Kingwell Group Limited — Proxy Solicitation & Information Statement 2021

Jan 7, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Kingwell Group Limited, you should at once hand this circular accompanying with the form of proxy to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

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

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KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

MAJOR TRANSACTION ACQUISITION OF THE PROPERTY

Financial Adviser to the Company

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Capitalised terms used in this cover page shall have the same meaning as those defined in this circular.

A letter from the Board is set out on pages 5 to 16 of this circular.

A notice convening the EGM of the Company to be held at Event Room 1-2, LG/F, New World Millennium Hong Kong Hotel, 72 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong, on 25, January 2021, at 11:00 a.m. is set out on pages 38 to 39 of this circular. A form of proxy for the EGM is enclosed herein. Whether or not you intend to attend and vote in person at the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed 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 (as the case may be) should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

PRECAUTIONARY MEASURES FOR THE EGM

Please see page 1 of this circular for measures being taken to try to prevent and control the spread of COVID-19, including:

– compulsory temperature checks

– health declarations

– recommended wearing of surgical face masks

– no distribution of corporate gifts and refreshments

Any person who does not comply with the precautionary measures may be denied entry into the EGM venue. The Company encourages attendees to wear face masks and reminds Shareholders that they may appoint the Chairman of the meeting as their proxy to vote on the relevant resolutions at the EGM as an alternative to attending the EGM in person.

8 January 2021

CONTENTS

	Pages
PRECAUTIONARY MEASURES FOR THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . . . . . .	17
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL
INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
APPENDIX III – PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
APPENDIX IV – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

– i –

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing spread of COVID-19 pandemic and recent requirements for prevention and control of its spread, the Company will implement the following preventive measures at the EGM to protect attending Shareholders, staff and other stakeholders from the risk of infection:

• (i) compulsory body temperature checks will be conducted on every Shareholder, proxy and other attendees at the entrance of the EGM venue. Any person with a body temperature of over 37.4 degrees Celsius may be denied entry into the EGM venue or be required to leave the EGM venue;

• (ii) all Shareholders, proxies and other attendees are required to complete and submit at the entrance of the EGM venue a declaration form confirming their names and contact details, and confirming that they have not travelled to, or to their best of knowledge had physical contact with any person who has recently travelled to, any affected countries or areas outside of Hong Kong (as per guidelines issued by the Hong Kong government at www.chp.gov.hk/ en/features/102742.html) at any time in the preceding 14 days. Any person who does not comply with this requirement may be denied entry into the EGM venue or be required to leave the EGM venue;

• (iii) the Company encourages attendees to wear surgical face masks inside the EGM venue at all times, and to maintain a safe distance between seats; and

• (iv) no refreshments will be served, and there will be no corporate gifts.

To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue in order to ensure the safety of the attendees at the EGM.

The Company reminds all Shareholders that physical attendance in person at the EGM is not necessary for the purpose of exercising voting rights in the Company. As an alternative, by using proxy forms with voting instructions inserted, Shareholders may appoint the chairman of the EGM as their proxy to vote on the relevant resolutions at the EGM instead of attending the EGM in person.

The proxy form is attached to this circular for Shareholders who opt to receive physical circulars. Alternatively, the proxy form can be downloaded from the website of Hong Kong Exchanges and Clearing Limited, at www.hkexnews.hk and the website of the Company at http://kingwell.todayir.com respectively. If you are not a registered Shareholder (if your Shares are held via banks, brokers, custodians or the Hong Kong Securities Clearing Company Limited), you should consult directly with your banks or brokers or custodians (as the case may be) to assist you in the appointment of proxy.

– 1 –

DEFINITIONS

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

• ‘‘Acquisition’’

the acquisition of the Property by the Purchaser subject to the terms and conditions of the Sale and Purchase Agreement

• ‘‘Announcement’’ the announcements of the Company dated 14 August 2020, 27 August 2020, 20 October 2020, 13 November 2020, 27 November 2020, 11 December 2020, 18 December 2020, 31 December 2020 and 4 January 2021, respectively, in relation to, inter alia, the Acquisition

• ‘‘associate(s)’’ has the meaning ascribed thereto under the Listing Rules

• ‘‘Board’’ the board of Directors

• ‘‘Business Day(s)’’ any day other than a Saturday, Sunday or public holiday on which banks are generally open for business in Hong Kong

• ‘‘Company’’ Kingwell Group Limited（ 京維集團有限公司）, a company incorporated in Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (stock code: 1195)

• ‘‘Completion’’ completion of the Acquisition

• ‘‘Completion Date’’ on or before 31 August 2021

• ‘‘connected person(s)’’ has the same meaning ascribed to it in the Listing Rules

• ‘‘Consideration’’ the sum of RMB40,000,000 (equivalent to approximately HK $44,400,000), being the purchase price of the Property

• ‘‘Director(s)’’ director(s) of the Company ‘‘EGM’’ the extraordinary general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving, among others, the Sale and Purchase Agreement and the Acquisition

• ‘‘Group’’ the Company and its subsidiaries ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC ‘‘HK$’’ Hong Kong dollars, the lawful currency of the Hong Kong ‘‘Latest Practicable Date’’ 4 January 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

– 2 –

DEFINITIONS

‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange ‘‘PRC’’ the People’s Republic of China, and for the purpose of this circular only, excluding Hong Kong, the Macau Special Administrative Region and Taiwan ‘‘Property’’ Block 10, Block 11 and Block 12 in Xuzhou Yueqiao Flower Garden Project[#] （徐州月橋花院項目）(located at the intersection of Fuchun road and Hanyuan Avenue, Yunlong District, Xuzhou City, Jiangsu Province, the PRC[#] （中國江蘇省徐州市雲龍區富春 路與漢源大道交匯處）) ‘‘Purchaser’’ Xuzhou Ronghui Commercial Management Company Limited[#] （徐州融匯商業管理有限公司）, a company established in the PRC with limited liability and an indirectly wholly-owned subsidiary of the Company ‘‘RMB’’ Renminbi, the lawful currency of the PRC ‘‘Sale and Purchase Agreement’’ the sale and purchase agreement dated 14 August 2020 (as amended and supplemented by the Supplemental Sale and Purchase Agreement) entered into between the Purchaser and the Vendor in relation to the Acquisition ‘‘Supplemental Sale and the supplemental sale and purchase agreement dated 4 January Purchase Agreement’’ 2021 entered into between the Purchaser and the Vendor to amend certain terms in relation to the Sale and Purchase Agreement ‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time ‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the issued share capital of the Company ‘‘Shareholder(s)’’ holder(s) of the Share(s) of the Company ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘subsidiary(ies)’’ has the meaning ascribed thereto in the Listing Rules ‘‘Title Transfer’’ completion of the title transfer of the property from the Vendor to the Purchaser ‘‘Vendor’’ Xuzhou City Zhongwei Real Estate Co., Ltd.[#] （徐州市中維地產 有限公司）, a company established in the PRC with limited liability ‘‘%’’ per cent

– 3 –

DEFINITIONS

• Translation of Chinese or English terms for reference only. In the event of any discrepancies between the Chinese names and their respective English translations, the Chinese version shall prevail.

The exchange rate used for the purpose of this circular is at RMB1.00 = HK$1.11. Such conversion should not be construed as a representation that any amount has been, could have been or may be exchanged at this or any other rate.

– 4 –

LETTER FROM THE BOARD

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KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

Executive Directors: Mr. Mu Dongsheng (Chairman) Mr. Du Yun

Independent non-executive Directors: Mr. Cheung Chuen Mr. Ling Aiwen Mr. Lu Lin

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

Principal Office in Hong Kong: Units 314-315 Wing On Plaza 62 Mody Road Tsim Sha Tsui East Kowloon, Hong Kong

8 January 2021

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF THE PROPERTY

INTRODUCTION

Reference is made to the Announcement in relation to the Acquisition.

