THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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 Kinetic Development Group Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

方星发展

KINETIC DEVELOPMENT GROUP

Kinetic Development Group Limited

力量發展集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1277)

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

RAINBOW

RAINBOW CAPITAL (HK) LIMITED

定德資本有限公司

Capitalized terms used shall have the same meanings as those defined in the section headed "Definitions" in this circular. A letter from the Board is set out on pages 8 to 32 of this circular. A letter from the Independent Board Committee is set out on page 33 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 34 to 64 of this circular. The valuation reports from Asia-Pacific Consulting and Appraisal Limited are set out on pages IA-1 to IB-11 of this circular.

A notice convening the EGM to be held at 18/F, 80 Gloucester Road, Wan Chai, Hong Kong on Friday, 3 January 2025 at 2:30 p.m. is set out on pages EGM-1 to EGM-3 of this circular.

A form of proxy for use by the Shareholders at the EGM is enclosed with this circular for dispatch to the Shareholders. Whether or not you intend to attend and/or vote at the EGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company's share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time specified for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

19 December 2024

CONTENTS

Pages

DEFINITIONS ... 1
LETTER FROM THE BOARD ... 8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE ... 33
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER ... 34
APPENDIX IA — VALUATION REPORT OF THE TARGET COMPANIES... IA-1
APPENDIX IB — VALUATION REPORT OF THE TARGET PROPERTIES IB-1
APPENDIX II — GENERAL INFORMATION II-1
NOTICE OF EXTRAORDINARY GENERAL MEETING... EGM-1

DEFINITIONS

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

“2022 Adjusted Properties” the target properties located in Wuhan, Jingmen, Qingdao, Zhongshan, Wuxi and Zunyi, which represent an adjustment to the scope of the Original Properties, the details of which were set out in the “Information on the Target Properties” section in the announcement of the Company dated 12 July 2022;

“2022 Property Purchase Agreement” the agreement on sale and purchase of properties entered into between the Original Vendors and Kinetic Qinhuangdao on 29 April 2022;

“2022 Terminated Vendors” the vendors under the 2022 Property Purchase Agreement whose rights and obligations were terminated pursuant to the Supplemental Agreement;

“2023 Adjusted Properties” the target properties in the 2022 Adjusted Properties which were not among the 2023 Terminated Properties;

“2023 Terminated Properties” the properties among the 2022 Adjusted Properties located in Jingmen, Wuxi and Wuhan which would no longer be sold to Kinetic Qinhuangdao pursuant to the Second Supplemental Agreement, the details of which were set out in the “Scope of Terminated Properties” in the announcement of the Company dated 1 December 2023;

“2024 Adjusted Target Properties” the target properties in the 2023 Adjusted Properties which were not among the 2024 Terminated Properties and the 2024 Further Terminated Properties;

“2024 Agreement Vendors” the vendors that entered into the Third Supplemental Agreement with Kinetic Qinhuangdao and Guangzhou, Hengyi, namely, Vendor 1, Vendor 2, Vendor 4 and Vendor 6;

“2024 Further Terminated Properties” the properties located in Zunyi and parts of the properties located in Zhongshan among the 2023 Adjusted Properties which would no longer be sold to Kinetic Qinhuangdao pursuant to the Fourth Supplemental Agreement, the details of which are set out in the “Acquisition of Seedlife” section in this circular;

DEFINITIONS

"2024 Target Properties"
the target properties located in Guangzhou, the details of which are set out in the "Information on 2024 Target Properties" section in the announcement of the Company dated 6 June 2024;

"2024 Terminated Properties"
the properties among the 2023 Adjusted Properties located in Wuhan and Zhongshan which would no longer be sold to Kinetic Qinhuangdao pursuant to the Third Supplemental Agreement, the details of which are set out in the "Scope of the 2024 Terminated Properties" section in the announcement of the Company dated 6 June 2024;

"2024 Third Tranche Terminated Properties"
parts of the properties located in Zhongshan among the 2024 Adjusted Target Properties which would no longer be sold to Kinetic Qinhuangdao pursuant to the Fifth Supplemental Agreement, the details of which are set out in the "Scope of the 2024 Third Tranche Terminated Properties" section in the announcement of the Company dated 4 November 2024;

"associate"
has the meaning ascribed to it under the Listing Rules;

"Board"
the board of Directors;

"Business Day"
any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks are required or authorized by law to be closed in Hong Kong or PRC;

"Closing"
the consummation of the Maoming Acquisition, as specified under the Maoming Share Transfer Agreement;

"Company"
Kinetic Development Group Limited (formerly known as Kinetic Mines and Energy Limited), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange;

"connected person(s)"
has the meaning ascribed to it under the Listing Rules;

"Directors"
the director(s) of the Company;

"EGM"
the extraordinary general meeting to be convened to approve the Maoming Share Transfer Agreement and the Maoming Acquisition and the transactions contemplated thereunder;

DEFINITIONS

"Enlarged Group"
the Group and the Target Companies immediately after the Closing;

"Fifth Supplemental Agreement"
the fifth supplemental agreement entered into between Kinetic Qinhuangdao, Vendor 2, Vendor 4 and Zhuhai Seedland on 1 November 2024;

"Fourth Supplemental Agreement"
the fourth supplemental agreement entered into between the Company, Kinetic Qinhuangdao, the 2024 Adjusted Properties Vendors, Seedland Smart Service and Mr. Zhang Liang, Johnson on 6 September 2024;

"Group"
the Company and its subsidiaries;

"Guangzhou Hengyi"
Guangzhou Hengyi Equipment Installation and Maintenance Co., Ltd.* (廣州恆逸設備安裝維護有限公司), a company incorporated in the PRC with limited liability, which is indirectly held by Mr. Zhang Liang, Johnson as to 100%;

"Hong Kong"
the Hong Kong Special Administrative Region of the PRC;

"Independent Board Committee"
the independent committee of the Board comprising all the independent non-executive Directors;

"Independent Financial Adviser" or "Rainbow Capital"
Rainbow Capital (HK) Limited, a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to advise the Independent Board Committee and the Independent Shareholder, in relation to the Maoming Share Transfer Agreement and the Maoming Acquisition and the transactions contemplated thereunder;

"Independent Shareholder(s)"
the Shareholder(s) other than those that are required under the Listing Rules to abstain from voting on the resolution(s) to be proposed at the EGM;

"Independent Valuer"
Asia-Pacific Consulting and Appraisal Limited, an independent valuer appointed by the Company;

DEFINITIONS

"Kinetic Qinhuangdao" or "Buyer"

Kinetic (Qinhuangdao) Energy Group Ltd. (力量(秦皇岛)能源集團有限公司), formerly known as Kinetic (Qinhuangdao) Energy Co., Ltd. (力量(秦皇岛)能源有限公司), a company incorporated in the PRC with limited liability and an indirectly wholly-owned subsidiary of the Company;

"Latest Practicable Date"

18 December 2024, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;

"Listing Rules"

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

"Maoming Acquisition"

the acquisition of 100% equity interests of each of Maoming Shengda and Maoming Shengcheng;

"Maoming Share Transfer Agreement"

the share transfer agreement dated 1 November 2024 entered into between the Kinetic Qinhuangdao and Zhuhai Seedland in relation to the acquisition of 100% equity interests of each of Maoming Shengda and Maoming Shengcheng;

"Maoming Shengcheng"

Maoming Shengcheng Real Estate Co., Ltd.* (茂名晟城置業有限公司), a company incorporated in the PRC with limited liability and is currently held by Zhuhai Seedland as to 100%;

"Maoming Shengda"

Maoming Shengda Real Estate Co., Ltd.* (茂名晟大置業有限公司), a company incorporated in the PRC with limited liability and is currently held by Zhuhai Seedland as to 100%;

"Original Properties"

the original target properties located in Wuhan, Jingmen, Tianjin, Huizhou and Qingdao, the details of which are set out in the "Information on the Target Properties" section in the announcement of the Company dated 2 May 2022;

"Original Vendors"

Qingdao Shihaoxing Real Estate Co., Ltd. (青岛實昊星置業有限公司), Huizhou Guopeng Color Printing Co., Ltd. (惠州市國鵬彩印有限公司), Tianjin Jinhewan Real Estate Co., Ltd.* (天津金河灣置業有限公司), Vendor 1, Vendor 2 and Vendor 3, being the original vendors under the 2022 Property Purchase Agreement;

DEFINITIONS

"PRC"
the People's Republic of China, and for the purpose of this circular only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan;

"RMB"
Renminbi, the lawful currency of the PRC;

"Second Supplemental Agreement"
the second supplemental agreement entered into between Kinetic Qinhuangdao, the Vendors and Taiyuan Hetai on 1 December 2023;

"Seedland"
Guangzhou Seedland Real Estate Development Co., Ltd* (寶地地產集團有限公司), a company incorporated in the PRC with limited liability and 100%-owned by Mr. Zhang Liang, Johnson;

"Seedland Smart Service"
Seedland Smart Service Group Limited, a limited liability company incorporated under the laws of the Cayman Islands and is held indirectly by Mr. Zhang Liang, Johnson as to 100%;

"Seedlife"
Seedlife Holding Limited, a limited liability company incorporated under the laws of the British Virgin Islands and is held directly by Seedland Smart Service as to 100%;

"Seedlife Share Purchase Agreement"
the share purchase agreement dated 6 September 2024 entered into between the Company, Seedland Smart Service and Seedlife in relation to the acquisition of 100% equity interests of Seedlife;

"Seedlife Share Purchase Supplemental Agreement"
a supplemental agreement dated 12 November 2024 to the Seedlife Share Purchase Agreement entered into between the Company, Seedland Smart Service and Seedlife in relation to the acquisition of 100% equity interests of Seedlife;

"SFO"
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

"Share(s)"
ordinary share(s) with a nominal value of US$0.001 each in the share capital of the Company;

"Shareholder(s)"
holder(s) of the Shares;

"Stock Exchange"
The Stock Exchange of Hong Kong Limited;

DEFINITIONS

“Supplemental Agreement” the supplemental agreement entered into between Kinetic Qinhuangdao, the Original Vendors, Vendor 4, Vendor 5 and Vendor 6 on 12 July 2022;

“Taiyuan Hetai” Taiyuan Hetai Shengrui Real Estate Co., Ltd.* (太原和泰盛瑞置業有限公司), a limited liability company established in the PRC, whose entire equity interests were acquired by Kinetic Qinhuangdao pursuant to the Second Supplemental Agreement;

“Target Companies” Maoming Shengda and Maoming Shengcheng;

“Third Supplemental Agreement” the third supplemental agreement entered into between the 2024 Agreement Vendors, Kinetic Qinhuangdao and Guangzhou Hengyi on 6 June 2024;

“Vendor 1” Wuhan Pingan Zhongxin Real Estate Co., Ltd.* (武漢平安中信置業有限公司), a company incorporated in the PRC with limited liability and an indirectly wholly-owned subsidiary of Seedland;

“Vendor 2” Qingdao Shilu Ocean Big Data Investment Development Co., Ltd.* (青島實錄海洋大數據投資開發有限公司), a company incorporated in the PRC with limited liability and an indirectly non-wholly-owned subsidiary of Seedland;

“Vendor 3” Jingmen Shiqiang Real Estate Co., Ltd.* (荊門實強房地產置業有限公司), a company incorporated in the PRC with limited liability and an indirectly non-wholly-owned subsidiary of Seedland;

“Vendor 4” Zhongshan Shidi Real Estate Development Co., Ltd.* (中山實地房地產開發有限公司), a company incorporated in the PRC with limited liability and a directly wholly-owned subsidiary of Seedland;

“Vendor 5” or “Wuxi Shidi” Wuxi Shidi Real Estate Development Co., Ltd.* (無錫實地房地產開發有限公司), a company incorporated in the PRC with limited liability and an indirectly wholly-owned subsidiary of Seedland;

DEFINITIONS

"Vendor 6"
Zunyi Shidi Real Estate Development Co., Ltd.* (遵義實地房地產開發有限公司), a company incorporated in the PRC with limited liability and a directly non-wholly-owned subsidiary of Seedland;

"Vendors"
collectively, Vendor 1, Vendor 2, Vendor 3, Vendor 4, Vendor 5 and Vendor 6;

"Zhuhai Seedland" or "Seller"
Zhuhai Seedland Real Estate Development Co., Ltd.* (珠海實地房地產開發有限公司), a company incorporated in the PRC with limited liability and a directly wholly-owned subsidiary of Seedland; and

"%"
per cent.

The English translation of the Chinese names of the respective companies in this circular, where indicated, is included for information purpose only, and should not be regarded as the official English names of the respective companies.
7 -

LETTER FROM THE BOARD

方星发展

KINETIC DEVELOPMENT GROUP

Kinetic Development Group Limited

力量發展集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1277)

Executive Directors:

Mr. Ju Wenzhong (Chairman)

Mr. Li Bo (Chief Executive Officer)

Mr. Ji Kunpeng

Non-executive Director:

Ms. Zhang Lin

Independent non-executive Directors:

Ms. Liu Peilian

Mr. Chen Liangnuan

Ms. Xue Hui

Registered office:

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

Head office and principal place of business in the PRC:

Dafanpu Coal Mine

Majiata Village

Xuejiawan Town

Zhunge'er Banner

Ordos City, Inner Mongolia, China

Principal place of business in Hong Kong:

18/F

80 Gloucester Road

Wan Chai

Hong Kong

19 December 2024

Dear Shareholders,

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

References are made to the announcements of the Company dated 2 May 2022, 12 July 2022, 1 December 2023, 12 December 2023, 7 February 2024, 3 June 2024, 6 June 2024, 6 September 2024, 4 November 2024 and 12 November 2024, and to the circulars of the Company dated 30 September 2022, 21 February 2024 and 25 November 2024.

LETTER FROM THE BOARD

On 29 April 2022, the Original Vendors entered into the 2022 Property Purchase Agreement with Kinetic Qinhuangdao, an indirect wholly-owned subsidiary of the Company, pursuant to which the Original Vendors agreed to sell, and Kinetic Qinhuangdao agreed to purchase, the Original Properties for the consideration of RMB769,014,000.

On 12 July 2022, Kinetic Qinhuangdao entered into the Supplemental Agreement with the Vendors and the 2022 Terminated Vendors, pursuant to which, among others, the Vendors agreed to sell, and Kinetic Qinhuangdao agreed to purchase, the 2022 Adjusted Properties, which represented an adjustment to the scope of the Original Properties, for the consideration of RMB809,480,000. In addition, pursuant to the Supplemental Agreement, the rights and obligations between the 2022 Terminated Vendors and Kinetic Qinhuangdao under the 2022 Property Purchase Agreement are terminated with effect from the date of the Supplemental Agreement, which effectively replaced the 2022 Property Purchase Agreement.

On 1 December 2023, Kinetic Qinhuangdao entered into the Second Supplemental Agreement with the Vendors and Taiyuan Hetai, pursuant to which, among others, (i) the 2023 Terminated Properties would no longer be sold to Kinetic Qinhuangdao; and (ii) Wuxi Shidi (Vendor 5) has agreed to sell, and Kinetic Qinhuangdao has agreed to acquire, 100% equity interests in Taiyuan Hetai for the consideration of RMB220,000,000, and Wuxi Shidi and Kinetic Qinhuangdao have entered into a share transfer agreement detailing the terms of acquisition of 100% equity interests in Taiyuan Hetai. Accordingly, the Second Supplemental Agreement removed the 2023 Terminated Properties from the scope of the properties to be acquired by Kinetic Qinhuangdao from the Vendors. The acquisition of Taiyuan Hetai contemplated under the Second Supplemental Agreement has been completed on 3 June 2024.

On 6 June 2024, Kinetic Qinhuangdao entered into the Third Supplemental Agreement with the 2024 Agreement Vendors and Guangzhou Hengyi, pursuant to which, among others, (i) Guangzhou Hengyi transferred the 2024 Target Properties to Kinetic Qinhuangdao for a total consideration of RMB45,000,000, which has been completed; (ii) the 2024 Terminated Properties would no longer be sold to Kinetic Qinhuangdao; and (iii) the rights and obligations between the 2024 Agreement Vendors and Kinetic Qinhuangdao in respect of the 2024 Terminated Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement and the Second Supplemental Agreement) are terminated with effect from the date of the Third Supplemental Agreement. The corporate income tax of RMB4,184,000 payable by Guangzhou Hengyi arising from the acquisition of the 2024 Target Properties has been paid by Kinetic Qinhuangdao, and has been deducted from the total consideration of RMB45,000,000 such that the net consideration payable by Kinetic Qinhuangdao for the acquisition of the 2024 Target Properties became RMB40,816,000.

LETTER FROM THE BOARD

amended by the Supplemental Agreement, the Second Supplemental Agreement and the Third Supplemental Agreement) are terminated with effect from the date of the Fourth Supplemental Agreement. On the same date, the Company, Seedland Smart Service and Seedlife entered into the Seedlife Share Purchase Agreement, pursuant to which, among others, the Company (either directly or through its affiliate) agreed to acquire, and Seedland Smart Service agreed to sell 100% equity interests of Seedlife for a total consideration of RMB423,000,000.

On 12 November 2024, the Company, Seedland Smart Service and Seedlife entered into the Seedlife Share Purchase Supplemental Agreement to the Seedlife Share Purchase Agreement, pursuant to which, the payment term of the equity consideration was amended to provide that the seller shall refund to the buyer all payments received by them (including the LOI Deposit and the Further Cash Payment) within 30 days of a written notice by the buyer if the buyer cannot obtain all necessary approvals required by the Listing Rules, as well as an interest calculated based on the one-year loan prime rate published by the People's Bank of China from the date of payment by the buyer of the relevant amount up to actual date of repayment. Save for the aforementioned, all other terms and conditions set forth in the Seedlife Share Purchase Agreement shall remain unchanged and in full force and effect. The Seedlife Acquisition is subject to independent shareholders' approval by way of a poll at the extraordinary meeting to be held on Friday, 3 January 2025 at 2:00 p.m..

