Asiasec Properties Limited — Proxy Solicitation & Information Statement 2019

Jan 24, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Lippo China Resources Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code: 156)

VERY SUBSTANTIAL DISPOSAL

DISPOSAL OF SUBSIDIARIES NOTICE OF EXTRAORDINARY GENERAL MEETING

A letter from the Board is set out on pages 7 to 23 of this circular.

A notice convening the EGM to be held at Harcourt Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Thursday, 14 February 2019 at 11:00 a.m. or any adjourned meeting thereof to approve matters referred to in this circular is set out on pages N-1 and N-2 of this circular. Whether or not you are able or intend to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at 40th Floor, Tower Two, Lippo Centre, 89 Queensway, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the EGM or any adjourned meeting thereof should Shareholders so desire.

25 January 2019

CONTENTS

			Page
Definitions . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			7
Appendix I	—	Financial information of the Group . . . . . . . . . . . . . . . .	I-1
Appendix IIA	—	Financial information of APM . . . . . . . . . . . . . . . . . . . .	IIA-1
Appendix IIB	—	Financial information of CM . . . . . . . . . . . . . . . . . . . . .	IIB-1
Appendix IIC	—	Financial information of APMSB Group . . . . . . . . . . .	IIC-1
Appendix III	—	Unaudited pro forma financial information
		of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	—	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . .			N-1

DEFINITIONS

In this circular, unless otherwise defined or the context otherwise requires, the following terms and expressions shall have the following meanings:

• “Associated Corporation(s)” has the same meaning ascribed to such term under Part XV of the SFO;

• “APFP” Auric Pacific Food Processing Sdn. Bhd., a company incorporated in Malaysia and a direct wholly-owned subsidiary of APMSB;

• “APGL” Auric Pacific Group Limited, a company incorporated in Singapore and an approximately 50.3% indirect subsidiary of the Company;

• “APGL Group” APGL and its subsidiaries;

• “APM” Auric Pacific Marketing Pte. Ltd., a company incorporated in Singapore and an indirect wholly-owned subsidiary of APGL;

• “APMSB” Auric Pacific (M) Sdn. Bhd., a company incorporated in Malaysia and a direct wholly-owned subsidiary of APGL;

• “APMSB Consideration” the consideration paid and payable by DKSH Malaysia to APGL for the sale and purchase of the APMSB Sale Shares;

• “APMSB Disposal Agreement”

• the agreement dated 21 December 2018 entered into by APGL and DKSH Malaysia in respect of the sale and purchase of the APMSB Sale Shares;

• “APMSB Group”

• APMSB and its subsidiaries;

• “APMSB Sale Shares”

• 1,000,000 ordinary shares in, representing the entire issued shares of, APMSB;

• “Board”

• the board of Directors of the Company;

• “Business Day”

a day on which banks are open for business in Hong Kong, Malaysia and Singapore excluding Saturdays, Sundays and public holidays in Hong Kong, Malaysia and Singapore (as applicable);

– 1 –

DEFINITIONS

• “close associates”

• has the same meaning ascribed to such term under the Listing Rules;

• “CM”

• Centurion Marketing Pte. Ltd., a company incorporated in Singapore and an indirect wholly-owned subsidiary of APGL;

• “Company”

• Lippo China Resources Limited 力寶華潤有限公司, a company incorporated in Hong Kong with limited liability whose shares are listed on the Stock Exchange and an approximately 74.99% indirect subsidiary of Lippo;

• “Completion” completion of the Disposal Agreements subject to and pursuant to the terms and conditions of the Disposal Agreements;

• “Completion Date” the date, being a Business Day, on which Completion actually takes place;

• “Conditions Precedent”

• the conditions precedent to the completion of the Disposal Agreements as set out in the paragraphs headed “Conditions Precedent of the Singapore Disposal Agreement” and “Conditions Precedent of the APMSB Disposal Agreement” in this circular;

• “Connected Persons”

• has the same meaning ascribed to such term under the Listing Rules;

• “Consideration”

• the total consideration for the sale and purchase of the Disposal Group Sale Shares;

• “Controlling Shareholder”

• has the same meaning ascribed to such term under the Listing Rules;

• “Directors”

• directors of the Company;

• “Disposal”

the disposal of the Disposal Group Sale Shares, representing the entire issued shares of each Disposal Company pursuant to the Disposal Agreements;

• “Disposal Agreements”

• the Singapore Disposal Agreement and the APMSB Disposal Agreement;

– 2 –

DEFINITIONS

• “Disposal Companies”

• “Disposal Group Sale Shares”

• “DKSH Holding”

• “DKSH Malaysia”

• “DKSH Singapore”

• “EGM”

• “Group”

• “HKC”

• “Hong Kong”

• “Hong Kong Companies Ordinance”

• “IP Rights”

• “IP Rights Assignment”

• APM, CM and APMSB (each a “Disposal Company”);

• the Singapore Subsidiaries Sale Shares and the APMSB Sale Shares;

• DKSH Holding Ltd., a company incorporated in Zurich, Switzerland whose shares are listed on the SIX Swiss Exchange, and the holding company of DKSH Singapore and DKSH Malaysia;

• DKSH Holdings (Malaysia) Berhad, a company incorporated in Malaysia whose shares are listed on the Bursa Malaysia Securities Berhad;

• DKSH Holding (S) Pte. Ltd., a company incorporated in Singapore and an indirect wholly-owned subsidiary of DKSH Holding;

• an extraordinary general meeting of the Company to be convened to consider and, if thought fit, to approve the Disposal Agreements and the transactions contemplated thereunder;

• the Company and its subsidiaries;

• Hongkong Chinese Limited (香港華人有限公司*), a company incorporated in Bermuda with limited liability whose shares are listed in the Main Board of the Stock Exchange and an approximately 71.63% indirect subsidiary of Lippo;

• the Hong Kong Special Administrative Region of the PRC;

• Companies Ordinance (Chapter 622 of the Laws of Hong Kong);

• certain trademarks which have been registered (either pending or fully registered) by APGL, some of which are being used in the business of the Disposal Companies and their subsidiaries and some of which are not currently being used in the business of the Disposal Companies and their subsidiaries;

an intellectual property rights assignment agreement dated 21 December 2018 as set out in the paragraph headed “Assignment of IP Rights” in this circular;

– 3 –

DEFINITIONS

• “Latest Practicable Date”

• 18 January 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular;

• “Lippo”

• Lippo Limited 力寶有限公司, a company incorporated in Hong Kong with limited liability whose shares are listed on the Stock Exchange;

• “Lippo Capital” Lippo Capital Limited, a company incorporated in Cayman Islands with limited liability and a Controlling Shareholder of Lippo;

• “Lippo Capital Group”

• Lippo Capital Group Limited, a company incorporated in Hong Kong with limited liability;

• “Lippo Capital Holdings”

• Lippo Capital Holdings Company Limited, a company incorporated in the British Virgin Islands with limited liability;

• “Lippo Group”

• Lippo and its subsidiaries, which includes the Group;

• “Lippo Shareholders”

• shareholders of Lippo;

• “Listing Rules” or “Rule”

• the Rules Governing the Listing of Securities on the Stock Exchange;

• “Long Stop Date”

• 5:00 p.m. on the date falling three months after the date of the Disposal Agreements, which will be automatically extended to four months after the date of the Disposal Agreements upon fulfilment of certain conditions or otherwise extended in accordance with the Disposal Agreements;

• “Malaysia”

• the Federation of Malaysia;

• “Manufacturing Licence”

• a licence to engage in a manufacturing activity under the laws of Malaysia;

• “Model Code”

the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 to the Listing Rules;

– 4 –

DEFINITIONS

• “NAV” net asset value, computed based on total assets less total liabilities, which shall exclude any amount due from/to the immediate holding company;

• “PRC” the People’s Republic of China;

• “Purchasers” DKSH Singapore and DKSH Malaysia;

• “Remaining Group” the Group, other than APM, CM and the APMSB Group;

• “Restricted Countries” Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Philippines, Vietnam and any other territory in which the IP Rights has been registered or in respect of which an application for registration has been made and each such registration or application is valid as at the date of the Disposal Agreements;

• “SFO”

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

• “SGX-ST”

• Singapore Exchange Securities Trading Limited;

• “Share(s)” share(s) in the Company;

• “Shareholder(s)” holder(s) of Shares;

• “Singapore” the Republic of Singapore;

• “Singapore Disposal Agreement”

• the agreement dated 21 December 2018 entered into by APGL and DKSH Singapore in respect of the sale and purchase of the Singapore Subsidiaries Sale Shares;

• “Singapore Disposal Deposit” the deposit in the amount of S$10,000,000 (equivalent to approximately HK$57,131,000);

• “Singapore Subsidiaries”

APM and CM;

• “Singapore Subsidiaries the consideration paid and payable by DKSH Singapore Consideration” to APGL for the sale and purchase of the Singapore Subsidiaries Sale Shares;

– 5 –

DEFINITIONS

• “Singapore Subsidiaries 10,000,000 ordinary shares in, representing the entire Sale Shares” issued shares of, APM and 500,000 ordinary shares in, representing the entire issued shares of, CM;

• “Skyscraper” Skyscraper Realty Limited, a company incorporated in the British Virgin Islands with limited liability and a Controlling Shareholder of the Company;

• “Stock Exchange” The Stock Exchange of Hong Kong Limited; “U.S.” or “United States” the United States of America; “Warehouse” a warehouse located in Singapore which is owned by APM;

• “Warehouse Letters” the letters in relation to the transfer of the Warehouse each signed by APM and a wholly-owned subsidiary of APGL prior to the entering of the Disposal Agreements;

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “RM” Malaysian Ringgit, the lawful currency of Malaysia; “RMB” Renminbi, the lawful currency of the PRC; “S$” Singapore dollars, the lawful currency of Singapore; “THB” Thai Bahts, the lawful currency of Thailand; “US$” United States dollars, the lawful currency of the United States; and

• “%” per cent.

• For identification purpose only

Note:

• (1) For the purpose of illustration only and unless otherwise stated, conversion of S$ into HK$ in this circular is based on the exchange rate of S$1.00 to HK$5.7131 and conversion of RM into HK$ in this circular is based on the exchange rate of RM1.00 to HK$1.8878. Such conversions should not be construed as a representation that any amount has been, could have been, or may be, exchanged at these or any other rates.

• (2) Certain English translation of Chinese names used in this circular are included for information purpose only and should not be relied upon as the official translation of such Chinese names.

– 6 –

LETTER FROM THE BOARD

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LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

Executive Directors:

Dr. Stephen Riady (Chairman) Mr. John Luen Wai Lee, BBS, JP (Chief Executive Officer) Mr. James Siu Lung Lee

Registered Office: 40th Floor Tower Two Lippo Centre 89 Queensway Hong Kong

Non-executive Director:

Mr. Leon Nim Leung Chan

Independent Non-executive Directors:

Mr. Edwin Neo Mr. King Fai Tsui Mr. Victor Ha Kuk Yung

25 January 2019

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL

DISPOSAL OF SUBSIDIARIES NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference was made to the joint announcement made by the Company and Lippo on 21 December 2018 relating to the Disposal.

The purpose of this circular is (a) to provide you with further information in relation to the Disposal and the transactions contemplated under the Disposal Agreements, and (b) to give you notice of the EGM at which an ordinary resolution will be proposed to approve the Disposal Agreements and the transactions contemplated thereunder.

– 7 –

LETTER FROM THE BOARD

DISPOSAL AGREEMENTS

On 21 December 2018, APGL, an indirect non-wholly owned subsidiary of the Company and the Purchasers entered into the Disposal Agreements, pursuant to which, APGL conditionally agreed to sell or procure the sale of, and the Purchasers conditionally agreed to purchase, the Disposal Group Sale Shares, representing the entire issued shares of each of the Disposal Companies for the aggregate initial consideration of approximately S$218,400,000 (equivalent to approximately HK$1,247,741,000), subject to adjustments as stated below.

Summarised below are the principal terms of the Disposal Agreements:

THE SINGAPORE DISPOSAL AGREEMENT

Date: 21 December 2018

Parties: (1) APGL, as the seller; and (2) DKSH Singapore, as the purchaser.

Assets to be disposed

Subject to the terms and conditions of the Singapore Disposal Agreement, APGL has conditionally agreed to procure the sale of, and DKSH Singapore has conditionally agreed to acquire, the Singapore Subsidiaries Sale Shares, representing the entire issued shares of each of APM and CM, free from all encumbrances and together with all rights attaching thereto as at the Completion Date.

The assets of APM consist of, among other things, the Warehouse, which has a net book value in the amount of approximately S$1,661,000 (equivalent to approximately HK$9,489,000). However, as APGL and DKSH Singapore have agreed to exclude the Warehouse from the Disposal, prior to the entering of the Disposal Agreements, a wholly-owned subsidiary of APGL and APM have signed the Warehouse Letters with the effect that the Warehouse may be transferred to a company in the APGL Group or, at the election of APGL, a third party buyer, in the future for the consideration payable to APM equivalent to the net book value of the Warehouse of approximately S$1,661,000 (equivalent to approximately HK$9,489,000). Under the terms of the Singapore Disposal Agreement, subject to the Completion and upon the completion of the transfer of the Warehouse in accordance with the Warehouse Letters, DKSH Singapore will pay APGL an amount equivalent to the consideration of the Warehouse of approximately S$1,661,000 (equivalent to approximately HK$9,489,000) less other costs and deductions as set out in the Singapore Disposal Agreement.

– 8 –

LETTER FROM THE BOARD

The Warehouse Letters are not inter-conditional with the Disposal Agreements and as the Warehouse Letters are between companies within the APGL Group, the transactions contemplated therein do not constitute a notifiable transaction for the Company.

Singapore Subsidiaries Consideration

The consideration for the Singapore Subsidiaries Sale Shares shall be the Singapore Subsidiaries Consideration which shall be payable by DKSH Singapore to APGL in cash in the following manner:

• (a) the Singapore Disposal Deposit, which shall be paid into an escrow account not later than one month after the date of the Singapore Disposal Agreement; and

• (b) an amount calculated as follows:

• (i) the initial consideration of S$60,726,000 (equivalent to approximately HK$346,934,000); less

• (ii) the estimated net debt of the Singapore Subsidiaries to be calculated based on total debt and debt-like items less total cash and cash equivalents by reference to a certain set of monthly management accounts prior to Completion (and if the estimated net debt is a negative figure, the difference will be added to the initial consideration as set out above); plus

• (iii) the estimated net working capital of the Singapore Subsidiaries to be calculated based on total current assets less total current liabilities (both excluding any item which has been included in (ii) above) by reference to a certain set of monthly management accounts prior to Completion (and if the estimated net working capital is a negative figure, the difference will be deducted from the initial consideration); less

• (iv) the Singapore Subsidiaries reference of net working capital of approximately S$23,512,000 (equivalent to approximately HK$134,326,000); less

• (v) any adjustments in relation to consents, waivers and regulatory approvals which shall not exceed approximately S$17,287,000 (equivalent to approximately HK$98,762,000); less

• (vi) the Singapore Disposal Deposit (which shall be released to APGL from the escrow account subject to any adjustments under the Singapore Disposal Agreement);

shall be payable on the Completion Date.

– 9 –

LETTER FROM THE BOARD

The net debt of the Singapore Subsidiaries as at 30 September 2018 was approximately S$4,827,000 (equivalent to approximately HK$27,577,000).

The net working capital of the Singapore Subsidiaries as at 30 September 2018 calculated in accordance with the Singapore Disposal Agreement was approximately S$23,512,000 (equivalent to approximately HK$134,326,000).

The Company does not expect that there will be any material change to the amount of net debt and the net working capital balance of the Singapore Subsidiaries as at Completion.

The Singapore Subsidiaries Consideration shall be adjusted so that the final consideration to be paid for the Singapore Subsidiaries Sale Shares shall be adjusted based on the actual net debt and actual working capital of the Singapore Subsidiaries as at Completion.

Any adjustment in the Singapore Subsidiaries Consideration upwards or downwards post-Completion shall be calculated within 45 days after the Completion Date and settled by DKSH Singapore or APGL (as the case may be) in cash within five Business Days thereafter.

The Singapore Subsidiaries Consideration was determined after arm’s length negotiations between APGL and DKSH Singapore with reference to the earnings before interest, taxes, depreciation and amortization of the Singapore Subsidiaries and adjusted by the net debt and normalized working capital.

Conditions Precedent of the Singapore Disposal Agreement

Completion of the Singapore Disposal Agreement shall be conditional upon, among others:

• (i) the approvals of the Shareholders and the Lippo Shareholders for the entering into by APGL of the Singapore Disposal Agreement and the transactions contemplated therein having been obtained and remaining in full force and effect as at Completion;

• (ii) all necessary consents or waivers as required from the parties with whom the Singapore Subsidiaries have entered into certain key distributions agreement in relation to the change of control of the Singapore Subsidiaries and the entering into of the Singapore Disposal Agreement;

• (iii) there shall not have occurred and be continuing any material adverse event since the date of the Singapore Disposal Agreement;

– 10 –

LETTER FROM THE BOARD

• (iv) there having been no decree, determination, injunction, judgment or other order (which is final and non-appealable) issued by any court or governmental authority of competent jurisdiction which has the effect of restraining or otherwise prohibiting consummation of the transactions contemplated in the Singapore Disposal Agreement and which remains in force and effect as at the Completion Date;

• (v) there shall not have occurred and be continuing any breach of certain warranties in any material respect; and

• (vi) obtaining certain regulatory approvals in relation to, among others, the change of control of the Singapore Subsidiaries.

If on or prior to the Long Stop Date, any of the above Conditions Precedent is not satisfied or is incapable of satisfaction and such condition has not been waived in accordance with the Singapore Disposal Agreement, the party (in case of non-compliance of the other party) shall be entitled to terminate the Singapore Disposal Agreement.

THE APMSB DISPOSAL AGREEMENT

Date: 21 December 2018

Parties: (1) APGL, as the seller; and

• (2) DKSH Malaysia, as the purchaser.

Assets to be disposed

Subject to the terms and conditions of the APMSB Disposal Agreement, APGL has conditionally agreed to sell, and DKSH Malaysia has conditionally agreed to acquire, the APMSB Sale Shares, representing the entire issued shares of APMSB, free from all encumbrances and together with all rights attaching thereto as at the Completion Date.

APMSB Consideration

The consideration for the APMSB Sale Shares shall be the APMSB Consideration which shall be payable by DKSH Malaysia to APGL in cash on the Completion Date in an amount calculated as follows:

• (i) the initial consideration of S$157,674,000 (equivalent to approximately HK$900,807,000); less

– 11 –

LETTER FROM THE BOARD

• (ii) the estimated net debt of APMSB to be calculated based on total debt and debt-like items less total cash and cash equivalents by reference to a certain set of monthly management accounts prior to Completion (and if the estimated net debt is a negative figure, the difference will be added to the initial consideration as set out above); plus

• (iii) the estimated net working capital of APMSB to be calculated based on total current assets less total current liabilities (both excluding any item which has been included in (ii) above) by reference to a certain set of monthly management accounts prior to Completion (and if the estimated net working capital is a negative figure, the difference will be deducted from the initial consideration); less

• (iv) the APMSB reference of net working capital of approximately S$26,062,000 (equivalent to approximately HK$148,895,000); less

• (v) any adjustments in relation to consents and waivers which shall not exceed approximately S$15,767,000 (equivalent to approximately HK$90,078,000).

The net debt of APMSB as at 30 September 2018 was approximately S$400,000 (equivalent to approximately HK$2,285,000).

The net working capital of APMSB as at 30 September 2018 calculated in accordance with the APMSB Disposal Agreement was approximately S$26,062,000 (equivalent to approximately HK$148,895,000).

The Company does not expect that there will be any material change to the amount of net debt and the net working capital balance of APMSB as at Completion.

The APMSB Consideration shall be adjusted so that the final consideration to be paid for the APMSB Sale Shares shall be adjusted based on the actual net debt and actual working capital of APMSB as at Completion.

Any adjustment in the APMSB Consideration upwards or downwards post-Completion shall be calculated within 45 days after the Completion Date and settled by DKSH Malaysia or APGL (as the case may be) in cash within five Business Days thereafter.

– 12 –

LETTER FROM THE BOARD

The APMSB Consideration was determined after arm’s length negotiations between APGL and DKSH Malaysia with reference to the earnings before interest, taxes, depreciation and amortization of APMSB and adjusted by the net debt and normalized working capital.

Conditions Precedent of the APMSB Disposal Agreement

Completion of the APMSB Disposal Agreement shall be conditional upon, among others:

• (i) the approvals of the Shareholders, the Lippo Shareholders and the shareholders of DKSH Malaysia for the entering into by APGL or DKSH Malaysia (as the case may be) of the APMSB Disposal Agreement and the transactions contemplated therein having been obtained and remaining in full force and effect as at Completion;

• (ii) the issue of the Manufacturing Licence to APFP;

• (iii) all necessary consents or waivers as required from the parties with whom APMSB has entered into certain key distributions agreement in relation to the change of control of APMSB and the entering into of the APMSB Disposal Agreement;

• (iv) there shall not have occurred and be continuing any material adverse event since the date of the APMSB Disposal Agreement;

• (v) there having been no decree, determination, injunction, judgment or other order (which is final and non-appealable) issued by any court or governmental authority of competent jurisdiction which has the effect of restraining or otherwise prohibiting consummation of the transactions contemplated in the APMSB Disposal Agreement and which remains in force and effect as at the Completion Date; and

• (vi) there shall not have occurred and be continuing any breach of certain warranties in any material respect.

If on or prior to the Long Stop Date, any of the above Conditions Precedent is not satisfied or is incapable of satisfaction and such condition has not been waived in accordance with the APMSB Disposal Agreement, the party (in case of non-compliance of the other party) shall be entitled to terminate the APMSB Disposal Agreement.

– 13 –

LETTER FROM THE BOARD

OTHER TERMS OF THE DISPOSAL AGREEMENTS

Completion of the Disposal Agreements

Completion shall take place within five Business Days of the satisfaction of the Conditions Precedent and other terms and conditions of the Disposal Agreements. Completion of the Singapore Disposal Agreement and the APMSB Disposal Agreement shall occur simultaneously and are inter-conditional with each other.

Restrictive Covenants in the Disposal Agreements

Under the Disposal Agreements, APGL has agreed to the usual and customary restrictive covenants in relation to non-competition. For a period of three years from the Completion Date and subject to permitted exceptions set out in the Disposal Agreements, APGL shall not, and shall cause its affiliates (which includes the Lippo Group and the Group) not to, own, invest, control, acquire, operate, manage, participate, be concerned in, undertake or engage in, directly or indirectly, the following competing businesses:

• (a) the manufacturing or production of butter or melange for distribution under the IP Rights and, in other cases, in the Restricted Countries; and

• (b) the distribution of certain products including beverages, snacks, confectionary, noodles, toiletries, consumer health products, infant milk formula, canned food, pet food, writing utensils, hair care and cosmetics, but excluding electronics and pharmaceuticals under the IP Rights in the Restricted Countries or, in other cases, in Singapore and Malaysia.

The Group is currently engaged in the businesses that are subject to the restrictive covenants under the Disposal Agreements via the Disposal Companies and under the IP Rights. The Group will cease such businesses upon Completion when the Disposal Companies are disposed of to the Purchasers and the IP Rights are assigned to DKSH Singapore and there will not be any effect on the remaining businesses of the Group arising from such restrictive covenants.

Change of name of the Disposal Companies

Within three months after the Completion Date, the Purchasers shall procure the Disposal Companies to take such action as may be necessary to remove any words or any other letters, words or expressions which might express or imply any association with the “Auric” or “Sunshine” brand and including the removal of any reference to “Auric”, “Auric Pacific” or “Sunshine” in any names, domains or branding used by the Disposal Companies.

– 14 –

LETTER FROM THE BOARD

Indemnities

Under the Disposal Agreements, APGL has agreed to provide the usual customary indemnities in relation to tax, intellectual property, regulatory matters and change of control which are subject to limitations of liability to be calculated in accordance with the Disposal Agreements.

Under the APMSB Disposal Agreement, APGL shall indemnify, hold harmless and keep the DKSH Malaysia fully indemnified in relation to any losses suffered by DKSH Malaysia (or its group companies) if APFP does not obtain the Manufacturing Licence prior to Completion and such condition has been waived by DKSH Malaysia.

ASSIGNMENT OF IP RIGHTS

As part of the transactions contemplated under the Disposal Agreements, on 21 December 2018, APGL and DKSH Singapore entered into the IP Rights Assignment, pursuant to which APGL agreed to sell and assign to, and DKSH Singapore agreed to purchase, the IP Rights and certain domain names owned by APGL.

TRANSITIONAL SERVICES

As part of the transactions contemplated under the Disposal Agreements, APGL and the Purchasers have agreed to negotiate and finalise a transitional services agreement in relation to certain transitional services to be provided by the APGL Group to the Disposal Companies after Completion.

INFORMATION ON THE DISPOSAL COMPANIES

The Disposal Companies are principally engaged in the wholesale distribution and manufacture of food and allied fast-moving consumer products in Singapore and Malaysia.

APGL is a company incorporated in Singapore with limited liability and is an indirect non-wholly owned subsidiary of the Company. APGL and its subsidiaries are principally engaged in wholesale and distribution of fast moving consumer goods, food manufacturing and food retail operations in chains of bakeries, cafés and bistros. The Group, through wholly-owned subsidiaries and non-wholly owned subsidiaries, is interested in approximately 50.3% of the shares in APGL. The remaining interest in the shares of APGL are held by Dr. Stephen Riady, the chairman and executive director of the Company, and his son-in-law, Dr. Andy Adhiwana, through companies owned by each of them respectively.

