Mao Geping Cosmetics Co., Ltd. — Proxy Solicitation & Information Statement 2017

Jun 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 a stockbroker or other registered dealer in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in Great Wall Pan Asia Holdings Limited , you should at once hand this circular, together with the accompanying form of proxy, to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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GREAT WALL PAN ASIA HOLDINGS LIMITED (長城環亞控股有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 583)

(1) DISCLOSEABLE AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED ACQUISITIONS OF THE TARGET GROUP AND

(2) CONTINUING CONNECTED TRANSACTION IN RELATION TO THE RESTATED ASSET MANAGEMENT AGREEMENT AND

(3) NOTICE OF SPECIAL GENERAL MEETING

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

All capitalised terms used in this circular shall have the meanings set out in the section headed “Definitions” on pages 1 to 6 of this circular.

A letter from the Board is set out on pages 7 to 24 of this circular. A letter from the Independent Board Committee is set out on pages 25 and 26 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 27 to 51 of this circular.

A notice convening the SGM to be held at United Conference Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Friday, 21 July 2017 at 11:00 a.m. is set out on pages N-1 to N-3 of this circular. A form of proxy for use in connection with the SGM is also enclosed herewith. Such form of proxy is also published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.gwpaholdings.com).

Whether or not you are able to attend the SGM, please complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and deliver, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 11:00 a.m. on Wednesday, 19 July 2017 (or if the SGM is adjourned, not less than 48 hours before the time appointed for the holding of the adjourned SGM). 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 should you so wish.

In case of any inconsistency between the English version and the Chinese version of this circular, the English version shall prevail.

• For identification purpose only

30 June 2017

CONTENTS

		Page
Definitions . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .		25
Letter from Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		27
Appendix I –	Financial Information of the Group. . . . . . . . . . . . . . . . . . . .	I-1
Appendix II-A –	Accountant’s Report of the First Target Group. . . . . . . . . . .	IIA-1
Appendix II-B –	Accountant’s Report of the Second Target Company . . . . . .	IIB-1
Appendix III –	Unaudited Pro Forma Financial Information of
	the Enlarged Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV –	Management Discussion and Analysis of
	the Target Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V –	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of SGM . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	N-1

– i –

DEFINITIONS

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

• “Acquisitions”

collectively, the First Acquisition and the Second Acquisition;

• “Acquisition Agreements”

collectively, the First Sale and Purchase Agreement and the Second Sale and Purchase Agreement;

• “Announcement”

the announcement of the Company dated 19 May 2017 in respect of the Acquisition Agreements and the transactions contemplated thereunder, and the Original Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps);

• “Annual Caps”

the estimated maximum aggregate annual amounts in respect of the Transaction contemplated under the Restated Asset Management Agreement for each financial year during the term of the Restated Asset Management Agreement;

• “Assets”

all rights, titles and interests in assets comprising the investment management account maintained in the name of the Vendor for the purpose of custody of such assets including, without limitation, all securities, investments and cash deposits that are acquired or being held in custody for the Vendor in connection with the Services;

• “associate”

has the meaning as ascribed to it under the Listing Rules;

• “Board”

• the board of Directors;

• “Business Day”

a day (other than a Saturday, Sunday or public holiday in Hong Kong or the PRC) on which banks are generally open for business in Hong Kong and the PRC;

“Bye-Laws”

the Bye-Laws of the Company, as amended from time to time;

– 1 –

DEFINITIONS

• “Commencement Date”

• “Company”

• “connected person”

• “Director(s)”

• “Enlarged Group”

• “First Acquisition”

• “First Completion Date”

• “First Conditions Precedent”

• “First Long Stop Date”

• “First Purchaser”

the latest of (i) the date of the Restated Asset Management Agreement, (ii) the date on which the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps) are approved by the Independent Shareholders, and (iii) First Completion Date;

• Great Wall Pan Asia Holdings Limited (長城環亞控股有 限公司)*, an exempted company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 583);

• has the meaning as ascribed to it under the Listing Rules;

• (a) director(s) of the Company;

• the Group together with the First Target Group and the Second Target Company to be acquired pursuant to the Acquisition Agreements;

• the proposed acquisition of the entire issued share capital in the First Target Company as contemplated under the First Sale and Purchase Agreement;

• the date which is the third (3rd) Business Day after, the date upon which the First Conditions Precedent have been satisfied, or such other date as the parties to the First Sale and Purchase Agreement may agree in writing;

• the conditions precedent to the completion of the First Sale and Purchase Agreement as set out in the sub-section headed “First Conditions Precedent” in the “Letter from the Board” section in this circular;

• 30 September 2017, or such other date as the parties to the First Sale and Purchase Agreement may agree in writing;

• Great Wall Pan Asia III Holding Limited, a company incorporated under the laws of the British Virgin Islands with limited liability;

– 2 –

DEFINITIONS

• “First Sale and Purchase Agreement”

• the sale and purchase agreement dated 19 May 2017 and entered into between the First Purchaser and the Vendor in relation to the acquisition of the entire issued share capital in the First Target Company;

• “First Target Company”

• Great Wall Pan Asia Asset Management Limited (長城環 亞資產管理有限公司), a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO;

• “First Target Group”

• the First Target Company and its subsidiaries;

• “Great Wall Pan Asia (BVI)”

• Great Wall Pan Asia (BVI) Holding Limited, a company incorporated under the laws of the British Virgin Islands with limited liability;

• “Group” the Company and its subsidiaries from time to time;

• “HKFRS”

• Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants;

• “HK$”

• Hong Kong dollar(s), the lawful currency of Hong Kong;

• “Hong Kong”

the Hong Kong Special Administrative Region of the People’s Republic of China;

• “Independent Board Committee”

an independent committee of the Board, comprising all the independent non-executive Directors, namely Dr. Song Ming, Dr. Sun Mingchun and Mr. Woo Chin Wan, formed for the purpose of advising the Independent Shareholders in respect of, among other things, the Acquisitions and the Transaction;

• “Independent Financial Adviser”

Nuada Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders on, among other matters, the fairness and reasonableness of the Acquisitions and Transaction;

– 3 –

DEFINITIONS

• “Independent Shareholders”

• “Latest Practicable Date”

• “Listing Rules”

• “Model Code”

• “Original Asset Management Agreement”

• “PRC”

• “Restated Asset Management Agreement”

• “Second Acquisition”

• “Second Completion Date”

the Shareholders who are not interested in the Acquisition Agreements or the transactions contemplated thereunder, the Restated Asset Management Agreement or the transactions contemplated thereunder (including the proposed Annual Caps) and are not required under the Listing Rules to abstain from voting at the SGM, being all Shareholders except for Great Wall Pan Asia (BVI) and its associates;

• 29 June 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular;

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

• the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules;

• the asset management agreement dated 19 May 2017 and entered into between the First Target Company and the Vendor;

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

• the restated agreement dated 29 June 2017 entered into between the First Target Company and the Vendor to amend and restate the terms of the Original Asset Management Agreement;

the proposed acquisition of the entire issued share capital in the Second Target Company as contemplated by the Second Sale and Purchase Agreement;

the date which is the third (3rd) Business Day after, the date upon which the Second Conditions Precedent have been satisfied, or such other date as the parties to the Second Sale and Purchase Agreement may agree in writing;

– 4 –

DEFINITIONS

• “Second Conditions Precedent”

• “Second Long Stop Date”

• “Second Purchaser”

• “Second Sale and Purchase Agreement”

• “Second Target Company”

• “Services”

• “SFC”

• “SFO”

• the conditions precedent to the completion of the Second Sale and Purchase Agreement as set out in the sub-section headed “Second Conditions Precedent” in the “Letter from the Board” section in this circular;

• 30 September 2017, or such other date as the parties to the Second Sale and Purchase Agreement may agree in writing;

• Great Wall Pan Asia II Holding Limited, a company incorporated under the laws of the British Virgin Islands with limited liability;

• the sale and purchase agreement dated 19 May 2017 and entered into between the Second Purchaser and the Vendor in relation to the acquisition of the entire issued share capital in the Second Target Company;

• Great Wall Pan Asia Corporate Finance Limited (長城環 亞融資有限公司), a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 6 (advising on corporate finance) regulated activity under the SFO;

• the services to be provided by the First Target Company to the Vendor in accordance with Restated Asset Management Agreement, and includes the range of services set out in the paragraph headed “Subject Matters” in the sub-section headed “(3) the Restated Asset Management Agreement” in the “Letter from the Board” section in this circular;

the Securities and Futures Commission of Hong Kong;

Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (as amended, supplemented or otherwise modified from time to time);

– 5 –

DEFINITIONS

• “SGM”

• the special general meeting of the Company to be convened and held for the Independent Shareholders to consider and, if thought fit, approve, inter alia, the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps), or any adjournment thereof;

• “Shareholder(s)” holder(s) of Share(s) from time to time;

• “Share(s)”

• ordinary share(s) of HK$0.10 each in the capital of the Company or if there has been a subsequent sub-division, consolidation, reclassification or reconstruction of the share capital of the Company, shares forming part of the ordinary equity share capital of the Company;

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited;

• “Target Group”

• collectively, the First Target Group and the Second Target Company;

• “Transaction”

• the provision of discretionary asset management services by the First Target Company to the Vendor as contemplated under the Restated Asset Management Agreement;

• “Vendor”

• Great Wall Pan Asia International Investment Co., Limited (長城環亞國際投資有限公司) (now known as “China Great Wall AMC (International) Holdings Company Limited (中國長城資產(國際)控股有限公司)”), a company incorporated under the laws of Hong Kong with limited liability; and

• “%”

per cent.

– 6 –

LETTER FROM THE BOARD

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GREAT WALL PAN ASIA HOLDINGS LIMITED (長城環亞控股有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 583)

Executive Directors Mr. Ou Peng (Chairman and Chief Executive Officer) Mr. Meng Xuefeng (Deputy Chief Executive Officer)

Non-executive Directors Mr. Huang Hu Ms. Lv Jia

Independent Non-executive Directors Dr. Song Ming Dr. Sun Mingchun Mr. Woo Chin Wan

Registered Office Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head Office and Principal Place of Business in Hong Kong Units 6507-6510, 65/F. The Center 99 Queen’s Road Central Hong Kong

30 June 2017

To the Shareholders

Dear Sir/Madam,

(1) DISCLOSEABLE AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED ACQUISITIONS OF THE TARGET GROUP AND

(2) CONTINUING CONNECTED TRANSACTION IN RELATION TO THE RESTATED ASSET MANAGEMENT AGREEMENT AND

(3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

References are made to the announcements of the Company dated 19 May 2017 and 29 June 2017 respectively in relation to, among other things, the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps), which will be considered by the Independent Shareholders at the SGM.

• For identification purpose only

– 7 –

LETTER FROM THE BOARD

The purposes of this circular are to provide you with, among other things, (1) further information in relation to the details of the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps); (2) a letter of advice from Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (3) the recommendation of the Independent Board Committee to the Independent Shareholders; and (4) a notice of the SGM in order to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the SGM.

In addition, taking into consideration of the potential impact to the Group’s revenue as a result of the Acquisitions, additional information, including the financial information of the Target Group for the three years ended 31 December 2014, 2015 and 2016 are also included in this circular to aid your decision on whether or not to approve the proposed resolutions at the SGM.

THE ACQUISITIONS AND THE TRANSACTION

(1) The First Sale and Purchase Agreement

The principal terms of the First Sale and Purchase Agreement are set out as follows:

Date

19 May 2017 (after trading hours)

Parties

• (a) the First Purchaser; and

• (b) the Vendor.

As at the Latest Practicable Date, Great Wall Pan Asia (BVI) is the controlling Shareholder holding approximately 74.89% of the total issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor. Therefore, the Vendor is a connected person of the Company under Chapter 14A of the Listing Rules.

Subject matter

The First Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the entire issued share capital in the First Target Company, subject to the terms and conditions of the First Sale and Purchase Agreement.

Upon completion of the First Acquisition, the First Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated to the financial results of the Group.

– 8 –

LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor established the First Target Company and the First Target Company established the subsidiaries in the First Target Group and there is no original acquisition cost for the shares in the First Target Group to the Vendor.

First Conditions Precedent

Completion of the First Sale and Purchase Agreement will be conditional upon the satisfaction of the following First Conditions Precedent on or before the First Long Stop Date:

• (a) the approval from the SFC for the change of substantial shareholder(s) of the First Target Company under the SFO having been granted;

• (b) all licences (including but not limited to the licences granted by the SFC for carrying on business in regulated activities under the SFO) held by the First Target Company having not been withdrawn, terminated or suspended as at the First Completion Date;

• (c) respective approval having been obtained from the Independent Shareholders at the SGM for the First Sale and Purchase Agreement and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps); and

• (d) there having been no laws, regulations, decisions, measures or actions by government authorities which would prohibit, restrict or practically delay the transactions contemplated under the First Sale and Purchase Agreement.

The Vendor shall use its best endeavours to ensure the fulfilment of the First Conditions Precedent (save for First Conditions Precedent (a) and (c)). The First Purchaser shall use its best endeavours to ensure the fulfilment of the First Conditions Precedent (a) and (c).

As at the Latest Practicable Date, none of the above First Conditions Precedent has been fulfilled. Application for approval of change of substantial shareholder(s) of the First Target Company has been made to the SFC.

If the First Conditions Precedent above have not been fulfilled by the First Long Stop Date, the First Purchaser may terminate the First Sale and Purchase Agreement by giving written notice to the Vendor whereupon the First Sale and Purchase Agreement will cease to be effective and of no further effect, save for any antecedent breach and obligations with continuing effect under the First Sale and Purchase Agreement.

The First Acquisition and the Second Acquisition are not inter-conditional upon each other.

– 9 –

LETTER FROM THE BOARD

Consideration

The consideration payable by the First Purchaser to the Vendor in respect of the First Acquisition amounts to HK$38,701,969 in cash which shall be settled on the First Completion Date. The consideration for the First Acquisition will be funded by internal resources of the Group.

The consideration under First Sale and Purchase Agreement was determined after arm’s length negotiations between the First Purchaser and the Vendor, taking into account the financial position and future growth prospects of the First Target Group, including (i) the net asset value of the First Target Group of approximately HK$38,164,000 as at 30 April 2017; (ii) the cash and cash equivalent which comprised the majority of the assets of the First Target Group as at 30 April 2017; (iii) the business prospects of First Target Company to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO in Hong Kong, which are expected to generate additional sustainable income to the Group, in particular from its well-established and readily available financial business platforms and sound infrastructure which are supported by its newly recruited and existing qualified experts; and (iv) other relevant factors set out in the paragraph headed “Reasons for and Benefits of the Acquisitions and the Transaction” of this circular.

The Directors (including the independent non-executive Directors after having considered the advice of the Independent Financial Adviser) are of the view that the terms of the First Sale and Purchase Agreement, which have been reached after arm’s length negotiations among the parties, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(2) The Second Sale and Purchase Agreement

The principal terms of the Second Sale and Purchase Agreement are set out as follows:

Date

19 May 2017 (after trading hours)

Parties

• (a) the Second Purchaser; and

• (b) the Vendor.

As at the Latest Practicable Date, Great Wall Pan Asia (BVI) is the controlling Shareholder holding approximately 74.89% of the total issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor. Therefore, the Vendor is a connected person of the Company under Chapter 14A of the Listing Rules.

– 10 –

LETTER FROM THE BOARD

Subject matter

The Second Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the entire issued share capital in the Second Target Company, subject to the terms and conditions of the Second Sale and Purchase Agreement.

Upon completion of the Second Acquisition, the Second Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated to the financial results of the Group.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor established the Second Target Company and there is no original acquisition cost for the shares in the Second Target Company to the Vendor.

Second Conditions Precedent

Completion of the Second Sale and Purchase Agreement will be conditional upon the satisfaction of the following Second Conditions Precedent on or before the Second Long Stop Date:

• (a) the approval from the SFC for the change of substantial shareholder(s) of the Second Target Company under the SFO having been granted;

• (b) all licences (including but not limited to the licences granted by the SFC for carrying on business in regulated activities under the SFO) held by the Second Target Company having not been withdrawn, terminated or suspended as at the Second Completion Date;

• (c) approval having been obtained from the Independent Shareholders at the SGM for the Second Sale and Purchase Agreement and the transactions contemplated thereunder; and

• (d) there having been no laws, regulations, decisions, measures or actions by government authorities which would prohibit, restrict or practically delay the transactions contemplated under the Second Sale and Purchase Agreement.

The Vendor shall use its best endeavours to ensure the fulfilment of the Second Conditions Precedent (save for Second Conditions Precedent (a) and (c)). The Second Purchaser shall use its best endeavours to ensure the fulfilment of Second Conditions Precedent (a) and (c).

As at the Latest Practicable Date, none of the above Second Conditions Precedent has been fulfilled. Application for approval of change of substantial shareholder(s) of the Second Target Company has been made to the SFC.

– 11 –

LETTER FROM THE BOARD

If the Second Conditions Precedent above have not been fulfilled by the Second Long Stop Date, the Second Purchaser may terminate the Second Sale and Purchase Agreement by giving written notice to the Vendor whereupon the Second Sale and Purchase Agreement will cease to be effective and of no further effect, save for any antecedent breach and obligations with continuing effect under the Second Sale and Purchase Agreement.

The First Acquisition and the Second Acquisition are not inter-conditional upon each other.

Consideration

The consideration payable by the Second Purchaser to the Vendor in respect of the Second Acquisition amounts to HK$868,834 in cash which shall be settled on the Second Completion Date. The consideration of the Second Acquisition will be funded by internal resources of the Group.

The consideration under Second Sale and Purchase Agreement was determined after arm’s length negotiations between the Second Purchaser and the Vendor with reference to (i) the net asset value of the Second Target Company of approximately HK$806,000 as at 30 April 2017; (ii) the business prospect of Second Target Company to carry out Type 6 (advising on corporate finance) regulated activity under the SFO in Hong Kong, which is expected to generate additional income to the Group; and (iii) other relevant factors set out in the paragraph headed “Reasons for and Benefits of the Acquisitions and the Transaction” of this circular.

The Directors (including the independent non-executive Directors after having considered the advice of the Independent Financial Adviser) are of the view that the terms of the Second Sale and Purchase Agreement, which have been reached after arm’s length negotiations among the parties, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(3) The Restated Asset Management Agreement

The principal terms of the Restated Asset Management Agreement are set out as follows:

Date

29 June 2017 (to amend and restate the terms of the Original Asset Management Agreement entered on 19 May 2017)

Parties

• (a) the First Target Company; and

• (b) the Vendor.

– 12 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, Great Wall Pan Asia (BVI) is the controlling Shareholder holding approximately 74.89% of the total issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor. Therefore, the Vendor is a connected person of the Company under Chapter 14A of the Listing Rules.

Subject matter

The First Target Company conditionally agreed to provide discretionary asset management services to the Vendor, and will have full authority and discretion, without prior notice to or consent from the Vendor, to make decisions to invest the Assets, including without limitation to:

• (a) buy, sell, exchange, redeem, hold, convert, re-invest, dispose, or otherwise deal with the Assets, including to leave the Assets un-invested;

• (b) exercise or refrain from exercising any right conferred by a particular investment to buy, sell, subscribe for, exchange or redeem an investment;

• (c) comply with any obligations under applicable law to take or refrain from taking any action in connection with the Assets;

• (d) generally enter into any kind of transaction or arrangement which is necessary or incidental to the provision of Services by the First Target Company; and

• (e) any other services as set out in the Restated Asset Management Agreement.

Term

The term of the Restated Asset Management Agreement is for three years, commencing on the Commencement Date and ends on (i) the third anniversary of the Commencement Date, (ii) the date on which the Restated Asset Management Agreement is otherwise terminated as agreed between the parties in writing; or (iii) the date on which the First Target Company unilaterally terminates the Restated Asset Management Agreement for the purpose of complying with any requirements under the Listing Rules or conditions imposed by Stock Exchange, whichever is earlier.

Conditions Precedent

The Restated Asset Management Agreement is conditional on:

• (a) approval having been obtained from the Independent Shareholders at the SGM for the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps); and

• (b) completion of the First Acquisition.

– 13 –

LETTER FROM THE BOARD

Management Fees

As consideration for performing the Services in accordance with the terms of the Restated Asset Management Agreement, the Vendor will pay to the First Target Company a fee equal to 1.5% per annum of the Assets payable at the end of each calendar month, which was determined with reference to (i) the relatively small size of the Assets under management; (ii) the prevailing market rates ranging from 1.0% to 2.0% for provision of similar services as advised by the responsible officers of the First Target Company based on their market experiences; (iii) the pricing policy agreed by the responsible officers of the First Target Company and the Vendor, having considered the aforesaid prevailing market rates and size of the Assets under management; and (iv) the estimated costs and expenses of the First Target Company during the term of the Restated Asset Management Agreement.

The Directors (including the independent non-executive Directors after having considered the advice of the Independent Financial Adviser) are of the view that the terms of the Restated Asset Management Agreement, which have been reached after arm’s length negotiations among the parties, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Proposed Annual Caps and Basis of Determination

It is proposed that the Annual Cap for the Services for each of the financial years ending 31 December 2017, 2018, 2019 and 2020 during the term of the Restated Asset Management Agreement, being three years commencing from the Commencement Date, is expected not to exceed the following:

	2017	2018	2019	2020
	HK$	HK$	HK$	HK$
Provision of Services
by First Target
Company to Vendor	13,500,000_(Note)_	40,500,000	40,500,000	27,000,000_(Note)_

Note: The proposed Annual Cap for each financial year above is estimated on the assumption that completion of the First Acquisition will take place at the end of August 2017.

The above proposed Annual Caps for the Services were determined by reference to (i) the expected net asset value of the Assets committed by the Vendor pursuant to the Restated Asset Management Agreement, which pursuant to the Restated Asset Management Agreement shall be no more than HK$2,700,000,000 and no less than HK$2,000,000,000 during the term of the Restated Asset Management Agreement, subject to the First Target Company’s sole discretion to adjust the aforesaid minimum amount to a sum no more than HK$2,000,000,000 upon notice to the Vendor; and (ii) the management fee equal to 1.5% per annum of the Assets as per the prevailing market rate for provision of similar services.

– 14 –

LETTER FROM THE BOARD

Internal Control Procedures

The legal and company secretarial department of the Company will be responsible for reviewing and assessing whether the First Target Company is in compliance with the terms of the Restated Asset Management Agreement and the Annual Cap on an annual basis and the responsible officers of the First Target Company and the relevant personnel of the Company will review the management fees to ensure compliance with the pricing policies as set out in the Restated Asset Management Agreement. Further, the legal and company secretarial department of the Company will monitor, collect and evaluate the detailed information of the continuing connected transaction under the Restated Asset Management Agreement, including but not limited to the implementations of the pricing policies, payment of the monthly management fee and actual transaction amount under the specific transactions on a monthly basis to ensure the relevant transactions are conducted in compliance with the pricing policies terms under the Restated Asset Management Agreement.

