ISP Holdings Limited — Proxy Solicitation & Information Statement 2021

Nov 30, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Synergis Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was affected for transmission to the purchaser or transferee.

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

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SYNERGIS HOLDINGS LIMITED 昇捷控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 02340)

(1) VERY SUBSTANTIAL DISPOSAL IN RELATION TO

THE DISPOSAL OF THE ENTIRE EQUITY INTERESTS IN THE PFM HK BUSINESS; AND

(2) PROPOSED CHANGE OF COMPANY NAME

Joint financial advisers to the Company

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A notice convening the SGM to be held at 8/F., KT336, 334–336 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong on 23 December 2021 at 11:30 a.m. is set out on pages SGM-1 to SGM-2 of this circular. Capitalised terms used in this cover shall have the same meanings as defined in this circular.

A letter from the Board is set out on pages 5 to 19 of this circular. Such form of proxy is also published on the websites of Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.hk) and the Company (https://www.synergis.com.hk/).

Whether or not you are able to attend and/or vote at the SGM in person, you are requested to complete the enclosed form of proxy and return it to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, located at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from subsequently attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

PRECAUTIONARY MEASURES FOR THE SGM

Please see page 20 of this circular for measures being taken to try to prevent and control the spread of the Novel Coronavirus (COVID-19) at the SGM, including, but not limited to:

. compulsory body temperature checks and health declarations . mandatory wearing of a surgical face mask for each attendee . no distribution of corporate gift and refreshment

Any person who does not comply with the precautionary measures or is subject to any Hong Kong Government prescribed quarantine may be denied entry into the meeting venue.

In light of the continuing risks posed by the COVID-19 pandemic, the Company strongly encourages Shareholders NOT to attend the SGM in person, and advises Shareholders to appoint the Chairman of the SGM as their proxies to vote according to their indicated voting instructions as an alternative to attending the SGM in person. Shareholders are advised to read page 20 of this circular for further detail and monitor the development of COVID-19. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

1 December 2021

CONTENTS

		Pages
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Precautionary measures for the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		20
Appendix I	— Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	— Financial Information of the Disposal Group . . . . . . . . . . . . . . . . . .	II-1
Appendix III — Unaudited Pro Forma Financial Information
	of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV — Management Discussion and Analysis
	of the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		SGM-1

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DEFINITIONS

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

• ‘‘Announcement’’ the announcement of the Company dated 26 November 2021 in relation to the Disposal

• ‘‘Board’’ the board of Directors

• ‘‘Change of Company Name’’ the proposed change of the Company’s English name from ‘‘Synergis Holdings Limited’’ to ‘‘ISP Holdings Limited’’ and the Company’s secondary name in Chinese from ‘‘昇捷 控股有限公司’’ to ‘‘昇柏控股有限公司’’

• ‘‘Company’’ Synergis Holdings Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the main board of the Stock Exchange (Stock code: 2340)

• ‘‘Completion’’ completion of the Disposal in accordance with the terms of the Sale and Purchase Agreement

• ‘‘Conditions’’ the conditions specified under the Sale and Purchase Agreement as set out in the section headed ‘‘Sale and Purchase Agreement — Conditions Precedent’’ in this circular

• ‘‘controlling shareholder(s)’’ has the meaning ascribed to it under the Listing Rules

• ‘‘Convertible Preference the unlisted restricted voting convertible preference shares Shares’’ of the Company of HK$0.10 each that are currently in issue and convertible into 80,000,000 Shares at a conversion price of HK$0.75 per Share, subject to adjustments, which have the same entitlement to dividend and other distribution as the holder of each Share and shall rank pari passu with the Shares as to dividend payments

• ‘‘Directors’’ the director(s) of the Company

‘‘Disposal Group’’ the indirect wholly-owned subsidiaries of the Company which are principally engaged in the provision of the PFM HK Business, being the Target Company and its direct/ indirect wholly-owned subsidiaries, namely SynWave Supply & Services Limited, SPM, Synergis Management Services Limited, Synergis Facility Management Limited, SecurExpert Solutions Limited, Master Clean Service Limited, Laundrimate Service Limited, Service Pro Limited and SynWave Services Limited together with the ‘‘Synergis’’ and certain other trademarks

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DEFINITIONS

• ‘‘Disposal’’

the disposal of the Share Capital as contemplated under the Sale and Purchase Agreement

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘Intercompany Accounts’’

• the payables and receivables between the Disposal Group and the Remaining Group prior to Completion. As at 30 June 2021, the amount due from the Remaining Group to the Disposal Group was approximately HK$34.1 million and the amount due from the Disposal Group to the Remaining Group was HK$73.9 million

• ‘‘Irrevocable Undertakings’’

• the deed of irrevocable undertakings entered into on 26 November 2021 by Mrs. Chu Yuet Wah and Champ Key Holdings Limited in favour of the Purchaser

• ‘‘ISP Business’’ interiors and special projects business of the Group in Hong Kong

• ‘‘Latest Practicable Date’’

• 29 November 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Long Stop Date’’

• 31 March 2022, or such later date as may be agreed by the parties to the Sale and Purchase Agreement in writing

• ‘‘Material Adverse Change’’

• any change, event, circumstance or other matter that has, or would reasonably be expected to have, either individually or in the aggregate, a material adverse effect on (a) the ability of any of the Warrantors or any member of the Disposal Group to perform its respective obligations under the Sale and Purchase Agreement or any other Transaction Documents or (b) the business, assets and liabilities, financial condition, or results of operations of the Disposal Group, including without limitation when any of: (i) the aggregate amount of service fees receivable by the members of the Disposal Group under all current services contract; (ii) the aggregate number of employees engaged in the PFM HK Business; (iii) the aggregate working capital of the Disposal Group; and (iv) the net asset value of the Disposal Group falling below specified thresholds, as well as any act or omission materially detrimental to the business reputation and good standing of the Disposal Group regarding its principal business activities in Hong Kong

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DEFINITIONS

• ‘‘Mrs. Chu’’ Mrs. Chu Yuet Wah, being the controlling shareholder (as defined under the Listing Rules) of the Company as at the Latest Practicable Date

• ‘‘percentage ratios’’ has the meaning ascribed to it under the Listing Rules

• ‘‘PFM Business’’ the property and facility management services of the Group (including the provision of ancillary services)

• ‘‘PFM China Business’’ the property and facility management services of the Group in the PRC (including the provision of ancillary services)

• ‘‘PFM HK Business’’ the property and facility management services of the Group in Hong Kong (including the provision of ancillary services)

• ‘‘PRC’’ the People’s Republic of China, which for the purpose of this circular, shall exclude the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan

• ‘‘Purchaser’’ Central Luck Developments Limited, a wholly-owned subsidiary of China Resources Property Management Limited, which in turn is a Hong Kong company principally engaged in the provision of property management services for residential and commercial properties in Hong Kong, and is an indirect wholly-owned subsidiary of China Resources (Holdings) Company Limited

• ‘‘Remaining Group’’ the remaining operations of the Group, being the ISP Business and the PFM China Business, upon Completion

• ‘‘Sale and Purchase Agreement’’ the sale and purchase agreement dated 26 November 2021 and entered into among the Purchaser, the Seller and the Company in respect of the Disposal

• ‘‘Seller’’

• Synergis Holdings (BVI) Limited, a company incorporated under the laws of the British Virgin Islands and a whollyowned subsidiary of the Company

• ‘‘SGM’’

• the special general meeting of the Company to be convened and held for the Shareholders to consider and, if thought fit, approve (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; and (ii) the Change of Company Name

• ‘‘Share Capital’’ 100% equity interest of the Target Company

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DEFINITIONS

• ‘‘Share(s)’’

• ordinary share(s) of HK$0.10 each in the share capital of the Company

• ‘‘Shared Facilities’’

• certain banking facilities shared by the Disposal Group and the Remaining Group

• ‘‘Shareholder(s)’’ holder(s) of the Shares

• ‘‘Special Dividend’’

• an interim dividend of approximately HK$0.59 per Share/ per Convertible Preference Share proposed to be paid by the Company to the Shareholders in accordance with the Company’s bye-laws subject to Completion and the Company’s compliance with the applicable legal requirements in Bermuda

• ‘‘SPM’’

• Synergis Property Management Limited, a company incorporated under the laws of Hong Kong and a member of the Disposal Group

• ‘‘Stock Exchange’’

• The Stock Exchange of Hong Kong Limited

• ‘‘Target Company’’

• True Hope Group Limited, which wholly owns the Disposal Group

• ‘‘Trademark Assignment Deed’’

• deed of assignment to be duly executed by the Seller and the Company as assignor and SPM as assignee, under which each of the Seller and the Company assign all of the ‘‘Synergis’’ and ‘‘昇捷’’ related trademarks held under their respective name to SPM

• ‘‘Transaction Documents’’ Sale and Purchase Agreement, the Irrevocable Undertakings, the Trademark Assignment Deed, the Transitional Services Agreement, and any other agreement(s) or document(s) executed, issued or delivered pursuant to or in connection with the Sale and Purchase Agreement

• ‘‘Warrantors’’ the Seller and the Company

• ‘‘%’’

• per cent.

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LETTER FROM THE BOARD

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SYNERGIS HOLDINGS LIMITED 昇捷控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 02340)

Executive Directors:

Mr. Kingston Chu Chun Ho (Chairman)

Ms. Mandy Hui Suk Man (Deputy Chairman and Managing Director for the property and facility management)

Independent Non-executive Directors: Mr. Lau Man Tak Mr. Eric Lee Hon Man Mr. To Chun Wai

Registered office: Clarendon House 2 Church Street Hamilton, HM 11 Bermuda

Principal Place of Business in Hong Kong: 8/F., KT336 334–336 Kwun Tong Road Kwun Tong, Kowloon Hong Kong

1 December 2021

To the Shareholders

Dear Sir/Madam,

(1) VERY SUBSTANTIAL DISPOSAL IN RELATION TO

THE DISPOSAL OF THE ENTIRE EQUITY INTERESTS IN THE PFM HK BUSINESS; AND (2) PROPOSED CHANGE OF COMPANY NAME

INTRODUCTION

Reference is made to the Announcement and the announcement of the Company dated 29 November 2021 in relation to the Change of Company Name.

On 26 November 2021 (after trading hours), the Seller, the Company and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Seller conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, the Share Capital, representing 100% of the equity interest in the Target Company, which in turns hold the

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LETTER FROM THE BOARD

equity interests of the Disposal Group, at a cash consideration of HK$539 million. The Disposal Group is principally engaged in the provision of PFM HK Business. Upon Completion, members of the Disposal Group will cease to be subsidiaries of the Company.

SALE AND PURCHASE AGREEMENT

The principal terms and conditions of the Sale and Purchase Agreement are set out below:

Date 26 November 2021 Parties (i) the Seller; (ii) the Company (as a Warrantor); and (iii) the Purchaser

The Directors confirm that, to the best of their knowledge, information and belief, having made all reasonable enquiries, the Purchaser and its ultimate beneficial owners are third parties independent of the Company and connected persons of the Company (as defined in the Listing Rules).

• Assets to be The entire equity interests of the members of the Disposal Group disposed of through the disposal of the Share Capital.

• Consideration and The consideration for the Disposal of the Share Capital shall be settlement HK$539 million (the ‘‘Consideration’’), and will be settled in cash upon Completion. By Completion, if the Remaining Group’s guarantees of certain bonds comprised in the Shared Facilities of the Disposal Group remain, the Purchaser may defer payment of that part of the Consideration equal to deposits paid by the Disposal Group to secure such bonds until 10 Business Days after the release of those guarantees and those Shared Facilities are fully segregated.

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LETTER FROM THE BOARD

The Consideration was determined after arm’s length negotiations between the Purchaser and the Company having taken into account (i) historical financial performance of the Disposal Group with reference to its adjusted net profit of approximately HK$38 million for the year ended 31 December 2020 (after the deduction of one-off government subsidies granted under the Anti-epidemic fund which amounted to approximately HK$81 million and adjustment for certain corporate overhead and listed company expenses nonattributable to the Disposal Group in the future from the net profit of the Disposal Group which amounted to approximately HK$113 million); (ii) future prospect of the property and facility management industry and the Disposal Group which is expected to remain stable; and (iii) price to earnings ratio (‘‘P/E Ratio’’) of comparable listed companies (based on net profit of the companies after the exclusion of one-off government subsidies granted under the Anti-epidemic fund), including FSE Lifestyle Services Limited (stock code: 0331), Modern Living Investments Holdings Limited (stock code: 8426) and Wecon Holdings Limited (stock code: 1793), ranging from approximately 5 times to 18 times. The P/E Ratio of the Disposal implied by the Consideration is approximately 14 times, which falls within the range of the abovementioned comparable companies.

Conditions Precedent

Completion is conditional upon the following conditions being satisfied or waived:

• (i) the Transaction Documents and the transactions contemplated under the Sales and Purchase Agreement having been approved in accordance with the relevant laws and regulations regarding the supervision and administration of state-owned assets of the PRC;

• (ii) the completion of the procedure of the filing for record of the valuation of the subject matters of the transactions contemplated under the Sales and Purchase Agreement in accordance with the relevant laws and regulations regarding valuation of state-owned assets of the PRC;

• (iii) the Shareholders having duly passed resolutions approving and authorizing (a) the execution of and performance of its obligations under the Sale and Purchase Agreement and any other Transaction Documents to which the Company is a party, in accordance with Chapter 14 of the Listing Rules and (b) the change of name of the Company such that it shall not contain the word ‘‘Synergis’’, ‘‘昇捷’’ (or anything confusingly similar thereto);

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LETTER FROM THE BOARD

• (iv) the Seller and/or the Company having delivered to the Purchaser documentary evidence showing that none of the names of any member of the Remaining Group (except where such member is a company established under the laws of the PRC) contains the word ‘‘Synergis’’, ‘‘昇捷’’ (or anything confusingly similar thereto);

• (v) to the extent that the consummation of the transactions contemplated under the Transaction Documents is prohibited, restricted or conditioned under, or grants the counterparty a termination right in respect of, any customer contract of any member of the Disposal Group with a contract value of HK$10 million or more or any lease, or certain banking facilities of the Disposal Group, the Seller having delivered to the Purchaser written consent (in form and substance reasonably satisfactory to the Purchaser) from (a) each such customer or (b) each such landlord or (c) each such lender (as the case may be), such that the relevant customer, landlord and lender shall have consented to the consummation of the transactions contemplated under the Transaction Documents and agreed not to exercise any right (whether termination or otherwise) arising by reason of such transactions;

• (vi) the Trademark Assignment Deed having been duly executed by the Seller and the Company as assignor and SPM as assignee, whereby each of the Seller and the Company shall assign all of the trademarks held under its respective name to SPM, in form and substance reasonably satisfactory to the Purchaser;

• (vii) the Seller and the Purchaser having obtained evidence to their reasonable satisfaction that upon Completion, (a) the performance bonds and other obligations of members of the Disposal Group underlying the Shared Facilities are not guaranteed by members of the Remaining Group and/or their affiliates, and (b) the performance bonds and other obligations of members of the Remaining Group underlying the Shared Facilities are not guaranteed by any member of the Disposal Group;

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LETTER FROM THE BOARD

• (viii) in respect of any insurance policies as at the date of the Sales and Purchase Agreement which relate to the Disposal Group but are not in the name of a members of the Disposal Group, the members of the Disposal Group having taken out replacement insurance policies (or having been added to the scope of insured persons under the existing policies in the name of a member of the Disposal Group) on such coverage and on other terms reasonably satisfactory to the Purchaser;

• (ix) all persons who are not an employee of any of the member of the Disposal Group as at Completion having been removed from the list of insured persons under group term life insurance of Synergis Management Services Limited;

• (x) all Intercompany Accounts having been fully and finally settled;

• (xi) the consummation of the transactions as contemplated under the Transaction Documents shall not have been restrained, enjoined or otherwise prohibited by any applicable law;

• (xii) there having been no event or transaction occurring prior to Completion which, individually or in the aggregate, had or could reasonably be expected to have, a Material Adverse Change;

• (xiii) the representations and warranties of each Warrantor having remained true, correct, accurate and not misleading in all respects as of the date of Completion with the same force and effect as if made on the date of Completion (except for the representations and warranties specified to be made only on other dates); and

• (xiv) each Warrantor having complied in all respects with its covenants and obligations under the Sale and Purchase Agreement which are required to be complied with by it on or prior to Completion.

The Purchaser may in its absolute discretion waive either in whole or in part at any time by notice in writing to the Seller any of the Conditions, except paragraph (iii) above which is not capable of being waived, and paragraph (vii) above which may only be waived by written agreement of both the Seller and the Purchaser.

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LETTER FROM THE BOARD

Purchaser’s Rights The Purchaser may, by written notice given to the Seller at to Terminate Completion or any time prior to Completion, terminate the Sale and Purchase Agreement without liability on its part if:

• (i) any fact, matter or event (whether existing or occurring on or before the date hereof or arising or occurring afterwards) comes to the notice of the Purchaser at Completion or any time prior to Completion which:

• (a) constitutes a material breach or non-performance by the Seller or the Company of any agreement, covenant, obligation or undertaking under the Sale and Purchase Agreement; or

• (b) would constitute a breach of any of the warranties under the Sale and Purchase Agreement; or

• (ii) there has been any Material Adverse Change since the date of the Sale and Purchase Agreement.

All rights and obligations of the parties shall cease to have effect immediately upon termination of the Sale and Purchase Agreement, save that the claims arising out of any antecedent breach of the Sale and Purchase Agreement shall continue in force following termination of the Sale and Purchase Agreement (for whatever reason) and further save that termination of the Sale and Purchase Agreement (for whatever reason) shall be without prejudice to the respective rights and liabilities of each of the parties accrued prior to such termination.

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LETTER FROM THE BOARD

Restrictive Covenants

Each of the Warrantors undertakes to the Purchaser that it shall not, and shall cause its respective affiliates (excluding Mrs. Chu and her affiliates (other than the Remaining Group)) not to, whether directly or indirectly (including through any third party), in any capacity, at any time during the period commencing from the date of Completion until the third anniversary of Completion:

• (i) own, manage, operate, participate in, invest in, carry on, be engaged in, be employed by, provide services to, be concerned or associated with, be interested in or in any way assist with, any business which is in competition with the PFM HK Business as carried out by any members of the Disposal Group as at the date of the Sale and Purchase Agreement in Hong Kong, provided that this shall not operate to restrict the provision of any security and cleaning services by the Remaining Group in Hong Kong which are solely ancillary to the ISP Business as carried out by the Remaining Group as at the date of the Sale and Purchase Agreement in Hong Kong;

• (ii) solicit any person who is or has at any time during the twelve (12) month period prior to Completion been, a customer or client of any member of the Disposal Group for the purpose of offering to such customer or client goods or services similar to or competing with those offered by any member of the Disposal Group in Hong Kong, or canvass or solicit any such person to terminate its business relationship with such member of the Disposal Group, provided that this shall not operate to restrict the provision of services (including ancillary services thereon) by the Remaining Group to such person in the course of its ISP Business as carried out by the Remaining Group as at the date of the Sale and Purchase Agreement; and

• (iii) employ, engage, offer to employ or engage, or otherwise facilitate the employment or engagement of any person earning a rate of remuneration, including benefits and bonuses, in excess of HK$500,000 per annum and who is, or has at any time during the twelve (12) month period prior to Completion been, an employee, officer, consultant or director of any member of the Disposal Group, or induce any such employee to terminate his or her employment with any member of the Disposal Group, whether or not on behalf of any other business, unless otherwise contemplated under the transitional service agreement.

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LETTER FROM THE BOARD

Guarantee

• The Company unconditionally and irrevocably guarantees to the Purchaser the due and punctual performance and observance by the Seller of its obligations, undertakings, warranties and indemnities under or pursuant to the Sale and Purchase Agreement.

• Completion The Completion shall take place five business days following the satisfaction (to the extent not waived by the appropriate part(ies)) of all Conditions, other than those Conditions which by their nature may only be satisfied at Completion, but subject to the satisfaction of all Conditions (to the extent not waived by the appropriate Party(ies)) at Completion (or such other date to be agreed by the parties).

Upon Completion, members of the Disposal Group will cease to be subsidiaries of the Company.

FINANCIAL EFFECTS OF THE DISPOSAL

It is estimated that the Remaining Group will record, subject to audit, a gain of approximately HK$446.7 million as a result of the Disposal, calculated by adding up (i) the Consideration after deducting relevant expenses and taxes; and less (ii) net assets of the Disposal Group which amounted to approximately HK$85.3 million as at 30 June 2021.

Shareholders should note that the above paragraph is for illustrative purposes only. The actual gain or loss from the Disposal may be different and will be determined based on the financial position of the Company on the completion date and the review of the Company’s auditors upon finalisation of the consolidated financial statements of the Company.