– 15 –

LETTER FROM THE BOARD

Set out below is the unaudited net profit of APM, unaudited net profit of CM and unaudited consolidated net profit of APMSB prepared in accordance with generally accepted accounting principles in Hong Kong for the twelve months ended 31 March 2017 and 31 March 2018 respectively:

APM

	For the twelve months	For the twelve months	For the twelve months	For the twelve months
	**ended 31 **	March 2017	**ended 31 **	March 2018
	S$’000	HK$’000	S$’000	HK$’000
Net profit before taxation	892	5,096	2,656	15,174
Net profit after taxation	766	4,376	2,442	13,951
CM
	For the twelve months		For the twelve months
	**ended 31 **	March 2017	**ended 31 **	March 2018
	S$’000	HK$’000	S$’000	HK$’000
Net profit before taxation	386	2,205	1,227	7,010
Net profit after taxation	443	2,531	1,086	6,204
APMSB
	For the twelve months		For the twelve months
	**ended 31 **	March 2017	**ended 31 **	March 2018
	RM’000	HK$’000	RM’000	HK$’000
Net profit before taxation	29,897	56,440	30,737	58,025
Net profit after taxation	20,867	39,393	23,399	44,173

As at 30 September 2018, the unaudited net asset value of APM was approximately S$17,503,000 (equivalent to approximately HK$99,996,000), the unaudited net asset value of CM was approximately S$3,990,000 (equivalent to approximately HK$22,795,000); and the unaudited consolidated net asset value of APMSB attributable to its equity holders was approximately RM79,749,000 (equivalent to approximately HK$150,550,000).

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LETTER FROM THE BOARD

INFORMATION ON THE PURCHASERS

DKSH Malaysia is listed on the Bursa Malaysia Securities Berhad and is a subsidiary of DKSH Holding. DKSH Singapore is an indirect wholly-owned subsidiary of DKSH Holding.

DKSH Holding is a leading market expansion services provider with a focus on Asia and its shares are listed on the SIX Swiss Exchange since 2012.

The Board confirms that, to the best of its knowledge, information and belief, having made all reasonable enquiries, the Purchasers and their ultimate beneficial owners are third parties independent of the Company and its Connected Persons.

REASON FOR AND BENEFIT OF THE DISPOSAL

The principal business activity of the Company is investment holding. The principal activities of the subsidiaries, associates, joint ventures and joint operation of the Company include investment holding, property investment, property development, healthcare services, food businesses, property management, mineral exploration, extraction and processing, securities investment, treasury investment and money lending.

The Board undertakes strategic reviews of its assets from time to time with a view to maximising returns to the Shareholders.

The Disposal Companies are principally engaged in the wholesale distribution and manufacture of food and allied fast-moving consumer products such as butter, margarine and related confectionary products in Singapore and Malaysia under house brands such as “SCS” and “Buttercup”. In the past few years, the Disposal Companies have experienced robust financial growth, and now cover nearly 10,000 distribution points and manage over 150 international consumer food brands in the markets of Singapore and Malaysia.

The financial and market performance of the Disposal Companies have been recognised by market participants, generating interest from strategic players that value their market leading positions in the retail and food service channels as well as the strength of market leading brands such as “SCS” and “Buttercup”. However, in view of the Group’s available resources and its business plans going forward to utilise such resources to maximise returns, despite the generally positive prospects of the Disposal Companies, the Board is of the view that committing significant further resources into the Disposal Companies would not be in line with its business plans and strategies since further growth in the Disposal Companies would, for example, involve the allocation of significant resources to enter into new markets which is not in line with the Group’s business strategy of investing in businesses which generate better returns from investments and therefore the next level of growth of the Disposal Companies that may be achieved is not commensurate with the amount of resources that would have to be committed.

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LETTER FROM THE BOARD

In addition, the Disposal Companies, that largely serve the roles of intermediaries between brand owners and retailers, are threatened by disintermediation, which in turn affects the profit margins and returns from investments. Furthermore, the majority of the Disposal Companies’ business lacks strong consumer-facing brands that can command a premium from consumers, which hinders the level of growth that can be achieved and the level of return from investments.

In response to active approaches from various parties for a strategic stake in the Disposal Companies, APGL ran a formal process to solicit interest from potential purchasers and received numerous offers in relation to the Disposal Companies. The offer received from DKSH Holding is attractive and reflects a premium for the business’ growth potential as well as the synergies that can be derived from a single platform with increased economies of scale. Additionally, DKSH Holding’s track record, resources, foot print and investment commitment position the Disposal Companies well for the next level of growth which APGL is not able to match, given a lack of comparable regional scale, without committing considerable resources (as discussed above).

The Consideration payable by the Purchasers is attractive with a price-earning ratio of approximately 16 based on the latest unaudited monthly management accounts of the Disposal Companies.

In view of the above and the basis of determination of the Consideration (including the expected gain from the Disposal as stated below), the Board considers that the terms of the Disposal Agreements (including the Consideration) are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole.

Upon Completion, the Disposal Companies will cease to be subsidiaries of the Company and the results, assets and liabilities of the Disposal Companies will cease to be consolidated into the accounts of the Company.

REMAINING BUSINESSES OF THE GROUP

Upon Completion, the remaining food businesses in the Group will mainly comprise manufacturing of bakery products, operation of food courts in Singapore and Malaysia and food retail in chains of bakeries, cafés and bistros in Singapore and Hong Kong.

The manufacturing of bakery products operates under the “Sunshine” bakery business (“Sunshine Bakery Business”), the key brands of which are “Sunshine” and “Top-One” which are sold in over 3,000 distribution points and outlets from its manufacturing facility in Singapore. The Sunshine Bakery Business has a well-recognized consumer brand in Singapore, a strong market position and a reputation for healthy products. This brand positioning can be extended to other markets with a growing middle class and increased consumption of healthy baked goods, providing further growth opportunities.

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LETTER FROM THE BOARD

The food retail business operates under the brand of “Food Junction” (“Food Junction Business”). Food Junction is a leading modern-themed food court operator offering affordable dining experience with diverse dining options set in chic and relaxing interiors. The increased out-of-home dining and convenience trends serve as drivers for growth for the Food Junction Business. The Food Junction Business consists of the following key segments:

• (a) food courts – there are currently 12 food courts in Singapore and 3 food courts in Malaysia;

• (b) self-run stores – drinks stalls and 8 food stalls at its food courts in Singapore and Malaysia as well as a standalone “Toast Junction” outlet in Singapore; and

• (c) a restaurant in Hong Kong under the “Lippo Chiuchow” brand.

The Group also operates the “Delifrance” business, a network of 36 casual French Parisian style cafés, bakery and retail outlets in Hong Kong and Singapore under a franchise agreement with Delifrance S.A and three other casual dining outlets under its own “Alfafa” brand in Hong Kong.

Unlike the Disposal Companies, the remaining food businesses leverage well-recognized consumer facing brands and do not play the roles of intermediaries. As such, threats of disintermediation, which is a factor that affects profits margins and returns on investments, are less likely to affect the remaining food businesses. It is expected that the remaining food businesses will continue to provide a recurring revenue to the Group as well as give higher returns to the Shareholders from investments, which is the business plan and strategy of the Group.

As part of the continuous review of the Group’s business plans and strategy, the Group’s current intention, which is yet to be finalised, is that APGL will likely declare a dividend in specie and distribute the interest in the “Delifrance” business and the “Alfafa” business owned by APGL to APGL’s shareholders. The interest of the Group in such businesses will remain the same after such proposed distribution. Save as disclosed herein, there is currently no intention to scale down or dispose of the remaining food businesses but the Group will review its business plans and strategy from time to time.

The Board is of the view that there will be no material impact on the remaining businesses of the Group as they have separate management and operational teams.

Apart from the remaining food businesses, the Remaining Group will continue its existing businesses after Completion such as healthcare investment, property investment, securities investment and treasury investment. The Group is interested in approximately 40.8% of the issued shares in Healthway Medical Corporation Limited, a company listed on the sponsor-supervised listing platform of the SGX-ST, which has been operating and

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LETTER FROM THE BOARD

managing close to 100 medical centres and clinics in Singapore. The Group is also interested in 39.9% of the issued shares in TIH Limited, a company listed on the Main Board of SGX-ST with a focus on investment in various sectors in Asia such as consumer and industrial products, healthcare, technology, media and telecommunications, food, manufacturing and chemicals. The Group is holding various properties for rental and investment purposes, which are mainly located in Hong Kong and the PRC.

FINANCIAL EFFECT OF THE DISPOSAL

The Disposal is expected to give rise to a non-recurring gain attributable to the Group of approximately HK$344 million (subject to adjustment and audit, and before expenses and taxes), which is calculated based on the effective share of APGL’s expected non-recurring gain on disposal of subsidiaries, being the difference between the initial consideration and the unaudited net asset value of the Disposal Companies as at 30 September 2018, after taking into account the release of exchange equalisation reserve.

The exact amount of the gain on the Disposal to be recorded in the consolidated statement of profit or loss of the Group upon Completion is subject to adjustments as stated above and audit, and will be calculated based on the carrying value of the Disposal Companies as at the Completion Date and the adjusted Consideration net of any incidental expenses and taxes and therefore may be varied from the figure provided above.

As at 30 September 2018, the unaudited consolidated total assets and total liabilities of the Group were approximately HK$6,500 million and HK$2,396 million, respectively. Based on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III of this circular, assuming the Disposal had been completed on 30 September 2018, the unaudited pro forma consolidated total assets and total liabilities of the Remaining Group would be approximately HK$7,127 million and HK$2,120 million, respectively.

For the year ended 31 March 2018, the Group recorded an audited loss attributable to equity holders of the Company of approximately HK$117 million. Based on the unaudited pro forma financial information of the Remaining Group as set out in Appendix III of this circular, assuming the Disposal had been completed on 1 April 2017, the unaudited pro forma consolidated profit of the Remaining Group attributable to the equity holders of the Company for the year ended 31 March 2018 would be approximately HK$161 million.

It should be noted that the aforementioned estimations are for illustrative purpose only and do not purport to represent how the financial position and performance of the Remaining Group will be upon Completion.

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LETTER FROM THE BOARD

USE OF PROCEEDS

It is currently intended that all the net proceeds from the Disposal will be applied to general corporate purposes of the Group, in particular, APGL intends to redeploy the proceeds from the divestment to grow and expand its remaining businesses as well as pursue investment and acquisition activities that are better aligned with its strategy to pursue opportunities in high growth sectors and businesses with strong brands.

The APGL Group intends to focus on the parts of its remaining businesses and development of house brands which can generate better returns from investments for APGL’s shareholders while looking for and exploring potential investments in businesses which generate higher returns and larger market coverage. It is intended that part of the net proceeds from the Disposal will be redeployed for investment in the expansion of the bakery products manufacturing activities of the APGL Group as well as the food retail activities of the APGL Group which will involve the construction of a food factory in Malaysia and development/enhancements to the food courts and self-operated stalls operated by the APGL Group including the opening of an additional food court in each of Singapore and Malaysia.

It is currently intended that the net proceeds of the Disposal will be used as follows:

	Allocation of net proceeds
Intended use	(approximately)
Construction of a	S$35 million (equivalent to approximately
food factory in Malaysia	HK$200 million)
Development/enhancements	S$6 million (equivalent to approximately
to the food courts and	HK$34 million)
self-operating stalls in
Singapore and Malaysia
General working capital of	S$10 million (equivalent to approximately
the APGL Group	HK$57 million)
Capital for potential	S$160 million (equivalent to approximately
acquisitions of businesses	HK$914 million)
in line with the APGL
Group’s business plans

LISTING RULES IMPLICATION

As one or more of the applicable percentage ratios in respect of the Disposal as calculated under Rule 14.07 of the Listing Rules exceeds 75%, the Disposal constitutes a very substantial disposal for the Company under the Listing Rules which is subject to the reporting, announcement and Shareholders’ approval requirements.

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LETTER FROM THE BOARD

The Purchasers are independent third parties of the Company. None of the Directors has a material interest in the Disposal Agreements and the transactions contemplated thereunder. None of them would be required to abstain from voting on the relevant Board resolution of the Company in respect of the resolution approving the Disposal Agreements and the transactions contemplated thereunder.

EGM

The notice of the EGM is set out on pages N-1 and N-2 of this circular. The form of proxy for use at the EGM is enclosed. Irrespective of whether you are able to attend the meeting, please complete the form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at 40th Floor, Tower Two, Lippo Centre, 89 Queensway, Hong Kong no less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so desire.

All Shareholders who have a material interest (which is different from that of all other Shareholders) in the Disposal Agreements and the transactions contemplated thereunder, and their close associates, will be required to abstain from voting on the resolution to approve the Disposal Agreements and the transactions contemplated thereunder at the EGM. As far as the Board is aware, having made all reasonable enquiries, no Shareholder is required to abstain from voting on the resolution referred to above at the EGM.

VOTING UNDERTAKING

Skyscraper has undertaken to procure that the voting rights attaching to the Shares held by it will be voted in favour of the resolution referred to above at the EGM.

RECOMMENDATION

The Directors are of the opinion that the Disposal Agreements and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole, and accordingly recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM.

GENERAL

Shareholders and potential investors of the Company should note that the Disposal is subject to the approval of the Shareholders and the Disposal Agreements may be terminated in certain circumstances. Accordingly, there is no assurance that the Disposal will be completed. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

Yours faithfully By Order of the Board LIPPO CHINA RESOURCES LIMITED John Luen Wai Lee

Chief Executive Officer

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2016, 2017 AND 2018 AND SIX MONTHS ENDED 30 SEPTEMBER 2018

Financial information of the Group for each of the three years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2018 is disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.lcr.com.hk) and can be accessed at the website addresses below:

For the annual report of the Company for the year ended 31 March 2016, please see: www.lcr.com.hk/file/financial_report/eng/E_AR_2015.pdf

For the annual report of the Company for the year ended 31 March 2017, please see: www.lcr.com.hk/file/financial_report/eng/E_AR_2016.pdf

For the annual report of the Company for the year ended 31 March 2018, please see: www.lcr.com.hk/file/financial_report/eng/E_AR_2018.pdf

For the interim report of the Company for the six months ended 30 September 2018, please see: www.lcr.com.hk/file/financial_report/eng/E_00156_IR_2018.pdf

2. INDEBTEDNESS STATEMENT

As at 31 December 2018, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of approximately HK$1,620 million, comprising secured bank loans of approximately HK$1,123 million, unsecured bank loans of approximately HK$168 million, unsecured notes of approximately HK$282 million, secured obligations under finance leases for certain fixed assets of approximately HK$1 million, secured bankers’ guarantees of approximately HK$19 million and unsecured bankers’ guarantees of approximately HK$27 million.

The bank loans were secured by certain investments properties, land and buildings, bank deposits, financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income of the Group. The obligation under finance leases were secured by the rights to certain leased fixed assets. The bankers’ guarantees were secured by certain bank deposits of the Group.

Save as aforesaid and apart from intra-group liabilities, the Group did not, as at 31 December 2018, have any outstanding debt securities, whether issued and outstanding, authorised or otherwise created but unissued, term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the issuer or by third parties) or unsecured, other borrowings or indebtedness in the nature of borrowing including bank

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, unguaranteed, secured or unsecured borrowings or debt, mortgages, charges, guarantees or other material contingent liabilities.

The Directors confirm that there are no material changes in the indebtedness and contingent liabilities of the Group since 31 December 2018.

3. WORKING CAPITAL

Taking into account the financial resources available to the Group, including internally generated funds, available facilities from banks and the net proceeds from the Disposal, the Directors are of the opinion that the Group has sufficient working capital for its present requirements for at least 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS

The global economy maintained a moderate pace of growth but multiple headwinds such as worsening trade disputes between the U.S. and mainland China, rising interest rates and depreciation in emerging market currencies loomed. The performance of the investment markets were adversely affected. The offer received from DKSH Holding for the Disposal is attractive and reflects a premium for the business’ growth potential as well as the synergies that can be derived from a single platform with increased economies of scale. The Disposal will enable the Group to realise the value of its investments at an opportune time. It is currently intended that all the net proceeds from the Disposal will be applied to general corporate purposes of the Group to finance the investment and capital expenditure required by the Group’s existing principal businesses. Upon Completion, the remaining food businesses of the Group, run by the APGL Group, will mainly comprise manufacturing of bakery products, operation of food courts in Singapore and Malaysia and food retail in chains of bakeries, cafés and bistros in Singapore and Hong Kong. The APGL Group intends to focus on the parts of its remaining businesses and development of house brands which can generate better returns from investments. It is intended that part of the net proceeds from the Disposal will be redeployed for investment in the expansion of the bakery products manufacturing activities of the APGL Group as well as the food retail activities of the APGL Group which will involve the construction of a food factory in Malaysia and development/enhancements to the food courts and self-operated stalls operated by the APGL Group. The property investment portfolio is located mainly in Hong Kong and mainland China and provides a stable recurring income to the Group. In relation to the “securities and treasury investment” segment, the Group will continue to manage its investment portfolio in accordance with the investment committee’s terms of reference and look for opportunities to enhance yields and seek gains. The Group will maintain a diversified investment portfolio including listed and unlisted equity securities, debt securities, investment funds and other structural products. The current volatility in the financial markets is expected to present opportunities for the Group’s investment in a listed closed-ended fund in Singapore to identify special situations, corporates

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

deleveraging and non-core secondary assets at attractive valuations. The Group is optimistic about the prospects in the healthcare industry in Singapore, and has established its presence in this field in 2017 through the investment in Healthway Medical Corporation Limited (“Healthway”). The ongoing business optimisation measures of Healthway and the rebranding initiatives will continue to anchor its transformation efforts going forward. The Group is watchful of market developments. It will cautiously monitor its investments and assess new business opportunities with a view to delivering sustainable long term shareholder return.

5. NO MATERIAL ADVERSE CHANGE

Save as disclosed herein, the Directors confirm that there are no material adverse changes in the financial or trading position of the Group since 31 March 2018 (being the date to which the latest published audited consolidated financial statements of the Company were made up).

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Following the Disposal, the Remaining Group will comprise the Company and its subsidiaries but excluding APM, CM and the APMSB Group. There will be no change to the existing business of the Remaining Group. The management discussion and analysis of the Remaining Group for the three years ended 31 March 2016, 2017 and 2018 and the six months ended 30 September 2018 are set out as follows:

(a) For the year ended 31 March 2016

Operating results

The Remaining Group recorded a consolidated loss attributable to shareholders of approximately HK$324 million for the year ended 31 March 2016 (“2016”). The loss was mainly attributable to provisions for impairment losses on investments related to a mining project and intangible assets and the net fair value loss on financial instruments at fair value through profit or loss. Revenue for 2016 totalled HK$1,170 million.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Business review, significant investments, material acquisitions and disposals

For the year ended 31 March 2016, the Remaining Group and its associates, joint ventures and joint operations were principally engaged in investment holding, property investment, property development, food businesses, property management, mineral exploration, extraction and processing, securities investment, treasury investment and money lending. The performance analysis, significant investments, material acquisitions and disposals of these business segments are shown as follows:

Food businesses

The Remaining Group’s food businesses are mainly operated by the APGL Group. As at 31 March 2016, the shares of APGL were listed on the Main Board of the SGX-ST and the Remaining Group was interested in approximately 49.3% of its issued share capital. The segment recorded a revenue of HK$1,072 million, mainly from the food retail operations in chains of bakeries, cafes and bistros. The APGL Group continued its businesses and operations review exercise to rationalise the non-performers in the restaurant and food retail businesses with the objective of building sustainable growth in revenue and profits. During 2016, the market’s response to the brand revitalisation program for food retail business fell well below expectations. The increasing presence and intense competition from new brands with similar product offerings, lower demand as well as rising operating costs negatively affected the performance. Consequently, management performed a business and operations review to rationalise operations including closure of non-performing stores in Singapore, Malaysia, Hong Kong and mainland China which resulted in significant deterioration in operating results. The rationalisation also resulted in a halt in new store expansion. This had resulted in some exceptional items being undertaken during 2016, mainly the impairment of intangible assets of HK$208 million. As a result, the segment recorded a loss of HK$271 million for 2016. Reinforcing its capabilities, the APGL Group would refocus its energies, time and resources on its core strengths to build up its brands and strengthen its performing businesses in manufacturing and the operation of food courts. The Remaining Group would further strengthen its core house brands by exploring new channels of communication to consumers and by expanding its range of product offerings. With the rationalisation of its non-profitable food retail courts, the APGL Group would further develop its core expertise in food court management.

Property investment

The Remaining Group’s investment properties are located mainly in Hong Kong and mainland China and provide a recurring income. Total

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

segment revenue from the property investment business for 2016 decreased to HK$51 million. Coupled with the net fair value gain on investment properties, the segment profit amounted to HK$56 million for 2016. In March 2016, the Remaining Group entered into an agreement for the disposal of an office floor in Hong Kong. The above disposal was completed in May 2016 and the total consideration of approximately HK$372 million was received and a gain of disposal of approximately HK$332 million was recorded in the accounts for 2017.

Property development

The Remaining Group primarily focused on property development projects in mainland China during 2016.

In September 2015, the Remaining Group entered into an agreement for the disposal of its entire equity interest in a subsidiary, 福建 大地湄洲工業區開發有限公司 (Fujian Tati Meizhou Industrial Park Development Co., Ltd.) (“Fujian Tati”), for a consideration of approximately RMB235.8 million (subject to adjustments). The Remaining Group also entered into an agreement to assign the debt due from Fujian Tati to the Remaining Group in an amount of RMB131.6 million (the “Debt”) to the buyer of Fujian Tati at a consideration equal to the amount of the Debt. The principal assets of Fujian Tati are the property interests situated at Shanting Township, Xiuyu District, Putian City, Fujian Province, the PRC. The disposal of Fujian Tati was subsequently completed in December 2015. The above disposal gave rise to a non-recurring gain on disposal of subsidiary of approximately HK$422 million. The above disposal provided a good opportunity for the Remaining Group to realise its investments in Fujian Tati at a profit and furthermore, the above disposal would enable the Remaining Group to free up capital for its operations and investment purposes when such opportunities arise.

In November 2015, the Remaining Group entered into an agreement for the disposal of its entire interest in Bestbeat Limited (“Bestbeat”) for a consideration of approximately HK$277.9 million which was settled by the allotment and issue of 646,366,795 new shares in Gemdale Properties and Investment Corporation Limited (“Gemdale”) at an issue price of HK$0.43 per share (the “Consideration Shares”). All the Consideration Shares were disposed of in March 2016. 力寶置業（江蘇）有限公司 (Lippo Realty (Jiangsu) Limited), a wholly-owned subsidiary of Bestbeat, had been granted the land use rights of a piece of land located in Huai’an City, Jiangsu Province, the PRC with a site area of approximately 41,000 square metres. Gemdale is a company listed on the Main Board of the Stock Exchange. The above disposals would provide a good chance for the Remaining Group to realise its direct investment in the property development project in Huai’an

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

City of the PRC in return of cash, thereby enhancing the liquidity of the Remaining Group. As a result of the above disposals, the Remaining Group recognised a net loss of HK$59 million during 2016, comprising a gain on disposal of subsidiaries of approximately HK$6 million and fair value loss on financial assets at fair value through profit or loss of HK$65 million.

Construction work planning for the development project located in China Medical City (中國醫藥城), Taizhou City, Jiangsu Province, the PRC (the “Taizhou Project”) was completed. The Taizhou Project, with a site area of approximately 81,000 square metres and a total gross floor area of approximately 220,000 square metres, was a residential development comprising townhouses and residential apartments. In view of the poor market conditions in the region, the Remaining Group intended to slow down the development of the Taizhou Project.

With the contribution from the disposal of certain property development projects during 2016, the segment profit increased to HK$344 million and the segment asset decreased to HK$233 million.

Treasury and securities investments

Treasury and securities investments businesses recorded a total revenue of HK$34 million during 2016, mainly attributable to the interest and dividend income received from the investment portfolio.

Following the disposal of various property interests, the Remaining Group had surplus cash on hand. In order to maximise the return on such surplus funds which were retained for the Remaining Group’s business and for future investment opportunities, the Remaining Group increased its treasury and securities investments during 2016 through the investment of such surplus fund in various securities and investment funds. The segment assets of the securities investment business increased to HK$1.9 billion as at 31 March 2016.

The Remaining Group managed its investment portfolio in accordance with the investment committee’s terms of reference and looked for opportunities to enhance yields and seek gains. However, due to the substantial downturn of the global stock market in the third quarter of the year 2015, the Remaining Group recorded net fair value loss on its investment portfolio. The net fair value loss of the securities investment segment included HK$60 million loss on listed equity securities, HK$9 million gain on bonds, HK$74 million loss on investment funds and HK$4 million gain on other financial instruments. As a result, the treasury and securities investments businesses recorded a net loss of HK$106 million for 2016.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Details of the top 4 financial assets that made up the net fair value loss of the Remaining Group’s financial assets at fair value through profit or loss for 2016 were as follows:

GSH Corporation Limited (“GSH”) iShares MSCI Emerging Market ETF (“EEM US”) iShares MSCI Emerging Markets UCITS ETF (“IEEM LN”) iShares MSCI World UCITS ETF (“IWDA LN”) Others_(Note)_	Year ended 31 March 2016 Net fair value loss Approximate percentage of net fair value loss on financial assets at fair value through profit or loss HK$’000 (54,939) 29% (20,819) 11% (15,391) 8% (14,160) 7% (87,068) 45% (192,377) 100%	As at 31 March 2016	As at 31 March 2016
	Net fair value loss HK$’000 (54,939) (20,819) (15,391) (14,160) (87,068) (192,377)	Fair value HK$’000 107,167 — 6,213 32,615 567,533 713,528	Approximate percentage of financial assets at fair value through profit or loss 15% 0% 1% 5% 79% 100%	Approximate percentage to the net assets 3% 0% 0% 1% 14%
				18%

Note: Others included fair value loss of HK$65 million for the Consideration Shares in relation to the disposal of Bestbeat, which was managed under the property development business segment. Save as aforesaid, others comprised of more than 100 securities, none of which accounted for more than 5% of the net fair value loss for 2016.