The Board will designate the chief financial officer of the Company to continuously monitor the revenue generated from the Services provided by the First Target Company, by comparing (i) the amount of Services provided to the Vendor with the amount of services (similar to the Services) provided to other independent third parties, if any; and (ii) the amount of revenue generated from the provision of Services to the Vendor with the Enlarged Group’s total revenue. The chief financial officer of the Company will provide regular updates to the management of the Company every month and the Board will review the amount of Services provided by the First Target Company on a quarterly basis.

In the event that there is any indication that the percentage of the amount of revenue generated from the provision of Services may exceed 50% of the Enlarged Group’s total revenue, the management of the Company will report to the Board immediately and the Board will re-evaluate the business model and marketing strategy of the First Target Company if it is effective in attracting third party clients given the then market conditions. The Company will also consider if it is necessary to seek for other business and investment opportunities in both the PRC and Hong Kong to further expand the Group’s sources of revenue.

In the event that the aggregate amount of revenue generated from the provision of Services reaches 50% of the then total revenue of the Enlarged Group at any time in the relevant financial year, the management of the Company will then inform the Board and the responsible officers of the First Target Company and the Board will consider, either terminating the Transaction or making necessary adjustments to the minimum amount of the Assets by providing written notice to the Vendor pursuant to the Restated Asset Management Agreement, so that the percentage of the amount of revenue that generated from the Services will not exceed 50% of the Enlarged Group’s total revenue.

The independent non-executive Directors will review the continuing connected transaction on an annual basis and confirm in the annual reports of the Company on whether the continuing connected transactions under the Restated Asset Management Agreement are (i) in the ordinary course of business of the Enlarged Group; (ii) on terms no less favourable than terms available to independent third parties, if there is any; (iii) in accordance with the Restated Asset Management Agreement; and (iv) on terms that are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

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LETTER FROM THE BOARD

The audit committee of the Company will review the annual financial results, annual reports, interim financial results and interim reports, which include disclosure and analysis of the continuing connected transaction to ensure that the terms of the continuing connected transaction are fair and reasonable, and the transaction amount does not exceed the Annual Caps.

The Company will engage its external auditor to report on whether the continuing connected transaction: (i) has been approved by the Board; (ii) were, in all material respects, in accordance with the pricing policies of the Enlarged Group; (iii) is, in all material respects, in accordance with the terms of the Restated Asset Management Agreement; and (iv) has not exceeded the Annual Caps.

INFORMATION ON THE GROUP

The Company was incorporated in Bermuda on 30 April 1990 as an exempted company with limited liability. The Company became listed on the main board of the Stock Exchange on 29 June 1990, trading under the stock code 583.

The Group is principally engaged in the property investment business in Hong Kong and currently owns four investment properties.

INFORMATION ON THE FIRST PURCHASER, THE SECOND PURCHASER, THE VENDOR AND THE TARGET GROUP

The Vendor is a company incorporated under the laws of Hong Kong with limited liability and its principal activity is investment holding.

The First Purchaser is a company established under the laws of the British Virgin Islands with limited liability and its principal business is investment holding.

The Second Purchaser is a company established under the laws of the British Virgin Islands with limited liability and its principal business is investment holding.

The First Target Company is a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO. Its principal businesses are dealing in securities, advising on securities and asset management. The First Target Company has established two subsidiaries in the PRC under the Shen Zhen Qian Hai’s pilot scheme of Qualified Foreign Limited Partners (“ QFLP ”), namely, Shen Zhen Great Wall Pan Asia International Equity Investment Fund Management Company Limited (深圳長 城環亞國際股權投資基金管理有限公司) (“ GWEI Fund Management Co,. Ltd ”) and Shen Zhen Great Wall Pan Asia International Equity Investment Fund Enterprise (Limited Partnership) (深圳長城環亞國際股權投資基金企業(有限合夥))) (“ GWEI Fund Enterprise (LP) ”), which are principally engaged in investment advisory, asset management and private equity investment activities. As at the Latest Practicable Date, the First Target Company provided discretionary asset management services to the Vendor only.

The Second Target Company is a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. Its principal business is advising on corporate finance.

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LETTER FROM THE BOARD

FINANCIAL INFORMATION OF THE TARGET GROUP

Certain audited consolidated financial information prepared in accordance with HKFRS in relation to the First Target Group is set out below:

	**For the **	year ended 31 December	year ended 31 December
	2016	2015	2014
	(audited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
	(approximately)	(approximately)	(approximately)
Revenue	33,560	12,490	7,893
Profit/(Loss) before tax	17,274	188	155
Profit/(Loss) after tax	13,412	48	129
Net asset value	38,071	10,177	10,129

Certain audited financial information prepared in accordance with HKFRS in relation to the Second Target Company is set out below:

	**For the **	year ended 31 December	year ended 31 December
	2016	2015	2014
	(audited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
	(approximately)	(approximately)	(approximately)
Revenue	989	3,528	113
(Loss)/Profit before tax	(233)	(110)	(3,134)
(Loss)/Profit after tax	(233)	(110)	(3,134)
Net asset value	1,523	1,756	1,866

REASONS FOR AND BENEFITS OF THE ACQUISITIONS AND THE TRANSACTION

The Acquisitions

The Group is principally engaged in the property investment in Hong Kong. Whilst the Board intends to continue developing the principal business of the Group and currently has no intention of disposing any of its principal assets, which generates stable income for the Group, the Board has been formulating development plans and strategies for the future direction of the Company’s businesses and has been considering enhancing its potential long-term growth by suitable diversification of its businesses, and subject to the regulatory requirements, to transform the Group from a company with a single line of business to an integrated conglomerate with its existing property investment business and other diversified businesses. In light of the above, the Board considers that it would be beneficial for the Group to seek suitable investment opportunities to diversify its business and to broaden the Group’s source of sustainable income.

The First Target Company is licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities, and the Second Target Company is licensed to carry out Type 6 (advising on corporate finance) regulated activities, respectively.

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LETTER FROM THE BOARD

The First Target Group has seized the opportunity provided by Shen Zhen Qian Hai’s pilot scheme of QFLP and established GWEI Fund Management Co,. Ltd, an onshore fund management company and GWEI Fund Enterprise (LP), a RMB fund in the form of limited partnership. The Board believes that, while the businesses of GWEI Fund Management Co., Ltd. and GWEI Fund Enterprise (LP) are at a preliminary stage and the revenue generated may not be stable, by virtue of this platform and combining the brand of the Company and the network of the professional team acquired through the Acquisitions, the First Target Group may enjoy long-term benefit as it is allowed to raise unlimited onshore fund and limited offshore fund of (up to US$300 million without the special approval of the PRC’s foreign exchange authority which would otherwise be required if not for this QFLP platform) to participate the booming private equity business in China which will further advance and strengthen the Group’s position in the financial service industry if the Transaction materialises.

For the two years ended 31 December 2015 and 2016, the First Target Group generated net profit after tax of approximately HK$48,000 and HK$13,410,000 respectively. For the two years ended 31 December 2015 and 2016, the Second Target Company recorded net loss after tax of approximately HK$110,000 and HK$233,000 respectively as it is still in its early stage of development. The losses were mainly related to the cost of building the second Target Company’s infrastructure of hiring a team of professionals to fulfil the requirement of maintaining at least two responsible officers for its regulated activity under the licensing requirements of the SFO so that the Second Target Company can build and expand its corporate finance business. As at the Latest Practicable Date, the Second Target Company has recruited three qualified individuals and is in course of applying for approval for these individuals to act as responsible officers with the SFC. It is expected that approval by the SFC will be obtained by the end of July 2017. Upon SFC’s approval, the Second Target Company will actively engage in providing advice on corporate finance transactions and the Listing Rules and The Codes on Takeovers and Mergers and Share Buy-backs.

Taking into consideration that (i) the First Target Company and the Second Target Company are licensed corporations under the SFO and the First Target Group has established a QFLP infrastructure with the Shenzhen Municipal Government Financial Services Office (深 圳市人民政府金融發展服務辦公室); (ii) the time and costs incurred to obtain such licences to carry out the regulated activities in Hong Kong, set up entities to commence operations and build up the clientele is substantial; (iii) the Group will not have to go through lengthy processes to apply for the relevant licences to operate business in the PRC; and (iv) the potential and benefits that QFLP platform can bring to the Group, the Board is of the view that the Acquisitions would provide the Group with immediate access to the Target Group’s well-established and readily available platforms and expertise in financial service industry in Hong Kong and the PRC, and would create additional source of revenue and enhance the profits of the Group.

The Board believes that the Acquisitions constitute an important step of the Group towards the diversification of its business and will enhance the Group’s revenue sources, profitability and long-term growth potential. Upon completion of the Acquisitions, the Enlarged Group will continue to adhere to its business strategies and deepen its revenue sources.

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LETTER FROM THE BOARD

The Transaction

The First Target Company is licensed to carry out Type 9 (asset management) regulated activities and the transactions contemplated under the Restated Asset Management Agreement are in the ordinary and usual course of business of the Group.

Pursuant to the Restated Asset Management Agreement, the First Target Company and the Vendor have agreed to set the management fee at 1.5% per annum of the Assets and minimum amount of the Assets at HK$2,000,000,000 in aggregate, which were determined after taking into consideration that, during the term of the Restated Asset Management Agreement, (i) the economies of scale of the asset management business; (ii) the management fee to be received by the First Target Company will be able to fully cover its operating costs and on the basis that reasonable profit can be generated after deducting the costs; and (iii) the costs of the First Target Group will be stabilised according to the business plan and the management’s expectations.

The success of an asset management business depends on the size of the asset under management and its track records. The Company believes that the Transaction enables the First Target Company to start its business under the Group with a reasonable size of assets under management and build up its track record. Combining the brand of the Company and the network of the professional team acquired by the Acquisitions, the Board believes that the Transaction will serve as a springboard for the Group to build up its reputation and broaden its clientele so as to advance and strengthen its position in the financial service industry. As the Group’s property investment business will continue to generate stable revenue to the Group, there will not be any over-reliance on the revenue generated from the Transaction.

The Board is of the view that the Transaction, if materialises, will broaden the income stream and enhance the revenue and profits of the Group and is in line with the Company’s strategic plan to diversify the Group’s existing line of business to provision of financial services.

FINANCIAL EFFECT OF THE ACQUISITIONS

Upon completion of the Acquisitions, each of the companies of the Target Group will become a wholly-owned subsidiary of the Company. The financial statements of each of the companies of the Target Group will be consolidated in the accounts of the Group after Completion.

Based on the unaudited pro forma information of the Enlarged Group as set out in Appendix III of this circular, assuming completion of the Acquisitions had taken place on 31 December 2016, the total assets of the Enlarged Group would increase from approximately HK$1,666 million to approximately HK$1,675 million; the total liabilities of the Enlarged Group would increase from approximately HK$27 million to approximately HK$38 million, as a result of the Acquisitions.

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LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE TRANSACTION

For the reasons as set out in the sub-section headed “Reasons for and Benefits of the Acquisitions and the Transaction” in this section, notwithstanding the relatively large amount of Services to be provided by the First Target Company to the Vendor under the Transaction and the revenue the Transaction is expected to generate to the Enlarged Group, the Board does not consider that there will be over-reliance of the Enlarged Group on the Vendor.

The Directors note that, apart from the Restated Asset Management Agreement, the First Target Company has not provided any asset management service with other independent third parties as at the Latest Practicable Date. Whilst no legally binding contract has been entered into by the First Target Company as of the Latest Practicable Date, in light of the expertise and experience of the First Target Company accumulated over the past few years through providing asset management services to the Vendor, and the recent recruitment of a number of management personnel with extensive experience in the financial services industry, the Board expects such negotiations to materialise in the near future. As a result, the First Target Company will be able to diversify its sources of revenue and reduce the Enlarged Group’s reliance on its controlling Shareholder.

Further, it is the Board’s intention to continue developing the principal business of the Group while formulating strategies for future directions of the Company’s business. Together with the Board’s active efforts in exploring other business opportunities to broaden the Company’s sources of revenue and enhance profitability and taking into consideration of the additional internal control measures that the Group will be taking during the term of the Restated Asset Management Agreement, it is expected that the Group’s reliance on its controlling Shareholder will be further reduced in the future.

IMPLICATIONS UNDER THE LISTING RULES

As at the Latest Practicable Date, Great Wall Pan Asia (BVI) is the controlling Shareholder of the Company holding approximately 74.89% of the total issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor. Therefore, the Vendor is a connected person of the Company under Chapter 14A of the Listing Rules.

The Acquisitions

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisitions exceeds 5% and all of the applicable percentage ratios are less than 25%, the Acquisitions collectively constitute (i) a non-exempt connected transaction under Chapter 14A of the Listing Rules and (ii) a discloseable transaction under Chapter 14 of the Listing Rules for the Company and therefore are subject to reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

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LETTER FROM THE BOARD

The Transaction

Following completion of the First Acquisition, the First Target Company will become an indirect wholly-owned subsidiary of the Company.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the annual cap amount under the Restated Asset Management Agreement is more than 5%, the transaction contemplated under the Restated Asset Management Agreement will constitute a non-exempt continuing connected transaction under Chapter 14A of the Listing Rules upon the completion of the First Acquisition and therefore is subject to reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

None of the Directors has any material interests in the Acquisitions or the Transaction (including the proposed Annual Caps) and was required to abstain from voting on the Board resolutions in relation to the Acquisitions and the Transaction (including the proposed Annual Caps).

SGM, PROXY ARRANGEMENT AND CLOSURE OF REGISTER OF MEMBERS

The Company will convene the SGM for the purpose of, among other things, seeking the approval of the Independent Shareholders on the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps). In compliance with Rule 13.39(4) of the Listing Rules, all the resolutions to be proposed at the SGM will be voted by poll. The voting results of the SGM will be announced in the manner prescribed under Rule 13.39(5) of the Listing Rules.

In accordance with the Listing Rules, any Shareholder and its associates with material interests in, namely, the Acquisitions and the Transaction and the transactions contemplated thereunder, must abstain from voting on the resolutions approving such matters at the SGM.

As at the Latest Practicable Date, since Great Wall Pan Asia (BVI) and its associates control or are entitled to exercise control of the voting rights of approximately 74.89% of the total issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor, Great Wall Pan Asia (BVI) and its associates are required to abstain from voting with respect to the resolutions for approving the Acquisitions and the Transaction (including the proposed Annual Caps).

A notice of the SGM is set out on pages N-1 to N-3 of this circular. A form of proxy for use in connection with the SGM is enclosed with this circular.

Whether or not you are able to attend and vote at the SGM, please complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and deliver, together with the power of attorney or other authority (if any) under which it is signed or a

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LETTER FROM THE BOARD

certified copy of that power of attorney or authority to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 11:00 a.m. on Wednesday, 19 July 2017 (or if the SGM is adjourned, not less than 48 hours before the time appointed for the holding of the adjourned SGM). 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 should you so wish.

For determining the entitlement to attend and vote at the SGM, the register of members of the Company will be closed from Monday, 17 July 2017 to Friday, 21 July 2017, both dates inclusive, during which period no transfer of Shares will be effected. In order to be eligible to attend and vote at the SGM, all duly completed and signed transfer forms accompanied by the relevant share certificates must be lodged with the company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 14 July 2017.

VOTING BY POLL

Pursuant to the Listing Rules, any vote of the Shareholders at a general meeting must be taken by poll. The Chairman of the SGM will therefore put each of the resolutions to be proposed at the SGM to be voted by way of a poll pursuant to Bye-Law 70 of the Bye-Laws.

Bye-Law 70 of the Bye-Laws sets out the procedures by which the Shareholders may demand a poll:

At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (1) required by the Listing Rules, except where the chairman of the meeting, in good faith and in compliance with the Listing Rules, decides to allow such resolution to be voted on by a show of hands; or (2) (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

• (i) by the chairman of the meeting;

• (ii) by at least three Shareholders present in person or by a duly authorised corporate representative or by proxy for the time being entitled to vote at the meeting;

• (iii) by any Shareholder or Shareholders present in person or by a duly authorised corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or

• (iv) by any Shareholder or Shareholders present in person or by a duly authorised corporate representative or by proxy and holding Shares in the Company, conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

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LETTER FROM THE BOARD

Unless a poll be so required or demanded as aforesaid, and in the latter case, not withdrawn, a declaration by the chairman of the meeting that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution.

RECOMMENDATIONS

An Independent Board Committee comprising all the independent non-executive Directors has been formed to advise the Independent Shareholders as to whether the terms of the Acquisitions and the Transaction are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and to advise and make recommendations to the Independent Shareholders as to how to vote at the SGM on the resolutions in relation to the Acquisitions and the Transaction, after taking into account the advice from the Independent Financial Adviser. No member of the Independent Board Committee has any material interest in the Acquisitions or the Transaction.

The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in connection with the Acquisitions as contemplated under the Acquisition Agreements and the Transaction as contemplated under the Restated Asset Management Agreement.

The Directors (including the independent non-executive Directors after having considered the advice of the Independent Financial Adviser) are of the view that the Acquisition Agreements and the Restated Asset Management Agreement were entered into on normal commercial terms and the respective terms of the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps) are in the ordinary and usual course of business of the Company, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Board recommends the Independent Shareholders to vote in favour of the proposed ordinary resolutions regarding the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps), as set out in the notice of the SGM.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 25 to 26 of this circular which contains its views and recommendation to the Independent Shareholders; and (ii) the letter from Independent Financial Adviser set out on pages 27 to 51 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders, in relation to the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps) and the principal factors and reasons considered by it in arriving at its advice.

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

Yours faithfully,

For and on behalf of the Board of

Great Wall Pan Asia Holdings Limited

Ou Peng

Chairman

– 24 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [153 x 51] intentionally omitted <==

GREAT WALL PAN ASIA HOLDINGS LIMITED (長城環亞控股有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 583)

30 June 2017

To the Independent Shareholders

Dear Sir/Madam,

(1) DISCLOSEABLE AND CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED ACQUISITIONS OF THE TARGET GROUP AND

(2) CONTINUING CONNECTED TRANSACTION IN RELATION TO THE RESTATED ASSET MANAGEMENT AGREEMENT

We refer to the circular issued by the Company to the Shareholders dated 30 June 2017 (the “ Circular ”), in which this letter forms part. Capitalised terms used in this letter will have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise you in respect of the terms of the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps). Nuada Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. None of the members of the Independent Board Committee has any direct or indirect interest in the Acquisition Agreements and the transactions contemplated thereunder, or the Restated Asset Management Agreement and the transactions contemplated thereunder.

Your attention is drawn to the letter from the Board and the letter from Independent Financial Adviser respectively set out on pages 7 to 24 and 27 to 51 of the Circular.

Having considered the principal factors and reasons considered by and the advice of Nuada Limited as set out in the Circular, we are of the view that, although the Acquisitions and the Transaction are not in the ordinary and usual course of business, (i) the terms of the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset

• For identification purpose only

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps) are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the transactions contemplated under the Acquisition Agreements and the Restated Asset Management Agreement are on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps).

Yours faithfully, Independent Board Committee

of

Great Wall Pan Asia Holdings Limited

Dr. Song Ming Dr. Sun Mingchun Mr. Woo Chin Wan Independent non-executive Independent non-executive Independent non-executive Director Director Director

– 26 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice to the Independent Board Committee and the Independent Shareholders from Nuada Limited dated 30 June 2017 prepared for the purpose of inclusion in this circular.

Unit 1805-08, 18/F OfficePlus @Sheung Wan 93-103 Wing Lok Street Sheung Wan, Hong Kong

30 June 2017

• To the Independent Board Committee and the Independent Shareholders of Great Wall Pan Asia Holdings Limited

Dear Sirs,

(1) DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE PROPOSED ACQUISITIONS OF THE TARGET GROUP AND (2) CONTINUING CONNECTED TRANSACTION IN RELATION TO THE RESTATED ASSET MANAGEMENT AGREEMENT

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 Acquisitions and the Transaction, details of which are set out in the section headed “Letter from the Board” (the “ Board Letter ”) in the Company’s circular dated 30 June 2017 to the Shareholders, of which this letter forms part. Our appointment as the Independent Financial Adviser has been approved by the Independent Board Committee. Terms used in this letter shall have the same meanings as defined in this circular unless the context requires otherwise.

On 19 May 2017, (i) the First Purchaser, a wholly-owned subsidiary of the Company, and the Vendor entered into the First Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell, and the First Purchaser conditionally agreed to purchase, the entire issued share capital in the First Target Company, for a cash consideration of HK$38,701,969; (ii) the Second Purchaser, a wholly-owned subsidiary of the Company, and the Vendor entered into the Second Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell, and the Second Purchaser conditionally agreed to purchase, the entire issued share capital of the Second Target Company, for a cash consideration of HK$868,834; and (iii) the First Target Company and the Vendor entered into the Original Asset Management Agreement, pursuant to which the First Target Company conditionally agreed to provide non-discretionary asset management services to the Vendor for a term commencing from the Commencement Date and ending on the third anniversary of the Commencement Date.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

On 29 June 2017, the First Target Company and the Vendor entered into the Restated Asset Management Agreement to amend and restate certain terms of the Original Asset Management Agreement, pursuant to which the parties thereto agreed to amend and restate certain terms of the Original Asset Management Agreement, in particular to amend, among other things (i) the scope of services to be provided by the First Target Company from non-discretionary asset management services to discretionary asset management services; (ii) the management fee; and (iii) the proposed Annual Caps. Details of the Restated Asset Management Agreement are set out in the announcement of the Company dated 29 June 2017.

As at the Latest Practicable Date, Great Wall Pan Asia (BVI) is the controlling shareholder of the Company (the “ Controlling Shareholder ”) holding approximately 74.89% of the issued share capital of the Company and Great Wall Pan Asia (BVI) is wholly-owned by the Vendor. Therefore, the Vendor is a connected person of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the Acquisitions are 5% or more and all of the applicable percentage ratios are less than 25%, the Acquisitions collectively constitute (i) a non-exempt connected transaction under Chapter 14A of the Listing Rules and (ii) a discloseable transaction for the Company under Chapter 14 of the Listing Rules, and therefore are subject to reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

Following the completion of the First Acquisition, the First Target Company will become an indirect wholly-owned subsidiary of the Company. As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the annual cap amounts under the Restated Asset Management Agreement are more than 5%, the transaction contemplated under the Restated Asset Management Agreement will constitute a non-exempt continuing connected transaction under Chapter 14A of the Listing Rules upon the completion of the First Acquisition and therefore is subject to reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

The Independent Board Committee (comprising all the independent non-executive Directors) has been established to consider the terms of the Acquisitions and the Transaction and to advise and provide recommendation to the Independent Shareholders on the Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement and the transactions contemplated thereunder (including the proposed Annual Caps). We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

During the past two years immediately preceding and up to the date of our appointment as the Independent Financial Adviser, save for this appointment as the Independent Financial Adviser in respect of the Acquisitions and the Transaction, there were no other engagements between the Group and us. Apart from normal professional fees for our services to the Company in connection with this appointment as the Independent Financial Adviser in respect of the Acquisitions and Transaction, no other arrangement exists whereby we will receive any

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

fees and/or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we are independent from, and are not associated with the Company, the First Purchaser, the Second Purchaser, or their respective substantial shareholder(s) or connected person(s) (as defined under the Listing Rules), and accordingly are considered eligible to give independent advice on the Acquisitions and the Transaction.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the accuracy of the statements, information, opinions and representations contained or referred to in this circular and the information and representations provided to us by the Company, the Directors and the management of the Company. We have no reason to believe that any information or representation relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the information provided and the representations made to us untrue, inaccurate or misleading. We have assumed that all information, representations and opinions contained or referred to in this circular, which have been provided by the Company, the Directors and the management of the Company and for which they are solely and wholly responsible, were true and accurate at the time when they were made and continue to be true up to the Latest Practicable Date and should there be any material changes after the despatch of this circular, the Shareholders would be notified as soon as possible.

