Li Ning Company Limited — Proxy Solicitation & Information Statement 2017

Mar 30, 2017

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 licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Chinlink International Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s), or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the 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 of Chinlink International Holdings Limited.

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

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CHINLINK INTERNATIONAL HOLDINGS LIMITED 普匯中金國際控股有限公司 (Incorporated in Bermuda with limited liability) (Stock Code: 0997)*

(1) MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN, AND THE SHAREHOLDER’S LOAN DUE BY, ZHONG HUI GLOBAL LIMITED AND ITS SUBSIDIARIES; (2) PROPOSED ISSUE OF CONVERTIBLE BONDS; AND (3) NOTICE OF SGM

Financial adviser to Chinlink International Holdings Limited

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Independent financial adviser to the Independent Board Committee and the Independent Shareholders

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Capitalised terms used on this cover shall have the same meanings as those defined in this circular, unless the context requires otherwise. A letter from the Board is set out on pages 7 to 27 of this circular. A letter from the Independent Board Committee is set out on pages 28 to 29 of this circular. A letter from Gram Capital containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 30 to 50 of this circular.

A notice convening the SGM to be held at 2:30 p.m. on Friday, 28 April 2017 at Suites 5-6, 40/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar and transfer office, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof (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 SGM or any adjournment thereof (as the case may be) should you so wish, and in such event, the instrument appointing the proxy shall be deemed to be revoked.

31 March 2017

• For identification purposes only

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . .	28
LETTER FROM GRAM CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . .	I-1
APPENDIX II – FINANCIAL INFORMATION OF THE TARGET GROUP. . . . . . . .	II-1
APPENDIX III – UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE ENLARGED GROUP. . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV – PROPERTY VALUATION REPORT. . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
NOTICE OF SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

DEFINITIONS

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

• “Acquisition”

the proposed acquisition of the Sale Share pursuant to the terms and conditions of the Acquisition Agreement and the proposed acquisition of the Sale Loan pursuant to the terms and conditions of the Loan Purchase and Financing Agreement

• “Acquisition Agreement”

the sale and purchase agreement dated 2 February 2017 entered into among the Vendor, the Purchaser, Mr. Li and the Company in respect of the acquisition of the Sale Share, as amended by the Acquisition Supplemental Deed

• “Acquisition Supplemental Deed”

the supplemental deed dated 13 March 2017 entered into among the Vendor, the Purchaser, Mr. Li and the Company to amend certain terms of the Acquisition Agreement

• “associate”

has the meaning ascribed to it under the Listing Rules

• “Board”

the board of Directors

• “Bond Issue”

the proposed issue of the Financing Bonds to Mr. Li or his nominee(s) pursuant to the terms and conditions of the Loan Purchase and Financing Agreement

• “Business Day”

• a day (other than a Saturday, Sunday and public holiday) on which licensed banks in Hong Kong are open for general business during their normal business hours

• “BVI”

the British Virgin Islands

• “Company”

Chinlink International Holdings Limited, a company incorporated in Bermuda whose issued shares are listed on the main board of the Stock Exchange (Stock Code: 0997)

• “Completion” completion of the acquisition of the Sale Share and the Sale Loan in accordance with the terms and conditions of the Acquisition Agreement and the Loan Purchase and Financing Agreement respectively, which shall take place simultaneously

• “Completion Date” the date on which Completion takes place

• “connected person(s)”

has the meaning ascribed to it under the Listing Rules

1

DEFINITIONS

• “Consolidated Share(s)”

• “Conversion Price”

• “Conversion Share(s)”

• “Convertible Bonds”

• “Director(s)”

• “Enlarged Group”

• “Existing Share Charges”

• “Financing Bonds”

• ordinary share(s) of HK$0.3125 each in the share capital of the Company immediately after the Share Consolidation which became effective on 28 March 2017

• the price at which the Conversion Shares will be issued upon exercise of the conversion rights attaching to the Convertible Bonds and initially will be HK$0.565 per Conversion Share (subject to adjustment pursuant to the terms and conditions of the Convertible Bonds)

• initially, up to an aggregate of 654,867,256 Consolidated Shares (subject to adjustment pursuant to the terms and conditions of the Convertible Bonds) which may fall to be allotted and issued by the Company upon exercise of the conversion rights attaching to the Convertible Bonds by the holders of the Convertible Bonds

• 3% coupon convertible bonds due 2019 in registered form to be secured by the Share Charges and issued by the Company pursuant to the Acquisition Agreement and the Loan Purchase and Financing Agreement

the director(s) of the Company from time to time

• the Group as enlarged by the Acquisition and the Bond Issue (assuming Completion has taken place)

• the existing share charges over the shareholdings of each member of the Target Group pledged as security for the borrowings of the Vendor in favour of an independent financial institution

• the Convertible Bonds in an aggregate principal amount of HK$58 million to be issued in two tranches to Mr. Li or his nominee(s) by the Company upon Mr. Li providing financing to the Group pursuant to the terms and conditions of the Loan Purchase and Financing Agreement after Completion

2

DEFINITIONS

• “Gram Capital” or

• “Independent Financial Adviser”

• “Group”

• “HK Subsidiary”

• “Hong Kong”

• “Increase in Authorised Share Capital”

• “Independent Board Committee”

• “Independent Shareholders”

• “Latest Practicable Date”

• “Listing Rules”

• “Loan Consideration Bonds”

Gram Capital Limited, a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders with respect to the Acquisition and the Bond Issue

the Company and its subsidiaries

Real King International Holdings Limited, a wholly-owned subsidiary of the Target incorporated in Hong Kong and the immediate holding company of the PRC Subsidiary

the Hong Kong Special Administrative Region of the PRC

the increase in the authorised share capital of the Company from HK$250,000,000 divided into 800,000,000 Consolidated Shares to HK$625,000,000 divided into 2,000,000,000 Consolidated Shares by the creation of an additional 1,200,000,000 Consolidated Shares as disclosed in the announcement of the Company dated 7 February 2017, which became effective on 27 March 2017

• the independent committee of the Board comprising all the independent non-executive Directors established pursuant to the Listing Rules to give recommendation to the Independent Shareholders in respect of the Acquisition and the Bond Issue

• Shareholders other than Mr. Li, Wealth Keeper, the Vendor and their respective associates

28 March 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

the Rules Governing the Listing of Securities on the Stock Exchange

the Convertible Bonds in an aggregate principal amount of HK$216 million to be issued at Completion to Mr. Li or his nominee(s) by the Company for the purpose of settlement of the consideration for the acquisition of the Sale Loan

3

DEFINITIONS

• “Loan Purchase and the agreement dated 2 February 2017 entered into among Financing Agreement” Mr. Li, the Purchaser and the Company in respect of the acquisition of the Sale Loan and the provision of financing by Mr. Li, as amended by the Loan Purchase and Financing Supplemental Deed

• “Loan Purchase and the supplemental deed dated 13 March 2017 entered into Financing Supplemental among Mr. Li, the Purchaser and the Company to amend Deed” certain terms of the Loan Purchase and Financing Agreement

• “Long Stop Date” 30 April 2017 (or such later date as the parties to the relevant agreement may agree in writing), being the latest date for fulfilment or, as the case may be, waiver of the conditions precedent of the Acquisition Agreement and the Loan Purchase and Financing Agreement

• “Macau”

• the Macau Special Administrative Region of the PRC

• “Mr. Li” Mr. Li Weibin, the chairman and managing Director of the Company

• “PRC” The People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, Macau and Taiwan

• “PRC Subsidiary” 匯景國際（西安）信息科技有限公司 (Real King International (Xi ’ an) Information Technology Company Limited*), a wholly foreign-owned enterprise established in the PRC and an indirect wholly-owned subsidiary of the Target

• “Property” the parcel of land situated at the junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, the PRC and the construction in progress thereon

• “Purchaser” Glorious Harvest Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of the Company

• “Sale Loan” all obligations, liabilities and debts owing or incurred by the Target Group to Mr. Li and his affiliated companies (including the Vendor) immediately prior to Completion, whether actual, contingent or deferred and irrespective of whether the same is due and payable on Completion

• For identification purposes only

4

DEFINITIONS

“Sale Share”

one (1) ordinary share in the share capital of the Target, representing the entire issued share capital of the Target as at the date of the Acquisition Agreement

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “SGM” the special general meeting of the Company to be convened and held for the purpose of considering and, if thought fit, approving, among other things, (i) the Acquisition Agreement and the transactions contemplated thereunder; and (ii) the Loan Purchase and Financing Agreement and the transactions contemplated thereunder

• “Share(s)” ordinary share(s) of HK$0.0125 each in the share capital of the Company before the Share Consolidation became effective on 28 March 2017

• “Share Charges”

• collectively, (i) the share charge over the Sale Share; (i) the share charge over the entire issued share capital of the HK Subsidiary; and (iii) the share charge over the entire paidup registered capital of the PRC Subsidiary to be executed by the Purchaser, the Target and the HK Subsidiary respectively in favour of a security agent to be appointed to secure the repayment obligation under the Convertible Bonds

• “Share Consideration Bonds” the Convertible Bonds in an aggregate principal amount of HK$96 million to be issued at Completion to the Vendor or its nominee(s) by the Company for the purpose of settlement the consideration for the acquisition of the Sale Share

• “Share Consolidation” the consolidation of every twenty-five (25) issued and unissued Shares into one (1) Consolidated Share as disclosed in the announcement and the circular of the Company dated 7 February 2017 and 9 March 2017 respectively, which became effective on 28 March 2017

• “Shareholder(s)” holder(s) of the Share(s) or the Consolidated Share(s), as the case may be

• “Share Options” the share options granted by the Company under the share option scheme approved and adopted by the Company on 21 September 2012

5

DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers
“Target”	Zhong Hui Global Limited, a company incorporated in the
	BVI with limited liability
“Target Group”	the Target and its subsidiaries (including the HK Subsidiary
	and the PRC Subsidiary)
“Vendor”	Bestwin International Investment Limited, a company
	incorporated in the BVI with limited liability and is wholly
	owned by Mr. Li
“Wealth Keeper”	Wealth Keeper International Limited, a company
	incorporated in the BVI with limited liability, the entire
	issued shares of which are wholly and beneficially owned
	by Mr. Li
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“US$”	United States dollar(s), the lawful currency of the United
	States of America
“sq. m.”	square metres
“%”	per cent.

In this circular, amounts in RMB are translated into HK$ on the basis of RMB1 = HK$1.127. The conversion rate is for illustration purpose only and should not be taken as a representation that RMB could actually be converted into HK$ at such rate or at other rates or at all.

6

LETTER FROM THE BOARD

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CHINLINK INTERNATIONAL HOLDINGS LIMITED 普匯中金國際控股有限公司*

(Incorporated in Bermuda with limited liability) (Stock Code: 0997)

Executive Directors: Mr. Li Weibin (Chairman and Managing Director) Mr. Siu Wai Yip Ms. Lam Suk Ling, Shirley Mr. Lau Chi Kit

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-executive Director: Ms. Fung Sau Mui

Independent non-executive Directors: Dr. Ho Chung Tai, Raymond Ms. Lai Ka Fung, May Ms. Chan Sim Ling, Irene

Head Office and Principal Place of Business in Hong Kong: Suites 5-6, 40/F One Exchange Square 8 Connaught Place Central, Hong Kong

31 March 2017

To the Shareholders and, for information only, holders of the Share Options and the outstanding convertible bonds of the Company

Dear Sirs,

(1) MAJOR AND CONNECTED TRANSACTION IN RELATION TO

THE PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN, AND THE SHAREHOLDER’S LOAN DUE BY, ZHONG HUI GLOBAL LIMITED AND ITS SUBSIDIARIES; AND

(2) PROPOSED ISSUE OF CONVERTIBLE BONDS

A. INTRODUCTION

Reference is made to the announcement dated 7 February 2017 in which it was announced that after the trading hours of the Stock Exchange on 2 February 2017, the Company, the Purchaser (a wholly-owned subsidiary of the Company), the Vendor and Mr. Li (as guarantor to the Vendor) entered into the Acquisition Agreement in relation to the proposed acquisition of the entire issued share capital of the Target. Simultaneously, the Company, the

• For identification purposes only

7

LETTER FROM THE BOARD

Purchaser and Mr. Li entered into the Loan Purchase and Financing Agreement in relation to the proposed acquisition of the Sale Loan and the provision of financing by Mr. Li to the Group. The Acquisition Agreement and the Loan Purchase and Financing Agreement are inter-conditional and shall complete contemporaneously.

The Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under the Listing Rules.

As at the Latest Practicable Date, Mr. Li (the chairman and managing Director of the Company), through Wealth Keeper and in his own capacity, is beneficially interested in 359,758,358 Consolidated Shares, representing approximately 53.70% of the existing issued share capital of the Company. The Vendor is wholly owned by Mr. Li and accordingly is a connected person of the Company. The Acquisition and the Bond Issue therefore also constitute connected transactions for the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The SGM will be convened by the Company at which resolutions will be proposed to seek approval from the Independent Shareholders for (i) the Acquisition; and (ii) the Bond Issue by way of poll. Mr. Li, Wealth Keeper, the Vendor and their respective associates shall abstain from voting on the resolutions approving the Acquisition and the Bond Issue at the SGM. Mr. Li has abstained from voting at the Board meeting which approved the Acquisition and the Bond Issue.

The Independent Board Committee has been established to advise the Independent Shareholders on the Acquisition and the Bond Issue. The Independent Board Committee comprises Dr. Ho Chung Tai, Raymond, Ms. Lai Ka Fung, May and Ms. Chan Sim Ling, Irene, all being independent non-executive Directors. Gram Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Bond Issue.

The purpose of this circular is to provide you with, among other things, (i) details of the Acquisition Agreement; (ii) details of the Loan Purchase and Financing Agreement; (iii) the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the Acquisition and the Bond Issue; (iv) the letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders in the same regard; (v) the financial information of the Group and the Target Group; (vi) the valuation report on the Property; and (vii) the notice of SGM.

B. THE ACQUISITION

1. THE ACQUISITION AGREEMENT

Date

2 February 2017 (as amended by the Acquisition Supplemental Deed dated 13 March 2017)

8

LETTER FROM THE BOARD

Parties

• (i) Glorious Harvest Limited, as purchaser;

• (ii) Bestwin International Investment Limited, as vendor;

• (iii) the Company; and

• (iv) Mr. Li, as guarantor to guarantee the due and punctual performance of the obligations of the Vendor under the Acquisition Agreement.

The Vendor is incorporated in the BVI and is wholly owned by Mr. Li. The principal business activity of the Vendor is investment holding. As at the Latest Practicable Date, Mr. Li (the chairman and managing Director of the Company) is beneficially interested in 359,758,358 Consolidated Shares (of which 347,112,758 Consolidated Shares are held by Wealth Keeper and 12,645,600 Consolidated Shares are held by Mr. Li personally) representing approximately 53.70% of the existing issued share capital of the Company. The Vendor is wholly owned by Mr. Li and accordingly is a connected person of the Company.

Assets to be acquired

Pursuant to the Acquisition Agreement, the Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the Sale Share free from all encumbrances with effect from Completion together with all rights attached thereto at any time on or after the Completion Date. The Sale Share represents the entire issued share capital of the Target as at the date of the Acquisition Agreement and Completion. Further information on the Target Group is set out in the section headed “Information on the Target Group” below.

Consideration

The consideration for the Sale Share is HK$96 million, which shall be satisfied by the Company issuing the Share Consideration Bonds with principal amount of HK$96 million to the Vendor or its nominee(s) at Completion.

The consideration was determined after arm’s length negotiations among the parties to the Acquisition Agreement with reference to the unaudited consolidated net asset value of the Target Group as at 30 September 2016 of approximately HK$95.6 million (based on the exchange rate of RMB1=HK$1.1271 on the date of the Acquisition Agreement), in which the Property at its existing state was stated at its preliminary valuation of approximately RMB382 million (equivalent to approximately HK$430.5 million) as appraised by an independent professional valuer using market approach, with considerations of the incurred development costs, the outstanding development period and the potential developer’s expected risk and return. For details of the valuation of the Property as at 31 December 2016, please refer to the valuation report prepared by Colliers International (Hong Kong) Ltd., an independent professional valuer, contained in Appendix IV to this circular.

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LETTER FROM THE BOARD

Conditions precedent

Completion of the sale and purchase of the Sale Share is conditional upon the fulfilment (or waiver, as the case may be) of the following conditions:

• (i) the Purchaser being satisfied with the results of the due diligence review (including but not limited to the review of the assets, liabilities, operations and affairs) of the Target Group;

• (ii) the Vendor and Mr. Li having obtained all necessary consents and approvals in respect of the Acquisition Agreement and the transactions contemplated thereunder;

• (iii) the Purchaser and the Company having obtained all necessary consents and approvals in respect of the Acquisition Agreement and the transactions contemplated thereunder;

• (iv) the passing of the necessary resolution(s) by the Independent Shareholders at the SGM to be convened and held to approve (a) the Acquisition Agreement and the transactions contemplated thereunder including but not limited to the issue of the Share Consideration Bonds and the grant of the specific mandate for the allotment and issue of the Conversion Shares; and (b) the Loan Purchase and Financing Agreement and the transactions contemplated thereunder; and the passing of the necessary resolution by the Shareholders at a special general meeting of the Company to be convened and held to approve the Increase in Authorised Share Capital;

• (v) the Purchaser having received a valuation report issued by a firm of independent professional valuer appointed by the Purchaser in such form and substance satisfactory to the Purchaser, showing the value of the Property as at 31 December 2016 to be not less than RMB382 million (equivalent to approximately HK$430.5 million);

• (vi) the Purchaser having obtained a PRC legal opinion (in such form and substance to the satisfaction of the Purchaser) to be issued by a PRC legal adviser appointed by the Purchaser in respect of the matters relating to the Acquisition Agreement, including but not limited to the due establishment of the PRC Subsidiary, the legality of its business and the legal title of the Property;

• (vii) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Conversion Shares;

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LETTER FROM THE BOARD

• (viii) (if applicable) the Stock Exchange granting the approval to the Company for the issue of the Share Consideration Bonds;

• (ix) the Loan Purchase and Financing Agreement having become unconditional (other than the condition for the Acquisition Agreement to become unconditional);

• (x) the representations, warranties and undertakings provided by the Vendor under the Acquisition Agreement remaining true and accurate in all material respects;

• (xi) the Increase in Authorised Share Capital becoming effective;

• (xii) the discharge of the Existing Share Charges by the lender in such form and substance to the satisfaction of the Purchaser; and

• (xiii) the Share Charges having been duly executed by the Purchaser, the Target and the HK Subsidiary respectively in favour of a security agent to be appointed to secure for the repayment obligation under the Convertible Bonds.

The Purchaser may at any time waive any of the conditions set out in (i), (vi) and (x) above by notice in writing to the Vendor. Save for the aforementioned, none of the conditions set out above can be waived by any party under the Acquisition Agreement.

If any of the above conditions is not fulfilled (or waived) at or before 4:00 p.m. on the Long Stop Date, the Acquisition Agreement shall cease and determine, and thereafter neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the terms thereof.

As at the Latest Practicable Date, conditions (ii) and (xi) set out above had been fulfilled.

Completion

Completion of the sale and purchase of the Sale Share shall take place on the third Business Day after all the conditions above have been fulfilled (or waived, as the case may be) or such later date as the Vendor and the Purchaser may agree, and shall take place simultaneously with completion of the sale and purchase of the Sale Loan under the Loan Purchase and Financing Agreement.

11

LETTER FROM THE BOARD

2. THE LOAN PURCHASE AND FINANCING AGREEMENT

Date

2 February 2017 (as amended by the Loan Purchase and Financing Supplemental Deed dated 13 March 2017)

Parties

• (i) Glorious Harvest Limited, as purchaser;

• (ii) Mr. Li, as vendor and financier; and

• (iii) the Company.

Asset being acquired

Pursuant to the Loan Purchase and Financing Agreement, the Purchaser conditionally agreed to purchase, and Mr. Li conditionally agreed to sell, the Sale Loan free from all encumbrances with effect from Completion. The Sale Loan represents all debts owing by the Target Group to Mr. Li or his affiliated companies (including the Vendor) immediately prior to Completion, which amounted to approximately HK$215.7 million as at 30 September 2016.

Consideration for the Sale Loan

The consideration for the Sale Loan shall be HK$216 million and shall be satisfied by the Company issuing the Loan Consideration Bonds with principal amount of HK$216 million to Mr. Li or his nominee(s) at Completion.

The consideration was determined after arm’s length negotiations among the parties to the Loan Purchase and Financing Agreement with reference to the amounts owed by the Target Group to Mr. Li and his affiliated companies of approximately HK$215.7 million as at 30 September 2016 and the further loan to be advanced by Mr. Li to support the general working capital needs of the Target Group before Completion. Mr. Li has undertaken that the Sale Loan shall not be less than HK$216 million upon Completion.

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LETTER FROM THE BOARD

Financing to be provided by Mr. Li

Mr. Li conditionally agreed to provide financing to the Group in the amount of HK$58 million after Completion to fund the construction costs of the Property. The financing shall be provided by Mr. Li in two installments within three months and within four to six months from Completion. In consideration of Mr. Li providing the financing, the Company shall accordingly issue the Financing Bonds in two tranches with principal value equal to the amount of financing to Mr. Li or his nominee(s) as follows:

Issue date

Issue date Tranche I the earlier of the date falling three months from the Completion Date or the first Business Date falling seven days after the date of the Company serving a written notice to Mr. Li requesting for the first installment financing Tranche II the earlier of the date falling six months from the Completion Date or the first Business Date falling seven days after the date of the Company serving a written notice to Mr. Li requesting for the second installment financing, but in any event such written notice shall not be served by the Company before the date falling three months from the Completion Date	Principal amount HK$ 30 million 28 million
	58 million

The estimated expenses directly attributable to the Bond Issue is considered minimal. Based on the 102,654,867 Conversion Shares that may fall to be issued upon exercise of the conversion rights attaching to the Financing Bonds, the net issue price per Conversion Share calculated using the net principal amount of the Financing Bonds is HK$0.565 per Conversion Share.

Conditions precedent

Completion of the sale and purchase of the Sale Loan and the provision of financing by Mr. Li to the Group are conditional upon the fulfilment (or waiver, as the case may be) of the following conditions:

• (i) Mr. Li having obtained all necessary consents and approvals in respect of the Loan Purchase and Financing Agreement and the transactions contemplated thereunder;

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LETTER FROM THE BOARD

• (ii) the Purchaser and the Company having obtained all necessary consents and approvals in respect of the Loan Purchase and Financing Agreement and the transactions contemplated thereunder;

• (iii) the passing of the necessary resolution(s) by the Independent Shareholders at the SGM to be convened and held to approve (a) the Acquisition Agreement and the transactions contemplated thereunder including but not limited to the issue of the Share Consideration Bonds and the grant of the specific mandate for the allotment and issue of the Conversion Shares; and (b) the Loan Purchase and Financing Agreement and the transactions contemplated thereunder; and the passing of the necessary resolution by the Shareholders at a special general meeting of the Company to be convened and held to approve the Increase in Authorised Share Capital;

• (iv) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Conversion Shares;

• (v) the Acquisition Agreement having become unconditional (other than the condition for the Loan Purchase and Financing Agreement to become unconditional);

• (vi) the representations, warranties and undertakings provided by Mr. Li under the Loan Purchase and Financing Agreement remaining true and accurate in all material respects;

• (vii) (if applicable) the Stock Exchange granting the approval to the Company for the issue of the Loan Consideration Bonds and the Financing Bonds;

• (viii) the Increase in Authorised Share Capital becoming effective;

• (ix) the discharge of the Existing Share Charges by the lender in such form and substance to the satisfaction of the Purchaser; and

• (x) the Share Charges having been duly executed by the Purchaser, the Target and the HK Subsidiary respectively in favour of a security agent to be appointed to secure for the repayment obligation under the Convertible Bonds.

The Company may at any time waive the condition set out in (vi) above by notice in writing to Mr. Li. Save for the aforementioned, none of the conditions set out above can be waived by any party under the Loan Purchase and Financing Agreement.

14

LETTER FROM THE BOARD

If any of the above conditions is not fulfilled (or waived) at or before 4:00 p.m. on the Long Stop Date, the Loan Purchase and Financing Agreement shall cease and determine, and thereafter neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the terms thereof.

As at the Latest Practicable Date, conditions (i) and (viii) set out above had been fulfilled.

Completion

Completion of the sale and purchase of the Sale Loan shall take place on the third Business Day after all the conditions above have been fulfilled (or waived, as the case may be) or such later date as Mr. Li and the Purchaser may agree, and shall take place simultaneously with completion of the Acquisition Agreement.

The Financing Bonds shall be issued in two tranches in accordance with the schedule described in the paragraph headed “Financing to be provided by Mr. Li” above.

3. PRINCIPAL TERMS OF THE CONVERTIBLE BONDS

Issuer: The Company Principal amount: HK$370 million in aggregate Interest: The Convertible Bonds bear interest at 3% per annum on the outstanding principal amount thereof Maturity: The Convertible Bonds shall mature on the date falling the second anniversary of the date of issue (the “ CB Maturity Date ”) Security: The obligations of the Company under the Convertible Bonds are secured by the Share Charges. The Share Charges will become enforceable if the Company commits a breach or on the occurrence of an event of default (as disclosed below) under the terms of the Convertible Bonds.

