Jingrui Holdings Limited — Proxy Solicitation & Information Statement 2014

Jan 28, 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular, you should consult a 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 Jingrui Holdings Limited, you should at once hand this circular to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Unless otherwise defined herein, terms used in this circular shall have the same meanings as those defined in the English prospectus dated October 21, 2013 (the “ Prospectus ”) issued by Jingrui Holdings Limited.

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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JINGRUI HOLDINGS LIMITED 景瑞控股有限公司[*] (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01862)

MAJOR TRANSACTION

ACQUISITION OF LAND USE RIGHTS IN HANGZHOU, THE PRC

* For identification purpose only

January 29, 2014

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . . . . . . .	9
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	11

– i –

DEFINITIONS

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

• “Acquisition”

• the acquisition of land use rights of the Lands through public bidding process at the Auction

• “associates”

• has the meaning ascribed to it under the Listing Rules

• “Auction”

• the public auction held by Hangzhou Land Bureau at which the Lands were offered for sale

• “Auction Confirmation(s)”

• the auction confirmation notice (國有建設用地使用權掛 牌競買成交通知書) dated January 7, 2014 issued by Hangzhou Land Bureau to Gainful Harmony and Huzhou Jingrui, respectively, confirming the successful bidding at the Auction

• “Board”

• the board of Directors

• “Company”

• Jingrui Holdings Limited (景瑞控股有限公司*), a company incorporated in the Cayman Islands with limited liability, whose Shares are listed on the Main Board of the Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

• “Directors”

• the directors of the Company

• “Gainful Harmony”

• Gainful Harmony International Limited (利致國際有限公 司), a company established in Hong Kong on October 30, 2013 and an indirectly wholly-owned subsidiary of the Company

• “Group” the Company and its subsidiaries

• “Hangzhou Land Bureau”

• 杭州市國土資源局 (Hangzhou Municipal Bureau of Land Resources)

• “HK$” Hong Kong dollars

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

– 1 –

DEFINITIONS

• “Huzhou Jingrui”

• “Independent Third Party(ies)”

• “Land Use Rights Grant Contract(s)”

• “Lands”

• “Latest Practicable Date”

• “Listing Rules”

• “percentage ratios”

• “PRC”

• “RMB”

• “SFO”

Huzhou Jingrui Property Co., Ltd. (湖州景瑞置業有限公 司), a company established in the PRC on August 20, 2007 and an indirectly wholly owned subsidiary of the Company

• an individual(s) or a company(ies) who or which is (are) independent of and not connected with (within the meaning of the Listing Rules) any Directors, chief executive or substantial shareholders, of the Company, its subsidiaries or any of their respective associate(s)

• Land Use Rights Grant Contracts (國有建設用地使用權 出讓合同) entered into between (i) Hangzhou Land Bureau and Gainful Harmony on January 14, 2014 for Land [2013] No. 105 and (ii) Hangzhou Land Bureau and Huzhou Jingrui on January 14, 2014 for Land [2013] No. 106, respectively, pursuant to the Auction Confirmations

• two pieces of land located at Shenhua Unit Land R21-19 and R21-17, Gongshu District (拱墅區(申花單元R21-19 地塊和R21-17地塊)), Hangzhou, Zhejiang Province, the PRC with a total site area of 30,148 sq.m. (a planned above-ground gross floor area not exceeding 69,340.4 sq.m.) and 24,319 sq.m. (a planned above-ground gross floor area not exceeding 65,661.3 sq.m.), respectively

• June 30, 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

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

• has the same meaning ascribed to them under the Listing Rules

• The People’s Republic of China, which for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan

• Renminbi, the lawful currency of the PRC

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

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DEFINITIONS

“Shanghai Jiachun” Shanghai Jiachun Investment Co., Ltd. (上海佳淳投資有 限公司), a company established in the PRC on July 8, 2013 and an indirectly wholly-owned subsidiary of the Company “Share(s)” the ordinary share(s) of US$0.01 each of the Company “Shareholder(s)” holders of the Shares “sq.m.” square metre(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “%” per cent.

