Ascletis Pharma Inc. — Proxy Solicitation & Information Statement 2017

Oct 24, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in World Houseware (Holdings) Limited, you should at once hand this circular, together with the enclosed form of proxy to the purchaser or other transferee or to the bank, stockbroker 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 takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims 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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世界（集團）有限公司 WORLD HOUSEWARE (HOLDINGS) LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code: 713)

VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION

A notice convening the EGM of World Houseware (Holdings) Limited to be held at the Lotus Room, 6th Floor, The Marco Polo Hongkong Hotel Harbour City, Kowloon, Hong Kong at 4:30 p.m. on Thursday, 9 November 2017 is set out on pages 74 to 75 of this circular. Whether or not you intend to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time for holding the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the EGM or any adjourned meeting should you so wish.

25 October 2017

CONTENTS

			Page
DEFINITIONS. . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			6
APPENDIX I	–	FINANCIAL INFORMATION
		RELATING TO THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . .	29
APPENDIX II – 1	–	VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34
APPENDIX II – 2	–	VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
APPENDIX II – 3	–	VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50
APPENDIX II – 4	–	VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	56
APPENDIX III	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .	67
NOTICE OF EGM	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	74

– i –

DEFINITIONS

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

“Agreement”

an agreement dated 16 August 2017 entered into between 4 parties of Welidy Limited and 世界塑膠餐墊（寶安）有 限公司 (World Plastic Mat (Baoan) Company Limited) (Party a), 深圳市花樣年房地產開發有限公司 (Shenzhen Fantasia Real Estate Co., Ltd) (Party b), 深圳置富房地 產開發有限公司 (Shenzhen Zhifu Real Estate Investment Development Co., Ltd) (Party c) and 花樣年集團（中國） 有限公司 (Fantasia Group (China) Co., Ltd) (Party d) as a new supplementary agreement of the Former Agreement

• “Announcement”

the announcement of the Company dated 16 August 2017 in relation to the Agreement and the transactions contemplated thereunder

• “Arrangement”

The parties have designated party (b) Shenzhen Fantasia Real Estate Co., Ltd as the executing entity（實施主體）of the Urban Renewal Project to obtain the approval from the PRC Government for the redevelopment and reconstruction works contemplated under the Urban Renewal Project, including but not limited to the demolition of the existing properties, the design, construction, renovation, completion, and the payment of all costs in connection thereto (including but not limited to the expenses incurred in connection with demolition, reconstruction, renovation, land premium and relevant tax and expenses) and apply to obtain title certificates of the re-developed Relevant Properties and hand over the same to Welidy and World Co. (Baoan). Welidy and World Co. (Baoan) will provide to SFRECL the Existing Land which is being occupied by World Co. (Baoan) as its manufacturing factory. The land has a site area of approximately 69,000 sq m, thereon properties with a total gross floor area approximately 79,463.49 sq m are erected. Among them, title certificates are held for properties with a gross floor area of 50,948.47 sq m, while no title certificates are available for those with a gross floor area 28,515.02 sq m. Welidy and World Co. (Baoan) have the right to demolish and remove relevant facilities, equipment and articles therein, and then hand over the properties to SFRECL for demolition in exchange for the Relevant Properties as replacement and monetary compensation under the Agreement.

– 1 –

DEFINITIONS

“Board”

“Cash Received”

“Company”

“Directors”

“EGM”

“Existing Land”

the board of Directors

the non-interest bearing Former Agreement deposit of RMB30 million (equivalent to approximately HK$35 million), following the execution of the Agreement of compensation of RMB35 million (equivalent to approximately HK$40 million), initial transition period compensation of approximately RMB28.6 million (equivalent to approximately HK$32.9 million) (i.e. transition period compensation for the 18 months ended 10 May 2018 following expiration of the Former Agreement dated 14 February 2011 and 11 August 2011), the noninterest bearing deposit of RMB30 million (equivalent to approximately HK$35 million), the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at the rate of 6% per annum and continuous transition period compensation estimated of approximately RMB131.665 million (equivalent to approximately HK$151.415 million) totalling to approximately RMB305.265 million (equivalent to approximately HK$351.315 million)

World Houseware (Holdings) Limited, a company incorporated in the Cayman Islands and whose shares are listed in the Stock Exchange

the directors of the Company from time to time

the extraordinary general meeting of the Company to be held at the Lotus Room, 6th Floor, The Marco Polo Hongkong Hotel, Harbour City, Kowloon, Hong Kong at 4:30 p.m. on Thursday, 9 November 2017 for the Shareholders to consider and approve, among others, the Agreement and the transactions contemplated thereunder

Land parcel No. G11207-1, Pingshan New Area, Longgang, Shenzhen City, site area of approximately 69,000 sq m

– 2 –

DEFINITIONS

“Former Agreement” Welidy and SZREIDCL have entered into a cooperative development framework agreement on 14 February 2011 and a removal remedy agreement on 11 August 2011, collectively referred to as Former Agreement “FGCCL” 花樣年集團（中國）有限公司 (Fantasia Group (China) Co., Ltd*), a limited liability company established under the laws of the PRC, a wholly owned subsidiary of Fantasia Holdings Group Co., Limited (Stock code: 01777), which is a fellow subsidiary of SFRECL and SZREIDCL “Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the PRC “HK$” Hong Kong dollars, the lawful currency of Hong Kong “KFPL” Knight Frank Petty Limited, an independent valuer “Latest Practicable Date” 19 October 2017 being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers, Appendix 10 to the Listing Rules “PRC” The People’s Republic of China “Relevant Properties” a gross area of 11,000 sq m of the Re-developed residential properties, a gross floor area of 35,000 sq m of the redeveloped commercial properties, not less than 390 car parking spaces with gross floor area of approximately 15,000 sq m of the re-developed properties and not less than a gross floor area of 8,000 sq m of the re-developed properties which can be used as parking spaces for private cars, lorries and container trucks, total gross floor area of approximately 69,000 sq m

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DEFINITIONS

“Relevant Shareholders”

“SFO”

“SFRECL”

“Shareholder(s)”

“sq m”

“Stock Exchange”

Goldhill Profits Limited, which is wholly-owned by a discretionary trust of which Mr. Lee Tat Hing (the Chairman of the Company), Mr. Lee Chun Sing (the Vice Chairman of the Company and the son of Mr. Lee Tat Hing), Mr. Lee Kwok Sing Stanley (the executive director of the Company and the son of Mr. Lee Tat Hing) and Madam Fung Mei Po (the Vice Chairperson and Chief Executive Officer of the Company and the wife of Mr. Lee Tat Hing) are discretionary objects, is beneficially entitled to 280,895,630 shares in the issued share capital of the Company; Lees International Investments Limited, a company beneficial owned by Mr. Lee Tat Hing, is beneficially entitled to 28,712,551 shares in the issued share capital of the Company; Mr. Lee Tat Hing is beneficially entitled to 14,256,072 shares in the issued share capital of the Company and Madam Fung Mei Po is beneficially entitled to 58,121,087 shares in the issued share capital of the Company. All the above-named beneficial shareholders collectively are beneficially entitled to 381,985,340 shares representing approximately 50.45% of the issued share capital of the Company

The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

深圳市花樣年房地產開發有限公司 (Shenzhen Fantasia Real Estate Co., Ltd*), a limited liability company established under the laws of the PRC, a wholly owned subsidiary of Fantasia Holdings Group Co., Limited (Stock code: 01777), which is a fellow subsidiary of FGCCL and SZREIDCL

shareholders of the Company

square meter

The Stock Exchange of Hong Kong Limited

– 4 –

DEFINITIONS

“SZREIDCL” 深圳置富房地產開發有限公司 (Shenzhen Zhifu Real Estate Investment Development Co., Ltd*), a limited liability company established under the laws of the PRC, a wholly owned subsidiary of Fantasia Holding Group Co., Limited (Stock code: 01777), which is a fellow subsidiary of FGCCL and SFRECL

• “Urban Renewal Project”

the redevelopment of the Existing Land by way of urban renewal

“Welidy” Welidy Limited, a company incorporated in Hong Kong with limited liability, which is a wholly owned subsidiary of the Company

“World Co. (Baoan)” 世界塑膠餐墊（寶安）有限公司 (World Plastic Mat (Baoan) Company Limited), a limited liability company established under the laws of the PRC, which is a wholly owned subsidiary of the Company

For the purpose of this circular, unless otherwise specified, conversions of RMB into HK$ is based on the approximate exchange rate of RMB1.00 to HK$1.15. The exchange rate is adopted for illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be, exchanged at this rate or any other rate at all.

All English translations of Chinese names in this circular marked with “*” are not official English names and are for identification purpose only.

– 5 –

LETTER FROM THE BOARD

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世界（集團）有限公司 WORLD HOUSEWARE (HOLDINGS) LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code: 713)

Executive Directors: Mr. Lee Tat Hing (Chairman) Madam Fung Mei Po (Vice Chairperson and Chief Executive Officer) Mr. Lee Chun Sing (Vice Chairman) Mr. Lee Pak Tung Madam Chan Lai Kuen Anita Mr. Lee Kwok Sing Stanley Mr. Kwong Bao To

Non-executive Director: Mr. Cheung Tze Man Edward Independent Non-executive Directors: Mr. Tsui Chi Him Steve Mr. Hui Chi Kuen Thomas Mr. Ho Tak Kay Mr. Shang Sze Ming

Registered office: P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Head office and principal place of business in Hong Kong: Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung New Territories Hong Kong

25 October 2017

To the Shareholders

Dear Sir/Madam,

VERY SUBSTANTIAL DISPOSAL AND VERY SUBSTANTIAL ACQUISITION

1. INTRODUCTION

Reference is made to the Announcement made on 16 August 2017 in relation to, among others, the Agreement and the transactions contemplated thereunder.

– 6 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information relating to, amongst other things, details of the Agreement and the transactions contemplated thereunder, notice of the EGM and such other information as required under the Listing Rules.

2. THE AGREEMENT

The principal terms of the Agreement are as follows:

Date: 16 August 2017

Parties

• (a) (i) Welidy, a wholly-owned subsidiary of the Company

• (ii) World Co. (Baoan), a wholly-owned subsidiary of the Company

• (b) SFRECL, a fellow subsidiary of SZREIDCL and FGCCL

• (c) SZREIDCL, a fellow subsidiary of SFRECL and FGCCL (a former party)

• (d) FGCCL, a fellow subsidiary of SFRECL and SZREIDCL (as guarantor for the obligations of SFRECL and SZREIDCL)

The Company have not entered into any transaction of a similar nature with SFRECL, SZREIDCL and FGCCL in the past 12 months that would need to be aggregated in accordance with Rule 14.22 of the Listing Rules.

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LETTER FROM THE BOARD

Arrangement

The parties have designated party (b) SFRECL as the executing entity（實施主 體）of the Urban Renewal Project to obtain the approval from the PRC Government for the redevelopment and reconstruction works contemplated under the Urban Renewal Project, including but not limited to the demolition of the existing properties, the design, construction, renovation, completion, and the payment of all costs in connection thereto (including but not limited to the expenses incurred in connection with demolition, reconstruction, renovation, land premium and relevant tax and expenses) and apply to obtain title certificates of the re-developed Relevant Properties and hand over the same to Welidy and World Co. (Baoan). Welidy and World Co. (Baoan) will provide to SFRECL the Existing Land which is being occupied by World Co. (Baoan) as its manufacturing factory. The land has a site area of approximately 69,000 sq m, thereon properties with a total gross floor area approximately 79,463.49 sq m are erected. Among them, title certificates are held for properties with a gross floor area of 50,948.47 sq m, while no title certificates are available for those with a gross floor area 28,515.02 sq m. Welidy and World Co. (Baoan) have the right to demolish and remove relevant facilities, equipment and articles therein, and then hand over the properties to SFRECL for demolition in exchange for the Relevant Properties as replacement and monetary compensation under the Agreement.

Former Agreement

Reference is made to the announcement of the Company on 27 October 2010 relating to the Existing Land may fall within the criteria of the Shenzhen urban redevelopment plans and may qualify for applying land use change from industrial use to business and residential purposes. The Board of the Company consider this development is in the interests of the Company and begin to look for interested party to discuss the cooperative development of the Existing Land at that time.

At the beginning of 2011, SZREIDCL, a wholly owned subsidiary of Fantasia Holding Group Co., Limited whose shares are listed in the Stock Exchange (Stock code: 01777), was introduced to discuss the terms of the cooperation with the Company, after taking into account the operational facilities on the Existing Land were established nearly 20 years, the Urban Renewal Project presents a valuable opportunity for the Group. Took into account the terms of the cooperation offered by SZREIDCL, the Board considered the terms of the cooperation was fair and reasonable and in the interests of the Company. On 14 February 2011, Welidy has entered into a cooperative development framework agreement with SZREIDCL.