The Directors have jointly and severally accepted full responsibility for the accuracy of the information contained in this circular and have confirmed in this circular, having made all reasonable inquiries, that to the best of their knowledge, opinion expressed in this circular have been arrived at after due and careful consideration and there are no other facts the omission of which would make any statement in this circular misleading.

We consider that we have reviewed sufficient information, including relevant information and documents provided by the Company and the Directors and the information published by the Company, to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in this circular to provide a reasonable basis for our opinions and recommendations. We have not, however, carried out any independent verification of the information provided by the Company and the Directors, nor have we conducted an independent in-depth investigation into the business and affairs, financial condition and future prospects of the Group.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation in respect of the Acquisitions and the Transaction (including the Annual Caps), we have taken into consideration the following principal factors and reasons:

1. Business and financial information of the Group

1.1 Business of the Group

As stated in the Board Letter and according to the management of the Company, the Group is principally engaged in the property investment business in Hong Kong and currently owns four investment properties.

On 14 December 2015, the Company announced the sale of the media business of the Group for a cash consideration of approximately HK$2.06 billion (the “ Media Business Disposal ”), which included the South China Morning Post newspaper and magazine and other media assets. The Media Business Disposal was completed on 5 April 2016. On 28 September 2016, the Company also completed the disposal of Coastline International Limited (the “ Coastline Disposal ”), a former indirect wholly-owned subsidiary of the Company, which held a vacant studio broadcasting complex in Sai Kung, to an independent third party. Further details of the Media Business Disposal and the Coastline Disposal are set out in the circulars published by the Company dated 19 February 2016 and 26 September 2016 respectively. Following the above disposals, the remaining business of the Group represents its investments in four properties in Hong Kong for rental purpose.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

1.2 Financial information

Set out below is a summary of the consolidated financial results of the Group for the two financial years ended 31 December 2015 (“ FY2015 ”) and 31 December 2016 (“ FY2016 ”) as extracted respectively from the annual report of the Company for the year ended 31 December 2016 (the “ Annual Report 2016 ”):

Table 1: Consolidated income statement of the Group

	For the year ended	For the year ended
	31 December
	2015	2016
	HK$’000	HK$’000
	(audited)	(audited)
Revenue from continuing operations	52,833	57,158
Revenue from discontinued operations	1,068,819	210,611
Total revenue	1,121,652	267,769
Fair value gain on investment properties	191,400	118,100
Operating profit of continuing operations	228,187	133,287
Profit for the year from continuing
operations	285,102	294,540
Profit for the year from discontinued
operations	50,438	1,408,732
Profit for the year	335,540	1,703,272

Table 2: Consolidated financial position of the Group

	**As at 31 **	December
	2015	2016
	HK$’000	HK$’000
	(audited)	(audited)
Cash and bank balances	39,487	88,387
Non-current assets	2,139,442	1,564,639
Current assets	66,350	101,494
Total assets	3,732,020	1,666,133
Total liabilities	357,531	26,773
Total equity	3,374,489	1,639,360

According to the Annual Report 2016, the revenue from continuing operations of the Group was mainly rental income from the investment properties owned by the Group. The revenue from continuing operations for FY2016 was approximately HK$57.16 million, which represents an increase of approximately 8.20% as compared with approximately HK$52.83 million in FY2015 The Group recorded a significant increase in profit for the year from approximately HK$335.54 million in FY2015 to approximately HK$1,703.27 million in

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

FY2016 mainly due to (i) a gain on disposal of media business of approximately HK$1,421.73 million; (ii) a fair value gain on disposal of investment properties of approximately HK$118.10 million; (iii) a gain on disposal of available-for-sale financial assets of approximately HK$27.06 million; (iv) a gain on disposal of asset held-for-sale of approximately HK$30.09 million; and (v) a gain on disposal of a subsidiary of approximately HK$104.22 million.

As at 31 December 2016, the Group had cash and bank balances of approximately HK$88.38 million. The total assets of the Group decreased from approximately HK$3,732.02 million as at 31 December 2015 to approximately HK$1,666.13 million as at 31 December 2016, which represents a decrease of approximately 55.36%, which was mainly due to the decrease in assets of disposal group classified as held-for-sale from approximately HK$1.53 billion as at 31 December 2015 to zero as at 31 December 2016. The total liabilities of the Group dropped by approximately 92.51% in FY2016, from approximately HK$357.53 million as at 31 December 2015 to approximately HK$26.77 million as at 31 December 2016, which was mainly due to the decrease in liabilities of disposal group classified as held-for-sale from approximately HK$296.32 million to zero in FY2016 and the special dividend payout. The total equity of the Group as at 31 December 2016 was approximately HK$1.64 billion, which represents a decrease of approximately 51.33% compare with approximately HK$3.37 billion as at 31 December 2015. According to the Annual Report 2016, such decrease was mainly attributable to the special dividend payout during FY2016 with a total amount of approximately HK$3,670 million.

2. Background of the Acquisitions

2.1 Information of the Target Group

As extracted from the Board Letter, the First Target Company is a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO. Its principal businesses are dealing in securities, advising on securities and asset management. The First Target Company has established two subsidiaries (the “ Subsidiaries ”) in the PRC under the Shen Zhen Qian Hai’s pilot scheme of Qualified Foreign Limited Partners (the “ QFLP ”), namely, Shen Zhen Great Wall Pan Asia International Equity Investment Fund Management Company Limited (the “ Subsidiary A ”) and Shen Zhen Great Wall Pan Asia International Equity Investment Fund Enterprise (Limited Partnership) (the “ Subsidiary B ”), which are principally engaged in investment advisory, asset management and private equity investment activities.

The Second Target Company is a company incorporated under the laws of Hong Kong with limited liability and licensed by the SFC to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. Its principal business is advising on corporate finance.

• For identification purpose only

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

The table below set forth a summary of the key financial information of the First Target Group based on the audited consolidated financial information of the First Target Group for the years ended 31 December 2014, 2015 and 2016 as set out in the Board Letter:

Table 3: Audited consolidated financial information of the First Target Group prepared in accordance with HKFRS:

	**For the **	year ended 31 December	year ended 31 December
	2016	2015	2014
	(audited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
	(approximately)	(approximately)	(approximately)
Revenue	33,560	12,490	7,893
Profit/(Loss) before tax	17,274	188	155
Profit/(Loss) after tax	13,412	48	129
Net asset value	38,071	10,177	10,129

For the three years ended 31 December 2014, 2015 and 2016, the First Target Group recorded revenue of approximately HK$7.89 million, HK$12.49 million and HK$33.56 million respectively, with net profit after tax of approximately HK$129,000, HK$48,000 and HK$13.41 million respectively. The net asset value of the First Target Group as at 31 December 2016 was approximately HK$38.07 million, representing an increase of approximately 273.97% as compared to the amount of approximately HK$10.18 million as at 31 December 2015.

The table below set forth a summary of the key financial information of the Second Target Company based on the audited financial information of the Second Target Company for the years ended 31 December 2014, 2015 and 2016 as set out in the Board Letter:

Table 4: Audited financial information of the Second Target Company prepared in accordance with HKFRS:

	**For the **	year ended 31 December	year ended 31 December
	2016	2015	2014
	(audited)	(audited)	(audited)
	HK$’000	HK$’000	HK$’000
	(approximately)	(approximately)	(approximately)
Revenue	989	3,528	113
(Loss)/Profit before tax	(233)	(110)	(3,134)
(Loss)/Profit after tax	(233)	(110)	(3,134)
Net asset value	1,523	1,756	1,866

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

For the three years ended 31 December 2014, 2015 and 2016, the Second Target Company recorded revenue of approximately HK$113,000, HK$3.53 million and HK$989,000 respectively, with net loss after tax of approximately HK$3.13 million, HK$110,000 and HK$233,000 respectively. The net asset value of the Second Target Company as at 31 December 2016 was approximately HK$1.52 million, representing a decrease of approximately 13.64% as compared to the amount of approximately HK$1.76 million as at 31 December 2015.

2.2 Reasons for and benefits of the Acquisitions

As stated in the Board Letter, the Directors consider that the Acquisitions would enable the Company to diversify its business segments and enhance its long term growth potential.

According to the Annual Report 2016, the Board is formulating development plans and strategies for the future direction of the Company’s business, and will enhance its potential long-term growth by disposal or acquisition of assets, business restructuring and diversification that are suitable to the Company and subject to the provision of the Listing Rules. The management of the Company would review the possibility of injecting certain assets or subsidiaries/financial business. Given that the Group has disposed of the media business during FY2016, the Directors advised that the Group needs to seek potential investment opportunities to broaden its income stream.

According to the audited financial statements of the First Target Group for FY2014, FY2015, FY2016 and the unaudited management accounts of the First Target Group as at 30 April 2017 provided by the management of the Company, the First Target Group recorded profit after tax consecutively in FY2014, FY2015 and FY2016 (i.e. approximately HK$129,000, HK$48,000 and HK$13.41 million respectively). The net asset value of the First Target Group also increased consecutively in as at 31 December 2014, 2015 and 2016 and 30 April 2017 (i.e. approximately HK$10.13 million, HK$10.18 million, HK$38.07 million and HK$38.16 million respectively).

According to the management of the Company, the revenue (details of which are set out under the section headed “2.1 Information of the Target Group” above in this letter), the profit after tax and the net asset value of the First Target Group improved significantly in FY2016 mainly attributable to (i) the increase in revenue from the existing business of the First Target Company during the year (i.e. approximately HK$12.49 million in FY2015 and approximately HK$22.20 million in FY2016); and (ii) the profits contributed by the newly established Subsidiary A (i.e. approximately HK$8.69 million in FY2016), which is a wholly-owned subsidiary of the First Target Company and established on 18 November 2015. With reference to the audited financial statements of the First Target Group for FY2016 provided by the management of the Company, the Subsidiary A generated revenue of approximately HK$11.36 million and profit after tax of approximately HK$8.69 million for FY2016 and the Subsidiary B did not commence operation in FY2016 and therefore it did not generate any revenue in FY2016.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

As stated in the Board Letter, the Subsidiaries are established in the PRC under the QFLP and are both principally engaged in the provision of investment advisory, asset management and private equity investment activities in the PRC. The Board believes that the First Target Group will enjoy long-term benefit as it is allowed to raise unlimited onshore fund and limited offshore fund (up to US$300 million without the special approval of the PRC’s foreign exchange authority which would otherwise be required if not for this QFLP platform) to participate in the growing private equity business in PRC. Based on the above, we concur the Directors’ view that the Acquisitions and the Transaction will be able to broaden the income stream of the Company.

With reference to the audited financial statements of the Second Target Company for FY2015, FY2016 and the unaudited management accounts of the Second Target Company as at 30 April 2017 provided by the management of the Company, the Second Target Company recorded loss after tax consecutively in FY2015, FY2016 and as at 30 April 2017 (i.e. approximately HK$110,000, HK$233,000 and HK$716,000 respectively). The net assets value of the Second Target Company as at 31 December 2015, 2016 and 30 April 2017 was approximately HK$1.76 million, HK$1.52 million and HK$806,000 respectively. According to the management of the Company and the responsible officer of the Second Target Company, the continuous decrease in the net asset value for the Second Target Company was mainly due to the decrease in revenue (details of which are set out under the section headed “2.1 Information of the Target Group” above in this letter) and increase in the staff costs in recent years.

As confirmed by the Directors, the Second Target Company has hired three qualified individuals and have also submitted licensing applications to SFC in March and May 2017 respectively for appointing them as responsible officers of the Second Target Company (“ Potential RO(s) ”) in order to fulfil the requirements under the SFO so that the Second Target Company can build and expand its corporate finance business. The management of the Company expected that the abovementioned applications will be approved around the end of July 2017. During the period of time that the abovementioned application pending approval, the Second Target Company is forbidden to engage in any corporate finance operations due to insufficient responsible officers as required by the SFC, which has short term adverse impact on the revenue of the Second Target Company. However, the management of the Company expects the revenue of the Second Target Company to improve substantially upon approvals of the Potential ROs have been obtained as the Second Target Company will be able to re-engage in their corporate finance activity under the SFO.

Despite the decrease in net asset value of the Second Target Company as mentioned above, taking into account that (i) the positive market outlook of the relevant industry (we elaborated our view under the section headed “2.3 Prospects and outlook of the Target Group” below in this letter); (ii) the Second Consideration is fair and reasonable (details of which are set out under the section headed “5. Our view on the First Consideration and Second Consideration”); and (iii) the revenue of the Second Target Company is expected to improve upon approvals of the Potential ROs are obtained from the SFC, we are of the view that the Acquisitions are in the interests of the Group and the Shareholders as a whole.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

The First Target Company and the Second Target Company are currently licensed by the SFC under the SFO to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities, and Type 6 (advising on corporate finance) regulated activity, respectively. As the First Target Company and the Second Target Company are licensed corporations under the SFO and the First Target Group has established a QFLP infrastructure with the Shenzhen Municipal Government Financial Services Office, the Directors are of the view that the Acquisitions (as compared to setting up a new company by the Company) would provide the Group with immediate access to the Target Group’s established platforms and expertise in financial service industries in Hong Kong and the PRC. We concur with the Director’s view that the Acquisitions would create additional source of revenue and enhance the profits of the Company and is in the interest of the Group and the Shareholders as a whole.

In light of the above and the strategy of the Company to diversify its business and broaden its income stream, we concur with the Director’s view that the Acquisitions would allow the Company to pursue its business diversification strategy by entering into the financial services business segment so as to further enhance its revenue sources.

2.3 Prospects and outlook of the Target Group

As stated in the Board Letter, the First Target Company and the Second Target Company are principally engaged in the provision of Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities, and Type 6 (advising on corporate finance) regulated activities, respectively, and the Subsidiaries are principally engaged in investment advisory, asset management and private equity investment activities. Therefore, we have researched different statistics with respect to the prospect of the finance industries in Hong Kong and the PRC.

According to the “Hang Seng Indexes 2016 Year-End Report” published by the Hang Seng Indexes Company Limited, the Hang Seng Index (the “ HSI ”) rose slightly by approximately 0.4% in 2016 and closed at around approximately 22,000 on the last trading day in 2016, as compared with a significant decline of approximately 7.2% in 2015. The HSI is having an upward trend in 2017 up to the Latest Practicable Date, from the lowest of 22,150 on 3 January 2017 to the highest of approximately 26,063 on 8 June 2017, representing a growth of approximately 18.47% as compared with approximately 22,000 on the last trading day in 2016.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Chart 1: Asset management business managed in Hong Kong

==> picture [328 x 162] intentionally omitted <==

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

8,000
6,856 6,823
7,000
5,827
6,000 5,707
5,000
3,851
4,000
3,000
2,000
1,000
0
2011 2012 2013 2014 2015
YEAR
HK$ BILLION
----- End of picture text -----

Source: Fund Management Activities Survey published by the SFC

With reference to the “Fund Management Activities Survey 2015” published by the SFC in July 2016 (the “ SFC Survey ”), the infrastructure and services necessary for the asset management industry remained in demand in Hong Kong. The proportion of overall assets being managed in Hong Kong kept increasing from 2013 to 2015 and reached 55.7% in 2015 (51.0% in 2013 and 53.7% in 2014). With reference to the above chart, despite a slight year-on-year decrease in the amount of assets managed in Hong Kong by approximately 0.5% from approximately HK$6,856 billion in 2014 to approximately HK$6,823 billion in 2015, there was a general upward trend since 2011 that recorded approximately HK$3,851 billion, which represents a compound annual growth rate of approximately 15.37% from 2011 to 2015.

In order to understand the outlook of the core business (i.e. investment advisory, asset management business and private equity investment activities in the PRC) of the Subsidiaries, we have made reference to the “Securities and Futures Management Private Equity Business Annual Report 2016” (the “ PE Report ”) published in April 2017 by Asset Management Association of China (the “ AMAC* ”), a non-profit and self-regulated organization operated under the guidance and supervision of the China Securities Regulatory Commission and Ministry of Civil Affairs of China. According to the PE Report, the total amount of assets under management in PRC has reached approximately RMB34,476.4 billion as at 31 December 2016, which represents an increase of approximately RMB9,739.2 billion (i.e. approximately 39.4%) as compared with that of prior year, out of which (i) the total assets under management by securities firms recorded growth of approximately 45.5% as compared with approximately RMB11,894.8 billion in 2015 and has reached RMB17,311.1 billion by the end of 2016; (ii) individual accounts of securities investment fund management companies recorded growth of approximately 70.8% as compared with approximately RMB2,987.9 billion in 2015 and has reached RMB5,104.3 billion by the end of 2016. Based on the above, we concur with the Directors’ view that the asset management industry in the PRC is in an upward trend.

* For identification purpose only

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Chart 2: Total number of companies listed on the Stock Exchange

==> picture [331 x 168] intentionally omitted <==

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

2,500
1,973
2,000 1,643 1,752 1,866
1,547
1,496
1,500
1,000
500
0
2011 2012 2013 2014 2015 2016
YEAR
NUMBER OF LISTED COMPANIES
----- End of picture text -----

Source: “HKEX Fact Books 2014, 2015 and 2016” published by the Stock Exchange

Regarding the corporate finance industry in Hong Kong, we have reviewed the HKEX Fact Books 2014, 2015 and 2016 published by the Stock Exchange and noted that the number of listed companies recorded continuous growth. Since 2013, there were more than 100 newly listed companies in each year and the number of listed companies in Hong Kong has reached 1,973 in 2016, which represents a compound annual growth rate of approximately 5.69% from 2011 to 2016. We concur with the Director’s view that the growth of listed companies, together with the launching of the Shanghai-Hong Kong Stock Connect in 2014 and Shenzhen-Stock Connect in 2016, creates opportunities for the securities and corporate finance advisory business of the Second Target Company.

Having considered the above, we are of the view that the prospect of the financial service industry is encouraging and the Acquisitions will strengthen the Group’s income stream.

2.4 Our view

Based on all of the above factors and having considered in particular that:

• (i) the Acquisitions would enable the Group diversify its business scope and broaden its income stream;

• (ii) the profit after tax of the First Target Group improved significantly in FY2016 which will be able to broaden the income stream of the Group upon completion of the Acquisitions;

• (iii) the Acquisitions would provide the Group with immediate access to the Target Group’s established platforms, customer base and talents with expertise in financial service industry; and

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

• (iv) the prospect of the financial service industries in Hong Kong and the PRC are encouraging in the absence of unforeseeable circumstances,

we consider that the Acquisitions are in the interests of the Company and the Independent Shareholders as a whole.

3. Principal terms of the First Sale and Purchase Agreement

On 19 May 2017, the First Purchaser, a wholly-owned subsidiary of the Company, and the Vendor entered into the First Sale and Purchase Agreement, principal terms of which are set out as follows:

3.1 Assets to be acquired

The First Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the entire issued share capital in the First Target Company, subject to the terms and conditions of the First Sale and Purchase Agreement.

3.2 Consideration

The consideration payable by the First Purchaser to the Vendor in respect of the First Acquisition amounts to HK$38,701,969 (the “ First Consideration ”) in cash, which shall be settled on the First Completion Date. The consideration for the First Acquisition will be funded by internal resources of the Group.

According to the Board Letter, the consideration under First Sale and Purchase Agreement was determined after arm’s length negotiations between the First Purchaser and the Vendor with reference to (i) the net asset value of the First Target Group of approximately HK$38.16 million as at 30 April 2017; (ii) the cash and cash equivalent which comprised the majority of the assets of the First Target Group as at 30 April 2017; (iii) the business prospects of the First Target Company to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the SFO in Hong Kong, which are expected to generate additional sustainable income to the Group, in particular from its well-established and readily available financial business platforms and sound infrastructure which are supported by its newly recruited and existing qualified experts; and (iv) other relevant factors set out in the paragraph headed “Reasons for and Benefits of the Acquisitions and the Transaction” in the Board Letter. Our view on the consideration of the First Sale and Purchase Agreement are set out under the section headed “5. Our view on the First Consideration and Second Consideration” below in this letter.

3.3 Other terms

Completion of the First Sale and Purchase Agreement are conditional upon, among other things, the First Sale and Purchase Agreement having become unconditional. Details of the conditions precedent to the completion of the First Sale and Purchase Agreement are set out under the section headed “First Conditions Precedent” in the Board Letter.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

We have also reviewed other terms of the First Sale and Purchase Agreement and are not aware of any terms which are uncommon to normal market practice. Based on our own experiences and the study on other sale and purchase agreements of our previous works, the remaining terms of the First Sale and Purchase Agreement (including conditions precedent, completion, warranties and pre-completion undertakings, etc) are the standard terms of normal sale and purchase agreements which we have reviewed before. Accordingly, we consider that the terms of the First Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

4. Principal terms of the Second Sale and Purchase Agreement

On 19 May 2017, the Second Purchaser, a wholly-owned subsidiary of the Company, and the Vendor entered into the Second Sale and Purchase Agreement, principal terms of which are set out as follows:

4.1 Assets to be acquired

The Second Purchaser conditionally agreed to purchase, and the Vendor conditionally agreed to sell, the entire issued share capital in the Second Target Company, subject to the terms and conditions of the Second Sale and Purchase Agreement. The First Acquisition and the Second Acquisition are not inter-conditional upon each other.

4.2 Consideration

The consideration payable by the Second Purchaser to the Vendor in respect of the Second Acquisition amounts to HK$868,834 (the “ Second Consideration ”) in cash which shall be settled on the Second Completion Date. The consideration of the Second Acquisition will be funded by internal resources of the Group.

According to the Board Letter, the consideration under Second Sale and Purchase Agreement was determined after arm’s length negotiations between the Second Purchaser and the Vendor with reference to, (i) the net asset value of the Second Target Company of approximately HK$806,000 as at 30 April 2017; (ii) the business prospect of the Second Target Company to carry out Type 6 (advising on corporate finance) regulated activity under the SFO in Hong Kong, which is expected to generate additional income to the Group; and (iii) other relevant factors set out in the paragraph headed “Reasons for and Benefits of the Acquisitions and the Transaction” in the Board Letter. Our view on the consideration of the Second Sale and Purchase Agreement are set out under the section headed “5. Our view on the First Consideration and Second Consideration” below in this letter.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

4.3 Other terms

Completion of the Second Sale and Purchase Agreement are conditional upon, among other things, the Second Sale and Purchase Agreement having become unconditional. Details of the conditions precedent to the completion of the Second Sale and Purchase Agreement are set out under the section headed “Second Conditions Precedent” in the Board Letter.