10 -

LETTER FROM THE BOARD

The details of the Original Properties, the 2022 Adjusted Properties, the 2023 Adjusted Properties the 2023 Adjusted Properties (excluding the 2024 Terminated Properties) and the 2024 Adjusted Target Properties are as follows:

Properties of Vendor 1

Original Properties as agreed on 29 April 2022	2022 Adjusted Properties as agreed on 12 July 2022	2023 Adjusted Properties as agreed on 1 December 2023	2023 Adjusted Properties (excluding the 2024 Terminated Properties) as agreed on 6 June 2024	2024 Adjusted Target Properties as agreed on 6 September 2024
89 units in Buildings No. 34, No. 35 and No. 36 located in land No. 104C of Wuhan Economic and Technological Development Zone (武漢高新技術開發區), Wuhan, Hubei Province, with an aggregate building area of approximately 12,179.6 square meters held by Vendor 1	88 units in Buildings No. 34, No. 35 and No. 36 located in land No. 104C of Wuhan Economic and Technological Development Zone (武漢高新技術開發區), Wuhan, Hubei Province, with an aggregate building area of approximately 11,705.9 square meters held by Vendor 1	11 units in Buildings No. 35 and No. 36 located in land No. 104C of Wuhan Economic and Technological Development Zone (武漢高新技術開發區), Wuhan, Hubei Province, with an aggregate building area of approximately 2,475.1 square meters held by Vendor 1	Such 11 units with an aggregate building area of approximately 2,475.1 square meters held by Vendor 1 were terminated for sale pursuant to the Third Supplemental Agreement	Not applicable
		77 units in Buildings No. 34 and No. 35 located in land No. 104C of Wuhan Economic and Technological Development Zone (武漢高新技術開發區), Wuhan, Hubei Province, with an aggregate building area of approximately 9,230.8 square meters held by Vendor 1 were terminated for sale pursuant to the Second Supplemental Agreement

11 -

LETTER FROM THE BOARD

Properties of Vendor 2

| | | 2023 Adjusted
Properties
(excluding the
2024
Terminated
Properties) as
agreed on
1 December
2023 | 2023 Adjusted
Properties
(excluding the
2024
Terminated
Properties) as
agreed on
6 June 2024 | 2024 Adjusted
Target
Properties as
agreed on
6 September
2024 | Consideration
Paid | Construction
Status | Mortgage
Status |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Original
Properties as
agreed on
29 April 2022 | 2022 Adjusted
Properties as
agreed on
12 July 2022 | 2023 Adjusted
Properties as
agreed on
1 December
2023 | 2024 Adjusted
Target
Properties as
agreed on
6 September
2024 | 2024 | 2024 | 2024 | 2024 |
| 2 units located in Ji Mo District (即墨區), Qingdao, Shandong Province, with an
aggregate building area of approximately 20,311.9 square meters held by
Vendor 2 | | | | | RMB210,960,000 | Expected to be
completed by
December
2025 | Expected to be
discharged
by 2026 |

Properties of Vendor 3

| Original Properties as
agreed on 29 April
2022 | 2022 Adjusted
Properties as agreed
on 12 July 2022 | 2023 Adjusted
Properties as agreed
on 1 December 2023 | 2023 Adjusted
Properties (excluding
the 2024 Terminated
Properties) as agreed
on 6 June 2024 | 2024 Adjusted Target
Properties as agreed
on 6 September 2024 |
| --- | --- | --- | --- | --- |
| 1 unit located in Dong
Bao District (東寶
區), Jingmen, Hubei
Province, with a
building area of
approximately
2,957.2 square
meters held by
Vendor 3 | 1 unit located in
Dongbao District
(東寶區), Jingmen,
Hubei Province, with
a building area of
approximately
4,787.1 square
meters held by
Vendor 3 | Such properties held by
Vendor 3 were
terminated for sale
pursuant to the
Second Supplemental
Agreement | Not applicable | Not applicable |

LETTER FROM THE BOARD

Properties of Vendor 4

		2023	2023 Adjusted	2024 Adjusted
Original	2022	Adjusted	Properties	Target
Properties	Adjusted	Properties	(excluding the	Properties)
as agreed	Properties	as agreed on	2024 Terminated	as
on 29 April	as agreed on	1 December	Properties) as	agreed on
2022	12 July 2022	2023	agreed on	6 June 2024	Consideration Paid	Construction Status	Mortgage Status
Not applicable	25 units located in Huoju Development Zone (火炬開發區), Zhongshan, Guangdong Province, with a building area of approximately 12,656.5 square meters currently held by Vendor 4	21 units located in Huoju Development Zone (火炬開發區), Zhongshan, Guangdong Province, with a building area of approximately 11,861.2 square meters held by Vendor 4	12 units located in Huoju Development Zone (火炬開發區), Zhongshan, Guangdong Province, with a building area of approximately 6,446.7 square meters held by Vendor 4	RMB108,680,000	Completed in 2011	Expected to be discharged by 2026
		4 units of properties for commercial use located in Huoju Development Zone (火炬開發區), Zhongshan, Guangdong Province, with an aggregate building area of approximately 795.3 square meters were terminated for sale pursuant to the Third Supplemental Agreement	9 units of properties for commercial use located in Huoju Development Zone (火炬開發區), Zhongshan, Guangdong Province, with an aggregate building area of approximately 5,414.5 square meters were terminated for sale pursuant to the Fourth Supplemental Agreement

13 -

LETTER FROM THE BOARD

Properties of Vendor 5

| | | | 2023 Adjusted
Properties
(excluding the 2024
Terminated
Properties) as
agreed on
6 June 2024 | 2024 Adjusted
Target Properties as
agreed on
6 September 2024 |
| --- | --- | --- | --- | --- |
| Original Properties
as agreed on
29 April 2022 | 2022 Adjusted
Properties as agreed
on 12 July 2022 | 2023 Adjusted
Properties as agreed
on 1 December 2023 | | |
| Not applicable | 2 units located in
Huishan District
(惠山區), Wuxi,
Jiangsu Province,
with a building
area of
approximately
4,071.9 square
meters held by
Vendor 5 | Such properties held
by Vendor 5 were
terminated for sale
pursuant to the
Second
Supplemental
Agreement | Not applicable | Not applicable |

Properties of Vendor 6

| | | | 2023 Adjusted
Properties
(excluding the 2024
Terminated
Properties) as
agreed on
6 June 2024 | 2024 Adjusted
Target Properties as
agreed on
6 September 2024 |
| --- | --- | --- | --- | --- |
| Original Properties
as agreed on
29 April 2022 | 2022 Adjusted
Properties as agreed
on 12 July 2022 | 2023 Adjusted
Properties as agreed
on 1 December 2023 | | |
| Not applicable | 2 commercial units located in Honghuagang District (紅花崗區),
Zunyi (遵義), Guizhou Province, with a building area of
approximately 16,695.4 square meters held by Vendor 6 | | | Such 2 commercial
units with a
building area of
approximately
16,695.4 square
meters held by
Vendor 6 were
terminated for sale
pursuant to the
Fourth
Supplemental
Agreement |

14 -

LETTER FROM THE BOARD

On 1 November 2024 (after trading hours), Kinetic Qinhuangdao and Zhuhai Seedland entered into the Maoming Share Transfer Agreement and the Fifth Supplemental Agreement in relation to the Maoming Acquisition and the 2024 Third Tranche Terminated Properties. The purpose of this circular is to provide further information in relation to the Maoming Share Transfer Agreement and the Maoming Acquisition.

As at the Latest Practicable Date, Kinetic Qinhuangdao has already paid RMB803,000,000 (inclusive of value-added tax) to the Vendors for the purchase of the 2024 Adjusted Target Properties, among which the consideration paid for the 2024 Third Tranche Terminated Properties amounts to approximately RMB57,990,000 (the “2024 Third Tranche Terminated Properties Paid Amount”) and among which the registrations of the properties with the total consideration of approximately RMB542,184,000 have not yet been completed (the “Pre-existing Outstanding Paid Amount”).

15 -

LETTER FROM THE BOARD

As at the Latest Practicable Date, the details of the set off amount, balance of the Pre-existing Outstanding Paid Amount, value of the terminated properties and balance of the value of the remaining target properties under the 2022 Property Purchase Agreement and each supplemental agreement are as follows:

Each of relevant agreements	Set-off Amount	Balance of the Pre-existing Outstanding Paid Amount (after deducting the Set-off Amount)	Value of the terminated properties^{(Note)}	Balance of the value of the remaining target properties (after deducting the value of the terminated properties)
2022 Property Purchase Agreement dated 29 April 2022	–	–	–	RMB769,014,000
Supplemental Agreement dated 12 July 2022	–	RMB803,000,000	–	RMB809,480,000
Second Supplemental Agreement dated 1 December 2023	RMB220,000,000	RMB583,000,000	RMB218,250,000	RMB591,230,000
Third Supplemental Agreement dated 6 June 2024	RMB40,816,000	RMB542,184,000	RMB40,890,000	RMB550,340,000
Fourth Supplemental Agreement dated 6 September 2024	RMB230,700,000	RMB311,484,000	RMB230,700,000	RMB319,640,000
Fifth Supplemental Agreement dated 1 November 2024	RMB57,750,000	RMB253,734,000	RMB57,990,000	RMB261,650,000

Note: The value of the terminated properties under each supplemental agreement represents the aggregate value of the properties selected by the parties which approximately equals, to the extent possible, the set-off amount under each supplemental agreement.

LETTER FROM THE BOARD

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG

The principal terms of the Maoming Share Transfer Agreement are described below:

Date: 1 November 2024

Parties:
(i) Kinetic Qinhuangdao (as the Buyer)
(ii) Zhuhai Seedland (as the Seller)

Assets to be Acquired: 100% equity interests of each of Maoming Shengda and Maoming Shengcheng

Consideration and Payment Terms:

The total consideration for the Maoming Acquisition is RMB70,000,000, among which the consideration for acquisition of Maoming Shengda amounts to RMB47,850,000 and the consideration for acquisition of Maoming Shengcheng amounts to RMB22,150,000. The corporate income tax of RMB12,250,000 payable by Zhuhai Seedland arising from the Maoming Acquisition will be paid by Kinetic Qinhuangdao, and has been deducted from the total consideration of RMB70,000,000 such that the payable consideration for the Maoming Acquisition becomes RMB57,750,000 (the “Payable Consideration”).

The Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount.

Closing:

Subject to the closing conditions specified in the Maoming Share Transfer Agreement having been waived or satisfied, the completion of the Maoming Acquisition shall take place on the date when the registration with competent authorities of the transfer of the 100% equity interests of both Maoming Shengda and Maoming Shengcheng from Zhuhai Seedland to Kinetic Qinhuangdao is completed.

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LETTER FROM THE BOARD

Conditions Precedent to Closing:

Completion of the Maoming Acquisition is conditional upon all the following conditions having been fulfilled, or waived by Kinetic Qinhuangdao:

(i) all necessary approvals and consents required for the consummation of the Maoming Acquisition shall have been obtained;

(ii) the equity interests of Maoming Shengda and Maoming Shengcheng (the “Target Equity Interests”), which are currently subject to a pledge and freeze in favour of JIC Trust Co., Ltd. (the “JIC Trust”), shall have been released; and

(iii) Kinetic Qinhuangdao shall have completed the due diligence with respect to Maoming Shengda and Maoming Shengcheng (including but not limited to financial, legal and business due diligence), and shall be satisfied with the outcome of such due diligence.

Although the Maoming Share Transfer Agreement does not specify which of the aforementioned conditions precedent may be waived by Kinetic Qinhuangdao, Kinetic Qinhuangdao will not waive conditions precedent (i) and (ii). Additionally, condition precedent (iii) has been fulfilled as at the Latest Practicable Date.

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LETTER FROM THE BOARD

The 100% equity interests of the Target Companies are currently subject to a pledge provided as security in favour of JIC Trust for an amount up to RMB168,000,000 (the “Outstanding Amount”) and are frozen pursuant to execution orders of the Intermediate People’s Court of Hangzhou City, Zhejiang Province (the “Hangzhou Court”). After completion of all relevant regulatory approvals applicable to the Maoming Acquisition, Kinetic Qinhuangdao will enter into an agreement (the “Settlement Agreement”) with, among others, JIC Trust to become one of the obligors to settle the Outstanding Amount, and upon the execution of the Settlement Agreement, JIC Trust will provide assistance to discharge the pledge over the Target Equity Interests and to apply to the Hangzhou Court to release the frozen Target Equity Interests as well as the seized assets of the Target Companies by stages against payment by Kinetic Qinhuangdao to JIC Trust by installment. Whilst the payments to be made by Kinetic Qinhuangdao to JIT Trust pursuant to the Settlement Agreement are non-refundable by nature, the terms of the Settlement Agreement also specify the actions that JIT Trust would need to take, including application to the Hangzhou Court to unfreeze the Target Equity Interests, and the corresponding time limit against receipt of each such payment. Considering the time required to complete all of the above procedures, the Company expects that the Closing shall take place following the release of the pledge and unfreeze of the Target Equity Interests by 30 June 2025.

In view that the rights and obligations of each of Kinetic Qinhuangdao and JIT Trust are clearly set out in the Settlement Agreement, the Directors consider that the interest of the Group is properly safeguarded. In the event that the Target Equity Interests are not transferred to Kinetic Qinhuangdao free of pledge and in unfrozen status after payments made to JIT Trust by Kinetic Qinhuangdao pursuant to the Settlement Agreement, the Group will take all appropriate actions including but not limited to taking legal actions to enforce its rights.

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LETTER FROM THE BOARD

Key Representations and Warranties:

Zhuhai Seedland represents and warrants to Kinetic Qinhuangdao that multiple statements under the Maoming Share Transfer Agreement are true, accurate, complete and not misleading as of the closing date of the Maoming Acquisition, including, among others, (i) the Target Equity Interests held by Zhuhai Seedland are free and clear of all encumbrances of any kind other than those disclosed to Kinetic Qinhuangdao as of the signing date of the Maoming Share Transfer Agreement; (ii) the information relating to Maoming Shengda and Maoming Shengcheng (including but not limited to the financial statements, properties, assets, contracts, qualifications, litigation, arbitration, administrative penalties, labor and tax) disclosed by Zhuhai Seedland to Kinetic Qinhuangdao is true, accurate, complete and effective; and (iii) each of the representations and warranties contained in the Maoming Share Transfer Agreement is true, accurate, complete and not misleading in all material aspects.

(i) the 2024 Third Tranche Terminated Properties would no longer be sold to Kinetic Qinhuangdao;

(ii) the rights and obligations between the 2024 Further Adjusted Properties Vendors and Kinetic Qinhuangdao in respect of the 2024 Third Tranche Terminated Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement) are terminated with effect from the date of the Fifth Supplemental Agreement;

(iii) the amount equaling to the 2024 Third Tranche Terminated Properties Paid Amount minus the Payable Consideration (i.e. RMB240,000) shall be considered as the payment for the 2024 Adjusted Target Properties (excluding the 2024 Third Tranche Terminated Properties); and

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(iv) the Equity Consideration shall be subject to adjustment if the actual total debt amounts of the Target Companies as at 30 September 2024, as audited by the auditor appointed by Kinetic Qinhuangdao, is larger than the debt amounts as at 30 September 2024 provided to Kinetic Qinhuangdao for the purpose of valuation of the Target Companies and the 2024 Further Adjusted Properties Vendors shall provide additional properties (the "Additional Properties") with a value not less than the extra debt amounts (the "Extra Debt Amounts"), to Kinetic Qinhuangdao. The adjusted Equity Consideration shall be calculated as below:

$$
\text{Adjusted Equity Consideration} = \text{RMB70,000,000} - \text{Extra Debt Amounts}
$$

The audited financial statements of the Target Companies for the nine months ended 30 September 2024 are expected to be available on or before the end of February 2025.

Although the Maoming Share Transfer Agreement did not specify any maximum cap for the Extra Debt Amounts, nothing has come to the attention of the Group that the Target Companies have other material indebtedness not disclosed to Kinetic Qinhuangdao after taking into account the due diligence results conducted by Kinetic Qinhuangdao and its professional advisers on, among others, the legal and financial affairs of the Target Companies. In addition, Zhuhai Seedland represents and warrants to Kinetic Qinhuangdao under the Maoming Share Transfer Agreement on the completeness and accuracy of the financial statements of the Target Companies disclosed to Kinetic Qinhuangdao.

In the event that the Company fails to obtain all necessary approvals for the Maoming Share Transfer Agreement and the Maoming Acquisition (including but not limited to the approvals of the Shareholders and the Stock Exchange (if needed)) or the Closing does not take place by 30 June 2025, the Maoming Share Transfer Agreement and the Fifth Supplemental Agreement shall be terminated.

LETTER FROM THE BOARD

Pursuant to the Fifth Supplemental Agreement, the scope of the 2024 Third Tranche Terminated Properties is set out below:

Properties of Vendor 4

No.	Location	Area (Square Meter)	Use	Property Title Certificate No.	Mortgage
1.	Commercial Building 1, Lily Garden, Bo Ai Avenue, Zhongshan Torch Development Zone	1,746.03	Commercial	Guangdong Land Properties No. C6707072	Yes
2.	Room 15, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	117.19	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006410	Yes
3.	Room 2, 2nd Floor, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	1,577.68	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006424	Yes
	Total	3,440.90

In selecting the 2024 Third Tranche Terminated Properties, the Company has taken into account various factors such as whether the properties are subject to mortgages provided as security in favour of creditors, whether these creditors have initiated legal proceedings against the relevant Vendors, whether these legal proceedings are likely to be resolved within a short period of time, whether the relevant properties are affected by foreclosure or reorganization procedures, and the value of properties.

After taking into consideration of the facts that (i) the properties held by Vendor 4 are more easily divisible into multiple units, while Vendor 2 holds two commercial buildings whose market value exceeds the Payable Consideration and are practically more difficult to divide into multiple units; (ii) the aggregate value of the 2024 Third Tranche Terminated Properties roughly equals the Payable Consideration; (iii) Vendor 2 is actively raising funds to complete the construction of the relevant 2024 Adjusted Target Properties (excluding the 2024 Third Tranche Terminated Properties) by applying for government subsidies for ensuring timely delivery of properties (保交付資金) and for bank loans and is negotiating with its creditors to discharge the mortgages over such properties by expediting the sales of properties to generate proceeds for repayment of debts owed to the creditors through market campaigns and promotions; and (iv) by acquiring 100% equity interest of Maoming Shengda and Maoming Shengcheng, the Company is

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able to protect and safeguard its interests as the Payable Consideration shall be fully set off against the Pre-existing Outstanding Paid Amount, the Company considers the above selection criteria in determining the scope of the 2024 Third Tranche Terminated Properties is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The Additional Properties will be selected from the 2024 Third Tranche Terminated Properties after arm's length negotiations between the Group and Zhuhai Seedland mainly based on the actual total debt amounts. The value of the Additional Properties shall roughly equal to the Extra Debt Amounts, and Kinetic Qinhuangdao will further enter into a supplemental agreement with the 2024 Further Adjusted Properties Vendors to determine the final adjusted scope. The 2024 Further Adjusted Properties Vendors shall continue to perform their obligations attributable to the Additional Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement).

After excluding the 2024 Third Tranche Terminated Properties, the 2024 Adjusted Target Properties are as follows:

Properties of Vendor 2

No.	Location	Area (Square Meter)	Use	Property Title Certificate No.	Mortgage	Notes
1.	Land no. 66, Tian Yun Shan 3rd Avenue, Aoshanwei Street Office, Ji Mo District (即墨區)	8,661.29	Commercial	Shandong (2019) Ji Mo City Property Title No. 0002182	Yes	Building 3 201-209, 301-309, 401-409, 501-509, 601-609, 701-709, 801-809, 901-909, 1001-1009, 1101-1109, 1201-1209
2.	Land no. 66-3, Tian Yun Shan 3rd Avenue, Aoshanwei Street Office, Ji Mo District (即墨區)	11,650.57	Commercial	Shandong (2019) Ji Mo City Property Title No. 0002184	Yes	Building 6 401-415, 1101-1128, 1201-1228, 1301-1328, 1401-1428, 1501-1528, 1601-1628, 1701-1707, 1710-1728, 501-528
	Total	20,311.86
	Consideration Paid:	RMB210,960,000

LETTER FROM THE BOARD

Properties of Vendor 4

No.	Location	Area (Square Meter)	Use	Property Title Certificate No.	Mortgage
1.	Room 5, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	124.52	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006377	Yes
2.	Room 13, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	184.44	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006406	Yes
3.	Room 16, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	143.06	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006412	Yes
4.	Room 19, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	144.37	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006417	Yes
5.	Room 7, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	134.46	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006386	Yes
6.	Room 10, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	179.08	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006401	Yes
7.	Room 11, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	180.11	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006402	Yes
8.	Room 18, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	44.81	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006415	Yes

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LETTER FROM THE BOARD

No.	Location	Area (Square Meter)	Use	Property Title Certificate No.	Mortgage
9.	Room 1, 2nd Floor, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	1,870.93	Commercial	Guangdong Land Zhongshan Properties Title No. 0112006420	Yes
	Total	3,005.78
	Consideration Paid:	RMB50,690,000

BASIS OF DETERMINATION OF CONSIDERATION

The consideration for the Maoming Acquisition was arrived at after arm's length negotiations between the Group and Zhuhai Seedland with reference to, among other things, the valuation of 100% equity interests of Maoming Shengda and Maoming Shengcheng of RMB52,255,000 and RMB24,190,000, respectively, as at 30 September 2024 according to the valuation report prepared by Asia-Pacific Consulting and Appraisal Limited (the "Valuation Report"), the Independent Valuer appointed by the Company, using the asset-based approach. A total consideration of RMB70,000,000 represents a discount of 8.43% on the total valuations of both Maoming Shengda and Maoming Shengcheng.