– 8 –

LETTER FROM THE BOARD

The principal terms of the cooperative development framework agreement are as follows:

• (i) Date of agreement:

14 February 2011

• (ii) Parties:

Welidy and SZREIDCL

• (iii) Obligations of Welidy:

To provide the Existing Land (Land parcel No. G11207-1, Pingshan New Area, Longgang, Shenzhen City, site area of approximately 69,000 sq m, buildings erected thereon with a total gross floor area of approximately 79,463.49 sq m)

• (iv) Obligations of SZREIDCL:

To obtain the approval from the PRC Government for the redevelopment and reconstruction works contemplated under the Urban Renewal Project, including but not limited to the demolition of the existing properties, the design, construction, renovation, completion, and the payment of all costs in connection thereto (including but not limited to the expenses incurred in connection with demolition, reconstruction, renovation, land premium and relevant tax and expenses) and apply to obtain title certificates of the redeveloped replacement properties and hand over the same to Welidy

– 9 –

LETTER FROM THE BOARD

• (v) Replacement properties:

A gross floor area of 11,000 sq m of the Re-developed residential properties, a gross floor area of 35,000 sq m of the redeveloped commercial properties and not less than 390 car parking spaces of the redeveloped properties, in which the commercial properties shall include all the street frontage shops in the shopping mall not higher than the 3rd floor and the entire of the 1st floor. (According to the current development plan and design, the basement level 1 will have a gross floor area of approximately 6,200 sq m, the level 1, level 2 and level 3 will have a gross floor area of approximately 9,400 sq m, 9,700 sq m and 9,700 sq m respectively, totalling to 35,000 sq m)

(vi) Deposit:

Non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million), is refundable to SZREIDCL within 60 days from the date when all the replacement properties have been handed over to Welidy

(vii) Expiry date of Within 5 years after signing the agreement the agreement: (being 13 February 2016)

– 10 –

LETTER FROM THE BOARD

(viii) Compensation for failure Pursuant to this agreement, if SZREIDCL fails to complete the to complete the development and construction development and before the expiry date of this agreement, construction before starting from the second day after the expiry the expiry date of date, it shall pay compensation to Welidy the agreement: to be calculated based on a total gross floor area of approximately 79,463.49 sq m of the buildings erected on the Existing Land, at a rate of RMB12 (equivalent to approximately HK$13.8) per sq m per month for the first 6 months after the expiry date and RMB24 (equivalent to approximately HK$27.6) per sq m for subsequent period starting from the second day after the end of the first 6 months, provided that the longest period for compensation shall not exceed 18 months.

As a new removal remedy agreement was signed on 11 August 2011, the cooperative development framework agreement was terminated upon the signing of the new removal remedy agreement.

The principal terms of the removal remedy agreement are as follows:

(i) Date of agreement: 11 August 2011 (ii) Parties: Welidy and SZREIDCL (iii) Obligations of Welidy: Consistent with the terms under the cooperative development framework agreement (iv) Obligations of Consistent with the terms under the SZREIDCL: cooperative development framework agreement (v) Replacement properties: Consistent with the terms under the cooperative development framework agreement

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LETTER FROM THE BOARD

(vi) Deposit:

Consistent with the terms under the cooperative development framework agreement and in addition, it is specified that, if SZREIDCL fails to complete the development and construction over 18 months from the expiry date of the agreement, the deposit will be non-refundable

• (vii) Expiry date of the agreement:

• Within 5 years and 3 months after signing the agreement (being 10 November 2016)

• (viii) Compensation for failure Consistent with the terms under the to complete the cooperative development framework development and agreement construction before the expiry date of the agreement:

As SZREIDCL failed to provide the replacement of commercial properties to Welidy as required and failed to complete the development and construction before the expiry date stipulated in the Former Agreement, and also due to other reasons on the part of SZREIDCL, the party to the Agreement should be changed to SFRECL, and the Agreement was entered into as a continuation of the Former Agreement. Pursuant to terms of the Former Agreement, SFRECL agreed to pay Welidy or World Co. (Baoan) initial transition period compensation from the second day after the expiry date of this agreement, for the compensation of approximately RMB5.72 million (equivalent to approximately HK$6.6 million) for the first 6 months from 11 November 2016 to 10 May 2017, which was calculated based on the gross floor area of 79,463.49 sq m multiplied by RMB12 (equivalent to approximately HK$13.8), and the compensation of RMB22.8 million (equivalent to approximately 26.3 million) for 12 months from 11 May 2017 to 10 May 2018, which was calculated based on the gross floor area of 79,463.49 sq m multiplied by RMB24 (equivalent to approximately HK$27.6). The calculation basis of RMB12 (equivalent to approximately HK$13.8) and RMB24 (equivalent approximately HK$27.6) were confirmed by both parties under the terms of the Former Agreement, and the aforesaid initial transition period compensation for a total of 18 months amounted to approximately RMB28.6 million (equivalent to approximately HK$32.9 million).

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LETTER FROM THE BOARD

These urban renewal and redevelopment projects are in line with the national policy of the PRC Government, which include certain land lots or districts in the scope of redevelopment from time to time. The Government publishes new planning policy to the public. However, such urban renewal and redevelopment projects are not conventional policy and involve a number of special regulatory requirements. Under such projects, a qualified stakeholder who owns a large portion of land in the relevant area may partner up with a suitable developer to apply for government approval for the development of the project. As the Existing Land owned by the Company are qualified for the government planning policy, the Company entered into an agreement with the developer, which designed the preliminary blueprint and applied for the project from the Government. The blueprint represented just preliminary ideas. When the developer contacted other property owners to negotiate the terms of properties replacement subsequently, these property owners insisted on in situ resettlement, independent property ownership and the right of self-management and operation as the preconditions. They also were not willing to share the same level of the shopping mall and operate their own business with other parties. After many years of negotiations, the parties were still unable to reach a consensus. In order to settle the issues, the developer negotiated with the Government and the Company and arrived at the current plan, where the minority owners would receive the street frontage shops outside the shopping mall to fulfil their needs, while the Company would now receive the entire shopping mall, comprising level 1, 2, 3 and shops in basement with a total gross floor area of 35,000 sq m.

The street frontage shops outside the shopping mall which will be received by Welidy or World Co. (Baoan) under the Former Agreement have a gross floor area of approximately 7,760 sq m. Based on the market information as at 31 July 2017, the value of street frontage shops at the neighboring regions of the Urban Renewal Project was approximately RMB33,000/sq m (equivalent to approximately HK$37,950). Hence the value of street frontage shops under the Urban Renewal Project was estimated to be approximately RMB256.1 million (equivalent to approximately HK$294.5 million).

Based on the valuation report prepared by KFPL, as at 31 July 2017, the gross floor area of level 1, 2, 3 and shops in basement was approximately 9,400 sq m, 9,700 sq m, 9,700 sq m and 6,200 sq m respectively, totalling 35,000 sq m. The valuation of level 1, 2, 3 and shops in basement was RMB426 million (equivalent to approximately HK$489.9 million), RMB241 million (equivalent to approximately HK$277.15 million), RMB155 million (equivalent to approximately HK$178.25 million) and RMB47 million (equivalent to approximately HK$54.05 million) respectively, totalling RMB869 million (equivalent to approximately HK$999.35 million).

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LETTER FROM THE BOARD

Based on the reference price of street frontage shops (i.e., approximately RMB33,000/sq m (equivalent to approximately HK$37,950)) and the shops in basement with a gross floor area of approximately 6,200 sq m and the valuation of RMB47 million (equivalent to approximately HK$54.05 million), the shops in basement were valued at RMB7,580/sq m of gross floor area (equivalent to approximately HK$8,717), the price difference was approximately RMB25,420/sq m (equivalent to approximately HK$29,233). The difference was calculated by multiplying the price difference (i.e., approximately RMB25,420/sq m (equivalent to approximately HK$29,233)) with the gross floor area of the street frontage shops (i.e., approximately 7,760/sq m). As a result of the change of property replacement, the value of properties received by the Company decreased by approximately RMB197.259 million (equivalent to approximately HK$226.848 million).

In view of the above change of properties to be received by the Company for replacement, SFRECL agreed to provide the following additional compensation and deposit:

• (1) Compensation of RMB35 million (equivalent to approximately HK$40 million) in cash.

• (2) Continuous transition period compensation, which is calculated with reference to the same basis of the Former Agreement. Which will be accrued from 11 May 2018 of approximately RMB1.907 million (equivalent to approximately HK$2.2 million) per month, calculated by multiplying the gross floor area of the buildings erected on the Existing Land (i.e., 79,463.49 sq m) with RMB24/month/sq m (equivalent to approximately HK$27.6).

• (2.1) Pursuant to the new Agreement, it is expected that the residential properties with an area of 11,000 sq m will be delivered by 30 March 2023. A total sum of RMB111.948 million (equivalent to approximately HK$128.74 million) will be received in approximately 58.7 months, calculated by multiplying 79,463.49 sq m with RMB24 (equivalent to approximately HK$27.6) and 58.7 months.

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LETTER FROM THE BOARD

• (2.2) In addition, it is expected that a total gross floor area of 68,463.49 sq m, which includes a total area of 35,000 sq m (comprising the commercial properties on level 1, 2 and 3 with a total gross floor area of 28,800 sq m and the shops in basement with a gross floor area of 6,200 sq m), 390 car parking space with a gross floor area of approximately 15,000 sq m, a property with a gross floor area of approximately 8,000 sq m which can be used as parking space for private cars, lorries and container trucks, and public and greenery area with a gross floor area of approximately 10,463.49 sq m, will be delivered by 30 March 2024. A total sum of RMB19.717 million (equivalent to approximately HK$22.675 million) will be received in 12 months (approximately 70.7 months net of 58.7 months as mentioned above), calculated by multiplying the gross floor area of 68,463.49 sq m with RMB24 (equivalent to approximately HK$27.6) and 12 months.

The expected total amount received is approximately RMB131.665 million (equivalent to approximately HK$151.415 million).

• (3) Additional compensation of redeveloped properties comprising a gross floor area of 8,000 sq m which can be used as parking space for private cars, lorries and container trucks. Pursuant to the Agreement, the value of such properties is approximately RMB160 million (equivalent to approximately HK$184 million), based on RMB20,000/sq m (equivalent to approximately HK$23,000/sq m).

The additional compensation to be provided under the new property replacement plan include (1) compensation of RMB35 million (equivalent to approximately HK$40 million) in cash, (2.1) and (2.2) continuous transition period compensation of approximately RMB131.665 million (equivalent to approximately HK$151.415 million) and (3) additional gross floor area of 8,000 sq m valued at approximately RMB160 million (equivalent to approximately HK$184 million) as compensation, totalling approximately RMB326.665 million (equivalent to approximately HK$375.665 million), net of the decrease in value of properties to be received by the Company (i.e., approximately RMB197.259 million (equivalent to approximately HK$226.848 million)) as a result of the change of property replacement as stated above. The estimated gain from the difference was approximately RMB129.406 million (equivalent to approximately HK$148.817 million).

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LETTER FROM THE BOARD

In addition, as SZREIDCL failed to complete the development and construction by the time agreed in the Former Agreement, it had to enter into an extension supplemental agreement. In view of such, SFRECL agreed to provide additional non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) and a deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at the rate of 6% per annum.

Based on the above estimated gain of approximately RMB129.406 million (equivalent to approximately HK$148.817 million), the Board of the Company, having given due consideration and carried out detailed studies, is of the view that owning the entire shopping mall is more beneficial to the Company than owning scattered small shops in terms of development prospects, potential and management in the long run. Given that it is difficult for the Company to manage over a hundred small scattered shops, the Board believes that the cash compensation of RMB35 million (equivalent to approximately HK$40 million), the continuous transition period compensation of RMB131.665 million (equivalent to approximately HK$151.415 million), the non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million), and the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at the rate of 6% per annum to be received can enhance and stabilize the cash flow business of the Company, while the new proposal also allows the Urban Renewal Project to be rolled out promptly as planned. Thus, the Board, having given careful consideration, agreed to accept the new replacement proposal of business properties.

Replacement of Relevant Properties and monetary compensation

Welidy and World Co. (Baoan) will receive:

• (i) the title to the Relevant Properties to be constructed on the redeveloped Existing Land, which is estimated to represent a monetary value of approximately RMB1,304 million (equivalent to approximately HK$1,500 million) as at 31 October 2016 based on the preliminary valuation report prepared by KFPL. Please refer to appendix II – 4 to this circular for the valuation report;

• (ii) compensation of RMB35 million (equivalent to approximately HK$40 million) in cash;

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LETTER FROM THE BOARD

The Relevant Properties replacement and monetary compensation were based on the Former Agreement, negotiated at arm’s length between Welidy and World Co. (Baoan) and SFRECL and was contemplated on 10 August 2017 after successfully strived for new compensation, taking into account current market conditions and land prices in the vicinity and preliminary valuation referred to above. Except for the mandatory requirement from the accounting standard, due to cost saving, the Company will not regularly value the properties of the Company. As the Agreement is principally based on the Former Agreement, so the Company employed KFPL to prepare the above valuation at 31 October 2016 before the expiry of the removal remedy agreement on 10 November 2016 as basis reference for the purpose of negotiating the renewal of the Former Agreement.

Based on the valuation report prepared by KFPL, the gross development value of the Relevant Properties, assuming they were completed as at 31 July 2017, was estimated approximately at RMB1,308 million (equivalent to approximately HK$1,505 million) as at 31 July 2017. Please refer to appendix II – 1 to this circular for the valuation report.

Transition Period Compensation

Welidy and SZREIDCL have entered the Former Agreement in the year 2011 in respect of the joint development of the Existing Land. Pursuant to the Agreement, SFRECL has undertaken to assume all and any rights and obligations of SZREIDCL under the Former Agreement. As SZREIDCL failed to perform its obligations as stipulated under the Former Agreement, SFRECL has agreed, according to the Former Agreement, to make initial transition period compensation to Welidy and World Co. (Baoan) of approximately RMB28.6 million (equivalent to approximately HK$32.9 million) in cash.

Under the Agreement, continuous transition period compensation of approximately RMB1.907 million (equivalent to approximately HK$2.2 million) each month on monthly basis in cash started from 11 May 2018 until the actual date of renovation (if required), delivery and registration of the Relevant Properties and delivery of the relevant title certificates of the same to Welidy and World Co. (Baoan).