We have also reviewed other terms of the Second Sale and Purchase Agreement and are not aware of any terms which are uncommon to normal market practice. Based on our own experiences and the study on other sale and purchase agreements of our previous works, the remaining terms of the Second Sale and Purchase Agreement (including conditions precedent, completion, warranties and pre-completion undertakings, etc) are the standard terms of normal sale and purchase agreements which we have reviewed before. Accordingly, we consider that the terms of the Second Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

5. Our view on the First Consideration and Second Consideration

The First Consideration and Second Consideration were respectively determined after arm’s length negotiations between the Vendor and the First Purchaser and the Second Purchaser, taking into account of various factors mentioned above in sections 3.2 and 4.2 in this letter.

In order to assess the fairness and reasonableness of the First Consideration and the Second Consideration, we have considered various valuation approaches, including the price-to-earnings ratio and price-to-book (“ P/B ”) ratio, which are the most widely used and accepted methods for valuing a business. We adopt to compare the P/B ratio of the First Target Company and the Second Target Company since the consideration of the Acquisition are based on the respective net asset values of First Target Company and the Second Target Company. We have searched on the website of the Stock Exchange on a best effort basis for all the acquisitions and disposals (the “ Comparable Transactions ”) of interests in private companies principally engaged in, among other things, securities underwriting and consultancy, advising on corporate finance and asset management as announced on the website on the Stock Exchange during the period from 19 May 2016 (being one year prior to the date of the First Sale and Purchase Agreement and the Second Sale and Purchase Agreement) and up to the date of the First Sale and Purchase Agreement and the Second Sale and Purchase Agreement by companies which (a) are listed on the Stock Exchange; and (b) are engaged in, among other things, provision of financial services based on their latest published financial statements on the website of the Stock Exchange. The table below illustrates the details of the Comparable Transactions:

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Table 5: Summary of the Comparable Transactions for the First Acquisition

					Net asset
					value of
					the target
	Date of initial		Stock		company/	Principal business of the
	announcement	Company	Code	Consideration	companies	respective target companies	P/B ratio
				HK$	HK$	(Note 2)	Approximate
				(Note 1)	(Note 1)		(Note 3)
1	15 June 2016	China Everbright	165	930,000,000	1,298,900,000	Securities, futures, forex and	1.46
		Limited			(Note 4)	bullion brokerage services,
						wealth management
						services, investment bank,
						asset management,
						proprietary trading and
						research businesses in
						Hong Kong
2	24 June 2016	Universe	1046	30,000,000	14,000,000	Provision of brokerage	2.14
		International				services and securities
		Financial				margin financing to clients
		Holdings				(licensed corporation under
		Limited				the SFO with the
						following regulated
						activities: (i) Type 1:
						Dealing in securities; and
						(ii) Type 4: Advising on
						securities)
3	30 June 2016	iOne Holdings	982	The aggregate of	N/A	Licensed corporation	N/A
		Limited		(i) HK$10,000,000	(Note 5)	carrying on business in	(Note 5)
				and; (ii) the net		Type 4 (advising on
				asset value of the		securities) and Type 6
				target company		(advising on corporate
						finance) regulated
						activities under the SFO
4	24 February	China Demeter	8120	39,200,000	54,400,000	A licensed corporation to	1.47
	2017	Financial			(Note 6)	carry out on businesses in
		Investments				Type 1 (dealing in
		Limited				securities), Type 4
		(Formerly known				(advising on securities)
		as China				and Type 9 (asset
		Demeter				management) regulated
		Investments				activities under the SFO
		Limited)

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

					Net asset
					value of
					the target
	Date of initial		Stock		company/	Principal business of the
	announcement	Company	Code	Consideration	companies	respective target companies	P/B ratio
				HK$	HK$	(Note 2)	Approximate
				(Note 1)	(Note 1)		(Note 3)
5	29 March 2017	iOne Holdings	982	76,467,600	43,500,000	Securities underwriting and	1.76
		Limited				consultancy, securities and
						futures brokerage and
						equity research businesses
						and holds the licences to
						carry out Type 1 (dealing
						in securities), Type 2
						(dealing in futures
						contracts) and Type 4
						(advising on securities)
						regulated activities under
						the SFO and a money
						lender’s licence under the
						Money Lenders Ordinance
						(Chapter 163 of the Laws
						of Hong Kong)

	Mean	1.71
	Maximum	2.14
	Minimum	1.46
The	First Target	1.01
	Company

Notes:

1. Figures are sourced from the relevant announcements.

2. Based on the information disclosed on the initial announcements of the Comparable Transactions.

3. The P/B ratios of the Comparable Transactions are calculated based in their respective considerations and effective net asset values (taking into account the percentage of shareholding interest acquired or disposed of) as set out in the relevant announcements.

4. As set out in the relevant announcement of China Everbright Limited dated 15 June 2016, only 49% of interests in the target company was sold to the purchaser. The P/B ratio is calculated based on the consideration and 49% of the net asset value of the target company (i.e. HK$636.46 million).

5. iOne Holdings Limited has not disclosed the net asset value of the target company of the respective acquisition in their voluntary announcement dated 30 June 2016.

6. As set out in the relevant announcement of China Demeter Financial Investments Limited (Formerly known as China Demeter Investments Limited) dated 24 February 2017, only 49% of interests in the target company was sold to the purchaser. The P/B ratio is calculated based on the consideration and 49% of the net asset value of the target company (i.e. HK$26.66 million).

– 43 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Table 6: Summary of the Comparable Transactions for the Second Acquisition

Net asset value of the target Date of initial Stock company/ Principal business of the announcement Company Code Consideration companies respective target company P/B ratio HK$ HK$ (Note 2) Approximate (Note 1) 1 30 June 2016 iOne Holdings 982 The aggregate of N/A Licensed corporation N/A Limited (i) HK$10,000,000 (Note 3) carrying on business in Type (Note 3) and; (ii) the net 4 (advising on securities) and asset value of the Type 6 (advising on target company corporate finance) regulated activities under the SFO The Second Target 1.08 Company

Notes:

1. Figures are sourced from the relevant announcement.

2. Based on the information disclosed in the initial announcements of the Comparable Transactions.

3. iOne Holdings Limited has not disclosed the net asset value of the target company of the respective acquisition in their voluntary announcement dated 30 June 2016.

As set out in the Table 5 above, the principal business those target companies of the Comparable Transactions are similar to that of the First Target Company, and the P/B ratios of the Comparable Transactions range from approximately 1.46 times to approximately 2.14 times, with an average of approximately 1.71 times. The implied P/B ratio of the First Acquisition is approximately 1.01 times which is below the range and average of the P/B ratios of the Comparable Transactions for the First Acquisition. In addition, with reference to the management accounts of the Target Group as at 30 April 2017, we found that approximately 96.96% of the total assets of the First Target Group were current assets (i.e. current assets: approximately HK$38.31 million, cash and bank balances: approximately HK$30.31 million and total assets: approximately HK$39.51 million). Based on the above, we consider that the liquidity of the First Target Group is adequate and the First Consideration is fair and reasonable.

As the announcement in relation to the only Comparable Transaction we found that has similar principal business to the Second Target Company as set out in Table 6 does not disclose the net asset value of the target company, we are not able to make comparable analysis on the Second Consideration. Nevertheless, with reference to the management accounts of the Target Group as at 30 April 2017, we found that approximately 99.75% of the total assets of the Second Target Company were current assets (i.e. current assets: approximately HK$3.93

– 44 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

million, cash and bank balances: approximately HK$3.63 million and total assets: approximately HK$3.94 million) and consider that the Second Target Group has sufficient liquid assets. Furthermore, taken into account that the implied P/B of approximately 1.08 times of the Second Acquisition means that the Second Consideration closely reflects the net asset value of the Second Target Company, we consider the Second Consideration is fair and reasonable.

Having considered in particular that (i) the profit after tax of the First Target Group improved significantly in FY2016 as mentioned under the section headed “2.1 Information of the Target Group” above in this letter; (ii) the Acquisitions would provide the Company with immediate access to the Target Group’s established platforms and expertise in financial service industry as mention under the section headed “2.2 Reasons for and benefits of the Acquisitions” above in this letter; (iii) the prospect of the financial service industry in Hong Kong is encouraging as mentioned under the section headed “2.3 Prospects and outlook of the Target Group” above in this letter; and (iv) our analysis on the consideration of the Acquisitions in this section, we are of the view that the Acquisitions are in the interest of the Company and the Shareholders as a whole.

6. Risk factors from the Acquisitions

Based on our understanding of the relevant industries of the Target Group and our discussion with the senior management of the Target Group and the Company respectively, set out below are certain risks involved in the operations of the Target Group which we are of the view that need to be brought to the attention of Independent Shareholders, including but not limited to:

6.1 Reliance on the senior management

The success of financial services business is highly dependent on the performance, expertise and market experience of its senior management. The underperformance or the departure of such skilled senior management could have a material adverse effect on the Target Group’s business, financial condition and results of operations.

We understand that the Target Group has recently recruited some prestigious talents in the financial services industry, among which two of them, who are prominent in the financial services industry with over 15 to 20 years of relevant experience for delivering remarkable performance, agree a lock-up arrangement with the Target Group and will remain at office for at least one year. To provide the Target Group with sufficient time to look for suitable replacement, all of the senior management of the Target Group are required to serve a three months’ notice period for resignation. As advised by the management of the Company, the existing senior management of the Target Group are expected to be stable taking into account the above-mentioned lock-up arrangement, the notice period required for resignation and their track records with the Target Group and previous employments.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

6.2 Possibility of misconduct of licensed staff of the Target Group

Misconduct of the responsible officers or licensed representatives, such as insider dealing or leakage of confidential information may result in violation of laws by the Target Group, regulatory sanctions against the Target Group and adverse reputational or financial harm to their disadvantage. As confirmed by the Directors and the senior management of the Target Group, as at the Latest Practicable Date, there had been no disciplinary action or reprimand against any licensed staff of the Target Group and they had not been involved in any legal proceedings in respect of professional negligence.

As advised by the Directors of the Target Group, proper internal control and measures have been established to mitigate the risks associated with the possible misconduct of their responsible officers or licensed representatives.

6.3 Loss of important records and confidential information may interrupt their normal operation

The operation of the Target Group relies on effectiveness of their computer system, which enables their licensed employees to conduct research, communicate with clients and prepare various documents in the course of providing their services. A failure of their computer system may interrupt their daily operation and cause leakage or loss of confidential information of their clients. As confirmed by the management of the Company and the Target Group respectively, they have in place various measures to protect their database to minimise the risks of losing important records and confidential information and an effective data recovery has been implemented.

7. Background of the Original Asset Management Agreement and the Restated Asset Management Agreement

On 19 May 2017, the First Target Company and the Vendor entered into the Original Asset Management Agreement, pursuant to which the First Target Company conditionally agreed to provide non-discretionary asset management services to the Vendor for a term of three years commencing from the Commencement Date and ending on the third anniversary of the Commencement Date, or the date on which the Original Asset Management Agreement is otherwise terminated as agreed between the parties in writing, whichever is earlier.

On 29 June 2017, the First Target Company and the Vendor entered into the Restated Asset Management Agreement to amend and restate certain terms of the Original Asset Management Agreement, pursuant to which the parties thereto agreed to amend and restate certain terms of the Original Asset Management Agreement, in particular to amend, among other things (i) the scope of services to be provided by the First Target Company from non-discretionary asset management services to discretionary asset management services; (ii) the management fee; and (iii) the proposed Annual Caps. Details of the Restated Asset Management Agreement are set out in the announcement of the Company dated 29 June 2017.

– 46 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

8. Principal terms of the Restated Asset Management Agreement

8.1 Term

The term of the Restated Asset Management Agreement is for three years commencing on the Commencement Date and ends on (i) the third anniversary of the Commencement Date; (ii) the date on which the Restated Asset Management Agreement is otherwise terminated as agreed between the parties in writing; and (iii) the date on which the First Target Company unilaterally terminates the Restated Asset Management Agreement for the purpose of complying with any requirements under the Listing Rules or conditions imposed by Stock Exchange, whichever is earlier.

8.2 Scope of Services

The First Target Company will provide discretionary investment management services to the Vendor, and will have full authority and discretion, without prior notice to or consent from the Vendor, to make decisions to invest the Assets, including, without limitation, to, among others:

• (a) buy, sell, exchange, redeem, hold, convert, re-invest, dispose, or otherwise deal with the Assets, including leaving the Assets un-invested;

• (b) exercise or refrain from exercising any right conferred by a particular investment to buy, sell, subscribe for, exchange or redeem an investment;

• (c) comply with any obligations under applicable laws to take or refrain from taking any action in connection with the Assets;

• (d) generally enter into any kind of transaction or arrangement which is necessary or incidental to the provision of the services provided by the First Target Company; and

• (e) any other services as set out in the Restated Asset Management Agreement.

8.3 Management Fees

As consideration for performing the Services in accordance with the terms of the Restated Asset Management Agreement, the Vendor will pay to the First Target Company a fee equal to 1.5% per annum of the Assets payable at the end of each calendar month.

– 47 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

8.4 Proposed Annual Caps

It is proposed that the Annual Cap for the Services for each of the financial years ending 31 December 2017, 2018, 2019 and 2020 during the term of the Restated Asset Management Agreement is expected not to exceed the following:

	2017	2018	2019	2020
	HK$	HK$	HK$	HK$
Provision of Services by First	13,500,000	40,500,000	40,500,000	27,000,000
Target Company to Vendor	(Note)			(Note)

Note: As stated in the Board Letter, the proposed Annual Cap for each financial year above is estimated on the assumption that completion of the First Acquisition will take place in the end of August 2017.

According to the Board Letter, the above proposed Annual Caps for the Services were determined by reference to (i) the expected net asset value of the Assets committed by the Vendor pursuant to the Restated Asset Management Agreement shall be no more than HK$2,700,000,000 and no less than HK$2,000,000,000 during the term of the Restated Asset Management Agreement, subject to the First Target Company’s sole discretion to adjust the aforesaid minimum amount to a sum no more than HK$2,000,000,000 upon notice to the Vendor; and (ii) the management fee equal to 1.5% per annum of the Assets as per the prevailing market rate for provision of similar services.

Furthermore, according to the Board Letter, in the event that the aggregate amount of revenue generated from the provision of Services reaches 50% of the then total revenue of the Enlarged Group at any time in the relevant financial year, the management of the Company will then inform the Board and the responsible officers of the First Target Company, and the Board will consider either terminating the Transaction or making necessary adjustments to the minimum amount of the Assets by providing written notice to the Vendor pursuant to the Restated Asset Management Agreement, so that the percentage of the amount of revenue that generated from the Services will not exceed 50% of the Enlarged Group’s total revenue.

9. Our view on the Restated Asset Management Agreement

9.1 Management fee

As advised by the management of the Company, as at the Latest Practicable Date, the First Target Company provided discretionary investment management services only to the Vendor but no other parties. In order to ensure that such management fee to be charged for provision of discretionary investment management services to its future clients who are Independent Third Parties being no less favourable than that to be charged to the Vendor, according to the Restated Asset Management Agreement, the Company is entitled to vary the management fees under the Restated Asset Management Agreement if and when necessary.

– 48 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

In order to assess the reasonableness and fairness of the management fee for discretionary asset management services under the Restated Asset Management Agreement, we attempted to obtain market data of management fee of investment mandate services available in Hong Kong. However, there are no publicly available official data published by relevant official authorities in Hong Kong relating to the abovementioned criteria. Instead, we have made reference to the “Fee Comparative Platform” (the “ Platform ”) available on the official website of the Mandatory Provident Fund Schemes Authority (the “ MPFSA ”). The Platform lists a total of 555 discretionary mandatory provident funds (the “ MPF(s) ”) available in Hong Kong and we have reviewed 405 MPFs (the “ FER Comparables ”) which are categorised as (i) bond funds (which the MPFs have no less than 70% of assets invested in bonds); (ii) equity funds (which the MPFs have no less than 70% of assets invested in equities); and (iii) mixed assets funds (which the MPFs have no less than 70% of its assets in bonds and equities). We consider the combination of FER Comparables are appropriate since the investment products involved in these funds are similar to the investment products to be managed by the First Target Company under the Restated Asset Management Agreement. MPFSA indicates that the fund expense ratio(s) (the “ FER(s) ”) of the MPFs are the ratios that measure the expenses of MPFs as a percentage of fund size and fees and charges are generally the main components of fund expenses. Based on the latest information provided on the Platform, the FERs of the FER Comparables ranges from approximately 0.67% to approximately 2.55% with an average of approximately 1.49%. As the management fee of the Restated Asset Management Agreement (i.e. 1.50%) is within the range of FER Comparables and close to the average FER of the FER Comparables, we are of the view that the management fee of the Restated Asset Management Agreement is fair and reasonable.

Having discussed with the Directors and the responsible officers of the First Target Company, when determining the management fee of the Restated Asset Management Agreement, they have considered, among other things, (i) the pricing policy agreed by the responsible officers of the First Target Company and the Vendor; (ii) the prevailing market rate charged by asset management companies providing discretionary asset management services of similar nature and scope advised by the responsible officers of the First Target Company; (iii) the relatively small size of the Assets under management; and (iv) the estimated costs of the First Target Company during the term of the Restated Asset Management Agreement. According to the Restated Asset Management Agreement, the amounts of the Assets will be no less than HK$2.0 billion and accordingly the First Target Company will receive management fees of at least approximately HK$30 million per annum.

– 49 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Having considered that:

• (i) the First Target Company will be able to receive management fee of at least approximately HK$30.0 million per annum which the Directors expect the First Target Company will be able to fully cover the operating costs of the First Target Company and generate profits under the term of the Restated Asset Management Agreement; and

• (ii) the Company is entitled to vary the management fees under the Restated Asset Management Agreement if and when necessary in order to ensure that such management fee to be charged to its future clients who are Independent Third Parties being no less favourable than that to be charged to the Vendor,

we are of the view that the terms of the Restated Asset Management Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

9.2 Proposed Annual Caps

As disclosed in the paragraph headed “8.4 Proposed Annual Caps” above, the Annual Caps for the Services were determined by reference to (i) the expected net asset value of the Assets which committed by the Vendor pursuant to the Restated Asset Management Agreement shall be no more than HK$2,700,000,000 and no less than HK$2,000,000,000 during the term of the Restated Asset Management Agreement; and (ii) the management fee equal to 1.5% per annum of the Assets as per the prevailing market rate for provision of similar services.

According to the Restated Asset Management Agreement, we understand that the Vendor is committed to invest not less than HK$2.0 billion and not more than HK$2.7 billion as Assets. Having considered the management fee is 1.5% per annum of the Assets payable at the end of each calendar month and the expected amount of Assets of not more than HK$2.7 billion. Since we are of the view that the terms of the Restated Asset Management Agreement (including the management fee) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole (details of which are set out under the sub-section headed “9.1 Management fee” above in this letter), we are of the view that the Proposed Annual Caps, which are calculated by multiplying the maximum amount of the Assets under management (i.e. HK$2.7 billion) by the management fee (1.5% per annum), are fair and reasonable so far as the Independent Shareholders are concerned.

– 50 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

10. Financial Effect of the Acquisitions

After completion of the Acquisitions, the Target Group will become indirect whollyowned subsidiaries of the Company and their respective financial results will be consolidated into the financial statements of the Group. The Company expects that the financial performance of the Group, including revenue stream and profit, would benefit from the Acquisitions through the businesses in dealing in securities, advising on securities, asset management and advising on corporate finance carried out by the Target Group.

RECOMMENDATION

Having taken into account the above-mentioned principal factors and reasons, we are of the opinion that although the Acquisitions and the Transaction are not in the ordinary and usual course of business of the Group (i.e. property investment business), (i) the Acquisitions and the Transaction is in line with the business strategy of the Group; (ii) the terms of the Acquisition Agreements and the Restated Asset Management Agreement (including the Annual Caps) are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and 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 Acquisition Agreements and the transactions contemplated thereunder, and the Restated Asset Management Agreement (including the Annual Caps) and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Nuada Limited Kim Chan Director

Mr. Kim Chan is a person licensed to carry out Type 6 (advising on corporate finance) regulated activity under the SFO and is a responsible officer of Nuada Limited who has over 16 years of experience in corporate finance industry.

– 51 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP

The Company is required to set out in this circular the information for the last three financial years with respect to the profits and losses, financial record and position, set out as a comparative table and the latest published audited statement of financial position together with the notes on the annual accounts for the last financial year for the Group.

The audited consolidated financial statements of the Group for the year ended 31 December 2016 have been set out in the 2016 Annual Report of the Company which was posted on 26 April 2017 on the Stock Exchange’s website (http://www.hkexnews.hk), from pages 99 to 180. Please also see below quick link to the 2016 Annual Report:

http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0426/LTN20170426355.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2015 have been set out in the 2015 Annual Report of the Company which was posted on 25 April 2016 on the Stock Exchange’s website (http://www.hkexnews.hk), from pages 90 to 169. Please also see below quick link to the 2015 Annual Report:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0425/LTN20160425275.pdf

The audited consolidated financial statements of the Group for the year ended 31 December 2014 have been set out in the 2014 Annual Report of the Company which was posted on 22 April 2015 on the Stock Exchange’s website (http://www.hkexnews.hk), from pages 103 to 183. Please also see below quick link to the 2014 Annual Report:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0422/LTN20150422415.pdf

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 April 2017, being the latest practicable date for the purpose of this statement of indebtedness of the Enlarged Group prior to the printing of this circular, the Enlarged Group did not have any bank borrowings.

As at the close of business on 30 April 2017, the Enlarged Group did not have any material contingent liabilities.

Save as aforesaid or otherwise mentioned herein, and apart from intra-group liabilities and normal trade payables in the ordinary course of the business, the Enlarged Group did not have any other outstanding borrowings, mortgages, charges, debentures, loan capital and overdraft, debt securities or other similar indebtedness, finance leases or hire purchase commitment, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities at the close of business on 30 April 2017, being the latest practicable date for the purpose of this statement of indebtedness prior to printing of this circular.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after taking into account the financial resources available to the Enlarged Group, including the internally generated funds and cash flows from operation, the Enlarged Group has sufficient working capital to satisfy its requirements for at least 12 months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

The Company is not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited financial statements of the Company were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

The Group is principally engaged in the property investment business in Hong Kong and currently holds four investment properties.

The Group’s property business faces many challenges, the prospects of which depend on the performance of the property market in Hong Kong. Any property market downturn in Hong Kong may materially and adversely affect the financial position, operations, businesses and prospects of the Group and may lead to fair value loss of the Group’s investment properties. The property market in Hong Kong is affected by many factors, including but not limited to, changes in Hong Kong’s economic, political, social and legal environment and changes in Hong Kong’s fiscal and monetary policy, all of which are beyond the control of the Group. In addition, the Group’s property investment business is operating in a rather competitive environment, as rental rate of properties are transparent in property leasing markets in Hong Kong. The transparency of the leasing markets put pressure on the revenue and profitability of the Group’s property investment business.

The Board intends to continue developing the principal business of the Group and currently has no intention of disposing any principal assets of the Group, which generates stable rental income for the Group. When suitable opportunities arise, the Board will expand the property investment business in the PRC, Hong Kong and overseas. Meanwhile, it is formulating development plans and strategies for the future direction of the Company’s businesses. The Board has been considering to transform the Company from a single business line of property investment and management to an integrated conglomerate with property investment and other diversified businesses, through disposal and acquisition of assets, business restructuring and diversification that are suitable to the Company.