On 14 August 2020, (after trading hours), the Purchaser, an indirectly wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement (as amended and supplemented by the Supplemental Sale and Purchase Agreement dated 4 January 2021) with the Vendor, pursuant to which the Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the Property at the Consideration of RMB40,000,000 (equivalent to approximately HK$44,400,000).

As one or more of the applicable percentage ratios (as defined in Rule14.07 of the Listing Rules) in respect of the Acquisition exceed 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company and is therefore subject to the announcement, reporting and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition; (ii) financial information of the Group; (iii) unaudited pro forma financial information of the Group illustrating the effect of the Acquisition on the financial position of the Group as if the Acquisition had been completed; (iv) a valuation of the Property; (v) the notice of EGM; and (vi) other information as required under the Listing Rules.

Major terms of the Sale and Purchase Agreement are as follows:

THE SALE AND PURCHASE AGREEMENT

Date : 14 August 2020 (as amended and supplemented by the Supplemental Sale and Purchase Agreement dated 4 January 2021) Vendor : Xuzhou City Zhongwei Real Estate Co., Ltd.[#] （徐州市中維地產有限公 司） Purchaser : Xuzhou Ronghui Commercial Management Company Limited[#] （徐州融 滙商業管理有限公司） Property to be : 3 blocks of 3-storey commercial buildings, which comprises of Block acquired 10, Block 11 and Block 12 in Xuzhou Yueqiao Flower Garden Project[#] （徐州月橋花院項目）developed by the Vendor. The Property is free from encumbrances including but not limited to lien, pledge, mortgage and any other form of restriction of rights. The Property is allowed to be used for commercial purpose and the Vendor has obtained from the relevant government authorities in the PRC the (i) construction land use right; (ii) permits for planning construction project; and (iii) pre-sale permits in relation to the development and sales of the Property. Consideration : The Consideration is in the sum of RMB40,000,000 (equivalent to approximately HK$44,400,000), which shall be paid on the Completion Date.

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendor, by reference to, among others, market values of comparable properties and a preliminary market valuation of the Property as appraised by an independent valuer of RMB42,400,000 (equivalent to approximately HK$47,064,000) as at 30 November 2020. The Consideration shall be financed by the internal resources of the Group.

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LETTER FROM THE BOARD

Escrow account : 30% of the Consideration (the ‘‘Amount’’) will be deposited and maintained into a pre-sale fund regulatory account of commercial housing[#] （商品房預售資金監管賬戶）until the completion of the Title Transfer, The escrow account will be maintained by an independent third party bank in the PRC and the Amount could not be withdrawn without the consent of the Purchaser.

Completion : Completion shall take place upon the fulfilment of the following events:

• (a) the passing of the necessary resolution(s) at the general meeting of the Purchaser and the EGM of the Company respectively to approve the Acquisition;

• (b) all the representations in relation to the Property in the Sale and Purchase Agreement remaining true; and

• (c) the Vendor having (i) obtained the construction completion examination certificate[#] （ 建 設工程竣 工驗收 備案證明 ）and related documents and the building drawing examination report[#] （房屋測繪報告）of the Property; and (ii) completed the installation of water pipelines and facilities, electricity and heating systems of the Property.

On the Completion Date, the Property shall be delivered from the Vendor to the Purchaser.

The Vendor undertakes that the Completion shall take place no later than 31 August 2021 failing which, the Vendor shall pay to the Purchaser a default payment of RMB5.0 million. If the Completion occurs within 30 days from 31 August 2021, apart from the default payment of RMB5.0 million, the Vendor shall also pay to the Purchaser a default penalty which is equivalent to 0.05% of the Consideration on daily basis. If the Completion fails to occur within 30 days from 31 August 2021, the Purchaser may terminate the Sale and Purchase Agreement and the Vendor shall pay to the Purchaser the default payment of RMB5.0 million and the default penalty which is equivalent to 0.05% of the Consideration on daily basis from 31 August 2021 to the termination date.

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LETTER FROM THE BOARD

The Completion is not conditional upon the completion of the Title Transfer. In order to safeguard the interest of the Purchaser under the Title Transfer, the Vendor has irrevocably and unconditionally guaranteed and undertaken to the Purchaser that following the receipt of the Consideration,

• (a) For the period between the Completion Date and completion date of the Title Transfer, the Purchaser will have the absolute discretion to decide upon the usage of the Property, and the Purchaser will receive all the economic benefits to be derived therefrom; and

• (b) the Vendor will use its best endeavour to complete the Title Transfer in accordance with the instructions of the Purchaser. If the Vendor could not complete the Title Transfer, as instructed by the Purchaser, in additional to refunding the full amount of the Consideration together with the interest accrued thereon from the Completion Date to the refund date, the Vendor is also obligated to compensate to the Purchaser a default penalty of RMB5.0 million.

INFORMATION ON THE PROPERTY

The Property is located at the intersection of Fuchun Road and Hanyuan Avenue, Yunlong District, Xuzhou City, Jiangsu Province, the PRC[#] （中國江蘇省徐州市雲龍區富春路與漢源大道交匯處）, which is a new city center in Xuzhou City (the ‘‘New District’’). The New District is the Xuzhou City local government base, new business and financial hub of Xuzhou City. The Property is located nearby the Xuzhou University of Technology[#] （徐州工程學院）and Xincheng Qu Da Longhu Jingqu[#] （新城區大龍 湖景區）.

The Property comprises of 3 blocks of 3-storey commercial buildings covering site area of a total of approximately 3,267.11 square metres, which encompasses Block 10 (with a site area of approximately 1,292.67 square metres), Block 11 (with a site area of approximately 1,143.94 square metres) and Block 12 (with a site area of approximately 830.50 square metres) in Xuzhou Yueqiao Flower Garden Project[#] （徐州月橋花院項目）developed by the Vendor.

As at the Latest Practicable Date, construction work for the main structure of the Property has been completed. Further work such as the installation of water and heating system and electrical wiring has also been completed. Based on the information available so far and the representations of the Vendor, it is currently expected that the Completion will take place by 31 January 2021.

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LETTER FROM THE BOARD

Set out below are some photos of the surrounding environments of the Property for illustrative purposes:

Xuzhou Yueqiao Flower Garden Project[#] （徐州月橋花院項目）:

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Xuzhou University of Technology[#] （徐州工程學院）

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LETTER FROM THE BOARD

Xuzhou Xincheng Qu Da Longhu Jingqu[#] （徐州新城區大龍湖景區）

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INFORMATION OF THE COMPANY, THE PURCHASER AND THE VENDOR

The Company is incorporated under the laws of the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange. The Group is principally engaged in the production and sale of gold and providing property development, property leasing and property management services, which involves the development of villas, apartments and commercial buildings, property leasing of self-owned properties, the sale of carpark spaces, and provision of property management services, construction services and sales agency service.

The Purchaser is a limited liability company established in the PRC and an indirectly whollyowned subsidiary of the Company. The Purchaser is principally engaged in property management and agency services.

The Vendor is a property development company established in the PRC with limited liability. The Vendor is wholly-owned by Shenzhen Shenmao Property Management Company Limited[#] (the ‘‘Property Management Company’’, 深圳市深茂物業管理有限公司）, which is a limited liability company established in the PRC principally engaged in property management. The Property Management Company is in turn wholly-owned by Beijing People’s Association for Friendship with Foreign Countries[#] (‘‘Association’’, 北京對外友好交流促進會）, which is a society community association[#] （社會團體）registered by Beijing Civil Affairs Bureau[#] （北京市民政局）in accordance with the local governmental regulation in the PRC, which is principally engaged in academic exchange, international exchange, event organisation and provision of consultancy service. The legal representative of Association is Mr. Li Jian (‘‘Mr. Li’’（) 李劍）, whom is a PRC natural person. As advised by the PRC legal adviser of the Company in the PRC (the ‘‘PRC Legal Adviser’’), society community association[#] （社會團體）established in the PRC has no shareholding structure in the PRC. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Mr. Li is the substantial investor[#] （出資人）contributing approximately 90% of the initial set up fund of Association. Each of the Vendor, the Property Management Company, Association and Mr. Li is not governmental body in the PRC and is third party independent of the Company and its connected person (s).