USE OF PROCEEDS

The net proceeds from the Disposal of approximately HK$532 million (after deducting expenses and related taxes) is intended to be used as follows:

• (i) approximately HK$180 million, representing approximately 33.8% of the net proceeds, will be used for the purchase of surety bonds or as cash deposits to fulfil funding and/or tendering requirements for potential and existing construction projects underlying the ISP Business. This can help increase the number and/or scale of tenders which the Remaining Group may participate in;

• (ii) approximately HK$17 million, representing approximately 3.2% of the net proceeds, will be used for recruiting additional employees after Completion to support the development and expansion of the Remaining Group, as well as to replace certain staff for back office and support functions (which were historically shared between the PFM and the ISP business divisions) following Completion;

• (iii) approximately HK$300 million, representing approximately 56.4% of the net proceeds, will be used for payment of the Special Dividend; and

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LETTER FROM THE BOARD

• (iv) approximately HK$35 million, representing approximately 6.6% of the net proceeds, will be used for general working capital of the Company.

GENERAL INFORMATION OF THE PARTIES TO THE SALE AND PURCHASE AGREEMENT

The Seller

Synergis Holdings (BVI) Limited, a company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company. It is principally engaged in investment holding.

The Company

The Company is a company incorporated in Bermuda with limited liability, whose shares are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the provision of PFM Business and ISP Business in Hong Kong, the PRC and Macau.

The Purchaser

The Purchaser is a wholly-owned subsidiary of China Resources Property Management Limited which is an independent third party to the Company in respect of the Disposal. China Resources Property Management Limited is incorporated in Hong Kong and is an indirect wholly-owned subsidiary of China Resources (Holdings) Company Limited which in turn is ultimately owned by 中國華潤有限公司 (China Resources Company Limited*), a State-owned enterprise in the PRC under the supervision of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. China Resources Property Management Limited is principally engaged in the provision of property management services for residential and commercial properties in Hong Kong.

GENERAL INFORMATION OF THE DISPOSAL GROUP

True Hope Group Limited is a company incorporated in the British Virgin Islands with limited liability, and a wholly owned subsidiary of the Company which in turn holds the entire equity interests of the Disposal Group. It is an investment holding company.

The rest of the Disposal Group consists of a number of indirect wholly-owned subsidiaries of the Company which are principally engaged in the provision of PFM HK Business.

The financial information of the Disposal Group is set out in appendix II to this circular.

• for identification only

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSAL

Having taken into consideration of the reasons for and benefits of the Disposal as set out below, the Directors are of the view that the terms of Disposal are fair and reasonable and in the interests of the Company and the Shareholders as a whole:

(i) The fairness and reasonableness of the Consideration

Given that (a) the Company recorded a loss after tax of the Group for the year ended 31 December 2020 (excluding the subsidies received under the government’s antiepidemic fund of approximately HK$81 million); and (b) the Consideration represents a premium over the net assets value of the Disposal Group as at 30 June 2021, the Directors consider that the Disposal represents a valuable opportunity for the Group to realise the intrinsic value of the PFM Business.

(ii) The benefit of Disposal and future development of the ISP Business

Despite that the ISP Business incurred operating losses for year ended 31 December 2018 and 31 December 2020, such financial results were attributable to a number of oneoff or isolated events and the Directors expect the ISP Business to pick up momentum as COVID-19 gradually recedes. Further to the disruption caused by the one-off social unrest and epidemic incidents in 2019 and 2020, respectively, the operation of the ISP Business has significantly improved after recovery of economy and implementation of cost control measures in 2021. When compared to the corresponding period in the last year, the ISP Business recorded increases in revenue and operating result of approximately 24.2% and approximately 98.6% for six months ended 30 June 2021, respectively.

Furthermore, according to the 2021 Hong Kong policy address, a number of development projects planned or under planning in the Northern Metropolis are estimated to provide about 350,000 residential units. An additional land parcel of approximately 600 hectares could be developed within the Northern Metropolis for residential and industry purposes, with an estimated provision of about 165,000 to 186,000 residential units. Upon the full development of the entire Northern Metropolis, a total of 905,000 to 926,000 residential units, including the existing 390,000 residential units in Yuen Long District and North District, will be available to accommodate a population of about 2.5 million. The Directors expect that above plan could also create substantial potential engagement opportunities for the ISP Business in the long run.

In addition, part of the proceeds from the Disposal is proposed to be deployed towards further strengthening the Remaining Group’s competitive advantage with extra cash for the purchase of surety bonds and payment of upfront cost, which will enable the Remaining Group to tender for larger and/or more projects which in turn can contribute to increase in tender success rate and facilitate the expansion of the ISP Business. It is expected that the Remaining Group will be able to capture more business opportunities in the market when they arise, thereby benefiting the profitability of the Remaining Group.

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LETTER FROM THE BOARD

(iii) The significant gain resultant from the Disposal

Upon Completion, it is proposed that a significant portion of the net proceeds will be used for the payment of the Special Dividend by the Company in cash to Shareholders. The Directors consider that the payment of the Special Dividend presents an opportunity for the Shareholders to recoup its investment costs in the Company, and partially realise the value of their shareholding and provide liquidity to the Shareholders, whilst continuing to retain their investment in the Company to enjoy return from the further development of the Group’s remaining businesses. After taking into consideration of the existing cash flow of the Remaining Group, it is considered that the Company has sufficient cash resources to pay the Special Dividend upon Completion and such payment of Special Dividend will not have any material adverse effect on the financial position of the Remaining Group.

The Company’s plan on its remaining business

It is the intention of the Remaining Group to focus on the expansion and development of ISP Business as the market of fitting-out works and repair, maintenance, alteration and addition works (‘‘RMAA’’) have shown great potential with increasing opportunities and market sizes. It is currently intended that the PFM China Business will be maintained at its existing operating scale upon Completion.

Following the (i) continuous supply of residential units supported by government policies such as the Land Sharing Pilot Scheme, (ii) improving living standards of Hong Kong residents with higher willingness to pay for premium services and better living environment, (iii) the increasing demand for relocation of office to other districts including Kowloon East, Quarry Bay, Tai Koo and Kwun Tong; (iv) increasing number of ageing buildings in Hong Kong; (v) the sale and development of commercial or hotel buildings under the 2020–2021 Land Sale Programme; and (vi) outbreak of COVID-19 which led to a number of upgrade and enhancement projects from hotels, it is expected that the demand for fitting-out works in Hong Kong will grow continuously.

Following (i) the rising awareness of the needs for regular inspection and maintenance of public facilities, in particular after the damage of public facilities after the protests in 2019; (ii) increasing public expenditures on renovation and maintenance of public properties and facilities according to the 2020/21 Hong Kong Budget, and (iii) increase in new town development projects which will in turn drive the number of public facilities in these new development regions, including playgrounds, hospitals, sports centres, schools, and other recreational facilities, it is expected that the demand for RMAA works in Hong Kong will increase.

Given the overall construction industry in Hong Kong is anticipated to grow over the next few years, the Directors are confident that there will be considerable business opportunities, growth drivers and room in the ISP industry to justify the Remaining Group’s expansion plan to gain further market share and position.

– 15 –

LETTER FROM THE BOARD

In the ordinary course of business, the Remaining Group has performed certain works, receivables are under disputes and negotiation being conducted with its client. The final amounts of these contract receivables have not been determined subject to the outcome of such dispute resolution. The Board has been striving but yet to reach an amicable settlement with its clients, failing of which may lead to legal means. The Remaining Group may need to recognize these provisions during the course of the annual audit for the year ending 31 December 2021. The Directors consider that such write offs are one off provision in nature, if materialized, would not have significant impact on its operations and would not have any material effect on cash flow of the Remaining Group.

As at the Latest Practicable Date, the Company has no intention or plan to dispose of any of its Remaining Business, or to acquire new assets and businesses.

Proposed declaration of Special Dividend

Subject to Completion and the Company’s compliance with the applicable legal requirements in Bermuda at the time, the Board intends to declare the Special Dividend of approximately HK$300 million, to the Shareholders whose names appear on the register of members of the Company on a record date to be determined. The Special Dividend will be paid out of the net proceeds from the Disposal in accordance with the Company’s bye-laws. For illustration, based on the 504,850,000 shares (including 424,850,000 Shares and 80,000,000 Convertible Preference Shares) in issue as at the Latest Practicable Date, the Special Dividend would be approximately HK$0.59 per Share/per Convertible Preference Share.

The Special Dividend will allow Shareholders to realise substantial value from their shareholdings in the Company while continuing to be invested in the Company’s remaining businesses. As the Special Dividend provides the opportunity for a substantial and immediate cash realization to the Shareholders from the outcome of the Disposal, the Board considers that the proposed distribution of the Special Dividend would, if materialized, be in the interests of the Company and the Shareholders as a whole. If the Disposal is not approved by the Shareholders, or does not complete, then the Special Dividend will not be paid.

A further announcement in respect of the details of the Special Dividend, including but not limited to, the closure date of the register of members of the Company, the record date for determining entitlements to receive the Special Dividend and the pay-out date for the Special Dividend, will be made by the Company when appropriate.

PROPOSED CHANGE OF COMPANY NAME

The Board proposed to change the English name of the Company from ‘‘Synergis Holdings Limited’’ to ‘‘ISP Holdings Limited’’ and the Company’s secondary name in Chinese from ‘‘昇捷控股有限公司’’ to ‘‘昇柏控股有限公司’’.

– 16 –

LETTER FROM THE BOARD

Conditions for the Change of Company Name

The Change of Company Name is subject to the following conditions having been satisfied:

• (a) the passing of a special resolution by the Shareholders at the SGM to consider and, if though fit, approve the Change of Company Name; and

• (b) the Registrar of Companies in Bermuda granting approval for the Change of Company Name.

Subject to the satisfaction of the conditions set out above, the change of Company Name will become effective from the date on which the Registrar of Companies in Bermuda registers the new English name in place of the existing English name of the Company, and registers the new secondary name of the Company in place of the existing secondary name of the Company as set out in the certificate of incorporation on change of name and the certificate of secondary name to be issued by the Registrar of Companies in Bermuda respectively. Thereafter, the Company will carry out all necessary filing procedures with the Companies Registry in Hong Kong.

REASONS FOR THE CHANGE OF COMPANY NAME

The Change of Company Name is one of the Conditions of the Sale and Purchase Agreement and is part of the re-branding exercise in light of the Disposal. The Board considers that the new name of the Company better aligns with the future prospect of the Company. The Change of Company Name is therefore in the interests of the Company and the Shareholders as a whole.

The Board believes that the Change of Company Name will benefit the Company’s future business development and is in the interests of the Company and the Shareholders as a whole.

EFFECTS OF THE CHANGE OF COMPANY NAME

The Change of Company Name will not affect any rights of the Shareholders or the Company’s daily business operation. All existing share certificates of the Company in issue bearing the current name of the Company will continue to be good evidence of legal title to such shares of the Company and will remain valid for trading, settlement, registration and delivery purposes. There will not be any arrangement for the exchange of the existing share certificates for new share certificates bearing the new name of the Company. Upon the Change of Company Name becoming effective, all new share certificates will be issued only in the new name of the Company. In addition, subject to confirmation by the Stock Exchange, the English and Chinese stock short names of the Company for trading in the securities on the Stock Exchange will also be changed after the Change of Company Name becoming effective. Subject to the Change of Company Name becoming effective, the Company will also adopt a new logo. Further announcement(s) will be made by the Company in relation to the effective date of the Change of Company Name and details of the change of the English and Chinese stock short names and the new logo of the Company.

– 17 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratio(s) calculated in accordance with the Listing Rules in respect of the Disposal contemplated under the Sale and Purchase Agreement exceeds 75%, the Disposal constitutes a very substantial disposal of the Company which is subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, none of the Shareholders has a material interest in (i) the Disposal; and (ii) the Change of Company Name. Accordingly, no Shareholders will be required to abstain from voting on the resolution(s) to be proposed at the SGM.

IRREVOCABLE UNDERTAKINGS

Champ Key Holdings Limited (a company wholly-owned by Mrs. Chu), being the controlling shareholder of the Company holding approximately 53.08% of the issued Shares in the Company as at the Latest Practicable Date, and Mrs. Chu have entered into the Irrevocable Undertakings in favour of the Purchaser to, respectively, vote and procure that Champ Key Holdings Limited vote in favour of the resolution to be proposed at the SGM to approve the Disposal and the transactions contemplated under the Sale and Purchase Agreement.

SGM

Set out on pages SGM-1 to SGM-2 of this circular is a notice convening the SGM to be held at 8/F., KT336, 334–336, Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong on Thursday, 23 December 2021 at 11:30 a.m. at which relevant resolutions will be proposed for the purpose of considering, and, if thought fit, approve: (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; and (ii) the Change of Company Name.

For determining the entitlement to attend and vote at the SGM, the register of members of the Company will be closed from Monday, 20 December 2021 to Thursday, 23 December 2021, both dates inclusive, during which period no transfer of Shares will be effected. In order to be eligible to attend and vote at the SGM, all transfers of Shares, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, 17 December 2021.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof.

– 18 –

LETTER FROM THE BOARD

Pursuant to Rule 13.39(4) of the Listing Rules, the resolutions will be voted on by way of poll at the SGM and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

ADDITIONAL INFORMATION

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

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the terms and conditions of the Disposal and the transactions contemplated under the Sale and Purchase Agreement are on normal commercial terms which are fair and reasonable and that the Disposal and the Change of Company Name are in the interests of the Company and the Shareholders as a whole, and recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the SGM to approve the same.

Yours faithfully, For and on behalf of the Board Synergis Holdings Limited Kingston Chu Chun Ho Chairman

– 19 –

PRECAUTIONARY MEASURES FOR THE SGM

The health of our Shareholders, staff and other participants of the SGM (the ‘‘Stakeholders’’) is of paramount importance to us. In view of the ongoing Novel Coronavirus (COVID-19) pandemic, the Company will implement the following precautionary measures at the SGM to protect the Stakeholders from the risk of infection, which include but not limited to:

• (i) Compulsory body temperature checks will be conducted for every attendee at the entrance of the meeting venue. Any person with a body temperature above the reference range quoted by the Department of Health from time to time may be denied entry into the meeting venue or be required to leave the meeting venue.

• (ii) Each attendee is required to wear a surgical face mask throughout the meeting and inside the meeting venue, and to maintain a safe distance between seats.

• (iii) No refreshment will be served and there will be no corporate gift.

• (iv) Each attendee is required to complete and sign a health declaration form to declare whether (a) he/she travels outside of Hong Kong within the 14-day period immediately before the SGM; (b) he/she is subject to any Hong Kong Government prescribed quarantine; and (c) he/she has any flu-like symptoms or close contact with any person under quarantine or with recent travel history. Anyone who responds positively to any of these questions may be denied entry into the meeting venue or be required to leave the meeting venue.

• (v) Anyone attending the SGM is reminded to observe good personal hygiene at all times.

In light of the continuing risks posed by the COVID-19 pandemic, and in the interests of protecting the Stakeholders, the Company is supportive of the precautionary measures being adopted and strongly encourages Shareholders NOT to attend the SGM in person and advises Shareholders to appoint the Chairman of the SGM as their proxies to vote according to their indicated voting instructions as an alternative to attending the SGM in person.

Shareholders are advised to read this section carefully and monitor the development of COVID-19. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

If any Shareholder chooses not to attend the meeting in person but has any question about any resolution or about the Company, or has any matter for communication with the Board, he/ she is welcome to send such question or matter in writing to the Company’s principal place of business in Hong Kong or to our email at investor@synergis.com.hk.

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR AUDITED FINANCIAL INFORMATION

Financial information of the Group for the three years ended 31 December 2020 and the six months ended 30 June 2021 has been disclosed on pages 93 to 180 of the annual report of the Group for the year ended 31 December 2020 (available from the hyperlink: https:// www1.hkexnews.hk/listedco/listconews/sehk/2021/0414/2021041400607.pdf), pages 96 to 188 of the annual report of the Group for the year ended 31 December 2019 (available from the hyperlink: https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0409/2020040900887.pdf), and pages 91 to 176 of the annual report of the Group for the year ended 31 December 2018 (available from the hyperlink: https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0417/ ltn201904171138.pdf), and pages 16 to 30 of the interim report of the Group for the six months ended 30 June 2021 (available from the hyperlink: https://www1.hkexnews.hk/listedco/ listconews/sehk/2021/0908/2021090800672.pdf), respectively, which have been published on both the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (https://www.synergis.com.hk/).

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 October 2021, being the latest practicable date for the purpose of this statement of indebtedness, the Group’s indebtedness includes:

• (i) secured bank borrowings of approximately HK$15,000,000; and

• (ii) lease liabilities of approximately HK$11,173,000.

Borrowings and pledged assets

As at the close of business on 31 October 2021, the Group’s bank borrowing was secured by the Group’s time deposit of HK$10,000,000.

Lease liabilities

Current liabilities Non-current liabilities Total	As of 31 October 2021 HK$’000 (Unaudited) 7,204 3,969
	11,173

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as otherwise disclosed above, the Group did not have any loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities issued and outstanding, and authorised or otherwise created but unissued and term loans or other borrowings, indebtedness in the nature of borrowings, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance lease or hire purchase commitments, which are either guaranteed, unguaranteed, secured or unsecured, guarantees or other material contingent liabilities outstanding as at the close of business on 31 October 2021.

3. WORKING CAPITAL SUFFICIENCY

The Directors are of the opinion that, after due and careful enquiry, after taking into account the financial resources available to the Group (including but not limited to internally generated fund, cash and cash equivalents and other external facilities from banks), and the proceeds from the Disposal, the Group will have sufficient working capital for its present requirements for a period of twelve months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Amid uncertainties surrounding the pandemic, the Group maintained a stable operation and recorded a very significant increase in profit attributable to Shareholders for the first half of 2021 as compared with that the corresponding period in 2020.

Despite that the Group had not received further government subsidies under Hong Kong Government’s Employment Support Scheme for the first half of 2021, the substantial increase in the profit attributable to Shareholders was mainly attributable to (i) the satisfactory results and improvement in the operation efficiency of both the PFM Business, and the ISP Business as well as successful cost control measures; and (ii) the non-recurrence of substantial loss on the completed projects of ISP Business whereas such loss was recognised for the corresponding period in 2020.

Two business teams worked tirelessly to make continuous improvement on its quality of services. The Company saw steady business development and had achieved better operating profit contributions than the past years.

Looking forward, the Company is optimistic that its business will gather further growth momentum at times of economic recovery once the epidemic has receded and are wellequipped to seize the opportunities to generate sustainable value for its Shareholders. Meanwhile, the Group will also grasp the opportunities of the increasing housing supply and commercial land supply initiated by the Hong Kong Government and strive to maintain a continuous business growth. Leveraging on its historical track records and experiences in the market, diversified professional team and its strengthened liquidity and financial position, the Group is able to undertake more sizeable projects in coming years.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On a group-wide overview, the Company considers that the overall financial performance of the Group remains sound. The management of the Group seeks to proactively enhance the quality of its services and create value for its stakeholders through comprehensive and innovative solutions and better communications with clients. The awards the Group have won over the years attest to the wide recognition the Group has received for its dedication. Aligning the Group’s values of customer focus, integrity, teamwork, innovation and pursuit of excellence, sustainability is its core business strategy. With the rapid change of business environment, the Company will continue to manage various operational and financial risks and take appropriate measures to minimize and combat these risks and have full confidence in overcoming all the difficulties ahead of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that there had been no material adverse change in the financial or trading position or prospects of the Group since 31 December 2020, being the date to which the latest audited consolidated financial statements of the Group were made up.

– I-3 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF SYNERGIS HOLDINGS LIMITED (the ‘‘Company’’)

Introduction

We report on the historical financial information of True Hope Group Limited (the ‘‘True Hope’’ or ‘‘Disposal Company’’) and its subsidiaries (together, the ‘‘Disposal Group’’) set out on pages II-4 to II-9, which comprises the combined statement of financial position as at 31 December 2018, 2019 and 2020 and 30 June 2021 and the combined statements of profit or loss and other comprehensive income, the combined statements of changes in equity and the combined statements of cash flows for each of the periods then ended (the ‘‘Track Record Period’’) and a summary of significant accounting policies and other explanatory information (together, the ‘‘Historical Financial Information’’). The Historical Financial Information set out on pages II-10 to II-60 forms an integral part of this report, which has been prepared for inclusion in the investment circular of the Company dated 1 December 2021 (the ‘‘Investment Circular’’) in connection with the proposed disposal of 100% equity interest of the Disposal Company.

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 3 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

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

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 3 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

– II-1 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

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

Opinion

In our opinion the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the Disposal Group’s financial position as at 31 December 2018, 2019 and 2020 and 30 June 2021 and of the Disposal Group’s financial performance and cash flows for the Track Record Period in accordance with the basis of preparation and presentation set out in Note 3 to the Historical Financial Information.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Disposal Group which comprises statements of combined profit or loss, comprehensive income, changes in equity and cash flows for the six months ended 30 June 2020 and other explanatory information (the ‘‘Stub Period Comparative Financial Information’’). The directors of the Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in Note 3 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in Note 3 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange

Adjustments

In preparing the Historical Financial Information and the Stub Period Comparative Historical Financial Information, no adjustments to the Underlying Financial Statements have been made.

BDO Limited

Certified Public Accountants

Lee Ka Leung, Daniel

Practising Certificate Number P01220

Hong Kong, 1 December 2021

– II-2 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

HISTORICAL FINANCIAL INFORMATION OF THE TARGET GROUP

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

The Underlying Financial statements, on which the Historical Financial Information is based, were audited by BDO Limited in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The Historical Financial Information is presented in HK dollars and all values are rounded to the nearest thousand (HK$’000) except when otherwise indicated.

