CIFI Holdings (Group) Co. Ltd. - Proxy Solicitation & Information Statement 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in CIFI Holdings (Group) Co. Ltd. , you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale 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.

CIFI Holdings (Group) Co. Ltd. 旭輝控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00884)

MAJOR TRANSACTION

PROPOSED JOINT VENTURE ARRANGEMENT FOR THE DEVELOPMENT PROJECT IN PUDONG NEW DISTRICT, SHANGHAI, THE PRC

A letter from the Board is set out on pages 7 to 20 of this circular.

Hong Kong, 24 August 2015

CONTENTS

			Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			7
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Accountants’ Report on Yongpan . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	Accountants’ Report on the Project Company . . . . . . . . . . . . .	III-1
Appendix IV	–	Valuation Report of the Site . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1

DEFINITIONS

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

“associates”
has the meaning ascribed to them under the Listing Rules
“Board”
the board of Directors
“CIFI (PRC)”
旭輝集團股份有限公司 (CIFI Group Co., Ltd.*), a joint stock company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“CIFI Offshore Shareholders’ Loan”
an interest-free shareholder loan of a sum in US$ equivalent to RMB600 million proposed to be contributed by Xu Jia into the Offshore JV pursuant to the Offshore JV Shareholder Loan Agreement upon completion of the Offshore JV Equity Subscription Agreement
“Coastwise (BVI)” or “Offshore JV”
Coastwise Limited, a company incorporated in British Virgin Islands and a direct wholly-owned subsidiary of Ingletone as of the Latest Practicable Date
“Coastwise (HK)”
Coastwise (HK) Limited, a company incorporated in Hong Kong and a direct wholly-owned subsidiary of Coastwise (BVI)
“Company”
CIFI Holdings (Group) Co. Ltd. (旭輝控股（集團）有限公司), a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange
“connected person(s)”
has the meaning ascribed to it under the Listing Rules
“Controlling Shareholder(s)”
has the meaning ascribed to it under the Listing Rules, and in the context of the Company, means Rosy Fortune, Ding Chang, Eminent Talent, Rain-Mountain, Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng

– 1 –

DEFINITIONS

“Ding Chang”
Ding Chang Limited (鼎昌有限公司), a company incorporated with limited liability in British Virgin Islands holding 1,175,675,671 Shares, representing approximately 17.38% of the entire issued share capital of the Company as at the Latest Practicable Date. The entire interest in Ding Chang is held by Sun Success Trust, which is a family trust set up by Mr. LIN Zhong as settlor. Mr. LIN Zhong also directly holds 5,978,000 Shares, representing approximately 0.09% of the entire issued share capital of the Company as at the Latest Practicable Date
“Directors”
the directors of the Company
“Eminent Talent”
Eminent Talent Limited (卓駿有限公司), a company incorporated with limited liability in British Virgin Islands holding 613,765,775 Shares, representing approximately 9.07% of the entire issued share capital of the Company as at the Latest Practicable Date. The entire interest in Eminent Talent is held by Mr. LIN Wei
“Group”
the Company and its subsidiaries
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Hongkong Land China”
Hongkong Land China Holdings Limited, a company incorporated in Bermuda
“Hongkong Land China Group” Hongkong Land China and its subsidiaries

– 2 –

DEFINITIONS

“Hongkong Land China offshore Shareholders’ Loan”
“HuaAn”
“IFRS”
“Independent Third Party(ies)”
“Ingletone”
“Joint Venture Arrangement”
“Land Use Rights Grant Contract”
“Latest Practicable Date”
an interest-free shareholder’s loan of a sum in US$ equivalent to RMB1,200 million proposed to be contributed by Ingletone into Coastwise (BVI) pursuant to the Offshore JV Shareholder Loan Agreement for its injection into Coastwise (HK) which will use such loan proceeds to pay Yongpan for its acquisition of the entire interest in the Project Company under the Master Agreement and the Project Company Equity Transfer Agreement. Such shareholder’s loan is proposed to be repaid partially by Coastwise (BVI) to Ingletone by applying the proceeds of the CIFI Offshore Shareholder’s Loan thereby reducing the loan amount to RMB600 million
華安未來資產管理（上海）有限公司 (HuaAn Future Asset Management (Shanghai) Limited*), a company incorporated in the PRC with limited liability
International Financial Reporting Standards
an individual(s) or a company(ies) who or which is (are) independent of and not connected with (within the meaning of the Listing Rules) any Directors, chief executive or substantial shareholders, of the Company, its subsidiaries or any of their respective associate(s)
Ingletone Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of Hongkong Land China
the joint venture arrangement to be carried out through Coastwise (BVI) between the Group and Hongkong Land China Group pursuant to the Master Agreement
Land Use Rights Grant Contract (國有建設用地使用權出讓合同) dated 27 November 2014 entered into between 上海市浦東新區規劃和土地管理局 (Land Bureau of Pudong New District, Shanghai*) as transferor and the Project Company as transferee in respect of the Site
21 August 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

– 3 –

DEFINITIONS

“Listing Rules”
“Master Agreement”
“Mr. LIN Feng”
“Mr. LIN Wei”
“Mr. LIN Zhong”
“Offshore JV Equity Subscription Agreement”
“Offshore JV Shareholder Loan Agreement”
“percentage ratios”
“PRC”
“Project Company”
the Rules Governing the Listing of Securities on the Stock Exchange
the master agreement dated 15 May 2015 made between the Company, Xu Jia, Yongpan, the Project Company, CIFI (PRC), Hongkong Land China and Ingletone relating to the proposed joint venture arrangement for development of the Site
Mr. LIN Feng (林峰先生), the executive Director and Chief Executive Officer of the Company
Mr. LIN Wei (林偉先生), the executive Director and Vice-chairman of the Company
Mr. LIN Zhong (林中先生), the executive Director and Chairman of the Company
the agreement proposed to be made between Xu Jia, the Company, Coastwise (BVI) and Hongkong Land China pursuant to which Xu Jia proposes to subscribe for 50% equity interest in the Coastwise (BVI) at the consideration of US$1 and injection into Coastwise (BVI) of a sum in HK$ or US$ equivalent to RMB600 million by way of the CIFI Offshore Shareholder’s Loan upon completion of the Offshore JV Equity Subscription Agreement
the agreement proposed to be made between Xu Jia and Ingletone as lenders and Coastwise (BVI) as borrower
has the same meaning ascribed to it under the Listing Rules
the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region and Taiwan
上海旭涇置業有限公司 (Shanghai XUJING Property Co., Limited*), a company incorporated in the PRC and the entire equity interest of which is held by Yongpan as at the date of the Master Agreement

– 4 –

DEFINITIONS

“Project Company Equity Transfer Agreement”
“Rain-Mountain”
“RMB”
“Rosy Fortune”
“SFO”
“Share(s)”
“Shareholders”
“Site”
“sq.m”
“Stock Exchange”
the agreement proposed to be made between Yongpan as seller and Coastwise (HK) as purchaser pursuant to which Yongpan will transfer the entire interest in the Project Company to Coastwise (HK) at the consideration of RMB1,200 million
Rain-Mountain Limited, a company incorporated with limited liability in British Virgin Islands holding 204,588,580 Shares, representing approximately 3.02% of the entire issued share capital of the Company as at the Latest Practicable Date. The entire interest in Rain-Mountain is held by Sun-Mountain Trust, which is a family trust set up by Mr. LIN Feng as settlor
Renminbi, the lawful currency of the PRC
Rosy Fortune Investments Limited (茂福投資有限公司), a company incorporated with limited liability in British Virgin Islands holding 2,217,129,975 Shares, representing approximately 32.77% of the entire issued share capital of the Company as at the Latest Practicable Date. The entire interest in Rosy Fortune is held by Lin’s Family Trust, which is a family trust jointly set up by Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng, being the executive Directors, as settlors. Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng are brothers and the founders of the Group
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
the ordinary share(s) of HK$0.1 each in the share capital of the Company

holders of the Shares

a piece of land of lot number 201100236472427305 located at Yangjing Street, Pudong New District Shanghai, the PRC (中國上海浦東新區洋涇街道)

square meter(s)

The Stock Exchange of Hong Kong Limited

– 5 –

DEFINITIONS

“US$” United States dollars, the lawful currency of the United States of America “WFOE” wholly foreign-owned enterprise established in the PRC

“Xu Jia” Xu Jia Co. Limited (旭嘉有限公司), a company incorporated with limited liability in the British Virgin Islands and an indirect wholly-owned subsidiary of the Company through which the Group will enter into the Joint Venture Arrangement with Hongkong Land China “Yongpan” 上海永磐實業有限公司 (Shanghai Yongpan Enterprise Co., Limited*), a company incorporated in the PRC in which the Company has an indirect interest of 49% as at the date of the Master Agreement with the remaining 51% interest held by HuaAn

“%” per cent.

For the purpose of illustration only and unless otherwise stated, conversion of RMB into Hong Kong dollars in this circular is based on the exchange rate of RMB1 to HK$1.25. Such conversion should not be construed as a representation that any amount has been, could have been, or may be, exchanged at this or any other rate.

In this Circular, the names of the companies or entities marked with “*” denotes English translation of the name of Chinese companies or entities and is provided for identification purpose only.

– 6 –

LETTER FROM THE BOARD

CIFI Holdings (Group) Co. Ltd. 旭輝控股（集團）有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 00884)

Executive Directors: Mr. LIN Zhong (Chairman) Mr. LIN Wei (Vice-chairman) Mr. LIN Feng (Chief Executive Officer)

Independent Non-executive Directors: Mr. GU Yunchang Mr. ZHANG Yongyue Mr. TAN Wee Seng

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

Principal Place of Business in Hong Kong: Suites 2002-2003 20th Floor One Pacific Place 88 Queensway Hong Kong 24 August 2015

To the Shareholders,

Dear Sir or Madam,

MAJOR TRANSACTION

PROPOSED JOINT VENTURE ARRANGEMENT FOR THE DEVELOPMENT PROJECT IN PUDONG NEW DISTRICT, SHANGHAI, THE PRC

INTRODUCTION

On 15 May 2015, the Company, Hongkong Land China, Ingletone, Xu Jia, Yongpan, the Project Company and CIFI (PRC) entered into the Master Agreement pursuant to which the parties proposed to undergo certain transactions and form the joint venture for the development of the Site.

The purpose of this circular is to provide you with, among other things, further particulars of the Joint Venture Arrangement and the financial information of the Group.

– 7 –

LETTER FROM THE BOARD

BACKGROUND

(1) Corporate structure before the Joint Venture Arrangement

As disclosed in the announcement of the Company dated 15 May 2015, the corporate structure showing the equity interest in the Site is set out below:

==> picture [297 x 381] intentionally omitted <==

----- Start of picture text -----

The Company
(Cayman)
100% ( indirect )
CIFI (PRC) HuaAn
(PRC) (PRC)
49% 51%
Yongpan
(PRC)
100%
Project Company
(PRC)
The Site
----- End of picture text -----

As at the date of the Master Agreement, the equity interest of Yongpan was 49% owned by the Group and 51% owned by HuaAn. Yongpan and the Project Company were not subsidiaries of the Company and their financial performances have not been consolidated into the financial statements of the Group. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries,

(i) HuaAn is a company incorporated in the PRC with limited liability principally engaged in asset management business; and

– 8 –

LETTER FROM THE BOARD

(ii) HuaAn and its ultimate beneficial owner(s) are Independent Third Parties.

The principal business of the Project Company is the development of the Site. The principal business of Yongpan is, through the Project Company, holding of the interests in the development of the Site.

Yongpan was established on 14 April 2014 with a registered capital of RMB100 million. Based on its audited financial statements under IFRS:

as at 31 December 2014 and 30 June 2015, Yongpan had a consolidated total asset of approximately RMB4,239.2 million and RMB4,612.9 million respectively, a consolidated total liabilities (including shareholders’ advances and external loans) of approximately RMB4,141.3 million and RMB4,517.4 million respectively, and a consolidated net asset of approximately RMB97.9 million and RMB95.5 million respectively;
during the period from its date of establishment to 31 December 2014 and the six months ended 30 June 2015, Yongpan’s consolidated net loss after taxation was approximately RMB2.1 million and RMB2.4 million, respectively.

The Project Company was established on 11 October 2014 with a registered capital of RMB100 million. Based on its audited financial statements under IFRS:

as at 31 December 2014 and 30 June 2015, the Project Company had a total asset of approximately RMB4,179.0 million and RMB4,436.6 million respectively, a total liabilities (including shareholders’ advances and external loans) of approximately RMB4,081.0 million and RMB4,341.0 million respectively, and a net asset of approximately RMB97.9 million and RMB95.6 million respectively;
during the period from its date of establishment to 31 December 2014 and the six month ended 30 June 2015, the Project Company’s consolidated net loss after taxation was approximately RMB2.1 million and RMB2.4 million respectively.

– 9 –

LETTER FROM THE BOARD

(2) Details of the Site

The Site was acquired by Yongpan through public land auction held by 上海市浦東新區規劃和土地管理局 (Planning and Land Bureau of Pudong New District, Shanghai*). The Project Company, which is wholly-owned by Yongpan, entered into the Land Use Rights Grant Contract (國有建設用地使用權出讓合同) on 27 November 2014. The Shanghai Certificate of Real Estate Ownership (上海市房地產權證) in respect of the Site was granted on 1 April 2015. Further details of the Site and the development are set out below:

Location : a piece of land of lot number 201100236472427305 located at Yangjing Street, Pudong New District Shanghai, the PRC (中國上海浦東新區洋涇街道)
Total site area : 87,179.60 sq.m. Primary intended use : Residential, office and commercial Planned gross floor area : 226,666.96 sq.m., of which: 30,000.00 sq.m. for residential 75,000.00 sq.m. for office 121,666.96 sq.m. for commercial
Terms of land use rights : 70 years for residential use 50 years for office use 40 years for commercial use
Land premium : RMB4,175 million

It is currently expected that the residential portion of the project will be held for strata-title sale, the office portion of the project will be held for en-bloc or strata-title sale, while the commercial portion of the project (which are mainly community retail spaces) will be held for en-bloc sale or for rental by the Project Company depending on the prevailing market condition in Shanghai.

