C&D Property Management Group Co., Ltd — Proxy Solicitation & Information Statement 2018

Dec 21, 2018

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, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Sandi Holdings Limited, you should at once hand this circular to the purchaser or 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 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.

CHINA SANDI HOLDINGS LIMITED 中國 三 迪控 股有 限公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 910)

MAJOR TRANSACTION

COOPERATION AGREEMENT AND MEMORANDUM IN RELATION TO A PROPERTY DEVELOPMENT PROJECT IN XI’AN

21 December 2018

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5
APPENDIX I –	FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . .	I-1
APPENDIX II	MANAGEMENT DISCUSSION AND ANALYSIS ON
	THE TARGET COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III –	ACCOUNTANTS’ REPORT ON THE TARGET
	COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV –	UNAUDITED PRO FORMA FINANCIAL
	INFORMATION ON THE ENLARGED GROUP. . . . . . . . . . . . . .	IV-1
APPENDIX V – VALUATION REPORT ON THE LAND PARCELS . . . . . . . . . . . . .		V-1
APPENDIX VI –	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1

– i –

DEFINITIONS

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

• “Advance(s)”

the advance(s) of RMB50,000,000 to be made by each of Chongfeng Real Estate and Fujian Sinco to the Representatives through the Target Company pursuant to the Cooperation Agreement

• “Announcement”

• the announcement made by the Company on 9 August 2018 in relation to the Cooperation

• “Board”

• the board of Directors

• “BVI”

• the British Virgin Islands

• “business day(s)”

a day on which banks in Hong Kong and PRC are open for normal business (excluding Saturday, Sunday and public holidays in Hong Kong or PRC or days on which a tropical cyclone signal number 8 or above or black rain storm warning is hoisted at any time between 9:00 a.m. to 12:00 noon and which has not been lowered by 12:00 noon on the same day)

• “Capital Contribution”

• the proposed contribution to be made by Fujian Sinco and Grand International of RMB6,200,000 and US$30,000,000 (equivalent to RMB201,000,000) to the registered capital of the Target Company pursuant to the Cooperation Agreement

• “CCZCC”

• Chile-China Zhejiang Chamber of Commerce（智利中國浙江商 會）

• “Chongfeng Real Estate”

• Xi’an Chongfeng Real Estate Company Limited（西安崇豐置 業有限公司）, a company established in the PRC with limited liability

• “Company” China Sandi Holdings Limited (Stock Code: 910), a company incorporated in Bermuda with limited liability, the ordinary shares of which are listed on the Main Board of the Stock Exchange

• “connected person(s)”

• has the meaning ascribed to it in the Listing Rules

• “controlling shareholder(s)”

• has the meaning ascribed to it in the Listing Rules

– 1 –

DEFINITIONS

• “Cooperation” (i) the Capital Contribution; (ii) the provision of the Shareholder’s Loans; and (iii) the extension of the Advance by Fujian Sinco and/or Grand International to the Target Company pursuant to the Cooperation Agreement

• “Cooperation Agreement” the cooperation agreement dated 9 August 2018 entered into among Chongfeng Real Estate, Fujian Sinco and Grand International in relation to the Cooperation

• “Director(s)” the director(s) of the Company

• “Enlarged Group” the Group as enlarged by the Target Group after completion of the Capital Contribution

• “Fujian Sinco” Fujian Sinco Industrial Co., Ltd.（福建先科實業有限公司）, a company established in the PRC with limited liability and a wholly-owned subsidiary of the Company

• “GFA” gross floor area

• “Group” the Company and its subsidiaries

• “Grand International”

• Grand International Development Company Limited（廣大國 際發展有限公司）, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Independent Third Party–(ies)” parties independent of and not connected with the Company and its connected persons

• “King Partner” King Partner Holdings Limited, a company incorporated in the BVI with limited liability which is wholly-owned by Mr. Guo

• “Land Grant Contract”

the State-owned construction land use right grant contract dated 2 June 2018 between Shaanxi Province Xixian New District Land Resources and Housing Administrative Bureau （陝西省西咸新區國土資源與房屋管理局） as grantor and the Target Company as grantee

– 2 –

DEFINITIONS

• “Land Parcels” the land parcels located at Xixian New District, Xi’an for residential and commercial uses

• ‘Latest Practicable Date” 14 December 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Memorandum” the memorandum dated 9 August 2018 entered into among Zhongnan Jiafeng, Chongfeng Real Estate, Fujian Sinco, Grand International and the Representatives

• “Mr. Guo” Mr. Guo Jiadi, an executive Director and the chairman of the Company

• “Percentage Ratios” has the meaning ascribed to it in the Listing Rules “PRC” the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purposes of this circular

• “Representatives” Mr. Zou Jianbing, Mr. Song Tongxin and Mr. Tan Xianli “RMB” Renminbi, the lawful currency of the PRC “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the capital of the Company

• “Shareholder(s)” holder(s) of the Share(s) “Shareholder’s Loans” the shareholder’s loans of RMB360,900,000 in aggregate to be provided by Fujian Sinco and Grand International to the Target Company pursuant to the Cooperation Agreement

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

– 3 –

DEFINITIONS

• “Target Company”

Xi’an Zhichengda Real Estate Company Limited（西安智晟 達置業有限公司）, a company established in the PRC with limited liability

• “United Century” United Century International Limited, a company incorporated in the BVI with limited liability which is wholly owned by Mr. Guo

• “US$” United States dollar(s), the lawful currency of the United States of America

• “Zhixiang Commercial” Xi’an Zhixiang Commercial Operation Management Company Limited（西安智翔商業運營管理有限公司）, a company to be established by the Representatives in the PRC and will hold 26% equity interest in the Target Company upon completion of the Capital Contribution

• “Zhongnan Jiafeng”

• Xi’an Zhongnan Jiafeng Real Estate Company Limited（西安 中南嘉豐置業有限公司）, a company established in the PRC with limited liability

• “%” per cent.

For ease of reference, the names of the PRC established companies or entities (if any) and the PRC laws and regulations (if any) have generally been included in this circular in both Chinese and English languages and in the event of inconsistency, the Chinese language shall prevail.

Unless specified otherwise, for illustration purposes, reference of RMB to HK$ in this circular is based on the exchange rate of RMB1=HK$1.16 while reference of US$ to RMB is based on the exchange rate of US$1 =RMB6.7

– 4 –

LETTER FORM THE BOARD

CHINA SANDI HOLDINGS LIMITED 中國 三 迪控 股有 限公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 910)

Executive Directors: Registered Office: Mr. Guo Jiadi (Chairman) Clarendon House Ms. Amika Lan E Guo 2 Church Street Mr. Wang Chao Hamilton HM 11 Bermuda

Non-executive Director:

Dr. Wong Yun Kuen

Independent Non-executive Directors:

Mr. Chan Yee Ping, Michael Mr. Yu Pak Yan, Peter Ms. Ma Shujuan

Head office and principal place of business: in Hong Kong: Unit 3309, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Sheung Wan, Hong Kong

Mr. Zheng Yurui

21 December 2018

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

COOPERATION AGREEMENT AND MEMORANDUM IN RELATION TO A PROPERTY DEVELOPMENT PROJECT IN XI’AN

INTRODUCTION

Reference is made to the Announcement.

– 5 –

LETTER FORM THE BOARD

On 9 August 2018, Fujian Sinco and Grand International, both being wholly-owned subsidiaries of the Company entered into the Cooperation Agreement with Chongfeng Real Estate whereby, among other things, (i) Fujian Sinco and Grand International shall make Capital Contribution of RMB6,200,000 and US$30,000,000 (equivalent to RMB201,000,000) to the Target Company in cash; (ii) Fujian Sinco and Grand International shall provide the Shareholder’s Loan of RMB360,900,000 to the Target Company; and (iii) Fujian Sinco shall provide the Advance of RMB50,000,000 to the Representatives through the Target Company. On the same date, Fujian Sinco and Grand International entered into the Memorandum with Zhongnan Jiafeng, Chongfeng Real Estate and the Representatives in relation to certain matters regarding the cooperation for the Land Parcels.

The purpose of this circular is to provide you with, among other things, (i) further details of the Cooperation Agreement and the Memorandum; (ii) the financial information of the Target Company; and (iii) the valuation report of the Land Parcels and other information as required by the Listing Rules.

COOPERATION AGREEMENT

The principal terms of the Cooperation Agreement are as follows:

Date:

• 9 August 2018

Parties:

• (1) Chongfeng Real Estate;

• (2) Fujian Sinco; and

• (3) Grand International.

Each of Fujian Sinco and Grand International is a wholly-owned subsidiary of the Company.

Subject matter:

As at the Latest Practicable Date, the Target Company is held by Chongfeng Real Estate and the Group, and Zhixiang Commercial as 37%, 37% and 26%, respectively.

– 6 –

LETTER FORM THE BOARD

Pursuant to the Cooperation Agreement, the Group and Chongfeng Real Estate shall jointly invest in the Target Company, and in turn jointly develop the Land Parcels. The total consideration payable by the Group under the Cooperation Agreement shall be RMB618,100,000 (equivalent to HK$716,996,000) (excluding the capital occupation interest as referred to in the sub-paragraph headed “(ii) Shareholder’s Loans” below), comprising (i) the Capital Contribution of RMB6,200,000 and US$30,000,000 (equivalent to RMB201,000,000) to be made by to the Target Company by Fujian Sinco and Grand International; (ii) the Shareholder’s Loans of RMB360,900,000 in aggregate to be made by Fujian Sinco and Grand International to the Target Company; and (iii) the Advance of RMB50,000,000 to be made by Fujian Sinco to the Representatives through the Target Company.

(i) Capital Contribution

The registered capital of the Target Company prior to the subscription of the registered capital by the Group was RMB352,800,000, none of which has been paid up. The registered capital of RMB207,200,000 subscribed by Chongfeng Real Estate will be converted from the shareholder’s loan of the same amount it provided. Pursuant to the Cooperation Agreement, Fujian Sinco and Grand International agreed to contribute RMB6,200,000 and US$30,000,000 (equivalent to RMB201,000,000) to the Target Company as registered capital within sixty (60) days after the land use rights certificates of the Land Parcels are registered under the name of the Target Company.

Upon completion of the Capital Contribution and the aforesaid conversion of shareholder’s loan provided by Chongfeng Real Estate into registered capital, the registered capital of the Target Company will be increased from RMB352,800,000 to RMB560,000,000, details of which are as follows:

Chongfeng Real Estate The Group Zhixiang Commercial_(Note)_ Total	Registered capital (RMB) Equity holding (%) Subscribed Paid-up 207,200,000 207,200,000 37.00 207,200,000 207,200,000 37.00 145,600,000 – 26.00 560,000,000 414,400,000 100.00	Registered capital (RMB) Equity holding (%) Subscribed Paid-up 207,200,000 207,200,000 37.00 207,200,000 207,200,000 37.00 145,600,000 – 26.00 560,000,000 414,400,000 100.00
		100.00

Note: Such portion of registered capital was initially subscribed by the Representatives and was transferred to Zhixiang Commercial on 31 August 2018. Please refer to the paragraph headed “Memorandum” below for details.

The Group paid up the registered capital in the aggregate amount of RMB207,200,000 in full on 28 September 2018. As at the Latest Practicable Date, the Group is interested in the Target Company as to 37%. The Target Company is accounted for as an associate in the financial statements of the Group.

– 7 –

LETTER FORM THE BOARD

(ii) Shareholder’s Loans

Pursuant to the Cooperation Agreement, Fujian Sinco and Grand International shall provide Shareholder’s Loans of RMB360,900,000 in aggregate to the Target Company within three (3) working days after the date on which the Capital Contribution is completed. The Shareholder’s Loans shall be used by the Target Company to repay the portion of the shareholder’s loan provided by Zhongnan Jiafeng and/or Chongfeng Real Estate in acquiring the Land Parcels.

In respect of the shareholder’s loans already advanced by Zhongnan Jiafeng and/ or Chongfeng Real Estate to the Target Company for payment of the land premium of the Land Parcels, Fujian Sinco and Grand International agreed to pay Chongfeng Real Estate a capital occupation interest on 50% of the land premium (being RMB568,100,000) calculated on an annualised interest rate of 13% and for the period from the date of payment of the shareholder’s loans by Zhongnan Jiafeng and/or Chongfeng Real Estate to the date of payment of the capital contribution and Shareholder’s Loan by Fujian Sinco and Grand International to the Target Company pursuant to the Cooperation Agreement. The Representatives are not required to pay any capital occupation interest.