– II-3 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

• A. COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the years ended 31 December 2018, 2019 and 2020 and six months ended 30 June 2020 and 2021

Note Revenue 7 Cost of sales and service Gross profit Other income 8 General and administrative expenses Interest expenses 9 Net allowances for impairment losses on receivables and contract assets Profit before taxation 10 Taxation 13 Profit for the year/period attributable to the equity holders of the Disposal Company Other comprehensive income/ (loss): Items that will not be reclassified to profit or loss: Actuarial gain/(loss) on long service payment liabilities Other comprehensive income/ (loss) for the year/period Total comprehensive income for the year/period attributable to equity holders of the Disposal Company	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 664,483 721,225 746,393 (579,478) (635,428) (657,162) 85,005 85,797 89,231 4,279 2,200 81,966 (59,878) (51,162) (50,639) — (350) (239) (541) (394) 25 28,865 36,091 120,344 (4,283) (6,064) (6,860) 24,582 30,027 113,484 (911) 121 (807) (911) 121 (807) 23,671 30,148 112,677	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 362,142 381,811 (319,182) (333,332) 42,960 48,479 14,499 809 (27,983) (27,315) (138) (110) (2) 325 29,336 22,188 (3,132) (3,406) 26,204 18,782 — — — — 26,204 18,782

– II-4 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

B. COMBINED STATEMENTS OF FINANCIAL POSITION As at 31 December 2018, 2019 and 2020 and 30 June 2021

Note Non-current assets Property, plant and equipment 16 Investment properties 17 Deferred tax assets 25 Total non-current assets Current assets Contract assets 18 Receivables 19 Deposits and prepayments Taxation recoverable Amounts due from fellow subsidiaries 23 Amounts due from intermediate holding companies 23 Cash and cash equivalents 20 Time deposits with original maturities over three months 20 Total current assets Current liabilities Payables and accruals 21 Contract liabilities 18 Lease liabilities 22 Taxation payable Amounts due to intermediate holding companies 23 Amounts due to the immediate holding company 23 Total current liabilities Net current assets Total assets less current liabilities	As 2018 HK$’000 (Audited) 6,522 7,000 328 13,850 61 152,295 14,423 101 2,153 18,770 55,412 866 244,081 82,708 4,149 — 464 34,118 — 121,439 122,642 136,492	at 31 December 2019 2020 HK$’000 HK$’000 (Audited) (Audited) 12,706 9,543 7,200 6,800 674 741 20,580 17,084 362 1,154 163,711 123,262 17,642 15,738 266 106 12,091 22,009 25,728 — 56,437 150,809 1,311 755 277,548 313,833 92,488 65,044 4,662 12,689 5,269 3,265 4,156 5,214 23,566 108,226 — 19,900 130,141 214,338 147,407 99,495 167,987 116,579	As at 30 June 2021 HK$’000 (Audited) 11,610 6,800 826
			19,236
			539 121,794 22,596 17 6,220 27,900 43,276 780
			223,122
			52,503 12,564 4,673 8,675 69,836 4,100
			152,351
			70,771
			90,007

– II-5 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Note Non-current liabilities Long service payment liabilities 24 Lease liabilities 22 Deferred tax liabilities 25 Total non-current liabilities Net assets Equity Share capital 26 Reserves 27 Total equity	As 2018 HK$’000 (Audited) 1,780 — 54 1,834 134,658 2,306 132,352 134,658	at 31 December 2019 2020 HK$’000 HK$’000 (Audited) (Audited) 1,543 1,367 1,805 1,498 95 165 3,443 3,030 164,544 113,549 2,306 2,306 162,238 111,243 164,544 113,549	As at 30 June 2021 HK$’000 (Audited) 1,367 3,260 106
			4,733
			85,274
			2,306 82,968
			85,274

– II-6 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

C. COMBINED STATEMENTS OF CHANGES IN EQUITY

For the years ended 31 December 2018, 2019 and 2020 and six months ended 30 June 2020 and 2021

At 1 January 2018 Profit for the year Other comprehensive income: Actuarial loss on long service payment liabilities Total other comprehensive income Total comprehensive income At 31 December 2018 At 1 January 2019 Change in accounting policy Restated at 1 January 2019 Profit for the year Other comprehensive income: Actuarial gain on long service payment liabilities Total other comprehensive income Total comprehensive income At 31 December 2019	Share capital HK$’000 (Audited) 2,306 — — — — 2,306 2,306 — 2,306 — — — — 2,306	Share premium HK$’000 (Audited) 4,788 — — — — 4,788 4,788 — 4,788 — — — — 4,788	Merger reserve HK$’000 (Audited) 207 — — — — 207 207 — 207 — — — — 207	Retained earnings HK$’000 (Audited) 103,686 24,582 (911) (911) 23,671 127,357 127,357 (262) 127,095 30,027 121 121 30,148 157,243	Total Equity HK$’000 (Audited) 110,987 24,582 (911) (911) 23,671 134,658 134,658 (262) 134,396 30,027 121 121 30,148 164,544

– II-7 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

At 1 January 2020 Profit for the year Other comprehensive income: Actuarial loss on long service payment liabilities Total other comprehensive income Total comprehensive income Dividend paid At 31 December 2020 At 1 January 2020 (Audited) Profit for the period and total comprehensive income Dividend paid At 30 June 2020 (Unaudited) At 1 January 2021 (Audited) Profit for the period and total comprehensive income Dividend paid At 30 June 2021 (Audited)	Share capital HK$’000 (Audited) 2,306 — — — — — 2,306 2,306 — — 2,306 2,306 — — 2,306	Share premium HK$’000 (Audited) 4,788 — — — — — 4,788 4,788 — — 4,788 4,788 — — 4,788	Merger reserve HK$’000 (Audited) 207 — — — — — 207 207 — — 207 207 — — 207	Retained earnings HK$’000 (Audited) 157,243 113,484 (807) (807) 112,677 (163,672) 106,248 157,243 26,204 (29,638) 153,809 106,248 18,782 (47,057) 77,973	Total Equity HK$’000 (Audited) 164,544 113,484 (807) (807) 112,677 (163,672) 113,549 164,544 26,204 (29,638) 161,110 113,549 18,782 (47,057) 85,274

– II-8 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

D. COMBINED STATEMENTS OF CASH FLOWS

For the years ended 31 December 2018, 2019 and 2020 and six months ended 30 June 2020 and 2021

Note Operating activities Cash generated from/ (used in) operations 28 Interest received Tax refund Income taxes paid Net cash generated from/(used in) operating activities Investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease/(increase) in time deposits Net cash used in investing activities Financing activities Dividend paid Repayment of principal portion of the lease liabilities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year/period	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 13,317 12,256 271,036 87 166 407 — — 40 (4,261) (2,842) (5,679) 9,143 9,580 265,804 (1,516) (2,231) (3,469) 283 329 1,057 (866) (445) 556 (2,099) (2,347) (1,856) — — (163,672) — (6,208) (5,904) — (6,208) (169,576) 7,044 1,025 94,372 48,368 55,412 56,437 55,412 56,437 150,809	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 56,162 (57,391) 152 69 — — (2,349) — 53,965 (57,322) (1,735) (373) 172 27 148 (25) (1,415) (371) (29,638) (47,057) (3,030) (2,783) (32,668) (49,840) 19,882 (107,533) 56,437 150,809 76,319 43,276

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. Corporate information

True Hope Group Limited (the ‘‘True Hope’’ or ‘‘Disposal Company’’) is a limited liability company incorporated in the British Virgin Islands. Its registered office is located at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.

The principal activity of True Hope is investment holding.

The immediate holding company of True Hope is Synergis Holdings (BVI) Limited (‘‘SHL BVI’’), which is incorporated in the British Virgin Islands with limited liability.

In the opinion of the directors, the ultimate holding company of True Hope is Champ Key Holdings Limited, which is incorporated in the British Virgin Islands with limited liability.

As at the date of this report, the Disposal Company has direct and indirect interest in its subsidiaries, all of which are private limited liability companies (or, if incorporated outside Hong Kong, have substantially similar characteristics to a private company incorporated in Hong Kong), the particulars of which are set out below:

	Place of			Percentage of equity	Percentage of equity
	incorporation		Issued and paid up/	attributable to
Name	and operation	Principal activities	registered capital	the Disposal Company
				Direct	Indirect	Note
Interest held directly:
Synergis Management	Hong Kong	Provision of property	206,837 ordinary shares	100%	—	1
Services Limited		management services	of HK$1 each
Synergis Facility	Hong Kong	Provision of facility	2 ordinary shares of	100%	—	1
Management		management services	HK$1 each
Limited
Synergis Property	Hong Kong	Provision of property	2 ordinary shares of	100%	—	1
Management		management and security	HK$1 each
Limited		guarding services
SynWave Supply &	British Virgin	Investment Holdings	1 ordinary shares of	100%	—	2
Services Limited	Islands		US$1 each

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

	Place of			Percentage of equity	Percentage of equity
	incorporation		Issued and paid up/	attributable to
Name	and operation	Principal activities	registered capital	the Disposal Company
				Direct	Indirect	Note
Interest held indirectly:
Service Pro Limited	Hong Kong	Provision of maintenance and	2 ordinary shares of	—	100%	1
		technical support services	HK$1 each
SecurExpert Solutions	Hong Kong	Provision of security and	2 ordinary shares of	—	100%	1
Limited		consultancy services	HK$1 each
Laundrimate Service	Hong Kong	Provision of laundry services	2 ordinary shares of	—	100%	1
Limited			HK$1 each
Master Clean Service	Hong Kong	Provision of cleaning	200,000 ordinary shares	—	100%	1
Limited		services	of HK$1 each
SynWave Services	Hong Kong	Provision of procurement and	1 ordinary share of HK$1	—	100%	1
Limited		trading business

Note 1: The statutory financial statements of these entities for the year ended 31 December 2019 and 2020, which were prepared in accordance with HKFRSs issued by the HKICPA, were audited by BDO limited in accordance with HKAS issued by the HKICPA. The statutory financial statements of these entities for the year ended 31 December 2018, which were prepared in accordance with HKFRSs issued by the HKICPA, were audited by PricewaterhouseCoopers in accordance with HKAS issued by the HKICPA.

• Note 2: No audited statutory financial statements have been prepared for SynWave Supply & Services Limited since it was incorporated in a country where there is no statutory audit requirement.

All subsidiaries now comprising the Disposal Group have adopted 31 December as their financial year end

date.

2. Adoption of Hong Kong Financial Reporting Standards (‘‘HKFRSs’’)

(a) Adoption of new/revised standards

The HKICPA has issued a number of new and amended HKFRSs. For the purpose of preparing the Historical Financial Information, the Disposal Group has adopted all applicable new and amended HKFRSs that are effective from 1 January 2021.

HKFRS 9, ‘‘Financial instruments’’ and HKFRS 15, ‘‘Revenue from contracts with customers’’ were effective for annual periods beginning on or after 1 January 2018. The Disposal Group has adopted HKFRS 9 and HKFRS 15 consistently throughout the Track Record Period. The adoption of HKFRS 16, ‘‘Leases’’ which was effective for annual periods beginning on or after 1 January 2019. The impact of adoption of HKFRS 16 was as follow.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

HKFRS 16 ‘‘Lease’’

(i) Impact of the adoption of HKFRS 16

HKFRS 16 brings significant changes in accounting treatment for lease accounting, primarily for accounting for lessees. It replaces HKAS 17 Leases (‘‘HKAS 17’’), HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases-Incentives and HK(SIC)Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. From a lessee’s perspective, almost all leases are recognised in the statement of financial position as right-of-use assets and lease liabilities, with the narrow exception to this principle for leases which the underlying assets are of low-value or are determined as short-term leases. From a lessor’s perspective, the accounting treatment is substantially unchanged from HKAS 17. For details of HKFRS 16 regarding its new definition of a lease, its impact on the Group’s accounting policies and the transition method adopted by the Group as allowed under HKFRS 16, please refer to section (ii) to (v) of this note.

The Disposal Group has applied HKFRS 16 using the cumulative effect approach and recognised all the cumulative effect of initially applying HKFRS 16 as an adjustment to the opening balance of retained earnings at the date of initial application. The comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17 and related interpretations as allowed by the transition provision in HKFRS 16.

The following tables summarised the impact of transition to HKFRS 16 on statement of financial position as of 31 December 2018 to that of 1 January 2019 as follows (increase/(decrease)):

Statement of financial position as at 1 January 2019	HK$’000
Right of use assets presented in property, plant and equipment	6,381
Payables and accruals	970
Non-current lease liabilities	855
Current lease liabilities	4,818
Retained earning	(262)

The following reconciliation explains how the operating lease commitments disclosed applying HKAS 17 at the end of 31 December 2018 could be reconciled to the lease liabilities at the date of initial application recognised in the statement of financial position as at 1 January 2019:

Reconciliation of operating lease commitment to lease liabilities Operating lease commitment as of 31 December 2018 Future interest expenses Total lease liabilities as of 1 January 2019 Of which are: Current lease liabilities Non-current lease liabilities	HK$’000 6,071 (398) 5,673 4,818 855 5,673

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognised in the statement of financial position as at 1 January 2019 is 4.7%.

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APPENDIX II

(ii) The new definition of a lease

Under HKFRS 16, a lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. A contract conveys the right to control the use of an identified asset for a period of time when the customer, throughout the period of use, has both: (a) the right to obtain substantially all of the economic benefits from use of the identified asset and (b) the right to direct the use of the identified asset.

(iii) Accounting as a lessee

Under HKAS 17, a lessee has to classify a lease as an operating lease or a finance lease based on the extent to which risks and rewards incidental to ownership of a lease asset lie with the lessor or the lessee. If a lease is determined as an operating lease, the lessee would recognise the lease payments under the operating lease as an expense over the lease term. The asset under the lease would not be recognised in the statement of financial position of the lessee.

Under HKFRS 16, all leases (irrespective of they are operating leases or finance leases) are required to be capitalised in the statement of financial position as right-of-use assets and lease liabilities, but HKFRS 16 provides accounting policy choices for an entity to choose not to capitalise (i) leases which are short-term leases and/or (ii) leases for which the underlying asset is of low-value. The lease payments associated with those leases have been expensed on straight-line basis over the lease term.

The Disposal Group recognised a right-of-use asset and a lease liability at the commencement date of a lease.

Right-of-use asset

The right-of-use asset should be recognised at cost and would comprise: (i) the amount of the initial measurement of the lease liability (see below for the accounting policy to account for lease liability); (ii) any lease payments made at or before the commencement date, less any lease incentives received; (iii) any initial direct costs incurred by the lessee and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. Under the cost model, the Disposal Group measures the right-to-use at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liability.

Lease liability

The lease liability should be recognised at the present value of the lease payments that are not paid at the date of commencement of the lease. The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Disposal Group shall use the Disposal Group’s incremental borrowing rate.

The following payments for the right-to-use the underlying asset during the lease term that are not paid at the commencement date of the lease are considered to be lease payments: (i) fixed payments less any lease incentives receivable: (ii) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at commencement date; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option and (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Subsequent to the commencement date, a lessee shall measure the lease liability by: (i) increasing the carrying amount to reflect interest on the lease liability; (ii) reducing the carrying amount to reflect the lease payments made; and (iii) remeasuring the carrying amount to reflect any reassessment or lease modifications, e.g., a change in future lease payments arising from change in an index or rate, a change in the lease term, a change in the in substance fixed lease payments or a change in assessment to purchase the underlying asset.

(iv) Accounting as a lessor

The Disposal Group has leased out its investment properties to a number of tenants. As the accounting under HKFRS 16 for a lessor is substantially unchanged from the requirements under HKAS 17, the adoption of HKFRS 16 does not have significant impact on these condensed consolidated financial statements.

(v) Transition

As mentioned above, the Disposal Group has applied HKFRS 16 using the cumulative effect approach and recognised all the cumulative effect of initially applying HKFRS 16 as an adjustment to the opening balance of retained earnings at the date of initial application (1 January 2019). The comparative information presented in 2018 has not been restated and continues to be reported under HKAS 17 and related interpretations as allowed by the transition provision in HKFRS 16.

The Disposal Group has recognised the lease liabilities at the date of 1 January 2019 for leases previously classified as operating leases applying HKAS 17 and measured those lease liabilities at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at 1 January 2019.

The Disposal Group has elected to recognise all the right-of use assets at 1 January 2019 for leases previously classified operating leases under HKAS 17 as if HKFRS 16 had been applied since the commencement date, but discounted using the lessee’s incremental borrowing rate at the date of initial application. For all these right-of-use assets, the Disposal Group has applied HKAS 36 Impairment of Assets at 1 January 2019 to assess if there was any impairment as on that date.

The Disposal Group has also applied the following practical expedients: (i) applied a single discount rate to a portfolio of leases with reasonably similar characteristics; and (ii) used hindsight in determining the lease terms if the contracts contain options to extend or terminate the leases.

In addition, the Disposal Group has also applied the practical expedients such that: (i) HKFRS 16 is applied to all of the Group’s lease contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease and (ii) not to apply HKFRS 16 to contracts that were not previously identified as containing a lease under HKAS 17 and HK(IFRIC)-Int4.

Amendments to HKFRS 16, ‘‘COVID-19 Related Rent Concessions’’

The Disposal Group has early adopted the amendment to HKFRS 16 for the annual period beginning on or after 1 January 2020. The adoption of the amendment to HKFRS 16 does not have any significant impact on current or future periods.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

(b) New/revised standards that have been issued but are not yet effective

The following new/revised standards, potentially relevant to the Disposal Group’s financial statements, have been issued, but are not yet effective for the current financial year. The Disposal Group’s current intention is to apply these changes on the date they become effective.

Amendments to HKFRS 3 Reference to the Conceptual Framework[2] Amendments to HKAS 1 Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)[3] Amendments to HKAS 16 Property, Plant and Equipment: Proceeds before Intended Use[2] Amendments to HKAS 37 Onerous Contracts — Cost of Fulfilling a Contract[2] Annual Improvements to HKFRSs Annual Improvements to HKFRSs 2018–2020 Cycle[2] Amendments to HKAS 1 and Disclosure of Accounting Policies[3] HKFRS Practice Statement 2 Amendments to HKAS 8 Definition of Accounting Estimates[3] 2021 Amendments to HKFRS 16 COVID-19 — Related Rent Concessions beyond 30 June 2021[1] Amendments to HKAS 12 Recognition of Deferred Tax Liabilities and Deferred Tax Assets[3]

• 1 Effective for annual periods beginning on or after 1 April 2021. 2 Effective for annual periods beginning on or after 1 January 2022. 3 Effective for annual periods beginning on or after 1 January 2023.

Amendments to HKFRS 3, Reference to the Conceptual Framework

The amendments update HKFRS 3 so that it refers to the revised Conceptual Framework for Financial Reporting 2018 instead of the version issued in 2010. The amendments add to HKFRS 3 a requirement that, for obligations within the scope of HKAS 37, an acquirer applies HKAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be within the scope of HK(IFRIC)-Int 21 Levies, the acquirer applies HK(IFRIC)-Int 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date. The amendments also add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

Amendments to HKAS 1, Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)

The amendments provide clarification and additional guidance on the assessment of right to defer settlement for at least twelve months from reporting date for classification of liabilities as current or non-current, which:

• . HKFRS 9, specify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. Specifically, the amendments clarify that:

• (i) the classification should not be affected by management intentions or expectations to settle the liability within 12 months; and

• (ii) if the right is conditional on the compliance with covenants, the right exists if the conditions are met at the end of the reporting period, even if the lender does not test compliance until a later date; and

• . clarify that if a liability has terms that could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own equity instruments, these terms do not affect its classification as current or non-current only if the entity recognises the option separately as an equity instrument applying HKAS 32 ‘‘Financial Instruments: Presentation’’.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

In addition, Hong Kong Interpretation 5 was revised as a consequence of the Amendments to HKAS 1 to align the corresponding wordings with no change in conclusion.

Amendments to HKAS 16, Property, Plant and Equipment Proceeds before Intended Use

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, the proceeds from selling such items, and the cost of producing those items, is recognised in profit or loss.

Amendments to HKAS 37, Onerous Contracts — Cost of Fulfilling a Contract

The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (e.g. direct labour and materials) or an allocation of other costs that relate directly to fulfilling contracts (e.g. the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

Annual Improvements to HKFRSs, Annual Improvements to HKFRSs 2018–2020 Cycle

The annual improvements amends a number of standards, including:

• . HKFRS 1, First-time Adoption of Hong Kong Financial Reporting Standards, which permit a subsidiary that applies paragraph D16(a) of HKFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to HKFRSs.

• . HKFRS 9, Financial Instruments, which clarify the fees included in the ‘10 per cent test’ in paragraph B3.3.6 of HKFRS 9 in assessing whether to derecognise a financial liability, explaining that only fees paid or received between the entity and the lender, including fees paid or received by either the entity or the lender on other’s behalf are included.

• . HKFRS 16, Leases, which remove the illustration of reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.

Amendments to HKAS 1 and HKFRS Practice Statement 2, Disclosure of Accounting Policies

The key amendments to HKAS 1 include (i) requiring companies to disclose their material accounting policies rather than their significant accounting policies; (ii) clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and (iii) clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company’s financial statements.