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LETTER FROM THE BOARD

Terms of Payment

The following payments in cash is payable by SFRECL to the bank accounts of Welidy or World Co. (Baoan) in the following manner:

• (a) Compensation of RMB35 million (equivalent to approximately HK$40 million) payable in cash within 15 days after signing the Agreement;

• (b) Initial transition period compensation of approximately RMB28.6 million (equivalent to approximately HK$32.9 million) payable in cash within 15 days after signing the Agreement (i.e. transition period compensation for the 18 months ended 10 May 2018 following expiration of the Former Agreement);

• (c) In addition to the non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) paid by SZREIDCL to Welidy under the Former Agreement, another non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) shall be paid by SFRECL to Welidy or World Co. (Baoan) in cash within 30 days after signing the Agreement;

• (d) The deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at a rate of 6% per annum shall be paid by SFRECL to Welidy or World Co. (Baoan) in cash within 60 days after signing the Agreement; and

• (e) Continuous transition period compensation of approximately RMB1.907 million (equivalent to approximately HK$2.2 million) payable in cash by monthly basis on or before 15th day of current month from 11 May 2018 until the time specified below (timeline (d) and (e) as referred to below in subsection headed “Timeline of the redevelopment” and actual date of delivery, renovation (if required) and registration of the Relevant Properties and delivery of the relevant title certificate to Welidy and World Co. (Baoan).

The above (a) compensation of RMB35 million (equivalent to approximately HK$40 million) and (b) initial transition period compensation of approximately RMB28.6 million (equivalent to approximately HK$32.9 million) were received on 30 August 2017, (c) another non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) was received on 11 September 2017 and (d) the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing interest rate of 6% per annum was received on 13 October 2017.

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LETTER FROM THE BOARD

Receivable, refundable and forfeitable of deposit, compensation and transition period compensation

1. Upon the performance of all undertakings and obligations under the Agreement by SFRECL, and SFRECL handed over the title certificates of the re-developed Relevant Properties to Welidy and World Co. (Baoan), Welidy and World Co. (Baoan) refund the following deposits in the following manner:

2. (a) the non-interest bearing Former Agreement deposit of RMB30 million (equivalent to approximately HK$35 million) paid to Welidy by SZREIDCL shall be returned to SFRECL within 14 days from when the proceeds from sales of the Relevant Properties delivered to Welidy and World Co. (Baoan) are able to cover the deposit after deducting government tax and charges.

3. (b) following the execution of the Agreement, the sum of RMB80 million (equivalent to approximately HK$92 million) comprising the non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) and the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at a rate of 6% per annum paid to Welidy or World Co. (Baoan) by SFRECL shall be returned to SFRECL within 30 days from upon obtained all the title certificates of the Relevant Properties and delivered to Welidy and World Co. (Baoan) and the proceeds from sales of the Relevant Properties are able to cover the deposits and interest after deducting government tax and charges.

4. If SFRECL fails to be approved as the executing entity（實施主體）of the Urban Renewal Project by PRC Government (timeline (a) as referred to below in the subsection headed “Timeline of the redevelopment” in this announcement) by the time specified below; or fails to carry out certain timeline of the development (timeline (b) to (e) as referred to below in the sub-section headed “Timeline of the redevelopment” in this announcement) by the time specified below, the payable amount of continuous transition period compensation will be based on the market rate of rental in the same region and not less than the agreed rental standard specified in the Agreement be revised, effective from the next day of the time specified.

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LETTER FROM THE BOARD

If SFRECL fails to carry out the timeline of the redevelopment (timeline (a) as referred to below in the sub-section headed “Timeline of the redevelopment” in this announcement) by the time specified below and the default is not rectified within 10 months; or fails to carry out certain timeline of the redevelopment (timeline (b) to (e) as referred to below in the sub-section headed “Timeline of the redevelopment” in this announcement) by the time specified below and the default is not rectified within 6 months, Welidy and World Co. (Baoan) have the right to terminate the Agreement and keep the non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) and the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at a rate of 6% per annum paid to Welidy or World (Baoan) by SFRECL and the compensation of RMB35 million (equivalent to approximately HK$40 million) and the non-interest bearing Former Agreement deposit of RMB30 million (equivalent to approximately HK$35 million) paid to Welidy by SZREIDCL, SFRECL shall return the original title documents of the Existing Land (if applicable) and Welidy and World Co. (Baoan) have the right to select not to terminate the Agreement and claim SFRECL to paid the market value in the same region of the Relevant Properties and not less than the value as specified in the Agreement in cash to Welidy and World Co. (Baoan).

1. In the event that the Agreement is terminated due to reasons attributable to Welidy and World Co. (Baoan), in the case where the compensation of RMB35 million (equivalent to approximately HK$40 million) paid to Welidy or World Co. (Baoan) at the termination of the Agreement, Welidy and World Co. (Baoan) shall return the compensation to SFRECL within 90 days interest free. In addition, in the case where the non-interest bearing deposit of RMB30 million (equivalent to approximately HK$35 million) and/or the deposit of RMB50 million (equivalent to approximately HK$57 million) bearing simple interest at a rate of 6% per annum paid to Welidy or World Co. (Baoan) by SFRECL at the termination of the Agreement, Welidy and World Co. (Baoan) shall return such deposit(s) together with interest to SFRECL within six months. As the Former Agreement have expired on 10 November 2016, during the extended period after the expiry date, the initial transition period compensation should be paid, the longest period shall not exceed 18 months, that is, if SZREIDCL performed all their obligation under the Former Agreement before 11 May 2018, the non-interest bearing deposit of Former Agreement RMB30 million (equivalent to approximately HK$35 million) pursuant to Former Agreement is refundable or otherwise is non-refundable.

2. For whatever reason cause the termination of the Agreement, all transition period compensation received by Welidy and World Co. (Baoan) are non-refundable.

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LETTER FROM THE BOARD

Timeline of the redevelopment

• (a) by the earlier of 5 months after Welidy and World Co. (Baoan) have handed over the original title certificates and relevant documents for passing the legal title of the Existing Land, within about 90 days after signing the Agreement, SFRECL shall have been approved as the executing entity（實施主體）of the Urban Renewal Project by PRC Government;

• (b) by the earlier of 4 years and 6 months after Welidy and World Co. (Baoan) have handed over the Existing Land to SFRECL, SFRECL shall have completed construction of the re-developed properties and obtained the relevant completion of construction certificate from the responsible body of the PRC Government;

• (c) by the earlier of 4 years and 6 months after Welidy and World Co. (Baoan) have handed over the Existing Land to SFRECL, SFRECL shall hand over the re-developed residential properties with a gross floor area of 11,000 sq m and not less than 390 car parking spaces and the re-developed properties with a gross floor area of not less than 8,000 sq m which can be used as parking spaces for private cars, lorries and container trucks to Welidy or World Co. (Baoan);

• (d) by the earlier of 5 years and 3 months after Welidy and World Co. (Baoan) have handed over the Existing Land to SFRECL, SFRECL shall registered Welidy or World Co. (Baoan) as the owners of the re-developed with a gross floor area of 11,000 sq m residential Properties and handed over the title certificates to Welidy or World Co. (Baoan);

• (e) by the earlier of 6 years and 3 months after Welidy and World Co. (Baoan) have handed over the Existing Land to SFRECL, SFRECL shall completed the renovation, obtained and handed over the title certificates and the re-developed commercial properties with a gross floor area of 35,000 sq m to Welidy or World Co. (Baoan).

If the actual performance time of the above matters is not in accordance with the above timeline of the redevelopment, the Company will make separate announcement to update the timeline of the redevelopment.

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LETTER FROM THE BOARD

Conditions Precedent

The arrangement is conditional upon the Agreement and the transactions contemplated thereunder being approved by the Shareholders at the EGM and the redevelopment proposal being approved by 深圳市坪山區城市更新局 (Shenzhen City Pingshan Area Urban Renewal Bureau*) in the PRC.

Guarantee

FGCCL, a fellow subsidiary of SFRECL and SZREIDCL, has agreed to be a guarantor to guarantee the due performance of the SFRECL and SZREIDCL’s obligations under the Agreement up to two years from both the expiration of the period of performance by SFRECL and SZREIDCL of their obligations under the Agreement (expected at 29 March 2024) and the termination of the Agreement and the Arrangement. The expected guarantee period is approximately up to 29 March 2026.

Termination of the Agreement

If either SFRECL or Welidy and World Co. (Baoan) fails to perform or observe the terms set forth under the Agreement, the non-defaulting party may, depending on the nature of the breach, terminate the Agreement, keep or return such deposits or enforce for liquidated damages (as the case may be) as stipulated under the Agreement.

3. REASONS FOR THE ARRANGEMENT

The Group’s operational facilities on the Existing Land in Shenzhen were established over 20 years. In order to keep pace with the modernised social development, purchasing new and advanced machineries can improve productive efficiency, increase production and reduce manpower and the production plant’s occupied area. In addition, streamlining structure is helpful to reduce management costs, and improve profit margin to increase profitability.

The Board considers that the Urban Renewal Project presents a valuable opportunity for the Group to modernise its business operations, the Cash Received will partially fund the Group’s expenses for the relocation of the manufacturing facilities on the Existing Land and combine the same into the Group’s Zhongshan manufacturing plant, which is expected to reduce the Group’s production costs, and the streamlined structure after combination will improve its competitiveness. The Group does not anticipate there to be any material disruption to the Groups’ operations nor material adverse impact on its production capacity given that the Group’s Zhongshan manufacturing plant is capable to produce the products of the same types. The Group has no intention to terminate, downsize and dispose of the existing business.

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LETTER FROM THE BOARD

The Urban Renewal Project will also signify the Group’s contribution to urban renewal in the locality and is expected to enhance the image of the Group. The replacement of Relevant Properties and compensation of RMB35 million (equivalent to approximately HK$40 million) represents a significant premium to the preliminary valuation of the Existing Land and existing properties on the Existing Land referred to below. Apart from contributing to fund the cost of the Group’s imminent relocation of its manufacturing facilities to Zhongshan, the Agreement provides the Group with the opportunity to continue to maintain its business presence in Shenzhen through the retention of the Relevant Properties on the Existing Land upon completion of the Urban Renewal Project, and by the time the Urban Renewal Project is completed. Upon the title of the Relevant Properties being transferred to Welidy and World Co. (Baoan), the Company intends to on-sell the properties to third parties or rent the properties out as long term investment, depending on the then market conditions and policies in the PRC.

Having considered the foregoing, the Board is of the view that the Agreement and transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

4. FINANCIAL EFFECT OF THE ARRANGEMENT

The net book value of the Existing Land and existing properties thereon as at 31 December 2016 was approximately HK$18 million. Based on the preliminary valuation report prepared by KFPL, the value of the Existing Land and existing properties thereon as at 31 October 2016 is estimated to be RMB286 million (equivalent to approximately HK$329 million). Please refer to appendix II – 3 to this circular for the valuation report.

The Existing Land is where World Co. (Baoan) is located at, which is the in-house production plant of the Group and is responsible for manufacturing of household products. The Existing Land is not a revenue-generating asset and as such there is no identifiable income stream originated from the Existing Land.

As the re-developed properties will be received after around six to seven years, the Group will depend on the market conditions when receiving relevant properties to formulate a concrete disposal or self-held strategy, and the preliminary plan is to dispose of the re-developed residential properties firstly, commercial properties held for rental income.

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LETTER FROM THE BOARD

Based on the valuation report prepared by KFPL, the market value of the Existing Land and existing properties thereon as at 31 July 2017 is estimated to be RMB183 million (equivalent to approximately HK$210 million) and the gross development value of the re-developed residential properties of 11,000 sq m and the re-developed commercial properties of 35,000 sq m, assuming they were completed as at 31 July 2017, was estimated at approximately RMB439 million (equivalent to approximately HK$504.9 million) and RMB869 million (equivalent to approximately HK$999.35 million) respectively, totalling RMB1,308 million (equivalent to approximately HK$1,504.25 million). Please refer to appendix II – 1 to this circular for the valuation report. In addition, not less than 390 car parking spaces with gross area of approximately 15,000 sq m of the re-developed properties and not less than a gross area of 8,000 sq m of the re-developed properties which can be used as approximately 209 car parking spaces for private cars, lorries and container trucks, although under current policy of the PRC Government department that the ownership of car parking spaces will not be registered, the developer SFRECL guarantee Welidy and World Co. (Baoan) shall obtain the ownership and usage right of such non registered properties as stipulated under the Agreement.

According to the valuation report prepared by KFPL, the Existing Land and existing properties thereon as at 31 October 2016 and 31 July 2017 are RMB286,000,000 (equivalent to approximately HK$329,000,000) and RMB183,000,000 (equivalent to approximately HK$210,000,000), the difference is RMB103,000,000 (equivalent to HK$118,450,000). It is because that, when KFPL valued the whole property at 31 October 2016 it had assumed that the whole property had acquired relevant title certificate. After KFPL have been provided the PRC legal opinion, stating that portion of the industrial complex with a total gross floor area of 28,515.02 sq m has not registered title certificate, therefore in the valuation report of such portion, they were assigned no commercial value which causes the difference.

The Existing Land was first acquired by Welidy in the year 1991 and 1992 and established factory buildings over 25 years. At that moment, the buildings were applied for the design and construction that could be registered to obtain the title certificates under the law. The buildings with gross floor area of 50,948.47 sq m were classified as such kind of properties. For the simple, crude and steel structure buildings are allowed to be established and used but no title certificate will be granted. The above mentioned properties with gross floor area of 28,515.02 sq m were classified as such kind of properties but the Company have the ownership and right of use, Pursuant to the Agreement, the Company only have to provide the Existing Land and the buildings with current status to SFRECL. The status of the buildings with title certificates of gross floor area 50,948.47 sq m and without title certificate of gross floor area 28,515.02 sq m have been specified in the Agreement. SFRECL have confirmed the acceptance and will not affect the execution of the Agreement.

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LETTER FROM THE BOARD

The valuation report set out in Appendix II – 2 to this circular was prepared by KFPL as reference for the PRC lawyer to prepare the legal opinions and for the Hong Kong auditor to prepare the cash flow report.