Following the Joint Venture Arrangement, the total investment amount of the Project Company (including but not limited to land costs, development costs and other expenses) is estimated to be around RMB7,300 million. Such development costs comprise land premium of RMB4,175 million which have already been paid and the remaining development costs (including construction, interest and other costs of RMB3,125 million) will be funded by pre-sale proceeds of the project, bank loans and contributions by the joint venture partners. If the estimated development costs of RMB7,300 million are not adequate to complete the development, the Company and Hongkong Land China will further consider how the shortfalls will be provided on a several basis pro rata to their respective equity interests in the Offshore JV.

– 10 –

LETTER FROM THE BOARD

As advised by the Group’s PRC legal adviser, Hiways Law Firm (海華永泰律師事務所), the Project Company has legally obtained the land use rights of the site and as at the Latest Practicable Date, the following certificates and permits in connection with the development and construction of the Site have been obtained:

(a) Construction Land Approval Certificate (建設用地批准書);
(b) Construction Land Planning Permit (建設用地規劃許可證);
(c) Construction Work Planning Permit (建設工程規劃許可證); and
(d) Construction Work Commencement Permit (建築工程施工許可證).

Construction of the project has already commenced in July 2015. The construction of residential portion of the project is expected to complete around the end of 2017 and the office and commercial portions are expected to be completed before December 2018. Since the construction has just begun in July 2015, the construction work done up to the Latest Practicable Date was not significant and the construction in progress has not been taken into account in the valuation report of the Site contained in Appendix IV of this circular for the valuation of the Site as at 30 June 2015.

JOINT VENTURE ARRANGEMENT

On 15 May 2015, the Master Agreement was entered into for the formation of a joint venture to develop the Site. Principal terms of the Master Agreement and the ancillary transaction documents and the transactions contemplated thereunder are as follows:

(a) Parties to the Master Agreement
(i) the Company
(ii) Hongkong Land China
(iii) Ingletone
(iv) Xu Jia
(v) Yongpan
(vi) the Project Company
(vii) CIFI (PRC)

– 11 –

LETTER FROM THE BOARD

(b) Proposed restructuring relating to the Project Company

After signing of the Master Agreement, the following steps would be contemplated before the signing of the Project Company Equity Transfer Agreement:

(i) The purchase by CIFI (PRC) of the 51% of the equity interest in Yongpan from HuaAn for a consideration of RMB51 million (“ Yongpan Equity Transfer ”). The consideration was determined with reference to the 51% of the registered capital of Yongpan. Following the completion of Yongpan Equity Transfer, CIFI (PRC) will own 100% of the equity interest in Yongpan;
(ii) The increase of the registered and paid-up capital of the Project Company from RMB100 million to RMB1,200 million. Yongpan is responsible for contribution of the increased registered capital of the Project Company; and
(iii) The restructuring of external onshore debts of the Project Company, so that the Project Company to have a total outstanding principal amount of debt of approximately RMB3,000 million. As at 30 June 2015, the Yongpan Group (including the Project Company) had a total outstanding external debt of RMB2.98 billion (other than advances due to the Group). These external debts were incurred at the level of Yongpan and the Project Company. As at the Latest Practicable Date, such external debts were entirely restructured at the level of the Project Company. As such the abovementioned restructuring had been completed.

(c) Offshore Loan

After signing of the Master Agreement, the Company and Hongkong Land China would use their best endeavor to seek to obtain an offshore loan in the principal amount of not less than a sum in HK$ or US$ equivalent to RMB2,100 million from offshore financial institution(s) with either Coastwise (BVI) or Coastwise(HK) as the borrower (the “ Offshore Loan ”).

Securing the offer of the Offshore Loan by the offshore financial institution(s) on committed basis is, amongst others, one of the condition precedents for the completion of Transaction I described below. The proceeds of the Offshore Loan will be used as additional capital injection into the Project Company following the completion of Transaction II described below.

– 12 –

LETTER FROM THE BOARD

(d) Transaction I: Project Company Equity Transfer Agreement

After completion of the incidents mentioned under the paragraph headed “(b) Proposed restructuring relating to the Project Company” above and subject to fulfilment of certain conditions including, among others, that the result of the due diligence on the Project Company and the Site is satisfactory to Hongkong Land China, Yongpan as seller and Coastwise (HK) as purchaser will sign the Project Company Equity Transfer Agreement for the transfer of the entire equity interest in the Project Company for a consideration of RMB1,200 million (the “ Project Company Equity Transfer ”). The consideration was determined with reference to the registered capital of the Project Company. The Group intends to apply the net proceeds from the Project Company Equity Transfer as internal resources of the Group.

Completion of the Project Company Equity Transfer Agreement is subject to fulfilment of certain conditions including, among others, that:

(i) all necessary government approvals in respect of the transactions concerning the Project Company Equity Transfer Agreement contemplated under the Master Agreement having been obtained;
(ii) relevant necessary consents/waivers being obtained by the Company from the offshore lenders of the Company’s relevant existing offshore loan agreement(s), in order to enable certain steps of the transactions contemplated under the Master Agreement to be conducted;
(iii) the Offshore JV Equity Subscription Agreement and the Offshore JV Shareholder Loan Agreement having been signed; and
(iv) Coastwise (BVI) or Coastwise (HK) having secured the offer of the Offshore Loan by the offshore financial institution(s) on committed basis by 31 August 2015 (as extended from the original deadline of 30 June 2015 under mutual consent of the parties thereto) (or such later date as may be agreed by the parties). It is expected that the Offshore Loan will be guaranteed by the Company and Hongkong Land China on 50%:50% several basis upon completion of the subscription under the Offshore JV Equity Subscription Agreement.

If the offer of the Offshore Loan could not be secured on committed basis on or before 31 August 2015 (or any other date as may be agreed by the parties), either the Company or Hongkong Land China shall be entitled to terminate the Master Agreement, the Project Company Equity Transfer Agreement and the Offshore JV Equity Subscription Agreement.

As at the Latest Practicable Date, the relevant government approvals mentioned in paragraph (i) above is still under progress, while the condition mentioned in paragraph (iii) above have been fulfilled. The conditions mentioned in paragraph (ii) and (iv) above are expected to be fulfilled or waived on or before 31 August 2015 (or any other dates that may be agreed amongst the parties).

– 13 –

LETTER FROM THE BOARD

After securing the offer of the Offshore Loan from the offshore financial institution(s) on a committed basis and before completion of the Project Company Equity Transfer Agreement, Ingletone will provide to Coastwise (BVI) the Hongkong Land China Offshore Shareholder’s Loan in the principal amount of a sum in US$ equivalent to RMB1,200 million. Coastwise (BVI) will inject such sum of money to Coastwise (HK) which will apply the same to pay to Yongpan to settle the consideration for the completion of the Project Company Equity Transfer Agreement. The Coastwise (BVI) will then indirectly hold the entire equity interest in the Project Company.

The following diagram illustrates the corporate structure of the companies holding interests in the Site immediately after completion of the Project Company Equity Transfer Agreement:

==> picture [332 x 402] intentionally omitted <==

----- Start of picture text -----

The Company Hongkong Land China
(Cayman) (Bermuda)
100% ( indirect )
Ingletone
(BVI)
100%
( indirect )
100%
CIFI (PRC) Coastwise (BVI)
(PRC) (BVI)
100% 100%
Yongpan Coastwise (HK)
Seller Purchaser
(PRC) (HK)
100% 100%
Equity
transfer
Project Company Project Company
(PRC) (WFOE)
The Site The Site
----- End of picture text -----

– 14 –

LETTER FROM THE BOARD

(e) Transaction II: Offshore JV Equity Subscription Agreement

After the signing of the Project Company Equity Transfer Agreement and subject to the fulfilment of certain conditions including, among others, that all necessary consents and approvals in respect of the transactions concerning the Project Company Equity Transfer Agreement contemplated under the Master Agreement having been obtained, Xu Jia, the Company, Coastwise (BVI) and Hongkong Land China would sign the Offshore JV Equity Subscription Agreement pursuant to which Xu Jia will subscribe for 1 new share of Coastwise (BVI) at US$1, representing 50% of the total issued share capital of Coastwise (BVI) as enlarged by the said new subscription share and inject the CIFI Offshore Shareholder’s Loan in the principal amount of a sum in US$ equivalent to RMB600 million. The proceeds of the CIFI Offshore Shareholder’s Loan will be applied to repay half of the Hongkong Land China Offshore Shareholder ’s Loan thereby the shareholder ’s loan contributed by Xu Jia and Ingletone into the Coastwise (BVI) will be on equal basis.

The following diagram illustrates the corporate structure of the companies holding interests in the Site immediately after completion of the Offshore JV Equity Subscription Agreement and the Joint Venture Arrangement:

==> picture [342 x 340] intentionally omitted <==

----- Start of picture text -----

The Company Hongkong Land China
(Cayman) (Bermuda)
100% ( indirect ) 100% ( indirect )
100% ( indirect )
CIFI (PRC) Xu Jia Ingletone
(PRC) (BVI) (BVI)
50% 50%
100%
Yongpan Coastwise (BVI)
(PRC) (BVI)
100%
Coastwise (HK)
(HK)
100%
Project Company
(WFOE)
The Site
----- End of picture text -----

– 15 –

LETTER FROM THE BOARD

Coastwise (BVI) and Coastwise (HK) were incorporated on 23 March 2015 and 1 April 2015 respectively. To the best knowledge of the Directors after making due and reasonable enquiries, other than the proposed interest in the Site to be held through the Joint Venture Arrangement, both Coastwise (BVI) and Coastwise (HK) have not operated any business since incorporation. Coastwise (BVI) is a single purpose vehicle which will be held by the Group and Hongkong Land China for the purpose of development of the Site.

(f) Further increase of registered capital of Project Company

Following completion of the Offshore JV Equity Subscription Agreement, the Company and Hongkong Land China agreed that the paid-up registered capital of the Project Company will be further increased from RMB1,200 million to the equivalent of RMB4,200 million. The increased registered capital will be contributed by the Company and Hongkong Land China via Coastwise (BVI) or Coastwise (HK) on 50%:50% basis, which will be funded by the Offshore Loan, and if there is any shortfall, by the internal resources of the Company and Hongkong Land China. The injection of such additional registered capital of the Project Company will be utilized to fully repay the outstanding onshore debts of the Project Company as described under item (iii) of the paragraph headed “(b) Proposed restructuring relating to the Project Company” above.

(g) Management of the Project Company after the Joint Venture Arrangement

Following completion of the Joint Venture Arrangement,

(i) the Project Company will be managed jointly by the Company and Hongkong Land China;
(ii) The board of directors of each of Coastwise (BVI), Coastwise (HK) and the Project Company will comprise six directors, three of whom will be nominated by the Group and three of whom will be nominated by Hongkong Land China Group; and
(iii) The chairman of the board of directors of each of Coastwise (BVI), Coastwise (HK) and the Project Company will be a director nominated by Hongkong Land China Group.
(h) Quorum for meetings of board of directors and shareholders

The quorum for meetings of board of directors of Coastwise (BVI), Coastwise (HK) and the Project Company are 4, of which at least one director is the representative nominated by the Group and one director is the representative nominated by Hongkong Land China. Two members present in person or by proxy constitute a quorum at a general meeting of Coastwise (BVI) and such two members have to comprise one from the Group and another one from Hongkong Land China.

– 16 –

LETTER FROM THE BOARD

(i) Dividend distribution policy

The directors of Coastwise (BVI) may from time to time declare and pay the members pro rata to their interest in Coastwise (BVI) the dividends that appear to them to be justified by the distributable profits of Coastwise (BVI) under the applicable laws.

(j) Reserved matters

Unanimous consent is required from all directors of each of Coastwise (BVI), Coastwise (HK) and the Project Company concerning certain reserved matters which include (a) amendments of constitutional documents; (b) issue of any new securities, options or instruments which are convertible into shares of the said companies; (c) winding up, dissolution, merger or reorganization of the said companies; and (d) provisions of guarantees by any of the said companies; and (e) variations of the aforesaid reserved matters.

(k) Capital Contribution and future financing

Following the Joint Venture Arrangement, the total investment amount of the Project Company (including but not limited to land costs, development costs and other expenses) is estimated to be around RMB7,300 million. Such development costs comprise land premium of RMB4,175 million which have already been paid and the remaining development costs of RMB3,125 million will be funded by pre-sale proceeds of the project, bank loans and contributions from the joint venture partners. Thus, the maximum capital commitment to the Joint Venture Arrangement expected to be undertaken by the Group pursuant to the Master Agreement and the ancillary transaction documents to be entered into by the Group will be around RMB3,650 million, being 50% of the estimated total investment amount of the Project Company. In case the estimated development costs of RMB7,300 million are not adequate to complete the development, the Company and Hongkong Land China will further consider how the shortfalls will be provided on a several basis pro rata to their respective equity interests in the Offshore JV.

(l) Profit and loss sharing

The Company and Hongkong Land China (each through its respective subsidiaries) will be entitled to share the profit or to bear the loss of the Offshore JV and its subsidiaries in proportion to their respective interest in the Coastwise (BVI).

The Offshore JV and its subsidiaries are intended to be accounted for as joint venture of the Group, which will not be consolidated into the financial statements of the Group.

– 17 –

LETTER FROM THE BOARD

INFORMATION ABOUT HONG KONG LAND CHINA

Hongkong Land China is a wholly-owned subsidiary of Hongkong Land Holdings Limited, one of Asia’s leading property investment, management and development groups. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Hongkong Land China and its ultimate beneficial owner(s) are Independent Third Parties.

REASONS FOR AND BENEFITS OF THE JOINT VENTURE FORMATION

The Group is principally engaged in the property development, property investment and property management businesses in the PRC. It has been the strategy of the Group to cooperate with renowned property developer for development of particular project so as to achieve synergy and diversify its financial exposure.