The Company's Assessment on the Valuation

In reviewing the Valuation Report prepared by the Independent Valuer, the Company considers the valuation is fair and reasonable after having conducted the following works:

With respect of the qualification of the Independent Valuer

The Board has:

(i) carried out some research based on publicly available information to make sure that the Independent Valuer is a well-established professional appraisal and consultancy firm experienced in providing professional advice on corporate valuation and pricing, helping clients solve their problems encountered in corporate financing, capital investment and mergers or acquisitions;

(ii) obtained the relevant qualifications and credentials of the team members involved in the valuation of the equity interest of the Target Companies and understood that they have been appointed as the valuer by over 10 Hong Kong listed companies in the past. Besides, Jack W. J. Li, the signatory of the Valuation

LETTER FROM THE BOARD

Report, is a Chartered Financial Analyst (CFA) and a Chartered Member of Royal Institution of Chartered Surveyors (RICS). He has extensive experience in providing consulting and evaluation services for different types of companies listed in major capital markets in Hong Kong, the United States, Singapore, and the United Kingdom;

(iii) conducted public searches to check that there is no relationship among the Independent Valuer, the Target Companies, the Seller and their respective connected persons from the management, operational and financial perspectives;

(iv) discussed with the Independent Valuer and obtained their confirmation that they are independent from the Target Companies, the Seller and their respective connected persons; and

(v) confirmed with the Independent Valuer that they are independent from the Group and its respective connected persons.

With respect of the valuation methodology

The Board noted that the Independent Valuer adopted the asset-based approach for valuing the Target Companies. The Board has considered and discussed with the Independent Valuer about the applicable valuation methodologies and understood that the asset-based approach would be the most appropriate valuation method for the Target Companies as at 30 September 2024 after considering the following factors. On such basis, the Board is of the view that the valuation methodology adopted is fair and reasonable.

(i) Nature of the Target Companies: the Target Companies primarily hold tangible assets, including lands and properties under construction, which are essential for their operations. An asset-based approach allows for a direct assessment of these underlying assets' value;

(ii) Market Conditions: given the current market conditions, including fluctuations in income-generating properties and the challenges faced in the revenue approach, an asset-based valuation provides a more stable and reliable estimate of value; and

(iii) Industry Practices: the asset-based approach is commonly used in the properties development industry for similar companies, making it a well-recognized method that stakeholders can understand and trust.

With respect to the major assumptions of the Valuation Report

The Board has reviewed the major assumptions in the Valuation Report, which have been set out in the section headed "Valuation Assumptions" of the Valuation Report in Appendix IA of this circular. Based on the information obtained and available so far in the

LETTER FROM THE BOARD

due diligence process and the discussion with the management of the Target Companies, the Board is not aware of any fact or circumstance which is contradictory to or materially diverts from any of these assumptions, and considers it reasonable and necessary for the Independent Valuer to rely on these assumptions to produce the Valuation Report. On this basis, the Board considers each of these assumptions fair and reasonable.

INFORMATION ON MAOMING SHENGDA AND MAOMING SHENGCHENG

Maoming Shengda is a limited liability company incorporated in the PRC and is currently held directly by Zhuhai Seedland as to 100%. It principally engages in real estate development and operation in the PRC.

Maoming Shengcheng is a limited liability company incorporated in the PRC and is currently held directly by Zhuhai Seedland as to 100%. It principally engages in real estate development and operation in the PRC.

Set out below are the financial information of each of Maoming Shengda and Maoming Shengcheng as extracted from its unaudited management accounts for the years ended 31 December 2023 and 2022:

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue (RMB)	Net loss before taxation (RMB)	Net loss after taxation (RMB)	Revenue (RMB)	Net loss before taxation (RMB)	Net loss after taxation (RMB)
Maoming Shengda	-	5,924,000	5,924,000	30,000	12,261,000	12,261,000
Maoming Shengcheng	-	8,000	8,000	-	158,000	158,000

The unaudited book value of the total assets of each of Maoming Shengda and Maoming Shengcheng as of 30 September 2024 amounted to RMB445,182,798 and RMB102,475,263, respectively. The total assets of each of Maoming Shengda and Maoming Shengcheng as of 30 September 2024 amounted to approximately RMB499,665,000 and approximately RMB101,958,000, respectively, as appraised by the Independent Valuer on the announcement of the Company dated 4 November 2024.

Furthermore, the management of the Target Companies has made adjustments to reclassify the negative tax payable, approximately RMB11,812,000 for Maoming Shengda and approximately RMB1,071,000 for Maoming Shengcheng, from liabilities to tax prepayment under assets. This adjustment brings the total assets of Maoming Shengda and Maoming Shengcheng to approximately RMB456,995,000 and RMB103,547,000, respectively. Consequently, the total assets of Maoming Shengda and Maoming Shengcheng as of 30 September 2024 amounted to approximately RMB511,477,000 and RMB103,030,000, respectively, as appraised by the Independent Valuer.

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LETTER FROM THE BOARD

The unaudited book value of the total net liabilities of Maoming Shengda as of 30 September 2024 amounted to approximately RMB2,227,000 while the unaudited book value of the total net assets of Maoming Shengcheng as of 30 September 2024 amounted to approximately RMB24,707,000. Such financial information of the Target Companies has taken into consideration the Outstanding Amount.

The paid-up share capital of both Maoming Shengda and Maoming Shengcheng is RMB25,000,000. The equity interests of both Maoming Shengda and Maoming Shengcheng are 100% held by Zhuhai Seedland.

INFORMATION ON THE GROUP AND PARTIES INVOLVED IN THIS TRANSACTION

The Group is principally engaged in the extraction and sales of coal products.

The 2024 Further Adjusted Properties Vendors are companies incorporated in the PRC with limited liability and principally engage in real estate development and property management. As of the Latest Practicable Date, the 2024 Further Adjusted Properties Vendors are ultimately beneficially owned by Mr. Zhang Liang, Johnson, the settlor and beneficiary of Zhang Family Overseas Limited, which holds 100% equity interests in King Lok Holdings Limited, the controlling shareholder of the Company, as to respectively 100% (with regards to Vendor 4) and 90% (with regards to Vendor 2).

Zhuhai Seedland is a limited liability company incorporated in the PRC and is held indirectly by Mr. Zhang Liang, Johnson as to 100%. It principally engages in the real estate development and operation and property management services in the PRC.

REASON FOR AND BENEFITS OF MAOMING ACQUISITION

As at the Latest Practicable Date, Kinetic Qinhuangdao has already paid RMB803,000,000 (inclusive of value-added tax) to the Vendors for the acquisition of 2024 Adjusted Target Properties pursuant to the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement). However, the overall progress of the property registration procedures in relation to the 2024 Adjusted Target Properties, including in particular the 2024 Third Tranche Terminated Properties, have not yet been completed as at the Latest Practicable Date. To protect and safeguard the interests of the Company and the Shareholders, the Group has been proactively exploring opportunities and identifying suitable assets to replace all or part of the 2024 Adjusted Target Properties which are subject to delay in registration with other assets that can be secured from the Vendors, Zhuhai Seedland and Mr. Zhang Liang, Johnson. Accordingly, Kinetic Qinhuangdao, as an indirectly wholly-owned subsidiary of the Company, has secured the 100% equity interests of each of Maoming Shengda and Maoming Shengcheng from Zhuhai Seedland under the Maoming Share Transfer Agreement, and has agreed with Zhuhai Seedland that the Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount.

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LETTER FROM THE BOARD

The terms and conditions of the Maoming Share Transfer Agreement were negotiated on an arm's length basis between the relevant parties therein. The Directors (excluding the independent non-executive Directors who reserve their views pending receipt of advice from the Independent Financial Adviser) consider that the terms of the Maoming Share Transfer Agreement, including the Equity Consideration, are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

Maoming Shengda and Maoming Shengcheng principally engage in real estate development and sales business and the Group could benefit from the future operation and management of Maoming Shengda and Maoming Shengcheng through their ongoing Royal Ivy Phase I and Phase II, respectively.

The Royal Ivy Project is located in Maonan District of Maoming City in Guangdong Province (廣東省茂名市茂南區). The Royal Ivy Phase I comprises 6 buildings for commercial and residential use under construction and is expected to be completed by the third quarter of 2025. The gross floor area of the Royal Ivy Phase I is 89,572.90 m², comprising 504 residential units, 91 apartments, and 13 commercial units. There are five towers currently under construction. Towers 1 and 2 have been completed and delivered, while Towers 5 and 6 have been structurally topped out. Tower 3 is still in the basement construction phase. Currently, Towers 1, 2, and 5 are available for sales, while Tower 6 has not yet received its pre-sale permit. The Royal Ivy Phase II comprises 3 buildings for commercial and residential use under construction and is expected to be completed by the last quarter of 2026. The gross floor area of the Royal Ivy Phase II is 44,158.30 m², consisting of 244 residential units, 24 apartments, and 26 commercial units. There are two towers and one low-rise apartment building, which are currently in the basement construction phase and have not yet been launched for sale.

The estimated construction costs required to complete the Royal Ivy Project are approximately RMB225,589,000. The Group plans to fund these costs through a combination of internal resources and pre-sales revenue. The conditions for applying for a pre-sale permit include having obtained land certificates, planning permits, and construction permits. Additionally, at least two-thirds of the structural work on high-rise buildings shall have been completed, and low-rise buildings shall have reached the topping-off stage. This strategic approach ensures that the Group maintains adequate liquidity while meeting our construction commitments. The construction is anticipated to be completed by the third quarter of 2025 for the Royal Ivy Phase I and the last quarter of 2026 for the Royal Ivy Phase II. Based on the construction progress as detailed above, the Group expects that it will be able to launch pre-sales for the Royal Ivy Phase I in the second quarter of 2025.

The Group has practical and first hand experience in overseeing property construction projects, starting with the acquisition of Taiyuan Hetai, which was approved by the Shareholders in March 2024. The Group's project management team employs best practices in construction oversight to ensure adherence to timelines, budgets, and quality standards. To effectively manage the remaining construction work for the Royal Ivy Project, the Group's project management team will closely monitor and supervise the project's construction progress.

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LETTER FROM THE BOARD

Recently, the officials from several PRC government departments announced measures to promote the stable development of the real estate market. Key initiatives include:

"Four Cancellations": Eliminating purchase and sales restrictions, price limits, and distinctions between types of residential properties.

"Four Reductions": Lowering housing loan rates, reducing down payment requirements, decreasing interest on existing loans, and lessening taxes on property transactions.

"Two Increases": Adding 1 million units for urban village and dilapidated housing renovations, and increasing the credit scale for "white list" projects to RMB4 trillion by year-end.

Taking into account of the favourable policies in the real estate market recently announced by the PRC government, the Group is expected to generate income in the form of sale proceeds through selling the residential units, shops, apartments and garages under the Royal Ivy Project.

Based on the above and after considering (i) the Maoming Acquisition will have no adverse financial impact on the principal business activities of the Group; (ii) the Maoming Acquisition provides excellent opportunity for the Group to diversify its revenue stream and increase the income and profits of the Group; and (iii) the Group has practical and first hand experience in real estate development industry, the Board is of the view that the Maoming Acquisition is in the interests of the Company and its Shareholders as a whole.

Ms. Zhang Lin, a non-executive Director, being an associate of Mr. Zhang Liang, Johnson, has abstained from voting on the Board resolution approving the Maoming Share Transfer Agreement and the Maoming Acquisition.

IMPLICATION UNDER THE LISTING RULES

As the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules in respect of the Maoming Acquisition are more than 5% but less than 25%, the Maoming Acquisition constitutes a discloseable transaction, and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, the 2024 Further Adjusted Properties Vendors and Zhuhai Seedland are ultimately beneficially owned by Mr. Zhang Liang, Johnson as to respectively 100% (with regards to Vendor 4); 90% (with regards to Vendor 2); and 100% (with regards to Zhuhai Seedland). As at the date of this circular, Mr. Zhang Liang, Johnson is interested in 62.96% shares of the Company held through King Lok Holdings Limited, the controlling shareholder of the Company, by reason of being a settlor of the Zhang Family Overseas Limited, a discretionary family trust for the benefit of himself and his family members. As such, the 2024 Further Adjusted Properties Vendors and Zhuhai Seedland are associates of Mr. Zhang Liang, Johnson, and thus connected persons of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios in respect of the Maoming Acquisition are more than 5%, the

LETTER FROM THE BOARD

Maoming Acquisition constitutes a connected transaction of the Company, and is subject to the announcement, annual reporting, and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Maoming Share Transfer Agreement and the Maoming Acquisition are subject to approval by the Independent Shareholders at the EGM and a resolution will be proposed to the Independent Shareholders for their consideration and approval, if thought fit. King Lok Holdings Limited, which holds 5,307,450,000 Shares, representing 62.96% of the Company's shareholding, of which Mr. Zhang Liang, Johnson is interested by way of being a settlor of the Zhang Family Overseas Limited, will abstain from voting at the EGM. Mr. Zhang Li and his spouse, collectively holding 955,482,000 Shares, representing 11.33% of the Company's shareholding, will also abstain from voting at the EGM. Based on the above, an aggregate of 6,262,932,000 Shares, representing approximately 74.29% of the Company's shareholding, will abstain from voting at the EGM. The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

EXTRAORDINARY GENERAL MEETING

The EGM will be held by the Company at 18/F, 80 Gloucester Road, Wan Chai, Hong Kong on Friday, 3 January 2025 at 2:30 p.m., to consider and if thought fit, to approve, among other things, the Maoming Share Transfer Agreement and the Maoming Acquisition. A form of proxy for use at the EGM is enclosed with this circular.

Any Shareholder and his or her or its associates with a material interest in the resolution will abstain from voting on the resolution to be proposed at the EGM. To the best knowledge, information and belief of the Directors having made all reasonable enquires, save for Mr. Zhang Li, Mr. Zhang Liang, Johnson and their respective associates, no other Shareholders were required to abstain from voting on the resolution at the EGM as at the Latest Practicable Date.

The notice convening the EGM is set out on pages EGM-1 to EGM-3 of this circular.

For those who intend to direct a proxy to attend the EGM, please complete the form of proxy and return the same in accordance with the instructions printed thereon. In order to be valid, the above documents must be delivered to the Company's share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for the EGM or any adjournment thereof.

You are urged to complete and return the form of proxy whether or not you will attend the EGM. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM (or any subsequent meetings following the adjournments thereof) should you wish to do so.

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LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all independent non-executive Directors has been formed to advise the Independent Shareholders on the reasonableness and fairness in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition. Rainbow Capital (HK) Limited, the Independent Financial Adviser, has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition. The letter from the Independent Board Committee is set out on page 33 of this circular and the letter from the Independent Financial Adviser containing its advice is set out on pages 34 to 64 of this circular.

RECOMMENDATION

The Directors (including the independent non-executive Directors, after considering the advice from the Independent Financial Adviser) consider that while the Maoming Share Transfer Agreement and the Maoming Acquisition are not in the ordinary and usual course of business of the Group, they are on normal commercial terms, and the terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole. As such, the Directors recommend that the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM.

ADDITIONAL INFORMATION

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

By Order of the Board
Kinetic Development Group Limited
Ju Wenzhong
Chairman and Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

方星发展

KINETIC DEVELOPMENT GROUP

Kinetic Development Group Limited

力量發展集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1277)

19 December 2024

Dear Independent Shareholders,

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG

We refer to the circular of the Company dated 19 December 2024 (the "Circular") of which this letter forms a part. Unless the context otherwise requires, terms defined in this letter shall have the same meanings as those defined in the Circular.

We have been appointed by the Board to form the Independent Board Committee to consider and advise the Independent Shareholders as to whether, in our opinion, the entering into of the Maoming Share Transfer Agreement and the Maoming Acquisition is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Having considered the terms of the Maoming Share Transfer Agreement and the advice of the Independent Financial Adviser in relation thereto as set out on pages 34 to 64 of the letter of the Independent Financial Adviser in the Circular, we are of the opinion that while the entering into of the Maoming Share Transfer Agreement and the Maoming Acquisition are not in the ordinary and usual course of business of the Group, they are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to approve the entering into of the Maoming Share Transfer Agreement and the Maoming Acquisition at the EGM.

Yours faithfully,

Independent Board Committee

Ms. Liu Peilian

Independent non-executive

Director

Mr. Chen Liangnuan

Independent non-executive

Director

Ms. Xue Hui

Independent non-executive

Director

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Rainbow Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation in this circular.

RAINBOW

RAINBOW CAPITAL (HK) LIMITED

宏博資本有限公司

19 December 2024

To the Independent Board Committee and the Independent Shareholders

Kinetic Development Group Limited

18th Floor

80 Gloucester Road

Wan Chai

Hong Kong

Dear Sir or Madam,

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition, details of which are set out in the "Letter from the Board" (the "Letter from the Board") contained in the circular issued by the Company to the Shareholders dated 19 December 2024 (the "Circular"), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Property Purchase Agreement are terminated with effect from the date of the Supplemental Agreement, which effectively replaced the 2022 Property Purchase Agreement.

On 6 September 2024, Kinetic Qinhuangdao entered into the Fourth Supplemental Agreement with the 2024 Adjusted Properties Vendors, the Company, Seedland Smart Service and Mr. Zhang Liang, Johnson, pursuant to which, among others, (i) the 2024 Further Terminated Properties would no longer be sold to Kinetic Qinhuangdao; and (ii) the rights and obligations between the 2024 Adjusted Properties Vendors and Kinetic Qinhuangdao in respect of the 2024 Further Terminated Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement and the Third Supplemental Agreement) are terminated with effect from the date of the Fourth Supplemental Agreement. On the same date, the Company, Seedland Smart Service and Seedlife entered into the Seedlife Share Purchase Agreement, pursuant to which, among others, the Company (either directly or through its affiliate) agreed to acquire, and Seedland Smart Service agreed to sell 100% equity interests of Seedlife for a total consideration of RMB423,000,000.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Further Cash Payment) within 30 days of a written notice by the buyer if the buyer cannot obtain all necessary approvals required by the Listing Rules, as well as an interest calculated based on the one-year loan prime rate published by the People's Bank of China from the date of payment by the buyer of the relevant amount up to actual date of repayment. Save for the aforementioned, all other terms and conditions set forth in the Seedlife Share Purchase Agreement shall remain unchanged and in full force and effect. The Seedlife Acquisition is subject to independent shareholders' approval by way of a poll at the extraordinary meeting to be held on Friday, 3 January 2025 at 2:00 p.m..

On 1 November 2024 (after trading hours), Kinetic Qinhuangdao and Zhuhai Seedland entered into the Maoming Share Transfer Agreement, pursuant to which, among others, Kinetic Qinhuangdao agreed to acquire, and Zhuhai Seedland agreed to sell, 100% equity interests of each of Maoming Shengda and Maoming Shengcheng for a total consideration of RMB70,000,000 (the "Equity Consideration"). The corporate income tax of RMB12,250,000 payable by Zhuhai Seedland arising from the Maoming Acquisition will be paid by Kinetic Qinhuangdao, and has been deducted from the total consideration of RMB70,000,000 such that the payable consideration for the Maoming Acquisition becomes RMB57,750,000 (the "Payable Consideration"). The Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount (as defined below).

In addition, on the same date, Kinetic Qinhuangdao entered into the Fifth Supplemental Agreement with Vendor 2 and Vendor 4 (the "2024 Further Adjusted Properties Vendors") as well as Zhuhai Seedland, pursuant to which, among others, (i) the 2024 Third Tranche Terminated Properties would no longer be sold to Kinetic Qinhuangdao; and (ii) the rights and obligations between the 2024 Further Adjusted Properties Vendors and Kinetic Qinhuangdao in respect of the 2024 Third Tranche Terminated Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement) are terminated with effect from the date of the Fifth Supplemental Agreement.

As at the Latest Practicable Date, Kinetic Qinhuangdao has already paid RMB803,000,000 (inclusive of value-added tax) to the Vendors for the purchase of 2024 Adjusted Target Properties, among which the consideration paid for the 2024 Third Tranche Terminated Properties amounts to approximately RMB57,990,000 (the "2024 Third Tranche Terminated Properties Paid Amount") and among which the registrations of the properties with the total consideration of approximately RMB542,184,000 have not yet been completed (the "Pre-existing Outstanding Paid Amount").