For illustrative purpose only, RMB is converted into Hong Kong dollars at an exchange rate of RMB1=HK$1.26996 in this circular.

• For identification purpose only

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LETTER FROM THE BOARD

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JINGRUI HOLDINGS LIMITED 景瑞控股有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01862)

Executive Directors: Mr. YAN Hao (Co-chairmen) Mr. CHEN Xin Ge (Co-chairmen) Mr. YANG Tie Jun Mr. XU Chao Hui

Independent non-executive Directors: Mr. HAN Jiong Dr. QIAN Shi Zheng Dr. LO Wing Yan, William

Registered Office: 190 Elgin Avenue George Town Grand Cayman KY1-9005 Cayman Islands

Principal place of business in Hong Kong: Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

January 29, 2014

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF LAND USE RIGHTS IN HANGZHOU, THE PRC

1. INTRODUCTION

Reference is made to the announcement of the Company dated January 8, 2014 in relation to the Acquisition. The purpose of this circular is to provide you with further details of the Acquisition.

2. ACQUISITION OF LAND USE RIGHTS

Gainful Harmony and Huzhou Jingrui, each an indirectly wholly-owned subsidiary of the Company, succeeded in their respective bids of the land use rights of the Land [2013] No. 105 and Land [2013] No. 106 offered for sale by Hangzhou Land Bureau (杭州市國土資源局), a local PRC government authority which is in charge of, among others, the sale of land use rights

* For identification purpose only

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LETTER FROM THE BOARD

in Hangzhou, Zhejiang Province, the PRC at the Auction on January 7, 2014 for RMB1,105 million (equivalent to approximately HK$1,403.0 million) and RMB971.5 million (equivalent to approximately HK$1,233.4 million), respectively. The Auction Confirmation was issued by Hangzhou Land Bureau to Gainful Harmony and Huzhou Jingrui, respectively, on January 7, 2014. The Land Use Rights Grant Contracts in relation to the Acquisition were entered into on January 14, 2014.

Principal terms of the Auction Confirmation

For Land [2013] No. 105

Date of the Auction : January 7, 2014 Confirmation Parties of the Auction : Hangzhou Land Bureau and Gainful Harmony Confirmation Note: Gainful Harmony and Shanghai Jiachun, each an indirectly wholly owned subsidiary of the Company, will form a specific project company for the development of the Land [2013] No. 105. The project company will be 51% owned by Gainful Harmony and 49% owned by Shanghai Jiachun. Code of the Land : Hangzhengchuchu Land [2013] No. 105 (杭政儲出[2013]105 號) Location of the Land : Shenhua Unit Land R21-19, Gongshu District (拱墅區(申花 單元R21-19地塊)), Hangzhou, Zhejiang Province, the PRC Total site area : 30,148 sq.m. (a planned above-ground gross floor area not exceeding 69,340.4 sq.m.) Nature of the land : Residential (with communal and supporting facilities) use rights Consideration : RMB1,105 million (equivalent to approximately HK$1,403.0 million)

For Land [2013] No. 106

Date of the Auction : January 7, 2014 Confirmation Parties of the Auction : Hangzhou Land Bureau and Huzhou Jingrui Confirmation

Note: Huzhou Jingrui and Shanghai Jiachun, each an indirectly wholly owned subsidiary of the Company, will form a specific project company for the development of the Land [2013] No. 106. The project company will be 51% owned by Huzhou Jingrui and 49% owned by Shanghai Jiachun.

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LETTER FROM THE BOARD

Code of the Land : Hangzhengchuchu Land [2013] No. 106 (杭政儲出[2013]106 號) Location of the Land : Shenhua Unit Land R21-17, Gongshu District (拱墅區(申花 單元R21-17地塊)), Hangzhou, Zhejiang Province, the PRC Total site area : 24,319 sq.m. (a planned above-ground gross floor area not exceeding 65,661.3 sq.m.) Nature of the land : Residential (with communal and supporting facilities) use rights Consideration : RMB971.5 million (equivalent to approximately HK$1,233.4 million)

Consideration

The consideration was arrived at after bidding at the Auction held by Hangzhou Land Bureau. It was previously disclosed in the Company’s announcement dated January 8, 2014 that the Company intends to finance the Acquisition using the Group’s internal resources. The Board currently expects that the consideration for the Acquisition will be financed using the Group’s internal resources and the proceeds from the Global Offering.