Before entering into the transactions contemplated under the Master Agreement, the Site is held on a joint venture basis between the Group and HuaAn (as a domestic PRC partner), with an onshore shareholding structure. Given Hongkong Land China’s strong track record in large mixed-use property projects, the Group prefers to exit the joint venture arrangement with HuaAn and transfer the ownership of the project from onshore shareholding structure to offshore shareholding structure, in order to facilitate the investment and joint venture by Hongkong Land China which has the status of a foreign investor from the PRC perspective. The transactions will enable the Company and Hongkong Land China (as an offshore partner) to jointly hold and develop the Site with an offshore shareholding structure. The cooperation with Hongkong Land China will enable the Group to leverage on Hongkong Land China’s execution capability in developing and managing large scale mixed-use property projects as a result of the Joint Venture Arrangement. The Directors consider that the Master Agreement and all the transactions contemplated thereunder are on normal commercial terms, and the terms and conditions therein are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE TRANSACTIONS ON THE COMPANY

Pursuant to the terms of the Master Agreement and the ancillary transaction documents, the maximum capital contribution to be paid by the Group in relation to the Joint Venture Arrangement is estimated to be RMB3,650 million, and such amount will be funded by pre-sale proceed, of the project, bank loans and the Group’s internal resources. As at the Latest Practicable Date, the Group had sufficient financial resources to pay the capital contribution. The Directors are of the view that the Joint Venture Arrangement will not have any significant adverse impact on the Group’s operations and liquidity. There will be no immediate material impact on the earnings or assets or liabilities of the Group.

The accountants report on Yongpan for the period from 14 April 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015 is contained in Appendix II of this circular. The accountants report on the Project Company for the period from 11 October 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015 is contained in Appendix III of this circular.

– 18 –

LETTER FROM THE BOARD

As disclosed above, Coastwise (BVI) and Coastwise (HK) were respectively incorporated on 23 March 2015 and 1 April 2015 and other than the proposed interest in the Site to be held through the Joint Venture Arrangement, both Coastwise (BVI) and Coastwise (HK) have not operated any business since incorporation and do not have significant assets and liabilities. Concerning Yongpan, following the restructuring of the external onshore debts as disclosed in paragraph (b)(iii) of the section headed “Joint Venture Arrangement” above and the completion of the Project Company Equity Transfer Agreement, Yongpan has no significant assets and liabilities. Furthermore, the transaction contemplated under the Joint Venture Arrangement is in substance formation of joint venture but not acquisition of companies or business by the Group. Accordingly, no profoma financial information for the investment in Coastwise (BVI) and Coastwise (HK) nor acquisition of Yongpan have been included in this circular.

LISTING RULES IMPLICATIONS

As the relevant percentage ratios of the transactions under the Master Agreement (including the Joint Venture Arrangement, Yongpan Equity Transfer and the Project Company Equity Transfer) under Rule 14.07 of the Listing Rules exceed 25% but are below 100%, the transactions under the Master Agreement constitute major transaction(s) for the Company and are subject to approval of the Shareholders.

The Company had obtained a written shareholders’ approval from a closely allied group of controlling Shareholders for the execution of the Master Agreement and all the underlying documents contemplated thereunder by the Company and relevant members of the Group, the Joint Venture Arrangement and all the transactions contemplated under the Master Agreement and the underlying documents as well as the performance of all the related obligations by the Company and relevant members of the Group. Such closely allied group of controlling Shareholders include, Mr. LIN Zhong, Rosy Fortune, Ding Chang, Eminent Talent and Rain-Mountain which hold an aggregate of 4,112,394,000 Shares, representing approximately 68.16% of the total issued share capital of the Company as at the date of the Master Agreement and an aggregate of 4,217,138,001 Shares, representing approximately 62.33% of the total issued share capital of the Company as at the Latest Practicable Date. Mr. LIN Zhong, Rosy Fortune, Ding Chang, Eminent Talent and Rain-Mountain respectively hold 5,978,000 Shares, 2,130,385,975 Shares, 1,157,675,670 Shares, 613,765,775 Shares and 204,588,580 Shares, representing approximately 0.1%, 35.31%, 19.19%, 10.17% and 3.39% of the entire issued share capital of the Company as at the date of the Master Agreement. As at the Latest Practicable Date, Mr. LIN Zhong, Rosy Fortune, Ding Chang, Eminent Talent and Rain-Mountain respectively hold 5,978,000 Shares, 2,217,129,975 Shares, 1,175,675,670 Shares, 613,765,775 Shares and 204,588,580 Shares, representing approximately 0.09%, 32.77%, 17.38%, 9.07% and 3.02% of the entire issued share capital of the Company. Rosy Fortune is held by Lin’s Family Trust, a family trust jointly set up by Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng. Ding Chang is held by a family trust set up by Mr. LIN Zhong. Eminent Talent is beneficially owned by Mr. LIN Wei. Rain-Mountain is held by a family trust set up by Mr. LIN Feng. Mr. LIN Zhong, Mr. LIN Wei and Mr. LIN Feng are brothers and founders of the Group. Accordingly, no general meeting for the Shareholders’ approval of the Joint Venture Arrangement will be held. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no shareholder is required to abstain from voting if a physical general meeting for the approval of the Joint Venture Arrangement was to be held.

– 19 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors believe that Joint Venture Arrangement has been entered into on normal commercial terms, and the terms and conditions thereof are fair and reasonable so far as the Shareholders are concerned and are in the best interests of the Company and the Shareholders as a whole. The Directors would recommend that all Shareholders to vote in favour of Joint Venture Formation if a physical meeting were to be held.

ADDITIONAL INFORMATION

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

Yours faithfully By Order of the Board CIFI Holdings (Group) Co. Ltd. LIN Zhong Chairman

– 20 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. AUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP

The Company is required to set out in this circular the information for the last three financial years with respect to the profits and losses, financial record and position, set out as a comparative table and the latest published audited balance sheet together with the notes on the annual accounts for the last financial year of the Group.

The audited consolidated financial statements of the Group for the year ended 31 December 2014 has been set out in the Annual Report 2014 of the Company which was published on 16 March 2015 on the website of the Stock Exchange (http://www.hkexnews.hk). The Annual Report 2014 has also been posted on the Company’s website (http://www.cifi.com.hk). Please also see below quick link to the Annual Report 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0316/LTN20150316333.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2013 gas been set out in the Annual Report 2013 of the Company which was published on 3 March 2014 on the website of the Stock Exchange (http://www.hkexnews.hk). The Annual Report 2013 has also been posted on the Company’s website (http://www.cifi.com.hk). Please also see below quick link to the Annual Report 2013:

http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0303/LTN20140303991.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2012 gas been set out in the Annual Report 2012 of the Company which was published on 20 February 2013 on the website of the Stock Exchange (http://www.hkexnews.hk). The Annual Report 2012 has also been posted on the Company’s website (http://www.cifi.com.hk). Please also see below quick link to the Annual Report 2012:

http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0220/LTN20130220093.pdf

2. INDEBTEDNESS

Bank and other borrowings

As at 30 June 2015, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of RMB19,539.1 million, consisting of secured bank and other borrowings of RMB6,425.5 million, unsecured bank and other borrowings of RMB4,842.0 million, unsecured loans from non-controlling shareholders of RMB235.8 million and unsecured senior notes of RMB8,035.8 million.

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Part of the bank and other borrowings, amounting to RMB6,570.6 million, is guaranteed by the shares of the subsidiaries of the Group. All other debts are not guaranteed.

The Group’s bank and other borrowings are secured by charges over its assets, including properties under development and inventories of completed properties.

Among the borrowings mentioned above, in particular, the Company had the following outstanding senior notes:

(a) 12.25% coupon senior notes due April 2018 with an aggregate principal amount of US$500 million, originally issued in April 2013 and additionally issued thereafter (the “ 2013 Notes ”);
(b) 8.875% coupon senior notes due January 2019 with an aggregate principal amount of US$400 million, originally issued in January 2014 and additionally issued thereafter (the “ 2014 Notes ”); and
(c) 7.75% coupon senior notes due June 2020 with an aggregate principal amount of US$400 million, originally issued in June 2015 (“ 2015 Notes ”).

Financial guarantees

The Group has provided mortgage guarantees to PRC banks in respect of the mortgage loans provided by the PRC banks to the Group’s customers. The Group’s mortgage guarantees are issued from the dates of grant of the relevant mortgage loans and released upon the earlier of (i) the relevant property ownership certificates being obtained and the certificates of other interests with respect to the relevant properties being delivered to the mortgage banks, or (ii) the settlement of mortgage loans between the mortgage banks and the Group’s customers. As at 30 June 2015, the Group provided mortgage guarantees in respect of mortgage loans provided by the PRC banks to the Group’s customers amounting to RMB2,840.5 million.

General

Save as aforesaid and apart from intra-group liabilities, the Group did not have any debt securities issued and outstanding, or authorised or otherwise created but unissued, other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase commitments, mortgages and charges, material contingent liabilities or guarantee outstanding as 30 June 2015.

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. WORKING CAPITAL

Barring any unforeseen circumstances and after taking into account the internal resources of the Group, available banking and other credit facilities and the net cash outflow arising from the proposed formation of joint venture with Hong Kong Land China, the Directors are of the opinion that the Group will have sufficient working capital for its present requirements for the next 12 months from the date of publication of this circular.

4. LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

Cash position

The Group had cash and bank balances (including pledged bank deposits) of approximately RMB10,144.2 million as at 30 June 2015.

Gearing ratio

The Group’s net debt-to-equity ratio (total indebtedness net of bank balances and cash including pledged bank deposits and restricted cash divided by total equity) was approximately 72.5% as at 30 June 2015. The Group’s debt-to-asset ratio (total indebtedness divided by total assets) was approximately 37.3% as at 30 June 2015. The Group’s current ratio (current assets divided by current liabilities) was approximately 1.7 times as at 30 June 2015.

5. FINANCIAL AND TRADING PROSPECTS FOR 2015

Despite the cyclical correction in 2014, long term housing demand remained intact in first- and second-tier cities in China due to sustained urbanization and migration of growing population into these big cities.

To stimulate the domestic economy, the central government has adopted monetary easing policies in 2015. These monetary easing measures will effectively improve the availability and affordability of mortgage loans and the sentiment for purchasing real estates. Further, the cumulative effects from loosening of home purchase restrictions, relaxation of the one-child policy and mortgage loans for upgraders will be very effective for releasing end-users’ demand for property. We believe supply and demand of China real estates will become more balanced in 2015.

We believe that different cities in China will experience different level of recovery in 2015. Overall, we expect transaction volume will recover with stable property prices. Inventory levels in first-tier cities were amongst the lowest in the nation with strongest recovery expected. Inventory levels in different second-tier cities vary but are generally higher than first-tier cities. Some second-tier cities with higher inventory levels require longer duration to absorb housing inventory will show slower recovery. Third-tier cities generally have the highest inventory levels and their recovery remains uncertain.

– I-3 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group adopts the “balanced development and sustainable growth” strategy to pursue sustainable and quality growth. The Group has set initial contracted sales target for the full year of 2015 at RMB25 billion, representing an increase of approximately 18% from the contracted sales in 2014. Barring unforeseen market circumstances, we are confident that we can achieve our contracted sales target in 2015.

The Group in future will manage its expansion cautiously by taking into account the Group’s sales performance, profitability and shareholders’ return, as well as financial prudence. As always, we will sustain our systematic, disciplined and prudent approach for landbanking. We will place priority on quality sites in quality first- and second-tier cities at better locations suitable for products targeted at self-use purchasers. We will continue to mitigate our business risks through lowering our exposures using joint ventures, maintaining balanced operating cash flows, lowering our finance costs and developing popular differentiating products in the mainstream end-users’ segment.

– I-4 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

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

==> picture [79 x 65] intentionally omitted <==

==> picture [65 x 48] intentionally omitted <==

24 August 2015

The Board of Directors

CIFI Holdings (Group) Co. Ltd.

Dear Sirs,

We set out below our report on the financial information of Shanghai Yongpan Enterprise Co., Limited (上海永磐實業有限公司) (“ Yongpan ”) and its subsidiary (hereinafter collectively referred to as the “ Yongpan Group ”) comprising the consolidated statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Yongpan Group for the period from 14 April 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015 (the “ Relevant Periods ”), and the consolidated statements of financial position of the Yongpan Group as at 31 December 2014 and 30 June 2015, together with the notes thereto (the “ Yongpan Group Financial Information ”), and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Yongpan Group for the period from 14 April 2014 (date of establishment) to 30 June 2014 (the “ Interim Comparative Information ”), prepared on the basis of preparation set out in note 2.1 of Section II below, for inclusion in the circular of CIFI Holdings (Group) Co. Ltd. (“ CIFI ”) dated 24 August 2015 (the “ Circular ”) in connection with the proposed joint venture arrangement of Shanghai Xujing Property Co., Limited (上海旭涇置業有限公司) (the “ Project Company ”) between CIFI and Hongkong Land China Holdings Limited (“ Hongkong Land China ”).

Yongpan was established in the People’s Republic of China (the “ PRC ”) as a company with limited liability on 14 April 2014 and its principal activity is investment holding. Particulars of the Project Company, Yongpan’s subsidiary, are set out in note 1 of Section II below.

The Yongpan Group has adopted 31 December as its financial year end date. As at the date of this report, no statutory financial statements have been prepared for Yongpan and the Project Company since their respective dates of establishment as there is no statutory audit requirement in the PRC.

Direct translation from the Chinese name which is for identification purpose only

– II-1 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

For the purpose of this report, the directors of Yongpan have prepared the consolidated financial statements of the Yongpan Group (the “ Yongpan Group Underlying Financial Statements ”) for each of the Relevant Periods in accordance with International Financial Reporting Standards (“ IFRSs ”) issued by the International Accounting Standards Board (the “ IASB ”). The Yongpan Group Underlying Financial Statements for each of the Relevant Periods were audited by us in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

The Yongpan Group Financial Information set out in this report has been prepared from the Yongpan Group Underlying Financial Statements with no adjustments made thereon.

Directors’ responsibility

The directors of Yongpan are responsible for the preparation of the Yongpan Group Underlying Financial Statements, the Yongpan Group Financial Information and the Interim Comparative Information that give a true and fair view in accordance with IFRSs, and for such internal control as the directors of Yongpan determine is necessary to enable the preparation of the Yongpan Group Underlying Financial Statements, the Yongpan Group Financial Information and the Interim Comparative Information that are free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

It is our responsibility to form an independent opinion and a review conclusion on the Yongpan Group Financial Information and the Interim Comparative Information, respectively, and to report our opinion and review conclusion thereon to you.