As at the Latest Practicable Date, the 2024 Further Adjusted Properties Vendors and Zhuhai Seedland are ultimately beneficially owned by Mr. Zhang Liang, Johnson as to respectively

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

100% (with regards to Vendor 4); 90% (with regards to Vendor 2); and 100% (with regards to Zhuhai Seedland). As at the Latest Practicable Date, Mr. Zhang Liang, Johnson is interested in 62.96% shares of the Company held through King Lok Holdings Limited, the controlling shareholder of the Company, by reason of being a settlor of the Zhang Family Overseas Limited, a discretionary family trust for the benefit of himself and his family members. As such, the 2024 Further Adjusted Properties Vendors and Zhuhai Seedland are associates of Mr. Zhang Liang, Johnson, and thus connected persons of the Company under Chapter 14A of the Listing Rules. As the applicable percentage ratios in respect of the Maoming Acquisition are more than 5%, the Maoming Acquisition constitutes a connected transaction of the Company, and is subject to the announcement, annual reporting, and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Company will seek approval from the Independent Shareholders in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition by way of a poll at the EGM. In view of the interest above, Mr. Zhang Liang, Johnson, Mr. Zhang Li and their respective associates will be required to abstain from voting at the EGM.

The Independent Board Committee, comprising all the three independent non-executive Directors, namely Ms. Liu Peilian, Mr. Chen Liangnuan and Ms. Xue Hui, has been formed to advise the Independent Shareholders on whether (i) the entering into of the Maoming Share Transfer Agreement and the Maoming Acquisition are conducted in the ordinary and usual course of business of the Group; and (ii) the terms of the Maoming Share Transfer Agreement and the Maoming Acquisition are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole, and advise the Independent Shareholders as to voting. We, Rainbow Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard.

As at the Latest Practicable Date, we did not have any relationships or interests with the Group, Mr. Zhang Liang, Johnson, Zhuhai Seedland, Maoming Shengda and Maoming Shengcheng that could reasonably be regarded as relevant to our independence. We have acted as the independent financial adviser to the independent board committee and the independent shareholders of the Company in relation to (i) a discloseable and connected transaction in relation to the acquisition and subscription of shares in a target company, details of which are set out in the circular of the Company dated 30 June 2023; (ii) a discloseable and connected transaction in respect of the Second Supplemental Agreement, details of which are set out in the circular of the Company dated 21 February 2024; and (iii) a connected transaction in respect of the Seedlife Share Purchase Agreement, details of which are set out in the circular of the Company dated 25 November 2024. Other than that, there was no engagement between the Group, Mr. Zhang Liang, Johnson, Zhuhai Seedland, Maoming Shengda or Maoming Shengcheng and us in the last two years. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no other arrangements exist whereby we had received any fees or benefits from the Group or any other party to the Maoming Acquisition. Accordingly, we are independent from the Company pursuant to the requirement under Rule 13.84 of the Listing Rules and therefore we are qualified to give

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

independent advice in respect of the Maoming Share Transfer Agreement and the Maoming Acquisition.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true as at the Latest Practicable Date and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations provided to us by the Directors and the management of the Group are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so until the date of the Circular.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Group or its respective substantial shareholders, subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering the fairness and reasonableness of the Maoming Share Transfer Agreement and the Maoming Acquisition, we have taken into account the principal factors and reasons set out below:

1. Background information on the Group

The Group is principally engaged in the extraction and sales of coal products. As a leading integrated coal enterprise in China, the Group's business activities operate through the whole coal industry chain, covering coal production, washing, loading, transportation and trading.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the consolidated financial information of the Group for (i) the two years ended 31 December 2023 ("FY2022" and "FY2023", respectively) as extracted from the annual report of the Company for FY2023; and (ii) the six months ended 30 June 2023 and 2024 ("6M2023" and "6M2024", respectively) as extracted from the interim report of the Company for 6M2024 (the "2024 Interim Report"):

(i) Financial performance

| | FY2022
RMB'000
(audited) | FY2023
RMB'000
(audited) | 6M2023
RMB'000
(unaudited) | 6M2024
RMB'000
(unaudited) |
| --- | --- | --- | --- | --- |
| Revenue | 6,155,830 | 4,745,069 | 1,492,198 | 2,532,355 |
| Cost of sales | (2,132,372) | (1,942,031) | (675,293) | (977,668) |
| Gross profit | 4,023,458 | 2,803,038 | 816,905 | 1,554,687 |
| Other incomes and losses, net | (65,535) | (27,000) | (15,545) | 58,762 |
| Net (losses) gains on fair value changes of financial assets | (39,860) | 29,278 | 15,296 | 15,597 |
| Selling expenses | (23,264) | (16,938) | (7,239) | (20,677) |
| Administrative expenses | (225,417) | (257,146) | (140,310) | (174,431) |
| Profit from operations | 3,669,382 | 2,531,232 | 669,107 | 1,433,938 |
| Share of profits of associates | 14,538 | 11,109 | 1,769 | 12,015 |
| Finance costs | (49,893) | (101,440) | (37,515) | (43,877) |
| Profit before taxation | 3,634,027 | 2,440,901 | 633,361 | 1,402,076 |
| Income tax expense | (977,712) | (368,178) | (64,286) | (316,909) |
| Profit attributable to the Shareholders | 2,664,533 | 2,077,831 | 570,236 | 1,095,281 |

FY2023 compared to FY2022

Revenue of the Group decreased by approximately $22.9\%$ from approximately RMB6,155.8 million for FY2022 to approximately RMB4,745.1 million for FY2023. Such decrease was mainly due to (a) the decrease in the Group's average selling price of the coal products; and (b) the decrease in the sales volume of the coal products of the Group as a result of the faults, fracture

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

zones, increase in pressure in roof plate and a slow progression of mining in the coal mining works of Dafanpu Coal Mine of the Group in the first half of 2023.

Gross profit of the Group decreased by approximately 30.3% from approximately RMB4,023.5 million for FY2022 to approximately RMB2,803.0 million for FY2023. Such decrease was mainly due to (a) the decrease in revenue as stated above; and (b) the decrease in the Group's gross profit margin from approximately 65.4% for FY2022 to approximately 59.1% for FY2023 as a result of the decrease in the average selling price of the Group's coal products.

The Group recorded a profit attributable to the Shareholders of approximately RMB2,077.8 million for FY2023, which represented a decrease of approximately 22.0% from approximately RMB2,664.5 million for FY2022. Such decrease was mainly due to (a) the decrease in revenue and gross profit as stated above; (b) the increase in administrative expenses by approximately RMB31.7 million primarily attributable to the increase in staff cost during FY2023; and (c) the increase in finance costs by approximately RMB51.5 million primarily attributable to the increase in average balance of interest-bearing liabilities during FY2023.

6M2024 compared to 6M2023

Revenue of the Group increased by approximately 69.7% from approximately RMB1,492.2 million for 6M2023 to approximately RMB2,532.4 million for 6M2024, which was primarily due to the resumption of normal production levels at the Group's Dafanpu Coal Mine.

In line with the increase in revenue as stated above, gross profit of the Group increased by approximately 90.3% from approximately RMB816.9 million for 6M2023 to approximately RMB1,554.7 million for 6M2024.

The Group recorded a profit attributable to the Shareholders of approximately RMB1,095.3 million for 6M2024, which represented a significant increase of approximately 92.1% from approximately RMB570.2 million for 6M2023. Such increase was mainly due to (a) the increase in revenue and gross profit as stated above; and (b) the turnaround from net other losses of approximately RMB15.5 million for 6M2023 to net other incomes of approximately RMB58.8 million for 6M2024 mainly due the increase in government grants and interest income and the decrease in donation, which was partially offset by (a) the increase in selling expenses by approximately RMB13.4 million as a result of the increase in marketing related expenses; and (b) the increase in administrative expenses by approximately RMB34.1 million due to the increase in staff cost during 6M2024.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) Financial position

	As at 31 December		As at 30 June
	2022 RMB'000 (audited)	2023 RMB'000 (audited)	2024 RMB'000 (unaudited)
Non-current assets, including:	7,880,432	8,780,727	9,219,664
Property, plant and equipment	1,716,365	2,483,678	2,928,013
Intangible assets	3,210,599	3,233,648	3,216,848
Prepayments for proposed acquisitions	2,546,892	2,449,881	2,211,882
Current assets, including:	1,612,209	2,157,187	2,569,233
Financial assets at fair value through profit or loss	190,899	220,592	269,035
Inventories	110,213	115,274	1,565,858
Trade and other receivables	220,718	194,053	164,536
Pledged and restricted deposits	475,903	727,784	158,614
Cash at bank and on hand	551,866	734,143	345,442
Total assets	9,492,641	10,937,914	11,788,897
Current liabilities, including:	1,815,415	2,572,076	3,032,879
Trade and other payables	518,906	1,066,741	1,209,627
Contract liabilities	196,283	68,351	817,308
Bank loans and other borrowing	300,000	1,033,000	598,260
Income tax payable	784,328	402,086	378,088
Non-current liabilities, including:	1,360,436	945,639	895,681
Bank loans and other borrowing	583,000	269,800	214,250
Long-term liabilities	638,992	583,936	576,131
Net current assets/(liabilities)	(203,206)	(414,889)	(463,646)
Total liabilities	3,175,851	3,517,715	3,928,560
Equity attributable to the Shareholders	6,328,794	7,367,850	7,817,789

As at 30 June 2024, non-current assets of the Group amounted to approximately RMB9,219.7 million, which mainly included (a) property, plant and equipment of approximately RMB2,928.0 million, primarily consisting of the Group's building, machinery and equipment, mining structures and construction in progress; (b)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

intangible assets of approximately RMB3,216.8 million, primarily consisting of mining rights arising from the Group’s acquisition of Ningxia Kinetic Mining Co., Ltd. (whose former name is Ningxia Sunshine Mining Co., Ltd.) (“Ningxia Kinetic”), a subsidiary which is principally engaged in coal mine construction, extraction and sale of coal products; and (c) prepayments for proposed acquisitions of approximately RMB2,211.9 million which was primarily attributable to the prepayments for the acquisitions of 75% equity interests in Liupanshui Changlin Real Estate Development Co., Ltd. and properties.

As at 30 June 2024, current assets of the Group amounted to approximately RMB2,569.2 million, which mainly included (a) financial assets at fair value through profit or loss of approximately RMB269.0 million, representing trust wealth management investments subscribed by the Group and trading securities held by the Group; (b) inventories of approximately RMB1,565.9 million, primarily consisting of properties under development; (c) trade and other receivables of approximately RMB164.5 million; and (d) cash at bank and on hand of approximately RMB345.4 million.

As at 30 June 2024, current liabilities of the Group amounted to approximately RMB3,032.9 million, which mainly included (a) trade and other payables of approximately RMB1,209.6 million; (b) contract liabilities of approximately RMB817.3 million; (c) bank loans and other borrowing of approximately RMB598.3 million which were secured with effective interest rates ranging from 5.00% to 5.50% per annum; and (d) income tax payable of approximately RMB378.1 million.

As at 30 June 2024, non-current liabilities of the Group amounted to approximately RMB895.7 million, which mainly included (a) bank loans and other borrowing of approximately RMB214.3 million which were secured with effective interest rate ranging from 5.00% to 5.50% per annum; and (b) long-term liabilities of approximately RMB576.1 million primarily consisting of present value of payables in relation to mining rights.

As at 30 June 2024, the Group had equity attributable to the Shareholders of approximately RMB7,817.8 million with net current liabilities of approximately RMB463.6 million.

(iii) Overall comment

The financial performance of the Group fluctuated for the periods under review as impacted by the supply and demand of the domestic coal market and the domestic coal policy. In 2023, the Group’s sales volume and the average selling price of coal product both declined as a result of the downward pressure of market coal prices and the decrease of production volume due to the unfavourable underground mining conditions of the Group’s Dafanpu Coal Mine in the first half of 2023. In response, the Group adopted effective measures in a proactive manner in the mining aspect, so

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

that the production and operation have gradually resumed normal in May 2023. In the first half of 2024, the Group's Dafanpu Coal Mine no longer experienced production disruptions as in the corresponding previous period. With the improvement in extraction efficiency, the Group's production volume of coal increased significantly year-on-year and returned to the expected normal level during 6M2024.

As disclosed in the 2024 Interim Report, the Group is currently constructing Yong'an Coal Mine and Weiyi Coal Mine. Yong'an Coal Mine is expected to be put into operation in the second half of 2024 and reach full capacity in 2027, while Weiyi Coal Mine is expected to put into operation in the second half of 2025 and reach full capacity in 2027. The Group will be able to tap into the coking coal business, and further increase the production capacity of coking coal by 2.1 million tons per year, thus breaking through the limitations arising from operating a single coal mine with a single coal type, and the coal mine project in Ningxia is expected to be one of the main driving forces of the growth in results in the future. On the other hand, the demand side of the coal market is expected to remain its resilience with the gradual recovery of the economy and the fact that thermal power will maintain its dominant position, as shown in the significant year-on-year increase in the number of new thermal power generating units during the period of the 14th Five-Year Plan. As such, we consider the Group's prospects shall continue to be positive.

As advised by the management of the Group, on the basis of the steady development of the principal coal business, the Group is diversifying its ancillary business and actively promoting the acquisition of quality projects by utilising surplus funds to strive for remarkable returns for the Shareholders. As such, the Maoming Acquisition represents a suitable investment opportunity for the Group to diversify its income stream to ride on the bottom of the Chinese property market and the future disposal of the Royal Ivy Project could potentially bring returns to the Shareholders through future capital appreciation of the Royal Ivy Project owned by Maoming Shengda or Maoming Shengcheng.

2. Information on Maoming Shengda and Maoming Shengcheng

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below are the financial information of each of Maoming Shengda and Maoming Shengcheng as extracted from its unaudited management accounts for the two years ended 31 December 2023:

| | FY2022
RMB'000
(unaudited) | FY2023
RMB'000
(unaudited) |
| --- | --- | --- |
| Maoming Shengda | | |
| Revenue | 30 | - |
| Net loss before taxation | 12,261 | 5,924 |
| Net loss after taxation | 12,261 | 5,924 |
| Maoming Shengcheng | | |
| Revenue | - | - |
| Net loss before taxation | 158 | 8 |
| Net loss after taxation | 158 | 8 |

The unaudited book value of the total assets of each of Maoming Shengda and Maoming Shengcheng as of 30 September 2024 amounted to approximately RMB445.2 million and approximately RMB102.5 million, respectively. The total assets of each of Maoming Shengda and Maoming Shengcheng as of 30 September 2024 amounted to approximately RMB499.7 million and approximately RMB102.0 million, respectively, as appraised by the Independent Valuer on the announcement of the Company dated 4 November 2024.

The paid-up share capital of both Maoming Shengda and Maoming Shengcheng is RMB25,000,000. The equity interests of both Maoming Shengda and Maoming Shengcheng are 100% held by Zhuhai Seedland.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Reasons for and benefits of the Maoming Acquisition

With reference to the Letter from the Board, as at the Latest Practicable Date, Kinetic Qinhuangdao has already paid RMB803,000,000 (inclusive of value-added tax) to the Vendors for the acquisition of the 2024 Adjusted Target Properties pursuant to the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement). However, the overall progress of the property registration procedures in relation to the 2024 Adjusted Target Properties, including in particular the 2024 Third Tranche Terminated Properties, have not yet been completed as at the Latest Practicable Date. To protect and safeguard the interests of the Company and the Shareholders, the Group has been proactively exploring opportunities and identifying suitable assets to replace all or part of the 2024 Adjusted Target Properties which are subject to delay in registration with other assets that can be secured from the Vendors, Zhuhai Seedland and Mr. Zhang Liang, Johnson. Accordingly, Kinetic Qinhuangdao, as an indirectly wholly owned subsidiary of the Company, has secured the 100% equity interests of each of Maoming Shengda and Maoming Shengcheng from Zhuhai Seedland under the Maoming Share Transfer Agreement, and has agreed with Zhuhai Seedland that the Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount.

In assessing whether there is a breach of contractual obligations on the part of the Vendors regarding the 2024 Third Tranche Terminated Properties, we have (i) reviewed the Supplemental Agreement and noted that the Supplemental Agreement did not impose a long stop date to obligate the Vendors to complete the construction works and/or discharge of the mortgages in relation to the 2024 Third Tranche Terminated Properties within a specified time period; and (ii) discussed with the PRC legal advisers to the Company and understood that as there was no long stop date of the Supplemental Agreement, the Vendors were not contractually in violation of the terms of the Supplemental Agreement by failing to complete the construction works and/or discharge of the mortgages for the 2024 Third Tranche Terminated Properties as at the Latest Practicable Date. On the other hand, as advised by the management of the Group, the Company has been actively following up with the Vendors on the progress of the construction works and the release of the mortgages. Taking into account that (i) the Vendors are not in breach of their contractual obligations under the Supplemental Agreement; (ii) the Company has been actively negotiating with the Vendors in good faith for the completion of the construction works and the release of the mortgages; and (iii) the Vendors have been actively negotiating with their creditors for the discharge of the mortgages, we concur with the management of the Group that it is difficult for the Company to claim a breach of contractual obligations regarding the 2024 Third Tranche Terminated Properties whose property registration procedures have been significantly delayed on the part of the Vendors.

On the other hand, Maoming Shengda and Maoming Shengcheng principally engage in real estate development and sales business and the Group could benefit from the future operation and management of Maoming Shengda and Maoming Shengcheng through their

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ongoing Royal Ivy Phase I and Phase II, respectively. The Royal Ivy Project is located in Maonan District of Maoming City in Guangdong Province (廣東省茂名市茂南區). The Royal Ivy Phase I comprises 6 buildings for commercial and residential use under construction and is expected to be completed by the third quarter of 2025. The Royal Ivy Phase II comprises 3 buildings for commercial and residential use under construction and is expected to be completed by the last quarter of 2026. The estimated construction costs required to complete the Royal Ivy Project are approximately RMB225,589,000. The Group plans to fund these costs through a combination of internal resources and pre-sales revenue. The conditions for applying for a pre-sale permit include having obtained land certificates, planning permits, and construction permits. Additionally, at least two-thirds of the structural work on high-rise buildings shall have been completed, and low-rise buildings shall have reached the topping-off stage. This strategic approach ensures that the Group maintains adequate liquidity while meeting its construction commitments. The construction is anticipated to be completed by the third quarter of 2025 for the Royal Ivy Phase I and the last quarter of 2026 for the Royal Ivy Phase II. Based on the construction progress as detailed above, the Group expects that it will be able to launch pre-sales for the Royal Ivy Phase I in the second quarter of 2025. Taking into account of the favourable policies in the real estate market recently announced by the PRC government, the Group is expected to generate income in the form of sale proceeds through selling the residential units, shops, apartments and garages under the Royal Ivy Project.

As discussed in the section headed "1. Background information on the Group" above, the Group is diversifying its business and actively promoting the acquisition of quality projects by utilising surplus funds to strive for remarkable returns for the Shareholders. The Company has tapped into property market in the PRC since 2022 through the acquisition of certain properties. Since the entering into of the Property Purchase Agreement, the Company has built its own property management team by recruiting personnel with relevant experience in the real estate sector, so as to further enhance its capability to oversee the construction of property projects and to track the property market for best terms in relation to property transactions. The Group's property management team has monitored the construction of the Ziteng Project, a commercial property development project located in Taiyuan Hi-Tech Industrial Development Zone* (太原高新技術產業開發區) developed by Taiyuan Hetai and acquired by the Company in early 2024. The Group's property management team employs best practices in construction oversight to ensure adherence to timelines, budgets and quality standards. To effectively manage the remaining construction work for the Royal Ivy Project, the Group's property management team will closely monitor and supervise the project's construction progress. As the Company would acquire 100% equity interests in Maoming Shengda and Maoming Shengcheng at a discount (i.e. approximately 8.4%) to the market value of Maoming Shengda and Maoming Shengcheng as at 30 September 2024, subject to market conditions at the time of sale, the sale price of the Royal Ivy Project is expected to be higher than the acquisition cost paid by the Company which would provide potential additional return to the Shareholders. Having considered that (i) the Group is able to finance the remaining construction cost of the Royal Ivy Project through its internal resources and pre-sales revenue of the Royal Ivy Project

For identification purpose only

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and therefore the Maoming Acquisition will have no adverse financial impact on the principal business activities of the Group; and (ii) the Group is able to leverage its practical and first hand experience in real estate development industry based on its past acquisition experience, we consider the Maoming Acquisition to be fair and reasonable.