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LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE ACQUISITION ON THE GROUP

Based on the ‘‘Unaudited Pro Forma Financial Information of the Group’’ as set out in Appendix II to this circular, the unaudited pro forma consolidated total assets of the Group as at 30 June 2020 would be approximately RMB200.57 million and the unaudited pro forma consolidated total liabilities of the Group as at 30 June 2020 would be approximately RMB49.70 million upon completion of the Acquisition, assuming that the Acquisition had taken place on 30 June 2020. Accordingly, the unaudited pro forma consolidated net assets of the Group as at 30 June 2020 would be approximately RMB150.88 million, which remained the same as if without the Acquisition, primarily because the cash outflow of the Consideration was completely offset by the addition of the Property which was classified as inventory under the current asset of the Group based on the Consideration upon Completion.

The Group’s earnings are expected to increase as a result of the Acquisition, after taking into account the potential rental income arising from leasing the Property and/or potential sales proceeds to be derived from disposal of the Property. According to the Company’s preliminary plan, the Group intends to dispose of the Property in the coming three to five years primarily based on its conservative estimate that the future development potential of the Property, which is situated in the New District, will be further maximised around such period of time, given the development of several key infrastructure in the New District that the Directors believe will increase the future pedestrian flow and help foster economic activities in the New District, which includes, among others, (i) the construction and future extension of railway network throughout the district of Xuzhou City in accordance with the ‘‘Xuzhou City Rail Transit Phase II Construction Plan (2019-2024)’’[#] （徐州市城市軌道交通第二期建設規劃 (2019-2024)) approved by the National Development and Reform Commission of the People’s Republic of China[#] （發改委）on 20 January 2020, which will increase 11 railway transit lines in Xuzhou City in the coming 5 years, amongst which 5 of the lines will pass through the New District; (ii) the construction of Huaihai International Expo Center[#] （淮海國際博覽中心）, the fourth largest convention and exhibition center in Jiangsu Province, which is situated in close proximity to the Property and consists of hotel rooms, restaurants, exhibition halls, meeting and conference rooms and other cultural and recreational facilities, is expected to be completed by 2021; and (iii) the expected construction of exhibition center, commercial building, hotel, schools and hospitals in the New District in the coming years.

In addition to the Company’s preliminary plan, following the Completion, the Company will also closely monitor and assess the property market from time to time in order to capture opportunities of leasing the Property to third parties tenants to generate rental income before disposing of the Property. As advised by the PRC Legal Adviser, completion of the Title Transfer is not a pre-requisite condition for the Purchaser to enter leasing arrangement and receive the rental income from leasing the Property under the applicable PRC laws and regulations. Given that (i) the Consideration is priced at a discount to the independent valuation of the Company; and (ii) the expected development potential of the Property as detailed above and in the below section headed ‘‘Reason for and benefits of the Acquisition’’, it is expected that the sales proceeds as a result of the disposal of the Property and/or potential rental income as a result of leasing the Property before disposal will contribute positively to the earnings of the Group.

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LETTER FROM THE BOARD

In light of the fact that (i) the Group will have the absolute discretion to decide upon the usage of the Property and will receive all the economic benefits to be derived from the Property upon Completion regardless of the completion of the Title Transfer according to the irrevocable and unconditional guarantee given by the Vendor; and (ii) following the applicable accounting standard as to the accounting treatment of the Property, in particular having considered (a) the Group intends to use the Property as completed properties held for sale upon Completion; (b) the economic benefits of potential sales proceeds as a result of the disposal of the Property; and (c) the effective control over the Property, such as the supervision of maintenance work and formulation of preliminary plan of the Property, will be pertained to the Company after the Completion, the Directors are of the view that the Property will be classified as inventory in the Company’s financial statement upon Completion.

REASONS FOR AND BENEFITS OF THE ACQUISITION

• (i) The Acquisition is generally in line with the procedure for pre-sale of commercial housing in the PRC

As advised by the PRC Legal Adviser, according to the relevant law and regulations in the PRC, there are four key processes from the pre-sale of commercial housing to the completion of title registration in the PRC:

		Timing under
		applicable PRC laws
Processes	Events	and regulations	Status of the Property
1. Filing (the ‘‘Filing’’)	After the PRC real estate developer	Within 15 days after	The Purchaser will enter the Pre-sale
of pre-sale contract	obtains the pre-sale permits, the	the signing of the	Contract with the Vendor after
of commercial	commercial housing can be pre-	Pre-Sale Contract	obtaining the Shareholders’ approval on
housing（商品房預售	sold to the public. The PRC real	under the applicable	the Acquisition at the EGM. The Filing
合同備案）	estate developer and the purchaser	PRC law.	will be done within the prescribed
(‘‘Pre-Sale	shall sign the Pre-Sale Contract		period pursuant to the applicable PRC
Contract’’)#	and file it with the relevant		laws and regulations.
(Stage 1)	housing management department.
	The PRC real estate developer
	shall not sell the commercial
	housing to others before the Pre-
	Sale Contract is terminated.
2. Examination on	The Examination shall be carried out	There is no specific	According to the pre-sale permit
construction	in accordance with the	time requirement	application document of the Property,
completion of	‘‘Construction Engineering	under the applicable	the Examination is expected to take
commercial housing#	Quality Management Regulations’’	PRC law.	place by 31 August 2021. However,
（商品房的竣工驗收）	《建設工程質量管理條例》and		based on the latest development of the
(the ‘‘Examination’’)	other provisions.		Property, according to the Vendor, the
(Stage 2)			Examination is expected to take place
			by 31 January 2021.
3. Delivery of	The commercial housing can only be	There is no specific	According to the pre-sale permit
commercial housing#	delivered after obtaining the	time requirement	application document of the Property,
（商品房的交付）	construction completion	under the applicable	the Delivery is expected to take place
(the ‘‘Delivery’’)	examination certificate.	PRC law.	by 31 December 2021. However, based
(Stage 3)			on the latest development of the
			Property, according to the Vendor, the
			Delivery is expected to take place by 31
			January 2021.

– 12 –

LETTER FROM THE BOARD

		Timing under
		applicable PRC laws
Processes	Events	and regulations	Status of the Property
4. Title registration of	The PRC real estate developer shall	Within 90 days from	The Company will use its best endeavour
commercial housing#	assist the purchaser of the	the date of	to procure the Vendor to complete the
(the ‘‘Title	commercial housing to register the	Delivery.	Title Registration in accordance with its
Registration’’)	property right and title after the		instructions within the prescribed period
（商品房的權屬登記）	Delivery. Upon the completion of		under the applicable PRC laws and
(Stage 4)	the Title Registration, the title is		regulations.
	transferred from the PRC real
	estate developer to the purchaser
	of the commercial housing.

According to Article 13 of the ‘‘Administrative Measures for the Online Registration and Recordation of Commercial Housing Sales Contracts in Xuzhou City’’[#] （徐州市商品房銷售合同網上登 記備案管理辦法第十三條）, the Pre-Sale Contract can only be terminated upon mutual consent between the Purchaser and the Vendor before applying for Title Registration (Stage 4).

As advised by the PRC Legal Adviser, after the Filing (Stage 1) is completed, the Vendor is not allowed to sell the Property to others before the Title Registration (Stage 4) is completed in the absence of termination of the Pre-Sale Contract (whether by mutual termination or defaults by the Vendor). According to (i) Article 15 of the ‘‘Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Trial of Disputes over Commercial Housing Sales Contracts’’[#] （最 高人民法院關於審理商品房買賣合同糾紛案件適用法律若干問題的解釋第十五條）which has been effective since 1 June 2003 and (ii) Article 94 of the ‘‘Contract law of the People’s Republic of ’’[#] China （中華人民共和國合同法第94條）, contracts regarding sale and purchase of commercial housing is terminated when the purchaser defaults or delays in payment. The Purchaser has no intention to default in payment of the Consideration nor terminate the Sale and Purchase Agreement. In light of the fact that (i) the Vendor is under an obligation to pay the default payment of RMB5.0 million if the Completion does not occur on the Completion Date; and (ii) the Examination (Stage 2) and the Delivery (Stage 3) are expected to take place by 31 January 2021, which is close to the date of this circular; and (iii) the Company has been regularly performing on-site monitoring and maintaining close communication with the Vendor regarding the progress of the construction of the Property; the Company is of the view that it is unlikely for the Pre-Sale Contract to be terminated.