Earnings

In order to comply with Rule 14.66(5) of the Listing Rules which requires the disclosure of the expected profit or loss arising from relevant transactions, the Group has make estimations as follows. It is estimated that, based on the valuation report prepared by KFPL for the valuation at 31 July 2017 of the relevant properties, the Group will record a gain before tax approximately HK$1,445 million assuming the Relevant Properties will be disposed of by the Group immediately upon completion of the arrangement. Such gain is estimated based on the Relevant Properties to be received in an amount of approximately RMB1,308 million (equivalent to approximately HK$1,505 million) and monetary compensation in an amount of RMB35 million (equivalent to approximately HK$40 million), totalling approximately RMB1,343 million (equivalent to approximately HK$1,545 million), less (i) the net book value of the Existing Land and existing properties of approximately HK$18 million as at 31 December 2016; (ii) the estimated cost of relevant move, demolition and relocation of approximately HK$35 million and (iii) the estimated professional fees and expenses of approximately HK$47 million. The actual gain to be recorded by the Group will depend on (i) the net book value of the Existing Land and existing properties as at the date of demolition; (ii) the actual relocation and demolition costs to be incurred by the Group in connection with the arrangement; (iii) the actual costs and expenses to be incurred by the Group in connection with the disposal or the leasing-out of the Relevant Properties; and (iv) the associated PRC taxes in connection with the above, therefore, the actual amount is subject to changes and may be different from the amount as presented above.

Assets and Liabilities

In order to comply with Rule 14.66(5) of the Listing Rules, based on the above expected gain before tax of approximately HK$1,445 million, the Group’s total assets are expected to increase by approximately HK$1,445 million.

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LETTER FROM THE BOARD

5. USE OF PROCEEDS

The estimated net proceeds before tax from the arrangement was approximately RMB1,473.265 million (equivalent to approximately HK$1,694.315 million), assuming the Relevant Properties will be disposed of by the Group immediately upon completion of the arrangement. The amount was based on the valuation report prepared by KFPL for the valuation, which were valued as at 31 July 2017 of the relevant properties to be received of approximately RMB1,308 million (equivalent to approximately HK$1,505 million), compensation of RMB35 million (equivalent to approximately HK$40 million), initial transition period compensation of approximately RMB28.6 million (equivalent to approximately HK$32.9 million) and continuous transition period compensation of approximately RMB131.665 million (equivalent to approximately HK$151.415 million), totalling of RMB1,503.265 million (equivalent to approximately HK$1,729.315 million) less the expected commission, legal and professional fee in relation to the sales of the Relevant Properties of approximately RMB30 million (equivalent to approximately HK$35 million). The proceeds may be used for (i) funding the relocation and demolition expenses; (ii) legal and professional fee; (iii) labour lay off expenses; (iv) acquiring modern machineries; (v) repaying bank loans and thus reducing interest expenses thereon; (vi) general working capital purpose; or (vii) suitable future investment(s).

The net proceeds will not be realised until after the disposal of all the Relevant Properties, which may only take place in around six to seven years’ time; and the Company has not identified any investment opportunities, the Company is therefore unable to ascertain the specific proportion of the net proceeds to be allocated to each of such purposes as stated above as at the Latest Practicable Date of this circular.

The Company will issue further announcement for the update on the breakdown of the use of proceeds if all the Relevant Properties have been actually sold and a definite plan to allocate the use of the proceeds is formulated.

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LETTER FROM THE BOARD

6. INFORMATION OF THE PARTIES

The Group is principally engaged in the design, manufacture and marketing of PVC and fabric household products, PVC pipes and fittings, operating recycling and reborn resources related business and property investment.

Welidy is principally engaged in property holding business.

World Co. (Baoan) is principally engaged in the manufacturing of household products business.

SFRECL is principally engaged in the property development business.

SZREIDCL is principally engaged in the property development and investment.

FGCCL is principally engaged in the investment holding and property development.

To the best of the Directors’ knowledge, information, and belief, having made all reasonable enquiries, SFRECL, SZREIDCL and FGCCL and their ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons.

7. IMPLICATIONS UNDER THE LISTING RULES

In accordance with Rule 14.07 of the Listing Rules, as the applicable percentage ratios calculated in respect of the disposal under the Agreement exceed 75% and those in respect of the acquisition exceed 100%, the disposal and the acquisition constitute a very substantial disposal and a very substantial acquisition of the Company respectively under Chapter 14 of the Listing Rules. The Relevant Shareholders, holding approximately 50.45% interest in the Company as at the date of this circular, have indicated to the Company that they will vote for the Agreement and the transactions contemplated thereunder at the EGM. To the best of the Directors’ knowledge, information and belief, having made reasonable enquiries, no Shareholder has a material interest in the Agreement and the transactions contemplated thereunder and is required to abstain from voting at the EGM.

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LETTER FROM THE BOARD

8. EGM

An EGM will be convened for the Shareholders to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder. The notice of EGM is set out on pages 74 to 75 of this circular.

A form of proxy for use at the EGM is enclosed and whether you intend to be present at the EGM, you are requested to complete the form of proxy and return it to the Company’s share registrar in Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time limit fixed for holding the EGM. Completion of the form of proxy and returning it to the Company will not preclude you from attending, and voting at, the EGM if you so wish.

To the best of the Directors’ knowledge, information and belief, having made reasonable enquiries, no Shareholder has a material interest in the Agreement and the transactions contemplated thereunder and is required to abstain from voting at the EGM.

9. VOTING BY WAY OF POLL

Pursuant to Rules 13.39(4) of the Listing Rules, all votes of Shareholders at the Extraordinary General Meeting will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

10. RECOMMENDATION

The Directors consider that the terms of the Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution to be proposed at the EGM.

11. GENERAL

Your attention is drawn to the appendices to this circular which contain certain additional information in relation to the Company.

Yours faithfully,

For and on behalf of the Board

Lee Tat Hing

Chairman

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FINANCIAL INFORMATION RELATING TO THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

The audited financial information of the Group for the three years 31 December 2014, 2015 and 2016 can be referred to the annual reports of the Company for the years ended 31 December 2014 (pages 25 to 93), 2015 (pages 25 to 97), 2016 (pages 29 to 105), respectively and the interim report for the six months ended 30 June 2017 (pages 3 to 24).

The above-mentioned financial information has been published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.worldhse.com). The auditors of the Company have not issued any qualified opinion on the Group’s financial statements for the financial years ended 31 December 2014, 2015 and 2016.

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 September 2017, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Company had other outstanding borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments of HK$327,303,000 (of which HK$319,612,000 was secured by certain investment properties, leasehold land and buildings, prepaid lease payments and bank deposits of the Company).

As at 30 September 2017, the Company had pledged certain investment properties, leasehold land and buildings, prepaid lease payments and bank deposits with an aggregate net book value of HK$269,597,000 to secure banking facilities granted to the Group.

Save as disclosed in this circular and apart from intra-group liabilities and normal accounts payables, the Group did not have any mortgages, charges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptances creditors, or any guarantees, or other contingent liabilities outstanding at the close of business on 30 September 2017.

The Directors are not aware of any material adverse changes in the Group’s indebtedness position and contingent liabilities since the Latest Practicable Date.

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FINANCIAL INFORMATION RELATING TO THE GROUP

APPENDIX I

3. WORKING CAPITAL

The Directors of the Company are of the opinion that, after taking into account the financial resources available to us including the available credit facilities, our internally generated funds, the cash flow impact of the Agreement and the transactions contemplated thereunder, the Group has sufficient working capital to satisfy its requirements for at least the next 12 months following the date of this circular.

4. FINANCIAL RESULTS

The unaudited consolidated financial results of the Group for the six months ended 30 June 2017 (the “Period Under Review”) as follows:

The Group recorded a consolidated turnover of HK$386,475,000 for the Period Under Review, representing a decrease of 6.2% or HK$25,443,000 as compared to HK$411,918,000 of the same period last year.

Gross profit of the Group was HK$55,671,000, representing a decrease of 18.7% or HK$12,783,000 as compared to HK$68,454,000 of the same period last year. The gross profit margin was 14.4%, representing a decrease of 2.2% as compared to 16.6% of the same period last year.

Loss for the period was HK$49,391,000, as compared to a loss of HK$13,942,000 for the same period last year.

Basic loss per share was HK6.52 cents, as compared to basic loss per share of HK1.87 cents for the same period last year.

The Board does not propose any payment of interim dividends for the Period Under Review.

5. LIQUIDITY, FINANCIAL RESOURCES AND FUNDING

The Group finances its operations from internally generated cash flows, terms loans and trade finance facilities provided by banks in Hong Kong and the PRC. At 30 June 2017, the Group had bank balances and cash and pledged bank deposits of approximately HK$70,705,000 (31.12.2016: HK$96,380,000) and had interest-bearing bank borrowings of approximately HK$330,116,000 (31.12.2016: HK$325,287,000). The Group’s interest-bearing bank borrowings were mainly computed at Hong Kong Inter-Bank Offering Rate plus a margin. The Group’s total banking facilities available as at 30 June 2017 amounted to HK$646,097,000; of which HK$330,116,000 of the banking facilities was utilised (utilisation rate was at 51.1%).

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FINANCIAL INFORMATION RELATING TO THE GROUP

APPENDIX I

The Group continued to conduct its business transactions principally in Hong Kong dollars, US dollars and Renminbi. The Group’s exposure to the foreign exchange fluctuations has not experienced any material difficulties in the operations or liquidity as a result of fluctuations in currency exchange.

At 30 June 2017, the Group had current assets of approximately HK$602,928,000 (31.12.2016: HK$562,616,000). The Group’s current ratio was approximately 0.97 as at 30 June 2017 as compared with approximately 0.96 as at 31 December 2016. Total shareholders’ funds of the Group as at 30 June 2017 decreased by 2.7% to HK$714,776,000 (31.12.2016: HK$734,954,000). The gearing ratio (measured as total liabilities/total shareholders’ funds) of the Group as at 30 June 2017 was 0.93 (31.12.2016: 0.86).

6. CHARGES ON ASSETS

At 30 June 2017, certain leasehold land and buildings, investment properties, prepaid lease payments, deposit and prepayments for a life insurance policy and bank deposits with an aggregate net book value of HK$278,152,000 (31.12.2016: HK$249,289,000) were pledged to banks for general banking facilities granted to the Group.

7. STAFF AND EMPLOYMENT

At 30 June 2017, the Group employed a total workforce of about 1,288 (30.6.2016: 1,542) including 1,225 staff in our factories located in the PRC. The total staff remuneration incurred during the period was HK$41,830,000 (30.6.2016: HK$53,824,000). It is the Group’s policy to review its employees’ pay levels and performance bonus system regularly to ensure that the remuneration policy is competitive within the relevant industries. It is the Group’s policy to encourage its subsidiaries to send the management and staff to attend training classes or seminars that related to the Group’s business. Tailor made internal training programmes were also provided to staff in our PRC factories.

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FINANCIAL INFORMATION RELATING TO THE GROUP

APPENDIX I

8. BUSINESS REVIEW

For the household products business, the business turnover for the Period Under Review dropped by 23.2% as compared with the same period last year and the business had recorded a loss of HK$13,169,000. It is mainly due to the fact that the Board of the Company had planned to close the manufacturing plant of household products which was erected on the Existing Land, and during the period of removal, there was a loss of workers and it took time for the manufacturing plant which located in Zhongshan to expand the operational factory, purchase machineries, employ and train up new workers, which led to the failure to timely ramp-up enough capacity to assume the production responsibility of World Co. (Baoan)’s manufacturing plant located in Shenzhen City in full. As a result, before accepting customers’ orders, the Group had to first predict the actual production capacity and in the meantime reduce the number of orders to avoid the damage of past reputation which may be caused by any delay in delivery of goods. Thus, the turnover dropped. It is expected that the turnover will increase gradually once the Group finishes expanding the operational factory, installing new production facilities and training of new workers.

For PVC pipes manufacturing business sector, the business was rather steady and the profit was HK$13,209,000 for the Period Under Review.

For the feed production from food waste recycling business for the Period Under Review, the business is progressing smoothly and the business turnover slightly increased when comparing with the same period last year but still did not reach the expected standard, and a deficit before impairment loss recognised on non-current assets of HK$11,806,000 was recorded. The management performed an impairment assessment on non-current assets relating to food waste recycling business and accordingly, impairment loss of HK$18,643,000 has been recognised.

During the Period Under Review, the gain arising from changes in fair value of investment properties was HK$2,270,000.

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FINANCIAL INFORMATION RELATING TO THE GROUP

APPENDIX I

9. PROSPECTS

Given the expiry of the original agreement for the redevelopment of the Existing Land in Pingshan Shenzhen by way of urban renewal, which was entered into between the Group and the developer with a term of 5 years and 3 months, the Group had entered into a new supplemental agreement with the developer on 16 August 2017 to extend the term of the agreement. Other than the receipt of the relevant properties to be constructed on the redeveloped existing land as agreed, the Group had also successfully secured cash compensation of RMB35,000,000 and transition compensation for a monthly payment of approximately RMB1,900,000 until the actual date of completion and delivery and obtaining of title certificates of the reconstructed properties, which will take approximately 6 to 7 years.

For the household products business in Pingshan Shenzhen, the business will be relocated to the Group’s Zhongshan Premises so as to streamline the management structure and reduce production cost. The Group would also purchase new advanced machineries so as to enhance efficiency of the production and reduce manpower so that the profit margin could be improved.

For PVC pipes manufacturing business sector, the Group will continue its strategy to develop the business to contribute to the profits of the Group.

For the feed production from food waste recycling business, the implementation of government charge on the disposal of urban waste in 2019 would benefit the development of the business and generate more business opportunities for the Group.

To conclude, the prospect of the Group is bright.

– 33 –

VALUATION REPORT

APPENDIX II – 1

The following is the text of a valuation report prepared for inclusion in this document, received from Knight Frank Petty Limited, an independent property valuer, in connection with their valuation as of 31 July 2017 of the Property held by the Group.