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LETTER FROM THE BOARD

Conversion right:

Subject to the conversion restrictions as specified below, the holder of the Convertible Bonds shall have the right at any time during the period commencing from the date of issue of the Convertible Bonds up to and including the CB Maturity Date to convert the whole or part of the outstanding principal amount of the Convertible Bonds into new Consolidated Shares at the initial Conversion Price of HK$0.565 per Conversion Share.

The Conversion Price is subject to adjustments upon the occurrence of any of the following events: (i) consolidation or subdivision of shares of the Company; (ii) capitalisation of profits or reserves; (iii) capital distribution; (iv) rights issues or grant of options or warrants to subscribe for shares of the Company at a price which is less than 90% of the then market price of the shares of the Company; (v) issue wholly for cash any securities which are convertible into or exchangeable for or carry rights of subscription for new shares of the Company at an initial total effective consideration per share of the Company of less than 90% of the then market price of the shares of the Company; (vi) issue wholly for cash any shares of the Company at a price per share of the Company which is less than 90% of the then market price of the shares of the Company; (vii) issue shares of the Company for the acquisition of asset at a price per share of the Company which is less than 90% of the then market price of the shares of the Company; or (viii) issue any securities for the acquisition of asset which are convertible into or exchangeable for or carry rights of subscription for new shares of the Company at an initial total effective consideration per share of the Company of less than 90% of the then market price of the shares of the Company.

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LETTER FROM THE BOARD

Conversion Restrictions:

Conversion Price:

No conversion of the Convertible Bonds is allowed if: (i) any conversion would trigger a mandatory offer obligation under Rule 26 of the Takeovers Code on the part of the holder of the Convertible Bonds which exercised the conversion rights; or (ii) the public float of the shares of the Company would be less than 25% (or any given percentage as required by the Listing Rules) of the issued shares of the Company as required under the Listing Rules.

The initial Conversion Price of HK$0.565 per Conversion Share:

• (i) represents a discount of approximately 57.2% to the closing price of HK$1.320 per Consolidated Share as quoted on the Stock Exchange as at the Latest Practicable Date;

• (ii) represents a discount of approximately 1.7% to the t h e o r e t i c a l c l o s i n g p r i c e o f H K$0.575 p e r Consolidated Share (based on the closing price of the Shares as quoted on the Stock Exchange on the last trading day before the date of the Acquisition Agreement and adjusted for the effect of the Share Consolidation);

• (iii) equals to the average theoretical closing price of HK$0.565 per Consolidated Share (based on the closing price of the Shares as quoted on the Stock Exchange for the last five consecutive trading days before the date of the Acquisition Agreement and adjusted for the effect of the Share Consolidation);

• (iv) represents a discount of approximately 3.1% to the average theoretical closing price of HK$0.583 per Consolidated Share (based on the closing price of the Shares as quoted on the Stock Exchange for the last ten consecutive trading days before the date of the Acquisition Agreement and adjusted for the effect of the Share Consolidation); and

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LETTER FROM THE BOARD

• (v) represents a discount of approximately 68.5% to the theoretical unaudited adjusted consolidated equity attributable to the Shareholders of approximately HK$1.791 per Consolidated Share (based on the unaudited equity attributable to the Shareholders of approximately HK$649,913,000 as at 30 September 2016 adjusted by the net proceeds of approximately HK$550,000,000 from the rights issue completed on 21 November 2016 and 16,750,060,914 Shares in issue immediately after completion of the rights issue and adjusted for the effect of the Share Consolidation).

The initial Conversion Price was determined after arm’s length negotiations among the parties to the Acquisition Agreement and the Loan Purchase and Financing Agreement which was the average of the closing prices per Share as quoted on the Stock Exchange for the last five consecutive trading days before the date of the Acquisition Agreement and the Loan Purchase and Financing Agreement.

Conversion Shares:

Based on the initial Conversion Price of HK$0.565 per Conversion Share, a total of 654,867,256 Conversion Shares shall fall to be allotted and issued upon exercise in full of the conversion rights attaching to the Convertible Bonds.

The Conversion Shares, when allotted and issued, shall rank pari passu in all respects with the shares of the Company then in issue.

As at the Latest Practicable Date, the Company has 670,002,436 Consolidated Shares in issue. The Conversion Shares represent (i) approximately 97.7% of the existing issued share capital of the Company; and (ii) approximately 49.4% of the issued share capital of the Company as enlarged by the allotment and issuance of the Conversion Shares upon full conversion of the Convertible Bonds (assuming that there is no change in the issued share capital of the Company other than the issue of the Conversion Shares upon full conversion of the Convertible Bonds).

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LETTER FROM THE BOARD

The Conversion Shares will be allotted and issued under a specific mandate to be sought for approval from the Independent Shareholders at the SGM. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

Transferability:

Redemption:

The Convertible Bonds shall be freely transferable in whole or in part (in multiples of HK$50,000 (or such lesser amount as may represent the entire outstanding principal amount thereof)) to any party.

The Convertible Bonds are redeemable at 100% of the principal amount of the Convertible Bonds on the CB Maturity Date.

The Company shall not be entitled to redeem any Convertible Bonds before the CB Maturity Date.

Voting rights:

Listing:

Events of Default:

The Convertible Bonds shall not carry any voting rights at any general meeting of the Company.

No application will be made by the Company for the listing of the Convertible Bonds on the Stock Exchange or any other stock exchange.

The Convertible Bonds will become immediately due and repayable if:

• (i) payment default: a default is made in the payment of the principal in respect of any of the Convertible Bonds; or

• (ii) other default: a default is made by the Company in the performance or observance of any covenant, condition or provision contained in the instrument constituting the Convertible Bonds or in the Convertible Bonds and on its part to be performed or observed (other than the covenant to pay the principal in respect of any of the Convertible Bonds) and such default continues for the period of 14 days next following the service by any holder of the Convertible Bonds on the Company of notice specifying brief details of such default and requiring such default to be remedied; or

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LETTER FROM THE BOARD

• (iii) dissolution of the Company and disposals: a resolution is passed or an order of a court of competent jurisdiction is made that the Company be wound up or dissolved or the Company disposes of all or substantially all of its assets; or

• (iv) bankruptcy: the Company is unable to pay its debts as and when they fall due or the Company shall initiate or consent to proceedings relating to itself under any applicable bankruptcy, reorganisation or insolvency law or make an assignment for the benefit of, or enter into any composition with, its creditors; or

• (v) scheme of arrangement: the Company enters into any scheme of arrangement, proposes or makes a g e n e r a l a s s i g n m e n t o r a n a r r a n g e m e n t o r composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any material part of the debts of the Company; or

• (vi) receivership: an encumbrancer takes possession or an administrative or other receiver or an administrator or other similar officer is appointed of the whole or a material part of the property, assets or turnover of the Company and is not discharged within thirty (30) days; or

• (vii) nationalisation and judicial seizure: any judicial step is taken by any person with valid ground with a view to the judicial seizure, compulsory acquisition, expropriation or nationalization of all or substantially all of the assets of the Company; or

• (viii) bankruptcy proceedings: proceedings shall have been initiated against the Company under any applicable bankruptcy, reorganisation or insolvency law and such proceedings shall not have been discharged or stayed within a period of 21 days; or

• (ix) prolonged suspension: trading in the shares of the Company on the Stock Exchange being suspended for a period of more than 20 consecutive trading days excluding any suspension for the purposes of clearing any announcement and/or circular in relation to any transactions conducted under the Acquisition Agreement and the Loan Purchase and Financing Agreement.

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LETTER FROM THE BOARD

4. INFORMATION ON THE TARGET GROUP

The Target is a company incorporated in the BVI in January 2013 and is wholly owned by Mr. Li through the Vendor as at the date of the Acquisition Agreement. The Target is principally engaged in investment holding. The PRC Subsidiary, which is indirectly wholly owned by the Target through the HK Subsidiary, is a wholly foreign-owned enterprise established in the PRC and owns a 100% interest in the Property. The original investment cost of the Target to Mr. Li was US$1. The original acquisition cost of the HK subsidiary to the Target was HK$1. The original acquisition cost of the PRC Subsidiary to the HK Subsidiary was US$3 million and it was acquired from Real Queen Limited, which was wholly owned by Mr. Li. The initial investment cost of the PRC subsidiary to Mr. Li was also US$3 million. Apart from the aforesaid investment cost, Mr. Li or its affiliated companies also advanced shareholder’s loans to the Target Group which amounted to approximately HK$215.7 million as at 30 September 2016.

The Property

The Property is situated at the junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, the PRC. It is situated at a convenient location with easy access to various modes of public transportation, within 15 minutes’ walk to Yundong Gongyuan Metro Station and 25 minutes’ drive from the Xi’an Xianyang International Airport. The neighbourhood of the Property is dominated by office and residential developments, and one of the largest city parks in Xi’an, namely Xi’an City Sport Park, is in its close proximity. Another notable landmark building in the vicinity is the Municipal Government Headquarter of Xi’an.

The Property comprises a parcel of land with site area of approximately 9,100 sq. m., on which a 25-level office development plus a 2-level basement carpark are currently under construction. Upon completion of the construction, it will have a total gross floor area of approximately 55,491 sq.m.. As at the Latest Practicable Date, the foundation, substructure construction and superstructure construction of the Property are completed, while the facade and window installation, building services installation, external and interior finishing and landscaping works of the Property are still ongoing. It is expected that the construction of the Property will be completed by the end of 2017, after which the Company intends to hold the Property as investment property for rental purpose and as office for internal use. It is estimated that the construction costs to be incurred to complete the construction works amount to approximately RMB54.2 million (equivalent to approximately HK$61.1 million).

The valuation of the Property at its existing state, as appraised by an independent professional valuer using market approach with considerations of the incurred development costs, the outstanding development period and the potential developer’s expected risk and return, is RMB384 million (equivalent to approximately HK$432.8 million) as at 31 December 2016. Please refer to Appendix IV to this circular for details.

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LETTER FROM THE BOARD

Financial information

Set out below is the audited consolidated financial information of the Target Group for each of the two years ended 31 December 2014 and 2015 extracted from the accountants’ report of the Target Group contained in Appendix II to this circular which was prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants:

Profit before taxation Profit after taxation	For the year ended 31 December 2015 2014 HK$’000 HK$’000 56,461 39,993 42,198 29,145	For the year ended 31 December 2015 2014 HK$’000 HK$’000 56,461 39,993 42,198 29,145
		29,145

The profits of the Target Group for the years ended 31 December 2014 and 2015 mainly represented the gain on fair value changes of the Property.

The audited net assets of the Target Group amounted to approximately HK$100.8 million as at 30 September 2016.

5. REASONS FOR AND BENEFITS OF THE ACQUISITION AND THE BOND ISSUE

The Company is an investment holding company. The Group is principally engaged in property investment, interior decoration works in Hong Kong and Macau, trading (including mainly electronic components and appliance, furnitures and fixtures, etc.) provision of financing guarantee services, finance leasing services and logistics services in the PRC.

The Group has been constantly reviewing its business strategy and continued to explore sound investment opportunities to strengthen its core competencies and to contribute sustainable growth and return for the Group and the Shareholders. The Directors consider the Acquisition provides an opportunity for the Group to expand its property investment portfolio in Xi’an which they believe to be a property market with great appreciation potential, particularly with the superb location of the Property. After completion of the development of the Property, it is the intention of the Company that the Property will be held for rental purpose to generate a stable and recurring income stream to the Group. In addition to holding the Property for rental purpose, the Group may also consider retaining certain floor area of the Property as the main office of the Group in Xi’an so as to enhance administrative efficiency and reduce rental expenses. The Acquisition would also strengthen the asset base of the Group and provide a strong asset backing for future financing as and when such financing is needed.

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LETTER FROM THE BOARD

In conjunction with the Acquisition, Mr. Li agreed to provide financing to the Group to support its funding needs for the remaining construction work of the Property. The provision of the financing and the issue of the Financing Bonds are negotiated in tranches having considered the progress of the outstanding development works.

The Directors are of the view that the issue of the Share Consideration Bonds and the Loan Consideration Bonds to settle the consideration for the Sale Share and the Sale Loan avoids the immediate cash outflow of the Group and may enlarge the capital base of the Company should the Share Consideration Bonds and the Loan Consideration Bonds be converted into Conversion Shares. The issue of the Financing Bonds represents an opportunity for the Company to raise funds for the construction of the Property. The Directors consider that the issue of the Financing Bonds is an appropriate means of raising additional capital for the Company since they will not have an immediate dilution effect on the shareholding of the existing Shareholders. In the event that the conversion right attaching to the Financing Bonds is exercised, the capital base of the Company will also be enlarged.

In view of the above, the Board (excluding Mr. Li who has a material interest but including the independent non-executive Directors after taking into consideration of the advice from Gram Capital) is of the view that the terms of the Acquisition Agreement and the Loan Purchase and Financing Agreement are fair and reasonable and the Acquisition and the Bond Issue are in the interest of the Group and the Shareholders as a whole.

6. FINANCIAL EFFECTS OF THE ACQUISITION

Assets and liabilities

Based on the unaudited pro forma financial information set out in Appendix III to this circular, the total assets of the Group as at 30 September 2016 would increase from approximately HK$3,336.0 million to approximately HK$3,779.8 million; and its total liabilities as at 30 September 2016 would increase from approximately HK$2,276.7 million to approximately HK$2,617.2 million, as a result of the Acquisition.

Earnings

Upon Completion, the Target will become an indirect wholly-owned subsidiary of the Company and all future financial results of the Target Group will be consolidated in the consolidated financial statements of the Group. Except for the transaction costs of approximately HK$3.9 million directly attributable to the Acquisition, there will be no immediate material effect on earnings of the Company associated with the Acquisition. After completion of construction of the Property in 2017, it is expected that rental income from the Property will be generated to the Group.

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LETTER FROM THE BOARD

7. ADJUSTMENTS TO THE SHARE OPTIONS AND CONVERTIBLE BONDS

As at the Latest Practicable Date, there are three lots of outstanding Share Options, entitling the holders thereof to subscribe for 7,653,533 Consolidated Shares, 1,176,075 Consolidated Shares and 361,869 Consolidated Shares respectively at the exercise prices of HK$6.4100, HK$7.7375 and HK$7.5175 per Consolidated Share respectively.

As at the Latest Practicable Date, there are outstanding convertible bonds in issue with principal amount of HK$77,523,000, entitling the holder thereof to convert into an aggregate of 11,484,888 Consolidated Shares at the prevailing conversion price of HK$6.75 per Consolidated Share.

The conversion shares to be issued under the outstanding convertible bonds are issued pursuant to the general mandate (the “2015 General Mandate” ) granted to the Directors at the annual general meeting of the Company (the “2015 AGM” ) held on 25 September 2015.

As a result of the issue of Convertible Bonds, adjustments will be made to the conversion price of the outstanding convertible bonds in accordance with the terms and conditions of the outstanding convertible bonds. The Company has calculated the adjustment and considers that the 2015 General Mandate is sufficient to cover any issue of new Consolidated Shares upon the conversion of the outstanding convertible bonds even after the adjustment. The Company will engage an independent investment bank to provide a certificate as to the adjustment required to be made to the conversion price of the outstanding convertible bonds and will make a further announcement about the adjustment after receiving the certificate.

Save for the aforesaid, the Company has no other outstanding options, warrants or securities convertible into or give rights to subscribe for, convert or exchange into any shares of the Company as at the Latest Practicable Date.

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LETTER FROM THE BOARD

C. SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the shareholding structures of the Company (i) as at the Latest Practicable Date; and (ii) upon full conversion of the Convertible Bonds:

Wealth Keeper Mr. Li Vendor Mr. Lau Chi Kit Sub-total Public Shareholders Total	(i) As at the Latest Practicable Date Number of Consolidated Shares % 347,112,758 51.81 12,645,600 1.89 – – 200,000 0.03 359,958,358 53.73 310,044,078 46.27 670,002,436 100.00	(ii) Upon full conversion of the Convertible Bonds Number of Consolidated Shares % 347,112,758 26.20 497,601,352 37.56 169,911,504 12.82 200,000 0.02 1,014,825,614 76.60 310,044,078 23.40 1,324,869,692 100.00	(ii) Upon full conversion of the Convertible Bonds Number of Consolidated Shares % 347,112,758 26.20 497,601,352 37.56 169,911,504 12.82 200,000 0.02 1,014,825,614 76.60 310,044,078 23.40 1,324,869,692 100.00
			76.60 23.40
			100.00

Note: The above table is for illustration purpose only and does not indicate or imply any intention or decision on the part of the Vendor or Mr. Li as to the timing or extent of conversion of the Convertible Bonds. The relevant parties will observe and comply with the requirements of the Listing Rules in connection with the conversion of the Convertible Bonds if and when it takes place. The allotment and issue of the Conversion Shares will not result in a change of control of the Company.

D. LISTING RULES IMPLICATIONS

The Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under the Listing Rules.

As at the Latest Practicable Date, Mr. Li (the chairman and managing Director of the Company), through Wealth Keeper and in his own capacity, is beneficially interested in 359,758,358 Consolidated Shares representing approximately 53.70% of the existing issued share capital of the Company. The Vendor is wholly owned by Mr. Li and accordingly is a connected person of the Company. The Acquisition and the Bond Issue therefore also constitute connected transactions for the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The SGM will be convened by the Company at which resolutions will be proposed to seek approval from the Independent Shareholders for (i) the Acquisition; and (ii) the Bond Issue by way of poll. Mr. Li, Wealth Keeper, the Vendor and their respective associates shall abstain from voting on the resolutions approving the Acquisition and the Bond Issue at the SGM. Mr. Li has abstained from voting at the Board meeting which approved the Acquisition and the Bond Issue.

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LETTER FROM THE BOARD

The Independent Board Committee has been established to advise the Independent Shareholders on the Acquisition and the Bond Issue. The Independent Board Committee comprises Dr. Ho Chung Tai, Raymond, Ms. Lai Ka Fung, May and Ms. Chan Sim Ling, Irene, all being independent non-executive Directors. Gram Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Bond Issue.

E. CLOSURE OF REGISTER OF MEMBERS AND THE SGM

The register of members of the Company will be closed from Tuesday, 25 April 2017 to Friday, 28 April 2017 (both dates inclusive) for determining the identity of the Shareholders who are entitled to attend and vote at the SGM. No transfer of shares of the Company and/or exercise of the Share Options and/or the conversion of the outstanding convertible bonds will be registered during this period. Shareholders whose name appear on the register of members of the Company on Friday, 28 April 2017 shall be entitled to attend and vote at the SGM. In order to be eligible to attend and vote at the SGM, unregistered holders of the shares of the Company should ensure that all transfer forms accompanied by the relevant share certificates must be lodged with the branch share registrar of the Company, Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Monday, 24 April 2017.

The notice convening the SGM to be held at 2:30 p.m. on Friday, 28 April 2017 at Suites 5-6, 40/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar and transfer office, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof (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 SGM or any adjournment thereof (as the case may be) should you so wish, and in such event, the instrument appointing the proxy shall be deemed to be revoked.

F. RECOMMENDATION

The Directors (excluding members of the Independent Board Committee whose views have been set out below) consider that the Acquisition and the Bond Issue are on normal commercial terms, the terms of the Acquisition and the Bond Issue are fair and reasonable so far as the Independent Shareholders are concerned, and the Acquisition and the Bond Issue are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, the Directors (excluding members of the Independent Board Committee) recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Acquisition and the Bond Issue.

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LETTER FROM THE BOARD

The Independent Board Committee, having considered the advice of Gram Capital, is of the opinion that (i) the terms of the Acquisition Agreement and the Loan Purchase and Financing Agreement (as amended by the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) despite the Acquisition and the Bond Issue are not conducted in the ordinary and usual course of business of the Company, the business conducted by the Target Group, i.e. property development and rental, is in the ordinary and usual course of business of the Group; and (iii) the Acquisition and the Bond Issue are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Acquisition Agreement and the Loan Purchase and Financing Agreement (as amended by the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed) and the Acquisition and the Bond Issue.

G. WARNING

Completion is conditional upon the fulfillment or waiver of the conditions of the Acquisition Agreement and the Loan Purchase and Financing Agreement. Accordingly, the Acquisition and the Bond Issue may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company and are recommended to consult their professional advisers if they are in any doubt about their position and as to the actions that they should take.

H. ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 28 to 29 of this circular which contain their recommendation to the Independent Shareholders as to voting at the SGM and the letter from Gram Capital set out on pages 30 to 50 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Bond Issue.

Your attention is also drawn to the financial information of the Group, the Target Group and the Enlarged Group, valuation report on the Property and other general information set out in the appendices to this circular.

By order of the Board Chinlink International Holdings Limited Mr. Li Weibin Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [145 x 82] intentionally omitted <==

CHINLINK INTERNATIONAL HOLDINGS LIMITED 普匯中金國際控股有限公司*

(Incorporated in Bermuda with limited liability) (Stock Code: 0997)

31 March 2017

To the Independent Shareholders

Dear Sir or Madam,

(1) MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN, AND THE SHAREHOLDER’S LOAN DUE BY, ZHONG HUI GLOBAL LIMITED AND ITS SUBSIDIARIES; AND (2) PROPOSED ISSUE OF CONVERTIBLE BONDS

We refer to the circular of the Company dated 31 March 2017 (the “ Circular ”), of which this letter forms part. Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as members of the Independent Board Committee to advise you (i) as to whether, in our opinion, (a) the terms of the Acquisition Agreement and the Loan Purchase and Financing Agreement (as amended by the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (b) the Acquisition and the Bond Issue are conducted in the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders as a whole; and (ii) as to the voting in respect of the ordinary resolutions to be proposed at the SGM to approve the Acquisition and the Bond Issue. Gram Capital has been appointed as the independent financial adviser to advise us and you in this regard. Details of their independent advice, together with the principal factors and reasons they have taken into consideration, are set out on pages 30 to 50 of the Circular.

• For identification purposes only

28

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the advice of Gram Capital, we are of the opinion that (i) the terms of the Acquisition Agreement and the Loan Purchase and Financing Agreement (as amended by the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) despite the Acquisition and the Bond Issue are not conducted in the ordinary and usual course of business of the Company, the business conducted by the Target Group, i.e. property development and rental, is in the ordinary and usual course of business of the Group; and (iii) the Acquisition and the Bond Issue are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Acquisition Agreement and Loan Purchase and Financing Agreement (as amended by the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed) and the Acquisition and the Bond Issue.

Yours faithfully, Independent Board Committee

Dr. Ho Chung Tai, Raymond Ms. Lai Ka Fung, May Ms. Chan Sim Ling, Irene Independent Independent Independent non-executive non-executive non-executive Director Director Director

29

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Bond Issue for the purpose of inclusion in this circular.

==> picture [168 x 33] intentionally omitted <==

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

31 March 2017

To: The independent board committee and the independent shareholders of Chinlink International Holdings Limited

Dear Sir/Madam,

(1) MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN, AND THE SHAREHOLDER’S LOAN DUE BY, ZHONG HUI GLOBAL LIMITED AND ITS SUBSIDIARIES; AND (2) PROPOSED ISSUE OF CONVERTIBLE BONDS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Bond Issue (collectively, the “ Transactions ”), details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 31 March 2017 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 2 February 2017, the Company, the Purchaser (a wholly-owned subsidiary of the Company), the Vendor and Mr. Li (as guarantor to the Vendor) entered into the Acquisition Agreement in relation to the proposed acquisition of the entire issued share capital of the Target. Simultaneously, the Company, the Purchaser and Mr. Li entered into the Loan Purchase and Financing Agreement in relation to the proposed acquisition of the Sale Loan and the provision of financing by Mr. Li to the Group. The Acquisition Agreement and the Loan Purchase and Financing Agreement (collectively, the “ Agreements ”) are inter-conditional and shall complete contemporaneously. On 13 March 2017, the parties to the Agreements executed the Acquisition Supplemental Deed and the Loan Purchase and Financing Supplemental Deed (collectively, the “ Supplemental Deeds ”) to amend certain terms of the Acquisition Agreement and the Loan Purchase and Financing Agreement respectively.

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LETTER FROM GRAM CAPITAL

With reference to the Board Letter, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under the Listing Rules. The Transactions also constitute connected transactions for the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising Dr. Ho Chung Tai, Raymond, Ms. Lai Ka Fung, May and Ms. Chan Sim Ling, Irene (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Agreements (as amended by the Supplemental Deeds) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Transactions are in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the resolutions to approve the Agreements (as amended by the Supplemental Deeds) and the Transactions at the SGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

OUR INDEPENDENCE

As at the Latest Practicable Date, we were not aware of any relationships or interests between Gram Capital and the Company during the past two years immediately preceding the Latest Practicable Date, or any other parties that could be reasonably regarded as hindrance to Gram Capital’s independence to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders.