In the event that the Vendor defaults the Pre-Sale Contract and the Sale and Purchase Agreement, i.e. the Completion could not take place, the Company could (i) seek compensation from the Vendor, including the default payment of RMB5.0 million as mentioned under the section headed ‘‘The Sale and Purchase Agreement’’; and (ii) proceed to the court in the PRC to continue the Title Registration (Stage 4) for sale of the Property to the others in its own discretion. Given (i) the abundant financial resources of the Group, which is shown by its net cash balance of approximately RMB84.6 million as at 30 June 2020 as disclosed in its latest annual report that is considered to be more than enough to settle the Consideration in full; (ii) the Consideration, which is priced at a discount to the independent market valuation, is based on commercial negotiation between the Purchaser and the Vendor and such discount can only be attained if the Purchaser settles the Consideration in full upon the Delivery (Stage 3); and (iii) the Consideration is settled upon the Delivery (Stage 3) and 30% of which will be deposited into an escrow account until the completion of the Title Transfer, the Directors consider that the payment of the Consideration in full before the Title Transfer is in the interest of the Company and its shareholders.

– 13 –

LETTER FROM THE BOARD

On the basis that (i) both the Company and the Vendor will complete the Filing (Stage 1) as soon as practicable after the Sale and Purchase Agreement is approved at the EGM; (ii) the Company can procure the Vendor to complete the Title Registration (Stage 4) in accordance with its instructions under the applicable PRC law; and (iii) the Company will closely follow the procedures for pre-sale of commercial housing in the PRC under all the applicable PRC laws and regulations which is mentioned in the above paragraphs, the Directors are of the view that the Acquisition complies with the applicable PRC laws and is in line with the procedure for pre-sale of commercial housing in the PRC.

(ii) Additional measures to safeguard and protect the Shareholders’ interest

As mentioned in the above paragraphs, the Company will use its best endeavour to procure the Vendor to complete the Title Transfer within the prescribed period. Taking into account that the completion of the Title Transfer in the PRC involves various and lengthy application, registration and approval process and the time required thereof is out of the control of the Company particularly in view of the pandemic since the beginning of year 2020, the Company is of the view that it is in the best interest of the Company that the Completion can take place without completing the Title Transfer for the purpose of expediting the Acquisition and obtaining the economic benefits to be derived from the Property right after the Completion.

Given (i) the irrevocable and unconditional guarantee given by the Vendor as detailed in the above section headed ‘‘The Sale and Purchase Agreement’’, which serves to safeguard the interest of the Company until the completion of the Title Transfer; (ii) the Group will receive all the economic benefits to be derived from the Property upon the Completion regardless of the completion of the Title Transfer according to the irrevocable and unconditional guarantee by the Vendor; (iii) the Company is entitled to receive the full Consideration together with interests accrued thereon and default payment in the event that the Company fails to complete the Title Transfer and (iv) the Amount is maintained by an independent third party bank in the PRC until the completion of the Title Transfer, which cannot be withdrawn without the consent of the Company; the Company is of the view that such arrangement is fair and reasonable and in the interest of the Company and its shareholders as a whole.

(iii) The Acquisition serves as an opportunity to expand the existing property portfolio of the Group with attractive Consideration

As disclosed in the annual report of the Company for the year ended 30 June 2020, the Company will continue to implement its diversified development strategy and proactive search for potential investment opportunities. Following the acquisition of its property management business and carpark spaces in Xuzhou City of the PRC in November 2018 and March 2019 respectively, the Group would like to further expand its property related business segment in the PRC with an intention to generate a sustainable income to the Group. In this connection, the Company has been actively identifying quality properties in the PRC for acquisition to increase its property portfolio and to expand the Group’s participation in the PRC property market.

– 14 –

LETTER FROM THE BOARD

The Group is familiar with the economic development and business environment in Xuzhou City. In considering a property portfolio for its expansion, the Group generally will take into account of (i) the cost of purchase; (ii) the location, in order to assess whether the Company’s resources in that area will be complementary to the development of the property; and (iii) the future development, in order to assess whether it has an upside development potential in that area. Having taken into account, among others, (i) the Consideration, which is priced at a discount to the independent valuation of the Property; (ii) the quality and location of the Property, where is located in the same city as the existing property management business and carpark spaces of the Group; and (iii) the development potential of the Property, where is situated in the business and financial hub of the New District, the Group considers that the Property fulfills its criteria for being selected as a property portfolio for its expansion, and the entering into the Sale and Purchase Agreement serves as a good opportunity to consolidate its current property portfolio in the PRC and the Acquisition is in line with the business strategies of the Group.

The Directors further consider that if the Acquisition takes place when the Title Transfer is completed, the Consideration would have been higher which would incur additional costs to the Company and thus would not be favourable to the shareholders from commercial perspective. As such, having considered and balancing factors which primarily includes (i) the Acquisition complies with the applicable PRC laws and regulation and is generally in line with the procedure for pre-sale of commercial housing in the PRC; (ii) the Amount is maintained by an independent third party bank in the PRC until the completion of the Title Transfer, which cannot be withdrawn without the consent of the Company; (iii) the Vendor’s irrevocable and unconditional undertakings and guarantees as aforementioned; and (iv) the Consideration is priced at a discount to the independent valuation of the Property at this stage, the Directors consider that the Acquisition is beneficial to the Company and its shareholders.

On the basis of the above, the Directors are of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms, fair and reasonable and are in the interests of Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisition exceed 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company and is therefore subject to the announcement, reporting and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholder or any of their respective associates have any material interest in the Acquisition. As such, no Shareholder would be required to abstain from voting on the resolution to approve, among others, the Sale and Purchase Agreement and the Acquisition at the EGM.

– 15 –

LETTER FROM THE BOARD

EGM

The EGM will be held at Event Room 1-2, LG/F, New World Millennium Hong Kong Hotel, 72 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on 25 January 2021 at 11:00 a.m. to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

A notice convening the EGM is set out on pages 38 to 39 of this circular. A proxy form for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM or any adjournment thereof, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Hong Kong Registrars 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 holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

RECOMMENDATION

The Board (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

By Order of the Board Kingwell Group Limited Mu Dongsheng Chairman

– 16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

Financial information of the Group for each of the three financial years ended 30 June 2018, 2019 and 2020 are disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (http://kingwell.todayir.com).

• a) annual report of the Company for the year ended 30 June 2018 (pages 39 to 120) (https://www1.hkexnews.hk/listedco/listconews/sehk/2018/1029/ltn20181029630.pdf)

• b) annual report of the Company for the year ended 30 June 2019 (pages 41 to 134) (https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1030/ltn20191030043.pdf)

• c) annual report of the Company for the year ended 30 June 2020 (pages 42 to 132) (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1028/2020102800378.pdf)

2. INDEBTEDNESS STATEMENT

As at the close of business on 30 November 2020, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had no outstanding borrowings.

As at 30 November 2020, guarantees given to the banks by the Group in connection with facilities granted to the buyers of certain properties developed by the Group was RMB2,480,000.

Save as aforesaid, and apart from intra-group liabilities, the Group did not have any outstanding debt securities issued and outstanding, and authorised or otherwise created but unissued, term loans, bank overdrafts and loans, other loans or other similar indebtedness, liabilities under acceptance or acceptable credits, debentures, mortgages, charges, hire purchases commitments, guarantee or other material contingent liabilities, at the close of business on 30 November 2020.