Taking into account that (i) as advised by the management of the Group, it is difficult to claim a breach of contractual obligations regarding the 2024 Third Tranche Terminated Properties whose property registration procedures have been significantly delayed on the part of the Vendors; (ii) the Maoming Acquisition represents an opportunity for the Group to set off against the 2024 Third Tranche Terminated Properties Paid Amount to protect and safeguard the interests of the Group and the Shareholders; (iii) the Maoming Acquisition is in line with the development strategy of the Group to actively promote the acquisition of quality projects to strive for remarkable returns for the Shareholders; and (iv) the outlook and trends of the property market in the PRC and Maoming, as discussed in the section headed "4. Industry overview" below, we concur with the Directors that although the Maoming Acquisition is not conducted in the ordinary and usual course of the business of the Group, it is in the interest of the Company and the Shareholders as a whole.

4. Industry overview

Set out below are the gross domestic product ("GDP") of the PRC and Maoming during the period from 2019 to 2023:

	2019	2020	2021	2022	2023	CAGR
GDP of the PRC (RMB billion)	98,652	101,357	114,924	120,472	126,058	6.3%
GDP of Maoming (RMB billion)	325.2	327.9	369.8	390.5	398.7	5.2%

Source: National Bureau of Statistics of China

As shown in the table above, the Chinese GDP has increased from approximately RMB98,652 billion in 2019 to approximately RMB126,058 billion in 2023 with a compound annual growth rate ("CAGR") of approximately 6.3% while the GDP of Maoming has increased from approximately RMB325.2 billion in 2019 to approximately RMB398.7 billion in 2023 with a CAGR of approximately 5.2%, indicating a solid economic foundation for both the PRC in the national level and Maoming in national level during the past five years. According to the International Monetary Fund, the Chinese economy is expected to continue to grow with a projected GDP growth rate of approximately 5.0% and 4.5% in 2024 and 2025, respectively (source: https://www.imf.org/en/News/Articles/2024/05/28/pr24184-china-imf-staff-completes-2024-art-iv-mission#:~:text=%E2%80%9CChina's%20economic%20growth%20is%20projected,data%20and%20recent%20policy%20measures.).

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With regard to the prospect of the real estate sector in the PRC, the Chinese government has introduced various policies to facilitate the positive cycle and healthy development of the property industry and reinforce the status of real estate being a major industry in the PRC such as (i) relaxing the restrictions on property purchases, loans and sales; (ii) reducing proportion of down payment and reducing home loan interest; and (iii) increasing the subsidies for property purchase. In November 2022, the People's Bank of China and China Banking and Insurance Regulatory Commission jointly issued the "Notice on Properly Performing Work for Current Financial Support for the Stable and Healthy Development of the Real Estate Market" (關於做好當前金融支持房地產市場平穩健康發展工作的通知), which listed out 16 measures for stabilising the Chinese property sector, including but not limited to, supporting the reasonable deferral of property development loans and credit loans, encouraging financial institutions to provide policy support for special loans that ensure the delivery of housing projects and supporting rational demand for personal housing loans. The press release of the meeting of the Political Bureau of the Communist Party of China Central Committee (中共中央政治局) held on 24 July 2023 stressed that (i) the real-estate policies should be adjusted and optimised in a timely manner; and (ii) the policy toolkit should be well utilised with city-specific measures to better meet residents' essential housing demand and their needs for better housing, and to foster the steady and healthy development of the real estate market. Furthermore, on 17 October 2024, the Minister of Housing and Urban-Rural Development announced new measures to cement signs of stabilisation in the property sector and stressed that all eligible real estate projects will be included in the "white list" mechanism and that their reasonable financing needs will be met through loans.

In addition, with regard to the prospect of the real estate sector in Maoming, the local government has issued the "Measures to Further Promote the Healthy and Stable Development of the Property Market in Maoming" (茂名市進一步促進房地產市場健康穩定發展若干措施) in September 2024, which introduced 15 measures to stabilise and support property development, such as increasing individual housing credit support, implementing tax incentives for property transactions, accelerating the improvement of municipal utilities around property projects and enhancing fiscal and tax policy support on property developers.

Although the growth in the Chinese property market may be sluggish in the current period, taking into account (i) the recovery of the economy of the PRC and Maoming; and (ii) the Chinese and Maoming government's dedication to facilitate the healthy development of the property market, we concur with the Directors that the outlook for the property market in the PRC and Maoming will be cautiously optimistic in the long run.

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5. Principal terms of the Maoming Share Transfer Agreement

Set out below is a summary of the principal terms of the Maoming Share Transfer Agreement. Independent Shareholders are advised to read further details of the Maoming Share Transfer Agreement as set out in the Letter from the Board.

Date : 1 November 2024

Parties : (i) Kinetic Qinhuangdao (as the Buyer); and
(ii) Zhuhai Seedland (as the Seller)

Assets to be acquired : 100% equity interests of each of Maoming Shengda and Maoming Shengcheng

Consideration and payment terms : The total consideration for the Maoming Acquisition is RMB70,000,000, among which the consideration for acquisition of Maoming Shengda amounts to RMB47,850,000 and the consideration for acquisition of Maoming Shengcheng amounts to RMB22,150,000. The corporate income tax of RMB12,250,000 payable by Zhuhai Seedland arising from the Maoming Acquisition will be paid by Kinetic Qinhuangdao, and has been deducted from the total consideration of RMB70,000,000 such that the Payable Consideration for the Maoming Acquisition becomes RMB57,750,000.

The Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount.

The Equity Consideration was arrived at after arm's length negotiations between the Group and Zhuhai Seedland with reference to, among other things, the valuation of 100% equity interests of Maoming Shengda and Maoming Shengcheng of RMB52,255,000 and RMB24,190,000, respectively, as at 30 September 2024 (the "Valuation") according to the valuation report prepared by the Independent Valuer appointed by the Company, using the asset-based approach.

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Closing

Conditions precedent to the Closing

Completion of the Maoming Acquisition is conditional upon, among others, all necessary approvals and consents required for the consummation of the Maoming Acquisition shall have been obtained; and the equity interests of Maoming Shengda and Maoming Shengcheng, which are currently subject to a pledge and freeze in favour of JIC Trust Co., Ltd., shall have been released.

In addition, on the same date, Kinetic Qinhuangdao entered into the Fifth Supplemental Agreement with the 2024 Further Adjusted Properties Vendors as well as Zhuhai Seedland, pursuant to which, among others, (i) the 2024 Third Tranche Terminated Properties would no longer be sold to Kinetic Qinhuangdao; (ii) the rights and obligations between the 2024 Further Adjusted Properties Vendors and Kinetic Qinhuangdao in respect of the 2024 Third Tranche Terminated Properties under the 2022 Property Purchase Agreement (as amended by the Supplemental Agreement, the Second Supplemental Agreement, the Third Supplemental Agreement and the Fourth Supplemental Agreement) are terminated with effect from the date of the Fifth Supplemental Agreement; (iii) the amount equaling to the 2024 Third Tranche Terminated Properties Paid Amount minus the Payable Consideration (i.e. RMB240,000) shall be considered as the payment for the 2024 Adjusted Target Properties (excluding the 2024 Third Tranche Terminated Properties); and (iv) the Equity Consideration shall be subject to adjustment if the actual total debt amounts of the Target Companies as at 30 September 2024, as audited by the auditor appointed by Kinetic Qinhuangdao, is larger than the debt amounts as at 30 September 2024 provided to Kinetic Qinhuangdao for the purpose of valuation of the Target Companies and the 2024 Further Adjusted Properties Vendors shall provide additional properties (the "Additional Properties"), with a value not less than the extra debt amounts (the "Extra Debt Amounts"), to Kinetic Qinhuangdao. The adjusted Equity Consideration shall be calculated as below:

$$
\text{Adjusted Equity Consideration} = \text{RMB70,000,000} - \text{Extra Debt Amounts}
$$

The audited financial statements of the Target Companies for the nine months ended 30 September 2024 are expected to be available on or before the end of February 2025.

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Pursuant to the Fifth Supplemental Agreement, the scope of the 2024 Third Tranche Terminated Properties is set out below:

Properties of Vendor 4

No	Location	Property title certificate no.	Area (square meter)	Use	Mortgage
1	Commercial Building 1, Lily Garden, Bo Ai Avenue, Zhongshan Torch Development Zone	Guangdong Land Properties No. C6707072	1,746.03	Commercial	Yes
2	Room 15, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	Guangdong Land Zhongshan Properties Title No. 0112006410	117.19	Commercial	Yes
3	Room 2, 2nd Floor, Tower 3, Lily Garden, No. 113 Bo Ai 7th Avenue, Zhongshan Torch Development Zone	Guangdong Land Zhongshan Properties Title No. 0112006424	1,577.68	Commercial	Yes
	Total		3,440.90

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As disclosed in the Letter from the Board, in selecting the 2024 Third Tranche Terminated Properties, the Company has taken into account various factors such as whether the properties are subject to mortgages provided as security in favour of creditors, whether these creditors have initiated legal proceedings against the relevant Vendors, whether these legal proceedings are likely to be resolved within a short period of time, whether the relevant properties are affected by foreclosure or reorganization procedures, and the value of properties.

Having considered that (i) all of the 2024 Third Tranche Terminated Properties are subject to mortgages which have not been discharged given the financial constraints encountered by Vendor 4; (ii) the aggregate value of the 2024 Third Tranche Terminated Properties roughly equals the Payable Consideration; (iii) Vendor 2 is actively raising funds to complete the construction of the relevant 2024 Adjusted Target Properties (excluding the 2024 Third Tranche Terminated Properties) by applying for government subsidies for ensuring timely delivery of properties (保交付資金) and for bank loans and is negotiating with its creditors to discharge the mortgages over such properties by expediting the sales of properties to generate proceeds for repayment of debts owed to the creditors through market campaigns and promotions; and (iv) by acquiring 100% equity interest of Maoming Shengda and Maoming Shengcheng, the Company is able to protect and safeguard its interests as the Payable Consideration shall be fully set off against the Pre-existing Outstanding Paid Amount, we concur with the Directors that the above selection criteria in determining the scope of the 2024 Third Tranche Terminated Properties is fair and reasonable and in the interest of the Company and the Shareholders as a whole. Although all of the 2024 Adjusted Target Properties are subject to mortgages which have not been discharged, having considered that (i) the aggregate value of the 2024 Third Tranche Terminated Properties roughly equals the Payable Consideration which allows the Group to fully set off against the Pre-existing Outstanding Paid Amount in the same amount as the Payable Consideration; and (ii) the properties held by Vendor 4 are more easily divisible into multiple units, while Vendor 2 holds two commercial buildings whose market value exceeds the Payable Consideration and are practically more difficult to divide into multiple units, we consider the scope of the 2024 Third Tranche Terminated Properties to be fair and reasonable.

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Taking into account (i) the reasons for the benefits of the Maoming Acquisition as detailed above; (ii) the Equity Consideration is determined with reference to the valuation of 100% equity interests of Maoming Shengda and Maoming Shengcheng conducted by the Independent Valuer; and (iii) the Payable Consideration shall be fully set off by the 2024 Third Tranche Terminated Properties Paid Amount so that the Group is not required to pay the majority of the Equity Consideration of RMB57,750,000 to Zhuhai Seedland at the Closing, we consider that the terms of the Maoming Share Transfer Agreement are on normal commercial terms which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

6. Valuation of Maoming Shengda and Maoming Shengcheng

As disclosed in the Letter from the Board, the Equity Consideration was arrived at after arm's length negotiations between the Group and Zhuhai Seedland with reference to, among other things, the valuation of 100% equity interests of Maoming Shengda and Maoming Shengcheng of RMB52,255,000 and RMB24,190,000, respectively, as at 30 September 2024 (the "Business Valuation") according to the valuation report prepared by the Independent Valuer using the asset-based approach (the "Business Valuation Report"). The full text of the Business Valuation Report is set out in Appendix IA to the Circular, and the Independent Shareholders are recommended to read in full.

When assessing the fairness and reasonableness of the Business Valuation, we have reviewed the Business Valuation Report and noted that the only difference between the book value and the market value of Maoming Shengda's assets and liabilities as at 30 September 2024 is the revaluation surplus of the Royal Ivy Phase I and the only difference between the book value and the market value of Maoming Shengcheng's assets and liabilities as at 30 September 2024 is the revaluation deficit of the Royal Ivy Phase II. The carrying amount of the Royal Ivy Phase I and the Royal Ivy Phase II is approximately RMB336,818,000 and approximately RMB102,117,000 as at 30 September 2024, respectively, while it was valued at RMB391,300,000 and approximately RMB101,600,000 as at 30 September 2024, respectively (the "Property Valuation"), according to the valuation report prepared by the Independent Valuer (the "Property Valuation Report"). The full text of the Property Valuation Report is set out in Appendix IB to the Circular, and the Independent Shareholders are also recommended to read in full.

We have conducted an interview with the Independent Valuer to inquire about their qualifications and experience in valuing similar property interests in the PRC, as well as their independence. In our review of the engagement letter between the Company and the Independent Valuer and other relevant information provided by the Independent Valuer, we noted that the Independent Valuer is a qualified asset appraisal firm to perform valuation works in the PRC, and the responsible persons of the Independent Valuer are chartered surveyors who have years of experience in conducting valuation and possess sufficient qualifications and experience in similar assets in the PRC. We have also enquired with the Independent Valuer as to their independence, and were given to understand that the Independent Valuer is independent of the Group, Mr. Zhang Liang, Johnson, Zhuhai

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Seedland, Maoming Shengda and Maoming Shengcheng. The Independent Valuer confirmed that apart from normal professional fees paid or payable to them in connection with their appointment as the Independent Valuer, no other arrangements exist whereby they will receive any fees or benefits from the Group, Mr. Zhang Liang, Johnson, Zhuhai Seedland, Maoming Shengda or Maoming Shengcheng. We have also reviewed the terms of engagement of the Independent Valuer, in particular in relation to their scope of work. We noted that their scope of work is appropriate to form the opinion required to be given and there are no limitations on the scope of work which might adversely impact on the degree of assurance given by the Independent Valuer in the Business Valuation and the Property Valuation. We have also performed work as required under note (1)(d) to Rule 13.80 of the Listing Rule in relation to the Independent Valuer and its work as regards the Business Valuation and the Property Valuation. Based on the above, we are satisfied with the terms of engagement of the Independent Valuer as well as their qualification and experience for performing the Business Valuation and the Property Valuation, and we are of the view that the scope of work of the Independent Valuer is appropriate. We therefore consider it appropriate to rely on their work and opinion.

(i) The Business Valuation

In respect of the Business Valuation, we have reviewed the Business Valuation Report and discussed with the Independent Valuer the methodology, basis and assumptions adopted in arriving at the Business Valuation. We understood that the Independent Valuer has considered the three generally accepted approaches, namely, market approach, income approach and asset-based approach and adopted the asset-based approach in the Business Valuation due to the following considerations:

(a) the selection of the valuation approach in valuing Maoming Shengda and Maoming Shengcheng is based on, among other criteria, the merits and limitations of each of the aforesaid valuation methodologies, the quantity and quality of the information provided, accessibility to available data, availability of relevant market information, the business nature, financial performance and financial position of Maoming Shengda and Maoming Shengcheng, professional judgment and technical expertise;

(b) income approach is not considered because it requires significant level of unobservable and subjective assumptions to be made to arrive at, among others, detailed operational information and long-term financial projections, to which the valuation is highly dependent on the financial projection of Maoming Shengda and Maoming Shengcheng prepared by the management of the Group. The historical operating situation of the Royal Ivy Project is difficult to be used as the reference data to predict its future annual earnings, and the expected earnings brought by its overall profitability are difficult to be objectively and reasonably predicted, which cannot provide a

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basis for the use of income method for valuation. In addition, there is no new project development plan of Maoming Shengda and Maoming Shengcheng as at the valuation date;

(c) market approach is not considered because there were insufficient public companies or market transactions which are comparable to the Royal Ivy Project in terms of the operating stage, operating risk, financial risk and other factors of the Royal Ivy Project; and

(d) asset-based approach uses the balance sheet as at the valuation date of the appraised entity as the basis for determining the value of the appraisal subject by reasonably appraising the fair value of each of the identifiable assets and liabilities of the subject. It estimates each asset and liability of an enterprise from the perspective of the current reconstruction of its assets and liabilities, and summarises them to obtain the value of the shareholders' equity. As the core assets of Maoming Shengda and Maoming Shengcheng are properties (i.e. the Royal Ivy Project) as at the valuation date and there is no new project or new business in the future, the asset-based approach could relatively fairly reflect the value of all shareholders' equity value of Maoming Shengda and Maoming Shengcheng on the valuation date.

We have also performed market research on recent circulars published by companies listed on the Stock Exchange from 1 May 2024 to the date of the Maoming Share Transfer Agreement (being approximately six months before the date of the Maoming Share Transfer Agreement) in relation to acquisition or disposal of equity interests in property related companies with a majority of assets being property interests, for which the consideration was determined with reference to independent valuations. We have, on a best effort basis, identified an exhaustive list of 9 comparable acquisition or disposal transactions (the "Comparable Transactions").

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The details of the Comparable Transactions are set out below:

Date of circular	Company name (stock code)	Subject of valuation	Principal business of the target company or group	Valuation approach
30 October 2024	China Jinmao Holdings Group Limited (817.HK)	The entire shareholders’ equity of Jin Mao Sanya Resort Hotel Company Limited	Principally engaged in the holding and operation of Hilton Sanya Resort and Spa	Asset-based approach
25 September 2024	ITC Properties Group Limited (199.HK)	50% equity interests in Bayshore Ventures JV Ltd.	Principally engaged in the holding and operating of the beneficial interests in a property	Asset-based approach
30 August 2024	Glory Sun Land Group Limited (299.HK)	100% equity interest of Shantou Taisheng Technology Limited	Principally engaged in a development and construction project	Asset-based approach
26 August 2024	Grand Baoxin Auto Group Limited (1293.HK)	All shareholders’ equity of Hangzhou Baoxin Enterprise Co., Ltd.	Principally engaged in the holding and leasing of a property	Asset-based approach
2 August 2024	New World Development Company Limited (17.HK)	100% equity interest of Shenzhen Tiande Real Estate Development Company	Principally engaged in the development, construction, sale, and operation of a composite development project	Asset-based approach
28 June 2024	Zhongzheng International Company Limited (943.HK)	100% equity interest in Hong Kong Zhongzheng City Investment Limited	Principally engaged in property development	Asset-based approach

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Date of circular	Company name (stock code)	Subject of valuation	Principal business of the target company or group	Valuation approach
28 June 2024	Zhongzheng International Company Limited (943.HK)	100% equity interest in Chengde Zhongzheng Jinyu Investment Development Co., Ltd.	Principally engaged in a primary land development project	Asset-based approach
7 June 2024	Yuexiu Property Company Limited (123.HK)	Net asset value of Guangzhou Quanxiu Property Development Co., Ltd.	Principally engaged in property development	Asset-based approach
10 May 2024	SRE Group Limited (1207.HK)	100% equity interest in Shanghai Jinxin Property Co., Ltd.	Principally engaged in real estate development business	Asset-based approach

As disclosed in the table above, we noted that all of the Comparable Transactions involved the adoption of asset-based approach and the corresponding valuation assumptions disclosed in the respective circulars are similar to those adopted by the Independent Valuer. We considered that the Business Valuation conducted by the Independent Valuer is comparable to the valuations conducted in the aforementioned transactions as the targets involved are primarily property interests.