The shares of GSH are listed in Singapore. GSH is a property developer in Southeast Asia with certain properties under development in Kuala Lumpur and Kota Kinabalu, Malaysia. GSH also owns the Sutera Harbour Resort in Kota Kinabalu and GSH Plaza in Singapore. This investment was made for asset diversification purpose. The share price performance of GSH was not satisfactory during 2016. Given the volatility in the stock and property markets, it is expected the share price of GSH may remain low until the property market recovers.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

EEM US is listed in New York and IEEM LN is listed in London, both of which track on index composed of companies from emerging markets. As reported by the Remaining Group’s investment advisor, sentiment around emerging market equities took a further downturn when the PRC announced a small but sudden RMB depreciation and this unexpected development fed investors’ worst fears that the PRC might devalue its currency as a means of speeding up economic growth and hence returns from EEM US and IEEM LN during 2016 was not satisfactory. While a weaker US dollar and rebound in commodities were supportive of emerging market equities recently (especially the commodities exporters), the macro environment was still challenging. Concern about capital outflow and RMB depreciation might well keep investors on the side-line for now. Unless there was a turnaround in these fundamentals, emerging market equities would likely remain challenging.

IWDA LN is a listed ETF in London that tracks the developed market equity portfolio benchmark. As reported by the Remaining Group’s investment advisor, the loss during 2016 was due to the negative sentiment surrounding emerging markets and the PRC spilled over in the midst of lacklustre corporate earnings and general investor caution ahead of the Federal Open Market Committee meeting during the first half of 2016. Although slower global growth and political concerns kept developed market central bank monetary policy very accommodative, rich valuations and weak corporate profits capped the upside for developed market equities. Historically, multiple contraction is expected after the first Fed rate hike. It was expected that developed market equities to remain range bound, stuck between the forces of plentiful liquidity and a poor corporate earnings outlook.

In view of the uncertain prospects of EEM US, IEEM LN and IWDA LN, the Remaining Group had divested a substantial part of these investments during 2016.

Given the importance of technology on the global economy and the prospects for such section, the Remaining Group made a number of small investments in technology related companies and private investment funds which invest in such section.

Mineral exploration and extraction

Asia Now Resources Corp. (“Asia Now”), in which the Remaining Group was interested in approximately 52.2% of its issued share capital as at 31 March 2016, was primarily engaged in the business of exploration of mineral deposits in Yunnan Province, mainland China. In June 2015, the special resolution for approving the arrangement agreement in respect of the

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

proposed acquisition for all of the issued and outstanding common shares of Asia Now not already owned by China Gold Pte. Ltd. (“China Gold”), a subsidiary of the Company, was not approved by the requisite shareholder approval. In connection with the proposed acquisition, China Gold had provided a secured loan to Asia Now of approximately $1.1 million Canadian dollars (C$) which was subsequently in default. In August 2015, China Gold filed an application to appoint a receiver over all of the assets of Asia Now so as to enforce its security against Asia Now. Following the entering of the receivership, in September 2015, the listing of Asia Now was transferred from TSX Venture Exchange of Canada (“TSXVE”) to NEX, a separate board of TSXVE which provides a trading forum for listed companies in Canada that have fallen below TSXVE’s ongoing financial listing standards. Shares of Asia Now were suspended from trading. Subsequently, China Gold had acquired all the assets of Asia Now on 31 December 2015 for a consideration of C$2.2 million. The receivership of Asia Now was completed in April 2016.

CS Mining, LLC (“CS Mining”), a majority owned subsidiary of Skye Mineral Partners, LLC (“Skye”), owned and controlled a number of copper ore deposits located in the State of Utah in the U.S., and was engaged in the business of mining and processing primarily copper. As at 31 March 2016, the Remaining Group was directly and indirectly interested in approximately 28% of all issued and outstanding class A units in Skye and approximately 27% of the total issued and outstanding units in Skye. During 2016, the Remaining Group acquired the entire issued share capital of, and the shareholder’s loan to, Waterloo Street Limited (“Waterloo”) for an aggregate cash consideration of approximately US$23 million. As at the date of the above acquisition, the sole investments of Waterloo was the secured loans due from CS Mining in an aggregate principal amount of US$29.75 million together with accrued interest of approximately US$3.4 million (the “Secured Loans”). Interest on the Secured Loans accrued at a rate based on US$ London Interbank Offered Rate plus a margin varying from 6% to 10% and the Secured Loans were secured by, inter alia, certain properties and assets and mining deposits owned by CS Mining. Due to the deadlock among the investors of Skye, CS Mining was unable to secure further funding for its operation. In early June 2016, a bankruptcy petition was filed by certain creditors against CS Mining pursuant to Chapter 11 of the United States Bankruptcy Code (the “Involuntary Petition”). Such Involuntary Petition triggered an automatic stay to protect against any enforcement or collection actions against CS Mining. CS Mining shall consider whether to accept the Involuntary Petition and proceed with the bankruptcy case or to contest its validity. Also, in early June 2016, a complaint was filed by certain investors of Skye in a court in the United States for, among others, damages allegedly suffered by CS Mining in relation to the acquisition by Waterloo (an indirect wholly-owned subsidiary of the Company) of the Secured Loans (the “2016 Complaint”). The 2016 Complaint had not been served on the entities of the

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Remaining Group. As advised by the U.S. counsel of the Remaining Group, it was believed that there were valid grounds for dismissal of the 2016 Complaint. The Remaining Group was considering further actions to be taken in respect of the Involuntary Petition and the 2016 Complaint.

In view of the predicament of CS Mining, the risk of it going into bankruptcy or receivership in the near future and the decline in copper prices, the Remaining Group recorded impairment losses of HK$312 million in the consolidated statement of profit or loss for 2016, comprising impairment for interests in associates, available-for-sale financial assets, and loans and receivables of HK$28 million, HK$125 million, and HK$159 million, respectively.

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. The Remaining Group had total cash and bank balances of HK$1.9 billion as at 31 March 2016. As at 31 March 2016, bank and other borrowings of the Remaining Group amounted to HK$557 million. Bank loans amounted to HK$555 million as at 31 March 2016, which comprised secured bank loans of HK$550 million and unsecured bank loans of HK$5 million and were denominated mainly in Hong Kong dollars. The bank loans were secured by certain properties and certain bank deposits of the Remaining Group. All of the bank borrowings carried interest at floating rates. The Remaining Group had obligations under finance leases for certain fixed assets which amounted to HK$2 million as at 31 March 2016. These obligations were secured by the rights to the leased fixed assets. As at 31 March 2016, approximately 8% of the bank and other borrowings were repayable within one year. As at 31 March 2016, the gearing ratio (measured as total borrowings, net of non-controlling interests, to equity attributable to equity holders of the Company from the Remaining Group) was 15.1%.

Capital structure and foreign exchange risk

There was no change in the Remaining Group’s capital structure.

The Remaining Group monitored the relative foreign exchange position of its assets and liabilities to minimise foreign currency risk. When appropriate, hedging instruments including forward contracts, swap and currency loans would be used to manage the foreign exchange exposure.

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Contingent liabilities and capital commitment

The Remaining Group had bankers’ guarantees of approximately HK$42 million as at 31 March 2016 issued in lieu of rental and utility deposits for the premises used for operation of food businesses. Approximately 68% of the bankers’ guarantees were secured by certain bank deposits of the Remaining Group.

As at 31 March 2016, the Remaining Group’s commitment amounted to HK$131 million, mainly related to the property development projects and securities investments of the Remaining Group. The investments or capital assets would be financed by the Remaining Group’s internal resources and/or external bank financing, as appropriate.

Employee and remuneration policies

The Remaining Group had 1,803 employees as at 31 March 2016. Staff costs (including directors’ emoluments) of the Remaining Group charged to the statement of profit or loss during 2016 amounted to HK$416 million. The Remaining Group ensured that its employees were offered competitive remuneration packages. The Remaining Group also provided benefits such as medical insurance and retirement funds to employees to sustain competitiveness of the Remaining Group.

Future plans for material investments and acquisition of capital assets

Save for disclosed elsewhere in this section, there was no specific plan for material investments and acquisition of capital assets as at 31 March 2016.

(b) For the year ended 31 March 2017

Operating results

The Remaining Group recorded a consolidated profit attributable to shareholders of approximately HK$370 million for the year ended 31 March 2017 (“2017”), as compared to a consolidated loss of approximately HK$324 million for the year ended 31 March 2016 (“2016”). Such profit was mainly attributable to gain on disposal of subsidiaries of approximately HK$334 million and fair value gain of approximately HK$190 million on its investments following the recovery of the stock markets. Revenue for 2017 totalled HK$1,081 million (2016 — HK$1,170 million). Food businesses were the principal sources of revenue of the Remaining Group, representing 93% (2016 — 92%) of total revenue.

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Business review, significant investments, material acquisitions and disposals

For the year ended 31 March 2017, the Remaining Group and its associates, joint ventures and joint operations were principally engaged in investment holding, property investment, property development, food businesses, property management, mineral exploration and extraction, securities investment, treasury investment and money lending. The performance analysis, significant investments, material acquisitions and disposals of these business segments are shown as follows:

Food businesses

The Remaining Group’s food businesses are mainly operated by APGL, a subsidiary of the Company. As at 31 March 2017, the Remaining Group was interested in approximately 49.3% of the issued shares in APGL. The segment recorded a revenue of HK$1,003 million (2016 — HK$1,072 million), mainly from the food retail operations in chains of bakeries, cafes and bistros. In 2016, management of the APGL Group performed a business and operations review to rationalise operations including closure of non-performing stores in Singapore, Malaysia, Hong Kong and mainland China which resulted in significant deterioration in operating results. As a result, some exceptional items, including but not limited to an impairment of intangible assets of HK$239 million were incurred during 2016. The drive for business growth and rationalisation yielded results with a stronger landing for 2017. The segment recorded a profit of HK$39 million for 2017 as compared to a loss of HK$271 million for 2016. However, in view of the challenges and uncertainties in the year ahead, APGL continued to focus building stronger foundation for its core businesses and to seek new avenues and opportunities for business growth.

In February 2017, it was announced that Silver Creek Capital Pte. Ltd. (“Silver Creek”, of which Dr. Stephen Riady, an executive Director of the Company, is the majority shareholder) made a voluntary conditional cash offer for all the issued and paid-up ordinary shares in the capital of APGL, other than those which were owned, controlled or agreed to be acquired by Silver Creek or by parties acting in concert or deemed to be acting in concert with Silver Creek (the “APGL Offer”), with a view to delist APGL from the Main Board of the SGX-ST. The APGL Offer did not extend to the Remaining Group. The APGL Offer closed on 7 April 2017. Trading of the shares in APGL was suspended on 10 April 2017 and APGL was subsequently delisted on 17 April 2017. In order to allow the Company to remain as the holding company (as defined in the Listing Rules) of APGL, Silver Creek and the Company entered into a letter of undertaking on 13 April 2017 pursuant to which Silver Creek undertook with the Company that Silver Creek shall,

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among other things, exercise or refrain from exercising the voting rights attached to a certain number of ordinary shares in the capital of APGL in accordance with the written directions as the Company may from time to time issue and deliver to Silver Creek.

Property investment

The Remaining Group’s investment properties are located mainly in Hong Kong and mainland China and provide a recurring income. Total segment revenue from the property investment business for 2017 amounted to HK$44 million (2016 — HK$51 million). The Remaining Group undertakes strategic review of its assets from time to time for maximising return to its shareholders which may include possible sale of certain properties held for investment purposes. In May 2016, the Remaining Group completed the disposal of its interest in a subsidiary which was holding an office floor in Hong Kong for an aggregate consideration of HK$372 million. Such disposal provided a good opportunity for the Remaining Group to realise its investments at a profit. Accordingly, the Remaining Group recognised a gain on disposal of a subsidiary of HK$332 million. Coupled with the segment revenue and net fair value gain on investment properties, the segment profit increased to HK$415 million (2016 — HK$56 million) for 2017.

Property development

Given the market conditions in the region and the time required to complete and sell the Taizhou Project, the Remaining Group entered into an agreement for the disposal of its entire equity interest in 力寶置業（泰州）有限 公司 (Lippo Realty (Taizhou) Limited) (“Lippo Realty”) and an agreement for the assignment of all its rights to the advance due and owing by Lippo Realty to the Remaining Group in May 2017. The aggregate consideration received and receivable by the Remaining Group from the above disposal shall amount to RMB175 million. By reference to the consideration for the disposal of the equity interest, the Remaining Group recorded a provision for impairment loss on properties under development for this development project of approximately HK$23 million during 2017 (2016 — Nil) and reported a loss of HK$27 million (2016 — loss of HK$19 million, which excluded the non-recurring net gain in relation to disposal of subsidiaries in 2016). Such disposal was completed during the year ended 31 March 2018.

Treasury and securities investments

Treasury and securities investments businesses recorded a total revenue of HK$24 million during 2017 (2016 — HK$34 million), mainly attributable to the interest and dividend income received from the investment portfolio.

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The Remaining Group managed its investment portfolio in accordance with the investment committee’s terms of reference and looked for opportunities to enhance yields and seek gains. As of 31 March 2017, the Remaining Group’s financial assets at fair value through profit or loss amounted to HK$1,028 million (2016 — HK$714 million), comprising equity securities of HK$434 million (2016 — HK$242 million), debt securities of HK$206 million (2016 — HK$193 million) and investment funds of HK$388 million (2016 — HK$279 million). Following the improvement in the global stock market in the third quarter of the year 2016, the Remaining Group recorded net fair value gain on its investments under the securities investment segment of HK$182 million for 2017 as compared to net fair value loss of HK$121 million for 2016. The net fair value gain of the securities investment segment for 2017 included HK$149 million gain on listed equity securities, HK$10 million gain on investment funds and HK$26 million gain on other financial instruments, net-off with HK$3 million loss on bonds. As a result, the treasury and securities investments businesses recorded a net profit of HK$187 million for 2017 (2016 — loss of HK$106 million).

Details of the major financial assets at fair value through profit or loss were as follows:

GSH Corporation Limited (“GSH”) US Treasury N/B 2.000% 11/15/26 TSY INFL IX N/B 0.125% 07/15/26 iShares EM Local Govt Bond UCITS ETF (“IEML”) Others_(Note)_	As at 31 March 2017 Fair value Approximate percentage of financial assets at fair value through profit or loss Approximate percentage to the net assets HK$’000 235,501 23% 6% 63,192 6% 2% 55,294 5% 1% 52,231 5% 1% 621,939 61% 15% 1,028,157 100% 25%	As at 31 March 2017 Fair value Approximate percentage of financial assets at fair value through profit or loss Approximate percentage to the net assets HK$’000 235,501 23% 6% 63,192 6% 2% 55,294 5% 1% 52,231 5% 1% 621,939 61% 15% 1,028,157 100% 25%	As at 31 March 2016 Fair value HK$’000 107,167 — — 15,036 591,325 713,528	For the year ended 31 March 2017	For the year ended 31 March 2017
	Fair value HK$’000 235,501 63,192 55,294 52,231 621,939 1,028,157	Approximate percentage of financial assets at fair value through profit or loss 23% 6% 5% 5% 61% 100%		Net fair value gain/(loss) HK$’000 128,334 819 (699) (914) 36,439 163,979	Approximate percentage of net fair value gain on financial assets at fair value through profit or loss 78% 0% n.m. n.m. 22%
					100%

n.m.: not meaningful

Note: Others included listed shares in Healthway with carrying amount of HK$37 million as of 31 March 2017, which was managed separately under healthcare services as disclosed below. Save as aforesaid, the remaining came from more than 100 securities, none of which accounted for more than 5% of the financial assets at fair value through profit or loss as at 31 March 2017 or 7% of the net fair value gain for 2017.

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As at 31 March 2017, the fair value of the Remaining Group’s equity securities in GSH amounted to HK$236 million, representing approximately 23% of the Remaining Group’s total financial assets at fair value through profit or loss. This investment was made for asset diversification purpose. GSH is a Singapore listed property developer in Southeast Asia with certain properties under development in Kuala Lumpur and Kota Kinabalu, Malaysia. GSH also owns the Sutera Harbour Resort in Kota Kinabalu which comprises two five-star hotels and a golf course. In March 2017, GSH entered into a conditional sale and purchase agreement for the disposal of a subsidiary which owns GSH Plaza, its flagship commercial property in Singapore. The completion date of the disposal was extended to July 2017. Such disposal was a good opportunity for GSH to realise cash flow for its other businesses, including increasing its presence in overseas markets such as mainland China. In line with the global stock market improvement since the third quarter of the year 2016, the share price performance of GSH was satisfactory during 2017, resulting in a fair value gain of HK$128 million, which accounted for approximately 78% of the total net fair value gain. It was expected that its performance would be largely affected by the global stock market conditions.

US Treasury N/B 2.000% 11/15/26 is one of the proxies to represent Treasuries in the Remaining Group’s bond portfolio. In addition to the capital gains, it also returned coupon interests to the Remaining Group. Since the issue of the bond in November 2016, the price came down a bit and then recovered. As advised by the Remaining Group’s investment advisor, the outlook for sovereign bonds was not very optimistic. Accordingly, the Remaining Group pared its exposure in its portfolio.

TSY INFL IX N/B 0.125% 07/15/26 is a treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. The price of this security had declined in December 2016 and then recovered. In addition to the price movements, the security also returned a coupon of 0.125% over inflation rate measured by consumer price index. The Remaining Group’s investment advisor advised that the outlook for Treasury inflation protected securities (“TIPs”) was not as rosy as well but a bit better than Treasuries as U.S. interest rate started hiking in the short term, and TIPs yields could be pressured higher. As a result, the Remaining Group had started reducing some exposure in the portfolio.

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IEML is a proxy for Emerging Market (“EM”) local currency bonds in the Remaining Group’s EM bond portfolio. Since April 2016, the ETF was up 8% including a sizable drawdown of 9% due to events surrounding U.S. presidential election in November 2016. We were underweight exposure in the EM strategy, and had post November built the strategy up to neutral weight. The outlook for EM Bonds was neutral as there were some cross currents from the view that sovereign bonds in the G-10 space was set to move higher (such as the Treasuries above) which would be a headwind for EM Bonds offset by the still solid global growth and investors search for yield. The Remaining Group’s investment advisor’s view on EM bonds (and IEML) was cautiously optimistic.

The Remaining Group also made a number of small investments in the technology sector and through private investment funds to participate in the growing New Economy which included technology companies and communication industry, etc.

Mineral exploration and extraction

In early June 2016, the Involuntary Petition was filed by certain creditors against CS Mining, a subsidiary of Skye, in the United States Bankruptcy Court for the District of Utah (the “U.S. Bankruptcy Court”). The Remaining Group is directly and indirectly interested in approximately 28% of all issued and outstanding class A units in Skye and approximately 27% of the total issued and outstanding units in Skye. In August 2016, CS Mining consented to the Involuntary Petition, and the U.S. Bankruptcy Court granted an order for relief in respect of CS Mining. CS Mining continued to operate its business and manage its affairs as a debtor-in-possession. Debtor-in-possession loan facilities (the “DIP Loan”) were provided to CS Mining. The DIP Loan was approved by the U.S. Bankruptcy Court. The DIP Loan was secured by a lien on all assets of CS Mining, which ranked senior to liens previously granted to Waterloo, a subsidiary of the Company, and certain other secured creditors. Pursuant to the terms of the DIP Loan, CS Mining had commenced a process to sell its business which was expected to complete in the third quarter of 2017. In early June 2016, a complaint was filed by certain investors of Skye against Waterloo and certain investors of Skye, in which the Remaining Group has equity interests (the “Group Entities”) and others, claiming, among other things, damages allegedly suffered by CS Mining. The action was removed to the U.S. Bankruptcy Court. This litigation remains ongoing. In July 2016, Waterloo and the Remaining Group Entities commenced an adversary proceeding in the U.S. Bankruptcy Court against CS Mining’s other significant secured creditor and various members and managers of CS Mining, asserting claims for equitable subordination, recharacterisation of certain claims, and damages due to tortious interference (the “Waterloo Complaint”). Certain defendants asserted

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counterclaims against Waterloo and the Remaining Group Entities. This litigation is ongoing. In February 2017, CS Mining filed several lawsuits in the U.S. Bankruptcy Court against some of its creditors, including, inter alia, a complaint filed against, inter alia, Waterloo with respect to the secured loan owed by CS Mining to Waterloo (the “Waterloo Loan”). In the lawsuit, CS Mining seeks several forms of relief with respect to the Waterloo Loan. Waterloo denied all claims made in the complaint. Discovery has commenced in this litigation and trial was scheduled for August 2017.

Having considered the potential recoverable amount from the sale of the business and the amount of the DIP Loan and other loan and expenditure which ranked senior to the Waterloo Loan with carrying value of HK$58 million, it was expected that the recoverable value of the Remaining Group’s remaining secured loan was highly likely to be minimal and hence should therefore be fully impaired for 2017. In 2016, impairment losses in a total of HK$312 million were made for the interests in associates, available-for-sale financial assets and loans and receivables in relation to the Remaining Group’s interests in CS Mining.

Notwithstanding the difficulties in the mining business, the Remaining Group is generally positive concerning the long term prospects for resource business. The Remaining Group may consider participating in investment in such business should the opportunity arise.

Other business

The Remaining Group saw the business potentials in the healthcare industry in Singapore, and would therefore like to establish their presence in this field. In February 2017, Gentle Care Pte. Ltd. (“Gentle Care”), a subsidiary of the Company, had made a voluntary conditional cash offer for all the issued and paid-up ordinary shares (the “Healthway Shares”) in Healthway at an offer price of S$0.042 per share (the “Healthway Offer”). The Healthway Offer was also extended to the convertible notes in the total principal amount of S$70 million issued by Healthway (the “CN”) to a third party during the offer period. The CN could be convertible into shares in Healthway at a conversion price of S$0.03384 per share.

As at 31 March 2017, the Remaining Group was interested in approximately 22% of the then issued shares in Healthway and the consideration paid for such Healthway Shares amounted to approximately S$20 million. On 23 April 2017, an agreement was entered into between Gentle Care and the noteholder pursuant to which Gentle Care acquired S$15 million CN for a consideration of approximately S$18.6 million and such CN were subsequently converted into Healthway Shares. The Healthway Offer closed on 12 May 2017. Immediately after the completion of settlement

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of the offer price on 23 May 2017, the Remaining Group was interested in approximately 55.02% of Healthway Shares and approximately 38.86% of the maximum potential issued share capital of Healthway assuming all outstanding CN issued were fully converted into Healthway Shares. Accordingly, Healthway was now regarded as a subsidiary of the Company under the Hong Kong Companies Ordinance and the Listing Rules. However, Healthway would be accounted for as an associate under the Hong Kong Financial Reporting Standards and accordingly, the earnings, assets and liabilities of Healthway would not be consolidated into the financial statements of the Company. The aggregate cash consideration paid for the above acquisition amounted to approximately S$71.4 million, which included acquisition of Healthway Shares before the Healthway Offer. Healthway is a company listed on the sponsor-supervised listing platform of the SGX-ST. Healthway, together with its subsidiaries (the “HMC Group”), owns, operates and manages medical centres and clinics. Healthway, as a well-established private healthcare provider in Singapore, matches the Remaining Group’s strategy to establish its presence in the healthcare industry in Singapore and to acquire quality healthcare management capability.

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. As at 31 March 2017, the Remaining Group’s total cash and bank balances (consisted of cash and cash equivalents, time deposits with original maturity of more than three months and restricted cash) amounted to HK$2.4 billion (31 March 2016 — HK$1.9 billion). In connection with the Healthway Offer, certain cash and bank balances, financial assets at fair value through profit or loss and available-for-sale financial assets were pledged to a bank as security for the bankers’ guarantees issued to Gentle Care in a total amount of S$228 million. Such cash and bank balances with a carrying amount of HK$0.9 billion was reclassified to restricted cash as at 31 March 2017. The bankers’ guarantees had not been utilised and were expired in June 2017 and the charges of the aforesaid assets had been fully released.

As at 31 March 2017, bank and other borrowings of the Remaining Group increased to HK$1,067 million (31 March 2016 — HK$557 million). As at 31 March 2017, bank loans amounted to HK$475 million and were secured by certain properties of the Remaining Group. Bank loans as at 31 March 2016 amounted to HK$555 million, comprised secured bank loans of HK$550 million and unsecured bank loans of HK$5 million. The bank loans were mainly denominated in Hong Kong dollars. All of the bank borrowings carried interest at floating rate. The Remaining Group’s other borrowings comprised of an unsecured loan from the holding company granted during 2017 and obligations under finance leases. During 2017, a

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fixed rate loan of HK$590 million was provided to the Remaining Group by the holding company. The Remaining Group had obligations under finance leases for certain fixed assets which amounted to HK$2 million as at 31 March 2017 (31 March 2016 — HK$2 million). These obligations were secured by the rights to the leased fixed assets. As at 31 March 2017, approximately 99.9% (31 March 2016 — 8%) of the bank and other borrowings were repayable within one year. As at 31 March 2017, the gearing ratio (measured as total borrowings, net of non-controlling interests, to equity attributable to equity holders of the Company from the Remaining Group) was 27.0% (31 March 2016 — 15.1%).

Capital structure and foreign exchange risk

There was no change in the Remaining Group’s capital structure.

The Remaining Group monitored the relative foreign exchange position of its assets and liabilities to minimise foreign currency risk. When appropriate, hedging instruments including forward contracts, swap and currency loans would be used to manage the foreign exchange exposure.

Contingent liabilities and capital commitment

The Remaining Group had bankers’ guarantees of approximately HK$32 million as at 31 March 2017 (31 March 2016 — HK$42 million) issued in lieu of rental and utility deposits for the premises used for operation of food businesses. Approximately 59% (31 March 2016 — 68%) of the bankers’ guarantees were secured by certain bank deposits of the Remaining Group.

The Remaining Group’s commitments as at 31 March 2017 included HK$506 million commitment in relation to the Healthway Offer. As a result, the total commitment as at 31 March 2017 increased to HK$629 million (31 March 2016 — HK$131 million). The investments or capital assets would be financed by the Remaining Group’s internal resources and/or external bank financing, as appropriate.

Employee and remuneration policies

The Remaining Group had 1,454 employees as at 31 March 2017 (31 March 2016 — 1,803 employees). Staff costs (including directors’ emoluments) of the Remaining Group charged to the statement of profit or loss during 2017 amounted to HK$362 million (2016 — HK$416 million). The Remaining Group ensured that its employees were offered competitive remuneration packages. The Remaining Group also provided benefits such as medical insurance and retirement funds to employees to sustain competitiveness of the Remaining Group.

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APPENDIX I

Future plans for material investments and acquisition of capital assets

Save for disclosed elsewhere in this section, there was no specific plan for material investments and acquisition of capital assets as at 31 March 2017.