For the purpose of this report, we have carried out procedures on the Yongpan Group Financial Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting Accountant issued by the HKICPA.

We have also performed a review of the Interim Comparative Information in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists principally of making enquires of management and applying analytical procedures to the financial information and, bases thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets and liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an opinion on the Interim Comparative Information.

– II-2 –

APPENDIX II ACCOUNTANTS’ REPORT ON YONGPAN

Opinion in respect of the Yongpan Group Financial Information

In our opinion, for the purpose of this report and on the basis of preparation set out in note 2.1 of Section II below, the Yongpan Group Financial Information gives a true and fair view of the state of affairs of the Yongpan Group as at 31 December 2014 and 30 June 2015, and of the consolidated results and cash flows of the Yongpan Group for each of the Relevant Periods.

Review conclusion in respect of the Interim Comparative Information

Based on our review which does not constitute an audit, for the purpose of this report and on the basis of preparation set out in note 2.1 of Section II below, nothing has come to our attention that causes us to believe that the Interim Comparative Information is not prepared, in all material respects, in accordance with the same basis adopted in respect of the Yongpan Group Financial Information.

– II-3 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

I. YONGPAN GROUP FINANCIAL INFORMATION

(A) Consolidated statements of profit or loss and other comprehensive income

Notes Interest income on bank deposits Selling and marketing expenses Administrative expenses Finance costs 6 LOSS BEFORE TAX 5 Income tax credit 8 LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF YONGPAN	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 4 (2,700) (46) – (2,742) 684 (2,058)	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) – – (2) – (2) – (2)	Six months ended 30 June 2015 RMB’000 54 (2,936) (347) –
			(3,229) 783
			(2,446)

– II-4 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

(B) Consolidated statements of financial position

Notes NON-CURRENT ASSETS Equipment 10 Deferred tax asset 16 Total non-current assets CURRENT ASSETS Properties under development for sale 11 Other receivables, deposits and prepayments 12 Deposits for land use rights for properties held for sale Bank balances and cash 13 Total current assets CURRENT LIABILITIES Accounts payables and accrued charges 14 Advances from equity holders of Yongpan 15 Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	As at 31 December 2014 RMB’000 – 684 684 – 21 4,236,629 1,897 4,238,547 8,219 1,784,070 1,792,289 2,446,258 2,446,942	As at 30 June 2015 RMB’000 3 1,467
		1,470
		4,604,750 3,251 – 3,434
		4,611,435

		34,889 2,533,520
		2,568,409
		2,043,026
		2,044,496

– II-5 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

(B) Consolidated statements of financial position (continued)

Notes CAPITAL AND RESERVE Paid-up capital 17 Accumulated losses Total equity attributable to equity holders of Yongpan NON-CURRENT LIABILITIES Advances from an equity holder of Yongpan 15 Total non-current liabilities TOTAL EQUITY AND NON-CURRENT LIABILITIES	As at 31 December 2014 RMB’000 100,000 (2,058) 97,942 2,349,000 2,349,000 2,446,942	As at 30 June 2015 RMB’000 100,000 (4,504) 95,496 1,949,000 1,949,000 2,044,496

– II-6 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

(C) Consolidated statements of changes in equity

Note At 14 April 2014 (date of establishment) Capital contribution by an equity holder of Yongpan 17 Loss and total comprehensive loss for the period At 31 December 2014 and 1 January 2015 Loss and total comprehensive loss for the period At 30 June 2015 (Unaudited) At 14 April 2014 (date of establishment) Loss and total comprehensive loss for the period At 30 June 2014	Attributable to equity holders of Yongpan Paid-up capital Accumulated losses Total RMB’000 RMB’000 RMB’000 – – – 100,000 – 100,000 – (2,058) (2,058) 100,000 (2,058) 97,942 – (2,446) (2,446) 100,000 (4,504) 95,496 – – – – (2) (2) – (2) (2)

– II-7 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

(D) Consolidated statements of cash flows

Note CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for: Interest income on bank deposits Increase in properties under development for sale Increase in deposits for land use rights for properties held for sale Increase in other receivables, deposits and prepayments Increase in accounts payables and accrued charges Net cash flows used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of equipment Interest received Net cash flows from investing activities	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 (2,742) (4) (2,746) – (4,176,055) (21) 4,300 (4,174,522) – 4 4	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) (2) – (2) – – – – (2) – – –	Six months ended 30 June 2015 RMB’000 (3,229) (54)
			(3,283) (178,665) – (3,230) 21,051
			(164,127)
			(3) 54
			51

– II-8 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

(D) Consolidated statements of cash flows (continued)

Note CASH FLOWS FROM FINANCING ACTIVITIES Net advances from equity holders of Yongpan Capital contribution by an equity holder of Yongpan 17 Interest paid Net cash flows from financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash as stated in the consolidated statements of financial position	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 4,133,070 100,000 (56,655) 4,176,415 1,897 – 1,897 1,897	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) 2 – – 2 – – – –	Six months ended 30 June 2015 RMB’000 349,450 – (183,837)
			165,613
			1,537 1,897
			3,434

			3,434

– II-9 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

II. NOTES TO THE YONGPAN GROUP FINANCIAL INFORMATION

1. CORPORATE INFORMATION

Yongpan is a limited liability company established in the PRC on 14 April 2014 by CIFI Group Co., Ltd. (旭輝集團股份有限公司) (“ CIFI PRC* ”, a wholly-owned subsidiary of CIFI). The address of its registered office is CIFI Hongqiao International, 5th Floor, Block 3, Lane 288, Tongxie Road, Changning District, Shanghai, the PRC.

During the Relevant Periods, the Yongpan Group was principally engaged in the business of property development in Mainland China.

Yongpan is a joint venture of HuaAn Future Asset Management (Shanghai) Limited (華安未來資產管理(上海)有限公司) (“ HuaAn* ”) and CIFI PRC. As at 31 December 2014 and 30 June 2015, Yongpan was owned as to 51% by HuaAn and 49% by CIFI PRC.

Yongpan had direct interest in the Project Company, the particulars of which are set out below:

	Place of
	establishment	Registered	Percentage of equity		Principal
Name	and business	capital	attributable to Yongpan		activities
			31 December	30 June 2015
			2014
The Project	PRC/	RMB100,000,000	100	100	Property
Company	MainlandChina				development

Direct translation from the Chinese name which is for identification purpose only

2.1 BASIS OF PREPARATION

The Yongpan Group Financial Information has been prepared in accordance with IFRSs issued by the IASB. All IFRSs effective for the accounting period commencing from 1 January 2015 have been early adopted in the preparation of the Yongpan Group Financial Information throughout the Relevant Periods. The Yongpan Group Financial Information has been prepared under the historical cost convention. The Yongpan Group Financial Information is presented in Renminbi (“ RMB ”) and all values are rounded to the nearest thousand except when otherwise indicated.

2.2 ISSUED BUT NOT YET EFFECTIVE IFRSs

The Yongpan Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in the Financial Information.

IFRS 9 Amendments to IFRS 10 and IAS 28 Amendments to IFRS 10, IFRS 12 and IAS 28 Amendments to IFRS 11 IFRS 14 IFRS 15 Amendments to IAS 1 Amendments to IAS 16 and IAS 38 Amendments to IAS 16 and IAS 41 Amendments to IAS 27 Annual Improvements 2012-2014 Cycle

Financial Instruments[3]

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture[1] Investment Entities: Applying the Consolidation Exception[1] Joint Arrangements: Accounting for Acquisitions of Interests[1] Regulatory Deferral Accounts[4] Revenue from Contracts with Customers[2] Disclosure Initiative[1] Clarification of Acceptable Methods of Depreciation and Amortisation[1] Agriculture: Bearer Plants[1]

Equity Method in Separate Financial Statements[1] Amendments to a number of IFRSs[1]

– II-10 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.2 ISSUED BUT NOT YET EFFECTIVE IFRSs (continued)

1 Effective for annual periods beginning on or after 1 January 2016
2 Effective for annual periods beginning on or after 1 January 2017
3 Effective for annual periods beginning on or after 1 January 2018
4 Effective for an entity that first adopts IFRSs for its annual financial statements beginning on or after 1 January 2016 and therefore is not applicable to the Yongpan Group

The Yongpan Group is in the process of assessing the impact of the new standards and amendments on the Yongpan Group Financial Information.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Yongpan Group Financial Information has been prepared on the historical cost basis and in accordance with accounting policies set out below which are in conformity with IFRSs.

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, the Yongpan Group 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 Yongpan Group Financial Information is determined on such a basis, except for leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.

Basis of consolidation

The consolidated financial information incorporate the financial information of Yongpan and its subsidiary. Control is achieved when Yongpan:

has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.

The Yongpan Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

– II-11 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of consolidation (continued)

When the Yongpan Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Yongpan Group considers all relevant facts and circumstances in assessing whether or not the Yongpan Group’s voting rights in an investee are sufficient to give it power, including:

the size of the Yongpan Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
potential voting rights held by the Yongpan Group, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Yongpan Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Yongpan Group obtains control over the subsidiary and ceases when the Yongpan Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Yongpan Group gains control until the date when the Yongpan Group ceases to control the subsidiary.

Where necessary, adjustments are made to the financial information of the subsidiary to bring their accounting policies into line with the Yongpan Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Yongpan Group are eliminated in full on consolidation.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Yongpan Group and the amount of revenue can be measured reliably. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Equipment

Equipment is stated in the consolidated statements of financial position at cost, less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of items of equipment less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The principal annual rate used for office equipment is 20%.

An item of equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Properties under development for sale

When the leasehold land is in the course of development for sale, the leasehold land is amortised over a straight-line basis over the lease term. During the construction period, the amortisation charge provided for the leasehold land is included as part of the costs of the properties under development.

– II-12 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Properties under development for sale (continued)

Properties under development for sale which are intended to be held for own use or their investment potential are shown as non-current assets.

Properties under development for sale which are intended to be held for sale are shown as current assets and carried at the lower of cost and net realisable value.

Impairment losses on tangible assets

At the end of the reporting period, the Yongpan Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount (the higher of value in use and fair value less costs to sell) of the asset is estimated in order to determine the extent of the impairment loss, if any. 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 as an expense immediately.

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 years. A reversal of an impairment loss is recognised as income immediately.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Yongpan Group as lessee

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straightline basis.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when 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 capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Income tax

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 profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Yongpan Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

– II-13 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax (continued)

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Yongpan Group Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and 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 deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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 the Yongpan Group 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, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Yongpan Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (“ FVTPL ”), loans and receivables, and available-for-sale financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

– II-14 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset 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 and points 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 financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

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

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 are measured at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment of financial assets below).

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be 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.

For all other financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
breach of contract, such as a default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
the disappearance of an active market for that financial asset because of financial difficulties.

For financial assets carried at amortised cost, the amount of the 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 financial asset is reduced by the impairment loss directly for all financial assets with the exception of accounts and other receivables, where the carrying amount is reduced through the use of an allowance account. When an account or other 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. Changes in the carrying amount of the allowance account are recognised in profit or loss.

For financial assets measured at amortised cost, 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.

– II-15 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial liabilities

Financial liabilities of the Yongpan Group are subsequently measured at amortised cost using 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 (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 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

The Yongpan Group 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. 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 and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

The Yongpan Group derecognises financial liabilities when, and only when, the Yongpan Group’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

3. CRITICAL JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying of the Yongpan Group’s accounting policies, which are described in note 2.3 to the Yongpan Group Financial Information, the directors of Yongpan are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Income tax expense

Deferred tax asset of RMB684,000 and RMB1,467,000 in relation to tax losses that have been recognised at 31 December 2014 and 30 June 2015, respectively, are set out in note 16 to the Yongpan Group Financial Information. The realisability of the deferred tax asset mainly depends on whether sufficient future profits will be available in the future. The directors of Yongpan determine the deferred tax asset based on the enacted or substantially enacted tax rates and the best knowledge of profit projections of the Yongpan Group for coming years during which the tax losses are expected to be utilised. The directors of Yongpan will review the assumptions and profit projections by the end of the reporting period. In cases where the actual future profits generated are less than expected, a reversal of deferred tax asset may arise, which would be recognised in profit or loss for the period in which such a reversal takes place.

– II-16 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

3. CRITICAL JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued)

Valuation of properties under development for sale

Properties under development for sale are stated at the lower of cost and net realisable value. The estimated net realisable value is the estimated selling price less selling expenses and the estimated cost of completion (if any), which are estimated based on the best available information.

4. SEGMENT INFORMATION

All the Yongpan Group’s operations are located and carried out in the PRC and the results of the Yongpan Group are derived from the property development business. Accordingly, no segment information by business and geographical segment is presented.

5. LOSS BEFORE TAX

The Yongpan Group’s loss before tax is arrived at after charging:

Minimum lease payments under operating leases in respect of land and buildings Employee benefit expense: Salaries, allowances and benefit in kind Retirement benefit costs Less: Amounts capitalised to properties under development for sale	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 202 – – – – –	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) – – – – – –	Six months ended 30 June 2015 RMB’000 38 943 187
			1,130 (1,130)
			–

6. FINANCE COSTS

An analysis of finance costs is as follows:

Interest on advances from an equity holder of Yongpan Less: interest capitalised	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 60,575 (60,575) –	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) – – –	Six months ended 30 June 2015 RMB’000 190,255 (190,255)
			–

– II-17 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

7. DIRECTORS’ REMUNERATION

No director received any fees or emoluments in respect of their services rendered to the Yongpan Group during the Relevant Periods.

8. INCOME TAX CREDIT

No PRC corporate income tax has been provided as the Yongpan Group did not generate any assessable profits arising in Mainland China during the Relevant Periods.

	From	From
	14 April 2014	14 April 2014
	(date of	(date of	Six months
	establishment)	establishment)	ended
	to 31 December	to 30 June	30 June
	2014	2014	2015
	RMB’000	RMB’000	RMB’000
		(Unaudited)
Deferred tax credited for the period
(note 16)	(684)	–	(783)

A reconciliation of the tax credit applicable to loss before tax at the statutory rates to the tax credit at the effective tax rates is as follows:

Loss before tax Tax at the statutory tax rate at 25% Expenses not deductible for tax Tax credit at the Yongpan Group’s effective rate	From 14 April 2014 (date of establishment) to 31 December 2014 RMB’000 (2,742) (686) 2 (684)	From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 (Unaudited) (2) (1) 1 –	Six months ended 30 June 2015 RMB’000 (3,229)

			(807) 24
			(783)

9. DIVIDENDS

No dividends have been paid or declared by Yongpan during the Relevant Periods.