As disclosed in the Prospectus, the Company intends to use the net proceeds from the Global Offering for the following purposes:

• approximately 90% will be used for acquisitions of new projects or land for development in each of Nanjing, Suzhou, Hangzhou, Ningbo and Shaoxing;

• the remaining amount of approximately not more than 10% will be used to provide funding for working capital and other general corporate purposes.

The Company’s use of the proceeds from the Global Offering for the Acquisition will be consistent with the disclosure in the Prospectus. As at the Latest Practicable Date, the Company has not used the proceeds from the Global Offering.

Information of Hangzhou Land Bureau

Hangzhou Land Bureau is a PRC governmental authority and the seller of the Lands. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Hangzhou Land Bureau is an Independent Third Party.

Reasons for the Acquisition

The Group is principally engaged in the property development business in the Yangtze River Delta region and the Acquisition is conducted in the ordinary and usual course of business of the Group.

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LETTER FROM THE BOARD

The Lands are intended to be developed as residential projects which will be sold. The Company expects to commence construction in the first half of 2014 and complete construction in 2016. Sales of units in the residential projects is expected to commence in the second half of 2014. The Board believes that the Acquisition provides an excellent investment opportunity for the Group to establish its position in the property market in Hangzhou, the PRC. The Directors consider that the Acquisition is in the interests of the Company and the Shareholders as a whole and the terms thereof are on normal commercial terms, which are fair and reasonable.

Listing Rules Implications

On the basis that the applicable percentage ratios in respect of the Acquisition are greater than 25% while all such ratios are less than 100% for the purposes of Rule 14.07 of the Listing Rules, the Acquisition constitutes a major transaction for the Company under the Listing Rules. Pursuant to Rule 14.33A, the Acquisition is exempt from shareholders’ approval as the Board had confirmed that it is in the Company’s ordinary and usual course of business; and that the Acquisition, including its financing and profit distribution arrangements, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Acquisition is regarded as a Qualified Property Acquisition under Rule 14.04(10C) of the Listing Rules as the Lands are pieces of governmental land in the PRC acquired by the Group from Hangzhou Land Bureau, a PRC Governmental Body through a tender, auction or listing-for-sale governed by the PRC law (as defined under Rule 19A.04 of the Listing Rules). Therefore, valuation of the Lands is not required under Rule 5.02A(2) of the Listing Rules.

Since the listing of the Shares on the Stock Exchange on October 31, 2013, the Company has been actively participating in the land auctions held by the governmental bodies in the PRC and has succeeded in acquiring two parcels of land in Taicang, Jiangsu on December 9, 2013, a parcel of land in Ningbo, Zhejiang on December 24, 2013 and a parcel of land in Shaoxing, Zhejiang on December 25, 2013 before the Acquisition and a parcel of land in Taizhou, Zhejiang on January 9, 2014 after the Acquisition (details of which are set out in the announcements of the Company dated December 10, 2013, December 26, 2013 and January 10, 2014, respectively). The Directors have considered that the Company is actively engaged in property development as a principal business activity. If the Company were requested to prepare and publish its financial statements as at the date of the circular, the Director would be able to confirm that:

• (a) there would be clear disclosure of property development activity as a current and continuing principal business activity in the Directors’ Report of its published financial statements;

• (b) the property development activity would be reported as a separate and continuing segment in its published financial statements; and

• (c) its format for reporting segmental information and its published financial statements would have fully complied with the requirements of relevant accounting standards adopted for the preparation of its published financial statements on reporting of segment revenue and segment expense.

