Modern Land (China) Co., Limited — Proxy Solicitation & Information Statement 2016

Aug 11, 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Modern Land (China) Co., Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or 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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MODERN LAND (CHINA) CO., LIMITED 當 代 置 業（ 中 國 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1107)

MAJOR TRANSACTION

ACQUISITION OF 100% EQUITY INTEREST IN NANJING XINLEI PROPERTY DEVELOPMENT COMPANY LIMITED

A letter from the Board is set out on pages 4 to 12 of this circular.

12 August 2016

CONTENTS

		Pages
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I	— Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	— Financial Information of Nanjing Xinlei . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III — Unaudited Pro Forma Financial Information
	of the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV — Management Discussion and Analysis on Nanjing Xinlei . . . . . . .		IV-1
Appendix V	— Property Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI — Reconciliation of Appraised Property Value
	with Net Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
Appendix VII— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		VII-1

– i –

DEFINITIONS

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

• ‘‘Acquisition’’ the proposed acquisition of the entire registered capital of Nanjing Xinlei in accordance with the terms of the Equity Transfer Agreement

• ‘‘Announcement’’ the announcement of the Company dated 20 June 2016 in relation to the Acquisition

• ‘‘associate’’ has the meaning as ascribed to it in the Listing Rules

• ‘‘Board’’ the board of Directors

• ‘‘Company’’ Modern Land (China) Co., Limited (當代置業(中國)有限公 司), an exempted company incorporated on 28 June 2006 under the laws of the Cayman Islands with limited liability, whose Shares are listed on the Main Board of the Stock Exchange

• ‘‘connected person’’ has the meaning ascribed to it under the Listing Rules

• ‘‘Consideration’’ the consideration payable by Yuedong Benpao for the Acquisition in the amount of RMB340,000,000 (equivalent to approximately HK$404,600,000)

• ‘‘controlling shareholder(s)’’ has the meaning ascribed to it under the Listing Rules

• ‘‘Debt’’

• the loan and interest owed by Nanjing Xinlei to Nanjing Xinhe, Nanjing Steel and Wuhan Sanjing in the total amount of RMB680,503,958.31 (equivalent to approximately HK$809,799,710.39)

• ‘‘Debt Settlement’’ the proposed settlement of the Debt by Yuedong Benpao on behalf of Nanjing Xinlei in accordance with the terms of the Debt Settlement Agreement

• ‘‘Debt Settlement Agreement’’ the debt settlement agreement (債務清償合同) dated 20 June 2016 (as amended and supplemented by a supplemental agreement thereto of the same date) among Nanjing Xinhe, Yuedong Benpao, Nanjing Steel, Wuhan Sanjing and Nanjing Xinlei relating to the Debt Settlement

• ‘‘Director(s)’’ director(s) of the Company from time to time

• ‘‘Enlarged Group’’

• the Group as enlarged by the consolidation of Nanjing Xinlei

– 1 –

DEFINITIONS

• ‘‘Equity Exchange’’

Nanjing City Public Resources Exchange* (南京市公共資 源交易中心)

• ‘‘Equity Transfer Agreement’’

• the equity transfer agreement (產權交易合同) dated 20 June 2016 (as amended and supplemented by a supplemental agreement thereto of the same date) between Nanjing Xinhe and Yuedong Benpao relating to the Acquisition

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HK$’’ Hong Kong dollar, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

• the Hong Kong Special Administrative Region of the PRC

• ‘‘Independent Third Party’’ a party that is independent of the Company and its connected persons

• ‘‘Latest Practicable Date’’

• 9 August 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

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

• ‘‘Nanjing Land’’ the land parcel located in Gulou District of Nanjing, Jiangsu Province, the PRC, with the land use rights of which held by Nanjing Xinlei

• ‘‘Nanjing Steel’’ Nanjing Iron & Steel Group Corporation* (南京鋼鐵集團有 限公司), a company established in the PRC with limited liability

• ‘‘Nanjing Xinhe’’ Nanjing Xinhe Property Development Company Limited* (南京鑫和房地產開發有限公司), a company established in the PRC with limited liability

• ‘‘Nanjing Xinlei’’

• Nanjing Xinlei Property Development Company Limited* (南京鑫磊房地產開發有限公司), a company established in the PRC with limited liability

• ‘‘PRC’’

• the People’s Republic of China

• ‘‘RMB’’

• Renminbi, the lawful currency of the PRC

• ‘‘Service Fee’’

• the service fee payable by each of the parties to the Equity Transfer Agreement in the amount of RMB3,400,000 to the Equity Exchange

– 2 –

DEFINITIONS

‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ‘‘Share(s)’’ ordinary share(s) with a nominal value of US$0.01 each in the share capital of the Company ‘‘Shareholder(s)’’ holder(s) of the Shares

• ‘‘Share Option Scheme’’ the share option scheme adopted by the Company on 14 June 2013

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Super Land’’ Super Land Holdings Limited, a company incorporated in the British Virgin Islands with limited liability and a controlling Shareholder

• ‘‘US$’’ United States dollar, the lawful currency of the United States of America

• ‘‘Wuhan Sanjing’’ Wuhan Sanjing Property Development Company Limited* (武漢三金房地產開發有限公司), a company established in the PRC with limited liability

• ‘‘Yuedong Benpao’’ Yuedong Benpao Real Estate (Beijing) Company Limited* (躍動奔跑置業(北京)有限公司), a company established in the PRC with limited liability

• ‘‘%’’ per cent.

– 3 –

LETTER FROM THE BOARD

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MODERN LAND (CHINA) CO., LIMITED 當 代 置 業（ 中 國 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1107)

Executive Directors: Mr. Zhang Lei (Chairman) Mr. Zhang Peng (President) Mr. Chen Yin

Non-executive Directors: Mr. Zhong Tianxiang Mr. Fan Qingguo

Independent non-executive Directors: Mr. Qin Youguo Mr. Cui Jian Mr. Hui Chun Ho, Eric

Registered Office: Floor 4 Willow House Cricket Square P.O. Box 2804 Grand Cayman KY1-1112 Cayman Islands

Place of Business in Hong Kong: Room 505 ICBC Tower Citibank Plaza 3 Garden Road, Central Hong Kong 12 August 2016

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

ACQUISITION OF 100% EQUITY INTEREST IN NANJING XINLEI PROPERTY DEVELOPMENT COMPANY LIMITED

INTRODUCTION

On 20 June 2016, the Board announced that Yuedong Benpao (an indirect wholly-owned subsidiary of the Company) (as purchaser) and Nanjing Xinhe (as vendor) entered into the Equity Transfer Agreement whereby Nanjing Xinhe agreed to dispose of, and Yuedong Benpao agreed to acquire from Nanjing Xinhe, 100% equity interest in Nanjing Xinlei at the Consideration of RMB340,000,000 (equivalent to approximately HK$404,600,000).

– 4 –

LETTER FROM THE BOARD

On the same date, Yuedong Benpao, Nanjing Xinhe, Nanjing Steel, Wuhan Sanjing and Nanjing Xinlei entered into the Debt Settlement Agreement whereby Yuedong Benpao agreed to settle on behalf of Nanjing Xinlei the Debt in the aggregate amount of RMB680,503,958.31 (equivalent to approximately HK$809,799,710.39) owed by Nanjing Xinlei to Nanjing Xinhe, Nanjing Steel and Wuhan Sanjing as at 29 February 2016.

Nanjing Xinlei holds the land use rights of the Nanjing Land and is the project company established by Nanjing Xinhe for its development.

The purpose of this circular is to provide you with information in respect of, among other things, the details of the Equity Transfer Agreement and the Debt Settlement Agreement, the financial information of the Group, the financial information of Nanjing Xinlei, the unaudited pro forma financial information of the Enlarged Group and the valuation report of the Nanjing Land.

THE ACQUISITION

As disclosed in the Announcement, Yuedong Benpao (an indirect wholly-owned subsidiary of the Company) participated in an open bidding process conducted by the Equity Exchange and on 15 June 2016, it was notified by the Equity Exchange that it is the successful bidder to acquire 100% equity interest in Nanjing Xinlei at the Consideration of RMB340,000,000 (equivalent to approximately HK$404,600,000).

Pursuant to the terms of the open bidding process set by the Equity Exchange, on 20 June 2016, Yuedong Benpao entered into (i) the Equity Transfer Agreement with Nanjing Xinhe and (ii) the Debt Settlement Agreement with Nanjing Xinhe, Nanjing Steel, Wuhan Sanjing and Nanjing Xinlei. The salient terms of the Equity Transfer Agreement and the Debt Settlement Agreement are set out as follows:

(I) Equity Transfer Agreement

Date

20 June 2016

Parties

• (1) Yuedong Benpao (an indirect wholly-owned subsidiary of the Company); and

• (2) Nanjing Xinhe

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Nanjing Xinhe and its ultimate beneficial owners are Independent Third Parties.

Subject assets to be acquired

As at the date of the Equity Transfer Agreement, Nanjing Xinlei had a registered capital of RMB50,000,000, which was fully paid up.

– 5 –

LETTER FROM THE BOARD

Pursuant to the terms of the Equity Transfer Agreement, Nanjing Xinhe agreed to dispose of, and Yuedong Benpao agreed to acquire from Nanjing Xinhe, 100% equity interest in Nanjing Xinlei.

Upon completion of the Acquisition, Nanjing Xinlei will become an indirect wholly-owned subsidiary of the Company.

Consideration and Service Fee

The Consideration for the Acquisition is RMB340,000,000 (equivalent to approximately HK$404,600,000), payable in cash as described below. The Consideration, being the final bidding price put forward by Yuedong Benpao in order to successfully win the bid, was determined by the open bidding process conducted on the Equity Exchange.

In deciding to join the open bidding process and fix the final bidding price at RMB340,000,000, the Group took into account a number of factors including but not limited to (i) the reference price of RMB216,000,000 set by the Equity Exchange; (ii) the equity valuation of Nanjing Xinlei amounted to RMB214,291,600 as at 29 February 2016 prepared by Jiangsu Huaxin Asset Appraisal Company Limited* (江 蘇華信資產評估有限公司) (‘‘Jiangsu Huaxin’’), an independent valuer appointed by Nanjing Xinhe; (iii) land price in the surrounding areas; (iv) economic potential of Nanjing; (v) the development potential of the Nanjing Land and the expected profits to be generated therefrom; and (vi) the dynamic nature of the open bidding process and potentially fierce competition which made it necessary for the Group to advance a bidding price that was competitive enough to win the bid.

Taking into account the surging urban mixed residential land price in Nanjing between October 2013 and February 2016, the appraised value of the total assets of Nanjing Xinlei as at 29 February 2016 (which value reflects the market value of the properties owned by Nanjing Xinlei as at 29 February 2016) was RMB895,158,200, representing a premium of RMB165,294,900 or 22.65% over the book value, while the appraised value of Nanjing Xinlei of RMB214,291,600 represents a premium of RMB165,294,900 or 337.36% over its book net asset value of RMB48,900,000. The appraised value of the total liabilities of Nanjing Xinlei as at 29 February 2016 was identical to its book value.

Yuedong Benpao already paid RMB50,000,000 into the designated bank account of the Equity Exchange when submitting the bid, which will be applied in and towards partial satisfaction of the same amount of the Consideration payable to Nanjing Xinhe within (3) working days after the Equity Transfer Agreement has become effective. The Equity Transfer Agreement shall become effective upon execution by both parties thereto and the Equity Exchange.