– II-18 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

10. EQUIPMENT

Office equipment RMB’000

At 14 April 2014 (date of establishment), 31 December 2014 and 1 January 2015: Cost and net carrying amount At 1 January 2015, net of accumulated depreciation Addition At 30 June 2015, net of accumulated depreciation At 30 June 2015: Cost Accumulated depreciation Net carrying amount At 14 April 2014 (date of establishment) and 30 June 2014 (Unaudited): Cost and net carrying amount PROPERTIES UNDER DEVELOPMENT FOR SALE From 14 April 2014 (date of establishment) to 31 December 2014 From 14 April 2014 (date of establishment) to 30 June 2014 RMB’000 RMB’000 (Unaudited) At the beginning of period – – Additions – – At the end of period – –		–

		– 3
		3

		3 –
		3

		–

		Six months ended 30 June 2015 RMB’000 – 4,604,750
		4,604,750

11. PROPERTIES UNDER DEVELOPMENT FOR SALE

The properties under development for sale represent properties under development for subsequent sale upon completion.

The properties under development for sale as at 30 June 2015 were expected to be completed and available for sale after more than twelve months from the end of the reporting period.

The Yongpan Group had pledged all properties under development for sale as at 30 June 2015 to secure the advances from HuaAn (note 15).

– II-19 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Other receivables Deposits and prepayments	As at 31 December 2014 RMB’000 – 21 21	As at 30 June 2015 RMB’000 234 3,017
		3,251

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

Included in the Yongpan Group’s prepayments as at 30 June 2015 was a prepayment to a wholly-owned subsidiary of CIFI (“ CIFI Subsidiary ”) with a carrying amount of RMB2,850,000 (31 December 2014: Nil) (note 21(b)).

13. BANK BALANCES AND CASH

All the bank balances and cash held by the Yongpan Group were denominated in RMB. Cash at banks earn interest at floating rates based on daily bank deposit rates.

14. ACCOUNTS PAYABLES AND ACCRUED CHARGES

Trade payables Other payables and accrued charges	As at 31 December 2014 RMB’000 – 8,219 8,219	As at 30 June 2015 RMB’000 24,747 10,142
		34,889

Trade payables and accrued expenditure on construction comprise construction costs and other project-related expenses which are payable based on project progress measured by the Yongpan Group. The average credit period of trade payables is 60 days. The Yongpan Group has financial risk management policies in place to ensure that all payables are within the credit timeframe.

An aged analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

Within 60 days 61 to 180 days	As at 31 December 2014 RMB’000 – – –	As at 30 June 2015 RMB’000 24,496 251
		24,747

– II-20 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

14. ACCOUNTS PAYABLES AND ACCRUED CHARGES (continued)

Included in the Yongpan Group’s other payables and accrued charges as at 31 December 2014 was an accrued charge payable to CIFI subsidiary with a carrying amount of RMB2,700,000 (note 21(b)).

15. ADVANCES FROM EQUITY HOLDERS OF YONGPAN

Notes Non-current HuaAn (a) Current CIFI PRC (b) HuaAn (a)	As at 31 December 2014 RMB’000 2,349,000 1,184,070 600,000 1,784,070 4,133,070	As at 30 June 2015 RMB’000 1,949,000
		1,533,520 1,000,000
		2,533,520
		4,482,520

Notes:

(a) The advances from HuaAn, an equity holder of Yongpan (note 1), carry fixed interest at 12.4% per annum for a term of 3 years and are secured by a pledge of the 49% equity interest of Yongpan that is owned by CIFI PRC. Since 20 April 2015, the Yongpan Group has also pledged its properties under development for sale to secure the advances from HuaAn (note 11).
(b) The advances from CIFI PRC, an equity holder of Yongpan (note 1), is unsecured, interest-free and has no fixed repayment terms.

16. DEFERRED TAX ASSET

At 14 April 2014 (date of establishment) Deferred tax credited to profit of loss during the period (note 8) At 31 December 2014 and 1 January 2015 Deferred tax credited to profit of loss during the period (note 8) At 30 June 2015	Losses available for offsetting against future taxable profits RMB’000 – 684
	684 783
	1,467

– II-21 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

17. PAID-UP CAPITAL

Registered capital Paid-up capital	As at 31 December 2014 RMB’000 100,000 100,000	As at 30 June 2015 RMB’000 100,000

		100,000

Yongpan was established on 14 April 2014 with a registered capital of RMB1,000,000 which was outstanding by CIFI PRC as at 30 June 2014. On 21 October 2014, the registered capital of Yongpan was increased from RMB1,000,000 to RMB100,000,000. The total capital of RMB100,000,000 was paid up by CIFI PRC in October 2014.

18. OPERATING LEASE ARRANGEMENTS

As lessee

The Yongpan Group leases certain of its office premises under operating lease arrangements. Leases for these properties are negotiated for terms of one year.

At 31 December 2014 and 30 June 2015, the Yongpan Group had total future minimum lease payments under non-cancellable operating leases falling due within one year amounted to RMB238,000 and RMB165,000, respectively.

19. COMMITMENTS

At 31 December 2014 and 30 June 2015, the Yongpan Group had no significant capital commitments.

20. CONTINGENT LIABILITIES

At 31 December 2014 and 30 June 2015, the Yongpan Group had no significant contingent liabilities.

21. RELATED PARTY DISCLOSURES

(a) During the period from 14 April 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015, CIFI Subsidiary provided consultancy services to the Yongpan Group amounted to RMB2,700,000 and RMB2,850,000, respectively. The Yongpan Group shall pay RMB950,000 quarterly to CIFI Subsidiary until the completion of the relevant property project.
(b) Outstanding balances with related parties:

Details of the Yongpan Group’s balances with its related companies are disclosed in notes 12, 14 and 15 to the Yongpan Group Financial Information.

(c) The directors of Yongpan are the key management personnel of the Yongpan Group. Details of their remuneration are set out in note 7 to the Yongpan Group Financial Information.

– II-22 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

22. CAPITAL RISK MANAGEMENT

The Yongpan Group manages its capital to ensure that entities in the Yongpan Group will be able to continue as a going concern while maximising the return to its equity holders through the optimisation of the debt and equity balance.

The capital structure of the Yongpan Group consists of net debt, which includes advances from equity holders of Yongpan net of bank balances and cash and equity attributable to equity holders of Yongpan, comprising paid-in capital and accumulated losses.

The directors of Yongpan review the capital structure on a regular basis. As part of this review, the directors of Yongpan consider the cost of capital and the risks associated with each class of capital, and take appropriate actions to balance its overall capital structure.

23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts of the Yongpan Group’s financial instruments reasonably approximate to their fair values.

Management has assessed that the fair values of bank balances and cash, trade payables, financial assets included in prepayments, deposits and other receivables, financial liabilities included in other payables and accrued charges and advances from equity holders of Yongpan approximate to their carrying amounts largely due to the short term maturities of these instruments.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair values of the non-current portions of advances from an equity holder of Yongpan have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The carrying amounts of the non-current portions of advances from an equity holder of Yongpan and approximate to their fair values. The Yongpan Group’s own non-performance risk for advances from an equity holder of Yongpan as at 31 December 2014 and 30 June 2015 were assessed to be insignificant.

24. FINANCIAL INSTRUMENTS

(a) Significant accounting policies

Details of the significant accounting policies adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial assets and financial liabilities are disclosed in note 2.3 to the Yongpan Group Financial Information.

(b) Categories of financial instruments

As at 31 December 2014 and 30 June 2015, all financial assets and liabilities of the Yongpan Group are loans and receivables, and financial liabilities at amortised cost, respectively.

(c) Financial risk management objectives and policies

The Yongpan Group’s major financial instrument is the advances from equity holders of Yongpan. Details of this financial instrument is set out in note 15. The risks associated with these financial instruments and 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 on a timely and effective manner.

– II-23 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

24. FINANCIAL INSTRUMENTS (continued)

(d) Interest rate risk management

The Yongpan Group has certain interest-bearing advances from an equity holder of Yongpan. However, the Yongpan Group’s exposure to the risk of changes in market interest rates is limited since these advances bear fixed an interest rate at 12.4% per annum.

(e) Credit risk management

The credit risk of the Yongpan Group’s financial assets, mainly comprise bank balances, arises from default of the counterparty, with a maximum exposure equals to the carrying amounts of these instruments. The bank balances are deposited with creditworthy banks with no recent history of default.

(f) Liquidity risk

The Yongpan Group’s objective is to maintain a balance between continuity of funding generated from operating activities and the flexibility through the use of borrowings. The directors of Yongpan closely monitor the liquidity position and expect to have adequate sources of funding to finance the Yongpan Group’s projects and operations.

The following table details the Yongpan Group’s expected remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Yongpan Group can be required to pay. The table includes both interest and principal cash flows.

As at 31 December 2014 Accounts payables and accrued charges Advances from equity holders of Yongpan As at 30 June 2015 Accounts payables and accrued charges Advances from equity holders of Yongpan	Within one year or on demand RMB’000 8,219 2,080,012 2,088,231 34,889 2,851,971 2,886,860	In the second year RMB’000 – 1,564,897 1,564,897 – 942,076 942,076	In the third to fifth years, inclusive RMB’000 – 1,021,308 1,021,308 – 1,308,087 1,308,087	Total RMB’000 8,219 4,666,217
				4,674,436

				34,889 5,102,134
				5,137,023

– II-24 –

APPENDIX II

ACCOUNTANTS’ REPORT ON YONGPAN

25. EVENT AFTER THE END OF THE RELEVANT PERIODS

On 15 May 2015, CIFI and Hongkong Land China entered into a master agreement pursuant to which the parties proposed to undergo certain transactions, including, inter alia, the transfer of the Project Company from Yongpan to a company jointly controlled by CIFI and Hongkong Land China. Details of this proposed joint venture arrangement of the Project Company between CIFI and Hongkong Land China are set out in CIFI’s announcement dated 15 May 2015.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Yongpan or its subsidiary in respect of any period subsequent to 30 June 2015.

Yours faithfully, ERNST & YOUNG Certified Public Accountants Hong Kong

– II-25 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

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

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24 August 2015

The Board of Directors CIFI Holdings (Group) Co. Ltd.

Dear Sirs,

We set out below our report on the financial information of Shanghai Xujing Property Co., Limited (上海旭涇置業有限公司) (the “ Project Company ”) comprising the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Project Company for the period from 11 October 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015 (the “ Relevant Periods ”), and the statements of financial position of the Project Company as at 31 December 2014 and 30 June 2015, together with the notes thereto (the “ Xujing Financial Information ”), prepared on the basis of preparation set out in note 2.1 of Section II below, for inclusion in the circular of CIFI Holdings (Group) Co. Ltd. (“ CIFI ”) dated 24 August 2015 (the “ Circular ”) in connection with the proposed joint venture arrangement of the Project Company between CIFI and Hongkong Land China Holdings Limited (“ Hongkong Land China* ”).

The Project Company was established in the People’s Republic of China (the “ PRC ”) as a company with limited liability on 11 October 2014.

The Project Company has adopted 31 December as its financial year end date. As at the date of this report, no statutory financial statements have been prepared for the Project Company since the date of its establishment as there is no statutory audit requirement in the PRC.

For the purpose of this report, the directors of the Project Company have prepared the financial statements of the Project Company (the “ Xujing Underlying Financial Statements ”) for each of the Relevant Periods in accordance with International Financial Reporting Standards (“ IFRSs ”) issued by the International Accounting Standards Board (the “ IASB ”). The Xujing Underlying Financial Statements for each of the Relevant Periods were audited by us in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

Direct translation from the Chinese name which is for identification purpose only

– III-1 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

The Xujing Financial Information set out in this report has been prepared from the Xujing Underlying Financial Statements with no adjustments made thereon.

Directors’ responsibility

The directors of the Project Company are responsible for the preparation of the Xujing Underlying Financial Statements and the Xujing Financial Information that give a true and fair view in accordance with IFRSs, and for such internal control as the directors of the Project Company determine is necessary to enable the preparation of the Xujing Underlying Financial Statements and the Xujing Financial Information that are free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

It is our responsibility to form an independent opinion on the Xujing Financial Information and to report our opinion thereon to you.

For the purpose of this report, we have carried out procedures on the Xujing Financial Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting Accountant issued by the HKICPA.

Opinion

In our opinion, for the purpose of this report and on the basis of preparation set out in note 2.1 of Section II below, the Xujing Financial Information gives a true and fair view of the state of affairs of the Project Company as at 31 December 2014 and 30 June 2015, and of its results and cash flows for each of the Relevant Periods.