(c) For the year ended 31 March 2018

Operating results

The Remaining Group recorded a consolidated loss attributable to shareholders of approximately HK$143 million for the year ended 31 March 2018 (“2018”), as compared to a consolidated profit of approximately HK$370 million for the year ended 31 March 2017 (“2017”) which included non-recurring gains on disposal of subsidiaries of approximately HK$334 million. The loss for 2018 incurred by the Remaining Group was mainly attributable to the share of losses of its associates and joint ventures and net fair value loss on financial instruments at fair value through profit or loss due to the volatile stock markets during 2018. Revenue for 2018 totalled HK$1,009 million (2017 — HK$1,081 million). Food businesses were the principal sources of revenue of the Remaining Group, representing 92% (2017 — 93%) of total revenue.

Business review, significant investments, material acquisitions and disposals

For the year ended 31 March 2018, the Remaining Group and its associates, joint ventures and joint operation were principally engaged in investment holding, property investment, property development, food businesses, healthcare services, property management, mineral exploration, extraction and processing, securities investment, treasury investment and money lending. The performance analysis, significant investments, material acquisitions and disposals of these business segments are shown as follows:

Food businesses

The Remaining Group’s food businesses are mainly operated by APGL, a 50.30% subsidiary of the Company. The segment recorded a revenue of HK$924 million (2017 — HK$1,003 million), mainly from food manufacturing and the food retail operations in chains of bakeries, cafes and bistros. The segment showed an improvement of the results and recorded a profit of HK$79 million for 2018 (2017 — HK$39 million). The profit for 2018 included a gain of HK$15 million from the sale of a joint venture; and a gain on disposal of fixed assets and write-back of provision for impairment losses from fixed assets in a total of HK$35 million, mainly resulted from the disposal of a factory during 2018. APGL continues to focus on building a

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APPENDIX I

strong foundation for its core businesses and seeks new avenues and opportunities for business growth. APGL has taken steps to increase its manufacturing capacity of housebrands, which is planned to be operational in 2019. In its pursuit of providing consumers with a wide range of healthier options, APGL launched a range of new products in the wholemeal bread and bun categories.

The APGL Offer closed on 7 April 2017. APGL was subsequently delisted from the Main Board of the SGX-ST on 17 April 2017. The APGL Offer did not extend to the Remaining Group. In July 2017, APGL announced that it proposed to cancel all the shares in APGL held by its minority shareholders, representing approximately 2% of all the then outstanding APGL’s shares in issue, by way of a selective capital reduction exercise in consideration of S$1.65 per share (the “Selective Capital Reduction”). The Selective Capital Reduction became effective on 16 November 2017, and APGL’s outstanding shares in issue were reduced from 125,667,324 shares to 123,116,883 shares. Accordingly, the Remaining Group’s equity interest in APGL was increased from 49.28% to 50.30%.

Property investment

The Remaining Group’s investment properties are located mainly in Hong Kong and mainland China and provide a stable recurring income to the Remaining Group. The total segment revenue for 2018 decreased to HK$42 million (2017 — HK$44 million). Coupled with the increase in net fair value gain on investment properties to HK$87 million (2017 — HK$64 million), the segment reported a profit of HK$99 million for 2018 (2017 — HK$415 million, which included a non-recurring gain on disposal of a subsidiary of approximately HK$332 million).

Property development

Given the market conditions in the region and the time required to complete and sell the Taizhou Project, the Remaining Group entered into agreements for the disposal of its entire interests in Lippo Realty in May 2017 for an aggregate consideration of RMB175 million. Such disposal was completed during 2018 giving rise to a non-recurring loss on disposal of subsidiary of approximately HK$15 million which was mainly due to the release of cumulated exchange loss on translation of the subsidiary upon disposal. As a result, the segment reported a loss of HK$16 million for 2018 (2017 — HK$27 million) and the segment asset decreased to HK$22 million as at 31 March 2018 (31 March 2017 — HK$198 million).

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Treasury and securities investments

Treasury and securities investments businesses recorded a total revenue of HK$35 million during 2018 (2017 — HK$24 million), mainly attributable to the interest and dividend income received from the investment portfolio. The Remaining Group managed its investment portfolio in accordance with the investment committee’s terms of reference and looked for opportunities to enhance yields and seek gains. As of 31 March 2018, the Remaining Group’s financial assets at fair value through profit or loss amounted to HK$1,738 million (31 March 2017 — HK$1,028 million), comprising equity securities of HK$808 million (31 March 2017 — HK$434 million), debt securities of HK$196 million (31 March 2017 — HK$206 million), investment funds of HK$358 million (31 March 2017 — HK$388 million) and equity linked notes of HK$376 million (31 March 2017 — Nil). The stock markets were volatile during 2018 and the Remaining Group recorded net fair value loss on its investments under the securities investment segment of HK$38 million for 2018 (2017 — gain of HK$182 million).

Besides, the Remaining Group also made a number of small investments in the Technology, Media and Telecommunication (TMT) sector and Biotech sector through direct investment and private investment funds in order to expand its investment portfolio in the growing New Economy. The Remaining Group recorded a gain on disposal of available-for-sale financial assets of HK$8 million but an impairment loss of HK$11 million (2017 — HK$8 million) from these investments was recorded during 2018. As a result, the treasury and securities investments businesses recorded a loss of HK$18 million for 2018 (2017 — profit of HK$187 million).

– I-22 –

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Details of the major financial assets at fair value through profit or loss were as follows:

Equity linked notes (“ELN”) GSH Corporation Limited (“GSH”) PPDAI Group Inc. (“PPDAI”) Tencent Holdings Limited (“Tencent”) Others_(Note)_	As at 31 March 2018	As at 31 March 2018	Approximate percentage to the net assets 9% 5% 3% 2% 22% 41%	As at 31 March 2017 Fair value HK$’000 — 235,501 — — 792,656 1,028,157	For the year ended 31 March 2018
	Fair value HK$’000 376,407 220,941 114,326 69,930 956,506 1,738,110	Approximate percentage of financial assets at fair value through profit or loss 22% 13% 7% 4% 54% 100%			Net fair value gain/(loss) HK$’000 (5,520) (14,561) (70,784) (465) 74,786
					(16,544)

Note: Others comprised more than 100 securities, none of which accounted for more than 4% of the financial assets at fair value through profit or loss as at 31 March 2018. The balance of “Others” as at 31 March 2017 included listed shares in Healthway with carrying amount of HK$37 million, which was managed separately as disclosed under healthcare services segment below.

ELN and Tencent Shares

On 28 March 2018, the Remaining Group subscribed for the ELN which was linked to shares in Tencent (the “Tencent Shares”) with an aggregate nominal value of HK$390 million at a consideration of approximately HK$382 million. As at 31 March 2018, the fair value of the ELN was HK$376 million, representing approximately 22% of the Remaining Group’s total financial assets at fair value through profit or loss. Unrealised fair value loss of HK$6 million was recorded by the Remaining Group for 2018. The ELN matured on 11 May 2018 and the final share price of Tencent Shares was above the strike price. Accordingly, the Remaining Group received the full face value of the ELN which generated a satisfactory return of approximately 2.11% for the tenor of the ELN to the Remaining Group.

During 2018, the Remaining Group also acquired Tencent Shares on the open market as the fundamentals of Tencent are stable and its potential future expansion globally is robust. As at 31 March 2018, the fair value of the Remaining Group’s equity securities in Tencent Shares amounted to HK$70 million, representing approximately 4% of the Remaining Group’s

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APPENDIX I

total financial assets at fair value through profit or loss, with a fair value loss of HK$0.5 million recognised for 2018.

GSH

As at 31 March 2018, the fair value of the Remaining Group’s equity securities in GSH amounted to HK$221 million, representing approximately 13% of the Remaining Group’s total financial assets at fair value through profit or loss. This investment was made for asset diversification purpose. GSH is a Singapore listed property developer in Southeast Asia with certain properties under development in Kuala Lumpur and Kota Kinabalu, Malaysia. GSH also owns 2 hotels at Sutera Harbour Resort. In July 2017, GSH completed the disposal of a subsidiary which owns GSH Plaza, its flagship commercial property in Singapore to unlock cash flow for its other businesses. GSH is launching its first luxury condominium, Coral Bay, in Kota Kinabalu and expects a good response from investors. In April 2018, it completed the acquisition of a 50% stake in a prime land parcel in the heart of Kuala Lumpur’s Chinatown that could potentially be developed into a premium condominium. The Remaining Group received a dividend income from GSH of HK$4 million for 2018. Given the volatility in the stock markets, the share price performance of GSH was not satisfactory during 2018, resulting in a fair value loss of HK$15 million. It was expected that the share price performance would be largely affected by the global stock market conditions.

PPDAI

In November 2017, the Remaining Group had acquired 1,538,000 American Depository Shares (“ADSs”) of PPDAI for an aggregate consideration of approximately US$20 million in the initial public offering of PPDAI’s ADSs which are listed on the New York Stock Exchange. PPDAI is one of the leading online consumer finance marketplace in the PRC with strong brand recognition. Launched in 2007, PPDAI is one of the first entrants in online financing service in the PRC connecting borrowers and investors, whose needs have not been met by traditional financial institutions. PPDAI generates revenues primarily from fees charged to borrowers for PPDAI’s services in matching them with investors and for other related services. PPDAI is of the view that with the growing wealth of the PRC’s large consumer base, the increasing willingness of the PRC’s young generation to spend, as well as new internet-based business models, the PRC’s household consumption shows favourable growth prospects. This is an opportunity allowing the Remaining Group to participate in the growing online consumer lending market in the PRC through its investment in the listed ADSs of PPDAI.

As at 31 March 2018, the Remaining Group held approximately 2 million ADSs of PPDAI with a carrying amount of HK$114 million,

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APPENDIX I

representing 7% of the Remaining Group’s total financial assets at fair value through profit or loss. During 2018, an announcement was made by the PRC’s Government putting a cap on the interest rate and restriction on the licensing in the online financing industry which affected many companies in this sector including PPDAI as reflected in their share price. Hence, the Remaining Group recorded a fair value loss of HK$71 million for 2018. Short term volatility is expected in this industry. Appropriate action will be taken should there be further adverse regulations imposed by the PRC’s Government in the online financing industry. Nevertheless, PPDAI’s matrix is good and growth in its business is expected after market consolidation.

Healthcare services

The Remaining Group is optimistic about the prospects in the healthcare industry in Singapore, and has established its presence in this field. In February 2017, Gentle Care, a subsidiary of the Company, made the Healthway Offer. Healthway, together with its subsidiaries, owns, operates and manages close to 100 medical centres and clinics. Healthway, as a well-established private healthcare provider in Singapore, matches the Remaining Group’s strategy to establish its presence in the healthcare industry in Singapore and to acquire quality healthcare management capability. The Healthway Offer was also extended to the convertible notes in the total principal amount of S$70 million issued by Healthway (the “CNs”) to GW Active Limited (“GW”, an independent third party) during the offer period. The CNs were convertible into Healthway Shares at a conversion price of S$0.03384 per share. On 23 April 2017, an agreement was entered into between Gentle Care and GW for the acquisition of S$15 million CNs for a consideration of approximately S$18.6 million and such CNs were subsequently converted into Healthway Shares. The Healthway Offer closed on 12 May 2017. Following the completion of the Healthway Offer, the Remaining Group was interested in approximately 55.02% of the total number of issued Healthway Shares and approximately 38.86% of the maximum potential issued share capital of Healthway assuming all the then outstanding CNs issued were fully converted into Healthway Shares. Healthway is accounted for as an associate of the Remaining Group and the purchase price allocation was completed. Upon the completion of the Healthway Offer, the investments in Healthway previously held by the Remaining Group were reclassified from available-for-sale financial assets and financial assets at fair value through profit of loss to interests in associates. Accordingly, the cumulated fair value gain of HK$13 million in relation to the available-for-sale financial assets were reclassified from other comprehensive income to statement of profit or loss for 2018.

After the completion of the Healthway Offer, the Remaining Group had acquired S$3 million CNs which were convertible into 88,652,482 Healthway

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Shares. On 30 October 2017, the Remaining Group had exercised its conversion rights to the S$3 million CNs and subsequently, on the same date, GW had also exercised its conversion rights to all its S$42 million CNs which were convertible into 1,241,134,751 Healthway Shares (together, the “CNs Conversion”). Following the CNs Conversion, there are no outstanding CNs in Healthway. The Remaining Group is now interested in an aggregate of 1,848,641,265 Healthway Shares. The Remaining Group’s interest in Healthway was diluted from approximately 55.02% to approximately 40.82% of the enlarged issued share capital of Healthway. After the CNs Conversion, Healthway ceased to be a subsidiary of the Company under the Hong Kong Companies Ordinance and the Listing Rules. However, Healthway continues to be treated as an associate of the Company under the Hong Kong Financial Reporting Standards. The Remaining Group recorded a gain on deemed disposal from the CNs Conversion of HK$5 million for 2018 after taking into account the impact of the purchase price allocation. Coupled with the fair value gain released as mentioned above and various legal and profession fees incurred, the segment reported a profit of HK$12 million (2017 — HK$7 million, mainly attributable from the fair value gain on Healthway Shares previously held under financial assets at fair value through profit or loss) before accounting for the results of associates for 2018.

Review on Healthway’s operational process was conducted in the fourth quarter of 2017. A new clinical management system, which includes the enhanced work flow and control mechanism in its design, will be used to replace the existing system for greater efficiency and effectiveness in areas such as clinic operations, inventory and pricing control. It is anticipated that the pilot test of the new system will be conducted in July 2018 and the whole system will be implemented in the first quarter of 2019. To offer cross-regional healthcare services for its customers, Healthway entered into a non-binding memorandum of understanding with UMP Healthcare Holdings Limited (“UMP”) in April 2018 to develop the Care Alliance Network for selected corporate and individual customers in Hong Kong, Singapore, Beijing and Shanghai. UMP is an established healthcare service provider in Hong Kong.

As at 31 March 2018, the Remaining Group’s interest in Healthway was approximately HK$454 million. The Remaining Group shared a loss of approximately HK$23 million from Healthway for 2018 (2017 — Nil) as it took time to crystalise the impact of the recovery and turnaround plan for Healthway in the aftermath of the challenges faced before the Remaining Group became the major shareholder.

Mineral exploration and extraction

As previously announced, the Remaining Group holds a minority ownership interest in Skye whose major asset is substantially all of the equity

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

interests in CS Mining, a company that owned a number of copper ore deposits in the Milford Mineral Belt in Beaver County, State of Utah in the U.S. and had engaged in the business of mining and processing copper and other minerals. The Remaining Group, in response to the majority investors’ failure to properly manage the business of CS Mining, commenced a series of actions aimed at permitting CS Mining to obtain additional capital needed to turnaround its business, including a petition filed in Delaware Chancery Court asking for the appointment of a receiver. In response to those actions, an involuntary bankruptcy petition was filed by certain creditors of CS Mining pursuant to Chapter 11 of the United States Bankruptcy Code in June 2016 in the Utah Bankruptcy Court. In the course of its bankruptcy case, CS Mining commenced a process to sell (the “Sale Process”) all or substantially all of its assets (the “Assets”), and which assets included certain claims or causes of action that CS Mining had or may have against the Remaining Group (the “Claims”). Notwithstanding the difficulties faced by CS Mining, the Remaining Group remained generally positive about the long term prospects of the underlying business of CS Mining. Accordingly, the Remaining Group made an investment in a joint venture consortium (the “JV Company”) for the purpose of participating in the Sale Process and bidding on the Assets in August 2017. Following a competitive auction that culminated the Sale Process, the JV Company’s bid of US$35 million (together with the assumption of certain liabilities of CS Mining) was declared the winning bid for the Assets, and the Utah Bankruptcy Court entered an order approving and authorising the sale of the Assets, including the Claims, to the JV Company. The acquisition of the Assets, including all of the Claims, was completed on 28 August 2017. The Remaining Group is effectively interested in 45% of the issued and outstanding membership interests in the JV Company. Following the purchase of the Assets, the JV Company, as the owner of all of the Claims, had entered into and granted a release of all of the Claims in favour of the Remaining Group. Following the approval of the sale of the Assets, CS Mining finalised the winding down of its business through a plan of liquidation that was approved by the Utah Bankruptcy Court in April 2018. As part of that plan of liquidation, Skye’s equity interests in CS Mining were extinguished.

The majority investors in Skye dismissed without prejudice litigation filed in early June 2016 against certain entities in the Remaining Group for damages allegedly suffered by CS Mining. However, subsequently, in January 2018, a verified complaint (the “Complaint”) was filed in a United States state court in Delaware (the “Delaware State Court”) by the majority investors in Skye individually and derivatively on behalf of Skye against, among others, certain entities and persons in or related to the Remaining Group for, among other things, damages for diminution in the value of their equity interests in CS Mining based on an alleged scheme perpetrated by the Remaining Group on CS Mining.

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The Remaining Group believes that the Complaint is frivolous and wholly without merit and will vigorously oppose the allegations set forth in the Complaint and any other claim that the majority investors in Skye may seek to bring against the Remaining Group. After the filing of the Complaint, the Remaining Group removed the Complaint to the United States Bankruptcy Court for the District of Delaware (the “Delaware Bankruptcy Court”) and asked the Delaware Bankruptcy Court to transfer the Complaint to the Utah Bankruptcy Court. In addition, the JV Company filed a motion with the Utah Bankruptcy Court asking the Utah Bankruptcy Court to rule that the claims set forth in the Complaint were part of the Assets that the JV Company purchased from CS Mining (the “Motion to Enforce”). On 4 June 2018, the Utah Bankruptcy Court determined that it did not have jurisdiction to decide the Motion to Enforce. The Remaining Group would evaluate all options to have the issues underlying the Motion to Enforce determined. On 19 June 2018, a subsidiary of the Company commenced an involuntary Chapter 7 bankruptcy case against Skye in the Delaware Bankruptcy Court. On 22 June 2018, two subsidiaries of the Company that are named in the Complaint removed the Complaint back to the Delaware Bankruptcy Court following the Delaware Bankruptcy Court’s ruling on 18 June 2018 remanding the Complaint back to Delaware State Court. In their notice of removal of the Complaint back to Delaware Bankruptcy Court, two subsidiaries of the Company stated that since the claims asserted in the Complaint relate to Skye, and as alleged by the majority investors in Skye are claims owned by Skye, those claims should be administered as part of the bankruptcy case of Skye pending in the Delaware Bankruptcy Court.

Following the acquisition of the Assets by the JV Company, the JV Company had commenced the copper production. In order to achieve a higher production level, the JV Company was in the process of enhancing the mining and processing activities of the plant. The Remaining Group shared a loss of joint ventures of HK$44 million for 2018 (2017 — Nil).

As at 31 March 2018, as a result of the participation in investment in the JV Company, total assets under this segment (comprising segment assets and interests in joint ventures) increased to HK$90 million (31 March 2017 — HK$3 million). Segment loss before accounting for share of results of joint ventures for 2018 amounted to HK$11 million (2017 — HK$85 million), which included a write-back of provision for impairment losses on loans and receivables of HK$21 million (2017 — provision of HK$58 million).

Other business

In order to expand its scope of business in securities and fund investments in Asia, in January 2018, Kaiser Union Limited (“Kaiser Union”), a subsidiary of the Company, as the bid vehicle for Premier Asia

– I-28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Limited, a subsidiary of the Company, and Alexandra Road Limited (“ARL”, an independent third party) (collectively, the “Joint Offerors”) made a voluntary unconditional offer for shares (the “TIH Shares”) in TIH Limited (“TIH”), a company listed on the Main Board of SGX-ST, at an offer price of S$0.57 per share (the “TIH Offer”), as to which S$0.125 was paid in cash and S$0.445 was paid by the notes issued by Kaiser Union. Such notes bear interest at a rate of 2.25% per annum accruing on and from the issue of the notes until the date falling three years from the close of the TIH Offer (the “Notes”). TIH is a closed-end fund in Singapore, with focus on investment in various sectors in Asia such as consumer and industrial products, healthcare, technology, media and telecommunications, food, manufacturing and chemicals.

The Remaining Group was of the view that the acquisition of interest in TIH would be beneficial to the future business direction, management and operations of the Remaining Group. The TIH Offer closed on 20 February 2018 and Kaiser Union received valid acceptances in respect of 110,732,656 TIH Shares, representing approximately 45.8% of the issued TIH Shares. As a result, the Notes of S$49.3 million (equivalent to approximately HK$295 million) were issued and included in the segment liabilities as at 31 March 2018. Pursuant to a review performed by the Joint Offerors following the close of the TIH Offer, Kaiser Union had transferred 14,259,453 TIH Shares, representing approximately 5.9% of the issued TIH Shares, to ARL so to reach a desired level of shareholding percentage in TIH. Following the above transfer, the Remaining Group’s interest in TIH was reduced to 96,473,203 TIH Shares, representing approximately 39.9% of the issued TIH Shares. TIH became an associate of the Remaining Group since then. The Remaining Group recorded a share of profit of HK$4 million from its investment in TIH for 2018 (2017 — Nil) and the interests in TIH as at 31 March 2018 amounted to HK$334 million.

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. As at 31 March 2018, the Remaining Group’s total cash and bank balances (consisted of cash and cash equivalents, time deposits with original maturity of more than three months and restricted cash) amounted to HK$1.3 billion (31 March 2017 — HK$2.4 billion). The decrease of the total cash and bank balances was mainly due to the various investments in associates, joint ventures and securities investments during 2018. Restricted cash balance as at 31 March 2018 included cash balance of HK$54 million which was solely earmarked to satisfy the principal and interest repayment for the Notes (other than those held by ARL and other concert parties of the TIH Offer). As at 31 March 2017, in connection with the Healthway Offer, certain cash and bank

– I-29 –

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balances, financial assets at fair value through profit or loss and available-for-sale financial assets were pledged to a bank as security for the bankers’ guarantees issued to Gentle Care in a total amount of S$228 million. Such cash and bank balances with a carrying amount of HK$0.9 billion was classified as restricted cash. The bankers’ guarantees had not been utilised and expired in June 2017. The charges on the aforesaid assets had been fully released, with the restricted cash reclassified back to cash and cash equivalents.

As at 31 March 2018, bank and other borrowings of the Remaining Group increased to HK$1.3 billion (31 March 2017 — HK$1.1 billion), which included secured bank loans of HK$1.0 billion (31 March 2017 — HK$0.5 billion), Notes issued in connection with the TIH Offer of HK$0.3 billion (31 March 2017 — Nil), and obligations under finance leases of HK$1 million (31 March 2017 — HK$2 million). During 2018, the Remaining Group repaid all the unsecured other loans due to a holding company of the Company of HK$0.6 billion. As at 31 March 2018, the bank loans were denominated mainly in Hong Kong dollars and were secured by certain properties of the Remaining Group. All of the bank loans carried interest at floating rates. The Notes were unsecured, denominated in Singapore dollars, and carried interest at a rate of 2.25% per annum. The obligations under finance leases were secured by the rights to the leased fixed assets. As at 31 March 2018, approximately 44.5% (31 March 2017 — 99.9%) of the bank and other borrowings were repayable within one year after the re-financing of bank loans during 2018. As at 31 March 2018, the gearing ratio (measured as total borrowings, net of non-controlling interests, to equity attributable to equity holders of the Company from the Remaining Group) was 33.7% (31 March 2017 — 27.0%).

Capital structure and foreign exchange risk

There was no change in the Remaining Group’s capital structure.

The Remaining Group monitored the relative foreign exchange position of its assets and liabilities to minimise foreign currency risk. When appropriate, hedging instruments including forward contracts, swap and currency loans would be used to manage the foreign exchange exposure.

Contingent liabilities and capital commitment

The Remaining Group had bankers’ guarantees of approximately HK$34 million as at 31 March 2018 (31 March 2017 — HK$32 million) issued in lieu of rental and utility deposits for the premises used for operation of food businesses. Approximately 59% (31 March 2017 — 59%) of the bankers’ guarantees were secured by certain bank deposits of the Remaining Group.

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As at 31 March 2018, the Remaining Group’s commitments were mainly related to the property and securities investments. The commitment as at 31 March 2017 included HK$506 million commitment in relation to Healthway Offer which was closed in May 2017. Hence, total commitment as at 31 March 2018 decreased to HK$94 million (31 March 2017 — HK$629 million). The investments or capital assets would be financed by the Remaining Group’s internal resources and/or external bank financing, as appropriate.

Employee and remuneration policies

The Remaining Group had 1,352 full-time employees as at 31 March 2018 (31 March 2017 — 1,454 full-time employees). Staff costs (including directors’ emoluments) of the Remaining Group charged to the statement of profit or loss during 2018 amounted to HK$328 million (2017 — HK$362 million). The Remaining Group ensured that its employees were offered competitive remuneration packages. The Remaining Group also provided benefits such as medical insurance and retirement funds to employees to sustain competitiveness of the Remaining Group.

Future plans for material investments and acquisition of capital assets

Save for disclosed elsewhere in this section, there was no specific plan for material investments and acquisition of capital assets as at 31 March 2018.

(d) For the six months ended 30 September 2018

Operating results

The Remaining Group recorded a consolidated loss attributable to shareholders of approximately HK$269 million for the six months ended 30 September 2018 (the “Period”), as compared to a consolidated profit of approximately HK$114 million for the six months ended 30 September 2017 (“Last Period”). The loss for the Period was mainly attributable to the net fair value loss on financial instruments marked to fair value through profit or loss due to the volatile stock markets, share of loss of joint ventures and finance costs during the Period. Revenue for the Period totalled HK$505 million (Last Period — HK$513 million). Food businesses are the principal sources of revenue of the Remaining Group, contributing to 89% (Last Period — 91%) of total revenue. As a result of higher distribution cost and selling and marketing expenses and the exchange losses incurred during the Period, total other operating expenses increased to HK$74 million (Last Period — HK$46 million) for the Period.