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LETTER FROM THE BOARD

As such, the Company considers itself to be a Qualified Issuer pursuant to Rule 14.04(10B) of the Listing Rules.

3. GENERAL

Your attention is also drawn to the financial information of the Group and general information set out in the appendices to this circular.

Yours faithfully, By Order of the Board Jingrui Holdings Limited Yan Hao Chen Xin Ge Co-chairmen

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. AUDITED CONSOLIDATED FINANCIAL INFORMATION

The Company was listed on the Stock Exchange on October 31, 2013. Financial information of the Group for the three years ended December 31, 2010, 2011 and 2012 and six months ended June 30, 2013 was disclosed in the “Financial Information” section and on pages I-4 to I-96 of Appendix I of the Prospectus which is available on the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (http://www.jingruis.com).

2. INDEBTEDNESS

At the close of business on November 30, 2013, being the latest practicable date for the purpose of the indebtedness statement prior to the printing of this circular, the Group had outstanding indebtedness of approximately RMB7,153.3 million, consisting of current borrowings of approximately RMB2,915.5 million, non-current borrowings of approximately RMB4,237.8 million. As at November 30, 2013, the Group had un-utilised banking facilities of approximately RMB535.5 million.

Save as disclosed above and apart from intra-group liabilities, the Group did not have any debt securities issued and outstanding or agreed to be issued, bank borrowings or other similar indebtedness, liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities at the close of business on November 30, 2013.

3. WORKING CAPITAL

After due and careful consideration, the Directors are of the opinion that, taking into account the completion of the Acquisition, the Group’s internal resources as well as the available facilities from banks and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements for the period of twelve months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

The Directors confirm that there was no material adverse change in the financial or trading position of the Group since June 30, 2013, being the date to which the latest published audited consolidated accounts of the Company were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

In the coming financial year, the Group will continue to be engaged in property development and property investment in the Yangtze River Delta region and other regions in the PRC. The management team has been exploring business opportunities in such area to expand the Group’s operation and enhance its earnings. The management team is actively looking for suitable investments opportunities to diversify its existing business portfolio and to broaden its source of income.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

Cash position

The Group had cash and bank balances (including pledged bank deposits) of approximately RMB751.5 million and restricted cash of approximately RMB440.7 million as at August 31, 2013.

Gearing ratio

The Group’s net debt-to-equity ratio (total indebtedness net of bank balances and cash including pledged bank deposits and restricted cash divided by total equity) was approximately 172.9% as at June 30, 2013. The Group’s gearing ratio (net debt, which represents total borrowings less cash and cash equivalents and restricted cash-deposits pledged for borrowings, divided by total capital, which represents total equity plus net debt) was approximately 63.4% as at June 30, 2013. The Group’s current ratio (total current assets divided by total current liabilities) was approximately 1.5 times as at June 30, 2013.

7. FINANCIAL EFFECT OF THE ACQUISITION

Immediately upon the Acquisition and assuming a total consideration RMB2,076.5 million (approximately HK$2,636.4 million) to be satisfied by the Group’s internal resources and proceeds from the Global Offering, the Company considers that there will be no material impact on the earnings or assets or liabilities of the Group immediately upon the Acquisition.

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GENERAL INFORMATION

APPENDIX II

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) Interests of the Directors and the Chief Executive of the Company

As at December 31, 2013, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or which were required, pursuant to Section 352 of the SFO to be entered in the register referred to therein, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Listing Rules, were as follows:

		Number of	Approximate %
	Capacity/Nature	Underlying	shareholding
Name of Director	of Interest	Shares	interest
Beyond Wisdom	Direct interest	442,346,008	35.28
Limited
Mr. Yan	Interest of a controlled	442,346,008	35.28
	corporation(1)
Decent King Limited	Direct interest	432,678,240	34.51
Mr. Chen	Interest of a controlled	432,678,240	34.51
	corporation(2)

Notes:

• (1) Mr. Yan owns 100% of Beyond Wisdom Limited. Mr. Yan is therefore deemed to be interested in the 442,346,008 Shares held by Beyond Wisdom Limited. Mr. Yan is the sole director of Beyond Wisdom Limited.