==> picture [33 x 48] intentionally omitted <==

Knight Frank 4/F, Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

T +852 2840 1177 F +852 2840 0600 www.knightfrank.com

25 October 2017 The Directors World Houseware (Holdings) Limited Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung New Territories Hong Kong

Dear Sirs

VALUATION OF A PARCEL OF LAND NO. G11207-1 AND THE BUILDINGS AND STRUCTURES ERECTED THEREON LOCATED AT NO 403 DONGZONG ROAD, PINGSHAN STREET, PINGSHAN NEW AREA, SHENZHEN, GUANGDONG PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA (THE “PROPERTY”)

In accordance with your instructions for us to value the market value of the Property held by World Houseware (Holdings) Limited (the “Company”), its subsidiaries, its associated company and its joint ventures (hereinafter together referred to as the “Group”), in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property in existing state as at 31 July 2017.

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VALUATION REPORT

APPENDIX II – 1

BASIS OF VALUATION

Our valuation is our opinion of the market value of the property which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

VALUATION METHODOLOGIES

We have adopted the Direct Comparison Approach with reference to market comparable sales evidence available in the market.

TITLE DOCUMENTS AND ENCUMBRANCES

We have been provided with extracts of documents in relation to the titles to the Property. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. We have relied on the information provided by the Group and its PRC legal advisor, Yingke Law Firm, regarding the title of the Property.

No allowance has been made in our report for any charges, mortgages or amounts owing on any property nor for any expenses or taxation which may be incurred in affecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

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VALUATION REPORT

APPENDIX II – 1

SOURCE OF INFORMATION

We have relied to a very considerable extent on the information given by the Group and the legal opinion of the Group’s PRC legal advisor. We have no reason to doubt the truth and the accuracy of the information provided by the Group which is material to the valuation. We have accepted advice given by the Group on such matters as planning approvals or statutory notices, easements, tenure, completion date of the buildings, particulars of occupancy, joint-venture agreements/contracts, and site and floor areas. Dimension, measurements and areas included in the attached valuation report are based on the information provided to us and are therefore only approximations. We have not been able to carry out detailed on-site measurements to verify the site and floor areas of the Property and we have assumed that the areas shown on the documents handed to us are correct. We were also advised by the Group that no material facts have been omitted from the information provided.

We have inspected the exteriors and, where possible, the interiors of the Property and the inspection was carried out by Joseph Kwan, Bachelor of Social Sciences with about 2 years’ experience in valuation of properties in the People’s Republic of China, in July 2017. However, we have not carried out site investigations to determine the suitability of ground conditions and services, etc. Our valuation is prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects, we are not, however, able to report that the Property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

IDENTITY OF PROPERTY TO BE VALUED

We exercised reasonable care and skill (but will not have an absolute obligation to you) to ensure that the Property, identified by the Property address in your instructions, is the Property inspected by us and contained within our valuation report. If there is ambiguity as to the Property address, or the extent of the Property to be valued, this should be drawn to our attention in your instructions or immediately upon receipt of our report.

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VALUATION REPORT

APPENDIX II – 1

ENVIRONMENTAL ISSUES

We are not environmental specialists and therefore we have not carried out any scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor have we undertaken searches of public archives to seek evidence of past activities that might identify potential for contamination. In the absence of appropriate investigations and where there is no apparent reason to suspect potential for contamination, our valuation is prepared on the assumption that the Property is unaffected. Where contamination is suspected or confirmed, but adequate investigation has not been carried out and made available to us, then the valuation will be qualified.

COMPLIANCE WITH RELEVANT ORDINANCES AND REGULATIONS

We have assumed that the Property had been constructed, occupied and used in full compliance with, and without contravention of any ordinances, statutory requirement and notices except only where otherwise stated. We have further assumed that, for any use of the Property upon which this report is based, any and all required licences, permits, certificates, consents, approvals and authorisations have been obtained, except only where otherwise stated.

REMARKS

In preparing our valuation report, we have complied with the requirements contained within relevant provisions of Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and The HKIS Valuation Standards 2012 Edition published by the Hong Kong Institute of Surveyors.

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VALUATION REPORT

APPENDIX II – 1

CURRENCY

All sums stated in our valuation are in Renminbi.

Our valuation report is attached.

Yours faithfully

For and on behalf of Knight Frank Petty Limited Clement W M Leung MFin MCIREA MHKIS MRICS RPS (GP) Executive Director Head of China Valuation

Remarks:

Clement W M Leung, MFin MCIREA, MHKIS, MRICS, RPS (GP), has been a qualified valuer and has about 23 years’ experience in the valuation of properties in Hong Kong, Macau and Asia Pacific Region and has 21 years’ experience in the valuation of properties in the People’s Republic of China.

– 38 –

VALUATION REPORT

APPENDIX II – 1

VALUATION REPORT

Property Held for Owner Occupation

Property

Description and tenure

Particulars of

occupancy

Market value in existing state as at 31 July 2017

A Parcel of Land The Property comprises an industrial No. G11207-1 and complex erected on the land parcel no. the Buildings and G11207-1, which are formed by seven Structures erected parcels of adjoining industrial land with a thereon located at total site area of approximately No. 403 Dongzong 69,080.30 sq m. Road, Pingshan Street, Pingshan New The Property comprises seven blocks of Area, Shenzhen, building including factories, warehouses, Guangdong Province, workshop, generator room, and dormitories The PRC with a total gross floor area of approximately 79,463.49 sq m. The Property was completed in 1993.

The property is RMB183,000,000 currently owner(RENMINBI ONE occupied as an HUNDRED AND industrial complex. EIGHTY THREE MILLION ONLY) (please see note (3))

The land use rights of the property have been granted a term of 50 years commencing from 9 January 1991 to 8 January 2041 for industrial and ancillary facilities uses.

Notes:

1. Pursuant to two Realty Title Certificates Nos. Shen Fang Di Zi Di 1003340 and 1004592 both issued by the People’s Government of Shenzhen dated 1 February 1996, the land use rights of Lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m were granted to Welidy Limited for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial use.

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VALUATION REPORT

APPENDIX II – 1

1. Pursuant to five Realty Title Certificates all issued by Shenzhen Real Estate Ownership Registration Centre, the land use rights of five parcels of land with a total site area of 28,952.10 sq m were granted to and the building ownership of various buildings erected upon with a total gross floor area of 50,948.47 sq m is vested in World Plastic Mat (Baoan) Company Limited for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial and warehouse uses. Details of the Real Estate Title Certificates are listed as follows:

					Real
			Gross		Estate Title
Lot number	Site Area	Building Name	Floor Area	Building Use	Certificate No	Issuance Date
	(Sq m)		(sq m)
G11207-0165	899.70	Block 5 Warehouse	1,181.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532536
G11207-1 (1)	3,967.50	Block 4 Power Plant	1,032.12	Industrial	Shen Fang Di Zi Di	27 November 2012
					No 6000548625
G11207-1 (2)	6,552.20	Block 3 Chemical	5,957.60	Industrial	Shen Fang Di Zi Di	8 August 2012
		Workshop			No 6000532547
G11207-1 (4)	11,409.70	Block 2 Factory	24,845.10	Industrial	Shen Fang Di Zi Di	4 July 2012
					No 6000527825
G11207-1 (5)	6,123.00	Block 1 Dormitory	17,932.05	Industrial	Shen Fang Di Zi Di	4 July 2012
				ancillary	No 6000527795

1. Building portion of the Property with a total gross floor area of approximately 28,515.02 sq m have not applied for land use planning and construction planning approval. Prior to the completion of registry to legally obtain realty title for such buildings, Welidy Limited can only enjoy the use of such portion of the Property but the right of rem is not established. Hence, we have assigned no commercial value to such buildings in the course of our valuation.

2. Pursuant to the Cooperation Development Framework Agreement dated 14 February 2011, the Provisional Removal Remedy Agreement dated 11 August 2011 and the Supplementary Agreement dated 16 August 2017, entered into between Welidy Limited (“Party A1”) and World Plastic Mat (Baoan) Company Limited (“Party A2”), Shenzhen Fantasia Real Estate Co., Ltd. (“Party B”), Shenzhen Zhifu real Estate Investment Development Co., Ltd. (“Party C”) and Fantasia Group (China) Co., Ltd. (“Party D”), the land parcel no. G11207-1 comprises seven parcels of adjoining land with a site area of approximately 69,080.30 sq m, which are mentioned in notes (1) and (2). Salient conditions stipulated in the mentioned agreements are summarized as follows:

3. (i) Party A1 and A2 will provide land parcel no. G11207-1 and the buildings erected thereon to Party B in exchange for compensation under the mentioned agreements.

4. (ii) High-class residential portion located at Lot Number 03 of the Property with a gross floor area of 11,000 sq m (“Residential Portion”) shall be compensated to Party A2.

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VALUATION REPORT

APPENDIX II – 1

• (iii) Newly-designed high-class quality retail portion; including basement 1 to level 3 of the building to be located at Lot Number 04 of the Property, with a gross floor area of 35,000 sq m (“Retail Portion”) shall be compensated to Party A1.

• (iv) No less than 390 number of car parking spaces (“Car Parking Portion”) shall be compensated to Party A1 and Party A2, of which no less than 280 number of car parking spaces of Retail Portion shall be compensated to Party A1, and no less than 110 number of car parking spaces of Residential Portion shall be compensated to Party A2. Party B agreed that the ownerships of the aforesaid car parking spaces are held by Party A1 and Party A2, and Party B is obligated to assist Party A1 and Party A2 in registering the titles and transferring the titles of the aforesaid car parking spaces to Party A1 and Party A2, subject to the permission of policies, laws and regulations.

• Pursuant to the Cooperation Development Framework Agreement, the Provisional Removal Remedy Agreement and the Supplementary Agreement mentioned in note (4), the gross development value of the Retail Portion and Residential Portion of the proposed development, assuming they were completed as at the date of valuation, was estimated approximately as follows:

Residential Portion Retail Portion Basement Level 1 Level 1 Level 2 Level 3 Total	Proposed Gross Floor Area (sq m) 11,000.00 6,200.00 9,400.00 9,700.00 9,700.00 35,000.00	Gross Development Value (RMB) 439,000,000 47,000,000 426,000,000 241,000,000 155,000,000
		869,000,000

Gross Development Value is defined as the aggregate market value of all saleable units of a property assuming that the property have been fully completed as at the date of valuation without taking into account any outstanding/ incurred construction costs nor development costs. In determining the gross development value of the portions, we have assumed that the portions were fully complete as at the date of valuation in accordance with the building plans and latest development scheme provided to us and with the benefit of immediate vacant possession. As advised by the Group, Car Parking Portion cannot obtain title document from relevant government authority, hence, we have assigned no commercial value to such portion in the course of our valuation.

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VALUATION REPORT

APPENDIX II – 1

1. We have been provided with the Group’s PRC legal adviser’s opinion, which inter-alia, contains the followings:

2. (i) Welidy Limited has legally obtained the land use rights of Lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m;

3. (ii) Welidy Limited has the rights to handle, mortgage and transfer the land use rights as mentioned in note (6)(i);

4. (iii) Welidy Limited has not applied for title registry for buildings erected on land lots mentioned in note (6)(i) and the right of rem of relevant buildings has not established; prior to the establishment of the right of rem of relevant buildings, Welidy Limited does not have the right to transfer or mortgage such buildings;

5. (iv) World Plastic Mat (Baoan) Company Limited has legally obtained the land use rights of Lots G11207-0165, G11207-1(1), G11207-1(2), G11207-1(4) and G11207-1(5) with a total site area of 28,952.10 sq m and the building ownership of buildings with a total gross floor area of 50,948.47 sq m erected thereon;

6. (v) Portion of property as mentioned in note (6)(iv) is subject to mortgage;

7. (vi) Upon full settlement of relevant mortgage loan, completion of registering process of release of mortgage right and release of other rights restriction, World Plastic Mat (Baoan) Company Limited can handle and transfer the portion of the property as mentioned in note (6)(iv); and

8. (vii) The special planning of subject urban renewal project has been approved by relevant government authorities and has currently entered the confirmation stage of executing entity application.

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VALUATION REPORT

APPENDIX II – 2

Our Ref: CV/CL/GL/JK/kl/12684(10)b

The Directors World Houseware (Holdings) Limited Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung, New Territories Hong Kong

21 August 2017

Dear Sirs

VALUATION OF A PARCEL OF LAND NO. G11207-1 AND THE BUILDINGS AND STRUCTURES ERECTED THEREON LOCATED AT NO 403 DONGZONG ROAD, PINGSHAN STREET, PINGSHAN NEW AREA, SHENZHEN, GUANGDONG PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA (THE “PROPERTY”)

In accordance with your instructions for us to value the market value of the property held by World Houseware (Holdings) Limited (hereinafter referred to as the “Company”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property in existing state with the benefit of immediate vacant possession as at 31 July 2017 for internal reference purpose.

BASIS OF VALUATION

Our valuation is our opinion of the market value of the property which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

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VALUATION REPORT

APPENDIX II – 2

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

VALUATION METHODOLOGIES

We have adopted the Direct Comparison Approach with reference to market comparable sales evidence available in the market.

TITLE DOCUMENTS AND ENCUMBRANCES

We have been provided with extracts of documents in relation to the title to the Property. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. We have relied on the information provided by the Company. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation.

No allowance has been made in our report for any charges, mortgages or amounts owing on any property nor for any expenses or taxation which may be incurred in affecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

SOURCE OF INFORMATION

We have accepted advice given by the Company on such matters as planning approvals or statutory notices, easements, tenure, ownership, identification of the property, building age, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the correctness of the site and floor areas of the property and we have assumed that the site and floor areas shown on the documents handed to us are correct. We were also advised by the Company that no material facts have been omitted from the information provided.