– III-2 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

I. XUJING FINANCIAL INFORMATION

(A) Statements of profit or loss and other comprehensive income

Notes Interest income on bank deposits Selling and marketing expenses Administrative expenses Finance costs 6 LOSS BEFORE TAX 5 Income tax credit 8 LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO THE EQUITY HOLDER OF THE PROJECT COMPANY	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 2 (2,700) (37) – (2,735) 684 (2,051)	Six months ended 30 June 2015 RMB’000 49 (2,936) (247) – (3,134) 783 (2,351)

– III-3 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

(B) Statements of financial position

Notes NON-CURRENT ASSETS Equipment 10 Deferred tax asset 16 Total non-current assets CURRENT ASSETS Properties under development for sale 11 Other receivables, deposits and prepayments 12 Deposits for land use rights for properties held for sale Bank balances and cash 13 Total current assets CURRENT LIABILITIES Accounts payables and accrued charges 14 Advances from Yongpan 21(b)(ii) Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	As at 31 December 2014 RMB’000 – 684 684 – 21 4,177,295 989 4,178,305 5,540 3,475,500 3,481,040 697,265 697,949	As at 30 June 2015 RMB’000 3 1,467
		1,470
		4,429,533 3,251 – 2,358
		4,435,142
		28,864 3,112,150
		3,141,014
		1,294,128
		1,295,598

– III-4 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

(B) Statements of financial position (continued)

Notes CAPITAL AND RESERVE Paid-up capital 17 Accumulated losses Total equity attributable to equity holder of the Project Company NON-CURRENT LIABILITIES Advances from HuaAn 15 Total non-current liabilities TOTAL EQUITY AND NON-CURRENT LIABILITIES	As at 31 December 2014 RMB’000 100,000 (2,051) 97,949 600,000 600,000 697,949	As at 30 June 2015 RMB’000 100,000 (4,402) 95,598 1,200,000 1,200,000 1,295,598

– III-5 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

(C) Statements of changes in equity

Note At 11 October 2014 (date of establishment) Capital contribution by the equity holder of the Project Company 17 Loss and total comprehensive loss for the period At 31 December 2014 and 1 January 2015 Loss and total comprehensive loss for the period At 30 June 2015	Attributable to the equity holder of the Project Company Paid-up capital Accumulated losses Total RMB’000 RMB’000 RMB’000 – – – 100,000 – 100,000 – (2,051) (2,051) 100,000 (2,051) 97,949 – (2,351) (2,351) 100,000 (4,402) 95,598

– III-6 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

(D) Statements of cash flows

CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for: Interest income on bank deposits Increase in properties under development for sale Increase in deposits for land use rights for properties held for sale Increase in other receivables, deposits and prepayments Increase in accounts payables and accrued charges Net cash flows used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of equipment Interest received Net cash flows from investing activities	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 (2,735) (2) (2,737) – (4,176,055) (21) 4,300 (4,174,513) – 2 2	Six months ended 30 June 2015 RMB’000 (3,134) (49) (3,183) (178,665) – (3,230) 21,051 (164,027) (3) 49 46

– III-7 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

(D) Statements of cash flows (continued)

Note CASH FLOWS FROM FINANCING ACTIVITIES Net advances from/(net repayment to) Yongpan Net advances from HuaAn Capital contribution by the equity holder of the Project Company 17 Interest paid Net cash flows from financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash as stated in the statements of financial position	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 3,475,500 600,000 100,000 – 4,175,500 989 – 989 989	Six months ended 30 June 2015 RMB’000 (363,350) 600,000 – (71,300) 165,350 1,369 989 2,358 2,358

– III-8 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

II. NOTES TO THE XUJING FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The Project Company is a limited liability company established in the PRC on 11 October 2014. The address of its registered office is CIFI Hongqiao International, 5th Floor, Block 3, Lane 288, Tongxie Road, Changning District, Shanghai, the PRC.

During the Relevant Periods, the Project Company was principally engaged in the business of property development in Mainland China.

In the opinion of the directors of the Project Company, the parent of the Project Company is Shanghai Yongpan Enterprise Co., Limited* (上海永磐實業有限公司) (“Yongpan”), a limited liability company established in the PRC.

Yongpan is a joint venture of HuaAn Future Asset Management (Shanghai) Limited (華安未來資產管理（上海）有限公司) (“HuaAn”) and CIFI Group Co., Ltd. (旭輝集團股份有限公司) (“CIFI PRC”, a wholly-owned subsidiary of CIFI). As at 31 December 2014 and 30 June 2015, Yongpan was owned as to 51% by HuaAn and 49% by CIFI PRC.

Direct translation from the Chinese name which is for identification purpose only

2.1 BASIS OF PREPARATION

The Xujing Financial Information has been prepared in accordance with IFRSs issued by the IASB. All IFRSs effective for the accounting period commencing from 1 January 2015 have been early adopted in the preparation of the Xujing Financial Information throughout the Relevant Periods. The Xujing Financial Information has been prepared under the historical cost convention. The Xujing Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand except when otherwise indicated.

2.2 ISSUED BUT NOT YET EFFECTIVE IFRSs

The Project Company has not applied the following new and revised IFRSs, that have been issued but are not yet effective, in the Xujing Financial Information.

IFRS 9	_Financial Instruments_3
Amendments to IFRS 10	Sale or Contribution of Assets between an Investor and its Associate
and IAS 28	_or Joint Venture_1
Amendments to IFRS 10,	_Investment Entities: Applying the Consolidation Exception_1
IFRS 12 and IAS 28
Amendments to IFRS 11	_Joint Arrangements: Accounting for Acquisitions of Interests_1
IFRS 14	_Regulatory Deferral Accounts_4
IFRS 15	_Revenue from Contracts with Customers_2
Amendments to IAS 1	_Disclosure Initiative_1
Amendments to IAS 16	Clarification of Acceptable Methods of Depreciation and
and IAS 38	_Amortisation_1
Amendments to IAS 16	_Agriculture: Bearer Plants_1
and IAS 41
Amendments to IAS 27	_Equity Method in Separate Financial Statements_1
Annual Improvements	Amendments to a number of IFRSs1
2012–2014 Cycle

1 Effective for annual periods beginning on or after 1 January 2016
2 Effective for annual periods beginning on or after 1 January 2017

3 Effective for annual periods beginning on or after 1 January 2018

4 Effective for an entity that first adopts IFRSs for its annual financial statements beginning on or after 1 January 2016 and therefore is not applicable to the Project Company

The Project Company is in the process of assessing the impact of the new standards and amendments on the Xujing Financial Information.

– III-9 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Xujing Financial Information has been prepared on the historical cost basis and in accordance with accounting policies set out below which are in conformity with IFRSs.

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, the Project Company 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 the Xujing Financial Information is determined on such a basis, except for leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Project Company and the amount of revenue can be measured reliably. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Equipment

Equipment is stated in the statements of financial position at cost, less subsequent accumulated depreciation and accumulated impairment losses, if any.

– III-10 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Properties under development for sale

Properties under development for sale which are intended to be held for own use or their investment potential are shown as non-current assets.

Properties under development for sale which are intended to be held for sale are shown as current assets and carried at the lower of cost and net realisable value.

Impairment losses on tangible assets

At the end of the reporting period, the Project Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount (the higher of value in use and fair value less costs to sell) of the asset is estimated in order to determine the extent of the impairment loss, if any. 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 as an expense immediately.

Leasing

The Project Company as lessee

Borrowing costs

– III-11 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax

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 profit before tax as reported in the statements of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Project 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 Xujing Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and 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 deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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

Retirement benefit costs

Payments to defined contribution retirement benefit plans are charged as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Project Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.

Financial instruments

Financial assets and financial liabilities are recognised when the Project Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

– III-12 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

Financial assets

Effective interest method

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

Loans and receivables

Impairment of financial assets

For all other financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
breach of contract, such as a default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
the disappearance of an active market for that financial asset because of financial difficulties.

– III-13 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

Financial assets (continued)

Financial liabilities

Financial liabilities of the Project Company are subsequently measured at amortised cost using effective interest method.

Effective interest method

Interest expense is recognised on an effective interest basis.

Derecognition

The Project Company 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. 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 and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

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

– III-14 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

3. CRITICAL JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying of the Project Company’s accounting policies, which are described in note 2.3 to the Xujing Financial Information, the directors of the Project Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Income tax expense

Deferred tax asset of RMB684,000 and RMB1,467,000 in relation to tax losses that have been recognised at 31 December 2014 and 30 June 2015, respectively, are set out in note 16 to the Xujing Financial Information. The realisability of the deferred tax asset mainly depends on whether sufficient future profits will be available in the future. The directors of the Project Company determine the deferred tax asset based on the enacted or substantially enacted tax rates and the best knowledge of profit projections of the Project Company for coming years during which the tax losses are expected to be utilised. The directors of the Project Company will review the assumptions and profit projections by the end of the reporting period. In cases where the actual future profits generated are less than expected, a reversal of deferred tax asset may arise, which would be recognised in profit or loss for the period in which such a reversal takes place.

Valuation of properties under development for sale

4. SEGMENT INFORMATION

All the Project Company’s operations are located and carried out in the PRC and the results of the Project Company are derived from the property development business. Accordingly, no segment information by business and geographical segment is presented.

– III-15 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

5. LOSS BEFORE TAX

The Project Company’s loss before tax is arrived at after charging:

Minimum lease payments under operating leases in respect of land and buildings Employee benefit expense: Salaries, allowances and benefit in kind Retirement benefit costs Less: Amounts capitalised to properties under development for sale	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 202 – – – – –	Six months ended 30 June 2015 RMB’000 38 943 187
		1,130 (1,130)
		–

6. FINANCE COSTS

An analysis of finance costs is as follows:

Interest on advances from HuaAn (note 15) Less: interest capitalised	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 1,240 (1,240) –	Six months ended 30 June 2015 RMB’000 73,573 (73,573)
		–

– III-16 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

7. DIRECTORS’ REMUNERATION

No director received any fees or emoluments in respect of their services rendered to the Project Company during the Relevant Periods.

8. INCOME TAX CREDIT

No PRC corporate income tax has been provided as the Project Company did not generate any assessable profits arising in Mainland China during the Relevant Periods.

								From
								11 October
								2014 (date of
								establishment)
								to	Six months
								31 December	ended
								2014	30 June 2015
								RMB’000	RMB’000
Deferred	tax	credited	for	the	period	_(note _	16)	(684)	(783)

A reconciliation of the tax credit applicable to loss before tax at the statutory rate to the tax credit at the effective tax rate is as follows:

Loss before tax Tax credit at the statutory tax rate at 25% and effective rate at 25%	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 (2,735) (684)	Six months ended 30 June 2015 RMB’000 (3,134)

		(783)

9. DIVIDENDS

No dividends have been paid or declared by the Project Company during the Relevant Periods.

– III-17 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

10. EQUIPMENT

At 11 October 2014 (date of establishment), 31 December 2014 and 1 January 2015: Cost and net carrying amount At 1 January 2015, net of accumulated depreciation Addition At 30 June 2015, net of accumulated depreciation At 30 June 2015: Cost Accumulated depreciation Net carrying amount	Office equipment RMB’000 –

	– 3
	3

	3 –
	3

11. PROPERTIES UNDER DEVELOPMENT FOR SALE

At the beginning of period Additions At the end of period	From 11 October 2014 (date of establishment) to 31 December 2014 RMB’000 – – –	Six months ended 30 June 2015 RMB’000 – 4,429,533
		4,429,533

The properties under development for sale represent properties under development for subsequent sale upon completion.

The properties under development for sale as at 30 June 2015 were expected to be completed and available for sale after more than twelve months from the end of the reporting period.

The Project Company had pledged all properties under development for sale as at 30 June 2015 to secure the advances from HuaAn (note 15).

– III-18 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Other receivables Deposits and prepayments	As at 31 December 2014 RMB’000 – 21 21	As at 30 June 2015 RMB’000 234 3,017
		3,251

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

Included in the Project Company’s prepayments as at 30 June 2015 was a prepayment to a wholly-owned subsidiary of CIFI (“ CIFI Subsidiary ”) with a carrying amount of RMB2,850,000 (31 December 2014: Nil) (note 21(b)(i)).

13. BANK BALANCES AND CASH

All the bank balance and cash held by the Project Company were denominated in RMB. Cash at banks earn interest at floating rates based on daily bank deposit rates.

14. ACCOUNTS PAYABLES AND ACCRUED CHARGES

Trade payables Other payables and accrued charges	As at 31 December 2014 RMB’000 – 5,540 5,540	As at 30 June 2015 RMB’000 24,747 4,117
		28,864

Trade payables and accrued expenditure on construction comprise construction costs and other project-related expenses which are payable based on project progress measured by the Project Company. The average credit period of trade payables is 60 days. The Project Company has financial risk management policies in place to ensure that all payables are within the credit timeframe.

An aged analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

Within 60 days 61 to 180 days	As at 31 December 2014 RMB’000 – – –	As at 30 June 2015 RMB’000 24,496 251
		24,747

– III-19 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

14. ACCOUNTS PAYABLES AND ACCRUED CHARGES (continued)

Included in the Project Company’s other payables and accrued charges as at 31 December 2014 was an accrued charge payable to CIFI Subsidiary with a carrying amount of RMB2,700,000 (note 21(b)(i)).

15. ADVANCES FROM HUAAN

The advances from HuaAn, an equity holder of Yongpan (note 1), carry fixed interest at 12.4% per annum for a term of 3 years and are secured by a corporate guarantee provided by Yongpan and a pledge of the 40% equity interest of the Project Company that is owned by Yongpan. Since 20 April 2015, the Project Company has also pledged its properties under development for sale to secure the advances (note 11).

16. DEFERRED TAX ASSET

At 11 October 2014 (date of establishment) Deferred tax credited to profit of loss during the period (note 8) At 31 December 2014 and 1 January 2015 Deferred tax credited to profit of loss during the period (note 8) At 30 June 2015	Losses available for offsetting against future taxable profits RMB’000 – 684
	684 783
	1,467

17. PAID-UP CAPITAL

Registered capital Paid-up capital	As at 31 December 2014 RMB’000 100,000 100,000	As at 30 June 2015 RMB’000 100,000

		100,000

The Project Company was established on 11 October 2014 with a registered capital of RMB100,000,000 which was paid up by its equity holder during the period from 11 October 2014 (date of establishment) to 31 December 2014.

– III-20 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

18. OPERATING LEASE ARRANGEMENTS

As lessee

The Project Company leases certain of its office premises under operating lease arrangements. Leases for these properties are negotiated for terms of one year.

At 31 December 2014 and 30 June 2015, the Project Company had total future minimum lease payments under non-cancellable operating leases falling due within one year amounted to RMB238,000 and RMB165,000, respectively.

19. COMMITMENTS

At 31 December 2014 and 30 June 2015, the Project Company had no significant capital commitments.

20. CONTINGENT LIABILITIES

At 31 December 2014 and 30 June 2015, the Project Company had no significant contingent liabilities.

21. RELATED PARTY DISCLOSURES

(a) During the period from 11 October 2014 (date of establishment) to 31 December 2014 and six months ended 30 June 2015, CIFI Subsidiary provided consultancy services to the Project Company amounted to RMB2,700,000 and RMB2,850,000, respectively. The Project Company shall pay RMB950,000 quarterly to CIFI Subsidiary until the completion of the relevant property project.
(b) Outstanding balances with related parties:
(i) Details of the Project Company’s balances with its related companies are disclosed in notes 12, 14 and 15 to the Xujing Financial Information.
(ii) The advances from Yongpan are unsecured, interest-free and have no fixed repayment terms.
(c) The directors of the Project Company are the key management personnel of the Project Company. Details of their remuneration are set out in note 7 to the Xujing Financial Information.
(d) Details of the corporate guarantee and pledged assets provided by Yongpan are disclosed in note 15 to the Xujing Financial Information.