Taking into account that (a) a majority of the assets of Maoming Shengda and Maoming Shengcheng is property interests and the revaluation of Maoming Shengda and Maoming Shengcheng's property interests under the asset-based approach can better reflect the net asset backing of Maoming Shengda and Maoming Shengcheng; (b) Maoming Shengda and Maoming Shengcheng incurred net losses in the last two financial years and it is impossible to apply market multiples such as price-to-earnings ratio or enterprise value-to-earnings before interest, taxes, depreciation and amortisation ratio under the market approach; (c) income approach requires significant level of unobservable and subjective assumptions to be made to arrive at; and (d) all of the Comparable Transactions involved the adoption of asset-based approach in valuing equity interests of a property related company, we concur with the Independent Valuer that it is fair and reasonable to adopt the asset-based approach in arriving at the market value of Maoming Shengda and Maoming Shengcheng.

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As the book values of property interests may or may not reflect the market value, the Independent Valuer performed the Property Valuation. After taking into consideration of the surplus and deficit from revaluation of the Royal Ivy Phase I and the Royal Ivy Phase II, respectively, the Independent Valuer came up with the reassessed net asset value (the “Reassessed NAV”) of Maoming Shengda and Maoming Shengcheng of RMB52,255,000 and RMB24,190,000, respectively, as at 30 September 2024.

(ii) The Property Valuation

In respect of the Property Valuation, the Independent Valuer confirmed that they have carried out site inspections and made relevant enquiries for the purpose of valuing the Royal Ivy Project. We have discussed with the management of the Group to understand the latest status as well as the latest development proposal of the Royal Ivy Project.

As stated in the Property Valuation Report, the Property Valuation is conducted in compliance with all the requirements contained in Chapter 5 and Practice Note 12 of the Listing Rules, the RICS Valuation – Professional Standards published by the Royal Institution of Chartered Surveyors, the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors and the International Valuation Standards published by the International Valuation Standards Council. We have discussed with the Independent Valuer regarding the methodology, basis and assumptions adopted in arriving at the market value of the Royal Ivy Project. Although the Royal Ivy Project is still under construction as at 30 September 2024, the Independent Valuer has valued the Royal Ivy Project on the basis that the Royal Ivy Project will be developed and completed in accordance with the latest development proposal as at the valuation date and the property can be freely transferred or disposed without payment of any further land premium, construction cost, penalty or transfer fees. When arriving at the Property Valuation, the Independent Valuer has considered the construction cost and the market development profit plus the value of the land of the Royal Ivy Project (the “Land”). As advised by the Independent Valuer, such method is in line with the market practice.

In arriving at the value of the Land, the Independent Valuer has adopted the market comparison approach by making reference to comparable sales evidence as available in the relevant market and where appropriate, it has also taken into account the estimated total and expanded construction costs. As advised by the Independent Valuer, comparable sales evidences of land are selected based on, among others, (a) time of the relevant transactions, being within approximately three years before the valuation date; (b) location, i.e. the Maoming city, where the Land is located; (c) designated usage (i.e. commercial use); and (d) permitted land use rights term, being 70 years. The Independent Valuer considered the aforesaid criteria were commonly used in valuation practice and were considered as fair and reasonable, as they were the most relevant factors for the purpose of identifying market comparables of a parcel of

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land. Based on the aforesaid criteria, on an exhaustive basis, three most comparable parcels of land have been selected for comparison with the Land. For our due diligence purpose, we have obtained information of the comparable parcels of land, such as location, usage, transaction date, site area, plot ratio, transaction price, land use term, etc., as well as the detailed comparison and adjustment analysis prepared by the Independent Valuer. Based on our review, we noted that (a) the comparable parcels of land are all located within close proximity to the Land with the same usage; (b) the comparable parcels of land share similar characteristics, especially locality and age with the Land; (c) the transaction dates of the comparable parcels of land are close to the valuation date; and (d) the Independent Valuer has made necessary adjustments based on factors, which include, among others, differences in location, size, transaction date, plot ratio and the perfect degree of infrastructure between the comparable parcels of land and the Land. Considering the above factors, we concur with the Independent Valuer that the selection criteria of the comparable parcels of land are fair and reasonable and the comparable parcels of land are appropriate for determining the valuation of the Land.

We were further advised by the Independent Valuer that in deriving the valuation of the Land, adjustments would be made in consideration of the differences in, among others, location, size, transaction date, plot ratio and the perfect degree of infrastructure between the comparable parcels of land and the Land. We have discussed with the Independent Valuer on the adjustments applied and understood that such adjustment factors were commonly adopted for valuation of land and the Independent Valuer has used their professional judgement and experience in valuing similar parcels of land to assign different weightings to the factors when applying adjustments, which is also conducted in the same manner as required by the HKIS Valuation Standards. In this regard, we have also performed independent research and noted that, according to the section headed "IVS105 Valuation Approached and Methods" of the International Valuation Standards published by the International Valuation Standards Council, a professional should make adjustments for any material differences between the comparable transactions and the subject asset. Examples of common differences that could warrant adjustments may include, among others, material physical characteristics (age, size, specifications, etc.) and geographical location. As such, we considered that the factors considered by the Independent Valuer are in compliance with the International Valuation Standards. In general, if the Land is better than comparables in terms of the aforementioned factor(s), an upward adjustment is being applied, and vice versa. In this regard, we have discussed with the Independent Valuer on the difference in each of the aforementioned factor(s) between the comparable parcels of land and the Land and the corresponding upward or downward adjustments being made. Based on our discussion and our review of the information of the comparable parcels of land, we consider that the adjustments made by the Independent Valuer were appropriate and in accordance with the International Valuation Standards. After adjustments were applied on the unit prices of the comparable parcels of land, the Independent Valuer had applied the average adjusted unit price of the comparable parcel of land as the unit price of the Land with

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permitted land use rights term of 70 years. Since the Land has shorter land use rights term than 70 years, a downward adjustment was applied to determine the final unit price of the Land. We further understood from the Independent Valuer that it is a common valuation practice to apply such adjustment to the unit price for a parcel of land to reflect its remaining service life. Taking into account that (a) the comparable parcels of land are appropriately selected for valuation of the Land; (b) the adjustment factors applied on arriving the valuation are commonly adopted in valuation of parcels of land; and (c) the adjustments were applied based on the Independent Valuer's professional judgment and experience and in accordance with the HKIS Valuation Standards, we consider the valuation of the Land is fair and reasonable.

Having arrived at the valuation of the Land, the Independent Valuer took into consideration several other factors to come up with the Property Valuation, including incurred construction costs such as preliminary engineering costs, infrastructure costs and construction and installation costs, finance costs, management fees, marketing costs, tax and development profit. According to the section headed "IVS410 Development Property" of the International Valuation Standards published by the International Valuation Standards Council, construction costs, consultant fees, marketing costs, finance costs and development profit are listed as the basic elements to estimate the market value of development property. As such, we are of the view that the Independent Valuer's approach in taking into account the aforementioned factors in determining the market value of the Royal Ivy Project is in line with the market practice and fair and reasonable. We have also reviewed the percentages and bases adopted by the Independent Valuer in estimating the aforementioned finance costs, management fees, marketing costs, tax and development profit and consider that they are fair and reasonable. In respect of the development profit, it is calculated as a development profit rate of approximately $11.1\%$ applied on the sum of the valuation of the Land, incurred construction costs, management fees and marketing costs. The development profit rate of approximately $11.1\%$ was determined with reference to a research report (https://mp.weixin.qq.com/s/xopelk8QMfKwy8jVkE822w) on the profitability of the Chinese property companies issued by CRIC Research (克而瑞). We have obtained and reviewed the aforementioned research report and noted that it concluded that the median gross profit margin of the typical PRC listed property companies amounted to approximately $11.1\%$ for the first half of 2024. As disclosed in its official website, established in 2006, CRIC Research is a leading provider of real estate information, consulting, advertising and online services with a presence in over 20 cities across China. It is also a subsidiary of E-House (China) Enterprise Holdings Limited which is listed on the Stock Exchange with stock code 2048.HK. Although Maoming Shengda and Maoming Shengcheng are not listed property companies, having considered that (a) both of Maoming Shengda and Maoming Shengcheng have not started the property sale so that no historical development profit rate can be directly used; and (b) the median gross profit margin of the typical PRC listed property companies provide a general reference on the development profit generated in the recent Chinese property market, we are of the view that the use of the median gross profit margin of the typical PRC listed property companies (i.e. $11.1\%$) as the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

development profit rate is fair and reasonable. Based on the factors above, we consider the derived development profit in the Property Valuation to be reasonable.

Taking into consideration of the nature of Maoming Shengda and Maoming Shengcheng and the Royal Ivy Project (including the Royal Ivy Phase I and the Royal Ivy Phase II) and that both of the Business Valuation and the Property Valuation are conducted in accordance with the aforesaid requirements, we consider that the methodology, basis and assumptions adopted by the Independent Valuer for determining the value of Maoming Shengda and Maoming Shengcheng and the Royal Ivy Project are appropriate and both of the Business Valuation and the Property Valuation are fair and reasonable so far as the Independent Shareholders are concerned.

7. Evaluation of the Equity Consideration

The Equity Consideration is RMB70,000,000, which was determined with reference to the valuation of 100% equity interests of Maoming Shengda and Maoming Shengcheng of RMB52,255,000 and RMB24,190,000, respectively, as at 30 September 2024 according to the Business Valuation Report prepared by the Independent Valuer using the asset-based approach.

When assessing the fairness and reasonableness of the Business Valuation, we have reviewed the Business Valuation Report and noted that the only difference between the book value and the market value of Maoming Shengda's assets and liabilities as at 30 September 2024 is its value of inventories (i.e. Royal Ivy Phase I) and the only difference between the book value and the market value of Maoming Shengcheng's assets and liabilities as at 30 September 2024 is its value of inventories (i.e. the Royal Ivy Phase II). The carrying amount of the Royal Ivy Phase I and the Royal Ivy Phase II is approximately RMB336,818,000 and approximately RMB102,117,000 as at 30 September 2024, respectively, while it was valued at approximately RMB391,300,000 and approximately RMB101,600,000 as at 30 September 2024, respectively, according to the Property Valuation Report.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the computation of the Reassessed NAV of 100% equity interests in Maoming Shengda and Maoming Shengcheng as at 30 September 2024:

RMB'000

Net asset value of Maoming Shengda as at 30 September 2024 (Note 1) (2,227)

Add: Net revaluation surplus arising from the valuation of the Royal Ivy Phase I under Property Valuation as at 30 September 2024 (Note 2) 54,482

The Reassessed NAV of Maoming Shengda under the Business Valuation 52,255

Equity interest of Maoming Shengda to be acquired under the Maoming Acquisition 100%

The Group’s share of the Reassessed NAV of Maoming Shengda under the Maoming Acquisition (A) 52,255

Net asset value of Maoming Shengcheng as at 30 September 2024 (Note 3) 24,707

Less: Net revaluation deficit arising from the valuation of the Royal Ivy Phase II under Property Valuation as at 30 September 2024 (Note 4) (517)

The Reassessed NAV of Maoming Shengcheng under the Business Valuation 24,190

Equity interest of Maoming Shengcheng to be acquired under the Maoming Acquisition 100%

The Group’s share of the Reassessed NAV of Maoming Shengcheng under the Maoming Acquisition (B) 24,190

The Equity Consideration 70,000

Discount of the Equity Consideration to Group’s share of the Reassessed NAV of Maoming Shengda and Maoming Shengcheng (being A+B) under the Maoming Acquisition 8.4%

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Notes:

Based on the unaudited consolidated financial statement of Maoming Shengda as at 30 September 2024.
Represents the revaluation surplus arising from the difference between the valuation of the Royal Ivy Phase I of approximately RMB391,300,000 as at 30 September 2024 based on the Property Valuation Report and the unaudited carrying amount of the Royal Ivy Phase I of approximately RMB336,818,000 as at 30 September 2024.
Based on the unaudited consolidated financial statement of Maoming Shengcheng as at 30 September 2024.
Represents the revaluation deficit arising from the difference between the valuation of the Royal Ivy Phase II of approximately RMB101,600,000 as at 30 September 2024 based on the Property Valuation Report and the unaudited carrying amount of the Royal Ivy Phase II of approximately RMB102,117,000 as at 30 September 2024.

As shown above, the Equity Consideration represents a discount of approximately 8.4% to the Group's share of the Reassessed NAVs of Maoming Shengda and Maoming Shengcheng under the Maoming Acquisition based on the Business Valuation and the Property Valuation.

In view of (i) the methodology, bases and assumptions adopted by the Independent Valuer in determining the Business Valuation and the Property Valuation are appropriate; (ii) the Equity Consideration is made with reference to the aforementioned independent valuation which was fairly and reasonably determined by the Independent Valuer; (iii) the Equity Consideration represents a discount of approximately 8.4% to the Business Valuation; (iv) the Equity Consideration shall be further adjusted if the actual total debt amount of Maoming Shengda and Maoming Shengcheng, as audited by the accounting firm appointed by Kinetic Qinhuangdao, is larger than the debt amount provided to Kinetic Qinhuangdao for the purpose of valuation and 2024 Further Adjusted Properties Vendors shall provide additional properties to Kinetic Qinhuangdao; and (v) the reasons for and benefits of the Maoming Acquisition as discussed in the section headed "3. Reasons for and benefits of the Maoming Acquisition" above, we consider the Equity Consideration to be fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OPINION AND RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that the terms of the Maoming Share Transfer Agreement and the Maoming Acquisition are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the entering into of the Maoming Share Transfer Agreement and the Maoming Acquisition, while not in the ordinary and usual course of business of the Group, is nevertheless in the interests of the Company and the Shareholders as a whole. We therefore advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Maoming Share Transfer Agreement and the Maoming Acquisition.

Yours faithfully,

For and on behalf of

Rainbow Capital (HK) Limited

Larry Choi

Managing Director

Mr. Larry Choi is a licensed person and a responsible officer of Rainbow Capital (HK) Limited registered with the Securities and Futures Commission to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO. He has over ten years of experience in the corporate finance industry.

APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

APA CONSULTING & APPRAISAL 亞太評估

Asia-Pacific Consulting and Appraisal Limited

Flat A 12/F Kiu Fu Commercial Bldg,

300 Lockhart Road,

Wan Chai, Hong Kong

19 December 2024

The Board of Directors

Kinetic Development Group Limited

18th Floor

80 Gloucester Road

Wan Chai

Hong Kong

Dear Sirs,

In accordance with the instructions received from Kinetic Development Group Limited (the "Company"), we have undertaken a valuation exercise which requires Asia-Pacific Consulting and Appraisal Limited ("APA") to express an independent opinion on the market value of 100% equity interest of Maoming Shengda Real Estate Co., Ltd. 茂名晟大置業有限公司 ("Maoming Shengda") and Maoming Shengcheng Real Estate Co., Ltd. 茂名晟城置業有限公司 ("Maoming Shengcheng") (hereinafter together referred to as the "Target Companies"), both wholly-owned subsidiary of Zhuhai Shidi Real Estate Development Co., Ltd. ("Zhuhai Shidi"), as at 30 September 2024 (the "Valuation Date").

The purpose of this valuation is for circular reference of the Company.

Our valuation was carried out on a market value basis which is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion".

INTRODUCTION

Maoming Shengda is a limited liability company incorporated in the People's Republic of China in 2017, and engages in the property development and sales in the People's Republic of China. The registered paid-up share capital of Maoming Shengda is RMB25,000,000. As at the Valuation Date, Maoming Shengda had only one property development project - Royal Ivy Phase I, which is currently under construction.

APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

According to the unaudited financial statement of Maoming Shengda, the book value of the total assets was approximately RMB445 million and the book value of net liabilities was approximately RMB2 million as at 30 September 2024.

As at the Valuation Date, the detailed assets and liabilities of Maoming Shengda were as follows:

| | Book Value
RMB'000
Unaudited |
| --- | --- |
| Cash at bank and on hand | 16,951 |
| Prepayment | 15,741 |
| Other receivable | 75,673 |
| Tax prepayment | 11,812 |
| Inventories | 336,818 |
| Total Assets | 456,995 |
| Note payable | 312 |
| Account payable | 7,743 |
| Advance from customers | 170,471 |
| Payroll payable | 709 |
| Other payable | 279,987 |
| Total Liabilities | 459,222 |
| Total Net Liabilities | (2,227) |

Maoming Shengcheng is a limited liability company incorporated in the People's Republic of China in 2019, and engages in the property development and sales in the People's Republic of China. The registered paid-up share capital of Maoming Shengcheng is RMB25,000,000. As at the Valuation Date, Maoming Shengcheng had only one property development project – Royal Ivy Phase II, which is currently under construction.

According to the unaudited financial statement of Maoming Shengcheng, the book value of the total assets was approximately RMB102 million and the book value of net assets was approximately RMB25 million as at 30 September 2024.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

As at the Valuation Date, the detailed assets and liabilities of Maoming Shengcheng were as follows:

| | Book Value
RMB'000
Unaudited |
| --- | --- |
| Cash at bank and on hand | 6 |
| Prepayment | 353 |
| Tax prepayment | 1,071 |
| Inventories | 102,117 |
| Total Assets | 103,547 |
| Note payable | 230 |
| Account payable | 2,563 |
| Other payable | 76,047 |
| Total Liabilities | 78,840 |
| Total Net Assets | 24,707 |

VALUATION METHODOLOGY

There are three generally accepted approaches, namely market approach, asset-based approach and income approach.

Market approach considers prices recently paid for similar assets, with adjustments made to market prices to reflect the condition and utility of the appraised assets relative to the market comparable. Assets for which there is an established secondary market may be valued by this approach. Benefits of using this approach include its simplicity, clarity, speed and the need for few or no assumptions. It also introduces objectivity in application as publicly available inputs are used. However, one has to be wary of the hidden assumptions in those inputs as there are inherent assumptions on the value of those comparable assets. It is also difficult to find comparable assets. Furthermore, this approach relies exclusively on the efficient market hypothesis.

Asset-based approach refers to the valuation methodology to determine the value of the subject of valuation on a reasonable basis by valuating an enterprise's value contribution to the overall on-balance-sheet and off-balance-sheet assets and liabilities, based on the balance sheet of the subject of valuation as at the valuation date.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

Income approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the project than an amount equal to the present worth of anticipated future benefits (income) from the same or a substantially similar project with a similar risk profile. This approach allows for the prospective valuation of future profits and there are numerous empirical and theoretical justifications for the present value of expected future cash flows. However, this approach relies on numerous assumptions over a long time horizon and the result may be very sensitive to certain inputs. It also presents a single scenario only.

The Target Companies are real estate project development enterprises with only one real estate project under development, and the progress of the project operation is relatively slow and uncertain. As at the valuation date, the main assets of the Target Companies are the lands and the buildings under construction.

Given the characteristics of the Target Companies, there are substantial limitations for the income approach and the market approach for valuing the underlying asset. Firstly, the income approach requires subjective assumptions to which the valuation is highly sensitive. According to the information provided by the management, there is no new project development plan as at the Valuation Date. The historical operating situation of Royal Ivy Project is difficult to be used as the reference data to predict its future annual earnings, and the expected earnings brought by its overall profitability are difficult to be objectively and reasonably predicted, which cannot provide a basis for the use of income method for valuation. Therefore, income approach is inappropriate in this case. Secondly, there is no sufficient public companies with single project or market transactions which are comparable in terms of business nature identified as at the Valuation Date. And, in terms of the operating stage, operating risk, financial risk and other factors of Royal Ivy Project, there are few similar or similar cases of comparable companies in the same industry, so it is difficult to obtain relevant reliable operating and financial data of comparable transaction cases, and it is impossible to calculate the appropriate value ratio. The market approach is not applicable as at the Valuation Date. The core assets of the Target Companies are properties as at the Valuation Date, and there is no new project or new business in the future. In view of the above, we have adopted the asset-based approach for the valuation.

In this valuation exercise, we conducted the valuation on the Target Companies on-balance-sheet assets and liabilities to calculate the market value of net assets of the Target Companies.

