Qian Xun Technology Limited — Proxy Solicitation & Information Statement 2019

Mar 25, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

CNT GROUP LIMITED 北海集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 701)

(1) VERY SUBSTANTIAL DISPOSAL IN RELATION TO PROPOSED DISPOSAL OF THE OCEAN WIDE SHARE (2) MAJOR TRANSACTION IN RELATION TO PROPOSED ACQUISITION OF THE NIGON SHARES AND

(3) NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company

Innovax Capital Limited

A notice convening a special general meeting of the Company to be held at 31st Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong Kong on Thursday, 9 May 2019 at 11:00 a.m. is set out on pages N-1 to N-2 of this circular. A form of proxy for use at the special general meeting is enclosed with this circular. Such form of proxy is also published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the Company (www.cntgroup.com.hk).

Whether or not you are able to attend the special general meeting, you are advised to read the notice and to complete and sign the accompanying form of proxy, in accordance with the instructions printed thereon and return it to the Company’s share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the special general meeting or any adjournment thereof should they so wish.

26 March 2019

CONTENTS

			Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			8
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix I - 1
Appendix II(A)	–	Financial Information of the Ocean Wide Group . . . . . . . . . . . . . . . . . . . . . . . .	Appendix II(A) - 1
Appendix II(B)	–	Accountants’ Report of the Nigon Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix II(B) - 1
Appendix III(A)	–	Management Discussion and Analysis on the Remaining Group . . . . . . . . . . . . .	Appendix III(A) - 1
Appendix III(B)	–	Management Discussion and Analysis on the Nigon Group . . . . . . . . . . . . . . . . .	Appendix III(B) - 1
Appendix IV	–	Unaudited Pro Forma Financial Information of the Remaining Group
		and the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix IV - 1
Appendix V(A)	–	Valuation Reports on the Sai Kung Property . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix V(A) - 1
Appendix V(B)	–	Valuation Reports on the Wan Chai Property . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix V(B) - 1
Appendix VI	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Appendix VI - 1
Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			N - 1

i

DEFINITIONS

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

• ‘‘Acquisition Condition(s)’’

• condition(s) precedent to the Proposed Acquisition set forth in the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• ‘‘Announcement’’ the announcement of the Company on 10 September 2018 in relation to, among other matters, the Share Exchange Agreement;

• ‘‘associate(s)’’ has the same meaning as ascribed to this term under the Listing Rules;

• ‘‘BO’’ the Building Ordinance, Chapter 123 of the Laws of Hong Kong, as amended, supplemented or otherwise modified from time to time;

• ‘‘Board’’ the board of Directors;

• ‘‘BVI’’ the British Virgin Islands;

• ‘‘Company’’ CNT Group Limited ( 北 海 集 團 有 限 公 司 ), a company incorporated in Bermuda with limited liability with its Shares listed on the main board of the Stock Exchange (stock code: 701);

• ‘‘Completion’’ completion of the Proposed Disposal and the Proposed Acquisition pursuant to the terms and conditions of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• ‘‘Completion Date’’ the date on which Completion shall take place, initially expected to be 31 May 2019;

• ‘‘Conley’’

• Conley Investment Limited, a company incorporated in Hong Kong with limited liability on 3 March 1981 and a wholly-owned subsidiary of Ocean Wide. Conley is the sole owner of the Sai Kung Property;

• ‘‘Conley Bank Loan’’

• the bank loan and any banking facilities granted by The Hongkong and Shanghai Banking Corporation Limited to the Company and/or its subsidiaries as secured by, among other things, the Tatpo Securities, and where the context shall so require, the outstanding amount of the principal sum and any interest accrued thereon as at Completion;

1

DEFINITIONS

• ‘‘CPM Group’’

CPM Group Limited ( 中 漆 集 團 有 限 公 司 ), a company incorporated in the Cayman Islands as an exempted company with limited liability with its shares listed on the main board of the Stock Exchange (stock code: 1932);

• ‘‘DBO’’

the Demolished Buildings (Re-development of Sites) Ordinance, Chapter 337 of the Laws of Hong Kong, as amended, supplemented or otherwise modified from time to time;

• ‘‘Director(s)’’ the director(s) of the Company;

• ‘‘Disposal Condition(s)’’

• condition(s) precedent to the Proposed Disposal set forth in the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• ‘‘Encumbrance’’

• a mortgage, charge, pledge, lien, option, right of first refusal, right of pre-emption, third-party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including a title transfer or retention arrangement) having similar effect and any agreement or obligation to create or grant any of the aforesaid;

• ‘‘Enlarged Group’’ the Remaining Group and Nigon;

• ‘‘GFA’’ gross floor area;

• ‘‘Government Authority’’

• (a) any government (whether supranational, national or local) in any relevant jurisdiction including the Government of Hong Kong or any bureau, department or official of any of the above; (b) any statutory or public authority or body in any relevant jurisdiction; (c) any court, tribunal or other judicial authority in any relevant jurisdiction; (d) the Government of Hong Kong as grantor and/or landlord in respect of the Sai Kung Property Government Lease or the Wan Chai Property Government Lease; and the expression ‘‘Government Authority’’ shall also include (e) any person to whom any power or authority of any of the above is delegated; and (f) any person engaged by any of the above for the purpose of exercising any of its powers or authorities or assisting in the exercise of any of its powers or authorities;

• ‘‘Group’’

• the Company and its subsidiaries;

• ‘‘HK$’’

• Hong Kong dollars, the lawful currency of Hong Kong;

• ‘‘Hong Kong’’

The Hong Kong Special Administrative Region of the PRC;

2

DEFINITIONS

• ‘‘Independent Third Party(ies)’’

• third parties independent of the Company and its connected persons;

• ‘‘Jetco’’

• Jetco (H.K.) Limited ( 怡高 (香港 )有 限公 司), a company incorporated in Hong Kong with limited liability on 29 March 2017 and wholly-owned by Mr. Tang, being (a) the vendor of the Nigon Shares and the assignor of the Nigon Shareholder’s Loan under the Proposed Acquisition; and (b) the purchaser of the Ocean Wide Share and assignee of the Ocean Wide Shareholder’s Loan under the Proposed Disposal;

• ‘‘Jetco Securities’’

• the security interests given by, over or otherwise affecting Nigon;

• ‘‘Latest Practicable Date’’ 22 March 2019, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein;

• ‘‘Lead Creation’’ Lead Creation Development Limited (領創發展有限公司), a company incorporated in Hong Kong with limited liability on 25 February 2005, the entire issued share capital of which is legally and beneficially owned by Mr. Tang as at the date of this circular;

• ‘‘Leaseback Agreement’’ the tenancy agreement to be entered into between Nigon, which will become a wholly-owned subsidiary of the Company upon Completion, as landlord and Tang’s Living as tenant immediately before Completion in respect of the Wan Chai Property;

• ‘‘Listing Rules’’

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time;

• ‘‘Long-stop Date’’ 31 July 2019;

• ‘‘Model Code’’

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

• ‘‘Mr. Tang’’

• Mr. Tang Shing Bor (鄧成波), an Independent Third Party and the guarantor of Jetco under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• ‘‘Nigon’’

• Nigon Hong Kong Limited (力運香港有限公司), a company incorporated in Hong Kong with limited liability on 15 May 2007 and a wholly-owned subsidiary of Jetco. Nigon is the sole owner of the Wan Chai Property;

3

DEFINITIONS

• ‘‘Nigon Adjustment’’

• ‘‘Nigon Bank Loan’’

• ‘‘Nigon Completion Accounts’’

• ‘‘Nigon Group’’

• ‘‘Nigon Initial Consideration’’

• ‘‘Nigon Net Asset Value’’

• ‘‘Nigon Pro Forma Completion Accounts’’

• ‘‘Nigon Shareholder’s Loan’’

• ‘‘Nigon Shares’’

• ‘‘Ocean Wide’’

• ‘‘Ocean Wide Adjustment’’

any upward or downward adjustments to the Nigon Initial Consideration on a dollar-to-dollar basis with reference to the Nigon Net Asset Value stated in the Nigon Pro Forma Completion Accounts and the Nigon Completion Accounts;

the bank loan and any banking facilities granted by the United Overseas Bank Limited to Nigon as secured by, among other things, the Jetco Securities and, where the context shall so require, the outstanding amount of the principal sum and any interest accrued thereon as of the Completion Date;

the unaudited statement of financial position of Nigon as at close of business on the Completion Date to be provided to Tatpo within 25 business days after the Completion Date;

• Nigon and Lead Creation;

• HK$530 million (as adjusted by the Nigon Adjustments);

the total assets of Nigon (other than the value of the Wan Chai Property, any intangible assets, other fixed assets and deferred tax assets) less the total liabilities of Nigon (other than the liabilities in respect of the Nigon Shareholder’s Loan, the Nigon Bank Loan and any deferred tax liabilities) as of the Completion Date as shown in the Nigon Pro Forma Completion Accounts or the Nigon Completion Accounts (as the case may be);

the pro-forma statement of financial position of Nigon as of close of business on the Completion Date to be provided to Tatpo on or before 5 business days prior to the Completion Date;

the loan due from Nigon to Jetco that will be assigned to Tatpo upon Completion under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), which amounted to be HK$31.8 million as of the Latest Practicable Date;

the 100 shares of Nigon, representing all shares in issue of Nigon;

