercial Operational Services Agreement;
(b) the letter from the Board, the text of which is set out in the section headed ‘‘Letter from the Board’’ in this circular;
(c) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 16 of this circular;

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GENERAL INFORMATION

APPENDIX

(d) the letter from the Independent Financial Adviser, the text of which is set out on pages 17 to 37 of this circular;
(e) the consent letter referred to in the paragraph headed ‘‘Qualification and Consent of Expert’’ in this Appendix; and
(f) this circular.

– 43 –

NOTICE OF EGM

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NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the ‘‘EGM’’) of SinoOcean Service Holding Limited (the ‘‘Company’’) will be held at Meeting Room, 31st Floor, Tower A, Ocean International Center, 56 Dongsihuanzhonglu, Chaoyang District, Beijing, PRC on Friday, 6 August 2021 at 9:00 a.m. for the purpose of considering and, if thought fit, passing the following ordinary resolution. Capitalised terms contained in the circular dated 21 July 2021 issued by the Company shall have the same meanings when used herein unless otherwise specified.

ORDINARY RESOLUTION

‘‘THAT:

(a) each of (i) the Master Commercial Operational Services Agreement, a copy of which has been produced to the EGM and marked ‘‘A’’ and initialed by the chairman of the EGM for identification purpose; (ii) the transactions contemplated under the Master Commercial Operational Services Agreement; and (iii) the Annual Caps be and are hereby approved, confirmed and ratified; and
(b) any one director of the Company be and is hereby authorised to do all such acts and things and to sign and execute all such documents, instruments and agreements for and on behalf of the Company as he/she may consider necessary, appropriate, desirable or expedient to give effect to or in connection with paragraph (a) of this resolution.’’

Yours faithfully, By order of the Board Sino-Ocean Service Holding Limited Yang Deyong Joint Chairman

Hong Kong, 21 July 2021

Notes:

(a) In order to be entitled to attend and vote at the EGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong share registrar, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Wednesday, 21 July 2021.

(Incorporated in the Cayman Islands with limited liability)

Sino-Ocean Service Holding Limited

Stock Code : 06677

– 44 –

NOTICE OF EGM

(b) Any Shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his/her behalf. A proxy need not be a Shareholder. To be valid, a form of proxy in the prescribed form together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power or authority, must be deposited with the Company’s Hong Kong share registrar, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the EGM (i.e., not later than 9:00 a.m. on Wednesday, 4 August 2021 (Hong Kong Time)), or any adjourned meeting. Completion and return of the form of proxy will not preclude a Shareholder from attending and voting in person at the EGM or any adjournment thereof should he/she so wish. In light of the epidemic situation of COVID-19, Shareholders are encouraged to appoint the chairman of the EGM as his/her proxy to vote on the resolution, instead of attending the EGM in person.
(c) As at the date of this notice, the Board comprises of two executive Directors, namely, Mr. Yang Deyong and Ms. Zhu Geying; two non-executive Directors, namely, Mr. Cui Hongjie and Mr. Zhu Xiaoxing; and three independent non-executive Directors, namely, Dr. Guo Jie, Dr. Xue Jun and Mr. Zhu Lin.

– 45 –

AI assistant

Sino-Ocean Service Holding Limited — Proxy Solicitation & Information Statement 2021

51028_rns_2021-07-21_973cffd5-60f8-4fd0-8ceb-7785d429cdc5.pdf

CONTINUING CONNECTED TRANSACTION IN RELATION TO

MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT AND

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

VMS Securities Limited

PRECAUTIONARY MEASURES FOR THE EGM

CONTENTS

DEFINITIONS

DEFINITIONS

CONTINUING CONNECTED TRANSACTION IN RELATION TO

MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT AND

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

THE MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

Date

Parties

Term

Subject matter

LETTER FROM THE BOARD

Pricing

LETTER FROM THE BOARD

Payment terms

Annual caps and basis

INTERNAL CONTROL MEASURES

REASONS FOR AND BENEFITS OF ENTERING INTO THE MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

LETTER FROM THE BOARD

INFORMATION ON THE COMPANY AND THE GROUP

INFORMATION ON SINO-OCEAN GROUP

IMPLICATIONS UNDER THE LISTING RULES

GENERAL

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

CONTINUING CONNECTED TRANSACTION IN RELATION TO MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

Yours faithfully,

For and on behalf of the

CONTINUING CONNECTED TRANSACTION IN RELATION TO MASTER COMMERCIAL OPERATIONAL SERVICES AGREEMENT

INTRODUCTION

IMPLICATIONS ON THE LISTING RULES

THE INDEPENDENT BOARD COMMITTEE

BASIS OF OUR OPINION

PRINCIPAL FACTORS CONSIDERED

I. Background information

Information on the Group

Information on Sino-Ocean Group

II. Reasons for and benefits of entering into the Master Commercial Operational Services Agreement

III. Terms of the Master Commercial Operational Services Agreement

Payment terms

Our view

IV. The Annual Caps

V. Internal control measures

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(a) Interests of the Directors and chief executive of the Company

(b) Interests of the substantial shareholders of the Company

3. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS

4. COMPETING INTERESTS

5. QUALIFICATION AND CONSENT OF EXPERT

Name

Qualification

6. MATERIAL ADVERSE CHANGE

7. SERVICE CONTRACTS

8. LITIGATION

9. MISCELLANEOUS

10. DOCUMENTS AVAILABLE FOR INSPECTION

ORDINARY RESOLUTION

‘‘THAT:

More from Sino-Ocean Service Holding Limited

Sino-Ocean Service Holding Limited Proxy Solicitation & Information Statement 2021