The balance of the Consideration is required to be paid in cash into the designated bank account of the Equity Exchange within nine (9) working days after the Equity Transfer Agreement has become effective.

– 6 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Consideration has been paid in full.

Service fee

Each of Yuedong Benpao and Nanjing Xinhe shall pay to the Equity Exchange the Service Fee in the sum of RMB3,400,000 within two (2) working days after the effective date of the Equity Transfer Agreement.

As at the Latest Practicable Date, the Service Fee has been paid by each party to the Equity Transfer Agreement in full.

Completion

Pursuant to the terms of the Equity Transfer Agreement, Nanjing Xinhe and Yuedong Benpao shall enter into the property rights transfer certificate (產權移交書) after the full payment of the Consideration and Service Fee by Yuedong Benpao into the designated bank account of the Equity Exchange and the full settlement of the Debt (as detailed below) by Yuedong Benpao. Upon receipt of the property rights transfer certificate (產權移交書), the Equity Exchange shall issue a property rights transfer certificate (進場交易證明書). Nanjing Xinhe and Yuedong Benpao shall complete the registration of the Equity Transfer with the relevant administration for industry and commerce based on the Equity Transfer Agreement and the property rights transfer certificate (進場交易證明書). Completion of the Acquisition shall take place upon completion of the said registration of Equity Transfer.

As at the Latest Practicable Date, completion of the Acquisition has not taken place.

(II) Debt Settlement Agreement

As agreed by the parties to the Equity Transfer Agreement therein, Yuedong Benpao shall enter into the Debt Settlement Agreement with Nanjing Xinlei and its creditors concurrently.

Date

20 June 2016

Parties

• (1) Yuedong Benpao (an indirect wholly-owned subsidiary of the Company);

• (2) Nanjing Xinhe;

• (3) Nanjing Steel;

• (4) Wuhan Sanjing; and

• (5) Nanjing Xinlei

– 7 –

LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, (i) Nanjing Xinlei is 100% owned by Nanjing Xinhe while both Nanjing Xinhe and Wuhan Sanjing are indirect wholly-owned subsidiaries of Nanjing Steel; and (ii) Nanjing Steel and its ultimate beneficial owners are Independent Third Parties.

Key terms of the Debt Settlement Agreement

As at 29 February 2016, the Debt owed by Nanjing Xinlei to Nanjing Steel, Nanjing Xinhe and Wuhan Sanjing amounted to RMB680,503,958.31 (equivalent to approximately HK$809,799,710.39), a breakdown of which is set out as follows:

Principal amount Interest payable (RMB) (RMB) Nanjing Steel 300,000,000 37,903,002.80 Nanjing Xinhe 296,000,000 15,328,626.74 Wuhan Sanjing 30,000,000 1,272,328.77 Total:	Total amount of Debt owed (RMB) 337,903,002.80 311,328,626.74 31,272,328.77
	680,503,958.31

Yuedong Benpao agreed to settle the Debt in cash on behalf of Nanjing Xinlei in two instalments as follows:

• (i) 50% of the Debt shall be paid to the relevant creditors within nineteen (19) working days from the date of the Equity Transfer Agreement; and

• (ii) the remaining 50% of the Debt shall be paid to the relevant creditors within twenty-nine (29) working days from the date of the Equity Transfer Agreement.

As at the Latest Practicable Date, the Debt has been settled in full.

INFORMATION ABOUT PARTIES TO THE EQUITY TRANSFER AGREEMENT AND THE DEBT SETTLEMENT AGREEMENT

The Company and Yuedong Benpao

The Company is incorporated in the Cayman Islands with limited liability and its Shares are listed on the Main Board of the Stock Exchange. The Group is a property developer focused on the development on green, energy-saving and eco-friendly residences in the PRC.

Yuedong Benpao is a company established in the PRC with limited liability. It is an indirect wholly-owned subsidiary of the Company and has not commenced operation as at the date hereof.

– 8 –

LETTER FROM THE BOARD

Nanjing Xinhe, Nanjing Steel and Wuhan Sanjing

Each of Nanjing Xinhe, Nanjing Steel and Wuhan Sanjing is a company established in the PRC with limited liability. Each of Nanjing Xinhe and Wuhan Sanjing is an indirect whollyowned subsidiary of Nanjing Steel. Nanjing Steel is a state-owned enterprise principally engaged in pressing and smelting of ferrous metals and sales of steel materials. Wuhan Sanjing is principally engaged in property development and sales in Wuhan, Hubei Province, the PRC. Nanjing Xinhe is principally engaged in property development and sales in Nanjing, Jiangsu Province, the PRC.

INFORMATION ABOUT NANJING XINLEI AND THE NANJING LAND

Nanjing Xinlei

Nanjing Xinlei was established in the PRC with limited liability on 16 October 2014. As at the Latest Practicable Date, it had a registered capital of RMB50,000,000, which was fully paid up. It is the project company established by Nanjing Xinhe for development of the Nanjing Land.

Set out below is the audited financial information of Nanjing Xinlei for the year ended 31 December 2015 and the two months ended 29 February 2016 prepared according to the PRC accounting standards:

			For the
		For the	two months
		year ended	ended
		31 December	29 February
		2015	2016
		(RMB)	(RMB)
Loss	before tax	(748,432.89)	(127,031.44)
Loss	after tax	(748,432.89)	(127,031.44)

The total and net asset values of Nanjing Xinlei as at 29 February 2016 are RMB729,863,331.97 and RMB48,996,739.22, respectively.

Please refer to Appendix II to this circular for further details about the financial information of Nanjing Xinlei for the period from 16 October 2014 (date of establishment) to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016.

The Nanjing Land

Nanjing Xinhe acquired the land use rights of the Nanjing Land on 25 October 2013 by way of auction at the purchase price of RMB570,000,000. The land use rights of the Nanjing Land was transferred from Nanjing Xinhe to Nanjing Xinlei on 9 December 2014.

– 9 –

LETTER FROM THE BOARD

The Nanjing Land is situated at Rehe South Road, Gulou District, Nanjing, Jiangsu Province, the PRC. It has a site area of 16,164.86 square metres, with estimated gross floor area of approximately 41,220 square metres (by plot ratio) and is planned for urban mixed residential use. The term for the residential usage is 70 years while the commercial land usage is 40 years. As at the Latest Practicable Date, the Nanjing Land is in initial planning stage. It is currently expected that (a) construction in respect of the urban mixed residential properties on the Nanjing Land (Nanjing Wan Guo Cheng Project) will commence in August 2016 and (b) completion of the Nanjing Wan Guo Cheng Project will take place in May 2018. The Group currently expects to incur approximately RMB1,200 million as capital expenditure in the Nanjing Wan Guo Cheng Project.

Please refer to Appendix V to this circular for the property valuation report of the property interests held by Nanjing Xinlei.

REASONS FOR AND BENEFITS OF THE ACQUISITION AND DEBT SETTLEMENT

The Group is a property developer focused on the development on green, energy-saving and eco-friendly residences in the PRC.

The Acquisition and the Debt Settlement (which is a pre-condition for the Acquisition imposed by the Equity Exchange) will enable the Group to acquire the entire registered capital of Nanjing Xinlei, which holds the land use rights of the Nanjing Land. In view of the location and the designated use of the Nanjing Land, the Board considers that the Acquisition offers a good opportunity for the Group to enhance its portfolio in the property market in the PRC with a view to bringing more investment return for the Shareholders. The Group has been actively seeking partner(s) to jointly develop the Nanjing Land including but not limited to introduction of new shareholders at project level. As at the Latest Practicable Date, no definitive agreement for the said joint development of the Nanjing Wan Guo Cheng Project has been entered into.

Based on the aforesaid and that the open bidding procedures were open to the public and regulated by applicable laws and regulations, the Directors (including independent nonexecutive Directors) consider that the terms of the Equity Transfer Agreement and the Debt Settlement Agreement are on normal commercial terms, are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

– 10 –

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE ACQUISITION

Upon completion of the Acquisition, Nanjing Xinlei will become an indirect whollyowned subsidiary of the Company and its financial results will be consolidated into the Group.

1. Assets and liabilities

As detailed in the unaudited pro forma statement of the consolidated assets and liabilities of the Enlarged Group in Appendix III to this circular, assuming the Acquisition was completed as at 31 December 2015, the unaudited pro forma consolidated assets of the Enlarged Group would have increased from approximately RMB15,723.4 million to RMB15,727.6 million, the unaudited pro forma consolidated liabilities of the Enlarged Group would have increased from approximately RMB11,948.3 million to RMB11,952.6 million and the net assets would have remain unchanged as a result of the Acquisition.

2. Earnings

Upon completion of the Acquisition, the financial results of the Target Group will be consolidated into the consolidated financial statements of the Group. While there is no immediate material impact on earnings of the Group, the Directors believe that the Acquisition would enhance the Group’s business development.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios set out in the Listing Rules in respect of the transactions as contemplated under the Equity Transfer Agreement and the Debt Settlement Agreement in aggregate is/are more than 25% but less than 100%, the entering into of the Equity Transfer Agreement and the Debt Settlement Agreement constitutes a major transaction of the Company under Chapter 14 of the Listing Rules. As such, the Equity Transfer Agreement, the Debt Settlement Agreement and the transactions contemplated thereunder are subject to reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, Super Land owns 71.65% of the number of issued Shares of the Company. On 20 June 2016, the Company received Super Land’s written consent to the Acquisition and the Debt Settlement and the entering into of the Equity Transfer Agreement and the Debt Settlement Agreement by Yuedong Benpao. As (i) no Shareholder has material interest in the Equity Transfer Agreement, the Debt Settlement Agreement and the transactions contemplated thereunder and no Shareholder would be required to abstain from voting if the Company were to convene a general meeting for the approval of the Acquisition and the Debt Settlement; and (ii) Super Land holds more than 50% of the voting rights that would be exercisable at any such general meeting, Super Land’s written consent is acceptable in lieu of holding a general meeting of the Company for approval of the Acquisition and the Debt Settlement pursuant to Rule 14.44 of the Listing Rules.

– 11 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors, including the independent non-executive Directors, are of the view that the terms of the Equity Transfer Agreement, the Debt Settlement Agreement and the transactions contemplated thereunder is fair and reasonable and in the interest of the Group and the Shareholders as a whole. Accordingly, should a resolution be put at a general meeting of the Company for the Shareholders to consider the same, the Directors would recommend the Shareholders to vote in favour of such resolution.

FURTHER INFORMATION

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

Yours faithfully, By Order of the Board Modern Land (China) Co., Limited Zhang Lei Chairman

– 12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

I. FINANCIAL INFORMATION OF THE GROUP FOR THE THREE FINANCIAL YEARS ENDED 31 DECEMBER 2015

Financial information of the Group for the three years ended 31 December 2013, 2014 and 2015 are disclosed on pages 81 to 192 of the annual report of the Company for the year ended 31 December 2013, pages 105 to 252 of the annual report of the Company for the year ended 31 December 2014 and pages 107 to 268 of the annual report of the Company for the year ended 31 December 2015, respectively, all of which are published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.modernland.hk. Quick links to the annual reports of the Company are set out below:

Annual report of the Company for the year ended 31 December 2013: http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0415/LTN20140415432.pdf

Annual report of the Company for the year ended 31 December 2014: http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0417/LTN20150417337.pdf

Annual report of the Company for the year ended 31 December 2015: http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0412/LTN20160412477.pdf

II. INDEBTEDNESS

1 Borrowings

As at the close of business on 20 June 2016, being the most recent practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Enlarged Group had outstanding borrowings of approximately RMB10,343,110,000, details of which are set out as follows:

Senior notes, secured and guaranteed Corporate bond, unsecured and unguaranteed Bank loans, secured and unguaranteed Other borrowings, secured and unguaranteed Amount due to a minority owner of subsidiary unsecured and unguaranteed Amount due to third parties, unsecured and unguaranteed	RMB’000 2,923,580 1,000,000 2,913,986 2,500,000 367,500 638,044
	10,343,110

2 Contingent liabilities and other guarantees

As at 20 June 2016, the Enlarged Group provided guarantees to the extent of approximately RMB7,552,362,103 to banks in respect of mortgage loans provided by the banks to customers for the purchase of the developed properties of the Enlarged Group.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

These guarantees provided by the Enlarged Group to the banks would be released upon receiving the building ownership certificates of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

3 Other mortgages and charges

As at 20 June 2016, the Enlarged Group pledged certain properties under development for sale of a PRC subsidiary as collateral for a loan of a third party amounted to RMB300,000,000. The pledge period matures in March 2017.