• (2) Mr. Chen owns 100% of Decent King Limited. Mr. Chen is therefore deemed to be interested in the 432,678,240 Shares held by Decent King Limited. Mr. Chen is the sole director of Decent King Limited.

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GENERAL INFORMATION

APPENDIX II

(b) Interests in Other Members of the Group

As at December 31, 2013, the following persons (excluding the Company) are directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

			Approximate %
Name of Subsidiary	Name of Shareholder	Registered Capital	of Interest
Chongqing	Hangzhou Industrial &	RMB100 million	49%
Jingshang	Commercial Trust Co., Ltd.
Hangzhou Jingyue	Hangzhou Industrial &	RMB100 million	49%
	Commercial Trust Co., Ltd.
Nantong Jingshang	Hangzhou Industrial &	RMB10 million	49%
	Commercial Trust Co., Ltd.
Ningbo Jingrui	Shanghai Dongxing	RMB100 million	30%
	Investment Holdings
	Co., Ltd. and
	Caitong Securities Co., Ltd.
Hangzhou Jinghang	Shanghai Jiacan Investment	RMB20 million	49%
	Co., Ltd.
Shanghai Fengxiang	Zhang Bei	RMB100 million	11%
Shanghai Huajiang	Shanghai South Real Estate	RMB100 million	30%
	Co., Ltd.
	Shanghai Jiading		20%
Shaoxing Jinghu	Hangzhou Industrial &	RMB100 million	49%
	Commercial Trust Co., Ltd.
Taicang Jingshang	Shanghai Jiading	RMB150 million	20%
	Shanghai Oasis		10%
Yangzhou Jingrui	Hangzhou Industrial &	RMB100 million	49%
	Commercial Trust Co., Ltd.
Zhuji Jingrui	Shanghai International Trust	RMB100 million	40%
	and Investment Co., Ltd.

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GENERAL INFORMATION

APPENDIX II

(c) Directors’ Service Contracts

None of the Directors has entered into a service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

(d) Directors’ Competing Interests

As at December 31, 2013, none of the Directors are interested in any business apart from the Group’s business which competes or is likely to compete, directly or indirectly, with the business of the Group.

(e) Disclaimers

Save as disclosed in this circular, none of the Directors or chief executive of the Company has any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Stock Exchange.

Save as disclosed in this circular, so far as is known to any Director or chief executive of the Company, no person has an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

As at December 31, 2013, 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 or were proposed to be acquired or disposed of by or leased to any member of the Group since June 30, 2013, being the date to which the latest published audited consolidated accounts of the Company were made up.

No Director was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which was significant in relation to the business of the Group taken as a whole.

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GENERAL INFORMATION

APPENDIX II

3. MATERIAL CONTRACTS

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

• (a) an equity transfer agreement dated May 15, 2013 entered into between Hainan Jingshen and Yangpu Wanbaolong, pursuant to which Hainan Jingshen agreed to purchase the 39.6485% equity interest in Jingrui Properties (Group) from Yangpu Wanbaolong for a consideration of RMB155,708,700;

• (b) an equity transfer agreement dated May 15, 2013 entered into between Hainan Jingshen and Yangpu Saiente, pursuant to which Hainan Jingshen agreed to purchase the 40.0516% equity interest in Jingrui Properties (Group) from Yangpu Saiente for a consideration of RMB157,291,730;

• (c) a deed of non-competition dated October 15, 2013 entered into among Mr. Yan Hao, Beyond Wisdom Limited, Mr. Chen Xin Ge, Decent King Limited and the Company in respect of the non-competition undertakings and covenants given by the Controlling Shareholders in favour of the Company;

• (d) a deed of indemnity dated October 15, 2013 entered into among Mr. Yan Hao, Beyond Wisdom Limited, Mr. Chen Xin Ge and Decent King Limited in respect of the taxation indemnities given by the Controlling Shareholders in favour of the Company;

• (e) a cornerstone investment agreement dated October 15, 2013 entered into between the Company, the joint global coordinators, Dalvey Asset Holding Ltd (the “ Cornerstone Investor ”) and RRJ Capital Master Fund II, L.P. where the Cornerstone Investor agreed to subscribe for such numbers of Offer Shares at the Offer Price which may be purchased with an aggregate amount of US$50 million; and

• (f) the underwriting agreement dated October 17, 2013 entered into among the Company the joint global coordinators and the Hong Kong underwriters relating to the offer of 31,344,000 new Shares for subscription by public in Hong Kong.