In this report, we had considered the type of assets and liabilities and their conditions when determining their market values and adopted appropriate valuation methodology depending on the type of assets and liabilities. The details are summarized as follows:

Cash at bank and on hand

Based on book values checking with bank statements.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

Prepayment

The prepayment mainly includes project engineering funds and the expenses required for project construction. We valued prepayment based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

Other receivable

The other receivable mainly includes the fund transfer to the related parties for daily operations and project construction. We valued other receivable based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

Tax Prepayment

The tax prepayment refers to the amount of value-added tax ("VAT") that has paid in advance or has been charged on purchases but has not yet been deducted from its VAT liability. This amount is recorded as an asset because it represents a future benefit to the Target Companies. We valued the tax prepayment based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

Inventories

Inventories in this report include the buildings under development of project – Royal Ivy Project. We have valued the buildings under development on the basis that they will be developed and completed in accordance with the latest development proposal provided to us. In the valuation of these buildings, we considered the construction cost and the market development profit plus the land portion value. In arriving at our opinion of value of the land, we have adopted market approach with reference to comparable sales evidence as available in the relevant market where appropriate, and we have also taken into account the estimated total and expanded construction costs.

In undertaking our valuation, we have identified and analysed various relevant sales evidences of land and selected three comparable parcels of land. All the three selected comparable parcels of land are commercial and residential land within the locality which have the similar characteristics as the subject land of the property. Appropriate adjustments and analysis are considered to account for the differences in several aspects including transaction date, transaction situation, site area, plot ratio and other characters between the comparable properties and the subject land of the property to arrive at our assumed accommodation value. The general basis of adjustment is that if the comparable property is superior to the land of the property, a downward adjustment is made. Alternatively, if the comparable property is inferior or less desirable than the land of the property, an upward adjustment is made.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

Royal Ivy Phase I is located at Plot DJ-23, Dongjiang Community, No. 59 North Guanghua Road, Maonan District. It is well-served by public transportation and community facilities. The surrounding environment comprises several residential developments with street front shops. According to the latest development proposal provided by the Company, the inventory includes 6 buildings with a total gross floor area of approximately 89,572.90 sq.m.. As advised by the Group, the property is scheduled to be completed in the third quarter of 2025 and the details are set out as follows:

Usage	Gross Floor Area (sq.m.)
Commercial	3,055.54
Residential	56,132.60
Apartment	4,268.42
Ancillary	2,584.26
Car parking spaces (675 lots)	23,532.08
Total	89,572.90

The development cost of the inventory is estimated to be approximately RMB462,525,000, of which approximately RMB336,818,000 had been paid up to the Valuation Date.

The land use rights of Royal Ivy Phase I have been granted for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use. We have been shown copies of various title documents including Real Estate Title Certificate (for land), Construction Work Planning Permits, Construction Work Commencement Permits and Pre-sale Permit relating to project - Royal Ivy Phase I.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

Royal Ivy Phase II is located at Plot ZG-02, Zhonggu Community, No. 59 North Guanghua Road, Maonan District. The surrounding environment comprises several residential developments with street front shops. According to the latest development proposal provided by Maoming Shengcheng, the inventory includes 3 buildings with a total gross floor area of approximately 44,158.30 sq.m.. As advised by management of Maoming Shengcheng, the property is scheduled to be completed in the last quarter of 2026 and the details are set out as follows:

Usage	Gross Floor Area (sq.m.)
Commercial	2,354.79
Residential	27,277.78
Apartment	1,136.61
Ancillary	1,197.65
Car parking spaces (313 lots)	12,191.47
Total	44,158.30

The development cost of the inventory is estimated to be approximately RMB201,999,000, of which approximately RMB102,117,000 had been paid up to the Valuation Date.

The land use rights of Royal Ivy Phase II have been granted for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use. We have been shown copies of various title documents including Real Estate Title Certificate (for land), Construction Work Planning Permits and Construction Work Commencement Permits – Royal Ivy Phase II.

Note payable and account payable

The note payable and account payable mainly include project payable and accrual cost. We valued note payable and account payable based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

Advance from customers

The advance from customers mainly includes advance from property contract. We valued advance from customers based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

Payroll payable

The payroll payable mainly includes salary. We valued payroll payable based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

Other payable

The other payable mainly includes the fund transfer from the related parties for financing the construction of the Royal Ivy Project. We valued other payable based on book values, together with checking, by inquiry and confirmation, calculation and rechecking the relevant account books.

BASIS OF OPINION

We have conducted our valuation with reference to the International Valuation Standards issued by the International Valuation Standards Council and the RICS Valuation-Global Standards issued by the Royal Institution of Chartered Surveyors. The valuation procedures employed include a review of economic condition of the Target Companies and an assessment of key assumptions, estimates, and representations made by the Target Companies. All matters essential to the proper understanding of the valuation are disclosed in this report.

The following factors form an integral part of our basis of opinion:

The economic outlook in general;
The nature of business and historical financial performance of the Target Companies;
Financial and business risk of the business including continuity of income and the projected future results;
Consideration and analysis on the micro and macro economy affecting the subject business; and
Other operational and market information in relation to the Target Companies' business.

We planned and performed our valuation so as to obtain all the information and explanations that we considered necessary in order to provide us with sufficient evidence to express our opinion on the market value of the net assets of the Target Companies.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

VALUATION ASSUMPTIONS

In determining the market value of net assets of the Target Companies, we made the following assumptions:

All relevant legal approvals and business certificates or licenses to operate the business in which the Target Companies operates or intends to operate have been or would be officially obtained and renewable upon expiry;
There will be no major change in the political, legal, economic and social environment in which the Target Companies operates or intends to operate;
Interest rates and exchange rates in the localities for the operation of the Target Companies will not differ materially from those presently prevailing;
It is assumed that the operational and contractual terms stipulated in the relevant contracts and agreements will be honored;
The financial and operational information provided by the Target Companies accurate and reliable;
There are no hidden or unexpected conditions associated with the asset valued that might adversely affect the reported value;
The current level of management expertise and effectiveness would continue to be maintained, and that the character and integrity of the Target Companies through any sale, reorganization, exchange, or diminution of the owners' participation would not be materially or significantly changed;
It is assumed the continuation of prudent management of Target Companies over whatever period of time that is reasonable and necessary to maintain the character and integrity of the assets valued;
The Target Companies will successfully carry out all necessary activities for the development of its business as a going concern;
Key management, competent personnel and technical staff to support the ongoing operations of the Target Companies;
The competitive advantages and disadvantages of the Target Companies do not change significantly during the period under consideration; and
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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

We have valued the buildings under development on the assumption that the buildings will be developed and completed in accordance with the latest development proposal as at the valuation date and can be freely transferred or disposed without payment of any further land premium, construction cost, penalty or transfer fees.

VALUATION COMMENT

The conclusion of value is based on accepted valuation procedures and practices that rely substantially on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. Further, while the assumptions and other relevant factors are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Target Companies and Asia-Pacific Consulting and Appraisal Limited.

We do not intend to express any opinion on matters which require legal or other specialized expertise or knowledge, beyond what is customarily employed by valuers. Our conclusions assume continuation of prudent management of the Target Companies over whatever period of time that is reasonable and necessary to maintain the character and integrity of the assets valued.

This report is issued subject to our limiting conditions.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

CALCULATION OF VALUATION RESULT

The calculation of the market value of net assets of Maoming Shengda as at the Valuation Date was as follows:

| | Book Value
(Based on financial statements of Maoming Shengda as at 30 September 2024)
RMB'000 | Market Value
as at 30 September 2024
RMB'000 |
| --- | --- | --- |
| Cash at bank and on hand | 16,951 | 16,951 |
| Prepayment | 15,741 | 15,741 |
| Other receivable | 75,673 | 75,673 |
| Tax prepayment | 11,812 | 11,812 |
| Inventories | 336,818 | 391,300 |
| Total Assets | 456,995 | 511,477 (a) |
| Note payable | 312 | 312 |
| Account payable | 7,743 | 7,743 |
| Advance from customers | 170,471 | 170,471 |
| Payroll payable | 709 | 709 |
| Other payable | 279,987 | 279,987 |
| Total Liabilities | 459,222 | 459,222 (b) |
| Total Net (Liabilities) Assets | (2,227) | 52,255 (c)=(a)-(b) |

Note 1: The difference between Maoming Shengda's book value and market value comes from the inventory account. The book value of inventory consists of the land cost and construction costs, in evaluating the inventory, we take into account construction costs and market development profits plus the land portion value. In arriving at our opinion of value of the land, we have adopted market approach with reference to comparable sales evidence as available in the relevant market where appropriate, and we have also taken into account the estimated total and expanded construction costs.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

The calculation of the market value of net assets of Maoming Shengcheng as at the Valuation Date was as follows:

| | Book Value
(Based on financial statements of Maoming Shengcheng as at 30 September 2024)
RMB'000 | Market Value
as at 30 September 2024
RMB'000 |
| --- | --- | --- |
| Cash at bank and on hand | 6 | 6 |
| Prepayment | 353 | 353 |
| Tax prepayment | 1,071 | 1,071 |
| Inventories | 102,117 | 101,600 |
| Total Assets | 103,547 | 103,030 (a) |
| Note payable | 230 | 230 |
| Account payable | 2,563 | 2,563 |
| Other payable | 76,047 | 76,047 |
| Total Liabilities | 78,840 | 78,840 (b) |
| Total Net Assets | 24,707 | 24,190 (c)=(a)-(b) |

Note 2: The difference between Maoming Shengcheng's book value and market value comes from the inventory account. The book value of inventory consists of the land cost and construction costs, in evaluating the inventory, we take into account construction costs and market development profits plus the land portion value. In arriving at our opinion of value of the land, we have adopted market approach with reference to comparable sales evidence as available in the relevant market where appropriate, and we have also taken into account the estimated total and expanded construction costs.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

OPINION OF VALUE

Based on the results of our investigations and analyses, we are of the opinion that the market value of 100% equity interest of Maoming Shengda as at the Valuation Date is reasonably stated approximately at the amount of RMB52,255,000 (RENMINBI FIFTY-TWO MILLION TWO HUNDRED AND FIFTY-FIVE THOUSAND YUAN).

Based on the results of our investigations and analyses, we are of the opinion that the market value of 100% equity interest of Maoming Shengcheng as at the Valuation Date is reasonably stated approximately at the amount of RMB24,190,000 (RENMINBI TWENTY-FOUR MILLION ONE HUNDRED AND NINETY THOUSAND YUAN).

Yours faithfully,

for and on behalf of

Asia-Pacific Consulting and Appraisal Limited

Jack W. J. Li
CFA, MRICS, MBA
Partner

David G.D. Cheng
MRICS
Partner

Note: Jack W. J. Li is a Chartered Surveyor who has 17 years' experience in the valuation in the PRC, Hong Kong and the Asia-Pacific region.

David G.D. Cheng is a Chartered Surveyor who has 22 years' experience in the valuation in the PRC, Hong Kong and the Asia-Pacific region.

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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

LIMITING CONDITIONS

To the best of our knowledge, all data, including historical financial data, if any, relied upon in reaching opinions and conclusions or set forth in this report are true and accurate. Although gathered from sources that we believe are reliable, no guarantee is made nor liability assumed for the truth or accuracy of any data, opinions, or estimates furnished by others that have been used in this analysis.
The calculation of value arrived at herein is valid only for the stated purpose as of the effective date of the calculations and it is neither intended nor valid for any other use.
Asia-Pacific Consulting and Appraisal Limited shall not be required to give testimony or attendance in court or to any government agency by reason of this exercise, with reference to the project described herein.
You agree to indemnify and hold us and our personnel harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorney's fees, to which we may become subjects in connection with this engagement. Our maximum liability relating to services rendered under this engagement (regardless of form of action, whether in contract, negligence or otherwise) shall be limited to the charges paid to us for the portion of its services or work products giving rise to liability. In no event shall we be liable for consequential, special, incidental or punitive loss, damage or expense (including without limitation, lost profits, opportunity costs, etc.), even if it has been advised of their possible existence.
Financial statements and other related information provided by the Company or its representatives, in the course of this engagement, have been accepted without any verification as fully and correctly reflecting the enterprise's business conditions and operating results for the respective periods, except as specifically noted herein. Asia-Pacific Consulting and Appraisal Limited has not audited, reviewed, or compiled the financial information provided to us and, accordingly, we express no audit opinion or any other form of assurance on this information.
We do not provide assurance on the achievability of the results forecasted for the subject company because events and circumstances frequently do not occur as expected; differences between actual and expected results may be material; and achievement of the forecasted result is dependent on actions, plans and assumptions of management.
This report and the calculation of value arrived at herein are for the exclusive use of our client for the sole and specific purposes as noted herein. They may not be used for any other purpose or by any other party for any purpose. Furthermore the report and calculation of value are not intended by the author and should not be construed by the reader to be investment advice in any manner whatsoever. The calculation of value represents the considered opinion of Asia-Pacific Consulting and Appraisal Limited based on limited information furnished to them by the subject company and other sources.
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APPENDIX IA VALUATION REPORT OF THE TARGET COMPANIES

No responsibility is assumed for matters legal in nature. No investigation has been made of the title to or any liabilities against the property appraised. We have assumed that the owner's claim is valid, the property rights are good and marketable, and there are no encumbrances that cannot be cleared through normal processes, unless otherwise stated in the report.
Areas, dimensions, and descriptions of property, if any, used in this analysis have not been verified, unless stated to the contrary in the report. Any areas, dimensions, and descriptions of property included in the report are provided for identification purposes only, and no one should use this information in a conveyance or other legal document. Plats, if any, presented in the report are intended only as aids in visualizing the property and its environment. Although the material was prepared using the best available data, it should not be considered as a survey or scaled for size.
Public information and industry and statistical information have been obtained from sources we deem to be reputable; however we make no representation as to the accuracy or completeness of such information, and have accepted the information without any verification.
The management and the Board of the Company has reviewed and agreed on the report and confirmed that the basis, assumptions, calculations and results are appropriate and reasonable.
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APPENDIX IB VALUATION REPORT OF THE TARGET PROPERTIES

The following is the text of a letter, summary of values and valuation certificate prepared for the purpose of incorporation in this circular received from Asia-Pacific Consulting and Appraisal Limited, an independent valuer, in connection with its valuation as at 30 September 2024 of the property interests of the Group.

APA
CONSULTING & APPRAISAL
驱太評估

Asia-Pacific Consulting and Appraisal Limited
Flat A 12/F Kiu Fu Commercial Bldg,
300 Lockhart Road,
Wan Chai, Hong Kong

19 December 2024

The Board of Directors
Kinetic Development Group Limited
18th Floor
80 Gloucester Road
Wan Chai
Hong Kong

Dear Sirs,

INSTRUCTIONS, PURPOSE AND VALUATION DATE

Asia-Pacific Consulting and Appraisal Limited (“APA” or “we”) is instructed by Kinetic Development Group Limited (the “Company”) to provide valuation service on the property which was intended to be acquired for disclosure purpose. We confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing our opinion of the market value of the property interests as at 30 September 2024 (the “Valuation Date”).

BASIS OF VALUATION

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

METHODS OF VALUATION

We have valued the property under development in the PRC on the basis that they will be developed and completed in accordance with the latest development proposal provided to us. In

APPENDIX IB VALUATION REPORT OF THE TARGET PROPERTIES

arriving at our opinion of value of the land, we have adopted the Market Comparison Approach by making reference to comparable sales evidence as available in the relevant market and where appropriate, we have also taken into account the estimated total and expanded construction costs.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interests.

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interests valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

We have valued the property on the assumption that they will be developed and completed in accordance with the latest development proposal as at the valuation date and the property can be freely transferred or disposed without payment of any further land premium, construction cost, penalty or transfer fees.

VALUATION STANDARDS

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Valuation – Professional Standards published by the Royal Institution of Chartered Surveyors; the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors; and the International Valuation Standards published by the International Valuation Standards Council.

SOURCE OF INFORMATION

We have relied to a very considerable extent on the information given by the Company and have accepted advice given to us on such matters as tenure and all other relevant matters.

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

DOCUMENT AND TITLE INVESTIGATION

We have been shown copies of various title documents including Real Estate Title Certificate and other title documents relating to the property interests and have made relevant

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APPENDIX IB VALUATION REPORT OF THE TARGET PROPERTIES

enquiries. However, we have not searched the original documents to verify the ownership or to ascertain any amendment. We have relied to a very considerable extent on the information given by the Target Companies, and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought confirmation from the Company that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld. We have relied considerably on the advice given by the Company's PRC legal adviser – Commerce & Finance Law Offices, concerning the validity of the property interests in the PRC.

AREA MEASUREMENT AND INSPECTION

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the documents and official site plans handed to us are correct. All documents have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties unless we have been otherwise instructed. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

The site inspection was carried out in July 2024 by Mr. David Cheng who is a member of Royal Institution of Chartered Surveyor and has more than 22 years' experience in property valuation in the PRC.

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APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

CURRENCY

All monetary figures stated in this report are in Renminbi (RMB).

Our valuation certificate is enclosed hereby for your attention.

Yours faithfully,

for and on behalf of

Asia-Pacific Consulting and Appraisal Limited

David G.D. Cheng

MRICS

Executive Director

Note: David G.D. Cheng is a Chartered Surveyor who has 22 years' experience in the valuation of assets in the Greater China Region, the Asia-Pacific region, the United States and Canada.

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APPENDIX IB VALUATION REPORT OF THE TARGET PROPERTIES

SUMMARY OF VALUES

Property interest contracted to be acquired by the Target Companies in the PRC

| No. Property | The total market value in existing state as at the Valuation Date
RMB |
| --- | --- |
| 1. Royal Ivy phase I and II, No. 59 Guanghua Road, Maonan District, Maoming City, Guangdong Province, The PRC 實地常春藤 | 492,900,000 |
| Total | 492,900,000 |

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APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

VALUATION CERTIFICATE

Property interests intend to be acquired in the PRC

No.	Property	Description and tenure	Particulars of occupancy	Market value in existing state as at the Valuation Date RMB
1.	Royal Ivy phase I and II, No. 59
Guanghua Road, Maonan District, Maoming City, Guangdong Province, The PRC實地常春藤	Royal Ivy is located at the junction of Zhonggu Road and Guanghua Road, Maonan District. The surrounding environment comprises several residential developments with street front shops.

According to the latest development proposal provided by the Company, Royal Ivy Phase I will comprise 6 buildings (Blocks 1, 2, 3, 5, 6 and S1) with a total gross floor area of approximately 89,572.90 sq.m. As advised by Maoming Shengda, the property is scheduled to be completed in the third quarter of 2025 and the details are set out as follows: | The property is under construction. | 492,900,000 |
| | | Gross Floor Area (sq.m.) | | |
| | | Commercial | 3,055.54 | |
| | | Residential | 56,132.60 | |
| | | Apartment | 4,268.42 | |
| | | Ancillary | 2,584.26 | |
| | | Car parking spaces (675 lots) | 23,532.08 | |
| | | Total | 89,572.90 | |

The development cost of Royal Ivy Phase I is estimated to be approximately RMB462,525,000, of which approximately RMB336,818,000 had been paid up to the Valuation Date.

The land use rights of Royal Ivy Phase I have been granted for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use.

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APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

No.	Property	Description and tenure	Particulars of occupancy	Market value in existing state as at the Valuation Date RMB
		Royal Ivy Phase II will comprise 3 buildings (Blocks 7, 8 and 9) with a total gross floor area of approximately 44,158.30 sq.m.. As advised by Maoming Shengcheng, the property is scheduled to be completed in the last quarter of 2026 and the details are set out as follows:
		Gross Floor
	Usage	Area (sq.m.)
	Commercial	2,354.79
	Residence	27,277.78
	Apartment	1,136.61
	Ancillary	1,197.65
	Car parking spaces (313 lots)	12,191.47
	Total	44,158.30
		The development cost of Royal Ivy Phase II is estimated to be approximately RMB201,999,000, of which approximately RMB102,117,000 had been paid up to the Valuation Date.
		The land use rights of Royal Ivy Phase II have been granted for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use.

