Great Eagle Holdings Limited - M&A Activity 2016

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect about this Composite Document or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Dan Form Holdings Company Limited, you should at once hand this Composite Document and the accompanying Form of Acceptance to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or transfer was effected for onward transmission to the purchaser(s) or the transferee(s).

This Composite Document should be read in conjunction with the accompanying Form of Acceptance, the contents of which form part of the terms and condition of the Offer.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Composite Document and the accompanying Form of Acceptance, make no representation as to their 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 Composite Document and the accompanying Form of Acceptance.

(Incorporated in Hong Kong with limited liability) (Stock Code: 28)

DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 271)

Autobest Holdings Limited

(Incorporated in the British Virgin Islands with limited liability)

COMPOSITE DOCUMENT RELATING TO CONDITIONAL MANDATORY CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF AUTOBEST HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF DAN FORM HOLDINGS COMPANY LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY AUTOBEST HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

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Financial adviser to the Offeror
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Financial adviser to Dan Form

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Independent financial adviser to the Dan Form IBC

Capitalised terms used on this cover page shall have the same meanings as those defined in this Composite Document.

A letter from Yu Ming containing, among other things, principal terms of the Offer is set out on pages 8 to 18 of this Composite Document. A letter from the Dan Form Board is set out on pages 19 to 23 of this Composite Document.

A letter from the Dan Form IBC to the Dan Form Independent Shareholders containing its recommendation in respect of the Offer is set out on pages 24 to 25 of this Composite Document.

A letter from the Dan Form IFA containing its advice to the Dan Form IBC in respect of the Offer is set out on pages 26 to 51 of this Composite Document.

The procedures for acceptance and other related information in respect of the Offer are set out in the Appendix I to this Composite Document and the accompanying Form of Acceptance. Form of Acceptance should be received by the Registrar as soon as possible and in any event not later than 4:00 p.m. on Friday, 9 December 2016 (or such later time and/or date as the Offeror may determine and announce, with the consent of the Executive, in accordance with the Takeovers Code).

18 November 2016

CONTENT

	Page
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM YU MING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM THE DAN FORM BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
LETTER FROM THE DAN FORM IBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
LETTER FROM THE DAN FORM IFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
APPENDIX I – FURTHER TERMS OF ACCEPTANCE OF THE OFFER . . . . . . .	I-1
APPENDIX II – FINANCIAL INFORMATION OF THE DAN FORM GROUP . . . .	II-1
APPENDIX III – VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV – GENERAL INFORMATION OF THE OFFEROR . . . . . . . . . . . . . . .	IV-1
APPENDIX V – GENERAL INFORMATION OF THE DAN FORM GROUP . . . . .	V-1
ACCOMPANYING DOCUMENT – FORM OF ACCEPTANCE

– i –

EXPECTED TIMETABLE

The expected timetable set out below is indicative only and is subject to change. Any changes to the timetable will be jointly announced by the Offeror and Dan Form.

Despatch date of this Composite Document and
the accompanying Form of Acceptance and
commencement date of the Offer (Note 1) . . . . . . . . . . . . . . . . Friday, 18 November 2016
Latest time and date for acceptance of the Offer
on the First Closing Date (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday,
9 December 2016
First Closing Date (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 9 December 2016
Announcement of the results of the Offer and
the level of acceptance as at the First Closing Date
on the website of the Stock Exchange . . . . . . . . . . . . . . . . . . . . no later than 7:00 p.m.
on Friday, 9 December 2016
Latest date for posting of remittances in respect of
valid acceptances received under the Offer as at
the First Closing Date (if the Offer becomes or
is declared unconditional on the First Closing Date) (Note 3) . . . Tuesday, 20 December 2016

Latest date by which the Offer can be declared unconditional to acceptance (Note 4) . . . . . . . . . . . . . Tuesday, 17 January 2017

Notes:

The Offer is conditional on the condition set out in the paragraph headed ‘‘Condition of the Offer’’ in this Composite Document. Acceptance of the Offer shall be irrevocable and not capable of being withdrawn, except in the circumstances set out in Rule 19.2 of the Takeovers Code.
The Offer must remain open for acceptance for at least 21 days following the date on which this Composite Document is posted. The latest time for acceptance will be at 4:00 p.m. on the First Closing Date unless the Offeror revises or extends the Offer in accordance with the Takeovers Code. An announcement will be jointly issued by the Offeror and Dan Form through the website of the Stock Exchange no later than 7:00 p.m. on the First Closing Date stating the results of the Offer and whether the Offer has been revised or extended or has expired. In the event that the Offeror decides that the Offer will remain open, the announcement will state the next closing date of the Offer or that the Offer will remain open until further notice. In the latter case, at least 14 days’ notice in writing will be given, before the Offer is closed, to those Dan Form Independent Shareholders who have not accepted the Offer.

– 1 –

EXPECTED TIMETABLE

Subject to the Offer becoming unconditional, remittance in respect of the consideration (after deducting the seller’s ad valorem stamp duty) payable for the Offer Shares tendered under the Offer will be posted by ordinary post to the Dan Form Shareholders accepting the Offer at their own risk as soon as possible, but in any event within 7 Business Days following the later of the date on which the Offer becomes, or is declared, unconditional and the date of receipt by the Registrar of all the relevant documents to render the acceptances under the Offer complete and valid in accordance with the Takeovers Code.
Pursuant to the Takeovers Code, unless with the consent of the Executive, the Offer may not become or be declared unconditional as to acceptance after 7:00 p.m. on the 60th day after the date of the posting of the initial Composite Document.

All references to date and time contained in this Composite Document and the Form of Acceptance refer to Hong Kong date and time.

Effect of bad weather on the latest time for acceptance of the Offer

If there is (i) a tropical cyclone warning signal number 8 or above; or (ii) a ‘‘black’’ rainstorm warning signal: (a) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the First Closing Date, the latest time and date for acceptance of the Offer will remain at 4:00 p.m. on the same Business Day; or (b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the First Closing Date, the latest time and date for acceptance will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m. or such other day as the Executive may approve.

– 2 –

DEFINITIONS

In this Composite Document, unless the context otherwise requires, the following terms shall have the following meanings:

‘‘acting in concert’’ has the meaning ascribed to it under the Takeovers Code ‘‘AGL’’ Allied Group Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board (Stock Code: 373), is a controlling shareholder of APL
‘‘APL’’ Allied Properties (H.K.) Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Main Board (Stock Code: 56), is a substantial shareholder of Tian An
‘‘associates’’ has the meaning ascribed to it under the Takeovers Code
‘‘Business Day(s)’’ a day on which the Stock Exchange is open for the transaction of business
‘‘CCASS’’ the Central Clearing and Settlement System established and operated by HKSCC
‘‘Closing Date’’ the First Closing Date, or if the Offer is extended, any subsequent closing date of the Offer in accordance with the Takeovers Code
‘‘Completion’’ completion of the sale and purchase of the Sale Shares contemplated under the Sale and Purchase Agreement
‘‘Composite Document’’ this composite offer and response document in respect of the Offer jointly issued by the Offeror, Tian An and Dan Form in accordance with the Takeovers Code containing, among other things, the detailed terms of the Offer
‘‘Consideration’’ consideration payable for the sale and purchase of the Sale Shares under the Sale and Purchase Agreement, being HK$1,245,455,664.75
‘‘Dan Form’’ Dan Form Holdings Company Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board (Stock Code: 271)
‘‘Dan Form Board’’

the board of directors of Dan Form from time to time

– 3 –

DEFINITIONS

‘‘Dan Form Director(s)’’

director(s) of Dan Form from time to time

‘‘Dan Form Group’’

Dan Form and its subsidiaries

‘‘Dan Form IBC’’
the independent board committee of Dan Form, comprising all the non-executive director and independent nonexecutive directors of Dan Form, namely Mr. Kenneth Hiu King Kon, Mr. Jesse Nai Chau Leung, Dr. Xiang Bing and Mr. Edward Shen, formed to advise the Dan Form Independent Shareholders in respect of the Offer
‘‘Dan Form IFA’’ or ‘‘Investec’’
Investec Capital Asia Limited, a wholly-owned subsidiary of Investec Bank PLC, and a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, being the independent financial adviser appointed by the Dan Form IBC to advise the Dan Form IBC in respect of the Offer
‘‘Dan Form Independent Shareholder(s)’’
holder(s) of the Dan Form Shares, other than the Vendors, the Offeror and parties acting in concert with any of them
‘‘Dan Form Overseas Shareholder(s)’’
Dan Form Shareholder(s) whose address(es) as stated in the register of members of Dan Form is or are outside Hong Kong
‘‘Dan Form Share(s)’’
the issued share(s) of Dan Form
‘‘Dan Form Shareholder(s)’’ the holder(s) of the Dan Form Share(s)
‘‘DFIL’’
Dan Form International Limited, a company incorporated in the British Virgin Islands and a Dan Form Shareholder holding 2,926,000 Dan Form Shares, being approximately 0.24% of the entire issued shares of Dan Form prior to Completion
‘‘Encumbrances’’

any mortgage, charge, pledge, lien, hypothecation, encumbrance or other security arrangement of any kind or any option, equity, claim, adverse interest or other third party right of any kind or any arrangement by which any right is subordinated to any right of such third party or any contractual right of set-off (including any agreement or commitment to create or procure to create, or to permit or suffer to be created or subsisted)

– 4 –

DEFINITIONS

‘‘Executive’’

the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

‘‘Facility’’
a loan facility of HK$1,500,000,000 granted by SHK Investment to the Offeror for the purpose of the Offer
‘‘FIL’’
Fabulous Investments Limited, a company incorporated in the British Virgin Islands and the controlling Dan Form Shareholder holding 424,666,969 Dan Form Shares, being approximately 34.18% of the entire issued shares of Dan Form prior to Completion
‘‘First Closing Date’’ 9 December 2016, being the first closing date of the Offer (or such later date as may be determined and announced by the Offeror in accordance with the Takeovers Code)
‘‘Form of Acceptance’’ the form of acceptance and transfer in respect of the Offer accompanying this Composite Document
‘‘HKSCC’’
Hong Kong Securities Clearing Company Limited
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the PRC
‘‘Joint Announcement’’
the announcement jointly issued by the Offeror, Tian An and Dan Form dated 22 September 2016, in relation to, among other things, the sale and purchase of the Sale Shares and the Offer
‘‘Last Trading Day’’ 19 September 2016, the last trading date before the halt of trading in the Dan Form Shares
‘‘Latest Practicable Date’’
16 November 2016, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Main Board’’

Main Board of the Stock Exchange (excludes the option market) operated by the Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Stock Exchange

– 5 –

DEFINITIONS

‘‘Mr. Dai’’

Mr. Dai Xiaoming, the chairman, chief executive and executive director of Dan Form and a Dan Form Shareholder holding 25,300,000 Dan Form Shares, being approximately 2.04% of the entire issued shares of Dan Form prior to Completion

‘‘Offer’’ the conditional mandatory cash offer for all the Dan Form Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) being made by Yu Ming on behalf of the Offeror at the Offer Price ‘‘Offer Period’’ commencing from 22 September 2016, being the date of the Joint Announcement and ending on the Closing Date

‘‘Offer Price’’ HK$2.75 per Offer Share

‘‘Offer Share(s)’’ 777,791,976 Dan Form Share(s) that is subject to the Offer ‘‘Offeror’’ Autobest Holdings Limited, a company incorporated in the British Virgin Islands with limited liability and the purchaser of the Sale Shares under the Sale and Purchase Agreement and the offeror of the Offer ‘‘PRC’’PRC’’’’ the People’s’ss Republic of China and for the purpose of this Composite Document, excludes Hong Kong, Macau Special Administrative Region and Taiwan ‘‘Registrar’’ Tricor Tengis Limited, the share registrar of Dan Form, with its address at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong

‘‘PRC’’PRC’’’’ the People’s’ss Republic of China and for the purpose of this Composite Document, excludes Hong Kong, Macau Special Administrative Region and Taiwan

‘‘Relevant Period’’ the period commencing on 23 March 2016, being the date falling six months before the date of the Joint Announcement, up to and including the Latest Practicable Date

‘‘Sale and Purchase Agreement’’ the agreement dated 19 September 2016 entered into between the Vendors, the Offeror and Tian An in relation to the conditional sale and purchase of the Sale Shares

– 6 –

DEFINITIONS

‘‘Sale Shares’’	452,892,969 Dan Form Shares legally and beneficially
	owned by the Vendors pursuant to the Sale and Purchase
	Agreement prior to Completion, representing approximately
	36.45% of the entire issued shares of Dan Form as at the
	date of the Joint Announcement, and each a ‘‘Sale Share’’
‘‘SFC’’	the Securities and Futures Commission of Hong Kong
‘‘SFO’’	Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
‘‘SHK Investment’’	Sun Hung Kai Investment Services Limited, provider of the
	Facility
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Takeovers Code’’	Hong Kong Code on Takeovers and Mergers issued by the
	SFC
‘‘Tian An’’	Tian An China Investments Company Limited, a company
	incorporated in Hong Kong with limited liability and the
	shares of which are listed on the Main Board (Stock Code:
	28)
‘‘Tian An Board’’	the board of directors of Tian An from time to time
‘‘Tian An Group’’	Tian An and its subsidiaries
‘‘Tian An Share(s)’’	the issued share(s) of Tian An
‘‘Tian An Shareholder(s)’’	the holder(s) of the Tian An Share(s)
‘‘Vendors’’	the vendors under the Sale and Purchase Agreement,
	namely FIL, DFIL and Mr. Dai
‘‘Yu Ming’’	Yu Ming Investment Management Limited, a company
	incorporated in Hong Kong with limited liability and a
	licensed corporation under the SFO authorised to carry out
	regulated activities of type 1 (dealing in securities), type 4
	(advising on securities), type 6 (advising on corporate
	finance) and type 9 (asset management)
‘‘HK$’’	Hong Kong dollars, the lawful currency of Hong Kong
‘‘%’’	per cent.

– 7 –

LETTER FROM YU MING

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To the Dan Form Independent Shareholders

18 November 2016

Dear Sir or Madam,

CONDITIONAL MANDATORY CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF AUTOBEST HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF DAN FORM HOLDINGS COMPANY LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY AUTOBEST HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

It was announced in the Joint Announcement that, after the Stock Exchange trading hours on 19 September 2016, the Vendors, the Offeror and Tian An entered into the Sale and Purchase Agreement, pursuant to which the Vendors conditionally agreed to sell and the Offeror conditionally agreed to acquire the Sale Shares, representing approximately 36.45% of the total issued shares of Dan Form. The Consideration for the Sale Shares is HK$1,245,455,664.75, equivalent to HK$2.75 per Sale Share.

Completion took place on 16 November 2016. Prior to Completion, the Offeror and parties acting in concert with it held 11,740,000 Dan Form Shares, representing approximately 0.94% of the issued shares of Dan Form. Immediately after Completion, the Offeror and parties acting in concert with it hold a total of 464,632,969 Dan Form Shares, representing approximately 37.39% of the entire issued shares of Dan Form. Accordingly, pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a conditional mandatory cash offer for all the Dan Form Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it).

This letter forms part of this Composite Document and sets out, among other things, the principal terms of the Offer, the information on the Offeror and its intentions in relation to Dan Form. Further details of the Offer are also set out in Appendix I to this Composite Document and in the accompanying Form of Acceptance. Your attention is also drawn to the letter from the Dan Form Board on pages 19 to 23, the letter from the Dan Form IBC on pages 24 to 25 and the letter from the Dan Form IFA on pages 26 to 51 of this Composite Document before reaching a decision as to whether or not to accept the Offer.

– 8 –

LETTER FROM YU MING

CONDITIONAL MANDATORY CASH OFFER

Principal terms of the Offer

We, Yu Ming, the financial adviser to the Offeror, are making the Offer, for all the Dan Form Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) on behalf of the Offeror in compliance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.75 in cash

The Offer Price of HK$2.75 per Offer Share under the Offer is the same as the purchase price per Sale Share paid by the Offeror under the Sale and Purchase Agreement. The Offer Shares to be acquired under the Offer shall be fully paid and free from all Encumbrances together with all rights attached thereto, including but not limited to all rights to any dividend or other distribution declared, made or paid on or after the date on which the Offer is made, being the date of despatch of this Composite Document.

Further terms of the Offer and the procedures for acceptance are set out in Appendix I to this Composite Document and the accompanying Form of Acceptance.

Comparison of value

The Offer Price of HK$2.75 per Offer Share represents:

(i) a premium of approximately 1.48% over the closing price of HK$2.71 per Dan Form Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 15.06% over the closing price of HK$2.39 per Dan Form Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 27.55% over the average closing price of approximately HK$2.156 per Dan Form Share for the last five trading days immediately prior to and including the Last Trading Day;
(iv) a premium of approximately 32.08% over the average closing price of approximately HK$2.082 per Dan Form Share for the last ten trading days immediately prior to and including the Last Trading Day;
(v) a premium of approximately 43.83% over the average closing price of approximately HK$1.912 per Dan Form Share for the last thirty trading days immediately prior to and including the Last Trading Day; and
(vi) a discount of approximately 31.93% to the unaudited net asset value of the Dan Form Group attributable to the Dan Form Shareholders of approximately HK$4.04 per Dan Form Share as at 30 June 2016.

– 9 –

LETTER FROM YU MING

Highest and lowest Dan Form Share prices

The highest closing price of the Dan Form Shares as quoted on the Stock Exchange during the Relevant Period was HK$2.73 per Dan Form Share on 28 October 2016 and the lowest closing price of the Dan Form Shares as quoted on the Stock Exchange during the Relevant Period was HK$1.28 per Dan Form Share on 23 March 2016.

Value of the Offer

As at the Latest Practicable Date, there are 1,242,424,945 Dan Form Shares in issue and there are no outstanding options, warrants, derivatives or convertibles which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into the Dan Form Shares.

Based on the Offer Price of HK$2.75 per Offer Share, the entire issued shares of Dan Form is valued at HK$3,416,668,598.75. The Offer is being made to the Dan Form Independent Shareholders. As the Offeror and parties acting in concert with it hold in aggregate 464,632,969 Dan Form Shares immediately after Completion, 777,791,976 Dan Form Shares will be subject to the Offer. In the event that the Offer is accepted in full by the Dan Form Independent Shareholders, the aggregate amount payable by the Offeror under the Offer will be HK$2,138,927,934.

Confirmation of financial resources

The Offeror intends to finance the Offer by internal resources of Tian An Group and the Facility. Yu Ming has been appointed as the financial adviser to the Offeror in respect of the Offer and is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptance of the Offer.

Repayment of the Facility and the interest thereof by the Offeror will not depend on any significant extent of the business of Dan Form.

Condition of the Offer

Pursuant to the Takeovers Code, where the Offer becomes or is declared unconditional in all respects, the Offer will remain open for acceptance for not less than 14 days thereafter. The Offeror will make an announcement as and when the Offer becomes or is declared unconditional in all respects.

The Offer will lapse if the Offer does not become unconditional.

– 10 –

LETTER FROM YU MING

Effect of accepting the Offer

By accepting the Offer, the Dan Form Independent Shareholders will sell their Dan Form Shares fully paid and free from all liens, charges, Encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them including the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after the date on which the Offer is made, being the date of posting of this Composite Document.

The Dan Form Independent Shareholders are reminded to read the recommendations of the Dan Form IBC and the advice of the Dan Form IFA appointed by the Dan Form IBC in respect of the Offer which are included in this Composite Document.

Dan Form Overseas Shareholders

The Offeror intends to make the Offer available to all Dan Form Independent Shareholders, including the Dan Form Overseas Shareholders. However, the Offer is in respect of securities of a company incorporated in Hong Kong and is subject to the procedural and disclosure requirements of Hong Kong which may be different from other jurisdictions. Dan Form Overseas Shareholders who wish to participate in the Offer but with a registered address outside Hong Kong are subject to, and may be limited by, the laws and regulations of their respective jurisdictions in connection with their participation in the Offer. Dan Form Overseas Shareholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should, before taking any action as to the Offer, obtain information about and observe relevant applicable legal or regulatory requirements and, where necessary, seek legal advice in respect of the Offer. It is the responsibility of the Dan Form Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offer (including the obtaining of any governmental, exchange control or other consent and any registration or filing which may be required or the compliance with other necessary formalities, regulatory and/or legal requirement and the payment of any transfer or other taxes due in respect of such jurisdictions).

Any acceptance by any Dan Form Overseas Shareholder will be deemed to constitute a representation and warranty from such Dan Form Overseas Shareholder to the Offeror that the local laws and requirements have been complied with and such Dan Form Overseas Shareholder is permitted under all applicable laws to receive and accept the Offer, and such acceptance shall be valid and binding in accordance with all applicable laws. Dan Form Overseas Shareholders should consult their professional advisers if in doubt.

– 11 –

LETTER FROM YU MING

Stamp duty

In Hong Kong, seller’s ad valorem stamp duty arising in connection with acceptances of the Offer will be payable by the relevant Dan Form Independent Shareholders at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptances of the Offer, whichever is higher. An amount equivalent to the aforesaid stamp duty will be deducted from the cash amount payable by the Offeror to such Dan Form Independent Shareholder who accepts the Offer (where the stamp duty calculated includes a fraction of HK$1, the stamp duty would be rounded-up to the nearest HK$1). The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant Dan Form Independent Shareholders accepting the Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptances of the Offer and the transfer of the Offer Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).

INFORMATION ON THE OFFEROR AND TIAN AN

Information on the Offeror

The Offeror was incorporated in the British Virgin Islands with limited liability and is a wholly-owned subsidiary of Tian An. The principal business activity of the Offeror is investment holding.

Information on Tian An

Tian An is incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board. Tian An Group is principally engaged in the development of apartments, villas, office buildings and commercial properties, property investment and property management in the PRC.

INFORMATION ON THE DAN FORM GROUP

Dan Form is incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board. The Dan Form Group is principally engaged in property investment, property rental and estate management.

Your attention is drawn to the details of the information of the Dan Form Group as set out under the section headed ‘‘Information on the Dan Form Group’’ in the ‘‘Letter from the Dan Form Board’’ and in Appendices II and V to this Composite Document.

– 12 –

LETTER FROM YU MING

INTENTIONS OF THE OFFEROR REGARDING THE DAN FORM GROUP

The Offeror intends to continue the existing core businesses of the Dan Form Group which focus on property investment, property rental and estate management. As at the Latest Practicable Date, the Offeror has no plan to inject any assets or businesses into the Dan Form Group or to procure the Dan Form Group to acquire or dispose of any assets.

Immediately after the close of the Offer, the Offeror will conduct a review of the financial position and operations of the Dan Form Group in order to formulate a long-term strategy for the Dan Form Group and explore other property investment opportunities for enhancing its future development and strengthening its revenue bases. As at the Latest Practicable Date, the Offeror has not identified such investment or business opportunities.

The Offeror intends that, following the close of the Offer, Dan Form’s English name and Chinese name will be changed as soon as practicable. A special resolution will be proposed at an extraordinary general meeting of Dan Form to effect such change in due course. Nevertheless, the Offeror has not determined the proposed new name for Dan Form.

The Offeror has no intention to terminate any employment of the employees of the Dan Form Group or to make significant changes to any employment (except for the proposed change of board composition of Dan Form as detailed in the section headed ‘‘Proposed change of composition of the Dan Form Board’’ below) or to dispose of or re-allocate the Dan Form Group’s assets which are not in the ordinary and usual course of business of the Dan Form Group.

Pursuant to the Sale and Purchase Agreement, in consideration of the Vendors agreeing to sell the Sale Shares to the Offeror, the Offeror undertakes to Mr. Dai for and on behalf of each of the existing employees of Dan Form to procure Dan Form to retain them for one year after Completion, unless a summary dismissal is justified under the Employment Ordinance, Chapter 57 of the laws of Hong Kong. In the event that Dan Form terminates the employment of existing employee of Dan Form other than due to a summary dismissal during this period, the Offeror shall pay the relevant existing employee of Dan Form a termination amount equal to the amount such employee would have earned had he been employed up to the date which is one year after Completion. On 29 September 2016, the Offeror, Tian An and the Vendors had entered into a side letter to delete such clause in entirety from the Sale and Purchase Agreement.

– 13 –

LETTER FROM YU MING

Proposed change of composition of the Dan Form Board

Pursuant to the Sale and Purchase Agreement, the Vendors will procure (i) the appointment of new directors nominated by the Offeror to the majority of the Dan Form Board with effect immediately after this Composite Document is posted or such other date permitted under the Takeovers Code; and (ii) the resignation of such incumbent Dan Form Directors with effect from the earliest time permitted under the Takeovers Code which is the day immediately after the first closing date of the Offer or the date when the Offer becomes or is declared unconditional, whichever is the later. All such changes to the Dan Form Board will be made in compliance with the Takeovers Code and the Listing Rules and further announcement will be made as and when appropriate.

On 16 November 2016, the Dan Form Board has appointed Mr. Lee Seng Hui, Mr. Patrick Lee Seng Wei, Mr. Edwin Lo King Yau, Mr. Tao Tsan Sang, Mr. Liu Kin Sun and Ms. Cindy Yung Yee Mei nominated by the Offeror as Dan Form Directors which will become effective immediately after this Composite Document is posted. Biographies of the new Dan Form Directors are as follows:

Lee Seng Hui, aged 47, was appointed the chairman and a non-executive director of Tian An in April 2007. Mr. Lee graduated from the Law School of the University of Sydney with Honours. Previously, he worked with Baker & McKenzie and N M Rothschild & Sons (Hong Kong) Limited. Mr. Lee is also the chief executive and an executive director of each of AGL and APL. He is a non-executive director of APAC Resources Limited, (Stock Code: 1104, ‘‘APAC Resources’’) and the non-executive chairman of Mount Gibson Iron Limited (‘‘Mount Gibson’’). AGL, APL, Tian An and APAC Resources are companies listed on the Main Board. Mount Gibson is a company listed on the Australian Securities Exchange. He is a cousin of Mr. Patrick Lee Seng Wei.

As at the Latest Practicable Date, Mr. Lee Seng Hui together with Ms. Lee Su Hwei and Mr. Lee Seng Huang are the trustees of Lee and Lee Trust, being a discretionary trust. They together, through Lee and Lee Trust, own approximately 74.49% of the total issued shares of AGL (inclusive of Mr. Lee’s personal interest) which owns approximately 74.99% of the total issued shares of APL which in turn holds approximately 48.66% of the total issued shares of Tian An. As such, Mr. Lee Seng Hui is deemed to be interested in 464,632,969 shares in Dan Form held by the Offeror.

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LETTER FROM YU MING

Patrick Lee Seng Wei, aged 64, is a director of the Offeror. He was appointed an executive director of Tian An in June 1996 and became the chairman and the acting managing director of Tian An in February 2004 and December 2005 respectively. He relinquished his role as the chairman and was re-designated from the acting managing director to the managing director of Tian An in April 2007. Being an architect, he worked for IBM Australia before becoming involved in property development in Malaysia and Hong Kong more than thirty years ago. He has extensive experience in the property field. Mr. Patrick Lee is a cousin of Mr. Lee Seng Hui.

Edwin Lo King Yau, aged 55, is a director of the Offeror. He was appointed an executive director of Tian An in August 1999. Mr. Lo holds a Master’s Degree in Applied Finance from Macquarie University, Australia and is a chartered company secretary. He had served various executive roles in several companies in Hong Kong including as company secretary for public listed companies. Mr. Lo is also an executive director of AGL.

Tao Tsan Sang, aged 52, is a director of the Offeror. He was appointed an executive director of Tian An in October 2009. He is also the financial controller of Tian An. He joined Tian An in May 1994. Mr. Tao holds a Master’s Degree in Business Administration from The Hong Kong Polytechnic University and is an associate of the Hong Kong Institute of Certified Public Accountants and The Chartered Institute of Management Accountants. He has extensive experience in accounting, financial management and China business field.

Liu Kin Sun, aged 46, is the finance manager of Tian An. He joined Tian An in May 1999. Mr. Liu holds a Bachelor’s Degree in Accountancy from City University of Hong Kong. He is an associate of the Hong Kong Institute of Certified Public Accountants, a fellow of The Association of Chartered Certified Accountants, an associate of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. Mr. Liu has extensive experience in accounting, financial management and China business field.

Cindy Yung Yee Mei, aged 51, was appointed the company secretary of Tian An in March 2004. Ms. Yung is an associate of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. She has over twenty years of experience in the company secretarial field.

– 15 –

LETTER FROM YU MING

Maintaining the listing status of Dan Form

The Offeror has no intention to privatise the Dan Form Group and intends to maintain the listing of the Dan Form Shares on the Stock Exchange. The directors of the Offeror and the new directors appointed (effective after this Composite Document is posted) to the Dan Form Board have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the entire issued shares of Dan Form will continue to be held by the public at all times.

The Stock Exchange has indicated that if, upon closing of the Offer, less than the minimum prescribed percentage applicable to Dan Form, being 25% of the issued Dan Form Shares, are held by the public or if the Stock Exchange believes that:

(i) a false market exists or may exist in the Dan Form Shares; or
(ii) there are insufficient Dan Form Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend dealing in the Dan Form Shares.

ACCEPTANCE OF THE OFFER

Procedures for acceptance

To accept the Offer, Dan Form Independent Shareholders should complete and sign the accompanying Form of Acceptance for the Offer Shares in accordance with the instructions printed thereon. The Form of Acceptance forms part of the terms of the Offer.

The completed Form of Acceptance should then be forwarded, together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of the Offer Shares (and/or any satisfactory indemnity or indemnities required in respect thereof) for not less than the number of the Offer Shares in respect of which you intend to tender under the Offer, by post or by hand, to the Registrar at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, in an envelope marked ‘‘Dan Form Offer’’ as soon as possible after the receipt of this Composite Document but in any event not later than 4:00 p.m. on the First Closing Date or such later time and/or date as the Offeror may determine and announce in compliance with the Takeovers Code.

No acknowledgement of receipt of any Form of Acceptance and the title documents will be given.

Your attention is drawn to the paragraph headed ‘‘General procedures for acceptance of the Offer’’ as set out in Appendix I to this Composite Document and the accompanying Form of Acceptance.

– 16 –

LETTER FROM YU MING

Settlement of the Offer

Subject to the Offer becoming or being declared unconditional and provided that the accompanying Form of Acceptance, together with the Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are valid, complete and in good order and have been received by the Registrar no later than 4:00 p.m. on the First Closing Date or such later time and/ or date as the Offeror may determine and announce in compliance with the Takeovers Code, a cheque for the amount due to each of the accepting Dan Form Independent Shareholders in respect of the Dan Form Shares tendered under the Offer (less seller’s ad valorem stamp duty payable by them, as the case maybe) will be despatched to the accepting Dan Form Independent Shareholders by ordinary post at their own risk within 7 Business Days following the later of the date on which the Offer becomes or is declared unconditional and the date of receipt of all relevant documents which render such acceptance complete and valid by the Registrar in compliance with Note 1 to Rule 30.2 of the Takeovers Code.

Settlement of the consideration to which any accepting Dan Form Independent Shareholders is entitled under the Offer will be paid by the Offeror in full in accordance with the terms of the Offer (save with respect of the payment of seller’s ad valorem stamp duty) set out in this Composite Document and the accompanying Form of Acceptance, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Dan Form Independent Shareholders.

No fraction of a cent will be payable and the amount of consideration payable to a Dan Form Independent Shareholder who accepts the Offer will be rounded up to the nearest cent.

Tax implications

Dan Form Independent Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of their acceptance of the Offer. It is emphasised that none of the Offeror and parties acting in concert with it, Yu Ming, the Registrar or any of their respective directors or any persons involved in the Offer accepts responsibility for any taxation effects on, or liabilities of, any person or persons as a result of their acceptance of the Offer.

COMPULSORY ACQUISITION

The Offeror does not intend to exercise any right which may be available to it to compulsorily acquire any outstanding Offer Shares not acquired under the Offer after the close of the Offer.

– 17 –

LETTER FROM YU MING

GENERAL

To ensure equality of treatment of all Dan Form Independent Shareholders, those Dan Form Independent Shareholders who hold the Dan Form Shares as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owner of the Dan Form Shares, whose investments are registered in nominee names, to accept the Offer, it is essential that they provide instructions to their nominees of their intentions with regard to the Offer.

All documents and remittances will be sent to the Dan Form Independent Shareholders by ordinary post at their own risk. These documents and remittances will be sent to them at their respective addresses as they appear in the register of members, in case of joint holders whose name appear first in the said register of members, unless otherwise specified in the accompanying Form of Acceptance completed, returned and received by the Registrar. None of the Offeror and the parties acting in concert with it, Yu Ming, the Registrar or any of their respective directors, officers, associates, agents or any other person involved in the Offer will be responsible for any loss or delay in transmission of such documents and remittances or any other liabilities that may arise as a result thereof.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information regarding the Offer set out in the appendices to this Composite Document and the accompanying Form of Acceptance, which form part of this Composite Document. In addition, your attention is also drawn to the ‘‘Letter from the Dan Form Board’’, the ‘‘Letter from the Dan Form IBC’’ and the letter of advice by the independent financial adviser to the Dan Form IBC as set out in the ‘‘Letter from the Dan Form IFA’’ contained in this Composite Document.