4. LITIGATION AND CLAIMS

(a) Contractual Arrangements with Contractors

In September 2010, the Company, through its subsidiary, Taicang Jingrui, entered into a general contractor agreement with Longyuan Construction Group Co., Ltd. (龍元建設集團股份 有限公司), or Longyuan Construction. The agreed contract price relating to the contractor work in dispute was approximately RMB170.0 million. Subsequently, Longyuan Construction refused to abide by the initial terms with respect to construction payments as agreed to under

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APPENDIX II

GENERAL INFORMATION

the general contractor agreement. In January 2012, the Company and Longyuan Construction entered into an administrative mediation agreement, pursuant to which the Company paid RMB15.0 million of the then outstanding construction consideration to Longyuan Construction and both parties agreed to engage a third party professional construction cost consulting firm to review the contract price. In August 2012, Longyuan Construction brought a lawsuit against Taicang Jingrui with Suzhou Intermediate People’s Court of Jiangsu Province, claiming an amount of approximately RMB97.1 million (being the total outstanding construction consideration and material costs but excluding an aggregate of RMB92.6 million in construction consideration that Taicang Jingrui had previously paid to Longyuan Construction prior to the lawsuit) and other penalty and legal fees in an aggregate amount of approximately RMB4.8 million. Meanwhile, certain residential units under development in Suzhou Jingrui Royal Bay were held in the custody of Suzhou Intermediate People’s Court upon Longyuan Construction’s request. In September 2012, Taicang Jingrui filed a counterclaim against Longyuan Construction for penalties arising under the contractor agreement. Based on the review and evaluation of third party entities appointed by Suzhou Intermediate People’s Court, the evaluated construction consideration was estimated to be approximately RMB136.5 million, but such consideration may not be the final amount. As at December 31, 2012, RMB136.5 million was accrued for the construction costs and reflected in the Company’s consolidated financial statements, of which a total of RMB92.6 million had since been paid. In April 2013, the Company paid an additional RMB10.0 million, after which the custody of the residential units was released back to the Company. Furthermore, Longyuan Construction undertook to us in writing that it would not request custody for any of the Company properties. The Company engaged another general contractor shortly after terminating the agreement with Longyuan Construction and the Company did not experience any delay in delivering these properties to its customers. In July 2013, pursuant to the mediation letter issued by Suzhou Intermediate People’s Court, the Company and Longyuan Construction mutually agreed, among other things, that the total construction consideration is determined to be RMB138.0 million and the outstanding amounts payable by the Company to Longyuan Construction are to be comprised of (i) outstanding construction consideration of RMB28.5 million, payable in three installments with RMB10.0 million payable before July 31, 2013, RMB10.0 million before August 31, 2013 and RMB8.5 million before September 30, 2013, and (ii) outstanding warranty deposit of RMB6.8 million, payable in three installments, with RMB2.7 million payable before September 30, 2013, RMB2.7 million before December 31, 2014 and RMB1.4 million before December 31, 2015. As of September 30, 2013, the Company had paid RMB31.2 million to Longyuan Construction out of the above outstanding construction consideration and warranty deposits, pursuant to the mediation letter. By accepting the mediation letter, the Company and Longyuan Construction waived the right to appeal.