Ocean Wide Assets Limited, a company incorporated under the laws of BVI with limited liability on 18 May 1999 and is wholly-owned by Tatpo. Ocean Wide is the sole shareholder of Conley;

any upward or downward adjustments to the Ocean Wide Initial Consideration on a dollar-to-dollar basis with reference to the Ocean Wide Net Asset Value stated in the Ocean Wide Pro Forma Completion Accounts and the Ocean Wide Completion Accounts;

4

DEFINITIONS

• ‘‘Ocean Wide Completion Accounts’’

• ‘‘Ocean Wide Group’’

• ‘‘Ocean Wide Initial Consideration’’

• ‘‘Ocean Wide Net Asset Value’’

• ‘‘Ocean Wide Pro Forma Completion Accounts’’

• ‘‘Ocean Wide Shareholder’s Loan’’

• ‘‘Ocean Wide Share’’

• ‘‘Remaining Group’’

• ‘‘RMB’’

• ‘‘PRC’’

• ‘‘Proposed Acquisition’’

the unaudited consolidated statement of financial position of Ocean Wide as at close of business on the Completion Date to be provided to Jetco within 25 business days after the Completion Date;

Ocean Wide and Conley;

HK$900 million (as adjusted by the Ocean Wide Adjustments);

• the total assets of Ocean Wide (other than the value of the Sai Kung Property, any intangible assets, other fixed assets and deferred tax assets) less the total liabilities of Ocean Wide (other than the liabilities in respect of the Ocean Wide Shareholder’s Loan, the Conley Bank Loan and any deferred tax liabilities) as of Completion Date as shown in the Ocean Wide Pro Forma Completion Accounts or the Ocean Wide Completion Accounts (as the case may be);

• the pro-forma consolidated statement of financial position of Ocean Wide as of close of business on the Completion Date to be provided to Jetco on or before 5 business days prior to the Completion Date;

• the loan due from Ocean Wide to Tatpo that will be assigned to Jetco upon Completion under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), which amounted to be HK$42.3 million as of the Latest Practicable Date;

• one issued share of Ocean Wide, being the entire allotted and issued share capital of Ocean Wide;

the Group excluding the Ocean Wide Group;

• Renminbi, the lawful currency of the PRC;

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

• the proposed acquisition of the Nigon Shares and the Nigon Shareholder’s Loan from Jetco by Tatpo (or its nominee) pursuant to the terms and conditions of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

5

DEFINITIONS

• ‘‘Proposed Disposal’’

• ‘‘Sai Kung Property’’

• ‘‘Sai Kung Property Government Lease’’

• ‘‘SFO’’

• ‘‘Share Exchange Agreement’’

• ‘‘Share(s)’’

• ‘‘Shareholder(s)’’

• ‘‘Special General Meeting’’

• ‘‘Stock Exchange’’

• ‘‘sq. ft’’

• ‘‘substantial shareholder’’

• ‘‘Supplemental Announcement’’

• the proposed disposal of the Ocean Wide Share and the Ocean Wide Shareholder’s Loan by Tatpo to Jetco pursuant to the terms and conditions of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• all those pieces or parcels of ground respectively registered in the Land Registry as Lot No. 963 in D.D. 215 and the extension thereto & Lot No. 991 in D.D. 215 in Sai Kung, New Territories including and of and in the messuages, erections and buildings thereon now known as Nos. 7 and 9 Hong Ting Road, Sai Kung, New Territories, Hong Kong;

• collectively, New Grant No. 6503 in respect of Lot No. 963 in Demarcation District No. 215 and the Extension thereto and New Grant No. SK7294 in respect of Lot No. 991 in Demarcation District No. 215;

• the Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong, as amended, supplemented or other modified from time to time;

• the Share Exchange Agreement dated 8 September 2018 entered into among Tatpo, Jetco and Mr. Tang for the Proposed Acquisition and the Proposed Disposal;

• the ordinary share(s) of nominal value of HK$0.10 each in the share capital of the Company;

• the holder(s) of the Share(s);

• the special general meeting of the Company to be convened for the purpose of allowing the Shareholders to consider and, if thought fit, approve the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated thereunder;

• The Stock Exchange of Hong Kong Limited;

• square feet;

• has the same meaning as ascribed to this term under the Listing Rules;

• the announcement of the Company dated 20 March 2019 in relation to, among other matters, the Supplemental Deed;

6

DEFINITIONS

• ‘‘Supplemental Deed’’

• ‘‘Tang’s Living’’

• ‘‘Tatpo’’

• ‘‘Tatpo Securities’’

• ‘‘Wan Chai Property’’

• ‘‘Wan Chai Property Government Lease’’

• ‘‘%’’

the Supplemental Deed entered into among Tatpo, Jetco and Mr. Tang on 20 March 2019 to amend certain terms of the Share Exchange Agreement;

• Tang’s Living Guesthouse (Morrison Hill Road) Limited (鄧氏賓 館(摩理臣山道)有限公司), a company incorporated in Hong Kong with limited liability on 14 November 2017 and ultimately and wholly-owned by Mr. Tang Yiu Sing;

Tatpo Corporation Limited, a company incorporated under the laws of Liberia with limited liability on 11 November 1988 and a wholly-owned subsidiary of the Company. Tatpo is (a) the vendor of the Ocean Wide Share and the assignor of the Ocean Wide Shareholder’s Loan under the Proposed Disposal; and (b) the purchaser of the Nigon Shares and assignee of the Nigon Shareholder’s Loan under the Proposed Acquisition;

• the security interests given by, over or otherwise affecting Ocean Wide, Conley and/or the Sai Kung Property;

the messuages, erections and buildings thereon now known as Minimal Hotel • Urban (簡悅酒店 • 銅鑼灣) (previously, Hotel Bonaparte), No. 11 Morrison Hill Road, Wan Chai, Hong Kong;

collectively, the government leases of Inland Lot No. 3983 and Inland Lot No. 3984; and

per cent.

7

LETTER FROM THE BOARD

CNT GROUP LIMITED 北海集團有限公司

(Incorporated in Bermuda with limited liability) (Stock Code: 701)

Executive Directors

Lam Ting Ball, Paul (Chairman) Chong Chi Kwan (Managing Director)

Non-Executive Directors

Tsui Ho Chuen, Philip Chan Wa Shek Zhang Yulin Hung Ting Ho, Richard

Independent non-executive Directors

Wu Hong Cho Danny T Wong Zhang Xiaojing

Registered Office

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal Office

Unit E, 28th Floor CNT Tower 338 Hennessy Road Wanchai Hong Kong 26 March 2019

To the Shareholders,

Dear Sir or Madam,

(1) VERY SUBSTANTIAL DISPOSAL IN RELATION TO PROPOSED DISPOSAL OF THE OCEAN WIDE SHARE

(2) MAJOR TRANSACTION IN RELATION TO PROPOSED ACQUISITION OF THE NIGON SHARES

AND

(3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

References are made to the Announcement and the Supplemental Announcement in relation to the Share Exchange Agreement, the Supplemental Deed and the transactions contemplated thereunder, including the Proposed Disposal and the Proposed Acquisition.

The purpose of this circular is to provide you with, inter alia, further details on the Share Exchange Agreement, the Supplemental Deed and the transactions contemplated thereunder, the financial information of the Ocean Wide Group, the accountants’ report of the Nigon Group, the respective valuation reports of the Sai Kung Property and the Wan Chai Property, and the notice of the Special General Meeting.

8

LETTER FROM THE BOARD

THE SHARE EXCHANGE AGREEMENT AND THE SUPPLEMENTAL DEED

The principal terms of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) are set forth below:

Date of the Share Exchange : 8 September 2018 Agreement Date of the Supplemental Deed : 20 March 2019 Parties : (a) Tatpo, a wholly-owned subsidiary of the Company;

• (b) Jetco; and

• (c) Mr. Tang, as guarantor of Jetco.

To the best of the Director’s knowledge, information and belief having made all reasonable enquiries, both Jetco and its ultimate beneficial owner(s) and Mr. Tang are Independent Third Parties.

• Assets to be disposed : the entire issued share capital of Ocean Wide and the Ocean of by Tatpo Wide Shareholder’s Loan.

• Assets to be acquired : the entire issued share capital of Nigon and the Nigon by Tatpo Shareholder’s Loan.

• Consideration : The consideration for the Proposed Disposal is HK$900 million (subject to the Ocean Wide Adjustments), which shall be satisfied in cash by Jetco in the following manner:

• (a) as to HK$37 million (the ‘‘Deposit’’), being the deposit and the part payment towards the consideration for the Proposed Disposal, has been paid by Jetco to Tatpo upon signing of the Share Exchange Agreement; and

• (b) as to HK$863 million, being the remaining balance of the consideration for the Proposed Disposal, after deducting the amount to (i) fully set off against consideration for the Proposed Acquisition (i.e. HK$530 million); and (ii) repay any amount that may be required to release the Tatpo Securities (which shall be payable to the relevant bank), if any, shall be paid by Jetco to Tatpo at Completion.