– I-31 –

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APPENDIX I

Business review, significant investments, material acquisitions and disposals

For the six months ended 30 September 2018, the Remaining Group and its associates, joint ventures and joint operation were principally engaged in investment holding, property investment, property development, food businesses, healthcare services, property management, mineral exploration, extraction and processing, securities investment, treasury investment and money lending. The performance analysis, significant investments, material acquisitions and disposals of these business segments are shown as follows:

Food businesses

The Remaining Group’s food businesses are mainly operated by APGL, a 50.30% subsidiary of the Company. The segment recorded a revenue of HK$451 million (Last Period — HK$467 million), mainly from food manufacturing and the food retail operations in chains of cafés and bistros, including Delifrance in Singapore and Hong Kong and Alfafa in Hong Kong. The segment recorded a profit of HK$20 million for the Period (Last Period — HK$50 million, included a non-recurring gain of HK$14 million from the sale of a joint venture). During the Period, food retail operations and food manufacturing contributed lower earnings to the Remaining Group. In order to broaden its production capacity and lower its cost of production, the APGL Group had awarded a construction contract with a contract sum of approximately RM60.5 million (equivalent to approximately HK$114 million) to a contractor for the construction of a new food factory in Malaysia.

Property investment

The Remaining Group’s property investment portfolio is located mainly in Hong Kong and mainland China and provides a stable recurring income to the Remaining Group. Segment revenue from the property investment business for the Period amounted to HK$18 million (Last Period — HK$21 million). The segment reported a profit of HK$33 million for the Period (Last Period — HK$63 million), after taking into account the fair value gain on investment properties and depreciation.

Treasury and securities investments

The Remaining Group managed its investment portfolio in accordance with the investment committee’s terms of reference and looked for opportunities to enhance yields and seek gains. The Remaining Group invested in a diversified portfolio including listed and unlisted equity securities, debt securities, investment funds and other structural products. Treasury and securities investments businesses recorded a total revenue of HK$32 million during the Period (Last Period — HK$20 million), mainly attributable to the interest income and dividend income received from the

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APPENDIX I

investment portfolio. The stock markets were volatile during the Period and the Remaining Group recorded net fair value loss in the statement of profit or loss from its securities investments of HK$188 million for the Period (Last Period — gain of HK$80 million). The net fair value loss included unrealised loss of HK$155 million (Last Period — gain of HK$45 million) from the changes in fair value of financial instruments in this category and realised loss on disposal of HK$33 million (Last Period — gain of HK$35 million). The unrealised loss, arising from uncertainties of the stock markets, has no impact to the cash flow of the Remaining Group. As a result, the treasury and securities investments businesses recorded a net loss of HK$177 million in the statement of profit or loss for the Period (Last Period — profit of HK$105 million).

As at 30 September 2018, the treasury and securities investments portfolio of HK$2,661 million (31 March 2018 — HK$2,986 million) comprised mainly cash and bank balances of HK$1,027 million (31 March 2018 — HK$964 million), financial assets at fair value through profit or loss of HK$1,335 million (31 March 2018 — HK$1,736 million) and financial assets at fair value through other comprehensive income of HK$230 million (31 March 2018 — Nil). The balance as at 31 March 2018 also included available-for-sale financial assets of HK$283 million. Further details of securities investments under different categories are as follows:

Financial assets at fair value through profit or loss

As of 30 September 2018, the Remaining Group’s financial assets at fair value through profit or loss (“FVPL”) amounted to HK$1,335 million (31 March 2018 — HK$1,738 million), comprising equity securities of HK$578 million (31 March 2018 — HK$808 million), debt securities of HK$402 million (31 March 2018 — HK$196 million) and investment funds of HK$355 million (31 March 2018 — HK$358 million). The balance as at 31 March 2018 also included equity linked notes (“ELNs”) of HK$376 million.

– I-33 –

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APPENDIX I

Details of the major financial assets at FVPL were as follows:

GSH Corporation Limited (“GSH”) PPDAI Group Inc. (“PPDAI”) Tencent Holdings Limited (“Tencent”) 5-year US$ Callable Credit Linked Certificates with principal and interest at risk on Oversea-Chinese Banking Corporation Limited (“CLN”) Others_(Note)_ Total	As at 30 September 2018 Fair value Approximate percentage of financial assets at FVPL Approximate percentage to the net assets HK$’000 177,704 13% 5% 82,227 6% 2% 78,845 6% 2% 74,990 6% 2% 921,612 69% 25% 1,335,378 100% 36%	As at 30 September 2018 Fair value Approximate percentage of financial assets at FVPL Approximate percentage to the net assets HK$’000 177,704 13% 5% 82,227 6% 2% 78,845 6% 2% 74,990 6% 2% 921,612 69% 25% 1,335,378 100% 36%	As at 31 March 2018 Fair value HK$’000 220,941 114,326 69,930 — 1,332,913 1,738,110	For the six months ended 30 September 2018
	Fair value HK$’000 177,704 82,227 78,845 74,990 921,612 1,335,378	Approximate percentage of financial assets at FVPL 13% 6% 6% 6% 69% 100%		Net fair value loss HK$’000 (43,237) (32,027) (37,468) (1,648) (42,025)
				(156,405)

Note: Others comprised of various securities, none of which accounted for more than 6% of the financial assets at FVPL as at 30 September 2018.

GSH

As at 30 September 2018, the fair value of the Remaining Group’s equity securities in GSH amounted to HK$178 million, representing approximately 13% of the Remaining Group’s total financial assets at FVPL. GSH is a Singapore listed property developer in Southeast Asia with certain properties under development in Kuala Lumpur and Kota Kinabalu, Malaysia. The pre-sale of one of its residential projects in Kuala Lumpur received satisfactory response. GSH also owns and operates two hotels at Sutera Harbour Resort in Kota Kinabalu. In April 2018, GSH completed the acquisition of a 50% stake in a prime land parcel in the heart of Kuala Lumpur’s Chinatown that could potentially be developed into a premium condominium. The Remaining Group received a dividend income of HK$6 million from GSH for the Period. Given the volatility in the stock markets, the share price performance of GSH was not satisfactory, resulting in an unrealised fair value loss of HK$43 million recognised for the Period. The share price performance of GSH may continue to fluctuate due to the prevailing stock market conditions, which is not directly related to the actual operational performance of GSH.

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PPDAI

As at 30 September 2018, the Remaining Group held ADSs of PPDAI with a carrying amount of HK$82 million, representing approximately 6% of the Remaining Group’s total financial assets at FVPL. PPDAI’s ADSs are listed on the New York Stock Exchange. It is one of the leading online consumer finance marketplace in the PRC with strong brand recognition. Launched in 2007, PPDAI is one of the first entrants in online financing service in PRC connecting borrowers and investors, whose needs have not been met by traditional financial institutions. PPDAI generates revenues primarily from fees charged to borrowers for PPDAI’s services in matching them with investors and for other related services. As of 30 September 2018, PPDAI had approximately 84 million cumulative registered users and reached 13.4 million cumulative number of borrowers. Based on its unaudited financial results for the three months ended 30 September 2018 (“Q3 2018”), operating revenues decreased to RMB1,104.3 million in Q3 2018 from RMB1,250.3 million in the same period of 2017, mainly due to the lower loan origination volume for the quarter with net profit substantially increased by 20% to RMB649.5 million for Q3 2018 from RMB541.4 million in the same period of 2017.

After the initial public offering (the “IPO”) of PPDAI’s ADSs, an announcement was made by the PRC Government putting a cap on the interest rate and restriction on the licensing in the online financing industry which affected many companies in this sector including PPDAI as reflected in their share price. Hence, the share price performance of PPDAI was not satisfactory. It also came to the Remaining Group’s attention that a class action lawsuit has been filed by law firms in the U.S. against PPDAI. The filed complaint concerned whether PPDAI’s filings with the U.S. Securities and Exchange Commission in connection with the IPO contained untrue statements or omitted material information regarding PPDAI’s business practices, the interest rates on loans or the quality of loans. The Remaining Group recorded an unrealised fair value loss of HK$32 million for the Period. Short term volatility is expected, as regulators in PRC is pushing through tough reforms in the Peer-to-Peer lending industry.

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Tencent Shares

Since the last financial year, the Remaining Group acquired Tencent Shares on the open market. As at 30 September 2018, the fair value of such Tencent Shares amounted to HK$79 million, representing approximately 6% of the Remaining Group’s total financial assets at FVPL. Given the volatility in the stock markets and the uncertainties of the regulations imposed on the products of Tencent, the price performance of Tencent Shares was not satisfactory, resulting in a fair value loss of HK$37 million recognised for the Period.

CLN

The Remaining Group subscribed for the credit linked note linked to the credit risk of the reference entity, Oversea-Chinese Banking Corporation Limited and the issuer bank, BNP Paribas (the “CLN”) with an aggregate nominal value of US$10 million during the Period. This investment was made for the purpose of generating a floating rate yield on excess cash in the environment of rising interest rates. The stipulated yield upon satisfaction of a daily range accrual condition will be 3-month US$ LIBOR + 257 bps. The CLN has a 5-year tenor and will mature in June 2023, and is callable at par value three years from the issue date. The Remaining Group intends to hold the CLN until maturity if uncalled. During the Period, the Remaining Group received coupon interest of HK$1.4 million from the CLN, and will continue to receive coupons on every subsequent quarter until maturity. As at 30 September 2018, the fair value of the CLN was HK$75 million, representing approximately 6% of the Remaining Group’s total financial assets at FVPL. Unrealised fair value loss of HK$2 million was recorded for the Period.

Financial assets at fair value through other comprehensive income

In addition to the above investments under FVPL, the Remaining Group also invests in listed and unlisted equity securities which are held for long-term strategic purposes. As at 30 September 2018, the fair value of such investments amounted to approximately HK$230 million and was recorded under financial assets at fair value through other comprehensive income (“FVOCI”) upon adoption of the new accounting standard for financial instruments on 1 April 2018. During the Period, unrealised fair value loss of HK$36 million was recognised in other comprehensive income from these investments.

– I-36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 30 September 2018, the major investment under this category was the Tencent Shares received on the expiry of the ELNs linked to Tencent Shares during the Period. Since the end of the last financial year, the Remaining Group subscribed for a number of ELNs which were linked to Tencent Shares. The Remaining Group recorded a realised gain in the statement of profit or loss of HK$15 million upon maturity of ELNs and received a total of 607,878 Tencent Shares. These Tencent Shares are not intended to be held for trading and was designated at FVOCI at initial recognition. As at 30 September 2018, the fair value of these Tencent Shares amounted to HK$196 million, representing approximately 86% of the Remaining Group’s total financial assets at FVOCI. Unrealised fair value loss of HK$34 million was recorded in other comprehensive income due to the volatility in the price of the Tencent Shares as mentioned above.

Healthcare services

The Remaining Group is optimistic about the prospects in the healthcare industry in Singapore, and has established its presence in this field in 2017. The Remaining Group is interested in approximately 40.82% of the issued shares in Healthway. Healthway is a company listed on the Catalist Board of the SGX-ST and a well-established private healthcare provider in Singapore. The HMC Group owns, operates and manages close to 100 medical centres and clinics. During the Period, the HMC Group continued to review the performance of its business units and rebalance its network of clinics to continually improve operational efficacy. The HMC Group continues its rebranding exercise. It progressively refurbishes and refreshes its clinics to complement the vision of a network of clinics that is technology-enabled and hospitality-led. This has resulted in a reduction of operating hours in certain clinics that are undergoing refurbishment works. The ongoing business optimisation measures and the rebranding initiatives will continue to anchor the HMC Group’s transformation efforts going forward. As a result of the above measures, the Remaining Group’s share of loss from the HMC Group reduced to HK$4 million (Last Period — HK$13 million). Coupled with the impact of depreciation of Singapore dollar during the Period, the Remaining Group’s interest in Healthway decreased to HK$430 million (31 March 2018 — HK$454 million).

Mineral exploration and extraction

Reference was made to the Remaining Group’s interest in a minority ownership interest in Skye whose major asset, prior to the events described below, was substantially all of the equity interests in CS Mining, a company that owned a number of copper ore deposits in the Milford Mineral Belt in Beaver County, State of Utah in the U.S. The JV Company, in which the Remaining Group has 45% effective interest, had acquired all or substantially

– I-37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

all of the assets held by CS Mining (the “Assets”) in a sale process under its bankruptcy proceedings in August 2017. In January 2018, a verified complaint (the “Complaint”) was filed in Delaware State Court by the majority investors in Skye individually and derivatively on behalf of Skye against, among others, certain entities and persons in or related to the Remaining Group for, among other things, damages for diminution in the value of their equity interests in CS Mining based on an alleged scheme perpetrated by the Remaining Group on CS Mining. The Remaining Group believes that the Complaint is frivolous and wholly without merit and has opposed, and will continue to vigorously oppose, the allegations set forth in the Complaint and any other claim that the majority investors in Skye may seek to bring against the Remaining Group. In June 2018, a subsidiary of the Company commenced an involuntary Chapter 7 bankruptcy case (the “Skye Involuntary Bankruptcy”) against Skye in the Delaware Bankruptcy Court. The majority investors of Skye opposed the Skye Involuntary Bankruptcy and moved to dismiss same. As of 30 September 2018, the Delaware Bankruptcy Court had not ruled on the motion to dismiss. For the reasons as mentioned above, the Remaining Group believes that such events will not have any material adverse impact on its financial position. In December 2018, the Delaware Bankruptcy Court entered an order dismissing the Skye Involuntary Bankruptcy. Subsequently, the Remaining Group appealed the order dismissing the Skye Involuntary Bankruptcy. No activity has taken place in connection with such appeal.

Following the acquisition of the Assets by the JV Company, the JV Company has commenced the copper production since the last quarter of 2017. As a result of the drop in copper price and the increased production cost during the Period, the Remaining Group shared a loss of joint venture of HK$48 million for the Period (Last Period — HK$0.1 million). The JV Company is considering various plans to minimise operating costs.

As at 30 September 2018, total assets under this segment (comprising segment assets and interests in a joint venture) decreased to HK$42 million (31 March 2018 — HK$90 million). Segment loss before accounting of share of results of a joint venture for the Period amounted to HK$5 million (Last Period — HK$0.03 million).

Other business

In order to expand its scope of business in securities and fund investments in Asia, the Remaining Group had acquired 39.9% interest in TIH, a company listed on the Main Board of SGX-ST in early 2018. TIH is an associate of the Remaining Group. The Remaining Group recorded a share of loss of HK$14 million from its investment in TIH for the Period (Last Period — not applicable), mainly attributable to the fair value loss on its investments

– I-38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

at fair value through profit or loss. The interests in TIH as at 30 September 2018 amounted to HK$305 million (31 March 2018 — HK$334 million). The current volatility in the financial markets is expected to present opportunities for TIH to identify special situations, corporates deleveraging and non-core secondary assets at attractive valuations.

Liquidity, financial resources and charge on assets

The Remaining Group financed its liquidity requirements through a combination of cash flow generated from operations and bank borrowings. As at 30 September 2018, the Remaining Group’s total cash and bank balances (consisted of cash and cash equivalents, time deposits with original maturity of more than three months and restricted cash) amounted to HK$1.2 billion (31 March 2018 — HK$1.3 billion). Restricted cash balance as at 30 September 2018 increased to HK$146 million (31 March 2018 — HK$66 million), mainly due to the cash deposits pledged to banks as securities for facilities granted to the Remaining Group.

As at 30 September 2018, bank and other borrowings of the Remaining Group increased to HK$1.6 billion (31 March 2018 — HK$1.3 billion), which included bank loans of HK$1.3 billion (31 March 2018 — HK$1.0 billion), unsecured notes of HK$0.3 billion (31 March 2018 — HK$0.3 billion) and obligations under finance leases of HK$0.5 million (31 March 2018 — HK$1 million). As at 30 September 2018, bank loans comprised secured bank loans of HK$1,204 million (31 March 2018 — HK$1,027 million) and unsecured bank loans of HK$80 million (31 March 2018 — Nil) and were denominated mainly in Hong Kong dollars. The bank loans were secured by fixed or floating charges on certain properties, bank deposits and securities investments of the Remaining Group. All of the bank loans carried interest at floating rates. The unsecured notes were unsecured, denominated in Singapore dollars, and carried interest at a rate of 2.25% per annum. The obligations under finance leases were secured by the rights to the leased fixed assets. As at 30 September 2018, approximately 55% (31 March 2018 — 45%) of the bank and other borrowings were repayable within one year. As at 30 September 2018, the gearing ratio (measured as total borrowings, net of non-controlling interests, to equity attributable to equity holders of the Company from the Remaining Group) was 42.1% (31 March 2018 — 33.7%).

Capital structure and foreign exchange risk

There was no change in the Remaining Group’s capital structure.

The Remaining Group monitored the relative foreign exchange position of its assets and liabilities to minimise foreign currency risk. When appropriate, hedging instruments including forward contracts, swap and currency loans would be used to manage the foreign exchange exposure.

– I-39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities and capital commitment

The Remaining Group had bankers’ guarantees of approximately HK$25 million as at 30 September 2018 (31 March 2018 — HK$34 million) issued in lieu of rental and utility deposits for the premises used for operation of food businesses. Approximately 58% (31 March 2018 — 59%) of the bankers’ guarantees were secured by certain bank deposits of the Remaining Group.

The Remaining Group’s commitments are mainly related to the securities investments and food businesses. During the Period, the construction of the new factory for the food businesses was commenced. Hence, total commitment as at 30 September 2018 increased to HK$281 million (31 March 2018 — HK$94 million). The investments or capital assets will be financed by the Remaining Group’s internal resources and/or external bank financing, as appropriate.

Employee and remuneration policies

The Remaining Group had 1,429 employees as at 30 September 2018 (30 September 2017 — 1,439 employees). Staff costs (including directors’ emoluments) of the Remaining Group charged to the statement of profit or loss for the Period amounted to HK$160 million (Last Period — HK$151 million). The Remaining Group ensures that its employees are offered competitive remuneration packages. The Remaining Group also provides benefits such as medical insurance and retirement funds to employees to sustain competitiveness of the Remaining Group.

Future plans for material investments and acquisition of capital assets

Save for disclosed elsewhere in this section, there was no specific plan for material investments and acquisition of capital assets as at 30 September 2018.

– I-40 –

APPENDIX IIA

FINANCIAL INFORMATION OF APM

Set out below are the financial information of APM which comprises the unaudited statements of financial position of APM as at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018 and the unaudited statements of profit or loss, unaudited statements of comprehensive income, unaudited statements of changes in equity and unaudited statements of cash flows of APM for each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018 and certain explanatory notes (the “Unaudited Financial Information of APM”).

The Unaudited Financial Information of APM has been presented on the basis set out in Note 2 to the Unaudited Financial Information of APM and Rule 14.68(2)(a)(i)(A) of the Listing Rules.

The reporting accountants of APM, Messrs. Ernst & Young, were engaged to review the Unaudited Financial Information of APM set out on pages IIA-2 to IIA-10 of this circular in accordance with the Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity and with reference to Practice Note 750 Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal issued by the Hong Kong Institute of Certified Public Accountants. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountants to obtain assurance that the reporting accountants would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountants do not express an audit opinion.

Based on the review, nothing has come to the reporting accountants’ attention that causes them to believe that the Unaudited Financial Information of APM is not prepared, in all material respects, in accordance with the basis of preparation set out in Note 2 to the Unaudited Financial Information of APM.

– IIA-1 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

UNAUDITED STATEMENTS OF PROFIT OR LOSS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

Revenue Cost of sales Gross profit Administrative expenses Other operating expenses Finance costs Profit before tax Income tax Profit for the year/period	For the year ended 31 March 2016 S$’000 104,896 (80,762) 24,134 (11,566) (10,787) – 1,781 (248) 1,533	For the year ended 31 March 2017 S$’000 110,462 (85,845) 24,617 (13,427) (10,298) – 892 (126) 766	For the year ended 31 March 2018 S$’000 101,630 (78,924) 22,706 (11,362) (8,688) – 2,656 (214) 2,442	For the six months ended 30 September 2017 S$’000 51,891 (40,587) 11,304 (5,668) (4,331) – 1,305 1 1,306	For the six months ended 30 September 2018 S$’000 51,015 (38,380)
					12,635 (5,698) (5,121) (7)
					1,809 (304)
					1,505

– IIA-2 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

				For the	For the
	For the	For the	For the	six months	six months
	year ended	year ended	year ended	ended	ended
	31 March	31 March	31 March	30 September	30 September
	2016	2017	2018	2017	2018
	S$’000	S$’000	S$’000	S$’000	S$’000
Profit for the year/period
and total comprehensive
income for the
year/period	1,533	766	2,442	1,306	1,505

– IIA-3 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

UNAUDITED STATEMENTS OF FINANCIAL POSITION

As at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018

Non-current assets Fixed assets Deferred tax assets Current assets Inventories Debtors, prepayments and deposits Amounts due from group companies Cash and cash equivalents Current liabilities Creditors, accruals and deposits received Amounts due to group companies Tax payable Net current assets Total assets less current liabilities Non-current liabilities Deferred tax liabilities Net assets Equity Share capital Retained profits	31 March 2016 S$’000 1,264 – 1,264 16,586 20,759 22,242 189 59,776 21,807 25,960 370 48,137 11,639 12,903 113 12,790 10,000 2,790 12,790	31 March 2017 S$’000 552 247 799 16,847 23,246 5,902 2,541 48,536 23,650 11,456 673 35,779 12,757 13,556 – 13,556 10,000 3,556 13,556	31 March 2018 S$’000 624 44 668 14,946 19,055 9,930 2,355 46,286 21,471 8,947 538 30,956 15,330 15,998 – 15,998 10,000 5,998 15,998	30 September 2018 S$’000 2,149 121
				2,270
				13,757 18,952 7,322 1,720
				41,751
				17,245 8,536 737
				26,518
				15,233
				17,503
				–
				17,503
				10,000 7,503
				17,503

– IIA-4 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

UNAUDITED STATEMENTS OF CHANGES IN EQUITY

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

At 1 April 2015 Profit for the year and total comprehensive income for the year Dividend At 31 March 2016 At 1 April 2016 Profit for the year and total comprehensive income for the year At 31 March 2017 At 1 April 2017 Profit for the year and total comprehensive income for the year At 31 March 2018 At 1 April 2018 Profit for the period and total comprehensive income for the period At 30 September 2018 At 1 April 2017 Profit for the period and total comprehensive income for the period At 30 September 2017	Share capital S$’000 10,000 – – 10,000 10,000 – 10,000 10,000 – 10,000 10,000 – 10,000 10,000 – 10,000	Retained profits S$’000 26,257 1,533 (25,000) 2,790 2,790 766 3,556 3,556 2,442 5,998 5,998 1,505 7,503 3,556 1,306 4,862	Total equity S$’000 36,257 1,533 (25,000) 12,790 12,790 766 13,556 13,556 2,442 15,998 15,998 1,505 17,503 13,556 1,306 14,862

– IIA-5 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

UNAUDITED STATEMENTS OF CASH FLOWS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

Cash flows from operating activities Profit before tax Adjustments for: Depreciation Loss on disposal of fixed assets Provisions for impairment losses on trade debtors Provisions/(Write-back of provisions) for impairment losses of inventories Decrease/(Increase) in inventories Decrease/(Increase) in debtors, prepayments and deposits Increase/(Decrease) in creditors, accruals and deposits received Cash generated from/(used in) operations Tax paid Net cash flows from/(used in) operating activities	For the year ended 31 March 2016 S$’000 1,781 494 – 12 1,318 3,605 1,355 1,344 345 6,649 (36) 6,613	For the year ended 31 March 2017 S$’000 892 989 44 152 2,254 4,331 (2,515) (2,639) 1,842 1,019 (279) 740	For the year ended 31 March 2018 S$’000 2,656 245 – 18 39 2,958 1,862 4,178 (2,179) 6,819 (147) 6,672	For the six months ended 30 September 2017 S$’000 1,305 124 – 14 (219) 1,224 3,327 1,768 (2,204) 4,115 (422) 3,693	For the six months ended 30 September 2018 S$’000 1,809 200 – – 367
					2,376 822 5 (4,226)
					(1,023) (85)
					(1,108)

– IIA-6 –

APPENDIX IIA

FINANCIAL INFORMATION OF APM

For the year ended 31 March 2016 S$’000 Cash flows from investing activities Proceeds from disposals of fixed assets – Payment to acquire fixed assets (217) Net cash flows used in investing activities (217) Cash flows from financing activities Dividend paid (25,000) Changes in intercompany balances 18,630 Net cash flows from/(used in) financing activities (6,370) Net increase/(decrease) in cash and cash equivalents 26 Cash and cash equivalents at beginning of year/period 163 Cash and cash equivalents at end of year/period 189	For the year ended 31 March 2017 S$’000 40 (361) (321) – 1,933 1,933 2,352 189 2,541	For the year ended 31 March 2018 S$’000 – (317) (317) – (6,541) (6,541) (186) 2,541 2,355	For the six months ended 30 September 2017 S$’000 – (315) (315) – (5,658) (5,658) (2,280) 2,541 261	For the six months ended 30 September 2018 S$’000 4 (1,729)
				(1,725)
				– 2,198
				2,198
				(635) 2,355
				1,720

– IIA-7 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

NOTES TO THE UNAUDITED FINANCIAL INFORMATION OF APM

1. General information

APM is a private limited company incorporated and domiciled in Singapore. The principal activities of APM are wholesale distributors of food and allied fast-moving consumer products.

On 21 December 2018, APGL, an indirect non-wholly owned subsidiary of the Company, and DKSH Singapore entered into the Singapore Disposal Agreement, pursuant to which, APGL conditionally agreed to sell or procure the sale of its equity interests in APM and CM, for the initial consideration of S$60,726,000, subject to adjustments. Upon Completion, APM will cease to be the subsidiary of the Company.

2. Basis of preparation

The Unaudited Financial Information of APM has been prepared in accordance with Rule 14.68(2)(a)(i)(A) of the Listing Rules, and solely for the purposes of inclusion in the circular in connection with the proposed transaction. The financial information does not contain sufficient information to constitute a complete set of financial statements as described in Hong Kong Accounting Standard (“HKAS”) 1 Presentation of Financial Statements nor a set of condensed financial statements as defined in HKAS 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). It should be read in connection with the annual report of the Company for the year ended 31 March 2018 and the interim report of the Company for the six months ended 30 September 2018. The unaudited financial information are presented in Singapore dollar (“S$”) and all values are rounded to the nearest thousands (“S$’000”) except when otherwise indicated.