Amended HKFRS Practice Statement 2 includes guidance and two additional examples on the application of materiality to accounting policy disclosures.

Amendments to HKAS 8, Definition of Accounting Estimates

The amendments introduce a new definition for accounting estimates: clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty.

The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

2021 Amendments to HKFRS 16, COVID-19 — Related Rent Concessions beyond 30 June 2021

The 2021 Amendment to HKFRS 16 extends the availability of the practical expedient in paragraph 46A of HKFRS 16 so that it applies to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022, provided the other conditions for applying the practical expedient are met. The amendment is effective for annual periods beginning on or after 1 April 2021 with earlier application permitted and shall be applied retrospectively.

Amendments to HKAS 12, Recognition of Deferred Tax Liabilities and Deferred Tax Assets

The amendments narrow the scope of the recognition exemption so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The directors of the Disposal Group have performed an assessment on new standards, amendments and interpretations, and have concluded on a preliminary basis that these new standards and amendments would not have a significant impact on the Disposal Group’s combined financial statements in subsequent period.

3. Reorganisation, basis of presentation and preparation of the Historical Financial Information

Pursuant to the Reorganisation (refer to the Reorganisation section in the circular), True Hope Group Limited became the holding company of the companies now comprising the Disposal Group on 27 September 2021. The companies now comprising the Disposal Group have been under the common control and beneficially owned by Synergis Holdings Limited (‘‘Company’’) throughout the Track Record Period. Accordingly, the Reorganisation has been accounted for as if the Disposal Company had always been the holding company of the Disposal Group throughout the Track Record Period.

The combined statements of profit or loss and other comprehensive income, combined statements of changes in equity and combined statements of cash flows including the results and cash flows of the companies now comprising the Disposal Group have been prepared as if the current group structure had been in existence throughout the Track Record Period. The combined statements of financial position of the Disposal Group as at 31 December 2018, 2019 and 2020 and 30 June 2021 have been prepared to present the assets and liabilities of the companies now comprising the Disposal Group as if the current group structure had been in existence as at those dates. The net assets and results of the Disposal Group were combined using the carrying value from the perspective of the controlling shareholders. All significant intra-group transactions and balances have been eliminated in full on combination.

The Historical Financial Information of the Disposal Group for the years ended 31 December 2018, 2019 and 2020 and six months ended 30 June 2021 has been prepared solely for the purpose of inclusion in the circular to be issued by the Company, the intermediate holding company of the Disposal Company, in connection with the proposed disposal in accordance with paragraph 14.68(2)(a)(i) of the Listing Rules.

The amounts included in the Historical Financial Information of the Disposal Group have been recognised and measured in accordance with the relevant accounting policies of the Company adopted in the preparation of the consolidated financial statements of the Company and its subsidiaries (collectively, the ‘‘Group’’) for the relevant years, which conform with Hong Kong Financial Reporting Standards (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations) issued by the HKICPA and accounting principles generally accepted in Hong Kong. The Historical Financial Information of the Disposal Group has been prepared under the historical cost convention, except for investment properties and certain financial instruments that are measured at fair values, at the end of each reporting period, as explained in the accounting policies set out below.

– II-17 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

4. Significant Accounting Policies

(a) Basis of combination

The combined financial statements incorporate the financial statements of the Disposal Group and entities controlled by the Disposal Company and its subsidiaries. Control is achieved when the Disposal Company:

• . has power over the investee;

• . is exposed, or has rights, to variable returns from its involvement with the investee; and

• . has the ability to use its power to affect its returns.

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

Combination of a subsidiary begins when the Disposal Group obtains control over the subsidiary and ceases when the Disposal Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the combined statements of profit or loss and other comprehensive income from the date the Disposal Group gains controls until the date when the Disposal Group ceases to control the subsidiary.

Profit or loss and each item of other comprehensive income are attributed to the owners of the Disposal Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Disposal Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Disposal Group’s accounting policies.

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

Non-controlling interests in subsidiaries are presented separately from the Disposal Group’s equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.

(b) Merger accounting for business combination involving businesses under common control

The Disposal Group incorporates the financial statements items of the combining businesses in which the common control combination occurs as if they had been combined from the date when the combining businesses first came under the control of the controlling party.

The net assets of the combining businesses are consolidated using the existing carrying values from the controlling party’s perspective. No amount is recognised in respect of goodwill or bargain purchase gain at the time of common control combination.

The combined statement of profit or loss and other comprehensive income includes the results of each of the combining businesses from the earliest date presented or since the date when the combining businesses first came under the common control, where this is a shorter period.

The comparative amounts in the financial statements are presented as if the businesses had been combined at the beginning of the previous reporting period or when they first came under common control, whichever is shorter.

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

(c) Subsidiaries

A subsidiary is an investee over which the Disposal Company is able to exercise control. The Disposal Company controls an investee if all three of the following elements are present: power over the investee, exposure, or rights, to variable returns from the investee, and the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

In the Disposal Company’s statement of financial position, investments in subsidiaries are stated at cost less impairment loss, if any. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

(d) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments and making strategic decisions.

(e) Investment properties

Investment property is held for long-term rental yields or for capital appreciation or both, and is not occupied by the companies in the Disposal Group.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value. Fair value is revaluated bi-annually based on active market prices, adjusted for any necessary difference in the nature, location or condition of the specific asset.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions. Changes in fair values are recognised in profit or loss.

(f) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in each asset’s carrying amount only when it is probable that there is future economic benefit to the Disposal Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.

Depreciation of property, plant and equipment is calculated using the straight-line method based on estimated useful lives, as follows:

Leasehold improvements Over the lease period Motor vehicles 25%–33% per annum Furniture and equipment 10%–50% per annum

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assets’ carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 6(a)).

The gain or loss on disposal of an item of property, plant and equipment is the difference between the net sale proceeds and its carrying amount, and is recognised in profit or loss on disposal.

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APPENDIX II

(g) Financial Instruments

(i) Financial assets

A financial asset (unless it is an account receivable without a significant financing component) is initially measured at fair value plus, for an item not at fair value through profit or loss (‘‘FVTPL’’), transaction costs that are directly attributable to its acquisition or issue. An account receivable without a significant financing component is initially measured at the transaction price.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Disposal Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place.

Financial assets with embedded derivatives are considered in their entirely when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Disposal Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Disposal Group classifies its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets at amortised cost are subsequently measured using the effective interest rate method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain on derecognition is recognised in profit or loss.

Fair value through other comprehensive income (‘‘FVOCI’’): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through OCI. Debt investments at fair value through other comprehensive income are subsequently measured at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Fair value through profit or loss (‘‘FVTPL’’): Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through other comprehensive income, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Equity instruments

On initial recognition of an equity investment that is not held for trading, the Disposal Group could irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis. Equity investments at fair value through other comprehensive income are measured at fair value. Dividend income are recognised in profit or loss unless the dividend income clearly represents a

– II-20 –

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APPENDIX II

recovery of part of the cost of the investments. Other net gains and losses are recognised in other comprehensive income and are not reclassified to profit or loss. All other equity instruments are classified as FVTPL, whereby changes in fair value, dividends and interest income are recognised in profit or loss.

(ii) Impairment loss on financial assets

The Disposal Group recognises loss allowances for expected credit loss (‘‘ECL’’) on account receivables, contract assets, and financial assets measured at amortised cost. The ECLs are measured on either of the following bases: (1) 12 months ECLs: these are the ECLs that result from possible default events within the 12 months after the reporting date: and (2) lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. The maximum period considered when estimating ECLs is the maximum contractual period over which the Disposal Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the difference between all contractual cash flows that are due to the Disposal Group in accordance with the contract and all the cash flows that the Disposal Group expects to receive. The shortfall is then discounted at an approximation to the assets’ original effective interest rate.

The Disposal Group has elected to measure loss allowances for account receivables and contract assets using HKFRS 9 simplified approach and has calculated ECLs based on lifetime ECLs. The Disposal Group has established a provision matrix that is based on the Disposal Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For other debt financial assets, the ECLs are based on the 12-month ECLs. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECLs.

Significant increase in credit risk

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Disposal Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information analysis, based on the Disposal Group’s historical experience and informed credit assessment and including forward-looking information.

The Disposal Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due, unless the Disposal Group has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Disposal Group assumes that the credit risk on a debt instrument has not increase significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if (i) it has a low risk of default, (ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and (iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Disposal Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

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Credit-impaired financial assets

The Disposal Group considers a financial asset to be credit-impaired when: (1) the borrower is unlikely to pay its credit obligations to the Disposal Group in full, without recourse by the Disposal Group to actions such as realising security (if any is held); or (2) the financial asset is more than 90 days past due.

Interest income on credit-impaired financial assets is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset. For non credit-impaired financial assets interest income is calculated based on the gross carrying amount.

Definition of default

The Disposal Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

• . when there is a breach of financial covenants by the debtor; or

• . information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Disposal Group, in full (without taking into account any collaterals held by the Disposal Group).

The Disposal Group considers that default has occurred when a financial asset is more than 90 days past due unless the Disposal Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Write-off policy

The Disposal Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Disposal Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forwardlooking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date.

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the Disposal Group in accordance with the contract and all the cash flows that the Disposal Group expects to receive, discounted at the original effective interest rate.

If the Disposal Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Disposal Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Disposal Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

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(iii) Financial liabilities

The Disposal Group classifies its financial liabilities, depending on the purpose for which the liabilities were incurred. Financial liabilities at fair value through profit or loss are initially measured at fair value and financial liabilities at amortised costs are initially measured at fair value, net of directly attributable costs incurred.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of sale in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in profit or loss.

Where a contract contains one or more embedded derivatives, the entire hybrid contract may be designated as a financial liability at fair value through profit or loss, except where the embedded derivative does not significantly modify the cash flows or it is clear that separation of the embedded derivative is prohibited.

Financial liabilities may be designated upon initial recognition as at fair value through profit or loss if the following criteria are met: (i) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the liabilities or recognising gains or losses on them on a different basis; (ii) the liabilities are part of Disposal Group of financial liabilities which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or (iii) the financial liability contains an embedded derivative that would need to be separately recorded.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, with changes in fair value recognised in profit or loss in the period in which they arise, except for the gains and losses arising from the Disposal Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortised cost

Financial liabilities at amortised cost including account and other payables and borrowings are subsequently measured at amortised cost, using the effective interest method. The related interest expense is recognised in profit or loss.

Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

(iv) Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability, or where appropriate, a shorter period.

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(v) Derecognition

The Disposal Group derecognises a financial asset when the contractual rights to the future cash flows in relation to the financial asset expire or when the financial asset has been transferred and the transfer meets the criteria for derecognition in accordance with HKFRS 9.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires.

Where the Disposal Group issues its own equity instruments to a creditor to settle a financial liability in whole or in part as a result of renegotiating the terms of that liability, the equity instruments issued are the consideration paid and are recognised initially and measured at their fair value on the date the financial liability or part thereof is extinguished. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments are measured to reflect the fair value of the financial liability extinguished. The difference between the carrying amount of the financial liability or part thereof extinguished and the consideration paid is recognised in profit or loss for the year.

(h) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. It is the Disposal Group’s policy to forfeit any untaken annual leave with a specific time period. Subject to regular assessment of staff turnover rate, a provision will be made or reversed. Employee entitlements to sick leave and maternity leave are not recognised until the time of leave. A provision is made for the estimated liability up to the end of reporting date.

(ii) Profit sharing and bonus plans

Provisions for profit sharing and bonus are made for the estimated liability for incentive bonus as a result of services rendered by employees up to the end of reporting date, where there is a contractual obligation or past practice that has created a constructive obligation, and a reliable estimate of the obligation can be made.

(iii) Retirement benefit

The Disposal Group participates in mandatory provident fund schemes in Hong Kong which are defined contribution plan generally funded through payments to trustee — administered funds. The assets of the schemes is held separately from those of the Disposal Group in independently administered funds.

(iv) Long service payment liabilities

The Disposal Group’s net obligation in respect of long service accounts payable on cessation of employment in certain circumstances under the Hong Kong Employment Ordinance is the amount of future benefit that employees have earned in return for their services in the current and prior periods. That benefit is discounted to determine the present value and reduced by entitlements accrued under the Disposal Group’s retirement plans. The obligation is calculated using the projected unit credit method by a qualified actuary. Actuarial gains or losses was charged/credited to the other comprehensive income.

(i) Foreign currency

Transactions entered into by the Disposal Group entities in currencies other than the currency of the primary economic environment in which it/they operate(s) (the ‘‘functional currency’’) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the

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APPENDIX II

rates ruling at the end of reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income, in which case, the exchange differences are also recognised in other comprehensive income.

On consolidation, income and expense items of foreign operations are translated into the presentation currency of the Disposal Group at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the rates approximating to those ruling when the transactions took place are used. All assets and liabilities of foreign operations are translated at the rate ruling at the end of reporting period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity as exchange reserve. Exchange differences recognised in profit or loss of Disposal Group entities’ separate financial statements on the translation of long-term monetary items forming part of the Disposal Group’s net investment in the foreign operation concerned are reclassified to other comprehensive income and accumulated in equity as foreign exchange reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are reclassified to profit or loss as part of the profit or loss on disposal.

(j) Impairment of assets (other than financial assets)

At the end of each reporting period, the Disposal Group reviews the carrying amounts of the following assets to determine whether there is any indication that those assets have suffered an impairment loss or an impairment loss previously recognised no longer exists or may have decreased:

. property, plant and equipment

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount under another HKFRS, in which case the impairment loss is treated as a revaluation decrease under that HKFRS.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased. Value in use is based on the estimated future cash flows expected to be derived from the asset or cash generating unit, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit.

(k) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Disposal Group has a legal or constructive obligation arising as a result of a past event, which it is probable will result in an outflow of economic benefits that can be reliably estimated.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, the existence of which will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

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(l) Current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting date in the countries where the Disposal Group’s entities operate and generate taxable income. Management periodically evaluates tax related situations and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the combined financial statements. However, 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 substantially enacted by the end of reporting 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 asset is recognised 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 is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Disposal Group and it is probable that the temporary difference will not reverse in the foreseeable future.

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.

Current and deferred tax is recognised in profit or loss, 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.

• (m)(i) Leasing (accounting policies applied from 1 January 2019)

The policy of lease recognition under HKFRS 16 is set out in Note 2(a).

(m)(ii) Leasing (accounting policies applied until 31 December 2018)

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

The Group as lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Disposal Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Disposal Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on the straightline basis over the lease term.

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The Group as lessee

Assets held under finance leases are initially recognised as assets at their fair value or, if lower, the present value of the minimum lease payments. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to profit or loss over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

(n) Revenue and income recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Disposal Group’s activities. Revenue is shown net of returns and discounts and after eliminating sales within the Disposal Group.

Revenue are recognised when or as the control of the services or goods is transferred to the purchaser. Depending on the terms of the contract and the laws that apply to the contract, control of the services or goods may transfer over time or at a point in time. Control of the services or goods is transferred over time if the Disposal Group’s performance:

• . provides all the benefits received and consumed simultaneously by the purchaser; or

• . creates and enhances an asset that the purchaser controls as the Disposal Group performs; or

• . do not create an asset with an alternative use to the Disposal Group and the Disposal Group has an enforceable right to payment for performance completed to date.

If control of the services or goods transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the purchaser obtains control of the asset.

The progress towards complete satisfaction of the performance obligation is measured based on output method that best depict the Disposal Group’s performance in satisfying the performance obligation. The output method is made reference to the gross value of contracting work to date as compared to the total contract sum receivable under the contracts.

An entity is a principal if it controls the promised good or service before transferring it to the customer. An entity is an agent if its role is to arrange for another entity to provide the good or service.

In determining the transaction price, the Disposal Group adjusts the promised amount of consideration for the effect of a financing component if it is significant.

Provision of services of property and facility management

Property and facility management fees and other supporting service fees are recognised when the services are rendered and in accordance with the terms of agreements. There are two types of agreement, namely management remuneration contracts (‘‘MR Contracts’’) and lump sum contracts (‘‘LS Contracts’’). Under a MR Contract, the Disposal Group is remunerated based on a fixed percentage of the costs involved in the management of the property or facility, and only such fee is recognised as the Disposal Group’s revenue. Under a LS Contract, the Disposal Group is paid a lump sum fee which normally covers the costs involved, thus the whole of lump sum fee is recognised as the Disposal Group’s revenue.

Sale of goods

Revenue from the sale of goods is recognised when control of the goods has transferred, being when the products are delivered to the customer. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

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Operating lease rental income

Operating lease rental income is recognised on a straight-line basis over the term of the lease.

Interest income

Interest income is recognised on a time proportion basis, taking into account the principal amounts or refundable deposits outstanding and the effective interest rates applicable.

Contract assets and liabilities

A contract asset represents the Disposal Group’s right to consideration in exchange for services that the Disposal Group has transferred to a customer that is not yet unconditional. In contrast, a receivable represents the Disposal Group’s unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

A contract liability represents the Disposal Group’s obligation to transfer services to a customer for which the Disposal Group has received consideration (or an amount of consideration is due) from the customer.

(o) Related parties

• (a) A person or a close member of that person’s family is related to the Disposal Group if that person:

• (i) has control or joint control over the Disposal Group;

• (ii) has significant influence over the Disposal Group; or

• (iii) is a member of key management personnel of the Disposal Group or the Company’s parent.

• (b) An entity is related to the Disposal Group if any of the following conditions apply:

• (i) The entity and the Disposal Group are members of the same Disposal group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

• (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a Disposal Group of which the other entity is a member).

• (iii) Both entities are joint ventures of the same third party.

• (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• (v) The entity is a post-employment benefit plan for the benefit of the employees of the Disposal Group or an entity related to the Disposal Group.

• (vi) The entity is controlled or jointly controlled by a person identified in (a).

• (vii) A person identified in (a)(i) has significant influence over the entity or is a member of key management personnel of the entity (or of a parent of the entity).

• (viii) The entity, or any member of a Disposal Group of which it is a part, provides key management personnel services to the Disposal Group or to the group’s parent.

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Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:

• (i) that person’s children and spouse or domestic partner;

• (ii) children of that person’s spouse or domestic partner; and

• (iii) dependents of that person or that person’s spouse or domestic partner.

(p) Government grant

Government grants are not recognised until there is reasonable assurance that the Disposal Group will comply with the conditions attaching to them and that the grants will be received.

Government grants that are receivable as compensation for wages and salaries already incurred or for the purpose of giving immediate financial support to the Disposal Group with no future related costs are recognised in profit or loss in the period in which they become receivable and are recognised as other income, rather than reducing wages and salaries.

(q) Dividend distribution

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

5. Financial Risk Management

5.1 Financial risk factors

Risk management seeks to minimise any potential material effects on the Disposal Group’s financial performance from the following factors.

• (a) Market risk

• (i) Foreign currency exchange risk

The Disposal Group mainly operated in Hong Kong with most of the transactions settled in Hong Kong dollar and did not have significant exposure to risk resulting from changes in foreign currency exchange rates.

• (ii) Interest rate risk

As the Disposal Group has no significant interest bearing assets and liabilities, the Disposal Group’s income and operating cash flows are substantially independent of changes in market interest rate.

• (b) Credit risk

The Disposal Group’s credit risk mainly arises from deposits, cash and bank balances, contract assets and receivables. Current policies ensure that sales and services are made to customers with an appropriate credit history and subject to periodic credit evaluations. Collection of outstanding receivables is closely monitored on an ongoing basis.

As at 31 December 2018, 2019, 2020 and 30 June 2021, a provision of approximately HK$572,000, HK$1,114,000, HK$623,000 and HK$345,000 respectively approximately against receivables respectively based on the impairment assessment. As at 31 December 2020 and 30 June 2021, a provision of approximately HK$7,000 and HK$3,000 respectively approximately against contract assets respectively based on the impairment assessment.

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In order to minimise the credit risk, the directors of the Company are responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Certain customers have exceeded their respective credit terms during the reporting. However, management does not expect any significant losses from nonperformance by these counterparties because of their satisfactory repayment history.

For other non-trade related receivables, the Disposal Group has assessed whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk, the Disposal Group will measure the loss allowance based on lifetime rather than 12-month ECL.

The credit risk associated with deposits and cash and bank balances is limited because the counterparties are bank with high credit rating.

The Disposal Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout the reporting period. To assess whether there is a significant increase in credit risk the Disposal Group compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated:

• internal and external credit rating

• actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower’s ability to meet its obligations

• actual or expected significant changes in the operating results of the borrower

• significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of borrowers in the Disposal Group and changes in the operating results of the borrower

The Disposal Group’s exposure to credit risk

The tables below detail the credit quality of the Group’s financial assets and contract assets as well as the Group’s maximum exposure to credit risk.