In September 2009, the Company, through its subsidiary, Zhoushan Jingrui, entered into a general contractor agreement with Hengzun Group Co., Ltd. (恆尊集團有限公司), or Hengzun Group, in connection with the construction for part of Zhoushan Jingrui HOPSCA project. The total contract price under the agreement was approximately RMB29.9 million. In July 2012, Hengzun filed a lawsuit against Zhoushan Jingrui with the People’s Court of Putuo District, Zhoushan, Zhejiang Province, claiming a total outstanding construction consideration of RMB10.3 million plus related fees. The construction of Zhoushan Jingrui HOPSCA had been substantially completed at that time and the Company had already paid a total RMB18.5 million to Hengzun Group under the general contractor agreement. In October 2012, Hengzun

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APPENDIX II

GENERAL INFORMATION

Group withdrew the lawsuit and both parties agreed to engage a third party professional construction cost consulting firm to review the contract price. Due to the delay in delivering the finalized review report by this consulting firm, in March 2013, Hengzun Group filed another lawsuit against Zhoushan Jingrui, claiming a total outstanding construction consideration of RMB10.3 million plus related fees. The litigation is currently in progress as at the Latest Practicable Date. The final evaluation result of the third party professional construction costs consulting firm is still not yet available as of the Latest Practicable Date. The Company have not experienced any delay in delivering these properties to its customers. As at December 31, 2012, RMB4.0 million was accrued and reflected in its consolidated financial statements based on the Company’s estimation of the construction consideration by referring to the review and evaluation results conducted by another third party according to the original construction agreement, which the Company believes to be the best estimate of the construction costs.

The construction agreements with Longyuan Construction and Hengzun Group were entered into prior to the full implementation of the Company’s standardized project development procedures. The total contract prices of the agreements with these general construction contractors were fixed without the flexibility for adjustment, and was determined by taking into account the then prevailing market prices and limited estimations of fluctuations as to certain costs, primarily related to raw materials or labors. The Company believes the disputes with these contractors were primarily due to the significant increases in the costs and expenses incurred by them during the relevant construction periods, which led to such contractors becoming unsatisfied as to the original construction agreements and decided not to perform under such agreements. To avoid future disputes, the Company has since amended its standard terms of agreements with general construction contractors, which provide certain adjustment to the total contract price based on the suggested standard salary for construction workers issued periodically by the relevant local labor authority during the contract term. On the other hand, the general contractor agreements provide the price ranges for key raw material, namely steel and concrete, by referring to the average monthly market prices issued by relevant local authorities during the property construction period. By providing the flexibility to adjust the contract price rather than based the agreement on a pre-determined fixed total price, the Company believes it is now able to better mitigate the potential risks as to disputes between the Company and its general construction contractors regarding the contract price, while continuing to be able to manage any potential cost fluctuations.

(b) Shanghai Garden City

In 2002, the Company’s subsidiary, Shanghai Garden City, obtained land parcels in Shanghai for project development from the local government through public tenders, auctions and listings-for-bidding for land use rights. It also agreed to construct a school on an additional land parcel to be granted by the government after the necessary demolition work needed in relation to such land is completed by the responsible local government authorities. However, since the relevant authorities failed to complete the demolition work on time, the Company was not granted the additional land parcel and were not able to construct the school. In June 2005, Shanghai Garden City and the Education Bureau of Hongkou District, Shanghai (上海市虹口 區教育局), or the Education Bureau, entered into an agreement, under which Shanghai Garden City reaffirmed that it will construct the school, and agreed to pledge its land use rights to a