The Unaudited Financial Information of APM has been prepared in accordance with the accounting policies as set out in the annual report of the Company for the year ended 31 March 2018 except for the adoption of the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”), HKASs and Interpretations (hereinafter collectively referred to as the “new and revised HKFRSs”) as disclosed in Note 3 below.

3. Changes in accounting policies

The following new and revised HKFRSs have been adopted for the first time for the financial year beginning on 1 April 2018:

Amendments to HKFRS 2	Classification and Measurement of Share-based
	Payment Transactions
Amendments to HKFRS 4	Applying HKFRS 9 Financial Instruments with
	HKFRS 4 Insurance Contracts
HKFRS 9	Financial Instruments
HKFRS 15	Revenue from Contracts with Customers
Amendments to HKFRS 15	Clarifications to HKFRS 15 Revenue from
	Contracts with Customers
Amendments to HKAS 40	Transfers of Investment Property
Amendments to HKFRS 1 included in	First-time Adoption of Hong Kong Financial
Annual Improvements 2014-2016 Cycle	Reporting Standards
Amendments to HKAS 28 included in	Investments in Associates and Joint Ventures
Annual Improvements 2014-2016 Cycle
HK(IFRIC)-Int 22	Foreign Currency Transactions and Advance
	Consideration

– IIA-8 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

Except for HKFRS 9 and HKFRS 15, the application of other amendments and interpretation do not have material financial effects on the APM’s financial information. APM has taken transitional provisions and methods not to restate comparative information for prior periods. The comparative information continues to be reported under the accounting policies prevailing prior to 1 April 2018. The nature and effect of these changes in accounting policies are disclosed below.

(a) HKFRS 9 Financial Instruments

HKFRS 9 replaces HKAS 39 Financial Instruments: Recognition and Measurement , bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. APM has adopted HKFRS 9 from 1 April 2018. APM has not restated comparative information as permitted by the transitional provisions in HKFRS 9.

The adoption of HKFRS 9 does not have any material impact related to the classification and measurement of financial instruments of APM. The impacts from adopting HKFRS 9 related to the impairment requirements are summarised as follows:

The adoption of HKFRS 9 has changed the APM’s accounting for impairments by replacing HKAS 39’s incurred loss approach with a forward-looking expected credit loss approach. HKFRS 9 requires an impairment on debt instruments recorded at amortised cost or at fair value through other comprehensive income, lease receivables, loan commitments and financial guarantee contracts that are not accounted for at fair value through profit or loss under HKFRS 9, to be recorded based on an expected credit loss model either on a twelve-month basis or a lifetime basis.

Upon adoption of HKFRS 9, APM has applied the simplified approach and recorded lifetime expected losses that are estimated based on the present values of all cash shortfalls over the remaining life of all of its trade debtors. The results of the revision at 1 April 2018 have not resulted in any material change in impairment provision or any material impact on the carrying amount of the APM’s financial assets.

(b) HKFRS 15 Revenue from Contracts with Customers

HKFRS 15 supersedes HKAS 11 Construction Contracts , HKAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. HKFRS 15 establishes a new five-step model that applies to revenue arising from contracts with customers. Under HKFRS 15, revenues are recognised at amounts that reflect the consideration to which an entity expects to be entitled in exchange for transferring goods or services to customers.

APM has elected to apply the modified retrospective approach for transition to the new revenue standard. Results for the periods beginning on or after 1 April 2018 are presented under HKFRS 15, while prior period amounts are not adjusted and continue to be reported in accordance with the previous basis. The major changes as a result of the adoption of HKFRS 15 are as follows:

Variable consideration

Some contracts with customers provide a right of return, trade discounts, free goods, promotion rebates or volume rebates. Such provisions give rise to variable consideration under HKFRS 15. APM previously recognised revenue from the sale of goods measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. If revenue could not be reliably measured, APM deferred revenue recognition until the uncertainty was resolved. Under HKFRS 15, variable consideration is estimated and is constrained to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

– IIA-9 –

FINANCIAL INFORMATION OF APM

APPENDIX IIA

Right of return

APM previously recorded a provision for the net margin arising from expected returns. Under HKFRS 15, APM estimates the amount of expected returns in determining the transaction price and recognises revenue based on the amounts to which the Group expects to be entitled through the end of the return period. APM recognises the amount of expected returns as a refund liability, representing its obligation to return the customer’s consideration. Separately, APM recognises a related asset for the right to recover the returned goods.

The following table gives a summary of the amounts of affected line items in the unaudited statement of profit or loss for the six months ended 30 September 2018 that has been impacted by HKFRS 15:

	Six months	ended 30 September	2018
	As presented		As presented
	under		under
	accounting	Effect on	accounting
	policies pre	adoption of	policies from
	1 April 2018	HKFRS 15	1 April 2018
	S$’000	S$’000	S$’000
Revenue	50,170	845	51,015
Cost of sales	(38,483)	103	(38,380)
Gross profit	11,687	948	12,635
Other operating expenses	(4,173)	(948)	(5,121)

There is no material impact on profit for the six months ended 30 September 2018.

– IIA-10 –

APPENDIX IIB

FINANCIAL INFORMATION OF CM

Set out below are the financial information of CM which comprises the unaudited statements of financial position of CM as at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018 and the unaudited statements of profit or loss, unaudited statements of comprehensive income, unaudited statements of changes in equity and unaudited statements of cash flows of CM for each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018 and certain explanatory notes (the “Unaudited Financial Information of CM”).

The Unaudited Financial Information of CM has been presented on the basis set out in Note 2 to the Unaudited Financial Information of CM and Rule 14.68(2)(a)(i)(A) of the Listing Rules.

The reporting accountants of CM, Messrs. Ernst & Young, were engaged to review the Unaudited Financial Information of CM set out on pages IIB-2 to IIB-10 of this circular in accordance with the Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity and with reference to Practice Note 750 Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal issued by the Hong Kong Institute of Certified Public Accountants. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountants to obtain assurance that the reporting accountants would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountants do not express an audit opinion.

Based on the review, nothing has come to the reporting accountants’ attention that causes them to believe that the Unaudited Financial Information of CM is not prepared, in all material respects, in accordance with the basis of preparation set out in Note 2 to the Unaudited Financial Information of CM.

– IIB-1 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

UNAUDITED STATEMENTS OF PROFIT OR LOSS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

Revenue Cost of sales Gross profit Administrative expenses Other operating expenses Profit before tax Income tax Profit for the year/period	For the year ended 31 March 2016 S$’000 47,512 (40,723) 6,789 (2,046) (3,941) 802 (121) 681	For the year ended 31 March 2017 S$’000 45,242 (39,174) 6,068 (1,770) (3,912) 386 57 443	For the year ended 31 March 2018 S$’000 41,997 (36,163) 5,834 (1,770) (2,837) 1,227 (141) 1,086	For the six months ended 30 September 2017 S$’000 21,710 (18,881) 2,829 (884) (1,415) 530 (19) 511	For the six months ended 30 September 2018 S$’000 23,140 (19,318)
					3,822 (977) (2,481)
					364 (40)
					324

– IIB-2 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

							For the	For the
		For the		For the		For the	six months	six months
	year ended		year ended		year ended		ended	ended
	31 March		31 March		31 March		30 September	30 September
		2016		2017		2018	2017	2018
		S$’000		S$’000		S$’000	S$’000	S$’000
Profit for the year/period
and total comprehensive
income for the year/period		681		443		1,086	511	324

– IIB-3 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

UNAUDITED STATEMENTS OF FINANCIAL POSITION

As at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018

Non-current assets Fixed assets Deferred tax assets Current assets Inventories Debtors, prepayments and deposits Amounts due from group companies Cash and cash equivalents Current liabilities Creditors, accruals and deposits received Amounts due to group companies Tax payable Net current assets Net assets Equity Share capital Retained profits	31 March 2016 S$’000 23 47 70 9,366 11,876 2 10 21,254 5,747 13,236 204 19,187 2,067 2,137 500 1,637 2,137	31 March 2017 S$’000 7 60 67 8,622 11,785 13 4 20,424 8,895 8,961 55 17,911 2,513 2,580 500 2,080 2,580	31 March 2018 S$’000 – 60 60 9,441 10,650 603 7 20,701 11,703 5,270 122 17,095 3,606 3,666 500 3,166 3,666	30 September 2018 S$’000 1 60
				61
				7,519 11,949 251 1,642
				21,361
				10,987 6,348 97
				17,432
				3,929
				3,990
				500 3,490
				3,990

– IIB-4 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

UNAUDITED STATEMENTS OF CHANGES IN EQUITY

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

At 1 April 2015 Profit for the year and total comprehensive income for the year At 31 March 2016 At 1 April 2016 Profit for the year and total comprehensive income for the year At 31 March 2017 At 1 April 2017 Profit for the year and total comprehensive income for the year At 31 March 2018 At 1 April 2018 Profit for the period and total comprehensive income for the period At 30 September 2018 At 1 April 2017 Profit for the period and total comprehensive income for the period At 30 September 2017	Share capital S$’000 500 – 500 500 – 500 500 – 500 500 – 500 500 – 500	Retained profits S$’000 956 681 1,637 1,637 443 2,080 2,080 1,086 3,166 3,166 324 3,490 2,080 511 2,591	Total equity S$’000 1,456 681
			2,137
			2,137 443
			2,580
			2,580 1,086
			3,666
			3,666 324
			3,990
			2,580 511
			3,091

– IIB-5 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

UNAUDITED STATEMENTS OF CASH FLOWS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

Cash flows from operating activities Profit before tax Adjustments for: Depreciation Provisions for impairment losses on trade debtors Provisions for impairment losses of inventories (Increase)/Decrease in inventories Decrease/(Increase) in debtors, prepayments and deposits Increase/(Decrease) in creditors, accruals and deposits received Net cash generated from operations Tax paid Net cash flows from operating activities	For the year ended 31 March 2016 S$’000 802 17 23 243 1,085 (2,994) 1,258 903 252 (49) 203	For the year ended 31 March 2017 S$’000 386 16 1 611 1,014 133 90 3,148 4,385 (105) 4,280	For the year ended 31 March 2018 S$’000 1,227 7 20 416 1,670 (1,235) 1,114 2,807 4,356 (73) 4,283	For the six months ended 30 September 2017 S$’000 530 7 – 69 606 402 78 1,809 2,895 (31) 2,864	For the six months ended 30 September 2018 S$’000 364 – 8 99
					471 1,823 (1,306) (715)
					273 (66)
					207

– IIB-6 –

APPENDIX IIB

FINANCIAL INFORMATION OF CM

Cash flows from investing activities Payment to acquire fixed assets Net cash flows used in investing activities Cash flows from financing activities Changes in intercompany balances Net cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year/period Cash and cash equivalents at end of year/period	For the year ended 31 March 2016 S$’000 – – (216) (216) (13) 23 10	For the year ended 31 March 2017 S$’000 – – (4,286) (4,286) (6) 10 4	For the year ended 31 March 2018 S$’000 – – (4,280) (4,280) 3 4 7	For the six months ended 30 September 2017 S$’000 – – (2,855) (2,855) 9 4 13	For the six months ended 30 September 2018 S$’000 (2)
					(2)
					1,430
					1,430
					1,635 7
					1,642

– IIB-7 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

NOTES TO THE UNAUDITED FINANCIAL INFORMATION OF CM

1. General information

CM is a private limited company incorporated and domiciled in Singapore. The principal activities of CM are wholesale distributors of food and allied fast-moving consumer products.

On 21 December 2018, APGL, an indirect non-wholly owned subsidiary of the Company, and DKSH Singapore entered into the Singapore Disposal Agreement, pursuant to which, APGL conditionally agreed to sell or procure the sale of its equity interests in APM and CM, for the initial consideration of S$60,726,000, subject to adjustments. Upon Completion, CM will cease to be the subsidiary of the Company.

2. Basis of preparation

The Unaudited Financial Information of CM has been prepared in accordance with Rule 14.68(2)(a)(i)(A) of the Listing Rules, and solely for the purposes of inclusion in the circular in connection with the proposed transaction. The financial information does not contain sufficient information to constitute a complete set of financial statements as described in Hong Kong Accounting Standard (“HKAS”) 1 Presentation of Financial Statements nor a set of condensed financial statements as defined in HKAS 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). It should be read in connection with the annual report of the Company for the year ended 31 March 2018 and the interim report of the Company for the six months ended 30 September 2018. The unaudited financial information are presented in Singapore dollar (“S$”) and all values are rounded to the nearest thousands (“S$’000”) except when otherwise indicated.

The Unaudited Financial Information of CM has been prepared in accordance with the accounting policies as set out in the annual report of the Company for the year ended 31 March 2018 except for the adoption of the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”), HKASs and Interpretations (hereinafter collectively referred to as the “new and revised HKFRSs”) as disclosed in Note 3 below.

3. Changes in accounting policies

The following new and revised HKFRSs have been adopted for the first time for the financial year beginning on 1 April 2018:

Amendments to HKFRS 2	Classification and Measurement of Share-based
	Payment Transactions
Amendments to HKFRS 4	Applying HKFRS 9 Financial Instruments with
	HKFRS 4 Insurance Contracts
HKFRS 9	Financial Instruments
HKFRS 15	Revenue from Contracts with Customers
Amendments to HKFRS 15	Clarifications to HKFRS 15 Revenue from
	Contracts with Customers
Amendments to HKAS 40	Transfers of Investment Property
Amendments to HKFRS 1 included in	First-time Adoption of Hong Kong Financial
Annual Improvements 2014-2016 Cycle	Reporting Standards
Amendments to HKAS 28 included in	Investments in Associates and Joint Ventures
Annual Improvements 2014-2016 Cycle
HK(IFRIC)-Int 22	Foreign Currency Transactions and Advance
	Consideration

– IIB-8 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

Except for HKFRS 9 and HKFRS 15, the application of other amendments and interpretation do not have material financial effects on the CM’s financial information. CM has taken transitional provisions and methods not to restate comparative information for prior periods. The comparative information continues to be reported under the accounting policies prevailing prior to 1 April 2018. The nature and effect of these changes in accounting policies are disclosed below.

(a) HKFRS 9 Financial Instruments

HKFRS 9 replaces HKAS 39 Financial Instruments: Recognition and Measurement , bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. CM has adopted HKFRS 9 from 1 April 2018. CM has not restated comparative information as permitted by the transitional provisions in HKFRS 9.

The adoption of HKFRS 9 does not have any material impact related to the classification and measurement of financial instruments of CM. The impacts from adopting HKFRS 9 related to the impairment requirements are summarised as follows:

The adoption of HKFRS 9 has changed the CM’s accounting for impairments by replacing HKAS 39’s incurred loss approach with a forward-looking expected credit loss approach. HKFRS 9 requires an impairment on debt instruments recorded at amortised cost or at fair value through other comprehensive income, lease receivables, loan commitments and financial guarantee contracts that are not accounted for at fair value through profit or loss under HKFRS 9, to be recorded based on an expected credit loss model either on a twelve-month basis or a lifetime basis.

Upon adoption of HKFRS 9, CM has applied the simplified approach and recorded lifetime expected losses that are estimated based on the present values of all cash shortfalls over the remaining life of all of its trade debtors. The results of the revision at 1 April 2018 have not resulted in any material change in impairment provision or any material impact on the carrying amount of the CM’s financial assets.

(b) HKFRS 15 Revenue from Contracts with Customers

HKFRS 15 supersedes HKAS 11 Construction Contracts , HKAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. HKFRS 15 establishes a new five-step model that applies to revenue arising from contracts with customers. Under HKFRS 15, revenues are recognised at amounts that reflect the consideration to which an entity expects to be entitled in exchange for transferring goods or services to customers.

CM has elected to apply the modified retrospective approach for transition to the new revenue standard. Results for the periods beginning on or after 1 April 2018 are presented under HKFRS 15, while prior period amounts are not adjusted and continue to be reported in accordance with the previous basis. The major changes as a result of the adoption of HKFRS 15 are as follows:

Variable consideration

Some contracts with customers provide a right of return, trade discounts, free goods, promotion rebates or volume rebates. Such provisions give rise to variable consideration under HKFRS 15. CM previously recognised revenue from the sale of goods measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. If revenue could not be reliably measured, CM deferred revenue recognition until the uncertainty was resolved. Under HKFRS 15, variable consideration is estimated and is constrained to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

– IIB-9 –

FINANCIAL INFORMATION OF CM

APPENDIX IIB

Right of return

CM previously recorded a provision for the net margin arising from expected returns. Under HKFRS 15, CM estimates the amount of expected returns in determining the transaction price and recognises revenue based on the amounts to which the Group expects to be entitled through the end of the return period. CM recognises the amount of expected returns as a refund liability, representing its obligation to return the customer’s consideration. Separately, CM recognises a related asset for the right to recover the returned goods.

The following table gives a summary of the amounts of affected line items in the unaudited statement of profit or loss for the six months ended 30 September 2018 that has been impacted by HKFRS 15:

	Six months	ended 30 September	2018
	As presented		As presented
	under		under
	accounting	Effect on	accounting
	policies pre	adoption of	policies from
	1 April 2018	HKFRS 15	1 April 2018
	S$’000	S$’000	S$’000
Revenue	21,933	1,207	23,140
Cost of sales	(18,730)	(588)	(19,318)
Gross profit	3,203	619	3,822
Other operating expenses	(1,862)	(619)	(2,481)

There is no material impact on profit for the six months ended 30 September 2018.

– IIB-10 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

Set out below are the financial information of APMSB Group which comprises the unaudited consolidated statements of financial position of APMSB Group as at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018 and the unaudited consolidated statements of profit or loss, unaudited consolidated statements of comprehensive income, unaudited consolidated statements of changes in equity and unaudited consolidated statements of cash flows of APMSB Group for each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018 and certain explanatory notes (the “Unaudited Financial Information of APMSB Group”).

The Unaudited Financial Information of APMSB Group has been presented on the basis set out in Note 2 to the Unaudited Financial Information of APMSB Group and Rule 14.68(2)(a)(i)(A) of the Listing Rules.

The reporting accountants of APMSB Group, Messrs. Ernst & Young, were engaged to review the Unaudited Financial Information of APMSB Group set out on pages IIC-2 to IIC-10 of this circular in accordance with the Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity and with reference to Practice Note 750 Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal issued by the Hong Kong Institute of Certified Public Accountants. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountants to obtain assurance that the reporting accountants would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountants do not express an audit opinion.

Based on the review, nothing has come to the reporting accountants’ attention that causes them to believe that the Unaudited Financial Information of APMSB Group is not prepared, in all material respects, in accordance with the basis of preparation set out in Note 2 to the Unaudited Financial Information of APMSB Group.

– IIC-1 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

For the year ended 31 March 2016 RM’000 Revenue 263,982 Cost of sales (183,837) Gross profit 80,145 Administrative expenses (15,200) Other operating expenses (46,278) Finance costs (260) Profit before tax 18,407 Income tax (5,195) Profit for the year/period 13,212 Attributable to: Equity holders of the company 13,238 Non-controlling interests (26) Profit for the year/period 13,212	For the year ended 31 March 2017 RM’000 274,811 (176,100) 98,711 (14,802) (53,935) (77) 29,897 (9,030) 20,867 20,891 (24) 20,867	For the year ended 31 March 2018 RM’000 301,067 (210,804) 90,263 (14,704) (44,283) (539) 30,737 (7,338) 23,399 23,401 (2) 23,399	For the six months ended 30 September 2017 RM’000 155,705 (109,104) 46,601 (7,625) (24,985) (153) 13,838 (5,406) 8,432 8,434 (2) 8,432	For the six months ended 30 September 2018 RM’000 171,572 (117,387)
				54,185 (8,156) (29,911) (318)
				15,800 (4,617)
				11,183
				11,195 (12)
				11,183

– IIC-2 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

For the year ended 31 March 2016 RM’000 Profit for the year/period and total comprehensive income for the year/period 13,212 Attributable to: Equity holders of the company 13,238 Non-controlling interests (26) 13,212	For the year ended 31 March 2017 RM’000 20,867 20,891 (24) 20,867	For the year ended 31 March 2018 RM’000 23,399 23,401 (2) 23,399	For the six months ended 30 September 2017 RM’000 8,432 8,434 (2) 8,432	For the six months ended 30 September 2018 RM’000 11,183
				11,195 (12)
				11,183

– IIC-3 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018

31 March 2016 RM’000 Non-current assets Intangible assets 6,056 Fixed assets 2,579 Deferred tax assets 3,379 12,014 Current assets Inventories 46,485 Debtors, prepayments and deposits 62,079 Amounts due from group companies 4,884 Tax recoverable 1,291 Cash and cash equivalents 31,755 146,494 Current liabilities Bank and other borrowings 5,956 Creditors, accruals and deposits received 40,360 Amounts due to group companies 86,276 Tax payable – 132,592 Net current assets 13,902 Net assets 25,916 Equity Equity attributable to owner of the company Share capital 1,000 Retained profits 23,262 24,262 Non-controlling interests 1,654 25,916	31 March 2017 RM’000 6,056 2,118 1,303 9,477 51,791 57,324 3,255 – 55,637 168,007 438 43,372 86,681 210 130,701 37,306 46,783 1,000 44,153 45,153 1,630 46,783	31 March 2018 RM’000 6,056 2,486 3,142 11,684 70,810 68,953 4,673 – 19,734 164,170 19,370 60,800 28,732 770 109,672 54,498 66,182 1,000 67,554 68,554 (2,372) 66,182	30 September 2018 RM’000 6,056 2,649 3,172 11,877 42,688 68,542 3,313 – 30,495 145,038 14,600 43,777 21,085 88 79,550 65,488 77,365 1,000 78,749 79,749 (2,384) 77,365

– IIC-4 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

At 1 April 2015 Profit/(Loss) for the year and total comprehensive income/(loss) for the year Dividends At 31 March 2016 At 1 April 2016 Profit/(Loss) for the year and total comprehensive income/(loss) for the year At 31 March 2017 At 1 April 2017 Profit/(Loss) for the year and total comprehensive income/(loss) for the year Waiver of advance to immediate holding company At 31 March 2018 At 1 April 2018 Profit/(Loss) for the period and total comprehensive income/(loss) for the period At 30 September 2018 At 1 April 2017 Profit/(Loss) for the period and total comprehensive income/(loss) for the period At 30 September 2017	Attributable	to equity holders	of APMSB Total RM’000 73,408 13,238 (62,384) 24,262 24,262 20,891 45,153 45,153 23,401 – 68,554 68,554 11,195 79,749 45,153 8,434 53,587	Non- controlling interest RM’000 1,680 (26) – 1,654 1,654 (24) 1,630 1,630 (2) (4,000) (2,372) (2,372) (12) (2,384) 1,630 (2) 1,628	Total equity RM’000 75,088 13,212 (62,384)
	Share capital RM’000 1,000 – – 1,000 1,000 – 1,000 1,000 – – 1,000 1,000 – 1,000 1,000 – 1,000	Retained profits RM’000 72,408 13,238 (62,384) 23,262 23,262 20,891 44,153 44,153 23,401 – 67,554 67,554 11,195 78,749 44,153 8,434 52,587
					25,916
					25,916 20,867
					46,783
					46,783 23,399 (4,000)
					66,182
					66,182 11,183
					77,365
					46,783 8,432
					55,215

– IIC-5 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For each of the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and the six months ended 30 September 2017 and 30 September 2018

For the year ended 31 March 2016 RM’000 Cash flows from operating activities Profit before tax 18,407 Adjustments for: Depreciation 822 Bad debts recovered (20) Amount due with related company (recovered)/ written off 285 Loss/(Gain) on disposal of fixed assets (33) Provisions for impairment losses of receivables 1,756 Provision for impairment losses of inventories 6,130 Finance cost 260 Interest income (703) Unrealised foreign exchange (gain)/loss 1,920 28,824 Decrease/(Increase) in inventories (1,621) Decrease/(Increase) in debtors, prepayments and deposits (10,064) Increase/(Decrease) in creditors, accruals and deposits received 10,804 Net cash generated from operations 27,943 Interest received 703 Tax paid (3,634) Net cash flows from operating activities 25,012	For the year ended 31 March 2017 RM’000 29,897 1,131 (2) (285) 35 1,107 4,267 77 (1,305) 2,017 36,939 (9,573) 6,319 1,400 35,085 1,305 (6,207) 30,183	For the year ended 31 March 2018 RM’000 30,737 638 – – (29) 803 2,477 539 (1,106) (1,845) 32,214 (21,496) (13,530) 19,673 16,861 1,106 (8,938) 9,029	For the six months ended 30 September 2017 RM’000 13,838 311 – – – 436 1,544 153 (729) (535) 15,018 17,842 (4,294) (4,924) 23,642 729 (5,931) 18,440	For the six months ended 30 September 2018 RM’000 15,800 291 – – 24 1,588 1,563 318 (253) 65
				19,396 26,560 (735) (24,734)
				20,487 253 (4,413)
				16,327

– IIC-6 –

APPENDIX IIC

FINANCIAL INFORMATION OF APMSB GROUP

For the year ended 31 March 2016 RM’000 Cash flows from investing activities Payment to acquire of fixed assets (668) Proceeds from disposal of fixed assets 33 Net cash flows used in investing activities (635) Cash flows from financing activities Interest paid (260) Net drawdown/(repayment) of banks and borrowings (1,750) Changes in intercompany balances 34 Dividends paid (4,035) Net cash flows used in financing activities (6,011) Net increase/(decrease) in cash and cash equivalents 18,366 Cash and cash equivalents at beginning of year/period 13,389 Cash and cash equivalents at end of year/period 31,755	For the year ended 31 March 2017 RM’000 (737) 31 (706) (77) (5,550) 32 – (5,595) 23,882 31,755 55,637	For the year ended 31 March 2018 RM’000 (1,106) 130 (976) (539) 19,370 (4,438) (58,349) (43,956) (35,903) 55,637 19,734	For the six months ended 30 September 2017 RM’000 (120) – (120) (153) 7,200 (438) (25,000) (18,391) (71) 55,637 55,566	For the six months ended 30 September 2018 RM’000 (539) 61
				(478)
				(318) (4,770) – –
				(5,088)
				10,761 19,734
				30,495

– IIC-7 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

NOTES TO THE UNAUDITED FINANCIAL INFORMATION OF APMSB GROUP

1. General information

APMSB is a private limited company incorporated and domiciled in Malaysia. The principal activities of APMSB Group are wholesale distribution, manufacture of food and allied fast-moving consumer products.