(iii) Advance

Pursuant to the Cooperation Agreement, each of Chongfeng Real Estate and Fujian Sinco agreed to provide an Advance of RMB50,000,000 to the Representatives through the Target Company within three (3) working days after the date on which the Capital Contribution is completed. The Advances shall be extended on an interest-free basis and shall be repaid on the date on which the profits of the Target Company entitled by and distributed to the Representatives are adequate to settle the Advances in full.

To the best knowledge, information and belief of the Company having made all reasonable enquiries, the Advances will be utilised as the costs and expenses for introducing branded operators who are either licensed sole dealers or exclusive distributors of imported goods in China. As this is a pre-requisite under the Land Grant Contract, the Company is of the view that it is necessary and reasonable for the Company to provide the Advance to the Representatives. In the event that the expenses relating to the introduction of branded operators is paid by the Target Company, it would increase the expenses of the Target Company and eat up the profits of the Target Company, which would in turn affect the future dividend distribution of the Target Company. Therefore, the Company considers that it is in the interests of the Group to provide the Advance to the Representatives for the sake of introducing branded operators.

– 8 –

LETTER FORM THE BOARD

The Group and Chongfeng Real Estate will hold 74% equity interest in the Target Company and control the composition of the board of directors of the Target Company (as the Group and Chongfeng Real Estate together are entitled to nominate 4 out of 5 directors), it is submitted that the Group and Chongfeng Real Estate will have control over the decisions of the board of directors and shareholders at the respective meetings and thus distribution of profits by the Target Company. In addition, the Representatives issued a letter of guarantee in favour of the other joint venture partners in which the Representatives have confirmed and undertaken that they will repay the Advances to Chongfeng Real Estate and Fujian Sinco in full on the date on which they have received the profits of the Target Company in the amount which is adequate to fully settle the Advances of the same amount. The PRC legal counsel of the Group (the “ PRC Counsel ”) has opined that the said letter of guarantee is valid and enforceable under the PRC laws. On the basis of the aforesaid, the Company considers that there are adequate measures in place to ensure that the Representatives will settle the Advances.

The consideration for the Cooperation was arrived at after arm’s length negotiations among the parties to the Cooperation Agreement with reference to the cost and land premium of the Land Parcels, the prepayment already paid by Zhongnan Jiafeng and/or Chongfeng Real Estate and the recent market value of the comparable residential development in Xi’an.

The consideration will be funded by the Group’s available internal resources.

Board of directors

Pursuant to the terms of the Cooperation Agreement, the board of directors of the Target Company shall comprise five (5) directors, two of whom shall be nominated by Chongfeng Real Estate, two shall be nominated by Fujian Sinco and Grand International and one by the Representatives. The chairman of the board of directors of the Target Company shall be appointed by Chongfeng Real Estate. All resolutions of the Target Company (including the resolutions in relation to distribution of profits) shall be passed by two-thirds of the directors while certain specific matters (including alternation of the articles of association, increase or decrease of registered capital, alternation of the contribution ratio and payment due date of registered capital, disposal or transfer of assets in excess of RMB3 million (other than sales of properties), provision of corporate guarantees, alternation of the profit sharing ratio and merger, division, dissolution or alternation of company form of the Target Company) shall be resolved by all directors.

Future capital requirements, corporate guarantees and additional shareholder’s loans

The parties to the Cooperation Agreement agreed that all capital requirements of the Target Company shall first be procured by financing from banks or financial institutions. In the event where corporate guarantees are required for such financing, the total guaranteed amount shall not exceed RMB1 billion while the amount to be guaranteed by each of (i) Chongfeng Real Estate and (ii) Fujian Sinco and Grand International in aggregate shall not exceed RMB500 million.

– 9 –

LETTER FORM THE BOARD

In the event where the Target Company requires shareholders’ loans to accommodate its financial need for the construction and development of the Land Parcels, Chongfeng Real Estate, Fujian Sinco and Grand International agreed to provide additional shareholder’s loans on a pro rata basis to the Target Company with interest calculated at the rate of 13% per annum. The maximum amount of shareholder’s loans to be provided by each of (i) Chongfeng Real Estate and (ii) Fujian Sinco and Grand International in aggregate shall not exceed RMB181,900,000.

As advised by the PRC Counsel, the Cooperation Agreement is valid and enforceable under the PRC laws and regulations and Chongfeng Real Estate is obliged under the Cooperation Agreement to make their portion of shareholder’s loans in accordance with the terms thereunder. In addition, the Group will only provide its portion of shareholder’s loan simultaneously or after Chongfeng Real Estate has contributed its portion.

Profit sharing

As provided in the Cooperation Agreement, subject to the full payment of the return entitled by the Representatives in accordance with the provisions in the Cooperation Documents previously agreed among the Representatives and Zhongnan Jiafeng, the profits generated by the Target Company, after deducting the portion that the Representatives are entitled to, shall be shared by the Group and Chongfeng Real Estate as to 50% each.

As provided in the cooperation agreement dated 15 May 2018 between Zhongnan Jiafeng and the Representatives, it was agreed that the Representatives shall be entitled to a return amounting to RMB400 million in the event that (i) the base bidding price for the portion of the Land Parcels for residential use is not more than RMB500 per mu; (ii) the final bidding price for the portion of the Land Parcels for commercial use is not more than RMB300 per mu; and (iii) the site area of the Land Parcels obtained by the Target Company is 160 mu (the “ Relevant Requirements ”). The aforesaid return shall comprise cash return of RMB80 million by way of distribution of profits and commercial properties of 60,000 square metres. If (for illustration purpose only) its share of the profits generated by the Target Company in proportion to its 26% equity holding exceeds RMB400 million (that is, the total profits generated by the Target Company amounted to over approximately RMB1,538.5 million (the “ Threshold ”)), the Representatives shall also be entitled to the amount in excess.

The Target Company won the bid for the Land Parcels in June 2018 and as the Relevant Requirements are all met, the Representatives shall be entitled to RMB80 million and commercial properties of 60,000 square metres as their return.

In the event that the total profits generated by the Target Company do not exceed the Threshold, the balance (calculated by the total profits generated minus RMB400 million) shall be shared by the Group and Chongfeng Real Estate as to 50% each. On the other hand, in the event that the total profits generated by the Target Company exceed the Threshold, the profits generated by the Target Company shall be distributed to Zhixiang Commercial, the Group and Chongfeng Real Estate in proportion to their equity holdings (that is, 26%:37%:37%). The Representatives (or via Zhixiang Commercial) will be entitled to a return of RMB400 million if the Target Company is loss making.

– 10 –

LETTER FORM THE BOARD

MEMORANDUM

In May 2018, Zhongnan Jiafeng (being the holding company of Chongfeng Real Estate) and the Representatives entered into certain documents (including a memorandum, a cooperation agreement and a supplemental agreement thereto) (the “ Cooperation Documents ”) whereby the Representatives agreed to liaise with the authorities in relation to the proposed bidding of the Land Parcels by a joint venture to be established by Zhongnan Jiafeng and other parties designated by each of Zhongnan Jiafeng and the Representatives. In May 2018, Chongfeng Real Estate and the Representatives established the Target Company which then proceeded to win the bid for the Land Parcels at a public auction conducted online on 12 June 2018.

On 9 August 2018, Zhongnan Jiafeng, Chongfeng Real Estate, Fujian Sinco, Grand International and the Representatives entered into the Memorandum whereby it was agreed among the parties that, among other things, (i) the Representatives agreed Chongfeng Real Estate to enter into the Cooperation Agreement with Fujian Sinco and Grand International; (ii) Chongfeng Real Estate, Fujian Sinco and Grand International shall not require the Representatives to pay up the registered capital of the Target Company in the amount of RMB145,600,000 subscribed by them prior to the payment due date which shall be the expiry of the term of joint venture for the Target Company; (iii) the Representatives shall transfer their respective equity holdings in the Target Company to Zhixiang Commercial; and (iv) the equity holdings of the Representatives (or via Zhixiang Commercial) in the Target Company shall be changed to 26% upon completion of the Capital Contribution.

Zhixiang Commercial was established on 19 June 2018 with its equity interest held by Mr. Zou Jianbing, Mr. Song Tongxin and Mr. Tan Xianli as to 40%, 20% and 40%, respectively. On 31 August 2018, the Representatives transferred 26% of the registered capital of the Target Company to Zhixiang Commercial.

The Land Parcels are designated for the development of Nan Mei Commodity Trading Centre Phases 1, 2 and 3 （南美商品貿易中心項目一、二、三期）. Pursuant to the Land Grant Contract, the acquirer of the Land Parcels is specifically required to be able to introduce not less than 30 branded operators who are either “licensed sole dealers or exclusive distributors of imported goods in China (具有國外進口商中國總經銷或獨家在中國代理經銷的授權)”, which is the only selection criteria for the branded operators. No due date for introducing not less than 30 branded operators is fixed in the Land Grant Contract. Shaanxi Province Xixian New District Land Resources and Housing Administrative Bureau (陝西省西咸新區國土資源與房屋管理局) is entitled to require the Target Company to fulfill the said obligation at any time, or the Target Company may also fulfill the said obligation at any time, in either case with appropriate notice period given to the other party for preparation.

As advised by the PRC Counsel, based on the provisions in the Land Grant Contract, the introduction of the branded operators is not subject to government approval.

– 11 –

LETTER FORM THE BOARD

As advised by the PRC Counsel, if the requirement to introduce not less than 30 branded operators is not fulfilled, it shall constitute a breach of the Land Grant Contract on the part of the Target Company which shall bear the liabilities for breach of contract such as to continue performing its obligations, to take remedial measures or to compensate for losses in accordance with the Contract Law of the PRC. If the Target Company and/or any shareholder of the Target Company suffers any debt, liability or loss, the relevant party may require the Representatives to compensate in full pursuant to the Letter of Guarantee (as defined and detailed below).

On 30 August 2017, CCZCC and Xixian New Town Fengdong Xincheng Management Committee (西咸新區灃東新城管委會) entered into a framework agreement titled 《中國西安南美 商品貿易中心項目投資框架協議》 (the “ Framework Agreement ”) (and being included in the Cooperation Agreement as an appendix) which is a framework document setting out the principles of the cooperation between the Representatives and Xixian New Town Fengdong Xincheng Management Committee regarding the “Nan Mei Commodity Trading Centre” project in response to the PRC central government’s “One Belt, One Road” initiative and subject to the execution of definitive agreement(s) to implement the cooperation. CCZCC is a chamber of commerce established to carry out the function of promoting trade and investment flows between China and Chile and is not a limited liability company established pursuant to the PRC Company Law. It was entrusted by the Representatives to sign the Framework Agreement on their behalves and the Representatives shall bear all rights and obligations under the Framework Agreement. The Representatives are entitled to cooperate with other partners with their designated entity in acquiring and develop the Land Parcels and so they first cooperated with Zhongnan Jiafeng (being the holding company of Chongfeng Real Estate) while they liaised with Xixian New Town Fengdong Xincheng Management Committee in acquiring the Land Parcels in June 2018 and the Group subsequently joined as a partner pursuant to the Cooperation Agreement and Memorandum in August 2018.

As extracted from the Framework Agreement, CCZCC, being established in 2011 for promoting trade and investment flows between China and Chile and having 500 members with imports from Chile to China totalling RMB12 billion annually, is able to satisfy the aforesaid requirements prescribed in the Land Grant Contract. While it is the obligation of the Target Company under the Land Grant Contract, the Representatives issued to the other joint venture partners a letter of guarantee (the “ Letter of Guarantee ”) in which they confirm and undertake that it is their designated role and sole responsibility to introduce not less than 30 branded operators as required in the Land Grant Contract and they will discharge such responsibility. If they are unable to fulfill the requirement or there is a delay in fulfillment of the requirement to introduce not less than 30 branded operators, the Representatives undertake to indemnify the other joint venture partners in respect of any debt, liability or loss they suffered within seven (7) days from the date of indemnification notice issued by the relevant joint venture partner. Without the Representatives’ participation in the joint venture, the Target Company would not have obtained the land use rights of the Land Parcels from the Shaanxi provincial government.