30 June 2021 Notes 12-month or lifetime ECL Account receivables (a) Lifetime ECL (Simplified approach) Retention receivables (b) Lifetime ECL (Simplified approach) Other receivables (c) 12-month ECL Contract assets (d) Lifetime ECL (Simplified approach) Deposits (c) 12-month ECL	Gross carrying amount HK$’000 95,181 921 26,122 122,224 542 5,731	Accumulated Loss allowance HK$’000 (345) — (85) (430) (3) —	Net carrying amount HK$’000 94,836 921 26,037
			121,794
			539
			5,731

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31 December 2020 Notes 12-month or lifetime ECL Account receivables (a) Lifetime ECL (Simplified approach) Retention receivables (b) Lifetime ECL (Simplified approach) Other receivables (c) 12-month ECL Contract assets (d) Lifetime ECL (Simplified approach) Deposits (c) 12-month ECL 31 December 2019 Notes 12-month or lifetime ECL Account receivables (a) Lifetime ECL (Simplified approach) Retention receivables (b) Lifetime ECL (Simplified approach) Other receivables (c) 12-month ECL Contract assets (d) Lifetime ECL (Simplified approach) Deposits (c) 12-month ECL	Gross carrying amount HK$’000 99,744 966 23,303 124,013 1,161 6,732 Gross carrying amount HK$’000 139,830 1,194 24,571 165,595 362 7,315	Accumulated Loss allowance HK$’000 (623) — (128) (751) (7) — Accumulated Loss allowance HK$’000 (1,114) — (770) (1,884) — —	Net carrying amount HK$’000 99,121 966 23,175
			123,262
			1,154
			6,732
			Net carrying amount HK$’000 138,716 1,194 23,801
			163,711
			362
			7,315

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31 December 2018 Notes 12-month or lifetime ECL Account receivables (a) Lifetime ECL (Simplified approach) Retention receivables (b) Lifetime ECL (Simplified approach) Other receivables (c) 12-month ECL Contract assets (d) Lifetime ECL (Simplified approach) Deposits (c) 12-month ECL	Gross carrying amount HK$’000 128,604 1,433 23,748 153,785 61 5,071	Accumulated Loss allowance HK$’000 (572) — (918) (1,490) — —	Net carrying amount HK$’000 128,032 1,433 22,830
			152,295
			61
			5,071

Notes:

• (a) For account receivables, the Disposal Group has applied the simplified approach to measure the loss allowance at lifetime ECL. The Disposal Group determines the expected credit losses by using a provision matrix, grouped based on share credit risk characteristics and the days past due.

The loss allowances for account receivables as at 31 December 2018, 2019, 2020 and 30 June 2021 were determined as follows:

30 June 2021 Gross carrying amount (HK$’000) Less: Individually assessed (HK$’000) Carrying amount under collective measurement (HK$’000) Expected credit loss rate (%) ECL allowance for collectively measurement (HK$’000) Individually assessed loss allowance (HK$’000) Total loss allowance (HK$’000)	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 75,718 9,324 4,272 1,294 1,273 3,300 95,181 — — — — — — — 75,718 9,324 4,272 1,294 1,273 3,300 95,181	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 75,718 9,324 4,272 1,294 1,273 3,300 95,181 — — — — — — — 75,718 9,324 4,272 1,294 1,273 3,300 95,181	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 75,718 9,324 4,272 1,294 1,273 3,300 95,181 — — — — — — — 75,718 9,324 4,272 1,294 1,273 3,300 95,181	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 75,718 9,324 4,272 1,294 1,273 3,300 95,181 — — — — — — — 75,718 9,324 4,272 1,294 1,273 3,300 95,181
	— —	0.5% 1.0% 1.5% 3.0% 6.0% 47 43 19 38 198 345 — — — — — —
	—	47 43 19	38	198 345

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

31 December 2020 Gross carrying amount (HK$’000) Less: Individually assessed (HK$’000) Carrying amount under collective measurement (HK$’000) Expected credit loss rate (%) ECL allowance for collectively measurement (HK$’000) Individually assessed loss allowance (HK$’000) Total loss allowance (HK$’000) 31 December 2019 Gross carrying amount (HK$’000) Less: Individually assessed (HK$’000) Carrying amount under collective measurement (HK$’000) Expected credit loss rate (%) ECL allowance for collectively measurement (HK$’000) Individually assessed loss allowance (HK$’000) Total loss allowance (HK$’000)	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 65,814 17,560 2,958 4,426 3,323 5,663 99,744 — — — — — — — 65,814 17,560 2,958 4,426 3,323 5,663 99,744	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 65,814 17,560 2,958 4,426 3,323 5,663 99,744 — — — — — — — 65,814 17,560 2,958 4,426 3,323 5,663 99,744	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 65,814 17,560 2,958 4,426 3,323 5,663 99,744 — — — — — — — 65,814 17,560 2,958 4,426 3,323 5,663 99,744	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 65,814 17,560 2,958 4,426 3,323 5,663 99,744 — — — — — — — 65,814 17,560 2,958 4,426 3,323 5,663 99,744
	— —	0.5% 1.0% 1.5% 3.0% 6.0% 87 30 66 100 340 623 — — — — — —
	—	87 30 66	100	340 623
	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 74,317 33,135 9,226 7,354 6,753 9,045 139,830 — — — — — — — 74,317 33,135 9,226 7,354 6,753 9,045 139,830
	— —	0.5% 1.0% 1.5% 3.0% 6.0% 166 92 110 203 543 1,114 — — — — — —
	—	166 92 110	203	543 1,114

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31 December 2018 Gross carrying amount (HK$’000) Less: Individually assessed (HK$’000) Carrying amount under collective measurement (HK$’000) Expected credit loss rate (%) ECL allowance for collectively measurement (HK$’000) Individually assessed loss allowance (HK$’000) Total loss allowance (HK$’000)	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 77,644 31,114 10,634 3,235 3,256 2,721 128,604 — — — — — — — 77,644 31,114 10,634 3,235 3,256 2,721 128,604	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 77,644 31,114 10,634 3,235 3,256 2,721 128,604 — — — — — — — 77,644 31,114 10,634 3,235 3,256 2,721 128,604	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 77,644 31,114 10,634 3,235 3,256 2,721 128,604 — — — — — — — 77,644 31,114 10,634 3,235 3,256 2,721 128,604	Not yet due 1 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total 77,644 31,114 10,634 3,235 3,256 2,721 128,604 — — — — — — — 77,644 31,114 10,634 3,235 3,256 2,721 128,604
	— —	0.5% 1.0% 1.5% 3.0% 6.0% 156 106 49 98 163 572 — — — — — —
	—	156 106 49	98	163 572

• (b) For retention receivables, the Disposal Group has applied the simplified approach permitted by HKFRS 9 to measure the allowance for credit losses at lifetime ECL. The retention receivables is assessed for ECL by using the provision matrix. The directors of the Disposal Group consider that the allowance for ECL for the year ended 31 December 2018, 2019, 2020 and 30 June 2021 on retention receivables are insignificant to the Disposal Group by using the provision matrix.

• (c) For other receivables and deposits, the Disposal Group has assessed these balances using 12-month ECL basis as there was no significant increase in credit risk for these balances since initial recognition. The directors of the Company consider that the allowance for ECL for the year ended 31 December 2018, 2019, 2020 and 30 June 2021 on other receivables and deposits are insignificant to the Disposal Group.

• (d) For contract assets, the Disposal Group has applied the simplified approach permitted by HKFRS 9 to measure the allowance for credit losses at lifetime ECL. The contract assets are assessed for ECL by using the provision matrix. The allowance for ECL on contract assets of HK$7,000 and HK$3,000 is recognized as at 31 December 2020 and 30 June 2021. The director of the Company consider that the allowance for ECL on contract assets are insignificant to the Disposal Group as at 31 December 2020 and 30 June 2021.

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APPENDIX II

(c) Liquidity risk

The Disposal Group adopts prudent liquidity risk management which includes maintaining sufficient bank balances and cash, and having available funding through an adequate amount of committed credit facilities.

Since the year end, there have been no changes in the risk management department or in any risk management policies.

Financial risk factors

Liquidity risk (in HK$’000)

Liquidity risk (in HK$’000)
At 30 June 2021 Lease liabilities Amounts due to intermediate holding companies Payables and accruals Total At 31 December 2020 Lease liabilities Amounts due to intermediate holding companies Amounts due to immediate holding company Payables and accruals Total At 31 December 2019 Lease liabilities Amounts due to intermediate holding companies Payables and accruals Total	Less than 1 year 4,942 69,836 52,503 127,281 Less than 1 year 3,378 108,226 19,900 65,044 196,548 Less than 1 year 5,478 23,566 92,488 121,532	Between 1 and 2 years 3,329 — — 3,329 Between 1 and 2 years 1,348 — — — 1,348 Between 1 and 2 years 1,777 — — 1,777	Between 2 and 5 years — — — — Between 2 and 5 years 189 — — — 189 Between 2 and 5 years 56 — — 56	Total contractual undiscounted cash flow 8,271 69,836 52,503 130,610 Total contractual undiscounted cash flow 4,915 108,226 19,900 65,044 198,085 Total contractual undiscounted cash flow 7,311 23,566 92,488 123,365	Carrying amount 7,933 69,836 52,503
					130,272
					Carrying amount 4,763 108,226 19,900 65,044
					197,933
					Carrying amount 7,074 23,566 92,488
					123,128

– II-35 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

At 31 December 2018 Amounts due to intermediate holding companies Payables and accruals Total	Less than 1 year 34,118 82,708 116,826	Between 1 and 2 years — — —	Between 2 and 5 years — — —	Total contractual undiscounted cash flow 34,118 82,708 116,826	Carrying amount 34,118 82,708
					116,826

5.2 Capital risk management

The Disposal Group manages its capital to ensure that entities in the Disposal Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balances. The Disposal Group’s overall strategy remains unchanged from prior year.

The capital structure of the Disposal Group consists of bank balances and cash disclosed in note 20 and equity attributable to owners of the Disposal Company, comprising issued share capital and reserves.

The directors of the Company review the capital structure periodically. As part of the review, the directors of the Company consider the cost of capital and the risks associated with each class of capital. Based on the recommendations of the directors of the Company, the Disposal Group will balance its overall capital structure through the payment of dividends, new share issues, issue of new debts or the redemption of existing debt.

5.3 Fair value estimation

The carrying amounts of the Disposal Group’s current assets and liabilities approximate their fair values due to their short term maturities as at 31 December 2018, 2019, 2020 and 30 June 2021.

6. Critical Accounting Judgments and key sources of estimation uncertainty

In the application of the Disposal Group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results differ from these estimates.

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

(a) Useful lives of property, plant and equipment

Management determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment. Such estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions.

(b) Impairment of receivables, deposits and prepayment and contract assets

Management determines the specific provision for impairment of receivables, deposits and prepayment and contract assets based on assessment of the recoverability of the balances. The assessment is based on the specific recoverability assessment and ageing profile of the balances, which requires the use of judgements and estimates. A considerable amount of judgement is required in assessing the ultimate realisation of the balance, including the financial position, the historical payment pattern of each counterparty and forward-

– II-36 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

looking factors. The Disposal Group has set out policies to ensure follow-up action is taken to recover overdue receivables and deposits. The Disposal Group has been negotiating with the counterparties for the payment of settlement. The determination of the provision involved significant management estimation.

(c) Income tax

The Disposal Group is subject to income taxes in Hong Kong. Significant judgment is required in determining the provision for Hong Kong income taxes. There are a number of transactions and calculations for which ultimate tax determination is uncertain during the ordinary course of business. The Disposal 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 affect the income tax and deferred tax provision in the period in which such determination is made.

(d) Fair value measurement

A number of assets and liabilities included in the Disposal Group’s financial statements require measurement at, and/or disclosure of, fair value.

The fair value measurement of the Disposal Group’s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the ‘‘fair value hierarchy’’):

• . Level 1: Quoted prices in active markets for identical items (unadjusted);

• . Level 2: Observable direct or indirect inputs other than Level 1 inputs;

• . Level 3: Unobservable inputs (i.e. not derived from market data).

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

The Disposal Group measures the below item at fair value:

• . Investment properties (note 17)

For more detailed information in relation to the fair value measurement of the item above, please refer to the applicable note.

7. Revenue and Segment Information

In accordance with the Disposal Group’s internal financial reporting provided to the chief operating decisionmaker, identified as the Executive Committee, who is responsible for allocating resources, assessing performance of the operating segments and making strategic decisions, the reportable operating segments and their results are as below:

• property and facility management services in Hong Kong; and

• ancillary business including integrated procurement, laundry, cleaning, security, maintenance and technical support services

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

• (a) Segment Results (in HK$’000)

Six months ended 30 June 2021 Revenue — At a point in time — Over time Gross Profit Gross Profit Margin Operating expenses Net allowances (reversal) for impairment losses on receivables and contract assets Operating Profit Operating Profit Margin Interest expenses Other income Profit before taxation Taxation Profit for the period Six months ended 30 June 2020 Revenue — At a point in time — Over time Gross Profit Gross Profit Margin Operating expenses Net allowances for impairment losses on receivables and contract assets Operating Profit Operating Profit Margin Interest expenses Other income Profit before taxation Taxation Profit for the period	PFM — 308,391 308,391 34,701 11.3% (22,237) 194 12,658 4.1% PFM — 302,856 302,856 32,805 10.8% (21,650) (7) 11,148 3.7%	Ancillary Business 6,723 66,697 73,420 13,778 18.7% (5,078) 131 8,831 12.0% Ancillary Business 7,369 51,917 59,286 10,155 17.1% (6,333) 5 3,827 6.5%	Total 6,723 375,088 381,811 48,479 12.7% (27,315) 325 21,489 5.6% (110) 809 22,188 (3,406) 18,782 Total 7,369 354,773 362,142 42,960 11.9% (27,983) (2) 14,975 4.1% (138) 14,499 29,336 (3,132) 26,204

– II-38 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Year ended 31 December 2020 Revenue — At a point in time — Over time Gross Profit Gross Profit Margin Operating expenses Net allowances for impairment losses on receivables and contract assets Operating Profit Operating Profit Margin Interest expenses Other income Profit before taxation Taxation Profit for the year Year ended 31 December 2019 Revenue — At a point in time — Over time Gross Profit Gross Profit Margin Operating expenses Net allowances for impairment losses on receivables and contract assets Operating Profit Operating Profit Margin Interest expenses Other income Profit before taxation Taxation Profit for the year	PFM — 626,225 626,225 66,942 10.7% (38,469) (29) 28,444 4.5% PFM — 591,015 591,015 62,195 10.5% (38,329) (201) 23,665 4.0%	Ancillary Business 13,017 107,151 120,168 22,289 18.5% (12,170) 54 10,173 8.5% Ancillary Business 16,599 113,611 130,210 23,602 18.1% (12,833) (193) 10,576 8.1%	Total 13,017 733,376 746,393 89,231 12.0% (50,639) 25 38,617 5.2% (239) 81,966 120,344 (6,860) 113,484 Total 16,599 704,626 721,225 85,797 11.9% (51,162) (394) 34,241 4.7% (350) 2,200 36,091 (6,064) 30,027

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APPENDIX II

Year ended 31 December 2018 Revenue — At a point in time — Over time Gross Profit Gross Profit Margin Operating expenses Net allowances for impairment losses on receivables and contract assets Operating Profit Operating Profit Margin Other income Profit before taxation Taxation Profit for the year	PFM — 547,597 547,597 63,323 11.6% (46,397) (27) 16,899 3.1%	Ancillary Business 20,268 96,618 116,886 21,682 18.5% (13,481) (514) 7,687 6.6%	Total 20,268 644,215
			664,483
			85,005 12.8%
			(59,878 (541
			24,586 3.7% 4,279
			28,865 (4,283
			24,582

• (b) Information about a major customer

The Disposal Group’s customer base is diversified and none of the customers with whom transactions have exceeded 10% of the Disposal Group’s revenue during the Track Record Period.

(c) Geographical analysis

The Disposal Group’s revenue and information about its non-current assets by geographical location (excluding deferred tax assets) are detailed below:

Non-current assets — Hong Kong Revenue — Hong Kong	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 13,522 19,906 16,343 664,483 721,225 746,393	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 16,931 18,410 362,142 381,811	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 16,931 18,410 362,142 381,811
			381,811

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FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

8. Other Income

Government subsidies (note) Bank interest income Miscellaneous income Exchange gain/(loss) (Loss)/gain on disposal of property, plant and equipment Others Fair value (loss)/gain on investment properties	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) — — 81,338 83 173 409 2,801 1,927 733 21 (54) 60 (26) (4) (174) — (42) — 1,400 200 (400) 4,279 2,200 81,966	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 13,571 14 137 73 1,174 698 (27) 7 (156) 17 — — (200) — 14,499 809	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 13,571 14 137 73 1,174 698 (27) 7 (156) 17 — — (200) — 14,499 809
			809

Note:

Almost all the government subsidies were granted from the Employment Support Scheme (‘‘ESS’’) under the Anti-epidemic Fund of the Hong Kong Government, which aim to retain employment and combat COVID-19. As a condition of receiving the subsidies from the ESS, the Disposal Group undertook not to make redundancies by 30 November 2020 after deducting the reimbursement to be paid to the respective Incorporation Owners or clients in PFM Business.

9. Interest Expenses

				For the six months	For the six months	ended
	For the year ended 31 December			30 June
	2018	2019	2020	2020		2021
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Interest expenses on lease
liabilities	—	350	239	138		110

– II-41 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

10. Profit Before Taxation

					For the six months ended	For the six months ended
	For the year ended 31 December				30 June
	2018	2019		2020	2020	2021
	HK$’000	HK$’000	HK$’000		HK$’000	HK$’000
	(Audited)	(Audited)	(Audited)		(Unaudited)	(Audited)
Profit before taxation is
arrived after charging:
Staff costs, including
directors’ emoluments
(note 11)	503,460	537,665	578,033		284,050	288,295
Depreciation of property, plant
and equipment	4,456	3,929		2,867	1,562	1,246
Depreciation of right-of-use
assets	—	6,733		6,504	3,436	2,893
Auditor’s remuneration
— Audit	664	687		450	253	250
Total minimum lease payments
for leases previously
classified as operating
leases under HKAS 17	5,574	—		—	—	—

11. Staff Costs, Including Directors’ Emoluments

Wages and salaries — included in cost of sales — included in general and administrative expenses Pension — defined contribution scheme — included in cost of sales — included in general and administrative expenses	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 438,094 474,264 513,302 44,604 40,501 41,239 19,122 19,914 21,754 1,640 2,986 1,738 503,460 537,665 578,033	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 249,826 256,455 22,440 20,289 10,760 10,677 1,024 874 284,050 288,295	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 249,826 256,455 22,440 20,289 10,760 10,677 1,024 874 284,050 288,295
			288,295

– II-42 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

12. Benefits and Interest on Directors

Directors’ Emoluments (in HK$’000)

The remuneration of the directors are set out below:

For the six month ended 30 June 2021

Name of Directors Executive Directors HUI Suk Man, Mandy TAM Pui Ching Celine CHEUNG Yuk Lung WONG Big See Lorna LEE Ka Fu, Martin	Fees 20 3 3 3 3 32	Salaries, allowances and bonuses* 228 684 659 461 420 2,452	Employer’s contribution to a retirement benefit scheme* 12 34 32 23 9 110	Total 260 721 694 487 432
				2,594

• The amounts represented emoluments in respect of services provided in connection with the management of the affairs of the Disposal Company’s subsidiaries undertaking.

Directors’ Emoluments (in HK$’000)

The remuneration of the directors are set out below:

For the six month ended 30 June 2020

Name of Directors Note Executive Directors HUI Suk Man, Mandy TAM Pui Ching Celine CHEUNG Yuk Lung WONG Big See Lorna 1 LEE Ka Fu, Martin HO Siu Leung, Nelson 2	Fees 26 3 3 1 3 2 38	Salaries, allowances and bonuses* 288 691 628 150 357 489 2,603	Employer’s contribution to a retirement benefit scheme* 14 33 30 7 9 24 117	Total 328 727 661 158 369 515
				2,758

Note 1: Appointed as Director with effect from 2 May 2020.

Note 2: Resigned as Director with effect from 2 May 2020.

• The amounts represented emoluments in respect of services provided in connection with the management of the affairs of the Disposal Company’s subsidiaries undertaking.

– II-43 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Directors’ Emoluments (in HK$’000)

The remuneration of the directors are set out below:

For the year ended 31 December 2020

Name of Directors Note Executive Directors HUI Suk Man, Mandy TAM Pui Ching Celine CHEUNG Yuk Lung WONG Big See Lorna 1 LEE Ka Fu, Martin HO Siu Leung, Nelson 2	Fees 59 5 5 3 5 2 79	Salaries, allowances and bonuses* 926 1,626 1,481 768 768 489 6,058	Employer’s contribution to a retirement benefit scheme* 33 66 60 29 18 24 230	Total 1,018 1,697 1,546 800 791 515
				6,367

Note 1: Appointed as Director with effect from 2 May 2020.

Note 2: Resigned as Director with effect from 2 May 2020.

• The amounts represented emoluments in respect of services provided in connection with the management of the affairs of the Disposal Company’s subsidiaries undertaking.

Directors’ Emoluments (in HK$’000)

The remuneration of the directors are set out below:

For the year ended 31 December 2019

Name of Directors Executive Directors HUI Suk Man, Mandy TAM Pui Ching Celine CHEUNG Yuk Lung LEE Ka Fu, Martin HO Siu Leung, Nelson	Fees 20 5 5 5 5 40	Salaries, allowances and bonuses* 383 1,436 1,251 725 1,535 5,330	Employer’s contribution to a retirement benefit scheme* 16 61 53 18 66 214	Total 419 1,502 1,309 748 1,606
				5,584

• The amounts represented emoluments in respect of services provided in connection with the management of the affairs of the Disposal Company’s subsidiaries undertaking.