The Acquisitions constitute an important step of the Group towards the diversification of its business and will enhance the Group’s revenue sources and profitability. Upon completion of the Acquisitions, the Enlarged Group will continue to adhere to its business strategies and deeper its revenue sources. The unaudited pro forma financial information of the Enlarged Group in Appendix III of this circular illustrates the financial impact of the Acquisitions on the assets and liabilities of the Group.

– I-2 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

The following is the text of a report set out on pages IIA-1 to IIA-2, received from the Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [67 x 49] intentionally omitted <==

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF GREAT WALL PAN ASIA HOLDINGS LIMITED

Introduction

We report on the historical financial information of Great Wall Pan Asia Asset Management Limited (the “First Target Company”) (formerly known as Great Wall Pan Asia International Asset Management Limited) and its subsidiaries (together, the “First Target Group”) set out on pages IIA-3 to IIA-26, which comprises the consolidated and company statements of financial position as at 31 December 2014, 2015 and 2016, and the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for each of the period/years then ended (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages IIA-3 to IIA-26 forms an integral part of this report, which has been prepared for inclusion in the circular of Great Wall Pan Asia Holdings Limited (the “Company”) dated 30 June 2017 (the “Circular”) in connection with the proposed acquisition of the First Target Company by the Company.

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

The consolidated financial statements of the First Target Group for the Track Record Period (“Underlying Financial Statements”), on which the Historical Financial Information is based, were prepared by the directors of the Company based on the previously issued financial statements and management accounts of the First Target Company and its subsidiaries comprising the First Target Group for the Track Record Period. The directors of the respective companies comprising the First Target Group are responsible for the preparation of the respective companies’ financial statements in accordance with the relevant accounting principles generally accepted in their place of incorporation, and for such internal control as the directors determine is necessary to enable the preparation of respective companies’ financial statements that are free from material misstatement, whether due to fraud or error.

– IIA-1 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

Reporting accountant’s responsibility

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

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountant’s judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountant considers 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 set out in Note 2.1 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 directors, 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 accountant’s report, a true and fair view of the financial position of the First Target Company as at 31 December 2014, 2015 and 2016 and the consolidated financial position of the First Target Group as at 31 December 2014, 2015 and 2016 and of its consolidated financial performance and its consolidated cash flows for the Track Record Period in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Adjustments

In preparing the Historical Financial Information no adjustments to the Underlying Financial Statements have been made.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong 30 June 2017

– IIA-2 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

I. HISTORICAL FINANCIAL INFORMATION OF THE FIRST TARGET GROUP

Preparation of Historical Financial Information

Set out below is the consolidated and company statements of financial position as at 31 December 2014, 2015 and 2016, and the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for each of the period/years then ended (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”) which forms an integral part of this accountant’s report.

The consolidated financial statements of Great Wall Pan Asia Asset Management Limited (the “First Target Company”) (formerly known as Great Wall Pan Asia International Asset Management Limited) and its subsidiaries (together, the “First Target Group”) for the Track Record Period (“Underlying Financial Statements”), on which the Historical Financial Information is based, were audited by PricewaterhouseCoopers in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The Historical Financial Information is presented in HK dollars except when otherwise indicated.

– IIA-3 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Note ASSETS Non-current assets Fixed assets 9 Current assets Amounts due from the immediate holding company 13 Amounts due from a fellow subsidiary 13 Prepayments Cash and bank balances 15 Total current assets Total assets EQUITY Capital and reserves attributable to the First Target Group’s equity holders Share capital 11 Retained earnings Translation reserve Total equity LIABILITIES Current liabilities Amounts due to the immediate holding company 13 Amounts due to a fellow subsidiary 13 Income tax payable Other payables 14 Total liabilities Total equity and liabilities	2014 HK$ 67,703 67,703 ----------- 7,893,212 – – 6,406,698 14,299,910 ----------- 14,367,613 10,000,000 129,232 – 10,129,232 ----------- 3,632,844 – 25,537 580,000 4,238,381 ----------- 14,367,613	2015 HK$ 1,567,378 1,567,378 ----------- – – 21,198 10,761,219 10,782,417 ----------- 12,349,795 10,000,000 177,212 – 10,177,212 ----------- 1,564,461 1,945 165,346 440,831 2,172,583 ----------- 12,349,795	2016 HK$ 1,315,806 1,315,806 ----------- 5,786,205 39,274 21,198 36,726,677 42,573,354 ----------- 43,889,160 25,560,000 13,588,743 (1,077,888) 38,070,855 ----------- – 1,945 3,532,591 2,283,769 5,818,305 ----------- 43,889,160

– IIA-4 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

STATEMENTS OF FINANCIAL POSITION

Note ASSETS Non-current assets Fixed assets 9 Investment in subsidiaries 10 Current assets Amounts due from the immediate holding company 13 Amounts due from a fellow subsidiary 13 Amounts due from a subsidiary 13 Prepayments Cash and bank balances 15 Total current assets Total assets EQUITY Capital and reserves attributable to the First Target Company’s equity holders Share capital 11 Retained earnings 12 Total equity LIABILITIES Current liabilities Amounts due to the immediate holding company 13 Amount due to a subsidiary 13 Income tax payable Other payables 14 Total liabilities Total equity and liabilities	2014 HK$ 67,703 – 67,703 ----------- 7,893,212 – – – 6,406,698 14,299,910 ----------- 14,367,613 10,000,000 129,232 10,129,232 ----------- 3,632,844 – 25,537 580,000 4,238,381 ----------- 14,367,613	2015 HK$ 1,567,378 8 1,567,386 ----------- – – – 21,198 10,759,626 10,780,824 ----------- 12,348,210 10,000,000 177,564 10,177,564 ----------- 1,564,461 8 165,346 440,831 2,170,646 ----------- 12,348,210	2016 HK$ 1,269,443 15,560,008
			16,829,451 ----------- 5,786,205 39,274 25,451 21,198 10,470,022
			16,342,150 ----------- 33,171,601
			25,560,000 4,931,387
			30,491,387 ----------- – – 764,999 1,915,215
			2,680,214 ----------- 33,171,601

– IIA-5 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Note Income Revenue 4, 13 Interest income Foreign exchange gain Total income Operating expenses Employee benefits expense 5 Depreciation 9 Other operating expenses 7 Total operating expenses Profit before tax Tax expense 8 Profit for the period/year Other comprehensive income Translation reserve Total comprehensive income for the period/year	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 7,893,212 582 424 7,894,218 - - - - - - - - - - - - - (5,268,507) (6,874) (2,464,068) (7,739,449) - - - - - - - - - - - - - 154,769 (25,537) 129,232 – 129,232	For the year ended 31 December 2015 HK$ 12,490,429 2,380 850 12,493,659 - - - - - - - - - - - - - (7,765,466) (54,203) (4,486,201) (12,305,870) - - - - - - - - - - - - - 187,789 (139,809) 47,980 – 47,980	For the year ended 31 December 2016 HK$ 33,560,411 24,348 672,293 34,257,052 - - - - - - - - - - - - - (12,235,477) (329,073) (4,418,605) (16,983,155) - - - - - - - - - - - - - 17,273,897 (3,862,366) 13,411,531 (1,077,888) 12,333,643

– IIA-6 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Note At 2 January 2014 (date of incorporation) Issuance of share capital 11 Total comprehensive income for the period At 31 December 2014 and 1 January 2015 Total comprehensive income for the year At 31 December 2015 and 1 January 2016 Issuance of share capital 11 Total comprehensive income for the year At 31 December 2016	Share capital HK$ – 10,000,000 – 10,000,000 – 10,000,000 15,560,000 – 25,560,000	Translation reserve HK$ – – – – – – – (1,077,888) (1,077,888)	Retained earnings HK$ – – 129,232 129,232 47,980 177,212 – 13,411,531 13,588,743	Total equity HK$ – 10,000,000 129,232
				10,129,232 47,980
				10,177,212 15,560,000 12,333,643
				38,070,855

– IIA-7 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

CONSOLIDATED STATEMENTS OF CASH FLOWS

Note Cash flows from operating activities Profit before taxation Adjustments for: Depreciation 9 Interest income Exchange gain (Increase)/decrease in amounts due from the immediate holding company Increase/(decrease) in amounts due to the immediate holding company Increase in amounts due from a fellow subsidiary Increase in amounts due to a fellow subsidiary Increase in prepayments Increase/(decrease) in other payables Cash (used in)/generated from operations Interest received Tax paid Net cash (used in)/generated from operating activities Cash flows from investing activities Purchase of fixed assets 9 Net cash used in investing activities Cash flows from financing activities Issuance of shares 11 Net cash generated from financing activities Increase in cash and cash equivalents Effect of changes in foreign exchange rate Cash and cash equivalents at beginning of the period/year Cash and cash equivalents at end of the period/year Analysis of balances of cash and cash equivalents Cash and bank	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 154,769 6,874 (582) (424) 160,637 (7,893,212) 3,632,844 – – – 580,000 (3,519,731) 582 – (3,519,149) - - - - - - - - - - - - - (74,577) (74,577) - - - - - - - - - - - - - 10,000,000 10,000,000 - - - - - - - - - - - - - 6,406,274 424 – 6,406,698 - - - - - - - - - - - - - 6,406,698 - - - - - - - - - - - - -	For the year ended 31 December 2015 HK$ 187,789 54,203 (2,380) (850) 238,762 7,893,212 (2,068,383) – 1,945 (21,198) (139,169) 5,905,169 2,380 – 5,907,549 - - - - - - - - - - - - - (1,553,878) (1,553,878) - - - - - - - - - - - - - – – - - - - - - - - - - - - - 4,353,671 850 6,406,698 10,761,219 - - - - - - - - - - - - - 10,761,219 - - - - - - - - - - - - -	For the year ended 31 December 2016 HK$ 17,273,897 329,073 (24,348) (672,293)
			16,906,329 (5,786,205) (1,564,461) (39,274) – – 1,842,938
			11,359,327 24,348 (366,732)
			11,016,943 - - - - - - - - - - - - - (77,448)
			(77,448) - - - - - - - - - - - - - 15,560,000
			15,560,000 - - - - - - - - - - - - -
			26,499,495 (534,037) 10,761,219
			36,726,677 - - - - - - - - - - - - -
			36,726,677 - - - - - - - - - - - - -

– IIA-8 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 GENERAL INFORMATION

Great Wall Pan Asia Asset Management Limited (the “First Target Company”) (formerly known as Great Wall Pan Asia International Asset Management Limited) is a limited liability company incorporated in Hong Kong. The registered office of the First Target Company is located at 6806, 68/F., The Center, 99 Queen’s Road Central, Hong Kong.

The principal activities of the First Target Company are to provide investment advisory and asset management related services. The First Target Company is licensed under the Hong Kong Securities and Futures Ordinance for carrying out advising on securities and asset management regulated activities.

The First Target Company has no subsidiaries as at 31 December 2014. During the year ended 31 December 2015, the First Target Company invested in subsidiary incorporated in Cayman. During the year ended 31 December 2016, the First Target Company invested in subsidiaries incorporated in the People’s Republic of China (“PRC”) and disposed of its subsidiary incorporated in Cayman. For the details of the subsidiaries, refer to Note 10 to the Historical Financial Information.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the Historical Financial Information are set out below. These policies have been consistently applied to all the period/years presented, unless otherwise stated.

2.1 Basis of preparation

The Historical Financial Information of the First Target Group has been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of certified Public Accountants (“HKICPA”). The Historical Financial Information has been prepared under the historical cost convention.

The preparation of Historical Financial Information in conformity with HKFRS requires the use of accounting estimates. It also requires Directors to exercise its judgment in the process of applying the First Target Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 3. The First Target Group makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal the related actual results.

The Historical Financial Information contained in this Accountant’s Report does not constitute First Target Company’s statutory financial statements for either of the years ended 31 December 2014, 2015 and 2016. Further information relating to the First Target Company’s statutory financial statements required to be disclosed in accordance with section 436 of the Companies Ordinance is as follows:

As First Target Company is a private company, it is not required to deliver its financial statements to the Registrar of Companies, and has not done so.

First Target Company’s auditor has reported on the company level financial statements for all three years. The auditor’s reports were unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis; and did not contain a statement under either sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

New standards, amendments and interpretations have been issued but not yet effective for the Track Record Period and have not been early adopted

HKFRS 9, ‘Financial instruments’

The new standard addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces a new impairment model for financial assets.

While the First Target Group will undertake further detailed assessment of the classification and measurement of financial assets, loans and receivables financial assets that are currently accounted for at amortised cost would continue to be accounted for using amortised cost model under HKFRS 9. Accordingly, the First Target Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.

– IIA-9 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

There will be no impact on the First Target Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the First Target Group does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. While the First Target Group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the First Target Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

HKFRS 9 must be applied for financial years commencing on or after 1 January 2018. Based on the transitional provisions in the completed HKFRS 9, early adoption in phases was only permitted for annual reporting periods beginning before 1 February 2015. After that date, the new rules must be adopted in their entirety. The First Target Group plans to adopt the standard when it becomes effective in 2018 without restating comparative information. At this stage, the First Target Group is assessing the impact of HKFRS 9 and it is expected there is no material impact on its financial statements.

HKFRS 15, ‘Revenue from contracts with customers’

The HKICPA has issued a new standard for the recognition of revenue. This will replace HKAS 18 which covers contracts for goods and services and HKAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The First Target Group will make more detailed assessments of the impact over the next twelve months.

HKFRS 15 is mandatory for financial years commencing on or after 1 January 2018. At this stage, the First Target Group does not intend to adopt the standard before its effective date.

There are no other HKFRSs or HK (IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the First Target Group.

2.2 Consolidation

The consolidated financial information include the financial information of the First Target Company and its subsidiaries.

Subsidiaries

A subsidiary is an entity (including a structured entity) over which the group has control. The First Target Group controls an entity when the First Target Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the First Target Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between First Target Group companies are eliminated. Profit and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary in the Historical Financial Information, to ensure consistency with the policies adopted by the First Target Group.

Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the First Target Company on the basis of dividend received and receivable.

– IIA-10 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets.

2.3 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the First Target Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Historical Financial Information is presented in Hong Kong dollar (“HK$”), which is the First Target Company’s functional currency and First Target Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.

(c) First Target Group companies

The results and financial position of all the First Target Group’s entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

• (ii) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• (iii) All resulting exchange differences are recognised in other comprehensive income.

2.4 Fixed assets

Fixed assets are stated at historical cost less depreciation. Historical cost of an item of fixed assets includes expenditure that is directly attributable to the acquisition of the item.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the First Target Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated on the straight-line basis to allocate the cost of office equipment, furniture and fixtures and leasehold improvements to its residual value over its estimated useful life at an annual rate of 20%.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

An item of fixed assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the consolidated statement of comprehensive income in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

– IIA-11 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

2.5 Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. 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. An impairment loss is charged to the consolidated statement of comprehensive income in the period in which it arises.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the consolidated statement of comprehensive income in the period in which it arises.

2.6 Financial assets

The First Target Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets. The First Target Group’s loans and receivable comprise “amounts due from the immediate holding company”, “amounts due from a fellow subsidiary” and “cash and bank” in the consolidated statement of financial position.

Loans and receivables are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the First Target Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

The First Target Group assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

2.7 Impairment of financial assets

The First Target Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income.

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 (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.

– IIA-12 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

2.8 Financial liabilities at amortised cost

Financial liabilities including amounts due to the immediate holding company, amounts due to a fellow subsidiary and other payables are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Gains and losses are recognised in the consolidated statement of comprehensive income when the liabilities are derecognised as well as through the amortisation process.

2.9 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated statements of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the First Target Group or the counterparty.

2.10 Cash and cash equivalents

Cash and cash equivalents comprise bank deposits that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired.

2.11 Receivables and payables

Receivables and payables are recognised initially at book values which approximate fair values and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the First Target Group will not be able to collect all amounts due according to the original terms of the receivables.

Receivables are classified as current assets if expected to be settled within 12 months; otherwise they are classified as non-current. Payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

2.12 Provisions

Provisions are recognised when the First Target Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

2.13 Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the First Target Group and when the revenue can be measured reliably. Revenue is recognised when the asset management and investment advisory related services are rendered.

2.14 Income and expenses

Interest income is recognised on a time proportion basis using the effective interest method.

Expenses are recognised on an accrual basis.

– IIA-13 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

2.15 Share capital

Ordinary shares are classified as equity.

2.16 Employee benefits cost

(i) Employee leave entitlements

Employee entitlements to sick leave, maternity or paternity leave are not recognised.

Accruals for annual leave entitled to employees are recognised when the First Target Group has a present obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(ii) Annual bonus

Bonus is accrued when the First Target Group has an obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(iii) Pension obligations

The First Target Group participates in a mandatory provident fund scheme in accordance with the Hong Kong Mandatory Provident Fund Schemes Ordinance which is a defined contribution plan, the assets of which are generally held in separate trustee-administered funds. The plan is generally funded by payments from both the employer and employees.

The First Target Group’s contributions to the defined contribution plan are expensed as incurred.

2.17 Current and deferred income tax

The tax expense comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the First Target Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Historical Financial Information. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

– IIA-14 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the First Target Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The First Target Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Estimation of revenue

The First Target Company recognises investment advisory fee income based on the terms of the underlying agreement when relevant act has been completed. In addition, judgement is made by management after considering the extent of involvement in the relevant activities and the market practice of ultimate allocation of income among all the counterparties. Any changes in the estimates used for calculating the investment advisory fee income will affect the ultimate revenue to be recognised.

4 REVENUE

Revenue, which is also the First Target Group’s turnover, represents management fees from asset management service provided to the immediate holding company (Refer to Note 13) and investment advisory fee income.

An analysis of revenue is as follows:

Revenue Asset management fee income from the immediate holding company (Note 13(a)) Investment advisory fee income	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 7,893,212 – 7,893,212	For the year ended 31 December 2015 HK$ 12,490,429 – 12,490,429	For the year ended 31 December 2016 HK$ 16,809,827 16,750,584
			33,560,411

– IIA-15 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

5 EMPLOYEE BENEFITS EXPENSE

Employee benefits expense (including directors’ emoluments (Note 6)): Salaries and allowances (Note (a)) Bonuses Mandatory Provident Fund Scheme contribution (Note (a))	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 4,672,940 500,000 95,567 5,268,507	For the year ended 31 December 2015 HK$ 7,184,988 413,613 166,865 7,765,466	For the year ended 31 December 2016 HK$ 11,959,363 – 276,114
			12,235,477

Note (a): The salaries and allowances and Mandatory Provident Fund Scheme contributions include key management compensation. Refer to Note 6.

6 DIRECTOR’S EMOLUMENTS

The aggregate remuneration of the directors of the First Target Company for the period/years ended 31 December 2014, 2015 and 2016 are set out below:

Directors’ emoluments (in respect of a their services as a director, whether of the company or its subsidiary undertaking): Salaries and other short-term employee benefits Mandatory Provident Fund Scheme contributions	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 1,294,522 33,500 1,328,022	For the year ended 31 December 2015 HK$ 1,089,300 18,000 1,107,300	For the year ended 31 December 2016 HK$ 1,026,079 18,000
			1,044,079

– IIA-16 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

7 OTHER OPERATING EXPENSES

Other operating expenses: Telecommunication expenses Entertainment expenses Travelling expenses Rental expenses (Note (a)) Property management fee (Note (a)) Government rent and rates (Note (a)) Legal and professional fee Auditors’ remuneration – Audit services Cleaning expenses Miscellaneous expenses	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 147,742 146,295 426,949 882,409 111,828 80,557 490,697 80,000 12,530 85,061 2,464,068	For the year ended 31 December 2015 HK$ 268,982 242,100 873,311 1,505,871 180,949 124,557 993,037 60,000 9,000 228,394 4,486,201	For the year ended 31 December 2016 HK$ 421,060 353,075 891,916 1,447,200 159,240 111,480 724,978 83,364 1,490 224,802
			4,418,605

Note (a): These expenses are recharged by its immediate holding company (Refer to Note 13(a)(viii)).

8 TAX EXPENSES

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit for the Track Record Period. The First Target Company’s subsidiary pays Corporate Income Tax (“CIT”) in the PRC at the rate of 25% on the profits of the subsidiary for the year ended 31 December 2016.

The amount of taxation charged to the consolidated statement of comprehensive income represents:

Current tax – Hong Kong profits tax – PRC corporate income tax Underprovision in prior period/year – Hong Kong profits tax Tax expense Profit before taxation	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 25,537 – – 25,537 154,769	For the year ended 31 December 2015 HK$ 92,673 – 47,136 139,809 187,789	For the year ended 31 December 2016 HK$ 966,385 2,895,981 –
			3,862,366
			17,273,897

– IIA-17 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

Tax at Hong Kong tax rate of 16.5% (2015: 16.5%) Effect of different tax rates of operating in other jurisdictions Tax effect of – Income not subject to tax – Expenses not deductible for tax purposes – Temporary difference not recognised Under provision in prior year Others Tax charge for the period/year	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 25,537 – – – – – – 25,537	For the year ended 31 December 2015 HK$ 30,985 – (393) 103,414 (41,333) 47,136 – 139,809	For the year ended 31 December 2016 HK$ 2,850,193 984,633 (284) 9,091 38,733 – (20,000) 3,862,366

There was no significant unprovided deferred taxation for the Track Record Period.

9 FIXED ASSETS

Group Period from 2 January 2014 to 31 December 2014 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2014 Cost Accumulated depreciation Net carrying amount Opening net book amount Additions Depreciation Closing net book amount At 31 December 2015 Cost Accumulated depreciation Net carrying amount	Office equipment HK$ – 70,120 (6,279) 63,841 70,120 (6,279) 63,841 63,841 145,686 (22,621) 186,906 215,806 (28,900) 186,906	Furniture and fixtures HK$ – 4,457 (595) 3,862 4,457 (595) 3,862 3,862 191,211 (11,299) 183,774 195,668 (11,894) 183,774	Leasehold improvements HK$ – – – – – – – – 1,216,981 (20,283) 1,196,698 1,216,981 (20,283) 1,196,698	Total HK$ – 74,577 (6,874) 67,703 74,577 (6,874) 67,703 67,703 1,553,878 (54,203) 1,567,378 1,628,455 (61,077) 1,567,378

– IIA-18 –

APPENDIX II-A

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

Group Year ended 31 December 2016 Opening net book amount Additions Net exchange difference Depreciation Closing net book amount At 31 December 2016 Cost Accumulated depreciation Net carrying amount Company Period from 2 January 2014 to 31 December 2014 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2014 Cost Accumulated depreciation Net carrying amount Year ended 31 December 2015 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2015 Cost Accumulated depreciation Net carrying amount Year ended 31 December 2016 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2016 Cost Accumulated depreciation Net carrying amount	Office equipment HK$ 186,906 77,448 53 (46,543) 217,864 293,307 (75,443) 217,864 Office equipment HK$ – 70,120 (6,279) 63,841 70,120 (6,279) 63,841 63,841 145,686 (22,621) 186,906 215,806 (28,900) 186,906 186,906 29,938 (45,343) 171,501 245,744 (74,243) 171,501	Furniture and fixtures HK$ 183,774 – – (39,134) 144,640 195,668 (51,028) 144,640 Furniture and fixtures HK$ – 4,457 (595) 3,862 4,457 (595) 3,862 3,862 191,211 (11,299) 183,774 195,668 (11,894) 183,774 183,774 – (39,134) 144,640 195,668 (51,028) 144,640	Leasehold improvements HK$ 1,196,698 – – (243,396) 953,302 1,216,981 (263,679) 953,302 Leasehold improvements HK$ – – – – – – – – 1,216,981 (20,283) 1,196,698 1,216,981 (20,283) 1,196,698 1,196,698 – (243,396) 953,302 1,216,981 (263,679) 953,302	Total HK$ 1,567,378 77,448 53 (329,073) 1,315,806 1,705,956 (390,150) 1,315,806 Total HK$ – 74,577 (6,874) 67,703 74,577 (6,874) 67,703 67,703 1,553,878 (54,203) 1,567,378 1,628,455 (61,077) 1,567,378 1,567,378 29,938 (327,873) 1,269,443 1,658,393 (388,950) 1,269,443

– IIA-19 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

10 INVESTMENT IN SUBSIDIARIES

At 2 January 2014 (date of incorporation), 31 December 2014 and 1 January 2015 Capital injection to a newly opened subsidiary (note (i)) At 31 December 2015 and 1 January 2016 Capital injection to a newly opened subsidiary (note (ii)) At 31 December 2016	Investment in subsidiaries HK$ – 8
	8 15,560,000
	15,560,008

The following is a list of the principal subsidiaries as at 31 December 2014, 2015 and 2016:

The First Target Company has no subsidiaries as at 31 December 2014.