III. WORKING CAPITAL

After taking into account the Enlarged Group’s available resources, including internally generated funds, external borrowings and the presently available banking facilities, in the absence of unforeseen circumstances, the Directors are of the opinion that the Enlarged Group will have sufficient working capital to meet its present requirements for the next twelve months from the date of this circular.

IV. MATERIAL ADVERSE CHANGE

The Directors were not aware of any material adverse change to the financial or trading position of the Group since 31 December 2015, being the date to which the latest audited consolidated financial statements of the Company were published.

V. OUTLOOK AND PROSPECTS

Upon completion of the Acquisition, the Enlarged Group will continue to be principally engaged in property development in the PRC while Nanjing Xinlei will continue to be engaged in development of the Nanjing Land. The Nanjing Land has a site of 16,164.86 square metres with estimated gross floor area of approximately 41,220 square metres (by plot ratio) and is planned for urban mixed residential use. As at the Latest Practicable Date, the Nanjing Land is still in initial planning stage.

The unaudited pro forma financial information of the Enlarged Group illustrating the financial impact of the Acquisition on the assets and liabilities of the Group is set out in Appendix III to this circular. The unaudited pro forma financial information of the Enlarged Group has been prepared for illustration purpose only, based on the judgments and assumptions of the Directors, and, due to its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group as at the date of completion of the Acquisition or any future date.

2016 real estate outlook: rising prices, quantity assurance, and improvement. Rising prices mean that favorable monetary policies and land policies will further spur an increase in housing prices. Quantity assurance means that in the future, there are larger risks in the real estate market due to higher volatility, and developers will try to assure the quantity, while the government will do its best to restore the normal level of overall volume of real estate investment. improvement means that housing improvement demand will become the growth point of the real estate market in 2016.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Company expects that the real estate industry will enter a new norm in 2016 and the Company targets to achieve breakthroughs in products, financing structure and customer operations, details of which are set out in the 2015 annual report of the Company. The Board is confident that 2016 will be a year of steady and solid development for the Group.

VI. OTHER INFORMATION

(a) Liquidity and Financial Resources

As at 31 December 2015, the Group’s cash, restricted cash and bank balances were approximately RMB3,575.8 million.

As at 31 December 2015, the Group’s total borrowings were approximately RMB5,258.9 million.

(b) Gearing Ratio

As at 31 December 2015, the Group’s net debt ratio (calculated by net borrowings divided by total equity) was approximately 44.6%.

(c) Employee and Remuneration Policy

As at 31 December 2015, the Group had an aggregate of 915 employees. The Group recruited and promoted individual persons according to their strength and development potential. The Group determined the remuneration packages of all employees (including the Directors) with reference to individual performance and current market rate.

(d) Material acquisitions by the Group

Other than the Acquisition and those set out as follows, the Group has not entered into any material acquisitions after 31 December 2015, being the date to which the latest published audited accounts of the Company have been made up:

1. On 8 January 2016, Modern Green Development Co., Ltd. and Huainan Xinyi Real Estate Development Co., Ltd. entered into an equity transfer agreement whereby Modern Green Development Co., Ltd. agreed to acquire from Huainan Xinyi Real Estate Development Co., Ltd. 49% equity interest in Anhui MOMA Development Co., Ltd. for a consideration of RMB65,000,000.

2. On 15 April 2016, the Company and AVIC Trust Co., Ltd. entered into an equity transfer agreement whereby the Company agreed to acquire from AVIC Trust Co., Ltd. 35% equity interest in Nanchang Moma Real Estate Co., Ltd. for a consideration of RMB161,083,555.85.

3. On 29 April 2016, the Company, Great Wall Pan Asia International Investment Co., Limited and Modern Land (HKNo.5) Limited entered into a termination agreement to whereby it was agreed that, among other things, the joint venture arrangement between the Company and Great Wall Pan Asia International

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Investment Co., Limited shall be terminated and the Company shall buy back the remaining shareholding in each of Modern Land (HKNo.5) Limited and Modern Land (HKNo. 1) Limited for an aggregate consideration of HK$98.

1. On 30 May 2016, Modern Land Seattle, LLC, Modern Green Land Bellevue LLC and CW Development LLC entered into a limited liability company agreement to form MGCW, LLC with the investment amount to be contributed by Modern Land Seattle, LLC, Modern Green Land Bellevue LLC and CW Development LLC to be US$15.3 million, US$7.2 million and US$7.5 million, respectively.

2. On 27 June 2016, Modern Green Development Co., Ltd. and Shenzhen Pingan Dahua Huitong Wealth Management Company Limited entered into an equity transfer agreement whereby Modern Green Development Co., Ltd. agreed to acquire from Shenzhen Pingan Dahua Huitong Wealth Management Company Limited 5% equity interest in Wuhan Modern Green Development Co., Ltd. for a consideration of RMB10,000,000.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

12 August 2016

The Directors Modern Land (China) Co., Limited

Dear Sirs,

INTRODUCTION

We set out below our report on the financial information relating to Nanjing Xinlei Property Development Company Ltd. (the ‘‘Target Company’’) comprising the statements of financial position of the Target Company as at 31 December 2014 and 2015 and 31 March 2016, and the statements of comprehensive income, the statements of changes in equity and the cash flow statements, for the period from 16 October 2014 (date of incorporation) to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016 (the ‘‘Relevant Periods’’), and a summary of significant accounting policies and other explanatory information (the ‘‘Financial Information’’), for inclusion in the circular issued by Modern Land (China) Co., Limited (the ‘‘Company’’) dated 12 August 2016 (the ‘‘Circular’’) in connection with the proposed acquisition of the Target Company by the Company (the ‘‘Proposed Acquisition’’).

The Target Company was incorporated in the People’s Republic of China (the ‘‘PRC’’) on 16 October 2014 with limited liability.

The Target Company has adopted 31 December as its financial year end date. The statutory financial statements of the Target Company for the period from 16 October 2014 (date of incorporation) to 31 December 2014 and the year ended 31 December 2015 were audited by Jiangsu Suyajincheng Certified Public Accountants LLP (江蘇蘇亞金誠會計師事務 所 (特殊普通合夥)) and were prepared in accordance with the Accounting Standards of Business Enterprises issued by the Ministry of Finance of the PRC.

The directors of the Target Company have prepared the financial statements for the Relevant Periods (the ‘‘Underlying Financial Statements’’) in accordance with International Financial Reporting Standards (‘‘IFRSs’’) issued by the International Accounting Standards Board (the ‘‘IASB’’). The Underlying Financial Statements for the Relevant Periods were

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

audited by KPMG Huazhen LLP (畢馬威華振會計師事務所 (特殊普通合夥)) in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (the ‘‘IAASB’’).

The Financial Information has been prepared by the directors of the Company for inclusion in the Circular in connection with the Proposed Acquisition based on the Underlying Financial Statements, with no adjustments made thereon and in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL INFORMATION

The directors of the Company are responsible for the preparation of the Financial Information that gives a true and fair view in accordance with IFRSs issued by the IASB and the applicable disclosure provisions of the Listing Rules, and for such internal control as the directors of the Company determine is necessary to enable the preparation of the Financial Information that is free from material misstatement, whether due to fraud or error.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to form an opinion on the Financial Information based on our procedures performed in accordance with Auditing Guideline ‘‘Prospectuses and the Reporting Accountant’’ (Statement 3.340) issued by the Hong Kong Institute of Certified Public Accountant. We have not audited any financial statements of the Target Company in respect of any period subsequent to 31 March 2016.

OPINION

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the Target Company as at 31 December 2014, 31 December 2015 and 31 March 2016 and of the Target Company’s financial performance and cash flows for the Relevant Periods.

CORRESPONDING FINANCIAL INFORMATION

For the purpose of this report, we have also reviewed the unaudited corresponding interim financial information of the Target Company comprising the statement of comprehensive income, the statement of changes in equity and the cash flow statement for the three months ended 31 March 2015, together with the notes thereon (the ‘‘Corresponding Financial Information’’), for which the directors are responsible, in accordance with International Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ issued by the IAASB.

The directors of the Company are responsible for the preparation of the Corresponding Financial Information in accordance with the same basis adopted in respect of the Financial Information. Our responsibility is to express a conclusion on the Corresponding Financial Information based on our review.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the Corresponding Financial Information.

Based on our review, for the purpose of this report, nothing has come to our attention that causes us to believe that the Corresponding Financial Information is not prepared, in all material respects, in accordance with the same basis adopted in respect of the Financial Information.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

A FINANCIAL INFORMATION OF THE TARGET COMPANY

1 Statements of Comprehensive Income

Section B Note Revenue Cost of sales Gross profit Interest income Administrative expenses Loss from operations Finance costs 2(a) Loss before taxation Income tax Loss and total comprehensive income for the period/year	Period from 16 October 2014 (date of incorporation) to 31 December 2014 RMB’000 — — — 28 (156) (128) — (128) — (128)	Year ended 31 December 2015 RMB’000 — — — 61 (807) (746) (2) (748) — (748)	Three months ended 31 March 2015 2016 RMB’000 RMB’000 (unaudited) — — — — — — 17 2 (619) (101) (602) (99) — — (602) (99) — — (602) (99)

The accompanying notes form part of the Financial Information.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

2 Statements of Financial Position

Section B Note Current assets Properties under development for sale 4 Other receivables 5 Bank balances and cash 6 Total current assets Current liabilities Loans 7 Trade and other payables 8 Total current liabilities NET ASSETS CAPITAL AND RESERVES 9 Paid-in capital Reserves TOTAL EQUITY	At 31 December 2014 2015 RMB’000 RMB’000 660,011 703,809 — 18,016 32,330 4,319 692,341 726,144 — 630,000 642,469 47,020 642,469 677,020 49,872 49,124 50,000 50,000 (128) (876) 49,872 49,124	At 31 March 2016 RMB’000 715,698 18,010 111 733,819 626,000 58,794 684,794 49,025 50,000 (975) 49,025

The accompanying notes form part of the Financial Information.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

3 Statements of Changes in Equity

Section B Note Balance at 16 October 2014 (date of incorporation) Capital injection 9(a) Loss and total comprehensive income for the period Balance at 31 December 2014 and 1 January 2015 Loss and total comprehensive income for the year Balance at 31 December 2015 and 1 January 2016 Loss and total comprehensive income for the period Balance at 31 March 2016 (Unaudited) Balance at 1 January 2015 Loss and total comprehensive income for the period Balance at 31 March 2015	Paid-in capital RMB’000 — 50,000 — 50,000 — 50,000 — 50,000 50,000 — 50,000	Accumulated losses RMB’000 — — (128) (128) (748) (876) (99) (975) (128) (602) (730)	Total equity RMB’000 — 50,000 (128) 49,872 (748) 49,124 (99) 49,025 49,872 (602) 49,270

The accompanying notes form part of the Financial Information.

