Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. C&D INTERNATIONAL INVESTMENT GROUP LIMITED 建 發 國 際 投 資 集 團 有 限 公 司 (incorporated in the Cayman Islands with limited liability) (Stock Code: 1908) CONTINUING CONNECTED TRANSACTION IN RELATION TO PROVISION OF ENTRUSTED MANAGEMENT SERVICES PROPERTY PROJECT ENTRUSTED MANAGEMENT SERVICE AGREEMENT The Board is pleased to announce that on 22 October 2018 (after trading hours), Zhaocheng Construction, a wholly-owned subsidiary of the Company, entered into the Entrusted Management Service Agreement in relation to the Tongzishan Project with Nanping Zhaoheng, pursuant to which Zhaocheng Construction shall provide entrusted management services to Nanping Zhaoheng in respect of the Tongzishan Project. Under the Entrusted Management Service Agreement, the entrusted management services commenced on 22 October 2018 and are estimated to end on 30 September 2021. The entrusted management service fee shall be 8% of total sales of the Tongzishan Project payable on a lump sum basis, which is expected to be no more than RMB145,000,000. LISTING RULES IMPLICATIONS Zhaocheng Construction is a wholly-owned subsidiary of the Company. Nanping Zhaoheng, which is 45% owned by Jiaying Real Estate (a subsidiary of C&D Real Estate), is an associate of C&D Real Estate, which is in turn a controlling shareholder of the Company. Nanping Zhaoheng is therefore considered to be a connected person of the Company. Accordingly, the entering into of the Entrusted Management Service Agreement in relation to the Tongzishan Project between Zhaocheng Construction, a wholly-owned subsidiary of the Company, and Nanping Zhaoheng will constitute a continuing connected transaction under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios in respect of the transaction contemplated under the Entrusted Management Service Agreement exceeds 0.1% but is less than 5%, such transaction is subject to the reporting, announcement and annual review requirements but is exempted from the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. – 1 – INTRODUCTION The Board is pleased to announce that on 22 October 2018 (after trading hours), Zhaocheng Construction, a wholly-owned subsidiary of the Company, entered into the Entrusted Management Service Agreement in relation to the Tongzishan Project with Nanping Zhaoheng, pursuant to which Zhaocheng Construction shall provide entrusted management services to Nanping Zhaoheng in respect of the Tongzishan Project. Entrusted Management Service Agreement The principal terms of the Entrusted Management Service Agreement are set out as follows: Date 22 October 2018 Parties 1. Zhaocheng Construction 2. Nanping Zhaoheng Term Commence on 22 October 2018 and are estimated to end on 30 September 2021. Services Zhaocheng Construction is entrusted by Nanping Zhaoheng to provide management and sales services in respect of the development and construction of the Tongzishan Project in the whole process ranging from design, operation, sales, completion to delivery of construction. Entrusted Management Service Fee The entrusted management service fee shall be 8% of total sales of the Tongzishan Project payable on a lump sum basis, which is expected to be no more than RMB145,000,000, including (i) Zhaocheng Construction’s marketing and management costs incurred for the performance of the entrusted management service; and (ii) the project development and management fee, brand license fee and other service fee received by Zhaocheng Construction from Nanping Zhaoheng. Zhaocheng Construction shall charge RMB800,000 from Nanping Zhaoheng at a monthly basis after the date of entering into the Entrusted Management Service Agreement till the date on which the project realizes contract sales. After contract sales for the Tongzishan Project is realised, Zhaocheng Construction shall charge the entrusted management service payment of the previous year in early January of each year from the date on which the project is contracted for sale, 10% of which shall be retained until 90% of the project has been sold and after the completion and delivery of construction. Upon the final settlement, unsold values shall be calculated at the average unit sale price of various types of project in the previous three months. – 2 – The parties agreed, if the total net profit after taxation recorded by Nanping Zhaoheng is less than or equal to RMB60,000,000, the entrusted management service fee shall be adjusted to 7% of total sales of the Tongzishan Project payable on a lump sum basis. The entrusted management service fee was determined on arm’s length basis by reference to the prevailing market rates as well as the services, quantity and nature of services to be provided by Zhaocheng Construction to Nanping Zhaoheng. PROPOSED ANNUAL CAPS The proposed annual caps of the entrusted management service fee to be received by Zhaocheng Construction under the Entrusted Management Service Agreement are as follows: RelevantFinancialYear Proposedannualcapsofentrusted management service fee Yearending31December2018 RMB5,000,000 Yearending31December2019 RMB75,000,000 Yearending31December2020 RMB55,000,000 Yearending31December2021 RMB10,000,000 In determining the proposed annual caps, the Board has based their estimates on the projected progress of development and sales arrangements of the Tongzishan Project. APPROVAL BY THE BOARD To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Directors had material interest in the transaction contemplated under the Entrusted Management Service Agreement, and accordingly none of them was required to abstain from voting on the Board resolution for considering and approving the transactions contemplated under the Entrusted Management Service Agreement. REASONS FOR AND BENEFITS OF ENTERING INTO THE TRANSACTION The Group is principally engaged in the business of property development, real estate industry chain investment services and investment in emerging industries in the PRC. The Tongzishan Project is located at the northwest of Tongzishan Bridge* (童子山大橋), Wuyi New District* (武夷新區), Wuyishan City* (武夷山市), Fujian Province, the PRC, with an estimated gross floor area of not exceeding approximately 149,787.9 sq.m., and is to be developed as a residential project. The transaction contemplated under the Entrusted Management Service Agreement anticipates certain space for profit because of the following reasons: (a) pursuant to the Group’s previous experience on property development, the estimated fees of the transaction contemplated under the Entrusted Management Service Agreement mainly include marketing and management expenses, and marketing and management expenses usually comprise 6% or less of the total project sales; and – 3 – (b) with reference to the comparable market charge for similar entrusted management service fee, the entrusted management service fee usually ranges from 5% to 8% of the total project sales. As such, the entrusted management service fee under the Entrusted Management Service Agreement (accounting for 8% of the total project sales) would not only cover the Company’s costs but also create certain margin for profit for the Group. Further, the entering into of the Entrusted Management Service Agreement represents an expansion of entrusted management business for the Company in that: (a) the scope of service under the Entrusted Management Service Agreement covers all aspects of property development, ranging from design, operations, sales, completion to delivery of construction, specifically participating sales; and (b) the entrusted management service fee under the Entrusted Management Service Agreement accounting for 8% of the total project sales, as compared with the Company’s previous entrusted management service fee charged in the entrusted management service business, which was usually charged proportionally based on the total construction cost of projects, has more space for profit. Through entering into Entrusted Management Service Agreement, the Company will expand its business in both size and scope. The Directors (including the independent non-executive Directors) consider that the terms of the Entrusted Management Service Agreement are on normal commercial terms, which are fair and reasonable, and the entering into of such agreement is in the interest of the Company and its shareholders as a whole. LISTING RULES IMPLICATIONS Zhaocheng Construction is a wholly-owned subsidiary of the Company. Nanping Zhaoheng, which is 45% owned by Jiaying Real Estate (a subsidiary of C&D Real Estate), is an associate of C&D Real Estate, which is in turn a controlling shareholder of the Company. Nanping Zhaoheng is therefore considered to be a connected person of the Company. Accordingly, the entering into of the Entrusted Management Service Agreement in relation to the Tongzishan Project between Zhaocheng Construction, a wholly-owned subsidiary of the Company, and Nanping Zhaoheng will constitute a continuing connected transaction under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios in respect of the transaction contemplated