Yours faithfully,

For and on behalf of Yu Ming Investment Management Limited Warren Lee

Managing Director

– 18 –

LETTER FROM THE DAN FORM BOARD

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DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 271)

Executive Director: Mr. Dai Xiaoming (Chairman and Chief Executive)

Non-executive Director: Mr. Kenneth Hiu King Kon

Registered office: 33/F, Tower A, Billion Centre 1 Wang Kwong Road Kowloon Bay Hong Kong

Independent non-executive Directors:

Mr. Jesse Nai Chau Leung Dr. Xiang Bing Mr. Edward Shen

18 November 2016

To the Dan Form Independent Shareholders,

Dear Sir or Madam,

CONDITIONAL MANDATORY CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF AUTOBEST HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF DAN FORM HOLDINGS COMPANY LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY AUTOBEST HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

Reference is made to the Joint Announcement.

– 19 –

LETTER FROM THE DAN FORM BOARD

As announced in the Joint Announcement that, after the Stock Exchange trading hours on 19 September 2016, the Vendors, the Offeror and Tian An entered into the Sale and Purchase Agreement, pursuant to which the Vendors conditionally agreed to sell and the Offeror conditionally agreed to acquire the Sale Shares, representing approximately 36.45% of the total issued shares of Dan Form. The Consideration for the Sale Shares is HK$1,245,455,664.75, equivalent to HK$2.75 per Sale Share). Completion took place on 16 November 2016.

Prior to Completion, the Offeror and parties acting in concert with it held 11,740,000 Dan Form Shares, representing approximately 0.94% of Dan Form Shares. Immediately after Completion, the Offeror and parties acting in concert with it hold a total of 464,632,969 Dan Form Shares, representing approximately 37.39% of Dan Form Shares.

As set out in ‘‘Letter from Yu Ming’’ contained in this Composite Document, pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a conditional mandatory cash offer for all the Dan Form Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it). The Offer is conditional upon the Offeror having received valid acceptances of the Offer Shares which, together with the Dan Form Shares already acquired or agreed to be acquired by the Offeror and the parties acting in concert with it before or during the Offer Period, will result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights of Dan Form.

The purpose of this Composite Document, of which this letter forms part, is to provide you with, among others, information relating to the Dan Form Group and the Offer as well as setting out the letter from the Dan Form IBC containing its recommendation and advice to the Dan Form Independent Shareholders in respect of the Offer and the letter from the Dan Form IFA containing its advice to the Dan Form IBC and the Dan Form Independent Shareholders in respect of the Offer.

CONDITIONAL MANDATORY CASH OFFER

The ‘‘Letter from Yu Ming’’ set out on pages 8 to 18 in this Composite Document contained the information in respect of the Offer including those set out below.

– 20 –

LETTER FROM THE DAN FORM BOARD

According to the ‘‘Letter from Yu Ming’’, Yu Ming, is making, the Offer on behalf of the Offeror to acquire all of the Dan Form Shares in compliance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.75 in cash

By validly accepting the Offer, Dan Form Independent Shareholders will sell their tendered Dan Form Shares, fully paid and free from all liens, charges, options, claims, equities, adverse interests, rights of pre-emption and any other third party rights or encumbrances of any nature whatsoever and together with all rights accruing or attaching thereto, including the rights to receive in full dividends and other distributions declared, made or paid on or after the date on which the Offer is made, being the date of posting of this Composite Document.

As at the Latest Practicable Date, Dan Form has 1,242,424,945 Dan Form Shares in issue. Dan Form has no other outstanding Dan Form Shares, options, warrants, derivatives or other securities that are convertible or exchangeable into Dan Form Shares or other types of securities in Dan Form as at the Latest Practicable Date.

FURTHER DETAILS OF THE OFFER

You are advised to refer to the ‘‘Letter from Yu Ming’’ set out on pages 8 to 18 of this Composite Document for details of further terms and conditions of the Offer and the procedures for acceptance and settlement of the Offer as set out in Appendix I to this Composite Document and the accompanying Form of Acceptance.

INFORMATION ON THE OFFEROR AND TIAN AN

Your attention is drawn to the section headed ‘‘Information on the Offeror and Tian An’’ in the ‘‘Letter from Yu Ming’’ contained in this Composite Document for the information of the Offeror and Tian An.

INFORMATION ON THE DAN FORM GROUP

Dan Form was incorporated in Hong Kong with limited liability and the issued shares of which are listed on the Main Board. The principal activity of Dan Form is investment holding. The Dan Form Group is principally engaged in property investment, property rental and estate management. Dan Form Group is interested in an extensive portfolio of commercial, industrial and residential properties in Hong Kong and the PRC.

– 21 –

LETTER FROM THE DAN FORM BOARD

Your attention is drawn to Appendices II and V to this Composite Document which contain further financial and general information of the Dan Form Group.

OFFEROR’S INTENTIONS ON THE DAN FORM GROUP AND PROPOSED CHANGE OF COMPOSITION OF THE DAN FORM BOARD

Your attention is drawn to the sections headed ‘‘Intentions of the Offeror regarding the Dan Form Group’’ and ‘‘Proposed change of composition of the Dan Form Board’’ in the ‘‘Letter from Yu Ming’’ as set out in this Composite Document for the Offeror’s intentions with respect to the Dan Form Group and the proposed change of the composition of the Dan Form Board.

The Dan Form Board is aware of the Offeror’s intentions in respect of the Dan Form Group and is willing to co-operate with the Offeror and acts in the best interests of Dan Form and the Dan Form Shareholders as a whole.

On 16 November 2016, the Dan Form Board has appointed Mr. Lee Seng Hui, Mr. Patrick Lee Seng Wei, Mr. Edwin Lo King Yau, Mr. Tao Tsan Sang, Mr. Liu Kin Sun and Ms. Cindy Yung Yee Mei as Dan Form Directors nominated by the Offeror, which will become effective immediately after this Composite Document is posted. The biographical details of new Dan Form Directors are set out in ‘‘Letter from Yu Ming’’ in this Composite Document.

MAINTAINING THE LISTING STATUS OF DAN FORM

The Dan Form Board noted from the ‘‘Letter from Yu Ming’’ as set out in this Composite Document that the Offeror intends to maintain the listing of the Dan Form Shares on the Main Board after the close of the Offer.

The directors of the Offeror and the new directors appointed (effective after this Composite Document is posted) to the Dan Form Board have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists for the Dan Form Shares if the public float of Dan Form falls below 25% following the close of the Offer.

The Stock Exchange has stated that if, upon closing of the Offer, less than the minimum prescribed percentage applicable to Dan Form, being 25% of the issued Dan Form Shares, are held by the public or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Dan Form Shares; or (ii) there are insufficient Dan Form Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend trading in the Dan Form Shares until the prescribed level of public float is restored.

– 22 –

LETTER FROM THE DAN FORM BOARD

DAN FORM IBC AND DAN FORM IFA

The Dan Form IBC, comprising all non-executive Dan Form Director and independent nonexecutive Dan Form Directors, namely Mr. Kenneth Hiu King Kon, Mr. Jesse Nai Chau Leung, Dr. Xiang Bing and Mr. Edward Shen, has been established to make a recommendation to the Dan Form Independent Shareholders regarding the Offer.

Investec has been appointed with the approval of the Dan Form IBC as the Dan Form IFA to advise the Dan Form IBC and the Dan Form Independent Shareholders in respect of the Offer.

RECOMMENDATION

Your attention is drawn to (i) the letter from the Dan Form IBC on pages 24 to 25 of this Composite Document, which set out the recommendation to the Dan Form Independent Shareholders in respect of the Offer; and (ii) the letter from the Dan Form IFA on pages 26 to 51 of this Composite Document, which set out its recommendation and advice to the Dan Form IBC and the Dan Form Independent Shareholders as to the fairness and reasonableness of the Offer and as to acceptance of the Offer, and the principal factors and reasons it has considered before arriving at its advice.

ADDITIONAL INFORMATION

You are recommended to read this Composite Document and the accompanying Form of Acceptance for information relating to the terms of the Offer and procedures for acceptance and settlement of the Offer. Your attention is also drawn to the additional information set out in the appendices to this Composite Document.

WARNING

Dan Form Independent Shareholders and potential investors of Dan Form should be aware that the Offer is subject to the satisfaction of the condition of the Offer as set out in the section headed ‘‘Condition of the Offer’’ in the ‘‘Letter from Yu Ming’’ in this Composite Document. Accordingly, the Offer may or may not become unconditional. Dan Form Independent Shareholders and potential investors should therefore exercise caution when dealing in Dan Form Shares and exercising other rights in respect of any of them. Persons who are in doubt as to the action they should take should consult their licensed securities dealer or registered institution in securities, bank manager, solicitor or other professional advisers.

Yours faithfully, By order of the Board of

Dan Form Holdings Company Limited DAI Xiaoming

Chairman

– 23 –

LETTER FROM THE DAN FORM IBC

Set out below is the text of the letter of recommendation from the Dan Form IBC in respect of the Offer.

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DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 271)

18 November 2016

To the Dan Form Independent Shareholders

Dear Sirs,

We refer to the Composite Document dated 18 November 2016 jointly issued by the Offeror, Tian An and Dan Form, of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Composite Document.

We have been appointed by the Dan Form Board to form the Dan Form IBC to consider and advise the Dan Form Independent Shareholders as to whether or not the terms of the Offer are fair and reasonable and to make a recommendation as to acceptance of the Offer.

Investec has been appointed as the Dan Form IFA to advise us in respect of the above.

We wish to draw your attention to the ‘‘Letter from Yu Ming’’, the ‘‘Letter from the Dan Form Board’’ and the ‘‘Letter from the Dan Form IFA’’ as set out in the Composite Document as well as the additional information set out in the appendices to the Composite Document.

– 24 –

LETTER FROM THE DAN FORM IBC

RECOMMENDATION

Having considered the terms of the Offer, taking into account the information contained in the Composite Document and the advice of the Dan Form IFA, in particular the factors, reasons and recommendations as set out in its letter in the Composite Document, we are of the opinion that the terms of the Offer are fair and reasonable so far as the Dan Form Independent Shareholders are concerned. Accordingly, we recommend you to accept the Offer.

The Dan Form Independent Shareholders who would like to realise part or all of their investments, are reminded to monitor the trading price and liquidity of the Dan Form Shares during the Offer Period and should, having regard to their own circumstances, consider selling their Dan Form Shares in the open market instead of accepting the Offer if the net proceeds obtained from such disposal of the Dan Form Shares (after deducting all transaction costs) would be higher than the net proceeds from accepting the Offer.

As different Dan Form Independent Shareholders would have different investment criteria, objectives, risk preference and tolerance level and/or circumstances, we would recommend any Dan Form Independent Shareholder, who may require advice in relation to any aspect of the Composite Document, or as to the action to be taken, to consult a licensed securities dealer, bank manager, solicitor, professional accountant, tax adviser or other professional adviser before making the decision to, whether or not, accept the Offer.

Yours faithfully,

For and on behalf of the

DAN FORM IBC

Kenneth Hiu King Kon Jesse Nai Chau Leung Xiang Bing Edward Shen Non-executive director Independent nonIndependent nonIndependent nonexecutive director executive director executive director

– 25 –

LETTER FROM THE DAN FORM IFA

The following is the text of the letter of advice from Investec Capital Asia Limited to the Dan Form IBC and the Dan Form Independent Shareholders in respect of the Offer prepared for the purpose of inclusion in Composite Document.

Investec Capital Asia Ltd Room 3609, 36/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong 香港中環金融街8號國際金融中心二期36樓3609室 Tel/電話: (852) 3187 5000 Fax/傳真: (852) 2501 0171 www.investec.com

18 November 2016

To: The independent board committee

and the shareholders of Dan Form Holdings Company Limited

Dear Sir or Madam,

MANDATORY CONDITIONAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF AUTOBEST HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF DAN FORM HOLDINGS COMPANY LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY AUTOBEST HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Dan Form IBC and the Dan Form Shareholders with respect to the Offer, details of which are set out in the letter from the Dan Form Board (the ‘‘Letter from the Dan Form Board’’) contained in the Composite Document dated 18 November 2016 jointly issued by the Dan Form, Tian An and the Offeror to the Dan Form Independent Shareholders, of which this letter forms part. Unless otherwise stated, terms defined in the Composite Document have the same meanings in this letter.

Reference is made to the Joint Announcement in relation to, among other things, the Sale and Purchase Agreement. Pursuant to the Sale and Purchase Agreement entered into between the Vendors, the Offeror and Tian An (as Offeror’s guarantor), the Offeror conditionally agreed to acquire, and the Vendors agreed to sell 452,892,969 Dan Form Shares, for a total Consideration of HK$1,245,455,664.75, equivalent to HK$2.75 per Sale Share. The Sale Shares represent approximately 36.45% of the Dan Form Shares in issue as at the Latest Practicable Date. Completion of the Sale and Purchase Agreement is subject to the Conditions more particularly described in the ‘‘Letter from Yu Ming’’ as set out in the Composite Document.

– 26 –

LETTER FROM THE DAN FORM IFA

Based on the Composite Document, at the Latest Practicable Date, the Offeror and parties acting in concert with it does not hold any Dan Form Share. Immediately after completion, the Offeror and parties acting in concert with it will become interested in aggregate 464,632,969 Dan Form Shares, representing approximately 37.39% of the entire issued share capital of Dan Form (assuming that there is no change in the issued shares of Dan Form from the Latest Practicable Date to the date of Completion). Pursuant to Rule 26.1 of the Takeovers Code, subject to and upon Completion, the Offeror would be required to make a conditional mandatory cash offer to acquire all the Dan Form Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it). It is the intention of the Offeror that Yu Ming makes the Offer on behalf of the Offeror at the Offer Price of HK$2.75 in cash for each Dan Form Share. As at the Latest Practicable Date, there are 1,242,424,945 Dan Form Shares in issue and there are no outstanding options, warrants, derivatives or convertibles which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into the Dan Form Shares. Based on the Offer Price of HK$2.75 per Offer Share, the entire issued shares of Dan Form are valued at HK$3,416,668,598.75.

THE DAN FORM IBC

Pursuant to Rule 2.1 and Rule 2.18 of the Takeovers Code, the Dan Form IBC, comprising all the non-executive Dan Form Directors, namely Mr. Kenneth Hiu King Kon and all the independent non-executive Dan Form Director, namely Mr. Jesse Nai Chau Leung, Dr. Xiang Bing and Mr. Edward Shen, none of whom has any direct or indirect interest in the Offer, has been established to advise to the Dan Form Independent Shareholders as to whether the Offer is fair and reasonable and as to acceptance. We have been appointed by the Dan Form IBC as the Independent Financial Adviser in relation to the Offer, our role is to provide the Dan Form IBC and the Dan Form Independent Shareholders with an independent opinion and recommendation as to whether the terms of the Offer are fair and reasonable as far as the Dan Form Independent Shareholders are concerned and whether the Dan Form Independent Shareholders should, or should not accept the Offer.

As at the Latest Practicable Date, we were independent from and not connected with the Dan Form Group and any party acting in concert, and accordingly, are qualified to give independent advice to the Dan Form IBC and the Dan Form IFA regarding the Offer. Apart from the normal advisory fee payable to us in connection with our appointment as the independent financial adviser, no arrangement exists whereby we shall receive any other fees or benefits from Dan Form.

– 27 –

LETTER FROM THE DAN FORM IFA

BASIS OF OUR OPINION

In formulating our advice, we have relied solely on the statements, information, opinions, beliefs and representations for matters relating to the Dan Form Group contained in the Composite Document and the information and representations provided to us by the Dan Form Group and/or its senior management staff (the ‘‘Management’’) and/or the Dan Form Directors. We have assumed that all such statements, information, opinions, beliefs and representations contained or referred to in the Composite Document or otherwise provided or made or given by the Dan Form Group and/or Management and/or the Dan Form Directors and for which it is/they are solely responsible were true and accurate, and valid and complete in all material respects at the time they were made and given and continue to be true and accurate, and valid and complete in all material respects as at the date of the Composite Document. We have assumed that all the opinions, beliefs and representations for matters relating to the Dan Form Group made or provided by Management and/or the Dan Form Directors contained in the Composite Document have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from Dan Form and/or Management and/or the Dan Form Directors that no material facts have been omitted from the information provided and referred to in the Composite Document and Dan Form shall notify Dan Form Shareholders of any subsequent material changes as soon as possible.

We consider that we have been provided with sufficient information and documents to enable us to reach an informed view and Management has assured us no material information has been withheld from us to allow us to reasonably rely on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions, beliefs and representations provided to us by the Dan Form Group and/or Management and/or the Dan Form Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Dan Form, Tian An, the Offeror and their shareholder(s) and subsidiaries or affiliates, and their respective histories, experience and track records, or the prospects of the markets in which they respectively operate.

– 28 –

LETTER FROM THE DAN FORM IFA

PRINCIPAL TERMS OF THE OFFER

The Offer

The Offer will be made by Yu Ming on behalf of the Offeror in accordance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.75 in cash

The Offer Price of HK$2.75 per Offer Share equals the purchase price per Sale Share paid by the Offeror under the Sale and Purchase Agreement. The Offer is conditional upon the Offeror having received valid acceptances of the Offer Shares which, together with the Dan Form Shares already acquired or agreed to be acquired by the Offeror and the parties acting in concert with it before or during the Offer Period, will result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights of Dan Form.

As set out in the ‘‘Letter from Yu Ming’’ to the Composite Document, the Offer Price of HK$2.75 per Offer Share paid by the Offeror pursuant to the Sale and Purchase Agreement and represents:

(i) a premium of approximately 1.48% over the closing price of HK$2.71 per Dan Form Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 15.06% over the closing price of HK$2.39 per Dan Form Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 27.55% over the average closing price of HK$2.156 per Dan Form Share on the Stock Exchange over the last five consecutive trading days up to and including the Last Trading Day;
(iv) a premium of approximately 32.08% over the average closing price of HK$2.082 per Dan Form Share on the Stock Exchange over the last ten consecutive trading days up to and including the Last Trading Day;
(v) a premium of approximately 43.83% over the average closing price of approximately HK$1.912 per Dan Form Share on the Stock Exchange over the last 30 consecutive trading days up to and including the Last Trading Day; and
(vi) a discount of approximately 31.93% over the unaudited net asset value of the Dan Form Group attributable to the Dan Form Shareholders of approximately HK$4.04 per Dan Form Share as at 30 June 2016.

– 29 –

LETTER FROM THE DAN FORM IFA

Assuming that there is no change in the issued share capital of Dan Form and on the basis of the Offer Price at HK$2.75 per Offer Share, the entire issued share capital of the Dan Form would be valued at approximately HK$3,416,668,598.75. As the Offeror and parties acting in concert with it will hold in aggregate 464,632,969 Dan Form Shares immediately after Completion, 777,791,976 Dan Form Shares will be subject to the Offer. In the event that the Offer is accepted in full by the Dan Form Independent Shareholders, the aggregate amount payable by the Offeror under the Offer will be HK$2,138,927,934.

The Offer is conditional upon the Offeror having received valid acceptances of the Offer Shares which, together with the Dan Form Shares already acquired or agreed to be acquired by the Offeror and the parties acting in concert with it before or during the Offer Period, will result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights of Dan Form. By accepting the Offer, the Dan Form Independent Shareholders will sell their Dan Form Shares fully paid and free from all liens, charges, Encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them including the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after the date on which the Offer is made, being the date of posting of the Composite Document.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion regarding the Offer, we have taken into consideration the following principal factors:

1. Background information of the Dan Form Group

1.1 Information on the Dan Form Group

The Dan Form Group is principally engaged in property investment, property rental and estate management in Hong Kong and the PRC. The Dan Form Shares have been listed on the Main Board of the Stock Exchange of Hong Kong Limited since February 1973. As stated in the Dan Form’s annual report for the year ended 31 December 2015 (the ‘‘2015 Annual Report’’), it is the stated strategy the Dan Form Group to enhance value and increase recurring revenue of investment properties in its subsidiaries and associated companies. The Management advised that, through maintenance of interests in retail properties at Harbour Crystal Centre, and units in Harbour Industrial Centre and Oceanic Industrial Centre, Queen Centre and Wah Shun Industrial Building held by associates, the Dan Form Group would generate stable and recurrent rental income.

– 30 –

LETTER FROM THE DAN FORM IFA

As set out in the 2015 Annual Report, Dan Form Group has one reportable operating segment and has historically derived primarily its revenue from property rental and estate management fees.

1.2 Historical financial performance of the Dan Form Group

Set out below is a summary of the unaudited consolidated results of the Dan Form Group for the six months period ended 30 June 2016, extracted from the interim report of the Dan Form Group for the six months ended 30 June 2016 (the ‘‘2016 Interim Report’’) and the two financial years ended 31 December 2014 and 31 December 2015 as extracted from the 2015 Annual Report.

For the

	For the
HK$’000 Revenue – Rental from investment properties – Estate management fees – Dividend from unlisted investments Operating profit before change in fair value of investment properties Change in fair value of investment properties Operating profit Share of results of associates (Loss)/profit before income tax Income tax expenses (Loss)/profit for the period/year	six months period ended 30 June 2016 (Unaudited) 28,070 20,705 5,865 1,500 21,417 5,660 27,077 (35,686) (8,609) (1,937) (10,546)	For the year ended 31 December 2015 2014 (Audited) (Audited) 50,759 49,745 37,484 36,815 11,925 11,730 1,350 1,200 4,292 5,722 72,215 39,613 76,507 45,335 132,062 209,300 208,569 254,635 (12,851) (7,432) 195,718 247,203
			45,335 209,300
			254,635 (7,432)
			247,203

– 31 –

LETTER FROM THE DAN FORM IFA

Financial performance for the six months period ended 30 June 2016

As set out in the 2016 Interim Report, the Dan Form Group recorded revenue of approximately HK$28.1 million and a loss attributable to its equity holders of approximately HK$10.5 million for the six months ended 30 June 2016, which was mainly attributable to the decrease in fair value gain of investment properties held by the Dan Form Group and share of results of associates from profits to losses which was also mainly attributable to changes in fair value of investment properties held by the associates.

As set out in the 2016 Interim Report, Dan Form Group recorded a fair value gain from investment properties of approximately HK$5.7 million for the six months period ended 30 June 2016, compared to approximately HK$41.4 million for the six months period ended 30 June 2015, representing a substantial decrease of approximately 86.2%. In addition the share of losses of associates amounted to approximately HK$35.7 million for the six months period ended 30 June 2016, compared to share of profit of associates of approximately HK$132.1 million for the corresponding prior year period.

Attributable to the aforesaid factors, the Dan Form Group recorded a loss of approximately HK$10.5 million for the six months period ended 30 June 2016, compared to a profit of approximately HK$122.4 million for the six months period ended 30 June 2015.

Financial performance for year ended 31 December 2015

For the financial year ended 31 December 2015, the Dan Form Group recorded turnover of approximately HK$50.8 million, representing a slight increase of approximately 2.0% in comparison to the financial year ended 31 December 2014. Revenue for the Dan Form Group was primarily derived from rental income from investment properties, estate management fees and to a lesser extent, dividend income from unlisted investments. As set out in the 2015 Annual Report, the increase in revenue was mainly due to increase in rental income from investment properties during the financial year ended 31 December 2015.

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LETTER FROM THE DAN FORM IFA

Despite the slight increase in revenue recognised during the financial year ended 31 December 2015, the profit attributable to equity owners of Dan Form decreased from approximately HK$247.2 million for the year ended 31 December 2014 to approximately HK$195.7 million for the year ended 31 December 2015, representing a year-on-year decrease of approximately 20.8%. As set out in the 2015 Annual Report, the decline was mainly attributable to the decrease in share of results of associates from approximately HK$209.3 million for the year ended 31 December 2014 to approximately HK$132.1 million for the year ended 31 December 2015.

1.3 Historical financial position of the Dan Form Group

HK$’000 Non-current assets Property, plant and equipment Investment properties Land use rights Associates Available-for-sale financial assets Current assets Debtor, prepayments, deposits and other receivables Amounts due from associates Income tax recoverable Cash and bank balances Total Assets	As at 30 June 2016 (Unaudited) 85,240 1,038,750 24,267 3,158,109 45,526 4,351,892 8,818 – – 1,104,071 1,112,889 5,464,781	As at 31 December 2015 2014 (Audited) (Audited) 86,050 135,717 1,033,090 910,375 24,629 25,646 3,193,795 3,558,411 46,283 43,925 4,383,847 4,674,074 8,138 9,796 130,815 150,915 628 485 875,190 368,887 1,014,771 530,083 5,398,618 5,204,157	As at 31 December 2015 2014 (Audited) (Audited) 86,050 135,717 1,033,090 910,375 24,629 25,646 3,193,795 3,558,411 46,283 43,925 4,383,847 4,674,074 8,138 9,796 130,815 150,915 628 485 875,190 368,887 1,014,771 530,083 5,398,618 5,204,157
			4,674,074
			9,796 150,915 485 368,887
			530,083
			5,204,157

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LETTER FROM THE DAN FORM IFA

HK$’000 Equity Share capital Reserves Total equity Non-current liabilities Deferred income tax liabilities Current liabilities Creditor and accruals Amounts due to associates Income tax payable Total liabilities Total equity and liabilities	As at 30 June 2016 (Unaudited) 681,899 4,333,214 5,015,113 135,535 214,706 98,655 772 314,133 449,668 5,464,781	As at 31 December 2015 2014 (Audited) (Audited) 681,899 681,899 4,537,759 4,361,117 5,219,658 5,043,016 134,997 123,868 26,976 25,248 16,986 11,500 1 525 43,963 37,273 178,960 161,141 5,398,618 5,204,157	As at 31 December 2015 2014 (Audited) (Audited) 681,899 681,899 4,537,759 4,361,117 5,219,658 5,043,016 134,997 123,868 26,976 25,248 16,986 11,500 1 525 43,963 37,273 178,960 161,141 5,398,618 5,204,157
			5,043,016
			123,868
			25,248 11,500 525
			37,273
			161,141
			5,204,157

As at 30 June 2016, the Dan Form Group’s total assets amounted to approximately HK$5,464.8 million as compared to approximately HK$5,398.6 million and approximately HK$5,204.2 million as at 31 December 2015 and 31 December 2014, respectively, representing a year-on-year increase of approximately 1.2% and approximately 3.7%. The non-current assets of the Group as at 30 June 2016 amounted to approximately HK$4,351.9 million, approximately 96.4% of which was investment properties and associates. It is also noted that a number of owner-occupied properties were recorded under property, plant and equipment of approximately HK$85.2 million as at 30 June 2016. The Dan Form Group’s noncurrent assets as at 30 June 2016 was approximately HK$4,351.9 million, which decreased from approximately HK$4,383.8 million as at 31 December 2015 and approximately HK$4,674.1 million as at 31 December 2014, respectively.

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LETTER FROM THE DAN FORM IFA

Associates, in the amount of approximately HK$3,158.1 million, was the single largest component of the non-current assets of the Dan Form Group, followed by investment properties of approximately HK$1,038.8 million, as at 30 June 2016.

As advised by the Management, the principal associates of the Dan Form Group include (i) Beijing Jing Yuan Property Development Company Limited (‘‘Beijing Jing Yuan’’), owned as to 29.4% by the Dan Form Group; (ii) Ho Pok Investment Company Limited (‘‘Ho Pok’’) and its wholly owned subsidiary, Kin Tong Land Investment Company Limited (‘‘Kin Tong’’), owned as to 50% by the Dan Form Group, respectively; and (iii) Zeta Estates Limited (‘‘Zeta Estates’’), owned as to onethird by the Dan Form Group.

As set out in the 2016 Interim Report, Beijing Jing Yuan submitted an application for its liquidation to the State-owned Assets Supervision and Administration Commission in Xicheng District, Beijing, during the first half of 2016 (the ‘‘Jing Yuan Liquidation’’). As at the Latest Practicable Date, the Management advised that there is no concrete progress and no definitive timetable of when and certainty of how much Dan Form Group will receive as a result of the Jing Yuan Liquidation. On this basis, the investment in Beijing Jing Yuan has been fully written off and the carrying value of Beijing Jing Yuan is currently recorded at nil by Dan Form.

In connection with Ho Pok and Kin Tong, the Management advised that their principal assets comprised primarily of (i) various commercial units and office units at a commercial building in Wanchai; and (ii) various industrial units and parking spaces at an industrial building in Yau Tong. Details of which are set out in the independent valuation report by DTZ Cushman & Wakefield Limited in Appendix III to the Composite Document (the ‘‘Independent Valuation Report’’).

As for Zeta Estates, which is owned as to one-third by each of the Dan Form Group and two independent third parties (the ‘‘Zeta Estates JV Partner(s)’’), it is the largest asset by value under the associates balance. According to the 2015 Annual Report, the carrying value of Zeta Estates was approximately HK$2,896.3 million, represented over 90% of the carrying value of the associates balance of approximately HK$3,193.8 million as at 31 December 2015.

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LETTER FROM THE DAN FORM IFA

Based on documents provided by the Management, it is stated that operations and business of Zeta Estates shall be transacted by joint meetings of a representative from each of the Zeta Estates JV Partners (including Dan Form) (the ‘‘Joint Meetings’’). No business shall be transacted by Joint Meetings unless a quorum of three (i.e. one representative from each of the Zeta Estates JV Partners) is present and all resolutions of the Joint Meetings must be passed by a majority of votes. Notwithstanding from the above, the Management advised that in practice historically, major business transactions (including material purchases, sales or dividend payouts) were transacted on the basis of unanimous agreement among the representatives of the Zeta Estates JV Partners. On this basis, the Management is of the view that no single Zeta Estates JV Partner has control over the operations and business of Zeta Estates.

We note from the Independent Valuation Report and as confirmed by the Management that the principal assets of Zeta Estates as at 30 September 2016 comprised of (i) a portfolio of 30 apartments, 146 car parking spaces and 47 semidetached houses of the Redhill Peninsula at Island South, Hong Kong, most of which are vacant and up for sale, and a small portion are being rented out; and (ii) various units of Harbour Industrial Centre and Oceanic Industrial Centre, both of which are situated at Ap Lei Chau, Hong Kong, and a majority of these units are being leased out. As set out in the 2016 Interim Report, the sales of various apartments at Redhill Peninsula was launched from 2015 onwards and since 2015 up to the date of the 2016 Interim Report (i.e. 23 August 2016), a total of 102 apartments, 138 car parking spaces and 2 houses were contracted to be sold for a total consideration of approximately HK$3,152.5 million. Notwithstanding the above, certain sales were still pending completion as at the Latest Practicable Date. Details of the properties held by Zeta Estates, other associates of the Group as well as the Group’s investment properties including their description, tenure, particulars as well as their market value in existing state as at 30 September 2016 are set out in the Independent Valuation Report. Based on information currently available, save for the information as set out above, the Management is not aware of whether and when the remaining properties at Redhill Peninsula held by Zeta Estates can be sold.

Notwithstanding that during the year ended 31 December 2015, Zeta Estates paid a dividend of approximately HK$1,487.9 million to its shareholders. Based on the annual report of Dan Form for each of the year ended 31 December 2013 and 2014, Zeta Estates did not pay any dividend to its shareholders for each of the three year ended 31 December 2012, 2013 and 2014.

– 36 –

LETTER FROM THE DAN FORM IFA

As at 30 June 2016, Dan Form Group’s current assets amounted to approximately HK$1,112.9 million, compared to approximately HK$1,014.8 million and approximately HK$530.1 million as at 31 December 2015 and 31 December 2014, respectively. Cash and bank balances increased from approximately HK$368.9 million as at 31 December 2014 to approximately HK$875.2 million as at 31 December 2015, and further to approximately HK$1,104.1 million as at 30 June 2016, which was mainly attributable to the net effect of (i) a dividend of approximately HK$496.7 million from associates in 2015; and (ii) the decrease in amounts due from associates of approximately HK$130.8 million and the increase in amounts due to associates of approximately HK$81.7 million during the six months ended 30 June 2016.

The total liabilities of the Dan Form Group increased from approximately HK$179.0 million as at 31 December 2015 to approximately HK$449.7 million as at 30 June 2016, representing an increase of approximately 151.2% during the period. As set out in the 2016 Interim Report, this was mainly attributable to the final special dividend of approximately HK$186.4 million payable on 5 July 2016. As at 30 June 2016, Dan Form Group had no bank loans.

Based on the ‘‘Letter from Yu Ming’’, the unaudited net asset value of the Dan Form Group attributable to the Dan Form Shareholders was approximately HK$4.04 per Dan Form Share as at 30 June 2016. Notwithstanding from the above, with a view to assess the fairness and reasonableness of the Offer, we have also considered the latest valuation of the properties held by Dan Form Group (including those properties held by its associates) as set out in the Independent Valuation Report. Further details of our analysis are set out under section headed ‘‘iv. Comparison with comparable companies’’ in this letter below.

2. Overview of Macro-economy and Hong Kong’s commercial and residential property sector

2.1 Overview of macro-economy and risks

The global economy is facing uncertainties arising from events such as the anticipated withdrawal of the United Kingdom from the European Union, the results of the U.S. presidential election, a slowdown in the PRC’s economy and potential changes in U.S. fiscal policy, which in turn could affect investor sentiment and preference.

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LETTER FROM THE DAN FORM IFA

Furthermore, both the U.S. and Hong Kong has experienced low interest rate environment in the recent years and there has been on-going speculation of interest rate hikes by the Federal Reserve, which may affect global financial markets. Given Hong Kong’s currency is peg to the U.S. dollar and its position as one of the leading international trading and financial centres, any such changes could have significant knock on effects to Hong Kong.