Besides that, apart from the advisory fee and expenses payable to us in connection with our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there is no undisclosed private agreement/

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LETTER FROM GRAM CAPITAL

arrangement or implied understanding with anyone concerning the Transactions. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

We have not made any independent evaluation or appraisal of the assets and liabilities of the Target, the Target Group or the Property, and we have not been furnished with any such evaluation or appraisal, save as and except for (i) the valuation of the Property as at 30 September 2016 (the “ September Valuation ”); and (ii) the valuation of the Property as at 31 December 2016 (the “ December Valuation ”) as contained in Appendix IV to the Circular. Both of the September Valuation and the December Valuation were prepared by Colliers International (Hong Kong) Limited, an independent valuer (the “ Valuer ”). Since we are not experts in the valuation of land and/or properties, we have relied solely upon the September Valuation and the December Valuation for the market value of the Property as at 30 September 2016 and 31 December 2016 respectively.

The 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 the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement as contained in the Circular or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Purchaser, the Vendor, Mr. Li, the Target or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Transactions. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

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LETTER FROM GRAM CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Transactions, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Transactions

Business overview of the Group

With reference to the Board Letter, the Company is an investment holding company. The Group is principally engaged in property investment, interior decoration works in Hong Kong and Macau, trading (including mainly electronic components and appliance, furniture and fixtures etc.), provision of financing guarantee services, finance leasing and logistics services in the PRC.

Set out below are the consolidated financial information of the Group for the six months ended 30 September 2016 and the two years ended 31 March 2016 as extracted from the interim report of the Company for the six months ended 30 September 2016 (the “ 2016/17 Interim Report ”) and the annual report of the Company for the year ended 31 March 2016 (the “ 2016 Annual Report ”):

	For the
	six months	For the	For the
	ended	year ended	year ended	Year on
	30 September	31 March	31 March	year
	2016	2016	2015	change
	(unaudited)	(audited)	(audited)	%
	HK$’000	HK$’000	HK$’000
Revenue	87,545	201,297	252,393	(20.24)
– Property investment	37,292	44,888	Nil	N/A
– Interior decoration work	1,611	16,538	140,362	(88.22)
– International trading	33,835	113,388	72,488	56.42
– Financing guarantee services	8,311	20,231	26,961	(24.96)
– Logistics services	486	687	7,662	(91.03)
– Unallocated revenue	6,010	5,565	4,920	13.11
Gross Profit	37,968	51,331	55,790	(7.99)
(Loss)/profit attributable to
owners of the Company for the
period/year	(393)	157,663	(80,189)	N/A

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LETTER FROM GRAM CAPITAL

	As at	As at	As at	Year on
	30 September	31 March	31 March	year
	2016	2016	2015	change
	(unaudited)	(audited)	(audited)	%
	HK$’000	HK$’000	HK$’000
Bank balances and cash	58,771	48,975	67,145	(27.06)
Net assets	1,059,286	1,111,810	228,353	386.88

As illustrated by the above table, the Group’s revenue and gross profit for the year ended 31 March 2016 (“ FY2016 ”) amounted to approximately HK$201.30 million and HK$51.33 million respectively, representing decrease of approximately 20.24% and 7.99% respectively as compared to those for the year ended 31 March 2015 (“ FY2015 ”). With reference to the 2016 Annual Report, the most significant revenue decline was from the Group’s interior decoration work business as a result of the strategic repositioning of the Group by putting more emphasis and resources on developing finance business and property investment. Revenue from international trading business and the property investment compensated the shrinking revenue from interior decoration work business during FY2016. Despite the decrease in overall revenue and gross profit, the gross profit margin increased by 3.4 percent points from approximately 22.1% for FY2015 to 25.5% for FY2016.

With reference to the 2016 Annual Report, with a recognition of a gain on bargain purchase of HK$310 million from the acquisition in relation to the Commercial Complex (as defined below) in August 2015 (the “ 2015 Acquisition ”) which was partially net-off by the increase in administrative expenses and finance costs as a result of the Group’s expansion and the 2015 Acquisition, the Group recorded profit attributable to owners of the Company of HK$157.66 million for FY2016, compared to a loss of HK$80.19 million for FY2015.

As at 30 September 2016, the Group had bank balances and cash of approximately HK$58.77 million and net assets of approximately HK$1.06 billion.

With reference to the 2016/2017 Interim Report, the Group is gradually streamlining by reallocating resources away from the interior decoration work business (where the Group sees limited opportunities for new/large-scale projects) towards the higher potential businesses such as financing services and property investment. The steady cash flow from rental income and management fees provides strong support for the Group.

Information on the Vendor

With reference to the Board Letter, the Vendor is incorporated in the BVI and is wholly owned by Mr. Li. The principal business activity of the Vendor is investment holding. As at the Latest Practicable Date, the Vendor was wholly owned by Mr. Li and accordingly was a connected person of the Company.

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Information on Mr. Li

With reference to the Board Letter, Mr. Li is the chairman and managing Director of the Company. As at the Latest Practicable Date, Mr. Li, through Wealth Keeper and in his own capacity, was beneficially interested in 359,758,358 Consolidated Shares, representing approximately 53.70% of the existing issued share capital of the Company.

Information on the Target Group

With reference to the Board Letter, the Target is a company incorporated in the BVI in January 2013 and is wholly owned by Mr. Li through the Vendor as at the date of the Acquisition Agreement. The Target is principally engaged in investment holding. The PRC Subsidiary, which is indirectly wholly owned by the Target through the HK Subsidiary, is a wholly foreign owned enterprise established in the PRC and owns a 100% interest in the Property. The original investment cost of the Target to Mr. Li was US$1. The original acquisition cost of the HK subsidiary to the Target was HK$1. The original acquisition cost of the PRC Subsidiary to the HK Subsidiary was US$3 million and it was acquired from Real Queen Limited, which was wholly owned by Mr. Li. The initial investment cost of the PRC subsidiary to Mr. Li was also US$3 million.

The Property is situated at the junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, the PRC. It is situated at a convenient location with easy access to various modes of public transportation, within 15 minutes’ walk to Yundong Gongyuan Metro Station and 25 minutes’ drive from the Xi’an Xianyang International Airport. The neighbourhood of the Property is dominated by office and residential developments. One of the largest city parks in Xi’an, namely Xi’an City Sport Park, is in the Property’s close proximity. Another notable landmark building in the vicinity is the Municipal Government Headquarter of Xi’an.

The Property comprises a parcel of land with site area of approximately 9,100 sq. m., on which a 25-level office development plus a 2-level basement carpark are currently under construction. Upon completion of the construction, it will have a total gross floor area of approximately 55,491 sq.m.. As at the Latest Practicable Date, the foundation, substructure construction and superstructure construction of the Property were completed, while the facade and window installation, building services installation, external and interior finishing and landscaping works of the Property were still ongoing. It is expected that the construction of the Property will be completed by the end of 2017, and the Company intends to hold the Property as investment property for rental purpose and as office for internal use. It is estimated that the construction costs to be incurred to complete the construction works (the “ Construction Costs ”) amount to approximately RMB54.2 million (equivalent to approximately HK$61.1 million).

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Set out below is the key audited financial information of the Target Group for the two years ended 31 December 2015 as extracted from the accountant’s report of the Target Group as contained in Appendix II to the Circular (the “ Accountant’s Report ”):

	For the year	For the year	For the year
		ended	ended
	31	December	31 December
		2015	2014
		HK’000	HK$’000
Profit before taxation		56,461	39,993
Profit after taxation		42,198	29,145

With reference to the Board Letter, the profits of the Target Group for the years ended 31 December 2014 and 2015 mainly represented the gain on fair value changes of the Property. The audited net assets of the Target Group amounted to approximately HK$100.77 million as at 30 September 2016.

Reasons for and benefits of the Transactions

With reference to the Board Letter, the Group has been constantly reviewing its business strategy and continued to explore sound investment opportunities to strengthen its core competencies and to contribute sustainable growth and return for the Group and the Shareholders. The Directors consider the Acquisition provides an opportunity for the Group to expand its property investment portfolio in Xi’an which they believe to be a property market with great appreciation potential, particularly with the superb location of the Property.

After completion of the development of the Property, it is the intention of the Company that the Property will be held for rental purpose to generate a stable and recurring income stream to the Group. In addition to holding the Property for rental purpose, the Group may also consider retaining certain floor area of the Property as the main office of the Group in Xi’an so as to enhance administrative efficiency and reduce rental expenses. The Acquisition would also strengthen the asset base of the Group and provide a strong asset backing for future financing as and when such financing is needed.

In conjunction with the Acquisition, Mr. Li agreed to provide financing to the Group to support its funding needs for the remaining construction work of the Property. The provision of the financing and the issue of the Financing Bonds are negotiated in tranches having considered the progress of the outstanding development works.

We have further discussed with the Directors regarding the financing alternatives for the Acquisition and the construction of the Property. We noted from the 2016/17 Interim Report that the Group’s bank borrowings as at 30 September 2016 carried interest rates at (i) Hong Kong Interbank Offered Rate plus 2.5% to 3.75% per annum; and (ii) base rate fixed by People’s Bank of China plus a premium per annum. As at the

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date of Agreements, (i) the interest settlement rate with a maturity of one year as quoted by The Hong Kong Association of Banks was approximately 1.55% and (ii) the base rate fixed by the People’s Bank of China with a maturity of two years was 4.75%. The interest rate of the Convertible Bonds is lower than that of the Group’s bank borrowings as at 30 September 2016.

In respect of equity financing, we were advised by the Directors that placing/ subscription of new Shares will have immediate dilution effect on the shareholding interests of the existing Shareholders. The Directors also considered that as the Company had just completed a rights issue in November 2016, the Shareholders’ responses to another rights issue/open offer with fund raising size comparable to the aggregated principal amount of the Convertible Bonds (i.e. HK$370 million in aggregate, as compared to the market capitalisation of approximately HK$469 million as at the date of the Agreements) will be unpredictable. If the Shareholders do not participate in the rights issue/open offer, their shareholding interests will be immediately diluted.

Having considered the above, the Directors are of the view that the issue of the Share Consideration Bonds and the Loan Consideration Bonds to settle the consideration for the Sale Share and the Sale Loan avoids the immediate cash outflow of the Group and may enlarge the capital base of the Company should the Share Consideration Bonds and the Loan Consideration Bonds be converted into Conversion Shares. The issue of the Financing Bonds represents an opportunity for the Company to raise funds for the construction of the Property. The Directors consider that the issue of the Financing Bonds is an appropriate means of raising additional capital for the Company since they will not have an immediate dilution effect on the shareholding of the existing Shareholders. In the event that the conversion right attaching to the Financing Bonds is exercised, the capital base of the Company will also be enlarged.

We noted that the Group’s revenue from property investment contributed approximately 22.30% and 42.60% of the Group’s total revenue for FY2016 and for the six months ended 30 September 2016 respectively. With reference to the 2016/2017 Interim Report and as advised by the Directors, the Group’s property investment business is currently based at Daminggong Construction Materials and Furniture Shopping Center (Dongsanhuan Branch) (the “ Commercial Complex* ”) in Xi’an, which was acquired by the Group together with a parcel of land (with the Commercial Complex) with undeveloped construction area of about 119,000 sq. m., through the acquisition of 100% equity interests in E-Innovation Limited in August 2015. The Commercial Complex is a nine-floor (seven above-ground and two basements) shopping center, situated at a prime location in Xi’an. Because of the superb location, the Commercial Complex enjoys an occupancy rate of about 90.0%, and is able to be selective in accepting superior quality tenants such as prime names and anchor-grade tenants.

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With reference to the 2016/2017 Interim Report and as advised by the Directors, the Group aims to duplicate the great success of the Commercial Complex in Xi’an at the integrated logistics park (the “ Chinlink•Worldport ”) in Hanzhong, which is located in the southwest of Xi’an. On 19 October 2015, the Company has entered into a letter of intent with the Government of Hantai District, Hanzhong, Shaanxi Province in relation to the possible establishment of a Chinese herbal medicine trading base in Chinlink•Worldport. Chinlink•Worldport has a prime, strategic location at the nexus of three major logistics regions – Central (WuhanZhengzhou), Northwest (Xi’an-Lanzhou-Urumqi), and Southwest (Chongqing-Chengdu-Nanning) and three major economic zones – Jianghan Economic Zone, Chengdu-Chongqing Economic Zone, and Guanzhong-Tianshui Economic Zone.

We also noted from the statistics year book 2011 and 2016 (the “ Year Books ”) published by the Xi’an Bureau of Statistics (http://www.xatj.gov.cn) that the gross domestic product (“ GDP ”) of Xi’an grew at a compounded annual growth rate (“ CAGR ”) of approximately 12.34% from 2010 to 2015 and amounted to approximately RMB580.12 billion in 2015. We also noted from the Year Books that the number of enterprises in Xi’an and Weiyang District grew at a CAGR of approximately 8.67% and 10.87% respectively from 2010 to 2015, reaching 106,485 and 19,090 in 2015.

With reference to a statistics release published by the Shaanxi Provincial Bureau of Statistics on 10 January 2017, from January 2016 to November 2016, the total investment in real estate development in Shaanxi Province amount to approximately RMB245.93 billion, representing an increase of approximately 8.2% as compared to the same period in 2015. Among the total investment in real estate development, investment in office premises in Shaanxi Province amount to approximately RMB16.90 billion from January 2016 to November 2016, representing an increase of approximately 17.1% as compared to the same period in 2015. From January 2016 to November 2016, the total area of real estate sold in Xi’an amounted to approximately 1,730.12 sq.m., representing an increase of approximately 11.8% as compared to the same period in 2015. Taking into account the above, we consider the real estate market (including that for office premises) in Xi’an to be positive.

Having considered that (i) it is the Group’s strategy to develop the property investment business; (ii) the real estate market (including that for office premises) in Xi’an is positive; (iii) the issue of Financing Bonds would alleviate the financing burden of the Group on the construction of the Property; and (iv) the issue of the Convertible Bonds are considered to be a preferable financing method for the Acquisition and the construction of the Property as illustrated above, we concur with the Directors that the Transactions are in the interests of the Company and the Shareholders as a whole.

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2. Principal terms of Agreements

a) The Acquisition Agreement

Date

2 February 2017 (as amended by the Acquisition Supplemental Deed dated 13 March 2017)

Parties

• (i) Glorious Harvest Limited, as purchaser;

• (ii) Bestwin International Investment Limited, as vendor;

• (iii) the Company; and

• (iv) Mr. Li, as guarantor to guarantee the due and punctual performance of the obligations of the Vendor under the Acquisition Agreement

Assets to be acquired

Pursuant to the Acquisition Agreement, the Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the Sale Share free from all encumbrances with effect from Completion together with all rights attached thereto at any time on or after the Completion Date. The Sale Share represents the entire issued share capital of the Target as at the date of the Acquisition Agreement and Completion.

Consideration

The consideration for the Sale Share is HK$96 million (the “ Sale Share Consideration ”), which shall be satisfied by the Company issuing the Share Consideration Bonds with principal amount of HK$96 million to the Vendor or its nominee(s) at Completion.

With reference to the Board Letter, the Sale Share Consideration was determined after arm’s length negotiations among the parties to the Acquisition Agreement with reference to the unaudited consolidated net asset value of the Target Group as at 30 September 2016 of approximately HK$95.6 million (based on the exchange rate of RMB1 = HK$1.1271 on the date of the Acquisition Agreement), in which the Property at its existing state was stated at its preliminary valuation of approximately RMB382 million (i.e. the September Valuation) as appraised by the Valuer using market approach, with considerations of the incurred development costs, the outstanding development period and the potential developer’s expected risk and return.

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We noticed from the Accountant’s Report that the audited net assets of the Target Group amounted to approximately HK$100.77 million as at 30 September 2016 (the “ Target Group NAV ”). The September Valuation was adopted for the book value of the Property as at 30 September 2016 under the Accountant’s Report. We also noted that the December Valuation of RMB384 million is slightly higher than the September Valuation.

Therefore, the Sale Share Consideration represents a discount of approximately 4.73% to the Target Group NAV as at 30 September 2016.

The Valuation

In order to assess the fairness and reasonableness of the Sale Share Consideration, we have reviewed the September Valuation and the December Valuation and discussed with Valuer regarding the methodology adopted and the basis and assumptions used in the aforesaid valuations.

We understand from the Valuer that in preparing the September Valuation and the December Valuation, the Valuer adopted the market approach with considerations of the incurred development costs, the outstanding development period and the potential developer’s expected risk and return, to assess the market value of the Property, assuming the Property in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market. As confirmed by the Valuer, the market approach is one of the commonly adopted approaches for valuation of companies and is also consistent with normal market practice.

For our due diligence purpose, we have reviewed and enquired into (i) the terms of engagement of the Valuer with the Company; (ii) the Valuer’s qualification and experience in relation to the preparation of the September Valuation and the December Valuation; and (iii) the steps and due diligence measures taken by the Valuer for conducting the September Valuation and the December Valuation. From the mandate letter and other relevant information provided by the Valuer and based on our interview with them, we are satisfied with the terms of engagement of the Valuer as well as their qualification and experience for preparation of the September Valuation and the December Valuation. The Valuer has also confirmed that they are independent to the Group, the Vendor, Mr. Li and the Target Group.

During our discussion with the Valuer, we have not identified any major factors which caused us to doubt the fairness and reasonableness of the principal bases and assumptions adopted for the September Valuation and the December Valuation. However, Shareholders should note that valuation of assets or companies usually involves assumptions and therefore the September Valuation/ December Valuation may or may not reflect the market value of the Property accurately.

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LETTER FROM GRAM CAPITAL

Having considered:

• (i) that the Sale Share Consideration represents a discount of approximately 4.73% to the Target Group NAV as at 30 September 2016;

• (ii) the September Valuation was adopted for the book value of the Property (being the major asset of the Target Group) as at 30 September 2016 under the Accountant’s Report;

• (iii) the December Valuation of RMB384 million is slightly higher than the September Valuation; and

• (iv) our due diligence on the September Valuation and the December Valuation as mentioned above,

we are of the view that the Sale Share Consideration is fair and reasonable so far as the Independent Shareholders are concerned.

Other terms of the Acquisition Agreement are set out under the section headed “1. The Acquisition Agreement” of the Board Letter.

b) The Loan Purchase and Financing Agreement

Date

2 February 2017 (as amended by the Loan Purchase and Financing Supplemental Deed dated 13 March 2017)

Parties

• (i) Glorious Harvest Limited, as purchaser;

• (ii) Mr. Li, as vendor and financier; and

• (iii) the Company

Assets to be acquired

Pursuant to the Loan Purchase and Financing Agreement, the Purchaser conditionally agreed to purchase, and Mr. Li conditionally agreed to sell, the Sale Loan free from all encumbrances with effect from Completion. The Sale Loan represents all debts owing by the Target Group to Mr. Li or his affiliated companies (including the Vendor) immediately prior to Completion, which amounted to approximately HK$215.7 million as at 30 September 2016.

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Consideration

The consideration for the Sale Loan shall be HK$216 million (the “ Sale Loan Consideration ”) and shall be satisfied by the Company issuing the Loan Consideration Bonds with principal amount of HK$216 million to Mr. Li or his nominee(s) at Completion.

With reference to the Board Letter, the Sale Loan Consideration was determined after arm’s length negotiations among the parties to the Loan Purchase and Financing Agreement with reference to the amount owed by the Target Group to Mr. Li and his affiliated companies of approximately HK$215.7 million as at 30 September 2016 and the further loan to be advanced by Mr. Li to support the general working capital needs of the Target Group before Completion. Mr Li has undertaken that the Sale Loan shall not be less than HK$216 million upon Completion.

On the above basis, we consider that the Sale Loan Consideration to be fair and reasonable so far as the Independent Shareholders are concerned.

Financing to be provided by Mr. Li

Mr. Li conditionally agreed to provide financing to the Group in the amount of HK$58 million (the “ Financing Amount ”) after Completion to fund the Construction Costs. The financing shall be provided by Mr. Li in two instalments within three months and within four to six months from Completion. In consideration of Mr. Li providing the financing, the Company shall accordingly issue the Financing Bonds in two tranches to Mr. Li or his nominee(s), details of which is set out under the section headed “Financing to be provided by Mr. Li” under the Board Letter.

The Financing Amount covers a substantial amount of the Construction Costs.

Other terms of the Loan Purchase and Financing Agreement are set out under the section headed “2. The Loan Purchase and Financing Agreement” of the Board Letter.

c) The Convertible Bonds

Issuer

The Company

Principal amount

HK$370 million in aggregate

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Interest

The Convertible Bonds bear interest at 3% per annum on the outstanding principal amount thereof.

Maturity

The Convertible Bonds shall mature on the date falling the second anniversary of the date of issue.

Security

The obligations of the Company under the Convertible Bonds are secured by the Share Charges. The Share Charges will become enforceable if the Company commits a breach or on the occurrence of an event of default under the terms of the Convertible Bond.

Conversion Price

The initial Conversion Price of HK$0.565 per Conversion Share was determined after arm’s length negotiations among the parties to the Acquisition Agreement and the Loan Purchase and Financing Agreement which is the average of the closing prices per Share as quoted on the Stock Exchange for the last five consecutive trading days before the date of the Acquisition Agreement.

Conversion Shares

Based on the initial Conversion Price of HK$0.565 per Conversion Share, a total of 654,867,256 Conversion Shares shall fall to be allotted and issued upon exercise in full of the conversion rights attaching to the Convertible Bonds.

Other terms of the Convertible Bonds are set out under the section headed “3. Principal terms of the Convertible Bonds” of the Board Letter.

Analysis on the Conversion Price

The initial Conversion Price of HK$0.565 per Conversion Share:

• (i) represents a discount of approximately 57.20% to the closing price of HK$1.32 per Consolidated Shares as quoted on the Stock Exchange as at the Latest Practicable Date;

• (ii) represents a discount of approximately 19.29% (the “ Agreement Date Discount ”) to the theoretical closing price of HK$0.7 per Consolidated Share as quoted on the Stock Exchange on the date of the Acquisition Agreement;

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• (iii) represents a discount of approximately 1.74% to the theoretical closing price of HK$0.575 per Consolidated Share as quoted on the Stock Exchange on the last trading day before the date of the Acquisition Agreement;

• (iv) equals to the average theoretical closing price of HK$0.565 per Consolidated Share as quoted on the Stock Exchange for the last five consecutive trading days before the date of the Acquisition Agreement; and

• (v) represents a discount of approximately 68.45% to the unaudited adjusted consolidated equity attributable to the Shareholders of approximately HK$1.791 per Consolidated Share (based on the unaudited equity attributable to the Shareholders of approximately HK$649,913,000 as at 30 September 2016 adjusted by the net proceeds of approximately HK$550,000,000 from the rights issue completed on 21 November 2016 and 670,002,436 Consolidated Shares in issue immediately after completion of the rights issue).

In order to assess the fairness and reasonableness of the initial Conversion Price, we have reviewed the theoretical daily closing price of the Consolidated Shares as quoted on the Stock Exchange from 1 February 2016 up to and including 2 February 2017 (the “ Review Period ”), being a period of approximately one year prior to and including the date of the Agreements. The comparison of theoretical daily closing prices of the Consolidated Shares and the initial Conversion Price is illustrated as follows:

Historical theoretical daily closing price per Consolidated Share HK$

==> picture [385 x 195] intentionally omitted <==

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

8.000
7.000
6.000
5.000
4.000
3.000
2.000
1.000
0.000
Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec Jan Feb
2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017
Theoretical daily closing price Initial Conversion Price
----- End of picture text -----

Source: The Stock Exchange’s website

Notes:

1. The closing prices of the Shares from 1 February 2016 to 20 October 2016 were adjusted for the effect of the rights issue on the basis of five rights shares for every one share held on the record date as announced by the Company on 7 September 2016

2. The closing prices of the Shares during the Review Period were adjusted for the effect of the Share Consolidation.

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During the Review Period, the lowest and highest theoretical closing prices of the Consolidated Shares as quoted on the Stock Exchange were HK$0.55 recorded on 24 January 2017 and 25 January 2017 and HK$6.75 per Consolidated Share recorded on 31 March 2016 respectively. The initial Conversion Price of HK$0.565 is within the range of the lowest and highest theoretical closing prices of the Consolidated Shares as quoted on the Stock Exchange during the Review Period.

After the theoretical closing prices of Consolidated Shares reached their peak on 31 March 2016, the theoretical closing prices of Consolidated Shares plummeted in April 2016 and reached HK$2.775 on 3 May 2016. The theoretical closing prices of Consolidated Shares were relatively stable from May 2016 to August 2016 and formed a general decreasing trend until the date of Agreements. As advised by the Directors, they were not aware of any affirmative reasons for the aforesaid movements in the theoretical closing prices of the Consolidated Shares.

Comparison with other comparable companies

Pursuant to the Agreements, the Company conditionally agreed to issue the Share Consideration Bonds and the Loan Consideration Bonds for the purpose of the settlement of the Sale Share Consideration and the Sale Loan Consideration. In consideration of Mr. Li providing the financing, the Company shall also issue the Financing Bonds.

As part of our analysis, we have identified transactions involving (i) the subscription/placing of convertible bonds/notes; or (ii) issue of convertible bonds/ notes as all or part of the consideration, announced by companies listed on the Stock Exchange from 3 December 2016 to 2 February 2017 (the “ Selection Period ”), being the date of the Agreements (the “ CB Comparables ”). The Selection Period was chosen for the demonstration of the market practices prior to the Agreements were entered into. To the best of our knowledge and as far as we are aware of, we found 28 transactions which met the said criteria. Shareholders should note that the businesses, operations and prospects of the Company are not the same as the CB Comparables. Nevertheless, the CB Comparables can demonstrate the market practices during the Selection Period.