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APPENDIX II

GENERAL INFORMATION

land parcel with a site area of approximately 7,116 sq.m. in favour of and to pay a total amount of RMB30.5 million to the local government as guarantee to perform such obligation. Based on the best knowledge of the Company, since the occupier of that land parcel and the relevant land usage were changed at that time, the responsible government authorities were not able to complete the demolition work and as a result, the Company was not able to construct the school by May 2007 as agreed. The Education Bureau filed a lawsuit in December 2012 with Hongkou District People’s Court of Shanghai in which, among other things, it seeks to retain the RMB30.5 million that was previously paid and to obtain the land use rights to the land parcel of Shanghai Garden City with a site area of approximately 7,116 sq.m. as compensation. In July 2013, Hongkou District People’s Court of Shanghai delivered a judgment in favor of the Education Bureau, ruling that it is entitled to retain the RMB30.5 million and to obtain the land use rights in dispute. As at December 31, 2012, RMB30.5 million was estimated and accrued for the relevant construction costs and reflected in the Company’s combined financial statements. A full provision of RMB23.5 million on the carrying amount of the land use rights to the land parcel with a site area of 7,116 sq.m. was also made in the Company’s combined financial statements as at December 31, 2012 based on the judgment of Hongkou District People’s Court of Shanghai.

The Company is of the view that the pledge of the land use rights to the land parcel with a site area of approximately 7,116 sq.m. to the local government which were acquired by Shanghai Garden City at a cost of RMB23.5 million only served as a guarantee for Shanghai Garden City to fulfill its obligation to construct a school and to bear the construction costs on an additional land parcel to be granted at zero consideration by the local government. The failure by the local government to complete the required demolition work and deliver the additional land parcel to us does not give rise to the Education Bureau the rights to require the Company to surrender its title to the land use rights with a site area of approximately 7,116 sq.m. at zero consideration to them which the Company had acquired through open market for commercial property development and in fact special approvals are required to change the use of the land. The Company has filed a petition to appeal the judgment with the Shanghai Second Intermediate People’s Court in August 2013. The appeal is currently in progress as at the Latest Practicable Date. In the event that the appeal were not successful, the Company believes that this would not have a material adverse effect on its business, financial conditions or operating results as the resulting losses are already provided for fully in its financial results.

In addition, in April 2013, the Company entered into an equity transfer agreement with an independent third party who agreed to acquire the 100% equity interest in Shanghai Garden City from the Company. Pursuant to a supplementary agreement entered into in June 2013, the consideration for the equity transfer is determined to be RMB70.0 million. RMB10.0 million had been received as deposit as at June 30, 2013. The existence of this ongoing litigation has been disclosed in the equity transfer agreement. The Company engaged Shanghai Hu Jing Law Firm to represent us in the litigation, whom is of the view that upon the completion of the proposed equity transfer, all of its current rights and obligations pertaining to Shanghai Garden City, including the potential obligations relating to the litigation with the Education Bureau, will be transferred to the independent transferee. As such, the Company will not be liable for any future potential losses or claims in relation to this litigation upon the completion of the proposed equity transfer. As of the Latest Practicable Date, the transferee had not made additional payments to the Company for the equity transfer, which was supposed to be

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completed prior to July 31, 2013 pursuant to the equity transfer agreement. Pursuant to the supplementary agreement, if the counterparty does not make the additional payments to us within 30 calendar days after July 31, 2013, the Company is entitled to unilaterally terminate the equity transfer agreement and the supplementary agreement, forfeit the deposit of RMB10.0 million and claim damages from the counterparty for its failure to make payments to the Company. The Company is currently in discussions with the transferee to finalize the payment schedule and complete the transfer.

The Directors believe that these legal proceedings will not have a material adverse effect on the Company’s business, financial condition and operation results.

Saved as disclosed above, as at December 31, 2013, no member of the Group was engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened by or against the Group, that would have a material adverse effect on its business, financial condition or results of operations.

5. GENERAL

The English text of this circular shall prevail over the Chinese text in case of inconsistency.

The joint company secretaries of the Company are Mr. Yu Jia Le and Ms. Lai Siu Kuen (FCIS, FCS).

The registered office of the Company is situated at 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands and its principal place of business in Hong Kong is situated at 8th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.

6. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents will be available for inspection at the principal place of business of the Company in Hong Kong at 8th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours on any weekday (public holidays excluded) from the date of this circular up to and including February 12, 2014:

• (i) the memorandum and articles of association of the Company;

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

• (iii) the accountant’s report for the three years ended December 31, 2012 and the six months ended June 30, 2013 from PricewaterhouseCoopers; and

• (iv) this circular.

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