3. WORKING CAPITAL OF THE GROUP

The Directors, after due and careful enquiry, are of the opinion that, after taking into account the financial resources presently available to the Group including the internally generated funds, the currently available facilities and the effects of the Acquisition, and in the absence of unforeseen circumstances, the Group has sufficient working capital for its normal business for at least the next twelve months from the date of this circular.

– 17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MATERIAL ADVERSE CHANGE

The Directors confirmed that they are not aware of any material adverse change in the financial position of the Group since 30 June 2020 (being the date to which the latest published audited consolidated financial statements of the Group had been made up) up to the Latest Practicable Date.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in property development, property leasing and gold mining business.

In order to sustain the continuous growth of the Group, the Group developed its property development and property leasing business in Anlu City, Hubei Province, the PRC. The real estate project is comprising various types of properties including villas, apartments and commercial buildings. The Anlu Taihe’s daily operations are being significant affected by the Covid-19 in Hubei Province. The Group are implementing the precautionary measures against Covid-19 to protect our staff and customers. These situation will affect the sales income in the future. Although the property market is under great pressure, the Directors expect that the Anlu Taihe will continue to generate positive cashflow.

The property management business in Xuzhou City, Jiangsu Province, the PRC, will enhance the Group’s expertise in the daily management of properties in the PRC, enabling the Group to improve the quality of the property management at the Group’s property development project. The property management business in Xuzhou City are implementing the precautionary measures against Covid-19 to protect our staff and customers. Also, by leveraging on the existing property management team which includes a total of 56 staff that is based in Xuzhou City, the Group will expand the sales agency service from the existing property management service in Xuzhou to provide further value-added services for assisting the property developer to sell its inventories. Going forward, with the increase in property portfolio in Xuzhou City following the Acquisition and the uplift of the Group’s expertise in managing the properties, the Group will continue to explore properties in the PRC in order to provide more valueadded services by its property management team. The Directors expect that the property management business will continue contributing positive cashflow to the Group.

In addition, the Group has completed the acquisition of 700 carpark spaces in Xuzhou City, the PRC. This acquisition is a good opportunity to expand the Group’s participation in the PRC property market. Due to the Covid-19 in China and it will affect the carpark sales situation in Xuzhou City.

The Group would place more resources in property related business to enhance the core business in the future.

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As for the gold mining business, since the mining area is too large and the rock composition in the northern Molchan region is complex, the Russia gold mining company planned to conduct small scale production prior to large scale exploitation, which is common for all the mining exercise. The Russia gold mining company submitted the plan of exploitation to the local government in October 2017. However, due to the increase in number of wildfire and environmental destruction incidents caused by mining activities in 2017, the Russian authority raised the environment protection requirements on exploitation applications at the beginning of 2018. As the Group signed an outsourcing contract with a third party which modified the original submitted plan, the Group was required to re-submit a new plan of exploitation which satisfies the tightened regulation. The Group has filed the reschedules in November 2018 and obtained the exploitation approval within the year of 2020. According to the new legal requirements in Russia, it is very difficult to get the working visa for the PRC workers. In this case, the outsourcing contractor had employed the local Russian workers for this project. Due to the Covid-19, the Group has changed the exploitation plan and postponed the normal production of the Russia Gold mine to protect our staff and outsourcing contractor staff. The Group expects the Russia gold mine will only maintain the minimum operation by the outsourcing contractor in 2020 and 2021. In the coming years, the Group will continue to sign the contract with the outsourcing contractor. Also, the Group will also invite and negotiate with the other outsourcing contractors. The Group would like to obtain the better terms with outsourcing contractors. Due to the Covid-19, most of the Russia workers refused to go out to do the mining work. Also, the heavy raining and flooding in the Molchan region will also affect the mining work. In this case, the Group do not expect the Russia gold mine will provide significant income in 2020 and 2021.

Due to the outbreak of the Covid-19 epidemic in January 2020, the Group will closely monitor the impact on the Group’s operations.

Following the acquisition of its property management business and carpark spaces in Xuzhou City of the PRC in November 2018 and March 2019 respectively, the Group would like to further expand its property related business segment in the PRC with the intention to generate a sustainable income to the Group. The Property, which is situated in the new business and financial hub of Xuzhou City, is considered to have development potential which serves to further consolidate the existing property portfolio of the Group in the PRC.

Looking ahead, the Group will continue to implement its diversified development strategy and proactively search for potential investment opportunities.

– 19 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Introduction

The unaudited pro forma financial information (the ‘‘Unaudited Pro Forma Financial Information’’) of the Group has been prepared for the purposes of providing shareholders of the Company with information about the impact of the proposed acquisition of the 3 blocks of 3-storey commercial buildings, which comprises of Block 10, Block 11 and Block 12 in the Xuzhou Yueqiao Flower Garden Project（徐州月橋花院項目）developed by the Xuzhou City Zhongwei Real Estate Co., Ltd.（徐州市中維地產有限公司）(the ‘‘Property’’) (the ‘‘Acquisition’’), as if the Acquisition had taken place on 30 June 2020. The Unaudited Pro Forma Financial Information presented below is prepared to illustrate the financial position of the Group immediately after completion of the Acquisition as at 30 June 2020 as if the Acquisition had been completed on 30 June 2020.

The Unaudited Pro Forma Financial Information has been prepared based on a number of assumptions, estimates, uncertainties and currently available information. Accordingly, the Unaudited Pro Forma Financial Information does not purport to describe the actual financial position of the Group that would have been attained had the Acquisition been completed on 30 June 2020 nor purport to predict the Group’s future financial position.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the Acquisition been completed as of 30 June 2020.

The Unaudited Pro Forma Financial Information is prepared based on the consolidated statement of financial position of the Group as at 30 June 2020 as extracted from the published annual report of the Group for the year ended 30 June 2020, after making pro forma adjustments relating to the Acquisition that are directly attributable to the Acquisition. The Unaudited Pro Forma Financial Information should be read in conjunction with other financial information included elsewhere in this circular.

– 20 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

NON-CURRENT ASSETS Property, plant and equipment Investment properties Goodwill Intangible assets Deferred tax assets Total non-current assets CURRENT ASSETS Inventories Trade receivables Prepayments and other receivables Financial assets at fair value through profit or loss Pledged deposits Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals Contract liabilities Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	The Group as at 30 June 2020 RMB’000 Note 1 1,215 5,490 4,821 42,763 5,428 59,717 35,652 13,772 1,027 5,303 506 84,596 140,856 5,524 25,618 4,827 9,482 45,451 95,405 155,122	Pro forma adjustment RMB’000 (Unaudited) Note 2 – – – – – – 40,000 – – – – (40,000) – – – – – – – –	Pro forma of the Group after the Acquisition RMB’000 1,215 5,490 4,821 42,763 5,428
			59,717
			75,652 13,772 1,027 5,303 506 44,596
			140,856
			5,524 25,618 4,827 9,482
			45,451
			95,405
			155,122

– 21 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

NON-CURRENT LIABILITIES Non-redeemable convertible preferred shares Deferred tax liabilities Total non-current liabilities Net Assets EQUITY Equity attributable to owners of the Company Issued capital Non-redeemable convertible preferred shares Other reserves Non-controlling interests Total Equity	The Group as at 30 June 2020 RMB’000 Note 1 865 3,381 4,246 150,876 252,856 2,252 (128,451) 126,657 24,219 150,876	Pro forma adjustment RMB’000 (Unaudited) Note 2 – – – – – – – – – –	Pro forma of the Group after the Acquisition RMB’000 865 3,381 4,246 150,876 252,856 2,252 (128,451) 126,657 24,219 150,876

Notes:

1. Basis of preparation

This Unaudited Pro Forma Financial Information has been prepared in accordance with Rule 4.29 of the Listing Rules and based upon the consolidated statement of financial position of the Group as at 30 June 2020, which has been extracted from the published annual report of the Group for the year ended 30 June 2020.

No adjustments have been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 June 2020.