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APPENDIX II

4 Cash Flow Statements

Operating activities Loss before taxation Adjustment for: — Interest income Increase in properties under development for sale (Increase)/decrease in other receivables Increase/(decrease) in trade and other payables Cash used in operations Income tax paid Net cash used in operating activities Investing activities Loan provided to a fellow subsidiary Interest received Net cash generated from/(used in) investing activities Financing activities Capital injection Interest paid Proceeds from loans Repayment of loans Net cash generated from/(used in) financing activities Net 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	Period from 16 October 2014 (date of incorporation) to 31 December 2014 RMB’000 (128) (28) (156) (660,011) — 642,469 (17,698) — (17,698) — 28 28 50,000 — — — 50,000 32,330 — 32,330	Year ended 31 December 2015 RMB’000 (748) (61) (809) (43,798) (16) (39,184) (83,807) — (83,807) (18,000) 61 (17,939) — (2,265) 260,000 (184,000) 73,735 (28,011) 32,330 4,319	Three months ended 31 March 2015 2016 RMB’000 RMB’000 (unaudited) (602) (99) (17) (2) (619) (101) (60) (11,889) (67) 6 (20,000) 11,774 (20,746) (210) — — (20,746) (210) — — 17 2 17 2 — — — — — — — (4,000) — (4,000) (20,729) (4,208) 32,330 4,319 11,601 111

The accompanying notes form part of the Financial Information.

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FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

B NOTES TO FINANCIAL INFORMATION

1 SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The Financial Information set out in this report has been prepared in accordance with all applicable International Financial Reporting Standards (‘‘IFRSs’’), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board (‘‘IASB’’). Further details of the significant accounting policies adopted are set out in the remainder of this Section B.

The IASB has issued a number of new and revised IFRS. For the purpose of preparing this Financial Information, the Target Company has adopted all applicable new and revised IFRSs to the Relevant Periods, except for any new standards or interpretations that are not yet effective for the accounting period beginning from 1 January 2016. The revised and new accounting standards and interpretations issued but not yet effective for the accounting period beginning 1 January 2016 are set out in Note 15.

The Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’).

The accounting policies set out below have been applied consistently to all periods presented in the Financial Information.

The Corresponding Financial Information for the three months ended 31 March 2015 has been prepared in accordance with the same basis and accounting policies adopted in respect of the Financial Information.

(b) Basis of preparation

As at 31 March 2016, the Target Company had not yet generated any revenue and is dependent on financial support for further property development and business continuance. The Financial Information have been prepared on a going concern basis as Modern Land (China) Co., Limited, on the condition that the acquisition of the Target Company would be successful, have undertaken to provide the necessary financial support, including an undertaking to provide financial support to the Target Company when its debts fall due. Accordingly, the Target Company will be able to meet its financial obligations for the foreseeable future.

(c) Basis of measurement

The Financial Information is presented in Renminbi (‘‘RMB’’), rounded to the nearest thousand. It is prepared on the historical cost basis.

(d) Use of estimates and judgements

The preparation of the Financial Information in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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

Judgements made by management in the application of IFRSs that have significant effect on the Financial Information and major sources of estimation uncertainty are discussed in Note 13.

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APPENDIX II

(e) Impairment of tangible and intangible assets other than goodwill

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

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

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

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

(f) Properties under development for sale

Properties under development for sale which are intended to be sold in the ordinary course of business upon completion of development are classified as current assets, and carried at the lower of cost and net realisable value. Costs include the related land cost, development expenditure incurred and, where appropriate, borrowing costs capitalised.

Properties under development for sale are transferred to properties held for sale upon completion.

(g) Financial instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Target Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transactions costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

(i) Financial assets

The Target Company’s financial assets are classified into loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

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APPENDIX II

(ii) Effective interest method

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

Interest income is recognised on an effective interest basis for debt instruments, of which interest income is included in other income.

(iii) Loans and receivables

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

(iv) Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

Objective evidence of impairment for financial assets could include:

• significant financial difficulty of the issuer or counterparty; or

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

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

For certain categories of financial asset, such as other receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Target Company’s past experience of collecting payments, observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets measured at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of other receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a other receivable are considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

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

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APPENDIX II

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

(v) Financial liabilities

Financial liabilities including loans, trade payables, other payables and amounts due to related parties are subsequently measured at amortised cost, using the effective interest method.

(vi) Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis.

(vii) Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire, or when the financial assets are transferred and the Target Company has transferred substantially all the risks and rewards of ownership of the financial assets to another entity.

On recognition of a financial asset in its entirety, the difference between the assets’ carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Financial liabilities are derecognised when the Target Company’s obligation specified in the relevant contract is discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

(h) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(i) Taxation

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

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before taxation as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Target Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

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APPENDIX II

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

(j) Provisions and contingent liabilities

Provisions are recognised for other liabilities of uncertain timing or amount when the Target Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(k) Related parties

• (a) A person, or a close member of that person’s family, is related to the Target Company if that person:

• (i) has control or joint control over the Target Company;

• (ii) has significant influence over the Target Company; or

• (iii) is a member of the key management personnel of the Target Company’s parent.

• (b) An entity is related to the Target Company if any of the following conditions applies:

• (i) The entity is a member of the same group (which means that each parent, subsidiary and entities controlled by the controlling shareholders is related to the others).

• (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

• (iii) Both entities are joint ventures of the same third party.

• (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• (v) The entity is a post-employment benefit plan for the benefit of employees of either the Target Company or an entity related to the Target Company.

• (vi) The entity is controlled or jointly controlled by a person identified in (a).

• (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

• (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the group or to the group’s parent.

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APPENDIX II

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

2 LOSS BEFORE TAXATION

Loss before taxation is arrived at after charging/(crediting):

(a) Finance costs

Interest on loans Less: Interest expense capitalized into properties under development for sale* Bank charges	Period from 16 October 2014 (date of incorporation) to 31 December 2014 RMB’000 — — — — —	Year ended 31 December 2015 RMB’000 42,133 (42,133) — 2 2	Three months ended 31 March 2015 2016 RMB’000 RMB’000 (unaudited) 6,649 11,442 (6,649) (11,442 — — — — — —	Three months ended 31 March 2015 2016 RMB’000 RMB’000 (unaudited) 6,649 11,442 (6,649) (11,442 — — — — — —
				(11,442
				— —
				—

• The borrowing costs have been capitalized at a rate of 6%–9% per annum for the year ended 31 December 2015 and the three months ended 31 March 2015 and 2016.

(b) Other item

		Period from
		16 October
		2014 (date of
		incorporation)
		to	Year ended	Three months ended
		31 December	31 December	31 March
		2014	2015	2015	2016
		RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Auditors’	remuneration	—	18	—	100

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APPENDIX II

3 DIRECTORS’ EMOLUMENTS

Directors’ emoluments during the Relevant Periods is disclosed as follows:

	Period from
	16 October
	2014 (date of
	incorporation)
	to	Year ended	Three months ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
			(unaudited)
Directors’ fee	—	—	—	—
Salaries, allowances and benefits in kind	—	—	—	—
Discretionary bonuses	—	—	—	—
Retirement scheme contributions	—	—	—	—
Total	—	—	—	—

4 PROPERTIES UNDER DEVELOPMENT FOR SALE

Properties under development for sale	At 31 December 2014 2015 RMB’000 RMB’000 660,011 703,809	At 31 March 2016 RMB’000 715,698

• (a) The land use right included in properties under development for sale are located in the PRC with period of right ranging from 40 to 70 years.

• (b) The amount of properties under development for sale expected to be recovered after more than one year is analysed as follows:

Properties under development for sale	At 31 December 2014 2015 RMB’000 RMB’000 660,011 703,809	At 31 March 2016 RMB’000 715,698

• (c) Certain properties under development for sale of the Target Company as at 31 March 2016 were pledged against a loan of the ultimate holding company, details are set out in Note 12(b).

5 OTHER RECEIVABLES

Amount due from a fellow subsidiary Others	At 31 December 2014 2015 RMB’000 RMB’000 — 18,000 — 16 — 18,016	At 31 March 2016 RMB’000 18,000 10
		18,010

Amount due from a fellow subsidiary represented an interest free advance provided to a fellow subsidiary during 2015, which became interest-bearing at a rate of 6% per annum starting 1 January 2016, and was unsecured and had no fixed term of repayment.

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APPENDIX II

(a) Impairment of loans and receivables

Impairment losses in respect of loans and receivables are recorded using an allowance account unless the Target Company is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against loans and receivables directly (see Note 1(g)(iv)).

(b) Loans and receivables that are not impaired

The ageing analysis of loans and receivables that are neither individually nor collectively considered to be impaired are as follows:

Neither past due nor impaired	At 31 December 2014 2015 RMB’000 RMB’000 — 18,016	At 31 March 2016 RMB’000 18,010

Receivables that were neither past due nor impaired related to a related party and debtor for whom there was no recent history of default.

6 BANK BALANCES AND CASH

Cash on hand Cash at bank	At 31 December 2014 2015 RMB’000 RMB’000 7 26 32,323 4,293 32,330 4,319	At 31 March 2016 RMB’000 30 81
		111

7 LOANS

The Target Company’s loans comprise:

Loan from the immediate holding company Loan from the ultimate holding company Loan from a fellow subsidiary	At 31 December 2014 2015 RMB’000 RMB’000 — 300,000 — 300,000 — 30,000 — 630,000	At 31 March 2016 RMB’000 296,000 300,000 30,000
		626,000

The above loans are unsecured and repayable within 1 year at 31 December 2015 and 31 March 2016. Interest rates were fixed at 6%, 9% and 6% per annum for loans from the immediate holding company, the ultimate holding company and a fellow subsidiary, respectively.

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APPENDIX II

8 TRADE AND OTHER PAYABLES

Note Trade payables Amounts due to related parties (a) Other payables (a) Amounts due to related parties Amounts due to the immediate holding company Amounts due to the ultimate holding company Amounts due to a fellow subsidiary	At 31 December 2014 2015 RMB’000 RMB’000 — 2 642,409 46,839 60 179 642,469 47,020 At 31 December 2014 2015 RMB’000 RMB’000 Note 12(a)(i) 70,735 9,398 538,971 36,465 32,703 976 642,409 46,839	At 31 March 2016 RMB’000 196 58,457 141
		58,794
		At 31 March 2016 RMB’000 16,836 40,196 1,425
		58,457

In 2015, the Target Company entered into loan agreements with the related parties to restructure RMB 484,000,000 of the amounts due to the ultimate holding company and RMB70,000,000 of the amount due to the immediate holding company as at 31 December 2014 as interest-bearing loans from related parties and repaid remaining balance of RMB81,438,000. Amounts due to related parties as at 31 December 2015 and 31 March 2016 mainly represented interest payables associated with loans from the respective related parties (Note 7).

9 SHARE CAPITAL

(a) Paid-in capital

During the period from 16 October 2014 (date of incorporation) to 31 December 2014, the Target Company received RMB50,000,000 from its immediate holding company for its paid-in capital.

As at 31 December 2014 and 2015, and 31 March 2016, the registered and paid-in capital of the Target Company was RMB 50,000,000.