As at 31 December 2015

Place of Principal Particulars of Interest held Name incorporation activities issued shares held Directly Indirectly Great Wall Pan Asia Cayman Islands Inactive 1 issued share of 100% – International Asset HK$8 Management (Cayman) Limited (“Great Wall Cayman”) (note (iii))

As at 31 December 2016

Place of Principal Particulars of Interest held Name incorporation activities issued shares held Directly Indirectly Shen Zhen Great Wall Pan Asia International Equity Investment Fund Management Company Limited 深圳長城環亞國際股權投 The PRC To provide Registered capital 100% – 資基金管理有限公司 corporate of RMB13,298,665 (“Fund Management consultancy Company”) services Shen Zhen Great Wall Pan Asia International Equity Investment Fund Enterprise (Limited Partnership) (深圳長城環亞國際股權投 The PRC Inactive Nil 99.29% 0.71% 資基金企業(有限合夥)) (“Limited Partnership”) (note (iv))

Notes:

• (i) Great Wall Cayman was incorporated in Cayman Islands on 30 November 2012. The First Target Company subscribed 1 issued share of HK$8 on 15 April 2015, which represents 100% of the shareholder’s interest of Great Wall Cayman. The First Target Company disposed Great Wall Cayman during the year ended 31 December 2016.

* For identification purpose only

– IIA-20 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

• (ii) Fund Management Company was incorporated by the First Target Company in the PRC on 18 November 2015. The First Target Company paid up the registered capital of RMB13,298,665 (equivalent to HK$15,560,000) on 18 February 2016, representing 100% of the equity interest of Limited Partnership.

• (iii) The First Target Company transferred its shareholding interest in Great Wall Cayman to Great Wall Pan Asia International Investment Company Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”), its immediate holding company on 14 October 2016 with nil consideration.

• (iv) According to the Partnership Agreement, Fund Management Company and the First Target Company are the general partner and limited partner of the Limited Partnership respectively. They are the only partners of the Limited Partnership and hence, holding 100% controlling interest of the Limited Partnership.

11 SHARE CAPITAL

Ordinary shares, issued and fully paid At 2 January 2014 (date of incorporation) Issuance of share capital (Note (a)) At 31 December 2014 and 1 January 2015 Issuance of share capital At 31 December 2015 and 1 January 2016 Issuance of share capital (Note (a)) At 31 December 2016	Number of shares – 10,000,000 10,000,000 – 10,000,000 15,560,000 25,560,000	Share capital HK$ – 10,000,000
		10,000,000 –
		10,000,000 15,560,000
		25,560,000

Note (a): The First Target Company issued 10,000,000 and 15,560,000 ordinary shares with HK$1 per share respectively on 2 January 2014 and 16 February 2016 to its immediate holding company for cash.

12 RETAINED EARNINGS – COMPANY

At 2 January 2014 (date of incorporation) Total comprehensive income for the period At 31 December 2014 and 1 January 2015 Total comprehensive income for the year At 31 December 2015 and 1 January 2016 Total comprehensive income for the year At 31 December 2016	Retained earnings HK$ – 129,232
	129,232 48,332
	177,564 4,753,823
	4,931,387

– IIA-21 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

13 RELATED PARTY TRANSACTIONS

Parties are considered to be related if the First Target Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operation decisions, or vice versa, or where the First Target Group and the party subject to common control or common significant influence. Related parties may be individuals or other entities.

Save for disclosed elsewhere in the Historical Financial Information, the First Target Group had the following balances with related parties in the normal course of business as follows:

(a) Related party transactions and intercompany balances

Group Consolidated statement of comprehensive income Management fee income from the immediate holding company (note (i)) Expenses recharged by the immediate holding company (note (viii)) Consolidated statement of financial position Amounts due from the immediate holding company (note (ii)) Amounts due to the immediate holding company (note (iii)) Amounts due from a fellow subsidiary (note (iv)) Amounts due to a fellow subsidiary (note (vi)) Company Statement of financial position Amounts due from the immediate holding company (note (ii)) Amounts due to the immediate holding company (note (iii)) Amounts due from a fellow subsidiary (note (iv)) Amounts due from a subsidiary (note (v)) Amount due to a subsidiary (note (vii))	For the period from 2 January 2014 (date of incorporation) to 31 December 2014 HK$ 7,893,212 1,074,794 2014 HK$ 7,893,212 (3,632,844) – – 2014 HK$ 7,893,212 (3,632,844) – – –	For the year ended 31 December 2015 HK$ 12,490,429 1,811,377 2015 HK$ – (1,564,461) – (1,945) 2015 HK$ – (1,564,461) – – 8	For the year ended 31 December 2016 HK$ 16,809,827 1,717,920 2016 HK$ 5,786,205 – 39,274 (1,945) 2016 HK$ 5,786,205 – 39,274 25,451 –

Notes:

(i) Pursuant to asset management agreements dated 13 August 2014 and 21 August 2015, the First Target Group has been appointed as investment manager by its immediate holding company, Great Wall Pan Asia International Investment Company Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”).

• (ii) Amounts due from the immediate holding company are unsecured, interest-free and repayable on demand. The balance includes a receivable from the immediate holding company for certain amount of recharge by the First Target Group.

– IIA-22 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

• (iii) Amounts due to the immediate holding company are unsecured, interest-free and repayable on demand.

• (iv) Amounts due from a fellow subsidiary are unsecured, interest-free and repayable on demand.

• (v) Amounts due from a subsidiary are unsecured, interest-free and repayable on demand.

• (vi) Amounts due to a fellow subsidiary are unsecured, interest-free and repayable on demand.

• (vii) Amount due to a subsidiary is unsecured, interest-free and repayable on demand.

• (viii) The expenses recharged represent rental expenses, property management fee and government rent and rates paid by the immediate holding company, Great Wall Pan Asia International Investment Company Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”), which is then recharged to the First Target Group.

(b) Key management compensation

Key management includes directors only. Refer to Note 6 for details of key management compensation.

14 OTHER PAYABLES

Group Other payables: Bonus payable Audit fee payable Business tax payable Others Company Other payables: Bonus payable Audit fee payable Others 15 CASH AND BANK BALANCES Group Cash on hand Cash at bank	2014 HK$ 500,000 80,000 – – 580,000 2014 HK$ 500,000 80,000 – 580,000 2014 HK$ 199 6,406,499 6,406,698	2015 HK$ 335,029 60,000 – 45,802 440,831 2015 HK$ 335,029 60,000 45,802 440,831 2015 HK$ 476 10,760,743 10,761,219	2016 HK$ 1,721,740 75,000 368,857 118,172
			2,283,769
			2016 HK$ 1,721,740 75,000 118,475
			1,915,215
			2016 HK$ – 36,726,677
			36,726,677

– IIA-23 –

APPENDIX II-A ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

Company Cash on hand Cash at bank	2014 HK$ 199 6,406,499 6,406,698	2015 HK$ 476 10,759,150 10,759,626	2016 HK$ – 10,470,022
			10,470,022

The cash and bank balances are denominated in the following currencies:

Group Hong Kong Dollar United States Dollar Company Hong Kong Dollar United States Dollar	2014 HK$ 6,162,185 244,513 6,406,698 2014 HK$ 6,162,185 244,513 6,406,698	2015 HK$ 10,636,234 124,985 10,761,219 2015 HK$ 10,636,234 123,392 10,759,626	2016 HK$ 21,154,775 15,571,902
			36,726,677
			2016 HK$ 10,414,599 55,423
			10,470,022

16 FINANCIAL INSTRUMENTS BY CATEGORY

All financial assets and liabilities in the consolidated statement of financial position are carried at amortized cost using the effective interest method.

As the financial assets and financial liabilities are short term in nature, the carrying amounts of its financial assets and financial liabilities are a reasonable approximation of their fair values. There are no financial assets and liabilities not carried at fair value but for which the fair value is disclosed.

17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The First Target Group’s activities expose it to a variety of financial risks: credit risk, currency risk, liquidity risk and interest rate risk. The First Target Group’s overall risk management program seeks to minimise potential adverse effects on the First Target Group’s financial performances. The risk and the respective risk management policies employed by the First Target Group to manage these risks are discussed below.

(a) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The First Target Group’s credit risk primarily arises from cash and bank, amounts due from the immediate holding company and amounts due from a fellow subsidiary.

– IIA-24 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

The First Target Group’s bank balances are mainly deposited in a number of reputable financial institutions and their credit ratings are as follows:

Bank balances Aa3 (Credit Rating from Moody’s) Baa1 (Credit Rating from Moody’s)	2014 HK$ 6,406,499 – 6,406,499	2015 HK$ 10,760,743 – 10,760,743	2016 HK$ 10,471,615 26,255,062
			36,726,677

Management has a credit policy in place and exposures to these credit risks are monitored on an ongoing basis. In addition, the majority of the receivables are derived from the immediate holding company, the directors consider credit risk exposure on these balances to be low because the immediate holding company has strong financial ability in meeting its repayment obligation to the First Target Company.

(b) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.

The First Target Group operates in Hong Kong and the PRC and therefore is exposed to foreign exchange risk arising from Renminbi (“RMB”).

As at 31 December 2014 and 2015, the First Target Group is not exposed to significant foreign exchange risk. The majority of the First Target Group’s assets and liabilities are denominated in HK$ and United States dollar (“USD”). As USD is pegged to HK$, the directors consider the First Target Group is not exposed to significant foreign exchange risk as at these dates.

As at 31 December 2016, the other currency which the First Target Group exposed to is RMB and the net amount exposure of RMB6,845,610 (equivalent to approximately HK$7,610,054) represents 20% of the total equity of the First Target Group. As at 31 December 2016, should the RMB/HKD exchange rate fluctuate by 5%, the profit for the year would have been approximately HK$380,503 higher/lower, and the other comprehensive income for the year would have been approximately HK$380,503 lower/higher.

(c) Liquidity risk

Liquidity risk is the risk that the First Target Group will encounter difficulty in raising funds to meet commitments associated with financial instruments. In the management of liquidity risk, the First Target Group monitors and maintains a level of working capital deemed adequate by management to finance the First Target Group’s operations.

The maturity profile of the First Target Group’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

Amounts due to the immediate holding company Other payables	As at 31 December 2014 On demand Less than 3 months Total HK$ HK$ HK$ 3,632,844 – 3,632,844 – 580,000 580,000 3,632,844 580,000 4,212,844	As at 31 December 2014 On demand Less than 3 months Total HK$ HK$ HK$ 3,632,844 – 3,632,844 – 580,000 580,000 3,632,844 580,000 4,212,844
		4,212,844

– IIA-25 –

ACCOUNTANT’S REPORT OF THE FIRST TARGET GROUP

APPENDIX II-A

Amounts due to the immediate holding company Amounts due to a fellow subsidiary Other payables Amounts due to a fellow subsidiary Other payables	As at 31 December 2015 On demand Less than 3 months Total HK$ HK$ HK$ 1,564,461 – 1,564,461 1,945 – 1,945 – 440,831 440,831 1,566,406 440,831 2,007,237 As at 31 December 2016 On demand Less than 3 months Total HK$ HK$ HK$ 1,945 – 1,945 – 2,283,769 2,283,769 1,945 2,283,769 2,285,714	As at 31 December 2015 On demand Less than 3 months Total HK$ HK$ HK$ 1,564,461 – 1,564,461 1,945 – 1,945 – 440,831 440,831 1,566,406 440,831 2,007,237 As at 31 December 2016 On demand Less than 3 months Total HK$ HK$ HK$ 1,945 – 1,945 – 2,283,769 2,283,769 1,945 2,283,769 2,285,714
		2,285,714

(d) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The First Target Group’s only exposure to interest rate risk arises from the First Target Group’s cash at banks of HK$6,406,698, HK$10,761,219 and HK$36,726,677 as at 31 December 2014, 2015 and 2016. Cash at banks earns interests at floating interest rates based on daily bank deposit rates.

The First Target Group estimates that a movement of 25 basis points in interest rates for all currencies would have an impact of increasing or decreasing the profit before taxation of approximately HK$16,017, HK$26,903, and HK$91,817 for the period/year ended 31 December 2014, 2015 and 2016 mainly as a result of higher or lower net interest income earned on bank balances.

(e) Capital management

The First Target Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns to the shareholder and the benefits for other stakeholders and to comply with the capital requirements set by the Securities and Futures Commission. The First Target Group’s capital structure is regularly reviewed and managed with due regard to the capital management practices of the First Target Group. Adjustments are made to the capital structure in light of changes in economic conditions affecting the First Target Group, to the extent that these do not conflict with the directors’ fiduciary duties towards the First Target Group.

18 Ultimate holding company and immediate holding company

The First Target Company is a wholly owned subsidiary of Great Wall Pan Asia International Investment Company Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”), which is incorporated in Hong Kong and the ultimate holding company of the First Target Company is China Great Wall Asset Management Co., Ltd., which is incorporated in the PRC.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the First Target Company or any of its subsidiaries in respect of any period subsequent to 31 December 2016 and up to the date of this report. No dividend or distribution has been declared or made by the First Target Company or any of its subsidiaries in respect of any period subsequent to 31 December 2016.

– IIA-26 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

The following is the text of a report set out on pages IIB-1 to IIB-2, received from the Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [67 x 49] intentionally omitted <==

ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF GREAT WALL PAN ASIA HOLDINGS LIMITED

Introduction

We report on the historical financial information of Great Wall Pan Asia Corporate Finance Limited (the “Second Target Company”) (formerly known as Great Wall International Corporate Finance Limited) set out on pages IIB-3 to IIB-20, which comprises the statements of financial position as at 31 December 2014, 2015 and 2016, and the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for each of the period/years then ended (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages IIB-3 to IIB-20 forms an integral part of this report, which has been prepared for inclusion in the circular of Great Wall Pan Asia Holdings Limited (the “Company”) dated 30 June 2017 (the “Circular”) in connection with the proposed acquisition of the Second Target Company by the Company.

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

The Historical Financial Information in this report was prepared by the directors of the Company based on the previously issued financial statements of the Second Target Company for the Track Record Period (“Historical Financial Statements”). The directors of the Second Target Company are responsible for the preparation of the Historical Financial Statements that gives a true and fair view in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Statements that are free from material misstatement, whether due to fraud or error.

– IIB-1 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

Reporting accountant’s responsibility

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

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountant’s judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountant considers 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 set out in Note 2.1 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 directors, 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 accountant’s report, a true and fair view of the financial position of the Second Target Company as at 31 December 2014, 2015 and 2016 and of its financial performance and its cash flows for the Track Record Period in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Adjustments

In preparing the Historical Financial Information no adjustments to the Historical Financial Statements have been made.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong 30 June 2017

– IIB-2 –

ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

APPENDIX II-B

I. HISTORICAL FINANCIAL INFORMATION OF THE SECOND TARGET COMPANY

Preparation of Historical Financial Information

Set out below is the statements of financial position as at 31 December 2014, 2015 and 2016, and the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for each of the period/years then ended (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”) which forms an integral part of this accountant’s report.

The Historical Financial Information in this report was prepared by the directors of the Company based on the previously issued financial statements of the Second Target Company for the Track Record Period. The previously issued financial statements were audited by the statutory auditors of the Second Target Company in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The statutory auditor of the Second Target Company for the period ended 31 December 2014 was PricewaterhouseCoopers and the statutory auditor of the Second Target Company for the years ended 31 December 2015 and 2016 was Deloitte Touche Tohmatsu.

The Historical Financial Information is presented in HK dollars except when otherwise indicated.

– IIB-3 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

STATEMENTS OF FINANCIAL POSITION

Note ASSETS Non-current assets Fixed assets 9 Current assets Accounts receivable 10 Cash and bank balances 14 Total current assets Total assets EQUITY Capital and reserves attributable to the Second Target Company’s equity holders Share capital 11 Accumulated losses Total equity LIABILITIES Current liabilities Amount due to the immediate holding company 12 Fee income received in advance Other payables Total liabilities Total equity and liabilities	2014 HK$ 21,529 21,529 ----------- – 4,421,492 4,421,492 ----------- 4,443,021 5,000,000 (3,133,804) 1,866,196 ----------- 1,809,603 587,222 180,000 2,576,825 ----------- 4,443,021	2015 HK$ 21,824 21,824 ----------- 330,000 4,262,420 4,592,420 ----------- 4,614,244 5,000,000 (3,243,568) 1,756,432 ----------- 2,797,812 – 60,000 2,857,812 ----------- 4,614,244	2016 HK$ 15,608 15,608 ----------- 300,000 4,341,623 4,641,623 ----------- 4,657,231 5,000,000 (3,476,880) 1,523,120 ----------- 3,059,111 – 75,000 3,134,111 ----------- 4,657,231

– IIB-4 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

STATEMENTS OF COMPREHENSIVE INCOME

Note Income Revenue 4 Total income Operating expenses Employee benefits expense 5 Depreciation 9 Other operating expenses 7 Total operating expenses Loss before taxation Tax expense 8 Loss for the period/year Other comprehensive income Total comprehensive loss for the period/year	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ 112,777 112,777 - - - - - - - - - - - - - (2,212,483) (3,349) (1,030,749) (3,246,581) - - - - - - - - - - - - - (3,133,804) – (3,133,804) – (3,133,804)	For the year ended 31 December 2015 HK$ 3,528,449 3,528,449 - - - - - - - - - - - - - (2,597,780) (5,905) (1,034,528) (3,638,213) - - - - - - - - - - - - - (109,764) – (109,764) – (109,764)	For the year ended 31 December 2016 HK$ 988,503 988,503 - - - - - - - - - - - - - (855,874) (6,216) (359,725) (1,221,815) - - - - - - - - - - - - - (233,312) – (233,312) – (233,312)

– IIB-5 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

STATEMENTS OF CHANGES IN EQUITY

Note At 20 March 2014 (date of incorporation) Issuance of share capital 11 Total comprehensive loss for the period At 31 December 2014 and 1 January 2015 Total comprehensive loss for the year At 31 December 2015 and 1 January 2016 Total comprehensive loss for the year At 31 December 2016	Share capital HK$ – 5,000,000 – 5,000,000 – 5,000,000 – 5,000,000	Accumulated losses HK$ – – (3,133,804) (3,133,804) (109,764) (3,243,568) (233,312) (3,476,880)	Total equity HK$ – 5,000,000 (3,133,804) 1,866,196 (109,764) 1,756,432 (233,312) 1,523,120

– IIB-6 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

STATEMENTS OF CASH FLOWS

Note Cash flows from operating activities Loss before taxation Adjustments for: Depreciation 9 (Increase)/decrease in accounts receivable Increase in amount due to the immediate holding company Increase/(decrease) in fee income received in advance Increase/(decrease) in other payables Cash (used in)/inflow from operations Net cash (used in)/inflow from operating activities Cash flows from investing activities Purchase of fixed assets 9 Net cash used in investing activities Cash flow from financing activities Issuance of share capital 11 Net cash generated from financing activities Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period/year Cash and cash equivalents at end of the period/year Analysis of balance of cash and cash equivalents Cash and bank balances	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ (3,133,804) 3,349 (3,130,455) – 1,809,603 587,222 180,000 (553,630) (553,630) - - - - - - - - - - - - - (24,878) (24,878) - - - - - - - - - - - - - 5,000,000 5,000,000 - - - - - - - - - - - - - 4,421,492 – 4,421,492 4,421,492	For the year ended 31 December 2015 HK$ (109,764) 5,905 (103,859) (330,000) 988,209 (587,222) (120,000) (152,872) (152,872) - - - - - - - - - - - - - (6,200) (6,200) - - - - - - - - - - - - - – – - - - - - - - - - - - - - (159,072) 4,421,492 4,262,420 4,262,420	For the year ended 31 December 2016 HK$ (233,312) 6,216 (227,096) 30,000 261,299 – 15,000 79,203 79,203 - - - - - - - - - - - - - – – - - - - - - - - - - - - - – – - - - - - - - - - - - - - 79,203 4,262,420 4,341,623 4,341,623

– IIB-7 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 GENERAL INFORMATION

Great Wall Pan Asia Corporate Finance Limited (the “Second Target Company”) (formerly known as Great Wall International Corporate Finance Limited) is a limited liability company incorporated in Hong Kong. The registered office of the Second Target Company is located at Suites 6503, 05-06, 65/F., The Center, 99 Queen’s Road Central, Hong Kong.

The principal activities of the Second Target Company are to provide corporate finance advisory services. The Second Target Company is licensed under the Hong Kong Securities and Futures Ordinance for providing advisory service on corporate finance regulated activities.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these Historical Financial Information are set out below. These policies have been consistently applied to the all the period/years presented, unless otherwise stated.

2.1 Basis of preparation

The Historical Financial Information of the Second Target Company has been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The Historical Financial Information has been prepared under the historical cost convention.

The preparation of the Historical Financial Information in conformity with HKFRS requires the use of accounting estimates. It also requires the Second Target Company’s directors to exercise its judgment in the process of applying the Second Target Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 3. The Second Target Company makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal the related actual results.

The Historical Financial Information contained in this Accountant’s Report does not constitute the Second Target Company’s statutory financial statements for either of the years ended 31 December 2014, 2015 or 2016 but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Companies Ordinance is as follows:

As the Second Target Company is a private company, it is not required to deliver its financial statements to the Registrar of Companies, and has not done so.

The Second Target Company’s auditor has reported on these financial statements for all three years. The auditor’s reports were unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis; and did not contain a statement under either sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

New standards, amendments and interpretations have been issued but not yet effective for the Track Record Period and have not been early adopted

HKFRS 9, ‘Financial instruments’

The new standard addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces a new impairment model for financial assets.