2. Note to the pro forma adjustment

As the Group will receive all the economic benefits to be derived from the Property upon the Completion regardless of the completion of the Title Transfer and the Group intends to use the Property as completed properties held for sale after the completion of the Acquisition, the Property is classified as inventory. The adjustments of inventory and cash and cash equivalents is to reflect the Acquisition of the Property at the cash consideration of RMB40,000,000, as if the Acquisition has been completed on or before 30 June 2020. The cost of inventory is lower than the market value of RMB42,400,000 as at 30 November 2020 as set out in Appendix III to this circular.

– 22 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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

The following is the text of a report, received from the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong Kong, prepared for the purpose of incorporation in this circular, in respect of the unaudited pro forma financial information of the Group.

22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

To the Directors of Kingwell Group Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Kingwell Group Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position of the Group as at 30 June 2020 and the related notes set out in the section A of Appendix II to the circular dated 8 January 2021 issued by the Company (the ‘‘Circular’’) (the ‘‘Unaudited Pro Forma Financial Information’’) in connection with the proposed acquisition of the 3 blocks of 3-storey commercial buildings, which comprises of Block 10, Block 11 and Block 12 in the Xuzhou Yueqiao Flower Garden Project（徐州月橋花院項目）developed by Xuzhou Zhongwei Real Estate Co., Ltd.（徐州市中維地產有限公司）(the ‘‘Acquisition’’). The applicable criteria on the basis of which the Directors have compiled the Pro Forma Financial Information are described in the notes 1 and 2 in the section A of Appendix II to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Acquisition on the Group’s financial position as at 30 June 2020, as if the Acquisition had taken place at 30 June 2020. As part of this process, information about the Group’s financial position as at 30 June 2020 has been extracted by the Directors from the published annual report of the Group for the year ended 30 June 2020.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

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

Our independence and quality control

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

– 23 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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

Reporting accountants’ responsibilities

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

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

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

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Acquisition on unadjusted financial information of the Group as if the Acquisition had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Acquisition would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the Acquisition, and to obtain sufficient appropriate evidence about whether:

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

• the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

– 24 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

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

In our opinion:

• (a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;

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

• (c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

Ernst & Young

Certified Public Accountants Hong Kong

8 January 2021

– 25 –

PROPERTY VALUATION REPORT

APPENDIX III

The following is the text of a letter and a valuation certificate prepared for the purpose of incorporation in this circular received from AVISTA Valuation Advisory Limited, an independent valuer, in connection with its valuation as at 30 November 2020 of the property interests held by the Group.

��������������������������

23rd Floor, Siu On Centre, No. 188 Lockhart Road, Wan Chai, Hong Kong

: (852) 3702 7338 : (852) 3914 6388

8 January 2021

The Board of Directors Kingwell Group Limited Units 314-315, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong

Dear Sirs/Madams,

INSTRUCTIONS

In accordance with the instructions of Kingwell Group Limited (the ‘‘Company’’) and its subsidiaries (hereinafter together referred to as the ‘‘Group’’) for us to carry out the valuation of the property interests located in the No. 16 Fuchun Road, Yunlong District, Xuzhou City, Jiangsu Province, the People’s Republic of China (the ‘‘PRC’’) held by Xuzhou City Zhongwei Real Estate Co., Ltd.（徐州 市中維地產有限公司）(the ‘‘Vendor’’). We confirm that we have carried out inspection, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the Market Value of the property interests as at 30 November 2020 (the ‘‘Valuation Date’’).

VALUATION STANDARDS

In valuing the property interests, we have complied with all the requirements set out 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 ‘‘Listing Rules’’), the HKIS Valuation Standards (2017 Edition) published by the Hong Kong Institute of Surveyors and the International Valuation Standards published from time to time by the International Valuation Standards Council.

BASIS OF VALUATION

Our valuation is carried out on a Market Value basis, which is defined by the Hong Kong Institute of Surveyors 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’’.

– 26 –

PROPERTY VALUATION REPORT

APPENDIX III

VALUATION ASSUMPTIONS

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

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

In the course of our valuation of the property in the PRC, we have assumed that transferable land use rights in respect of the property for a specific term at nominal annual land use fees have been granted and that any premium has already been fully settled. We have relied on the advice given by the Group regarding the title to the property. For the purpose of our valuation, we have assumed that the grantee has an enforceable title to the property.

In valuing the property in the PRC, we have assumed that the grantees or the users of the property have free and uninterrupted rights to use or to assign the property for the whole of the unexpired term as granted.

Unless noted in the report, vacant possession is assumed for the property concerned.

Moreover, we have assumed that the design and construction of the properties are/will be in compliance with the local planning regulations and requirements and had been/would have been duly examined and approved by the relevant authorities.

Continued uses assumes the properties will be used for the purposes for which the properties are designed and built, or to which they are currently adapted. The valuation on the property in continued uses does not represent the amount that might be realised from piecemeal disposition of the property in the open market.

No environmental impact study has been ordered or made. Full compliance with applicable national, provincial and local environmental regulations and laws is assumed. Moreover, it is assumed that all required licences, consents or other legislative or administrative authority from any local, provincial or national government or private entity or organisation either have been or can be obtained or renewed for any use which the report covers.

It is also assumed that all applicable zoning and use regulations and restrictions have been complied with unless nonconformity has been stated, defined and considered in the valuation report. In addition, it is assumed that the utilisation of the land and improvements are within the boundaries of the properties described and that no encroachment or trespass exists, unless noted in the report.

We have further assumed that the properties were not transferred or involved in any contentious or non-contentious dispute as at the valuation date. We have also assumed that there was not any material change of the properties in between dates of our inspection and the valuation date.

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PROPERTY VALUATION REPORT

APPENDIX III

VALUATION METHODOLOGY

In the course of our valuation, unless otherwise stated, we have valued the properties in their designated uses with the understanding that the properties will be used as such (hereafter referred to as ‘‘continued uses’’).

In valuing the property interests, we have valued by market approach by making reference to comparable market transactions/asking in our assessment of the property interests. This approach rests on the wide acceptance of the market transactions/asking as the best indicator and pre-supposes that evidence of relevant transactions/asking in the market place can be extrapolated to similar properties, subject to allowances for variable factors.

TITLE INVESTIGATION

We have been provided with copies of documents in relation to the title of the property interests in the PRC. Where possible, we have examined the original documents to verify the existing title to the property interest in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. All documents have been used for reference only and all dimensions, measurements and areas are approximate. In the course of our valuation, we have relied considerably on the legal opinion given by the Company’s PRC legal adviser – Dentons, concerning the validity of title of the property interests in the PRC.

SITE INVESTIGATION

We have inspected the exteriors and, where possible, the interior of the Property. The site inspection was carried out on 7 July 2020 by Xavier Gong (Analyst). However, we have not carried out an investigation on site to determine the suitability of ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory. We have further assumed that there is no significant pollution or contamination in the locality which may affect any future developments.

Moreover, no structural surveys have been undertaken, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the Property is free of rot, infestation or any other structural defects. No tests were carried out on any of the utility services.

SOURCE OF INFORMATION

Unless otherwise stated, we shall rely to a considerable extent on the information provided to us by the Company or the legal or other professional advisers on such matters as statutory notices, planning approvals, zoning, easements, tenures, completion date of buildings, development proposal, identification of properties, particulars of occupation, site areas, floor areas, matters relating to tenure, tenancies and all other relevant matters.

We have had 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 reach an informed view and we have no reason to suspect that any material information has been withheld.

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PROPERTY VALUATION REPORT

APPENDIX III

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

LIMITING CONDITION

Wherever the content of this report is extracted and translated from the relevant documents supplied in Chinese context and there are discrepancies in wordings, those parts of the original documents will take prevalent.

CURRENCY

Unless otherwise stated, all monetary amounts stated in this report are in Renminbi (RMB).

Our valuations are summarized below and the valuation certificates are attached.