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					Premium/(discount) of
					the conversion price
					over/to closing price per
					share on the date of
					agreement in relation to
					the respective
				Interest rate	subscription/placing of
Company name		Date of	Maturity	per annum	convertible bonds/notes
(Stock code)	Nature	announcement	(Years)	(%)	(%)
C&D International Investment Group	Subscription	4 December 2016	Perpetual	4	(7.07)
Limited (1908)					(Note 7)
Viva China Holdings Limited (8032)	Subscription	5 December 2016	5	5	20.00
China Ocean Industry Group Limited	Subscription	6 December 2016	2	2	(23.73)
(651)
North Mining Shares Company	Subscription	8 December 2016	2	10	(15.25)
Limited (433)
China Railway Construction	Placing	8 December 2016	5	1.5	25.00
Corporation Limited (1186)			(Note 1)
Longrun Tea Group Company	Placing	11 December 2016	2	5.5	(12.90)
Limited (2898)
Pa Shun Pharmaceutical International	Subscription	15 December 2016	2	4	17.65
Holdings Limited (574)			(Note 2)
			2	4	135.29
			(Note 2)
Sino Energy International Holdings	Subscription	16 December 2016	1.83	7.5	(3.03)
Group Limited (1096)
Beijing Gas Blue Sky Holdings	Subscription	16 December 2016	3	4.8	9.84
Limited (formerly brown as Blue
Sky Power Holdings Limited)
(6828)
China Public Procurement Limited	Subscription	16 December 2016	2	7	4.45
(1094)
China E-Learning Group Limited	Consideration	21 December 2016	2	nil	(14.75)
(8055)	issue
Silverman Holdings Limited (1616)	Subscription	22 December 2016	2	5	4.31
Dingyi Group Investment Limited	Subscription	23 December 2016	3	7	14.86
(508)
China E-Learning Group Limited	Consideration	29 December 2016	2	nil	(17.67)
(8055)	issue
Sino Haijing Holdings Limited (1106)	Consideration	29 December 2016	3	nil	(35.48)
	issue
China Trends Holdings Limited	Placing	30 December 2016	3	1	117.65
(8171)
Ernest Borel Holdings Limited (1856)	Subscription	5 January 2017	2	10	13.64
Midland IC&I Limited (459)	Consideration	10 January 2017	4	Nil	(4.17)
	issue
Standard Chartered PLC (2888)	Placing	12 January 2017	Perpetual	7.75	(9.84)
					(Note 3)
Automated Systems Holdings Limited	Placing	12 January 2017	3	Nil	(36.84)
(771)		46

LETTER FROM GRAM CAPITAL

					Premium/(discount) of
					the conversion price
					over/to closing price per
					share on the date of
					agreement in relation to
					the respective
				Interest rate	subscription/placing of
Company name		Date of	Maturity	per annum	convertible bonds/notes
(Stock code)	Nature	announcement	(Years)	(%)	(%)
HC International, Inc. (2280)	Consideration	13 January 2017	1/2/3	Nil	29.31
	issue		(Note 4)
China Huarong Energy Company	Subscription	16 January 2017	2	7	16.28
Limited (1101)
Tesson Holdings Limited (1201)	Subscription	17 January 2017	19	3	45.45
			(Note 5)
China U-Ton Holdings Limited (6168)	Subscription	18 January 2017	2	8	16.28
Ping An Securities Group (Holdings)	Subscription	20 January 2017	2/3	5	5.49
Limited (231)			(Note 6)
LT Commercial Real Estate Limited	Subscription	22 January 2017	3	8	0.52
(112)					(Note 7)
Daisho Microline Holdings Limited	Placing	24 January 2017	3	8	(43.97)
(567)					(Note 8)
China Household Holdings Limited	Subscription	24 January 2017	2	2	(17.36)
(692)
Maximum			Perpetual	10	135.29
Minimum			1.00	Nil	(43.97)
Average				4.38	8.07
The Convertible Bonds		7 February 2017	2	3	(19.29)

Source: The Stock Exchange’s website

Notes:

1. The maturity date is on or about 21 December 2021.

2. The issuer may seek the bondholders’ prior written approval to extend the maturity date by one year.

3. Based on the conversion price of US$7.732, the closing price of shares of HK$66.5 as quoted on the Stock Exchange as at 12 January 2017 and the US$/HK$ exchange rate of 7.7546 as at 12 January 2017.

4. The convertible bonds mature in three tranches on the 15th day from the date of issue of the relevant audited financial statements of the target for each of the three years ending 31 December 2019.

5. The maturity date is 30 June 2036.

6. Half of the principal amount matures on the date falling on the last day of 24 months from the issue date and half of the principal amount matures on the date falling on the last day of 36 months from the issue date.

7. Based on the closing price of shares as at the last trading day prior to the date of agreement.

8. Based on the closing price of shares as at the last trading day prior to the date of agreement as the issuer was suspended since 25 June 2015.

47

LETTER FROM GRAM CAPITAL

We noted from the above table that (i) the conversion prices of the CB Comparables ranged from a discount of approximately 43.97% to a premium of approximately 135.29% to/over the respective closing prices of their shares on the date of agreement in relation to the respective transactions (the “ Discount/ Premium Range ”). As such, the Agreement Date Discount of approximately 19.29% falls within the Discount/Premium Range. Therefore, we are of the opinion that the initial Conversion Price is in line with the recent market practice.

Taking into account that (i) the initial Conversion Price is close to the theoretical closing prices of the Consolidated Shares immediately before the date of the Agreements; (ii) the initial Conversion Price of HK$0.565 is within the range of the lowest and highest theoretical closing prices of the Consolidated Shares as quoted on the Stock Exchange during the Review Period; and (iii) the Agreement Date Discount of approximately 19.29% falls within the Discount/Premium Range, we consider the initial Conversion Price to be fair and reasonable.

Other major terms of the Convertible Bonds

Pursuant to the Supplemental Deeds, (i) a share charge over the Sale Share, (ii) a share charge over the entire issued share capital of the HK Subsidiary and (iii) a share charge over the entire paid-up registered capital of the PRC Subsidiary would be executed by the Purchaser, the Target and the HK Subsidiary respectively to secure for the repayment obligation under the Convertible Bonds (i.e. the Share Charges).

As advised by the Directors, the Share Charges were concluded after arm’s length negotiations among the parties to the Agreements. From our observation, we notice that there are six Comparables which involved (i) charge over share capital of the issuer/the issuer’s subsidiary; (ii) charge over cash account of the issuer in favour of the subscriber; or (iii) personal/corporate guarantees, to secure the obligations under respective transaction documents/convertible notes/bonds. Accordingly, we consider that the Share Charge is not abnormal under the market practice.

In light of the above, we consider that the terms of the Agreements (as amended by the Supplemental Deeds) are fair and reasonable, on normal commercial terms and in the interest of the Company and the Shareholders as a whole.

48

LETTER FROM GRAM CAPITAL

3. Possible dilution effect on the shareholding interests of the public Shareholders

With reference to the shareholding table in the section headed “Shareholding structure of the Company” of the Board Letter, the shareholding interests of the public Shareholders would be diluted by approximately 22.87 percent point as a result of the full conversion of the Convertible Bonds. In this regard, taking into account (i) the reasons for and benefits of the Transactions; and (ii) the terms of the Agreements (as amended by the Supplemental Deeds) being fair and reasonable, we are of the view that the said level of dilution to the shareholding interests of the public Shareholders as a result of the full conversion of the Convertible Bonds is acceptable.

4. Financial effects of the Transactions

We were advised by the Directors that upon Completion, the Target will become a wholly-owned subsidiary of the Company and its financial results, assets and liabilities will be fully consolidated into the financial statements of the Group.

The unaudited pro forma financial information of the Enlarged Group (the “ Pro Forma Information ”) is included in Appendix III to the Circular.

As extracted from the 2016/2017 Interim Report, the unaudited consolidated total assets and total liabilities of the Group were approximately HK$3,335.99 million and HK$2,276.71 million as at 30 September 2016 respectively. According to the Pro Forma Information, the unaudited consolidated total assets and total liabilities of the Enlarged Group would be approximately HK$3,779.75 million and HK$2,617.18 million respectively as if the Acquisition had taken place on 30 September 2016.

It should be noted that the aforementioned analyses are for illustrative purposes only and do not purport to represent how the financial position of the Group will be upon Completion.

49

LETTER FROM GRAM CAPITAL

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Agreements (as amended by the Supplemental Deeds) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) although the Transactions are not conducted in the ordinary and usual course of business of the Company, the Transactions are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Agreements (as amended by the Supplemental Deeds) and the Transactions and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Susanna Ho Managing Director Director

• Note: Mr. Graham Lam is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. He has over 20 years of experience in investment banking industry.

Ms. Susanna Ho is a licensed person registered with the Securities and Futures Commission and a responsible officer of Gram Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. She has over 12 years of experience in investment banking industry.

50

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Financial information on the Group for each of the three financial years ended 31 March 2014, 2015 and 2016 and the six months ended 30 September 2016 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.chinlinkint.com/en_US/index.html):

• annual report of the Company for the year ended 31 March 2014 published on 25 July 2014 (pages 73 to 188);

• annual report of the Company for the year ended 31 March 2015 published on 29 July 2015 (pages 80 to 211);

• annual report of the Company for the year ended 31 March 2016 published on 28 July 2016 (pages 89 to 263); and

• interim report of the Company for the six months ended 30 September 2016 published on 23 December 2016 (pages 39 to 96).

I-1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

As at the close of business on 31 January 2017, being the latest practicable date for the sole purpose of this statement of indebtedness prior to the date of this circular, the Enlarged Group had outstanding borrowings comprising the following:

	HK$’000
Bank borrowings, secured and guaranteed	958,744
Bank overdraft, secured and guaranteed	3,760
Bank overdraft, unsecured and unguaranteed	500
Amounts due to the Company’s former subsidiaries,
unsecured and unguaranteed	9,536
Amounts due to related companies of the Group,
unsecured and unguaranteed	198,124
Other borrowing, secured and unguaranteed	30,335
Other borrowings, unsecured and unguaranteed	75,116
Loans from staff of the Group, unsecured
and unguaranteed	4,855
7.5% coupon bonds of the Company, unsecured
and unguaranteed	200,000
10% convertible bonds of the Company, unsecured
and guaranteed	77,505
Obligations under finance leases, secured
and unguaranteed	1,606
Amount due to a director of the Company,
unsecured and unguaranteed	2,400
Amount due to a director of the Target Company,
unsecured and unguaranteed	218,050

I-2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Bank borrowings and bank overdraft

As at 31 January 2017, the secured and guaranteed bank borrowings and bank overdraft of approximately HK$958,744,000 and HK$3,760,000 of the Group were secured by:

• (a) investment properties of the Group located in the PRC;

• (b) properties, plant and equipment of the Group; and

• (c) a corporate guarantee given to a bank to the extent of RMB150,000,000 (equivalent to approximately HK$169,800,000) by the Target Group.

Other borrowing

As at 31 January 2017, the secured and unguaranteed other borrowing of the Company of approximately HK$30,335,000 was secured by the deposit in the form of a duly signed cheque drawn by the Company on a licensed bank in Hong Kong.

Obligation under finance lease

As at 31 January 2017, the finance lease obligation of approximately HK$1,606,000 of the Group was secured by the lessor’s charge over the leased asset of the Group.

Contingent liabilities or guarantees

As at 31 January 2017, the Group has entered into agreements with banks and other lenders in respect of its financing guarantee services to provide corporate guarantees with respect to bank loans granted to independent third parties and related companies. The maximum liabilities of the Group as at 31 January 2017 under these guarantees were approximately HK$396,766,000 and such guarantees were secured by pledged bank deposits of the Group of approximately HK$ 221,174,000.

As at 31 January 2017, corporate guarantees amounting to RMB150,000,000 (equivalent to approximately HK$169,800,000) were given to a bank by the Target Group for the provision of general banking facilities granted to a related company.

Disclaimer

For the purpose of the above statement of indebtedness, foreign currency denominated amounts have been translated into HK$ at the rate of exchange of HK$1.132 to RMB1 and HK$7.76 to USD1 as at 31 January 2017.

I-3

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Except as disclosed above and apart from intra-group liabilities, the Enlarged Group did not have, as at 31 January 2017, any other debt securities issued and outstanding, and authorised or otherwise created but unissued, terms loans, other borrowings and indebtedness, bank overdrafts, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchases commitments, finance lease obligations, mortgages, charges, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

After taking into account the Acquisition and the Enlarged Group’s:

• (i) internal financial resources;

• (ii) present available banking facilities;

• (iii) loan facilities from Mr. Li and a company controlled by Mr. Li totaling approximately HK$626.4 million pursuant to the loan agreements entered into between the Company and these parties on 16 June 2016 and 1 September 2016 respectively and the supplementary agreements on 3 March 2017; and

• (iv) conditional issue of convertible bonds with face value amounting to HK$58 million pursuant to the Loan Purchase and Financing Agreement for provision of further financing;

the Directors are of the opinion that the Enlarged Group will have sufficient working capital for at least twelve months from the date of this circular, i.e. 31 March 2017 to meet its present requirements in the absence of unforeseen circumstances.

4. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

The Group

The Group would continue to derive its competitive advantages from strategic geographical focus and unique positioning. The existing business operations and investments are mainly in Shaanxi Province with a major focus in Xi’an City, the capital of the Province. Under the “Open Up the West” and the “One Belt, One Road” economic development plans, Xi’an City is a designated growth center to drive the transformation of the PRC’s underdeveloped western region into a national economic pole. The Group is expected to benefit from this transformation process because of its early establishment in Shaanxi Province, its local market knowledge and business network. The Group also enjoys strong support from local government as evidenced by the approval granted by the government of Hanzhong City to set up a custom import bonded warehouse and the Qinba Chinese Herbal Medicine Trading Center in Chinlink•Worldport.

I-4

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Another major competitive advantage of the Group is its unique positioning in alternative finance service for small and medium enterprises (“ SMEs ”) through an integrated financing platform, offering financing guarantee, finance leasing, supply chain finance and logistics services. The Group’s objective is to offer better funding channels for the SMEs who are deprived of traditional bank credit. SMEs have been the backbone of the PRC’s economic development. However, they often find difficulties in gaining necessary funding through regular banking channels, due to the small loan size which is not justified with the approval efforts, low credit quality, lack of financial transparency and insufficient collaterals acceptable to banks. Through the Group’s unique risk management system in combining supply chain finance and logistics, the Group is able to mitigate these fundamental credit weaknesses and continue to provide financial assistance to these SMEs, even under the current slow economic environment.

The Group has earmarked two major growth areas for its finance business, namely supply chain finance and finance leasing. Supply chain finance serves to optimise the management of capital and liquidity tie-up in supply chain process for its clients. Financing is short term transaction base and self-liquidating, and the Group’s logistics operation would provide visibility into the transaction and control on the underlying goods and inventory as collaterals. The Group possesses good client resources through partnering with the trade and logistics centers in Xi’an City and its self-owned soon to open Chinlink•Worldport in Hanzhong City. Most of these clients are SMEs specialised in wholesale and distribution of building and construction materials who have substantial portion of their capitals tied-up in stocks and receivables and hence have huge needs for working capital finance which favours the development of the Group’s supply chain finance business. In Hong Kong and Shenzhen City, the Group works closely with the well-established supply chain logistics operators and taps into their customer base mainly in the electronic components business. The Group provides them with procurement and inventory short-term financings in Hong Kong and the logistics operators handle the warehousing, custom clearance and delivery. Shenzhen City is traditionally the biggest hub for import and distribution of electronic parts and components in the PRC whilst the PRC is the largest exporter of electronic products in the world. There are abundant demands for supply chain finance in this particular market. Hence the Group has strong confidence on the robust growth of the supply chain finance business in the coming years. Funding for the Group’s supply chain finance is mainly provided by commercial banks in Hong Kong and Xi’an in the forms of short term working capital loans and trade finance facilities. Current bank facilities available to the Group’s supply chain finance is approximately HK$140 million and the turnover cycle is roughly 90 days. The Group will continue to negotiate with the existing and other banks for larger credit limit as business grows. Given with the huge market demand for supply chain finance both in the PRC and Hong Kong, supply chain finance will be a key contributor to the Group’s sales turnover in the coming years.

I-5

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s finance lease company in the PRC will start operation by the second quarter of 2017. Since the approval for the formation of a wholly foreign-owned leasing company was granted by the Shaanxi Provincial Department of Commerce, the Group has spent considerable efforts in building a professional management team and business plan which will initially focus on the industries such as healthcare, infrastructure, public transportation and environmental protection facility, which have strong demand for finance lease in the PRC. The Group is confident to achieve a sizable leasing portfolio within the first 12 months of operation. As a foreign-owned leasing company, the Group is entitled to a 10 times gearing on paid-up capital and is allowed to raise offshore debts. Given the huge market potential and the Group’s funding advantage, outlook of the finance leasing business is highly encouraging and will be a major contributor to the Group in the years ahead. The finance lease company will have a registered capital of US$30 million to be paid up by stages. The Group is considering different means to raise the finance lease company’s required capital which may include the issue of bond or other financial instruments. The Group is also looking for potential investors to jointly develop the finance lease company, and if materialised as appropriate, it will provide the Company with larger capital base and new business opportunities through the investors’ respective business networks.

The development of the Chinlink•Worldport, the Group’s logistics project in Hanzhong City, is under smooth progress. The first phrase will comprise of a large scale commercial area including Daminggong (Hanzhong) Building and Construction Materials Wholesale Center, Qinba Chinese Herbal Medicine Trading Center, warehousing and other logistics facilities. Daminggong (Hanzhong) Building and Construction Materials Wholesale Center with auxiliary business facilities with total commercial area of approximately 147,000 sq.m will start operation by mid-2017. Chinlink•Worldport will provide the Group new income sources in the forms of rental, property management fees and logistics services fees etc. It also provides new opportunities for the Group’s supply chain finance in terms of procurement, inventory and receivables financing and finance leasing businesses.

The Group’s financial guarantee company has been operating since 2013 with paid-up capital of US$30 million. It is the first wholly-foreign owned financial guarantee enterprise in the Shaanxi Province. As at 31 July 2016, guaranteed portfolio is approximately RMB314 million and available bank limit for accepting the corporate guarantee is over RMB900 million. The financial guarantee company will expand its business through collaboration with the Group’s supply chain finance and finance lease companies, assisting them to obtain bank financing by providing corporate guarantee for their clients. These joint financing services could enhance the Group’s overall income from a single transaction against the same credit exposure. Given the zero default record during last three years, the financial guarantee company continues to provide stable income to the Group and business synergy within the Group’s other financial operations.

I-6

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group will continue to explore new opportunities in related business areas, especially in various specialized financing services such as factoring, Internet microfinance, fund management and brokage, to complement with the Group’s existing financial services targeted at the SMEs in the PRC and Hong Kong. This expansion strategy is aimed to improve the Group’s customer resources and the management expertise. The Group’s strategic geographical position in Shaanxi Province is also considered to be the frontier to the PRC’s economic growth driven by the One-Belt-One-Road national development policy.

As at the Latest Practicable Date, apart from the Bond Issue, the Company has not identified any concrete fund raising plan and has not contemplated any fund raising exercise. However, the Directors noted that certain of the Company’s bonds and bank and other borrowings will fall due within 2017 and that the Group requires capital for business expansion. While the Company would like to take advantage of market opportunities to raise capital to fulfil its funding needs, the Directors will ensure that the future fund raising activities, if any, will be conducted with terms that are justifiable taking into account the then circumstances, in the best interest of the Company and the Shareholders as a whole, and in compliance with the applicable Listing Rules. The Company will make further announcement in this regard in accordance with the Listing Rules as and when appropriate.

The Target Group

The Group expects that the acquisition of the Target Group can benefit the Group in different ways. The level of commercial activity in Xi’an shows a healthy growth in the past few years. According to the Statistical Year Books published by the Xi’an Statistical Bureau, the gross domestic product and the number of enterprises of Xi’an City have a compound annual growth rate of approximately 12.3% and 11.8% respectively from 2010 to 2015. In addition, according to the valuation report as set out in Appendix IV to this circular, the prevailing gross yields and occupancy rates of office buildings of similar type within the subject area are in the range of 6%-6.5% and a range of 80%-90% respectively. Besides, the Property is located at the vicinity of the soon to be announced Shaanxi Xi’an Free Trade Zone. With this favourable circumstance, the Group expects the Property will have a great appreciation potential. Furthermore, the Property will be held for rental purpose to generate a stable and recurring income stream. Given the favorable location of the Property, it is expected that the Property will bring a promising rental return to the Group. The Property can also enhance the management efficiency as the Group will retain certain floors of the Property as the main office of the Group. The Acquisition can also provide a strong asset backing for financing as and when such financing is needed in the future.

I-7

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. RECONCILIATION STATEMENT OF THE VALUE OF THE PROPERTY

The Company has engaged Colliers International (Hong Kong) Ltd. to value the Property. Details of the property valuation report are set out in Appendix IV to this circular. The reconciliation of the net book value and the valuation as required under Rule 5.07 of the Listing Rules is set out below:

Carrying value of the Property as at 30 September 2016 as shown in the audited financial statement of the Target Group set out in Appendix II to this circular Valuation surplus Exchange realignment Valuation of the Property as at 31 December 2016_(note)_	HK$ 443,686,000 2,254,200 (13,133,800) 432,806,400

Note: As set out in Appendix IV to this circular, the Property is valued at RMB384,000,000 (equivalent to approximately HK$432.8 million) as at 31 December 2016.

I-8

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

1. ACCOUNTANT’S REPORT OF THE TARGET GROUP

The following is the text of a report set out on pages II-1 to II-39 received from the Company’s reporting accountant, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF CHINLINK INTERNATIONAL HOLDINGS LIMITED

==> picture [175 x 26] intentionally omitted <==

Introduction

We report on the historical financial information of Zhong Hui Global Limited (the “Target Company”) and its subsidiaries (together, the “Target Group”) set out on pages II-5 to II-39, which comprises the consolidated statements of financial position as at 31 December 2013, 2014 and 2015 and 30 September 2016, the statements of financial position of the Target Company as at 31 December 2013, 2014 and 2015 and 30 September 2016 and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for each of the periods then ended (the “Relevant Periods”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages II-5 to II-39 forms an integral part of this report, which has been prepared for inclusion in the circular of Chinlink International Holdings Limited (“the Company”) dated 31 March 2017 (the “Circular”) in connection with the proposed major and connected transaction in relation to the proposed acquisition of the entire equity interest in, and the shareholder’s loan due by, the Target Group.

Director’s responsibility for the Historical Financial Information

The director of the Target Company is responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information, and for such internal control as the director determines is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

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

II-1

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgment, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the director, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the Target Company and the Target Group’s financial position as at 31 December 2013, 2014 and 2015 and 30 September 2016 and of the Target Group’s financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Group which comprises the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the nine months ended 30 September 2015 and other explanatory information (the “Stub Period Comparative Financial Information”). The director of the Target Company is responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in note 1 to the Historical Financial Information.

II-2

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page II-4 have been made.