2.2 Hong Kong Government’s housing policies and overview of Hong Kong’s commercial and residential property sector

Based on information set out in the 2016 Policy Address published by the Government of Hong Kong (the ‘‘Government’’) in January 2016, in connection with the issues on housing and land in Hong Kong, it was stated that housing remains the most important livelihood issue the Government has to address. The Government recognises the exorbitant property prices, high rentals, small living spaces, the proliferation of subdivided flats and record high public rental housing applications to be problems which must be tackled with resolve and perseverance. It is also noted that since taking office, the current-term Government has stated its determination to increase housing supply and curb property speculation and overheated investment. It has also reminded the community of potential fluctuations in the property market caused by a long period of ultra-low interest rates and low supply. In November 2016, the Government increased the stamp duty on property transactions for non first-time buyers to 15% of transaction value for all residential transactions for individuals or companies.

The 2016 Policy Address also sets out that the Government’s efforts over the past three and a half years have produced results. The housing supply has significantly increased and property prices and rentals have started to fall, reversing the perception that property prices and rentals can only go up. Nonetheless, the current property price and rental levels are still considered to be beyond the affordability of the general public. The Government expressed that it should continue to tackle the housing problem.

– 38 –

LETTER FROM THE DAN FORM IFA

With regard to demand, the Housing Authority and the Hong Kong Housing Society will, over the next five years, produce about 97,100 public housing units, of which about 76,700 will be public rental housing units and about 20,400 will be subsidised sale flats. According to the 2016 Policy Address, the latest production forecast is higher than similar forecasts starting from 2013-14 and 2014-15. On private housing, projected supply from the first-hand residential property market for the coming three to four years is approximately 87,000 units, a record high since the first release in September 2004 of the quarterly statistics on supply.

On land supply, it was noted that since taking office, the current-term Government has been increasing land supply through a multi-pronged approach and addressing the supply-demand imbalance by formulating short, medium and long-term measures. In the short and medium term, the Government will continue to rezone sites, increase development intensity and conduct holistic land use reviews to make optimal use of land. At the end of last year, 38 potential housing sites (capable of producing about 38,600 units), through land use reviews, had been allocated for residential use. The Government is determined to identify more sites going forward. In 2015-16, a total of 16 residential sites were sold or will be put up for sale under the Land Sale Programme. Together with other private housing land, it is estimated that about 20,300 flats can be produced. This is higher than the target of 19,000 flats, and the second highest since 2010.

In terms of market data, based on the Hong Kong Property Review Monthly Supplement (November 2016) published by the Rating and Valuation Department, (i) average rental indices of Hong Kong private domestic properties for the first nine months ended 30 September 2016 was approximately 166.5 compared to approximately 172.6 for the correspondence prior year period; (ii) average rent per sq.m. of private domestic properties for the first nine months ended 30 September 2016 (Class E properties categorised as 160 sq.m. or above) was approximately HK$430.0, HK$365.0 and HK$233.0 for Hong Kong, Kowloon and New Territories, respectively (average rent per sq.m. for the first nine months ended 30 September 2015 was approximately HK$466.0, HK$349.0 and HK$253.0, respectively); and (iii) average price of private domestic properties per sq.m. for the first nine months ended 30 September 2016 (Class E properties categorised as 160 sq.m. or above) was approximately HK$227,191.0, HK$222,903.0 and HK$78,156.0 for Hong Kong, Kowloon and New Territories, respectively (average price per sq.m. for the first nine months ended 30 September 2015 was approximately HK$240,439.0, HK$210,701.0 and HK$91,027.0, respectively). Based on the above data, average rental indices of Hong Kong private domestic properties, and in general, both average rent and price per sq.m. of private domestic properties (save for Kowloon) have decreased year-on-year (up to 30 September 2016).

– 39 –

LETTER FROM THE DAN FORM IFA

Based on statistics stated by the Rating and Valuation Department, the average sales of domestic units in Hong Kong amounted to approximately 4,201 for the first nine months ended 30 September 2016, representing an average annual consideration of approximately HK$31,002.0 million, compared to approximately 5,090 domestic units sold and average annual consideration of approximately HK$38,153 million, a decrease in comparison to corresponding first nine months ended 30 September 2015. On this basis, the volume of transactions as well as the average annual consideration have also experienced a decrease.

With reference to the statistics set out by the Rating and Valuation Department, the average monthly rent of private flatted factories for the first nine months ended 30 September 2016 was approximately HK$173.0, HK$181.0 and HK$127.0 per sq.m. for Hong Kong, Kowloon and New Territories, respectively, compared to the average monthly rent of approximately HK$169.0, HK$177.0 and HK$124.0 per sq.m., representing a slight increase compared to the corresponding areas and first nine months ended 30 September 2015. Notwithstanding the above, the average price of private flatted factories for the first nine months ended 30 September 2016 amounted to approximately HK$70,167.0, HK$68,143.0 and HK$44,565.0 per sq.m. for Hong Kong, Kowloon and New Territories, respectively, compared to the average price of approximately HK$80,698.0, HK$75,150.0 and HK$47,548.0 per sq.m., representing a decrease in both Hong Kong, Kowloon and New Territories compared to the corresponding areas for the nine months ended 30 September 2015.

Based on the above, there are certain risks and uncertainties related to the macroeconomy and Hong Kong’s commercial and residential property sector which could have an effect on the pricing and outlook of the property market in Hong Kong.

3. Information on the Offeror and Tian An

3.1 Information on the Offeror

The Offeror was incorporated in the British Virgin Islands with limited liability and is a wholly-owned subsidiary of Tian An. The principal business activity of the Offeror is investment holding.

– 40 –

LETTER FROM THE DAN FORM IFA

3.2 Information on Tian An

4. Intention of the Offeror regarding the Dan Form Group and proposed change of Board Composition

As set out in the ‘‘Letter from Yu Ming’’, the Offeror intends to continue the existing core businesses of the Dan Form Group which focus on property investment, property rental and estate management. As at the Latest Practicable Date, the Offeror has no plan to inject any assets or businesses into the Dan Form Group or to procure the Dan Form Group to acquire or dispose of any assets.

The Offeror has no intention to terminate any employment of the employees of the Dan Form Group or to make significant changes to any employment (except for the proposed change of board composition of Dan Form as detailed in the section headed ‘‘Proposed change of board composition of Dan Form’’ below) or to dispose of or reallocate the Dan Form Group’s assets which are not in the ordinary and usual course of business of the Dan Form Group.

– 41 –

LETTER FROM THE DAN FORM IFA

5. Analysis on Offer Price

i. Historical price performance of the Dan Form Shares

We have reviewed and analysed the closing prices of the Dan Form Shares over the 12 months period immediately prior to the Last Trading Day commencing on 21 September 2015 (the ‘‘First Review Period’’) and from the date of the Joint Announcement up to and including the Latest Practicable Date (the ‘‘Second Review Period’’ together with the First Review Period, the ‘‘Review Period’’) below:

==> picture [355 x 192] intentionally omitted <==

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

HK$ Offer Price = HK$2.75 Closing Price
3.0
3.0
19/8/2016
2.5
2.5 Termination
15/9/2015 Announcement
Publication of 2015 22/9/2016
2.0 2.0 Interim Report Publication of the
Joint Announcement
1.5
1.5
23/8/2016
Publication of 2016
1.0
1.0 Interim Results Announcement
28/6/2016
30/3/2016
Announcement pursuant to
0.5 0.5 Publication of 2015 Rule 3.7 of the Takeovers Code and
Annual Results Announcement
Rule 13.09 of the Listing Rules
0.0
0.0
Sep-15 2015/9/1 Oct-15 2015/10/2 Nov-15 2015/11/2 Dec-15 2015/12/1 Jan-16 2016/1/4 Feb-16 2016/ 2 Mar-16 016/3/1/1 2016/4/1 Apr-16 2016/5/3 May-16 2016/6/1 Jun-16 2016/7/4 Jul-16 2016/8/1 Aug-16 2016/9/1 Sep-16 2016/ Oct- 6 1 2 0 Nov-16 /316/11/1
----- End of picture text -----

Source: Bloomberg and Stock Exchange

During the First Review Period, the closing price of the Dan Form Shares fluctuated between the range from HK$0.96 to HK$2.39. From the commencement of the First Review Period up to the date of the publication of the annual results announcement on the 30 March 2016 (after trading hours), the closing price of the Dan Form Shares fluctuated between the range from HK$0.96 to HK$1.408. On 28 June 2016, Dan Form published an announcement (the ‘‘June Announcement’’) pursuant to, among others, Rule 3.7 of the Takeovers Code, setting out that the Board was informed by Dai Xiaoming, the then controlling Shareholder, that an independent third party has offered to purchase his entire interests (including his interest through his controlled corporations) in Dan Form. The closing price per Dan Form Share on (i) the last trading day immediately prior to the publication of the June Announcement was HK$1.48; and (ii) the trading day of which the Dan Form Shares resumed trading after the publication of the June Announcement was HK$1.93. Subsequently on 19 August 2016, Dan Form published an announcement (after trading hours) stating that the negotiation in relation to the aforesaid potential transaction was terminated (the ‘‘Termination Announcement’’). After the publication of the Termination

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LETTER FROM THE DAN FORM IFA

Announcement, the closing price per Dan Form Share decreased to HK$1.62 before increasing to HK$2.39 on the Last Trading Day. The average closing price of the Dan Form Shares during the First Review Period was approximately HK$1.41.

Trading in the Dan Form Shares was suspended on 20 September 2016 and resumed trading on 23 September 2016 following the publication of the Joint Announcement on 22 September 2016. The closing price per Dan Form Share increased significantly from HK$2.39 on the Last Trading Day to HK$2.66 on the trading day after the publication of the Joint Announcement, representing an increase of approximately 11.3%. During the Second Review Period, the closing price per Dan Form Share ranged from HK$2.66 to HK$2.71. The closing price per Dan Form Share as at the Latest Practicable Date was HK$2.71.

While Dan Form Group’s interim results for the six months period ended 30 June 2016 recorded a loss of approximately HK$10.5 million compared a profit of approximately HK$122.4 million recorded in the corresponding prior period. The closing price per Dan Form Share increased significantly from HK$1.179 on 21 September 2015 (i.e. the commencement of the Review Period) to HK$2.66 on the trading day after the publication of the Joint Announcement, representing notable increase of approximately 125.6%. On this basis, the aforesaid notable increase in the closing price of the Dan Form Shares may be attributable to the market reaction to the publication of the Joint Announcement and therefore, the sustainability of the current price level of the Dan Form Shares is subject to uncertainties. As shown in the chart above, the closing prices of the Dan Form Shares during the First Review Period were always notably below the Offer Price prior to the Joint Announcement, the difference between the Offer Price and the closing Dan Form Share price were even more significant prior to the June Announcement.

The Offer Price represents:

(a) a premium of approximately 15.1% to the highest closing price of the Dan Form Shares of HK$2.39 during the First Review Period;
(b) a premium of approximately 186.5% to the lowest closing price of the Dan Form Shares of HK$0.96 during the First Review Period;
(c) a premium of approximately 95.0% to the average Dan Form Share Price of HK$1.41 during the First Review Period;
(d) a premium of approximately 1.5% to the closing price of the Dan Form Share of HK$2.71 as at the Latest Practicable Date.

– 43 –

LETTER FROM THE DAN FORM IFA

ii. Historical liquidity of the Dan Form Shares

The following table sets out the monthly total trading volume, the number of trading days in each month, the highest, lowest and average daily number of Dan Form Shares traded in each month and the percentage of average daily trading volume of Dan Form Shares as compared to the total number of Dan Form Shares in issue during the First Review Period:

						Approximately
						percentage of
						average daily
						trading volume
						to total number
			Number of	Total	Average daily	of Dan Form
Month			trading days	trading volume	trading volume	Shares in issue
				(number of Dan	(number of Dan
				Form Shares)	Form Shares)	(%)
						(Note 1)
2015
September	(Note	2)	7	5,739,020	819,860	0.07
October			20	10,701,833	535,092	0.04
November			21	6,791,450	323,402	0.03
December			22	14,012,513	636,932	0.05
2016
January			20	8,124,000	406,200	0.03
February			18	17,773,404	987,411	0.08
March			21	31,753,070	1,512,051	0.12
April			20	14,160,756	708,038	0.06
May			21	47,306,590	2,252,698	0.18
June			21	113,222,000	5,391,524	0.43
July			20	64,565,512	3,228,276	0.26
August			22	50,858,032	2,311,729	0.19
September	(Note	3)	12	175,558,580	8,611,379	0.79
Average				36,349,715	2,031,389	0.18

Source: Bloomberg

Note 1: Based on issued Dan Form Shares as disclosed in the monthly return of movements in securities of Dan Form

Note 2: Commencing on 21 September 2016 up to and including 30 September 2016.

Note 3: Up to and including the Last Trading Day

– 44 –

LETTER FROM THE DAN FORM IFA

The above table demonstrates that during the Review Period, the average daily trading volume of the Shares as a percentage of the total number of the Dan Form Shares in issue ranged from approximately 0.03% (November 2015 and January 2016) to 0.79% (September 2016) with an average of approximately 0.18%. The above statistics revealed that trading in the Dan Form Shares was relatively thin during the First Review Period and the Dan Form Shares were generally illiquid in the open market. The Offer presents an opportunity for those Independent Shareholders who consider disposing their significant number of Dan Form Shares in the open market, as they can dispose their Dan Form Shares without exerting the downward pressure on the market price of the Dan Form Shares as a result of the disposal.

iii. Historical discount of market price to net asset value

Further to our analysis on the historical price performance and liquidity of the Dan Form Shares, we have also compared the historical closing price of the Dan Form Shares (on the trading day immediately after the publication of the respective results announcement) against the then latest consolidated net asset value of the Dan Form Group. We have assumed that the then latest consolidated net asset value of the Dan Form Group was generally available to the market from the date of publication of the relevant results announcements and the Dan Form Share price has reflected such information thereafter.

			Closing price
			per Dan Form
			Share on the	Discount of
		Net asset value	trading day	closing price to
		attributable to	immediately	net asset value
		the Dan Form	after the	per Dan Form
		Shareholders	relevant results	Share (the
	Date of results	per Dan Form	announcement	‘‘Price to NAV
	announcement	Share	date	Discount’’)
				(calculated
		(A)	(B)	based on
		Note 1	Note 2	(A – B)/A)
		HK ’million	HK$	%
Interim results for the
six months ended
30 June 2015	28/8/2015	5,146.0	1.230	70.2
Annual results for the
year ended
31 December 2015	30/3/2016	5,219.7	1.408	66.4
Interim results for the
six months ended
30 June 2016	23/8/2016	5,015.1	1.670	58.6
Average discount of closing
price to net asset value
per Dan Form Share (the
‘‘Average Price to
NAV Discount’’)	–	–	–	65.1

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LETTER FROM THE DAN FORM IFA

Note 1: Net asset value attributable to the Dan Form Shareholders per Dan Form Share are calculated based on the net assets value extracted from Dan Form’s respective annual report or interim report divided by the total number of Dan Form Shares issued as at the corresponding year ended/period ended date.

Note 2: Based on information extracted from the website of Stock Exchange and/or Bloomberg

Based on the analysis set out above, the stated discount of the Offer Price to the unaudited net asset attributable to the Dan Form Shareholders as at 30 June 2016 of approximately 31.9% (the ‘‘Offer Price to NAV Discount’’) is considerably less than (i) the lowest discount of approximately 58.6%; and (ii) the Average Price to NAV Discount of approximately 65.1%, as set out above. Dan Form Shareholders should note that the Dan Form Share price had traded at a significant discount well in excess of 50% to the Dan Form Group’s net asset value at the relevant time in the above analysis. On this basis, the Offer represents an unique liquidity event for the Dan Form Independent Shareholders to realise their investment in Dan Form at the Offer Price which represents a considerable smaller discount to Dan Form Group’s net asset value.

iv. Comparison with comparable companies

In assessing the fairness and reasonableness of the Offer Price, we have considered using the price-to-earnings ratio (the ‘‘P/E ratio(s)’’) and the price-to-book ratios (the ‘‘P/B ratio(s)’’) of companies which are listed on the Main Board of the Stock Exchange and are engaged in similar businesses to those of the Dan Form Group for comparison purposes.

However, for asset-based companies such as property investment companies listed in Hong Kong, P/B ratio analysis is a more commonly used approach for valuation. On the other hand, earnings of property investment companies are likely to fluctuate substantially depending on the timing of the sales of the property projects as well as fair value movements of the investment properties during the relevant period which may lead to possible distortions on the results of a P/E ratio analysis. Such is evidenced by Dan Form Group’s consolidated financial results for the six months period ended 30 June 2016 which recorded a loss of approximately HK$10.5 million, while its full year consolidated financial results for the year ended 31 December 2015 was a profit of approximately HK$192.7 million. On this basis, our analysis was primarily focused on comparison of P/B ratios of Comparable Companies (defined hereafter).

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LETTER FROM THE DAN FORM IFA

In accordance with to the relevant accounting policies adopted by the Dan Form Group, the Management advised that (i) the associates balance recorded in the consolidated balance sheet of the Dan Form Group has also taken into account revaluation surplus of properties held by the respective associates arising from the historical movement in fair value of the properties held by the associates; and (ii) the investment properties held by the Dan Form Group are being recorded at their respective fair value. Notwithstanding the above, given the valuation date of the Independent Valuation Report is 30 September 2016 and the latest published consolidated financial statements of the Dan Form Group are as at 30 June 2016, when assessing the implied P/B ratio under the Offer based on the adjusted net asset value, we have also taken into consideration the relevant fair value movement between 1 July 2016 and 30 September 2016.

In this connection, the adjusted net asset value after taken into account the aforesaid factors is approximately HK$5,175.6 million (the ‘‘Adjusted NAV’’), being the net asset value of the Dan Form Group as at 30 June 2016 of approximately HK$5,015.1 million after taken into account the following adjustments, namely (i) add the fair value uplift from 1 July 2016 to 30 September 2016 (being the valuation date of the Independent Valuation Report) of the investment properties held by the Dan Form Group of approximately HK$76.7 million[1] ; and (ii) adjust the difference between the fair value (extracted from the Independent Valuation Report) and book value of owner-occupied properties (which was recorded at lower of cost and fair value historically by Dan Form) of approximately HK$83.8 million[2] . On this basis, the implied P/B ratio of the Offer, calculated based on the total value of the Offer divided by the Adjusted NAV, would be approximately 0.66 times (the ‘‘Adjusted P/B ratio’’).

For the purpose of our comparable analysis, we have identified the following companies as relevant comparables to Dan Form based on the following criteria: (i) listed on the Main Board of the Stock Exchange and engaging in businesses similar to those of the Dan Form Group; (ii) revenue generated from property development and investment represents over 50% of its total revenue for the latest completed financial year; (iii) revenue primarily generated in Hong Kong and/or the PRC; (iv) net asset value of not less than HK$2.0 billion as at the latest published balance sheet date; and (v) with a market capitalisation of not less than HK$2.0 billion and not more than HK$5.0 billion as at the Latest Practicable Date. Based on the aforementioned criteria, we have identified, to the best of our knowledge, a list of eight comparable companies (the ‘‘Comparable Companies’’). The table below sets out the P/B ratio of each of the Comparable Companies and the Adjusted P/B ratio of Dan Form.

1 RMB is translated into HKD at the exchange rate of RMB 1:HKD 1.15 for illustration purposes only

2 RMB is translated into HKD at the exchange rate of RMB 1:HKD 1.15 for illustration purposes only

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LETTER FROM THE DAN FORM IFA

						Net assets
					Market	attributable to	P/B ratio
Stock	code	Company name	Principal Business	Share Price	capitalisation	owners	(approximately)
				(Note 1)	(Note 1)	(Note 1)	(Note 2)
				HK$	HK ’million	HK ‘million
131		Cheuk Nang (Holdings) Limited	Property development	5.61	2,812.5	5,152.5	0.51
			and investment
26		China Motor Bus Company Limited	Property development	83.85	3,800.0	7,609.2	0.50
		(‘‘China Motor Bus’’)	and investment
194		Liu Chong Hing Investment Limited	Property development	10.64	4,028.1	10,945.6	0.37
			and investment
158		Melbourne Enterprises Limited	Property investment	171.0	4,275.0	5,964.8	0.72
237		Safety Godown Company Limited	Property investment	18.98	2,562.3	4,528.5	0.57
878		Soundwill Holdings Limited	Property development	13.98	3,960.7	16,573.2	0.24
		(‘‘Soundwill’’)	and investment
266		Tian Teck Land Limited	Property investment	8.48	4,025.7	7,765.4	0.52
		(‘‘Tian Teck’’)
75		Y.T. Realty Group Limited	Property investment	3.43	2,742.5	3,652.4	0.75
		(‘‘Y.T. Realty’’)			(Note 3)		(Note 3)
						Minimum	0.24
						Maximum	0.75
						Average	0.52
271		The Dan Form Group	Property investment,	2.75	3,430.1	5,015.1	0.68 (Note 6)/
			property rental and	(Note 4)	(Note 5)	(Note 6)	0.66 (Note 7)
			estate management

Source: the website of the Stock Exchange and the respective interim/annual report of the listed company
Note 1: The closing share price and market capitalisation of the Comparable Companies as at the Latest Practicable Date are sourced from the website of Stock Exchange. The market capitalisation of the Comparable Companies is calculated based on their respective closing share prices and number of issued shares as at the Latest Practicable Date. The latest published consolidated net asset value attributable to equity holders are extracted from the respective latest annual/interim reports/announcements of the Comparable Companies.
Note 2: The P/B Ratios of the Comparable Companies are calculated based on their market capitalisation as at the Latest Practicable Date and their latest published consolidated net asset value attributable to equity holders.
Note 3: Subsequent to the announcement of a special dividend in the form of distribution in species dated 29 September 2016, the closing price per Y.T. Realty share (cum-special dividend share price) have been trading notably higher up to 15 November 2016, being the last day for trading in Y.T. Realty shares with entitlements to the distribution in species. Given the above, we consider that Y.T. Realty is an outliner to other Comparable Companies.
Note 4: The Offer Price of HK$2.75 per Share.

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LETTER FROM THE DAN FORM IFA

Note 5: We have taken the Offer Price and the issued share capital of the Dan Form Group of 1,242,424,945 Shares as at the Latest Practicable Date for the purpose of determining the theoretical market capitalisation of the Dan Form Group.
Note 6: The P/B Ratio of the Dan Form Group is calculated based on the implied market capitalisation of Dan Form Group pursuant to the Offer Price of HK$2.75 per Share divided by its latest published unaudited consolidated net asset value attributable to owners of Dan Form as at 30 June 2016.
Note 7: The Adjusted P/B Ratio of the Dan Form Group is calculated based on the implied market capitalisation of Dan Form Group pursuant to the Offer Price of HK$2.75 per Share divided by its Adjusted NAV.

As shown in the above table, the historical P/B ratio of the Comparable Companies ranged from approximately 0.24 times to 0.75 times, with an average of approximately 0.52 times. The Adjusted P/B ratio of approximately 0.66 times is within range and above average of the P/B Ratios of the Comparable Companies. Upon closer review, in connection with Y.T. Realty, we noted from its announcement dated 29 September 2016 that its board approved a special dividend in the form of a distribution in specie of 155,254,432 shares of The Cross-Harbour (Holdings) Limited for every 103 Y.T. Realty shares held. The closing share price of Y.T. Realty on the trading day immediately after the aforesaid announcement was HK$6.22 compared to that of HK$4.79 per Y.T. Realty share at the previous close, representing an increase of approximately 29.9%. Subsequently, the closing share price of Y.T. Realty (cumspecial dividend share price) as of 15 November 2016, being the last day for trading on Y.T. Realty shares with entitlements to the abovementioned distribution in specie, still represented notable increase from its closing price prior to the special dividend announcement. Given the abovementioned background, Y.T. Realty has been trading at a notable higher P/B ratio as compared with that of the other Comparable Companies as at the Latest Practicable Date, which we consider that Y.T. Realty is an outlier to other Comparable Companies and may produce anomalous results to our analysis. In light of the aforesaid, if we exclude Y.T. Realty from our analysis, the P/B ratio of the remaining seven Comparable Companies ranged from approximately 0.24 times to approximately 0.72 times with an average of approximately 0.49 times. On this basis, the Adjusted P/B ratio of approximately 0.66 times is within range and above average of the P/B ratios of the Comparable Companies.

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LETTER FROM THE DAN FORM IFA

In addition, we note that, among the Comparable Companies, market capitalisation of China Motor Bus, Soundwill and Tian Teck being approximately HK$3,799.1 million, HK$3,960.7 million and HK$4,025.7 million, respectively, were the three closest to that of Dan Form’s implied market capitalisation under the Offer of approximately HK$3,430.1 million. We further looked into the net asset values among the abovementioned three Comparable Companies and note that China Motor Bus’ net asset value of approximately HK$7,609.2 million as at 30 June 2016 was the closest to that of Dan Form’s net asset value of approximately HK$5,015.1 million as at 30 June 2016. On this basis, we have compared the P/B ratio of China Motor Bus, being approximately 0.50 times, against the Adjusted P/B ratio of approximately 0.66 times and note that the Adjusted P/B ratio is higher than the P/B ratio of China Motor Bus.

Notwithstanding the above, there is no guarantee that the current market price of the Dan Form Shares will sustain and will be higher than the Offer Price during and after the period for the acceptance of the Offer, thus, we are of the view that the Offer Price is fair and reasonable.

RECOMMENDATION

Having considered the factors and reasons set out in this letter, in particular,

(i) the risks and uncertainties related to the macro-economy and Hong Kong’s commercial and residential property sector as set out under section headed ‘‘2. Overview of Macroeconomy and Hong Kong’s commercial and residential property sector’’;
(ii) the Management is of the view that no single Zeta Estates JV Partner has control over the operations and business of Zeta Estates, being the largest asset by value recorded under the Dan Form Group’s associates balance, as such, the Dan Form Group, on a standalone basis, cannot dictate major business transactions (including material purchases, sales or dividend payouts) in practice as these were transacted on the basis of unanimous agreement among the representatives of the Zeta Estates JV Partners historically;
(iii) the Offeror’s stated intention to maintain the listing of Dan Form Shares on the Stock Exchange and that as at the Latest Practicable Date it has no plan to procure the Dan Form Group to acquire or dispose any assets;
(iv) the Offer Price represents a notable premium to the closing price of the Dan Form Shares for the entire First Review Period;

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LETTER FROM THE DAN FORM IFA

(v) the Dan Form Shares have been traded at a significant level of discounts to its net asset value that the Dan Form Shares prior to and during the First Review Period and that the Offer Price represents a premium of approximately 15.1% to the closing price of the Dan Form Shares as at the Last Trading Day of approximately HK$2.39 per Dan Form Share;
(vi) the average daily trading volume of the Shares has been thin in general during the First Review Period, in particular, prior to the June Announcement and the Dan Form Independent Shareholders may find it difficult to dispose of a significant number of Shares in the open market without causing an adverse impact on the market price level of the Dan Form Shares. The Offer, therefore, represents an opportunity for the Dan Form Independent Shareholders to dispose of their entire holdings at the Offer Price of HK$2.75 each; and
(vii) the Adjusted P/B ratio of approximately 0.66 times is higher than the average P/B ratio of the Comparable Companies,

we consider the terms of the Offer to be fair and reasonable so far as the Dan Form Independent Shareholders are concerned. Accordingly, we recommend the Dan Form IBC to advise the Dan Form Independent Shareholders to accept the Offer.

The Dan Form Independent Shareholders, in particular those who intend to accept the Offer, are reminded to note the recent fluctuation in the price of the Dan Form Shares. There is no guarantee that the current market price of the Dan Form Shares will or will not sustain and will or will not be higher than the Offer Price during and after the period for the acceptance of the Offer. The Dan Form Independent Shareholders who intend to accept the Offer are reminded to closely monitor the market price and the liquidity of the Dan Form Shares during the period for the acceptance of the Offer and shall, having regard to their own circumstances and investment objectives, consider selling their Dan Form Shares in the open market, instead of accepting the Offer, if the net proceeds from the sale of such Shares would be higher than that receivable under the Offer. They should also note that the Offer is conditional upon Completion and the Offeror having received valid acceptances of the Offer Shares which, together with the Dan Form Shares already acquired or agreed to be acquired by the Offeror and the parties acting in concert with it before or during the Offer Period, will result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights of Dan Form. Accordingly, the Offer may or may not become unconditional.

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LETTER FROM THE DAN FORM IFA

The Dan Form Independent Shareholders should read carefully the procedures for accepting the Offer as detailed in the Composite Document, the appendices to the Composite Document and the form of acceptance, if they wish to accept the Offer.

Yours faithfully For and on behalf of Investec Capital Asia Limited Lewis Lai Managing Director Corporate Finance

Mr. Lewis Lai is a licensed person registered with the SFC and a responsible officer of Investec Capital Asia Limited. He has around ten years of experience in the corporate finance industry.

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

1. GENERAL PROCEDURES FOR ACCEPTANCE OF THE OFFER

To accept the Offer, you should complete and sign the accompanying Form of Acceptance in accordance with the instructions printed thereon, which instructions form part of the terms of the Offer.

(a) If the Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Dan Form Share(s) is/are in your name, and you wish to accept the Offer, you must send the duly completed Form of Acceptance together with the relevant Dan Form Share certificate(s) and/or transfer receipt(s) and/ or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) by post or by hand, to the Registrar at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, in an envelope marked ‘‘Dan Form ’’
Offer .
(b) If the Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Dan Form Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Offer in respect of your Dan Form Shares, you must either:
(i) lodge your Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver the duly completed Form of Acceptance together with the relevant Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(ii) arrange for the Dan Form Shares to be registered in your name by Dan Form through the Registrar, and send the duly completed Form of Acceptance together with the relevant Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

(iii) if your Dan Form Shares have been lodged with your licensed securities dealer/ registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Offer on your behalf on or before the deadline set by HKSCC Nominees Limited (which is normally one Business Day before the latest date on which acceptances of the Offer must be received by the Registrar). In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/ registered institution in securities/custodian bank for the timing on processing of your instruction, and submit your instruction to your licensed securities dealer/ registered institution in securities/custodian bank as required by them; or
(iv) if your Dan Form Shares have been lodged with your investor participant’s account maintained with CCASS, give your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set by HKSCC Nominees Limited.
(c) If the Dan Form Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Dan Form Shares is/are not readily available and/or is/are lost and you wish to accept the Offer in respect of your Dan Form Shares, the Form of Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your Dan Form Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, the relevant Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/ or any satisfactory indemnity or indemnities required in respect thereof) should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Dan Form Share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

(d) If you have lodged transfer(s) of any of your Dan Form Shares for registration in your name and have not yet received your Dan Form Share certificate(s), and you wish to accept the Offer in respect of your Dan Form Shares, you should nevertheless complete the Form of Acceptance and deliver it to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to Yu Ming and/or the Offeror or their respective agent(s) to collect from the Registrar on your behalf the relevant Dan Form Share certificate(s) when issued and to deliver such certificate(s) to the Registrar as if it was/they were delivered to the Registrar with the Form of Acceptance.
(e) Acceptance of the Offer will be treated as valid only if the completed Form of Acceptance is received by the Registrar no later than 4:00 p.m. on the First Closing Date or such later time and/or date as the Offeror may determine and announce with the consent of the Executive in accordance to the Takeovers Code and the Registrar has recorded that the acceptance and the relevant documents as required under this paragraph have been so received, and is:
(i) accompanied by the relevant Dan Form Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if the Dan Form Share certificate(s) is/are not in your name, such other documents in order to establish your right to become the registered holder of the relevant Dan Form Shares; or
(ii) from a registered Dan Form Shareholder or his/her/its personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to Dan Form Shares which are not taken into account under another sub-paragraph of this paragraph (e)); or
(iii) certified by the Registrar or the Stock Exchange.
(f) If the Form of Acceptance is executed by a person other than the registered Dan Form Shareholder, appropriate documentary evidence of authority to the satisfaction of the Registrar must be produced.

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APPENDIX I

FURTHER TERMS OF ACCEPTANCE OF THE OFFER

(g) Seller’s ad valorem stamp duty for transfer of Dan Form Shares registered on the Registrar arising in connection with acceptance of the Offer will be payable by relevant Dan Form Independent Shareholders at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptances of the Offer, whichever is higher, will be deducted from the cash amount payable by the Offeror to such Dan Form Independent Shareholder on acceptance of the Offer. The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of relevant Dan Form Independent Shareholders accepting the Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptances of the Offer and the transfer of the Offer Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).
(h) No acknowledgement of receipt of any Form of Acceptance, Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.
ACCEPTANCE PERIOD AND REVISIONS
(a) Unless the Offer has previously been declared unconditional or extended or revised with the consent of the Executive, the latest time and date for acceptance will be 4:00 p.m. on the First Closing Date, or if the Offer is extended, any subsequent closing date of the Offer that is extended and announced by the Offeror in accordance with the Takeovers Code. The Offer shall be conditional upon the Offeror having received acceptances in respect of the Offer Shares which, together with the Dan Form Shares acquired or agreed to be acquired before or during the Offer, will result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights of Dan Form.
(b) The Offeror will make an announcement as and when the Offer becomes unconditional. The Offeror reserves the right to revise the terms of the Offer. If the Offeror revises the terms of the Offer, all Dan Form Independent Shareholders, whether or not they have already accepted the Offer, will be entitled to accept the revised Offer under the revised terms.
(c) If the Offer is extended or revised, the announcement of such extension or revision will state the revised date of closing. If the Offer is revised, the Offer will remain open for acceptance for a period of not less than 14 days from the posting of the revised Composite Document to the Dan Form Independent Shareholders. If the closing date of the Offer is extended, any reference in this Composite Document and in the Form of Acceptance to the closing date shall, except where the context otherwise requires, be deemed to refer to the closing date of the Offer as so extended.