While the Second Target Company will undertake further detailed assessment of the classification and measurement of financial assets, loans and receivables and financial assets that are currently accounted for at amortised cost would continue to be accounted for using amortised cost model under HKFRS 9. Accordingly, the Second Target Company does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.

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APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

There will be no impact on the Second Target Company’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Second Target Company does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. While the Second Target Company has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Second Target Company’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

HKFRS 9 must be applied for financial years commencing on or after 1 January 2018. Based on the transitional provisions in the completed HKFRS 9, early adoption in phases was only permitted for annual reporting periods beginning before 1 February 2015. After that date, the new rules must be adopted in their entirety. The Second Target Company plans to adopt the standard when it becomes effective in 2018 without restating comparative information. At this stage, the Second Target Company is assessing the impact of HKFRS 9 and it is expected there is no material impact on its financial statements.

HKFRS 15, ‘Revenue from contracts with customers’

The HKICPA has issued a new standard for the recognition of revenue. This will replace HKAS 18 which covers contracts for goods and services and HKAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Second Target Company will make more detailed assessments of the impact over the next twelve months.

HKFRS 15 is mandatory for financial years commencing on or after 1 January 2018. At this stage, the Second Target Company does not intend to adopt the standard before its effective date.

There are no other HKFRSs or HK (IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Second Target Company.

2.2 Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Second Target Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Historical Financial Information is presented in Hong Kong dollar (“HK$”), which is the Second Target Company’s functional currency and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.

2.3 Fixed assets

Fixed assets are stated at historical cost less depreciation. Historical cost of an item of fixed assets includes expenditure that is directly attributable to the acquisition of the item.

– IIB-9 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Second Target Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated on the straight-line basis to allocate the cost of office equipment to its residual value over its estimated useful life at an annual rate of 20%.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

An item of fixed assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of comprehensive income in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

2.4 Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. 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. An impairment loss is charged to the statement of comprehensive income in the period in which it arises.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the statement of comprehensive income in the period in which it arises.

2.5 Financial assets

The Second Target Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets. The Second Target Company’s loans and receivable comprise “accounts receivable” and “cash and bank balances” in the statement of financial position.

Loans and receivables are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Second Target Company has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

The Second Target Company assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

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APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

2.6 Impairment of financial assets

The Second Target Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of comprehensive income.

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 (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.

2.7 Financial liabilities at amortised cost

Financial liabilities including amount due to the immediate holding company and other payables are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the amortisation process.

2.8 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Second Target Company or the counterparty.

2.9 Cash and cash equivalents

Cash and cash equivalents comprise bank deposits that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired.

2.10 Receivables and payables

Receivables and payables are recognised initially at book values which approximate fair values and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Second Target Company will not be able to collect all amounts due according to the original terms of the receivables.

– IIB-11 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

Receivables are classified as current assets if expected to be settled within 12 months; otherwise they are classified as non-current. Payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

2.11 Provisions

Provisions are recognised when the Second Target Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

2.12 Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Second Target Company and when the revenue can be measured reliably. Revenue is recognised when the corporate investment advisory related services are rendered.

2.13 Income and expenses

Interest income is recognised on a time proportion basis using the effective interest method.

Expenses are recognised on an accrual basis.

2.14 Share capital

Ordinary shares are classified as equity.

2.15 Employee benefits cost

(i) Employee leave entitlements

Employee entitlements to sick leave, maternity or paternity leave are not recognised.

Accruals for annual leave entitled to employees are recognised when the Second Target Company has a present obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(ii) Annual bonus

Bonus is accrued when the Second Target Company has an obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(iii) Pension obligations

The Second Target Company participates in a mandatory provident fund scheme in accordance with the Hong Kong Mandatory Provident Fund Schemes Ordinance which is a defined contribution plan, the assets of which are generally held in separate trustee-administered funds. The plan is generally funded by payments from both the employer and employees.

The Second Target Company’s contributions to the defined contribution plan are expensed as incurred.

2.16 Current and deferred income tax

The tax expense comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

– IIB-12 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the jurisdiction that the Second Target Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Historical Financial Information. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Second Target Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Estimation of revenue

The Second Target Company recognises corporate investment advisory fee income based on the terms of the underlying agreement when relevant act has been completed. In addition, judgement is made by management after considering the extent of involvement in the relevant activities and the market practice of ultimate allocation of income among all the counterparties. Any changes in the estimates used for calculating the corporate investment advisory fee will affect the ultimate revenue to be recognised.

(b) Estimation of realisability of deferred tax assets

Determining income tax provisions involves judgement on the future tax treatment of certain transactions. As those deferred tax assets can only be recognised to the extent that it is probable that future taxable profit will be available against which the unused tax credits can be utilised, management’s judgement is required to assess the probability of future taxable profits.

As at 31 December 2014, 2015 and 2016, the Second Target Company has unrecognised deferred tax assets of approximately HK$517,078, HK$535,189, and HK$573,685 respectively which management consider that the Second Target Company is less probable to generate available future taxable profit to utilise the deferred tax benefit within the next financial year. At 31 December 2014, 2015 and 2016, the Second Target Company has unrecognised tax losses of HK$3,133,804, HK$3,243,568 and HK$3,476,879 respectively which is uncertain as to whether it can be utilised to set off against future taxable income.

– IIB-13 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

4 REVENUE

Revenue, which is also the Second Target Company’s turnover, represents investment advisory fee income.

An analysis of revenue is as follows:

Revenue Investment advisory fee income EMPLOYEE BENEFITS EXPENSE Employee benefits expense (including directors’ emoluments (Note 6)): Salaries and allowances (Note (a)) Bonuses Reversal of prior period bonuses Mandatory Provident Fund Scheme contributions (Note (a))	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ 112,777 112,777 For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ 2,076,413 100,000 – 36,070 2,212,483	For the year ended 31 December 2015 HK$ 3,528,449 3,528,449 For the year ended 31 December 2015 HK$ 2,637,000 – (93,220) 54,000 2,597,780	For the year ended 31 December 2016 HK$ 988,503
			988,503
			For the year ended 31 December 2016 HK$ 835,809 – – 20,065
			855,874

• 5 EMPLOYEE BENEFITS EXPENSE

(a) The salaries and allowances and Mandatory Provident Fund Scheme contributions include key management compensation. Refer to Note 6.

– IIB-14 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

6 DIRECTORS’ EMOLUMENTS

The aggregated remuneration of the directors of the Second Target Company for the period/years ended 31 December 2014, 2015 and 2016 (the “Track Record Period”) are set out below:

Directors’ emoluments (in respect of a their services as a director of the Second Target Company): Salaries and other short-term employee benefits Mandatory Provident Fund Scheme contributions	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ 1,409,910 13,000 1,422,910	For the year ended 31 December 2015 HK$ 1,477,750 18,000 1,495,750	For the year ended 31 December 2016 HK$ 471,129 6,565
			477,694

7 OTHER OPERATING EXPENSES

Other operating expenses: Travelling expenses Rental expenses (Note (a)) Property management fee (Note (a)) Government rent and rates (Note (a)) Legal and professional fee Auditors’ remuneration – Audit services Miscellaneous expenses	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ 42,339 648,130 82,140 59,169 88,165 80,000 30,806 1,030,749	For the year ended 31 December 2015 HK$ 39,107 707,052 88,740 59,321 4,405 60,000 75,903 1,034,528	For the year ended 31 December 2016 HK$ – 138,656 45,636 30,578 38,155 75,000 31,700
			359,725

(a) These expenses are recharged by the Second Target Company’s immediate holding company based on the agreement entered into between the Second Target Company and its immediate holding company on pre-determined basis (Refer to Note 12 (a)(ii)).

– IIB-15 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

8 TAX EXPENSES

No provision for Hong Kong profit tax has been made in the Historical Financial Information as the Second Target Company has no assessable profit for the Track Record Period.

A reconciliation of the tax expense applicable to loss before taxation using the statutory rate of Hong Kong is as follows:

Loss before taxation Calculated at a tax rate of 16.5% Tax loss not recognised Tax charge for the period/year	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ (3,133,804) (517,078) 517,078 –	For the year ended 31 December 2015 HK$ (109,764) (18,111) 18,111 –	For the year ended 31 December 2016 HK$ (233,311) (38,496) 38,496 –

As at 31 December 2014, 2015 and 2016, the Second Target Company has unrecognised deferred tax assets of approximately HK$517,078, HK$535,189, and HK$573,685 respectively which management consider that the Second Target Company is less probable to generate available future taxable profit to utilise the deferred tax benefit within the next financial year. At 31 December 2014, 2015 and 2016, the Second Target Company has unrecognised accumulative estimated tax losses carried forward of HK$3,133,804, HK$3,243,568 and HK$3,476,879 respectively which is uncertain as to whether it can be utilised to set off against future taxable income.

9 FIXED ASSETS

Period from 20 March 2014 to 31 December 2014 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2014 Cost Accumulated depreciation Net carrying amount	Office equipment HK$ – 24,878 (3,349) 21,529 24,878 (3,349) 21,529

– IIB-16 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

Year ended 31 December 2015 Opening net book amount Additions Depreciation Closing net book amount At 31 December 2015 Cost Accumulated depreciation Net carrying amount Year ended 31 December 2016 Opening net book amount Depreciation Closing net book amount At 31 December 2016 Cost Accumulated depreciation Net carrying amount ACCOUNTS RECEIVABLE Accounts receivable arising from corporate investment advisory services	2014 HK$ – –	Office equipment HK$ 21,529 6,200 (5,905) 21,824 31,078 (9,254) 21,824 21,824 (6,216) 15,608 31,078 (15,470) 15,608 2015 2016 HK$ HK$ 330,000 300,000 330,000 300,000	Office equipment HK$ 21,529 6,200 (5,905)	Office equipment HK$ 21,529 6,200 (5,905)
				21,824
				31,078 (9,254)
				21,824
				21,824 (6,216)
				15,608
				31,078 (15,470)
				15,608
				2016 HK$ 300,000
				300,000

10 ACCOUNTS RECEIVABLE

As at 31 December 2015 and 2016, all trade receivables were past due but not impaired. The following is an aging analysis of the accounts receivables from corporate investment advisory services based on invoice date and due date at the end of the reporting date:

Overdue 0 – 6 months Over 6 months	2014 HK$ – – –	2015 HK$ 330,000 – 330,000	2016 HK$ – 300,000
			300,000

– IIB-17 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

11 SHARE CAPITAL

At 20 March 2014 (date of incorporation) Issuance of share capital At 31 December 2014, 1 January 2015, 31 December 2015, 1 January 2016 and 31 December 2016	Number of shares – 5,000,000 5,000,000	Share capital HK$ – 5,000,000
		5,000,000

The Second Target Company issued 5,000,000 ordinary shares at HK$1 each for cash on 20 March 2014 to its immediate holding company.

There was no movement of share capital during the years ended 31 December 2015 and 2016.

12 RELATED PARTY TRANSACTIONS

Parties are considered to be related if the Second Target Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operation decisions, or vice versa, or where the Second Target Company and the party subject to common control or common significant influence. Related parties may be individuals or other entities.

Save for disclosed elsewhere in the Historical Financial Information, the Second Target Company had the following balances with related parties in the normal course of business as follows:

(a) Related party transactions and intercompany balances

Statement of comprehensive income Investment advisory fee income from immediate holding company (note (i)) Expenses recharged by the immediate holding company (note(ii)) Statement of financial position Amount due to the immediate holding company (note (iii))	For the period from 20 March 2014 (date of incorporation) to 31 December 2014 HK$ – 789,439 31 December 2014 HK$ 1,809,603	For the year ended 31 December 2015 HK$ 2,000,000 855,113 31 December 2015 HK$ 2,797,812	For the year ended 31 December 2016 HK$ 500,000 214,870
			31 December 2016 HK$ 3,059,111

Notes:

(i) Investment advisory fee income is received from the immediate holding company for the provision of corporate finance services. The fees are calculated based on the fee agreements signed between the two parties.

• (ii) The expenses recharged represent rental expenses, property management fee and government rent and rates paid by the immediate holding company, Great Wall Pan Asia International Investment Company

– IIB-18 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”), which is then recharged to the Second Target Company.

• (iii) Balance represents expenses recharge incurred with the immediate holding company, Great Wall Pan Asia International Investment Company Limited. Such amount was a payable of the Second Target Company as at 31 December 2014, 2015 and 2016. The balances are unsecured, interest-free and repayable on demand.

(b) Key management compensation

Key management includes directors only. Refer to Note 6 for details of key management compensation.

13 FINANCIAL INSTRUMENTS BY CATEGORY

All financial assets and liabilities in the statement of financial position are carried at amortised cost using the effective interest method.

As the financial assets and financial liabilities are short term in nature, the carrying amounts of its financial assets and financial liabilities are a reasonable approximation of their fair values. There are no financial assets and liabilities not carried at fair value but for which the fair value is disclosed.

14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Second Target Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Second Target Company’s overall risk management program seeks to minimise potential adverse effects on the Second Target Company’s financial performances. The risk and the respective risk management policies employed by the Second Target Company to manage these risks are discussed below.

(a) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Second Target Company’s only exposure to interest rate risk arises from the Second Target Company’s cash at banks of HK$4,421,492, HK$4,262,420 and HK$4,341,623 as at 31 December 2014, 2015 and 2016. Cash at banks which earns interests at floating interest rates based on daily bank deposit rates.

The Second Target Company estimates that a movement of 25 basis points in interest rates for all currencies would have an impact of decreasing or increasing the loss before taxation of approximately HK$11,053 HK$10,656 and HK$10,854 for the period/years ended 31 December 2014, 2015 and 2016 mainly as a result of higher or lower net interest income earned on bank balances and cash.

(b) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The Second Target Company’s credit risk primarily arises from cash and bank balances and accounts receivables. At 31 December 2014, 2015 and 2016, all bank balances are placed with the Bank of China (Hong Kong) Limited with credit rating of Aa3 as at the three dates. Management has a credit policy in place and exposures to these credit risks are monitored on an ongoing basis. In addition, the majority of the accounts receivable are derived from a third party. The Second Target Company is of the view that such third party has a strong financial ability for the repayment of the obligation. Hence, the directors consider credit risk exposure on the balance to be low.

(c) Liquidity risk

Liquidity risk is the risk that the Second Target Company will encounter difficulty in raising funds to meet commitments associated with financial instruments. In the management of liquidity risk, the Second Target Company monitors and maintains a level of cash at bank deemed adequate by management to finance the Second Target Company’s operations. In particular, the Second Target Company maintains a level of capital to fulfill the liquid capital requirement under the Securities and Futures (Financial Resources) Rules.

– IIB-19 –

APPENDIX II-B ACCOUNTANT’S REPORT OF THE SECOND TARGET COMPANY

The maturity profile of the Second Target Company’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

Amount due to the immediate holding company Other payables Amount due to the immediate holding company Other payables Amount due to the immediate holding company Other payables	As at 31 December 2014 On demand Less than 3 months Total HK$ HK$ HK$ 1,809,603 – 1,809,603 – 180,000 180,000 1,809,603 180,000 1,989,603 As at 31 December 2015 On demand Less than 3 months Total HK$ HK$ HK$ 2,797,812 – 2,797,812 – 60,000 60,000 2,797,812 60,000 2,857,812 As at 31 December 2016 On demand Less than 3 months Total HK$ HK$ HK$ 3,059,111 – 3,059,111 – 75,000 75,000 3,059,111 75,000 3,134,111	As at 31 December 2014 On demand Less than 3 months Total HK$ HK$ HK$ 1,809,603 – 1,809,603 – 180,000 180,000 1,809,603 180,000 1,989,603 As at 31 December 2015 On demand Less than 3 months Total HK$ HK$ HK$ 2,797,812 – 2,797,812 – 60,000 60,000 2,797,812 60,000 2,857,812 As at 31 December 2016 On demand Less than 3 months Total HK$ HK$ HK$ 3,059,111 – 3,059,111 – 75,000 75,000 3,059,111 75,000 3,134,111
		3,134,111

(d) Capital management

The Second Target Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns to the shareholder and the benefits for other stakeholders and to comply with the capital requirements set by the Securities and Futures Commission. The Second Target Company’s capital structure is regularly reviewed and managed with due regard to the capital management practices of the Second Target Company. Adjustments are made to the capital structure in light of changes in economic conditions affecting the Second Target Company, to the extent that these do not conflict with the directors’ fiduciary duties towards the Second Target Company.

15 ULTIMATE HOLDING COMPANY AND IMMEDIATE HOLDING COMPANY

The Second Target Company is a wholly owned subsidiary of Great Wall Pan Asia International Investment Company Limited (with effect from 8 June 2017 known as “China Great Wall AMC (International) Holdings Company Limited”), which is incorporated in Hong Kong and the ultimate holding company of the Second Target Company is China Great Wall Asset Management Co., Ltd., which is incorporated in the People’s Republic of China.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Second Target Company in respect of any period subsequent to 31 December 2016 and up to the date of this report. No dividend or distribution has been declared or made by the Second Target Company in respect of any period subsequent to 31 December 2016.

– IIB-20 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is an illustrative and unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 31 December 2016 (the “Unaudited Pro Forma Financial Information”) which has been prepared on the basis as set out in the notes below for the purpose of illustrating the effect of the proposed acquisitions of the entire equity interests in the First Target Company and Second Target Company, as if the Acquisitions had been taken place on 31 December 2016.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Acquisitions been completed as at 31 December 2016 or at any future date.

The Unaudited Pro Forma Financial Information of the Enlarged Group should be read in conjunction with other financial information included elsewhere in this circular.

– III-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

NON-CURRENT ASSETS Property, plant and equipment Investment properties Investment in associates CURRENT ASSETS Accounts receivable Prepayments, deposits and other receivables Amounts due from related companies Cash and bank balances TOTAL ASSETS NON-CURRENT LIABILITIES Deferred income tax liabilities CURRENT LIABILITIES Accounts payable, other payables and accrued liabilities Amounts due to associates Amounts due to related companies Current income tax liabilities TOTAL LIABILITIES NET ASSETS	Consolidated statement of assets and liabilities of the Group as at 31 December 2016 HK$’000 Note 1 1,128 1,560,500 3,011	Pro forma adjustments Consolidated statement of assets and liabilities of the First Target Group as at 31 December 2016 Statement of assets and liabilities of the Second Target Company as at 31 December 2016 HK$’000 HK$’000 Note 2 Note 3 1,316 15 – – – – 1,316 15 – 300 21 – 5,825 – 36,727 4,342 42,573 4,642 43,889 4,657 – – 2,284 75 – – 2 3,059 3,532 – 5,818 3,134 5,818 3,134 38,071 1,523	Pro forma adjustments Consolidated statement of assets and liabilities of the First Target Group as at 31 December 2016 Statement of assets and liabilities of the Second Target Company as at 31 December 2016 HK$’000 HK$’000 Note 2 Note 3 1,316 15 – – – – 1,316 15 – 300 21 – 5,825 – 36,727 4,342 42,573 4,642 43,889 4,657 – – 2,284 75 – – 2 3,059 3,532 – 5,818 3,134 5,818 3,134 38,071 1,523	HK$’000 Note 4 – – –	HK$’000 Note 5 – – –	Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group as at 31 December 2016 HK$’000 2,459 1,560,500 3,011
	1,564,639	1,316	15	–	–	1,565,970
	3,407 9,700 – 88,387	– 21 5,825 36,727	300 – – 4,342	– – – (39,571)	– – – –	3,707 9,721 5,825 89,885
	101,494	42,573	4,642	(39,571)	–	109,138
	1,666,133	43,889	4,657	(39,571)	–	1,675,108
	1,574	–	–	–	–	1,574
	20,998 2,228 – 1,973	2,284 – 2 3,532	75 – 3,059 –	– – – –	1,800 – – –	25,157 2,228 3,061 5,505
	25,199	5,818	3,134	–	1,800	35,951
	26,773	5,818	3,134	–	1,800	37,525
	1,639,360	38,071	1,523	(39,571)	(1,800)	1,637,583

– III-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Notes to the unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group

1. The amounts are extracted from the audited consolidated balance sheet of the Group as at 31 December 2016 as set out in the Company’s published annual report for the year ended 31 December 2016.

2. The amounts are extracted from the audited consolidated statement of financial position of the First Target Group as at 31 December 2016 in the accountant’s report as set out in Appendix II-A to this circular. The amounts are rounded to the nearest thousand.

3. The amounts are extracted from the audited statement of financial position of the Second Target Company as at 31 December 2016 in the accountant’s report as set out in Appendix II-B to this circular. The amounts are rounded to the nearest thousand.

4. For the purpose of the Unaudited Pro Forma Financial Information, given that the Group, the First Target Group and the Second Target Company are under the common control of China Great Wall Asset Management Co., Ltd. both before and after the Acquisitions, the Acquisitions will be accounted as business combinations under common control and will be accounted for using the principles of merger accounting in accordance with Accounting Guideline 5 “Merger Accounting for Common Control Combinations” issued by the Hong Kong Institute of Certified Public Accountants.

Pursuant to the terms and conditions of the First Sale and Purchase Agreement and Second Sale and Purchase Agreement, the total consideration for the Acquisitions is approximately HK$39.6 million (approximately HK$38.7 million for the First Acquisition and approximately HK$0.9 million for the Second Acquisition). The adjustment represents the total consideration paid of approximately HK$39.6 million, assuming that completion of the Acquisitions had taken place as of 31 December 2016 and was settled fully by cash.

For the purpose of the Unaudited Pro Forma Financial Information, the difference between the total consideration of HK$39.6 million and the net asset value of the First Target Group and Second Target Company as at 31 December 2016 has been recognised in merger reserve of the Group.

1. The adjustment represents the estimated legal and professional fees and other expenses of approximately HK$1.8 million in connection with the Acquisitions. The amounts are assumed to be paid after the completion of the Acquisitions.

2. No adjustments have been made to reflect any results or other transactions of the Group, the First Target Group and Second Target Company entered into subsequent to 31 December 2016.

– III-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The following is the text of a report received from the reporting accountant of the Company, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

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

To the Directors of Great Wall Pan Asia Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Great Wall Pan Asia Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”), Great Wall Pan Asia Asset Management Limited (the “First Target Company”) and its subsidiaries (the “First Target Group”) and Great Wall Pan Asia Corporate Finance Limited (the “Second Target Company”) (collectively the “Enlarged Group”) by 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 31 December 2016, and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages III-1 to III-3 of the Company’s circular dated 30 June 2017, in connection with the proposed acquisitions of the First Target Group and Second Target Company (the “Transactions”) by the Company. The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on pages III-1 to III-3.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Transactions on the Group’s financial position as at 31 December 2016 as if the Transactions had taken place at 31 December 2016. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s financial statements for the year ended 31 December 2016, on which an audit report has been published.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

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

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.

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Our firm applies Hong Kong Standard on Quality Control 1 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 Accountant’s 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 accountant plans and performs 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 a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Transactions at 31 December 2016 would have been as presented.

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

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

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

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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

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

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

Opinion

In our opinion:

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

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

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

PricewaterhouseCoopers

Certified Public Accountants Hong Kong, 30 June 2017

– III-6 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX IV

The following is the management discussion and analysis on the Target Group for the three years ended 31 December 2014, 2015 and 2016 and which is prepared based on the accountant’s reports of the Target Group set out in Appendix II-A and Appendix II-B to this circular.