9

LETTER FROM THE BOARD

The consideration for the Proposed Acquisition is HK$530 million (subject to the Nigon Adjustments), shall be satisfied by Tatpo to Jetco at Completion by way of set-off against part of the consideration for the Proposed Disposal abovementioned.

Pursuant to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), the consideration of the Proposed Disposal and the consideration of the Proposed Acquisition will be adjusted upward or downward on a dollar-to-dollar basis with reference to the Nigon Net Asset Value and the Ocean Wide Net Asset Value.

The amount to be paid on Completion will be based on the Nigon Net Assets Value stated in the Nigon Pro Forma Completion Accounts and the Ocean Wide Net Asset Value stated in the Ocean Wide Pro Forma Completion Accounts respectively.

In the event that the consideration for the Proposed Disposal and the consideration for the Proposed Acquisition are required to be further adjusted after finalisation of the Ocean Wide Completion Accounts and the Nigon Completion Accounts, Tatpo and Jetco shall settle the balance within 10 business days after the finalisation of the said completion accounts in cash.

Based on the information available as at the Latest Practicable Date, the Directors expect that no outstanding amount will be required to pay for the release of the Tatpo Securities upon Completion. As such, the Directors expect that the Group will receive not less than HK$370 million (subject to the Ocean Wide Adjustments and the Nigon Adjustments) by way of cash upon Completion.

10

LETTER FROM THE BOARD

Basis of Consideration

: The consideration of the Proposed Disposal was determined after arm’s length negotiations between Tatpo and Jetco on normal commercial terms principally with reference to, among others, (i) the preliminary valuation of the Sai Kung Property on existing use basis at HK$415 million carried out by BMI Appraisals Limited on 31 July 2018; and (ii) the premium over the appraised value of the Sai Kung Property that Mr. Tang is willing to pay.

The consideration of the Proposed Acquisition was determined after arm’s length negotiations between Tatpo and Jetco on normal commercial terms principally with reference to, among others, the valuation of the Wan Chai Property at HK$530 million carried out by Centaline Surveyors Limited on 31 July 2018.

BMI Appraisals Limited and Centaline Surveyors Limited are independent surveyors to the Company. The valuers valued the Sai Kung Property and the Wan Chai Property by comparison approach with reference to comparable market transactions as reported in the market at similar locations.

The Directors (including the independent non-executive Directors) consider that the consideration involved in the Proposed Disposal and the Proposed Acquisition are favourable to the Group and are in the interest of the Company and the Shareholders as a whole.

Interest on late payment

• : If a party fails to pay an amount required to be paid under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) when it is due, that party must pay interest on the amount due at the rate per year of 2.0 per cent above the best lending rate from time to time of The Hongkong and Shanghai Banking Corporation Limited.

Conditions of the Proposed : Disposal

• Completion of the Proposed Disposal is subject to the following Disposal Conditions:

• (i) the passing by the Shareholders in the Special General Meeting approving the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated in or accidental thereunder;

11

LETTER FROM THE BOARD

• (ii) Jetco having undertaken a due diligence review of the Ocean Wide Group and the Sai Kung Property and has not identified any issues which may have a material adverse effect on the financial position of Ocean Wide and/or the Sai Kung Property;

• (iii) Conley is the sole registered and beneficial owner of the Sai Kung Property free from Encumbrances and is able to show and give good title to the Sai Kung Property in accordance with the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• (iv) Tatpo is the sole and beneficial owner of the Ocean Wide Share and Ocean Wide Shareholder’s Loan free from all Encumbrances and has the capacity and power to sell the Ocean Wide Share and assign the Ocean Wide Shareholder’s Loan to Jetco free from all Encumbrances;

• (v) there having been no breach by Tatpo of the fundamental warranties it provided under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• (vi) no part of the Sai Kung Property is, for any reason, condemned, closed or declared dangerous by the relevant Government Authority, damaged, destroyed, rendered inaccessible or subject to demolition order(s) of closure order(s) under BO or DBO or any other applicable legislation of a like nature; and

• (vii) the Proposed Acquisition being completed simultaneously.

Other than the Disposal Conditions (i) and (vii) abovementioned which are not waivable, Jetco may waive all the other Disposal Conditions.

12

LETTER FROM THE BOARD

If the Disposal Condition (i) has not been satisfied at or before 1:00 p.m. on 31 May 2019, Tatpo and Jetco shall postpone the Completion Date to the Long-stop Date. If the Disposal Condition (i) has not been satisfied at or before 1:00 p.m. on the Long-stop Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

If the Disposal Condition (vii) has not been satisfied at or before 1:00 p.m. on 31 May 2019 as a result of (x) a default by Tatpo of using its reasonable endeavour to procure satisfaction of certain Acquisition Conditions; or (y) a default by Tatpo to complete the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Jetco may at its option postpone the Completion Date to a business day not later than 10 business days thereafter. However, if Jetco chooses not to postpone the Completion Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

13

LETTER FROM THE BOARD

If any of the Disposal Conditions (other than the Disposal Conditions (i) or (vii)) has not been satisfied (or waived by Jetco to the extent it may be waived) at or before 1:00 p.m. on 31 May 2019, Jetco may at its option postpone the Completion Date to the Long-stop Date. However, if Jetco chooses not to postpone the Completion Date to the Long-stop Date or if any of such Disposal Conditions has not been satisfied (or waived by Jetco to the extent that it may be waived) on or before the Long-stop Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

• Conditions of the Proposed : Completion of the Proposed Acquisition is subject to the Acquisition following Acquisition Conditions:

• (i) Tatpo having undertaken a due diligence review of the Nigon Group and the Wan Chai Property and has not identified any issues which may have a material adverse effect on the financial position of Nigon and/or the Wan Chai Property;

• (ii) Nigon is the sole registered and beneficial owner of the Wan Chai Property free from Encumbrances and is able to show and give good title to the Wan Chai Property in accordance with the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

• (iii) Jetco is the sole and beneficial owner of the Nigon Shares and Nigon Shareholder’s Loan free from all Encumbrances and has the capacity and power to sell the Nigon Shares and assign the Nigon Shareholder’s Loan to Tatpo free from all Encumbrances;

• (iv) there having been no breach by Jetco of the fundamental warranties it provided under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed);

14

LETTER FROM THE BOARD

• (v) no part of the Wan Chai Property is, for any reason, condemned, closed or declared dangerous by the relevant Government Authority, damaged, destroyed, rendered inaccessible or subject to demolition order(s) of closure order(s) under BO or DBO or any other applicable legislation of a like nature;

• (vi) Nigon has disposed of the entire issued share capital of Lead Creation to Mr. Tang or an entity nominated by him;

• (vii) the passing by the Shareholders in the Special General Meeting approving the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated in or accidental thereunder; and

(viii) the Proposed Disposal being completed simultaneously.

Other than the Acquisition Conditions (vi), (vii) and (viii) which are not waivable, Tatpo may waive all the other Acquisition Conditions.

If the Acquisition Condition (vii) has not been satisfied at or before 1:00 p.m. on 31 May 2019, Tatpo and Jetco shall postpone the Completion Date to the Long-stop Date. If the Acquisition Condition (vii) has not been satisfied at or before 1:00 p.m. on the Long-stop Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

15

LETTER FROM THE BOARD

If the Acquisition Condition (viii) has not been satisfied at or before 1:00 p.m. on 31 May 2019 as a result of (x) a default by Jetco of using its reasonable endeavour to procure satisfaction of certain Disposal Conditions; or (y) a default by Jetco to complete the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Tatpo may at its option postpone the Completion Date to a business day not later than 10 business days thereafter. However, if Tatpo chooses not to postpone the Completion Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall be entitled to forfeit and retain the Deposit.

If any of the Acquisition Conditions (other than the Acquisition Conditions (vii) and (viii)) has not been satisfied (or waived by Tatpo to the extent it may be waived) at or before 1:00 p.m. on 31 May 2019, Tatpo may at its option further postpone the Completion Date to the Long-stop Date.

However, if Tatpo chooses not to postpone the Completion Date to the Long-stop Date or if any of the abovementioned Acquisition Conditions (other than the Acquisition Conditions (vii) and (viii)) has not been satisfied (or waived by Tatpo to the extent it may be waived) at or before 1:00 p.m. on the Long-stop Date, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall be entitled to forfeit and retain the Deposit.

16

LETTER FROM THE BOARD

Completion : The Proposed Disposal and the Proposed Acquisition are inter-conditional. Subject to the Disposal Conditions and the Acquisition Conditions being satisfied (or waived in accordance with the terms of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed)), Completion is expected to take place on the Completion Date.

In the event that the Completion does not take place as a result of the default of Tatpo to complete the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Jetco may postpone the Completion Date to a business day not later than 10 business days thereafter. However, if Jetco chooses to terminate the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

In the event that the Completion does not take place as a result of the default of Jetco to complete the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Tatpo may postpone the Completion Date to a business day not later than 10 business days thereafter. However, if Tatpo chooses to terminate the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), Tatpo shall be entitled to forfeit and retain the Deposit.