Dividends

We refer to note 12 to the Historical Financial Information which states that no dividends have been paid by the Target Company in respect of the Relevant Periods.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

31 March 2017

II-3

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

HISTORICAL FINANCIAL INFORMATION OF THE TARGET GROUP

Preparation of Historical Financial Information

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

The consolidated financial statements of the Target Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

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

II-4

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(A) HISTORICAL FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes Other income, gains and losses 6 Administrative expenses Finance costs 7 Gain on fair value changes of investment property under construction 14 Profit before taxation 8 Income tax expense 9 Profit for the year/period attributable to owners of the Target Company Other comprehensive income (expense) Item that will not be subsequently reclassified to profit or loss: Exchange difference arising from translation to presentation currency Total comprehensive income attributable to owners of the Target Company	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) (498) 7 151 119 43 (557) (809) (1,071) (489) (304) – – – – – 22,729 40,795 57,381 49,802 35,101 21,674 39,993 56,461 49,432 34,840 (5,837) (10,848) (14,263) (12,451) (8,775) 15,837 29,145 42,198 36,981 26,065 1,520 (386) (8,884) (5,821) (4,781) 17,357 28,759 33,314 31,160 21,284	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) (498) 7 151 119 43 (557) (809) (1,071) (489) (304) – – – – – 22,729 40,795 57,381 49,802 35,101 21,674 39,993 56,461 49,432 34,840 (5,837) (10,848) (14,263) (12,451) (8,775) 15,837 29,145 42,198 36,981 26,065 1,520 (386) (8,884) (5,821) (4,781) 17,357 28,759 33,314 31,160 21,284
	2013 HKD’000 (498) (557) – 22,729 21,674 (5,837) 15,837 1,520 17,357	2014 HKD’000 7 (809) – 40,795 39,993 (10,848) 29,145 (386) 28,759

II-5

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

THE TARGET GROUP

Notes ASSETS AND LIABILITIES Non-current assets Equipment 13 Investment property under construction 14 Current assets Other receivables Amount due from an independent third party 15 Amount due from a related party 15 Pledged bank deposits 16 Bank balances and cash 16 Current liabilities Other payables and accruals Construction cost accruals Amount due to an independent third party 15 Amounts due to related parties 15 Amount due to a director 15 Other borrowings 17 Net current liabilities Non-current liability Deferred tax liabilities 18 Net assets CAPITAL AND RESERVES Share capital 19 Reserves Equity attributable to owners of the Target Company	As at 30 September As at 31 December 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 70 79 43 24 185,696 318,177 402,254 443,686 185,766 318,256 402,297 443,710 283 271 221 2 2,513 2,505 2,358 2,295 11,193 11,155 10,504 – – 3,803 – – 3,007 1,573 1,614 1,604 16,996 19,307 14,697 3,901 107 4,034 317 361 43,871 113,439 144,128 90,159 3,180 3,169 2,984 2,904 72,231 68,754 75,180 130,623 7,868 84,944 84,997 85,040 51,850 – – – 179,107 274,340 307,606 309,087 (162,111) (255,033) (292,909) (305,186) 6,246 17,055 29,906 37,758 17,409 46,168 79,482 100,766 – – – – 17,409 46,168 79,482 100,766 17,409 46,168 79,482 100,766	As at 30 September As at 31 December 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 70 79 43 24 185,696 318,177 402,254 443,686 185,766 318,256 402,297 443,710 283 271 221 2 2,513 2,505 2,358 2,295 11,193 11,155 10,504 – – 3,803 – – 3,007 1,573 1,614 1,604 16,996 19,307 14,697 3,901 107 4,034 317 361 43,871 113,439 144,128 90,159 3,180 3,169 2,984 2,904 72,231 68,754 75,180 130,623 7,868 84,944 84,997 85,040 51,850 – – – 179,107 274,340 307,606 309,087 (162,111) (255,033) (292,909) (305,186) 6,246 17,055 29,906 37,758 17,409 46,168 79,482 100,766 – – – – 17,409 46,168 79,482 100,766 17,409 46,168 79,482 100,766
	2013 HKD’000 70 185,696 185,766 283 2,513 11,193 – 3,007 16,996 107 43,871 3,180 72,231 7,868 51,850 179,107 (162,111) 6,246 17,409 – 17,409 17,409	2014 HKD’000 79 318,177 318,256 271 2,505 11,155 3,803 1,573 19,307 4,034 113,439 3,169 68,754 84,944 – 274,340 (255,033) 17,055 46,168 – 46,168 46,168

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

STATEMENTS OF FINANCIAL POSITION

THE TARGET COMPANY

Notes ASSETS AND LIABILITIES Non-current asset Investment in a subsidiary Current liability Amount due to a director 15 Net current liabilities Net assets CAPITAL AND RESERVE Share capital 19 Reserve 25 Equity attributable to owners of the Target Company	As at 31 December As at 30 September 2016 2013 2014 2015 HKD’000 HKD’000 HKD’000 HKD’000 1,000 1,000 1,000 1,000 1,010 1,015 1,020 1,026 (1,010) (1,015) (1,020) (1,026) (10) (15) (20) (26) – – – – (10) (15) (20) (26) (10) (15) (20) (26)	As at 31 December As at 30 September 2016 2013 2014 2015 HKD’000 HKD’000 HKD’000 HKD’000 1,000 1,000 1,000 1,000 1,010 1,015 1,020 1,026 (1,010) (1,015) (1,020) (1,026) (10) (15) (20) (26) – – – – (10) (15) (20) (26) (10) (15) (20) (26)
	2013 HKD’000 1,000 1,010 (1,010) (10) – (10) (10)	2014 HKD’000 1,000 1,015 (1,015) (15) – (15) (15)

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

As at 1 January 2013 Profit for the year Other comprehensive income – Exchange difference arising from translation to presentation currency Total comprehensive income for the year Acquisition of a subsidiary under common control Deemed distribution to controlling shareholder for acquisition of a subsidiary As at 31 December 2013 Profit for the year Other comprehensive expense – Exchange difference arising from translation to presentation currency Total comprehensive income for the year As at 31 December 2014 Profit for the year Other comprehensive expense – Exchange difference arising from translation to presentation currency Total comprehensive income for the year As at 31 December 2015		Attributable to owners of the Target	Attributable to owners of the Target
	Paid-in/ share capital HKD’000 23,669 – – – (23,669) – – – – – – – – – –	Merger reserve HKD’000 – – – – 23,669 (23,390) 279 – – – 279 – – – 279	Accumulated Translation profits reserve (losses) HKD’000 HKD’000 2,033 (2,260) – 15,837 1,520 – 1,520 15,837 – – – – 3,553 13,577 – 29,145 (386) – (386) 29,145 3,167 42,722 – 42,198 (8,884) – (8,884) 42,198 (5,717) 84,920	Total HKD’000 23,442
				15,837 1,520
				17,357
				– (23,390)
				17,409
				29,145 (386)
				28,759
				46,168
				42,198 (8,884)
				33,314
				79,482

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APPENDIX II

Profit for the period Other comprehensive expense – Exchange difference arising from translation to presentation currency Total comprehensive income for the period As at 30 September 2016 As at 1 January 2015 Profit for the period (unaudited) Other comprehensive expense – Exchange difference arising from translation to presentation currency (unaudited) Total comprehensive income for the period (unaudited) As at 30 September 2015 (unaudited)		Attributable to owners of the Target	Attributable to owners of the Target	Total HKD’000 26,065 (4,781) 21,284 100,766 46,168 36,981 (5,821) 31,160 77,328
	Paid-in/ share capital HKD’000 – – – – – – – – –	Merger reserve HKD’000 – – – 279 279 – – – 279	Accumulated Translation profits reserve (losses) HKD’000 HKD’000 – 26,065 (4,781) – (4,781) 26,065 (10,498) 110,985 3,167 42,722 – 36,981 (5,821) – (5,821) 36,981 (2,654) 79,703

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APPENDIX II

CONSOLIDATED STATEMENTS OF CASH FLOWS

Operating activities Profit before taxation Adjustments for: Depreciation of equipment Interest income Gain on fair value change of investment property under construction Operating cash flows before movements in working capital (Increase) decrease in other receivables Increase (decrease) in other payables and accruals Net cash (used in) generated from operations Investing activities Addition of investment property under construction Purchase of property, plant and equipment Interest received Repayment from a related party Placement of pledged bank deposit Withdrawal of pledged bank deposit Net cash used in investing activities Financing activities Net cash outflow on acquisition of a subsidiary under common control Interest paid New other borrowings raised Repayments of other borrowings Advances from related parties Repayments to related parties Advance from director Repayment to director Net cash from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year/period Effect of foreign exchange rate change Cash and cash equivalents at the end of the year/period, represented by bank balances and cash	For the year ended 31 December 2013 2014 2015 HKD’000 HKD’000 HKD’000 21,674 39,993 56,461 20 28 32 (1) (1) (59) (22,729) (40,795) (57,381) (1,036) (775) (947) (144) 11 34 106 3,918 (3,478) (1,074) 3,154 (4,391) (71,339) (20,008) (14,567) (21) (36) – 1 1 59 – – – – (3,803) – – – 3,581 (71,359) (23,846) (10,927) (23,390) – – (1,418) (2,554) – 56,000 – – (4,150) (51,850) – 41,066 21,023 15,512 (511) (24,428) (58) 19,171 109,973 – (11,330) (32,897) – 75,438 19,267 15,454 3,005 (1,425) 136 2 3,007 1,573 – (9) (95) 3,007 1,573 1,614	For the year ended 31 December 2013 2014 2015 HKD’000 HKD’000 HKD’000 21,674 39,993 56,461 20 28 32 (1) (1) (59) (22,729) (40,795) (57,381) (1,036) (775) (947) (144) 11 34 106 3,918 (3,478) (1,074) 3,154 (4,391) (71,339) (20,008) (14,567) (21) (36) – 1 1 59 – – – – (3,803) – – – 3,581 (71,359) (23,846) (10,927) (23,390) – – (1,418) (2,554) – 56,000 – – (4,150) (51,850) – 41,066 21,023 15,512 (511) (24,428) (58) 19,171 109,973 – (11,330) (32,897) – 75,438 19,267 15,454 3,005 (1,425) 136 2 3,007 1,573 – (9) (95) 3,007 1,573 1,614	For the nine months ended 30 September 2015 2016 HKD’000 HKD’000 (unaudited) 49,432 34,840 25 18 (59) – (49,802) (35,101) (404) (243) 7 213 (3,506) 53 (3,903) 23 (10,686) (70,097) – – 59 – – 10,221 – – 3,581 – (7,046) (59,876) – – – – – – – – 11,110 70,247 (57) (10,360) – – – – 11,053 59,887 104 34 1,573 1,614 (55) (44) 1,622 1,604
	2013 HKD’000 21,674 20 (1) (22,729) (1,036) (144) 106 (1,074) (71,339) (21) 1 – – – (71,359) (23,390) (1,418) 56,000 (4,150) 41,066 (511) 19,171 (11,330) 75,438 3,005 2 – 3,007	2014 HKD’000 39,993 28 (1) (40,795) (775) 11 3,918 3,154 (20,008) (36) 1 – (3,803) – (23,846) – (2,554) – (51,850) 21,023 (24,428) 109,973 (32,897) 19,267 (1,425) 3,007 (9) 1,573	2015 HKD’000 (unaudited) 49,432 25 (59) (49,802) (404) 7 (3,506) (3,903) (10,686) – 59 – – 3,581 (7,046) – – – – 11,110 (57) – – 11,053 104 1,573 (55) 1,622

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL AND BASIS OF PREPARATION

The Target Company is a private limited company incorporated in the British Virgin Islands (the “BVI”) on 3 January 2013. Its parent and ultimate holding company is Bestwin International Investment Limited (“Bestwin International”), a company incorporated in the BVI and the ultimate controlling shareholder of Bestwin International is Mr. Li Weibin, also being the sole director and chief executive of the Target Company (“Mr. Li”). The address of the registered office and principal place of business of the Target Company is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the BVI.

The functional currency of the Target Company is Renminbi (“RMB”). For the convenience of the Historical Financial Information users, the Historical Financial Information is presented in Hong Kong dollars (“HKD”).

The Target Company is an investment holding company. The principal activity of the Target Group is property development.

On 3 September 2013, Real King International Holdings Limited (formerly known as East Joy Asia Investment Limited) (“Real King”), a wholly-owned subsidiary of the Target Company, entered into share transfer agreements with Real Queen Limited (“Real Queen”) which was wholly owned by Mr. Li, to acquire the entire equity interests in 匯景國際(西安)信息科技有限公司 (“匯景國際(西安)”) for cash consideration of United States Dollars (“USD”) 3,000,000. The Target Company, Real King, Real Queen and 匯景國際(西安) are commonly controlled by Mr. Li.

The consolidated statement of profit or loss and other comprehensive income and consolidated statement of cash flows for the year ended 31 December 2013 have been prepared to include the results, changes in equity and cash flows of the Target Company, Real King and 匯景國際(西安) as if the current group structure had been in existence since 1 January 2013, or since the respective dates of incorporation, whichever period is shorter. The consolidated statement of financial position of the Target Company, Real King and 匯景國際(西安) as at 31 December 2013 has been prepared to present the assets and liabilities of the Target Company, Real King and 匯景國際(西安) as if the current group structure had been in existence as at 31 December 2013.

Going concern basis

In preparing the Historical Financial Information, the director of the Target Company has given careful consideration to the future liquidity of the Target Group in light of the fact that, as at 31 December 2013, 2014 and 2015 and 30 September 2016, the Target Group’s current liabilities exceeded its current assets by approximately HKD162,111,000, HKD255,033,000, HKD292,909,000 and HKD305,186,000 respectively.

The Target Group was wholly owned by Mr. Li and Mr. Li agreed that, in case the Acquisition is not completed, Mr. Li will provide financial support to the Target Group. In case the Acquisition is completed, the Company agreed that it will provide financial support to the Target Group.

After taking into account the above arrangements, the director of the Target Company considers that the Target Group will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due for the foreseeable future. Accordingly, the Historical Financial Information has been prepared on a going concern basis.

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APPENDIX II

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRS”)

For the purpose of preparing and presenting the Historical Financial Information throughout the Relevant Periods, the Target Group has consistently applied HKFRSs issued by the HKICPA that are effective for the Target Group’s accounting periods beginning on 1 January 2016 throughout the Relevant Periods.

The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective:

HKFRS 9 Financial instruments[2] HKFRS 15 Revenue from contracts with customers[2] HKFRS 16 Leases[3] Amendments to HKFRS 2 Classification and measurement of share-based payment transactions[2] Amendments to HKFRS 4 Applying HKFRS 9 Financial instruments with HKFRS 4 Insurance contracts[2] Amendments to HKFRS 10 and Sale or contribution of assets between an investor and its HKAS 28 associate or joint venture[4] Amendments to HKFRS 15 Clarifications to HKFRS 15 Revenue from contracts with customers[2] Amendments to HKAS 7 Disclosure initiative[1] Amendments to HKAS 12 Recognition of deferred tax assets for unrealised losses[1] Amendments to HKFRSs Annual Improvements to HKFRSs 2014-2016 Cycle[5]

• 1 Effective for annual periods beginning on or after 1 January 2017. 2 Effective for annual periods beginning on or after 1 January 2018. 3 Effective for annual periods beginning on or after 1 January 2019. 4 Effective for annual periods beginning on or after a date to be determined. 5 Effective for annual periods beginning on or after 1 January 2017 or 1 January 2018, as appropriate.

HKFRS 9 “Financial instruments”

HKFRS 9 issued in 2009 introduced new requirements for the classification and measurement of financial assets. HKFRS 9 was subsequently amended in 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in 2013 to include the new requirements for general hedge accounting. Another revised version of HKFRS 9 was issued in 2014 mainly to include (a) impairment requirements for financial assets and (b) limited amendments to the classification and measurement requirements by introducing a ‘’fair value through other comprehensive income’’ measurement category for certain simple debt instruments.

In relation to the impairment of financial assets, HKFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under HKAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

The director of the Target Company anticipates that the application of HKFRS 9 in the future may result in early recognition of credit losses based on the expected loss model in relation to the Target Group’s financial assets measured at amortised costs and is not likely to have other material impact on the results and financial position of the Target Group based on an analysis of the Target Group’s existing business model.

The director of the Target Company does not anticipate that the application of other new and revised HKFRSs will have a material impact on the future financial statement of the Target Group.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

3. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared in accordance with accounting policies which are in conformity with HKFRSs issued by HKICPA. In addition, the Historical Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Main Board of the Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

The Historical Financial Information has been prepared on the historical cost basis, except for investment property under construction that is measured at fair value at the end of each reporting period, as explained in the accounting policies set out below. Historical cost is generally based on the fair value of the consideration given in exchange for goods.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Target Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in this Historical Financial Information is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2 “Share-based payment”, leasing transactions that are within the scope of HKAS 17 “Leases”, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 “Inventories” or value in use in HKAS 36 “Impairment of assets”.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

Basis of consolidation

The Historical Financial Information incorporates the financial statements of the Target Company and entities controlled by the Target Company and its subsidiaries. Control is achieved when the Company:

• has power over the investee;

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

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

The Target Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Target Group obtains control over the subsidiary and ceases when the Target Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Target Group gains control until the date when the Target Group ceases to control the subsidiary. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Target Group’s accounting policies.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

All intra-group assets, liabilities, equity, income, expenses and cash flows relating to transactions between members of the Target Group are eliminated in full on consolidation.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

Revenue is recognised when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the Target Group and when specific criteria have been met for each of the Target Group’s activities, as described below.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Target Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Equipment

Equipment is stated in the consolidated statement of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of items of equipment, less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefits costs

Payments to state-managed retirement benefit scheme in the People’s Republic of China (the “PRC”) are recognised as an expense when employees have rendered service entitling them to the contributions.

Foreign currencies

In preparing the Historical Financial Information of each individual Target Group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.

For the purposes of presenting the Historical Financial Information, the assets and liabilities of the Target Group’s operations are translated into the presentation currency of the Target Group (i.e. Hong Kong dollars) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year/period. Taxable profit differs from ‘profit before taxation’ as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Target Group’s liabilities for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax asset is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Target Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred taxation arising from investment property under construction that is measured using the fair value model, the director of the Target Company has reviewed the Target Group’s investment property under construction and concluded that substantially all of the Target Group’s investment property under construction are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property under construction over time, rather than through sale. Therefore, in measuring the Target Group’s deferred taxation on investment property under construction, the director of the Target Company has determined that the presumption that the carrying amount of investment property under construction measured using the fair value model is recovered entirely through sale is rebutted.

Accordingly, deferred taxation in relation to the Target Group’s investment property under construction has been measured based on the tax consequences of recovering the carrying amounts entirely through use.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Investment property/investment property under construction

An investment property is property held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment property includes land currently held for undetermined future use.

An investment property is initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment property is measured at its fair value. Gains and losses arising from changes in the fair value of investment property are included in profit or loss in the period in which they arise.

Construction costs incurred for investment property under construction are capitalised as part of the carrying amount of the investment property under construction.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

Financial instruments

Financial assets and financial liabilities are recognised in the statements of financial position when the Target Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Financial assets

Financial assets of the Target Group are loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including other receivables, amount due from an independent third party, amounts due from a related party, bank balances and cash and pledged bank deposits) are measured at amortised cost using the effective interest method, less any impairment (see the accounting policy in respect of impairment loss on loans and receivables below).

Impairment of loans and receivables

Loans and receivables are assessed for indicators of impairment at the end of each reporting period. Loans and receivables are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the loans and receivables, the estimated future cash flows of the loans and receivables have been affected.

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• breach of contract, such as default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

The amount of impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition

The Target Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and cumulated in equity is recognised in profit or loss.

Financial liabilities and equity instruments

Debt and equity instruments issued by the Target Group are classified either as financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Interest expense is recognised on an effective interest basis.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Target Group after deducting all of its liabilities. Equity instruments issued by the Target Company are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities including other payables and accruals, construction costs accruals, other borrowings, amount due to an independent third party and amounts due to related parties and amount due to a director are subsequently measured at amortised cost, using the effective interest method.

Derecognition

The Target Group derecognises financial liabilities when, and only when, obligations of the Target Group are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Impairment of tangible assets

At the end of each reporting period, the Target Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Target Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Investment in a subsidiary

Investment in a subsidiary is included in the Target Company’s statement of financial position at cost less any identified impairment loss. The result of subsidiary is accounted for by the Target Company on the basis of dividends received and receivable during the year.

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APPENDIX II

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of accounting policies of the Target Group, which are described in note 3, the director is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

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

Key sources of estimation uncertainty

The following is the key assumption concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year.

Fair value of investment property under construction

The Target Group’s investment property under construction is stated at fair value based on the valuation performed by an independent qualified professional valuer. In determining the fair value, the valuer has applied a market value basis which involves, inter-alia, certain estimates, including estimation of construction cost to complete, developer’s profit margin and prices realised on actual sales or arising prices of comparable properties, comparable properties are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market values.

5. SEGMENT INFORMATION

The director of the Target Company, being the chief operating decision maker, assesses the performance and allocates the resources of the Target Group as a whole because the Target Group is engaged in single business of property development. Therefore, the director of the Target Company considers that the Target Group only has one operating segment under the standard of HKFRS 8 ‘’Operating segments’’. In this regard, no segment information is presented.

Geographical information

The operations and assets of the Target Group are mainly located in the PRC.

Information about major customers

Since the investment property is under development and no rental income from investment property is recognised during the Relevant Periods, no major customer is disclosed.

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APPENDIX II

6. OTHER INCOME, GAINS AND LOSSES

Other income Interest income Other gains and losses Net foreign exchange (loss) gain	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 1 1 59 59 – (499) 6 92 60 43 (498) 7 151 119 43	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 1 1 59 59 – (499) 6 92 60 43 (498) 7 151 119 43	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 1 (499) (498)	2014 HKD’000 1 6 7		2016 HKD’000 –
				43
				43

7. FINANCE COSTS

Interest on other borrowings Less: Amount capitalised in investment property under construction	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 1,418 2,554 – – – (1,418) (2,554) – – – – – – – –	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 1,418 2,554 – – – (1,418) (2,554) – – – – – – – –	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 1,418 (1,418) –	2014 HKD’000 2,554 (2,554) –		2016 HKD’000 – –
				–

Finance cost capitalised during the year ended 31 December 2013 and 2014 arose on the general borrowings were approximately HKD1,418,000 and HKD2,554,000 which are calculated by applying capitalisation rate of 8.68% and 9.06% per annum respectively.

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APPENDIX II

8. PROFIT BEFORE TAXATION

Profit before taxation has been arrived after charging: Auditor’s remuneration Depreciation of equipment Staff costs (including director’s emoluments) – salaries and other benefits – contribution to retirement benefits scheme Total staff costs Less: Amount capitalised in investment property under construction	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) – 6 6 6 5 20 28 32 25 18 274 299 293 218 139 95 104 98 77 46 369 403 391 295 185 (263) (288) (279) (211) (132) 106 115 112 84 53	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) – 6 6 6 5 20 28 32 25 18 274 299 293 218 139 95 104 98 77 46 369 403 391 295 185 (263) (288) (279) (211) (132) 106 115 112 84 53	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 – 20 274 95 369 (263) 106	2014 HKD’000 6 28 299 104 403 (288) 115		2016 HKD’000 5 18 139 46
				185 (132)
				53

9. INCOME TAX EXPENSE

Current tax Deferred tax_(Note 18)_ Income tax expense for the year/period	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) – – – – – 5,837 10,848 14,263 12,451 8,775 5,837 10,848 14,263 12,451 8,775	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) – – – – – 5,837 10,848 14,263 12,451 8,775 5,837 10,848 14,263 12,451 8,775	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 – 5,837 5,837	2014 HKD’000 – 10,848 10,848		2016 HKD’000 – 8,775
				8,775

No provision for Hong Kong Profits Tax has been made as the Target Group’s income neither arises in, nor is derived from, Hong Kong.

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC entity is 25%.

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APPENDIX II

The taxation for the year/period can be reconciled to the profit before taxation per the consolidated statements of profit or loss and other comprehensive income as follows:

Profit before taxation Tax at the PRC EIT rate of 25% Tax effect of expenses not deductible for tax purposes Income tax for the year/period	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 21,674 39,993 56,461 49,432 34,840 5,419 9,998 14,115 12,358 8,710 418 850 148 93 65 5,837 10,848 14,263 12,451 8,775	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 21,674 39,993 56,461 49,432 34,840 5,419 9,998 14,115 12,358 8,710 418 850 148 93 65 5,837 10,848 14,263 12,451 8,775	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 21,674 5,419 418 5,837	2014 HKD’000 39,993 9,998 850 10,848		2016 HKD’000 34,840
				8,710 65
				8,775

10. DIRECTOR’S EMOLUMENTS AND EMPLOYEES’ EMOLUMENTS

Director’s emoluments

No emoluments have been paid to, or are payable to, the sole director and chief executive of the Target Company, Mr. Li, during the Relevant Periods.

Employees’ emoluments

The emoluments for the five individuals with the highest emoluments in the Target Group did not include any director of the Target Company for the Relevant Periods. The emoluments of the five highest paid individuals were as follows:

Salaries and other allowances Contributions to retirements benefits Scheme	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 274 299 293 218 139 95 104 98 77 46 369 403 391 295 185	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 (unaudited) 274 299 293 218 139 95 104 98 77 46 369 403 391 295 185	For the nine months ended 30 September	For the nine months ended 30 September
	2013 HKD’000 274 95 369	2014 HKD’000 299 104 403		2016 HKD’000 139 46
				185

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APPENDIX II

				For	the
		For the		nine months ended
	year	ended 31 December		30 September
	2013	2014	2015	2015	2016
	Number of	Number of	Number of	Number of	Number of
	employees	employees	employees	employees	employees
				(unaudited)
Their emoluments were within
the following band:
Below HKD1,000,000	5	5	5	5	5

During the Relevant Periods, no emolument was paid or payable by the Target Company to the five highest paid individuals as an inducement to join or upon joining the Target Company or as compensation for loss of office.

11. EARNINGS PER SHARE

No earnings per share information is presented for the purpose of this report as its inclusions is not considered meaningful.

12. DIVIDEND

No dividend was paid or proposed during the Relevant Periods, nor has any dividend been proposed since the end of the Relevant Periods.