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

(d) The Offeror may introduce new conditions to be attached to the revised Offer, or any subsequent revision thereof but only to the extent necessary to implement the revised Offer and subject to the consent of the Executive.
(e) In order to be valid, the Form of Acceptance for the Offer must be received by the Registrar in accordance with the instructions printed thereon by 4:00 p.m. on the First Closing Date, unless the Offer becomes or is declared unconditional or extended or revised with the consent of the Executive. In the event that the Offer becomes or is declared unconditional, the Offer will remain open for acceptance for not less than 14 days thereafter.
(f) If there is (i) a tropical cyclone warning signal number 8 or above; or (ii) a ‘‘black’’ rainstorm warning signal: (a) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the First Closing Date, the latest time and date for acceptance of the Offer will remain at 4:00 p.m. on the same Business Day; or (b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the First Closing Date, the latest time and date for acceptance will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m. or such other day as the Executive may approve.

3. ANNOUNCEMENT

(a) By 6:00 p.m. on the First Closing Date (or such later time and/or date as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the revision, extension, expiry or unconditionality of the Offer. The Offeror must publish an announcement on the Stock Exchange’s website by 7:00 p.m. on the First Closing Date stating whether the Offer has been extended or revised, has expired or has become or been declared unconditional (and, in each case, whether as to acceptance or in all respects).

Such announcement must state the following:

(i) the total number of Dan Form Shares and rights over Dan Form Shares for which acceptances of the Offer have been received;
(ii) the total number of Dan Form Shares and rights over Dan Form Shares held, controlled or directed by the Offeror or its concert parties before the Offer Period;

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

(iii) the total number of Dan Form Shares and rights over Dan Form Shares acquired or agreed to be acquired by the Offeror or its concert parties during the Offer Period;
(iv) details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in Dan Form which the Offeror or any parties acting in concert with it has borrowed or lent, save for any borrowed securities which have been either on-lent or sold; and
(v) the percentages of the relevant classes of share capital of Dan Form and the percentages of voting rights of Dan Form represented by these numbers.
(b) In computing the total number of Dan Form Shares represented by acceptances, only valid acceptances in complete and good order and which have been received by the Registrar no later than 4:00 p.m. on the First Closing Date, unless the Offer becomes or is declared unconditional, or is extended or revised with the consent of the Executive, shall be included.

4. RIGHT OF WITHDRAWAL

(a) Acceptance of the Offer tendered by the Dan Form Independent Shareholders shall be irrevocable and cannot be withdrawn, except in the circumstances set out in subparagraph (b) below or in compliance with Rule 17 of the Takeovers Code, which provides that an acceptor of the Offer shall be entitled to withdraw his/her/its acceptance within 21 days from the First Closing Date if the Offer has not by then become unconditional as to acceptance. An acceptor of the Offer may withdraw his/ her/its acceptance by lodging a notice in writing signed by the acceptor (or his/her/its agent duly appointed in writing and evidence of whose appointment is produced together with the notice) to the Registrar.
(b) If the Offeror is unable to comply with the requirements set out in paragraph 3 of this appendix headed ‘‘Announcement’’ above, the Executive may require pursuant to Rule 19.2 of the Takeovers Code that the Dan Form Independent Shareholders who have tendered acceptance to the Offer be granted a right of withdrawal on terms that are acceptable to the Executive until the requirement of Rule 19 of the Takeovers Code can be met.

In such case, when the Dan Form Independent Shareholders withdraw their acceptance(s), the Offeror shall, as soon as possible but in any event within 10 days thereof, return by ordinary post the Dan Form Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) lodged with the Form of Acceptance to the relevant Dan Form Independent Shareholder(s).

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

5. SETTLEMENT OF THE OFFER

Subject to the Offer becoming or being declared unconditional and provided that the accompanying Form of Acceptance, together with the Dan Form Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are valid, complete and in good order and have been received by the Registrar no later than 4:00 p.m. on the First Closing Date or such later time and/ or date as the Offeror may determine and announce in compliance with the Takeovers Code, a cheque for the amount due to each of the accepting Dan Form Independent Shareholders in respect of the Dan Form Shares tendered under the Offer (less seller’s ad valorem stamp duty payable by them, as the case maybe) will be despatched to the accepting Dan Form Independent Shareholders by ordinary post at their own risk within 7 Business Days following the later of the date on which the Offer becomes or is declared unconditional and the receipt of all relevant documents which render such acceptance complete and valid by the Registrar in compliance with Note 1 to Rule 30.2 of the Takeovers Code.

Settlement of the consideration to which any accepting Dan Form Independent Shareholders is entitled under the Offer will be paid by the Offeror in full in accordance with the terms of the Offer (save with respect of the payment of seller’s ad valorem stamp duty) set out in this Composite Document (including this appendix) and the accompanying Form of Acceptance, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Dan Form Independent Shareholders.

No fraction of a cent will be payable and the amount of consideration payable to an Dan Form Independent Shareholder who accepts the Offer will be rounded up to the nearest cent.

6. DAN FORM OVERSEAS SHAREHOLDERS

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APPENDIX I

FURTHER TERMS OF ACCEPTANCE OF THE OFFER

relevant applicable legal or regulatory requirements and, where necessary, seek legal advice in respect of the Offer. It is the responsibility of the Dan Form Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offer (including the obtaining of any governmental, exchange control or other consent and any registration or filing which may be required or the compliance with other necessary formalities regulatory and/or legal requirement and the payment of any transfer or other taxes due in respect of such jurisdictions).

7. TAX IMPLICATIONS

8. GENERAL

(a) All communications, notices, Form of Acceptance, certificates, transfer receipts and other documents of title or of indemnity or of any other nature to be delivered by or sent to or from the Dan Form Independent Shareholders will be delivered by or sent to or from them, or their designated agents, at their own risk, and none of the Offeror and parties acting in concert with it, Yu Ming, the Registrar or any of their respective directors or any persons involved in the Offer accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.
(b) Acceptance of the Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror that the Dan Form Shares tendered under the Offer are sold by such person or persons free from all liens, charges, claims, equities, Encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them, including the rights to receive dividends if any, declared, made or paid by Dan Form on the posting of this Composite Document.
(c) Acceptance of the Offer by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Dan Form Shares in respect of which it is indicated in the Form of Acceptance the aggregate number of Dan Form Shares held by such nominee for such beneficial owners who accept the Offer.

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FURTHER TERMS OF ACCEPTANCE OF THE OFFER

APPENDIX I

(d) The provisions set out in the accompanying Form of Acceptance form part of the terms of the Offer.
(e) The accidental omission to despatch this Composite Document and/or the accompanying Form of Acceptance or either of them to any person to whom the Offer is made shall not invalidate the Offer in any way.
(f) The Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.
(g) Due execution of Form of Acceptance in compliance with Note 1 to Rule 30.2 of the Takeovers Code, will constitute an authority to the Offeror or its agents to complete and execute on behalf of the person accepting the Offer, and to do any other act that may be necessary or expedient for the purpose of vesting in the Offeror, or such other person as it may direct.
(h) The Offer is made in accordance with the Takeovers Code.
(i) The English text of this Composite Document and the accompanying Form of Acceptance shall prevail over the Chinese text.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

1. SUMMARY OF FINANCIAL INFORMATION OF THE DAN FORM GROUP

Set out below is a summary of the financial information of the Dan Form Group for the three years ended 31 December 2013, 31 December 2014 and 31 December 2015 and for the six months ended 30 June 2016, which is extracted from the audited consolidated financial statements of the Dan Form Group as set forth in the annual reports of the Company for each of the year ended 31 December 2013, 31 December 2014 and 31 December 2015 and the unaudited consolidated financial statements of the Group as set forth in the interim report of Dan Form for the six months ended 30 June 2016.

Revenue Operating profit before change in fair value of investment properties Change in fair value of investment properties Operating profit Share of results of associates (Loss)/profit before income tax Income tax expenses (Loss)/profit for the period/year	For the six months ended 30 June 2016 HK$’000 (Unaudited) 28,070 21,417 5,660 27,077 (35,686) (8,609) (1,937) (10,546)	For the year ended 31 December 2015 2014 2013 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 50,759 49,745 47,505 4,292 5,722 18,138 72,215 39,613 51,229 76,507 45,335 69,367 132,062 209,300 175,672 208,569 254,635 245,039 (12,851) (7,432) (10,042) 195,718 247,203 234,997	For the year ended 31 December 2015 2014 2013 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 50,759 49,745 47,505 4,292 5,722 18,138 72,215 39,613 51,229 76,507 45,335 69,367 132,062 209,300 175,672 208,569 254,635 245,039 (12,851) (7,432) (10,042) 195,718 247,203 234,997
			18,138 51,229
			69,367 175,672
			245,039 (10,042)
			234,997

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Other comprehensive (loss)/income: Items that may be classified to profit or loss in future Surplus on revaluation of building(s) Change in fair value of available- for-sale financial assets Exchange differences Other comprehensive (loss)/income for the period/year, net of tax Total comprehensive (loss)/income for the period/year Dividends Dividend per Share (HK cents) (Loss)/earnings per Share Basic and diluted (HK cents)	For the six months ended 30 June 2016 HK$’000 (Unaudited) – (936) (161) (1,097) (11,643) – – (0.85)	For the year ended 31 December 2015 2014 2013 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 4,439 – 149 2,423 6,346 1,709 (992) (555) 405 5,870 5,791 2,263 201,588 252,994 237,260 187,095 24,946 – 0.15 0.02 – 15.69 19.82 18.84	For the year ended 31 December 2015 2014 2013 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 4,439 – 149 2,423 6,346 1,709 (992) (555) 405 5,870 5,791 2,263 201,588 252,994 237,260 187,095 24,946 – 0.15 0.02 – 15.69 19.82 18.84
			2,263
			237,260
			–
			– 18.84

The audited consolidated financial statements of the Dan Form Group for each of the year ended 31 December 2013, 2014 and 2015 did not contain any qualified opinion from the auditor of Dan Form. The Dan Form Group had no exceptional items because of size, nature or incidence for each of the year ended 31 December 2013, 2014 and 2015 and for the six months ended 30 June 2016.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

2. AUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE DAN FORM GROUP

Set out below is the reproduction of the text of the audited consolidated financial statements of the Dan Form Group together with the accompanying notes contained in the annual report of Dan Form for the year ended 31 December 2015 (the ‘‘Annual Report’’). Capitalised terms used in this section have the same meanings as those defined in the Annual Report.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2015

Note Revenue 6 Other income 7 Other losses, net 8 Rent and rates Building management fees Staff costs, including Directors’ remuneration 9 Depreciation and amortisation Repairs and maintenance Administrative expenses Operating profit before change in fair value of investment properties Change in fair value of investment properties 18 Operating profit 10 Share of profits of associates 13 Profit before income tax Income tax expenses 14 Profit for the year Dividends 15 Interim paid Final special proposed Earnings per share Basic and diluted 16	2015 HK$’000 50,759 3,122 (3,627) (479) (5,778) (20,974) (4,991) (3,772) (9,968) 4,292 72,215 76,507 132,062 208,569 (12,851) 195,718 – 187,095 187,095 HK cents 15.69	2014 HK$’000 49,745 2,722 (2,784) (470) (5,808) (18,776) (7,178) (1,783) (9,946) 5,722 39,613 45,335 209,300 254,635 (7,432) 247,203 – 24,946 24,946 HK cents 19.82

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2015

Note Profit for the year Other comprehensive income: Items that may be reclassified to profit or loss Surplus on revaluation of a building 17 Available-for-sale financial assets: Fair value gain arising during the year Exchange differences Other comprehensive income for the year, net of tax Total comprehensive income for the year	2015 HK$’000 195,718 4,439 2,423 (992) 5,870 201,588	2014 HK$’000 247,203
		– 6,346 (555)
		5,791 252,994

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

CONSOLIDATED BALANCE SHEET

As at 31 December 2015

Note ASSETS Non-current assets Property, plant and equipment 17 Investment properties 18 Land use rights 19 Associates 20 Available-for-sale financial assets 21 Current assets Debtors, prepayments, deposits and other receivables 22 Amounts due from associates 20 Income tax recoverable Cash and bank balances 23 Total assets EQUITY Share capital 24 Reserves 25 Total equity LIABILITIES Non-current liabilities Deferred income tax liabilities 26 Current liabilities Creditors and accruals 27 Amounts due to associates 20 Income tax payable Total liabilities Total equity and liabilities	31 December 2015 HK$’000 86,050 1,033,090 24,629 3,193,795 46,283 4,383,847 8,138 130,815 628 875,190 1,014,771 5,398,618 681,899 4,537,759 5,219,658 134,997 26,976 16,986 1 43,963 178,960 5,398,618	31 December 2014 HK$’000 135,717 910,375 25,646 3,558,411 43,925
		4,674,074
		9,796 150,915 485 368,887
		530,083
		5,204,157
		681,899 4,361,117
		5,043,016
		123,868
		25,248 11,500 525
		37,273
		161,141
		5,204,157

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

Share capital HK$’000 623,649 –	Share premium HK$’000 58,250 –	Special capital reserve HK$’000 663 –	Other reserves HK$’000 20,621 –	Retained profits HK$’000 4,086,839 247,203	Total HK$’000 4,790,022 247,203
– –	– –	– –	6,346 (555)	– –	6,346 (555)
– – 58,250 – 681,899 –	– – (58,250) – – –	– – – (30) 633 –	5,791 5,791 – – 26,412 –	– 247,203 – 30 4,334,072 195,718	5,791 252,994 – – 5,043,016 195,718
– – –	– – –	– – –	4,439 2,423 (992)	– – –	4,439 2,423 (992)
– – – – 681,899	– – – – –	– – – (633) –	5,870 5,870 – – 32,282	– 195,718 (24,946) 633 4,505,477	5,870 201,588 (24,946) – 5,219,658

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2015

Note Cash flows from operating activities Cash generated from operations 28 Hong Kong profits tax paid Net cash generated from operating activities Cash flows from investing activities Purchases of property, plant and equipment Interest received Decrease in amounts due from associates Increase in amounts due to associates (Increase)/decrease in non-pledged time deposits with original maturity of over three months Dividends received from available-for-sale financial assets Dividends received from associates Net cash generated from investing activities Cash flow from an financing activity Dividend paid 15 Net cash used in an financing activity Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at end of the year 23	2015 HK$’000 10,799 (2,389) 8,410 (991) 3,016 20,100 5,486 (21,215) 1,350 496,679 504,425 (24,946) (24,946) 487,889 330,073 (2,801) 815,161	2014 HK$’000 13,154 (3,461) 9,693 (126) 2,665 26,229 5,976 108 1,200 – 36,052 – – 45,745 286,984 (2,656) 330,073

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General information

Dan Form Holdings Company Limited (the ‘‘Company’’) is a limited liability company incorporated in Hong Kong and is listed on the Main Board of The Stock Exchange of Hong Kong Limited. The address of its registered office is 33/F., Tower A, Billion Centre, 1 Wang Kwong Road, Kowloon Bay, Hong Kong.

The principal activities of the Company and its subsidiaries (together, the ‘‘Group’’) are property investment, property rental and estate management.

These consolidated financial statements have been approved for issue by the Board of Directors on 30 March 2016.

These consolidated financial statements are presented in HK dollars, unless otherwise stated.

2 Basis of preparation

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants and under the historical cost convention as modified by the revaluation of investment properties and available-forsale financial assets, which are carried at fair value.

The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies of the Group. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

The accounting policies and methods of computation used in the preparation of the financial statements are consistent with those used in the financial statements for the year ended 31 December 2014, except as stated otherwise.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Changes in accounting policies and disclosures

(a) Amended standards

The following amendments to existing standards are mandatory for the first time for the financial year beginning 1 January 2015:

HKAS 19 (2011) Defined benefit plans: Employee contributions (Amendment) HKFRSs (Amendment) Annual improvements to HKFRSs 2010-2012 cycle HKFRSs (Amendment) Annual improvements to HKFRSs 2011-2013 cycle

The adoption of these amendments to existing standards does not have significant impact on the Group’s reported results and financial position nor any substantial changes in the Group’s accounting policies or presentation of the financial statements.

(b) New and amended standards not yet adopted by the Group

The following standards and amendments to existing standards have been issued, but are not effective for the financial year beginning 1 January 2015 and have not been early adopted:

		Effective
		for accounting
		periods beginning
		on or after
HKFRSs (Amendment)	Annual improvements 2012-2014 cycle	1 January 2016
HKFRS 10 and HKAS 28	Sale or contribution of assets between an	1 January 2016
(Amendment)	investor and its associate or joint venture
HKFRS 10, HKFRS 12 and	Investment entities: Applying the	1 January 2016
HKAS 28 (Amendment)	consolidation exception
HKFRS 11 (Amendment)	Accounting for acquisitions of interests in	1 January 2016
	joint operations
HKAS 1	Disclosure initiative	1 January 2016
HKFRS 14	Regulatory deferral accounts	1 January 2016
HKAS 16 and HKAS 38	Clarification of acceptable methods of	1 January 2016
(Amendment)	depreciation and amortisation
HKAS 16 and HKAS 41	Agriculture: Bearer plants	1 January 2016
(Amendment)
HKAS 27 (Amendment)	Equity method in separate	1 January 2016
	financial statements
HKFRS 15	Revenue from contracts with customers	1 January 2018
HKFRS 9	Financial instruments	1 January 2018

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application and is not yet in a position to state whether these new and revised HKFRSs will have any significant impact on the Group’s result of operations and financial position.

(c) New Hong Kong Companies Ordinance (Cap. 622)

In addition, the requirements of Part 9 ‘‘Accounts and Audit’’ of the new Hong Kong Companies Ordinance (Cap. 622) come into operation during the financial year, as a result, there are changes to presentation and disclosures of certain information in the consolidated financial statements.

3 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements, which have been consistently applied to all the years presented, are set out below.

(a) Consolidation

A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December and the share of post acquisition results and reserves of its associates attributable to the Group.

Results attributable to subsidiaries and associates acquired or disposed of during the financial period are included in the consolidated income statement from the date of acquisition or to the date of disposal, as applicable.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The financial information of subsidiaries has been adjusted where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the Group.

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APPENDIX II

FINANCIAL INFORMATION OF THE DAN FORM GROUP

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Business Combination

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the aggregate fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis. Non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by HKFRSs.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with HKAS 39 either in profit or loss.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

The excess of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

(b) Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

(c) Associates

An associate is a company, not being a subsidiary or a joint venture, in which an equity interest is held for the long-term and significant influence is exercised in its management, generally accompanying a shareholding of between 20 to 50% of the voting rights.

Investments in associates are accounted for under the equity method of accounting and are initially recognised at cost. The carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The investments in associates of the Group include goodwill identified on acquisition, net of any accumulated impairment loss. The financial information of associates has been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

The share of post-acquisition profits or losses of associates attributable to the Group is recognised in the consolidated income statement, and the share of postacquisition reserves is recognised in equity. The cumulative post-acquisition reserves are adjusted against the carrying amount of the investment. When the share of losses of the Group in an associate equals or exceeds its interest in the associate, including any other unsecured receivable, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profits of associates’ in the income statement.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the interest in the associates held by the Group. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

(d) Goodwill

Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.

Goodwill on acquisitions of subsidiaries is recognised separately as an intangible asset. Goodwill on acquisitions of associates is included in investments in associates and is tested for impairment as part of the overall balance. Separately recognised goodwill on acquisitions of subsidiaries is tested for impairment and carried at cost less accumulated impairment losses.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cashgenerating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

(e) Foreign currency translation

Items included in the financial statements of each of the entities in the Group are measured using the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). These financial statements are presented in Hong Kong dollars, which is the Company’s functional and the Group’s presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the exchange rates ruling at the balance sheet date are recognised in the income statement.

Foreign exchange gains and losses are presented in the income statement within ‘other gains’.

Translation differences on non-monetary financial assets held at fair value through profit or loss are reported as part of the fair value gain or loss. Translation differences on non-monetary available-for-sale financial assets are included in other comprehensive income.

The results and financial positions of all the entities in the Group that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) assets and liabilities for each balance sheet are translated at the closing rates at the date of that balance sheet;
(b) income and expenses for each income statement are translated at average exchange rates; and
(c) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rates at the balance sheet date.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

(f) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the carrying amount of an asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repairs and maintenance costs are expensed in the income statement during the financial period in which they are incurred.

Leasehold land classified as finance lease commences amortisation from the time when the land interest becomes available for its intended use. Amortisation on leasehold land classified as finance lease and depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Leasehold land	Remaining lease term
Buildings	30 to 50 years
Office equipment	5 years
Furniture and fixtures	5 years
Motor vehicles	4 to 5 years

The residual values and useful lives of the assets are reviewed and adjusted if appropriate, at each balance sheet date. Where the carrying amount of an asset is greater than its recoverable amount, it is written down immediately to its estimated recoverable amount.

Gain or loss on disposal is determined as the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised as other gains/(losses), net in the income statement.

(g) Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Group, is classified as investment property. Investment property comprises land held under operating leases and buildings held under finance leases. Land held under operating leases is classified and accounted for as investment property when the rest of the definition of investment property is met. The operating lease is then accounted for as if it were a finance lease.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Investment property is measured initially at its cost, including related transaction costs and borrowing costs. Borrowing costs incurred for the purpose of acquiring or constructing a qualifying asset are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway and cease once the asset is substantially complete, or suspended if the development of the asset is suspended.

After initial recognition, investment property is carried at fair value. Fair value is based on valuations carried out by external valuers. Investment property that is being redeveloped for continuing use as investment property, or for which the market has become less active, continues to be measured at fair value. Where fair value of investment property under construction is not reliably determinable, such investment property under construction is measured at cost until either its fair value becomes reliably determinable or construction is completed (whichever is earlier).

Changes in fair values are recognised in the income statement. The fair value of investment property reflects, among other things, rentals from current leases and assumptions about rentals from future leases in light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property. Some of those outflows are recognised as a liability, including finance lease liabilities in respect of leasehold land, if any, classified as investment property; others, including contingent rent payments, are not recognised in the financial statements.

Subsequent expenditure is added to the carrying amount of the property only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed in the income statement during the financial period in which they are incurred.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

When an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to completed properties held for sale at its fair value at the date of change in use.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for accounting purposes.

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APPENDIX II

FINANCIAL INFORMATION OF THE DAN FORM GROUP

If a self-occupied property becomes an investment property because its use has changed, any difference between the carrying amount and its fair value at the date of transfer is recognised in equity as a revaluation reserve. Any resulting gain is recognised in the income statement to the extent that it reverses a previous impairment loss, with any remaining increase recognised as other comprehensive income. Any resulting decrease in the carrying amount of the property is initially charged in other comprehensive income against any previously recognised revaluation surplus, with any remaining decrease charged to income statement.

(h) Operating leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessors are classified as operating leases. Rentals payable, net of incentives received from lessors, under operating leases are charged to the income statement on a straight line basis over the period of the leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-currents assets are credited to the income statement on a straight-line basis over the lease terms.

Prepayments of land use rights represent non-refundable rental payments for the lease of land and are stated at cost less accumulated amortisation (note 3(f)) and impairment. Amortisation is calculated to write off the prepayments over the period of the lease on a straight-line basis. When there is impairment, the impairment is expensed in the income statement. The amortisation of land use rights is capitalised as part of the costs of the property when the land use rights is under development.

(i) Impairment of associates and other non-financial assets

Assets that have an indefinite useful life or are not yet available for use are not subject to amortisation, but are tested at least annually for impairment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the fair value of an asset less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each balance sheet date.

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(j) Financial assets

The Group classifies its investments as loans and receivables, or available-forsale financial assets. Management determines the classification of its investments at initial recognition according to the purpose for which the investments were acquired.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than twelve months after the balance sheet date, which are classified as noncurrent assets. Loans and receivables are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest method.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in the balance sheet under non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date. Available-for-sale financial assets are initially recognised at fair value plus transaction costs and subsequently carried at fair value.

Regular way purchases and sales of investments are recognised on trade-date, which is the date on which the Group commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Unrealised gains and losses arising from changes in the fair value of nonmonetary available-for-sale financial assets are recognised in equity. When availablefor-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains or losses from available-for-sale financial assets.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted investments), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the specific circumstances of the issuer.

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The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of available-for-sale financial assets, a significant or prolonged decline in the fair value of the financial assets below its cost is considered as an indicator in determining whether the financial assets are impaired. If any such evidence exists for availableforsale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial assets previously recognised in the income statement is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on available-for-sale financial assets (equity instruments only) are not reversed through the income statement.

(k) Debtors

Debtors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, which is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivable. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the provision is the difference between the carrying amount of the debtor and the present value of estimated future cash flows, discounted at the effective interest rate. The carrying amount of debtors is reduced through the use of an allowance account and the amount of the provision is recognised in the income statement within administrative expenses. When a debtor is uncollectible, it is written off against the allowance account for debtors. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the income statement.

If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

(l) Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances and deposits with banks and financial institutions.

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(m) Share capital

Incremental costs directly attributable to the issue of new shares or options are recognised in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(n) Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

(o) Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

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(p) Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only when there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable temporary differences arising from the associate’s undistributed profits is not recognised.

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Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(q) Employee benefits

Contributions to publicly or privately administered defined contribution retirement or pension plans on a mandatory, contractual or voluntary basis are recognised as employee benefit expenses in the financial period when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. Employee entitlements to annual leave and long service payments are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service payments as a result of services rendered by employees up to the balance sheet date. Employee entitlements to sick and maternity leave are not recognised until the time of leave.

Provision for bonus plans due are recognised when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate can be made.

(r) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

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(s) Revenue recognition

Revenue comprises the fair value of the consideration for sales of goods and rendering of services in the normal course of business activities of the Group. Revenue is recognised when the amount can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria for each of the activities have been met. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the activity have been resolved. Revenue is shown net of sales tax, returns, rebates and discounts, allowances for credit and other revenue reducing factors.

Rental income net of any incentives given to the lessees is recognised on a straight-line basis over the period of the leases. Revenue from the sale of completed properties is recognised when the relevant sales contracts are concluded and the risk and rewards of the property have been passed to the purchasers. Estate management income is recognised when services are provided. Interest income is recognised on a time proportion basis using the effective interest method, taking into account the principal amounts outstanding and the effective interest rates applicable. Dividend income is recognised when the right to receive payment is certain.

(t) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decisionmaker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified collectively as the executive Directors that make strategic decisions.

(u) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankrupt of the company or the counterparty.

(v) Dividend distribution

Dividend distribution to the shareholders of the Company is recognised as a liability in the financial statements in the financial period in which the dividends are declared by the Directors in the case of interim dividends or approved by the Company’s shareholders in the case of final dividends.

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4 Financial risk management

The activities of the Group expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Financial risk management is carried out by the finance department under policies approved by the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific areas, such as price risk, foreign exchange risk, interest rate risk, credit risk and non-derivative financial instruments, and investing excess liquidity.

(a) Price risk

The Group is exposed to price risk arising from unlisted equity securities and club debentures which are classified as available-for-sale financial assets. The Group is not exposed to commodity price risk.

The carrying amount of available-for-sale financial assets of the Group would be an estimate of HK$2,314,000 (2014: HK$2,196,000) higher or lower if the year end prices of the above mentioned financial assets were to differ by 5% (2014: 5%).

(b) Foreign exchange risk

The Group operates primarily in Hong Kong and has limited exposure to foreign exchange risk, mainly from certain properties and cash and bank balances denominated in Renminbi (‘‘RMB’’). The Group monitors foreign currency risk and considers entering into forward foreign exchange contracts to reduce exposure when necessary.

At 31 December 2015, if Hong Kong dollar had weakened or strengthened by 5% (2014: 5%) against RMB with all other variables held constant, profit before taxation for the year would have been higher or lower by approximately HK$3,810,000 (2014: HK$4,294,000), mainly as a result of foreign exchange gains or losses arising from translation of cash and bank balances.

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(c) Interest rate risk

The Group has no fixed rate borrowings and is exposed to cash flow interest rate risk principally due to the fluctuation of the prevailing market interest rate on bank deposits.

If interest rates had increased or decreased by 1% (2014: 1%) with all other variables held constant, the profit before taxation for the year would increase or decrease by approximately HK$7,840,000 (2014: HK$3,139,000), mainly as a result of higher or lower interest income from bank deposits.

(d) Credit risk

The Group’s credit risk is primarily attributable to trade and other debtors, bank deposits and amounts due from associates.

The Group has policies in place to ensure that properties are rented and property management services are provided to customers with appropriate credit histories. The Group reviews the recoverable amount of debtors on a regular basis and an allowance for doubtful debts is made where there is an identified loss.

With regard to credit exposure to customers for rental of properties, the Group also receives rental payments in advance with sufficient initial rental deposits to cover potential default in future rental payments. Amounts due from associates and an investee company are generally supported by the underlying assets and the Group monitors the credibility of associates and the investee company continuously.

At each balance sheet date, the Group reviews the recoverable amount of each debtor to ensure that adequate provision is made for irrecoverable amounts.

The credit risk on liquid funds is limited because 99% of the funds are placed in banks with high credit rankings, ranging from AA to A by reference to Standard and Poor and Moody’s credit ratings. Management does not expect any losses from the non-performance of these banks.

(e) Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its current obligations when they fall due.

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The Group mainly relies on cash inflows from rental of properties and property management to fund its operations. The Group has sufficient cash on hand and also has alternative plans to monitor liquidity risk should there be significant adverse changes on the Group’s cash flow projections.

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of credit facilities, and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping credit lines available, if necessary.

The Group does not have any borrowings and all creditors and accruals are due for settlement within one year.

(f) Capital risk management

The objectives of the Group when managing capital are to safeguard the ability of the Group to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares.

The Group does not have any borrowings as at 31 December 2015 and uses equity to finance its operations.

(g) Fair value estimation

The financial instruments that are measured in the balance sheet at fair value are required to disclose their valuation method. The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

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The following represents the Group’s financial assets that are measured at fair value at 31 December 2015. See Note 18 for disclosure of the investment properties that are measured at fair value.

At 31 December 2015, the Group’s assets measured at fair value are availablefor-sale instruments, of which HK$10,420,000 (2014: HK$10,501,000) represents Level 2 instruments and HK$35,863,000 (2014: HK$33,424,000) represents Level 3 instruments. The fair value change in Level 3 instruments for the year ended 31 December 2015 was HK$2,439,000 (2014: HK$3,761,000).

There were no transfers between level 1, 2 and 3 during the year.

The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

Quoted market prices or dealer quotes for similar instruments.
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

5 Critical accounting estimates and judgements

Estimates and judgements used in preparing the financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events.

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The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities of the Group are discussed below.

(i) Investment properties

The fair values of investment properties are determined by independent valuers on an open market for existing use basis. In making the judgement, the independent valuers consider information from a variety of sources including:

current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;
recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and
discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts, and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

If information on current or recent prices of investment properties is not available, the fair values of investment properties are determined using discounted cash flow valuation techniques.

The principal assumptions underlying the estimation of fair value are those related to: the receipt of contractual rentals; expected future market rentals; maintenance requirements; and appropriate discount rates. These valuations are regularly compared to actual market yield data, and actual transactions by the Group and those reported by the market. These assumptions are mainly based on market conditions existing at each balance sheet date. The expected future market rentals are determined on the basis of current market rentals for similar properties in the same location and condition.

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(ii) Available-for-sale financial assets

The fair value of each asset is reviewed at each accounting date and whenever events or changes in circumstances indicate that the carrying amount of the asset has been affected. The fair value also reflects the market conditions existing at each balance sheet date. For unlisted equity investments, the Group establishes fair value by using valuation techniques, including the use of arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flows analysis, or the underlying net assets to reflect the specific circumstances.

The significant assumption adopted in the valuation of the unlisted securities was minority discount rate of 20% (2014: 20%).

(iii) Trade and other receivables

Impairment of accounts receivable is established when there is objective evidence on the ultimate recoverability of the amount due according to the original terms. Estimates are made based on the assessments of the financial position of the debtors, probability of the debtor being bankrupt, default or delinquent. The provision takes into account the present value of the estimated future cash flows, discounted at the effective interest rate.

(iv) Taxation

The Group is subject to taxation in Hong Kong and Mainland China. Significant judgement is required in determining the provision for taxation for each entity in the Group. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for potential tax exposures based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the taxation payable and deferred taxation in the financial period in which such determination is made.

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6 Revenue and segment information

Revenue is shown as follows:

Rental from investment properties Estate management fees Dividend from unlisted investments	2015 HK$’000 37,484 11,925 1,350 50,759	2014 HK$’000 36,815 11,730 1,200
		49,745

The chief operating decision-maker has been identified as the executive Director of the Company. The executive Director regards the Group’s business as a single operating segment, which is property rental and estate management and reviews financial information accordingly. Therefore, no segment analysis of the Group’s revenue and contribution to operating profit is presented.