Notes:

Pursuant to a Real Estate Title Certificate – Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044836, the land use rights of a parcel of land with a site area of approximately 18,328.83 sq.m. have been granted to Maoming Shengda Real Estate Co., Ltd. (茂名晟大置業有限公司) (“Maoming Shengda”, a wholly-owned subsidiary of Zhuhai Shidi Real Estate Development Co., Ltd. (“Zhuhai Shidi”) for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use.
Pursuant to a Real Estate Title Certificate – Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044835, the land use rights of a parcel of land with a site area of approximately 8,852.93 sq.m. have been granted to Maoming Shengcheng Real Estate Co., Ltd. (茂名晟城置業有限公司) (“Maoming Shengcheng”, a wholly-owned subsidiary of Zhuhai Shidi for terms expiring on 22 March 2060 for commercial use and expiring on 22 March 2090 for residential use.
Pursuant to 3 Construction Work Planning Permits – Mao Nan Jian Zi No. (2021) 2, Mao Nan Jian Zi No. (2021) 27, Mao Nan Jian Zi No. (2020) 209, in favour of Maoming Shengda, Royal Ivy Phase I which have a total gross floor area of approximately 89,572.90 sq.m. has been approved for construction.
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APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

Pursuant to a Construction Work Planning Permit – Mao Nan Jian Zi Nos. (2021) 29 in favour of Maoming Shengcheng, Royal Ivy Phase II which have a total gross floor area of approximately 44,158.30 sq.m. has been approved for construction.
Pursuant to 3 Construction Work Commencement Permits – Nos. 440902202101220101, 440902202103010101 and 440902202101150101 in favour of Maoming Shengda, permissions by the relevant local authority have been given to commence the construction of Royal Ivy Phase I with a total gross floor area of approximately 89,572.90 sq.m..
Pursuant to a Construction Work Commencement Permit – No. 440902202103080101 in favour of Maoming Shengcheng, permissions by the relevant local authority have been given to commence the construction of Royal Ivy Phase II with a total gross floor area of approximately 44,158.30 sq.m..
Pursuant to 3 Pre-sales Permits – Nos. 2021115, 2021082, 001-440902-2022-00009-8 in favour of Maoming Shengda, Maoming Shengda is entitled to sell the residential units of Blocks 1, 2 and 5 and commercial units of Block 2 with a total gross floor area of approximately 43,798.55 sq.m..
According to the Execution Order of the Intermediate People's Court of Hangzhou City, Zhejiang Province ((2023) Zhe 01 Zhi No. 1522), all assets under Maoming Shengda were seized to repay the debts of JIC Trust Co., Ltd.. According to the Execution Order of the People's Court of Maonan District, Maoming City, Guangdong Province ((2022) Yue 0902 Cai Bao No. 30), the court has seized the land use rights of Maoming Shengda located at Maonan District (Certificate No.: Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044836), involving a dispute with Guangdong New South Foundation Engineering Co., Ltd.
According to the Real Estate Registration Certificate (Yue (2021) Mao Ming Shi Bu Dong Chan Quan Di No. 0023724) and the Real Estate Certificate (Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044835), the real estate rights of the Maoming Shengcheng located in Maonan District have been mortgaged.
According to the Execution Order of the Intermediate People's Court of Hangzhou City, Zhejiang Province ((2023) Zhe 01 Zhi No. 1522), all assets under Maoming Shengcheng were seized to repay the debts of JIC Trust Co., Ltd.. According to the confirmation of Maoming Shengcheng, the real estate rights of Maoming Shengcheng located at Maonan District (Certificate No. (Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044835) have been seized. According to the Civil Ruling of the People's Court of Maonan District, Maoming City, Guangdong Province ((2022) Yue 0902 Min Chu No. 4660), and the Real Estate Certificate (Yue (2020) Mao Ming Shi Bu Dong Chan Quan Di No. 0044835), the real estate rights of Maoming Shengcheng located in Maonan District have been seized, involving a dispute with Guangdong New South Foundation Engineering Co., Ltd.
In undertaking the land valuation of the property, we have identified and analysed various relevant sales evidences of land within the locality which have the similar characteristics as the property, and selected three comparable properties based on the following selection criteria:

a. the transaction date of the comparable property should be within two years;

b. the usage of the comparable property should be commercial and residential uses;

c. the land use rights terms of the comparable property should be 40 years for commercial use and 70 years for residential use; and

d. the comparable property should be bare land and connected with road and the supply of water and electricity and with land levelling.

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APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

All of the three selected comparable properties are commercial land site within the locality which have the similar location, infrastructure and plot ratio as the subject property. The accommodation value of these comparable land sites ranges from RMB2,057 to RMB2,154 per sq.m. Appropriate adjustments and analysis are considered to the differences in several aspects including transaction date, site area, accessibility and other characters between the comparable properties and the subject property to arrive at our assumed accommodation value. The general basis of adjustment is that if the comparable property is superior to the property, a downward adjustment is made. Alternatively, if the comparable property is inferior or less desirable than the property, an upward adjustment is made. Details of the three comparable properties and adjustments are set out below, the list of the comparable properties is exhaustive based on the above selection criteria as at the time we performed the valuation of the property.

Comparable:	A	B	C
Location	Lingnan Community Site, Maonan District	Xiangtang Community Site, Maonan District	Huangtang Community Site, Maonan District
Usage	Commercial and residential	Commercial and residential	Commercial and residential
Transaction situation	Market value	Market value	Market value
Transaction date	July 2023	December 2022	October 2022
Location and accessibility	Good	Good	Good
Site area (sq.m.)	122,832	47,008	16,864
Plot ratio	3	3.1	3
Land use rights term	40/70	40/70	40/70
Accommodation value (RMB/sq.m.)	2,057.00	2,154.00	2,093.00
Adjustment factors:
Usage	Similar with the property	Similar with the property	Similar with the property
Transaction situation	Similar with the property	Similar with the property	Similar with the property
Transaction date	Inferior to property	Inferior to property	Inferior to property
Location and accessibility	Inferior to property	Inferior to property	Inferior to property
Site area (sq.m.)	Inferior to property	Inferior to property	Similar with the property
Plot ratio	Superior to the property	Superior to the property	Superior to the property
Remaining land use rights term	Superior to the property	Superior to the property	Superior to the property
Total adjustment	-15%	-13%	-9%
Adjusted accommodation value (RMB/sq.m.)	2,413	2,467	2,293

Based on the analysis of the three comparable properties, the adjusted average accommodation value for the market value of the property is approximately RMB2,380 per sq.m.

APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

The calculation of the market value of Royal Ivy as at the Valuation Date is as follows:

Royal Ivy Phase I

| | As at
30 September 2024
(RMB) | |
| --- | --- | --- |
| Market value of the land | 151,027,000 | (a) |
| Construction costs | 159,375,044 | (b) |
| Interest | 12,463,026 | (c) |
| Management expenses | 3,427,343 | (d) |
| Marketing expenses | 22,698,621 | (e) |
| Sales taxes and prepaid land value-added tax | 4,948,981 | (f) |
| Applied development profit rate | 11.1% | (g) |
| Development profit | 37,354,609 | (h)=(a)+(b)+(d)+(e)*g |
| Market value of the property (rounded to hundred
thousands) | 391,300,000 | (i)=(a)+(b)+(c)+(d)+(e)+(f)+(h) |

Royal Ivy Phase II

| | As at
30 September 2024
(RMB) | |
| --- | --- | --- |
| Market value of the land | 73,231,000 | (a) |
| Construction costs | 17,166,577 | (b) |
| Interest | 848,975 | (c) |
| Management expenses | 31,820 | (d) |
| Marketing expenses | - | (e) |
| Sales taxes and prepaid land value-added tax | 254,804 | (f) |
| Applied development profit rate | 11.1% | (g) |
| Development profit | 10,037,663 | (h)=(a)+(b)+(d)+(e)*g |
| Market value of the property (rounded to hundred
thousands) | 101,600,000 | (i)=(a)+(b)+(c)+(d)+(e)+(f)+(h) |

Note: The development profit rate adopted as 11.1% reference to the profit rate of typical PRC listed real estate companies through CRIC data base.

We have been provided with a legal opinion regarding the property interest by the Company's PRC legal advisers, which contains, inter alia, the following:

a. Maoming Shengda and Maoming Shengcheng have obtained the land use rights under the Real Estates Title Certificate mentioned in notes 1 and 2.

b. For the property that have been mortgaged and sealed up, any transfer shall be restricted in accordance with the law until such mortgage or seal is lifted.

c. For the property under construction, Maoming Shengda and Maoming Shengcheng have obtained the relevant construction land planning permits, construction project planning permits and construction permits.

d. Subject to the consent of the mortgagee, Maoming Shengda has the right to pre-sell the buildings in accordance with the Pre-sales Permits mentioned in note 7 except for the sealed portion.

APPENDIX IB

VALUATION REPORT OF THE TARGET PROPERTIES

A summary of major certificates/approvals is shown as follows:

a. Real Estate Title Certificate (for land) Yes
b. Construction Work Planning Permit Yes
c. Construction Work Commencement Permit Yes
d. Pre-sale Permit Yes
e. Construction Work Completion and Inspection Certificate/Table No

For the purpose of this report, the properties are classified into the two parts, we are of the opinion that the market value of each phase as at the Valuation Date in its existing state is set out as below:

Phase	Market value in existing state as at the Valuation Date (RMB)
Royal Ivy Phase I	391,300,000
Royal Ivy Phase II	101,600,000
Grand-total	492,900,000

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APPENDIX II

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the 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 INTEREST BY DIRECTORS AND CHIEF EXECUTIVE

Long positions in shares and underlying shares of the Company and its associated corporation

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

Long Positions in the shares of the Company

Name of Directors	Capacity/Type of interest	Number of ordinary Shares	Approximate percentage of shareholding^{(Note)}
Mr. Ju Wenzhong	Beneficial Interests	9,821,659	0.12%
Mr. Li Bo	Beneficial Interests	2,901,886	0.03%
Ms. Xue Hui	Beneficial Interests	3,860,055	0.05%

Note: The calculation is based on the total number of issued ordinary shares of 8,430,000,000 shares as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, there were no other Directors or the chief executive of the Company or any of their associates who had any interests or short positions in any shares, underlying shares or debentures of the Company or any of 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 (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required to be

APPENDIX II

GENERAL INFORMATION

recorded in the register required to be kept by the Company pursuant to section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

As at the Latest Practicable Date, none of the Directors was a director or an employee of any shareholders of the Company or a company which has an interest or short position in Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS' SERVICE CONTRACTS

Each of the executive Directors has entered into a service contract with the Enlarged Group for a term of three years, which may be terminated by not less than three months' notice in writing served by either party on the other.

The non-executive and independent non-executive Directors have been appointed for a term of three years in accordance with their respective letters of appointment with the Enlarged Group.

As at the Latest Practicable Date, none of the Directors who are proposed for re-election at the forthcoming annual general meeting has a service contract with the Enlarged Group which is not determinable by the Enlarged Group within one year without payment of compensation, other than statutory compensation.

4. EXPERTS' QUALIFICATIONS AND CONSENTS

The followings are the qualifications of the experts who have given their opinions or advice, which are contained or referred to in this circular:

Name	Qualification
Rainbow Capital (HK) Limited	A licensed corporation permitted to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO
Asia-Pacific Consulting and Appraisal Limited	Independent valuer qualified in the PRC

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APPENDIX II

GENERAL INFORMATION

Each of the above experts has given and has not withdrawn its written consent to the publication of this circular with the inclusion of its respective letter and report and all references to its name in the form and context in which they respectively appear. The respective letter and report from each of the above experts were given as of the date of this circular for incorporation in this circular.

As at the Latest Practicable Date, the above experts (i) did not have any 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 (ii) had no direct or indirect interests in any assets which had been acquired or disposed of by or leased to any member of the Group since 31 December 2023 (the date to which the latest published audited combined financial statements of the Company were made up) or proposed to be acquired, disposed of or leased to any member of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2023, being the date to which the latest published audited financial statements of the Company were made up.

6. DIRECTORS' INTERESTS IN THE ASSETS OR CONTRACTS

As at the Latest Practicable Date, (i) none of the Directors, proposed director or expert had any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2023, being the date to which the latest published audited accounts of the Company were made up; and (ii) none of the Directors, proposed director or expert was materially interested in any contract or arrangement entered into by any member of the Enlarged Group which was subsisting as at the Latest Practicable Date and was significant in relation to the business of the Enlarged Group.

7. DIRECTORS' INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates (as defined under the Listing Rules) had any interest in a business which competed or was likely to compete, either directly or indirectly, with the business of the Group, or had or might have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules.

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APPENDIX II

GENERAL INFORMATION

8. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the website of the Stock Exchange (www.hkexnews.hk) and the Company’s website (http://www.kineticme.com/) for a period of 14 days from the date of this circular:

(i) the Maoming Share Transfer Agreement;

(ii) the 2022 Property Purchase Agreement;

(iii) the Supplemental Agreement;

(iv) the Second Supplemental Agreement;

(v) the Third Supplemental Agreement;

(vi) the Fourth Supplemental Agreement; and

(vii) the Fifth Supplemental Agreement.

9. MISCELLANEOUS

In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

NOTICE OF EXTRAORDINARY GENERAL MEETING

方星发展

KINETIC DEVELOPMENT GROUP

Kinetic Development Group Limited

力量發展集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1277)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “EGM”) of Kinetic Development Group Limited (the “Company”) will be held at 18/F, 80 Gloucester Road, Wan Chai, Hong Kong on Friday, 3 January 2025 at 2:30 p.m., to consider, if thought fit, and transact the following resolution of the Company by way of ordinary resolution:

ORDINARY RESOLUTION

“THAT:

(a) terms of the share transfer agreement (the “Maoming Share Transfer Agreement”) entered into between Kinetic (Qinhuangdao) Energy Group Ltd., a limited liability company and an indirectly wholly-owned subsidiary of the Company, and Zhuhai Seedland Real Estate Development Co., Ltd., a limited liability company ultimately beneficially owned by Mr. Zhang Liang, Johnson as to 100%, dated 1 November 2024 (a copy of which has been produced to this EGM and initialed by the chairman of the meeting for identification purpose) and the transactions in connection therewith and any other ancillary documents be and are hereby confirmed, approved and ratified, subject to such addition or amendment as any director(s) of the Company (the “Director(s)”) may consider necessary, desirable or appropriate; and

EGM-1 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

(b) any authority of the Director(s) to sign, execute, deliver or to authorize the signing, execution and delivery of the Maoming Share Transfer Agreement, and to do or authorize doing all such acts, matters and things as he/she may in his/her discretion consider necessary, expedient or desirable to give effect to and implement the Maoming Share Transfer Agreement and any ancillary documents and transactions thereof be and is hereby confirmed, approved and ratified.”

By order of the Board
Kinetic Development Group Limited
Ju Wenzhong
Chairman and Executive Director

Hong Kong, 19 December 2024

Registered office:
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands

Headquarters and principal place of business in the PRC:
Dafanpu Coal Mine
Majiata Village
Xuejiawan Town
Zhunge'er Banner
Ordos City, Inner Mongolia, China

Principal place of business in Hong Kong:
18/F
80 Gloucester Road
Wan Chai
Hong Kong

Notes:

A shareholder of the Company (the "Shareholder") entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote in his/her stead. A Shareholder who is the holder of two or more shares in the Company (the "Shares") may appoint more than one proxy to represent him/her and vote on his/her behalf at the EGM. A proxy need not be a Shareholder.
In the case of joint holders of Shares, any one of such joint holders may vote, either in person or by proxy, in respect of such Shares as if he/she were solely entitled thereto, but if more than one of such joint holders are present at the EGM, personally or by proxy, that one of the said persons so present whose name stands first in the register of members of the Company in respect of such Shares shall alone be entitled to vote in respect thereof. The resolution set out in this notice will be decided by poll at the EGM.
EGM-2 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

In order to be valid, the form of proxy must be in writing under the hand of the appointor or of his attorney duly authorized in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney duly authorized, and must be deposited with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong (together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof) not less than 48 hours before the time fixed for holding of the EGM (or any adjournment thereof).
Delivery of an instrument appointing a proxy should not preclude a Shareholder from attending and voting in person at the EGM or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.
The Company reminds all Shareholders that physical attendance in person at the EGM is not necessary for the purpose of exercising voting rights. Shareholders may appoint the chairman of the EGM as their proxy to vote on the relevant resolution at the EGM instead of attending the EGM in person, by completing and return the form of proxy.
If any Shareholder has any question about any resolution or about the Company, or has any matter for communication with the board of directors of the Company, he/she is welcome to send such question or matter in writing to the head office and principal place of business in Hong Kong of the Company or by fax at (852) 2525 7890. If any Shareholder has any question relating to the EGM, please contact Computershare Hong Kong Investor Services Limited, the Company's Hong Kong branch share registrar as follows:

Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen's Road East Wan Chai
Hong Kong

As at the date of this notice, the Board comprises seven Directors, of whom three are executive Directors, namely Mr. Ju Wenzhong (Chairman), Mr. Li Bo (Chief Executive Officer) and Mr. Ji Kunpeng; one is a non-executive Director, namely Ms. Zhang Lin; and three are independent non-executive Directors, namely Ms. Liu Peilian, Mr. Chen Liangnuan and Ms. Xue Hui.

EGM-3 -

AI assistant

Kinetic Development Group Limited — Proxy Solicitation & Information Statement 2024

49818_rns_2024-12-19_153e4bfe-6a0b-4a15-83c6-f34eb298febb.pdf

方星发展

Kinetic Development Group Limited

力量發展集團有限公司

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

DEFINITIONS

DEFINITIONS

方星发展

Kinetic Development Group Limited

力量發展集團有限公司

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Properties of Vendor 2

Properties of Vendor 3

Properties of Vendor 4

Properties of Vendor 5

Properties of Vendor 6

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG

Conditions Precedent to Closing:

BASIS OF DETERMINATION OF CONSIDERATION

The Company's Assessment on the Valuation

With respect of the qualification of the Independent Valuer

With respect of the valuation methodology

With respect to the major assumptions of the Valuation Report

INFORMATION ON MAOMING SHENGDA AND MAOMING SHENGCHENG

INFORMATION ON THE GROUP AND PARTIES INVOLVED IN THIS TRANSACTION

REASON FOR AND BENEFITS OF MAOMING ACQUISITION

IMPLICATION UNDER THE LISTING RULES

EXTRAORDINARY GENERAL MEETING

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

ADDITIONAL INFORMATION

方星发展

Kinetic Development Group Limited

力量發展集團有限公司

CONNECTED TRANSACTION

ACQUISITION OF MAOMING SHENGDA AND MAOMING SHENGCHENG

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information on the Group

6M2024 compared to 6M2023

2. Information on Maoming Shengda and Maoming Shengcheng

3. Reasons for and benefits of the Maoming Acquisition

4. Industry overview

5. Principal terms of the Maoming Share Transfer Agreement

6. Valuation of Maoming Shengda and Maoming Shengcheng

7. Evaluation of the Equity Consideration

OPINION AND RECOMMENDATION

INTRODUCTION

VALUATION METHODOLOGY

Cash at bank and on hand

Prepayment

Other receivable

Tax Prepayment

Inventories

Note payable and account payable

Advance from customers

Payroll payable

Other payable

BASIS OF OPINION

VALUATION ASSUMPTIONS

VALUATION COMMENT

CALCULATION OF VALUATION RESULT

OPINION OF VALUE

LIMITING CONDITIONS

INSTRUCTIONS, PURPOSE AND VALUATION DATE

BASIS OF VALUATION

METHODS OF VALUATION

VALUATION ASSUMPTIONS

VALUATION STANDARDS

SOURCE OF INFORMATION

DOCUMENT AND TITLE INVESTIGATION

AREA MEASUREMENT AND INSPECTION

Kinetic Development Group Limited Proxy Solicitation & Information Statement 2024