– II-44 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Directors’ Emoluments (in HK$’000)

The remuneration of the directors are set out below:

For the year ended 31 December 2018

Name of Directors Executive Directors HUI Suk Man, Mandy TAM Pui Ching Celine CHEUNG Yuk Lung LEE Ka Fu, Martin HO Siu Leung, Nelson	Fees 5 2 2 2 5 16	Salaries, allowances and bonuses* 810 1,227 1,087 568 1,413 5,105	Employer’s contribution to a retirement benefit scheme* 37 56 48 20 63 224	Total 852 1,285 1,137 590 1,481
				5,345

• The amounts represented emoluments in respect of services provided in connection with the management of the affairs of the Disposal Company’s subsidiaries undertaking.

13. Taxation

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profits for the year after application of available tax losses brought forward for both years.

The amount of tax charged to the combined profit or loss represents:

Current taxation Hong Kong profits tax — provision for the year/ period — over provision in prior years Deferred taxation (note 25)	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 4,923 6,446 7,007 (176) (77) (150) (464) (305) 3 4,283 6,064 6,860	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 3,303 3,550 (37) — (134) (144 3,132 3,406	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 3,303 3,550 (37) — (134) (144 3,132 3,406
			3,406

– II-45 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

The income tax expense for the year can be reconciled to the profit before income tax expense in the combined statement of comprehensive income as follows:

Profit before taxation Calculated at a taxation rate of 16.5% Over provision in prior years Income not subject to taxation Expenses not deductible for taxation purposes Unrecognised tax losses/ (Utilisation of previously unrecognised tax losses) Others	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 28,865 36,091 120,344 4,762 5,955 19,857 (176) (77) (150) (227) (47) (13,449) 28 205 247 3 45 422 (107) (17) (67) 4,283 6,064 6,860	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 29,336 22,188 4,840 3,661 (37) — (2,225) (41) 113 1 480 (197) (39) (18) 3,132 3,406

14. Dividend

For the year ended 31 December 2020, six month ended 30 June 2020 and 2021, dividends of HK$163,672,000, HK$29,638,000 and HK$47,057,000 were declared and paid to the then shareholders respectively.

15. Earnings Per Share

Earning per share information is not presented as its inclusion for the purpose of this report is not considered meaningful with regard to the reorganisation and the presentation of the results for the Track Record Period.

– II-46 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

16. Property, Plant and Equipment

Cost At 1 January 2018 Additions Disposals At 31 December 2018 original presented Initial application of HKFRS 16 Restated balance as at 1 January 2019 Additions Disposals At 31 December 2019 Additions Disposals At 31 December 2020 Additions Disposals At 30 June 2021 Accumulated depreciation At 1 January 2018 Depreciation for the year Disposals At 31 December 2018 original presented Initial application of HKFRS 16 Restated balance as at 1 January 2019 Depreciation for the year Disposals At 31 December 2019 Depreciation for the year Disposals At 31 December 2020 Depreciation for the year Disposals At 30 June 2021 Net book value At 30 June 2021 At 31 December 2020 At 31 December 2019 At 31 December 2018	Right-of-use assets HK$’000 — — — — 14,676 14,676 8,567 — 23,243 3,970 (14,549) 12,664 5,843 (8,017) 10,490 — — — — 8,295 8,295 6,733 — 15,028 6,504 (13,795) 7,737 2,893 (8,017) 2,613 7,877 4,927 8,215 —	Leasehold improvements HK$’000 8,546 287 — 8,833 — 8,833 103 — 8,936 170 — 9,106 89 — 9,195 4,558 1,778 — 6,336 — 6,336 1,737 — 8,073 738 — 8,811 113 — 8,924 271 295 863 2,497	Motor vehicles HK$’000 2,636 58 (49) 2,645 — 2,645 541 (552) 2,634 27 (573) 2,088 — (209) 1,879 1,818 301 (24) 2,095 — 2,095 246 (273) 2,068 122 (270) 1,920 34 (209) 1,745 134 168 566 550	Furniture and equipment HK$’000 48,752 1,171 (946) 48,977 — 48,977 1,587 (610) 49,954 3,272 (1,305) 51,921 284 (5,460) 46,745 43,787 2,377 (662) 45,502 — 45,502 1,946 (556) 46,892 2,007 (1,131) 47,768 1,099 (5,450) 43,417 3,328 4,153 3,062 3,475	Total HK$’000 59,934 1,516 (995) 60,455 14,676 75,131 10,798 (1,162) 84,767 7,439 (16,427) 75,779 6,216 (13,686) 68,309 50,163 4,456 (686) 53,933 8,295 62,228 10,662 (829) 72,061 9,371 (15,196) 66,236 4,139 (13,676) 56,699 11,610 9,543 12,706 6,522

– II-47 –

APPENDIX II

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

Right-of-use assets Balance as at 31 December 2018 Adoption of HKFRS 16 Balance as at 1 January 2019 Additions Depreciation Balance as at 31 December 2019 and 1 January 2020 Additions Depreciation Disposal Balance as at 31 December 2020 and 1 January 2021 Additions Depreciation Balance as at 30 June 2021 17. Investment Properties	Leasehold Land and buildings HK$’000 — 6,156 6,156 8,567 (6,675) 8,048 3,970 (6,446) (754) 4,818 5,843 (2,864) 7,797	Furniture and equipment HK$’000 — 225 225 — (58) 167 — (58) — 109 — (29) 80	Total HK$’000 — 6,381
			6,381 8,567 (6,733
			8,215 3,970 (6,504 (754
			4,927 5,843 (2,893
			7,877

At 1 January Unrealised (loss)/gain arising from change in fair value At 31 December/30 June	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 5,600 7,000 7,200 1,400 200 (400) 7,000 7,200 6,800	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 7,200 6,800 (200) — 7,000 6,800	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 (Unaudited) (Audited) 7,200 6,800 (200) — 7,000 6,800
			6,800

Note:

The investment properties were valued as of year-end date on the basis of their open market value by an independent professional property valuer, Savills Valuation and Professional Services Limited.

(a) Valuation processes of the Disposal Group

The Disposal Group measures its investment properties at fair value. The fair value of the Disposal Group’s investment properties at each reporting date has been determined on the basis of valuations carried out by independent valuers. Discussion of valuation processes and results are held between the Disposal Group’s senior management and valuers at least once every six months, in line with the Group’s interim and annual reporting dates. At each reporting date the Disposal Group’s senior management:

• verifies all major inputs to the independent valuation report;

• assess property valuations movement when compared to the prior period valuation report; and

• holds discussions with the independent valuers.

Change in Levels 2 and 3 fair values are also analysed at each reporting date during the semi-annual valuations discussions date between the Disposal Group’s senior management.

– II-48 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

(b) Fair value hierarchy

The following tables analyses the fair value of investment properties at different levels 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).

As at 30 June 2021 Recurring fair value measurements Investment properties As at 30 June 2020 Recurring fair value measurements Investment properties As at 31 December 2020 Recurring fair value measurements Investment properties As at 31 December 2019 Recurring fair value measurements Investment properties As at 31 December 2018 Recurring fair value measurements Investment properties	Quoted prices in active market for identical assets (Level 1) HK$’000 — — — — —	Significant other observable inputs (Level 2) HK$’000 6,800 7,000 6,800 7,200 7,000	Significant unobservable inputs (Level 3) HK$’000 —
			—
			—
			—
			—

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

Fair vale measurements using significant other observable inputs (Level 2)

Fair value of the investment properties are derived using the direct comparison method. This valuation method is based on comparing the property to be valued directly with other comparable properties, which have recently transacted. However, given the heterogeneous nature of the properties, appropriate adjustments are usually required to allow for any qualitative differences that may affect the price likely to be achieved by the property under consideration.

– II-49 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

18. Contract Assets and Liabilities

Contract assets Less: impairment Total contract assets Contract liabilities	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 61 362 1,161 — — (7) 61 362 1,154 4,149 4,662 12,689	As at 30 June 2021 HK$’000 (Audited) 542 (3
		539
		12,564

Notes:

(i) Movements in the provision for impairment of contract assets that are assessed for impairment collectively are as follows:

Contract assets At 1 January Written-off Provision for impairment recognized At 31 December/30 June	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) — — — — — — — — 7 — — 7	As at 30 June 2021 HK$’000 (Audited) 7 (4 —
		3

For contract assets, the Disposal Group has applied the simplified approach permitted by HKFRS 9 to measure the allowance for credit losses at lifetime ECL. The contract assets are assessed for ECL by using the provision matrix similar with the approach of trade receivables. After the assessment by the directors of the Company, the allowance for ECL on contract assets are HK$7,000 and HK$3,000 as at 31 December 2020 and 30 June 2021.

(ii) Revenue recognised in relation to contract liabilities

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities.

	As at 31 December	As at 31 December		As at 30 June
	2018	2019	2020	2021
	HK$’000	HK$’000	HK$’000	HK$’000
	(Audited)	(Audited)	(Audited)	(Audited)
Revenue recognised that was
included in the contract liability
balance at the beginning of the
year/period
Property and facility services	8,063	4,149	4,662	12,689

– II-50 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

19. Receivables

The credit period of the Disposal Group’s accounts receivable generally ranges from 30 to 60 days and the majority of the Disposal Group’s accounts receivable are denominated in Hong Kong dollars. The ageing analysis of accounts receivable by invoice date is as follows:

Accounts receivable 0 to 30 days 31 to 60 days 61 to 90 days Over 90 days Retention receivables and other receivables (note i) Receivables Impairment of accounts receivable, retention receivables and other receivables (note ii)	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 63,321 66,111 49,421 37,459 32,187 26,121 13,883 14,316 9,402 13,941 27,216 14,800 128,604 139,830 99,744 25,181 25,765 24,269 153,785 165,595 124,013 (1,490) (1,884) (751) 152,295 163,711 123,262	As at 30 June 2021 HK$’000 (Audited) 57,004 25,357 5,703 7,117 95,181 27,043 122,224 (430) 121,794

Note i:

Retention receivables in respect of the contracting business are settled in accordance with the terms of the respective contracts. At 31 December 2018, 2019, 2020 and 30 June 2021, retention receivables held by customers for contract works amounting to approximately HK$1,433,000, HK$1,194,000, HK$966,000 and HK$921,000 are expected to be recovered or settled within 12 months from the end of the reporting period. Retention receivables are included in current assets as the Disposal Group expects to realise these within its normal operating cycle.

The retention receivables are classified as contract assets until the end of the retention period as the Group’s entitlement to this final payment is conditional on the Disposal Group’s work satisfactorily passing inspection.

For retention receivables, the Disposal Group has applied the simplified approach permitted by HKFRS 9 to measure the allowance for credit losses at lifetime ECL. The retention receivables are assessed for ECL by using the provision matrix similar with the approach of trade receivables. After the assessment by the directors of the Company, the allowance for ECL on retention receivables are insignificant to the Disposal Group as at 31 December 2018, 2019, 2020 and 30 June 2021.

– II-51 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Note ii:

The other classes within trade and other receivables do not contain impaired assets. The Disposal Group does not hold any collateral as security.

Impairment of receivables At 1 January Provision for impairment recognised Written-off Doubtful debts recovery At 31 December/30 June	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 949 1,490 1,884 880 394 (32) — — (1,101) (339) — — 1,490 1,884 751	As at 30 June 2021 HK$’000 (Audited) 751 (321 — —
		430

The maximum exposure to credit risk at the reporting date is the carrying value of the accounts receivable mentioned above. The Disposal Group does not hold any collateral as security.

20. Cash and Cash Equivalents/Time Deposits With Original Maturities Over Three Months

Cash and bank balance Time deposits with original maturities less than three months Time deposits with original maturities over three months	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 48,054 36,016 57,307 7,358 20,421 93,502 55,412 56,437 150,809 866 1,311 755	As at 30 June 2021 HK$’000 (Audited) 27,803 15,473
		43,276
		780

The Disposal Group’s deposit, cash and cash equivalents is denominated in Hong Kong dollars.

– II-52 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

21. Payables and Accruals

The credit period of the Disposal Group’s accounts payable generally ranges from 30 to 60 days. The ageing analysis of accounts payable by invoice date is as follows:

Accounts payable 0 to 30 days 31 to 60 days 61 to 90 days Over 90 days Other payables and accruals 22. Leases Liabilities As at 31 December 2018 Adoption of HKFRS 16 As 1 January 2019 Additions Interest expenses Lease payments As at 31 December 2019 and 1 January 2020 Additions Termination Interest expenses Lease payments As at 31 December 2020 and 1 January 2021 Additions Interest expenses Lease payments As at 30 June 2021		As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 29,469 30,576 25,730 4,059 6,093 3,186 2,288 3,841 1,567 11,882 15,235 7,239 47,698 55,745 37,722 35,010 36,743 27,322 82,708 92,488 65,044 Leasehold land and buildings Furniture and equipment HK$’000 HK$’000 — — 5,442 231 5,442 231 7,259 — 340 10 (6,142) (66) 6,899 175 3,597 — (243) — 232 7 (5,839) (65) 4,646 117 5,843 — 108 2 (2,750) (33) 7,847 86	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 29,469 30,576 25,730 4,059 6,093 3,186 2,288 3,841 1,567 11,882 15,235 7,239 47,698 55,745 37,722 35,010 36,743 27,322 82,708 92,488 65,044 Leasehold land and buildings Furniture and equipment HK$’000 HK$’000 — — 5,442 231 5,442 231 7,259 — 340 10 (6,142) (66) 6,899 175 3,597 — (243) — 232 7 (5,839) (65) 4,646 117 5,843 — 108 2 (2,750) (33) 7,847 86	As at 30 June 2021 HK$’000 (Audited) 27,921 2,391 745 5,930 36,987 15,516 52,503 Total HK$’000 — 5,673 5,673 7,259 350 (6,208) 7,074 3,597 (243) 239 (5,904) 4,763 5,843 110 (2,783) 7,933

– II-53 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Future lease payments are due as follows:

Not later than one year Later than one year and not later than two years Later than two years and not later than five years At 30 June 2021 Not later than one year Later than one year and not later than two years Later than two years and not later than five years At 31 December 2020 Not later than one year Later than one year and not later than two years Later than two years and not later than five years At 31 December 2019	Minimum lease payments HK$’000 4,942 3,329 — 8,271 Minimum lease payments HK$’000 3,378 1,348 189 4,915 Minimum lease payments HK$’000 5,479 1,777 56 7,312	Interest HK$’000 (269) (69) — (338) Interest HK$’000 (113) (37) (2) (152) Interest HK$’000 (210) (27) (1) (238)	Present value HK$’000 4,673 3,260 —
			7,933
			Present value HK$’000 3,265 1,311 187
			4,763
			Present value HK$’000 5,269 1,750 55
			7,074

1. Amounts due from/(to) fellow subsidiaries/intermediate holding companies/immediate holding company

The amounts are unsecured, non-interest bearing and repayable on demand.

24. Long Services payment liabilities

Under the Hong Kong Employment Ordinance, the Disposal Group is obliged to make lump sum payments on cessation of employment in certain circumstances to certain employees who have completed at least five years of service with the Disposal Group. The amount payable is dependent on the employee’s final salary and years of service, and is reduced by entitlements accrued under the Disposal Group’s defined contribution retirement scheme that is attributable to contributions made by the Disposal Group. The Disposal Group does not set aside any assets to fund any remaining obligations.

– II-54 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

The liability recognised in the combined statement of financial position is present value of unfunded obligation and its movements are as follows:

At 1 January Net charge to profit or loss Current service cost Interest cost Net credit to other comprehensive income Remeasurements Actual loss/(gain) arising from: Liability experience Financial assumptions Demographic assumptions Other Benefit paid At the ended of reporting period	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 1,342 1,780 1,543 114 112 122 16 29 25 130 141 147 931 (123) 615 (18) 4 192 (2) (2) — 911 (121) 807 (603) (257) (1,130) 1,780 1,543 1,367	For the six months ended 30 June 2021 HK$’000 (Audited) 1,367
		— —
		—
		— — —
		—
		—
		1,367

The principal actuarial assumptions used for accounting purposes are as follows:

				For the six
				months ended
	For the year	ended 31 December		30 June
	2018	2019	2020	2021
	%	%	%	%
Discount rate	1.8	1.7	0.25	0.25
Long term salary increase rate	4.0	4.0	2.5	2.5
Long term average expected return on
mandatory provident fund scheme
assets	3.5	3.5	3.0	3.0

– II-55 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

The sensitivity of the defined benefit obligation to changes in the significant principal assumptions are as follows.

30 June 2021	Impact	on defined benefit obligation	on defined benefit obligation
	Change in	Increase in	Decrease in
	assumption	assumption	assumption
Discount rate	0.25%	Decrease by 0.6%	Increase by 0.6%
Long-term salary increase rate	0.25%	Increase by 3.9%	Decrease by 3.8%
Long-term average expected return on
mandatory provident fund scheme assets	0.25%	Decrease by 4.4%	Increase by 4.6%
31 December 2020	Impact	on defined benefit obligation
	Change in	Increase in	Decrease in
	assumption	assumption	assumption
Discount rate	0.25%	Decrease by 0.6%	Increase by 0.6%
Long-term salary increase rate	0.25%	Increase by 3.9%	Decrease by 3.8%
Long-term average expected return on
mandatory provident fund scheme assets	0.25%	Decrease by 4.4%	Increase by 4.6%
31 December 2019	Impact	on defined benefit obligation
	Change in	Increase in	Decrease in
	assumption	assumption	assumption
Discount rate	0.25%	Decrease by 0.6%	Increase by 0.6%
Long-term salary increase rate	0.25%	Increase by 2.6%	Decrease by 2.6%
Long-term average expected return on
mandatory provident fund scheme assets	0.25%	Decrease by 2.2%	Increase by 2.2%
31 December 2018	Impact	on defined benefit obligation
	Change in	Increase in	Decrease in
	assumption	assumption	assumption
Discount rate	0.25%	Decrease by 0.6%	Increase by 0.6%
Long-term salary increase rate	0.25%	Increase by 2.1%	Decrease by 2.1%
Long-term average expected return on
mandatory provident fund scheme assets	0.25%	Decrease by 1.7%	Increase by 1.7%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied.

The weighted average duration of the defined benefit obligation are 2.2 years, 2.4 years, 2.4 years and 2.4 years as at 31 December 2018, 2019 and 2020 and 30 June 2021 respectively.

– II-56 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

25. Deferred Taxation

Deferred taxation is calculated in full on temporary differences under the liability method using tax rates substantively enacted as at the date of statement of financial position. The movement on the net deferred tax (assets)/liabilities account is as follows:

Beginning of the year/period Deferred taxation recognised in profit or loss (note 13) End of the year/period	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (190) 274 579 464 305 (3) 274 579 576	As at 30 June 2021 HK$’000 (Audited) 576 144
		720

The movement on the deferred tax assets and liabilities (prior to offsetting of balances within the same taxation jurisdiction) during the year/period is as follows:

At 1 January 2018 Charged to profit or loss At 31 December 2018 Charged/(credited) to profit or loss At 31 December 2019 Charged/(credited) to profit or loss At 31 December 2020 Charged to profit or loss At 30 June 2021	Deferred tax assets Accounting tax depreciation HK$’000 41 287 328 346 674 67 741 85 826	Deferred tax liabilities
		Accelerated tax depreciation HK$’000 (231 177
		(54 (41
		(95 (70
		(165 59
		(106

As at 31 December 2018, 2019, 2020 and 30 June 2021, the Disposal Group have tax losses arising in Hong Kong approximately of HK$557,000, HK$829,000, HK$3,384,000 and HK$2,187,000 respectively that are available indefinitely for offsetting against future taxable profits of it subsidiaries in which the losses arise. Deferred tax assets have not been recognized in respect of the tax losses, including the tax losses arising from the subsidiaries in Hong Kong, as it is not probable that taxable profit will be available against which the tax losses can be utilized in the foreseeable future.

– II-57 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority. The following amounts, determined after appropriate offsetting, are shown in the combined statement of financial position.

Deferred tax assets Deferred tax liabilities	As at 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 328 674 741 (54) (95) (165) 274 579 576	As at 30 June 2021 HK$’000 (Audited) 826 (106) 720

26. Share Capital

The Disposal Company was incorporated in the British Virgin Islands on 27 September 2021 with an authorised share capital of US$50,000 divided into 50,000 shares of par value of US$1 each. One ordinary share was issued and allotted upon incorporation.

For the purpose of this report, the share capital presented as at 1 January 2018, 31 December 2018, 2019 and 2020 and 30 June 2021 represented the share capital of Synergis Management Services Limited, Synergis Facility Management Limited, Synergis Property Management Limited and SynWave Supply & Services Limited.

27. Reserves

Details of movement in the reserves of the Disposal Group are set out on page II-7 to II-8.