(b) Capital management

The Target Company manages its capital to ensure that entity will be able to continue as a going concern while maximising the return to immediate holding company through the optimisation of the debt and equity balance.

The capital structure of the Target Company consists of the loans disclosed in Note 7, net of bank balances and cash and equity of the Target Company.

The directors of the Target Company review the capital structure on a regular basis. As part of this review, the directors of the Target Company consider the cost of capital and the risks associated with each class of capital, and take appropriate actions to balance its overall capital structure.

– II-16 –

FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

10 FINANCIAL RISK MANAGEMENT AND FAIR VALUES

Exposure to credit and liquidity risks arises in the normal course of the Target Company’s business. The Target Company is not exposed to significant interest rate risk and currency risk as it has no interest-bearing financial instruments with variable interest rates, and no transactions and balances are in foreign currency. The Target Company’s exposure to these risks and the financial risk management policies and practices used by the Target Company to manage these risks are described below.

(a) Credit risk

The Target Company’s credit risk is primarily attributable to other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

With respect to credit risk arising from amount due from a fellow subsidiary, the Target Company’s exposure to credit risk arising from default of the counterparty is limited as the counterparty is a fellow subsidiary and the Target Company’s loan from and amounts due to related parties under the same ultimate holding company were of a higher amount.

The maximum exposure to credit risk without taking account of any collateral held is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. Except for the financial guarantee given by the Target Company as set out in Note 11, the Target Company does not provide any guarantees which would expose the Target Company to credit risk. The maximum exposure to credit risk in respect of these financial guarantees at the end of the reporting period is disclosed in Note 11.

Further quantitative disclosures in respect of the Target Company’s exposure to credit risk arising from other receivables are set out in Note 5.

(b) Liquidity risk

The Target Company’s objective is to maintain a balance between continuity of funding and the flexibility through the use of borrowings. The directors of the Target Company closely monitor the liquidity position and expect to have adequate sources of funding to finance its projects and operations.

The following table details the remaining contractual maturities at the end of the each reporting period of the Target Company’s financial liabilities which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and the earliest date the Target Company can be required to pay:

Loan from the immediate holding company Loan from the ultimate holding company Loan from a fellow subsidiary Trade and other payables	At 31 December 2014 2015 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 RMB’000 RMB’000 — — 318,000 300,000 — — 302,145 300,000 — — 30,681 30,000 642,469 642,469 47,020 47,020 642,469 642,469 697,846 677,020	At 31 March 2016 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 309,429 296,000 322,488 300,000 30,385 30,000 58,794 58,794 721,096 684,794	At 31 March 2016 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 309,429 296,000 322,488 300,000 30,385 30,000 58,794 58,794 721,096 684,794
			684,794

– II-17 –

FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

(c) Fair values

The directors of the Target Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the statements of financial position approximate their respective fair values at the end of each reporting period.

11 CONTINGENT LIABILITIES

The Target Company pledged certain properties under development for sale as a guarantee in respect of a loan of the ultimate holding company and the pledge period matures in March 2017 (see Note 12(b)). The Target Company has not recognised any deferred income in respect of such guarantee.

12 MATERIAL RELATED PARTY TRANSACTIONS

• (a) Transactions with related parties

	Period from
	16 October
	2014 (date of
	incorporation)
	to	Year ended	Three months ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
			(unaudited)
Land use right acquired from
— The immediate holding
company (note (i))	642,409	—	—	—
Liabilities assumed from
— The immediate holding
company (note (i))	642,409	—	—	—
Loans from
— The immediate holding
company	—	300,000	—	—
— The ultimate holding company	—	300,000	—	—
— A fellow subsidiary	—	30,000	—	—
Loans repaid to
— The immediate holding
company	—	—	—	4,000
— The ultimate holding company	—	184,000	—	—
Interest expense charged by
— The immediate holding
company	—	11,662	1,036	4,439
— The ultimate holding company	—	29,494	4,660	6,554
— A fellow subsidiary	—	977	953	449
Loan provided to
— A fellow subsidiary	—	18,000	—	—

– II-18 –

FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

Note:

• (i) Prior to the incorporation of the Target Company, the immediate holding company acquired a land use right in Nanjing at a cash consideration of RMB570,000,000.

Subsequent to the incorporation of the Target Company in 2014, the immediate holding company obtained the approval from the relevant government authority and transferred to the Target Company the legal title of the above land use right at a consideration equals to the then carrying amount of the land use right amounted to RMB642,409,000. The Target Company assumed from the immediate holding company liabilities of RMB538,971,000 representing amounts due to the ultimate holding company and RMB32,703,000 representing amounts due to a fellow subsidiary as part settlement of the consideration. The remaining balance of RMB70,735,000 was recognised as an amount due to the immediate holding company. The above liabilities were interest-free and had no fixed terms of repayment as at 31 December 2014.

• (ii) Further details of the loans from related parties are disclosed in Note 7.

• (iii) Further details of the loan provided to a fellow subsidiary are disclosed in Note 5.

(b) Other related parties transactions

In 2016 and as at 31 March 2016, the Target Company pledged certain properties under development for sale as collateral for a loan of the ultimate holding company amounted to RMB300,000,000. The pledge period matures in March 2017.

13 CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING THE TARGET COMPANY’S ACCOUNTING POLICIES

The Target Company believes the following critical accounting policies involve the most significant judgement and estimates used in the preparation of the Financial Information.

(a) Provision for properties under development for sale

As explained in Note 1(f), the Target Company’s properties under development for sale are stated at the lower of cost and net realisable value. Based on the latest market information, the Target Company makes estimates of the selling prices, the costs to completion, and the costs to be incurred in selling the properties based on prevailing market conditions.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value will decrease and this may result in provision for properties under development for sale. Such provision requires the use of judgement and estimates. Where the expectation is different from the original estimate, the carrying value and provision for properties under development for sale in the periods in which such estimate is changed will be adjusted accordingly.

In addition, given the volatility of the PRC property market and the unique nature of individual properties, the actual outcomes in terms of costs and revenue may be higher or lower than that estimated at the end of the reporting period. Any increase or decrease in the provision would affect profit or loss in future years.

(b) Impairment for other receivables

The Target Company estimates impairment losses for other receivables resulting from the inability of the parties to make the required payments. The Target Company assesses the estimates based on the aging of the other receivable balance, credit-worthiness, and historical write-off experience. If the financial conditions of the parties were to deteriorate, actual provisions would be higher than that estimated.

– II-19 –

FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

14 IMMEDIATE AND ULTIMATE HOLDING COMPANY

At 31 March 2016, the directors consider the immediate holding company to be Nanjing Xinhe Property Development Company Limited (‘‘南京鑫和房地產開發有限公司’’) and the ultimate holding company of the Target Company to be Nanjing Iron & Steel Group Corporation (‘‘南京鋼鐵集團有限公司’’), both of which are incorporated in Nanjing, China. These entities do not produce financial statements available for public use.

15 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ACCOUNTING PERIOD BEGINNING FROM 1 JANUARY 2016

Up to the date of issue of the Financial Information, the IASB has issued a number of amendments and new standards which are not yet effective for period beginning from 1 January 2016 and which have not been adopted in the Financial Information. These include the following which may be relevant to the Target Company.

	Effective for
	accounting periods
	beginning on or after
Amendments to IAS 7, Disclosure initiative	1 January 2017
Amendments to IAS 12, Income taxes — Recognition of deferred tax assets for	1 January 2017
unrealised losses
IFRS 9, Financial instruments (2014)	1 January 2018
IFRS 15, Revenue from contracts with customers	1 January 2018
IFRS 16, Leases	1 January 2019

The Target Company is in process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Financial Information except for the following:

IFRS 15 Revenue from contracts with customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction contracts and IFRIC 13 Customer Loyalty Programmes. It also includes guidance on when to capitalise costs of obtaining or fulfilling a contract not otherwise addressed in other standards, and includes expanded disclosure requirements.

The Target Company does not plan to early adopt the above new standards or amendments. With respect to IFRSs 9, 15 and 16, given the Target Company has not completed its assessment of their full impact on the Target Company, their possible impact on the Target Company’s results of operations and financial position has not been quantified.

– II-20 –

FINANCIAL INFORMATION OF NANJING XINLEI

APPENDIX II

C SUBSEQUENT FINANCIAL STATEMENTS AND DIVIDENDS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 31 March 2016. No dividend or distribution has been declared or made by the Target Company in respect of any period subsequent to 31 March 2016.

Yours faithfully, KPMG

Certified Public Accountants Hong Kong

– II-21 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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

The following is the text of a report received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong, in respect of the Group’s pro forma financial information for the purpose in this circular.

8th Floor Prince’s Building 10 Chater Road Central Hong Kong

12 August 2016

TO THE DIRECTORS OF MODERN LAND (CHINA) CO., LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of Modern Land (China) Co., Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 31 December 2015 and related notes as set out in Part B of Appendix III to the circular dated 12 August 2016 (the ‘‘Circular’’) issued by the Company. The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described in Part B of Appendix III to the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of 100% equity interest in Nanjing Xinlei Real Estate Development Co., Ltd. (the ‘‘Acquisition’’) on the Group’s financial position as at 31 December 2015 as if the Acquisition had taken place at 31 December 2015. As part of this process, information about the Group’s assets and liabilities as at 31 December 2015 has been extracted by the Directors from the consolidated financial statements of the Group for the year then ended, on which an audit report has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are responsible for compiling the 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’’).

– III-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Our Independence and Quality Control

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

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the 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 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 (‘‘HKSAE’’) 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the pro forma financial information in accordance with paragraph 4.29 of the Listing Rules, and with reference to AG 7 issued by the HKICPA.

For purpose of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the 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 pro forma financial information.

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of events or transactions as at 31 December 2015 would have been as presented.

– III-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

A reasonable assurance engagement to report on whether the 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 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 pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the 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 pro forma financial information has been properly compiled on the basis stated;

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

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

KPMG

Certified Public Accountants Hong Kong

– III-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(B) UNAUDITED PRO FORMA FINANCIAL INFORMATION

(1) Introduction to the unaudited pro forma financial information

The following is the unaudited pro forma financial information of the Enlarged Group, being the Group together with the Target Company, as if the Acquisition had been completed on 31 December 2015 for the unaudited pro forma consolidated statement of assets and liabilities. Details of the Acquisition are set out in the section headed ‘‘Letter from the Board’’ contained in this Circular.

The unaudited pro forma financial information of the Enlarged Group has been prepared in accordance with Paragraph 4.29 of the Listing Rules, for the purpose of illustrating the effect of the Acquisition pursuant to the terms of the purchase agreements by and among the Company, through its wholly-owned subsidiary, Yuedong Benpao Real Estate (Beijing) Company Limited (the ‘‘Purchase Agreements’’). Because of its hypothetical nature, the unaudited pro forma financial information may not give a true picture of the financial position of the Enlarged Group had the Acquisition been completed as of the specified date or any future date.

The unaudited pro forma financial information of the Enlarged Group is based upon the consolidated statement of financial position of the Group as at 31 December 2015, which has been extracted from the Group’s published annual report for the year then ended and the statement of financial position of the Target Company as at 31 March 2016 set out in Appendix II to this Circular, and adjusted on a pro forma basis to reflect the effect of the Acquisition. These pro forma adjustments are (i) directly attributable to the Acquisition and not relating to other future events and decision and (ii) factually supportable based on the terms of the Purchase Agreements.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the historical financial information of the Group set out in the annual report of the Group for the year ended 31 December 2015 and other financial information included elsewhere in this Circular.