Yours faithfully, For and on behalf of AVISTA Valuation Advisory Limited Sr Oswald W Y Au MHKIS(GP) AAPI MSc(RE) Registered Professional Surveyor (GP) Director

Note: Mr. Oswald W Y Au holds a Master‘s Degree of Science in Real Estate from the University of Hong Kong. He is also a member of Hong Kong Institute of Surveyors (General Practice) and Associate Member of Australian Property Institute. In addition, he is a Registered Professional Surveyor (General Practice) registered with Surveyors Registration Board. He has over 15 years’ experience in the valuation of properties including Hong Kong, the PRC, the U.S., Canada, East and Southeast Asia including Singapore, Japan and Korea.

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PROPERTY VALUATION REPORT

APPENDIX III

VALUATION CERTIFICATE

Property interests held for sale by the Vendor in the PRC

No. Property Description and tenure

Market value in existing state as at Particulars 30 November of occupancy 2020 RMB

1. Block 10, Block 11 The property comprises 3 blocks of 3-storey and Block 12 in the commercial buildings erected thereon and is ‘‘Xuzhou Yueqiao expected to be completed by 31 January 2021. Flower Garden’’ (‘‘徐州月橋花院’’) The property has a total gross floor area of located at approximately 3,267.11 sq.m.. No. 16 Fuchun Road Yunlong District The property is located nearby the Xuzhou Xuzhou City University of Technology and Xincheng Qu Da Jiangsu Province Longhu Jingqu, with approximately 15km to the PRC Xuzhou East Station and 35km to Xuzhou Guanyin International Airport.

2. The property is 42,400,000 currently under construction as at the valuation date.

The land use rights of the property have been granted for a term expiring on 15 October 2047 for commercial use.

Notes:

1. Pursuant to the current development’s State-owned Land Use Rights Certificates – Su (2018) Xu Zhou Shi Bu Dong Chan Quan Di No. 0067332 dated 14 June 2018 with a total site area of approximately 62,715.80 sq.m. has been vested to 徐州市 中維地產有限公司, the Vendor, for a term of approximately 40 years for commercial and municipal utilities use, 50 years for comprehensive use and 70 years for residential use.

2. Pursuant to the whole development’s Construction Land Planning Permit – Di Zi Di No. 320300201303081 dated 8 October 2013 in favour of 徐州市中維地產有限公司, permission towards the planning of a parcel of land with a total site area of approximately 165,068.4 sq.m. is obtained.

3. Pursuant to the Construction Works Planning Permit – No. XG2013020-4 dated 25 November 2015 in favour of 徐州市中維 地產有限公司, the development of Block B3-B6 and B8-B12 with total gross floor area of approximately 9,803.4 sq.m. have been approved for the construction of commercial buildings.

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PROPERTY VALUATION REPORT

APPENDIX III

1. Pursuant 3 Construction Works Commencement Permits in favour of 徐州市中維地產有限公司, the development of Block 10, Block 11 and Block 12 with total gross floor area of approximately 3,329 sq.m. have been approved for the construction of commercial buildings and the details are shown as below:

No. Construction Works Commencement Permit No. a. Xu Jian Shi Zheng Xin No. 2016004 b. Xu Jian Shi Zheng Xin No. 2016005 c. Xu Jian Shi Zheng Xin No. 2016006 Total:	Gross Floor Area Date of Issue (sq.m.) 1,318 13-Jan-16 1,163 13-Jan-16 848 13-Jan-16 3,329

1. Pursuant 3 Pre-sale Permits in favour of 徐州市中維地產有限公司, the development of Block 10, Block 11 and Block 12 with total gross floor area of approximately 3,267.11 sq.m. have been permitted to be pre-sale and the details are shown as below:

No. Pre-sale Permit No. a. Xu Fang Shou Xu Zi (2020) Di No. 47 b. Xu Fang Shou Xu Zi (2020) Di No. 48 c. Xu Fang Shou Xu Zi (2020) Di No. 46 Total:	Gross Floor Area Date of Issue (sq.m.) 1,292.67 7-July-20 1,143.94 8-July-20 830.5 7-July-20 3,267.11

1. 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:

2. a. 徐州市中維地產有限公司 is legally obtained the land use right and the land use right can be legally leased, transferred and mortgaged by 徐州市中維地產有限公司;

3. b. 徐州市中維地產有限公司 is legally obtained the Construction Land Planning Permit, Construction Works Planning Permit, Construction Works Commencement Permits and Pre-sale Permits; and

4. c. The property is free from encumbrances including but not limited to lien, pledge, mortgage and any other form of restriction of rights.

5. In our valuation, we have made reference to some asking price references of comparable nearby development. We have adopted the range of unit rates between RMB18,000 to RMB20,000 (1/F), RMB9,500 to RMB10,500 (2/F) and RMB7,500 to RMB8,500 (3/F). The unit rates assumed by us are consistent with the said price reference. Due adjustments to the unit rates of those price reference have been considered to reflect factors including but not limited to passenger flow, accessibility, frontage, time, location, floor and size in arriving at the key assumptions.

We have adopted floor and size adjustment in the valuation, due to the size of the asking price references adopted are different from the subject property, therefore size adjustment have been adopted, the bigger size, the lower unit rate. In addition, the floor level of the asking price references adopted are different from the subject property, therefore floor adjustment have been adopted, the higher floor level, the lower unit rate.

1. The property is structurally completed, however the completion acceptance has not yet been obtained.

2. The estimated value after completion of the property would be RMB42,400,000.

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PROPERTY VALUATION REPORT

APPENDIX III

1. A summary of major certificates/licenses is shown as follows:

2. a. State-owned Land Use Rights Certificate Yes b. Construction Land Planning Permit Yes c. Construction Works Planning Permit Yes d. Construction Works Commencement Permit Yes e. Pre-sale Permit Yes

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GENERAL INFORMATION

APPENDIX IV

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 aspects and not misleading or deceptive, and there is no other matter the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required pursuant to Section 352 of the SFO to the entered in the register referred to therein; or (c) were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the ‘‘Model Code‘‘）as set out in Appendix 10 of the Listing Rules to be notified to the Company and the Stock Exchange, were as follows:

Long position in Shares and options of the Company

			Total
		Number of	approximate
		issued	% of the
		ordinary	issued share
Name of Directors	Capacity	Shares held	capital
Mr. Du Yun	Interest held through	394,198,376	13.62
	controlled corporation	(Note)
Mr. Mu Dongsheng	Beneficial owner	277,777,777	9.60

Note: 394,198,376 ordinary Shares are held by Union Day Group Limited (a company incorporated in the British Virgin Islands with limited liability), which is 40% beneficially owned by Mr. Du Yun.

Save as disclosed above, as at the Latest Practicable Date, none of the Director and chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or 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 were taken or deemed to have under such provisions of the SFO) or were required, pursuant to section 352 of the SFO, to be entered in the register referred therein; or were required, pursuant to the Model Code as set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX IV

3. SUBSTANTIAL SHAREHOLDERS

So far as was known to the Directors, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the shares or underlying shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

			Total
		Number of	approximate
		issued	% of the
		ordinary	issued share
Name of Shareholder	Capacity	Shares held	capital
Union Day Group Limited	Beneficial owner	394,198,376	13.62
		(Note)
Mr. Yin Jia Tang	Beneficial owner	217,880,604	7.53

Note: 394,198,376 ordinary Shares are held by Union Day Group Limited ( a company incorporated in the British Virgin Islands with limited liability), which is 40% beneficially owned by Mr. Du Yun.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

4. COMPETING INTEREST

As at the Latest Practicable Date, the Directors confirm that neither themselves nor any of their respective close associates (as defined in the Listing Rules) were interested in any business apart from the business of the Group which competed, or was likely to compete, either directly or indirectly, with the business of the Group.

5. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been, since 30 June 2020 (being the date to which the latest published audited financial statements of the Company were made up) and up to the Latest Practicable Date, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX IV

6. INTEREST IN CONTRACT OR ARRANGEMENT

The Directors confirm that there was no contract or arrangement subsisting at the Latest Practicable Date in which they were materially interested and which was significant in relation to the business of the Group.