The following describes the nature and purpose of each reserve within owners’ equity

Reserve

Description and purpose

Share premium Prior to 3 March 2018, the application of the share premium account was governed by s.48B of the Hong Kong Companies Ordinance, Cap. 32. In accordance with the transitional provisions set out in s.37 of Schedule 11 to the Hong Kong Companies Ordinance, Cap. 622 (the Ordinance) any amount standing to the credit of the share premium account at the beginning of 3 March 2018 became part of the company’s share capital. The use of this share premium balance is governed by s.38 of Schedule 11 to the Ordinance.

Merger reserve Amount of proceeds on merger accounting relating to the difference between the cost of investment and the nominal value of the share capital acquired.

Retained earnings

Cumulative net gains and losses recognized in profit or loss.

– II-58 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

28. Notes to Statement of Cash Flows

Reconciliation of profit before taxation to cash generated from operations:

Profit before taxation Depreciation Net allowances for impairment losses on receivables Net allowances for impairment losses on contract assets Interest income Interest expenses Fair value loss/(gain) on investment properties Loss/(gain) on disposal of property, plant and equipment Operating profit before working capital changes Decrease/(increase) in contract assets Decrease/(increase) in receivables Decrease/(increase) in deposits and prepayments Net change in balance with fellow subsidiaries Net change in balance with intermediate companies Net change in balance with the immediate holding company Increase/(decrease) in payables and accruals and long service payment liabilities Cash generated from/(used in) operations	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 28,865 36,091 120,344 4,456 10,662 9,371 541 394 (32) — — 7 (83) (173) (409) — 350 239 (1,400) (200) 400 26 4 174 32,405 47,128 130,094 14 (301) (799) (13,753) (11,803) 40,483 (1,068) (3,219) 1,904 5,347 (9,938) (9,918) (10,617) (17,510) 110,388 (5,350) — 19,900 6,339 7,899 (21,016) 13,317 12,256 271,036	For the six month ended 30 June 2020 2021 HK$’000 HK$’000 29,336 22,188 4,998 4,139 2 (321) — (4) (137) (73) 138 110 200 — 156 (17) 34,693 26,022 (727) 619 17,439 1,793 (3,562) (6,858) 6,773 15,789 3,353 (66,290) 23,300 (15,800) (25,107) (12,666) 56,162 (57,391)

29. Contingent liabilities

As at 31 December 2018, 2019, 2020 and 30 June 2021, the Disposal Group did not have any significant contingent liabilities.

– II-59 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

30. Related Party Transactions

• (a) Key management personnel compensation

Salaries, allowances and benefits in kind Pension — defined contribution scheme	For the year ended 31 December 2018 2019 2020 HK$’000 HK$’000 HK$’000 5,121 5,370 6,137 224 214 230 5,345 5,584 6,367	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 2,641 2,484 117 110 2,758 2,594	For the six months ended 30 June 2020 2021 HK$’000 HK$’000 2,641 2,484 117 110 2,758 2,594
			2,594

• (b) Significant related party transactions

Summary of the significant related party transactions carried out by the Disposal Group during the year are follows:

					For the six months ended	For the six months ended
		For the year	ended 31	December	30 June
		2018	2019	2020	2020	2021
	Notes	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Service charges paid to	(i)
— Company with common
controlling shareholder		4,607	4,048	4,862	2,436	2,688
Services income from	(ii)
— Company with common
controlling shareholder		2,064	2,170	2,252	1,133	1,114
Maintenance and technical	(iii)
support service income from
— Company with common
controlling shareholder		4,637	1,672	488	315	—
— Company controlled by
a director		—	—	—	—	80

Notes:

• (i) Service charges paid in respect of management fee was mutually agreed by both parties.

• (ii) Services income earned on services including property management, agency services, consultancy fee, security, laundry, cleaning, etc. rendered was mutually agreed by both parties.

• (iii) Maintenance and technical support service income represents fees earned on repair and maintenance works. The prices and terms were mutually agreed by both parties.

– II-60 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is the unaudited pro forma financial information of Synergis Holdings Limited (the ‘‘Company’’) and its subsidiaries (collectively referred to as the ‘‘Group’’) upon the completion of the disposal of the 100% equity interest of True Hope Group Limited (the ‘‘Disposal’’) (the ‘‘Remaining Group’’), comprising the unaudited pro forma consolidated statement of financial position as at 30 June 2021, the unaudited pro forma consolidated statement of profit or loss and other comprehensive income and unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2020 and related notes, which have been prepared by the directors of the Company in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). The unaudited pro forma financial information of the Remaining Group has been prepared to illustrate the effects of the completed Disposal on the consolidated statement of financial position of the Group as at 30 June 2021 as if the Disposal had been completed on 30 June 2021, and the Group’s financial performance and cash flows for the year ended 31 December 2020 as if the Disposal had been completed on 1 January 2020. Details of the Disposal are set out in the ‘‘Letter from the Board’’ contained in the circular dated 1 December 2021 (the ‘‘Circular’’) issued by the Company.

The unaudited pro forma financial information has been prepared for illustrative purposes only and is based on certain assumptions, estimates, uncertainties and other currently available information. Accordingly, and because of its hypothetical nature, the unaudited pro forma financial information of the Remaining Group may not give a true picture of the financial position, financial performance or cash flows of the Remaining Group following the completion of the Disposal. Further, the unaudited pro forma financial information of the Remaining Group does not purport to predict the Group’s future financial position, financial performance or cash flows.

The unaudited pro forma financial information of the Remaining Group has been prepared based upon the audited consolidated statement of financial position of the Group as at 30 June 2021, which have been extracted from the published interim report of the Group for the six months ended 30 June 2021, the audited consolidated statement of profit or loss and other comprehensive income and audited consolidated statement of cash flows of the Group for the year ended 31 December 2020, which have been extracted from the published annual report of the Group for the year ended 31 December 2020, after making pro forma adjustments as summarised in the accompanying notes that are directly attributable to the Disposal, factually supportable and clearly identified as to those have no continuing effect on the Group.

Furthermore, the unaudited pro forma financial information does not purport to predict the Remaining Group’s future results of operations, financial positions or cash flows. The unaudited pro forma financial information should be read in conjunction with the financial information of the Group as set out in Appendix I to this circular, the published annual report

– III-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

of the Group for the year ended 31 December 2020, the published interim report of the Group for the six months ended 30 June 2021, the financial information of the True Hope Group Limited and its subsidiaries (the ‘‘Disposal Group’’) as set out in Appendix II to this circular, the Company’s announcement dated 26 November 2021 and other financial information included elsewhere in this circular. The unaudited pro forma financial information does not take into account any trading or other transactions subsequent to the dates of the respective financial statements of the companies comprising the Remaining Group.

– III-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE REMAINING GROUP AS AT 30 JUNE 2021

Non-current assets Property, plant and equipment Investment properties Deferred tax assets Total non-current assets Current assets Contract assets Receivables Deposits and prepayments Taxation recoverable Amounts due from Remaining Group Amounts due from Disposal Group Cash and cash equivalents Time deposits with original maturities over three months Total current assets Current liabilities Payables and accruals Contract liabilities Bank loans Lease liabilities Taxation payable Amounts due to Disposal Group Amounts due to Remaining Group Total current liabilities Net current assets Total assets less current liabilities	The Group as at 30 June 2021 HK$’000 (Note 1) 17,102 6,800 1,109 25,011 92,924 233,250 25,469 17 — — 97,153 10,780 459,593 258,435 21,975 15,000 7,148 10,122 — — 312,680 146,913 171,924	Unaudited pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 2(a)) (Note 2(b)) (Note 3 and 4) (11,610) — — (6,800) — — (826) — — (19,236) — — (539) — — (121,794) — — (22,596) — — (17) — — (34,120) 34,120 — — 73,936 — (43,276) — 532,000 (780) — — (223,122) 108,056 532,000 (52,503) — — (12,564) — — — — — (4,673) — — (8,675) — — — 34,120 — (73,936) 73,936 — (152,351) 108,056 — (70,771) — 532,000 (90,007) — 532,000	The Remaining Group HK$’000 5,492 — 283
			5,775
			92,385 111,456 2,873 — — 73,936 585,877 10,000
			876,527
			205,932 9,411 15,000 2,475 1,447 34,120 —
			268,385
			608,142
			613,917

– III-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Non-current liabilities Long service payment liabilities Lease liabilities Deferred tax liabilities Total non-current liabilities Net assets Equity Share capital Reserves Total equity	The Group as at 30 June 2021 HK$’000 (Note 1) 1,516 4,820 277 6,613 165,311 50,486 114,825 165,311	Unaudited pro forma adjustments HK$’000 HK$’000 HK$’000 (Note 2(a)) (Note 2(b)) (Note 3 and 4) (1,367) — — (3,260) — — (106) — — (4,733) — — (85,274) — 532,000 (2,306) — 2,306 (82,968) — 529,694 (85,274) — 532,000	The Remaining Group HK$’000 149 1,560 171
			1,880
			612,037
			50,486 561,551
			612,037

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF THE REMAINING GROUP FOR THE YEAR ENDED 31 DECEMBER 2020

Revenue Cost of sales and service Gross profit Other income General and administrative expenses Interest expenses Net allowances for impairment losses on receivables and contract assets Profit before taxation Taxation Profit for the year Other comprehensive income/ (loss): Items that will not be reclassified to profit or loss: Actuarial gain/(loss) on long service payment liabilities Items that may be subsequently reclassified to profit or loss: Exchange differences on translating foreign operations Other comprehensive income for the year Total comprehensive income for the year attributable to equity holders of the Disposal Company	The Group for the year ended 31 December 2020 HK$’000 (Note 5) 1,127,656 (1,077,518) 50,138 85,863 (89,792) (10,514) (8,140) 27,555 (13,342) 14,213 (1,186) 1,795 609 14,822	Unaudited pro forma adjustment HK$’000 HK$’000 HK$’000 (Note 6) (Note 7) (Note 10) (746,393) — 4,334 657,162 — 260 (89,231) — 4,594 (81,966) 367,456 4,855 50,639 — (9,449) 239 — — (25) — — (120,344) 367,456 — 6,860 — — (113,484) 367,456 — 807 — — — — — 807 — — (112,677) 367,456 —	Unaudited pro forma of the Remaining Group HK$’000 385,597 (420,096) (34,499) 376,208 (48,602) (10,275) (8,165) 274,667 (6,482) 268,185 (379) 1,795 1,416 269,601

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS OF THE REMAINING GROUP FOR THE YEAR ENDED 31 DECEMBER 2020

Profit before taxation Depreciation Impairment of receivables Impairment of contract assets Interest income Interest expenses Fair value loss on investment properties Loss on disposal of property, plant and equipment Gain on disposal of subsidiaries Operating profit before working capital changes Decrease in contract assets Decrease in receivables Increase in deposits and prepayments Increase in amount due from Disposal Group Increase in amount due to Disposal Group Decrease in payables and accruals and long service payment liabilities Cash generated from/(used in) operations Interest received Interest paid Income tax paid Net cash generated from/(used in) operating activities	The Group for the year ended 31 December 2020 HK$’000 (Note 5) 27,555 16,118 7,228 773 (751) 10,514 400 1,564 — 63,401 221,753 59,007 (2,256) — — (164,399) 177,506 890 (7,053) (4,495) 166,848	Unaudited pro forma adjustment HK$’000 HK$’000 (Note 8) (Note 7 and 9) (120,344) 367,456 (9,371) — 32 — (7) — 409 — (239) — (400) — (174) — — (367,456) (130,094) — 799 — (40,483) — (1,904) — (130,288) — 9,918 — 21,016 — (271,036) — (407) — — — 5,639 — (265,804) —	Unaudited pro forma of the Remaining Group HK$’000 274,667 6,747 7,260 766 (342) 10,275 — 1,390 (367,456) (66,693) 222,552 18,524 (4,160) (130,288) 9,918 (143,383) (93,530) 483 (7,053) 1,144 (98,956)

– III-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease/(increase) in pledged bank deposits/time deposits with original maturities over three months Proceeds from disposal of subsidiaries, net of cash acquired Net cash (used in)/generated from investing activities Financing activities Drawdown of bank loans Repayment of bank loans Repayment of principal portion of the lease liabilities Dividend paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Exchange gain on cash and cash equivalents Cash and cash equivalents at the end of the year	The Group for the year ended 31 December 2020 HK$’000 (Note 5) (3,506) 302 716 — (2,488) 105,000 (172,000) (10,866) — (77,866) 86,494 116,873 1,715 205,082	Unaudited pro forma adjustment HK$’000 HK$’000 (Note 8) (Note 7 and 9) 3,469 — (1,057) — (556) — — 475,563 1,856 475,563 — — — — 5,904 — 163,672 — 169,576 — (94,372) 475,563 (56,437) 56,437 — — (150,809) 532,000	Unaudited pro forma of the Remaining Group HK$’000 (37) (755) 160 475,563 474,931 105,000 (172,000) (4,962) 163,672 91,710 467,685 116,873 1,715 586,273

– III-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

1. The Group’s financial information is extracted from the published interim report of Synergis Holdings Limited (the ‘‘Company’’) and its subsidiaries (collectively referred to as the ‘‘Group’’) as at 30 June 2021.

2. (a) These adjustments represent the exclusion of assets and liabilities of True Hope Group Limited (‘‘True Hope’’ or ‘‘Disposal Company’’) and its subsidiaries (together the ‘‘Disposal Group’’) to be disposed of as at 30 June 2021 assuming the completion of the Disposal of the 100% issued share capital of True Hope was completed on 30 June 2021.

3. (b) These adjustments represent the reinstatement of intragroup balance with the Disposal Group as extracted from the financial information of Disposal Group as at 30 June 2021, set out in Appendix II to this Circular. The amount due from/to Disposal Group is unsecured and repayable on demand. Upon the completion of the Disposal, the management of the Group is expected to demand for repayment of the balance due from Disposal Group on or before 31 March 2022.

4. The adjustment represent the pro forma gain on Disposal as if the Disposal had been completed on 30 June 2021, which is calculated as follows:

Total consideration (Note 11) (i) Less: Share of net assets of the Disposal Group as at 30 June 2021 (ii) Estimated cost and expenses of the Disposal (Note 4)	HK$’000 539,000 (85,274) (7,000) 446,726

• (i) Pursuant to the Sale and Purchase Agreement, the Group agreed to dispose of its 100% equity interest in True Hope to the Purchaser, which is an independent third party.

• (ii) This amount represents the net assets of Disposal Group amounting to approximately HK$85,274,000 as at 30 June 2021. The amount is extracted from the audited consolidated statement of financial position of the Disposal Group, as set out in the Appendix II to this Circular.

• This represents the effect of estimated transaction cost of HK$7,000,000 for the transaction. The actual amount of the gain/loss on the Disposal can only be determined at Completion which may be substantially different from the estimated amounts used in the preparation of the unaudited pro forma financial information.

• The Group’s financial information is extracted from the published annual report of the Group for the year ended 31 December 2020.

• These adjustments represent the exclusion of financial performance of Disposal Group to be disposed of for the year ended 31 December 2020 assuming the completion of the Disposal of the 100% issued share capital of True Hope was completed on 1 January 2020.

– III-8 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

1. The adjustment represent the pro forma gain on Disposal as if the Disposal had been completed on 1 January 2020, which is calculated as follows:

Total consideration (Note 11) (i) Less: Share of net assets of the Disposal Group as at 1 January 2020 (ii) Estimated cost and expenses of the Disposal (Note 4)	HK$’000 539,000 (164,544) (7,000) 367,456

• (i) Pursuant to the Sale and Purchase Agreement, the Group agreed to dispose of its 100% equity interest in the True Hope to the Purchaser, which is an independent third party.

• (ii) This amount represents the net assets of Disposal Group amounting to approximately HK$164,544,000 as at 1 January 2020. The amount is extracted from the audited consolidated statement of financial position of the Disposal Group, as set out in the Appendix II to this Circular.

• These adjustments represent the exclusion of cash flows of the Disposal Group to be disposed of for the year ended 31 December 2020 assuming the completion of the Disposal of the 100% issued share capital of True Hope was completed on 1 January 2020.

• The adjustment represent the pro forma proceed from Disposal as if the Disposal had been completed on 1 January 2020, which is calculated as follows:

Total consideration received (Note 11) (i) Less: Cash and cash equivalent disposed (ii) Estimated cost and expenses of the Disposal (Note 4) Proceeds from disposal of subsidiaries, net of cash acquired	HK$’000 539,000 (56,437) (7,000) 475,563

• (i) Pursuant to the Sale and Purchase Agreement, the Group agreed to dispose of its 100% equity interest in True Hope to the Purchaser, which is an independent third party.

• (ii) The amounts are extracted from the audited consolidated statement of financial position of the Disposal Group, as set out in the Appendix II to this Circular.

• The adjustment represents the reversal of the elimination of intra-group transactions between the Disposal Group and the Remaining Group when preparing the unaudited pro forma financial information of the Remaining Group.

• Pursuant to the Sale and Purchase Agreement dated 26 November 2021, the Group has agreed to dispose 100% equity interest in True Hope at a consideration of HK$539,000,000, and shall be paid to the Group at Completion by wire transfer in immediately available funds to the Group’s bank account.

• No adjustment is expected to have a continuing effect on the unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Remaining Group and the unaudited pro forma consolidated statement of cash flows of the Remaining Group.

– III-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

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

To the directors of Synergies Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Synergis Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated financial position, unaudited pro forma consolidated statement of profit and loss and other comprehensive income and unaudited pro forma consolidated statement of cash flows and related notes as set out on pages III-3 to III-7 of the Company’s circular dated 1 December 2021 (the ‘‘Circular’’) in connection with the Proposed disposal (‘‘Proposed Disposal’’) of the entire equity interest in True Hope Group Limited and its subsidiaries (the ‘‘Disposal Group’’). The Group excluding the Disposal Group immediately after the completion of the Proposed Disposal is referred to as the ‘‘Remaining Group’’. The applicable criteria on the basis of which the directors of the Company have compiled the unaudited pro forma financial information are described on pages III-8 to III-9 of the Circular.

The unaudited pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the Proposed Disposal on the Company’s consolidated financial position as at 30 June 2021, consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows for the year ended 31 December 2020 as if the Proposed Disposal had taken place at 1 January 2020. As part of this process, information about the Company’s consolidated financial position has been extracted by the directors of the Company from the Company’s interim financial statements for the six months ended 30 June 2021, on which a review report has been published, and information about the Company’s consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows has been extracted by the directors of the Company from the Company’s annual financial statements for the year ended 31 December 2020, on which an auditor’s report has been published.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

The directors of the Company are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

– III-10 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Our Independence and Quality Control

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

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

Reporting Accountants’ Responsibilities

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

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

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

The purpose of unaudited pro forma financial information included in a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 June 2021 or 1 January 2020 would have been as presented.

– III-11 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

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

• . the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the entity, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

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

Opinion

In our opinion:

• (a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;

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

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

BDO Limited Certified Public Accountants Hong Kong

1 December 2021

– III-12 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Upon Closing, the Company will cease to hold any interest in the Target Company, the Target Company will cease to be a subsidiary of the Company and the financial results of the Target Company will no longer be consolidated into the consolidated financial statements of the Group.

The following discussion should be read in conjunction with the financial information of the Group and the historical financial information and operating data included in this circular. The financial statements of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. Certain numerical figures included in this management discussion and analysis of the Company have been rounded. Therefore, discrepancies in tables between totals and the sums of the amounts listed may occur due to such rounding.

Following the Disposal, the Remaining Group shall comprise the Company and its subsidiaries but exclude the Target Company. The management discussion and analysis of the Remaining Group for the three years ended 31 December 2020 and the six months ended 30 June 2021 are set out as follows:

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Upon Completion, the Remaining Group will focus on the expansion and development of its ISP business in Hong Kong (i.e. the ISP Business), while it is currently intended that the PFM Business of the Group in the PRC (i.e. the PFM China Business) will be maintained at its existing operating scale upon Completion.

Benefited from the gradual recovery of local economy and the non-recurrence of substantial loss on the completed projects of ISP Business, whereas such loss was recognised for the six months ended 30 June 2020 together with effective implementation of cost control mechanism and the keen efforts put by the Company, the results of ISP Business turned around from loss and contributed the profit amounted to approximately HK$2.8 million during the six months ended 30 June 2021.

The total outstanding workload for contracts on hand recorded by ISP Business as of 30 June 2021 was approximately HK$280 million, over two-thirds of which would be expected to complete by end of 2021. During the six months ended 30 June 2021, the ISP Business awarded a handful of key contracts up to around HK$160 million including (i) several fitting out works, namely Regency Centre, Sikh Temple and 25–31 Yin Chong Street; (ii) the enhancement works at ESF’s Shatin College; and (iii) the cladding replacement works and works complying mandatory building inspection scheme requirements at The Langham in Tsim Sha Tsui.

– IV-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

Revenue

The revenue of the Remaining Group increased by approximately HK$45.2 million from approximately HK$193.8 million for the six months ended 30 June 2020 to approximately HK$239 million for the six months ended 30 June 2021 mainly due to our current projects were entered into final stage.

Profit/(loss) for the period

The profit/(loss) for the period of the Remaining Group increased by approximately HK$25.3 million from the loss of approximately HK$24.6 million for the six months ended 30 June 2020 to the profit of approximately HK$0.7 million for the six months ended 30 June 2021 mainly due to the non-recurrence of substantial loss on the completed projects whereas such loss was recognized in the first half of 2020 and effective implementation of cost control mechanism.