– 12 –

LETTER FORM THE BOARD

For the above reason, the other joint ventures agreed not to require the Representatives to pay up the portion of the registered capital subscribed by them prior to the expiry of the term of joint venture of the Target Company on 31 May 2038. Taking into account the aforesaid background and the Representatives’ designated role in the joint venture arrangement, the Company considers that it is justifiable and fair and reasonable for the Company to (i) pay the capital occupation interest as referred to in the paragraph headed “Cooperation Agreement – (ii) Shareholder’s Loans” above while the Representatives are not required to do so; and (ii) provide an interest-free Advance of RMB50,000,000 as referred to in the paragraph headed “Cooperation Agreement – (iii) Advance” above.

As advised by the PRC Counsel, (i) the indemnification given by the Representatives in the Letter of Guarantee is a debt undertaking (債務加入行為) under which the Representatives undertake to indemnify any of Chongfeng Real Estate, Fujian Sinco and Grand International against all past or future debt or liabilities; and (ii) the Letter of Guarantee executed by the Representatives in favour of the other joint venture partners is valid and enforceable under the PRC laws. On this basis and considering that the Representatives via Zhixiang Commercial hold 26% equity interests in the Target Company and the valuation of the Land Parcels as at 30 September 2018 worthed RMB1.73 billion, the Company considers that the indemnification given by the Representatives in the Letter of Guarantee are effective.

In respect of the non-payment of the portion of the registered capital subscribed by the Representatives (and transferred to Zhixiang Commercial on 31 August 2018) until 31 May 2038, the PRC Counsel opined that it is in compliance with the laws and regulations of the PRC. As the Target Company will make its distribution to the equity holders from the profits generated rather than the registered capital, there will be no impact on profit distribution.

INFORMATION OF THE PARTIES TO THE COOPERATION AGREEMENT AND THE MEMORANDUM

Fujian Sinco is a company established in the PRC with limited liability. It owns a shopping mall in Fuzhou as an investment property and its principal subsidiaries are engaged in property development in Fujian Province and Shaanxi Province, the PRC.

Grand International is a company incorporated in Hong Kong with limited liability. It is an investment holding company while its principal subsidiaries are engaged in property development, holding of property for investment and rental purpose in the PRC.

Each of Zhongnan Jiafeng and Chongfeng Real Estate (being a wholly-owned subsidiary of Zhongnan Jiafeng) is a company established in the PRC with limited liability and is principally engaged in property development in the PRC.

The Representatives are three representatives from CCZCC with Mr. Zou Jianbing being the chairman of CCZCC and Mr. Song Tongxin and Mr. Tan Xianli being members of CCZCC. Zhixiang Commercial is held by Mr. Zou Jianbing, Mr. Song Tongxin and Mr. Tan Xianli as to 40%, 20% and 40%, respectively. Each of the Representatives is a PRC resident and a merchant.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, each of the Representatives, CCZCC, Zhixiang Commercial, Zhongnan Jiafeng, Chongfeng Real Estate and their ultimate beneficial owners is an Independent Third Party.

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LETTER FORM THE BOARD

INFORMATION OF THE TARGET COMPANY AND THE LAND PARCELS

The Target Company is a company established in the PRC with limited liability and is principally engaged in property development in the PRC. Since it is newly established in May 2018 and has not carried out any business activities, it has recognised a loss of approximately RMB1,000 for the period the period from 18 May 2018 (date of incorporation) to 31 July 2018.

As at 31 July 2018, the audited total asset and net asset of the Target Company were approximately RMB1,170,922,000 and RMB359,413,000, respectively.

The principal assets of the Target Company are the Land Parcels, which consist of three parcels of land located at the south of Zhenghe Jiu Road, the west of Tai’an Road, the east of Taiping Road and the north of Zhenghe Lu Road, Fengdong New Town, Xixian District, Xi’an with a total site area of approximately 182,646 square metres for residential and commercial uses and the total construction GFA would be approximately 625,630 square metres. The portion of the Land Parcels for residential purpose has a land use rights of 70 years while the portion of the Land Parcels for commercial purpose has a land use rights of 40 years. The Target Company won the bid for the Land Parcels at a public auction conducted online on 12 June 2018 and the land premium of the Land Parcels in the aggregate sum of RMB1,136,200,000 was settled in full by the Target Company using the shareholder’s loans provided by Zhongnan Jiafeng and Chongfeng Real Estate.

With a well-developed metro network around, Xixian District is located between the city centre of Xi’an and Jiancheng District of Xianyang and is conveniently accessible within fifteen minutes from both cities by metro. There are urban business, residential community and tourist attractions in the vicinity. The area where the Land Parcels situate is part of the Shaanxi Pilot Free Trade Zone.

According to the latest development proposal of the Land Parcels, the Land Parcels are planned to be developed into a mixed property development project, with a total construction gross floor area of approximately 418,830 square metres for commercial and residential uses, and a total construction gross floor area of approximately 206,800 square metres for ancillary facilities, including carpark. The construction of Nan Mei Commodity Trading Centre Phases 1 and 2 （南美商品貿易中心項目一、二 期） is scheduled to commence by the end of 2018 and complete by December 2021. The construction of Nan Mei Commodity Trading Centre Phase 3 （南美商品貿易中心項目三期） is scheduled to commence in the second or third quarter of 2019.

– 14 –

LETTER FORM THE BOARD

The estimated development cost to be incurred for developing the Land Parcels is approximately RMB2 billion. The Target Company intends to finance the same by (i) obtaining potential loan facilities from financial institutions of approximately RMB500 million to 1 billion; (ii) obtaining additional shareholder’s loans to be provided by each of (x) Chongfeng Real Estate and/ or Zhongnan Jiafeng and (y) Fujian Sinco and Grand International in aggregate of not exceeding RMB181,900,000; and (iii) utilising cash proceeds to be generated from the pre-sales of properties of approximately RMB640 million to 1.1 billion. In respect of loan facilities to be obtained from financial institutions, the Target Company intends to provide security including pledge of the land use rights certificates of the Land Parcels and/or any buildings/structures erected thereon as well as corporate guarantees to be provided by each of (x) Chongfeng Real Estate and/or Zhongnan Jiafeng and (y) Fujian Sinco and Grand International in aggregate of not exceeding RMB500 million.

The Target Company intends to hire approximately 20 to 25 personnel, including a general manager, 9 to 10 staff in design and engineering department, 7 to 8 staff in accounting and administrative department and 1 to 2 marketing staff.

FINANCIAL EFFECTS OF COOPERATION AGREEMENT

Assets and liabilities

Based on the unaudited pro forma financial information on the Enlarged Group as set out in Appendix IV to this circular (the “ Pro Forma Financial Information ”), the unaudited pro forma consolidated total assets of the Enlarged Group as at 30 September 2018 would decrease by approximately HK$0.6 million to approximately HK$7,555.9 million, the unaudited pro forma consolidated total liabilities remain unchanged and the unaudited pro forma consolidated net assets of the Enlarged Group as at 30 September 2018 would decrease by approximately HK$0.6 million to approximately HK$3,131.5 million after the acquisition, assuming that the completion of the Cooperation had taken place on 30 September 2018.

Earnings

While the Cooperation would not have any immediate material impact on the earnings of the Group, as the financial results of the Target Company will be accounted for as an interest in associate in the financial statements of the Group after Completion, the earnings of the Group will be affected by the performance of the Target Company in the future as interest in associate would be adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the Target Company. It is expected that the Cooperation would enhance the Group’s business development and broaden the Group’s earnings base.

Further information regarding the financial position and financial performance, as well as the management discussions and analysis and other financial information of the Target Company is contained in Appendices II, III and IV to this circular.

– 15 –

LETTER FORM THE BOARD

Gearing

As at 30 September 2018, the Group had total assets of approximately HK$7,556.5 million, total debts (including bank and other borrowings and bonds payable) of approximately HK$999.1 million and total equity of approximately HK$3,132.1 million. With reference to the Pro Forma Financial Information, assuming that the Cooperation is completed on 30 September 2018, total assets of the Group would decrease to approximately HK$7,555.9 million, the total debt would remain unchanged and the total equity would decrease to approximately HK$3,131.5 million. As such, the Group’s gearing ratio (total debt/total assets) would remain unchanged at approximately 13.2% as at 30 September 2018.

REASONS FOR AND BENEFITS OF THE COOPERATION

The Group is principally engaged in property development and holding of property for investment and rental purpose as well as money lending business. Currently, the Group owns a shopping mall in Fuzhou as an investment property. The Group are also engaged in property development in Fujian Province and Shaanxi Province, the PRC. The Group currently own i) a commercial and hotel property development project named Fuzhou Sandi Chuangfu Plaza（福州三迪 創富廣場）in Fuzhou City, Fujian Province; ii) a residential and commercial property development project named Wuyishan Sandi New Times Square（武夷山三迪新時代廣場）in Wuyishan City, Fujian Province and iii) a residential and commercial property development project named Qujiang Xiangsong Fengdan • Xian Sandi（西安三迪•曲江香頌楓丹）in Xi’an City, Shaanxi Province.

The Group is cautiously optimistic about the future economic development in Xi’an and the PRC as a whole and the associated demand for properties in Xi’an. Benefiting from the rapid development of the northwestern part of the PRC, Xi’an as the capital of Shaanxi Province, will play an important part in contributing to the economic growth of the central-northwest region. Xi’an was designated to serve “One Belt One Road” national strategies, and it has re-emerged as an important cultural, industrial and educational centre of the central-northwest region.

In addition, the management of the Group is familiar with property market in Xi’an. In view of the prime location, designated uses and development potential of the Land Parcels, the Board considers that the Cooperation offers a good opportunity for the Group to enhance its portfolio in the property market in Xi’an with a view to bringing more investment return for the Shareholders.

The Directors consider that the terms of the Cooperation pursuant to the Cooperation Agreement are made on normal commercial terms which are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

– 16 –

LETTER FORM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable Percentage Ratios set out in the Listing Rules in respect of the Cooperation Agreement and the transactions contemplated thereunder is/are more than 25% but less than 100%, the entering into of the Cooperation Agreement constitutes a major transaction of the Company under Chapter 14 of the Listing Rules. As such, the Cooperation Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

SHAREHOLDERS’ WRITTEN APPROVAL

To the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiries, none of the Shareholders has any material interest in the Cooperation Agreement and the transactions contemplated thereby and therefore no Shareholder is required to abstain from voting if the Company were to convene a special general meeting for the approval of the Cooperation Agreement and the transactions contemplated thereby.

As at the Latest Practicable Date, United Century and King Partner, both wholly-owned by Mr. Guo, hold 2,581,054,801 and 320,414,201 Shares, representing approximately 57.89% and 7.19% of the issued share capital of the Company, respectively. On 9 August 2018, the Company received written approval from United Century and King Partner in respect of the Memorandum, the Cooperation under the Cooperation Agreement and the transactions as contemplated under the Cooperation Agreement.

As (i) no Shareholder would be required to abstain from voting if the Company were to convene a general meeting for the approval of the Memorandum, the Cooperation under the Cooperation Agreement and the transactions as contemplated under the Cooperation Agreement; and (ii) United Century and King Partner together hold more than 50% of the voting rights that would be exercisable at such general meeting, the written approval from United Century and King Partner is acceptable in lieu of holding a general meeting of the Company for approval of the Memorandum, the Cooperation under the Cooperation Agreement and the transactions as contemplated under the Cooperation Agreement pursuant to Rule 14.44 of the Listing Rules.

RECOMMENDATION

The Board (including the independent non-executive Directors) considers that the terms of the Cooperation Agreement are fair and reasonable and the transactions contemplated thereunder are in the best interests of the Company and the Shareholders as a whole.

Although a general meeting will not be convened by the Company to approve the Cooperation Agreement and the transactions contemplated therein, if such a general meeting were to be convened by the Company, the Board would recommend the Shareholders to vote in favour of the resolutions to approve the Cooperation Agreement and the transactions contemplated therein.