The total of non-current assets other than associates and available-for-sale financial assets located in Hong Kong is HK$1,112,512,000 (2014: HK$1,039,695,000), and the total of non-current assets located in Mainland China is HK$31,257,000 (2014: HK$32,043,000).

7 Other income

Interest income Others	2015 HK$’000 3,016 106 3,122	2014 HK$’000 2,665 57
		2,722

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8 Other losses, net Net exchange losses Loss on disposal of property, plant and equipment Write off of available-for-sale financial assets 9 Staff costs (including directors’ remuneration) Wages and salaries Social security costs (Note 11) Provision for long service payments Retirement benefit costs – Defined contribution plans (Note 11) 10 Operating profit Operating profit is arrived at after charging: Direct operating expenses of investment properties that generate rental income Direct operating expenses of investment properties that did not generate rental income Loss on disposal of property, plant and equipment Auditor’s remuneration Audit services Non-audit services	2015 HK$’000 (3,627) – – (3,627) 2015 HK$’000 19,327 1,036 27 584 20,974 2015 HK$’000 10,193 306 – 1,120 248	2014 HK$’000 (2,495) (139) (150) (2,784) 2014 HK$’000 17,696 523 265 292 18,776 2014 HK$’000 7,479 227 139 1,050 86

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11 Retirement benefit and social security costs

The Group operates a defined contribution provident fund scheme (the ‘‘Scheme’’), which is available to certain employees who joined the Group before 1 December 2000, and a mandatory provident fund scheme (the ‘‘Fund’’), which is available to all employees in Hong Kong effective 1 December 2000. The assets of the Scheme and the Fund are held separately from those of the Group in independently administered funds. Contributions to the Scheme and the Fund by the Group and the employees are calculated as a percentage of the monthly salaries of the employees. Contributions to the Scheme are reduced by contributions forfeited by those employees who leave the Scheme prior to vesting fully in the contributions. During the year, no forfeited contributions in respect of the Scheme (2014: Nil) were utilised and there were no forfeited contributions available to reduce future contributions at 31 December 2015 (2014: Nil).

The Group also participates in the employee pension schemes of the municipal governments in Mainland China where the Group operates. The Group is required to make monthly defined contributions at rates calculated as a percentage of the monthly payroll. The respective municipal government will assume the retirement benefit obligations of the PRC existing and future retired employees in Mainland China of the Group.

The cost charged to the consolidated income statement (Note 9) represents contributions payable by the Group to the above schemes.

12 Benefits and interests of directors and five highest paid individuals

The following disclosure in respect of benefits and interests of Directors are made pursuant to section 383 of the Hong Kong Companies Ordinance (Cap. 622) and the Companies (Disclosure of Information about Benefits of Directors) Regulation (Cap. 622G):

(a) Directors’ emoluments

For the year ended 31 December 2015:

Name Mr. DAI Xiaoming (Note) Mr. Kenneth Hiu King KON Mr. Jesse Nai Chau LEUNG Dr. XIANG Bing Mr. Edward SHEN	Fees HK$’000 10 200 240 230 240 920	Emoluments paid or receivable in in connection with the the company Salary Discretionary bonuses HK$’000 HK$’000 2,515 426 – – – – – – – – 2,515 426	respect of a person’s services as a management of the affairs whether or its subsidiary undertaking Housing allowance Estimated money value of other benefits HK$’000 HK$’000 522 – – – – – – – – – 522 –	director and of Employer’s contribution to a retirement benefit scheme HK$’000 – – – – – –	Total HK$’000 3,473 200 240 230 240
					4,383

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For the year ended 31 December 2014 (Restated):

Certain of the comparative information of Directors’ emoluments for the year ended 31 December 2014 previously disclosed in accordance with the predecessor Companies Ordinance have been restated in order to comply with the new scope and requirements by the Hong Kong Companies Ordinance (Cap. 622).

Name Mr. DAI Xiaoming (Note) Mr. Kenneth Hiu King KON Mr. Jesse Nai Chau LEUNG Dr. XIANG Bing Mr. Edward SHEN	Fees HK$’000 10 200 240 230 240 920	Emoluments paid or receivable i in connection with the the company Salary Discretionary bonuses HK$’000 HK$’000 2,515 200 – – – – – – – – 2,515 200	n respect of a person’s services as management of the affairs whethe or its subsidiary undertaking Housing allowance Estimated money value of other benefits HK$’000 HK$’000 522 – – – – – – – – – 522 –	a director and r of Employer’s contribution to a retirement benefit scheme HK$’000 – – – – – –	Total HK$’000 3,247 200 240 230 240
					4,157

During the year ended 31 December 2015, no remunerations paid or receivable in respect of accepting office as Director (2014: Nil).

None of the Directors of the Company has waived the right to receive their emoluments during the year ended 31 December 2015 (2014: Nil). The Directors represent key management personnel of the Company having authority and responsibility for planning, directing and controlling the activities of the Group.

Note: Mr. DAI Xiaoming is also the Chief Executive of the Group.

(b) Directors’ retirement benefits and termination benefits

None of the Directors received or will receive any retirement benefits or termination benefits during the year (2014: Nil).

(c) Consideration provided to or receivable by third parties for making available Directors’ services

During the year ended 31 December 2015, the Group did not pay consideration to any third parties for making available Directors’ services (2014: Nil).

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(d) Information about loans, quasi-loans and other dealings in favour of Directors, controlled bodies corporate by and connected entities with such Directors

As at 31 December 2015, there is no loans, quasi-loans and other dealing arrangements in favour of Directors, controlled bodies corporate by and controlled entities with such Directors (2014: Nil).

(e) Directors’ material interests in transactions, arrangements or contracts

Save as disclosed in Note 31 to the consolidated financial statements, no other significant transactions, arrangements and contracts to which the Company was a party and in which a Director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

(f) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include one (2014: one) Directors whose emoluments are reflected in Note (a) above. The emoluments for the remaining four (2014: four) highest paid individuals are as follows:

Salaries and allowances Discretionary bonuses Retirement benefit costs – Defined contribution plans	2015 HK$’000 3,222 393 54 3,669	2014 HK$’000 3,034 190 50
		3,274

The emoluments of these individuals fell within the following bands:

Emolument bands Nil to HK$1,000,000 HK$1,000,001 to HK$1,500,000	Number of individuals 2015 2014 3 3 1 1 4 4	Number of individuals 2015 2014 3 3 1 1 4 4
		4

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13 Share of profits of associate

Share of profit of associates include the following:

Change in fair value of investment properties (Note) Taxation	2015 HK$’000 241,348 (39,822)	2014 HK$’000 220,333 (36,355)

Note:

The investment properties of the associates were valued by DTZ Debenham Tie Leung Limited, independent professional qualified surveyors, to determine the fair value of the investment properties as at 31 December 2015 and 2014 based on current prices in an active market for the properties.

14 Income tax expenses

Hong Kong profits tax has been provided at the rate of 16.5% (2014: 16.5%) on the estimated assessable profit for the year. Taxation on profits generated in Mainland China has been provided at the rate of taxation prevailing in Mainland China.

The amount of income tax charged to the consolidated income statement represents:

Current income tax Hong Kong Overprovision in prior year Deferred income tax (Note 26) – Origination and reversal of temporary differences	2015 HK$’000 1,778 (56) 1,722 11,129 12,851	2014 HK$’000 2,385 (40) 2,345 5,087 7,432

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The taxation on the profit before income tax differs from the theoretical amount that would arise using the profits tax rate of Hong Kong where the Group principally operates, as follows:

Profit before income tax Adjusted for: Share of profits of associates Tax charge at the rate of 16.5% (2014: 16.5%) Effect of different taxation rates Over provision of taxation in prior year Income not subject to taxation Expenses not deductible for taxation purposes Utilisation of previously unrecognised tax losses Tax losses not recognised Temporary differences not recognised Income tax expenses 15 Dividends Interim dividend paid of HK$Nil (2014: HK$Nil) per ordinary share Proposed final special dividend of HK$0.15 (2014: HK$0.02) per ordinary share	2015 HK$’000 208,569 (132,062) 76,507 12,624 (407) (56) (2,608) 2,618 (192) 513 359 12,851 2015 HK$’000 – 187,095 187,095	2014 HK$’000 254,635 (209,300) 45,335 7,480 (338) (40) (809) 1,750 (99) 197 (709) 7,432 2014 HK$’000 – 24,946 24,946

The dividend paid in 2015 was HK$24,946,000 (2014: HK$Nil).

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

A final special dividend in respect of the year ended 31 December 2015 of HK$0.15 per share, amounting to a total final special dividend of HK$187,095,000, is to be proposed at the annual general meeting of the Company. This final special dividend will be reflected as an appropriation of the retained profits for the year ending 31 December 2016.

Subsequent to the year ended 31 December 2015, and up to the date of this report, the Company repurchased a total of 4,874,000 of its shares in the market. Therefore, if no further repurchases of the Company shares being made before the ex-entitlement dividend date on 3 June 2016, the final special dividend payable, because of the repurchases of 4,874,000 shares of the Company, will be reduced by HK$731,000 to HK$186,364,000.

16 Earnings per share

The calculation of basic earnings per share for the year is based on the following:

Profit attributable to equity holders Weighted average number of shares for calculating basic earning per share (’000) Basic earnings per share (HK cents)	2015 HK$’000 195,718 1,247,299 15.69	2014 HK$’000 247,203
		1,247,299
		19.82

The calculation of basic earnings per share is based on the Group’s profit attributable to equity holders of HK$195,718,000 (2014: profit of HK$247,203,000) and the weighted average number of 1,247,298,945 ordinary shares in issue during the year (2014: 1,247,298,945).

The diluted earnings per share equals the basic earnings per share since there were no dilutive potential shares in issue during both years.

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17 Property, plant and equipment

Cost At 1 January 2014 Transfer from investment properties (Note 18) Additions Disposals Currency translation differences At 31 December 2014 Revaluation surplus Transfer to investment properties (Note 18) Additions Currency translation differences At 31 December 2015 Accumulated depreciation At 1 January 2014 Charge for the year Disposals Currency translation differences At 31 December 2014 Charge for the year Transfer to investment properties (Note 18) Currency translation differences At 31 December 2015 Net book value At 31 December 2014 At 31 December 2015	Land and buildings HK$’000 93,571 47,442 – – (34) 140,979 4,439 (51,539) – (64) 93,815 6,429 2,975 – (2) 9,402 2,637 (1,039) (6) 10,994 131,577 82,821	Office equipment HK$’000 2,653 – 126 (90) (4) 2,685 – – 991 (25) 3,651 1,878 431 (59) (1) 2,249 343 – (3) 2,589 436 1,062	Furniture and fixtures HK$’000 17,097 – – – (17) 17,080 – – – (7) 17,073 10,224 3,219 – (1) 13,442 1,467 – (3) 14,906 3,638 2,167	Motor vehicles HK$’000 2,568 – – (1,074) – 1,494 – – – – 1,494 2,317 77 (966) – 1,428 66 – – 1,494 66 –	Total HK$’000 115,889 47,442 126 (1,164) (55)
					162,238 4,439 (51,539) 991 (96)
					116,033
					20,848 6,702 (1,025) (4)
					26,521 4,513 (1,039) (12)
					29,983
					135,717
					86,050

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

18 Investment properties

At beginning of the year Transfer to property, plant and equipment (Note 17) Transfer to land use rights (Note 19) Transfer from property, plant and equipment (Note 17) Changes in fair value Currency translation differences At end of the year	2015 HK$’000 910,375 – – 50,500 72,215 – 1,033,090	2014 HK$’000 919,067 (47,442) (848) – 39,613 (15) 910,375

An independent valuation of the Group’s investment properties was performed by the valuer, DTZ Debenham Tie Leung Limited, independent professional qualified surveyors, to determine the fair value of the investment property as at 31 December 2015 and 2014 based on current prices in an active market for the property.

At 31 December 2015, investment properties of the Group in Hong Kong with fair value of HK$940,940,000 (2014: HK$872,800,000), were pledged as securities for the banking facilities which expired in November 2010. The Group underwent a discussion with the bank for the renewal of banking facilities and the bank agreed to provide banking facilities if necessary. At 31 December 2014 and 2015, the Group did not have bank borrowings.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

Fair value hierarchy

Fair value measurements at 31 December 2015 using Quoted prices in active Significant markets for other Significant identical observable unobservable asset inputs inputs Description (Level 1) (Level 2) (Level 3) HK$’000 HK$’000 HK$’000 Recurring fair value measurements Investment properties: – Commercial building – – – Hong Kong 985,740 – Residential building – – – Hong Kong 47,350 – – 1,033,090 Fair value measurements at 31 December 2014 using Quoted prices in active Significant markets for other Significant identical observable unobservable asset inputs inputs Description (Level 1) (Level 2) (Level 3) HK$’000 HK$’000 HK$’000 Recurring fair value measurements Investment properties: – Commercial building – – – Hong Kong 864,500 – Residential building – – – Hong Kong 45,875 – – 910,375

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APPENDIX II

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between Levels 1, 2 and 3 during the year.

Valuation processes of the Group

The Group’s investment properties were valued at 31 December 2015 and 2014 by independent professionally qualified surveyors who hold a recognised relevant professional qualification and have recent experience in the locations and segments of the investment properties valued. For the investment properties, its current use equates to the highest and best use.

The Group’s finance department includes a team that reviews the valuations performed by the independent surveyors for financial reporting purposes. This team reports directly to the financial controller (FC) and the audit committee (AC). Discussions of valuation processes and results are held between the FC, the valuation team and surveyors at least once every six months, in line with the Group’s interim and annual reporting dates. As at 31 December 2015 and 2014, the fair values of the properties have been determined by DTZ Debenham Tie Leung Limited.

At each financial year end the finance department:

Verifies all major inputs to the independent valuation report;
Assess property valuations movements when compared to the prior year valuation report; and
Holds discussions with the independent surveyors.

Valuation technique

The valuation was determined by capitalising the net rental income with due allowance for outgoing and reversionary income potential or where appropriate by direct comparison approach by making reference to comparable sales transactions as available in the relevant market.

There were no changes to the valuation techniques during the year.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

19 Land use rights

At beginning of the year Transfer from investment properties (Note 18) Amortisation Currency translation difference At the end of the year 20 Associates Share of net assets Amounts due from associates Less: provisions Amounts due to associates	2015 HK$’000 25,646 – (476) (541) 24,629 2015 HK$’000 3,193,795 228,121 (97,306) 130,815 16,986	2014 HK$’000 25,570 848 (476) (296) 25,646 2014 HK$’000 3,558,411 248,221 (97,306) 150,915 11,500

The amounts due from/to associates are unsecured, interest free and repayable on demand. The carrying amounts of the amounts due from/to associates approximate their fair values.

The carrying amounts of the amounts due from/to associates are denominated in Hong Kong dollars.

Particulars of the principal associates as at 31 December 2015 are set out in Note

33(b).

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APPENDIX II

Set out below is the associate of the Group as at 31 December 2015, which, in the opinion of the Directors, is material to the Group. This associate has share capital consisting solely of ordinary shares, which are held directly by the Group; the country of incorporation or registration is also its principal place of business.

Nature of investment in associate as at 31 December 2015 and 2014

	Place of business/	% of
	country of	ownership	Nature of the	Measurement
Name of entity	incorporation	interest	relationship	method
Zeta Estates Limited	Hong Kong	331/3	Note 1	Equity

(‘‘Zeta Estates’’)

Note 1: Zeta Estates Limited is a property investment company, which invests in industrial and residential properties in Hong Kong.

There are no contingent liabilities relating to the Group’s interest in the associates.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Summarised financial information for associates

Set out below are the summarised financial information for Zeta Estates Limited which are accounted for using the equity method.

Summarised balance sheet

Current Cash and cash equivalents Other current assets (excluding cash) Total current assets Financial liabilities (excluding trade payables) Other current liabilities (including trade payables) Total current liabilities Non-current Assets Liabilities Total non-current assets Net assets	Zeta Estates 31 December 2015 31 December 2014 HK$’000 HK$’000 121,320 655 480,640 31,739 601,960 32,394 (420,294) (453,242) (487,916) (41,979) (908,210) (495,221) 10,701,927 12,259,593 (1,706,725) (1,892,166) 8,995,202 10,367,427 8,688,952 9,904,600

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APPENDIX II

Summarised statement of comprehensive income

Revenue Cost of sales Other income and gains Change in fair value of investment properties Administrative expenses Operating profit Income tax expenses Profit and total comprehensive income for the year Dividends received from associate	Zeta Estates For the year ended 31 December 2015 2014 HK$’000 HK$’000 1,768,065 147,025 (1,897,769) – 8,867 4,203 514,293 607,000 (75,503) (78,195) 317,953 680,033 (45,720) (112,039) 272,233 567,994 15,029 –

The information above reflects the amounts presented in the financial statements of the associate (and not the Group’s share of those amounts) adjusted for differences in accounting policies between the Group and the associate.

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APPENDIX II

Reconciliation of summarised financial information

		Zeta Estates	Zeta Estates
		2015	2014
		HK$’000	HK$’000
	Opening net assets at the beginning of the year	9,904,600	9,336,606
	Profit for the year	272,233	567,994
	Dividend paid	(1,487,881)	–
	Closing net assets at the end of the year	8,688,952	9,904,600
	Interest in associates (331/3%)	2,896,317	3,301,533
	Carrying value	2,896,317	3,301,533
21	Available-for-sale financial assets
		2015	2014
		HK$’000	HK$’000
	At 1 January	43,925	37,761
	Net gains transfer to equity (Note 25)	2,423	6,346
	Write off during the year	–	(150)
	Currency translation differences	(65)	(32)
	At 31 December	46,283	43,925
	Available-for-sale financial assets are analysed as follows:
		2015	2014
		HK$’000	HK$’000
	Unlisted equity securities	35,863	33,424
	Club debentures	10,420	10,501
		46,283	43,925

The carrying amounts of the available-for-sale financial assets are denominated in Hong Kong dollars.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

22 Debtors, prepayments, deposits and other receivables

Trade debtors Other debtors Prepayments and deposits	2015 HK$’000 876 4,750 2,512 8,138	2014 HK$’000 2,895 5,346 1,555
		9,796

The carrying amounts of the debtors, prepayments, deposits and other receivables are denominated in the following currencies:

Hong Kong dollar Renminbi US dollar	2015 HK$’000 8,013 118 7 8,138	2014 HK$’000 9,645 144 7
		9,796

Trade debtors of the Group represent rentals and estate management fees receivable and are receivable on presentation of invoices. At 31 December 2015, trade debtors of HK$876,000 (2014: HK$2,895,000) were past due but not considered impaired. These debtors relate to a number of independent customers for whom there is no recent history of default. The ageing of these trade debtors of the Group based on invoices date is as follows:

Within 30 days 31 to 60 days 61 to 90 days Over 90 days	2015 HK$’000 876 – – – 876	2014 HK$’000 2,697 195 – 3
		2,895

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

At 31 December 2015 and 2014, no trade debtors were individually determined to be impaired. There is no concentration of credit risk with respect to trade debtors, as the Group has a large number of customers.

Other debtors of the Group represent reimbursable expenses paid on behalf of customers and amounts receivable from investee company, which are held by the Group under available-for-sale financial assets, of HK$3,601,000 (2014: HK$3,936,000). The amounts receivable from investee companies are unsecured and have no fixed term of repayment. There is no history of default. At 31 December 2015 and 2014, no other debtor was individually determined to be impaired.

The Group does not hold any collateral as security, except that the Group holds rental deposits from tenants for leasing of properties.

The other classes within trade and other debtors do not contain impaired assets. The maximum exposure to credit risk represents the fair value of each class of receivable.

23 Cash and bank balances

Non-pledged time deposits with original maturity of over three months Cash and cash equivalents: Cash at bank and in hand Short term bank deposits with original maturity within three months Cash and cash equivalents for cash flow statements analysis	2015 HK$’000 60,029 91,165 723,996 815,161 875,190	2014 HK$’000 38,814
		54,951 275,122
		330,073
		368,887

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

The carrying amounts of cash and bank balances are denominated in the following currencies:

Hong Kong dollar Renminbi (‘‘RMB’’) United States dollar Others	2015 HK$’000 757,848 76,200 41,137 5 875,190	2014 HK$’000 241,947 85,883 41,057 –
		368,887

Note:

As at 31 December 2015, the Group had cash and bank balances denominated in RMB of approximately HK$25,920,000 (2014: HK$21,021,000) deposited with the banks in the PRC. RMB is not freely convertible into foreign currencies.

24 Share capital

Issued and fully paid: At 1 January Transition to no-par value regime on 3 March 2014 (Note a) At 31 December	2015 Number of shares HK$’000 1,247,298,945 681,899 – – 1,247,298,945 681,899	2014 Number of shares HK$’000 1,247,298,945 623,649 – 58,250 1,247,298,945 681,899	2014 Number of shares HK$’000 1,247,298,945 623,649 – 58,250 1,247,298,945 681,899
			681,899

Note:

(a) In accordance with the transitional provisions set out in section 37 of Schedule 11 to Hong Kong Companies Ordinance (Cap. 622), on 3 March 2014, any amount standing to the credit of the share premium account has become part of the Company’s share capital.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

25 Reserves

Share premium HK$’000 58,250	Special capital reserve HK$’000 (Note a) 663	Investment revaluation reserve HK$’000 23,170	Property revaluation reserve HK$’000 1,954	Exchange reserve HK$’000 (4,503)	Retained profits HK$’000 4,086,839	Total HK$’000 4,166,373
– – –	– – –	– 6,346 –	– – –	– – (555)	247,203 – –	247,203 6,346 (555)
– (58,250) – –	– – (30) 633	6,346 – – 29,516	– – – 1,954	(555) – – (5,058)	247,203 – 30 4,334,072	252,994 (58,250) – 4,361,117
– – – – –	– – – – –	– 2,423 – – –	– – 4,439 – –	– – – – (992)	195,718 – – (24,946) –	195,718 2,423 4,439 (24,946) (992)
– – –	– (633) –	2,423 – 31,939	4,439 – 6,393	(992) – (6,050)	170,772 633 4,505,477	176,642 – 4,537,759

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Note:

(a) On 9 December 2011, an extraordinary general meeting was passed by the shareholders of the Company for approving the share premium reduction of the Company. The purpose of the share premium reduction is to reduce the credit standing to the share premium account of the Company to the extent of HK$579,389,000 and to apply the credit arising from such reduction to eliminate the accumulated losses of the Company by the same amount. A sealed copy of the order made by the High Court on 3 February 2012 confirming the reduction of share premium account was submitted to the Registrar of Companies in Hong Kong and was duly registered on 8 February 2012.

Under the court order, the Company at the same time has to transfer sum of HK$2,655,000 from retained profits to a special capital reserve account which shall not be treated as realised profits and be treated as an undistributable reserve, so long as the debt of or the claim of HK$2,655,000 against the Company remains outstanding.

During the year ended 31 December 2012, part of the debt on the claim against the Company amounting to HK$1,992,000 was settled, resulting a transfer from the special capital reserve of HK$1,992,000 to retained profits which is available for distribution and the sum of HK$663,000 is remained in the special reserve not available for distribution. There was no further debt settlement during the year ended 31 December 2013. During the year ended 31 December 2014, a further debt of HK$30,000 was settled, resulting the sum of HK$30,000 was transferred from the special capital reserve to retained profits, and therefore the sum of HK$633,000 is remained in the special capital reserve not available for distribution. During the year ended 31 December 2015, the remaining debt of HK$633,000 was settled, and the sum of HK$633,000 was transferred from the special capital reserve to retained profits. There was no special capital reserve as at 31 December 2015.

26 Deferred income tax liabilities

The gross movements on the deferred income tax liabilities are as follows:

At beginning of the year Charged to the income statement (Note 14) At end of the year	2015 HK$’000 123,868 11,129 134,997	2014 HK$’000 118,781 5,087
		123,868

All deferred income tax liabilities are expected to be settled after twelve months.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

The movements in deferred income tax liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:

At beginning of the year Charged to the income statement At end of the year	Fair value change of investment properties 2015 2014 HK$’000 HK$’000 123,667 117,091 11,129 6,576 134,796 123,667	Others 2015 2014 HK$’000 HK$’000 201 1,690 – (1,489) 201 201	Total 2015 2014 HK$’000 HK$’000 123,868 118,781 11,129 5,087 134,997 123,868	Total 2015 2014 HK$’000 HK$’000 123,868 118,781 11,129 5,087 134,997 123,868
				123,868

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. On that basis, the Group did not recognise deferred tax assets of HK$4,144,000 (2014: HK$3,823,000) in respect of unused tax losses amounting to HK$25,113,000 (2014: HK$23,170,000) that can be carried forward against future taxable income. These unused tax losses have no expiry date.

27 Creditors and accruals

2015 HK$’000 Trade creditors 56 Other creditors and deposits 19,459 Accrued operating expenses 7,461 26,976 The ageing of trade creditors of the Group is as follows: 2015 HK$’000 Within 30 days 56	2014 HK$’000 17 18,212 7,019
	25,248
	2014 HK$’000 17

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

The carrying amounts of creditors and accruals are denominated in the following currencies:

Hong Kong dollar Renminbi	2015 HK$’000 26,806 170 26,976	2014 HK$’000 25,119 129
		25,248

The carrying amounts of creditors and accruals approximate their fair values.

28 Notes to the consolidated cash flow statement

Reconciliation of operating profit to net cash generated from operations

Operating profit Depreciation and amortisation Net exchange losses Loss on disposal of property, plant and equipment Write off of available-for-sale financial assets Change in fair value of investment properties Dividend income Interest income Operating profit before working capital changes Decrease in debtors, prepayments, deposits and other receivables Increase in creditors and accruals Net cash generated from operations	2015 HK$’000 76,507 4,991 2,496 – – (72,215) (1,350) (3,016) 7,413 1,658 1,728 10,799	2014 HK$’000 45,335 7,178 2,495 139 150 (39,613) (1,200) (2,665)
		11,819 1,253 82
		13,154

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

In the statement of cash flows, proceeds from sale of property, plant and equipment comprise:

Net book amount Loss on disposal of property, plant and equipment Proceeds from disposal of property, plant and equipment	2015 HK$’000 – – –	2014 HK$’000 139 (139)
		–

29 Financial instruments by category

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets

Available-for-sale financial assets Loans, deposits and Receivables Debtors and other receivables Amounts due from associates Cash and bank balances Total	2015 HK$’000 46,283 6,713 130,815 875,190 1,012,718 1,059,001	2014 HK$’000 43,925
		8,241 150,915 368,887
		528,043
		571,968

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

Financial liabilities

Financial liabilities at amortised cost Financial liabilities in accrued liabilities and other payables Amounts due to associates Total	2015 HK$’000 25,958 16,986 42,944	2014 HK$’000 25,248 11,500
		36,748

30 Commitments

(a) Capital commitments

Capital expenditure contracted for at the end of the year but not yet incurred is as follows:

Investment properties – repairs and maintenance Property, plant and equipment	2015 HK$’000 – 680 680	2014 HK$’000 3,474 –
		3,474

(b) Operating lease rental receivable

The future minimum lease rental receipts under non-cancellable operating leases in respect of investment properties are receivable in the following periods:

Within one year Between one to five years	2015 HK$’000 21,786 20,910 42,696	2014 HK$’000 30,204 29,456
		59,660

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

31 Related party transactions

The Group received estate management fees income from its associates of HK$6,866,000 (2014: HK$6,886,000), which was determined at specified percentages of the gross operating revenues of the relevant companies.

On 21 August, 2015, the Company entered into a transaction with SRT (S&P) Architects Limited (‘‘SRT’’) in which the Independent Non-Executive Director Mr. Edward Shen has owned more than 30% equity interest, whereby SRT has provided designing service to the subsidiaries of the Company at a fee HK$100,000.

The Directors of the Company are regarded as key management of the Group and details of compensation paid to them are disclosed in Note 12 to the consolidated financial statements.

32 Ultimate holding company

The Directors regard Fabulous Investment Limited, a company incorporated in the British Virgin Islands, as being the immediate holding company of the Company.

The Directors regard Harlesden Limited (‘‘Harlesden’’), a company incorporated in the British Virgin Islands, as being the ultimate holding company of the Company. The Company is ultimately controlled by Mr. Dai Xiaoming, who is the sole shareholder of Harlesden.

33 Principal subsidiaries and associates

(a) Principal subsidiaries

			Percentage of	Percentage of
			attributable	equity
		Particular of issued	directly held
	Place of Incorporation	share capital/	by the	held	by	the	Principal activities
Name	and kind of legal entity	paid up capital	Company		Group		and place of operation
AsiaSec Finance Limited	Hong Kong, limited	1,000 Ordinary shares/	–			100	Financing, Hong Kong
	liability company	HK dollar 10,000
AsiaSec Property	Hong Kong, limited	300,000 Ordinary shares/	–			100	Property management,
Management Limited	liability company	HK dollar 300,000					Hong Kong
Citigrand Investment Limited	Hong Kong, limited	2 Ordinary shares/	–			100	Property investment,
	liability company	HK dollar 2					Hong Kong
Dan Form (China) Limited	Hong Kong, limited	2 Ordinary shares/	100			100	Investment holding,
	liability company	HK dollar 2					Hong Kong
Dan Form (Hong Kong) Limited	Hong Kong, limited	1,000,000	100			100	Investment holding,
	liability company	Ordinary shares/					Hong Kong
		HK dollar 1,000,000
Dawna Range Company	Hong Kong, limited	2 Ordinary shares/	–			100	Investment holding,
Limited	liability company	HK dollar 20					Hong Kong

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

			Percentage of	Percentage of
			attributable	equity
		Particular of issued	directly held
	Place of Incorporation	share capital/	by the	held	by	the	Principal activities
Name	and kind of legal entity	paid up capital	Company		Group		and place of operation
Diamond Property Management	Hong Kong, limited	1,000 Ordinary shares/	–			100	Property management,
Company Limited	liability company	HK dollar 10,000					Hong Kong
Harcape Limited	Hong Kong, limited	10,000 Ordinary shares/	–			100	Property investment,
	liability company	HK dollar 10,000					Hong Kong
Keen Safe Investment Limited	Hong Kong, limited	1,010,000	–			100	Investment holding,
	liability company	Ordinary shares/					Hong Kong
		HK dollar 1,010,000
Man Lee Offshore Limited	British Virgin Islands,	1 Ordinary share/	–			100	Property Investment,
	limited liabilities	US dollar 1					Mainland China
	company
Oriental Dragon Investment	British Virgin Islands,	1 Ordinary share/	–			100	Property investment,
Limited	limited liabilities	US dollar 1					Mainland China
	company
Smart Golf (International)	Hong Kong, limited	60,000,000	–			100	Investment holding,
Company Limited	liabilities company	Ordinary shares/					Hong Kong
		HK dollar 60,000,000
Top Power Development	Hong Kong, limited	2 Ordinary shares/	–			100	Property investment,
Limited	liabilities company	HK dollar 2					Hong Kong
Winshine Properties Limited	British Virgin Islands,	1 Ordinary share/	–			100	Property investment,
	limited liabilities	US dollar 1					Mainland China
	company
深圳隆運諮詢服務有限公司	Mainland China, limited	US dollar 2,150,000 (2)	–			100	Business consultant,
	liabilities company						Mainland China

(b) Principal associates

			Percentage of	Percentage of
			attributable	equity
		Particular of issued	directly held
	Place of Incorporation	share capital/	by the	held	by the	Principal activities
Name	and kind of legal entity	paid up capital	Company		Group	and place of operation
Beijing Jing Yuan Property	Mainland China, limited	US dollar 61,220,000 (2)	–		29.4	Property development,
Development Company,	liabilities company					Mainland China
Limited (1)
Ho Pok Investment	Hong Kong, limited	100 Ordinary shares/	–		50	Investment holding,
Company Limited	liabilities company	HK dollar 10,000				Hong Kong
Kin Tong Land Investment	Hong Kong, limited	1,000,000	–		50	Property investment,
Company Limited	liabilities company	Ordinary shares/				Hong Kong
		HK dollar 10,000,000
Zeta Estates Limited	Hong Kong, limited	9,900 Ordinary shares/	–		33.33	Property investment,
	liabilities company	HK dollar 990,000				Hong Kong

(1) Sino-foreign joint venture companies

(2) Paid-up registered capital

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

APPENDIX II

34 Balance sheet and reserve movement of the company

Balance sheet

AS AT 31 DECEMBER 2015

ASSETS Non-current assets Property, plant and equipment Subsidiaries Available-for-sale financial assets Current assets Debtors, prepayments, deposits and other receivables Amount due from a subsidiary Income tax recoverable Cash and bank balances Total assets EQUITY Share capital Reserves (Note a) Total equity LIABILITIES Current liabilities Creditors and accruals Amounts due to subsidiaries Total liabilities Total equity and liabilities	2015 HK$’000 132 301,652 8,870 310,654 933 140,000 393 800,136 941,462 1,252,116 681,899 563,240 1,245,139 6,624 353 6,977 1,252,116	2014 HK$’000 893 347,569 8,920
		357,382
		511 140,000 471 285,957
		426,939
		784,321
		681,899 84,483
		766,382
		6,741 11,198
		17,939
		784,321

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

Note (a) Reserve movement of the Company

At 1 January 2014 Profit for the year Change in fair value of available-for-sale financial assets Transition to no-par value regime on 3 March 2014 Transfer from special capital reserve to retained profits At 31 December 2014 Profit for the year Dividends relating to 2014 Change in fair value of available-for-sale financial assets Transfer from special capital reserve to retained profits At 31 December 2015	Share premium HK$’000 58,250 – – (58,250) – – – – – – –	Special capital reserve HK$’000 663 – – – (30) 633 – – – (633) –	Investment revaluation reserve HK$’000 2,647 – 2,109 – – 4,756 – – (50) – 4,706	Retained profits HK$’000 51,045 28,019 – – 30 79,094 503,753 (24,946) – 633 558,534	Total HK$’000 112,605 28,019 2,109 (58,250) –
					84,483 503,753 (24,946) (50) –
					563,240

35 Event after the reporting period

Subsequent to the year ended 31 December 2015 and up to the date of this report, the Company repurchased a total of 4,874,000 of its shares in the market at an aggregated consideration of approximately HK$6,538,000 (including expenses) and all the repurchased shares were cancelled.