22. CAPITAL RISK MANAGEMENT

The Project Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to its equity holder through the optimisation of the debt and equity balance.

The capital structure of the Project Company consists of net debt, which includes advances from Yongpan and HuaAn net of bank balances and cash and equity attributable to equity holder of the Project Company, comprising paid-in capital and accumulated losses.

The directors of the Project Company review the capital structure on a regular basis. As part of this review, the directors of the Project Company consider the cost of capital and the risks associated with each class of capital, and take appropriate actions to balance its overall capital structure.

– III-21 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts of the Project Company’s financial instruments reasonably approximate to their fair values.

Management has assessed that the fair values of bank balances and cash, trade payables, financial assets included in prepayments, deposits and other receivables, financial liabilities included in other payables and accrued charges and advances from Yongpan approximate to their carrying amounts largely due to the short term maturities of these instruments.

The fair values of the non-current portion of advances from HuaAn have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The carrying amounts of the non-current portions of advances from HuaAn and approximate to their fair values. The Project Company’s own non-performance risk for advances from HuaAn as at 31 December 2014 and 30 June 2015 was assessed to be insignificant.

24. FINANCIAL INSTRUMENTS

(a) Significant accounting policies

(b) Categories of financial instruments

As at 31 December 2014 and 30 June 2015, all financial assets and liabilities of the Project Company are loans and receivables, and financial liabilities at amortised cost, respectively.

(c) Financial risk management objectives and policies

The Project Company’s major financial instruments include advances from Yongpan and HuaAn. Details of these financial instruments are set out in respective notes. The risks associated with these financial instruments and 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 on a timely and effective manner.

(d) Interest rate risk management

The Project Company has interest-bearing advances from HuaAn. However, the Project Company’s exposure to the risk of changes in market interest rates is limited since these advances bear fixed interest rate at 12.4% per annum.

– III-22 –

APPENDIX III

ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

24. FINANCIAL INSTRUMENTS (continued)

(e) Credit risk management

The credit risk of the Project Company’s financial assets, mainly comprise bank balances, arises from default of the counterparty, with a maximum exposure equals to the carrying amounts of these instruments. The bank balances are deposited with creditworthy banks with no recent history of default.

(f) Liquidity risk

The Project Company’s objective is to maintain a balance between continuity of funding generated from operating activities and the flexibility through the use of borrowings. The directors of the Project Company closely monitor the liquidity position and expect to have adequate sources of funding to finance the Project Company’s projects and operations.

The following table details the Project Company’s expected remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Project Company can be required to pay. The table includes both interest and principal cash flows.

As at 31 December 2014 Accounts payables and accrued charges Advances from HuaAn As at 30 June 2015 Accounts payables and accrued charges Advances from HuaAn	Within one year or on demand RMB’000 5,540 75,433 80,973 28,864 151,280 180,144	In the second year RMB’000 – 75,433 75,433 – 151,280 151,280	In the third to fifth years, inclusive RMB’000 – 663,654 663,654 – 1,308,087 1,308,087	Total RMB’000 5,540 814,520
				820,060

				28,864 1,610,647
				1,639,511

25. EVENT AFTER THE END OF THE RELEVANT PERIODS

On 15 May 2015, CIFI and Hongkong Land China entered into a master agreement pursuant to which, inter alia, the parties proposed to undergo certain transactions and form a joint venture for the development of the properties held by the Project Company and the transfer of Yongpang’s 100% equity interest in the Project Company to a company jointly controlled by CIFI and Hongkong Land China. Further details of this proposed joint venture arrangement are set out in CIFI’s announcement dated 15 May 2015.

– III-23 –

APPENDIX III ACCOUNTANTS’ REPORT ON THE PROJECT COMPANY

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Project Company in respect of any period subsequent to 30 June 2015.

Yours faithfully, ERNST & YOUNG Certified Public Accountants Hong Kong

– III-24 –

APPENDIX IV

VALUATION REPORT OF THE SITE

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Savills Valuation and Professional Services Limited, an independent property valuer, in connection with their valuation as of 30 June 2015 of the Property.

==> picture [72 x 72] intentionally omitted <==

The Directors CIFI Holdings (Group) Co. Ltd. Suites 2002–2003 20th Floor One Pacific Place 88 Queensway Hong Kong 24 August 2015

Savills Valuation and Professional Services Limited 23/F Two Exchange Square Central, Hong Kong

T: (852) 2801 6100 F: (852) 2530 0756

EA LICENCE: C-023750 savills.com

Dear Sirs,

RE: A PARCEL OF LAND (LOT NO. 201100236472427305) LOCATED AT YANGJING STREET, PUDONG NEW AREA, SHANGHAI, THE PEOPLE’S REPUBLIC OF CHINA (中華人民共和國上海市浦東新區洋涇街道之一塊土地（地號201100236472427305)) (THE “PROPERTY”)

INSTRUCTION

In accordance with your instructions for us to value the Property situated in the People’s Republic of China (the “ PRC ”) held by CIFI Holdings (Group) Co. Ltd. (the “ Company ”) and its associate (hereinafter together referred to as the “ Group ”), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of value of the Property as at 30 June 2015 (the “ valuation date ”) for circular purpose.

BASIS OF VALUATION

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

– IV-1 –

APPENDIX IV

VALUATION REPORT OF THE SITE

Market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

In valuing the Property, we have complied with the requirements as set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. Our valuation is also prepared in accordance with The HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors.

PROPERTY CATEGORIZATION AND VALUATION METHODOLOGY

In valuing the Property, which is held by the Group for future development in the PRC, we have valued it by direct comparison approach assuming sale with the benefit of vacant possession in its existing state and by making reference to comparable sales transactions as available in the relevant market.

TITLE INVESTIGATION

We have been provided with copies of extracts of title documents relating to the Property. However, we have not searched the original documents to verify ownership or to ascertain the existence of any amendments which do not appear on the copies handed to us. We have relied to a considerable extent on information given by the Group and the Group’s PRC legal adviser, Hiways Law Firm (海華永泰律師事務所), regarding the title and other legal matters to the Property.

VALUATION CONSIDERATION AND ASSUMPTIONS

In the course of our valuation, we have relied to a considerable extent on information given to the Group and have also accepted advice given to us on such matters as planning approvals, statutory notices, easements, tenure, particular of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. No on-site measurements have been taken. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group, which is material to our valuation. We were also advised by the Group that no material facts have been omitted from the information supplied.

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

SITE INSPECTION

We have inspected the Property and did not note any serious defects. The site inspection was carried out in July 2015 by our Mr. James Woo (Director) and his assistants

– IV-2 –

APPENDIX IV

VALUATION REPORT OF THE SITE

Ms. Tracy Lin (Manager) and Mr. Daniel Qiu (Valuer). Mr. James Woo is a professional member of The Royal Institution of Chartered Surveyors. During the course of our inspection, we did not note any serious defects. However, no structural survey has been made, we are therefore unable to report whether the Property is free of rot, infestation or any other structural defects. No tests were carried out on any of the services. We have also not carried out investigations on site to determine the suitability of the ground conditions and the services for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and no extraordinary expenses or delay will be incurred during the development period.

REMARKS

Unless otherwise stated, all money amounts stated are in Renminbi (“ RMB ”).

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of

Savills Valuation and Professional Services Limited

Anthony C K Lau

MHKIS MRICS RPS(GP)

Director

Note: Mr. Anthony C K Lau is a qualified surveyor and has over 22 years’ post-qualification experience in the valuation of properties in Hong Kong and the PRC.

– IV-3 –

APPENDIX IV

VALUATION REPORT OF THE SITE

VALUATION CERTIFICATE

Property held by the Group for future development in the PRC

Market value in existing state as at 30 June 2015

			Market value in existing state as
Property	Description and tenure	Particulars of occupancy	at 30 June 2015
A parcel of land	The Property is located at	As at the valuation date,	RMB5,070,000,000
(Lot No. 201100236472427305)	Yangjing Street of Pudong New	the Property was vacant
located at Yangjing Street,	Area in Shanghai. The	for future development.
Pudong New Area,	immediate locality is a mature
Shanghai,	residential area and
PRC	predominated by domestic
	buildings of various ages and
(中國上海市浦東新區洋涇	heights.
街道之一塊土地（地號
201100236472427305）)	The Property comprises a parcel
	of land with a site area of
	approximately 87,179.60 sq.m.
	(938,401 sq.ft.).
	According to the Land Use
	Rights Grant Contract, the
	permissible gross floor area of
	the Property is approximately
	226,666.96 sq.m.
	(2,439,843 sq.ft.). As advised by
	the Group, no detailed
	development plan has been
	approved.
	The land use rights of the
	Property have been granted for
	three concurrent terms expiring
	on 10 November 2054 for
	commercial use, 10 November
	2064 for office use and 10
	November 2084 for residential
	use respectively.

Notes:

Pursuant to the Land Use Rights Grant Contract – Hu Pu Gui Tu (2014) Chu Rang He Tong Bu Zi No. 68 entered into between Pudong New Area Planning and Land Authority (浦東新區規劃和土地管理局) and Shanghai XUJING Property Co., Limited (上海旭涇置業有限公司) (the “ Project Company ”), a 49% owned associate of the Company, on 27 November 2014, the land use rights of a parcel of land of the Property have been agreed to be granted to the Project Company. Details of the said contract are as follows:

Site Area : 87,179.60 sq.m. Usage and Land Use Term : Commercial: 40 years Office: 50 years Residential: 70 years Permissible Gross Floor Area : Commercial: 121,666.96 sq.m. Office: 75,000.00 sq.m. Residential: 30,000.00 sq.m. Height Limit : Not more than 80 m Site Coverage : Not more than 40%

– IV-4 –

APPENDIX IV

VALUATION REPORT OF THE SITE

Green Area Ratio : Not less than 25% Building Covenant Period : The construction work of the Property has to be commenced before 17 December 2015 and completed before 17 December 2018. Facilities for Public Use : Not less than 1,500 sq.m. of indemnificatory apartment has to be constructed inside the Property and then handed over to the relevant housing department. Special Requirement : The aforesaid commercial portion cannot be sold on strata title and is required to be operated as a whole. Total Consideration : RMB4,175,000,000

Pursuant to the Construction Land Planning Permit – Hu Pu Gui Di Lu (2015) No. EA31011520154011 issued by Pudong New Area Planning and Land Authority dated 26 January 2015, the Project Company is permitted to use a parcel of land of the Property with a site area of 87,179.60 sq.m. for development.
Pursuant to the Shanghai Certificate of Real Estate Ownership – Hu Fang Di Pu Zi (2015) No. 020413 issued by Shanghai Planning, Land & Resources Administration Bureau (上海市規劃和國土資源管理局) dated 1 April 2015, the land use rights of a parcel of land of the Property with a site area of 87,179.60 sq.m. have been granted to the Project Company for three concurrent terms expiring on 10 November 2054 for commercial use, 10 November 2064 for office use and 10 November 2084 for residential use respectively.
Pursuant to the Construction Work Planning Permit – Jian Zi No. Hu Pu Gui Jian Lu (2015) FA31011520154068 issued by Pudong New Area Planning and Land Authority dated 7 July 2015, the approved construction scale of portion of the Property is 61,063.79 sq.m.
Pursuant to the Construction Work Commencement Permit – No. 15LJPD0002D01 310115201501272019 issued by Shanghai Pudong New Area Construction and Transportation Commission (上海市浦東新區建設和交通委員會) dated 7 July 2015, the approved construction scale of portion of the Property is 61,063.79 sq.m.
As advised by the Group, the Property was subject to a mortgage in favour of Jincheng Bank Co., Ltd. for a lending period expiring on 12 December 2017 to an extent of RMB1,200,000,000 as at the valuation date.
We have been provided with a legal opinion on the title to the Property issued by the Group’s PRC legal adviser, which contains, inter alia, the following information:
i. the Project Company has legally obtained the land use rights of the Property and is entitled to occupy, use, let, transfer, mortgage or dispose of the land use rights by other legal means within the terms of land use rights in accordance with the stipulations as stated in the Land Use Rights Grant Contract and the Shanghai Certificate of Real Estate Ownership, and in compliance with the requirements as set out in the mortgage agreement;
ii. the Project Company is not prohibited from selling the commercial portion of the Property as a whole in accordance with the stipulations as stated in the Land Use Rights Grant Contract;
iii. the Project Company has obtained the necessary permits, approvals and certificates for the construction of the Property and such permits, approvals and certificates have not been withdrawn, amended, abolished or cancelled. Thus the Project Company has a legal and compete development rights for the Property;
iv. the Property is subject to a mortgage. In respect of the mortgaged portion of the Property, the Project Company is entitled to occupy or use such portion but prior approval from the mortgagee has to be obtained before letting or re-mortgaging such portion; and
v. apart from the aforesaid mortgage, the Property is free from any seizures, mortgages or any kinds of limitation.

– IV-5 –

APPENDIX V

GENERAL INFORMATION

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 circular misleading.