– 17 –

LETTER FORM THE BOARD

ADDITIONAL INFORMATION

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

By Order of the Board China Sandi Holdings Limited Guo Jiadi Chairman

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The financial information of the Group for the three financial years ended 31 March 2016, 31 March 2017 and 31 March 2018 respectively was set out in the annual reports of the Company for these three financial years respectively and are available on the website of the Stock Exchange set out below:

Financial year ended Website 31 March 2016 http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0720/LTN20160720240.pdf 31 March 2017 http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0724/LTN20170724495.pdf 31 March 2018 http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0723/LTN20180723331.pdf

The above annual reports are also available at the website of the Company at http:// www.chinasandi.com.hk.

2. INDEBTEDNESS

Statement of indebtedness

As at 31 October 2018, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding indebtedness as summarised below.

Borrowings

As at the close of business on 31 October 2018, being the date of this indebtedness statement prior to the printing of this circular, the Group had outstanding interest-bearing bank borrowings in the aggregated principal amount of approximately HK$793.5 million repayable by instalments up to 4 April 2026. The bank borrowings are secured by the Group’s various properties. Mr. Guo Jiadi, an executive Director and the chairman of the Company and Ms. Shen Bizhen, the spouse of Mr. Guo Jiadi, have granted a guarantee to the relevant bank for the borrowings in the principal amount of approximately HK$793.5 million in which the guarantee is to fulfil covenant of bank facilities if the subsidiary has breached the covenants of bank facilities. Corporate guarantees were provided for all bank borrowings.

Debt securities

The Company had issued an unsecured 4-year 7% coupon bonds with principal amount of HK$11.0 million (the “Bonds”) to certain Independent Third Parties. The Bonds are denominated in HK$. Interest is payable semi-annually and the principal amount will be repaid when the Bonds fall due on 23 July 2019. There had been no early redemption by either the Company or the holder(s) of the Bonds and, as at 31 October 2018, the outstanding principal amount of the Bonds remained at HK$11.0 million.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities

The Group did not have any contingent liabilities as at 31 October 2018.

Disclaimer

Save as aforesaid and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures, loan capital, debt securities, loans, bank overdraft or other similar indebtedness, financial leases or hire purchase commitments, liabilities under acceptances or acceptance credits or guarantees or contingent liabilities as at 31 October 2018.

3. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group

The Company is an investment holding company. The Group is principally engaged in property development and holding of property for investment and rental purpose as well as money lending business. Currently, the Group owns a shopping mall in Fuzhou as an investment property.

The Group is also engaged in property development in Fujian Province and Shaanxi Province, the PRC. The Group currently owns i) a commercial and hotel property development project named Fuzhou Sandi Chuangfu Plaza（福州三迪創富廣場）in Fuzhou City, Fujian Province; ii) a residential and commercial property development project named Wuyishan Sandi New Times Square（武夷山三迪新時代廣場）in Wuyishan City, Fujian Province and iii) a residential and commercial property development project named Qujiang Xiangsong Fengdan • Xian Sandi（西安三迪•曲江香頌楓丹）in Xi’an City, Shaanxi Province.

For the six months period ended 30 September 2018, the Group recorded revenue of approximately HK$90.7 million (2017: HK$473.8 million). The Group’s revenue is primarily generated from property development, rental income and property management services, which contributed approximately HK$20.3 million and HK$70.4 million of the revenue for the six months period ended 30 September 2018 respectively.

Notwithstanding the above, as disclosed in the section headed “Management Discussion and Analysis” of the annual report of the Group for the year ended 31 March 2018 and the interim results announcement of the Group for the six months period 30 September 2018, the Group is optimistic about the residential and commercial property market of Xi’an. Xi’an was designated to serve “One Belt One Road” national strategies, and it was named as the starting point for the Silk Road Economic Belt. This should help to attract capital and talent to Xi’an, strengthening the city’s innovation-driven growth model. The Group is seeking for opportunities to acquire optimal scale land parcels or property development and investment projects in Xi’an. In line with the strategy as described above, the Group entered into the Cooperation Agreement.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Enlarged Group

Upon completion of the Cooperation, the Target Company will become an associate of the Group and the Group would account for its investment in associate using the equity method, of which the Group’s interest in associate is initially recognised at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the Target Company.

4. SUFFICIENCY OF WORKING CAPITAL

The Directors are of the opinion that, after taking into account the expected completion of the Cooperation Agreement and the financial resources available to the Enlarged Group (including but not limited to internally generated funds, cash and cash equivalents), the Enlarged Group has sufficient working capital for its present requirement, that is for at least the next 12 months from the date of this circular.

5. MATERIAL ADVERSE CHANGE

The Directors confirm that save for the disclosures made in the profit warning announcement dated 16 November 2018 and the interim results announcement dated 29 November 2018 for the six months ended 30 September 2018, there had been no material change in the financial or trading position or outlook of the Group since 31 March 2018, being the date to which the latest published audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

– I-3 –

APPENDIX II MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

This appendix summaries the management discussion and analysis of the Target Company for the period from 18 May 2018 (date of incorporation) to 31 July 2018. The following financial information is based on the accountants’ report on the Target Company as set out in Appendix III to this circular.

A. BUSINESS REVIEW AND PROSPECTS

The Target Company was established in the PRC on 18 May 2018 and is principally engaged in the development and sale of real estate and property management. The Target Company owns the Land Parcels, the land use and development rights of the land parcel for residential use shall be expired on 24 June 2088 and the land parcel for commercial use shall be expired on 24 June 2058.

The Land Parcels cover a total site area of approximately 182,646 square metres and the total construction GFA would be approximately 625,630 square metres of which approximately 374,992 square metres would be for residential use and 250,638 square metres would be for commercial use.

B. FINANCIAL REVIEW

Financial performance

Segment information, revenue and cost of sales

For the period from 18 May 2018 (date of incorporation) to 31 July 2018, the Target Company had only one reportable business segment, which was the development and sale of real estate and property management.

As the Target Company has not carried out any business activities since its establishment on 18 May 2018, thus it has recorded no revenue and cost of sales up to the date hereof.

Administrative expenses and loss for the period

For the period ended 31 July 2018, the Target Company recognised a loss of approximately RMB1,000 which represented administrative expenses incurred during the period.

Financial position

The following paragraph has been extracted from, and should be read in conjunction with the Accountants’ report of the Target Company as set out in Appendix III to this circular.

– II-1 –

APPENDIX II MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

Prepayment for acquisition of land use certificates

As at 31 July 2018, the prepayment for acquisition of land use rights certificates represented the land premium of the Land Parcels and the associated land taxes in the aggregate sum of approximately RMB1,170,854,000, which was settled in full by the Target Company using the shareholder’s loan provided by Zhongnan Jiafeng and/or Chongfeng Real Estate.

Amount due to an intermediate holding company

Amount due to an intermediate holding company of approximately RMB811,509,000 represented the amount provided by Zhongnan Jiafeng. The amount was interest-free, unsecured and unguaranteed.

Liquidity, financial resources and capital structure

For the period from 18 May 2018 (date of incorporation) to 31 July 2018, the Target Company financed its operations primarily through shareholders’ loan from Zhongnan Jiafeng and/or Chongfeng Real Estate, such shareholders’ loan was recognised as amount due to an intermediate holding company in the financial statement of the Target Company.

As at 31 July 2018, the Target Company had cash and cash equivalents of approximately RMB1,000 which was denominated in RMB.

As at 31 July 2018, the total equity of the Target Company was approximately RMB359.4 million.

Gearing Ratio

As at 31 July 2018, the gearing ratio for the Target Group was nil, which calculated based on the net external debts over the total equity of approximately RMB359.4 million. As at 31 July 2018, the total asset and total equity of the Target Company were approximately RMB1,170.9 million and RMB359.4 million respectively. After excluding the amount due to an intermediate holding company of approximately RMB811.5 million provided by Zhongnan Jiafeng, the Target Company did not recognise any external debts as at 31 July 2018. Therefore, the gearing ratio was nil accordingly.

Charge of assets

As at 31 July 2018, the Target Company had no charge of assets.

– II-2 –

APPENDIX II MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

Material acquisitions and disposals of subsidiaries, associates and joint ventures

There was no material acquisitions and disposals of subsidiaries, associates and joint ventures.

Significant investments

There was no significant investments held by the Target Company.

Foreign currency and hedging

The Target Company has limited exposure in foreign currency risk as the assets and liabilities, and the business transactions were denominated in RMB. In addition, the Target Company has not used any financial instrument to hedge potential fluctuation in interest rates and exchange rates.

Employee and remuneration policies

As at 31 July 2018, the total number of employees for the Target Company was nil as the Target Company was newly established on 18 May 2018. In the future, the Target Company would consider to hire more appropriate personnel to cope with the development of the company and competitive remuneration package with reference to the standard in the market would be offered to the employees.

Future plans for material investments or capital assets

As at 31 July 2018, the Target Company did not have any material commitments, future plans for material investments or capital assets.

Contingent liabilities

As at 31 July 2018, the Target Company did not have material contingent liabilities.

– II-3 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

The following is the text of a report on the Xi’an Zhichengda Real Estate Company Limited, prepared for the purpose of incorporation in this circular, received from the independent reporting accountants, D & PARTNERS CPA LIMITED, Hong Kong.

21 December 2018

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INOFMRATION TO THE DIRECTOR OF XI’AN ZHICHENGDA REAL ESTATE COMPANY

Introduction

We report on the historical financial information of Xi’an Zhichengda Real Estate Company Limited (“Xi’an Zhichengda”) set out on pages III-5 to III-21, which comprises the statements of financial position as at 31 July 2018, the statements of profit or loss and other comprehensive income, the statements of changes in equity and the statements of cash flows for the period from 18 May 2018 (date of incorporation) to 31 July 2018 (the “Relevant Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages III-5 to III-21 forms an integral part of this report, which has been prepared for inclusion in the circular of China Sandi Holdings Limited (the “Company”) dated 21 December 2018 in connection with the major transaction in relation to the proposed capital contribution of 37% registered capital of Xi’an Zhichengda (the “Cooperation”).

Director’s responsibility for the Historical Financial Information

The director of Xi’an Zhichengda are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information, and for such internal control as the director of Xi’an Zhichengda determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

– III-1 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 Accountants “Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the director of Xi’an Zhichengda, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion the Historical Financial Information gives, for the purpose of the accountants’ report, a true an fair view of the Xi’an Zhichengda’s financial position as at 31 July 2018 and of the Xi’an Zhichengda’s financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

– III-2 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON THE STOCK EXCHNAGE AND THE COMPANIES (WINDING UP AND MISCELLANCOUS PROVISION) ORDINANCE

Adjustments

In preparing the Historical Financial Information no adjustments to the Underlying Historical Financial Information as defined on pages III-4 have been made.

Dividends

We refer to note 12 to the Historical Financial Information which states that no dividend has been paid by the Xi’an Zhichengda in respect of the Relevant Period.

No Historical Financial Information for Xi’an Zhichengda

No Historical Financial Information have been prepared for Xi’an Zhichengda since its date of establishment.

D & PARTNERS CPA LIMITED

Certified Public Accountant

Hong Kong

– III-3 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

1. Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The Historical Financial Information of Xi’an Zhichengda for the Relevant Periods, on which the Historical Financial Information is based, have been prepared in accordance with the accounting policies which conform with Hong Kong Financial Reporting Standards which issued by HKICPA and were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”).

– III-4 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD FROM 18 MAY 2018 (DATE OF INCORPORATION) TO 31 JULY 2018

NOTES Administrative expenses Loss before taxation 4 Income tax expenses 5 Loss and total comprehensive expense for the period	18.5.2018 to 31.7.2018 RMB’000 (1) (1) – (1)

– III-5 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

STATEMENT OF FINANCIAL POSITION

AT 31 JULY 2018

NOTES Current assets Prepayment for acquisition of land use rights 6 Other receivables and prepayment Bank balance 7 Total assets and current assets Capital and reserve Paid-up capital 9 Reserves Non-current liabilities Amount due to an intermediate holding company 8 Net assets Total equity	2018 RMB’000 1,170,854 67 1
	1,170,922
	– 359,413
	811,509
	359,413
	359,413

– III-6 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 18 MAY 2018 (DATE OF INCORPORATION) TO 31 JULY 2018

On date of incorporation Loss and total comprehensive expense for the period Deemed contribution from an intermediate holding company_(Note)_ At 31 July 2018	Paid-up capital RMB’000 – – – –	Contribution reserve RMB’000 – – 359,414 359,414	Accumulated losses RMB’000 – (1) – (1)	Total RMB’000 – (1) 359,414 359,413

Note:

Xi’an Zhichengda has an interest-free, unsecured and unguaranteed balance due to an intermediate holding company. Such amount was measured at its fair value at initial recognition based on the best estimate of the expected repayments by Xi’an Zhichengda at the time of recognising the amount due to an intermediate holding company. The differences between the amount due to an intermediate holding company and fair value at initial recognition were recognised in equity as deemed contribution from an intermediate holding company, and the amount due to an intermediate holding company were then carried at amortised cost using effective interest.