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APPENDIX II

3. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF THE DAN FORM GROUP

Set out below is the reproduction of the text of the unaudited condensed consolidated financial statements of the Dan Form Group for the six months ended 30 June 2016 together with the accompanying notes contained in the interim report of Dan Form for the six months ended 30 June 2016 (the ‘‘Interim Report’’). Capitalised terms used in this section have the same meanings as those defined in the Interim Report.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2016

Note
Revenue
3
Other income
Other gains, net
4
Rent and rates
Building management fees
Staff costs, including directors’ remuneration
Depreciation and amortisation
Repair and maintenance
Administrative expenses
Operating profit before change in fair value
of investment properties
Change in fair values of investment properties
11
Operating profit
5
Share of results of associates
6
(Loss)/profit before income tax
Income tax expenses
7
(Loss)/profit for the period
Dividends
8
(Loss)/earnings per share
Basic and diluted
9

Unaudited
Six months ended 30 June
2016
2015
HK$’000
HK$’000
28,070
25,755
2,499
1,522
15,227
–
(258)
(265)
(3,058)
(2,897)
(11,616)
(9,210)
(2,128)
(2,942)
(361)
(3,143)
(6,958)
(4,757)
21,417
4,063
5,660
41,385
27,077
45,448
(35,686)
83,591
(8,609)
129,039
(1,937)
(6,600)
(10,546)
122,439
–
–
HK cents
HK cents
(0.85)
9.82

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2016

Note (Loss)/profit for the period Other comprehensive (loss)/income: Items that may be reclassified to profit or loss in future periods Surplus on revaluation of a building 10 Changes in fair value of available-for-sale financial assets Currency translation differences Other comprehensive (loss)/income for the period, net of tax Total comprehensive (loss)/income for the period	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (10,546) 122,439 – 4,439 (936) 1,035 (161) – (1,097) 5,474 (11,643) 127,913	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (10,546) 122,439 – 4,439 (936) 1,035 (161) – (1,097) 5,474 (11,643) 127,913
		4,439 1,035 –
		5,474
		127,913

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APPENDIX II

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 June 2016

Note ASSETS Non-current assets Property, plant and equipment 10 Investment properties 11 Land use rights Associates 12 Available-for-sale financial assets Current assets Debtors, prepayments, deposits and other receivables 13 Amounts due from associates 12 Income tax recoverable Cash and bank balances 14 Total assets EQUITY Share capital 15 Reserves 16 Total equity LIABILITIES Non-current liabilities Deferred income tax liabilities Current liabilities Creditors and accruals 17 Amounts due to associates 12 Income tax payable Total liabilities Total equity and liabilities	Unaudited 30 June 2016 HK$’000 85,240 1,038,750 24,267 3,158,109 45,526 4,351,892 8,818 – – 1,104,071 1,112,889 5,464,781 681,899 4,333,214 5,015,113 135,535 214,706 98,655 772 314,133 449,668 5,464,781	Audited 31 December 2015 HK$’000 86,050 1,033,090 24,629 3,193,795 46,283
		4,383,847
		8,138 130,815 628 875,190
		1,014,771
		5,398,618
		681,899 4,537,759
		5,219,658
		134,997
		26,976 16,986 1
		43,963
		178,960
		5,398,618

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2016

At 31 December 2014 (Audited) Profit for the period Surplus on revaluation of buildings Change in fair value of available-for-sale financial assets Other comprehensive income for the period Total comprehensive income for the period Final dividend paid relating to 2014 At 30 June 2015 (Unaudited)	Share capital HK$’000 681,899 –	Special capital reserve HK$’000 633 –	Other reserves HK$’000 26,412 –	Retained profits HK$’000 4,334,072 122,439	Total HK$’000 5,043,016 122,439
	– –	– –	4,439 1,035	– –	4,439 1,035
	– – – 681,899	– – – 633	5,474 5,474 – 31,886	– 122,439 (24,946) 4,431,565	5,474 127,913 (24,946) 5,145,983

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

Share capital HK$’000 681,899 –	Other reserves HK$’000 32,282 –	Retained profits HK$’000 4,505,477 (10,546)	Total HK$’000 5,219,658
			(10,546)
– –	(936) (161)	– –	(936) (161)
– – – – 681,899	(1,097) (1,097) – – 31,185	– (10,546) (186,364) (6,538) 4,302,029	(1,097)
			(11,643) (186,364) (6,538)
			5,015,113

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APPENDIX II

INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2016

Note
Cash flows from operating activities
Cash generated from operations
18
Net cash generated from
operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from disposal of property,
plant and equipment
Purchases of available-for-sale financial assets
Interest received
Decrease/(increase) in amounts
due from associates
Increase in amounts due to associates
Decrease in non-pledged time deposits
with original maturity of more than
three months when acquired
Dividends received from
available-for-sale financial assets
Dividend received from an associate
Net cash generated from investing activities
Cash flow from financing activity
Dividend paid
8
Repurchase of shares
Net cash used in financing activity
Increase in cash and cash equivalents
Cash and cash equivalents at
beginning of the period
Effect of foreign exchange rate changes
Cash and cash equivalents at
end of the period
Analysis of cash and cash equivalents
Cash and bank balances
Non-pledged time deposits with
original maturity of less than
three months when acquired
14

Unaudited
Six months ended 30 June
2016
2015
HK$’000
HK$’000
21,152
9,126
21,152
9,126
(1,105)
(56)
82
–
(190)
–
2,499
1,522
130,815
(33,164)
81,669
–
19,870
38,814
1,500
1,350
–
100,000
235,140
108,466
–
(24,946)
(6,538)
–
(6,538)
(24,946)
249,754
92,646
815,161
330,073
(1,003)
–
1,063,912
422,719
325,923
68,001
737,989
354,718
1,063,912
422,719

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APPENDIX II

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 General information

The principal activities of the Company and its subsidiaries (together, the ‘‘Group’’) are property investment, property rental and estate management.

The condensed consolidated interim financial information has been approved by the Board of Directors on 23 August 2016.

This condensed consolidated interim financial information is presented in HK dollars, unless otherwise stated.

The condensed consolidated interim financial information has not been audited.

The financial information relating to the year ended 31 December 2015 that is included in the condensed consolidated interim financial information for the six months ended 30 June 2016 as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:

The Company has delivered the financial statements for the year ended 31 December 2015 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance (Cap. 622).

The Company’s auditor has reported on those financial statements. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance (Cap. 622).

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APPENDIX II

2 Basis of preparation

The condensed consolidated interim financial information for the six months ended 30 June 2016 has been prepared in accordance with Hong Kong Accounting Standard (‘‘HKAS’’) 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants and comply with the applicable disclosure provision of the listing rules. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’).

The accounting policies, methods of computation, financial risk management and critical accounting estimates and judgements used in the preparation of the interim financial information are consistent with those used in the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

There are no amendments to standards or interpretations that are effective for the first time for this interim period that could be expected to have a material impact on this Group.

The following amendments to standards have been issued, but are not effective for the financial period beginning 1 January 2016 and have not been early adopted:

		Effective for
		accounting
		periods beginning
		on or after
HKFRS 10 and HKAS 28	Sale or Contribution of Assets Between	To be determined
(Amendments)	an Investor and Its Associate or
	Joint Venture
HKFRS 15	Revenue from Contracts with Customers	1 January 2018
HKFRS 9	Financial Instruments	1 January 2018
HKFRS 16	Leases	1 January 2019

The Group is in the process of making an assessment of the impact of these revised HKFRSs upon initial application and is not yet in a position to state whether these revised HKFRSs will have any significant impact on the Group’s results of operations and financial position.

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APPENDIX II

3 Revenue and segment information

Revenue is shown as follows:

Rental from investment properties Estate management fees Dividend income from unlisted investments	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 20,705 18,562 5,865 5,843 1,500 1,350 28,070 25,755	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 20,705 18,562 5,865 5,843 1,500 1,350 28,070 25,755
		25,755

The chief operating decision-maker has been identified as the executive director of the Company. The executive director regards the Group’s business as a single operating segment, which is property rental and estate management and reviews financial information accordingly. Therefore, no segment analysis of the Group’s revenue and contribution to operating profit is presented.

The total of non-current assets other than associates and available-for-sale financial assets located in Hong Kong is HK$1,117,508,000 (31 December 2015: HK$1,112,512,000), and the total of non-current assets located in Mainland China is HK$30,749,000 (31 December 2015: HK$31,257,000).

4 Other gains, net

Net exchange losses Gain on disposal of property, plant and equipment Write-back of provision for doubtful debt (Note)	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (1,000) – 80 – 16,147 – 15,227 –	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (1,000) – 80 – 16,147 – 15,227 –
		–

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APPENDIX II

Note:

On 30 May 2016, the second cash distribution in respect of the liquidation of a then subsidiary, Beijing Dan Yao Property Company Limited (‘‘Dan Yao’’) was received. Accordingly, the provision for doubtful debt on Dan Yao was written back to the consolidated statement of profit or loss, to the extent of the cash received.

5 Operating profit

Operating profit is arrived at after charging: Outgoings of investment properties that generated rental income Outgoings of investment properties that did not generated rental income	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 3,763 6,040 26 140

6 Share of results of associates

Change in fair value of investment properties (Note) Taxation	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (12,751) 161,700 2,104 (26,681)

Note:

The investment properties of the associates were valued by DTZ Cushman & Wakefield Limited (formally known as DTZ Debenham Tie Leung Limited), independent professional qualified surveyors. The valuation was determined by capitalising the net rental income with due allowance for outgoing and reversionary income potential or where appropriate by direct comparison approach by making reference to comparable sales transactions as available in the relevant market.

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APPENDIX II

7 Income tax expenses

Hong Kong profits tax has been provided at the rate of 16.5% (six months ended 30 June 2015: 16.5%) on the estimated assessable profit for the period. Taxation on profits generated in Mainland China has been provided at the relevant rates of taxation prevailing in Mainland China.

Current income tax Hong Kong Deferred income tax	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 1,399 646 538 5,954 1,937 6,600	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 1,399 646 538 5,954 1,937 6,600
		6,600

Income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year ending 31 December 2016 is 16.5% (six months ended 30 June 2015: 16.5%).

8 Dividends

Interim dividend of HK$Nil (six months ended 2015: HK$Nil) per ordinary share	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 – –

Note:

The Board of Directors do not recommend the payment of interim dividend for the six months ended 30 June 2016 (six months ended 30 June 2015: nil).

A final special dividend of HK$186,364,000 for the year ended 31 December 2015 has been approved at the annual general meeting of the Company held on 25 May 2016. The final special dividend was paid on 5 July 2016.

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APPENDIX II

9 (Loss)/earnings per share

The calculation of basic (loss)/earnings per share is based on the Group’s loss attributable to equity holders of HK$10,546,000 (six months ended 30 June 2015: profit of HK$122,439,000) and the weighted average number of 1,243,802,170 (30 June 2015: 1,247,298,945) shares in issue during the period.

The diluted (loss)/earnings per share equals the basic (loss)/earnings per share since there are no dilutive potential shares in issue during both periods.

10 Property, plant and equipment

Net book value at 1 January 2016/2015 Surplus on revaluation of a building Additions Disposals Transfer to investment properties Exchange realignment Depreciation Net book value at 30 June 2016/31 December 2015 Investment properties At 1 January 2016/2015 Transfer from property, plant and equipment Change in fair values At 30 June 2016/31 December 2015	Unaudited 30 June 2016 HK$’000 86,050 – 1,105 (2) – (22) (1,891) 85,240 Unaudited 30 June 2016 HK$’000 1,033,090 – 5,660 1,038,750	Audited 31 December 2015 HK$’000 135,717 4,439 991 – (50,500) (84) (4,513) 86,050 Audited 31 December 2015 HK$’000 910,375 50,500 72,215 1,033,090

11 Investment properties

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

Fair value hierarchy

==> picture [356 x 582] intentionally omitted <==

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

Fair value measurements
at 30 June 2016 using
Quoted
prices
in active Significant
markets other Significant
for identical observable unobservable
asset inputs inputs
Description (Level 1) (Level 2) (Level 3)
HK$’000 HK$’000 HK$’000
Recurring fair value measurements
Investment properties:
– Commercial building
– – –
Hong Kong 993,600
– Residential building
– – –
Hong Kong 45,150
Unaudited – 1,038,750 –
Fair value measurements
at 31 December 2015 using
Quoted
prices
in active Significant
markets other Significant
for identical observable unobservable
asset inputs inputs
Description (Level 1) (Level 2) (Level 3)
HK$’000 HK$’000 HK$’000
Recurring fair value measurements
Investment properties:
– Commercial building
– – –
Hong Kong 985,740
– Residential building
– – –
Hong Kong 47,350
Audited – 1,033,090 –
----- End of picture text -----

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APPENDIX II

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

There were no transfers between Levels 1, 2 and 3 during the period.

Valuation processes of the group

The Group’s investment properties were valued at 30 June 2016 and 31 December 2015 by independent professionally qualified surveyors who hold a recognised relevant professional qualification and have recent experience in the locations and segments of the investment properties valued. For the investment properties, its current use equates to the highest and best use.

The Group’s finance department includes a team that reviews the valuations performed by the independent surveyors for financial reporting purposes. This team reports directly to the financial controller (FC) and the audit committee (AC). Discussions of valuation processes and results are held between the FC, the valuation team and surveyors at least once every six months, in line with the Group’s interim and annual reporting dates. As at 30 June 2016 and 31 December 2015, the fair values of the properties have been determined DTZ Cushman & Wakefield Limited (formally known as DTZ Debenham Tie Leung Limited).

At each financial period end, the finance department:

Verifies all major inputs to the independent valuation report;
Assess property valuations movements when compared to the prior year valuation report; and
Holds discussions with the independent surveyors.

Valuation technique

There were no changes to the valuation techniques during the period.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

12 Associates

Share of net assets Amounts due from associates Less: provisions Amounts due to associates	Unaudited 30 June 2016 HK$’000 3,158,109 97,306 (97,306) – 98,655	Audited 31 December 2015 HK$’000 3,193,795
		228,121 (97,306)
		130,815
		16,986

The amounts due from/(to) associates are unsecured, interest free and repayable on demand.

13 Debtors, prepayments, deposits and other receivables

Trade debtors Other debtors Prepayments and deposits	Unaudited 30 June 2016 HK$’000 1,644 5,561 1,613 8,818	Audited 31 December 2015 HK$’000 876 4,750 2,512
		8,138

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

Trade debtors represent rental income and estate management fees receivables and are receivable on presentation of invoices. The ageing of these trade debtors of the Group, net of provisions and in accordance with the dates of the invoices, is as follows:

Within 30 days 14 Cash and bank balances Non-pledged time deposits with original maturity of over three months Cash and cash equivalents: Cash at bank and in hand Short term bank deposits with original maturity within 3 months Cash and cash equivalents for cash flow statements analysis Total	Unaudited 30 June 2016 HK$’000 1,644 Unaudited 30 June 2016 HK$’000 40,159 325,923 737,989 1,063,912 1,104,071	Audited 31 December 2015 HK$’000 876
		Audited 31 December 2015 HK$’000 60,029
		91,165 723,996
		815,161
		875,190

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APPENDIX II

15 Share capital

Issued and fully paid: At 1 January 2016/2015 Repurchases of shares At 30 June 2016/ 31 December 2015	Unaudited 2016 Number of shares HK$’000 1,247,298,945 681,899 (4,874,000) – 1,242,424,945 681,899	Audited 2015 Number of shares HK$’000 1,247,298,945 681,899 – – 1,247,298,945 681,899	Audited 2015 Number of shares HK$’000 1,247,298,945 681,899 – – 1,247,298,945 681,899
			681,899

Note:

The Group acquired 4,874,000 of its own shares through purchases on The Stock Exchange of Hong Kong Limited during the period. The total amount paid to acquire the shares was HK$6,538,000 which has been deducted from retained profits.

16 Reserves

On 9 December 2011, an extraordinary general meeting was passed by the shareholders of the Company for approving the share premium reduction of the Company. The purpose of the share premium reduction is to reduce the credit standing to the share premium account of the Company to the extent of HK$579,389,000 and to apply the credit arising from such reduction to eliminate the accumulated losses of the Company by the same amount. A sealed copy of the order made by the High Court on 3 February 2012 confirming the reduction of share premium account was submitted to the Registrar of Companies in Hong Kong and was duly registered on 8 February 2012.

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

During the year ended 31 December 2012, part of the debt on the claim against the Company amounting to HK$1,992,000 was settled, resulting a transfer from the special capital reserve of HK$1,992,000 to retained profits which is available for distribution and the sum of HK$663,000 is remained in the special reserve not available for distribution. There was no further debt settlement during the year ended 31 December 2013. During the year ended 31 December 2014, a further debt of HK$30,000 was settled, resulting the sum of HK$30,000 was transferred from the special capital reserve to retained profits, and therefore the sum of HK$633,000 is remained in the special capital reserve not available for distribution. During the year ended 31 December 2015, the remaining debt of HK$633,000 was settled, and the sum of HK$633,000 was transferred from the special capital reserve to retained profits. No special capital reserve maintained since 31 December 2015.

17 Creditors and accruals

Trade creditors Other creditors Dividend payable (Note 8) Accrued operating expenses	Unaudited 30 June 2016 HK$’000 338 21,377 186,364 6,627 214,706	Audited 31 December 2015 HK$’000 56 19,459 – 7,461
		26,976

The ageing of the trade creditors of the Group is as follows:

Within 30 days	Unaudited 30 June 2016 HK$’000 338	Audited 31 December 2015 HK$’000 56

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APPENDIX II

18 Notes to the condensed consolidated cash flow statement

Reconciliation of operating profit to net cash generated from operations

Operating profit Depreciation and amortisation Net exchange losses Gain on disposal of property, plant and equipment Write-back of provision for doubtful debt Change in fair value of investment properties Dividend income from available-for-sale financial assets Interest income Operating profit before working capital changes Decrease in debtors, prepayments, deposits and other receivables Increase in creditors and accruals Net cash generated from operations	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 27,077 45,448 2,128 2,942 1,000 – (80) – (16,147) – (5,660) (41,385) (1,500) (1,350) (2,499) (1,522) 4,319 4,133 15,467 1,677 1,366 3,316 21,152 9,126	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 27,077 45,448 2,128 2,942 1,000 – (80) – (16,147) – (5,660) (41,385) (1,500) (1,350) (2,499) (1,522) 4,319 4,133 15,467 1,677 1,366 3,316 21,152 9,126
		4,133 1,677 3,316
		9,126

In the condensed consolidated cash flow statement, proceeds from sale of property, plant and equipment comprise:

Net book amount Gain on disposal of property, plant and equipment Proceeds from disposal of property, plant and equipment	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 2 – 80 – 82 –	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 2 – 80 – 82 –
		–

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APPENDIX II

19 Fair value of financial assets and financial liabilities

The financial instruments that are measured in the consolidated balance sheet at fair value are required to disclose their valuation method. The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following represents the Group’s financial assets that are measured at fair value at 30 June 2016. See note 11 for disclosure of the investment properties that are measured at fair value.

At 30 June 2016, the Group’s assets measured at fair value are available-for-sale instruments, of which HK$10,079,000 (31 December 2015: HK$10,420,000) represents Level 2 instruments and HK$35,257,000 (31 December 2015: HK$35,863,000) represents Level 3 instruments. The fair value change in Level 3 instruments for the six ended 30 June 2016 was HK$606,000 (six months ended 30 June 2015: HK$2,439,000).

There were no transfers between levels 1, 2 and 3 during the period.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

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APPENDIX II

Specific valuation techniques used to value financial instruments include:

Quoted market prices or dealer quotes for similar instruments.
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

At the period end date, the net book value of the Group’s other financial assets and financial liabilities approximated their fair values.

Fair values are determined based on quoted market price, otherwise, with reference to professional valuations and/or estimations that take into account assumptions and estimates on factors affecting the value of the financial instruments and change of such assumptions and estimates to reasonably possible alternatives would not have material effect on the Group’s results for the period and financial position at the period end date.

20 Commitments

(a) Capital commitments

Capital expenditure contracted for at the end of the period but not yet incurred is as follows:

Property, plant and equipment	Unaudited 30 June 2016 HK$’000 –	Audited 31 December 2015 HK$’000 680

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FINANCIAL INFORMATION OF THE DAN FORM GROUP

(b) Operating lease rental receivable

The future minimum lease rental receipts under non-cancellable operating leases in respect of investment properties are receivable in the following periods:

Within one year Between one to five years	Unaudited 30 June 2016 HK$’000 38,527 44,811 83,338	Audited 31 December 2015 HK$’000 21,786 20,910
		42,696

21 Related party transactions

Estate management fee income from associates	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 3,187 3,536

The Group received estate management fees income from its associates of HK$3,187,000 (six months ended 30 June 2015: HK$3,536,000), which was determined at specified percentages of the gross operating revenues of the relevant companies.

On 18 February, 2016, the Company entered into a transaction with SRT (S&P) Architects Limited (‘‘SRT’’) in which the Independent Non-Executive Director Mr. Edward Shen has owned more than 30% equity interest, whereby SRT has provided designing service to the subsidiaries of the Company at a fee HK$100,000.

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APPENDIX II

4. INDEBTEDNESS STATEMENT

As of the close of business on 31 August 2016, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, Dan Form Group’s indebtedness of approximately HK$131 million represents amounts due to associates which are unsecured.

Save as aforesaid or otherwise disclosed in the Composite Document and apart from intragroup liabilities and normal trade payables, Dan Form Group had no other debt securities issued, outstanding and authorised or otherwise created but unissued, bank overdraft, loans, other borrowings, indebtedness in the nature of borrowing, acceptances, hire purchase commitments, outstanding mortgages and charges, contingent liabilities or guarantees as at the close of business on 31 August 2016.

5. MATERIAL CHANGE

Dan Form Directors confirm that there has been no material change in the financial or trading position or outlook of Dan Form Group since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Dan Form Group were made up, up to and including the Latest Practicable Date.

6. RECONCILIATION OF CARRYING VALUE DAN FORM GROUP’S PROPERTIES

As at 31 December 2015, being the date to which the latest audited financial statements of Dan Form Group were made up, the properties held by Dan Form Group were valued at HK$4,850.03 million. Based on the valuation report set out in Appendix III to this Composite Document, the then market value of the properties held by Dan Form Group was approximately HK$5,002.02 million as at 30 September 2016.

Set out below is the reconciliation of the difference between the carrying value of such properties as at 31 December 2015 and the market value as at 30 September 2016:

Book value of the properties held by Dan Form Group as at 31 December 2015 Fair value gain for the period from 31 December 2015 to 30 September 2016 Market value of the properties held by Dan Form Group as at 30 September 2016	HK$’000 4,850,027 151,990
	5,002,017

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VALUATION REPORT

APPENDIX III

The following is the text of a letter with the summary of valuations and valuation certificates received from DTZ Cushman & Wakefield Limited, the independent property valuer, prepared for the purpose of inclusion in this Composite Document, in connection with the market values of the properties as at 30 September 2016 of the Group.

==> picture [150 x 45] intentionally omitted <==

16th Floor Jardine House 1 Connaught Place Central Hong Kong

18 November 2016

The Directors

Dan Form Holdings Company Limited

33/F, Tower A, Billion Centre

1 Wang Kwong Road Kowloon Bay Kowloon

Dear Sirs,

Re: Portfolio Valuation

Instructions, Purpose & Date of Valuation

In accordance with your instructions for us to value the properties held by Dan Form Holdings Company Limited and/or its subsidiaries (hereinafter together referred to as ‘‘the Group’’) in Hong Kong and the People’s Republic of China (the ‘‘PRC’’). We confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of such properties as at 30 September 2016 (the ‘‘Valuation Date’’).

Basis of Valuation

Our valuation of each property represents its market value which in accordance with the HKIS Valuation Standards (2012 Edition) published by the Hong Kong Institute of Surveyors is defined as ‘‘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 .

III – 1

VALUATION REPORT

APPENDIX III

Valuation Assumptions

In undertaking our valuation, we have complied with the requirements 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, The Codes on Takeovers and Mergers and Share Buy-back of Securities and Futures Commission and the HKIS Valuation Standards (2012 Edition) published by the Hong Kong Institute of Surveyors.

Our valuation excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

In respect of the properties in the PRC, in the course of valuation of the properties, we have relied on the information and advice given by the Group and its legal adviser, Commerce & Finance Law Offices（通商律師事務所）regarding the title to each of the property of the Group.

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

Method of Valuation

We have valued the properties generally by capitalising the net rental income provided to us with due allowance for outgoings and reversionary income potential or where appropriate by direct comparison approach by making reference to comparable sales transactions as available in the relevant market.

According to the information provided by the Group, the potential tax liability which would arise upon disposal of the properties in Hong Kong is profits tax which is calculated at 16.5% of net profit upon disposal, save for deduction of any profit which is capital in nature. Regarding the potential tax liability in respect of sale of the properties in the PRC, it will comprise (a) Valueadded Tax, (b) Corporate Income Tax (standard rate of 25%) and (c) Land Appreciation Tax (progressive rates from 30% to 60%). The precise tax implication for the sales of properties will be subject to prevailing rules and regulations at the time of disposal.

As advised by the Group, in respect of property nos. 1 to 6 and 11 to 13 in Group I which are properties held by the Group for investment in Hong Kong, the properties in Group II which are properties held by the Group for owner-occupation in Hong Kong, the properties in Group III and Group IV which are properties held by the Group for investment and owner-occupation in the PRC, the Group has no intention to dispose of or transfer those property interests and it is unlikely that such tax liabilities will be crystalized in the near future. For property nos. 7 to 10 in Group I which are properties held by the Group for investment in Hong Kong, it is likely that the relevant tax liability will be crystalized upon sale. As advised by the Group, the total estimated amount of potential tax liability in respect of property nos. 7 to 10 in Group I is approximately HK$243.94 million, which has been fully provided for in the accounts of the Group as at 30 June 2016.

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VALUATION REPORT

APPENDIX III

Source of Information

We have relied to a considerable extent on information provided by the Group and have accepted advice given to us by the Group on such matters as planning approvals, statutory notices, easement, tenure, lettings, particulars of occupancy, attributable interest to the Group of each property, status of pre-sale, site and floor areas and all other relevant matters.

Dimensions, measurements and areas included in the attached valuation certificates are based on information contained in the documents provided to us by the Group and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us which are material to the valuation. We were also advised by the Group that no material facts have been omitted from the information supplied.

Land Tenure

In valuing the properties in Groups III and IV which are held by the Group in the PRC, we have assumed that transferable land use rights in respect of the properties at nominal land use fees have been granted and that any premium payable has already been fully settled. We have, unless otherwise stated, assumed that the grantees or the users of the respective properties have free and uninterrupted rights to use, occupy, underlet or assign the properties for the whole of the respective unexpired terms as granted.

Title Investigation

We have caused searches to be made at the relevant Land Registries for the properties in Hong Kong. However, we have not scrutinised the original documents to verify ownership or any amendments to any documents. All documents and leases have been used as reference only and all dimensions, measurements and areas are approximate. We have not caused title searches for the properties in the PRC but we have made reference to the copies of the title documents which have been made available to us.

Site Inspection

Our valuers in Hong Kong Office, Savannah Li and Stephanie Chong (both of them are holders of Bachelor degree in Estate Management and have over three years’ experience in property valuation) and our valuers in the PRC, Xing-chan Zhen (holder of Bachelor degree in Engineering and has over 12 years’ experience in property valuation) and Eric Liu (holder of Master degree in Urban Planning and has over 5 years’ experience in property valuation) inspected the exterior and wherever possible the interior of the properties in October 2016. No structural survey has been made, but in the course of our inspection, we did not note any serious defect. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of the documents handed to us are correct.

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VALUATION REPORT

APPENDIX III

Currency

Unless otherwise stated, the market values are stated in Hong Kong dollars (‘‘HK$’’) for properties in Groups I to II and in Renminbi (‘‘RMB’’) for properties in Groups III to IV.

We enclose herewith a summary of valuations and our valuation certificates.

Yours faithfully, For and on behalf of

DTZ Cushman & Wakefield Limited

K. B. Wong

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser

MHKIS

Senior Director, Valuation & Advisory Services

Note: Mr. K B Wong is a Registered Professional Surveyor (General Practice) who has over 30 years’ experience in valuation of properties in Hong Kong and The PRC.