– 44 –

APPENDIX II – 2

VALUATION REPORT

We have inspected the exteriors and, where possible, the interiors of the Property and the inspection was carried out by Joseph Kwan in July 2017. However, we have not carried out site investigations to determine the suitability of ground conditions and services, etc. Our valuation is prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects, we are not, however, able to report that the Property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

IDENTITY OF PROPERTY TO BE VALUED

We exercised reasonable care and skill (but will not have an absolute obligation to you) to ensure that the Property, identified by the Property address in your instructions, is the Property inspected by us and contained within our valuation report. If there is ambiguity as to the Property address, or the extent of the Property to be valued, this should be drawn to our attention in your instructions or immediately upon receipt of our report.

ENVIRONMENTAL ISSUES

We are not environmental specialists and therefore we have not carried out any scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor have we undertaken searches of public archives to seek evidence of past activities that might identify potential for contamination. In the absence of appropriate investigations and where there is no apparent reason to suspect potential for contamination, our valuation is prepared on the assumption that the Property is unaffected. Where contamination is suspected or confirmed, but adequate investigation has not been carried out and made available to us, then the valuation will be qualified.

COMPLIANCE WITH RELEVANT ORDINANCES AND REGULATIONS

We have assumed that the Property had been constructed, occupied and used in full compliance with, and without contravention of any ordinances, statutory requirement and notices except only where otherwise stated. We have further assumed that, for any use of the Property upon which this report is based, any and all required licences, permits, certificates, consents, approvals and authorisations have been obtained, except only where otherwise stated.

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VALUATION REPORT

APPENDIX II – 2

REMARKS

In our valuation, Knight Frank has prepared the valuation based on information and data available to us as at the valuation date. It must be recognised that the real estate market is subject to market fluctuations, while changes in policy direction and social environment could be immediate and have sweeping impact on the real estate market. It should therefore be noted that any market violation, policy and social changes or other unexpected incidents after the valuation date may affect the value of the property.

Neither the whole nor any part of this letter and valuation certificate nor any reference thereto may be included in any published document, circular or statement nor published in any way whatsoever whether in hard copy or electronically (including on any web-site) without our prior written approval of the form and context in which it may appear.

In accordance with our standard practice, we must state that this report is for the use only of the party to whom it is addressed and no responsibility is accepted to any third party for the whole or any part of its contents.

If there is any inconsistency or ambiguity between the English version and the Chinese version, the English version shall prevail.

CURRENCY

All sums stated in our valuation are in Renminbi.

Our valuation report is attached.

Yours faithfully

Gary Lau

MRICS RICS Registered Valuer Associate Director, China Valuation For and on behalf of Knight Frank Petty Limited

Clement W M Leung

MFin MCIREA MHKIS MRICS RPS (GP) RICS Registered Valuer Executive Director, Head of China Valuation For and on behalf of Knight Frank Petty Limited

Enc

JK/kl

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VALUATION REPORT

APPENDIX II – 2

VALUATION REPORT

Description and tenure

Property

A Parcel of Land The Property comprises an industrial No. G11207-1 and complex erected on the land parcel no. the Buildings and G11207-1, which are formed by seven Structures erected parcels of adjoining industrial land with a thereon located at total site area of approximately 69,080.30 No. 403 Dongzong sq m. Road, Pingshan Street, Pingshan New The Property comprises seven blocks of Area, Shenzhen, building including factories, warehouses, Guangdong Province, workshop, generator room, and The PRC dormitories with a total gross floor area of 79,463.49 sq m. The Property was completed in 1993.

Market value in Particulars of existing state occupancy as at 31 July 2017 The property is RMB183,000,000 currently owner(RENMINBI ONE occupied as an HUNDRED EIGHTY industrial complex. THREE MILLION ONLY) (Please see note (5))

The land use rights of the property have been granted a term of 50 years commencing from 9 January 1991 to 8 January 2041 for industrial and ancillary facilities uses.

Notes:

1. Pursuant to two Realty Title Certificates Nos. Shen Fang Di Zi Di 1003340 and 1004592 both issued by the People’s Government of Shenzhen dated 1 February 1996, the land use rights of Lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m were granted to Welidy Limited for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial use.

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VALUATION REPORT

APPENDIX II – 2

1. Pursuant to five Realty Title Certificates all issued by Shenzhen Real Estate Ownership Registration Centre, the land use rights of five parcels of land with a total site area of 28,952.10 sq m were granted to and the building ownership of various buildings erected upon is vested in World Plastic Mat (Baoan) Company Limited for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial and warehouse uses. Details of the Real Estate Title Certificates are listed as follows:

					Real
					Estate Title
Lot number	Site Area	Building Name	Gross Floor Area	Building Use	Certificate No	Issuance Date
	(sq m)		(sq m)
G11207-0165	899.70	Block 5 Warehouse	1,181.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532536
G11207-1 (1)	3,967.50	Block 4 Power Plant	1,032.12	Industrial	Shen Fang Di Zi Di	27 November 2012
					No 6000548625
G11207-1 (2)	6,552.20	Block 3 Chemical Workshop	5,957.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532547
G11207-1 (4)	11,409.70	Block 2 Factory	24,845.10	Industrial	Shen Fang Di Zi Di	4 July 2012
					No 6000527825
G11207-1 (5)	6,123.00	Block 1 Dormitory	17,932.05	Industrial ancillary	Shen Fang Di Zi Di	4 July 2012
					No 6000527795

1. Pursuant to the cooperation development framework agreement entered into between Welidy Limited (“Party A”) and Shenzhen Zhifu Real Estate Investment Development Co., Ltd（深圳置富房地產開發有限公司）(“Party B”) dated 14 February 2011, the land parcel no. G11207-1 comprising seven parcels of adjoining land with a site area of approximately 69,080.30 sq m, which are mentioned in notes (1) and (2). Salient conditions stipulated in the mentioned agreement are summarized as follows:

2. (i) Party A agreed Party B to act on behalf of Party B to apply for urban renewal project (the “Project”), and compensate Party A, or any party appointed by Party A, with property agreed by both parties. Party B will settle all necessary capital for relevant government authorities and the development of the project.

3. (ii) Party B agreed that Party A or any party appointed by Party A will have priority to be compensated with a portion of the completed property of Phase 1 of the Project, and both Parties agreed that the standard of the property to be compensated to Party A by Party B as follows: (1) Retail with a total gross floor area of approximately 35,000 sq m which is newly-designed, high-class and of the first class quality (“Retail Portion”), and high quality residential with a total gross floor area of approximately 11,000 sq m (“Residential Portion”), and car parking spaces in accordance with the ratio between the total compensated area (Retail Portion and Residential Portion) and the total gross floor area of Phase I but not less than 390 car parking spaces (“Car Parking Portion”); (2) All the compensated properties shall facilitate the practical use and need of Party A, and Retail Portion shall not exceed 3-storey above ground, while ground floor retail units of Phase 1 of the Project shall be included in the Retail Portion as compensation.

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VALUATION REPORT

APPENDIX II – 2

1. Pursuant to the Cooperation Development Framework Agreement mentioned in note (3), the gross development value of the Retail Portion and Residential Portion of the Project, assuming they were completed as at the valuation date, was estimated approximately as RMB869,000,000 and RMB439,000,000 respectively. Gross Development Value is defined as the aggregate market value of all saleable units of a property assuming that the property have been fully completed as at the date of valuation without taking into account any outstanding/incurred construction costs nor development costs. In determining the gross development value of the portions, we have assumed that the portions were fully complete as at the date of valuation in accordance with the building plans and latest development scheme provided to us and with the benefit of immediate vacant possession. As advised, Car Parking Portion will not acquire title document upon completion, hence, we have assigned no commercial value to such portion in the course of our valuation.

2. Pursuant to the supplementary agreement regarding cooperation development framework agreement and removal remedy agreement for Urban Renewal Project of World factory area in Pingshan New Area in Shenzhen, entered into between Party A, World Plastic Mat (Baoan) Company Limited, Shenzhen Fantasia Real Estate Co., Ltd, Party B and Fantasia Group (China) Co., Ltd on 16 August 2017, portion of the Property with a total gross floor area of 28,515.02 sq m have not been vested with relevant title document. Hence, we have assigned no commercial value to such portion in the course of our valuation.

3. In addition, we have prepared our valuation based on the following assumption:

4. (i) the property has a proper legal title;

5. (ii) all land premium, costs of public utility services and relocation costs have been settled in full;

6. (iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

7. (iv) the property can be freely disposed of to local or oversea purchasers.

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VALUATION REPORT

APPENDIX II – 3

Our Ref: CV/CL/GL/JK/12684(7)

The Directors World Houseware (Holdings) Limited Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung, New Territories Hong Kong

24 July 2017

Dear Sirs

VALUATION OF AN INDUSTRIAL COMPLEX, NO 403 DONGZONG ROAD, PINGSHAN STREET, PINGSHAN NEW AREA, SHENZHEN, GUANGDONG PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA

In accordance with your instructions for us to value the market value of the property held by World Houseware (Holdings) Limited (hereinafter referred to as the “Company”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property in existing state with the benefit of immediate vacant possession as at 31 October 2016 for internal reference purpose.

BASIS OF VALUATION

Our valuation is our opinion of the market value of the property which we would define as intended to mean “the estimated amount for which an asset or liability, should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

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VALUATION REPORT

APPENDIX II – 3

VALUATION METHODOLOGIES

We have valued the property by Direct Comparison Approach with reference to comparable sale evidences available in the market.

TITLE DOCUMENTS AND ENCUMBRANCES

We have been provided with extracts of documents in relation to the title to the property. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. We have relied on the information provided by the Company. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation.

No allowance has been made in our report for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in affecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

SOURCE OF INFORMATION

We have accepted advice given by the Company on such matters as planning approvals or statutory notices, easements, tenure, ownership, identification of the property, building age, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the correctness of the site and floor areas of the property and we have assumed that the site and floor areas shown on the documents handed to us are correct. We were also advised by the Company that no material facts have been omitted from the information provided.

INSPECTION AND STRUCTURAL CONDITION

We have inspected the property and the inspection was carried out by our Joseph Kwan in November 2016. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services, etc for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, and we did not note any serious defects. We are not, however, able to report that the property is free from rot, infestation or any other structural defects, nor were any tests carried out to any of the services.

– 51 –

VALUATION REPORT

APPENDIX II – 3

IDENTITY OF PROPERTY TO BE VALUED

We exercised reasonable care and skill (but will not have an absolute obligation to you) to ensure that the property, identified by the property address in your instructions, is the property inspected by us and contained within our valuation report. If there is ambiguity as to the property address, or the extent of the property to be valued, this should be drawn to our attention in your instructions or immediately upon receipt of our report.

ENVIRONMENTAL ISSUES

We are not environmental specialists and therefore we have not carried out any scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor have we undertaken searches of public archives to seek evidence of past activities that might identify potential for contamination. In the absence of appropriate investigations and where there is no apparent reason to suspect potential for contamination, our valuation is prepared on the assumption that the property is unaffected. Where contamination is suspected or confirmed, but adequate investigation has not been carried out and made available to us, then the valuation will be qualified.

COMPLIANCE WITH RELEVANT ORDINANCES AND REGULATIONS

We have assumed that the property had been constructed, occupied and used in full compliance with, and without contravention of any ordinances, statutory requirements and notices except only where otherwise stated. We have further assumed that, for any use of the property upon which this report is based, any and all required licences, permits, certificates, consents, approvals and authorisations have been obtained, except only where otherwise stated.

CURRENCY

Unless otherwise stated, all monetary amounts stated in our valuation are in Renminbi.

REMARKS

In our valuation, Knight Frank has prepared the valuation based on information and data available to us as at the valuation date. It must be recognised that the real estate market is subject to market fluctuations, while changes in policy direction and social environment could be immediate and have sweeping impact on the real estate market. It should therefore be noted that any market violation, policy and social changes or other unexpected incidents after the valuation date may affect the value of the property.

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VALUATION REPORT

APPENDIX II – 3

This report is confidential to the client for the specific purpose to which it refers. It may be disclosed to other professional advisers assisting the client in respect of the purpose, but the client shall not disclose the report to any other person.

Neither the whole nor any part of this letter and valuation certificate nor any reference thereto may be included in any published document, circular or statement nor published in any way whatsoever whether in hard copy or electronically (including on any web-site) without our prior written approval of the form and context in which it may appear.

In accordance with our standard practice, we must state that this report is for the use only of the party to whom it is addressed and no responsibility is accepted to any third party for the whole or any part of its contents.

Our valuation certificate is attached.

Yours faithfully

Gary Lau Clement W M Leung MRICS MFin MCIREA MHKIS MRICS RPS (GP) RICS Registered Valuer RICS Registered Valuer Associate Director, Executive Director, China Valuation Head of China Valuation For and on behalf of For and on behalf of Knight Frank Petty Limited Knight Frank Petty Limited

Enc

GL/kl

– 53 –

VALUATION REPORT

APPENDIX II – 3

VALUATION CERTIFICATE

Property Description and tenure An industrial complex The property comprises an industrial No 403 complex erected on a parcel of land with a Dongzong Road site area of approximately 69,080.30 sq m Pingshan Street Pingshan New Area The property comprises seven blocks of Shenzhen building including factories, warehouses, Guangdong Province workshop, generator room, and dormitories The PRC with a total gross floor area of 79,463.49 sq m. The property was completed in 1993.

Market Value in Particulars of existing state as at occupancy 31 October 2016 The property is RMB285,700,000 currently owner(RENMINBI TWO occupied as an HUNDRED EIGHTY industrial complex. FIVE MILLION AND SEVEN HUNDRED THOUSAND ONLY)

The land use rights of the property have been granted a term of 50 years commencing from 9 January 1991 to 8 January 2041 for industrial and ancillary facilities uses.

Notes:

1. Pursuant to two Realty Title Certificates Nos. Shen Fang Di Zi Di 1003340 and 1004592 both issued by People’s Government of Shenzhen dated 1 February 1996, the land use rights of Lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m were granted to Welidy Limited（佳多榮有限公司） for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial use.