FOR THE YEAR ENDED 31 DECEMBER 2020

2020 had been a tough year for ISP Business. The total revenue of ISP Business recorded a plunged for the year ended 31 December 2020. Barely recovered from the weakened economy caused by local order events in 2019, the segment was further hit by the novel coronavirus pandemic since January 2020 when Hong Kong reported its first local case. The launch of social distancing measures and travel restrictions hit severely the construction, retail as well as hotel industries and ultimately the segment’s performance. All in all, the decrease in gross profit of ISP Business was attributable to (i) the completion of a few key contracts and substantial loss being incurred in some of the project works; (ii) certain costs incurred involving works done from construction projects still under negotiations with customers; (iii) lack of new significant ISP orders replenishment during the Reporting Year because of the increasingly competitive business environment; and (iv) the novel coronavirus pandemic having disrupted the progress of some on-going projects and reduced the number of available tenders in the industry.

Despite the uncertainty of external economic environment, the total outstanding workload for contracts on hand recorded by ISP Business as of 31 December 2020 was approximately HK$350 million, which was attributed to the hard work of the management team of the ISP Business. The ISP Business were awarded several new major contracts with a total contract sum of approximately HK$120 million during 2020. Major contracts include (i) airconditioning system replacement and addition and alteration works at English Schools Foundation’s Quarry Bay School in Quarry Bay; (ii) renovation works of Victoria Centre located in Tin Hau; and (iii) addition and alteration works at basement to 4/F, 5–19 Jardine’s Bazaar in Causeway Bay.

Amid the public health crisis, Hong Kong has seen a record plunge in economic performance in 2020. Construction projects and property sales have slowed down as developers and investors took a more prudent business approach. At the same time, the launch of social distancing measures and travel restrictions further reduced economic activities and gave a severe hit to the local operating environment, in particular retail and hotel operations. All these

– IV-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

have inevitably affected the ISP Business. During this difficult time, the Remaining Group put more focus on the opportunities of education sector, banks and offices which are relatively more stable under economic downturn.

Revenue

The revenue of the Remaining Group dropped by approximately HK$467.3 million from approximately HK$852.9 million for the year ended 31 December 2019 to approximately HK$385.6 million for the year ended 31 December 2020 mainly due to the delay of projects and reduced number of available tenders as a result of the outbreak of COVID-19.

Profit/(loss) for the year

The profit/(loss) for the year of the Remaining Group decreased by approximately HK$106.9 million from the profit of approximately HK$7.6 million for the year ended 31 December 2019 to the loss of approximately HK$99.3 million for the year ended 31 December 2020 mainly due to (i) the completion of a few key contracts and substantial loss being incurred in some of the project works; (ii) certain costs incurred involving works done from construction projects still under negotiations with customers; (iii) lack of new significant ISP orders replenishment during the year because of the increasingly competitive business environments; and (iv) the novel coronavirus pandemic having disrupted the progress of some on-going projects and reduced the number of available tenders in the industry.

FOR THE YEAR ENDED 31 DECEMBER 2019

In 2019, the PFM China Business had turned around with the effective resource relocation strategy implemented in 2018. The team has successfully obtained a 3-year asset management services contract (including business positioning, technical support consultancy, leasing and operation management) for Jinan Traffic Centre which is a commercial complex developed by Jinan Sijian Construction Group, a famous developer in Shandong Province, the PRC. Located in the heart of Tianqiao District of Jinan City, Jinan Traffic Centre project is a commercial development with 340,000 square metres comprising top-grade office, residential buildings, shopping centre and deluxe hotel. The project works commenced in August 2019.

For the year ended 31 December 2019, the total revenue and operating profit of ISP Business recorded approximately HK$838.1 million and approximately HK$10 million, respectively. The revenue was approximate to that of 2018 with 12.4% increment in operating profit. The management of ISP Business took a cautious approach last year to monitor operating expenses and such effective cost control measure has uplifted the operating profit although minor reduction on gross profit was recorded.

Despite the increasing competitive environment of the industry, the total outstanding workload for contracts on hand as of 31 December 2019 was approximately HK$680 million. For the year ended 31 December 2019, the ISP Business were awarded several new major contracts with a total contract sum of approximately HK$300 million. The key projects include (i) Cognita Annex Works at 25 Man Fuk Road in Homantin; (ii) main contract for Renovation Works at Fung Tak Market in Diamond Hill; (iii) proposed alteration and addition works at

– IV-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

Kam Tai Shopping Centre in Ma On Shan; (iv) ATL warehouse floor lobbies renovation package 3 (phase 2) contract; and (v) re-layout Works at some shops in Telford Plaza II, Kowloon Bay.

Affected by ongoing public order events, Hong Kong’s property market has weakened since the latter half of 2019. Construction projects and property sales have slowed down as developers and investors took a more prudent business approach. At the same time, the local operating environment, in particular retail and hotel operations, has weakened. All these have inevitably affected the ISP Business.

Revenue

The revenue of the Remaining Group dropped by approximately HK$20.1 million from approximately HK$873 million for the year ended 31 December 2018 to approximately HK$852.9 million for the year ended 31 December 2019. The slight decrease was mainly due to the strike and social unrest activities that broke out at various places in Hong Kong during the second half of 2019, which in turn affected staff attendance to work sites and the progress of work, as well as the general propensity of businesses to commission ISP work. The Directors believe that the social unrest activities were temporary and considered to have limited impact on the financial results of the Remaining Group going forward.

Profit/(loss) for the year

The profit/(loss) for the year of the Remaining Group increased by approximately HK$192.4 million from the loss of approximately HK$184.8 million for the year ended 31 December 2018 to the profit of approximately HK$7.6 million for the year ended 31 December 2019 mainly due to decrease in operating expenses from implementation of cost control mechanism and impairment was made on goodwill in 2018 of the Remaining Group.

FOR THE YEAR ENDED 31 DECEMBER 2018

In 2018, despite the increasing competitive environment of the industry, ISP Business has managed to obtain a number of new projects during the year ended 31 December 2018 with the contract sum amounting to approximately HK$917.2 million. The major contracts mainly for alteration and addition, and construction are (i) a temple renovation project at Kowloon Tong; (ii) proposed commercial building development works at 2C&2D Lau Li Street and 68–70 Electric Road; (iii) residential development at 2 Headland Road, Repulse Bay; and (iv) renovation of existing toilets at Watson Centre in Kwai Chung.

The total outstanding workload for contracts on hand as of 31 December 2018 exceeded HK$1 billion, over two-third of which was expected to be completed in 2019. In view that ISP Business faced a very challenging business environment recently and suffered reduction of the outstanding workload for contracts on hand and its business performance (including the revenue and gross profit) of ISP Business is unlikely to be significantly improved in the near future, it is inevitable for the Company to make a further provision for all the remaining carrying value of the goodwill for 2018.

– IV-4 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

The significant revenue contribution came from 4 key projects including residential development at Discovery Bay North Phase 16, decoration works for a hotel in Tung Chung, the new factory development of a well-established pharmaceutical brand in Yuen Long, builder works for automation of arrival bags delivery at Hong Kong International Airport, which contributed over half of ISP Business’s revenue for the year ended 31 December 2018.

Revenue

For the year ended 31 December 2018, the revenue of the Remaining Group dropped by approximately HK$585.6 million from approximately HK$1,458.6 million for the year ended 31 December 2017 to approximately HK$873 million for the year ended 31 December 2018, mainly due to the completion of few key contracts and fewer new contracts with substantial revenue contributions for the year ended 31 December 2018.

Profit/(loss) for the year

The profit/(loss) for the year of the Remaining Group decreased by approximately HK$106 million from the loss of approximately HK$78.8 million for the year ended 31 December 2017 to the loss of approximately HK$184.8 million for the year ended 31 December 2018 mainly due to the completion of few key contracts and fewer new contracts with substantial revenue and gross profit contributions for the year ended 31 December 2018 and further impairment was made on goodwill in 2018 of the Remaining Group.

Liquidity, financial resources and capital commitments

The Remaining Group’s assets portfolio was mainly financed by its bank borrowings.

										As at
						As	at	31 December		30 June
						2018		2019	2020	2021
						HK$’000		HK$’000	HK$’000	HK$’000
Bank	borrowings	of	the	Remaining	Group	166,000		131,000	64,000	15,000

The bank borrowings were dominated in HK$.

Based on the agreed scheduled repayment dates in the loan agreements and ignoring the effect of any repayment on demand clause, the Remaining Group’s bank borrowings were repayable:

				As at
	As at	31 December		30 June
	2018	2019	2020	2021
Within the first year	86.7%	61.1%	100.0%	100.0%
Within the second year	13.3%	38.9%	—	—
Effective interest rates of bank borrowings
per annum	4.5%	4.2%	3.7%	4.6%

– IV-5 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

All the bank borrowings of the Remaining Group are at variable interest rates. The Remaining Group currently does not have any interest rate hedging policy in relation to such interest rate risk for the three years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2021. The Remaining Group would monitor its exposure on an ongoing basis and will consider hedging interest rate risk should the need arise.

				As at
	As at 31 December			30 June
	2018	2019	2020	2021
	HK$’000	HK$’000	HK$’000	HK$’000
Net (current liabilities)/current assets of
the Remaining Group	(57,787)	(10,721)	25,877	76,142
Cash and cash equivalents and time
deposits with original maturities over
three months of the Remaining Group	57,672	70,596	64,273	63,877

Cash and cash equivalents and time deposits with original maturities over three months of the Remaining Group denominated in:

Hong Kong dollar	68.9%	76.4%	68.3%	67.1%
Renminbi	31.1%	23.6%	31.7%	32.9%

As for the treasury policies, the objectives of the Remaining Group when managing capital are to safeguard the ability of the Remaining Group to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. The Remaining Group generally finances its operations with internally generated resources and borrowings provided by banks. The Remaining Group endeavors to monitor its cash flow position, and to improve the cost-efficiency of funding initiatives by its treasury function.

Employees and remuneration policies

The Remaining Group had 721, 461, 321 and 295 employees as at 31 December 2018, 2019 and 2020 and 30 June 2021, respectively. The staff cost (including the Directors’ emoluments) of the Remaining Group for the three years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2021 were approximately HK$169.5 million, HK$107.8 million, HK$75.3 million and HK$25.5 million, respectively.

The Remaining Group recognized the importance of retaining high caliber and competent staff and continued to provide appropriate remuneration packages to employees with reference to prevailing market conditions and individual performance.

– IV-6 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX IV

Material investments

The Remaining Group did not have any material investment for the year ended 31 December 2020.

Material acquisitions and disposals

The Remaining Group did not have any material acquisitions and disposals for the year ended 31 December 2020.

Charges on assets

As at 31 December 2018, 2019 and 2020 and 30 June 2021, the Remaining Group had secured by floating charge on assets of the Company and its subsidiaries, personally guaranteed by an indirect shareholder and pledged cash, an aggregate carrying value of approximately HK$126.0 million, HK$106.2 million, HK$39.0 million and HK$10.0 million, respectively to secure banking facilities granted to subsidiaries of the Remaining Group.

Gearing Ratio

The gearing ratio was calculated as a percentage of bank borrowings net of cash, bank balances and investments held for trading over net assets attributable to equity holders of the Remaining Group. As at 31 December 2018, 2019 and 2020 and 30 June 2021, the gearing ratio of the Remaining Group was approximately 240.0%, 178.3%, -0.9% and -61.1%, respectively.

Exposure to fluctuations in exchange rates and related hedges

The Remaining Group conducted part of its businesses in the PRC, with the income and the major cost items in these places being denominated in RMB. Therefore, it is expected that any fluctuation RMB would not have material effect on the operations of the Remaining Group. However, as the Remaining Group’s consolidated financial statements are presented in Hong Kong dollar, the Remaining Group’s financial position is subject to exchange exposure to these foreign currencies. The Remaining Group did not have any related hedges for the three years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2021. The Remaining Group would closely monitor this risk exposure from time to time.

Contingent liabilities

As at 31 December 2018, 2019, 2020 and 30 June 2021, the Remaining Group does not have any material contingent liabilities.

– IV-7 –

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Interest of Directors and Chief Executive in the Company and associated corporation

As at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the ‘‘SFO’’)) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which they were taken or deemed to have under such provisions of the SFO), or were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Interests of substantial Shareholders

So far as is known to the Directors, as at the Latest Practicable Date, the persons other than a Director or chief executive of the Company who had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or as recorded in the register required to be kept by the Company under section 336 of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of

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GENERAL INFORMATION

APPENDIX V

share capital carrying rights to vote in all circumstances at general meetings of any member of the Group or had any options in respect of such capital, were as follow:

(a) Ordinary Shares

			Approximate
			percentage of
			interests in the
Name of		Number of	total number of
Shareholders	Capacity	Shares held	issued shares
			(Note 2)
Mrs. Chu	Interest of controlled	225,518,633	53.08%
	corporation	(Note 1)
Champ Key	Beneficial owner	225,518,633	53.08%
Holdings Limited
(‘‘Champ Key’’)

Notes:

1. Champ Key being a company wholly-owned by Mrs. Chu is deemed to be a controlled corporation of Mrs. Chu under the SFO.

2. There were 424,850,000 Shares of the Company in issue at the Latest Practicable Date.

(b) Convertible Preference Shares

			Approximate
		Number of	percentage of
		Convertible	interests in the
Name of		Preference	total number of
Shareholders	Capacity	Shares held	issued shares
			(Note 2)
Mrs. Chu	Interest of controlled	80,000,000	100%
	corporation	(Note 1)
Champ Key	Beneficial owner	80,000,000	100%

Notes:

1. Champ Key being a company wholly-owned by Mrs. Chu is deemed to be a controlled corporation of Mrs. Chu under the SFO.

2. There were 80,000,000 convertible preference shares of the Company in issue at the Latest Practicable Date, which can be convertible into 80,000,000 Shares.

– V-2 –

GENERAL INFORMATION

APPENDIX V

Save as disclosed above, the Directors and the chief executive of the Company were not aware that there was any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or as recorded in the register required to be kept by the Company under section 336 of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any options in respect of such capital.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any members of the Group, which are not determinable by the Group within one year without payment of compensation (other than statutory compensations).

4. LITIGATION

Falcon Insurance Company (Hong Kong) Limited, as the 1st defendant, and ISP Construction (Engineering) Limited (‘‘ISPCE’’), an indirect wholly-owned subsidiary of the Company, as the 2nd defendant (collectively, the ‘‘Defendants’’), received a writ of summons issued by Fortune Pharmacal Co. Ltd (‘‘Fortune’’) on 14 January 2021 against the Defendants for the net sum of HK$54.4 million regarding the Defendants’ alleged breaches of the surety bond executed by the Defendants to guarantee due performance and observance by ISPCE for construction of main contract works for Fortune Pharmacal New Factory Development at Yuen Long given the ISPCE’s alleged breaches of the contract and/or its negligence in carrying out the works. A stay of proceedings in favour of arbitration has been granted to ISPCE by the Court on 21 September 2021, against which Fortune has applied for the leave to appeal on 18 November 2021. As of the Latest Practicable Date, the proceedings are still ongoing and no final judicial decision/ arbitral award has been made.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

5. MATERIAL CONTRACTS

Within two years immediately preceding the date of this circular, the following agreements, being contracts not entered into in the ordinary course of business, had been entered into by member(s) of the Group and were or may be material:

• (i) the Sale and Purchase Agreement;

• (ii) the ISP Works Master Agreement; and

• (iii) the General Business Services Master Agreement.

– V-3 –

GENERAL INFORMATION

APPENDIX V

6. COMPETING INTEREST OF DIRECTOR

As at the Latest Practicable Date, none of the Directors or any of their respective close associates (as defined under the Listing Rules) had any interest in a business which competes or likely to compete, either directly or indirectly, with the business of the Group.

7. INTEREST OF DIRECTOR IN ASSETS ACQUIRED OR DISPOSED OF BY OR LEASED TO ANY MEMBER OF THE GROUP

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group.

8. CONTRACTS OR ARRANGEMENTS WHICH DIRECTORS ARE MATERIALLY INTERESTED AND ARE SIGNIFICANT IN RELATION TO THE BUSINESS OF THE REMAINING GROUP

As at the Latest Practicable Date, (i) none of the Directors nor their respective close associate(s) had any direct or indirect interest in any assets which had been, since 31 December 2020 (being the date of which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and (ii) none of the Directors was materially interested in any contract or arrangement which was significant in relation to the business of the Group.

9. EXPERT AND CONSENT

The qualification of the expert who has given opinions and advice in this circular is as follows:

Name Qualification

BDO Limited Certified Public Accountants

As at the Latest Practicable Date, BDO Limited had no shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group and had no direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group since 31 December 2020, being the date to which the latest published audited accounts of the Company were made up or were proposed to be acquired or disposed of by or leased to any member of the Group.

BDO Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, report, advice and/or references to its name, in the form and context in which they respectively appear.

– V-4 –

GENERAL INFORMATION

APPENDIX V

10. GENERAL

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

• (b) The principal place of business of the Company is located at 8/F., KT336, 334–336 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong.

• (c) The company secretary of the Company is Mr. Chan Kwong Leung, Eric, who has been appointed by the Company from an external secretarial services provider as the Company’s Secretary. Mr. Chan is an associate member of both The Institute of Chartered Secretaries and Administrators in the United Kingdom and The Hong Kong Institute of Chartered Secretaries.

• (d) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (e) In the event of inconsistency, the English text shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the websites of Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.hk) and the Company (https://www.synergis.com.hk/) from the date of this circular up to and including the date of the SGM:

• (a) the letter from BDO Limited, the reporting accountants of the Company, in respect of the audited consolidated financial statements of the Target Company, the text of which is set out in Appendix II to this circular;

• (b) the letter from BDO Limited, the reporting accountants of the Company, in respect of the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix III to this circular;

• (c) the written consent referred to in the paragraph headed ‘‘Expert and Consent’’ in this appendix;

• (d) copy of the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix; and

• (e) this circular.

– V-5 –

NOTICE OF THE SGM

==> picture [41 x 74] intentionally omitted <==

SYNERGIS HOLDINGS LIMITED 昇捷控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 02340)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of Synergis Holdings Limited (the ‘‘Company’’) will be held at 11:30 a.m. on 23 December 2021 at 8/F., KT336, 334–336 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

‘‘THAT

• (i) the disposal (‘‘Disposal’’) by Synergis Holdings (BVI) Limited (‘‘Seller’’) as seller to Central Luck Developments Limited (‘‘Purchaser’’) as purchaser of the entire equity interest in True Hope Group Limited pursuant to the conditional sale and purchase agreement (‘‘SPA’’) dated 26 November 2021 between the Seller, the Purchaser and the Company (a copy of which is marked ‘‘A’’ and produced to the SGM and initialed by the chairman of the SGM for identification purpose) be and is hereby approved; and

• (ii) the directors of the Company be and are hereby authorized to do all such acts, matters and things as they may consider necessary, desirable or expedient to implement, give effect to the Disposal and the transactions contemplated under the SPA and all matters incidental or ancillary thereto.’’

and considering and, if thought fit, passing the following resolution as a special resolution:

SPECIAL RESOLUTION

‘‘THAT subject to and conditional upon the approval of the Registrar of Companies in Bermuda being obtained, the English name of the Company be changed from ‘‘Synergis Holdings Limited’’ to ‘‘ISP Holdings Limited’’ and the secondary name of the Company be changed from ‘‘昇捷控股有限公司’’ to ‘‘昇柏控股有限公司’’ (together the ‘‘Proposed Change of Company Name’’), with effect from the date on which the Registrar of Companies in Bermuda registers the new English name in place of the existing English name of the Company and registers such second name as the new secondary name in place of the existing secondary name of the Company as set out in the certificate of

– SGM-1 –

NOTICE OF THE SGM

incorporation on change of name and the certificate of secondary name to be issued by the Registrar of Companies in Bermuda respectively, and any one director of the Company be and is hereby authorised to do all such acts, deeds and things and execute all such documents as he considers necessary or expedient in connection with the implementation of or in order to give effect to the Proposed Change of Company Name.’’

By order of the board of directors of Synergis Holdings Limited Eric Chan Kwong Leung Company Secretary

Hong Kong, 1 December 2021

Notes:

1. A shareholder of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company. If more than one proxy is appointed, the number of shares in respect of which each such proxy so appointed must be specified in the relevant form of proxy.

2. In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority, must be deposited at the Company’s share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

3. For determining the entitlement to attend and vote at the SGM, the register of members of the Company will be closed from Monday, 20 December 2021 to Thursday, 23 December 2021, both dates inclusive, during which period no transfer of shares will be registered. In order to qualify for attending and voting at the SGM, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712– 1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, 17 December 2021.

4. If there are joint registered holders of a share in the Company, any one of such joint holders may vote at the SGM, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders is present at the SGM in person or by proxy, that one of the joint holders so present whose name stands first in the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

5. All resolutions at the SGM will be taken by poll (except where the chairman decides to allow a resolution relating to a procedural or administrative matter to be voted on by a show of hands) pursuant to the Listing Rules.

– SGM-2 –