– III-7 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

STATEMENT OF CASH FLOWS FOR THE PERIOD FROM 18 MAY 2018 (DATE OF INCORPORATION) TO 31 JULY 2018

OPERATING ACTIVITIES Loss for the period and operation cash flows before movements in working capital Increase in prepayment for acquisition of land use rights Increase in other receivables and prepayment NET CASH USED IN OPERATING ACTIVITIES CASH FROM A FINANCING ACTIVITY Advance from an intermediate holding company NET INCREASE IN CASH AT THE END OF THE PERIOD, represented by bank balance	18.5.2018 to 31.7.2018 RMB’000 (1) (1,170,854) (67) (1,170,922) 1,170,923 1

– III-8 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

1. GENERAL INFORMATION AND BASIS OF PREPARATION AND PRESENTATION OF THE HISTOICAL FINANCIAL INFORMATION

General

Xi’an Zhichengda was established in the PRC with limited liability on 18 May 2018.

The address of its registered office and the principal place of business of the Xi’an Zhichengda are Room 4-2-4118, 2nd floor, Building 4, Free Trade Industry Park, No. 2168 Zhenghe 4th Road, Xixian New District, Xi’an City Shaanxi Province, the PRC.

Xi’an Zhichengda is principally engaged in development and sales of properties.

Xi’an Zhichengda ‘s immediate holding company is Xi’an Chongfeng Real Estate Company Limited which established in the in the PRC with limited liability. The Xi’an Zhichengda ‘s intermediate holding company is Xi’an Zhongnan Jiafeng Real Estate Company Limited and ultimate holding company is Jiangsu Zhongnan Construction Group Co., Ltd (‘‘江 蘇中南建設集團股份有限公司’’) which established in the PRC with limited liability.

The Historical Financial Information is presented in Renminbi (“RMB”), which is also the functional currency of the Xi’an Zhichengda.

– III-9 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

For the purpose of preparing and presenting the Historical Financial Information for the Relevant Periods, Xi’an Zhichengda has consistently applied HKFRSs issued by the HKICPA that are effective for Xi’an Zhichengda annual accounting periods beginning on 18 May 2018 throughout the Relevant Periods.

Xi’an Zhichengda has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 16	Leases1
HKFRS 17	Insurance Contracts3
HK(IFRIC) – Int 23	Uncertainty over Income Tax Treatments1
Amendments to HKFRS 9	Prepayment Features with Negative Compensation1
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an
HKAS 28	Investor and its Associate or Joint Venture2
Amendments to HKAS 19	Plan Amendment, Curtailment or Settlement1
Amendments to HKAS 28	Long-term Interests in Associates
	and Joint Ventures1
Amendments to HKFRSs	Annual Improvements to HKFRSs 2015 – 2017
	Cycle1

1 Effective for annual periods beginning on or after January 1, 2019

2 Effective for annual periods beginning on or after a date to be determined

3 Effective for annual periods beginning on or after January 1, 2021

In the opinion of the director of Xi’an Zhichengda, the application of the other new and amendments to HKFRSs issued but not yet effective is not expected to have a material impact on the results and the financial position of Xi’an Zhichengda.

– III-10 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

3. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared on the historical cost basis and in accordance with the following accounting policies which conform to HKFRSs. In addition, the Financial Information includes the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, Xi’an Zhichengda takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these Historical Financial Information is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2 Share-based Payment , leasing transactions that are within the scope of HKAS 17 Leases , and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 Inventories or value in use in HKAS 36 Impairment of Assets .

The principal accounting policies are set out below.

Foreign currencies

In preparing the Historical Financial Information, transactions in currencies other than the functional currency of Xi’an Zhichengda (“foreign currencies”) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arsing on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.

– III-11 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from “loss before taxation” as reported in the statement of profit or loss and other comprehensive income because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries except where Xi’an Zhichengda is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

– III-12 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which Xi’an Zhichengda expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss.

Impairment losses on assets

At the end of the reporting period, Xi’an Zhichengda reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately.

– III-13 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

Financial instruments

Financial asset and financial liability are recognised when Xi’an Zhichengda becomes a party to the contractual provisions of the instrument.

Financial asset and financial liability are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial asset and financial liability are added to or deducted from the fair value of the financial asset or financial liability, as appropriate, on initial recognition.

Financial asset

The Company’s financial asset is classified as loans and receivables.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument or, where appropriate, a shorter period to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (representing bank balance) are measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for shortterm receivables where the recognition of interest would be immaterial.

– III-14 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

Loans and receivables are assessed for indicators of impairment at the end of the reporting period. Loans and receivables are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• breach of contract, such as default or delinquency in interest and principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the respective credit period, observable changes in national or local economic conditions that correlate with default on receivables.

The amount of impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the loans and receivables is reduced by the impairment loss directly with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity instruments

Debts and equity instruments issued by Xi’an Zhichengda are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

– III-15 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of Xi’an Zhichengda after deducting all of its liabilities. Equity instruments issued by Xi’an Zhichengda are recognised at the proceeds received, net of direct issue costs.

Financial liability at amortised cost

Financial liability (representing amount due to an intermediate holding company) are subsequently measured at amortised cost, using the effective interest method.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

Derecognition

Xi’an Zhichengda derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If Xi’an Zhichengda neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, Xi’an Zhichengda continues to recognise the asset to the extent of its continuing involvement and recognises an associated liability. If Xi’an Zhichengda retains substantially all the risks and rewards of ownership of a transferred financial asset, Xi’an Zhichengda continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Xi’an Zhichengda derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

– III-16 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

4. LOSS BEFORE TAXATION

18.5.2018 to 31.7.2018 RMB’000

Loss for the period has been arrived at after charging: Staff costs, including directors’ emoluments Salaries and other benefits Retirement benefit scheme contribution Auditor’s remuneration	– – –
	– –

5. INCOME TAX EXPENSES

No provision for PRC income tax has been made in the Historical Financial Information as Xi’an Zhichengda was making loss for the Relevant Period.

There is no other significant unprovided deferred tax for the Relevant Period or at the end of the Relevant Period.

6. PREPAYMENT FOR ACQUISITION OF LAND USE RIGHTS

The amount represented the prepayment for the acquisition of land use rights located in Xian. Subsequent to the Relevant Period, land use right certificates had been obtained by Xi’an Zhichengda.

7. BANK BALANCE

As at 31 July 2018, the bank balance carried interest at prevailing market rates.

8. AMOUNT DUE TO AN INTERMEDIATE HOLDING COMPANY

The amount is interest-free, unsecured and unguaranteed. In the opinion of directors of Xi’an Zhichengda, the amount is expected to repay by 2021.

– III-17 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

9. PAID-UP CAPITAL

As at 31 July 2018, the total registered capital of RMB50,000,000 and no capital has been paid up by the shareholders of Xi’an Zhichengda at the end of Relevant Period.

10. CAPITAL RISK MANAGEMENT

Xi’an Zhichengda manages its capital to ensure that Xi’an Zhichengda will be able to continue as a going concern while maximising the return to the shareholders through the optimisation of the debt and equity balance. Xi’an Zhichengda’s overall strategy remains unchanged throughout the Relevant Periods.

The capital structure of Xi’an Zhichengda consists of amount due to an intermediate holding company net of cash and cash equivalent and equity attributable to owners of the Company, comprising paid-up capital and reserves.

The directors of Xi’an Zhichengda review the capital structure on an on-going basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, Xi’an Zhichengda will balance its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt.

11. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

Financial asset Loans and receivables (representing bank balance) Financial liability Amortised cost	2018 RMB’000 1
	811,509

– III-18 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

b. Financial risk management objectives and policies

The major financial instruments of Xi’an Zhichengda include bank balance and amount due to an intermediate holding company. Details of the financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Credit risk

The maximum exposure to credit risk by Xi’an Zhichengda which will cause a financial loss due to failure to discharge an obligation by the counterparties is arising from the carrying amounts of the recognised financial assets as stated in the statement of financial position.

The credit risk on liquid funds of Xi’an Zhichengda is limited because the counterparty is a bank with high credit rating assigned by international credit-rating agencies.

Liquidity risk

The Xi’an Zhichengda ‘s operations are dependent on the financial support from its shareholders. Ultimate responsibility for liquidity risk management rests with the directors of the Xi’an Zhichengda, which has built an appropriate liquidity risk management framework for the management of the Company’s funding and liquidity management requirements. The Company manages liquidity risk by continuously monitoring forecast and actual cash flows.

– III-19 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

The following table details the Xi’an Zhichengda’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flow of the financial liabilities based on the earliest date on which Xi’an Zhichengda can be required to pay. The table includes principal cash flows.

		On demand			Total	Total
	Effective	or within	Between	**Between **	undiscounted	carrying
	interest rate	1 year	1-2 years	2 – 5 years	cash flow	amount
	%	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
As at 31 July 2018
Non-derivative financial
liability
Amount due to
intermediate holding
company	13	105,496	119,211	1,170,923	1,395,630	811,509

c. Fair value measurements of financial instruments

The fair values of financial asset and financial liability are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The directors consider that the carrying amounts of financial asset and financial liability recognised in the Historical Financial Information approximate their fair values.

12. DIVIDEND

No dividend has been paid or declared by Xi’an Zhichengda during the Relevant Period.

– III-20 –

ACCOUNTANT’S REPORT ON THE TARGET COMPANY

APPENDIX III

13. RELATED PARTY DISCLOSURES

• (a) The key management personnel are directors of the Company and the compensation paid to them is disclosed in note 4.

• (b) Details of balances and transactions with related companies are disclosed in note 8.

14. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Xi’an Zhichengda in respect of any period subsequent to 31 July 2018.

15. SUBSEQUENT EVENT

Xi’an Zhichengda has no significant event subsequent to 31 July 2018.

– III-21 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF CHINA SANDI HOLDINGS LIMITED AND ITS SUBSIDIARIES (THE ‘‘GROUP’’) INCLUDING XI’AN ZHICHENGDA REAL ESTATE COMPANY LIMITED (THE “TARGET COMPANY”) (HEREINAFTER REFERRED TO AS THE ‘‘ENLARGED GROUP’’)

A. Basis of Preparation

The following is an unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group immediately upon Completion (the “Unaudited Pro Forma Consolidated Statement of Assets and Liabilities”) which has been prepared in accordance with paragraph 4.29 of the Listing Rules for the purpose of illustrating the effect of the proposed capital contribution of 37% registered capital of the Target Company which holds three parcels of land located at Xixian New District, Xi’an (the “Cooperation”) as if the Cooperation had been completed on 30 September 2018.

The Unaudited Pro Forma Consolidated Statement of Assets and Liabilities is prepared based on the unaudited consolidated statement of financial position of the Group as at 30 September 2018 which has been extracted from the unaudited condensed consolidated financial statements set out in the latest published interim financial information of the Group, after making unaudited pro forma adjustments relating to the Cooperation that are (i) directly attributable; and (ii) factually supportable as if the Cooperation had been undertaken as at 30 September 2018.

The Unaudited Pro Forma Consolidated Statement of Assets and Liabilities has been prepared by the Directors based on a number of assumptions, estimates and uncertainties for illustrative purposes only and because of its nature, it may not give a true picture of the consolidated assets and liabilities of the Group upon completion of the Cooperation as at 30 September 2018.