On 21 December 2018, APGL, an indirect non-wholly owned subsidiary of the Company, and DKSH Malaysia entered into the APMSB Disposal Agreement, pursuant to which, APGL conditionally agreed to sell or procure the sale of its equity interest in APMSB, for the initial consideration of S$157,674,000, subject to adjustments. Upon Completion, APMSB Group will cease to be the subsidiaries of the Company.

2. Basis of preparation

The Unaudited Financial Information of APMSB Group has been prepared in accordance with Rule 14.68(2)(a)(i)(A) of the Listing Rules, and solely for the purposes of inclusion in the circular in connection with the proposed transaction. The financial information does not contain sufficient information to constitute a complete set of financial statements as described in Hong Kong Accounting Standard (“HKAS”) 1 Presentation of Financial Statements nor a set of condensed financial statements as defined in HKAS 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). It should be read in connection with the annual report of the Company for the year ended 31 March 2018 and the interim report of the Company for the six months ended 30 September 2018. The unaudited financial information are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousands (“RM’000”) except when otherwise indicated.

The Unaudited Financial Information of APMSB Group has been prepared in accordance with the accounting policies as set out in the annual report of the Company for the year ended 31 March 2018 except for the adoption of the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”), HKASs and Interpretations (hereinafter collectively referred to as the “new and revised HKFRSs”) as disclosed in Note 3 below.

3. Changes in accounting policies

The following new and revised HKFRSs have been adopted for the first time for the financial year beginning on 1 April 2018:

Amendments to HKFRS 2	Classification and Measurement of Share-based
	Payment Transactions
Amendments to HKFRS 4	Applying HKFRS 9 Financial Instruments with
	HKFRS 4 Insurance Contracts
HKFRS 9	Financial Instruments
HKFRS 15	Revenue from Contracts with Customers
Amendments to HKFRS 15	Clarifications to HKFRS 15 Revenue from
	Contracts with Customers
Amendments to HKAS 40	Transfers of Investment Property
Amendments to HKFRS 1 included in	First-time Adoption of Hong Kong Financial
Annual Improvements 2014-2016 Cycle	Reporting Standards
Amendments to HKAS 28 included in	Investments in Associates and Joint Ventures
Annual Improvements 2014-2016 Cycle
HK(IFRIC)-Int 22	Foreign Currency Transactions and Advance
	Consideration

– IIC-8 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

Except for HKFRS 9 and HKFRS 15, the application of other amendments and interpretation do not have material financial effects on the APMSB Group’s financial information. APMSB Group has taken transitional provisions and methods not to restate comparative information for prior periods. The comparative information continues to be reported under the accounting policies prevailing prior to 1 April 2018. The nature and effect of these changes in accounting policies are disclosed below.

(a) HKFRS 9 Financial Instruments

HKFRS 9 replaces HKAS 39 Financial Instruments: Recognition and Measurement , bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. APMSB Group has adopted HKFRS 9 from 1 April 2018. APMSB Group has not restated comparative information as permitted by the transitional provisions in HKFRS 9.

The adoption of HKFRS 9 does not have any material impact related to the classification and measurement of financial instruments of APMSB Group. The impacts from adopting HKFRS 9 related to the impairment requirements are summarised as follows:

The adoption of HKFRS 9 has changed the APMSB Group’s accounting for impairments by replacing HKAS 39’s incurred loss approach with a forward-looking expected credit loss approach. HKFRS 9 requires an impairment on debt instruments recorded at amortised cost or at fair value through other comprehensive income, lease receivables, loan commitments and financial guarantee contracts that are not accounted for at fair value through profit or loss under HKFRS 9, to be recorded based on an expected credit loss model either on a twelve-month basis or a lifetime basis.

Upon adoption of HKFRS 9, APMSB Group has applied the simplified approach and recorded lifetime expected losses that are estimated based on the present values of all cash shortfalls over the remaining life of all of its trade debtors. The results of the revision at 1 April 2018 have not resulted in any material change in impairment provision or any material impact on the carrying amount of the APMSB Group’s financial assets.

(b) HKFRS 15 Revenue from Contracts with Customers

HKFRS 15 supersedes HKAS 11 Construction Contracts , HKAS 18 Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. HKFRS 15 establishes a new five-step model that applies to revenue arising from contracts with customers. Under HKFRS 15, revenues are recognised at amounts that reflect the consideration to which an entity expects to be entitled in exchange for transferring goods or services to customers.

APMSB Group has elected to apply the modified retrospective approach for transition to the new revenue standard. Results for the periods beginning on or after 1 April 2018 are presented under HKFRS 15, while prior period amounts are not adjusted and continue to be reported in accordance with the previous basis. The major changes as a result of the adoption of HKFRS 15 are as follows:

Variable consideration

Some contracts with customers provide a right of return, trade discounts, free goods, promotion rebates or volume rebates. Such provisions give rise to variable consideration under HKFRS 15. APMSB Group previously recognised revenue from the sale of goods measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. If revenue could not be reliably measured, APMSB Group deferred revenue recognition until the uncertainty was resolved. Under HKFRS 15, variable consideration is estimated and is constrained to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

– IIC-9 –

FINANCIAL INFORMATION OF APMSB GROUP

APPENDIX IIC

Right of return

APMSB Group previously recorded a provision for the net margin arising from expected returns. Under HKFRS 15, APMSB Group estimates the amount of expected returns in determining the transaction price and recognises revenue based on the amounts to which the Group expects to be entitled through the end of the return period. APMSB Group recognises the amount of expected returns as a refund liability, representing its obligation to return the customer’s consideration. Separately, APMSB Group recognises a related asset for the right to recover the returned goods.

The following table gives a summary of the amounts of affected line items in the unaudited statement of profit or loss for the six months ended 30 September 2018 that has been impacted by HKFRS 15:

	Six months	ended 30 September	2018
	As presented		As presented
	under		under
	accounting	Effect on	accounting
	policies pre	adoption of	policies from
	1 April 2018	HKFRS 15	1 April 2018
	RM’000	RM’000	RM’000
Revenue	174,125	(2,553)	171,572
Cost of sales	(119,796)	2,409	(117,387)
Gross profit	54,329	(144)	54,185
Other operating expenses	(30,055)	144	(29,911)

There is no material impact on profit for the six months ended 30 September 2018.

– IIC-10 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (a) Basis of preparation of the unaudited pro forma financial information of the Remaining Group

The following is an illustrative unaudited pro forma consolidated statement of financial position, unaudited pro forma consolidated statement of profit or loss, unaudited pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated statement of cash flows of the Remaining Group (the “Unaudited Pro Forma Financial Information”), which have been prepared in accordance with paragraph 4.29 of the Listing Rules and on the basis of the notes set out below, for the purpose of illustrating the effect of the Disposal as if it had taken place on 30 September 2018 for the unaudited pro forma consolidated statement of financial position, and 1 April 2017 for the unaudited pro forma consolidated statement of profit or loss, unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not give a true picture of the financial position, financial results or cash flows of the Remaining Group had the Disposal been completed as at 30 September 2018 for the financial position, or 1 April 2017 for the financial results and cash flows or at any future date.

The Unaudited Pro Forma Financial Information should be read in conjunction with the audited financial statements of the Group for the year ended 31 March 2018 as set out in the annual report of the Company for the year ended 31 March 2018, the interim report of the Company for the six months ended 30 September 2018 and other financial information included elsewhere in this circular.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2018 extracted from the published interim report of the Company for the six months ended 30 September 2018, the audited consolidated statement of profit or loss, the audited consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 March 2018 extracted from the annual report of the Company for the year ended 31 March 2018, after making pro forma adjustments relating to the Disposal as described in the notes that are (i) directly attributable to the transactions concerned and not relating to future events or decisions; (ii) factually supportable; and (iii) considered to be integral to the Disposal.

– III-1 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(b) Unaudited pro forma Consolidated Statement of Financial Position

Non-current assets Intangible assets Exploration and evaluation assets Fixed assets Investment properties Interests in associates Interests in joint ventures Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Debtors, prepayments and deposits Deferred tax assets Current assets Inventories Debtors, prepayments and deposits Amounts due from group companies Financial assets at fair value through profit or loss Tax recoverable Restricted cash Time deposits with original maturity of more than three months Cash and cash equivalents Current liabilities Bank and other borrowings Creditors, accruals and deposits received Amounts due to group companies Other financial liabilities Tax payable Net current assets Total assets less current liabilities	Condensed consolidated statement of financial position of the Group as at 30 September 2018 (Unaudited) Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(a)) (Note 2(a)) (Note 2(b)) 204,249 (11,433) 476 935,233 (17,284) 861,886 753,558 42,722 229,693 531,852 35,684 7,021 (7,021) 3,602,374 212,956 (202,138) 589,236 (305,935) – (49,519) 49,519 803,526 311 146,240 67,041 1,077,932 (76,776) 1,247,741 2,897,242 893,384 (27,562) 547,365 (243,934) – (124,838) 124,838 9,546 165,705 (4,931) 1,616,000 1,281,242 4,883,616	Pro forma of the Remaining Group (Unaudited) HK$’000 192,816 476 917,949 861,886 753,558 42,722 229,693 531,852 35,684 –
		3,566,636
		10,818 283,301 – 803,526 311 146,240 67,041 2,248,897
		3,560,134
		865,822 303,431 – 9,546 160,774
		1,339,573
		2,220,561
		5,787,197

– III-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Non-current liabilities Bank and other borrowings Creditors, accruals and deposits received Deferred tax liabilities Net assets Equity Equity attributable to equity holders of the Company Share capital Reserves Non-controlling interests	Condensed consolidated statement of financial position of the Group as at 30 September 2018 (Unaudited) Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(a)) (Note 2(a)) (Note 2(b)) 700,263 29,491 50,599 780,353 4,103,263 1,705,907 1,894,282 17,155 344,455 3,600,189 503,074 30,000 511,971 4,103,263	Pro forma of the Remaining Group (Unaudited) HK$’000 700,263 29,491 50,599
		780,353
		5,006,844
		1,705,907 2,255,892
		3,961,799 1,045,045
		5,006,844

– III-3 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(c) Unaudited Pro Forma Consolidated Statement of Profit or Loss

Revenue Cost of sales Gross profit Administrative expenses Other operating expenses Gain/(Loss) on disposal of subsidiaries Net fair value gain on investment properties Net fair value loss on financial instruments at fair value through profit or loss Write-back of provision/(Provisions) for impairment losses on: Loans and receivables Available-for-sales financial assets Finance costs Share of results of associates Share of results of joint ventures Profit/(Loss) before tax Income tax Profit/(Loss) for the year Attributable to: Equity holders of the Company Non-controlling interests	Consolidated statement of profit or loss of the Group for the year ended 31 March 2018 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(b)) (Note 3(a)) (Note 3(b)) 2,400,637 (1,391,623) (1,367,850) 1,058,017 1,032,787 (678,248) 103,192 (293,992) 149,405 (14,560) 771,773 87,492 (42,696) 4,108 (23,895) (33,925) 1,011 (15,922) (43,254) (22,105) (22,414) 15,804 (44,519) (117,364) (25,300) 304,156 72,845 (38,894) 467,617 (44,519)	Unaudited pro forma of the Remaining Group HK$’000 1,009,014 (309,833)
		699,181 (575,056) (144,587) 757,213 87,492 (42,696) 4,108 (23,895) (32,914) (15,922) (43,254)
		669,670 (6,610)
		663,060
		161,492 501,568
		663,060

– III-4 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(d) Unaudited Pro Forma Consolidated Statement of Comprehensive Income

Consolidated statement of comprehensive income of the Group for the year ended 31 March 2018 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(b)) (Note 3(a)) (Note 3(b)) Profit/(Loss) for the year (44,519) (64,194) 771,773 Other comprehensive income/(loss) Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods: Available-for-sale financial assets: Changes in fair value 18,556 Adjustment for disposals (2,436) Adjustment for derecognition (12,919) 3,201 Exchange differences on translation of foreign operations 170,526 (4,422) Exchange differences reclassified to profit or loss upon: Disposal of foreign subsidiaries 13,155 45,611 Disposal of a foreign joint operation 2,021 Deemed disposal of a foreign associate (1,849) Liquidation of foreign operations 13,665 Settlement of intercompany dividend 10,054 37,046 Share of other comprehensive income of associates 19,362 Net other comprehensive income to be reclassified to profit or loss in subsequent periods and other comprehensive income for the year, net of tax 230,135 Total comprehensive income for the year 185,616 Attributable to: Equity holders of the Company 34,542 (27,043) 322,131 Non-controlling interests 151,074 (41,573) 495,253 185,616	Unaudited pro forma of the Remaining Group HK$’000 663,060
	18,556 (2,436) (12,919)
	3,201 166,104 58,766 2,021 (1,849) 13,665 10,054
	82,657 19,362
	271,324
	934,384
	329,630 604,754
	934,384

– III-5 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(e) Unaudited Pro Forma Consolidated Statement of Cash Flows

Cash flows from operating activities Profit/(Loss) before tax Adjustments for: Share of results of associates Share of results of joint ventures Loss/(Gain) on disposal of: Fixed assets A joint venture A joint operation Subsidiaries Available-for-sale financial assets Gain on deemed disposal of an associate Gain on derecognition of available-for-sale financial assets Provisions/(Write-back of provisions) for impairment losses on: Fixed assets Available-for-sale financial assets Inventories Loans and receivables Fixed assets written off Realised translation losses reclassified to the statement of profit or loss relating to: Liquidation of foreign operations Settlement of intercompany dividend Net fair value loss on financial instruments at fair value through profit or loss Net fair value gain on investment properties Finance costs Interest income Dividend income Depreciation Amortisation of intangible assets	Consolidated statement of cash flows of the Group for the year ended 31 March 2018 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(b)) (Note 3(a)) (Note 3(b), 4) (22,105) (79,998) 771,773 15,922 43,254 (21,720) 54 (14,678) 105 14,560 (771,773) (7,767) (4,859) (12,919) (13,227) 23,895 7,774 (7,265) (4,108) (1,725) 3,582 13,665 10,054 42,696 (87,492) 33,925 (1,011) (13,185) 2,074 (24,928) 67,364 (2,647) 104 49,912	Unaudited pro forma of the Remaining Group HK$’000 669,670 15,922 43,254 (21,666) (14,678) 105 (757,213) (7,767) (4,859) (12,919) (13,227) 23,895 509 (5,833) 3,582 13,665 10,054 42,696 (87,492) 32,914 (11,111) (24,928) 64,717 104
		(40,606)

– III-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Decrease in properties held for sale Increase in inventories Increase in debtors, prepayments and deposits Increase in financial instruments at fair value through profit or loss Decrease in assets classified as held for sale Increase in creditors, accruals and deposits received Increase in other financial liabilities Decrease in liabilities classified as held for sale Cash used in operations Interest received Dividends received from investments Taxes paid: Hong Kong Overseas Net cash flows used in operating activities Cash flows from investing activities Proceeds from disposals of: Fixed assets A joint venture Available-for-sale financial assets Payments to acquire: Fixed assets Exploration and evaluation assets Associates Available-for-sale financial assets Additions to investment properties Advances to joint ventures Disposal of a joint operation, net of cash and cash equivalents Disposal of subsidiaries, net of cash and cash equivalents Disposal of the Disposal Companies Recovery of loans and advances Increase in time deposits with original maturity of more than three months Net cash flows from/(used in) investing activities	Consolidated statement of cash flows of the Group for the year ended 31 March 2018 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(b)) (Note 3(a)) (Note 3(b), 4) 3,679 (54,660) 36,699 (36,252) (5,103) (774,117) 173 493,966 (31,414) 834 (55) (316,520) 12,692 (2,074) 25,509 (7,547) (68,060) 18,027 (353,926) 48,005 (244) 28,792 8,347 (140,304) 3,899 (393) (98,309) (477,440) (57,769) (134,162) 784 181,753 – 986,411 21,475 (22,686) (641,907)	Unaudited pro forma of the Remaining Group HK$’000 3,679 (17,961) (41,355) (774,117) 173 462,552 834 (55)
		(406,856) 10,618 25,509 (7,547) (50,033)
		(428,309)
		47,761 28,792 8,347 (136,405) (393) (98,309) (477,440) (57,769) (134,162) 784 181,753 986,411 21,475 (22,686)
		348,159

– III-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Cash flows from financing activities Finance costs paid Drawdown of bank and other borrowings Repayment of bank and other borrowings Repayment of obligations under finance leases Movement of balances between the Disposal Companies and the Remaining Group Payment for share capital reduction by a subsidiary Dividends paid to shareholders of the Company Dividends paid to non-controlling shareholders of a subsidiary Dividend received from APMSB Decrease in restricted cash Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange realignments Cash and cash equivalents at end of year	Consolidated statement of cash flows of the Group for the year ended 31 March 2018 Pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 1(b)) (Note 3(a)) (Note 3(b), 4) (39,621) 1,011 1,224,271 (36,323) (1,221,617) (574) – 70,634 (24,588) (87,276) (91,184) – 109,416 832,036 591,447 (404,386) 1,538,558 (111,930) 67,689 (16,287) 1,201,861	Unaudited pro forma of the Remaining Group HK$’000 (38,610) 1,187,948 (1,221,617) (574) 70,634 (24,588) (87,276) (91,184) 109,416 832,036
		736,185
		656,035 1,426,628 51,402
		2,134,065

– III-8 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(f) Notes to the Unaudited Pro Forma Financial Information

• (1) (a) The amounts are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2018 as set out in the published interim report of the Company for the six months ended 30 September 2018.

• (b) The amounts are extracted from the audited consolidated statement of profit or loss, consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 March 2018 as set out in the annual report of the Company for the year ended 31 March 2018.

• (2) The following pro forma adjustments have been made to the unaudited pro forma consolidated statement of financial position, assuming the Disposal had taken place on 30 September 2018:

• (a) The adjustments represent the derecognition of assets and liabilities of the Disposal Companies as at 30 September 2018, assuming the Disposal had taken place on 30 September 2018. The assets and liabilities of the Disposal Companies are extracted from the unaudited statement of financial position of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively. For the purpose of the unaudited pro forma consolidated statement of financial position, the balances denominated in Singapore dollars have been translated into Hong Kong dollars at S$1=HK$5.7131 and the balances denominated in Malaysian Ringgit have been translated into Hong Kong dollars at RM1=HK$1.8878, being the exchange rates prevailing as at 30 September 2018.

– III-9 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (b) The adjustments represent the estimated gain on disposal assuming the Disposal had taken place on 30 September 2018 and is calculated as follows:

Consideration (Note (i)) Carrying value of net assets of the Disposal Companies attributable to owners of the Disposal Companies as at 30 September 2018 (Note (ii)) Settlement of intercompany balances between the Disposal Companies and the Remaining Group as at 30 September 2018 (Note (iii)) Release of exchange equalisation reserves attributable to the Disposal Companies as at 30 September 2018 Estimated gain on disposal Attributable to: Equity holders of the Company Non-controlling interests

HK$’000 1,247,741 (273,342) (75,319) (42,654) 856,426 344,455 511,971 856,426

Notes:

• (i) The amount represents the aggregate initial consideration of S$218,400,000.

• (ii) The amount represents the net assets of the Disposal Companies attributable to owners of the Disposal Companies which is extracted from the unaudited financial information of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively.

• (iii) Upon Completion, all the intercompany balances between the Disposal Companies and the Remaining Group will be settled. The intercompany balances of the Disposal Companies with the Remaining Group are extracted from the unaudited financial information of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively.

– III-10 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (3) The following pro forma adjustments have been made to the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows, assuming the Disposal had taken place on 1 April 2017:

• (a) The adjustments represent the derecognition of the results and cash flows of the Disposal Companies for the year ended 31 March 2018, assuming the Disposal had taken place on 1 April 2017. The statement of profit or loss, statement of comprehensive income and statement of cash flows of the Disposal Companies are extracted from the unaudited statement of profit or loss, unaudited statement of comprehensive income and statement of cash flows of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively. For the purpose of the unaudited pro forma consolidated statement of profit or loss, unaudited pro forma consolidated statement of comprehensive income and unaudited pro forma consolidated statement of cash flows, the amounts denominated in Singapore dollars have been translated into Hong Kong dollars at S$1=HK$5.7584 and the amounts denominated in Malaysian Ringgit have been translated into Hong Kong dollars at RM1=HK$1.8752, being the average exchange rate prevailing for the year ended 31 March 2018. The amounts in Note 3(b) denominated in Singapore dollars have been translated into Hong Kong dollars at S$1=HK$5.5569 and the amounts denominated in Malaysian Ringgit have been translated into Hong Kong dollars at RM1=HK$1.7576, being the exchange rate prevailing as at 1 April 2017.

– III-11 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

• (b) The adjustments represents the estimated gain on disposal assuming the Disposal had taken place on 1 April 2017 and is calculated as follows:

Consideration (Note (i)) Carrying value of net assets of the Disposal Companies attributable to owners of the Disposal Companies as at 1 April 2017 (Note (ii)) Settlement of intercompany balances between the Disposal Companies and the Remaining Group as at 1 April 2017 (Note (iii)) Release of exchange equalisation reserves attributable to the Disposal Companies as at 1 April 2017 Estimated gain on disposal Attributable to: Equity holders of the Company Non-controlling interests

HK$’000 1,213,627 (169,027) (227,216) (45,611) 771,773 304,156 467,617 771,773

Notes:

• (i) The amount represents the aggregate initial consideration of S$218,400,000.

• (ii) The amount represents the net assets of the Disposal Companies attributable to owners of the Disposal Companies which is extracted from the unaudited financial information of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively.

• (iii) Upon Completion, all the intercompany balances between the Disposal Companies and the Remaining Group will be settled. The intercompany balances of the Disposal Companies with the Remaining Group are extracted from the unaudited financial information of APM set out in Appendix IIA, CM set out in Appendix IIB and APMSB Group set out in Appendix IIC to this circular respectively.

• (4) The adjustment represents the exclusion of cash inflow in relation to the intercompany balances between the Disposal Companies and the Remaining Group during the year ended 31 March 2018 assuming that no funding would have occurred had the Completion taken place on 1 April 2017.

• (5) All the above pro forma adjustments are not expected to have a continuing effect on the Remaining Group.

– III-12 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

2. REPORT FROM THE REPORTING ACCOUNTANT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is the text of the independent reporting accountants’ assurance report, received from Messrs. Ernst & Young, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, for the purpose of incorporation in this circular.

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Lippo China Resources Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Lippo China Resources Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position as at 30 September 2018, and the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 March 2018, and related notes as set out on pages III-1 to III-12 in Appendix III of the circular dated 25 January 2019, issued by the Company (the “Circular”) (the “Unaudited Pro Forma Financial Information”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in Appendix III of the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the disposal of (i) Auric Pacific Marketing Pte. Ltd., (ii) Centurion Marketing Pte. Ltd; and (iii) Auric Pacific (M) Sdn. Bhd. and its subsidiaries (the “Disposal”) on the Group’s consolidated financial position as at 30 September 2018 and the Group’s consolidated financial performance and cash flows for the year ended 31 March 2018 as if the Disposal had been completed at 30 September 2018 and 1 April 2017, respectively. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s interim report for the six months ended 30 September 2018, on which no audit or review report has been issued, and information about the Group’s financial performance and cash flows has been extracted by the Directors from the Group’s consolidated financial statements for the year ended 31 March 2018, on which an auditor’s report has been published.

– III-13 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline (“AG”) 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements , and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

– III-14 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Unaudited Pro Forma Financial Information.

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Disposal on unadjusted financial information of the Group as if the Disposal had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Disposal would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the Disposal, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the Disposal in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

– III-15 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Opinion

In our opinion:

• (a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Ernst & Young

Certified Public Accountants

Hong Kong

25 January 2019

– III-16 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its Associated Corporations which had been notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Directors’ and chief executive’s interests and short positions in shares and underlying shares of the Company and Associated Corporations

	Personal			Corporate		Approximate
	interests	Family		interests		percentage of
	(held as	interests		(interest of		total interests
	beneficial	(interest of		controlled		in the
Name of Director	owner)	spouse)		corporations)	Total interests	issued shares
Number of Shares
Stephen Riady	–		–	6,890,184,389	6,890,184,389	74.99
				Notes (i) and (ii)
James Siu Lung Lee	2,000		–	–	2,000	0.00
Number of ordinary shares in Lippo
Stephen Riady	–		–	369,800,219	369,800,219	74.98
				Note (i)
John Luen Wai Lee	1,031,250		–	–	1,031,250	0.21
Number of ordinary shares of HK$1.00 each in HKC
Stephen Riady	–		–	1,431,355,492	1,431,355,492	71.63
				Notes (i) and (iii)
John Luen Wai Lee	2,000,270		270	–	2,000,540	0.10
King Fai Tsui	600,000	75,000		–	675,000	0.03
James Siu Lung Lee	2,000		–	–	2,000	0.00

– IV-1 –

GENERAL INFORMATION

APPENDIX IV

Note:

• (i) As at the Latest Practicable Date, Lippo Capital, an Associated Corporation of the Company, and through its wholly-owned subsidiary, J & S Company Limited, was directly and indirectly interested in an aggregate of 369,800,219 ordinary shares in, representing approximately 74.98% of the issued shares of, Lippo. Lippo Capital was a 60% owned subsidiary of Lippo Capital Holdings, an Associated Corporation of the Company, which in turn was a wholly-owned subsidiary of Lippo Capital Group, an Associated Corporation of the Company. Dr. Stephen Riady was the beneficial owner of one ordinary share in, representing 100% of the issued share capital of, Lippo Capital Group.

• (ii) As at the Latest Practicable Date, Lippo, through its 100% owned subsidiaries, was indirectly interested in 6,890,184,389 Shares, representing approximately 74.99% of the issued shares of the Company.