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VALUATION REPORT

APPENDIX II – 3

1. Pursuant to five Realty Title Certificates all issued by Shenzhen Real Estate Ownership Registration Centre, the land use rights of five parcels of land with a total site area of 28,952.10 sq m were granted to and the building ownership of various buildings erected upon is vested in World Plastic Mat (Baoan) Company Limited（世界塑膠餐墊（寶安） 有限公司）for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial and warehouse use. Details of the Real Estate Title Certificates are listed as follows:

					Real
					Estate Title
Lot number	Site Area	Building Name	Gross Floor Area	Building Use	Certificate No	Issuance Date
	(sq m)		(sq m)
G11207-0165	899.70	Block 5 Warehouse	1,181.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532536
G11207-1 (1)	3,967.50	Block 4 Power Plant	1,032.12	Industrial	Shen Fang Di Zi Di	27 November 2012
					No 6000548625
G11207-1 (2)	6,552.20	Block 3 Chemical Workshop	5,957.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532547
G11207-1 (4)	11,409.70	Block 2 Factory	24,845.10	Industrial	Shen Fang Di Zi Di	4 July 2012
					No 6000527825
G11207-1 (5)	6,123.00	Block 1 Dormitory	17,932.05	Industrial ancillary	Shen Fang Di Zi Di	4 July 2012
					No 6000527795

1. The maximum permitted plot ratio of the property was not provided in the title documents. According to your specific terms of instruction, we have assumed that the property has no remaining plot ratio and we have valued the property in existing state with the benefit of immediate vacant possession without taken into account the remaining plot ratio, if any.

2. In addition, we have prepared our valuation based on the following assumption:

3. (i) the property has a proper legal title;

4. (ii) all land premium, costs of public utility services and relocation costs have been settled in full;

5. (iii) the design and construction of the property are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

6. (iv) the property can be freely disposed of to local or oversea purchasers.

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VALUATION REPORT

APPENDIX II – 4

Our Ref: CV/CL/GL/JK/12684(8-9)

The Directors World Houseware (Holdings) Limited Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung, New Territories Hong Kong

24 July 2017

Dear Sirs

VALUATION OF (I) THE SHOPPING MALL PORTION OF PROPOSED DEVELOPMENT; AND (II) PORTION OF RESIDENTIAL BUILDING BLOCK 1D OF PROPOSED DEVELOPMENT TO BE ERECTED THEREON A PARCEL OF LAND NUMBERED G11207-1 LOCATED AT LOT YANGMUZHANG, LIULIAN, PINGSHAN TOWN, SHENZHEN, GUANGDONG PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA (THE “PROPERTIES”)

In accordance with your instructions for us to value the market value of the properties held by World Houseware (Holdings) Limited (hereinafter referred to as the “Company”) in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values, which are gross development values, of the properties as at 31 October 2016 for internal reference purpose. The definition of gross development value is stated in the following section.

BASIS OF VALUATION

Our valuation is our opinion of the market value of the properties which we would define as intended to mean “the estimated amount for which an asset or liability, should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

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VALUATION REPORT

APPENDIX II – 4

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a properties is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

Gross Development Value (“GDV”) which is defined as the aggregate market value of all saleable units of a property assuming that the property has been fully completed as at the Date of Valuation without taking into account any outstanding/incurred construction costs nor development costs. In determining the GDV of the Properties, we have assumed that the Properties were fully complete as at the Date of Valuation in accordance with the building plans and latest development scheme provided to us and with the benefit of immediate vacant possession.

VALUATION METHODOLOGIES

We have valued the properties by Direct Comparison Approach with reference to comparable sale evidences available in the market.

TITLE DOCUMENTS AND ENCUMBRANCES

We have been provided with extracts of documents in relation to the title to the properties. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. We have relied on the information provided by the Company. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation.

No allowance has been made in our report for any charges, mortgages or amounts owing on the properties nor for any expenses or taxation which may be incurred in affecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

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VALUATION REPORT

APPENDIX II – 4

SOURCE OF INFORMATION

We have accepted advice given by the Company on such matters as planning approvals or statutory notices, easements, tenure, ownership, identification of the properties, building age, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the correctness of the site and floor areas of the properties and we have assumed that the site and floor areas shown on the documents handed to us are correct. We were also advised by the Company that no material facts have been omitted from the information provided.

INSPECTION AND STRUCTURAL CONDITION

We have inspected the properties and the inspection was carried out by our Joseph Kwan in November 2016. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services, etc for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, and we did not note any serious defects. We are not, however, able to report that the properties are free from rot, infestation or any other structural defects, nor were any tests carried out to any of the services.

IDENTITY OF PROPERTIES TO BE VALUED

We exercised reasonable care and skill (but will not have an absolute obligation to you) to ensure that the properties, identified by the property addresses in your instructions, are the properties inspected by us and contained within our valuation report. If there is ambiguity as to the property addresses, or the extent of the properties to be valued, this should be drawn to our attention in your instructions or immediately upon receipt of our report.

ENVIRONMENTAL ISSUES

We are not environmental specialists and therefore we have not carried out any scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor have we undertaken searches of public archives to seek evidence of past activities that might identify potential for contamination. In the absence of appropriate investigations and where there is no apparent reason to suspect potential for contamination, our valuation is prepared on the assumption that the properties is unaffected. Where contamination is suspected or confirmed, but adequate investigation has not been carried out and made available to us, then the valuation will be qualified.

– 58 –

VALUATION REPORT

APPENDIX II – 4

COMPLIANCE WITH RELEVANT ORDINANCES AND REGULATIONS

We have assumed that the properties had been constructed, occupied and used in full compliance with, and without contravention of any ordinances, statutory requirements and notices except only where otherwise stated. We have further assumed that, for any use of the properties upon which this report is based, any and all required licences, permits, certificates, consents, approvals and authorisations have been obtained, except only where otherwise stated.

CURRENCY

Unless otherwise stated, all monetary amounts stated in our valuation are in Renminbi.

REMARKS

In our valuation, Knight Frank has prepared the valuation based on information and data available to us as at the valuation date. It must be recognised that the real estate market is subject to market fluctuations, while changes in policy direction and social environment could be immediate and have sweeping impact on the real estate market. It should therefore be noted that any market violation, policy and social changes or other unexpected incidents after the valuation date may affect the value of the property.

This report is confidential to the client for the specific purpose to which it refers. It may be disclosed to other professional advisers assisting the client in respect of the purpose, but the client shall not disclose the report to any other person.

Neither the whole nor any part of this letter and valuation certificate nor any reference thereto may be included in any published document, circular or statement nor published in any way whatsoever whether in hard copy or electronically (including on any web-site) without our prior written approval of the form and context in which it may appear.

– 59 –

VALUATION REPORT

APPENDIX II – 4

In accordance with our standard practice, we must state that this report is for the use only of the party to whom it is addressed and no responsibility is accepted to any third party for the whole or any part of its contents.

Our valuation certificates are attached.

Yours faithfully

Gary Lau

Clement W M Leung

MRICS MFin MCIREA MHKIS MRICS RPS (GP) RICS Registered Valuer RICS Registered Valuer Associate Director, Executive Director, China Valuation Head of China Valuation For and on behalf of For and on behalf of Knight Frank Petty Limited Knight Frank Petty Limited

Enc

GL/kl

– 60 –

VALUATION REPORT

APPENDIX II – 4

SUMMARY OF VALUES

Property

GDV as at 31 October 2016

1. Shopping mall portion of proposed development to be erected thereon a parcel of land numbered G11207-1 located at Lot Yangmuzhang, Liulian, Pingshan Town Shenzhen, Guangdong Province The PRC RMB863,600,000 2. Portion of Residential Building Block 1D of proposed development to be erected thereon a parcel of land numbered G11207-1 located at Lot Yangmuzhang, Liulian, Pingshan Town Shenzhen, Guangdong Province The PRC RMB440,500,000 Total: RMB1,304,100,000

– 61 –

VALUATION REPORT

APPENDIX II – 4

VALUATION CERTIFICATE

Property

1. Shopping mall portion of a proposed development to be erected thereon a parcel of land numbered G11207-1 located at Lot Yangmuzhang Liulian, Pingshan Town Shenzhen, Guangdong Province The PRC

Description and tenure

The property comprises shopping mall portion of a proposed composite development (the “Development”) with a total site area of approximately 55,850.80 sq m. According to the latest development scheme as provided, the Development will be developed with residential blocks, retail areas, indemnificatory housing as well as public facilities including greenery area, sport facilities and kindergarten.

Particulars of occupancy

The parcel of land of the Development is currently occupied by an industrial complex.

GDV as at 31 October 2016

RMB863,600,000 (RENMINBI EIGHT HUNDRED SIXTY THREE MILLION AND SIX HUNDRED THOUSAND ONLY) (Please see notes 3 and 4)

The property comprises the proposed 4-storey shopping mall of the Development. The property will be situated at the east portion of the Development, that is the west of Dongzong road and south of Jinbi Road. Breakdown of the approximate planned gross floor area (“GFA”) of the property is listed below.

Description and tenure

Basement Level 1 Level 1 Level 2 Level 3 Total	Approximate Planned GFA (sq m) 14,257.00 9,400.00 9,700.00 9,700.00
	43,057.00

The property will also include 390 nos. of car parking spaces.

The land use rights of the property have been granted a term of 50 years commencing from 9 January 1991 to 8 January 2041 for industrial and ancillary facilities uses.

– 62 –

VALUATION REPORT

APPENDIX II – 4

Notes:

1. Pursuant to two Realty Title Certificates Nos. Shen Fang Di Zi Di 1003340 and 1004592 both issued by People’s Government of Shenzhen dated 1 February 1996, the land use rights of Lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m were granted to Welidy Limited（佳多榮有限公司）for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial use.

2. Pursuant to five Realty Title Certificates all issued by Shenzhen Real Estate Ownership Registration Centre, the land use rights of five parcels of land with a total site area of 28,952.10 sq m were granted to and the building ownership of various buildings erected upon is vested in World Plastic Mat (Baoan) Company Limited（世界塑 膠餐墊（寶安）有限公司）for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial and warehouse use. Details of the Real Estate Title Certificates are listed as follows:

					Real
					Estate Title
Lot number	Site Area	Building Name	Gross Floor Area	Building Use	Certificate No	Issuance Date
	(sq m)		(sq m)
G11207-0165	899.70	Block 5 Warehouse	1,181.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532536
G11207-1 (1)	3,967.50	Block 4 Power Plant	1,032.12	Industrial	Shen Fang Di Zi Di	27 November 2012
					No 6000548625
G11207-1 (2)	6,552.20	Block 3 Chemical Workshop	5,957.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532547
G11207-1 (4)	11,409.70	Block 2 Factory	24,845.10	Industrial	Shen Fang Di Zi Di	4 July 2012
					No 6000527825
G11207-1 (5)	6,123.00	Block 1 Dormitory	17,932.05	Industrial ancillary	Shen Fang Di Zi Di	4 July 2012
					No 6000527795

1. According to the specific term of instruction by the Company, we are instructed to value the GDV of the property. Hence, in the course of our valuation, we have assumed that the property has been constructed and completed according to the latest development scheme provided to us as at the date of valuation and all costs of demolition and construction have been fully settled. Moreover, we have assumed in our valuation that the latest development scheme of the Development will be approved and any required approval and permit of the proposed development will be obtained.

2. As advised, portion of Basement Level 1 of the property with a planned gross floor area of approximately 8,000 sq m and 390 nos. of car parking spaces will not acquire the relevant title document; in the course of our valuation, we have assigned no commercial value to this portion of the property.

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VALUATION REPORT

APPENDIX II – 4

1. In addition, we have prepared our valuation based on the following assumption:

2. (i) the properties have proper legal titles except the above-mentioned portion in Note (4);

3. (ii) all land premium, costs of public utility services and relocation costs have been settled in full;

4. (iii) the design and construction of the properties are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

5. (iv) the properties can be freely disposed of to local or oversea purchasers.

– 64 –

VALUATION REPORT

APPENDIX II – 4

Property

Description and tenure

Particulars of GDV as at occupancy 31 October 2016

1. Portion of Block The property comprises portion of 1D of a proposed residential building of a proposed development to be composite development (the erected thereon “Development”) with a total site area a parcel of land of approximately 55,850.80 sq m. numbered G11207-1 According to the latest development located at Lot scheme as provided, the Development Yangmuzhang will be developed with residential Liulian, Pingshan blocks, retail areas, indemnificatory Town Shenzhen, housing as well as public facilities Guangdong Province including greenery area, sport The PRC facilities and kindergarten.

The parcel of land of the RMB440,500,000 Development is currently (RENMINBI FOUR occupied by an industrial HUNDRED FORTY complex. MILLION AND FIVE HUNDRED THOUSAND ONLY) (Please see note 3)

• The property comprises portion of Level 23 to Level 48 of Block 1D, a residential building of the Development with a total planned gross floor area of approximately 11,000 sq m. Block 1D will be located at the west of Dahong Road.

The land use rights of the property have been granted a term of 50 years commencing from 9 January 1991 to 8 January 2041 for industrial and ancillary facilities uses.

Notes:

1. Pursuant to two Realty Title Certificates nos. Shen Fang Di Zi Di 1003340 and 1004592 both issued by People’s Government of Shenzhen dated 1 February 1996, the land use rights of lots G11207-1(6) and G11207-1(7) with a total site area of 40,128.20 sq m were granted to Welidy Limited（佳多榮有限公司）for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial use.