– IV-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX IV

B. Unaudited Pro Forma Consolidated Statement of Assets and Liabilities

Non-current assets Investment properties Property, plant and equipment Interest in an associate Properties under development Deposit for properties under development Amount due from associate Other receivable Deferred tax assets Total non-current assets Current assets Inventories of properties Trade and other receivables and prepayments Financial assets at fair value through profit or loss Amounts due from related companies Prepaid income tax Restricted bank deposit Bank balance and cash Total current assets Total assets	The Group 30.9.2018 HK$’000 Note 1 3,604,176 5,005 234,823 327,815 15,066 – – 18,413 4,205,298 2,238,252 472,559 234,078 130,309 18,341 575 257,109 3,351,223 7,556,521	Unaudited pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note 2 Note 3 Note 4 Note 5 21,654 17,473 410,885 39,452 21,654 410,885 56,925 – (21,654) (410,885) (56,925) (600) (21,654) (410,885) (56,925) (600) – – – (600)	The Group upon completion 30.9.2018 HK$’000 3,604,176 5,005 273,950 327,815 15,066 410,885 39,452 18,413
			4,694,762
			2,238,252 472,559 234,078 130,309 18,341 575 (232,955)
			2,861,159
			7,555,921

– IV-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX IV

Current liabilities Trade and other payables and accruals Contract liabilities Amounts due to related companies Amounts due to non-controlling shareholders of subsidiaries Bonds payable Bank borrowings Income tax payable Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Deferred tax liabilities Bank borrowings Total non-current liabilities Net assets	The Group 30.9.2018 HK$’000 Note 1 222,878 2,049,041 292,489 121,670 10,579 187,338 52,096 2,936,091 415,132 4,620,430 687,118 801,194 1,488,312 3,132,118	Unaudited pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note 2 Note 3 Note 4 Note 5 – – – – (21,654) (410,885) (56,925) (600) – – – (600) – – – – – – – (600)	The Group upon completion 30.9.2018 HK$’000 222,878 2,049,041 292,489 121,670 10,579 187,338 52,096
			2,936,091
			(74,932)
			4,619,830
			687,118 801,194
			1,488,312
			3,131,518

– IV-3 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

Notes to the Unaudited Pro Forma Financial Information of the Group

1. The figures are extracted from the latest published unaudited condensed consolidated statement of financial position of the Group as at 30 September 2018 as set out in the latest published interim financial information of the Company for the six months period ended 30 September 2018.

2. On 9 August 2018, Fujian Sinco Industrial Co., Ltd (“Fujian Sinco”), Grand International Development Company Limited (“Grand International”), being wholly-owned subsidiaries of the Company and Xi’an Chongfeng Real Estate Company Limited (“Chongfeng Real Estate”) entered into a cooperation agreement, in connection with the capital contribution of approximately 1.11% and 35.89% of the aggregate registered captial subscribed by the Target Company by Fijian Sinco and Grand International respectively (the “Cooperation Agreement”). The total capital contribution involved is RMB207,200,000. The Group paid up the capital contribution in aggregate amount of RMB207,200,000 in full on 28 September 2018 and recognised its interest in the Target Company in non-current assets as interest in associate as at 30 September 2018.

In respect of the shareholder’s loans already advanced by Chongfeng Real Estate to the Target Company for payment of the land premium of the Land Parcels, Fujian Sinco and Grand International agreed to pay Chongfeng Real Estate a capital occupation interest on 50% of the land premium (being RMB568,100,000) calculated on an annualised interest rate of 13% and for the period from the date of payment of the shareholder’s loans by Chongfeng Real Estate to the date of payment of the capital contribution and Shareholder’s Loan by Fujian Sinco and Grand International to the Target Company pursuant to the Cooperation Agreement. The estimated amount of the capital occupation interest on 50% of the land premium (being RMB568,100,000) payable by the Group to Chongfeng Real Estate is RMB19,020,000 (approximately HK$21,654,000).

In the opinion of directors of the Group, the capital occupation interest portion form part of the long term investment in the Target Company. Therefore, the adjustments of HK$21,654,000 represent the estimated capital occupation interest payable by the Group which is assumed to be financed by internal resources and recognised in interest in associate.

1. Pursuant to the Cooperation Agreement, Fujian Sinco and Grand International shall provide shareholder’s loans of RMB360,900,000 (approximately HK$410,885,000) in aggregate to the Target Company. The shareholder’s loans shall be repaid only when the Target Company recognises a working capital surplus and secure all its financial need for the construction and development of the Land Parcels (the “Shareholder’s Loans”) which is assumed to be financed by internal resources. The adjustment represents the recognition of the Shareholder’s Loans in non-current assets as amount due from associate in the Unaudited Pro Forma Consolidated Statement of Assets and Liabilities by the Group.

2. Pursuant to the Cooperation Agreement, each of Chongfeng Real Estate and Fujian Sinco agreed to provide an advance to three individuals being representatives of the Chile-China Zhejiang Chamber of Commerce (the “Representatives”), who are also the shareholders of the Target Company, through the Target Company of RMB50,000,000 (approximately HK$56,925,000) which are interest-free and shall be repaid on the date of which the profits of the Target Company entitled by and distributed to the Representatives of the Target Company are adequate to settle the advance in full (the “Advance”).

– IV-4 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

The Advance was initially measured at its fair value at initial recognition based on the best estimate of the expected repayments by the shareholders of the Target Company at the time of recognising the Advance and recognised in non-current assets as other receivable in the Unaudited Pro Forma Consolidated Statement of Assets and Liabilities by the Group. The differences between the Advance and its fair value at initial recognition were recognised in non-current assets as interest in associate in the Unaudited Pro Forma Consolidated Statement of Assets and Liabilities by the Group. The Advance was then carried at amortised cost using effective interest.

1. The amount represents the estimated amounts for legal and professional fees and other expenses payable by the Group related to the capital contribution in the Target Company.

2. No other adjustments have been made to reflect any trading results or other transactions of the Group and the Target Company entered into subsequent to 30 September 2018. Unless otherwise stated, the adjustments above do not have a recurring effect.

3. The unaudited pro forma adjustments are converted from RMB to HK$ at the rate of RMB1 to HK$1.1385. No representation is made to represent that RMB have been, could have been or could be converted to HK$, or vice versa, at that rate or at any other rates or at all.

– IV-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX IV

The following is the text of a report received from the reporting accountants, D & PARTNERS CPA LIMITED, Certified Public Accountants, Hong Kong, in respect of the Group’s unaudited pro forma financial information for the purpose of incorporation in this Circular.

2. INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of China Sandi Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information (the “Unaudited Pro Forma Financial Information”) of China Sandi Holdings 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 statement of assets and liabilities of the Group as at 30 September 2018 and related notes as set out on pages IV-2 to IV-5 of the circular issued by the Company dated 21 December 2018 (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on page IV-1 of Appendix IV to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed capital contribution of 37% registered capital of Xi'an Zhichengda Real Estate Company Limited on the Group's assets and liabilities as at 30 September 2018 as if the Cooperation had taken place at 30 September 2018. As part of this process, information about the Group's assets and liabilities has been extracted by the Directors from the Group's unaudited condensed consolidated financial statements for the six months ended 30 September 2018, on which no audit or review report has been published.

Directors' Responsibilities 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 7 "Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars" (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

– IV-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX IV

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" issued by the HKICPA 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 owned 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 (7) of the Listing Rules and with reference to AG 7 issued by the HKICPA.

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 Unaudited Pro Forma Financial Information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction 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 event or transaction at 30 September 2018 would have been as presented.

– IV-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX IV

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 event or transaction, 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' judgement, having regard to the reporting accountants' understanding of the nature of the Group, the event or transaction 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.

Opinion

In our opinion:

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

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

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

D & PARTNERS CPA LIMITED

Certified Public Accountants

Hong Kong 21 December 2018

– IV-8 –

APPENDIX V VALUATION REPORT ON THE TARGET COMPANY

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from Asset Appraisal Limited, an independent valuer, in connection with its valuation as at 30 September 2018 of the Land Parcels.

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Rm 901, 9/F., On Hong Commercial Building 145 Hennessy Road, Wanchai, Hong Kong ��������145� ������9��901� Tel : (852) 2529 9448 Fax : (852) 3521 9591

Date: 21 December 2018

The Board of Directors

China Sandi Holdings Limited

Unit 3309, 33/F, West Tower Shun Tak Centre Nos. 168-200 Connaught Road Central Hong Kong

Dear Sirs,

Re: Valuation of three adjoining land parcels situated at Xixian New District, Xian City, Shaanxi Province, the People’s Republic of China (the “PRC”)

In accordance with the instructions from China Sandi Holdings Limited (the “ Company ”) to value the captioned land parcels (the “ Land Parcels ”), we confirm that we have inspected the Land Parcels, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Land Parcels as at 30 September 2018 (the “ valuation date ”).

BASIS OF VALUATION

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

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APPENDIX V

TITLESHIP

We have been provided with copies of legal documents regarding title to the Land Parcels. However, we have not verified ownership of the Land Parcels and to ascertain any amendment which may not appear on the copies handed to us.

We have also relied upon the legal opinion provided by the PRC legal advisers, namely Fujian New Stone Law Firm 福建新世通律師事務所 (the “ PRC Legal Opinion ”), to the Company on the title and other legal matters relation to the Land Parcels.

VALUATION METHODOLOGY

In valuing the Land Parcels, we have adopted the Market Approach by making use of the (Comparison Method) where comparison based on price information of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market values.

ASSUMPTIONS

Our valuation has been made on the assumption that the owner sell the Land Parcels on the market in their existing states without the benefit of deferred terms contracts, leaseback, joint ventures, management agreements or any similar arrangement which would serve to affect the value of the Land Parcels.

As the Land Parcels are held by the owner by means of long term Land Use Rights granted by the Government, we have assumed that the owner has good legal title to the Land Parcels and has free and uninterrupted rights to occupy, use, transfer, lease or assign the Land Parcels for the whole of the unexpired term of the land use rights

Other special assumptions for our valuation (if any) would be stated out in the footnotes of the valuation certificate attached herewith.

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APPENDIX V

LIMITING CONDITIONS

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

We have relied to a very considerable extent on the information given by the Company and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the Land Parcels but have assumed that the floor areas shown on the title deeds handed to us are correct. All documents of the Land Parcels have been used as reference only and all dimensions, measurements and areas are approximations.

The Land Parcels were lasted inspected by Zhou Tong, who is a registered PRC Real Estate Appraiser, on 8 August 2018. However, no site investigation has been carried out to determine the suitability of ground conditions or the services for any property development to be carried out on the Land Parcels. Our valuation has been made on the basis that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction period.

The market value estimate contained within this report specifically excludes the impact of environmental contamination resulting from earthquakes or other causes. It is recommended that the reader of this report consult a qualified environmental auditor for the evaluation of possible environmental defects, the existence of which could have a material impact on market value.

No soil analysis or geological studies were ordered or made in conjunction with this report, nor were any water, oil, gas, or other subsurface minerals use rights or conditions investigated.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought confirmation from the Company that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

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APPENDIX V VALUATION REPORT ON THE TARGET COMPANY

In valuing the Land Parcels, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors.

Unless otherwise stated, all monetary sums stated in this report are in Renminbi (RMB).

Our valuation certificate is attached herewith.

Yours faithfully, for and on behalf of

Asset Appraisal Limited

Tse Wai Leung

MFin BSc MRICS MHKIS RPS (GP) Director

Tse Wai Leung is a member of the Royal Institution of Chartered Surveyors, a member of The Hong Kong Institute of Surveyors, a Registered Professional Surveyor in General Practice and a qualified real estate appraiser in the PRC.. He is on the list of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers of the Hong Kong Institute of Surveyors, Registered Business Valuer under the Hong Kong Business Forum and has over 10 years’ experience in valuation of properties, ports and logistics facilities in the PRC.

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APPENDIX V VALUATION REPORT ON THE TARGET COMPANY

Valuation Certificate

Property Interests held for future development

Property

Description and Tenure

Market Value of the Land Parcels Particulars of in existing state as at occupancy 30 September 2018

Three adjoining land parcels (namely Lot Nos. FD2-7-13, FD2-7-14 and FD2-7-15) at the south of Zheng He Jiu Road（ 征 和九路）; west of Tai An Road（太安路）; east of Tai Ping Road（太平路） and north of Zheng He Liu Road（征和六路）

Xixian New District Xian City Shaanxi Province the PRC

The Land Parcels have a total land area of 182,645.61 square metres which is broken down into the followings:

Lot No. Site Area (m[2] ) FD2-7-13 71,457.08 FD2-7-14 35,619.16 FD2-7-15 75,569.37 Total 182,645.61

According to the Land Grant Contract of the Land Parcels, they have been planned for a residential/commercial development with a total gross floor area of 630,630 square metres inclusive of 211,800 square metres which is exempted for plot ratio computation.