2. DISCLOSURE OF INTEREST

(a) Interests and short positions of our Directors in the share capital of our Company and its associated corporations

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

					Approximate
				Number of	percentage
				Shares/	of interest
Name of	Name of		Capacity/	underlying	in our
Director	Corporation	Class of Securities	Nature of interest	Shares	company
LIN Zhong	Our Company	Ordinary Shares (L)	Founder of	1,175,675,671	17.38%
			a discretionary	Shares
			trust_(Note 1)_
	Our Company	Ordinary Shares (L)	Co-founder of	2,217,129,975	32.77%
			a discretionary	Shares
			trust_(Note 2)_
	Our Company	Ordinary Shares (L)	Beneficiary Owner	5,978,000 Shares	0.09%
LIN Wei	Our Company	Ordinary Shares (L)	Interest of controlled	613,765,775	9.07%
			corporation	Shares
			(Note 3)
	Our Company	Ordinary Shares (L)	Co-founder of	2,217,129,975	32.77%
			a discretionary	Shares
			trust_(Note 2)_

– V-1 –

APPENDIX V

GENERAL INFORMATION

					Approximate
				Number of	percentage
				Shares/	of interest
Name of	Name of		Capacity/	underlying	in our
Director	Corporation	Class of Securities	Nature of interest	Shares	company
LIN Feng	Our Company	Ordinary Shares (L)	Founder of	204,588,580	3.02%
			a discretionary	Shares
			trust_(Note 4)_
	Our Company	Ordinary Shares (L)	Co-founder of	2,217,129,975	32.77%
			a discretionary	Shares
			trust_(Note 2)_
	Our Company	Ordinary Shares (L)	Personal interest	5,800,000	0.09%
				(Note 5)
GU Yunchang	Our Company	Ordinary Shares (L)	Personal interest	2,100,000 Shares	0.03%
				(Note 5)
ZHANG	Our Company	Ordinary Shares (L)	Personal interest	2,100,000 Shares	0.03%
Yongyue				(Note 5)
TAN Wee Seng	Our Company	Ordinary Shares (L)	Personal interest	2,100,000 Shares	0.03%
				(Note 5)

Notes:

These Shares are held by Ding Chang. The entire issued share capital of Ding Chang is wholly owned by Eternally Success International Limited (“ Eternally Success ”), the entire issued share capital of which is in turn directly and wholly held by SCTS Capital Pte. Ltd. (“ SCTS ”), which is in turn wholly held by Standard Chartered Trust (Singapore) Limited (“ Standard Chartered Trust ”) as the trustee of the Sun Success Trust. The Sun Success Trust is a discretionary trust set up by Mr LIN Zhong as settlor and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Sun Success Trust include certain family members of Mr LIN Zhong. Mr LIN Zhong as founder of the Sun Success Trust is taken to be interested in the 1,175,675,671 Shares held by Ding Chang immediately upon completion of the Global Offering and Capitalisation Issue pursuant to Part XV of the SFO.
These Shares are held by Rosy Fortune. The entire issued share capital of Rosy Fortune is wholly owned by Gentle Beauty Assets Limited (“ Gentle Beauty ”), the entire issued share capital of which is in turn directly and wholly held by SCTS, which is in turn wholly held by Standard Chartered Trust as the trustee of the Lin’s Family Trust. The Lin’s Family Trust is a discretionary trust set up jointly by Mr LIN Zhong, Mr LIN Wei and Mr LIN Feng as settlors and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Lin’s Family Trust include certain family members of Mr LIN Zhong and Mr LIN Feng. Each of Mr LIN Zhong, Mr LIN Wei and Mr LIN Feng as a co-founder of the Lin’s Family Trust is taken to be interested in the 2,217,129,975 Shares held by Rosy Fortune immediately upon completion of the Global Offering and Capitalisation Issue pursuant to Part XV of the SFO.
These Shares are held by Eminent Talent. The entire issued share capital of Eminent Talent is wholly owned by Mr LIN Wei.

– V-2 –

APPENDIX V

GENERAL INFORMATION

These Shares are held by Rain-Mountain. The entire issued share capital of Rain-Mountain is wholly owned by Beauty Fountain Holdings Limited (“ Beauty Fountain ”), the entire issued share capital of which is in turn directly and wholly held by SCTS, which is in turn wholly held by Standard Chartered Trust as the trustee of the Sun-Mountain Trust. The Sun-Mountain Trust is a discretionary trust set up by Mr LIN Feng as settlor and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Sun-Mountain Trust include certain family members of Mr LIN Feng. Mr LIN Feng as founder of the Sun-Mountain Trust is taken to be interested in the 204,588,580 Shares held by Rain-Mountain immediately upon completion of the Global Offering and Capitalisation Issue pursuant to Part XV of the SFO.
The relevant Director was granted options to subscribe for such number of Shares under the share option scheme adopted by the Company on 9 October 2012.
(b) Interests and short positions of the Substantial Shareholders in the Shares or underlying Shares discloseable under Divisions 2 and 3 of Part XV of the SFO

In addition to the interests disclosed under paragraph (a) above, so far as our Directors were aware, as at the Latest Practicable Date, the following persons (other than our Directors and our chief executives) were expected to have interests and/or short positions in the Shares and underlying Shares of our Company which are required to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, and/or are expected to be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company:

(i) Long positions in the Shares and underlying Shares of our Company

			Approximate
			percentage of
			interest in the
			share capital of
			our Company
			immediately
			after the
			Capitalisation
	Capacity/	Number of Shares/	Issue and the
Name of interested party	Nature of interest	underlying Shares	Global Offering
Gentle Beauty	Interest of controlled	2,217,129,975	32.77%
	corporation
	(Note 1)
Rosy Fortune	Beneficial owner	2,217,129,975	32.77%
	(Note 1)

– V-3 –

APPENDIX V

GENERAL INFORMATION

			Approximate
			percentage of
			interest in the
			share capital of
			our Company
			immediately
			after the
			Capitalisation
	Capacity/	Number of Shares/	Issue and the
Name of interested party	Nature of interest	underlying Shares	Global Offering
Eternally Success	Interest of controlled	1,175,675,671	17.38%
	corporation
	(Note 2)
Ding Chang	Beneficial owner	1,175,675,671	17.38%
	(Note 2)
Eminent Talent	Beneficial owner	613,765,775	9.07%
	(Note 3)
Standard Chartered Trust	Trustee_(Note 4)_	3,597,394,226	53.17%
SCTS	Interest of controlled	3,597,394,226	53.17%
	corporation
	(Note 4)

Notes:

The entired issued share capital of Rosy Fortune is wholly owned by Gentle Beauty, which is in turn directly and wholly held by SCTS. SCTS is wholly held by Standard Chartered Trust as the trustee of the Lin’s Family Trust. The Lin’s Family Trust is a discretionary trust set up jointly by Mr LIN Zhong, Mr LIN Wei and Mr LIN Feng as settlors and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Lin’s Family Trust include certain family members of Mr LIN Zhong and Mr LIN Feng.
The entired issued share capital of Ding Chang is wholly owned by Eternally Success, which is in turn directly and wholly held by SCTS. SCTS is wholly held by Standard Chartered Trust as the trustee of the Sun Success Trust. The Sun Success Trust is a discretionary trust set up by Mr LIN Zhong as settlor and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Sun Success Trust include certain family members of Mr LIN Zhong.
The entired issued share capital of Eminent Talent is wholly owned by Mr LIN Wei.
These include 2,217,129,975 Shares held by Rosy Fortune, 1,175,675,671 Shares held by Ding Chang and 204,588,580 held by Rain-Mountain. The entire issued share capital of Rain-Mountain is wholly owned by Beauty Fountain, the entire issued share capital of which is in turn directly and wholly held by SCTS. SCTS is wholly held by Standard Chartered Trust as the trustee of the Sun-Mountain Trust. The Sun-Mountain Trust is a discretionary trust set up by Mr. LIN Feng as settlor and Standard Chartered Trust as trustee on 11 May 2012. The beneficiary objects of the Sun-Mountain Trust include certain family members of Mr. LIN Feng.

– V-4 –

APPENDIX V

GENERAL INFORMATION

5. SERVICE CONTRACTS

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

6. COMPETING BUSINESS

At the Latest Practicable Date, none of the Directors or their respective associates had any competing interests in a business which competes or is likely to compete with the business of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controlling shareholder).

7. DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS

As at the Latest Practicable Date, none of the Directors has had any direct or indirect interest in any assets which have since 31 December 2014 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

There is no contract or arrangement subsisting at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Group.

8. LITIGATION

As at the Latest Practicable Date, none of the members of the Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

9. MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2014, the date to which the latest published audited financial statements of the Group were made up.

– V-5 –

APPENDIX V

GENERAL INFORMATION

10. MATERIAL CONTRACTS

Saved as disclosed below, no material contracts (not being contract entered into in the ordinary course of business carried out by the Group), have been entered into by any member of the Group within the two years immediately preceding the date of this circular:

(a) a placing agreement dated 16 October 2013 between the Company (as issuer) and Dalvey Asset Holdings Ltd (“ Dalvey Asset ”) (as placee) for the placing of 256,579,000 Shares to Dalvey Asset at a total consideration of approximately HK$390 million;
(b) a placing and subscription agreement dated 18 May 2015 between the Company, Rosy Fortune and Ding Chang (as vendors) and Citigroup Global Markets Limited, Credit Suisse (Hong Kong) Limited and Nomura International (Hong Kong) Limited (as placing agents) for the placing and top-up subscription of 600,000,000 Shares with a gross proceeds of HK$1,320 million.

11. EXPERTS AND CONSENTS

(i) The following are the qualifications of the experts who had given their opinions and advice which are included in this circular:

Name Qualification

Deloitte Touche Tohmatsu Certified Public Accountants Ernst & Young Certified Public Accountants Hiways Law Firm PRC legal adviser Savills Valuation and Chartered Surveyors Professional Services Limited

(ii) As at the Latest Practicable Date, none of Deloitte Touche Tohmatsu, Ernst & Young and Savills Valuation and Professional Services Limited had 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.
(iii) Each of Deloitte Touche Tohmatsu, Ernst & Young and Savills Valuation and Professional Services Limited has given and has not withdrawn its written consent to the issue of this circular, with the inclusion of its letter or report or references to its name in the form and context in which they are included.
(iv) As at the Latest Practicable Date, none of Deloitte Touche Tohmatsu, Ernst & Young and Savills Valuation and Professional Services Limited had any direct or indirect interest in any assets which have been, since 31 December 2014

– V-6 –

APPENDIX V

GENERAL INFORMATION

(being the date to which the latest published audited financial statements of the Group were made up), acquired or disposed of by or leased to or were proposed to be acquired or disposed of by or leased to any member of the Group.

12. MISCELLANEOUS

(a) The registered office of the Company is at P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands, and the principal place of business in Hong Kong is at Suites 2002-2003, 20th Floor, One Pacific Place, 88 Queensway, Hong Kong.
(b) The secretary of the Company is Mr. Lo Tai On, who is a member of the Hong Kong Institute of Certified Public Accountants.
(c) The English text of this circular shall prevail over the Chinese text.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents of the Group are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Suites 2002-2003, 20th Floor, One Pacific Place, 88 Queensway, Hong Kong, except public holidays, up to and including for 14 days from the date of this circular:

(a) the memorandum of association and articles of association of the Company;
(b) the audited financial statements of the Group for the last two financial years ended 31 December 2014;
(c) the accountants’ report from Ernst & Young on Yongpan as set out in Appendix II to this circular for period from 14 April 2014 to 31 December 2014 and six months ended 30 June 2015;
(d) the accountants’ report from Ernst & Young on the Project Company as set out in Appendix III to this circular for the period from 11 October 2014 to 31 December 2014 and six months ended 30 June 2015;
(e) the property valuation report on the Site, the text of which is set out in Appendix IV to this circular;
(f) the written consents as referred to in the section headed “11. Experts and consents” in this appendix; and
(g) the material contracts referred to in the paragraph headed “10. Material Contracts” in this appendix.

– V-7 –

AI assistant

CIFI Holdings (Group) Co. Ltd. — Proxy Solicitation & Information Statement 2015

49539_rns_2015-08-23_68b5d901-691e-4140-8e0c-4a2f3fe2a6a2.pdf

CIFI Holdings (Group) Co. Ltd. 旭輝控股（集團）有限公司

MAJOR TRANSACTION

PROPOSED JOINT VENTURE ARRANGEMENT FOR THE DEVELOPMENT PROJECT IN PUDONG NEW DISTRICT, SHANGHAI, THE PRC

DEFINITIONS

DEFINITIONS

DEFINITIONS

CIFI Holdings (Group) Co. Ltd. 旭輝控股（集團）有限公司

(Stock code: 00884)

MAJOR TRANSACTION

PROPOSED JOINT VENTURE ARRANGEMENT FOR THE DEVELOPMENT PROJECT IN PUDONG NEW DISTRICT, SHANGHAI, THE PRC

INTRODUCTION

BACKGROUND

(1) Corporate structure before the Joint Venture Arrangement

(2) Details of the Site

LETTER FROM THE BOARD

JOINT VENTURE ARRANGEMENT

(c) Offshore Loan

(d) Transaction I: Project Company Equity Transfer Agreement

(e) Transaction II: Offshore JV Equity Subscription Agreement

(f) Further increase of registered capital of Project Company

(i) Dividend distribution policy

(j) Reserved matters

(k) Capital Contribution and future financing

(l) Profit and loss sharing

INFORMATION ABOUT HONG KONG LAND CHINA

REASONS FOR AND BENEFITS OF THE JOINT VENTURE FORMATION

FINANCIAL EFFECTS OF THE TRANSACTIONS ON THE COMPANY

LISTING RULES IMPLICATIONS

RECOMMENDATION

ADDITIONAL INFORMATION

1. AUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS

Bank and other borrowings

Financial guarantees

General

3. WORKING CAPITAL

4. LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

Cash position

Gearing ratio

5. FINANCIAL AND TRADING PROSPECTS FOR 2015

The Board of Directors

Dear Sirs,

Directors’ responsibility

Reporting accountants’ responsibility

Opinion in respect of the Yongpan Group Financial Information

Review conclusion in respect of the Interim Comparative Information

I. YONGPAN GROUP FINANCIAL INFORMATION

(A) Consolidated statements of profit or loss and other comprehensive income

(B) Consolidated statements of financial position

(B) Consolidated statements of financial position (continued)

(C) Consolidated statements of changes in equity

(D) Consolidated statements of cash flows

(D) Consolidated statements of cash flows (continued)

II. NOTES TO THE YONGPAN GROUP FINANCIAL INFORMATION

1. CORPORATE INFORMATION

2.1 BASIS OF PREPARATION

2.2 ISSUED BUT NOT YET EFFECTIVE IFRSs

2.2 ISSUED BUT NOT YET EFFECTIVE IFRSs (continued)

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of consolidation (continued)

Revenue recognition

Equipment

Properties under development for sale

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Properties under development for sale (continued)

Impairment losses on tangible assets

Leasing

The Yongpan Group as lessee

Borrowing costs

Income tax

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income tax (continued)

Retirement benefit costs

Financial instruments

Financial assets

CIFI Holdings (Group) Co. Ltd. Proxy Solicitation & Information Statement 2015