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APPENDIX II

13. EQUIPMENT

COST As at 1 January 2013 Additions Exchange realignment As at 31 December 2013 Additions Exchange realignment As at 31 December 2014 Exchange realignment As at 31 December 2015 Exchange realignment As at 30 September 2016 DEPRECIATION As at 1 January 2013 Charge for the year Exchange realignment As at 31 December 2013 Charge for the year As at 31 December 2014 Charge for the year Exchange realignment As at 31 December 2015 Charge for the period Exchange realignment As at 30 September 2016 CARRYING VALUES As at 31 December 2013 As at 31 December 2014 As at 31 December 2015 As at 30 September 2016

Furniture, fixtures and office equipment HKD’000 70 21 3 94 36 1 131 (8) 123 (3) 120 (3) (20) (1) (24) (28) (52) (32) 4 (80) (18) 2 (96) 70 79 43 24

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The above items of equipment are depreciated on a straight-line basis at the following rates per annum:

Furniture, fixtures and office equipment 10%

14. INVESTMENT PROPERTY UNDER CONSTRUCTION

Investment property under construction_(Note)_ As at 1 January 2013 Changes in fair value recognised in profit or loss Additions Exchange realignment As at 31 December 2013 Changes in fair value recognised in profit or loss Additions Exchange realignment As at 31 December 2014 Changes in fair value recognised in profit or loss Additions Exchange realignment As at 31 December 2015 Changes in fair value recognised in profit or loss Additions Exchange realignment As at 30 September 2016

HKD’000 35,752 22,729 123,801 3,414 185,696 40,795 92,530 (844) 318,177 57,381 48,357 (21,661) 402,254 35,101 17,880 (11,549) 443,686

Note: During the year ended 31 December 2013 and 2014, the investment property under construction was pledged to secure certain borrowing facilities granted to the related parties in which Mr. Li has significant influence to these related parties.

The Target Group’s investment property under construction is categorised into level 3 of the fair value hierarchy. At the end of each reporting period, the director of the Target Company works closely with the independent qualified professional valuer to establish and determine the appropriate valuation techniques and inputs to be used in determining the fair value of the investment property. Where there is a material change in the fair value of the assets, the causes of the fluctuations will be reported to the director of the Target Company.

As at 31 December 2013, 2014 and 2015 and 30 September 2016, the fair value of the investment property under construction was arrived at on the basis of a valuation carried out by Colliers International (Hong Kong) Ltd. (“Colliers”), an independent qualified professional valuer not connected with the Target Group. The address of Colliers is Suite 5701 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong. As at 31 December 2013, 2014, 2015 and 30 September 2016, the fair value of the investment property under construction are approximately RMB146,000,000, RMB251,000,000, RMB337,000,000 and RMB382,000,000 respectively, equivalent to HKD185,696,000 and HKD318,177,000, HKD402,254,000 and HKD443,686,000 respectively.

For investment property under construction as at 31 December 2013, 2014 and 2015 and 30 September 2016, the valuation has been arrived at using the market approach by making reference to recent sales transactions of completed properties as publicly available to determine the adjusted unit rate of the completed investment property, less estimated costs to completion and expected developer’s profit margin so as to determine the value of the proposed development as if these were completed as at the date of valuation.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

In estimating the fair value of the property, the highest and best use of the property is its current use.

Information about fair value measurement using significant unobservable inputs:

Investment property under construction

Commercial units located at the junction of Fengcheng Tenth Road and Wenjin Road, Weiyang district, Xi’an, Shaanxi Province, the PRC, under construction

					Relationship of
					unobservable
Fair value as at	**Valuation techniques **	Key	unobservable inputs	Weighted average price	inputs to fair value
31 December 2013	Market approach	(i)	Market price, taking into	Auxiliary retail portion:	The higher the market
HKD185,696,000			account the differences in	RMB19,625 (equivalent to	price, the higher the
(RMB146,000,000)			location, and individual	HKD24,964)/sqm	fair value
			factors, such as the building
			age, between the	Office portion: RMB10,400
			comparables and the	(equivalent to HKD13,228)/
			property	sqm
		(ii)	Expected developer profit	20%	The higher the expected
			margin		developer profit
					margin, the lower the
					fair value
		(iii)	Construction cost to	RMB216,000,000	The higher the cost, the
			complete		lower the fair value
		(iv)	Discount rate	7.10%	The higher the discount
					rate, the lower the
					fair value
		(v)	Rate of finance cost	7.10%	The higher the finance
					cost, the lower the
					fair value
31 December 2014	Market approach	(i)	Market price, taking into	Auxiliary retail portion:	The higher the market
HKD318,177,000			account the differences in	RMB19,939 (equivalent to	price, the higher the
(RMB251,000,000)			location, and individual	HKD25,275)/sqm	fair value
			factors, such as the building
			age, between the	Office portion: RMB10,600
			comparables and the	(equivalent to HKD13,437)/
			property	sqm
		(ii)	Expected developer profit	15%	The higher the expected
			margin		developer profit
					margin, the lower the
					fair value
		(iii)	Construction cost to	RMB150,000,000	The higher the cost, the
			complete		lower the fair value
		(iv)	Discount rate	7.10%	The higher the discount
					rate, the lower the
					fair value
		(v)	Rate of finance cost	7.10%	The higher the finance
					cost, the lower the
					fair value

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

					Relationship of
					unobservable
Fair value as at	**Valuation techniques **	Key	unobservable inputs	Weighted average price	inputs to fair value
31 December 2015	Market approach	(i)	Market price, taking into	Auxiliary retail portion:	The higher the market
HKD402,254,000			account the differences in	RMB18,381 (equivalent to	price, the higher the
(RMB337,000,000)			location, and individual	HKD21,940)/sqm	fair value
			factors, such as the building
			age, between the	Office portion: RMB9,800
			comparables and the	(equivalent to HKD11,697)/
			property	sqm
		(ii)	Expected developer profit	10%	The higher the expected
			margin		developer profit
					margin, the lower the
					fair value
		(iii)	Construction cost to	RMB75,000,000	The higher the cost, the
			complete		lower the fair value
		(iv)	Discount rate	7.10%	The higher the discount
					rate, the lower the
					fair value
		(v)	Rate of finance cost	7.10%	The higher the finance
					cost, the lower the
					fair value
30 September	Market approach	(i)	Market price, taking into	Auxiliary retail portion:	The higher the market
2016			account the differences in	RMB19,627 (equivalent to	price, the higher the
HKD443,686,000			location, and individual	HKD22,797)/sqm	fair value
(RMB382,000,000)			factors, such as the building
			age, between the	Office portion: RMB10,400
			comparables and the	(equivalent to HKD12,080)/
			property	sqm
		(ii)	Expected developer profit	10%	The higher the expected
			margin		developer profit
					margin, the lower the
					fair value
		(iii)	Construction cost to	RMB59,000,000	The higher the cost, the
			complete		lower the fair value
		(iv)	Discount rate	7.10%	The higher the discount
					rate, the lower the
					fair value
		(v)	Rate of finance cost	7.10%	The higher the finance
					cost, the lower the
					fair value

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APPENDIX II

15. AMOUNTS DUE FROM/TO RELATED PARTIES, A DIRECTOR AND AN INDEPENDENT THIRD PARTY

The Target Group

Amounts due from/to related companies in which Mr. Li has significant influence to these related parties are unsecured, non-interest bearing and repayable on demand.

Details of amounts due from a related company are as follows:

==> picture [371 x 169] intentionally omitted <==

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

Maximum
outstanding
amount
during
Maximum outstanding nine months
As at As at 30 amount during the year ended 30
As at 31 December ended 31 December
1 January September September
Relationship 2013 2013 2014 2015 2016 2013 2014 2015 2016
HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000
Amount due
from a
related party
西安匯景電子 The company
科技有限公司 to which
Mr. Li has
significant
influence 10,853 11,193 11,155 10,504 – 11,193 11,193 11,155 10,504
----- End of picture text -----

Amount due to a director is unsecured, non-interest bearing and repayable on demand.

Amount due from/to independent third parties are unsecured, non-interest bearing and repayable on demand and the amount were subsequently settled after 30 September 2016.

The Target Company

Amount due to a director is non-trade nature, unsecured, interest free and are repayable on demand.

16. BANK BALANCES AND CASH/PLEDGED BANK DEPOSITS

During the Relevant Periods, the entire bank balances are current deposits, carrying interest at market rates ranged from 0.01% to 0.35% per annum.

Cash and bank balances Pledged bank deposits_(Note)_	As	at 31 December 2014 2015 HKD’000 HKD’000 1,573 1,614 3,803 – 5,376 1,614	As at 30 September 2016 HKD’000 1,604 – 1,604
	2013 HKD’000 3,007 – 3,007	2014 HKD’000 1,573 3,803 5,376

Note: As at 31 December 2014, the pledged bank deposits of HKD3,803,000 represent deposits pledged to a bank to secure short-term banking facilities granted to the Target Group and therefore are classified as current assets. The pledged bank deposits were released upon settlement of corresponding bills payable which included in other payables and accruals in the consolidated statement of financial position and has been repaid in 2015. These pledged bank deposits have a maturity of less than one year as at 31 December 2014.

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APPENDIX II

17. OTHER BORROWINGS

Other borrowings – unsecured and carried at variable- rate which is determined by Prime rate set by The Hong Kong and Shanghai Banking Corporation Limited – unsecured and carried at fixed rate Carrying amount repayable based on contractual term within one year Effective interest rate – fixed rate other borrowing – variable rate other borrowing	As	at 31 December 2014 2015 HKD’000 HKD’000 – – – – – – – – – – – – – –	As at 30 September 2016 HKD’000 – –
	2013 HKD’000 25,000 26,850 51,850 51,850 51,850 8.30% 9.38%	2014 HKD’000 – – – – – – –
			–
			–
			–
			–
			–

The amounts due are based on scheduled repayment dates set out in the loan agreements.

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APPENDIX II

18. DEFERRED TAXATION

The following are the major deferred tax liabilities recognised and movements thereon during the year/ period:

As at 1 January 2013 Charge to profit or loss Exchange realignment As at 31 December 2013 Charge to profit or loss Exchange realignment As at 31 December 2014 Credit to profit or loss Exchange realignment As at 31 December 2015 Charge to profit or loss Exchange realignment As at 30 September 2016	Tax losses recognised HKD’000 (239) (200) (10) (449) 11 1 (437) (83) 29 (491) – 13 (478)	Fair value changes in investment property under construction HKD’000 547 6,037 111 6,695 10,837 (40) 17,492 14,346 (1,441) 30,397 8,775 (936) 38,236	Total HKD’000 308 5,837 101 6,246 10,848 (39) 17,055 14,263 (1,412) 29,906 8,775 (923) 37,758

At the end of reporting period, the Target Group has unused tax losses of approximately HKD1,796,000, HKD1,748,000, HKD1,964,000 and HKD1,912,000 as at 31 December 2013, 2014 and 2015 and 30 September 2016 respectively, available for offsetting against future profit which are subjected to the confirmation from the PRC tax bureau. Deferred tax assets of approximately HKD449,000, HKD437,000, HKD491,000, HKD478,000 are recognised in respect of such unused tax losses as at 31 December 2013, 2014 and 2015 and 30 September 2016 respectively. As at 31 December 2013, 2014 and 2015 and 30 September 2016, included in unused tax losses are losses of HKD1,796,000, HKD1,748,000, HKD1,964,000 and HKD1,912,000 respectively which will expire in 5 years from the year of origination which is ranged from 2014 to 2021.

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APPENDIX II

19. SHARE CAPITAL

Details of the Target Company’s share capital are disclosed as follows:

Authorised: As at 3 January 2013 (date of incorporation), 31 December 2013, 31 December 2014, 31 December 2015 and 30 September 2016 Issued and fully paid: As at 3 January 2013 (date of incorporation), 31 December 2013, 31 December 2014, 31 December 2015 and 30 September 2016 Amount in HKD	Number of shares 50,000 1	Amount USD 50,000
		1
		8

For the purpose of the preparation of the consolidated statements of financial position, the balance as at 1 January 2013 represented the paid-in capital of 匯景國際(西安). Upon completion of the acquisition of 匯景 國際(西安) as mentioned in note 1, the Company becomes the holding company comprising the Target Group.

20. CAPITAL RISK MANAGEMENT

The Target Group manages its capital to ensure it will be able to continue as a going concern. The Target Group will implement several measures as set out in note 1 to enable the Target Group to meet in full its financial obligations as they fall due for the foreseeable future should the need arises.

The capital structure of the Target Group consists of debts which include other borrowings, amount due to an independent third party, amounts due to related companies and a director, net of cash and cash equivalents and equity attributable to the owners of the Target Group, comprising paid-in/share capital and reserves.

The director of the Target Company reviews the capital structure on a regular basis. As part of this review, the director considers the cost of capital and the risks associated with each class of capital. Based on the recommendations of the director, the Target Group will balance its overall capital structure through issue of new debts or the redemption of existing debts.

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APPENDIX II

21. FINANCIAL INSTRUMENTS

Categories of financial instruments

The Target Group Financial assets Loans and receivables (including cash and cash equivalents) Financial liabilities Amortised cost The Target Company Financial liabilities Amortised cost	As	at 31 December 2014 2015 HKD’000 HKD’000 19,307 14,697 274,340 307,606 1,015 1,020	As at 30 September 2016 HKD’000 3,901
	2013 HKD’000 16,996 179,107 1,010	2014 HKD’000 19,307 274,340 1,015
			309,087
			1,026

Financial risk management objectives and policies

The Target Group’s major financial instruments include other receivables, amounts due from a related party, pledged bank deposits, bank balances and cash, other payables and accruals, amounts due to related parties and a director, construction cost accruals, amount due from/to independent third parties and other borrowings. Details of the financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The director of the Target Company manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

Currency risk

During the Relevant Periods, certain bank balances and other borrowings of the Target Group are denominated in foreign currencies other than the functional currency of the relevant entity. This exposes the Target Group to foreign currency risk.

The Target Group currently does not have a foreign currency hedging policy. However, the director monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The carrying amounts of the Target Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

HKD United States dollars (“USD”)	Assets As at 31 December As at 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 803 10 36 36 1,552 1,553 1,553 1,554 2,355 1,563 1,589 1,590	Liabilities As at 31 December As at 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 51,850 – – – – – – – 51,850 – – –	Liabilities As at 31 December As at 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 51,850 – – – – – – – 51,850 – – –
			–

Sensitivity analysis

During the Relevant Periods, the Target Group has significant monetary liabilities denominated in HKD as the foreign currency of the Target Group. 5% is the sensitivity rate used which represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding denominated monetary items and adjusts their translation as at the year/period end for a 5% change in the foreign currency exchange rate. A positive number below indicates increase in post-tax profit for the year/period where foreign currencies impact weaken 5% against RMB, the functional currency of the Target Group. For a 5% strengthening of foreign currencies impact against RMB, there would be an equal and opposite impact on the post-tax profit for the year/period and the balances below would be negative.

Increase in post-tax profit for the year/period Decrease in post-tax profit for the year/period		HKD impact	HKD impact
		For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 1,944 – – – USD impact
		For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 (88) (59) (60) (60)

In the opinion of the director of the Target Company, the sensitivity analysis is unrepresentative of the inherent foreign currency risk in relation to HKD and USD impact as the end of each reporting period exposure does not reflect the exposure during the respective year/period.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(i) Interest rate risk

The Target Group is exposed to cash flow interest rate risk in relation to the impact of interest rate changes on variable-rate other borrowing and bank balances.

The Target Group is also exposed to fair value interest rate risk in relation to the impact of fixed rate other borrowing.

The Target Group’s exposure to interest rates on financial liabilities are detailed in the liquidity risk management section in this note. The Target Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of the Hong Kong Prime Interest Rate arising from the Target Group’s HKD denominated borrowings.

The Target Group currently does not have interest rate hedging policy. However, the director monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

For the variable-rate bank balances as at 31 December 2013, 2014 and 2015, and 30 September 2016, the director considers the Target Group’s exposure to future cash flow interest rate risk is minimal taking into account the minimal fluctuation on market interest rate and the carrying amounts at the end of the reporting year/period. Accordingly, no sensitivity analysis on interest rate risk is presented.

The sensitivity analyses below were determined based on the exposure to interest rates for the variable-rate bank borrowing as at 31 December 2013. The analysis was prepared assuming the amount of liability outstanding at the end of the Relevant Periods was outstanding for the whole year. A 25 basis point increase or decrease represented management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Target Group’s finance cost for the year ended 31 December 2013 would decrease/ increase by HKD63,000. Since all the Target Group’s finance cost had been capitalised in investment property under construction, there would be no effect on the Target Group’s post-tax profit for the year ended 31 December 2013.

In the opinion of the director of the Target Company, the sensitivity analysis is unrepresentative of the inherent interest rate risk as the exposure as at 31 December 2013 does not reflect the exposure during the year.

Credit risk

The Target Group’s maximum exposure to credit risk which will cause a financial loss to the Target Group due to failure to discharge an obligation by the counterparties and corporate guarantee provided by the Target Group arises from the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position and the amount of contingent liabilities in relation to corporate guarantee provided by the Target Group as disclosed in note 24.

In order to minimise the credit risk in relation to amounts due from a related party and an independent third party, regarding counterparties failure to discharge the obligation to the Target Group and corporate guarantee provided by the Target Group to related companies, the director of the Target Company has received the repayment status of related companies as well as the financial performance regularly to ensure that follow-up action is taken timely. In this regard, the director of the Target Company considers that the Target Company›s credit risk is significantly reduced.

The Target Group’s bank balances are deposited with banks of high credit rating and the Target Group has limited exposure to any single financial institution.

II-34

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Liquidity risk

In the management of the liquidity risk, the Target Group monitors and maintains a level of cash and cash equivalents deemed adequate by management of the Target Group to finance its operations and mitigate the effects of fluctuations in cash flows. The Target Group implements several measures as set out in note 1 to enable the Target Group to meet in full its financial obligations as they fall due for the foreseeable future should the need arise.

The following tables detail the remaining contractual maturity of the Target Group for its financial liabilities and guarantees. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Target Group can be required to pay.

On demand Range of or within interest rate 3 months % HKD’000 As at 31 December 2013 Other payables and accruals – 107 Construction cost accruals – 43,871 Other borrowings 8.30%-9.38% 27,372 Amount due to an independent third party – 3,180 Amount due to a director – 7,868 Amount due to related parties – 72,231 Corporate guarantee provided – Maximum amount guarantee – 253 154,882 On demand Range of or within interest rate 3 months % HKD’000 As at 31 December 2014 Other payables and accruals – 4,034 Construction cost accruals – 113,439 Amount due to an independent third party – 3,169 Amount due to a director – 84,944 Amount due to related parties – 68,754 274,340	3 months Total to undiscounted 1 year cash flows HKD’000 HKD’000 – 107 – 43,871 26,669 54,041 – 3,180 – 7,868 – 72,231 13,280 13,533 39,949 194,831 3 months Total to undiscounted 1 year cash flows HKD’000 HKD’000 – 4,034 – 113,439 – 3,169 – 84,944 – 68,754 – 274,340	Carrying amount HKD’000 107 43,871 51,850 3,180 7,868 72,231 –
		179,107
		Carrying amount HKD’000 4,034 113,439 3,169 84,944 68,754
		274,340

II-35

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

On demand Range of or within interest rate 3 months % HKD’000 As at 31 December 2015 Other payables and accruals – 317 Construction cost accruals – 144,128 Amount due to an independent third party – 2,984 Amount due to a director – 84,997 Amount due to related parties – 75,180 307,606 On demand 3 months Range of or within to interest rate 3 months 1 year % HKD’000 HKD’000 As at 30 September 2016 Other payables and accruals – 361 – Construction cost accruals – 90,159 – Amount due to an independent third party – 2,904 – Amount due to a director – 85,040 – Amount due to related parties – 130,623 – Corporate guarantee provided – Maximum amount guarantee – 3,333 9,318 312,420 9,318	3 months Total to undiscounted 1 year cash flows HKD’000 HKD’000 – 317 – 144,128 – 2,984 – 84,997 – 75,180 – 307,606 Total 1-2 Over undiscounted years 2 years cash flows HKD’000 HKD’000 HKD’000 – – 361 – – 90,159 – – 2,904 – – 85,040 – – 130,623 52,175 147,847 212,673 52,175 147,847 521,760		Carrying amount HKD’000 317 144,128 2,984 84,997 75,180
			307,606
			Carrying amount HKD’000 361 90,159 2,904 85,040 130,623 –
			309,087

Fair values

The director of the Target Company considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Historical Financial Information approximate their fair values.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

22. RELATED PARTY TRANSACTIONS

Transactions with related parties

During the Relevant Periods, the Target Group provided corporate guarantees to the Related Companies and the amounts of corporate guarantees provided to the Related Companies are listed in the table below:

Related Companies_(Note 1)_	For the year ended 31 December For the nine months ended 30 September 2013 2014 2015 2015 2016 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) 12,592 – – – 174,222	For the nine months ended 30 September

Notes:

• (1) Companies in which the controlling shareholder of the Target Company (who is also a director of the Target Company) or the relatives of this controlling shareholder have significant influence to these companies (“Related Companies”).

• (2) The Target Group’s investment property under construction was pledged to rural credit cooperatives for a related company to secure the relevant bank borrowing amounted to RMB17,900,000 (equivalent to approximately HKD22,767,000) during the year ended 31 December 2013 and RMB9,900,000 (equivalent to approximately HKD12,592,000) during the year ended 31 December 2014.

As at 31 December 2014 and 2015, and 30 September 2016, the issued shares of the Target Group, comprising the Target Company, have been charged to a financial institution for the loan facility of HKD200,000,000 granted to Bestwin. Up to the reporting date of this accountant’s report on Historical Financial Information, the charge has not been released.

Balances with related parties

Details of the balances with related parties as at 31 December 2013, 2014 and 2015, and 30 September 2016 are set out in note 15 respectively.

Compensation of key management personnel

The director of the Target Company considered that the sole director is the key management of the Target Group. During the Relevant Periods, the director of the Target Company did not receive any remuneration from the Target Group.

23. CAPITAL COMMITMENT

Capital expenditure contracted but not provided for in the Historical Financial Information – in connection with the investment property under construction	As at 31 December As at 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 197,296 117,185 65,971 48,416

II-37

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

24. CONTINGENT LIABILITIES

Corporate guarantees Guarantees given to bank and rural credit cooperatives for loans advanced to: – Related Companies	As at 31 December As at 30 September 2013 2014 2015 2016 HKD’000 HKD’000 HKD’000 HKD’000 12,592 – – 174,222

Details about the management of credit risk by the Target Group regarding these corporate guarantees are set out in note 21.

25. RESERVE OF THE TARGET COMPANY

As at 3 January 2013 (date of incorporation) Total loss and comprehensive expense for the period As at 31 December 2013 Total loss and comprehensive expense for the year As at 31 December 2014 Total loss and comprehensive expense for the year As at 31 December 2015 Total loss and comprehensive expense for the period As at 30 September 2016 As at 1 January 2015 Total loss and comprehensive expense for the period (unaudited) As at 30 September 2015 (unaudited)

Attributable to owners of the Target Company Accumulated losses HKD’000 – (10) (10) (5) (15) (5) (20) (6) (26) (15) (5) (20)

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

26. PARTICULARS OF SUBSIDIARIES

Particulars of the Target Company’s subsidiaries as at the date of the Circular are as follows:

==> picture [394 x 142] intentionally omitted <==

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

Place and date of Place of
Name of subsidiaries establishment operation Equity interest attributable to the Target Company Registered capital Principal activity Notes
31 December
30 September 31 March
2013 2014 2015 2016 2017
Directly owned
Real King Hong Kong (“HK”) HK 100% 100% 100% 100% 100% Registered and paid up Investment (a)
3 October 2012 capital of HKD1,000,000 holding
Indirectly owned
匯景國際(西安) PRC PRC 100% 100% 100% 100% 100% Registered and paid up Property (b)
16 September 2009 capital of development
USD20,000,000
----- End of picture text -----

Other than Real King which is directly held by the Target Company, another subsidiary is indirectly held by the Target Company.

All subsidiaries now comprising the Target Group are limited liability companies and have adopted 31 December as their financial year end date.

Notes:

• (a) The statutory financial statements of Real King for the year ended 31 March 2013, 2014 and 2015 are prepared in accordance with the HKFRSs issued by the HKICPA. The statutory financial statements of Real King were audited by C.C. Chan & Co., certified public accountants registered in Hong Kong.

• (b) The statutory financial statements of 匯景國際(西安) for the year ended 31 March 2013, 2014 and 2015 are prepared in accordance with the relevant accounting principles and the financial regulations applicable to enterprise established in the PRC (the “PRC GAAP”) and were audited by 陝西華信會計師事務所有限責任公司 (“Shaanxi Huashin Certified Public Accountants Co., Ltd”), certified public accountants registered in the PRC.

27. SUBSEQUENT EVENTS

No significant event took place subsequent to 30 September 2016.

28. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company, any of its subsidiaries or the Target Group in respect of any period subsequent to 30 September 2016.

II-39

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

Set out below is the management discussion and analysis of the Target Group for each of the three financial years ended 31 December 2013, 2014 and 2015 and the nine months ended 30 September 2016:

For the year ended 31 December 2013

Financial results

The Target Group did not record any turnover during the year ended 31 December 2013. It recorded a gain on fair value change of the investment property amounting to approximately HK$22.7 million which was attributable to the Property. The income tax incurred was approximately HK$5.8 million and the Target Group recorded a profit of approximately HK$15.8 million for the year ended 31 December 2013.

Liquidity and financial resources

As at 31 December 2013, the Target Group’s net assets amounted to approximately HK$17.4 million. The current ratio, representing current assets divided by current liabilities, was 0.09.