7. LITIGATION

The Directors confirm that none of the member of the Group was engaged in any litigation or claims of material importance and no litigation or claim of material importance was pending or threatened against any member of the Group as at the Latest Practicable Date.

8. EXPERT AND CONSENT

The following is the qualification of the expert who has provided its opinion or advice, which are contained in this circular:

Name Qualification Ernst & Young Certified Public Accountants AVISTA Valuation Advisory Limited Independent property valuer

Each of the experts above had given and has not withdrawn its written consent to the issue of this circular, with the inclusion therein of its letter and/or report or the references to its name in the form and context in which it appears.

As at the Latest Practicable Date, each of the experts above did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of the Group.

As at the Latest Practicable Date, Each of the experts above did not have any direct or indirect interest in any assets which had since 30 June 2020, being the date to which the latest published audited financial statements of the Company were made up, been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX IV

9. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within two years immediately preceding the date of the circular and are or may be material:

			Major Transactions
Agreement Date	Parties	Amount Involved	Summary
14 August 2020	Xuzhou Ronghui	RMB40,000,000	Acquisition of 3 blocks of 3-
& 4 January 2021	Commercial	(equivalent to	storey commercial
	Management	approximately HK	buildings, which comprises
	Company	$44,400,000)	of Block 10, Block 11 and
	Limited#（徐州融滙		Block 12 in the Xuzhou
	商業管理有限公司）		Yueqiao Flower Garden
	as purchaser, Xuzhou		Project#（徐州月橋花院項
	City Zhongwei Real		目）
	Estate Co., Ltd.#（徐
	州市中維地產有限公
	司）as vendor
21 June 2019	Wu Fong Shing as	RMB53.0 million	The Company sold 35% of
	purchaser; the	(equivalent to	the issued share capital of
	Company as vendor	approximately HK	Port First Limited（首港有
		$60.4 million)	限公司）to Wu Fong Shing
1 March 2019	Jiangsu Tianan Hongji	RMB28.0 million	Acquisition of 700 carpark
	Property Management	(equivalent to	spaces in Xincheng
	Co., Ltd#（江蘇天安	approximately HK	District, Xuzhou City,
	鴻基物業管理有限	$31.9 million)	Jiangsu Province, PRC
	公司）as purchaser;
	Xuzhou Zhongwei
	Real Estate Co.,
	Ltd.#（徐州市中維地
	產有限公司）as
	vendor

10. SERVICE CONTARCTS

The Directors confirm that as at the Latest Practicable Date, the Directors did not have any existing or proposed service contract with any member of the Group (excluding contracts to expire or may be terminated by the employer within a year without payment of any compensation (other than statutory compensation)).

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GENERAL INFORMATION

APPENDIX IV

11. MISCELLANEOUS

• a) The company secretary of the Company is Mr. Poon Yan Wai, who is a Fellow Member of The Hong Kong Institute of Certified Public Accountants. He also holds a Bachelor’s degree in Accountancy and a Master’s degree in Corporate Finance from Hong Kong Polytechnic University.

• b) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands and the head office and principal place of business in Hong Kong is at Units 314-315, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong.

• c) The principal share registrar and transfer office of the Company in the Cayman Islands is Suntera (Cayman) Limited at 3rd Floor, The Royal Bank House, 24 Shedden Road, P.O. Box 1586, Grand Cayman, KY1-1110, Cayman Islands. The branch share registrar and transfer office of the Company in Hong Kong is Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• d) The English text of this circular shall prevail over the Chinese text in case of inconsistencies.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company at Units 314-315, Wing On Plaza, 62 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong during normal business hours on any business day up to and including the date which is 14 days from the date of this circular:

• a) the memorandum and articles of association of the Company;

• b) the annual reports of the Company for the three years ended 30 June 2018, 2019 and 2020;

• c) the unaudited pro forma financial information of the Group from Ernst & Young, the text of which is set out in Appendix II;

• d) the material contracts referred to under the section headed ‘‘Material Contracts’’ in this Appendix;

• e) the Sale and Purchase Agreement;

• f) the Supplemental Sale and Purchase Agreement;

• g) Property valuation report prepared by Avista Valuation Advisory Limited, the text of which is set out in Appendix III;

• h) the written consents referred to under the section headed ‘‘Expert and consent’’ in this Appendix; and

• i) this circular.

– 37 –

NOTICE OF THE EGM

==> picture [69 x 69] intentionally omitted <==

KINGWELL GROUP LIMITED 京維集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1195)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of Kingwell Group Limited (the ‘‘Company’’) will be held at Event Room 1-2, LG/F, New World Millennium Hong Kong Hotel, 72 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on 25 January 2021 at 11:00 a. m. for the purpose of considering and, if thought fit, passing (with or without amendments) the following resolution as ordinary resolution:

Words and expressions that are not expressly defined in this notice of EGM shall bear the same meaning as that defined in the circular dated 8 January 2021, a copy of which is marked ‘‘A’’ and tabled before the EGM and initialled by the chairman of the EGM for identification purpose.

ORDINARY RESOLUTION

1. ‘‘THAT:

2. (a) the Sale and Purchase Agreement dated 14 August 2020 (as amended and supplemental by the Supplemental Sale and Purchase Agreement dated 4 January 2021) (the ‘‘Sale and Purchase Agreement’’) entered into between Xuzhou Ronghui Commercial Management Company Limited#（ 徐州融匯商業管理有限公司）as purchaser and Xuzhou City Zhongwei Real Estate Co., Ltd.[#] （徐州市中維地產有限公司）as vendor, pursuant to which the Purchaser conditionally agreed to purchase and the Vendor conditionally agreed to sell the Property, at the Consideration of RMB40,000,000 (equivalent to approximately HK$44,400,000) be and is hereby approved confirmed and ratified; and

3. (b) anyone of the directors of the Company be and is hereby authorised to do such acts and things, to sign and execute all such further documents and to take such steps as he/she may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the Sale and Purchase Agreement and any transactions contemplated thereunder.’’

Yours faithfully, On behalf of the Board KINGWELL GROUP LIMITED Mu Dongsheng Chairman

Hong Kong, 8 January 2021

– 38 –

NOTICE OF THE EGM

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

Principal Place of Business in Hong Kong: Units 314-315 Wing On Plaza 62 Mody Road Tsim Sha Tsui East Kowloon, Hong Kong

Notes:

1. The resolution set out in this notice of EGM will be taken by poll pursuant to the Listing Rules and the results of the poll will be published on the websites of the Stock Exchange and the Company in accordance with the Listing Rules.

2. Any member entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her behalf. A proxy needs not be a member of the Company.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer, attorney or other person authorised to sign the same.

4. Completion and return of the form of proxy will not preclude members from attending and voting in person at the EGM or at any adjourned meeting (as the case may be) should they so wish. If the relevant member attends the EGM, the form of proxy shall be deemed to be revoked.

5. In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be deposited at the Company’s Hong Kong branch share registrar, Hong Kong Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjourned meeting (as the case may be).

6. Whether or not you intend to attend the EGM in person, you are urged to complete and return the form of proxy in accordance with the instructions printed thereon.

7. Where there are joint registered holders of any Share, any one of such joint registered holders may vote at the EGM, either in person or by proxy, in respect of such Share as if he/she was solely entitled thereto, but if more than one of such joint registered holders are present at the EGM, whether in person or by proxy, the joint registered holders present whose name stands first on the register of members of the Company in respect of the Shares shall be accepted to the exclusion of the votes of the other registered holders.

8. The register of members of the Company will be closed, for the purpose of determining the identity of members who are entitled to attend and vote at the EGM, from 19 January 2021 to 25 January 2021, both days inclusive, during which period no transfers of shares will be effected. In order to be eligible to attend and vote at the EGM, all properly completed and duly stamped transfer forms accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Hong Kong Registrars Limited at Shops 1712-1716, 17th floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, for registration not later than 4:30 p.m. on 18 January 2021.

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