The property was RMB1,730,000,000 vacant as at the valuation date.

The land use rights of the Property have been granted for a term of 40 years (for commercial use) or 70 years (for residential use) commencing on 25 June 2018.

Notes:

• (1) Pursuant to the State Owned Construction Land Use Right Grant Contract (Contract No. XXGT-2018C99-FD-7, referred to as the “Land Grant Contract”) entered into between the Shaanxi Province Xixian New District Land Resources and Housing Administrative Bureau（陝西省西咸新區國土資源與房屋 管理局, as Grantor) and Xi’an Zhichengda Real Estate Company Limited（西安智晟達置業有限公司, as Grantee) on 25 June 2018, the land use rights of the Land Parcels with a total area of 182,645.61 square metres were granted by the Grantor to the Grantee for a term of 40 years (for commercial use) and 70 years (for residential use) commencing on 25 July 2018.

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APPENDIX V

• (2) As mentioned in proviso 8 of the Land Grant Contract, the Land Parcels have been granted at a land premium of RMB1,136,200,000 which has been settled in full by the Grantee as at the valuation date.

• (3) As mentioned in proviso 16 of the Land Grant Contract, the construction of the proposed development on the Land Parcels shall commence on or before 25 January 2019 and the entire development shall be fully completed on or before 24 July 2021. The Grantee is required to gain prior approval from the Grantor if there is delay in construction work start or deferral in development completion and in any event, such delay or deferral shall not be more than 1 year.

• (4) As mentioned in Appendix 3 annexed to the Land Grant Contract, the Land Parcels are subject to the following planning conditions:

Lot No.: FD2-7-13

Site Area: 71,457.08 square metres Land Use: Residential Gross Floor Area Super-structures: 178,644 square metres of which commercial area shall not exceed 8,900 square metres Sub-structure: 71,500 square metres (for carpark and plant rooms) Site Coverage: Not exceeding 26% Building Height: Not exceeding 100 metres Green Area Ratio: Not less than 35%

Lot No.: FD2-7-14

Site Area: 35,619.16 square metres Land Use: Residential Gross Floor Area Super-structures: 89,048 square metres of which commercial area shall not exceed 4,500 square metres Sub-structure: 35,800 square metres (for carpark and plant rooms) Site Coverage: Not exceeding 26% Building Height: Not exceeding 60 metres Green Area Ratio: Not less than 35%

Lot No.: FD2-7-15

Site Area: 75,569.37 square metres Land Use: Commercial and Services Gross Floor Area Super-structures: 151,138 square metres Sub-structure: 5,000 square metres for commercial use and 99,500 square metres for carpark Site Coverage: Not exceeding 50% Building Height: Not exceeding 100 metres Green Area Ratio: Not less than 25%

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VALUATION REPORT ON THE TARGET COMPANY

APPENDIX V

• (5) As mentioned in Appendix 3 annexed to the Land Grant Contract, the following community facilities shall be provided within the development to be built on Lot Nos. FD2-7-13 and FD2-7-14 of the Land Parcels:

• Kindergarten/nursery (9 classes with a gross floor area not less than 5,040 square metres and land area of not less than 5,040 square metres);

• Community service offices (including party’s member activity rooms) at a ratio of 20square metres per 100 units or 400 square metres, whichever is the greater;

• Property management offices (with gross floor area not less than 3% of the total gross floor area or 100 square metres, whichever is the greater);

• Cultural activity rooms (with a gross floor area not less than 400 square metres);

• Hygienic station (with a gross floor area not less than 300 square metres);

• Daytime elderly care centre (with a gross floor area not less than 1,085 square metres);

• • Social amenity facilities (with a gross floor area not less than 300 square metres);

• Fitness facilities (indoor facilities with a gross floor area not less than 0.1 square metres per person and outdoor facilities with a land area of 0.3 square metres per person or 1,000 square metres, whichever is the greater);

• Public lavatories (with a gross floor area not less than 50 square metres);

• (6) As mentioned in Appendix 3 annexed to the Land Grant Contract, the following community facilities shall be provided within the development to be built on Lot No. FD2-7-15 of the Land Parcels:

• Public lavatories (with a gross floor area not less than 50 square metres);

• (7) As mentioned in Appendix 3 annexed to the Land Grant Contract, the residential portion of the development to be built on the Land Parcels is subject to requirements as laid down in the Notice from the Xi’an Municipal Government Over the Issue on Further Development on Stabilizing the Housing Market（西安市人民政府關於進一步穩定住房市場發展有關問題的通知）, certain residential units of the proposed development (not less than 5% of total gross floor area of the residential units) shall be designated as protective flats for rental only（租賃型保障房）.

• (8) Three sets of Construction Land Use Planning Permit (Ref Xi Xian Gui Di Zhi Nos. 02-2018-17, 022018-18 and 02-2018-019) all dated 25 July 2018 and two sets of Construction Work Planning Permit (Ref Xi Xian Gui Jian Zhi Nos. 02-2018-30 and 02-2018-30) all dated 19 September 2018 have been issued for the construction of the property.

• (9) Two sets of Construction Work Permit (Ref Nos. 610145201810312401 and 610145201810312501) both dated 31 October 2018 have been issued for allowing the carrying out of construction work of Phase 1 of the subject development with a total gross floor area of 238,015.59 square metres).

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APPENDIX V

• (10) Pursuant to the Cooperation Agreement entered into among Xi’an Chongfeng Real Estate Company Limited (“Chongfeng Real Estate”), Fujian Sinco Industrial Co., Ltd. (“Fujian Sinco”, a whollyowned subsidiary of the Company) and Grand International Development Company Limited (“Grand International”, a wholly-owned subsidiary of the Company) on 9 August 2018, the aforesaid parties shall jointly invest in Xi’an Zhichengda Real Estate Company Limited (the “Target Company”) and in turn jointly develop the Land Parcels under the following terms and conditions:

• 10.1 Fujian Sinco and Grand International agreed to contribute RMB6,200,000 and US$30,000,000 to the Target Company as registered capital within 60 days after the land use right certificates of the Land Parcels are registered under the name of the Target Company (by virtue of such capital contribution (the “Capital Contribution”), the registered capital of the Target Company would increase from RMB352,800,000 to RMB560,000,000 of which paid up capital among to RMB414,400,000).

• 10.2 Upon completion of the aforesaid capital contribution, Chongfeng Real Estate, the Group, and Zhixiang Commercial will be interested in the Target Company as to 37%, 37% and 26% respectively.

• 10.3 Fujian Sinco and Grand International shall provide shareholder’s loans of RMB360,900,000 in aggregate (the “New Shareholder’s Loans”) to the Target Company within 3 working days after the date on which the aforesaid capital contribution is completed and such shareholder’s loans shall be used by the Target Company to repay portion of existing shareholder’s loans advanced for the acquisition costs of the Land Parcels (the “Existing Shareholder’s Loans”).

• 10.4 Fujian Sinco and Grand International agreed to pay Chongfeng Real Estate a capital occupation interest on 50% of the land premium (being RMB568,100,000) calculated on an annualized interest rate of 13% for the period from the date of payment of the Existing Shareholder’s Loans to the date of payment of the Capital Contribution and the New Shareholder’s Loans.

• 10.5 Each of Chongfeng Real Estate and Fujian Sinco agreed to provide an advance of RMB50,000,000 (the “Advance”) to the Representatives through the Target Company within 3 working days after the date on which the Capital Contribution is completed. The Advance shall be extended on an interest-free basis and shall be repaid on the date on which the profits of the Target Company entitled by and distributed to the Representatives are adequate to settle the Advance in full.

• 10.6 In the event where the Target Company requires shareholders’ loans to accommodate its financial need for the construction and development of the Land Parcels, Chongfeng Real Estate, Fujian Sinco and Grand International agreed to provide additional shareholder’s loans on a pro rata basis to the Target Company with interest calculated at the rate of 13% per annum. The maximum of shareholder’s loans to be provided by each of (i) Chongfeng Real Estate and (ii) Fujian Sinco and Grand International in aggregate shall not exceed RMB181.9 million.

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APPENDIX V

• (11) Opinion of the PRC Lawyer on the Property is summarized as follows:

• 11.1 On 14 June 2018, the Shaanxi Province Xixian New District Land Resources and Housing Administrative Bureau and Xi’an Zhichengda Real Estate Company Limited executed the Confirmation Letter（西咸新區國有建色號用地使用權拍賣出讓成交確認書）which certifies that Xi’an Zhichengda Real Estate Company Limited has been successfully awarded the land use rights of the Land Parcels through open bidding. On 26 June 2018, the State Owned Construction Land Use Right Grant Contract (Contract No. XXGT-2018C-99-FD-7 was entered into by the same parties.

• 11.2 On 13 July 2018, Xi’an Zhichengda Real Estate Company Limited settled the land premium of RMB1,136,200,000 to the Shaanxi Province Xixian New District Finance Bureau（陝西省西咸新 區財政局）.

• 11.3 On 17 July 2018, Xi’an Zhichengda Real Estate Company Limited settled the deed tax of RMB34,654,100 to the Shaanxi Province Xixian New District Local Tax Bureau Feng Dong Xin Cheng Branch（西咸新區地方稅務局灃東新城分局）. Tax Fully Settled Certificate (181-Shann Di Zheng 00981989) was issued to Xi’an Zhichengda Real Estate Company Limited on 17 July 2018.

• 11.4 As revealed from 3 sets of Construction Land Use Planning Permits（建設用地規划許可證, Ref: Xi Xiang Gui Di Zhi Nos. 02-2018-17 to 02-2018-19), the Land Parcels have been designed for development of Nan Mei Commodity Trading Centre Phase 1, 2 and 3（南美商品貿易中心項目 一期、二期和三期）.

• 11.5 On 17 August 2018, 3 sets of Land Use Right Certificate (Ref Shann 2018 Xi An ShiBu Dong Chan Quan Nos. 0000417, 0000418 and 0000419) in relation to the Land Parcels were issued to Xi’an Zhichengda Real Estate Company Limited on 17 August 2018.

• 11.6 Xi’an Zhichengda Real Estate Company Limited has completed relevant procedures including execution of Land Use Right Grant Contract, payment of land premium and deed tax, title registration and obtaining Land Use Right Certificate to become the legal owner of the land use rights of the Land Parcels.

• 11.7 As provided in Proviso 16 of the State Owned Construction Land Use Right Grant Contract, Xi’an Zhichengda Real Estate Company Limited shall start construction work for the Land Parcels on or before 25 January 2019. Failure to start construction work on or before the prescribed date shall expose Xi’an Zhichengda Real Estate Company Limited to breach of contract damage payment or even having the land use rights of the Land Parcels reverted to the Government without compensation.

• 11.8 Xi’an Zhichengda Real Estate Company Limited has obtained the Interim Qualification Certificate for Real Estate Development Enterprise in the People’s Republic of China

• （中華人民共和國房地產開發企業暫定資質證書）and is qualified for acting as the developer of the property.

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GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares and, in respect of equity derivatives, underlying Shares in, and debentures of, the Company or any of its associated corporations (within the meaning of Part XV of the SFO) or members of the Group which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or, which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

(a) Long positions in the Shares and underlying Shares

					Approximate
					percentage
					of the issued
				Number of	capital as at
			Number of	share	the Latest
		Number of	underlying	options	Practicable
Name of Director	Capacity	Shares	Shares	held	Date
Mr. Guo Jiadi	Interest of	2,901,469,002	312,500,000	–	72.1%
	controlled	(Note 1)	(Note 2)
	corporation
	Beneficial owner	–	–	4,400,000	0.1%
				(Note 3)
Mr. Wang Chao	Beneficial owner	–	–	3,000,000	0.1%
				(Note 4)
Ms. Amika Lan E Guo	Beneficial owner	–	–	4,400,000	0.1%
				(Note 5)
Ms. Ma Shujuan	Beneficial owner	–	–	4,400,000	0.1%
				(Note 6)
Mr. Zheng Yurui	Beneficial owner	–	–	4,400,000	0.1%
				(Note 7)

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GENERAL INFORMATION

APPENDIX VI

Notes:

1. The 2,901,469,002 Shares comprised (a) 2,581,054,801 Shares in issue held by United Century and (b) 320,414,201 Shares held by King Partner. By virtue of the SFO, Mr. Guo is deemed to be interested in the Shares held by United Century and King Partner respectively.