Total borrowings of the Target Group as at 31 December 2013 were approximately HK$135.1 million which consisted of (i) amounts due to an independent third party, related parties and a director of the Target with aggregate amount of approximately HK$83.3 million which are non-interest bearing and are repayable on demand; and (ii) other borrowings of approximately HK$51.8 million which bear interest of 8.30% to 9.38% per annum and are repayable within one year. The cash and bank balances of the Target Group amounted to approximately HK$3.0 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.67.

During the year ended 31 December 2013, the Target Group funded its working capital and capital expenditures mainly through advances from related parties and a director of the Target and other borrowings.

Charges of assets

As of 31 December 2013, the investment property under construction of the Target Group was pledged.

Contingent liabilities

The Target Group has provided corporate guarantee to rural credit cooperatives for loans advanced to related parties amounting to HK$12,592,000 as at 31 December 2013.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Employees

The Target Group had 5 employees as at 31 December 2013. The employees are remunerated based on their working performance and experiences, taking into account the prevailing market conditions.

Foreign currency exposure

During the year ended 31 December 2013, the operating cost was mainly dominated in RMB. Amounts due from an independent third party and related parties and other borrowings were all denominated in RMB.

As the exchange rate of HK$ against RMB was relatively stable during the year ended 31 December 2013, the Target Group’s exposure to fluctuations in exchange rate was minimal. The Target Group will closely monitor the foreign currency exposure and arrange for hedging facilities when necessary.

Significant investments

During the year ended 31 December 2013, the Target Group did not have any significant investment.

Material acquisitions and disposals

The Target Group did not have any material acquisition and disposal during the year ended 31 December 2013.

For the year ended December 2014

Financial results

The Target Group did not record any turnover during the year ended 31 December 2014. It recorded a gain on fair value change of the investment property amounting to approximately HK$40.8 million which was attributable to the Property. The income tax incurred was approximately HK$10.8 million and the Target Group recorded a profit of HK$29.1 million for the year ended 31 December 2014.

Liquidity and financial resources

As at 31 December 2014, the Target Group’s net assets amounted to approximately HK$46.2 million. The current ratio, representing current assets divided by current liabilities, was 0.07.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Total borrowings of the Target Group as at 31 December 2014 were approximately HK$156.9 million which consisted of amounts due to an independent third party, related parties and a director of the Target which are non-interest bearing and are repayable on demand. The cash and bank balances of the Target Group amounted to approximately HK$1.6 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.46.

During the year ended 31 December 2014, the Target Group funded its working capital requirement and capital expenditures mainly through advances from related parties and a director of the Target.

Charges of assets

As of 31 December 2014, the bank deposits of HK$3.8 million were pledged.

Contingent liabilities

The Target Group did not have any material contingent liability as at 31 December 2014.

Employees

The Target Group had 5 employees as at 31 December 2014. The employees are remunerated based on their working performance and experiences, taking into account the prevailing market conditions.

Foreign currency exposure

During the year ended 31 December 2014, the operating cost was mainly dominated in RMB. Amounts due from an independent third party and related parties were all denominated in RMB.

As the exchange rate of HK$ against RMB was relatively stable during the year ended 31 December 2014, the Target Group’s exposure to fluctuations in exchange rate was minimal. The Target Group will closely monitor the foreign currency exposure and arrange for hedging facilities when necessary.

Significant investments

During the year ended 31 December 2014, the Target Group did not have any significant investment.

Material acquisitions and disposals

The Target Group did not have any material acquisition and disposal during the year ended 31 December 2014.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

For the year ended December 2015

Financial results

The Target Group did not record any turnover during the year ended 31 December 2015. It recorded a gain on fair value change of the investment property amounting to approximately HK$57.4 million which was attributable to the Property. The income tax incurred was approximately HK$14.3 million and the Target Group recorded a profit of approximately HK$42.2 million for the year ended 31 December 2015.

Liquidity and financial resources

As at 31 December 2015, the Target Group’s net assets amounted to approximately HK$79.5 million. The current ratio, representing current assets divided by current liabilities, was 0.05.

Total borrowings of the Target Group as at 31 December 2015 were approximately HK$163.2 million which consisted of amounts due to an independent third party, related parties and a director of the Target which are non-interest bearing and are repayable on demand. The cash and bank balances of the Target Group amounted to approximately HK$1.6 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.39.

During the year ended 31 December 2015, the Target Group funded its working capital requirement and capital expenditures mainly through advances from related parties and a director of the Target.

Charges of assets

As of 31 December 2015, none of the Target Group’s assets was pledged.

Contingent liabilities

The Target Group did not have any material contingent liability as at 31 December 2015.

Employees

The Target Group had 5 employees as at 31 December 2015. The employees are remunerated based on their working performance and experiences, taking into account the prevailing market conditions.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Foreign currency exposure

During the year ended 31 December 2015, the operating cost was mainly dominated in RMB. Amounts due from an independent third party and related parties were all denominated in RMB.

As the exchange rate of HK$ against RMB were relatively stable during the year ended 31 December 2015, the Target Group’s exposure to fluctuations in exchange rate was minimal. The Target Group will closely monitor the foreign currency exposure and arrange for hedging facilities when necessary.

Significant investments

During the year ended 31 December 2015, the Target Group did not have any significant investment.

Material acquisitions and disposals

The Target Group did not have any material acquisition and disposal during the year ended 31 December 2015.

For the nine months ended 30 September 2016

Financial results

The Target Group did not record any turnover during the nine months ended 30 September 2016. It recorded a gain on fair value change of investment property amounting to approximately HK$35.1 million which was attributable to the Property. The income tax incurred was approximately HK$8.8 million and the Target Group recorded a profit of approximately HK$26.1 million for the nine months ended 30 September 2016.

Liquidity and financial resources

As at 30 September 2016, the Target Group’s net assets amounted to approximately HK$100.8 million. The current ratio, representing current assets divided by current liabilities, was 0.01.

Total borrowings of the Target Group as at 30 September 2016 were approximately HK$218.6 million which consisted of amounts due to an independent third party, related parties and a director of the Target which are non-interest bearing and are repayable on demand. The cash and bank balances of the Target Group amounted to approximately HK$1.6 million. The gearing ratio, as a ratio of total borrowings over total assets, was 0.49.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

During the nine months ended 30 September 2016, the Target Group funded its working capital requirement and capital expenditures mainly through advances from related parties and a director of the Target.

Charges of assets

As of 30 September 2016, none of the Target Group’s assets was pledged.

Contingent liabilities

The Target Group has provided corporate guarantee to a bank for loans advanced to related parties amounting to HK$174,222,000 as at 30 September 2016.

Employees

The Target Group had 3 employees as at 30 September 2016. The employees are remunerated based on their working performance and experiences, taking into account the prevailing market conditions.

Foreign currency exposure

During the nine months ended 30 September 2016, the operating cost was mainly dominated in RMB. Amounts due from an independent third party and related parties were all denominated in RMB.

As the exchange rate of HK$ against RMB was relatively stable during the nine months ended 30 September 2016, the Target Group’s exposure to fluctuations in exchange rates was minimal. The Target Group will closely monitor the foreign currency exposure and arrange for hedging facilities when necessary.

Significant investments

During the nine months ended 30 September 2016, the Target Group did not have any significant investment.

Material acquisitions and disposals

The Target Group did not have any material acquisition and disposal during the nine months ended 30 September 2016.

II-45

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(A) BASIS OF PREPARATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

In connection with the proposed major and connected transaction in relation to the proposed acquisition of the entire equity interest in, and the shareholder’s loan due by Zhong Hui Global Limited (the "Target Company") and its subsidiaries (together with the Target Company hereinafter referred to as the "Target Group" (the "Acquisition") by Chinlink International Holdings Limited (the "Company") and its subsidiaries (together with the Company hereinafter referred to as the "Group") (together with the Target Group hereinafter referred to as the "Enlarged Group") the unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group has been prepared to illustrate the effect of the Acquisition on the Group’s financial position as at 30 September 2016 as if the Acquisition had taken place on 30 September 2016.

The unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group is prepared based on (i) the information on the unaudited condensed consolidated statement of assets and liabilities of the Group as at 30 September 2016 which has been extracted from the published interim report of the Group for the six months ended 30 September 2016; and (ii) the information on the audited consolidated statement of assets and liabilities of the Target Group as at 30 September 2016, which has been extracted from the accountants’ report set out in Appendix II to this circular.

The unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group has been prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules and is solely for the purpose to illustrate the assets and liabilities of the Enlarged Group as if the Acquisition had taken place on 30 September 2016.

The unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group is prepared based on the aforesaid historical data after giving effect to the pro forma adjustments described below in the accompanying notes that are (i) directly attributable to the Acquisition; and (ii) factually supportable.

The unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group has been prepared by the Directors based on certain assumptions and estimates and for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the assets and liabilities of the Enlarged Group upon completion of the Acquisition as at 30 September 2016 or at any future dates.

Accordingly, it does not purport to describe the financial position of the Enlarged Group that would have been attached had the Acquisition been completed on 30 September 2016, nor to predict the future financial position of the Enlarged Group.

III-1

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(B) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. Unaudited pro forma consolidated statement of assets and liabilities

The Group The Target as at Group as at 30 September 30 September Pro forma Pro forma 2016 2016 adjustment adjustment HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) NON-CURRENT ASSETS Property, plant and equipment 23,368 24 Investment properties 2,776,347 443,686 Intangible assets 2,819 – Deposits paid for acquisition of investment properties 31,366 – Deposit paid for prepaid lease payments for land 29,043 – Amounts due from former subsidiaries 12,744 – Deposits and prepayments 566 – 2,876,253 443,710 CURRENT ASSETS Inventories 1,018 – Accrued revenue 747 – Trade receivables 1,919 – Loan receivables 107,775 – Bills receivables 21,990 – Other receivables, deposits and prepayments 16,450 2 Amounts due from former subsidiaries 5,793 – Amount due from an independent third party – 2,295 Pledged bank deposits 245,275 – Bank balances and cash 58,771 1,604 (3,850) 459,738 3,901 Total assets 3,335,991 447,611	Unaudited pro forma Enlarged Group HK$’000 23,392 3,220,033 2,819 31,366 29,043 12,744 566
	3,319,963
	1,018 747 1,919 107,775 21,990 16,452 5,793 2,295 245,275 56,525
	459,789
	3,779,752

III-2

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The Group The Target as at Group as at 30 September 30 September Pro forma Pro forma 2016 2016 adjustment adjustment HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) CURRENT LIABILITIES Deferred revenue 2,642 – Trade payables 11,128 – Other payables and accruals 38,337 361 Loans from staff 8,580 – Construction costs accruals 56,897 90,159 Receipts in advance 43,109 – Deposits received from tenants 16,727 – Amount due to an independent third party – 2,904 Amounts due to related companies 227,222 130,623 (130,623) Amount due to a director 241,050 85,040 (85,040) Provision for warranty 222 – Financing guarantee contracts 2,347 – Tax payable 7,025 – Bank and other borrowings 114,840 – 10.0% convertible bonds 71,359 – Conversion option derivative embedded in convertible bonds 1 – 12.0% coupon bonds 274,755 – 8.0% coupon bonds 214,254 – 7.5% coupon bonds 195,128 – Obligations under finance leases 754 – 1,526,377 309,087 NON CURRENT LIABILITIES 12.0% coupon bond 121,184 – Deferred tax liabilities 211,544 37,758 Receipts in advance 28,574 – Bank and other borrowings 381,057 – Amounts due to former subsidiaries 6,872 – Obligations under finance leases 1,097 – 3.0% convertible bonds – – 209,296 750,328 37,758 Total liabilities 2,276,705 346,845	Unaudited pro forma Enlarged Group HK$’000 2,642 11,128 38,698 8,580 147,056 43,109 16,727 2,904 227,222 241,050 222 2,347 7,025 114,840 71,359 1 274,755 214,254 195,128 754
	1,619,801
	121,184 249,302 28,574 381,057 6,872 1,097 209,296
	997,382
	2,617,183

III-3

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

2. Notes to unaudited pro forma condensed consolidated statement assets and liabilities

Notes:

• (1) The amounts are extracted from the published interim report of the Group for the six months ended 30 September 2016.

• (2) The amounts are extracted from the audited consolidated statement of assets and liabilities of the Target Group as at 30 September 2016 in the accountants’ report of the Target Group as set out in Appendix II to this circular.

• (3) The adjustments represent the allocation of the pro forma purchase consideration to the Target Group’s identifiable assets and liabilities acquired, as if the Acquisition had taken place on 30 September 2016. The pro forma allocation of purchase consideration to the identifiable assets and liabilities of the Target Group has been based upon management’s preliminary estimates of their fair values and certain assumptions with respect to the assets to be acquired and the liabilities to be assumed. The actual fair values of the assets and liabilities will be determined as of the Completion Date and may differ materially from the amounts disclosed below in the preliminary pro forma loss arising from the Acquisition.

The primary asset of the Target Group is the Property situated at the junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, the PRC, which comprises investment property under construction. The Property comprises a parcel of land with site area of approximately 9,100 sq. m., on which a 25-level office development plus a 2-level basement carpark are currently under construction. Upon completion of the construction, it will have a total gross floor area of approximately 55,491 sq.m..

The primary asset acquired from the Acquisition is the investment property under construction and the Acquisition has been accounted for as an asset acquisition.

For the purpose of preparing the unaudited pro forma consolidated statement of assets and liabilities, assuming that the Acquisition had taken place on 30 September 2016, the fair value of the investment property under construction is based on the carrying amount of the investment property under construction as at 30 September 2016 extracted from the accountants’ report of the Target Group adopting fair value model and the carrying amounts of other assets and liabilities as at 30 September 2016 approximate to their fair values. Based on the estimation by the Directors, the excess of the consideration over the pro forma fair value of the identified assets and liabilities represents the loss arising from the Acquisition of HK$218,280,000 and is recognised to the profit or loss upon completion of the Acquisition as follows:

Pro forma fair value of consideration as at 30 September 2016_(Note i) Less: pro forma fair value of net assets of the Target Group as at 30 September 2016(Note ii) Less: Pro forma fair value of the Sale Loan(Note iii) Pro forma loss arising from the Acquisition(Note iv)_	HK$’000 534,709 (100,766) (215,663) 218,280

III-4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

• (i) Pursuant to clause 4.1(1) & (2) of the Acquisition Agreement, the consideration of HK$96,000,000 will be satisfied by the issuance of the Share Consideration Bonds by the Company which are convertible into new shares of the Company at an initial conversion price of HK$0.565 per Conversion Share (subject to usual antidilution adjustments).

In addition, pursuant to clause 4.1(1) & (2) of the Loan Purchase and Financing Agreement, the consideration of HK$216,000,000 will be satisfied by the issuance of the Loan Consideration Bonds by the Company which are convertible into new shares of the Company at an initial conversion price of HK$0.565 per Conversion Share (subject to usual antidilution adjustments).

According to the terms of the Share Consideration Bonds and Loan Consideration Bonds, the Company shall not be entitled to redeem any Share Consideration Bonds and Loan Consideration Bonds before the maturity date.

An analysis of the pro forma fair value of the consideration of the Acquisition assuming the Acquisition had taken place on 30 September 2016 is set out as follows:

			Fair value as at
			the date of
			the Acquisition
			Agreement
		Fair	and the
		value as at	Loan Purchase
		30 September	and Financing
	Face value	2016	Agreement
	HK$’000	HK$’000	HK$’000
Share Consideration Bonds	96,000	164,526	113,935
Loan Consideration Bonds	216,000	370,183	256,354

The holder of the Share Consideration Bonds and Loan Consideration Bonds may convert the whole or part of the Share Consideration Bonds and Loan Consideration Bonds into the Conversion Shares. The Share Consideration Bonds and Loan Consideration Bonds bear coupon interest at 3% per annum, payable annually in arrears, and with maturity of 2 years.

The Share Consideration Bonds and Loan Consideration Bonds shall be measured at fair value on the Completion Date considering both the fair value of the debt component and equity component. The debt components of the Share Consideration Bonds and Loan Consideration Bonds are recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity components are recognised initially at the difference between the fair value of the Share Consideration Bonds and Loan Consideration Bonds as a whole and the fair value of the debt components. Any directly attributable transaction costs are allocated to the debt and equity components in proportion to their initial carrying amount.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

For the purpose of the unaudited pro forma financial information, the fair value of the Share Consideration Bonds and Loan Consideration Bonds as at 30 September 2016 are considered as the fair value of the consideration as if the Acquisition had taken place on 30 September 2016 and are estimated by the Directors with reference to an independent valuation report prepared by Colliers International (Hong Kong) Ltd. (“Colliers”) to be HK$164,526,000 and HK$370,183,000 respectively. The fair value of Share Consideration Bonds comprises the fair value of the debt component of HK$64,399,000 and fair value of the equity component of HK$100,127,000 as at 30 September 2016. The fair value of the Loan Consideration Bonds comprises the fair value of the debt component of HK$144,897,000 and fair value of the equity component of HK$225,286,000 as at 30 September 2016.

Fair value of the Share Consideration Bonds and Loan Consideration Bonds are determined using the binomial option pricing model based on the key assumptions including volatility of the Company’s stock price of 63.53% and risk free rate of 0.45%.

Since the fair value of the Share Consideration Bonds and Loan Consideration Bonds to be issued on Completion may be substantially different from its fair value used in preparing the unaudited pro forma financial information, the amount of the consideration for the Acquisition and, accordingly, the amount of investment cost to the Company at the Completion may be different from the amounts presented above and the difference may be significant by comparing the face values and fair value as at the date of the Acquisition Agreement and the Loan Purchase and Financing Agreement and 30 September 2016 set out above.

• (ii) For the purpose of this unaudited pro forma financial information of the Enlarged Group, the Directors had assessed whether there is material fair value adjustment of the assets and liabilities being acquired based on their knowledge of the business of the Target Group as well as the assistance from an independent professional valuer. Based on the currently available information, the Directors are of the opinion that the fair values of all assets and liabilities of the Target Group approximate their respective carrying values as at the Completion Date. The fair values of the assets and liabilities being acquired, including the investment property under construction, may be subject to change after further assessment by the Directors as at the Completion Date.

• (iii) The amounts due to Mr. Li Weibin and his affiliated companies owed by the Target Group as at 30 September 2016 amounted to approximately HK$85,040,000 and HK$130,623,000, respectively, totalling HK$215,663,000 would be settled by the Group at the Completion Date per the issuance of the Loan Consideration Bonds. Therefore, the amounts are eliminated on, as part of the consideration in the pro forma adjustment.

• (iv) The amount of loss arising from the Acquisition is subject to change upon the completion of (i) the valuation of the fair value of the assets and liabilities of the Target Group; and (ii) the fair value of the Share Consideration Bonds and the Loan Convertible Bonds of the Company in issue as at the Completion Date.

• (4) The adjustment represents estimated acquisition-related costs (including professional fees to legal advisers, financial advisers, reporting accountants, property valuer, agent commission and other expenses) of approximately HK$3,850,000 which are directly attributable costs for the Acquisition.

• (5) No adjustments have been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 September 2016 including the financing agreed and shall be provided by Mr. Li Weibin in two intallments within three months and within four to six months from the Completion Date for the purpose of funding the construction costs of the Property.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The following is the text of the assurance report in respect of the Group’s unaudited pro forma financial information, prepared for the purpose of incorporation in this circular received from the independent reporting accountant, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.

(C) INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

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To the Directors of Chinlink International Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Chinlink International Holdings 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 statement of assets and liabilities as at 30 September 2016 and related notes as set out on pages 2 to 6 of Appendix III to the circular issued by the Company dated 31 March 2017 (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on page 1 of Appendix III to the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed major and connected transaction in relation to the proposed acquisition of the entire equity interest in, and the shareholder’s loan due by, Zhong Hui Global Limited and its subsidiaries on the Group’s financial position as at 30 September 2016 as if the transaction had taken place on 30 September 2016. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s condensed consolidated financial statements for the six months ended 30 September 2016, on which a review report has been published.

Directors’ Responsibilities 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 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Our Independence and Quality Control

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

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

Reporting Accountants’ Responsibilities

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

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

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

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the transaction as at 30 September 2016 would have been as presented.

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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

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

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

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

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

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

Opinion

In our opinion:

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

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

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

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

31 March 2017

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PROPERTY VALUATION REPORT

APPENDIX IV

The following is the text of a letter, summary of value and valuation certificate prepared for the purpose of incorporation in this circular received from Colliers International (Hong Kong) Ltd., an independent valuer, in connection with its valuation as at 31 December 2016 of the Property to be acquired by the Group. Terms defined in this appendix applies to this appendix only.

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.

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The Board of Directors

Chinlink International Holdings Limited Clarendon House 2 Church Street Hamilton HM 11 Bermuda

31 March 2017

Dear Sirs,

INSTRUCTIONS, PURPOSE AND VALUATION DATE

We refer to your instructions for us to assess the Market Value of the property (the “Property”) located in The People’s Republic of China (“The PRC”) to be acquired by Chinlink International Holdings Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”). 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 as at 31 December 2016 (the “Valuation Date”).

BASIS OF VALUATION

Our valuation has been undertaken on the basis of Market Value, 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’slength transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

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PROPERTY VALUATION REPORT

APPENDIX IV

Market Value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

This estimate specifically excludes an estimated price inflated or deflated by special considerations or concessions granted by anyone associated with the sale, or any element of special value.

VALUATION METHODOLOGY

We have carried out Market Approach with considerations of the incurred development costs, the outstanding development period and the potential developer’s expected risk and return, to assess the Market Value of the Property, assuming the Property in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

VALUATION STANDARDS

The valuation has been carried out in accordance with The HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors, the International Valuation Standards published by the International Valuation Standards Council, and the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

LAND TENURE AND TITLE INVESTIGATION

We have been provided with copies of documents in relation to the titles of the Property. However, we have not scrutinized the original documents to verify ownership or to verify any amendments, which may not appear on the copies handed to us. We have relied to a considerable extent on the information provided by the Group.

We have relied on the advice given by The PRC legal adviser – GFE Law Office, on The PRC laws, regarding the titles to the Property in The PRC. We do not accept liability for any interpretation that we have placed on such information, which is more properly placed within the sphere of the legal adviser.

All legal documents disclosed in this letter, Summary of Value and Valuation Certificate are for reference only. No responsibility is assumed for any legal matters concerning the legal titles to the Property set out in this letter, Summary of Value and Valuation Certificate.

SOURCES OF INFORMATION

We have relied to a considerable extent on the information provided by the Group and The PRC legal adviser, in respect of the titles to the Property in The PRC. We have also accepted advice given to us on matters such as statutory notices, easements, tenure, site

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PROPERTY VALUATION REPORT

APPENDIX IV

areas, site plans and all other relevant matters. Dimensions, measurements and areas included in the valuation are based on information contained in the documents provided to us and are, therefore, only approximations.

We have also been advised by the Group that no material factors or information have been omitted or withheld from the information supplied and consider that we have been provided with sufficient information to reach an informed view. We believe that the assumptions used in preparing our valuation are reasonable and have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation.

SITE MEASUREMENT

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

SITE INSPECTION

We have inspected the Property on 13 February 2017. We are unaware of any adverse ground conditions affecting the Property and have not had sight of a ground and soil survey. We have not carried out investigations on site to determine the suitability of the ground conditions and services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. We have further assumed that there is no significant pollution or contamination in the locality which may affect the construction on the Property.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the owner sells the Property on the open market without the benefit of deferred terms contracts, leasebacks, joint ventures, or any similar arrangements which would affect its value.

No allowances have been made in our valuation for any charges, mortgages or amounts owing neither on the Property nor for any expenses or taxes which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

As the Property is held under long term land use rights, we have assumed that the owner has free and uninterrupted rights to use the Property for the whole of the unexpired term of the land use rights.

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PROPERTY VALUATION REPORT

APPENDIX IV

CURRENCY

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

We hereby certify that we have neither present nor a prospective interest in the Property or the values reported.

Our Summary of Value and Valuation Certificate is attached hereto.

Yours faithfully, For and on behalf of

Colliers International (Hong Kong) Ltd. Vincent Cheung

BSc(Hons) MBA FRICS MHKIS RPS(GP) Deputy Managing Director, Asia Valuation & Advisory Services

Note: Mr. Vincent Cheung holds a Master of Business Administration and he is a Registered Professional Surveyor with over 19 years’ experiences in real estate industry and assets valuations sector. His experience on valuations covers Hong Kong, Macau, Taiwan, South Korea, Mainland China, Vietnam, Cambodia and other overseas countries. Mr. Cheung is a fellow member of the Royal Institution of Chartered Surveyors and a member of The Hong Kong Institute of Surveyors. Mr. Cheung is one of the valuers on the “list of property valuers for undertaking valuation for incorporation or reference in listing particulars and circulars and valuations in connection with takeovers and mergers” as well as a Registered Business Valuer of the Hong Kong Business Valuation Forum.