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VALUATION REPORT

APPENDIX II – 4

1. Pursuant to five Realty Title Certificates all issued by Shenzhen Real Estate Ownership Registration Centre, the land use rights of five parcels of land with a total site area of 28,952.10 sq m were granted to and the building ownership of various buildings erected upon is vested in World Plastic Mat (Baoan) Company Limited（世界塑 膠餐墊（寶安）有限公司）for a land use term of 50 years from 9 January 1991 to 8 January 2041 for industrial and warehouse use. Details of the Real Estate Title Certificates are listed as follows:

					Real
					Estate Title
Lot number	Site Area	Building Name	Gross Floor Area	Building Use	Certificate No	Issuance Date
	(sq m)		(sq m)
G11207-0165	899.70	Block 5 Warehouse	1,181.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532536
G11207-1 (1)	3,967.50	Block 4 Power Plant	1,032.12	Industrial	Shen Fang Di Zi Di	27 November 2012
					No 6000548625
G11207-1 (2)	6,552.20	Block 3 Chemical Workshop	5,957.60	Industrial	Shen Fang Di Zi Di	8 August 2012
					No 6000532547
G11207-1 (4)	11,409.70	Block 2 Factory	24,845.10	Industrial	Shen Fang Di Zi Di	4 July 2012
					No 6000527825
G11207-1 (5)	6,123.00	Block 1 Dormitory	17,932.05	Industrial ancillary	Shen Fang Di Zi Di	4 July 2012
					No 6000527795

1. According to the specific term of instruction by the Company, we are instructed to value the GDV of the property. Hence, in the course of our valuation, we have assumed that the property has been constructed and completed according to the latest development scheme provided to us as at the date of valuation and all costs of demolition and construction have been fully settled. Moreover, we have assumed in our valuation that the latest development scheme of the Development will be approved and any required approval and permit of the proposed development will be obtained.

2. In addition, we have prepared our valuation based on the following assumption:

3. (i) the properties have proper legal titles;

4. (ii) all land premium, costs of public utility services and relocation costs have been settled in full;

5. (iii) the design and construction of the properties are in compliance with the local planning regulations and have been approved by the relevant government authorities; and

6. (iv) the properties can be freely disposed of to local or oversea purchasers.

– 66 –

GENERAL INFORMATION

APPENDIX III

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 Group. 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 omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors or the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or were required pursuant to section 352 of the SFO to be entered in the register referred to therein; or were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:

Name of directors Personal interests Lee Tat Hing 14,256,072 Fung Mei Po 58,121,087 Lee Chun Sing 27,815,830 Lee Kwok Sing Stanley 2,481,280 Lee Pak Tung 4,466,448 Hui Chi Kuen Thomas 1,300,000 Chan Lai Kuen Anita 3,002,623 Kwong Bau To 3,103

Number of issued ordinary shares held Family interests Corporate interests Other interests Total Percentage of the issued share capital of the Company 58,121,087 (a) 28,712.55 (c) 280,895,630 (d) 381,985,340 50.45% 42,968,623 (b) – 280,895,630 (d) 381,985,340 50.45% 2,526,000 (e) – 280,895,630 (d) 311,237,460 41.11% – – 280,895,630 (d) 283,376,910 37.43% – – – 4,466,448 0.60% – – – 1,300,000 0.17% – – – 3,002,623 0.40% – – – 3,103 –

Notes:

• (a) Mr. Lee Tat Hing is the husband of Madam Fung Mei Po whose personal interests are therefore also the family interests of Mr. Lee Tat Hing.

• (b) Madam Fung Mei Po is the wife of Mr. Lee Tat Hing whose personal and corporate interests are therefore also the family interests of Madam Fung Mei Po.

• (c) The shares are held by Lees International Investments Limited, a company wholly owned by Mr. Lee Tat Hing.

– 67 –

GENERAL INFORMATION

APPENDIX III

• (d) The shares are held by Goldhill Profits Limited which is wholly owned by a discretionary trust of which Mr. Lee Tat Hing, Mr. Lee Chun Sing, Madam Fung Mei Po and Mr. Lee Kwok Sing Stanley are discretionary objects.

• (e) The shares are held by Madam Lai Lai Wah, the wife of Mr. Lee Chun Sing whose personal interests are also the family interests of Mr. Lee Chun Sing.

As at the Latest Practicable Date, the following directors had personal interests in the deferred non-voting shares of certain subsidiaries of the Company:

		Number of
		deferred
		non-voting
Name of director	Name of subsidiaries	shares held
Fung Mei Po	World Home Linen Manufacturing Company Limited	100
Lee Pak Tung	Hong Kong PVC Placemat Manufacturing Company	25,000
	Limited

The deferred shares do not carry any rights to vote at general meetings of these subsidiaries or to participate in any distributions of profits until the profits of these subsidiaries which are available for dividend exceed HK$10 billion, or to receive a return of capital until a total sum of HK$10 billion has been distributed to the ordinary shareholders of each of these subsidiaries.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company had or was deemed to have any interest or short position in the Shares, underlying Shares and debentures of the Company or any of its associated corporations within the meaning of Part XV of the SFO, which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or which were required pursuant to section 352 of the SFO to be entered in the register referred to therein; or were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transaction by Directors of Listed Companies.

– 68 –

GENERAL INFORMATION

APPENDIX III

Substantial Shareholders

As at the Latest Practicable Date, the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that, other than the interests in shares disclosed above in respect of the directors of the Company, the Company has not been notified of any other interests representing 5 percent or more of the Company’s issued share capital as at the Latest Practicable Date.

Save as disclosed in this circular, the directors and chief executive of the Company are not aware of any other person who, as at the Latest Practicable Date, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Part XV of the SFO.

Share Options and Directors’ Rights to Acquire Shares or Debentures

The following table discloses the Company’s share option as at the Latest Practicable Date:

				Outstanding
				as at
				the Latest
	Date of grant	Exercise price	Exercisable period	Practicable Date
		HK$
		(Note 1)
Category 1: Directors
Lee Tat Hing	01.09.2015	0.580	01.09.2015 to 31.08.2025	6,500,000
Lee Chun Sing	12.11.2012	0.309	12.11.2012 to 11.11.2022	6,500,000
	01.09.2015	0.580	01.09.2015 to 31.08.2025	3,000,000
Lee Kwok Sing Stanley	12.11.2012	0.309	12.11.2012 to 11.11.2022	4,500,000
	01.09.2015	0.580	01.09.2015 to 31.08.2025	3,000,000
Lee Pak Tung	12.11.2012	0.309	12.11.2012 to 11.11.2022	2,000,000
	01.09.2015	0.580	01.09.2015 to 31.08.2025	500,000
Chan Lai Kuen Anita	12.11.2012	0.309	12.11.2012 to 11.11.2022	1,000,000
	01.09.2015	0.580	01.09.2015 to 31.08.2025	100,000

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APPENDIX III

GENERAL INFORMATION

Date of grant Exercise price Exercisable period HK$ (Note 1) Kwong Bau To 01.09.2015 0.580 01.09.2015 to 31.08.2025 Cheung Tze Man Edward 24.10.2011 0.237 24.10.2011 to 23.10.2021 12.11.2012 0.309 12.11.2012 to 11.11.2022 01.09.2015 0.580 01.09.2015 to 31.08.2025 Tsui Chi Him Steve 24.10.2011 0.237 24.10.2011 to 23.10.2021 12.11.2012 0.309 12.11.2012 to 11.11.2022 01.09.2015 0.580 01.09.2015 to 31.08.2025 Hui Chi Kuen Thomas 01.09.2015 0.580 01.09.2015 to 31.08.2025 Ho Tak Kay 24.10.2011 0.237 24.10.2011 to 23.10.2021 12.11.2012 0.309 12.11.2012 to 11.11.2022 01.09.2015 0.580 01.09.2015 to 31.08.2025 Shang Sze Ming 01.09.2015 0.580 01.09.2015 to 31.08.2025 Category 2: Employees 24.10.2011 0.237 24.10.2011 to 23.10.2021 12.11.2012 0.309 12.11.2012 to 11.11.2022 01.09.2015 0.580 01.09.2015 to 31.08.2025

Outstanding as at the Latest Practicable Date 1,500,000 1,000,000 1,000,000 500,000 600,000 600,000 300,000 300,000 600,000 600,000 300,000 300,000 2,000,000 9,000,000 9,100,000

54,800,000

Note 1: These share options are exercisable, starting from the date of options granted for a period of 10 years.

Other than as disclosed above at no time during the year was the Company or any of its subsidiaries a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

3. DIRECTORS’ INTEREST IN CONTRACTS

• (a) As at the Latest Practicable Date, no Director was materially interested in any contract or arrangement subsisting which is significant in relation to the business of the Group taken as a whole.

• (b) Since the date to which the latest published audited financial statements of the Group were made up, none of the Directors has had any direct or indirect interest in any assets acquired or disposed of or leased to or proposed to be acquired or disposed of by any member of the Group.

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GENERAL INFORMATION

APPENDIX III

4. DIRECTOR’S INTEREST IN COMPETING BUSINESSES

As at the Latest Practicable Date, none of the Directors and their respective associates has an interest in any business which competes or may compete, either directly or indirectly, with the business of the Group or have or may have any other conflict of interest with the Group pursuant to the Listing Rules.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, no Director has entered into a service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation, other than statutory compensation.

6. LITIGATION

As at the Latest Practicable Date, no member of the Group is engaged in any litigation or claims of material importance known to the directors to be pending or threatened against any members of the Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position or prospects of the Group since 31 December 2016, being the date to which latest published audited consolidated financial statements of the Group were made up.

8. MATERIAL CONTRACTS

Save as the Agreement, no other material contract (being contracts not entered into in the ordinary course of business) has been entered into by the Group within the two years immediately preceding the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX III

9. EXPERT AND CONSENT

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

Name Qualification KFPL Professional property surveyors and valuers

As at the Latest Practicable Date, KFPL have given and have not withdrawn their written consents to the issue of this circular with the inclusion herein of their reports references to their names in the form and context in which they appear.

As at the Latest Practicable Date, KFPL did not have any interest, either direct or indirect, in any assets which have been, since 31 December 2016, being the date to which the latest published consolidated financial statements of the Group were made up, acquired or disposed of by the Group nor any shareholding 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 in any member of the Group.

10. MISCELLANEOUS

• (a) There is no contract or arrangement entered into by any member of the Group subsisting at the Latest Practical Date in which any Director is materially interested and which is significant in relation to the business of the Group.

• (b) None of the Directors has any direct or indirect interests in any assets which have been acquired or disposed of by or leased to, which are proposed to be acquired or disposed of by or leased to, the Company or any of its subsidiaries since 30 June 2017, the date to which the latest published audited consolidated financial statements of the Group were made up.

• (c) The Secretary of the Company is Mr. Tsui Chi Yuen, CPA.

• (d) The Company’s Hong Kong branch share register and transfer office is Tricor Secretaries Limited, which is situated at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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GENERAL INFORMATION

APPENDIX III

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during the normal business hours at any weekday (public holidays excepted) at our head office of Flat C, 18th Floor, Bold Win Industrial Building, 16-18 Wah Sing Street, Kwai Chung, New Territories, Hong Kong up to and including 9 November 2017.

• (a) the memorandum of association and bye-laws of the Company;

• (b) the material contracts referred to in the section headed “Material Contracts” of this Appendix;

• (c) the audited consolidated financial statements of the Company and its subsidiaries for the three financial years ended 31 December 2014, 31 December 2015 and 31 December 2016;

• (d) Announcement;

• (e) the Valuation Report;

• (f) the working capital statement on the Company included in this circular; and

• (g) this circular.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [73 x 57] intentionally omitted <==

世界（集團）有限公司 WORLD HOUSEWARE (HOLDINGS) LIMITED (Incorporated in the Cayman Islands with limited liability) (Stock Code: 713)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of World Houseware (Holdings) Limited (the “Company”) will be held at the Lotus Room, 6th Floor, The Marco Polo Hongkong Hotel, Harbour City, Kowloon, Hong Kong at 4:30 p.m. on Thursday, 9 November 2017 for the purpose of considering and if thought fit, passing the following resolution as ordinary resolution of the Company:

“ THAT :

• (a) the supplementary agreement dated 16 August 2017 (the “Agreement”), a copy of which has been produced to the EGM marked “A” and initialed by the Chairman of the meeting for the purpose of identification) entered between two wholly owned subsidiaries of the Company, Welidy Limited (“Welidy”) and World Plastic Mat (Baoan) Company Limited (“World Co. (Baoan)”) with Shenzhen Fantasia Real Estate Co., Ltd (“SFRECL”), Shenzhen Zhifu Real Estate Investment Development Co., Ltd and Fantasia Group (China) Co., Ltd. in which the parties have designated SFRECL as the executing entity（實施主體）of the Urban Renewal Project to obtain the approval from the PRC Government for the redevelopment and reconstruction works contemplated under the Urban Renewal Project, including but not limited to the demolition of the existing properties, the design, construction, renovation, completion, and the payment of all costs in connection thereto (including but not limited to the expenses incurred in connection with demolition, reconstruction, renovation, land premium and relevant tax and expenses) and apply to obtain the title certificates of the re-developed Relevant Properties and hand over the same to Welidy and World Co. (Baoan). Welidy and World Co. (Baoan) will provide to SFRECL the Existing Land which is being occupied by World Co. (Baoan) as its manufacturing factory in exchange for the Relevant Properties as replacement and monetary compensation under the Agreement; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (b) the directors of the Company (the “Directors”) be and are hereby authorized to do all such acts and things, and to sign and execute all such further documents and to take all steps as the Directors may in their absolute discretion consider necessary, appropriate, desirable or expedient or implement and/or give full effect to or in connection with the Agreement and the transactions contemplated thereunder.”

By Order of the Board Lee Tat Hing Chairman

Hong Kong, 25 October 2017

Registered office:

P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Head office and principal place of business in Hong Kong: Flat C, 18th Floor Bold Win Industrial Building 16-18 Wah Sing Street Kwai Chung New Territories Hong Kong

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, subject to the provisions of the Articles of Association, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which such proxy is so appointed.

2. A form of proxy for use at the meeting is enclosed. To be valid, this form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited at the office of the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited of Level 22, Hopewell Centre, 183 Queen’s Road East,Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment hereof.

3. The register of members of the Company will be closed from 2 November 2017 to 9 November 2017, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the right to attend and vote at the meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on 1 November 2017.

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