Termination for defective title : By 12 October 2018, Jetco and Tatpo must indicate to each other that it either accepts or does not accept Conley’s good title to the Sai Kung Property or Nigon’s good title to the Wan Chai Property (as the case may be).

17

LETTER FROM THE BOARD

If the conveyancing solicitor of Jetco insist with its objection or requisitions that the title of Sai Kung Property is defective, Tatpo may at its liberty give Jetco not less than 5 business days’ notice in writing to terminate the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), in which case, unless the objection or requisition shall have been withdrawn, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated with effect from the expiry of the said notice period and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

If the conveyancing solicitor of Tatpo insist with its objection or requisitions that the title of Wan Chai Property is defective, Jetco may at its liberty give Tatpo not less than 5 business days’ notice in writing to terminate the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), in which case, unless the objection or requisition shall have been withdrawn, the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall be terminated with effect from the expiry of the said notice period and that none of the parties to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) shall have any claim of any nature or liabilities thereunder whatsoever against any of the other parties, save for (x) any antecedent breach; and (y) Tatpo shall refund the Deposit to Jetco without interest within 5 business days after termination of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed).

On 12 October 2018, each of Jetco and Tatpo has informed the other party that Conley’s good title to the Sai Kung Property and Nigon’s good title to the Wan Chai Property (as the case may be) have been accepted.

18

LETTER FROM THE BOARD

Guarantee : Mr. Tang has agreed to unconditionally and irrevocably guarantee the due and punctual performances, observance and discharge by Jetco of all its obligations (whether payment obligations or otherwise) under or pursuant to the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed). Leaseback of the Wan Chai : Immediately before Completion, the Wan Chai Property will Property be leased back by Nigon, which will become a wholly-owned subsidiary of the Group upon Completion, as landlord to Tang’s Living as tenant for a term of 3 years at a monthly rental of HK$1,325,000 (exclusive of management fees, rates and government rent (if any)) and with an option to renew the lease for two further terms each of 3 years at the then open market rent.

INFORMATION OF JETCO, MR. TANG AND TANG’S LIVING

Jetco is an investment holding company and the sole shareholder of Nigon. Mr. Tang is the sole ultimate beneficial owner of Jetco. Tang’s Living is a hotel operating company ultimately and wholly-owned by Mr. Tang Yiu Sing, son of Mr. Tang. To the best of the Director’s knowledge, information and belief having made all reasonable enquiries, Jetco, Tang’s Living and their respective ultimate beneficial owner(s), Mr. Tang Yiu Sing and Mr. Tang are Independent Third Parties.

INFORMATION OF NIGON, LEAD CREATION AND THE WAN CHAI PROPERTY

Nigon is a company incorporated in Hong Kong with limited liability and is principally engaged in investment holding, property investment and letting of properties. Based on the information provided by Jetco, it acquired the entire issued share capital of Nigon in February 2018 for a consideration of HK$395 million.

The Wan Chai Property is a building with gross floor area of approximately 24,283 sq. ft. The Wan Chai Property comprises a 24-storey building and is currently used as a hotel under the name ‘‘Minimal Hotel • Urban (簡悅酒店 • 銅鑼灣)’’. As at the date of this letter, the Wan Chai Property is subject to two tenancy arrangements with monthly rental of HK$1,325,000 in aggregate, which both will be terminated on or before Completion. The ground floor of the Wan Chai Property has been leased to a tenant for running restaurant business for a lease term expiring on 7 December 2019 and the remaining portion of the Wan Chai Property has been leased to Tang’s Living for a lease term renewable on a monthly basis until Completion.

As at the date of the Share Exchange Agreement, Nigon was the sole shareholder of Lead Creation, which is a company incorporated in Hong Kong with limited liability and is principally engaged in hotel operation. Lead Creation is currently holding a hotel licence issued under the Hotel and Guesthouse Accommodation Ordinance (Chapter 349 of the Laws of Hong Kong) to operate, keep, manage or otherwise have control of the Wan Chai Property as a hotel and is responsible for ensuring that the Wan Chai Property complies with the licensing conditions and satisfies with the various codes of practices and requirements that is qualified to be operated as a hotel. On 30 November 2018, Nigon disposed of the

19

LETTER FROM THE BOARD

entire issued share capital of Lead Creation to Mr. Tang. To the best of the Director’s knowledge, information and belief, the Wan Chai Property has become the only major assets held by Nigon since then.

The Company does not intend to engage in hotel operation business and does not want to take up the statutory responsibility to operate, keep, manage or control the Wan Chai Property. It intends to focus on its investment property business so as to merely act as a landlord of the Wan Chai Property. As such, the Company takes the view that by acquiring Nigon (being the registered owner of the Wan Chai Property) without Lead Creation (being the holder of a hotel licence) will be the best way to achieve its purpose of acting merely as a landlord and to reflect its intention of focusing on its current business.

The selected consolidated financial information of Nigon Group for the two years ended 31 March 2017 and 2018 are as follows:

		Year ended	Year ended
		31 March	31 March
		2017	2018
		HK$’000	HK$’000
		(Audited)	(Audited)
Loss	before tax	(1,323)	(434)
Loss	after tax	(1,680)	(1,060)

The consolidated net asset value of Nigon Group as at 31 March 2018 amounted to approximately HK$159.0 million.

The excess of the consideration for the Proposed Acquisition over the net assets value of Nigon Group as at 31 March 2018 was approximately HK$371.0 million, which represents the difference between the consideration for the Proposed Acquisition of HK$530 million and the consolidated net asset value of the Nigon Group as at 31 March 2018 of HK$159.0 million.

The reconciliation between the selected consolidated financial information of Nigon Group for the two years ended 31 March 2017 and 2018 and the financial information in the Accountants’ Report of the Nigon Group as set out in Appendix II(B) to this circular is as follows:

			Year ended	Year ended
			31 March	31 March
			2017	2018
			HK$’000	HK$’000
			(Audited)	(Audited)
Loss	before	tax from continuing operation	(6,043)	(5,440)
Add:	Profit	before tax from discontinued operation	4,720	5,006
Loss	before	tax of Nigon Group	(1,323)	(434)

20

LETTER FROM THE BOARD

The financial information of the Nigon Group set forth above includes the financial information of Lead Creation, which was based on the unaudited management accounts. However, because the supporting accounting books and records of Lead Creation available to the Company and the Company’s auditors were incomplete, the auditors preparing the Accountants’ Report of the Nigon Group were unable to obtain sufficient appropriate audit evidence and were unable to carry out alternative audit procedures to satisfy themselves about the financial information of Lead Creation included in the Historical Financial Information of the Nigon Group (as defined in Appendix II(B) to this circular). As such, they do not express an audit opinion about whether the Historical Financial Information gives for the purposes of the accountants’ report, a true and fair view of the financial positions of the Nigon Group and Nigon as at 31 March 2016, 2017 and 2018 and 30 September 2018, and of the financial performance and cash flows of the Nigon Group for each of the Relevant Periods. Please refer to Appendix II(B) to this circular for details.

As mentioned before, the Company only intends to acquire the Wan Chai Property with steady recurrent income streams to form part of its investment property portfolio. The Group has no intention to acquire the hospitality business of Lead Creation. As the issue of incomplete supporting accounting books and records leading to the disclaimer opinion was solely related to Lead Creation while the most significant asset of the Nigon Group is the Wan Chai Property which estimated fair values as of the end of each of the financial years are recorded in the relevant financial statements of Nigon with reference to independent property valuations, the Board considers that the Shareholders have sufficient information to consider the terms of the Proposed Acquisition and to arrive at a properly informed decision.

As Nigon has already disposed of Lead Creation on 30 November 2018, only Nigon will become a subsidiary of the Company upon Completion. Auditors of the Company have confirmed that the said disclaimer opinion on Nigon Group will not affect the audit opinion on the Company’s financial statements for the year ended 31 December 2018 and the year ending 31 December 2019.

Upon Completion, the Wan Chai Property will be held by the Group as part of its investment property portfolio and will be leased back by Nigon (which will become a wholly-owned subsidiary of the Company upon Completion) as landlord to Tang’s Living as tenant for a term of 3 years with an option to renew the lease for two further terms each of 3 years at the then market rent pursuant to the Leaseback Agreement. Tang’s Living must give Nigon not less than 3 months prior notice in writing of its desire to exercise such option to renew before expiry of the relevant term.

As Lead Creation is currently held by Mr. Tang and that the Wan Chai Property will be leased back to Tang’s Living upon Completion, the Board takes the view that the operation of the Wan Chai Property will not be interrupted during the terms of the Leaseback Agreement. In the event that the Leaseback Agreement has been terminated or expired, the Company intends to market the Wan Chai Property to other hotel operators who have requisite licences to operate the Wan Chai Property as a hotel. Depends on the market condition and the combination of circumstances at the time, the Company may also apply for the hotel licence issued under the Hotel and Guesthouse Accommodation Ordinance (Chapter 349 of the Laws of Hong Kong) if it is to the interest of the Group and the Shareholders. As the Company will be informed at least 3 months prior to the expiry of the tenancy, the Company believes that it will be able to secure a new tenant or to acquire the necessary hotel licence before the termination of the tenancy without causing any material disruption to the operation of the Wan Chai Property.