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(2) Unaudited pro forma consolidated statement of assets and liabilities

Non-current assets Investment properties Property, plant and equipment Intangible assets Freehold land held for future development Interests in associates Interests in joint ventures Loans to joint ventures Available-for-sale investments Deferred tax assets Total non-current assets Current assets Inventories Prepaid lease payments Properties under development for sale Properties held for sale Deposits paid for acquisition of land use rights Trade and other receivables, deposits and prepayments Amounts due from related parties Advances to employees Restricted cash Bank balances and cash Total current assets	The Group as at 31 December 2015 RMB’000 1,368,240 498,816 2,355 29,547 71,959 1,182,955 2,169,600 34,850 322,481 5,680,803 3,941 130,162 3,653,643 1,303,189 187,120 622,079 535,530 31,139 1,054,992 2,520,759 10,042,554	Pro forma adjustments The Target Company as at 31 March 2016 Other pro forma adjustments RMB’000 RMB’000 RMB’000 (note 3a) (note 3b) (note 3c) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 715,698 294,375 — — — — — — — 18,010 — — — — — — — — — — — 111 (343,400) (680,503) 733,819 (49,025) (680,503)	The Enlarged Group RMB’000 1,368,240 498,816 2,355 29,547 71,959 1,182,955 2,169,600 34,850 322,481
			5,680,803
			3,941 130,162 4,663,716 1,303,189 187,120 640,089 535,530 31,139 1,054,992 1,496,967
			10,046,845

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Current liabilities Trade and other payables, deposits received and accrued charges Amounts due to related parties Taxation payable Bank and other borrowings — due within one year Total current liabilities Net current assets Total assets less current liabilities Non-current liabilities Bank and other borrowings — due after one year Long term payable Senior notes Deferred tax liabilities Total non-current liabilities Net assets	The Group as at 31 December 2015 RMB’000 3,859,078 728,840 1,839,585 1,756,687 8,184,190 1,858,364 7,539,167 700,000 133,134 2,802,214 128,770 3,764,118 3,775,049	Pro forma adjustments The Target Company as at 31 March 2016 Other pro forma adjustments RMB’000 RMB’000 RMB’000 (note 3a) (note 3b) (note 3c) — — — 58,794 — (54,503) — — — 626,000 — (626,000) 684,794 — (680,503) 49,025 (49,025) — 49,025 (49,025) — — — — — — — — — — — — — — — — 49,025 (49,025) —	The Enlarged Group RMB’000 3,859,078 733,131 1,839,585 1,756,687
			8,188,481
			1,858,364
			7,539,167
			700,000 133,134 2,802,214 128,770
			3,764,118
			3,775,049

– III-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(3) Notes to the unaudited pro forma financial information of the Enlarged Group

• a. The adjustment represents the Acquisition as if it had been completed on 31 December 2015 for the unaudited pro forma consolidated statement of assets and liabilities. The adjustment amounts are derived from the financial information of the Target Company as set out in Appendix II to the Circular for the unaudited pro forma consolidated statement of assets and liabilities as at 31 March 2016.

• b. The adjustment represents the consideration for the Acquisition of RMB340 million and service fee of RMB3.4 million to be satisfied by cash as if the Acquisition had been completed on 31 December 2015 for the unaudited pro forma consolidated statement of assets and liabilities.

The Target Company is a project company established for development of the Nanjing Land. Given that the Nanjing Land was in initial planning stage at the date of the Equity Transfer Agreement, the Target Company is not expected to be capable of being conducted and managed to provide a return to its owner by way of dividends, lower costs or other economic benefits prior to the completion of the Acquisition. Therefore, the assets acquired and liabilities assumed in the Target Company did not constitute a business as defined in IFRS 3 Business Combinations and, as a result, the Acquisition has been accounted for as assets acquisition. The cost of acquisition is allocated between the individual identifiable assets and liabilities in the Target Company based on their relative fair values at the acquisition date and for the purpose of the pro forma financial information, the fair values as at 20 June 2016 is used for allocation. The fair values of the identifiable assets and liabilities of the Target Company are subject to change upon the completion of the valuation of the fair values of the identifiable assets and liabilities of the Target Company on the date of completion of the Acquisition. Consequently, the actual allocation of the cost of acquisition at the date of completion will likely result in different amounts than those stated in this pro forma financial information.

• c. The adjustment represents the settlement of amount due to related parties and bank and other borrowings of the Target Company based on the debt settlement agreement entered into concurrently with and as agreed in the Purchase Agreements.

• d. No adjustment has been made to the unaudited pro forma financial information for acquisition-related costs (including fees to legal advisers, reporting accountants, printer, taxes and levies and other expenses) as the Directors determined that such costs are insignificant, except for the service fee mentioned in note 3b.

• e. Apart from the adjustments as stated above, no adjustments have been made to reflect any trading results or other transactions of the Enlarged Group entered into subsequent to 31 December 2015.

– III-7 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON NANJING XINLEI

This Appendix summarises the business and financial results and other financial information of Nanjing Xinlei for the period from 16 October 2014 (date of incorporation) to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016.

NANJING XINLEI

Business and financial results of Nanjing Xinlei

Nanjing Xinlei was established in the PRC with limited liability on 16 October 2014, which holds the land use rights of the Nanjing Land located in Gulou District of Nanjing, Jiangsu Province, the PRC.

As at the Latest Practicable Date, Nanjing Xinlei is a project company established by Nanjing Xinhe for the development of the Nanjing Land.

Revenue and gross profit

Revenue and gross profits of Nanjing Xinlei for the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016 are as follows:

	Period from
	16 October 2014 (date
	of incorporation) to	Year ended	Three months	ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	—	—	—	—
Gross profit	—	—	—	—

– IV-1 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON NANJING XINLEI

During the period from 16 October 2014 to 31 December 2014 and the year ended 31 December 2015, Nanjing Xinlei generated no revenue. For the three months ended 31 March 2016, Nanjing Xinlei generated no revenue as well.

Cost of sales

Cost of sales

	Period from
16	October 2014 (date
	of incorporation) to	Year ended	Three months	ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
	—	—	—	—

Nanjing Xinlei has no cost of sales for the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016.

Other operating expenses and income tax

	Period from
	16 October 2014 (date
	of incorporation) to	Year ended	Three months	ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
Administrative
Expenses	(156)	(807)	(619)	(101)
Finance costs	—	(2)	—	—
Income tax expenses	—	—	—	—

Administrative and other expenses

Administrative expenses primarily consist of office expenses and project management expenditures, which is insignificant during the respective year/periods.

Finance costs

The finance costs of Nanjing Xinlei for the year ended 31 December 2015 included mainly interest expenses in relation to borrowings which were charged at fixed interest rates. Since the borrowings are related to the development of the Nanjing Land, all interests, which are directly attributable to the development, they have been capitalised in the properties under development for sale for the year ended 31 December 2015 and the three months ended 31 March 2016.

– IV-2 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON NANJING XINLEI

Income tax expense

There is no income tax expense during the respective year/periods.

Loss for the year/period

Period from 16 October 2014

	Period from 16 October 2014
	(date of
	incorporation) to	Year ended	Three months	ended
	31 December	31 December	31 March
	2014	2015	2015	2016
	RMB’000	RMB’000	RMB’000	RMB’000
Loss before income tax	(128)	(748)	(602)	(99)
Income tax expenses	—	—	—	—
Loss and total comprehensive
income for the year/period	(128)	(748)	(602)	(99)

Nanjing Xinlei recorded a loss for each of the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016 with no income tax expenses.

Financial position and other information of Nanjing Xinlei

Financial resources and gearing ratio

Nanjing Xinlei generally finances its operations with cash flows generated internally from its operating activities and from borrowings from its immediate holding company, ultimate holding company and a fellow subsidiary.

– IV-3 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON NANJING XINLEI

As at 31 December 2014 and 2015 and 31 March 2015, Nanjing Xinlei’s borrowings from its immediate holding company, ultimate holding company and a fellow subsidiary were as follows:

• (i) From the then immediate holding company, ultimate holding company and a fellow subsidiary

Loan from the immediate holding company Loan from the ultimate holding company Loan from a fellow subsidiary Total	As at 31 December 2014 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 — — — — — — — —	As at 31 December 2015 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 318,000 300,000 302,145 300,000 30,681 30,000 650,826 630,000	As at 31 March 2016 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 309,429 296,000 322,488 300,000 30,385 30,000 662,302 626,000	As at 31 March 2016 Contractual undiscounted cash outflow within 1 year or on demand Carrying amount RMB’000 RMB’000 309,429 296,000 322,488 300,000 30,385 30,000 662,302 626,000
				626,000

Amounts due to the immediate holding company, ultimate holding company and a fellow subsidiary are unsecured, denominated in RMB and repayable within one year. The balances included RMB0, RMB630,000,000 and RMB626,000,000 as at 31 December 2014 and 2015 and 31 March 2016, respectively, which bear interest at an average rate of 7.4% per annum.

• (ii) Bank borrowings

As at 31 December 2014, 2015 and 31 March 2016, Nanjing Xinlei did not have any bank borrowings.

Contingent liabilities

As at 31 March 2016, Nanjing Xinlei pledged the Nanjing Land as a guarantee in respect of a loan amounted to RMB300,000,000 of the ultimate holding company. Nanjing Xinlei has not recognized any deferred income in respect of such guarantee.

Charge on assets

As at 31 March 2016, Nanjing Xinlei pledged the Nanjing Land as a guarantee in respect of a loan of the ultimate holding company. Nanjing Xinlei has not recognized any deferred income in respect of such guarantee.

– IV-4 –

APPENDIX IV MANAGEMENT DISCUSSION AND ANALYSIS ON NANJING XINLEI

Foreign currencies

For the period from 16 October 2014 (date of incorporation) to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016, there were no formal treasury policies for Nanjing Xinlei. The transactions and monetary assets of Nanjing Xinlei are principally denominated in RMB. Nanjing Xinlei has not experienced any material difficulties or effects on its operations or liquidity as a result of fluctuations in currency exchange rates for the period from 16 October 2014 (date of incorporation) to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016. Nanjing Xinlei did not employ any material financial instrument for hedging purposes.

Employees’ remuneration and policy

During the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015, and the three months ended 31 March 2016, no remuneration were paid to the employees of Nanjing Xinlei.

Segmental analysis

Nanjing Xinlei engaged in property investment and property development in the PRC. It is the project company established by Nanjing Xinhe for the development of the Nanjing Land. As Nanjing Xinlei is still in its early stage of development, therefore revenue was not classified by business segments for the time being.

Significant investments held

During the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016, Nanjing Xinlei did not hold any significant investments except for its interest in the Nanjing Land.

Material acquisitions and disposals of subsidiaries and associated companies

During the period from 16 October 2014 to 31 December 2014, the year ended 31 December 2015 and the three months ended 31 March 2016, Nanjing Xinlei did not have any material acquisitions or disposals.

Prospects of Nanjing Xinlei

Nanjing Xinlei is involved in property investment and property development in the PRC. It is expected that it will continue with the development of the Nanjing Land. In view of the location and designated use of the Nanjing Land, the Board considers that the Acquisition offers a good opportunity for the Group to enhance its portfolio in the property market in the PRC with a view to bringing more investment return for the Shareholders. Save for the development of the Nanjing Land, Nanjing Xinlei has no other investment plan.

– IV-5 –

PROPERTY VALUATION REPORT

APPENDIX V

The following is the text of the letter and valuation certificate prepared by DTZ Cushman & Wakefield in connection with the valuation of the property interest held by Nanjing Xinlei Property Development Company Limited as at 20 June 2016 for the purpose of incorporation in this circular.