2. This represented United Century’s long position in 312,500,000 underlying Shares which constituted unlisted physically settled equity derivatives pursuant to an arrangement entered into with Beyond Steady Limited (“Beyond Steady”). Beyond Steady is taken to have the short position in the same underlying shares. Beyond Steady is a company incorporated in BVI with limited liability which is indirectly wholly owned by Huarong International Financial Holdings Limited (“Huarong”).

3. As at the Latest Practicable Date, Mr. Guo Jiadi, an executive Director and Chairman of the Company was entitled to receive share options to subscribe for a maximum of 4,400,000 Shares upon exercise of the options in full.

4. As at the Latest Practicable Date, Mr. Wang Chao, an executive Director was entitled to receive share options to subscribe for a maximum of 3,000,000 Shares upon exercise of the options in full.

5. As at the Latest Practicable Date, Ms. Amika Lan E Guo, an executive Director was entitled to receive share options to subscribe for a maximum of 4,400,000 Shares upon exercise of the options in full.

6. As at the Latest Practicable Date, Ms. Ma Shujuan, an independent non-executive Director was entitled to receive share options to subscribe for a maximum of 4,400,000 Shares upon exercise of the options in full.

7. As at the Latest Practicable Date, Mr. Zheng Yurui, an independent non-executive Director was entitled to receive share options to subscribe for a maximum of 4,400,000 Shares upon exercise of the options in full.

(b) Short positions in the Shares and underlying Shares

			Approximate
			percentage of
		Number of	issued capital
		underlying	as at the Latest
Name of Director	Capacity	Shares	Practicable Date
Mr. Guo_(Note)_	Interest of controlled	125,000,000	2.8%
	corporation	(Note)

Note:

This represents United Century’s short position in 125,000,000 underlying Shares which constituted unlisted physically settled equity derivatives pursuant to an arrangement entered into with Chance Talent Management Limited (“Chance Talent’). Chance Talent’s intermediate holding company is CCB International Group Holdings Limited, and the ultimate holding company is Central Huijin Investment Ltd. Chance Talent is taken to have the long position in the same underlying Shares.

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GENERAL INFORMATION

APPENDIX VI

(c) Long positions in associated corporation

			Approximately
	Name of associated		percentage of
Name of Director	corporation	Capacity	registered capital
Mr. Guo_(Note)_	Fujian Jiake	Interest of	49%
	Industrial Company	controlled
	Limited	corporation

Note: Mr. Guo’s interest in Fujian Jiake is held through Fuzhou Gaojia Real Estate Development Co., Ltd., a company established in the PRC and ultimately controlled by Mr. Guo.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executives of the Company or their respective associates had any interests or short positions in the shares or, in respect of equity derivatives, underlying shares in, or debentures of, the Company or any of its associated corporations (within the meaning of Part XV of the SFO) or members of the Group which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX VI

DISCLOSURE OF INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the interests and short positions of Shareholders (not being Directors or the chief executives of the Company) in the Shares and underlying Shares which were notified to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO and required to be entered in the register maintained by the Company pursuant to section 336 of the SFO were as follows:

				Approximate
				percentage of
				issued capital
			Number of	as at the Latest
Name of		Number of	underlying	Practicable
Shareholder	Capacity	Shares	Shares	Date
Long Position
United Century	Beneficial	2,581,054,801	312,500,000	64.9%
(Note 1)	owner	(Note 1)	(Note 2a)
King Partner	Beneficial	320,414,201	–	7.2%
(Note 1)	owner	(Note 1)
Central Huijin	Interest of	–	2,399,039,555	53.8%
Investment Ltd.	controlled		(Note 2)
	corporations
Chance Talent	Beneficial	–	2,399,039,555	53.8%
	owner		(Note 2)
Huarong	Interest of	312,500,000	625,000,000	21.0%
	controlled	(Note 3a)	(Note 3b)
	corporations
Beyond Steady	Beneficial	312,500,000	625,000,000	21.0%
Limited	owner	(Note 3a)	(Note 3b)
Short Position
Huarong	Interest of	–	312,500,000	7.0%
	controlled		(Note 3c)
	corporations
Beyond Steady	Beneficial	–	312,500,000	7.0%
Limited	owner		(Note 3c)
United Century	Beneficial	–	125,000,000	2.8%
(Note 1)	owner		(Note 1)

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GENERAL INFORMATION

APPENDIX VI

Notes:

1. Please refer to Note 1 under section headed “Disclosure of Interests of Directors and Chief Executives” on page VI-2.

2. The 2,399,039,555 underlying Shares comprises: (a) security interest in 2,274,039,555 underlying Shares, and (b) long position in 125,000,000 underlying Shares which constituted unlisted physically settled equity derivatives pursuant to an arrangement entered into with United Century. United Century is taken to have the short position in the same underlying Shares.

3. (a) The 312,500,000 Shares are held by Beyond Steady, a company incorporated in BVI with limited liability which is indirectly wholly owned by Huarong.

• (b) Beyond Steady has security interest in 625,000,000 underlying Shares.

• (c) This represented Beyond Steady’s short position in 312,500,000 underlying Shares which constituted unlisted physically settled equity derivatives pursuant to an arrangement entered into with United Century. United Century is taken to have the long position in the same underlying shares.

3. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, (a) there was no contract or arrangement in which any of the Directors was materially interested and which is significant in relation to the business of the Group subsisted as at the Latest Practicable Date, and (b) none of the Directors had, or have had, any direct or indirect interests in any assets which have been acquired or disposed of by or leased to, or which are proposed to be acquired or disposed of by or leased to, any member of the Group since 31 March 2018, the date to which the latest published audited consolidated financial statements of the Group were made up.

4. COMPETING INTERESTS

As at the Latest Practicable Date, save and except for Mr. Guo, an executive Director, none of the Directors nor their respective associates had any businesses or interests that compete or might compete with the business of the Group or any other conflict of interests with the Group.

Mr. Guo carries out property development and investment businesses in the PRC through Fujian Sandi Property Development Company Limited and Fuzhou Gaojia Real Estate Development Co., Ltd.. To deal with the potential conflict of interests between Mr. Guo and the Company, (i) Mr. Guo and (ii) the Company had entered into the deed of non-competition on 15 March 2017, pursuant to which, among other things, Mr. Guo had given non-compete undertakings in favour of the Company on the terms as summarised in the announcement of the Company dated 15 March 2017.

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GENERAL INFORMATION

APPENDIX VI

5. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claims of material importance and, so far as the Directors were aware, no litigation or claim of material importance was pending or threatened by or against any member of the Group.

6. MATERIAL CONTRACTS

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

• (a) the agreement dated 15 December 2016 and entered into between Fujian Sinco and Fuzhou Gaojia Real Estate Development Co., Ltd.（福州高佳房地產開發有 限公司）in relation to the acquisition of the 95% of the equity interests of Fujian Jingdu Land Co., Ltd.（福建京都置業有限公司）and the entire amount of the loans owed by Fujian Jingdu Land Co., Ltd.（福建京都置業有限公司）to Fuzhou Gaojia Real Estate Development Co., Ltd.（福州高佳房地產開發有限公司）of RMB259,816,462.23;

• (b) the agreement dated 15 December 2016 and entered into between Fujian Sinco and Fuzhou Gaojia Real Estate Development Co., Ltd.（福州高佳房地產開發有 限公司）in relation to the acquisition of the 95% of the equity interests of Xian Sandi Real Estate Development Co., Ltd.（西安三迪房地產開發有限公司）and the entire amount of the loans owed by Xian Sandi Real Estate Development Co., Ltd.（西安三迪房地產開發有限公司）to Fuzhou Gaojia Real Estate Development Co., Ltd.（福州高佳房地產開發有限公司）of RMB107,437,650.70;

• (c) the deed of non-competition dated 15 March 2017 (the “ Non-competition Deed ”) whereby, among other things, Mr. Guo has undertaken to the Company that (i) he and his close associates would not engage in business compete (or may compete) with the business of the Group subject to the exceptions provided thereunder; (ii) if any new business opportunity is made available to him and/or his close associates during the restricted period under the Non-competition Deed, he and/or his close associates shall refer it to the Company for consideration; (iii) if he and/or any of his close associates wishes to sell any interest in his business and/or the business of his close associates to any third party (the “ Opportunity for Sale ”), Mr. Guo will offer and will procure his close associates to offer the Opportunity for Sale to the Company and the Company shall have a first right of refusal in respect of such Opportunity for Sale; and (iv) he shall indemnify and keep indemnified the Group against any damage, loss or liability suffered by the Group arising out of or in connection with his breach of the terms of the Noncompetition Deed;

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APPENDIX VI

• (d) the Cooperation Agreement;

• (e) the sale and purchase agreement dated 21 September 2018 entered into among Grand Supreme Limited, Primary Partner International Limited and Mr. Guo whereby Grand Supreme Limited agreed to purchase the entire issued share capital of All Excel Industries Limited from Primary Partner International Limited at the consideration of RMB1,500 million; and

• (f) the loan agreement dated 27 November 2018 entered into among Fujian Sinco (as lender), Shannan Tianyuan Investment Centre and Shannan Shengyuan Investment Centre (as borrowers) whereby Fujian Sinco agreed to lend to the two borrowers the loan in the principal amount of up to RMB 110 million at interest of 20% per annum for a term of 18 months.

Save and except for the parties set out below who were the connected persons of the Company as at the date of the relevant material contracts, each of the counterparties to the material contracts referred to above were Independent Third Parties as at the date of the relevant material contracts:

• (i) Fuzhou Gaojia Real Estate Development Co., Ltd.*（福州高佳房地產開發有限公 司）, a party to the material contracts set out in paragraphs (a) and (b) above;

• (ii) Mr. Guo, a party to the material contracts set out in paragraphs (c) and (e) above; and

• (iii) Primary Partner International Limited, a party to the material contract set out in paragraph (e) above.

7. SERVICE CONTRACTS OF DIRECTORS

As at the Latest Practicable Date, none of the directors of the Group had any existing or proposed service contracts with the Company which does not expire or is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given opinions or advice contained in this circular:

Name	Qualificaiton
D & PARTNERS CPA LIMITED	Certified Public Accountants
Asset Appraisal Limited	Independent Property Valuer
Fujian New-Stone Law Firm	PRC Legal Advisor
（福建新世通律師事務所）

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APPENDIX VI

As at the Latest Practicable Date, (a) the above experts did not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group and (b) did not have any direct or indirect interest in any assets which have been 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 since 31 March 2018, the date to which the latest published audited consolidated financial statements of the Group were made up.

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular, with the inclusion therein of its letter(s), report(s), opinion and/or the references to its name in the form and context in which they appear.

9. GENERAL

• (a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The principal place of business of the Company in Hong Kong is at Unit 3309, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong; and

• (d) The company secretary of the Company is Ms. Chan Po Yu, who is a member of the Hong Kong Institute of Certified Public Accountants and the Hong Kong Institute of Chartered Secretaries.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (except Saturdays and public holidays) at the principal office of the Company in Hong Kong at Unit 3309, 33/F, West Tower, Shun Tak Centre, 168 – 200 Connaught Road Central, Sheung Wan, Hong Kong for a period of 14 days from the date of this circular:

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

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APPENDIX VI

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

• (c) the letter from the Board, the text of which is set out on pages 5 to 18 of this circular;

• (d) the Accountants’ Report on the Target Company, the text of which is set out in Appendix III to this circular;

• (e) the valuation report on the Land Parcels, the text of which is set out in Appendix V to this circular;

• (f) the written consents from the experts referred to in the section headed “Experts and Consents” of this appendix;

• (g) the annual reports of the Company for each of the two financial years ended 31 March 2017 and 2018 respectively; and

• (h) this circular.

MISCELLANEOUS

For easy of reference, the names of the PRC established companies or entities (if any) and the PRC laws and regulations (if any) have generally been included in this circular in both Chinese and English languages and in the event of inconsistency, the Chinese language shall prevail.

Except for the above, the English text of this circular shall prevail over the Chinese text in the event of inconsistency.

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