21

LETTER FROM THE BOARD

INFORMATION OF OCEAN WIDE, CONLEY AND THE SAI KUNG PROPERTY

Ocean Wide is an investment holding company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of the Company. Ocean Wide has no business activity other than being the sole shareholder of Conley.

Conley is an investment holding company incorporated in Hong Kong with limited liability. Conley is currently holding the Sai Kung Property.

The Sai Kung Property is a land with gross floor area of approximately 143,252 sq. ft. The Sai Kung Property comprises two 4-storey industrial buildings and is currently leased to subsidiaries of the CPM Group and other Independent Third Parties. The Sai Kung Property was built by members of the Group between 1988 and 1990 for industrial purpose. Since 1993, with the relocation of the paint and coating production lines to the PRC by the subsidiaries of CPM Group, the Sai Kung Property has been treated as an investment property of the Group. In order to secure a re-development opportunity for the purpose of achieving a high investment return or enhancing the property portfolios of the Group, the Group submitted a planning application under Section 16 of Town Planning Ordinance (Chapter 131 of the laws of Hong Kong) to seek the Town Planning Board’s approval for a proposed residential development on the Sai Kung Property in May 2016. On 2 March 2018, the Town Planning Board has approved the application with conditions. The approved plot ratio is 2.036 with a maximum total GFA of about 80,288 sq. ft.

During the year ended 31 December 2017, the Group received gross rental income (including inter-group rental) of HK$27.0 million from the Sai Kung Property and recorded a fair value gain of HK$16.6 million. After deducting the relevant expenses borne by the Group, the Group received net rental income (including inter-group rental of HK$1.3 million from the Sai Kung Property) of HK$23.9 million during the year ended 31 December 2017.

The selected consolidated financial information of the Ocean Wide Group for the two years ended 31 December 2016 and 2017 are as follows:

		Year ended	Year ended
		31 December	31 December
		2016	2017
		HK$’000	HK$’000
		(Unaudited)	(Unaudited)
Profit	before tax	31,850	36,413
Profit	after tax	27,841	33,281

The consolidated net asset value of the Ocean Wide Group as at 31 December 2017 amounted to approximately HK$293.3 million. The excess of the consideration for the Proposed Disposal over the net asset value of the Ocean Wide Group as at 31 December 2017 was approximately HK$554.4 million, which represents the difference between the consideration for the Proposed Disposal of HK$900 million and the net asset value of the Ocean Wide Group (after excluding HK$52.3 million of shareholder’s loan) as at 31 December 2017 of HK$345.6 million.

22

LETTER FROM THE BOARD

Immediately prior to the Completion, Ocean Wide is held as to 100% by the Group. After completion of the Proposed Disposal, the entire issued share capital of Ocean Wide will be held by Jetco and the Group will cease to have any interest in Ocean Wide, Conley and the Sai Kung Property.

REASONS FOR AND BENEFITS OF THE PROPOSED DISPOSAL AND THE PROPOSED ACQUISITION

The Group is principally engaged in four business activities, namely: (i) property investment (including the investment in properties for rental income or for sale, and the proposed columbarium development in Hong Kong); (ii) trading of iron and steel products and related investment; (iii) through its non-wholly owned subsidiary, CPM Group, manufacturing and sales of paint products; and (iv) investment holding activities. The property investment business segment, which represents a major business segment of the Group as of the Latest Practicable Date, consists of (a) investments in residential, commercial and industrial properties for their rental income; and (b) development and sales of real estate properties (including columbarium development). The Group intends to continue to conduct all its existing business after Completion and has no intention, negotiation, agreement, arrangement and understanding (concluded or otherwise) about any disposal, scaling-down and/or termination of its existing business on sale of the paint products and sale of iron and steel projects and/or other major operating assets.

As property investment business is one of the core businesses of the Group, the Board reviews the existing investment portfolio from time to time and explores other business opportunities to enhance the value of the Company and return to the Shareholders. After the Town Planning Board has approved the proposed residential development on the Sai Kung Property in March 2018, the Group has performed a detailed cost-benefits analysis and noted that the valuation of the Sai Kung Property on a redevelopment basis as at 31 July 2018 is estimated to be approximately HK$708 million (having taken into account a land premium payable to the government of approximately HK$466 million), and if the Group would re-develop the Sai Kung Property by itself, the re-development project would require a substantial amount of redevelopment costs of approximately HK$682 million (having taken into account a land premium payable to the government of approximately HK$466 million) and at least 48 months to complete the project, during which, the Group may encounter various uncertainties, including the fluctuation in the global and local economic and property market and the surge in the bank loan interests. In the first quarter of 2018, Mr. Tang proposed to the Group to acquire the Sai Kung Property in exchange for the Wan Chai Property. Based on the information in public domain, Mr. Tang is the owner of the industrial properties surrounding the Sai Kung Property.

After taking into account the valuation of the Sai Kung Property on a redevelopment basis, the redevelopment costs and the length of time involved in a redevelopment project and comparing the consideration of HK$900 million with the preliminary estimated market value on the Sai Kung Property as at 31 July 2018, and the consolidated net assets value of the Ocean Wide Group as at 31 December 2018, the Board considers that the consideration of HK$900 million is (a) HK$485 million higher than the preliminary estimated market value of the Sai Kung Property of HK$415 million valued as at 31 July 2018; and (b) HK$533.8 million higher than the consolidated net asset value of the Ocean Wide Group as at 31 December 2018. As such, the Board considers that it will receive a higher investment return by entering the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) which can be used for enhancing the investment property portfolio of the Group and that the Proposed Disposal is fair and reasonable for the Company and the Shareholders as a whole.

23

LETTER FROM THE BOARD

Based on the latest consolidated management account of the Ocean Wide Group, the consolidated net assets value of Ocean Wide as at 31 December 2018 was HK$366.1 million, including the Ocean Wide Shareholder’s Loan of HK$42.3 million. Taking into account of the consideration of the Proposed Disposal of HK$900 million, the Directors expect that the Group would record a gain from the Proposed Disposal of approximately HK$491.6 million before tax and transaction costs and an increase in the net assets of the Group by approximately HK$491.6 million. Such gain is determined with reference to the unaudited consolidated financial statements of Ocean Wide Group for the year ended 31 December 2018. Subject to completion of audit, the actual amount of the gain on the Proposed Disposal to be recognised by the Group will be based on the actual net asset value of Ocean Wide as of the Completion Date and therefore may vary from the amount mentioned above.

In light of the above, the Board considers that the Proposed Disposal and the Proposed Acquisition provide an opportunity for the Group to realise the Sai Kung Property, being part of its strategic investment in light of the current favourable commercial property environment in Hong Kong in exchange for a whole block of hotel situated in urban area as part of the Group’s investment property portfolio which is expected to bring in steady recurrent income at a gross yield of approximately 3% per annum.

Further, the Proposed Disposal and the Proposed Acquisition may be potentially accretive to the net asset value of the Group as a whole and the net proceeds in the amount of HK$370 million can further strengthen the cash position of the Group and will allow the Group to acquire additional residential and/or commercial premises in Hong Kong and/or the PRC in order to enhance its investment property portfolio for the purpose of strengthening the recurring income and cash flows for long term investment properties.

As the Group has no intention to engage in hospitality business and will not consider to acquire Lead Creation, despite of the disclaimer opinion given by its auditors on Nigon’s financial statements for incomplete supporting accounting books and records of Lead Creation which the Board considers irrelevant, the Board considers that the Proposed Acquisition is fair and reasonable for the Company and the Shareholders as a whole.

The Directors consider that the terms of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), which are determined after arm’s length negotiations between Tatpo and Jetco, are on normal commercial terms which are fair and reasonable, and the entering into of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) is in the interests of the Group and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL AND THE PROPOSED ACQUISITION

Upon Completion, the Company will cease to hold any equity interests in Ocean Wide and Nigon will become a wholly-owned subsidiary of the Company and the financial effect of Nigon will be consolidated into the Remaining Group and become the Enlarged Group. The accompanying unaudited pro forma financial information of the Remaining Group and the Enlarged Group set forth in Appendix IV to this circular has been prepared to illustrate the effect of the Proposed Disposal and the Proposed Acquisition.

24

LETTER FROM THE BOARD

Based on the unaudited pro forma financial information of the Remaining Group and the Enlarged Group as set out in Appendix IV to this circular and on the basis of assumptions as stated in Appendix IV, the Proposed Disposal and the Proposed Acquisition will have the following effect to the Group:

• (a) the unaudited pro forma consolidated profit of the Enlarged Group for the year ended 31 December 2017 would be approximately HK$578.5 million;

• (b) (i) the unaudited pro forma consolidated total assets of the Enlarged Group will be increased by approximately HK$542.0 million as at 31 December 2017; and

• (ii) the unaudited pro forma consolidated total liabilities of the Enlarged Group will be decreased by approximately HK$10.5 million as at 31 December 2017.

Assets and Liabilities

As set out in the unaudited pro forma financial information of the Remaining Group and the Enlarged Group in Appendix IV to this circular, as at 31 December 2017, the total assets of the Enlarged Group will be increased from HK$2,390.3 million to HK$2,932.3 million, the total liabilities of the Enlarged Group will be decreased from HK$629.2 million to HK$618.7 million and the net assets of the Enlarged Group will be increased from HK$1,761.1 million to HK$2,313.6 million.