==> picture [176 x 51] intentionally omitted <==

16th Floor Jardine House 1 Connaught Place Central Hong Kong

12 August 2016

The Directors Modern Land (China) Co., Limited 4th Floor Building No. 10 No. 1 Xiangheyuan Road Dongcheng District Beijing The PRC

Dear Sirs,

RE: A PARCEL OF LAND, RE HE NAN ROAD, GULOU DISTRICT, NANJING, JIANGSU PROVINCE, THE PRC

INSTRUCTIONS, PURPOSE & DATE OF VALUATION

In accordance with your instructions for us to value the property situated in the People’s Republic of China (the ‘‘PRC’’) to be acquired by Modern Land (China) Co., Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing the Group with our opinion of the market value of the property as at 20 June 2016 (the ‘‘date of valuation’’).

DEFINITION OF MARKET VALUE

Our valuation of the property represents its market value which in accordance with The HKIS Valuation Standards 2012 Edition published by the Hong Kong Institute of Surveyors is defined as ‘‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without ’’ compulsion .

– V-1 –

PROPERTY VALUATION REPORT

APPENDIX V

VALUATION BASIS AND ASSUMPTION

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

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoing of an onerous nature which could affect its value.

In valuing the property, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and The HKIS Valuation Standards 2012 Edition published by The Hong Kong Institute of Surveyors.

METHOD OF VALUATION

In valuing the property, we have used Direct Comparison Method by making reference to comparable sales transactions as available in the relevant market.

SOURCE OF INFORMATION

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, identification of land, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on the information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation. We were also advised that no material facts have been omitted from the information supplied.

TITLE INVESTIGATION

We have been provided with copies of documents in relation to the title to the property. However, we have not been able to conduct searches to verify the ownership of the property or to ascertain any amendment which may not appear on the copies handed to us.

All documents and leases have been used for reference only and all dimensions, measurements and areas are approximate.

In the course of our valuation, we have relied to a considerable extent on the information given by the Group and its PRC legal adviser, King & Wood Mallesons Law Firm, in respect of the title to the property in the PRC.

– V-2 –

PROPERTY VALUATION REPORT

APPENDIX V

SITE INSPECTION

We have inspected the exterior of the property. The site inspection was carried out in June 2016 by Ms. Kelly Song of DTZ Nanjing office. However, we have not carried out investigation on site to determine the suitability of the soil conditions and the services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the property and we have assumed that the areas shown on the copies of the documents handed to us are correct.

CURRENCY

Unless otherwise stated, all monetary amounts stated in this valuation report are in Renminbi (‘‘RMB’’), the official currency of the PRC.

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of DTZ Cushman & Wakefield Limited

Andrew K. F. Chan

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser MSc, MHKIS Senior Director, Valuation & Advisory Services

Note: Mr. Andrew K.F. Chan is a Registered Professional Surveyor (General Practice) who has over 29 years’ experience in the valuation of properties in the PRC.

– V-3 –

PROPERTY VALUATION REPORT

APPENDIX V

VALUATION CERTIFICATE

Property to be acquired by the Group for future development in the PRC

Market value in Particulars of existing state as at Property Description and tenure occupancy 20 June 2016 A parcel of land, The property comprises a parcel of land At the date of RMB1,017,000,000 Re He Nan Road, with a site area of 16,164.86 sq m. valuation, the Gulou District, property was a Nanjing, The property is a planned development of vacant site. Jiangsu Province, residential and commercial uses. The the PRC property has a total planned gross floor area of 41,220 sq m.

The property is located in Gulou District of Nanjing. Developments nearby are mainly residential in nature. According to the information provided by the Group, the property is for residential and commercial uses.

The land use rights of the property have been granted for terms due to expire on 26 November 2084 for residential use and due to expire on 26 November 2054 for commercial use.

Notes:

• (1) According to State-owned Land Use Rights Certificate No. (2014) 25131, the land use rights of the property with a total site area of 16,164.86 sq m have been vested in Nanjing Xinlei Property Development Company Limited* (南京鑫磊房地產開發有限公司) for terms due to expire on 26 November 2084 for residential use and due to expire on 26 November 2054 for commercial use.

• (2) According to Grant Contract of State-owned Land Use Rights No. 3201012013CR0120 entered into between the State Land Resources Bureau of Nanjing and Nanjing Xinhe Property Development Company Limited (南京鑫和房地產開發有限公司), the land use rights of the property have been contracted to be granted to Nanjing Xinhe Property Development Company Limited (南京鑫和房地產開發有限公司) with details as follows:

(i) Site Area : 16,164.86 sq m (ii) Use : Urban comprehensive residential (iii) Plot Ratio : Greater than 1.0; less than 2.55 (iv) Land Premium : RMB570,000,000 (v) Building Covenant : Construction shall commence before 11 February 2015 and complete before 11 February 2017.

• (3) According to the reply in relation to the change of the land grantee of property, the land grantee was changed from Nanjing Xinhe Property Development Company Limited (南京鑫和房地產開發有限公司) to Nanjing Xinlei Property Development Company Limited (南京鑫磊房地產開發有限公司).

– V-4 –

PROPERTY VALUATION REPORT

APPENDIX V

• (4) According to Business Licence No. 913201003024593434, Nanjing Xinlei Property Development Company Limited* (南京鑫磊房地產開發有限公司) has been incorporated as a limited liability company with a registered capital of RMB50,000,000.

• (5) We have been provided with a legal opinion on the title to which contains, inter-alia, the following information:

• (i) Nanjing Xinlei Property Development Company Limited* (南京鑫磊房地產開發有限公司) is the sole legal land user of the property and has obtained the land use rights of the property;

• (ii) All land premium stated in the Grant Contract of State-owned Land Use Rights have been duly paid and settled;

• (iii) The property is subject to a mortgage; and

• (iv) Nanjing Xinlei Property Development Company Limited (南京鑫磊房地產開發有限公司) has the rights to occupy, use and lease the land use rights of the property. With prior consent from the mortgagee, Nanjing Xinlei Property Development Company Limited (南京鑫磊房地產開發有限公司) has the rights to transfer, mortgage and dispose of the land use rights of the property.

• For identification purposes only

– V-5 –

RECONCILIATION OF APPRAISED PROPERTY VALUE WITH NET BOOK VALUE

APPENDIX VI

RECONCILIATION OF APPRAISED PROPERTY VALUE WITH NET BOOK VALUE (RULE 5.07)

DTZ Cushman & Wakefield Limited, an independent valuer, has valued the property held by Nanjing Xinlei as at 20 June 2016 and is of the opinion that the market value of the property amounted to RMB1,017,000,000 as at 20 June 2016.

Set forth below is the reconciliation of the valuation figure of Nanjing Xinlei’s property with the figures included in the audited financial statements of Nanjing Xinlei:

	Properties under
	development for
	sale	Total
	RMB’000	RMB’000
Net book value as at 31 March 2016 per Nanjing
Xinlei’s accountants’ report set out in
Appendix II to this circular	715,698	715,698
Movements during the period (unaudited)	N/A	N/A
Additions during the period	4,432.16	4,432.16
Depreciation charge for the period	0	0
Net book value as at 20 June 2016	720,130.16	720,130.16
Valuation surplus	296,869.84	296,869.84
Valuation of the property as at 20 June 2016 per
valuation report set out in Appendix V to this
circular	1,017,000	1,017,000

– VI-1 –

GENERAL INFORMATION

APPENDIX VII

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. DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

As at the Latest Practicable Date, the interests and short positions, if any, of each Director and chief executive of the Company in the Shares, underlying Shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executive were deemed or taken to have under provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers adopted by the Company were as follows:

			Approximate
		Number of Shares	percentage of
Names of Directors	Nature of interest	(Note 7)	shareholding
Zhang Lei	Beneficiary of a trust	1,491,994,300 (L)	71.65%
(Notes 1, 2 & 6)
	Beneficial owner	15,597,400 (L)	0.75%
Zhang Peng	Interest in a	5,438,400 (L)	0.26%
(Notes 3 & 6)	controlled
	corporation
	Beneficial owner	11,000,000 (L)	0.53%
Chen Yin (Note 4)	Interest in a	6,283,200 (L)	0.30%
	controlled
	corporation
Fan Qingguo (Note 5)	Interest in a	5,438,400 (L)	0.26%
	controlled
	corporation
Hui Chun Ho, Eric	Beneficial owner	500,000 (L)	0.02%
(Note 6)

– VII-1 –

GENERAL INFORMATION

APPENDIX VII

Notes:

1. Such 1,491,994,300 Shares are held by Super Land as a registered holder. The entire issued share capital of Super Land is wholly-owned by Fantastic Energy Ltd., the entire issued share capital of which is in turn wholly-owned by Cititrust Private Trust (Cayman) Limited as the trustee of the family trust. The said family trust is a discretionary trust established by Mr. Salum Zheng Lee, the capital and income beneficiaries of whom are family members of Mr. Salum Zheng Lee, including Mr. Zhang Lei. Mr. Salum Zheng Lee is the younger brother of Mr. Zhang Lei. Therefore, Mr. Zhang Lei is deemed to have the same interest in the Company.

2. 7,407,400 Shares out of the 15,597,400 Shares are beneficially held by Mr. Zhang Lei in his own capacity while the remaining 8,190,000 Shares are held pursuant to share options granted under the Share Option Scheme.

3. Mr. Zhang Peng holds 100% of the issued share capital of Zhou Ming Development Ltd., which owns 5,438,400 Shares out of the issued share capital of the Company. Therefore, Mr. Zhang Peng is deemed to have the same interest in the Company.

4. Mr. Chen Yin holds 100% of the issued share capital of Dragon Shing Technology Ltd., which owns 6,283,200 Shares out of the issued share capital of the Company. Therefore, Mr. Chen Yin is deemed to have the same interest in the Company.

5. Mr. Fan Qingguo holds 100% of the issued share capital of Create Success Development Ltd., which owns 5,438,400 Shares out of the issued share capital of the Company. Therefore, Mr. Fan Qingguo is deemed to have the same interest in the Company.

6. Such share interest (including Mr. Zhang Lei’s interest in 8,190,000 Shares, Mr. Zhang Peng’s interest in 11,000,000 Shares and Mr. Hui Chun Ho, Eric’s interest in 500,000 Shares) is held pursuant to the share options granted under the Share Option Scheme.

7. ‘‘L’’ stands for a long position in the Shares.

– VII-2 –

GENERAL INFORMATION

APPENDIX VII

(b) Substantial Shareholders

So far as is known to any Director or the chief executive of the Company, as at the Latest Practicable Date, Shareholders who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO were as follows:

			Approximate
		Number of Shares	percentage of
Names of Shareholders	Nature of interest	(Note 3)	shareholding
Super Land (Note 1)	Registered holder	1,491,994,300 (L)	71.65%
Fantastic Energy Ltd.	Interest in a	1,491,994,300 (L)	71.65%
(Note 1)	controlled
	corporation
Cititrust Private Trust	Trustee	1,491,994,300 (L)	71.65%
(Cayman) Limited
(Note 1)
Salum Zheng Lee (Note 1)	Settlor of a	1,491,994,300 (L)	71.65%
	discretionary trust
Zhang Degui (Note 2)	Interest of a spouse	1,491,994,300 (L)	71.65%

Notes:

1. Such 1,491,994,300 Shares are held by Super Land as a registered holder. The entire issued share capital of Super Land is wholly-owned by Fantastic Energy Ltd., the entire issued share capital of which is in turn wholly-owned by Cititrust Private Trust (Cayman) Limited as the trustee of the family trust. The said family trust is a discretionary trust established by Mr. Salum Zheng Lee, the capital and income beneficiaries of whom are family members of Mr. Salum Zheng Lee who is therefore deemed to be interested in 1,491,994,300 Shares held by the family trust.