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VALUATION REPORT

APPENDIX III

SUMMARY OF VALUATIONS

					Market value in
					existing state
			Market value in		attributable to the
			existing state as at	Interest attributable	Group as at
	Property		30 September 2016	to the Group	30 September 2016
Group	I – Properties held by the Group for investment in Hong Kong
1.	Flat F on 5th Floor, Tower 22 (Mei Wah		HK$9,900,000	100%	HK$9,900,000
	Court), South Horizons, No. 22 South
	Horizon Drive, Ap Lei Chau, Hong Kong
2.	The whole of Basement, Lower Ground	Portion A:	HK$1,119,300,000	80%	HK$895,440,000
	Floor, Shop Nos. 1-5, 10-49, 50-57, 59-66
	on Ground Floor, Shop Nos. 1B, 2-7, 10-22,	Portion B:	HK$210,700,000	40%	HK$84,280,000
	24, 25, 29-32, 33-42, 43, 44, 48 and 56 on
	1st Floor, the whole of 2nd Floor and 3rd	Portion C:	HK$30,000,000	100%	HK$30,000,000
	Floor, 4th (Garage) Floor with the Entrance
	and Car Lift Shaft (including car lift therein)
	leading from Ground Floor to Garage and 2
	Car Parking Spaces on Ground Floor and
	Reserved Areas (including roof and external
	walls), Harbour Crystal Centre, No. 100
	Granville Road, Tsimshatsui East, Kowloon
3.	Basement Level, Units A, B, C, D and F on		HK$352,000,000	50%	HK$176,000,000
	Ground Floor; 1st Floor; Units C and D on
	2nd Floor; Units A, B, C and D on 3rd
	Floor; Units B and C on 5th Floor; Units A,
	B and C on 7th Floor; Units A, B and C on
	8th Floor; Units A and C on 9th Floor; Unit
	C on 10th Floor; Units A, B and C on 11th
	Floor; Unit A on 16th Floor; Units A and B
	on 19th Floor; and the whole of 21st Floor,
	Queen’s Centre, Nos. 58-64 Queen’s Road
	East, Wanchai, Hong Kong
4.	Units A, B and Storeroom on Lower Ground		HK$1,136,000,000	5%	HK$56,800,000
	Floor, Units C1, C2, C3 and D on Ground
	Floor and Units A1, A3, A4, A5, A6, B, C,
	D1, D2, D3 and E on Upper Ground Floor,
	Flat Roof on 2nd Floor and Roof Top and
	11 Car Parking Spaces on Lower Ground
	Floor, Far East Finance Centre, No. 16
	Harcourt Road, Admiralty, Hong Kong

III – 5

APPENDIX III

VALUATION REPORT

				Market value in
				existing state
		Market value in		attributable to the
		existing state as at	Interest attributable	Group as at
	Property	30 September 2016	to the Group	30 September 2016
5.	The whole of Lower Ground Floor and	HK$350,000,000	50%	HK$175,000,000
	Ground Floor, Units D and E on 1st Floor,
	Units A, B and G on 3rd Floor, Units E &
	Flat Roof thereof and G & Flat Roof on 4th
	Floor, Units B, C, E, G and P on 5th Floor,
	Units C, F and G on 6th Floor, Units A, C,
	D, G and H on 8th Floor and Roofs
	thereabove, Private Car Parking Space Nos.
	P4 and P5, Lorry Car Parking Space Nos.
	L2, L3, L7, L12, L13 and Container Car
	Parking Space No. C15 on 1st Floor and
	Lorry Car Parking Space Nos. L14 and L15
	on Lower Ground Floor, Wah Shun
	Industrial Building, No. 4 Cho Yuen Street,
	Yau Tong, Kowloon
6.	Various units of Harbour Industrial Centre	HK$5,194,000,000	1/3 share	HK$1,731,333,000
	(Phase I), No. 10 Lee Hing Street and
	various units of Oceanic Industrial Centre
	(Phase II), No. 2 Lee Lok Street, Ap Lei
	Chau, Hong Kong
7.	House Nos. 60, 62, 68, 70, 76, 78, 97, 99,	HK$1,380,000,000	1/3 share	HK$460,000,000
	105, 107, 113, 115, 121 and 123 at Palm
	Drive and House Nos. 108, 110 and 134 at
	Cedar Drive, The Redhill Peninsula-Site C
	(Phase 2), No. 18 Pak Pat Shan Road, Island
	South, Hong Kong
8.	House Nos. 129, 131, 137, 139, 145, 147	HK$2,369,400,000	1/3 share	HK$789,800,000
	and 153 at Palm Drive and House Nos. 63,
	65, 71, 73, 79, 81, 87, 89, 95, 97, 101, 140,
	142, 148, 150, 158, 164, 166, 172, 174 and
	178 at Cedar Drive, The Redhill Peninsula-
	Site B (Phase 3), No. 18 Pak Pat Shan Road,
	Island South, Hong Kong
9.	27 residential units in Towers 1, 3, 6, 7 and	HK$777,600,000	1/3 share	HK$259,200,000
	10 and 143 Car Parking Spaces at Phase 4
	of The Redhill Peninsula, No. 18 Pak Pat
	Shan Road, Island South, Hong Kong
10.	House Nos. 1 and 69 at Palm Drive, The	HK$146,000,000	1/3 share	HK$48,667,000
	Redhill Peninsula-Site D (Phase 1), No. 18
	Pak Pat Shan Road, Island South, Hong
	Kong
11.	Car Parking Space Nos. 95 and 97 on Level	HK$1,500,000	50%	HK$750,000
	2, Waldorf Garden, No. 1 Tuen Lee Street,
	Tuen Mun, New Territories

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APPENDIX III

VALUATION REPORT

Property Market value in existing state as at 30 September 2016 Interest attributable to the Group 12. Units D and E on 33rd Floor, Tower A, Billion Centre, No. 1 Wang Kwong Road, Kowloon Bay, Kowloon HK$58,000,000 100% 13. Flat B on 21st Floor and Car Parking Space No. C56 on 3rd Floor, Forfar, No. 2 Forfar Road, Ho Man Tin, Kowloon HK$35,200,000 100% Total of Group I: HK$13,169,600,000 Group II – Properties held by the Group for owner-occupation in Hong Kong 14. Workshop No. 13 on 9th Floor, Harbour Industrial Centre, No. 10 Lee Hing Street, Ap Lei Chau, Hong Kong HK$5,060,000 100% 15. Units A, B and C on 33rd Floor, Tower A and Car Parking Spaces Nos. P24 and P57 on 2nd Floor, Billion Centre, No. 1 Wang Kwong Road, Kowloon Bay, Kowloon HK$96,000,000 100% 16. Flat C on 45th Floor (including Flat Roof(s)), Tower 1 and Car Parking Spaces Nos. R151 and R152, The Wings, No. 9 Tong Yin Street, Tseung Kwan O, Sai Kung, New Territories HK$43,000,000 100% Total of Group II: HK$144,060,000 Group III – Property held by the Group for investment in the PRC 17. Unit B712 on Level 7, Wangfujing Century Square, No. 99 Wangfujing Avenue, Dongcheng District, Beijing, the PRC RMB2,660,000 100% Total of Group III: RMB2,660,000	Market value in existing state attributable to the Group as at 30 September 2016 HK$58,000,000 HK$35,200,000
	HK$4,810,370,000
	HK$5,060,000 HK$96,000,000 HK$43,000,000
	HK$144,060,000
	RMB2,660,000
	RMB2,660,000

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APPENDIX III

VALUATION REPORT

Property
Market value in
existing state as at
30 September 2016
Interest attributable
to the Group
Group IV – Properties held by the Group for owner-occupation in the PRC
18.
Unit A505 on Level 5, Wangfujing Century
Square, No. 99 Wangfujing Avenue,
Dongcheng District, Beijing, the PRC
RMB6,820,000
100%
19.
Unit B902 on Level 9, Wangfujing Century
Square, No. 99 Wangfujing Avenue,
Dongcheng District, Beijing, the PRC
No Commercial
Value
100%
20.
Units 1802 and 1809 on Level 15, Tower A,
Yintai Center, No. 4 Jianguomenwai Avenue,
Chaoyang District, Beijing, the PRC
RMB18,900,000
100%
21.
Unit B102 on Level 1, Block No. 1 of
Juning Villa (1), Xili Golf Course, Nanshan
District, Shenzhen, Guangdong Province, the
PRC
RMB13,000,000
100%
Total of Group IV:
RMB38,720,000

Market value in
existing state
attributable to the
Group as at
30 September 2016
RMB6,820,000
No Commercial
Value
RMB18,900,000
RMB13,000,000

RMB38,720,000

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VALUATION REPORT

APPENDIX III

VALUATION CERTIFICATE

Group I – Properties held by the Group for investment in Hong Kong

				Market value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	30 September 2016
1.	Flat F on 5th Floor, Tower 22	The property comprises a	As at the Valuation Date, the	HK$9,900,000
	(Mei Wah Court), South	domestic unit on the 5th floor	property was vacant.
	Horizons, No. 22 South	of a 37-storey (including the		(100% attributable
	Horizon Drive, Ap Lei Chau,	ground floor) residential		interest to the Group:
	Hong Kong	tower in a large scale		HK$9,900,000)
		residential development. The
	Sundry shares of and in the	property was completed in
	Remaining Portion of	1994.
	Aplichau Inland Lot No. 121
		The gross floor area of the
		property is approximately
		1,100 sq.ft. (102.19 sq.m).
		The locality of the property is
		served by public transport
		services and characterised by
		residential developments of
		various ages.
		The property is held from the
		Government under Conditions
		of Exchange No. UB11998
		for a term of years from 28
		January 1988 to 31 March
		2040. The Government rent
		payable for the property is an
		amount equal to 3% of the
		rateable value for the time
		being of the property per
		annum.

Notes:

(1) The registered owner of the property is Citigrand Investment Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Residential (Group A)’’ use under Aberdeen and Ap Lei Chau Outline Zoning Plan No. S/H5/30 dated 24 December 2015.

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VALUATION REPORT

APPENDIX III

Market value in existing state as at 30 September 2016 Portion A HK$1,119,300,000

Property Description and tenure Particulars of occupancy 30 September 2016 2. The whole of Basement, The property comprises As at the Valuation Date, Portion A Lower Ground Floor, Shop various shops on the ground except for a portion of the HK$1,119,300,000 Nos. 1-5, 10-49, 50-57, 59-66 and 1st floors, the whole of property with a total gross on Ground Floor, Shop Nos. basement, lower ground floor, floor area of approximately (80% attributable 1B, 2-7, 10-22, 24, 25, 29-32, 2nd and 3rd floors, the garage 1,075 sq.ft. (99.87 sq.m.) interest to the Group: 33-42, 43, 44, 48 and 56 on floor on the 4th floor together which were currently vacant, HK$895,440,000) 1st Floor, the whole of 2nd with various ancillary areas, the remaining portions were Floor and 3rd Floor, 4th reserved area as well as the leased to various tenants for Portion B (Garage) Floor with the external walls of a 16-storey terms of mainly 2 to 9 years HK$210,700,000 Entrance and Car Lift Shaft (including 2 basement levels) with the latest tenancy due to (including car lift therein) commercial building expire in March 2022 and the (40% attributable leading from Ground Floor to completed in 1982. total monthly rent receivable interest to the Group: Garage and 2 Car Parking was about HK$3,946,000 per HK$84,280,000) Spaces on Ground Floor and The total gross floor area of month, most of the rents are Reserved Areas (including the property (excluding the exclusive of rates and Portion C roof and external walls), areas of car parking spaces) is management fees. HK$30,000,000 Harbour Crystal Centre, No. approximately 147,544 sq.ft. 100 Granville Road, (13,707.17 sq.m.). (100% attributable Tsimshatsui East, Kowloon interest to the Group: The locality of the property is HK$30,000,000) Sundry shares of and in served by public transport Kowloon Inland Lot No. services and characterised by (see Note (1) below) 10600 commercial developments of various ages.

(see Note (1) below)

The property is held from the Government under Conditions of Sale No. 11281 for a term of 75 years from 11 December 1978 renewable for a further term of 75 years. The Government rent payable for the whole lot is HK$1,000 per annum.

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VALUATION REPORT

APPENDIX III

Notes:

(1) Details of different portions of the property and their respective registered owners are as follows:-

Potion A:	Registered Owner
Shop Nos. 7 on 1st Floor	Tenants in Common:-
	Asia Empire Investment Limited (80%)
	Yau Fook Hong Company Limited (20%)
Shop No. 10 on 1st Floor	Tenants in Common:-
	Asiawell Investment Limited (80%)
	Yau Fook Hong Company Limited (20%)
Shop No. 11 on 1st Floor	Tenants in Common:-
	Gold Asia Investment Limited (80%)
	Yau Fook Hong Company Limited (20%)
Shop No. 12 on 1st Floor	Tenants in Common:-
	Wide Asia Investment Limited (80%)
	Yau Fook Hong Company Limited (20%)
The Basement and Lower Ground Floor, Shop	Tenants in Common:-
Nos. 1-5, 10-49, 59-66 on Ground Floor, Shop	Harcape Limited (80%) and
Nos. 1B, 2-6, 13-22, 24, 25, 29-32, 43, 44, 48	Yau Fook Hong Company Limited (20%)
and 56 on 1st Floor, 2nd floor and 3rd Floor
and the Reserved Areas (including the roof and
the external walls)
Portion B:
Shop Nos. 50-57 on Ground Floor and Shop	Tenants in Common:-
Nos. 33-42 on 1st Floor	Harcape Limited (40%) and
	Rococo Estate Limited (60%)
Portion C:
Fourth (Garage) Floor with the Entrance and	Harcape Limited
Car Lift Shaft (including car lift herein) leading
from Ground Floor to the Garage and 2 car
parking spaces on Ground Floor

(2) The Group has 80%, 50% and 100% attributable interest in Portion A, Proton B and Portion C of the property respectively.
(3) The property is zoned for ‘‘Commercial’’ use under Tsimshatsui Outline Zoning Plan No. S/K1/28 dated 3 December 2013.

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VALUATION REPORT

APPENDIX III

Market value in existing state as at Property Description and tenure Particulars of occupancy 30 September 2016 3. Basement Level, Units A, B, The property comprises As at the Valuation Date, HK$352,000,000 C, D and F on Ground Floor; various commercial units on except for a portion of the 1st Floor; Units C and D on basement and ground floor property with a total gross (50% attributable 2nd Floor; Units A, B, C and and various office units on floor area of approximately interest to the Group: D on 3rd Floor; Units B and various floors of a 22-storey 1,811 sq.ft. (168.25 sq.m.) HK$176,000,000) C on 5th Floor; Units A, B (including a basement) which were vacant, the and C on 7th Floor; Units A, commercial building. The property was subject to B and C on 8th Floor; Units building was completed in various tenancies with terms A and C on 9th Floor; Unit C 1982. of mainly 2 to 3 years with on 10th Floor; Units A, B the latest tenancy due to and C on 11th Floor; Unit A The total gross floor area of expire in March 2019 and the on 16th Floor; Units A and B the property is approximately total monthly rent receivable on 19th Floor; and the whole 27,457 sq.ft. (2,550.81 sq.m.). was about HK$754,000 of 21st Floor, Queen’s Centre, exclusive of rates and Nos. 58-64 Queen’s Road The locality of the property is management fees. East, Wanchai, Hong Kong served by public transport services and characterised by Sundry shares of and in the commercial and residential Remaining Portion of Inland developments of various ages. Lot No. 2243 The property is held from the Government under a Government lease for a term of 999 years from 9 July 1844. The Government rent payable for the lot is HK$30 per annum.

Notes:

(1) The registered owner of the property is Kin Tong Land Investment Company Limited which the Group holds an attributable interest of 50%.
(2) The property is zoned for ‘‘Residential (Group A)’’ use under Wan Chai Outline Zoning Plan No. S/H5/27 dated 3 August 2012.

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APPENDIX III

VALUATION REPORT

Market value in existing state as at Property Description and tenure Particulars of occupancy 30 September 2016 4. Units A, B and Storeroom on The property comprises As at the Valuation Date, the HK$1,136,000,000 Lower Ground Floor, Units various commercial units and property was fully let and C1, C2, C3 and D on Ground storeroom on the lower subject to various tenancies (5% attributable interest Floor and Units A1, A3, A4, ground floor level, for terms of mainly 1 to 3 to the Group: A5, A6, B, C, D1, D2, D3 commercial units on the years with the latest tenancy HK$56,800,000) and E on Upper Ground ground and upper ground due to expire in March 2020. Floor, Flat Roof on 2nd Floor floors, flat roof area on the The total monthly rent and Roof Top and 11 Car 2nd floor and roof top receivable was about Parking Spaces on Lower together with 11 car parking HK$3,175,000 exclusive of Ground Floor, Far East spaces on the lower ground rates and management fees. Finance Centre, No. 16 floor in the Far East Finance Harcourt Road, Admiralty, Centre. The building was The total licence fee Hong Kong completed in 1982. receivable for the flat roof, roof and store room on lower Sundry shares of and in The total gross floor area of ground floor was about Inland Lot No. 8466 the property (excluding the HK$517,000 per month. areas of car parking spaces, flat roof and store) is The parking spaces were approximately 52,409 sq.ft. licenced on monthly basis and (4,868.91 sq.m.). the total income receivable in September 2016 was about The property has a flat roof HK$82,200. area of approximately 19,700 sq.ft. (1,830.19 sq.m.). The locality of the property is served by public transport services and characterised by commercial developments of various ages. The property is held from the Government under Conditions of Sale No. 11418 for a term of 75 years from 23 July 1980 renewable for a further term of 75 years. The Government rent payable for the whole lot is HK$1,000 per annum.

Notes:

(1) The registered owner of the property is Green Palm Estates Limited which the Group holds an attributable interest of 5%.
(2) The property is zoned for ‘‘Commercial’’ use under Central District Outline Zoning Plan No. S/H4/15 dated 11 December 2015.

III – 13

APPENDIX III

VALUATION REPORT

Market value in existing state as at 30 September 2016

Property Description and tenure Particulars of occupancy 30 September 2016 5. The whole of Lower Ground The property comprises As at the Valuation Date, HK$350,000,000 Floor and Ground Floor, various industrial units on the except a portion of the Units D and E on 1st Floor, lower ground floor, ground property with a gross floor (50% attributable Units A, B and G on 3rd floor, 1st, 3rd, 4th, 5th, 6th area of approximately 1,800 interest to the Group: Floor, Units E & Flat Roof and 8th floors respectively sq.ft. (167.22 sq.m.) which HK$175,000,000) thereof and G & Flat Roof on together with 2 lorry parking were vacant, the property was 4th Floor, Units B, C, E, G spaces on the lower ground subject to various tenancies and P on 5th Floor, Units C, floor, 5 lorry parking spaces, with the latest tenancy due to F and G on 6th Floor, Units 1 container parking space and expire in July 2018 at a A, C, D, G and H on 8th 2 private car parking spaces monthly rent of about Floor and Roofs thereabove, on the 1st floor of a 10-storey HK$929,000. Private Car Parking Space industrial building completed Nos. P4 and P5, Lorry Car in 1979. The car parking spaces were Parking Space Nos. L2, L3, subject to various tenancies at L7, L12, L13 and Container The total gross floor area of a total monthly rent of about Car Parking Space No. C15 the industrial units (excluding HK$23,200. on 1st Floor and Lorry Car the car parking spaces) is Parking Space Nos. L14 and approximately 134,236 sq.ft. L15 on Lower Ground Floor, (12,470.83 sq.m.) and the flat Wah Shun Industrial roof area and roof area are Building, No. 4 Cho Yuen 2,112 sq.ft. (196.21 sq.m.) Street, Yau Tong, Kowloon and 14,611 sq.ft. (1,357.40 sq.m.) respectively. Sundry shares of and in Yau Tong Inland Lot No. 29 The locality of the property is served by public transport services and characterised by industrial and residential developments of various ages. The property is held from the Government under Conditions of Sales No. 10916 for a term of 99 years from 1 July 1898 less the last three days which was statutorily extended until 30 June 2047. The Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Kin Tong Land Investment Company Limited which the Group holds an attributable interest of 50%.
(2) The property is zoned for ‘‘Residential (Group E)’’ use under Cha Kwo Ling, Yau Tong, Lei Yue Mun Outline Zoning Plan No. S/K15/24 dated 24 June 2016.

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APPENDIX III

Market value in Particulars of existing state as at Property Description and tenure occupancy 30 September 2016 6. Various units of The property comprises various industrial units As at the Valuation HK$5,194,000,000 Harbour Industrial and 133 car parking spaces on various floors Date, except for a Centre (Phase I), No. of two blocks of 24-storey industrial buildings. portion of the property ([1] /3 share to the 10 Lee Hing Street The development was completed in about with a total gross floor Group: and various units of 1991. area of 170,464 sq.ft. HK$1,731,333,000) Oceanic Industrial (15,836.49 sq.m.) which Centre (Phase II), No. The gross floor area of the property (excluding were vacant, the 2 Lee Lok Street, Ap the area of car parking spaces) is property was subject to Lei Chau, Hong Kong approximately as follows:various tenancies with the latest tenancy due to Sundry shares of and Gross Floor Area expire in March 2019 at in Ap Lei Chau Inland sq.ft. sq.m. a total monthly rent of Lot No. 116 about HK$7,955,000. Various units of Harbour The car parking spaces Industrial Centre 242,931 22,568.84 were subject to various plus Roof 23,195 2,154.87 tenancies at a total monthly rent of about Various units of HK$346,700. Oceanic Industrial Centre 704,152 65,417.32 plus Roof 37,554 3,488.85

The locality of the property is served by public transport services and characterised by industrial developments of various ages.

The property is held from the Government under Conditions of Exchange No. 11820 for a term of 75 years from 1 October 1980 renewable for a further term of 75 years. The Government rent payable for the whole lot is HK$1,000 per annum.

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APPENDIX III

Notes:

(1) The property comprises the following units:-

Harbour Industrial Centre

Floor(s)	Unit(s)
2nd	1-12
3rd	5, 6, 8, 9, 11
4th-6th	1-12
7th	2, 9, 10-14, 16-19
8th	7
9th	2, 10-12, 14, 16-20
10th	11-14, 16-19
11th	7, 9-11, 13-14, 16-19
12th	5, 16
13th	5, 11, 14, 19
14th	5, 7, 16-18
16th	5
17th	16
20th	16
21st	16, 21
22nd	7, 16, 21
23rd	1-3, 5-21

Carpark Space Nos. 1 to 30 and Lorry Space Nos. L1 to L29

Oceanic Industrial Centre

Floor(s)	Unit(s)
Ground	1-3
2nd	1-10, 12-32
3rd	16-26
4th-11th	1-26
12th-13th	1-27
14th	6-27
15th	8-15, 17, 19-27
16th-23rd	1-27

Carpark Space Nos. P1 to P3 on Ground Floor and P1 to P34 on 1st Floor Lorry Space Nos. L1 to L7 on Ground Floor and L1 to L30 on 1st Floor

(2) The registered owner of the property is Zeta Estates Limited which the Group holds an attributable interest of 1/3 share.
(3) The property is zoned for ‘‘Other Specified Uses (Business(3))’’ use under Aberdeen & Ap Lei Chau Outline Zoning Plan No. S/H15/30 dated 24 December 2015.

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APPENDIX III

Property

Description and

tenure

Particulars of

occupancy

Market value in existing state as at 30 September 2016

House Nos. 60, 62,	The property comprises 17 semi-detached	The property comprises 17 semi-detached	The property comprises 17 semi-detached
68, 70, 76, 78, 97, 99,	houses in Phase 2 of	a residential development
105, 107, 113, 115,	consisting of ten apartment towers and various
121 and 123 at Palm	houses. The property	was completed in about
Drive and House Nos.	1991.
108, 110 and 134 at
Cedar Drive, The	The total area of the	property is approximately
Redhill Peninsula-Site	as follows:-
C (Phase 2), No. 18
Pak Pat Shan Road,		sq.ft.	sq.m.
Island South,
Hong Kong	House	53,133	4,936.18
	Garden	25,251	2,345.88
Sundry shares of and	Flat Roof	8,146	756.78
in Remaining Portion	Carport/Entrance	9,288	862.88
of Section B of Rural		95,818	8,901.72
Building Lot No. 1050

As at the Valuation HK$1,380,000,000 Date, except House No. ([1] /3 share to the 110 at Cedar Drive was Group: let for a term of 2 years HK$460,000,000) from 8 December 2015 to 7 December 2017 at a monthly rent of HK$133,000, the remaining houses were vacant.

The locality of the property is served by public transport services and characterised by residential developments of various ages.

The property is held from the Government under Conditions of Sale No. 11461 for a term of 75 years from 2 January 1981 renewable for a further term of 75 years. The Government rent payable for the whole lot is HK$1,000 per annum.

Notes:

(1) The registered owner of the property is Zeta Estates Limited which the Group holds an attributable interest of 1/3 share.
(2) The property is zoned for ‘‘Residential (Group C)’’ use under Tai Tam & Shek O Outline Zoning Plan No. S/ H8/10 dated 6 May 2008.

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APPENDIX III

Description and Property tenure

House Nos. 129, 131,	The property comprises 28 semi-detached	The property comprises 28 semi-detached	The property comprises 28 semi-detached
137, 139, 145, 147	houses in Phase 3 of a residential development
and 153 at Palm Drive	consisting of ten apartment towers		and various
and House Nos. 63,	houses. The property was completed in about
65, 71, 73, 79, 81, 87,	1991.
89, 95, 97, 101, 140,
142, 148, 150, 158,	The total area of the property is approximately
164, 166, 172, 174	as follows:-
and 178 at Cedar
Drive, The Redhill
Peninsula-Site B		sq.ft.	sq.m.
(Phase 3), No. 18 Pak
Pat Shan Road, Island	House	81,604	7,581.20
South, Hong Kong	Yard	34,166	3,174.10
	Flat Roof	30,156	2,801.56
Sundry shares of and	Carport/Entrance	14,197	1,318.93
in Section C of Rural		160,123	14,875.79
Building Lot No. 1050

Market value in Particulars of existing state as at occupancy 30 September 2016 As at the Valuation HK$2,369,400,000 Date, except House No. 145 at Palm Drive was ([1] /3 share to the let for a term of 2 years Group: from 15 August 2015 to HK$789,800,000) 14 August 2017 at a monthly rent of HK$132,000, the remaining houses were vacant.

The locality of the property is served by public transport services and characterised by residential developments of various ages.

Notes:

(1) The registered owner of the property is Zeta Estates Limited which the Group holds an attributable interest of 1/3 share.
(2) House No. 166 of the property is subject to an Assignment for Sale and Purchase in favour of Renowned King Limited for a consideration of HK$102,241,300 vide Memorial No. 15111800460121 dated 26 October 2015.
(3) The property is zoned for ‘‘Residential (Group C)’’ use under Tai Tam & Shek O Outline Zoning Plan No. S/ H8/10 dated 6 May 2008.

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VALUATION REPORT

APPENDIX III

Property

27 residential units in Towers 1, 3, 6, 7 and 10 and 143 Car Parking Spaces at Phase 4 of The Redhill Peninsula, No. 18 Pak Pat Shan Road, Island South, Hong Kong

Sundry shares of and in the Remaining Portion of Rural Building Lot No. 1050

Description and tenure

The property comprises a total of 27 apartment units including 3 units in tower 1, 10 units in tower 3, 8 units in tower 6, 3 units in tower 7 and 3 units in tower 10 as well as 143 car parking spaces in Phase 4 of a residential development completed in about 1992.

Particulars of occupancy

As at the Valuation Date, except a car parking space was let for a term of 2 years from November 2014 to November 2016 at a monthly rent of HK$2,000, the remaining residential units and car parking spaces were vacant.

Market value in existing state as at 30 September 2016

HK$777,600,000

([1] /3 share to the Group: HK$259,200,000)

The saleable area of the domestic units is approximately 31,514 sq.ft. (2,927.72 sq.m.) excluding the area of car parking spaces.

The locality of the property is served by public transport services and characterised by residential developments of various ages.

The property is held form the Government under Conditions of Sale No. 11461 for a term of 75 years from 2 January 1981 renewable for a further term of 75 years. The Government rent payable for the whole of lot is HK$1,000 per annum.

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VALUATION REPORT

APPENDIX III

Notes:

(1) The property comprises the following units:-

Tower Units 1 Flats A on 1st and 6th Floors 1 Flats B on 16th to 17th Floors 3 Flats A on 4th, 7th and 14th to 16th Floors 3 Flats B on 4th, 7th to 9th and 15th Floors 6 Flats A on 4th to 7th and 10th Floors 6 Flats B on 5th, 7th and 9th Floors 7 Flats A on 6th, 8th and 10th Floors 10 Flats A on 4th and 5th Floor 10 Flat B on 3rd Floor

Car Parking Spaces Nos. 4, 34, 37-40, 57-59, 61-62, 65, 70, 74, 76-77, 81, 105-106, 108, 115, 117, 120, 134-139, 172, 212-217, 234, 257, 260, 263-264 on Carpark Level 1 and Car Parking Spaces Nos. 1-6, 9-15, 28-44, 58-67, 71-78, 83-87, 108-109, 118-119, 124-127, 141, 143-144, 146-147, 174, 180-189, 211-228, 247-249 and 269-272 on Carpark Level 2 in Phase 4

(2) The registered owner of the property is Zeta Estates Limited which the Group holds an attributable interest of 1/3 share.
(3) At the time of our recent title searches, we noticed that each of the following units were respectively subject to provisional sales and purchase agreement or agreement for sales and purchases. The units are as follows:-

Tower Units 1 Flats A on 1st and 6th Floors 3 Flats A on 4th, 7th, 14th, 15th and 16th Floors 3 Flats B on 9th and 15th Floors 6 Flats B on 5th and 9th Floors 7 Flats A on 6th, 8th and 10th Floors 10 Flat A on 5th Floor 10 Flat B on 3rd Floor

(4) The property is zoned for ‘‘Residential (Group C)’’ use under Tai Tam & Shek O Outline Zoning Plan No. S/ H8/10 dated 6 May 2008.

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VALUATION REPORT

APPENDIX III

Description and

Property tenure

Particulars of

occupancy

Market value in existing state as at 30 September 2016

House Nos. 1 and 69 The property comprises 2 semi-detached at Palm Drive, The houses in Phase 1 of a residential development Redhill Peninsula-Site consisting of ten apartment towers and various D (Phase 1), No. 18 houses. The property was completed in about Pak Pat Shan Road, 1990. Island South, Hong Kong The total area of the property is approximately as follows:-

As at the Valuation HK$146,000,000 Date, the property was vacant. ([1] /3 share to the Group: HK$48,667,000)

as follows:-
Sundry shares of and in Section A of Rural Building Lot No. 1050 Saleable Area Garden Flat Roof Carport/Entrance	sq.ft. 5,859 1,493 1,617 2,032 11,001	sq.m. 544.31 138.70 150.22 188.78
		1,022.01

The locality of the property is served by public transport services and characterised by residential developments of various ages.

Notes:

(1) The registered owner of the property is Zeta Estates Limited which the Group holds an attributable interest of 1/3 share.
(2) The property is zoned for ‘‘Residential (Group C)’’ use under Tai Tam & Shek O Outline Zoning Plan No. S/ H8/10 dated 6 May 2008.

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APPENDIX III

VALUATION REPORT

Market value in existing state as at 30 September 2016

				existing state as at
	Property	Description and tenure	Particulars of occupancy	30 September 2016
11.	Car Parking Space Nos.	The property comprises 2 car	As at the Valuation Date, the	HK$1,500,000
	95 and 97 on Level 2,	parking spaces on the level 2	property was let on monthly
	Waldorf Garden,	of a residential development	basis at a total monthly rent	(50% attributable
	No. 1 Tuen Lee Street,	with five apartment towers	of HK$2,600.	interest to the Group:
	Tuen Mun,	completed in 1982.		HK$750,000)
	New Territories
		The locality of the property is
	Sundry shares of and in Tuen	served by public transport
	Mun Twon Lot No. 194	services and characterised by
		residential developments of
		various ages.
		The property is held from the
		Government under New Grant
		No. 2344 for a term of 99
		years less the last 3 days
		from 1 July 1898 which was
		statutorily extended until 30
		June 2047. The Government
		rent payable for the property
		is amount equal to 3% of the
		rateable value for the time
		being of the property per
		annum.

Notes:

(1) The registered owners of the property are AsiaSec Project Management Limited (formerly known as Terrian Limited)（½ share) and Bevercourt Limited（½ share) (Tenants in Common). The Group holds an attributable interest of 50%.
(2) The property is zoned for ‘‘Residential (Group A)’’ use under Tuen Mun Outline Zoning Plan No. S/TM/33 dated 10 February 2015.

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APPENDIX III

VALUATION REPORT

Market value in existing state as at 30 September 2016

Property Description and tenure Particulars of occupancy 30 September 2016 12. Units D and E on 33rd Floor, The property comprises 2 As at the Valuation Date, the HK$58,000,000 Tower A, Billion Centre, office units on 33rd floor of a property was let for a term of No. 1 Wang Kwong Road, 31-storey commercial building 3 years from 16 June 2015 to (100% attributable Kowloon Bay, Kowloon with car parking spaces 15 June 2018 at a monthly interest to the Group: provided on ground to 3rd rent of HK$108,500. HK$58,000,000) Sundry shares of and in the floors of the property which Remaining Portion of New was completed in 2009. Kowloon Inland Lot No. 5925 The gross floor area of the property is approximately 5,425 sq.ft. (503.99 sq.m.). The locality of the property is served by public transport services and characterised by commercial and industrial developments of various ages. The property is held from the Government under Conditions of Sale No. UB11579 for a term of 99 years from 1 July 1898 and had been statutorily renewed to 30 June 2047. The Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Top Power Development Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Other Specified Use (Business)’’ use under Ngau Tau Kok & Kowloon Bay Outline Zoning Plan No. S/K13/28 dated 11 April 2014.

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APPENDIX III

VALUATION REPORT

Market value in existing state as at 30 September 2016

				existing state as at
	Property	Description and tenure	Particulars of occupancy	30 September 2016
13.	Flat B on 21st Floor and Car	The property comprises a	As at the Valuation Date, the	HK$35,200,000
	Parking Space No. C56 on	residential unit on the 21st	property was let for a term of
	3rd Floor, Forfar, No. 2	floor and a car parking space	2 years from 1 May 2016 to	(100% attributable
	Forfar Road, Ho Man Tin,	on the 3rd floor of a 23-	30 April 2018 at a monthly	interest to the Group:
	Kowloon	storey residential building	rent of HK$66,000, inclusive	HK$35,200,000)
		erected upon an 8-storey	of rates and management fees.
	Sundry shares of and in the	entrance/car park/recreation
	Remaining Portion of	facilities/sky garden podium
	Kowloon Inland Lot No. 4022	completed in 2010.
		The gross floor area of the
		property is approximately
		2,342 sq.ft. (217.58 sq.m.).
		The locality of the property is
		served by public transport
		services and characterised by
		residential developments of
		various ages.
		The property is held from the
		Government under Conditions
		of Sale No. UB3807 for a
		term of 75 years from 20
		June 1938 renewable for a
		further term of 75 years. The
		Government rent payable for
		the whole lot is HK$210 per
		annum.

Notes:

(1) The registered owner of the property is Citigrand Investment Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Residential (Group B)’’ use under Ma Tau Kok Outline Zoning Plan No. S/K10/ 22 dated 5 April 2016.

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APPENDIX III

VALUATION REPORT

Group II – Properties held by the Group for owner-occupation in Hong Kong

				Market value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	30 September 2016
14.	Workshop No. 13 on 9th	The property comprises an	As at the Valuation Date, the	HK$5,060,000
	Floor, Harbour Industrial	industrial unit on the 9th	property was occupied by the
	Centre, No. 10 Lee Hing	floor of a 24-storey industrial	Group.	(100% attributable
	Street, Ap Lei Chau, Hong	building. The development		interest to the Group:
	Kong	was completed in about 1991.		HK$5,060,000)
	Sundry shares of and in Ap	The gross floor area of the
	Lei Chau Inland Lot No. 116	property is approximately
		1,010 sq.ft. (93.83 sq.m.).
		The locality of the property is
		served by public transport
		services and characterised by
		industrial developments of
		various ages.
		The property is held from the
		Government under Conditions
		of Exchange No. 11820 for a
		term of 75 years from 1
		October 1980 renewable for a
		further term of 75 years. The
		Government rent payable for
		the whole lot is HK$1,000
		per annum.

Notes:

(1) The registered owner of the property is Dun Man Enterprises Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Other Specified Uses (Business(3))’’ use under Aberdeen & Ap Lei Chau Outline Zoning Plan No. S/H15/30 dated 24 December 2015.

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APPENDIX III

VALUATION REPORT

	Property	Description and tenure
15.	Units A, B and C on 33rd	The property comprises 3
	Floor, Tower A and Car	office units on 33rd floor and
	Parking Spaces Nos. P24 and	two car parking spaces on
	P57 on 2nd Floor, Billion	2nd floor of a 31-storey
	Centre, No. 1 Wang Kwong	commercial building with car
	Road, Kowloon Bay,	parking spaces provided on
	Kowloon	ground to 3rd floors of the
		property which was
	Sundry shares of and in the	completed in 2009.
	Remaining Portion of New
	Kowloon Inland Lot No. 5925	The gross floor area of the
		property is approximately
		8,426 sq.ft. (782.79 sq.m.)
		excluding the area of car
		parking spaces.