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PROPERTY VALUATION REPORT

APPENDIX IV

SUMMARY OF VALUE

Property to be acquired by the Group for investment in The PRC

Property

An office development namely Realking International Plaza located at the Junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, The PRC

Market Value in existing state as at Market Value 31 December in existing Interest to be 2016 to be state as at attributable to attributable to 31 December the Group postthe Group post2016 acquisition acquisition RMB RMB 384,000,000 100% 384,000,000 Total: 384,000,000

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PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION CERTIFICATE

Property to be acquired by the Group for investment in The PRC

Property

Description and tenure

Particulars of occupancy

Market Value in existing state as at 31 December 2016 RMB

An office The Property comprises a parcel of development development site of approximately 9,100 namely Realking square metres, on which a 25-level office International Plaza development with ancillary retail facilities on located at the Levels 1 to 4 plus a 2-level basement Junction of carpark are currently under construction. Fengcheng Tenth Upon completion, the Property will have a Road and Wenjin total gross floor area of approximately Road, Weiyang 55,490.62 square metres. District, Xi’an, Shaanxi Province, The area breakdown of the Property is The PRC detailed below:

The Property is 384,000,000 (Three currently under Hundred and Eighty construction. As Four Million) advised by the Group, the 100% interest to be construction is attributable to the expected to be Group postcompleted in acquisition: November 2017. 384,000,000 (Three Hundred and Eighty Four Million)

Use Office Ancillary Retail Basement Carpark Total	Proposed Gross Floor Area (square metres) 35,325.02 6,725.16 13,440.44 55,490.62

The land use rights of the Property were granted for a term expiring on 26 November 2059 for office/research uses (Please refer to Note No. 4 below).

Notes:

1. The Property is inspected by Mr. Vincent Cheung MHKIS FRICS RPS(GP) on 13 February 2017. Mr. Vincent Cheung has over 19 years’ experience in real estate valuations.

2. The valuation of the Property was prepared by Mr. Kit Cheung MHKIS MRICS RPS(GP) under the supervision of Mr. Vincent Cheung MHKIS FRICS RPS(GP) .

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PROPERTY VALUATION REPORT

APPENDIX IV

1. Pursuant to a State-owned Construction Land Use Rights Grant Contract, Xi Jing Kai Rang Zi (2009) No. 024, entered into between State-owned Land Resources Bureau of Xi’an – Branch of Economic and Technological Development Zone and Real King International (Xi’an) Information Technology Co., Ltd. (“Real King”) dated 26 November 2009, the land use rights of the Property were contracted to be granted to Real King with details as follows:

Land Use : Office/Research Site Area : 13.65 Mu Lot No. : WY12-42-9 Land Use Rights Term : 50 years Maximum Plot Ratio : 5.0 Maximum Height : 100 metres Maximum Site Coverage : 35%

1. Pursuant to a State-owned Land Use Rights Certificate, Xi Jing Guo Yong (2010Chu) Di No. 012, issued by the People’s Government of Xi’an dated 30 March 2010, the land use rights of the Property with a total site area of approximately 9,100 square metres were granted to Real King for a term expiring on 26 November 2059 for office/research uses.

2. Pursuant to a Construction Land Use Planning Permit, (2009) Di No. 67, issued by the Management Committee of Xi’an Economic and Technological Development Zone dated 12 June 2010, the proposed land use of the Property was approved.

3. Pursuant to a Construction Project Planning Permit, Jian Zi Di Xi Jing Kai (2014) Di No. 004, issued by the Management Committee of Xi’an Economic and Technological Development Zone dated 13 January 2014, the proposed construction of the Property with a total gross floor area of 56,477 square metres was approved.

4. Pursuant to a Construction Project Work Commencement Permit, No. 610131201509290101, issued by the Management Committee of Xi’an Economic and Technological Development Zone dated 29 September 2015, the construction works of the Property with a total gross floor area of 56,477 square metres was permitted to commence.

5. The gross development value of the Property by assuming that it has been completed on the Valuation Date is assessed at circa RMB566,000,000. With reference to the construction status of the Property, the outstanding construction cost as at the Valuation Date is estimated at circa RMB54,200,000.

6. In the course of our valuation, we considered the incurred development costs of circa RMB230,000,000; the outstanding development period of 11 months; and the developer’s profit subject to the estimated risk of the development at 10% on costs.

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PROPERTY VALUATION REPORT

APPENDIX IV

1. The locational and market information of the Property are summarized as below:

2. Location : The Property is located at the Junction of Fengcheng Tenth Road and Wenjin Road, Weiyang District, Xi’an, Shaanxi Province, The PRC.

3. Transportation : Yundonggongyuan Station of Metro Line No. 2 is within a 15-minutes walking distance. Various public bus routes and taxis are available along Fengcheng Tenth Road. Xi’an North Railway Station and Xi’an Xianyang International Airport are located in approximately 3 kilometres and 25 kilometres away respectively.

4. Nature of Surrounding Area : The subject area is a predominately commercial area within Xi’an Economic and Technological Development Zone, Weiyang District. The neighbourhood of the Property is dominated by office and retail developments.

5. Yield and Occupancy : According to our research over the market, the prevailing gross yields and occupancy rates of the office buildings of similar type within the subject area are in the range of 6%-6.5% and a range of 80%-90% respectively.

6. We have been provided with a legal opinion regarding the legality of the Property by The PRC legal adviser of the Group, which contains, inter alia, the following:

7. (a) Real King has legally and effectively obtained the land use rights of the Property;

8. (b) Real King is the sole legal holder of the land use rights. It has the legal and effective land use rights, and has the rights to freely use, transfer, lease or mortgage the subject land subject to the term and permitted use of the land use rights; and

9. (c) the Property is not subject to any mortgage, litigation, penalty, seizure, detention, sale, disposal, transfer or any other dispute or argument. The land use rights of the Property are currently not subject to any hypercritical or unusual commitment, clause or restrictive condition.

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GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were, and immediately upon full conversion of the Convertible Bonds (assuming no further Consolidated Shares will be issued or repurchased since the Latest Practicable Date) will be as follows:

Authorised:		HK$
2,000,000,000	Consolidated Shares	625,000,000

Issued, fully paid or credited as fully paid:

670,002,436 Consolidated Shares in issue as at the Latest Practicable Date 654,867,256 Conversion Shares to be allotted and issued upon full conversion of the Convertible Bonds 1,324,869,692 Consolidated Shares immediately upon full conversion of the Convertible Bonds	209,375,761 204,646,017
	414,021,778

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GENERAL INFORMATION

APPENDIX V

3. DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they were taken or deemed to have under such provisions of the SFO); (ii) pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein; or (iii) pursuant to the Model Code of Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(i) Long position in the Consolidated Shares/underlying shares

Number of Consolidated Shares/underlying shares held (including Share Options)

				Approximate
				percentage of the
				issued shares of
		Interest in		the Company as
	Beneficial	controlled		at the Latest
Name of Director	owner	corporation	Total	Practicable Date
Mr. Li	498,379,370	517,024,262	1,015,403,632	151.55%
	(note 1)	(note 2)
Mr. Lau Chi Kit	561,869	–	561,869	0.08%
(note 3)

Notes:

1. It includes Share Options entitling Mr. Li to subscribe for 778,018 Consolidated Shares.

2. 347,112,758 Consolidated Shares are held by Wealth Keeper, the entire issued share capital of which is wholly and beneficially owned by Mr. Li. 169,911,504 underlying shares are interested by Bestwin International Investment Limited (“ Bestwin ”), the entire issued share capital of which is wholly and beneficially owned by Mr. Li, pursuant to the Acquisition Agreement. Accordingly, Mr. Li is deemed to have the same interest as Wealth Keeper and Bestwin by virtue of the SFO.

3. It includes 200,000 Consolidated Share beneficially owned by Mr. Lau Chi Kit and Share Options entitling him to subscribe for 361,869 Consolidated Shares.

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GENERAL INFORMATION

APPENDIX V

(ii) Long positions in the Share Options

		Number of	Approximate
Name of Director	Capacity	Share Options	% of interest
			(Note)
Mr. Li	Beneficial owner	778,018	0.12%
Mr. Siu Wai Yip	Beneficial owner	542,804	0.08%
Ms. Lam Suk Ling,	Beneficial owner	542,804	0.08%
Shirley
Mr. Lau Chi Kit	Beneficial owner	361,869	0.05%
Ms. Fung Sau Mui	Beneficial owner	180,935	0.03%
Dr. Ho Chung Tai,	Beneficial owner	361,869	0.05%
Raymond
Ms. Lai Ka Fung,	Beneficial owner	180,935	0.03%
May
Ms. Chan Sim Ling,	Beneficial owner	180,935	0.03%
Irene

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the shares, underlying shares and debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they were taken or deemed to have under such provisions of the SFO); (ii) pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein; or (iii) pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

4. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS

On 31 March 2016, 陝西普匯中金融資擔保有限公司 (Shaanxi Chinlink Financial Guarantee Limited) (“ Chinlink Finance ”), an indirect wholly-owned subsidiary of the Company, and 西安 德萬通商業運營管理有限公司 (Xi’an Dewantong Commercial Operation and Management Company Limited) (“ Dewantong ”) entered into a financing guarantee contract (“ Dewantong FG Contract I ”) and on 28 July 2016, Chinlink Finance and Dewantong entered into a new financing guarantee contract (“ Dewantong FG Contract II ”, together with the Dewantong FG Contract I, collectively, the “ Dewantong FG Contracts ”). Pursuant to Dewantong FG Contracts, Chinlink Finance has agreed to provide financing guarantee to the lending banks in favour of Dewantong for procuring Dewantong in obtaining the bank loans.

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GENERAL INFORMATION

APPENDIX V

The principal terms of the Dewantong FG Contracts are set out below:

				Approximate
			Guaranteed	guarantee	Guarantee service
Contract		Contract date	amount	income	period
			RMB in	RMB in
			million	million
Dewantong	FG	31 March 2016	7.000	0.175	31 March 2016 to
Contract	I				30 March 2017
Dewantong	FG	28 July 2016	3.000	0.075	28 July 2016 to
Contract	II				27 July 2017

The transactions pursuant to the Dewantong FG Contracts constituted continuing connected transactions under the Listing Rules as Mr. Li, an executive Director and the controlling Shareholder, indirectly holds 50% of Dewantong’s equity interest. Further details of the Dewantong FG Contracts are set out in the announcements of the Company dated 31 March 2016 and 28 July 2016.

On 27 March 2017, Chinlink Finance and 陝西滾石新天地文化投資有限公司 (Shaanxi Gun Shi Xin Tian Di Cultural Investment Company Limited) (“ Gun Shi ”) entered into a financing guarantee contract (“ GS FG Contract* ”). Pursuant to the GS FG Contract, Chinlink Finance has agreed to provide financing guarantee to the lending bank in favor of Gun Shi for procuring Gun Shi in obtaining the bank loans.

The principal terms of the GS FG Contract are set out below:

			Approximate
		Guaranteed	guarantee	Guarantee service
Contract	Contract date	amount	income	period
		RMB in	RMB in
		million	million
GS FG Contract	27 March 2017	4.500	0.1125	27 March 2017 to
				26 March 2018

The transactions pursuant to the GS FG Contract constituted continuing connected transactions under the Listing Rules as 68.13% of the equity interest of Gun Shi is held by the relative of Mr. Li. Further details of the GS FG Contract are set out in the announcement of the Company dated 27 March 2017.

The guarantee amount and financing guarantee services income charged to Dewantong and Gun Shi were based on the credit risk assessment on the respective parties and the prevailing market bank loan rate in the PRC.

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GENERAL INFORMATION

APPENDIX V

Save as disclosed above and save for the Acquisition Agreement and the Loan Purchase and Financing Agreement, as at the Latest Practicable Date, (i) none of the Directors had any direct or indirect interest in any assets which had been, since 31 March 2016, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Enlarged Group or were proposed to be acquired or disposed of by or leased to any member of the Enlarged Group; and (ii) none of the Directors was materially interested, directly and indirectly, in any contract or arrangement subsisting as at the Latest Practicable Date which was significant in relation to the business of the Enlarged Group.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or was proposing to enter into any service contract with any member of the Enlarged Group which is not determinable by the Enlarged Group within one year without payment of compensation, other than statutory compensation.

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associates (as defined under the Listing Rules) had any interests in any business which competed or might compete with the business of the Enlarged Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, save for the decline in the revenue and profit of the Group for the six months ended 30 September 2016 due to the drop in the Group’s interior decoration work and international trading businesses, significant increase in finance costs and no gain on bargain purchase being recognized as disclosed in the interim report for the six months ended 30 September 2016, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2016, being the date to which the latest published audited consolidated financial statements of the Group were made up.

8. LITIGATION

As at the Latest Practicable Date, there were no litigation or claims of material importance, known to the Directors, pending or threatened against any member of the Enlarged Group.

9. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) were entered into by members of the Enlarged Group within the two years immediately preceding and including the Latest Practicable Date and were or might be material:

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APPENDIX V

• (i) the sale and purchase agreement, the supplemental agreement, the second supplemental agreement, the third supplemental agreement, the fourth supplemental agreement and the fifth supplemental agreement entered into among Esteemed Zone Limited (“ Esteemed Zone ”) (a wholly-owned subsidiary of the Company), Sino Virtue Holdings Limited, Mr. Li Chi Yung and Mr. Kwan Ka Shing dated 18 February 2015, 30 April 2015, 29 May 2015, 30 June 2015, 31 July 2015 and 31 August 2015 respectively in relation to the acquisition of the entire issued share capital of E-Innovation Limited and sale loan of a subsidiary of E-Innovation Limited due to Sino Virtue Holdings Limited for a total consideration of HK$800 million;

• (ii) the placing agreement entered into between the Company and Emperor Securities Limited dated 29 June 2015 in relation to the placing of bonds in an aggregate principal amount of HK$200 million;

• (iii) the subscription agreement entered into among the Company, Mr. Li and Huatai Financial Holdings (Hong Kong) Limited dated 23 December 2015 in relation to a subscription of the convertible bonds in an aggregate principal amount of US$10 million (equivalent to approximately HK$77.523 million) which are convertible into new shares of the Company at the initial conversion price of HK$0.83 per conversion share. As a result of the completion of the five-for-one rights issue of the Company on 21 November 2016 and the Share Consolidation with effect from 28 March 2017, the conversion price was adjusted to HK$6.75 per conversion share;

• (iv) the loan facility agreement entered into between Esteemed Zone and Industrial and Commercial Bank of China (Asia) Limited (“ ICBC ”) dated 10 March 2016, pursuant to which, and subject to the fulfillment of respective conditions precedent, ICBC agreed to provide a 3-year-term, secured loan facility (the “ Loan Facility ”) to Esteemed Zone with maximum amount up to HK$630.0 million in two tranches. The Loan Facility will be secured by certain storeys of a commercial complex of the Group which is situated at the east side of Banyin Road, Baqiao District, Xi’an City, Shaanxi Province, the PRC. The Loan Facility consists of two tranches: (1) the first tranche of the Loan Facility representing a term loan amounting to HK$175.0 million was granted to Esteemed Zone on 10 June 2016; and (2) the second tranche of the Loan Facility comprising (a) a term loan of HK$295.0 million and (b) a revolving facility of HK$160.0 million was granted to Esteemed Zone on 27 October 2016;

• (v) the placing agreement and the supplemental placing agreement entered into between the Company and China Investment Securities International Brokerage Limited dated 29 March 2016 and 8 April 2016 respectively in relation to the proposed placing of convertible bonds in an aggregate principal amount of up to HK$300 million which are convertible into new shares of the Company at the conversion price of HK$0.80 per conversion share. The two agreements lapsed on 22 April 2016;

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APPENDIX V

• (vi) the underwriting agreement and the supplemental agreement entered into among the Company, Emperor Securities Limited, Mr. Li and Wealth Keeper dated 7 September 2016 and 30 September 2016 respectively in relation to the underwriting and respective arrangements in respect of a five-for-one rights issue of the Company;

• (vii) the Acquisition Agreement;

• (viii) the Loan Purchase and Financing Agreement;

• (ix) the Acquisition Supplemental Deed; and

• (x) the Loan Purchase and Financing Supplemental Deed.

10. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given their opinion or advice which are contained in this circular:

Name Qualifications Colliers International independent professional valuer (Hong Kong) Ltd. Deloitte Touche Tohmatsu Certified Public Accountants Gram Capital Limited a corporation licensed under the SFO to carry out Type 6 (advising on corporate finance) regulated activity

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, advice or report, as the case may be, and reference to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of the above experts had any shareholding in any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, none of the above experts had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to, or were proposed to be acquired, disposed of by or leased to any member of the Group since 31 March 2016 (the date to which the latest published audited financial statements of the Group were made up).

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APPENDIX V

11. MISCELLANEOUS

• (i) The secretary of the Company is Ms. Lam Suk Ling, Shirley. She is qualified as a Certified Public Accountant of Hong Kong Institute of Certified Public Accountants and a Certified Practising Accountant of CPA Australia.

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

• (iii) The head office and principal place of business of the Company is situated at Suites 5-6, 40/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong.

• (iv) The Hong Kong branch share registrar and transfer office of the Company is Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (v) In the event of inconsistency, the English text of this circular and the accompanying forms of proxies shall prevail over their respective Chinese texts.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the head office and principal place of business of the Company in Hong Kong at Suites 5-6, 40/F, One Exchange Square, 8 Connaught Place Central, Hong Kong from the date of this circular up to and including the date of the SGM:

• (i) the memorandum of association and the bye-laws of the Company;

• (ii) the annual reports of the Company for the two financial years ended 31 March 2015 and 31 March 2016 and the interim report of the Company for the six months ended 30 September 2016;

• (iii) the letter from the Independent Board Committee, the text of which is set out on pages 28 to 29 of this circular;

• (iv) the letter of advice from Gram Capital, the text of which is set out on pages 30 to 50 of this circular;

• (v) the accountants’ report of the Target Group issued by Deloitte Touche Tohmatsu as set out in Appendix II to this circular;

• (vi) the accountants’ report on the unaudited pro forma financial information of the Enlarged Group assuming Completion has taken place issued by Deloitte Touche Tohmatsu as set out in Appendix III to this circular;

• (vii) the valuation report of the Property issued by Colliers International (Hong Kong) Ltd. as set out in Appendix IV to this circular;

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APPENDIX V

• (viii) the material contracts disclosed in the section headed “Material Contracts” in this appendix;

• (ix) the written consents of the experts referred to in the section headed “Experts and Consents” in this appendix;

• (x) the circular of the Company dated 9 March 2017 in relation to (i) the proposed Share Consolidation; (ii) the proposed change in board lot size; (iii) the Increase in Authorised Share Capital; (iv) the proposed refreshment of general mandate; and (v) the proposed refreshment of scheme mandate limit; and

• (xi) this circular.

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NOTICE OF SGM

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CHINLINK INTERNATIONAL HOLDINGS LIMITED 普匯中金國際控股有限公司*

(Incorporated in Bermuda with limited liability) (Stock Code: 0997)

NOTICE OF SGM

NOTICE IS HEREBY GIVEN that a special general meeting (“ SGM ”) of Chinlink International Holdings Limited (the “ Company ”) will be held at 2:30 p.m. on Friday, 28 April 2017 at Suites 5-6, 40/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (a) the sale and purchase agreement (the “ Acquisition Agreement ”) dated 2 February 2017 (as supplemented on 13 March 2017) and entered into among the Company as issuer, Glorious Harvest Limited as purchaser, Bestwin International Investment Limited as vendor (the “ Vendor ”) and Mr. Li Weibin ( “Mr. Li ”) as guarantor in relation to the acquisition (the “ Shares Acquisition ”) of the entire issued share capital of Zhong Hui Global Limited (the “ Target ”) at a consideration of HK$96,000,000 (a copy of the Acquisition Agreement has been produced to the meeting and marked “A” and initialed by the Chairman of the meeting for the purpose of identification), and all the transactions contemplated thereunder, be and are hereby approved, confirmed and ratified;

3. (b) the issue of three (3) per cent. coupon two (2)-year secured bonds (the “ Convertible Bonds ”) convertible into the shares (the “ Shares ”) of par value of HK$0.3125 each in the share capital of the Company at the initial conversion price of HK$0.565 per Share, subject to adjustment, in the principal amount of HK$96,000,000 (the “ Shares Consideration CB ”) to the Vendor (or its nominee) to satisfy the consideration payable for the Shares Acquisition in accordance with the terms and conditions under the Acquisition Agreement be approved;

• For identification purposes only

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• (c) any one Director be and are hereby specifically authorised to allot and issue Shares (“ Conversion Shares I ”) to the Vendor (or its nominee) upon exercise of the conversion rights attaching to the Shares Consideration CB; and

• (d) any one Director be and is hereby authorised to do all such acts and things and sign, agree, ratify or execute all such documents or instrument under hand (or where required, under the common seal of the Company together with such other Director or person authorised by the board of Directors) and take all such steps as the Director in his/her discretion may consider necessary, appropriate, desirable or expedient to implement, give effect to or in connection with the Acquisition Agreement and any of the transactions contemplated thereunder including but not limited to the issue of the Shares Consideration CB and the Conversion Shares I.”

• “ THAT :

• (a) the agreement (the “ Loan Purchase and Financing Agreement ”) dated 2 February 2017 (as supplemented on 13 March 2017) and entered into among the Company as issuer, Glorious Harvest Limited as purchaser and Mr. Li as vendor and financier in relation to: (i) the acquisition (the “ Loan Acquisition ”) of all the debts owing or incurred by the Target and its subsidiaries to Mr. Li and his affiliated companies at a consideration of HK$216,000,000; and (ii) the issue of Convertible Bonds (the “ Financing Bonds ”) in the principal amount of HK$58,000,000 to Mr. Li (a copy of the Loan Purchase and Financing Agreement has been produced to the meeting and marked “B” and initialed by the Chairman of the meeting for the purpose of identification), and all the transactions contemplated thereunder, be and are hereby approved, confirmed and ratified;

• (b) the issue of Convertible Bonds in the principal amount of HK$216,000,000 (the “ Loan Consideration CB ”) to Mr. Li (or his nominee) to satisfy the consideration payable for the Loan Acquisition in accordance with the terms and conditions under the Loan Purchase and Financing Agreement be approved;

• (c) the issue of Financing Bonds in the principal amount of HK$58,000,000 to Mr. Li (or his nominee) in cash in accordance with the terms and conditions under the Loan Purchase and Financing Agreement be approved;

• (d) any one Director be and are hereby specifically authorised to allot and issue Shares (“ Conversion Shares II ”) to Mr. Li (or his nominee) upon exercise of the conversion rights attaching to the Loan Consideration CB and the Financing Bonds; and

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• (e) any one Director be and is hereby authorised to do all such acts and things and sign, agree, ratify or execute all such documents or instrument under hand (or where required, under the common seal of the Company together with such other Director or person authorised by the board of Directors) and take all such steps as the Director in his/her discretion may consider necessary, appropriate, desirable or expedient to implement, give effect to or in connection with the Loan Purchase and Financing Agreement and any of the transactions contemplated thereunder including but not limited to the issue of the Loan Consideration CB, the Financing Bonds and the Conversion Shares II.”

By order of the Board Chinlink International Holdings Limited Mr. Li Weibin Chairman

Hong Kong, 31 March 2017

As at the date of this notice, the Board comprises four executive Directors, namely Mr. Li Weibin, Mr. Siu Wai Yip, Ms. Lam Suk Ling, Shirley and Mr. Lau Chi Kit; a non-executive Director, namely Ms. Fung Sau Mui; and three independent non-executive Directors, namely Dr. Ho Chung Tai, Raymond, Ms. Lai Ka Fung, May and Ms. Chan Sim Ling, Irene.

Notes:

1. The register of members of the Company will be closed from Tuesday, 25 April 2017 to Friday, 28 April 2017 (both dates inclusive) for determining the identity of the Shareholders who are entitled to attend and vote at the SGM. No transfer of shares of the Company and/or exercise of the Share Options and/or the conversion of the outstanding convertible bonds will be registered during this period. Shareholders whose name appear on the register of members of the Company on Friday, 28 April 2017 shall be entitled to attend and vote at the SGM. In order to be eligible to attend and vote at the SGM, unregistered holders of the shares of the Company should ensure that all transfer forms accompanied by the relevant share certificates must be lodged with the branch share registrar of the Company, Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Monday, 24 April 2017.

2. A member entitled to attend and vote at the SGM convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the memorandum of association and bye-laws of the Company, vote in on his/her behalf. A proxy need not be a member of the Company but must be present in person at the meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which each such proxy is so appointed.

3. In order to be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, must be deposited at the offices of the Company’s Hong Kong branch share registrar and transfer office, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of form of proxy will not preclude a shareholder of the Company from attending in person and voting at the SGM or any adjournment thereof, should he/she so wish, and in such event, the instrument appointing the proxy shall be deemed to be revoked.

4. A form of proxy in respect of the SGM is enclosed. Whether or not you intend to attend the SGM in person, all members are urged to complete and return the form of proxy in accordance with the instructions printed thereon. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the SGM or any adjourned meeting if they so wish, and in such event, the instrument appointing the proxy shall be deemed to be revoked.

5. Pursuant to Rule 13.39(4) of the Listing Rules, all resolutions set out in this notice will be decided by poll at the SGM.

6. If Typhoon Signal No.8 or above, or a “black” rainstorm warning is in effect any time after 12:00 noon on the date of the SGM, the SGM will be postponed. Members may visit the website of the Company for details of the postponement and alternative meeting arrangement.

7. The Chinese translation of this notice is for reference only, and in case of any inconsistency, the English Version shall prevail.

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