2. Ms. Zhang Degui is the spouse of Mr. Salum Zheng Lee and is therefore deemed to be interested in 1,491,994,300 Shares held by the family trust.

3. ‘‘L’’ stands for a long position in the Shares.

Save as disclosed above, so far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, no other person (other than a Director or chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

– VII-3 –

GENERAL INFORMATION

APPENDIX VII

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 which should fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, each of Mr. Zhang Lei and Mr. Chen Yin entered into a service contract with the Company, pursuant to which each of them agreed to act as an executive Director for a term of three years with effect from 14 June 2016. Mr. Zhang Peng entered into a service contract with the Company to act as an executive Director for a term of three years with effect from 27 January 2014. Each of Mr. Fan Qingguo and Mr. Zhong Tianxiang entered into a service contract with the Company, pursuant to which each of them agreed to act as a non-executive Director for a term of three years with effect from 26 August 2014. Each of Mr. Qin Youguo, Mr. Cui Jian and Mr. Hui Chun Ho, Eric entered into a letter of appointment with the Company, pursuant to which each of them agreed to act as an independent non-executive Director for a term of three years with effect from 14 June 2016.

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group or any associated company of the Company (excluding contracts expiring or determinable within one year without payment of compensation, other than statutory compensation).

4. COMPETING BUSINESS INTEREST OF DIRECTORS

In order to eliminate competing business with the Group, Mr. Zheng Lei and Mr. Salum Zheng Lee, among others, entered into a deed of non-competition with the Company on 14 June 2013.

In compliance with the deed of non-competition signed on 14 June 2013, Mr. Zheng Lei and Mr. Salum Zheng Lee hereby make an annual declaration on his compliance with the noncompetition undertaking that save for the Modern Building Business Hotel project, none of them is engaged in, or is interested in any business (other than the Group) which, directly or indirectly, competes or may compete with the business of the Group.

As at the Latest Practicable Date, save as disclosed above, so far as the Directors were aware, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group as required to be disclosed pursuant to the Listing Rules.

5. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2015, the date to which the latest published audited accounts of the Company are made up.

– VII-4 –

GENERAL INFORMATION

APPENDIX VII

6. LITIGATION

As at the Latest Practicable Date, no member of the Enlarged Group was engaged in any litigation or arbitration proceedings of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against any member of the Enlarged Group.

7. MATERIAL CONTRACTS

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

1. on 10 September 2014, the Company, Great Wall Pan Asia International Investment Co., Limited and Modern Land (HKNo.5) Limited, among others, entered into a joint venture agreement dated 10 September 2014 for the formation of a joint venture company whereby each of the Company and Great Wall Pan Asia International Investment Co., Limited shall contribute RMB500,000,000 as shareholder loan;

2. on 10 October 2014, the Company, Great Wall Pan Asia International Investment Co., Limited and Modern Land (HKNo.5) Limited entered into a management service agreement (the ‘‘Great Wall Management Agreement’’), pursuant to which Great Wall Pan Asia International Investment Co., Limited shall provide management services to Modern Land (HKNo.5) Limited and its subsidiaries including liquidity control, budget control, operational supervision, recruitment, financing, brand building and related consultancy services. The annual caps for the transactions under the Great Wall Management Agreement for the year ending 31 December 2014, the year ending 31 December 2015 and the year ending 31 December 2016 are approximately RMB9,600,000, RMB41,500,000 and RMB41,500,000, respectively;

3. on 15 October 2014, Modern Green Development Co., Ltd., Hangzhou Huaqin Investment Management Company Limited and Shanghai Yujing Investment Management Company Limited entered into an equity transfer agreement whereby Modern Green Development Co., Ltd. agreed to acquire 100% equity interest in Shanghai Yujing Investment Management Company Limited for a consideration of RMB10,000,000, and to provide Shanghai Yujing Investment Management Company Limited a loan amount of RMB25,000,000;

4. on 17 October 2014, the Company, Great Wall Pan Asia International Investment Co., Limited and Modern Land (HKNo.5) Limited entered into a supplemental agreement to the Great Wall Management Agreement to revise and clarify certain terms in the Great Wall Management Agreement, whereby the annual caps under the Great Wall Management Agreement remained unchanged;

5. on 15 July 2015, the Company and Kingston Securities Limited entered into a conditional placing agreement in relation to the placing of up to 320,000,000 Shares at a price of HK$1.05 per Share to not less than six placees;

– VII-5 –

GENERAL INFORMATION

APPENDIX VII

1. on 18 August 2015, Shengeng Zhiye Investment (Beijing) Co., Ltd., Shaanxi Hongsheng Industrial Group Company Limited and Shaanxi Hejin Mineral Company Limited entered into an equity transfer agreement whereby Shengeng Zhiye Investment (Beijing) Co., Ltd. agreed to acquire 26% and 25% equity interest in Shaanxi Zhuoli Industrial Company Limited from Shaanxi Hongsheng Industrial Group Company Limited and Shaanxi Hejin Mineral Company Limited, respectively, at an aggregate consideration of RMB10,200,000, and Shengeng Zhiye Investment (Beijing) Co., Ltd. shall provide Shaanxi Zhuoli Industrial Company Limited with a loan in an amount of RMB200,000,000;

2. four interest transfer agreements dated 16 September 2015, 17 September 2015, 18 September 2015 and 19 September 2015 entered into among Modern Green Development Co., Ltd., San Sheng Hong Ye and Shihezi Hong Rui Rui An Equity Investment Partnership whereby the aggregate interest of RMB200,000,000 in Shanghai Zhong Cheng Can Shuo Investment Centre were transferred by San Sheng Hong Ye (on behalf of Modern Green Development Co., Ltd.) to Shihezi Hong Rui Rui An Equity Investment Partnership at a consideration of RMB200,000,000;

3. on 12 October 2015, Modern Green Development Co., Ltd. and Tujia Network Technology (Beijing) Company Limited entered into a strategic cooperation framework agreement, pursuant to which the parties agreed to establish a cooperation framework in respect of the management services of community apartments;

4. on 20 October 2015, the Company and AVIC Trust Co., Ltd. entered into an equity transfer agreement whereby the Company agreed to acquire from AVIC Trust Co., Ltd. 35% equity interest in Nanchang Xinjian Modern Real Estate Development Co., Ltd. at a consideration of RMB80,500,000;

5. on 8 January 2016, Modern Green Development Co., Ltd. and Huainan Xinyi Real Estate Development Co., Ltd. entered into an equity transfer agreement whereby Modern Green Development Co., Ltd. agreed to acquire from Huainan Xinyi Real Estate Development Co., Ltd. 49% equity interest in Anhui MOMA Development Co., Ltd. for a consideration of RMB65,000,000;

6. on 15 April 2016, the Company and AVIC Trust Co., Ltd. entered into an equity transfer agreement whereby the Company agreed to acquire from AVIC Trust Co., Ltd. 35% equity interest in Nanchang Moma Real Estate Co., Ltd. For a consideration of RMB161,083,555.85;

7. on 29 April 2016, the Company, Great Wall Pan Asia International Investment Co., Limited and Modern Land (HKNo.5) Limited entered into a termination agreement to whereby it was agreed that, among other things, the joint venture arrangement between the Company and Great Wall Pan Asia International Investment Co., Limited shall be terminated and the Company shall buy back the remaining shareholding in each of Modern Land (HKNo.5) Limited and Modern Land (HKNo. 1) Limited for an aggregate consideration of HK$98;

– VII-6 –

GENERAL INFORMATION

APPENDIX VII

1. on 30 May 2016, Modern Land Seattle, LLC, Modern Green Land Bellevue LLC and CW Development LLC entered into a limited liability company agreement to form MGCW, LLC with the investment amount to be contributed by Modern Land Seattle, LLC, Modern Green Land Bellevue LLC and CW Development LLC to be US$15.3 million, US$7.2 million and US$7.5 million, respectively;

2. on 27 June 2016, Modern Green Development Co., Ltd. and Shenzhen Pingan Dahua Huitong Wealth Management Company Limited entered into an equity transfer agreement whereby Modern Green Development Co., Ltd. agreed to acquire from Shenzhen Pingan Dahua Huitong Wealth Management Company Limited 5% equity interest in Wuhan Modern Green Development Co., Ltd. For a consideration of RMB10,000,000;

3. the Equity Transfer Agreement; and

4. the Debt Settlement Agreement.

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have been named in this circular or have given opinion or letter contained in this circular:

Name Qualifications KPMG Certified Public Accountants DTZ Cushman & Wakefield Property valuer

As at the Latest Practicable Date, KPMG and DTZ Cushman & Wakefield have given and have not withdrawn their written consent to the issue of this circular with the inclusion therein of their letters and references to their names, in the form and context in which they are included.

As at the Latest Practicable date, KPMG and DTZ Cushman & Wakefield did not have any shareholding in any member of the Enlarged Group and did not have the right to subscribe for or to nominate persons to subscribe for shares in any members of the Enlarged Group.

As at the Latest Practicable Date, KPMG and DTZ Cushman & Wakefield did not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Enlarged Group, or which are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Company were made up.

The letter, opinion and report given by each of KPMG and DTZ Cushman & Wakefield is given as of the date of this circular for incorporation in this circular.

– VII-7 –

GENERAL INFORMATION

APPENDIX VII

9. GENERAL

• (a) None of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Enlarged Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 December 2015, being the date to which the latest published audited accounts of the Company were made up, and up to the Latest Practicable Date.

• (b) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Enlarged Group, which was subsisting and was significant in relation to the business of the Enlarged Group.

• (c) The company secretary of the Company is Mr. Yeung Tak Yip. Mr. Yeung is a fellow member of Association of Chartered Certified Accountants a member of the Hong Kong Institute of Certified Public Accountants.

• (d) The registered office of the Company is Floor 4, Willow House, Cricket Square, P.O. Box 2804, Grand Cayman, KY1-1112, Cayman Islands.

• (e) The principal place of business of the Company in Hong Kong is Room 505, ICBC Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong.

• (f) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Investor Services Limited.

• (g) The principal share registrar and transfer office of the Company is Royal Bank of Canada Trust Company (Cayman) Limited.

• (h) The English text of this circular shall prevail over their respective Chinese text for the purpose of interpretation.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Room 505, ICBC Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong during normal business hours on any weekdays, except public holidays, from the date of this circular up to and including 26 August 2016:

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

• (b) the annual reports of the Company for the years ended 31 December 2013, 2014 and 2015;

• (c) the accountants’ report on Nanjing Xinlei, the text of which is set out in Appendix II to this circular;

• (d) the report on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III to this circular;

– VII-8 –

GENERAL INFORMATION

APPENDIX VII

• (e) the property valuation report of the property interests held by Nanjing Xinlei, the text of which is set out in Appendix V to this circular;

• (f) the material contracts as referred to in the section headed ‘‘Material Contracts’’ of this Appendix;

• (g) the written consents of the experts as referred to in the section headed ‘‘Experts and Consents’’ of this Appendix;

• (h) the Equity Transfer Agreement;

• (i) the Debt Settlement Agreement; and

• (j) this circular.

– VII-9 –