Particulars of occupancy

As at the Valuation Date, the property was occupied by the Group.

Market value in existing state as at 30 September 2016

HK$96,000,000 (100% attributable interest to the Group: HK$96,000,000)

The locality of the property is served by public transport services and characterised by commercial and industrial developments of various ages.

The property is held from the Government under Conditions of Sale No. UB11579 for a term of 99 years from 1 July 1898 and had been statutorily renewed to 30 June 2047. The Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Top Power Development Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Other Specified Use (Business)’’ use under Ngau Tau Kok & Kowloon Bay Outline Zoning Plan No. S/K13/28 dated 11 April 2014.

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APPENDIX III

VALUATION REPORT

Property Description and tenure 16. Flat C on 45th Floor The property comprises a (including Flat Roof(s)), residential unit on the 45th Tower 1 and Car Parking floor of a 38-storey Spaces Nos. R151 and R152, residential building and two The Wings, No. 9 Tong Yin car parking spaces within the Street, Tseung Kwan O, Sai development completed in Kung, New Territories 2011. Sundry shares of and in The gross floor area of the Tseung Kwan O Town Lot property is approximately No. 72 2,276 sq.ft. (211.45 sq.m.). The total flat roofs area is approximately 570 sq.ft. (52.95 sq.m.). The property is held from the Government under New Grant No. 20379 for a term of 50 years from 18 May 2007. The Government rent payable for the lot is an amount equal to 3% of the rateable value for the time being of the lot per annum.

Market value in existing state as at 30 September 2016

Particulars of occupancy

As at the Valuation Date, the HK$43,000,000 property was occupied by the Group. (100% attributable interest to the Group: HK$43,000,000)

Notes:

(1) The registered owner of the property is Citigrand Investment Limited, a wholly owned subsidiary of the Group.
(2) The property is zoned for ‘‘Other Specified Use (Commercial Development with Public Transport Interchange)’’ use under Tseung Kwan O Outline Zoning Plan No. S/TKO/23 dated 24 June 2016.

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APPENDIX III

Group III – Property held by the Group for investment in the PRC

Property Description and tenure
1. Unit B712 on Level 7, Completed in 1996, Wangfujing Century Square, Wangfujing Century Square No. 99 Wangfujing Avenue, comprises a 6-storey Dongcheng District, Beijing, apartment/office block built the PRC over a 4-level shopping mall complex with car parks erected on a parcel of land with a total site area of approximately 7,745.10 sq.m.

Market value in existing state as at 30 September 2016

Particulars of occupancy

RMB2,660,000

As the Valuation Date, the RMB2,660,000 property was leased at a prevailing monthly rent of (100% attributable RMB7,000 and the expiry interest to the Group: date of tenancy is 28 RMB2,660,000) February 2017.

The property comprises an apartment unit on the Level 7 of the apartment block of Wangfujing Century Square with a gross floor area of approximately 52.03 sq.m.

The property is held with land use rights for a term due to expire on 24 December 2063 for apartment use.

Notes:

(1) According to State-owned Land Use Rights Certificate No. (2007) 6014214 issued by People’s Government of Beijing on 30 March 2007, the land use rights of the property with an apportioned site area of 6.83 sq.m. have been vested in 東龍投資有限公司 (Oriental Dragon Investment Ltd.) with a term due to expire on 24 December 2063 for apartment use.
(2) According to Building Ownership Certificate No. 0310498 issued by 北京市建設委員會 (Beijing Construction Commission) on 15 February 2007, the building ownership of the property, comprising a gross floor area of approximately 52.03 sq.m., has been vested in 東龍投資有限公司 (Oriental Dragon Investment Ltd.).
(3) According to Certificate of Incorporation No. 1047806 dated 21 July 2006, 東龍投資有限公司 (Oriental Dragon Investment Ltd.) is incorporated in the British Virgin Islands as an International Business Company on 18 February 1994.

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VALUATION REPORT

APPENDIX III

(4) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Commerce & Finance Law Offices（通商律師事務所）which contains, inter alia, the following information:
(i) The State-owned Land Use Rights Certificate and Building Ownership Certificate of the property are valid, legal and enforceable under the PRC laws;
(ii) 東龍投資有限公司 (Oriental Dragon Investment Ltd.) is the sole legal land user of the property; and
(iii) 東龍投資有限公司 (Oriental Dragon Investment Ltd.) has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 東龍投資有限公司 (Oriental Dragon Investment Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance.
(5) The status of the title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes Certificate of Incorporation Yes

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APPENDIX III

Group IV – Properties held by the Group for owner-occupation in the PRC

Property Description and tenure
1. Unit A505 on Level 5, Completed in 1996, Wangfujing Century Square, Wangfujing Century Square No. 99 Wangfujing Avenue, comprises a 6-storey Dongcheng District, Beijing, apartment/office block built the PRC over a 4-level shopping mall complex with car parks erected on a parcel of land with a total site area of approximately 7,745.10 sq.m.

Market value in existing state as at 30 September 2016

Particulars of occupancy 30 September 2016 As at the Valuation Date, the RMB6,820,000 property was occupied by the Group as office. (100% attributable interest to the Group: RMB6,820,000)

The property comprises an office unit on Level 5 of the office block of Wangfujing Century Square with a gross floor area of approximately 206.76 sq.m.

The property is held with land use rights for a term due to expire on 24 December 2043 for office use.

Notes:

(1) According to State-owned Land Use Rights Certificate No. (2007) 6014213 issued by People’s Government of Beijing on 30 March 2007, the land use rights of the property with an apportioned site area of 27.14 sq.m. have been vested in 榮陽房地產有限公司 (Winshine Properties Ltd.) with a term due to expire on 24 December 2043 for office use.
(2) According to Building Ownership Certificate No. 0310497 issued by 北京市建設委員會 (Beijing Construction Commission) on 15 February 2007, the building ownership of the property, comprising a gross floor area of approximately 206.76 sq.m., has been vested in 榮陽房地產有限公司 (Winshine Properties Ltd.).
(3) According to Certificate of Incorporation No. 1044579 dated on 4 August 2006, 榮陽房地產有限公司 (Winshine Properties Ltd.) is incorporated in the British Virgin Islands as an International Business Company on 8 February 1994.

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APPENDIX III

(4) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Commerce & Finance Law Offices（通商律師事務所）which contains, inter alia, the following information:
(i) The State-owned Land Use Rights Certificate and Building Ownership Certificate of the property are valid, legal and enforceable under the PRC laws;
(ii) 榮陽房地產有限公司 (Winshine Properties Ltd.) is the sole legal land user of the property; and
(iii) 榮陽房地產有限公司 (Winshine Properties Ltd.) has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 榮陽房地產有限公司 (Winshine Properties Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance.
(5) The status of the title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

State-owned Land Use Rights Certificate Yes Building Ownership Certificate Yes Certificate of Incorporation Yes

III – 31

APPENDIX III

VALUATION REPORT

Property Description and tenure 19. Unit B902 on Level 9, Completed in 1996, Wangfujing Century Square, Wangfujing Century Square No. 99 Wangfujing Avenue, comprises a 6-storey Dongcheng District, Beijing, apartment/office block built the PRC over a 4-level shopping mall complex with car parks erected on a parcel of land with a total site area of approximately 7,745.10 sq.m. The property comprises an apartment unit on Level 9 of the apartment block of Wangfujing Century Square with a gross floor area of approximately 90.10 sq.m. The property is held with land use rights for a term due to expire on 24 December 2063 for apartment use.

Market value in existing state as at 30 September 2016

Particulars of occupancy

As at the Valuation Date, the No Commercial Value property was occupied by the Group as staff dormitory.

Notes:

(1) According to the Agreement for Sale and Purchase entered into between 世紀實業有限公司 (Long Age Industrial Ltd.) (‘‘Party A’’) and 朗欣投資有限公司 (Landfine Investment Limited) on 18 June 1997, a wholly-owned subsidiary of the Group (‘‘Party B’’), Party B agreed to purchase the property for a consideration of US$280,752.
(2) We have ascribed no commercial value to the property as valid State-owned Land Use Rights Certificate and Building Ownership Certificate have not been obtained by the Group. For illustrative purpose, had the Group obtained valid State-owned Land Use Rights Certificate and Building Ownership Certificate for the property, the market value of the property as at Valuation Date would be RMB4,630,000.
(3) According to Hong Kong Certificate of Incorporation No. 508609 dated 21 March 1995, 朗欣投資有限公司 (Landfine Investment Limited) was established on 21 March 1995 as a limited company.

III – 32

VALUATION REPORT

APPENDIX III

(4) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Commerce & Finance Law Offices（通商律師事務所）which contains, inter alia, the following information:
(i) The Agreement for Sale and Purchase of the property is valid and legal under the PRC laws;
(ii) 朗欣投資有限公司 (Landfine Investment Limited) has not obtained State-owned Land Use Rights Certificate and Building Ownership Certificate of the property and is not the legal owner of the property.
(5) The status of the title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Agreement for Sale and Purchase Yes State-owned Land Use Rights Certificate No Building Ownership Certificate No Hong Kong Certificate of Incorporation Yes

III – 33

APPENDIX III

VALUATION REPORT

Property

Description and tenure

Particulars of occupancy

Market value in existing state as at 30 September 2016

Units 1802 and 1809 on Completed in 2008, Yintai Level 15, Tower A, Yintai Center comprises 3 blocks of Center, No. 4 Jianguomenwai buildings, namely Towers A, Avenue, Chaoyang District, B and C. Beijing, the PRC Tower A is a 63-storey apartment building, whilst Towers B and C are 42-storey office buildings. The property comprises two apartment units on Level 15 of Tower A.

As at the Valuation Date, the property was vacant.

RMB18,900,000 (100% attributable interest to the Group: RMB18,900,000)

The gross floor area of Unit 1802 and unit 1809 are approximately 137.40 sq.m. and 133.20 sq.m. respectively.

The property is held with land use rights for a term due to expire on 30 August 2074 for residential use.

Notes:

(1) According to Building Ownership Certificate No. 1016660 issued by 北京市住房和城鄉建設委員會 (Beijing Housing Urban and Rural Construction Commission) on 9 July 2011, the building ownership of Unit 1802 on 15th floor of Tower A, comprising a gross floor area of approximately 137.40 sq.m., has been vested in 萬利海外有限公司 (Man Lee Offshore Limited) for apartment use.

According to Building Ownership Certificate No. 1016661 issued by 北京市住房和城鄉建設委員會 (Beijing Housing Urban and Rural Construction Commission) on 9 July 2011, the building ownership of Unit 1809 on 15th floor of Tower A, comprising a gross floor area of approximately 133.20 sq.m., has been vested in 萬利海外有限公司 (Man Lee Offshore Limited) for apartment use.

(2) According to Certificate of Incorporation No. 167149 dated 28 February 2011, 萬利海外有限公司 (Man Lee Offshore Limited) is incorporated in the British Virgin Islands as an International Business Company on 24 November 1995.

III – 34

VALUATION REPORT

APPENDIX III

(3) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Commerce & Finance Law Offices（通商律師事務所）which contains, inter alia, the following information:
(i) The Building Ownership Certificates of the property are valid, legal and enforceable under the PRC laws;
(ii) Although a State-owned Land Use Rights Certificate of the property has not yet been obtained by the Group, this does not affect 萬利海外有限公司 (Man Lee Offshore Limited)’s legal title of the property according to a Notice issued by Beijing Municipal Bureau of Land and Resources, as the Building Ownership Certificate of the property has already been obtained;
(iii) 萬利海外有限公司 (Man Lee Offshore Limited) is the sole legal user of the property; and
(iv) 萬利海外有限公司 (Man Lee Offshore Limited) has the rights to freely lease, transfer, mortgage and dispose of the building ownership of the property provided that where any of the property has been mortgaged, 萬利海外有限公司 (Man Lee Offshore Limited) has to discharge the mortgage or obtain the mortgagee’s consent in advance.
(4) The status of the title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Building Ownership Certificates Yes Certificate of Incorporation Yes

III – 35

APPENDIX III

VALUATION REPORT

Property Description and tenure
1. Unit B102 on Level 1, Block Completed in 2012, Juning No. 1 of Juning Villa (1), Villa (1) comprises various Xili Golf Course, Nanshan 5-storey residential terrace District, Shenzhen, buildings with basement, car Guangdong Province, the parking spaces and ancillary PRC facilities erected on a parcel of land with a total site area of approximately 4,309.50 sq.m. The property comprises an apartment unit on Level 1 of Block No. 1 of Juning Villa (1) with a gross floor area of approximately 172.87 sq.m.

Market value in existing state as at Particulars of occupancy 30 September 2016 As at the Valuation Date, the RMB13,000,000 property was vacant. (100% attributable interest to the Group: RMB13,000,000)

The property is held with land use rights for a term due to expire on 13 March 2071 for residential use.

Notes:

(1) According to Shenzhen Property Sale and Purchase Agreement No. (2012) 13540 entered into between 深圳西麗高爾夫球俱樂部有限公司 (Shenzhen Xili Golf Club Co. Ltd.) (‘‘Party A’’) and 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) on 12 December 2012, a wholly-owned subsidiary of the Group (‘‘Party B’’), Party B agreed to purchase the property for a consideration of RMB10,200,000.
(2) According to Real Estate Title Certificate No. 4000562827 issued by 深圳市房地產權登記中心 (Shenzhen Real Estate Title Registration Center) on 20 May 2013, the land use rights and building ownership of the property, comprising a total site area of 4,309.50 sq.m. with a gross floor area of approximately 172.87 sq.m., has been vested in 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) with a term of 70 years due to expire on 13 March 2071 for residential use.

According to the Real Estate Title Certificate, buyers of the property are restricted to be members of Shenzhen Xili Golf Club.

State-owned Land Use Rights Certificate and Building Ownership Certificate of the property have been combined into one certificate known as Real Estate Title Certificate, which has been disclosed above.

(3) According to Business License No. 91440300597753207L dated 6 July 2016, 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) was established on 24 July 2012 as a limited company.

III – 36

VALUATION REPORT

APPENDIX III

(4) We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Commerce & Finance Law Offices（通商律師事務所）which contains, inter alia, the following information:
(i) The Real Estate Title Certificate of the property is valid, legal and enforceable under the PRC laws;
(ii) According to the Real Estate Title Certificate, buyers of the property are restricted to be members of Shenzhen Xili Golf Club;
(iii) 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) is the sole legal land user of the property; and
(iv) 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) has the rights to lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 深圳隆運諮詢服務有限公司 (Shenzhen Longyun Consultancy Service Co. Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance.
(5) The status of the title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Shenzhen Property Sale and Purchase Agreement Yes Real Estate Title Certificate Yes Business Licence Yes

III – 37

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

1. RESPONSIBILITY STATEMENT

The directors of the Offeror jointly and severally accept full responsibility for the accuracy of information contained in this Composite Document (other than those relating to the Vendors, Dan Form Group and parties acting in concert with any of them) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than those relating to the Vendors, Dan Form Group and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement in this Composite Document misleading.

The directors of Tian An jointly and severally accept full responsibility for the accuracy of information contained in this Composite Document (other than those relating to the Vendors, Dan Form Group and parties acting in concert with any of them) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than those relating to the Vendors, Dan Form Group and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement in this Composite Document misleading.

2. MARKET PRICES

The table below sets out the closing prices of the Dan Form Shares as quoted on the Stock Exchange on (i) the last Business Day of each of the calendar months during the Relevant Period; (ii) the Last Trading Day; and (iii) the Latest Practicable Date:

	Closing price per
Date	Dan Form Share
	HK$
2016
31 March	1.417
29 April	1.381
31 May	1.563
30 June	2.02
29 July	1.94
31 August	1.76
19 September (Last Trading Day)	2.39
30 September	2.67
31 October	2.72
Latest Practicable Date	2.71

IV – 1

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

During the Relevant Period:

(a) the highest closing price of the Dan Form Shares as quoted on the Stock Exchange was HK$2.73 per Dan Form Share on 28 October 2016; and
(b) the lowest closing price of the Dan Form Shares as quoted on the Stock Exchange was HK$1.28 per Dan Form Share on 23 March 2016.

3. DISCLOSURE OF INTEREST

The Offeror is a wholly-owned subsidiary of Tian An. Tian An Group is principally engaged in the development of apartments, villas, office buildings and commercial properties, property investment and property management in the PRC.

As at the Latest Practicable Date, save for the 452,892,969 Sale Shares and 11,740,000 Dan Form Shares acquired on market by the Offeror as set out below, the Offeror and parties acting in concert with it are not interested in any other shares, underlying shares, debentures or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) of Dan Form.

Date of transaction on the Stock Exchange 11 October 2016 11 October 2016 12 October 2016 13 October 2016 18 October 2016 26 October 2016 9 November 2016 10 November 2016 11 November 2016 14 November 2016 15 November 2016	No. of Dan Form Shares purchased Unit price per Dan Form Share HK$ 131,000 2.69 576,000 2.70 2,360,000 2.69 500,000 2.69 222,000 2.70 1,241,000 2.70 2,000,000 2.70 382,000 2.70 2,000,000 2.70 2,172,000 2.70 156,000 2.70 11,740,000

IV – 2

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

Save for disclosed above, the Offeror confirms that:

(i) none of the Offeror, its ultimate beneficial owner, the directors of the Offeror and/or parties acting in concert with any of them owned or controlled or was interested in any Dan Form Share as at the Latest Practicable Date;
(ii) none of the Offeror, its ultimate beneficial owner, the directors of the Offeror and/or parties acting in concert with any of them had dealt for value in any Dan Form Share during the Relevant Period;
(iii) there was no Dan Form Share which the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them had borrowed or lent as at the Latest Practicable Date and during the Relevant Period;
(iv) save for that the Offeror irrevocably undertakes to SHK Investment that it will not withdraw, sell, transfer, dispose of or otherwise deal with or create any security interest or encumbrance over, in or in connection with all and any Sale Shares and any Offer Shares validly tendered for acceptance under the Offer deposited into the securities account designated by SHK Investment, the Offeror had no intention to enter into nor had entered into any agreement, arrangement or understanding to transfer, charge or pledge the Sale Shares and any Offer Shares validly tendered for acceptance under the Offer to any other persons as at the Latest Practicable Date; and
(v) as at the Latest Practicable Date, save for the Sale and Purchase Agreement, there was no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code existed between the Offeror and parties acting in concert with it and its associates, and any other person.

4. OTHER ARRANGEMENTS IN RELATION TO THE OFFER

The Offeror confirmed that as at the Latest Practicable Date:

(i) the Offeror had not received any irrevocable commitment to accept or reject the Offer;
(ii) save as disclosed under the section headed ‘‘Proposed change of composition of the Dan Form Board’’ set out in the letter from Yu Ming contained in this Composite Document, there was no agreement, arrangement or understanding (including any compensation arrangement) existed between any of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them, and any Dan Form Director, recent Dan Form Director, Dan Form Shareholder or recent Dan Form Shareholder which had any connection with or was dependent on the Offer;

IV – 3

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

(iii) no benefit (other than statutory compensation required under the applicable laws) had been or would be given to any Dan Form Directors as compensation for loss of office or otherwise in connection with the Offer; and
(iv) save for the Sale and Purchase Agreement and the undertaking made by APL that it will vote all its Tian An Shares in favour of approving the Sale and Purchase Agreement and the transactions contemplated thereunder, there is no agreement or arrangement to which the Offeror, its ultimate beneficial owner and/or any party acting in concert with any of them is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offer.

5. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert whose letter is contained in this Composite Document:

Name Qualification Yu Ming a licensed corporation permitted to carry out Types 1 (dealing in securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO

Yu Ming has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion of its letter and/or the references to its name in the form and context in which they appear.

6. GENERAL

(i) The Offeror is wholly-owned by Tian An. The principal members of the Offeror’s concert group are the Offeror and Tian An.
(ii) The board of directors of the Offeror comprises Mr. Patrick Lee Seng Wei, Mr. Edwin Lo King Yau and Mr. Tao Tsan Sang.
(iii) the Tian An Board comprises Mr. Song Zengbin, Mr. Patrick Lee Seng Wei, Mr. Ma Sun, Mr. Edwin Lo King Yau and Mr. Tao Tsan Sang as executive directors; Mr. Lee Seng Hui, Dr. Moses Cheng Mo Chi and Mr. Lee Shu Yin as non-executive directors; and Mr. Francis J. Chang Chu Fai, Mr. Jin Hui Zhi, Mr. Ngai Wah Sang and Ms. Lisa Yang Lai Sum as independent non-executive directors.

IV – 4

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

(iv) As at the Latest Practicable Date, Tian An is owned as to approximately 48.66% by APL. The board of directors of APL comprises Mr. Lee Seng Hui, Mr. Li Chi Kong and Mr. Mark Wong Tai Chun as executive directors; Mr. Arthur George Dew as nonexecutive director; and Mr. Steven Samuel Zoellner, Mr. Alan Stephen Jones and Mr. David Craig Bartlett as independent non-executive directors.
(v) As at the Latest Practicable Date, APL is owned as to approximately 74.99% by AGL. The board of directors of AGL comprises Mr. Lee Seng Hui, Mr. Edwin Lo King Yau and Mr. Mak Pak Hung as executive directors; Mr. Arthur George Dew and Ms. Lee Su Hwei as non-executive directors; and Mr. David Craig Bartlett, Mr. Alan Stephen Jones and Ms. Lisa Yang Lai Sum as independent non-executive directors.
(vi) As at the Latest Practicable Date, Mr. Lee Seng Hui together with Ms. Lee Su Hwei and Mr. Lee Seng Huang are the trustees of Lee and Lee Trust, being a discretionary trust. They together, through Lee and Lee Trust, own approximately 74.49% of the total issued shares of AGL (inclusive of Mr. Lee Seng Hui’s personal interest).
(vii) The registered office of the Offeror is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.
(viii) The correspondence address of the Offeror’s concert group is at 22nd Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong.
(ix) The registered office of Yu Ming is at Room 1801, 18th Floor, Allied Kajima Building, 138 Gloucester Road, Wanchai, Hong Kong.
(x) The English text of this Composite Document and the Form of Acceptance shall prevail over their respective Chinese texts in the case of inconsistency.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on the SFC’s website at http://www.sfc.hk and the website of Tian An at http://www.tiananchina.com from the date of despatch of this Composite Document up to and including the Closing Date:

(i) the memorandum and articles of association of the Offeror;
(ii) the Facility letter;
(iii) the letter from Yu Ming as set out on pages 8 to 18 to this Composite Document; and
(iv) the written consent from the expert referred to under the paragraph headed ‘‘Expert’s Qualification and Consent’’ in this appendix.

IV – 5

GENERAL INFORMATION OF THE DAN FORM GROUP

APPENDIX V

1. RESPONSIBILITY STATEMENT

The Dan Form Directors jointly and severally accept full responsibility for the accuracy of information contained in this Composite Document (other than those relating to the Offeror, Tian An Group and parties acting in concert with any of them) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than those relating to the Offeror, Tian An Group and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement in this Composite Document misleading.

2. SHARE CAPITAL

As at the Latest Practicable Date, the number of Dan Form Shares was 1,242,424,945.

The number of Dan Form Shares in issue at the end of the last financial year of (being 31 December 2015) was 1,247,298,945. Dan Form had not issued any Shares since the end of the last financial year (i.e. 31 December 2015) of Dan Form until the Latest Practicable Date. 4,874,000 Dan Form Shares has been repurchased by Dan Form since 31 December 2015, being the end of the last financial year of Dan Form.

All of Dan Form Shares as at the Latest Practicable Date in issue rank pari passu in all respects with each other, including all rights in respect of dividends, voting and interest in capital.

As at the Latest Practicable Date, other than the Dan Form Shares, there were no outstanding warrants, derivatives, options or other securities which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into the Dan Form Shares.

V – 1

GENERAL INFORMATION OF THE DAN FORM GROUP

APPENDIX V

4. DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests or short positions in the Dan Form Shares, underlying Dan Form Shares and debentures of Dan Form and its associated corporations

As at the Latest Practicable Date, none of the chief executive of Dan Form, Dan Form Directors or their respective associates had any interests or short positions, whether beneficial or non-beneficial, in the shares, underlying shares and debentures of Dan Form or any of its associated corporations as recorded in the register required to be kept under section 352 of the SFO or as otherwise notified to Dan Form and the Stock Exchange pursuant to the Model Code.

5. INTERESTS IN AND DEALINGS IN SECURITIES OF THE OFFEROR AND TIAN AN

As at the Latest Practicable Date, none of Dan Form nor any of Dan Form Directors had any interest in the shares of the Offeror and Tian An, and no such person had dealt in the shares of the Offeror and Tian An during the Relevant Period.

6. SHAREHOLDING AND DEALINGS IN SECURITIES OF DAN FORM

Save for the Sale Shares by the Vendors to the Offeror pursuant to the Sale and Purchase Agreement, none of the Dan Form Directors have dealt for value in any Dan Form Share or any convertible securities, warrants, option or derivatives issued by Dan Form during the Relevant Period.

As at the Latest Practicable Date,

(a) no Dan Form Share or any convertible securities, warrants, option or derivatives issued by Dan Form was owned or controlled by a subsidiary of Dan Form or by a pension fund (if any) of any member of the Dan Form Group or by an adviser to Dan Form as specified in class (2) of the definition of associate under the Takeovers Code or by the Independent Financial Adviser, and no such person had dealt in Dan Form Shares or any convertible securities, warrants, options or derivatives issued by Dan Form during the Relevant Period;

V – 2

GENERAL INFORMATION OF THE DAN FORM GROUP

APPENDIX V

(b) no Dan Form Shares or any convertible securities, warrants, option or derivatives issued by Dan Form was managed on a discretionary basis by fund managers (other than exempt fund managers) (if any) connected with Dan Form, and no such person had dealt in Dan Form Share or any convertible securities, warrants, options or derivatives issued by Dan Form during the Relevant Period;
(c) no Dan Form Shares or any convertible securities, warrants, option or derivatives issued by Dan Form was owned or controlled by a person who has an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with Dan Form or any person who is an associate of Dan Form by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code, and no such person had dealt in Dan Form Shares or any convertible securities, warrants, options or derivatives issued by Dan Form during the Relevant Period;
(d) other than Mr. Dai who had sold all of his Dan Form Shares pursuant to the Sale and Purchase Agreement, the remaining Dan Form Directors have no interest in any Dan Form Shares; and
(e) none of Dan Form or any of its Dan Form Directors has borrowed or lent any Shares or any convertible securities, warrants, options or derivatives issued by Dan Form during the Relevant Period.
ARRANGEMENTS AFFECTING DAN FORM DIRECTORS

As at the Latest Practicable Date,

(a) no benefit (other than statutory compensation) had been or would be given to any Dan Form Directors as compensation for loss of office or otherwise in connection with the Offer;
(b) save and except for the Sale and Purchase Agreement, there was no agreement or arrangement between any Dan Form Director and any other person which was conditional on or dependent upon the outcome of the Offer or otherwise connected with the Offer; and
(c) save and except for the Sale and Purchase Agreement, there was no material contract entered into by the Offeror in which any Dan Form Director has a material personal interest.

V – 3

GENERAL INFORMATION OF THE DAN FORM GROUP

APPENDIX V

8. DIRECTORS’ SERVICE CONTRACTS

Mr. Kenneth Hiu King Kon (‘‘Mr. Kon’’), a non-executive director of Dan Form, is appointed under his service agreement dated 27 March 2015 made with Dan Form. Mr. Kon’s current appointment with Dan Form under the said agreement is due to expire on 26 March 2018. During the three-year term of the said agreement, Mr. Kon would be entitled to an annual director’s fee of HK$200,000 and there is no variable remuneration payable under the said agreement.

Dr. Xiang Bing (‘‘Dr. Xiang’’), an independent non-executive director of Dan Form, is appointed under his service agreement dated 10 March 2016 made with Dan Form. Dr. Xiang’s current appointment with Dan Form under the said agreement is due to expire on 9 March 2019. During the three-year term of the said agreement, Dr. Xiang would be entitled to an annual director’s fee of HK$230,000 and there is no variable remuneration payable under the said agreement.

Save as disclosed above, as at the Latest Practicable Date, there was no service contract with Dan Form or any of its subsidiaries or associated companies in force for Dan Form Directors (i) which (including both continuous and fixed term contracts) has been entered into or amended within 6 months before the date on which the Offer Period commenced; (ii) which is a continuous contract with a notice period of 12 months or more; or (iii) which is a fixed term contract with more than 12 months to run irrespective of the notice period.

9. LITIGATION

As at the Latest Practicable Date, no member of the Dan Form Group was engaged in any litigation, arbitration or claims of material importance and no litigation, arbitration or claim of material importance was known to the Dan Form Directors to be pending or threatened by or against any member of the Dan Form Group.

10. MATERIAL CONTRACTS

The Dan Form Group did not enter into any contract which are or may be material (other than those entered into in the ordinary course of business) within the two years immediately preceding the date on which the Offer Period commenced and up to the Latest Practicable Date.

V – 4

GENERAL INFORMATION OF THE DAN FORM GROUP

APPENDIX V

11. EXPERTS AND CONSENTS

The followings are the qualification of the experts who have given opinions or advice which are contained in this Composite Document:

Name Qualification DTZ Cushman & Wakefield Independent professional valuer Limited (‘‘DTZ’’) Investec a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

Each of DTZ and Investec has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion of its advice, letter and recommendation and the references to its name and logo in the form and context in which they respectively appear.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on the websites of the SFC (www.sfc.hk) and Dan Form (www.danform.com.hk) during the period from the date of this Composite Document up to and including the Closing Date:

(a) the memorandum and articles of association of Dan Form;
(b) the annual reports of Dan Form for the two years ended 31 December 2014 and 31 December 2015 respectively;
(c) the interim report of Dan Form for the six months ended 30 June 2016;
(d) the letter from the Dan Form Board, the text of which is set out on pages 19 to 23 of this Composite Document;
(e) the letter from the Dan Form IBC, the text of which is set out on pages 24 to 25 of this Composite Document;
(f) the letter from the Dan Form IFA, the text of which is set out on pages 26 to 51 of this Composite Document;
(g) the valuation report from DTZ; and
(h) the written consents from Investec and DTZ referred to in the section headed ‘‘Experts and Consents’’ in this appendix.

V – 5

AI assistant

Great Eagle Holdings Limited — M&A Activity 2016

48897_rns_2016-11-17_8ca3f40b-46e3-40d6-a6a4-705b16bec08a.pdf

DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

CONTENT

EXPECTED TIMETABLE

EXPECTED TIMETABLE

Effect of bad weather on the latest time for acceptance of the Offer

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM YU MING

INTRODUCTION

LETTER FROM YU MING

CONDITIONAL MANDATORY CASH OFFER

Principal terms of the Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.75 in cash

Comparison of value

LETTER FROM YU MING

Highest and lowest Dan Form Share prices

Value of the Offer

Confirmation of financial resources

Condition of the Offer

LETTER FROM YU MING

Effect of accepting the Offer

Dan Form Overseas Shareholders

LETTER FROM YU MING

Stamp duty

INFORMATION ON THE OFFEROR AND TIAN AN

Information on the Offeror

Information on Tian An

INFORMATION ON THE DAN FORM GROUP

LETTER FROM YU MING

INTENTIONS OF THE OFFEROR REGARDING THE DAN FORM GROUP

LETTER FROM YU MING

Proposed change of composition of the Dan Form Board

LETTER FROM YU MING

LETTER FROM YU MING

Maintaining the listing status of Dan Form

ACCEPTANCE OF THE OFFER

Procedures for acceptance

LETTER FROM YU MING

Settlement of the Offer

Tax implications

COMPULSORY ACQUISITION

LETTER FROM YU MING

GENERAL

ADDITIONAL INFORMATION

DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

INTRODUCTION

LETTER FROM THE DAN FORM BOARD

CONDITIONAL MANDATORY CASH OFFER

LETTER FROM THE DAN FORM BOARD

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.75 in cash

FURTHER DETAILS OF THE OFFER

INFORMATION ON THE OFFEROR AND TIAN AN

INFORMATION ON THE DAN FORM GROUP

LETTER FROM THE DAN FORM BOARD

OFFEROR’S INTENTIONS ON THE DAN FORM GROUP AND PROPOSED CHANGE OF COMPOSITION OF THE DAN FORM BOARD

MAINTAINING THE LISTING STATUS OF DAN FORM

LETTER FROM THE DAN FORM BOARD

DAN FORM IBC AND DAN FORM IFA

RECOMMENDATION

ADDITIONAL INFORMATION

WARNING

LETTER FROM THE DAN FORM IBC

DAN FORM HOLDINGS COMPANY LIMITED 丹楓控股有限公司

LETTER FROM THE DAN FORM IBC

RECOMMENDATION

Yours faithfully,

For and on behalf of the

DAN FORM IBC

INTRODUCTION

LETTER FROM THE DAN FORM IFA

THE DAN FORM IBC

LETTER FROM THE DAN FORM IFA

BASIS OF OUR OPINION

LETTER FROM THE DAN FORM IFA

Great Eagle Holdings Limited M&A Activity 2016