• (iii) As at the Latest Practicable Date, Lippo, through its 100% owned subsidiaries, was indirectly interested in 1,431,355,492 ordinary shares of HK$1.00 each in, representing approximately 71.63% of the issued shares of, HKC.

As mentioned in Note (i) above, Dr. Stephen Riady was the beneficial owner of one ordinary share in, representing 100% of the issued share capital of, Lippo Capital Group. Through his interest in Lippo Capital Group, Dr. Stephen Riady was also interested or taken to be interested (through controlled corporations) in the issued shares of the following Associated Corporations of the Company as at the Latest Practicable Date:

				Approximate
			Number of	percentage of
			shares	interest in the
Name of Associated Corporation	Note	Class of shares	interested	issued shares
Abital Trading Pte. Limited	(a)	Ordinary shares	2	100
APGL	(b)	Ordinary shares	80,618,551	65.48
Bentham Holdings Limited	(c)	Ordinary shares	1	100
Blue Regent Limited	(a)	Ordinary shares	100	100
Boudry Limited	(a)	Ordinary shares	10	100
	(a)	Non-voting	1,000	100
		deferred shares
Brimming Fortune Limited	(a)	Ordinary shares	1	100
Broadwell Overseas Holdings Limited	(a)	Ordinary shares	1	100
First Tower Corporation (“First Tower”)	(d)	Ordinary shares	1	100
Gainmate Hong Kong Limited	(e)	Ordinary shares	100	100
Grand Peak Investment Limited	(a)	Ordinary shares	2	100
Great Honor Investments Limited	(a)	Ordinary shares	1	100
Greenorth Holdings Limited	(a)	Ordinary shares	1	100
HKCL Investments Limited	(a)	Ordinary shares	1	100
International Realty (Singapore)	(a)	Ordinary shares	2	100

Pte. Limited

– IV-2 –

GENERAL INFORMATION

APPENDIX IV

				Approximate
			Number of	percentage of
			shares	interest in the
Name of Associated Corporation	Note	Class of shares	interested	issued shares
J & S Company Limited	(a)	Ordinary shares	1	100
Lippo Assets (International) Limited	(a)	Ordinary shares	1	100
	(a)	Non-voting	15,999,999	100
		deferred shares
Lippo Capital	(c)	Ordinary shares	423,414,001	60
Lippo Capital Holdings	(f)	Ordinary shares	1	100
Lippo Finance Limited	(a)	Ordinary shares	6,176,470	82.35
Lippo Investments Limited	(a)	Ordinary shares	2	100
Lippo Realty Limited	(a)	Ordinary shares	2	100
MG Superteam Pte. Ltd.	(a)	Ordinary shares	1	100
Multi-World Builders &	(a)	Ordinary shares	4,080	51
Development Corporation
Skyscraper	(d)	Ordinary shares	10	100
The HCB General Investment	(a)	Ordinary shares	100,000	100
(Singapore) Pte. Ltd.
Valencia Development Limited	(a)	Ordinary shares	800,000	100
	(a)	Non-voting	200,000	100
		deferred shares
Winroot Holdings Limited	(a)	Ordinary shares	1	100

Note:

• (a) Such share(s) was/were 100% held directly or indirectly by Lippo Capital, a 60% owned indirect subsidiary of Lippo Capital Group.

• (b) Of these shares, 4,999,283 ordinary shares were held by Jeremiah Holdings Limited (“Jeremiah”), a 60% owned indirect subsidiary of the Company; 20,004,000 ordinary shares were held by Nine Heritage Pte Ltd, an 80% owned direct subsidiary of Jeremiah; 36,165,052 ordinary shares were held by Pantogon Holdings Pte Ltd, a 100% owned indirect subsidiary of the Company and 759,000 ordinary shares were held by Max Turbo Limited, a 100% owned indirect subsidiary of the Company. Details of Dr. Stephen Riady’s interest in the Company are disclosed in Notes (i) and (ii) above. In addition, as at the Latest Practicable Date, 18,691,216 ordinary shares were held by Silver Creek Capital Pte. Ltd. (“Silver Creek”). Dr. Stephen Riady, through companies controlled by him, is the beneficial owner of 100% of the issued shares in Silver Creek. Accordingly, Dr. Stephen Riady was taken to be interested in an aggregate of 80,618,551 ordinary shares in, representing approximately 65.48% of the issued shares of, APGL.

• (c) Such share(s) was/were held directly by Lippo Capital Holdings which in turn was a direct wholly-owned subsidiary of Lippo Capital Group.

• (d) Such share(s) was/were 100% held directly or indirectly by Lippo. Details of Dr. Stephen Riady’s interest in Lippo are disclosed in Note (i) above.

– IV-3 –

GENERAL INFORMATION

APPENDIX IV

• (e) 50 shares were held by Oddish Ventures Pte. Ltd., a 100% owned direct subsidiary of OUE Limited (“OUE”). OUE was indirectly owned as to approximately 68.65% by Fortune Code Limited (“Fortune Code”). HKC, through its 50% joint venture, Lippo ASM Asia Property Limited, held 92.05% interest in Fortune Code. 50 shares were held by Raising Fame Ventures Limited, a 100% owned indirect subsidiary of the Company. Details of Dr. Stephen Riady’s interest in HKC and the Company are disclosed in Notes (i) to (iii) above.

• (f) Such share was 100% held directly by Lippo Capital Group.

As at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests in the underlying shares in respect of physically settled, cash settled or other equity derivatives of the Company or any of its Associated Corporations.

All the interests stated above represent long positions. Save as disclosed herein, as at the Latest Practicable Date, to the knowledge of the Company:

• (1) none of the Directors and chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its Associated Corporations (a) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which the Directors and the chief executive of the Company were taken or deemed to have under such provisions of the SFO); or (b) which were required to be entered in the register kept by the Company under Section 352 of the SFO; or (c) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code; and

• (2) none of the Directors and chief executive of the Company nor their spouses or minor children (natural or adopted) were granted or had exercised any rights to subscribe for any equity or debt securities of the Company or any of its Associated Corporations.

Dr. Stephen Riady is also a director of each of Lippo Capital Group, Lippo Capital Holdings, Lippo Capital, Lippo, First Tower and Skyscraper and the Executive President of Lippo. Mr. John Luen Wai Lee is also a director of each of First Tower, Skyscraper and Lippo. Messrs. Leon Nim Leung Chan, Edwin Neo, Victor Ha Kuk Yung and King Fai Tsui are also directors of Lippo. Save as disclosed herein, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– IV-4 –

GENERAL INFORMATION

APPENDIX IV

3. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS

So far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, the persons (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO or who were, directly or indirectly, interested in 10% or more of the issued voting shares of any other members of the Group were as follows:

(a) The Company

		Approximate
Name	Number of Shares	percentage
Skyscraper	6,890,184,389	74.99
First Tower Corporation	6,890,184,389	74.99
(“First Tower”)
Lippo	6,890,184,389	74.99
Lippo Capital	6,890,184,389	74.99
Lippo Capital Holdings	6,890,184,389	74.99
Lippo Capital Group	6,890,184,389	74.99
Madam Shincee Leonardi	6,890,184,389	74.99
PT Trijaya Utama Mandiri	6,890,184,389	74.99
(“PT TUM”)
Mr. James Tjahaja Riady	6,890,184,389	74.99
Madam Aileen Hambali	6,890,184,389	74.99
Note (a):

1. 6,890,184,389 Shares were held by Skyscraper directly as beneficial owner which in turn is a 100% owned subsidiary of First Tower. First Tower is a 100% owned subsidiary of Lippo. Lippo Capital, and through its wholly-owned subsidiary, J & S Company Limited, was directly and indirectly interested in 369,800,219 ordinary shares in, representing approximately 74.98% of the issued shares of, Lippo.

2. Lippo Capital Holdings owned 60% of the issued shares in Lippo Capital. Lippo Capital Group owned 100% of the issued share capital of Lippo Capital Holdings. Dr. Stephen Riady was the beneficial owner of 100% of the issued share capital of Lippo Capital Group. Madam Shincee Leonardi is the spouse of Dr. Stephen Riady.

3. PT TUM owned the remaining 40% of the issued shares in Lippo Capital. PT TUM was wholly owned by Mr. James Tjahaja Riady who is a brother of Dr. Stephen Riady. Madam Aileen Hambali is the spouse of Mr. James Tjahaja Riady.

– IV-5 –

GENERAL INFORMATION

APPENDIX IV

1. Skyscraper’s interests in the Shares were recorded as the interests of First Tower, Lippo, Lippo Capital, Lippo Capital Holdings, Lippo Capital Group, Madam Shincee Leonardi, PT TUM, Mr. James Tjahaja Riady and Madam Aileen Hambali. The above 6,890,184,389 Shares related to the same block of Shares that Dr. Stephen Riady was interested, details of which are disclosed in the above paragraph headed “Disclosure of Interests — Directors’ and chief executive’s interests and short positions in shares, underlying shares and debentures of the Company and Associated Corporations”.

(b) Jeremiah Holdings Limited (“Jeremiah”)

	Number of
	ordinary shares
Name	of S$1.00 each	Percentage
Dragon Board Holdings Limited	779,187	60
(“Dragon Board”)
Mrs. Endang Utari Mokodompit	519,458	40

• Note (b): Dragon Board is a wholly-owned subsidiary of the Company. See also (a) above in respect of the substantial shareholders of the Company.

(c) Nine Heritage Pte Ltd (“Nine Heritage”)

	Number of
Name	ordinary shares	Percentage
Jeremiah	800,000	80
SouthQuay Capital Asia Limited	200,000	20
Note (c): See also (b) above in respect of the substantial shareholders of		Jeremiah.

(d) Lippo Select HK & Mainland Property ETF

		Approximate
Name	Number of units	percentage
World Grand Holding Limited	1,612,500	93.48
(“World Grand”)

• Note (d): World Grand is a wholly-owned subsidiary of the Company. See also (a) above in respect of the substantial shareholders of the Company.

– IV-6 –

GENERAL INFORMATION

APPENDIX IV

(e) APGL

	Number of	Approximate
Name	ordinary shares	percentage
Jeremiah	4,999,283	4.06
Nine Heritage	20,004,000	16.25
Pantogon Holdings Pte Ltd	36,165,052	29.37
(“Pantogon”)
Goldstream Capital Limited	42,498,332	34.52
Silver Creek Capital Pte. Ltd.	18,691,216	15.18

• Note (e): Nine Heritage is a subsidiary of Jeremiah and Pantogon is a wholly-owned subsidiary of the Company. See also (b) above in respect of the substantial shareholders of Jeremiah and (a) above in respect of the substantial shareholders of the Company.

(f) LCR Catering Services Limited

	Number of
Name	ordinary shares	Percentage
All Around Limited (“All Around”)	8,100,000	90

• Note (f): All Around is a subsidiary of APGL. See also (e) above in respect of the substantial shareholders of APGL.

(g) DLF (Thailand) Ltd

	Number of
	ordinary shares	Approximate
Name	of THB100.00 each	percentage
K. Somchai Krunthong	25,500 preference shares	51
Delifrance Asia Ltd.	24,495	48.9
(“Delifrance Asia”)
Edmontor Investments Pte Ltd	5	0.1
(“Edmontor”)

• Note (g): Delifrance Asia and Edmontor are wholly-owned subsidiaries of APGL. See also (e) above in respect of the substantial shareholders of APGL.

– IV-7 –

GENERAL INFORMATION

APPENDIX IV

All the interests stated above represent long positions. Save as disclosed herein, as at the Latest Practicable Date, none of the substantial shareholders (as defined under the Listing Rules) or other persons (other than the Directors or chief executive of the Company) had any interests or short positions in the Shares and underlying Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO.

Save as disclosed herein, as at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, there was no person, other than a Director or chief executive of the Company, who had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 10% or more of the issued voting shares of any other member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing and proposed service contract with any members of the Group other than contracts expiring or determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

5. COMPETING INTERESTS OF DIRECTORS AND CLOSE ASSOCIATES

The Lippo Group (a general reference to the companies in which Dr. Stephen Riady and his family members have a direct or indirect interest) is not a legal entity and does not operate as one. Each of the companies in the Lippo Group operates within its own legal, corporate and financial framework. As at the Latest Practicable Date, the Lippo Group might have had or developed interests in business in Hong Kong and other parts in Asia similar to those of the Group and there was a chance that such businesses might have competed with the businesses of the Group.

Other than the independent non-executive Directors, Dr. Stephen Riady and Messrs. John Luen Wai Lee and Leon Nim Leung Chan are also directors of Lippo, an intermediate holding company of the Company, and HKC, a fellow subsidiary of the Company. Further details of the Directors’ interests in Lippo and HKC are disclosed in the paragraph headed “Disclosure of Interests — Directors’ and chief executive’s interests and short positions in shares and underlying shares of the Company and Associated Corporations” in this appendix. Subsidiaries of Lippo and HKC are also engaged in property investment and property development.

The Directors are fully aware of, and have been discharging, their fiduciary duty to the Company. The Company and the Directors would comply with the relevant requirements of the Company’s articles of association and the Listing Rules whenever a Director has any conflict of interest in the transaction(s) with the Company.

– IV-8 –

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective close associates were considered to have interest in any business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group or have or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS OF THE GROUP AND OTHER INTERESTS

None of the Directors was materially interested in any contract or arrangement which was entered into by any member of the Group and subsisting at the Latest Practicable Date which was significant in relation to the business of the Group.

As at the Latest Practicable Date, the followings were particulars of assets acquired or disposed of by or leased to members of the Group since 31 March 2018, being the date to which the latest published audited consolidated financial statements of the Company were made up, in which Dr. Stephen Riady had a direct or indirect interest:

• (a) a joint venture agreement dated 17 July 2018 entered into among Raising Fame Ventures Limited (“Raising Fame”), a wholly-owned subsidiary of the Company, Oddish Ventures Pte. Ltd. (“Oddish”), a wholly-owned subsidiary of OUE Limited (“OUE”), and Gainmate Hong Kong Limited (“Gainmate”) in respect of the formation of a joint venture for the set-up and operation of café(s) and/or restaurant(s) in Hong Kong pursuant to which Raising Fame disposed of its 50 issued shares in, representing 50% of the entire issued shares of, Gainmate to Oddish for an aggregate consideration of HK$50 and the committed funding of each of Raising Fame and Oddish to be provided for Gainmate amounted to HK$2,950,000;

• (b) On 30 October 2018, Hongkong China Treasury Limited, a wholly-owned subsidiary of the Company, was allotted and issued with 1,411,332 new units in OUE Commercial Real Estate Investment Trust (“OUE C-REIT), a real estate investment trust constituted under the laws of Singapore and listed on the Main Board of SGX-ST, at an issue price of S$0.456 per unit for an aggregate consideration of approximately S$643,567 (excluding transaction costs) pursuant to the rights issue of OUE C-REIT; and

• (c) A lease dated 31 October 2018 entered into between Innovation Lab Technology Pte. Ltd. (“Innovation Lab”), a wholly-owned subsidiary of the Company, and Alkas Realty Pte Ltd (“Alkas”), a wholly-owned subsidiary of OUE, pursuant to which Innovation Lab agreed to lease from Alkas Unit #43-03 OUE Downtown 1, 6 Shenton Way, Singapore 068809, with an floor area of approximately 211 square metres, for a term commencing on 1 February 2019 and expiring on 31 July 2020 at a monthly rental of S$16,012.79 plus any applicable Goods and Services Tax (the “GST”) thereon with an option to renew for a further term of 3 years. The initial service charge to be paid by Innovation Lab under the above lease shall be S$2,158.53 per month plus GST.

– IV-9 –

GENERAL INFORMATION

APPENDIX IV

OUE C-REIT is managed by OUE Commercial REIT Management Pte. Ltd., a wholly-owned subsidiary of OUE which is the sponsor of OUE C-REIT. As at the Latest Practicable Date, OUE was indirectly interested in approximately 56.12% of the issued units in OUE C-REIT and a principal joint venture of HKC was interested in approximately 68.65% of the issued share capital of OUE (excluding treasury shares). Accordingly, OUE is a joint venture of HKC which is owned as to approximately 71.63% by Lippo. Lippo is a Controlling Shareholder of the Company and is interested in approximately 74.99% of the issued Shares. Dr. Stephen Riady, through companies controlled by him, is deemed to be interested in 60% of the issued share capital of Lippo Capital, an immediate holding company of Lippo.

Save as disclosed herein, as at the Latest Practicable Date, to the best of the knowledge of the Directors, none of the Directors had any direct or indirect interest in any asset which had been, since 31 March 2018, being the date to which the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by, or leased to, any member of the Group or were proposed to be acquired or disposed of by, or leased to, any member of the Group.

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the date of this circular and which are, or may be, material to the Group:

• (a) an agreement dated 23 April 2017 entered into between Gentle Care Pte. Ltd. (“Gentle Care”), a wholly-owned subsidiary of the Company, and GW Active Limited (“GW”) pursuant to which GW agreed to sell and Gentle Care agreed to purchase S$15 million in principal amount of certain convertible notes in Healthway Medical Corporation Limited at a consideration of S$18,617,021.26;

• (b) (i) an agreement dated 26 May 2017 entered into between Topstar China Limited (as seller), a wholly-owned subsidiary of the Company, and 江蘇華聯東方置業有限公司 (Jiangsu Hualian Oriental Realty Limited) (“Jiangsu Hualian”) (as purchaser) in respect of the disposal of 100% equity interest in 力寶置業（泰州）有限公司 (Lippo Realty (Taizhou) Limited) (the “Target Company”) at a consideration of approximately RMB152.2 million; and

• (ii) an agreement dated 26 May 2017 entered into between 北京力寶商業 顧問有限公司 (Beijing Lippo Commercial Consultants Limited) (the “Advance Vendor”), a wholly-owned subsidiary of the Company, Jiangsu Hualian and the Target Company in respect of the assignment to Jiangsu Hualian of all the rights of the Advance Vendor to the advance due and owing by the Target Company at a consideration of approximately RMB22.8 million;

– IV-10 –

GENERAL INFORMATION

APPENDIX IV

• (c) an agreement (the “Agreement”) dated 8 January 2018 entered into between the Company and Argyle Street Management Limited (“ASM”), pursuant to which, among other things, (i) the Company and ASM agreed to form a consortium to make, and jointly decide on all matters with respect to, a voluntary unconditional offer (the “Offer”) for all the issued and paid-up shares in TIH Limited (“TIH”, the shares of which are listed on the Main Board of the SGX-ST) at the price of S$0.57 per share (the “Offer Price”), as to which S$0.125 was paid in cash and S$0.445 was paid by the issue of 2.25% notes due three years from the close of the Offer at par; (ii) the Company and ASM agreed to make arrangements for the funding of the Offer through the loans to be advanced by a wholly-owned subsidiary of the Company and Alexandra Road Limited (“ARL”, an entity owned by ASM’s concert parties) for the purpose of financing the cash component of the Offer Price; (iii) the Company and ASM agreed to act in accordance with the terms and conditions of the Agreement in relation to matters of TIH, including but not limited to the management and operation of TIH (through the directors nominated onto the board of TIH pursuant to the Agreement); (iv) the Company and ASM agreed that each of the Company and ASM shall be entitled to appoint up to half of the aggregate number of directors onto the board of TIH, after taking into account requirements or best practices to the appointment of independent directors on the board of TIH under applicable laws and regulations; and (v) the Company and ASM agreed that decisions with respect to matters which are material are required to be approved by a simple majority of the directors of TIH present and voting, including the affirmative vote of one director nominated by each of the Company and ASM for so long as the Company or ASM (as the case may be) has such nomination rights. The Agreement took effect from 8 January 2018 and shall continue in full force and effect for an initial term of ten years, subject to each of the Company and ASM retaining a minimum shareholding percentage in TIH;

• (d) a letter of award dated 17 July 2018 was issued by the authorised representative of Auric Flavours Sdn Bhd (“Auric Flavours”), a wholly-owned subsidiary of APGL, to Bina Jurati Sdn. Bhd. (as contractor) in relation to the construction work of a new food factory of Auric Flavours in Malaysia with a contract sum of approximately RM60.5 million; and

• (e) the Disposal Agreements.

8. LITIGATION

Reference was made to the Group’s interest in a minority ownership interest in Skye Mineral Partners, LLC (“Skye”) whose major asset, prior to the events described below, was substantially all of the equity interests in CS Mining, LLC (“CS Mining”), a company that owned a number of copper ore deposits in the Milford Mineral Belt in Beaver County,

– IV-11 –

GENERAL INFORMATION

APPENDIX IV

State of Utah in the U.S. A joint venture consortium (the “JV Company”), in which the Group has 45% effective interest, had acquired all or substantially all of the assets held by CS Mining (the “Assets”) in a sale process under its bankruptcy proceedings in August 2017. In January 2018, a verified complaint (the “Complaint”) was filed in a United States state court in Delaware by the majority investors in Skye individually and derivatively on behalf of Skye against, among others, certain entities and persons in or related to the Group for, among other things, damages for diminution in the value of their equity interests in CS Mining based on an alleged scheme perpetrated by the Group on CS Mining. The Group believes that the Complaint is frivolous and wholly without merit and has opposed, and will continue to vigorously oppose, the allegations set forth in the Complaint and any other claim that the majority investors in Skye may seek to bring against the Group. In June 2018, a subsidiary of the Company (the “Subsidiary”) commenced an involuntary Chapter 7 bankruptcy case (the “Skye Involuntary Bankruptcy”) against Skye in the Delaware Bankruptcy Court. The majority investors of Skye opposed the Skye Involuntary Bankruptcy and moved to dismiss same. In December 2018, the Delaware Bankruptcy Court entered an order dismissing the Skye Involuntary Bankruptcy. Subsequently, the Subsidiary appealed the order dismissing the Skye Involuntary Bankruptcy. The appeal remains pending.

Save as disclosed herein, so far as the Directors are aware, the Group was not engaged in any material litigation or arbitration proceedings nor was any material litigation or claim pending or threatened against it as at the Latest Practicable Date.

9. EXPERT AND CONSENT

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

Name Qualification

Messrs. Ernst & Young Certified Public Accountants

As at the Latest Practicable Date, the above expert did not have:

• (a) any direct or indirect interest in any assets which had been, since 31 March 2018 (being the date to which the latest published audited consolidated financial statements of the Company were made up), acquired or disposed of by, or leased to, any member of the Group, or were proposed to be acquired or disposed of by, or leased to, any member of the Group; and

• (b) 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.

– IV-12 –

GENERAL INFORMATION

APPENDIX IV

As at the date of this circular, the above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or report and the references to its name in the form and context in which it appears.

10. MISCELLANEOUS

• (a) The Secretary of the Company is Ms. Millie Yuen Fun Luk, a fellow member of each of the Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Chartered Secretaries.

• (b) The registered office of the Company is situated at 40th Floor, Tower Two, Lippo Centre, 89 Queensway, Hong Kong.

• (c) The transfer office of the Company is situated at the office of its registrar, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours on any weekday (Saturday, Sunday and public holiday excluded) at the registered office of the Company at 40th Floor, Tower Two, Lippo Centre, 89 Queensway, Hong Kong for a period of 14 days from the date of this circular:

• (a) the articles of association of the Company;

• (b) the annual reports of the Company for the years ended 31 March 2017 and 2018;

• (c) the review reports from Messrs. Ernst & Young on the unaudited financial information of APM, CM and APMSB Group as set out in Appendix IIA, Appendix IIB and Appendix IIC of this circular respectively;

• (d) the report from Messrs. Ernst & Young on the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix III of this circular;

• (e) the material contracts referred to in the paragraph headed “Material Contracts” of this appendix;

• (f) the written consent referred to in the paragraph headed “Expert and Consent” of this appendix; and

• (g) this circular.

12. LANGUAGE

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

– IV-13 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [79 x 36] intentionally omitted <==

LIPPO CHINA RESOURCES LIMITED 力寶華潤有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 156)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Lippo China Resources Limited (the “Company”) will be held at Harcourt Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Thursday, 14 February 2019 at 11:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT:

• (a) the agreement dated 21 December 2018 entered into between Auric Pacific Group Limited (“APGL”) (as seller) and DKSH Holding (S) Pte. Ltd. (as purchaser) in relation to the sale and purchase of the entire issued shares in Auric Pacific Marketing Pte. Ltd. and Centurion Marketing Pte. Ltd.; and the agreement dated 21 December 2018 entered into between APGL (as seller) and DKSH Holdings (Malaysia) Berhad (as purchaser) in relation to the sale and purchase of the entire issued shares in Auric Pacific (M) Sdn. Bhd. (together, the “Disposal Agreements”, copies of which have been produced to the meeting and initialled by the chairman of the meeting for the purpose of identification) be and are hereby approved, ratified and confirmed;

• (b) all transactions contemplated under the Disposal Agreements be and are hereby approved, ratified and confirmed; and

• (c) the directors of the Company be and are hereby authorised for and on behalf of the Company to do all such acts and/or things as they may in their absolute discretion consider to be necessary, desirable, appropriate or expedient to implement and/or to give effect to the Disposal Agreements and the implementation of all transactions contemplated thereby and thereunder and to agree to such variation, amendment or waiver as are, in the opinion of the directors of the Company, in the interest of the Company.”

By Order of the Board LIPPO CHINA RESOURCES LIMITED Millie Luk Secretary

Hong Kong, 25 January 2019

– N-1 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Registered Office: 40th Floor Tower Two Lippo Centre 89 Queensway Hong Kong

Note:

1. Any member entitled to attend and vote at the meeting is entitled to appoint more than one proxy to attend and vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified true copy thereof) must be deposited at the Company’s registered office not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or any adjourned meeting thereof should they so desire.

3. The Register of Members of the Company will be closed from Tuesday, 12 February 2019 to Thursday, 14 February 2019 (both dates inclusive) during which period no transfer of shares will be registered, for the purpose of ascertaining shareholders’ entitlement to attend and vote at the meeting. In order to be entitled to attend and vote at the meeting, all transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s Registrar, Tricor Tengis Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Monday, 11 February 2019.

4. At the meeting, the chairman of the meeting will exercise his power under Article 79(i) of the Articles of Association of the Company to put the above resolution to the vote by way of a poll as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

5. Should there be any discrepancies between the English and the Chinese versions, the English version shall prevail.

– N-2 –