Earnings

Upon completion of the Proposed Acquisition and the Proposed Disposal, Nigon will become a wholly-owned subsidiary of the Company and its results will be consolidated to the Enlarged Group. Based on the net profit after taxation of Nigon Group of HK$136.4 million for the six months ended 30 September 2018, the Proposed Acquisition will have a positive impact to the Enlarged Group.

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

The Group is principally engaged in the manufacture and sale of paint products, property investment business, iron and steel trading business and other business. As stated in the annual report of the Company for the year ended 31 December 2017 and interim report for the six months ended 30 June 2018, paint business and property investment business are the key development of the Group at this stage.

For paint business, the Group considers that the current market situation remains challenging and competitive. The Group will remain prudent in the business development and will devote additional resources to promote the branded paint and coating products of the Group and improve the production process and technology. The distribution network and the sales and marketing activities, which target at a high-growth and environmental-friendly paint and coating products, will also be enhanced.

For property investment business, upon the completion of the Proposed Disposal and the Proposed Acquisition, the Group can realise the gain on disposal of the Sai Kung Property in exchange for a whole block of hotel situated in urban area which is expected to bring in steady recurrent income at a gross yield of approximately 3% per annum. The Group will continuously review the portfolio of its investment properties with a view to acquire additional properties in prime areas in Hong Kong and/or the PRC and

25

LETTER FROM THE BOARD

to maintain a constant stream of revenue. The receipt of net proceeds from the Proposed Disposal may be used by the Enlarged Group to acquire such additional residential and/or commercial premises with recurring stream of revenue and cash flow for long term investment purposes when opportunities arise.

LISTING RULES IMPLICATIONS

Pursuant to Rule 14.24 of the Listing Rules, the Stock Exchange will apply the percentage ratios to each of the Proposed Disposal and the Proposed Acquisition.

As one of the percentage ratio calculated pursuant to Chapter 14 of the Listing Rules in respect of the Proposed Disposal exceeds 75%, the Proposed Disposal constitutes a very substantial disposal on the part of the Company under Rule 14.06 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. As one of the percentage ratio calculated pursuant to Chapter 14 of the Listing Rules in respect of the Proposed Acquisition exceeds 25% but is below 100%, the Proposed Acquisition constitutes a major transaction on the part of the Company under Rule 14.06 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Special General Meeting

The Special General Meeting will be held on Thursday, 9 May 2019 at 11:00 a.m. at 31st Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong Kong, for the purpose of considering, and if thought fit, approving the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated thereunder, including but not limited to the Proposed Disposal and the Proposed Acquisition. A notice convening the Special General Meeting is set out on pages N-1 to N-2 of this circular. Whether or not you are able to attend the Special General Meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the Special General Meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the Special General Meeting if you so wish.

As no Shareholder has an interest in the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) that is materially different from other Shareholders, no Shareholder is required to abstain from voting at the Special General Meeting in respect of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated thereunder.

RECOMMENDATION

The Directors consider the terms of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) are fair and reasonable and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole and accordingly recommend the Shareholders to vote in favour of the relevant resolution to be proposed at the Special General Meeting for approving the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and the transactions contemplated thereunder.

26

LETTER FROM THE BOARD

FURTHER INFORMATION

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

Yours faithfully, On behalf of the Board CNT Group Limited Lam Ting Ball, Paul Chairman

27

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

I. FINANCIAL SUMMARY OF THE GROUP

The financial information of the Group for (i) the year ended 31 December 2015 is disclosed in the 2015 annual report of the Company published on 25 April 2016, from page 33 to 136; (ii) the year ended 31 December 2016 is disclosed in the 2016 annual report of the Company published on 26 April 2017, from page 49 to 143, and (iii) the year ended 31 December 2017 is disclosed in the 2017 annual report of the Company published on 26 April 2018, from page 53 to 148, all of which have been published on the website of Hong Kong Exchanges and Clearing Limited (www.hkex.com.hk) and the website of the Company (www.cntgroup.com.hk).

II. INDEBTEDNESS

As at the close of business on 31 January 2019, being the latest practicable date for the purpose of this indebtedness statement, the indebtedness of the Group and Nigon was as follows:

Securities

At the close of business on 31 January 2019, certain property, plant and equipment, investment properties and cash deposits of the Group, with a carrying amount of approximately HK$380.0 million as at 31 January 2019 and the shares of a subsidiary, were pledged to the banks for the bank and other borrowings and bills payable. An investment property of Nigon with a carrying amount of HK$530.0 million, a first floating charges over all the assets and business undertakings of Nigon and an assignment of receivables of Nigon were also pledged to a bank for the bank borrowings of Nigon.

Secured bank and other borrowings and bills payable

At the close of business on 31 January 2019, the Group had outstanding bank and other borrowings of approximately HK$275.6 million, certain of which contained a repayment on demand clause. HK$174.2 million of the Group’s bank and other borrowings and HK$17.3 million of bills payable were secured by the Group’s certain property, plant and equipment, investment properties, cash deposits and shares of a subsidiary. The Group’s secured bank and other borrowings bear interest at a range from 2.2% to 8.8% per annum. Nigon had outstanding bank borrowings of HK$242.1 million, which contained a repayment on demand clause and were secured by an investment property held by Nigon, certain properties held by Nigon’s related parties, a first floating charges over all the assets and business undertakings of Nigon, an assignment of receivables of Nigon, a charge over account provided by a related company of Nigon, an assignment of rental proceeds from the properties held by Nigon’s related parties, a joint and several personal guarantee of HK$242.1 million plus interests and charges provided by the directors of Nigon and an unlimited corporate guarantee provided by another related company of Nigon. Nigon’s secured bank borrowings bear interest at 3.3%.

Save as aforesaid and apart from the aforementioned, the bank and other borrowings and bills payable of approximately HK$68.1 million were guaranteed by the Company.

Appendix I - 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Commitments

At the close of business on 31 January 2019, other than the HK$1.02 million finance lease payable which has already been included in the bank and other borrowings, the Group had no finance lease commitments against the Group’s assets.

Contingent liabilities

Litigation

The Company has been named as a nominal defendant in a derivative action initiated by Chinaculture.com Limited, a substantial shareholder of the Company, against certain Directors and the Company. Details of the derivative action are set forth in the announcements of the Company dated 22 June 2017, 25 June 2017, 30 June 2017, 7 July 2017, 19 September 2017, 16 November 2017, 28 November 2017, 13 December 2017 and 10 January 2018 respectively.

Guarantee given to a bank

At the close of business on 31 January 2019, an unlimited guarantee was given by Nigon to a bank in connection with a facility granted to a related company of Nigon. The banking facility guaranteed by Nigon to the related company was utilised to the extent of HK$75.0 million.

Disclaimer

Save as aforesaid or as otherwise mentioned herein, and apart from intra-group liabilities, the Group did not have any outstanding borrowings, mortgages, charges, debentures, loan capital and overdraft, debt securities or other similar indebtedness, finance leases or hire purchase commitment, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities as at the close of business on 31 January 2019, being the latest practicable date for the purpose of this statement of indebtedness prior to printing of this circular.

Save as aforesaid, the Directors are not aware of any material changes in the indebtedness, contingent liabilities and commitments of the Group since 31 January 2019, the date to which the indebtedness statement is made and up to the Latest Practicable Date.

III. WORKING CAPITAL

The Directors are of the opinion that, in the absence of unforeseeable circumstances and after taking into account the effects of the Proposed Disposal and the Proposed Acquisition and the Remaining Group’s financial resources, including internally generated funds and presently available credit facilities before the Proposed Disposal and the Proposed Acquisition, the Remaining Group has sufficient working capital for its present requirements for the next twelve months from the date of this circular.

Appendix I - 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

IV. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2017, the date to which the latest audited financial statements of the Group were made up.

Appendix I - 3

APPENDIX II(A) FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

I. UNAUDITED FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

Set out below are the unaudited financial information of Ocean Wide Assets Limited (‘‘Ocean Wide’’) and its subsidiary (collectively, the ‘‘Ocean Wide Group’’) which comprises the unaudited consolidated statements of financial position of the Ocean Wide Group as at 31 December 2015, 2016 and 2017 and 30 September 2018 and the related unaudited consolidated statements of profit or loss and other comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the years ended 31 December 2015, 2016 and 2017 and the nine months ended 30 September 2017 and 2018 and certain explanatory notes (altogether the ‘‘Unaudited Financial Information’’).

The auditors of CNT Group Limited (the ‘‘Company’’), Ernst & Young, have reviewed the Unaudited Financial Information of the Ocean Wide Group in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’). A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the auditors to obtain assurance that they would become aware of all significant matters that might be identified in an audit. Accordingly, the auditors do not express any audit opinion.

Based on the auditors’ review, nothing has come to their attention that causes them to believe that the Unaudited Financial Information of the Ocean Wide Group is not prepared, in all material respects, in accordance with the basis of preparation as set out in Note 2 below.

UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

REVENUE Other income and gains Depreciation Rent and rates Employee benefit expense Other expenses Finance cost PROFIT BEFORE TAX Income tax expense PROFIT FOR THE YEAR/PERIOD AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR/PERIOD	Years ended 31 December 2015 2016 2017 HK$ HK$ HK$ 26,598,482 27,950,843 26,991,653 9,636,044 8,197,707 17,237,160 (2,745) (2,744) (2,745) (704,128) (834,229) (937,744) – (973,274) (871,046) (2,739,430) (2,475,669) (6,003,978) (849,156) (12,557) – 31,939,067 31,850,077 36,413,300 (3,878,417) (4,008,929) (3,132,066) 28,060,650 27,841,148 33,281,234	Nine months ended 30 September 2017 2018 HK$ HK$ 20,900,940 10,461,295 10,200,886 63,245,986 (2,058) (2,058) (697,968) (917,598) (647,760) (731,604) (4,490,612) (2,966,984) – – 25,263,428 69,089,037 (2,344,050) (954,049) 22,919,378 68,134,988

Appendix II(A) - 1

APPENDIX II(A) FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

NON-CURRENT ASSETS Property, plant and equipment Investment properties Total non-current assets CURRENT ASSETS Accounts receivables Prepayments and deposits Due from the ultimate holding company Tax recoverable Bank balance Total current assets CURRENT LIABILITIES Other payables and accruals Due to the ultimate holding company Due to the immediate holding company Tax payable Total current liabilities NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Due to a fellow subsidiary Deferred tax liabilities Total non-current liabilities Net assets EQUITY Issued capital Revaluation reserve Retained profits Total equity	As at 31 December 2015 2016 2017 HK$ HK$ HK$ 13,954 11,210 8,465 326,471,272 334,619,979 351,786,514 326,485,226 334,631,189 351,794,979 770,946 3,227,270 1,011,054 520,508 824,605 1,044,325 – 8,849,895 – – – 867,451 2,210,161 1,445,660 4,429,857 3,501,615 14,347,430 7,352,687 2,506,539 2,075,992 2,159,645 – – 1,010,660 51,450,156 51,460,814 51,262,131 6,053,029 217,773 – 60,009,724 53,754,579 54,432,436 (56,508,109) (39,407,149) (47,079,749) 269,977,117 295,224,040 304,715,230 2,833,593 – – 10,967,156 11,206,524 11,416,480 13,800,749 11,206,524 11,416,480 256,176,368 284,017,516 293,298,750 8 8 8 32,021,691 32,021,691 32,021,691 224,154,669 251,995,817 261,277,051 256,176,368 284,017,516 293,298,750	As at 30 September 2018 HK$ 6,407 415,000,000 415,006,407 125,297 223,531 – 92,268 1,935,587 2,376,683 2,052,538 – 42,301,468 – 44,354,006 (41,977,323) 373,029,084 – 11,595,346 11,595,346 361,433,738 8 32,021,691 329,412,039 361,433,738

Appendix II(A) - 2

APPENDIX II(A) FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 January 2015 Profit and total comprehensive income for the year At 31 December 2015 and 1 January 2016 Profit and total comprehensive income for the year At 31 December 2016 and 1 January 2017 Profit and total comprehensive income for the year Interim 2017 dividend declared At 31 December 2017 and 1 January 2018 Profit and total comprehensive income for the period At 30 September 2018 For the nine months ended 30 September 2017 At 1 January 2017 Profit and total comprehensive income for the period At 30 September 2017	Share Capital HK$ 8 – 8 – 8 – – 8 – 8 8 – 8	Leasehold land and building revaluation reserve HK$ 32,021,691 – 32,021,691 – 32,021,691 – – 32,021,691 – 32,021,691 32,021,691 – 32,021,691	Retained profits HK$ 196,094,019 28,060,650 224,154,669 27,841,148 251,995,817 33,281,234 (24,000,000) 261,277,051 68,134,988 329,412,039 251,995,817 22,919,378 274,915,195	Total HK$ 228,115,718 28,060,650 256,176,368 27,841,148 284,017,516 33,281,234 (24,000,000) 293,298,750 68,134,988 361,433,738 284,017,516 22,919,378 306,936,894

Appendix II(A) - 3

APPENDIX II(A)

FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs Depreciation Fair value gains on investment properties Decrease/(increase) in accounts receivables Increase/(decrease) in prepayments and deposits Change in balances with the ultimate holding company Increase/(decrease) in other payables and accruals Decrease in an amount due to a fellow subsidiary Cash generated from/ (used in) operations Hong Kong profits tax paid Net cash flows from/ (used in) operating activities	Years ended 31 December 2015 2016 2017 HK$ HK$ HK$ 31,939,067 31,850,077 36,413,300 849,156 12,557 – 2,745 2,744 2,745 (9,592,044) (8,148,707) (17,166,535) (592,414) (2,456,324) 2,216,216 832,086 (304,097) (219,720) – (8,849,895) (14,349,445) (816,403) (430,547) 83,653 (19,700,738) (2,833,593) – 2,921,455 8,842,215 6,980,214 – (9,604,817) (4,007,334) 2,921,455 (762,602) 2,972,880	Nine months ended 30 September 2017 2018 HK$ HK$ 25,263,428 69,089,037 – – 2,058 2,058 (10,170,886) (63,213,486) 784,030 885,757 (491,275) 820,794 (14,349,445) (1,010,660) 408,674 (107,107) – – 1,446,584 6,466,393 – – 1,446,584 6,466,393

Appendix II(A) - 4

APPENDIX II(A)

FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

CASH FLOWS FROM AN INVESTING ACTIVITY Additions to investment properties CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in an amount due to the immediate holding company Interest paid Net cash flows from/ (used in) financing activities NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year/ period CASH AND CASH EQUIVALENTS AT END OF YEAR/ PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Bank balance	Years ended 31 December 2015 2016 2017 HK$ HK$ HK$ (877,000) – – 9,914 10,658 11,317 (849,156) (12,557) – (839,242) (1,899) 11,317 1,205,213 (764,501) 2,984,197 1,004,948 2,210,161 1,445,660 2,210,161 1,445,660 4,429,857 2,210,161 1,445,660 4,429,857	Nine months ended 30 September 2017 2018 HK$ HK$ – – 10,382 (8,960,663) – – 10,382 (8,960,663) 1,456,966 (2,494,270) 1,445,660 4,429,857 2,902,626 1,935,587 2,902,626 1,935,587

Appendix II(A) - 5

APPENDIX II(A) FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

NOTES TO THE UNAUDITED FINANCIAL INFORMATION

1. GENERAL INFORMATION

Ocean Wide Assets Limited (‘‘Ocean Wide’’) is a limited liability company incorporated in the British Virgin Islands. The registered office of Ocean Wide is located at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.

The principal activities of Ocean Wide and its subsidiary (collectively, the ‘‘Ocean Wide Group’’) are investment holding and property investment.

Ocean Wide is a wholly-owned subsidiary of Tatpo Corporation Limited (‘‘Tatpo’’), which is incorporated in Liberia. CNT Group Limited (the ‘‘Company’’), a company incorporated in Bermuda and listed in Hong Kong, is considered by the directors to be the ultimate holding company of Ocean Wide.

On 8 September 2018, Tatpo, Jetco (H.K.) Limited (the ‘‘Purchaser’’) and Mr. Tang Shing Bor entered into a share exchange agreement (the ‘‘Agreement’’), pursuant to which Tatpo agreed to (i) dispose of the entire issued share capital of Ocean Wide and the shareholder’s loan owed by Ocean Wide to the Purchaser; and (ii) acquire the entire issued share capital of Nigon Hong Kong Limited (‘‘Nigon’’) and the shareholder’s loan owed by Nigon from the Purchaser. The completion of the Agreement is expected to take place on or before 31 May 2019.

Information about a subsidiary

Particulars of Ocean Wide’s subsidiary is as follows:

			Percentage of
			equity
	Place of		attributable to
	incorporation	Issued	Ocean Wide	Principal
Name	and business	share capital	Direct	activity
Conley Investment	Hong Kong	HK$2	100	Property
Limited				investment

2. BASIS OF PREPARATION AND PRESENTATION OF THE FINANCIAL INFORMATION

The Unaudited Financial Information of the Ocean Wide Group for each of the years ended 31 December 2015, 2016 and 2017 and the nine months ended 30 September 2017 and 2018 has been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Listing Rules, and solely for the purpose of inclusion in this circular to be issued by the Company in connection with the proposed disposal of the entire equity interest of Ocean Wide.

Appendix II(A) - 6

APPENDIX II(A) FINANCIAL INFORMATION OF THE OCEAN WIDE GROUP

The Unaudited Financial Information for the years ended 31 December 2015, 2016 and 2017 and the nine months ended 30 September 2017 and 2018 has been prepared using the same accounting policies adopted by the Company in the preparation of the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2017, which conform with the Hong Kong Financial Reporting Standards issued by the HKICPA.

The Unaudited Financial Information of the Ocean Wide Group does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ issued by the HKICPA nor an interim report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the HKICPA.