THE FIRST TARGET GROUP

Financial review

The revenue of the First Target Group amounted to approximately HK$7,893,212, HK$12,490,429 and HK$33,560,411 during the three years ended 31 December 2016, respectively, which was mainly attributable to the increasing management fees under the asset management agreements dated 13 August 2014 and 21 August 2015 entered into between the First Target Company and the Vendor. Further, approximately HK$16,750,584 of the increase from the year ended 31 December 2015 to the year ended 31 December 2016 is attributable to investment advisory fee income earned during the year ended 31 December 2016, of which, approximately HK$5.4 million was derived from advisory services to a customer in the real estate industry through providing research analysis on overseas real estate and construction market, while approximately HK$11.4 million was derived from advisory services to a customer in the new energy industry through advising on industry/environment/business plan.

Total operating expenses

During the three years ended 31 December 2016, the First Target Group recorded expenses of HK$7,739,449, HK$12,305,870 and HK$16,983,155, respectively. The increase in total operating expenses from the period ended 31 December 2014 to the year ended 31 December 2015 is mainly attributable to the increase in employee benefits expense of directors and staff of HK$2,496,959 and increase in other operating expenses of HK$2,022,133. The increase in other operating expenses is mainly attributable to increase in rental expenses, entertainment expenses and legal and professional fee as a result of business expansion and increase in headcount of the First Target Group.

The increase in expenses from the year ended 31 December 2015 to the year ended 31 December 2016 is mainly attributable to the increase in employee benefits expense of directors and staff of HK$4,470,011. The increases in employee benefits expense during the three years ended 31 December 2016 is mainly attributable to increase in headcount of the First Target Group.

Profit before tax

The profit before tax amounted to HK$154,769, HK$187,789 and HK$17,273,897 during the three years ended 31 December 2016. The increases in profit before tax is primarily due to the increase in revenue, as offset by increases in total operating expenses, as explained above.

– IV-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX IV

Tax expense

The First Target Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions in which the Target Group operates. Tax expense amounted to HK$25,537, HK$139,809 and HK$3,862,366 during the three years ended 31 December 2016, representing effective tax rate of 16.5%, 74.5% and 22.4% during the same periods. The effective tax rate of 16.5% during the period ended 31 December 2014 is the same as the Hong Kong statutory tax rate. The increase in effective tax rate to 74.5% during the year ended 31 December 2015 is primarily due to increase in legal and professional fees which are non-deductible for tax computation. During the year ended 31 December 2016, the First Target Group’s subsidiary pays corporate income tax in the People’s Republic of China at the rate of 25% which resulted in a higher effective tax rate.

Profit for the period/year

As a result of the foregoing, primarily due to the increases in revenue as offset by increases in the total operating expenses and tax expense, the First Target Group’s net profit decreased from HK$129,232 for the period ended 31 December 2014 to HK$47,980 for the year ended 31 December 2015. With the further increase in revenue derived from the provision of its investment advisory services, the First Target Group’s net profit increased from HK$47,980 for the year ended 31 December 2015 to HK$13,411,531 for the year ended 31 December 2016.

Liquidity and financial resources

The First Target Group’s net assets amounted to HK$10,129,232, HK$10,177,212 and HK$38,070,855 as at 31 December 2014, 2015 and 2016. The First Target Group’s current liabilities amounted to HK$4,238,381, HK$2,172,583 and HK$5,818,305 as at 31 December 2014, 2015 and 2016.

The First Target Group had a total amount due to its sole shareholder of HK$3,632,844, HK$1,564,461 as at 31 December 2014 and 2015, respectively, which were non-interest bearing and payable on demand.

Borrowings

As at 31 December 2014, 2015 and 2016, the First Target Group did not have any external bank borrowings.

Gearing ratio

As at 31 December 2014, 2015 and 2016, the gearing ratio of the First Target Group was approximately 0%, 0% and 0%, respectively.

Pledge of assets

As at 31 December 2014, 2015 and 2016, none of the assets of the First Target Group was pledged.

– IV-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX IV

Significant investments

During the three years ended 31 December 2016, the First Target Company did not have any significant investment.

Contingent liabilities

As at 31 December 2014, 2015 and 2016, the First Target Group did not have any material contingent liabilities.

Material acquisitions and disposals

The First Target Company disposed of its entire interest in Great Wall Pan Asia International Asset Management (Cayman) Limited on 14 October 2016 at nil consideration.

Save as disclosed above, the First Target Group did not have any other material acquisition or disposal during the three years ended 31 December 2016.

Foreign exchange risks

The First Target Group is not exposed to material foreign exchange risks other than the risks arising from Renminbi (“ RMB ”).

As at 31 December 2014 and 2015, the First Target Group is not exposed to significant foreign exchange risk. The majority of the First Target Group’s assets and liabilities are denominated in HK$ and United States dollar (“ US$ ”). As US$ is pegged to HK$, the First Target Group is not exposed to significant foreign exchange risk as at these dates.

As at 31 December 2016, the other currency which the First Target Group exposed to is RMB and the net amount exposure of RMB6,845,610 (equivalent to approximately HK$7,610,054) represents 20% of the total equity of the First Target Group. The First Target Group will closely monitor the foreign currency exposure and arrange for hedging facilities if and when necessary.

Staff and remuneration policies

For each of the year ended 31 December 2014, 2015 and 2016, the total number of staff of the First Target Group was 7, 14 and 23, respectively. The First Target Group’s employee benefits and remuneration policy are in line with prevailing market practice, as salary increments are assessed based on the performance of individual staff member. The Group intends to employ all of the First Target Group’s employees and retain their current positions after completion of the Acquisitions.

– IV-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX IV

SECOND TARGET COMPANY

Financial review

The revenue of the Second Target Company amounted to approximately HK$112,777, HK$3,528,449 and HK$988,503 during the three years ended 31 December 2016. The increase in the revenue between the year ended 31 December 2014 and the year ended 31 December 2015 was mainly attributable to the investment advisory fee income from provision of corporate finance services during the relevant periods, and the drop in the revenue between the year ended 31 December 2015 and the year ended 31 December 2016 was mainly due to the departure of an experienced responsible officer from the Second Target Company and the consequential loss of business.

The Second Target Company recorded loss before taxation in the amount of HK$3,133,804, HK$109,764 and HK$233,312 during the three years ended 31 December 2016, respectively. The amount of loss after taxation is the same. The Second Target Company was incorporated and started its business in the year 2014 with limited revenue recognised during the year ended 31 December 2014. The loss incurred during the year ended 31 December 2014 was mainly attributable to employee benefits expense of HK$2,212,483 and rental expenses of HK$648,130. The decrease in the losses incurred between the year ended 31 December 2014 and the year ended 31 December 2015 was mainly attributable to increase in revenue during the year 2015 due to increased contract volume. The Second Target Company experienced an increased loss between the year ended 31 December 2015 and the year ended 31 December 2016, which was mainly attributable to the costs associated with the recruitment and the remuneration of responsible officers to fulfill the requirement of maintaining at least two responsible officers for its regulated activity under the licensing requirements of the SFO.

During the three years ended 31 December 2016, the Second Target Company recorded expenses of HK$3,246,581, HK$3,638,213 and HK$1,221,815, respectively. The decrease in expenses were mainly attributable to the decreasing remuneration of directors and employees and other operating expenses.

Liquidity and financial resources

The Second Target Company’s net assets amounted to HK$1,866,196, HK$1,756,432 and HK$1,523,120 as at 31 December 2014, 2015 and 2016. The Second Target Company’s current liabilities amounted to HK$2,576,825, HK$2,857,812 and HK$3,134,111 as at 31 December 2014, 2015 and 2016.

The Second Target Company had a total amount due to its sole shareholder of HK$1,809,603, HK$2,797,812 and HK$3,059,111 as at 31 December 2014, 2015 and 2016, which were non-interest bearing and payable on demand.

Borrowings

As at 31 December 2014, 2015 and 2016, the Second Target Company did not have any external bank borrowings.

– IV-4 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX IV

Gearing ratio

As at 31 December 2014, 2015 and 2016, the gearing ratio of the Second Target Company was approximately 0%, 0% and 0%, respectively.

Pledge of assets

As at 31 December 2014, 2015 and 2016, none of the assets of the Second Target Company was pledged.

Significant investments

During the three years ended 31 December 2016, the Second Target Company did not have any significant investment.

Contingent liabilities

As at 31 December 2014, 2015 and 2016, the Second Target Company did not have any material contingent liabilities.

Material acquisitions and disposals

The Second Target Company did not have any material acquisition and disposal during the three years ended 31 December 2016.

Foreign exchange risks

The Second Target Company has no exposure to foreign currency risk as all of its transactions are denominated in HK$.

Staff and remuneration policies

For each of the year ended 31 December 2014, 2015 and 2016, the total number of staff in the Second Target Company was 2, 3 and 0, respectively. The Second Target Company’s employee benefits and remuneration policy are in line with prevailing market practice, as salary increments are assessed based on the performance of individual staff member. The Group intends to employ all of the Second Target Company’s employees and retain their current positions after completion of the Acquisitions.

– IV-5 –

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 Group. 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. INTEREST OF DIRECTORS AND CHIEF EXECUTIVES

Directors’ and chief executive’s interests

As at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company under Section 352 of the SFO, or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

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

Substantial Shareholders’ Interests

Save as disclosed below, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any other persons (other than Directors or chief executive of the Company) who had interests or short positions in the Shares or underlying Shares as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO or which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

			Approximate
		Number of	percentage of
Name	Capacity	Shares held	shareholding(3)
China Great Wall Asset	Interest in a controlled	1,174,018,094 (L)	74.89%
Management Co., Ltd	corporation
Great Wall Pan Asia	Beneficial owner	1,174,018,094 (L)	74.89%
(BVI) Holding
Limited(1)

– V-1 –

GENERAL INFORMATION

APPENDIX V

			Approximate
		Number of	percentage of
Name	Capacity	Shares held	shareholding(3)
Central Huijin	Interest in a controlled	155,000,000 (L)	9.89%
Investment Ltd.(2)	corporation
China Construction	Interest in a controlled	155,000,000 (L)	9.89%
Bank Corporation(2)	corporation
Wan Tai Investments	Beneficial owner	155,000,000 (L)	9.89%
Limited(2)

The letter “L” denotes the entity’s long position in such shares.

Notes:

• (1) Great Wall Pan Asia (BVI) Holding Limited is a wholly-owned subsidiary of China Great Wall Asset Management Co., Ltd.. Under the SFO, China Great Wall Asset Management Co., Ltd. is deemed to be interested in all the Shares owned by Great Wall Pan Asia (BVI) Holding Limited.

• (2) Central Huijin Investment Ltd. directly holds 57.31% of China Construction Bank Corporation which, in turn, indirectly owns 100% of Wan Tai Investments Limited. Wan Tai Investments Limited is therefore a controlled corporation of China Construction Bank Corporation and Central Huijin Investment Ltd. pursuant to Section 316 of the SFO.

• (3) Approximate percentage was calculated based on the 1,567,745,596 ordinary Shares in issue as at the Latest Practicable Date.

3. DIRECTOR’S INTERESTS IN CONTRACTS AND ASSETS

As at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Enlarged Group subsisting at the Latest Practicable Date which was significant in relation to the business of the Enlarged Group.

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

4. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

– V-2 –

GENERAL INFORMATION

APPENDIX V

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a service contract with any member of the Enlarged Group which is not expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation).

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016 (being the date to which the latest published audited financial statements of the Company were made up).

7. MATERIAL LITIGATION

As at the Latest Practicable Date, none of the members of the Enlarged Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

8. MATERIAL CONTRACTS

The following contracts (being contracts entered into outside the ordinary course of business carried on by the Group) have been entered into by members of the Group within the two years immediately preceding the date of this circular that are, or may be material:

• (a) the sale and purchase and subscription agreement dated 19 October 2015 between Affleck Limited, a wholly-owned subsidiary of the Company, and among others, MyDress AME Group Limited and MyDress Holdings Limited, pursuant to which Affleck Limited conditionally agree to acquire 31% of the existing issued shares in the capital of MyDress Holdings Limited from MyDress AME Group Limited and subscribe for a further 37.18% of the enlarged issued share capital of MyDress Holdings Limited and the HK$3 million note convertible into shares in MyDress Holdings Limited, which was subsequently terminated by the termination agreement dated 11 December 2015;

– V-3 –

GENERAL INFORMATION

APPENDIX V

• (b) the sale and purchase agreement dated 11 December 2015 between the Company and Alibaba Investment Limited, pursuant to which the Company agreed to sell and Alibaba Investment Limited agreed to purchase the media business of the Group for a cash consideration of HK$2,060.6 million;

• (c) the deed of adherence dated 5 April 2016 executed by the Company, pursuant to which the Company agreed to be bound by and comply with the shareholders agreement dated 1 November 1997 between Dymocks Franchise Systems (NSW) Pty Limited, South China Morning Post Finance (Cayman) Limited, New Trend International Limited and Dymocks Franchise Systems (China) Limited with respect to New Trend International Limited;

• (d) the novation agreement dated 11 April 2016 between SCMP Retailing Limited (as the retiring party), Dymocks Franchise Systems (China) Limited (as the continuing party) and the Company (as the new party), pursuant to which the parties agreed to transfer by novation from SCMP Retailing Limited to the Company the rights and obligations under a loan agreement dated 24 February 2009;

• (e) the sale and purchase agreement relating to the entire issued share capital of Coastline International Limited (“ Coastline ”) dated 12 August 2016 between Armada Property Investment Limited (“ Armada Property ”) and Wealth Luck Holdings Limited, which was terminated on 2 September 2016;

• (f) the deed of indemnity dated 12 August 2016 executed by Kerry Media Limited and the Company under which Kerry Media Limited granted an indemnity in favour of the Company in connection with the sale of the entire issued share capital of Coastline;

• (g) the sale and purchase agreement relating to the entire issued share capital of Coastline dated 2 September 2016 between Armada Property and Paulton Global Limited;

• (h) the First Sale and Purchase Agreement; and

• (i) the Second Sale and Purchase Agreement.

– V-4 –

GENERAL INFORMATION

APPENDIX V

9. EXPERTS AND CONSENT

The following are the qualifications of the professional advisers who have given the Company opinions or provided advice referred to or contained in this circular:

Nuada Limited

Licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

PricewaterhouseCoopers

Certified Public Accountants, being the reporting accountant for the financial information of the First Target Group and the Second Target Company and the unaudited pro forma financial information of the Enlarged Group

As at the Latest Practicable Date, the experts named above had no shareholding interest, directly or indirectly, in any member of the Group or right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

As at the Latest Practicable Date, the experts named above did not have any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any member of the Enlarged Group, or proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2016, the date to which the latest published audited financial statements of the Group were made up.

Each of the experts named above has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of the text of its letter dated the date of this circular and/or the references to its name in the form and context in which they respectively appear.

10. MISCELLANEOUS

• (a) The company secretary of the Company is Ms. Zheng Yuanyuan.

• (b) The principal share registrar and transfer office of the Company in Bermuda is MUFG Fund Services (Bermuda) Limited, The Belvedere Building, 69 Pitts Bay Road Pembroke HM08, Bermuda.

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

• (d) The registered office of the Company is situated at Canon’s Court, 22 Victoria Street Hamilton HM12, Bermuda. The head office and principal place of business of the Company in Hong Kong is situated at Units 6507-6510, 65/F., The Center, 99 Queen’s Road Central, Hong Kong.

• (e) The English text of this circular and the accompanying form of proxy shall prevail over its Chinese text.

– V-5 –

GENERAL INFORMATION

APPENDIX V

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company in Hong Kong at Units 6507-6510 on the 65th Floor, The Center, 99 Queen’s Road Central, Hong Kong, from the date of this circular up to and including the date of the SGM and at the SGM:

• (a) the memorandum of association and Bye-Laws of the Company;

• (b) the letter from the Board to the Independent Shareholders, the text of which is set out on pages 7 to 24 of this circular;

• (c) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 25 to 26 of this circular;

• (d) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 27 to 51 of this circular;

• (e) the accountant’s reports on the First Target Group and the Second Target Company issued by PricewaterhouseCoopers, the text of which is set out in Appendix II-A and Appendix II-B of this circular;

• (f) the independent reporting accountant’s assurance report on the pro forma financial information of the Enlarged Group issued by PricewaterhouseCoopers, the text of which is set out in Appendix III to this circular;

• (g) the material contracts referred to in paragraph 8 of this Appendix;

• (h) the written consents referred to in paragraph 9 of this Appendix;

• (i) the First Sale and Purchase Agreement;

• (j) the Second Sale and Purchase Agreement;

• (k) the Restated Asset Management Agreement;

• (l) circular of the Company dated 16 May 2017; and

• (m) this circular.

– V-6 –

NOTICE OF SGM

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GREAT WALL PAN ASIA HOLDINGS LIMITED (長城環亞控股有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 583)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Special General Meeting of Great Wall Pan Asia Holdings Limited (the “ Company ”) will be held at United Conference Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Friday, 21 July 2017 at 11:00 a.m. for the purposes of considering and, if thought fit, pass with or without amendments the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT

2. (a) the First Sale and Purchase Agreement dated 19 May 2017 (the “ First Sale and Purchase Agreement ”), a copy of which has been produced to the meeting marked “A” and initialled by the Chairman of the meeting for identification purposes) entered into between Great Wall Pan Asia III Holding Limited (the “ First Purchaser ”) and China Great Wall AMC (International) Holdings Company Limited (中國長城資產(國際)控股有限公司) (formerly known as “Great Wall Pan Asia International Investment Co., Limited (長城環亞國際投資 有限公司)”) (the “ Vendor ”), pursuant to which the Vendor conditionally agreed to sell, and the First Purchaser conditionally agreed to purchase, the entire issued share capital in the First Target Company, for a cash consideration of HK$38,701,969 be and is hereby approved, ratified and confirmed; and

3. (b) any one of the Directors of the Company be and is hereby authorised to do all such acts and things, to sign and execute all documents or agreements under hand (and, where required, under the common seal of the Company together with any other Director or the Company Secretary of the Company) for and on behalf of the Company as he/she/they may consider necessary, desirable, appropriate or expedient in connection with and/or to implement and/or give effect to the First Sale and Purchase Agreement and the transactions contemplated thereunder, and to agree to such verification, amendment or waiver as are, in the opinion of the Directors, in the interests of the Company.”

4. “ THAT

5. (a) the Second Sale and Purchase Agreement dated 19 May 2017 (the “ Second Sale and Purchase Agreement ”), a copy of which has been produced to the meeting

6. For identification purpose only

– N-1 –

NOTICE OF SGM

marked “B” and initialled by the Chairman of the meeting for identification purposes) entered into between Great Wall Pan Asia II Holding Limited (the “ Second Purchaser ”) and the Vendor, pursuant to which the Vendor conditionally agreed to sell, and the Second Purchaser conditionally agreed to purchase, the entire issued share capital in the Second Target Company, for a cash consideration of HK$868,834 be and is hereby approved, ratified and confirmed; and

• (b) any one of the Directors of the Company be and is hereby authorised to do all such acts and things, to sign and execute all documents or agreements under hand (and, where required, under the common seal of the Company together with any other Director or the Company Secretary of the Company) for and on behalf of the Company as he/she/they may consider necessary, desirable, appropriate or expedient in connection with and/or to implement and/or give effect to the Second Sale and Purchase Agreement and the transactions contemplated thereunder and to agree to such verification, amendment or waiver as are, in the opinion of the Directors, in the interests of the Company.”

• “ THAT

• (a) subject to the passing of the resolution no. 1 above, the original asset management agreement dated 19 May 2017, as amended and restated by the restated asset management agreement dated 29 June 2017 (the “ Restated Asset Management Agreement ”), a copy of which has been produced to the meeting marked “C” and initialled by the Chairman of the meeting for identification purposes) entered into between the First Target Company and the Vendor, pursuant to which the First Target Company conditionally agreed to provide discretionary asset management services to the Vendor pursuant to the terms and conditions contained therein be and is hereby approved, ratified and confirmed; and

• (b) any one of the Directors of the Company be and is hereby authorised to do all such acts and things, to sign and execute all documents or agreements under hand (and, where required, under the common seal of the Company together with any other Director or the Company Secretary of the Company) for and on behalf of the Company as he/she/they may consider necessary, desirable, appropriate or expedient in connection with and/or to implement and/or give effect to the Restated Asset Management Agreement (including the proposed annual caps contemplated thereunder) and the transactions contemplated thereunder and to agree to such verification, amendment or waiver as are, in the opinion of the Directors, in the interests of the Company.”

By Order of the Board Great Wall Pan Asia Holdings Limited Ou Peng Chairman

Hong Kong, 30 June 2017

– N-2 –

NOTICE OF SGM

Notes:

1. Resolutions at the meeting will be taken by poll pursuant to the Company’s Bye-Laws and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) (except where the chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands) and the results of the poll will be published on the websites of Stock Exchange and the Company in accordance with the Listing Rules.

2. Any shareholder of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint not more than two persons (who must be individuals) as his/her proxies to attend and vote on his/her behalf. A proxy need not be a shareholder of the Company.

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

4. Where there are joint registered holders of any share, any one of such persons may vote at the above meeting, either personally or by proxy, in respect of such share(s) as if he/she were solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share(s) shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share stands will for this purpose be deemed joint holders thereof.

5. A form of proxy for the above meeting is enclosed. In order to be valid, the completed and signed form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be delivered to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 11:00 a.m. on Wednesday, 19 July 2017 (or if the SGM is adjourned, not less than 48 hours before the time appointed for the holding of the adjourned SGM). Completion and delivery of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

6. For the determining the entitlement to attend and vote at the meeting, the register of members of the Company will be closed from Monday, 17 July 2017 to Friday, 21 July 2017, both dates inclusive, during which period no transfer of shares shall be effected. In order to be eligible to attend and vote at the meeting, all duly completed and signed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 14 July 2017.

7. In accordance with Chapter 14A of the Listing Rules, Great Wall Pan Asia (BVI) Holding Limited and its associates are required to abstain from voting on the above ordinary resolutions.

8. Unless otherwise defined in this notice of SGM, capitalised terms used herein shall have the same meanings ascribed to them in the circular of the Company dated 30 June 2017.

9. Shareholders of the Company are advised to read the circular to the shareholders of the Company dated 30 June 2017 which contains further information on the proposals in relation to the Acquisitions and the Transaction. The circular will be sent to the shareholders of the Company on 30 June 2017.

10. Bad Weather Arrangements

If a typhoon warning signal no. 8 or above is hoisted or is expected to be hoisted or a black rainstorm warning signal is in force or expected to be in force in Hong Kong at any time between 7:00 a.m. and 11:00 a.m. on the date of the meeting, the meeting will be automatically postponed to a later date. The Company will post an announcement on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.gwpaholdings.com) to notify shareholders of the date, time and location of the rescheduled meeting.

The SGM will be held as scheduled when an amber or a red rainstorm warning signal is in force in Hong Kong. Shareholders should in any event exercise due care and caution when deciding to attend the SGM in adverse weather conditions.

– N-3 –