The Unaudited Financial Information has been prepared under the historical cost convention, except for investment properties which have been measured at fair value. The Unaudited Financial Information are presented in Hong Kong dollars (‘‘HK$’’).

As at 30 September 2018, the current liabilities of the Ocean Wide Group exceeded its current assets by HK$41,977,323. The above condition indicated the existence of uncertainties which may cast significant doubt on the abilities of the Ocean Wide Group to continue as a going concern and therefore, the Ocean Wide Group may not be able to realise its assets and discharge its liabilities in normal course of business. However, the Company has undertaken to provide continued financial support to enable the Ocean Wide Group to fulfill its financial liabilities when they fall due. Accordingly, the Unaudited Financial Information has been prepared by the directors of the Company on a going concern basis.

Appendix II(A) - 7

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong Kong.

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

==> picture [86 x 35] intentionally omitted <==

The Directors Nigon Hong Kong Limited

Dear Sirs,

We were engaged to report on the historical financial information of Nigon Hong Kong Limited (‘‘Nigon’’) and its subsidiary (together, the ‘‘Nigon Group’’) set out on pages Appendix II(B)-4 to Appendix II(B)-65, which comprises the consolidated statements of profit or loss, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows of the Nigon Group for each of the years ended 31 March 2016, 2017 and 2018, and the six months ended 30 September 2018 (the ‘‘Relevant Periods’’), and the consolidated statements of financial position of the Nigon Group and the statements of financial position of Nigon as at 31 March 2016, 2017 and 2018, and 30 September 2018, and a summary of significant accounting policies and other explanatory information (together, the ‘‘Historical Financial Information’’). The Historical Financial Information set out on pages Appendix II(B)-4 to Appendix II(B)-65 forms an integral part of this report, which has been prepared for inclusion in the circular of CNT Group Limited (the ‘‘Company’’) dated 26 March 2019 (the ‘‘Circular’’) in connection with the proposed acquisition of entire equity interest of Nigon.

Directors’ responsibility for the Historical Financial Information

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

Reporting accountants’ responsibility

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

Appendix II(B) - 1

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

matter described in the Basis for disclaimer of opinion section below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for our opinion on the Historical Financial Information.

Basis for disclaimer of opinion

The Historical Financial Information includes the financial information of the wholly-owned subsidiary of Nigon, Lead Creation Development Limited (‘‘Lead Creation’’) based on its statutory financial statements and unaudited management accounts. Lead Creation was classified as a disposal group held for sale and as a discontinued operation as further explained in note 9 to the Historical Financial Information. However, because the supporting accounting books and records available to us were incomplete, we were unable to obtain sufficient appropriate audit evidence and were unable to carry out alternative audit procedures to satisfy ourselves about the financial information of Lead Creation included in the Historical Financial Information. Any adjustments to the financial information of Lead Creation found to be necessary would have a consequential effect on the Nigon Group’s results for each of the years ended 31 March 2016, 2017 and 2018, and the six months ended 30 September 2018 and the net assets or liabilities of the Nigon Group as at those dates, the related elements making up the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows, and the related disclosures thereof in the Historical Financial Information.

Disclaimer of opinion

We do not express an opinion as to whether the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the financial positions of the Nigon Group and Nigon as at 31 March 2016, 2017 and 2018, and 30 September 2018, and of the financial performance and cash flows of the Nigon Group for each of the Relevant Periods in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information. Because of the significance of the matter described in the Basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the Historical Financial Information.

Review of interim comparative financial information

We were engaged to review the interim comparative financial information of the Nigon Group which comprises the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the six months ended 30 September 2017 and other explanatory information (the ‘‘Interim Comparative Financial Information’’). The directors of Nigon are responsible for the preparation of the Interim Comparative Financial Information in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Interim Comparative Financial Information based on our review, in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Appendix II(B) - 2

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

However, because of the significance of the matter described in the Basis for disclaimer of opinion section of our report in respect of the financial information of Lead Creation, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for a review conclusion on the Interim Comparative Financial Information. Any adjustments to the financial information of Lead Creation found to be necessary would have a consequential effect on the Nigon Group’s results, the related elements making up the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the six months ended 30 September 2017, and the related disclosures thereof in the Interim Comparative Financial Information. Accordingly, we do not express a review conclusion on the Interim Comparative Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

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

Yours faithfully,

Ernst & Young Certified Public Accountants Hong Kong

26 March 2019

Appendix II(B) - 3

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

I. HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

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

The financial statements of the Nigon Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the ‘‘Underlying Financial Statements’’).

The Historical Financial Information is presented in Hong Kong dollars (‘‘HK$’’).

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

Notes CONTINUING OPERATIONS REVENUE 4 Other income and gain 4 Depreciation Other expenses Finance cost 5 PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS 6 Income tax expense 8 PROFIT/(LOSS) FOR THE RELEVANT PERIODS FROM CONTINUING OPERATIONS DISCONTINUED OPERATION Profit/(loss) for the year/period from a discontinued operation 9 PROFIT/(LOSS) FOR THE YEAR/ PERIOD	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 430,667 480,000 480,000 831,414 654,913 436,722 (5,414,037) (5,414,037) (4,737,282) (75,303) (53,933) (115,479) (1,884,838) (1,709,861) (1,503,935) (6,112,097) (6,042,918) (5,439,974) (258,821) (270,235) (211,307) (6,370,918) (6,313,153) (5,651,281) 3,758,412 4,633,044 4,591,414 (2,612,506) (1,680,109) (1,059,867)	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 240,000 6,665,000 262,874 134,575,500 (2,707,019) – (40,669) (919,612) (711,636) (3,530,417) (2,956,450) 136,790,471 (145,844) (365,652) (3,102,294) 136,424,819 1,995,275 (4,029) (1,107,019) 136,420,790	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 240,000 6,665,000 262,874 134,575,500 (2,707,019) – (40,669) (919,612) (711,636) (3,530,417) (2,956,450) 136,790,471 (145,844) (365,652) (3,102,294) 136,424,819 1,995,275 (4,029) (1,107,019) 136,420,790
			136,790,471 (365,652)
			136,424,819 (4,029)
			136,420,790

Appendix II(B) - 4

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Notes PROFIT/(LOSS) FOR THE YEAR/ PERIOD OTHER COMPREHENSIVE INCOME FOR THE YEAR/ PERIOD Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Gain on property revaluation 10 Income tax effect OTHER COMPREHENSIVE INCOME FOR THE YEAR/ PERIOD, NET OF TAX TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR/PERIOD	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ (2,612,506) (1,680,109) (1,059,867) – – 183,175,784 – – (3,506,956) – – 179,668,828 (2,612,506) (1,680,109) 178,608,961	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) (1,107,019) 136,420,790 – – – – – – (1,107,019) 136,420,790	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) (1,107,019) 136,420,790 – – – – – – (1,107,019) 136,420,790
			– –
			–
			136,420,790

Appendix II(B) - 5

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Notes NON-CURRENT ASSETS Property, plant and equipment 10 Investment property 11 Utility and other deposits 13 Deferred tax assets 18 Total non-current assets CURRENT ASSETS Inventories Accounts receivable 12 Prepayments and deposits 13 Due from a related company 14 Tax recoverable Bank balance Assets of a disposal group classified as held for sale 9 Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals 15 Due to the holding company 16 Interest-bearing bank and other borrowings 17 Liabilities directly associated with the assets classified as held for sale 9 Total current liabilities	2016 HK$ 222,846,856 – 448,536 14,878 223,310,270 61,728 469,603 347,455 49,122,157 234,326 37,623,636 87,858,905 – 87,858,905 1,168,986 266,894 – 325,563,328 326,999,208 – 326,999,208	As at 31 March 2017 2018 HK$ HK$ 217,142,274 – – 395,000,000 447,000 516,100 10,817 – 217,600,091 395,516,100 47,606 – 752,050 60,000 262,611 82,500 81,077,070 40,822,700 151,621 – 6,086,743 3,600,000 88,377,701 44,565,200 – 183,808 88,377,701 44,749,008 1,219,517 – 314,587 204,006 – 32,260,303 321,683,595 242,100,000 323,217,699 274,564,309 – 733,482 323,217,699 275,297,791	As at 30 September 2018 HK$ – 530,000,000 421,300 –
			530,421,300
			– 6,425,000 14,629 35,336,663 – 4,202,928
			45,979,220 48,619
			46,027,839
			– 232,755 31,760,303 242,100,000
			274,093,058 602,322
			274,695,380

Appendix II(B) - 6

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

Notes NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Other payable 15 Deferred tax liabilities 18 Net assets/(liabilities) EQUITY/(DEFICIENCY IN ASSETS) Share capital 19 Reserves 20 Total equity/(net deficiency in assets)	2016 HK$ (239,140,303) (15,830,033) 120,000 1,945,519 2,065,519 (17,895,552) 100 (17,895,652) (17,895,552)	As at 31 March 2017 2018 HK$ HK$ (234,839,998) (230,548,783) (17,239,907) 164,967,317 120,000 – 2,215,754 5,934,017 2,335,754 5,934,017 (19,575,661) 159,033,300 100 100 (19,575,761) 159,033,200 (19,575,661) 159,033,300	As at 30 September 2018 HK$ (228,667,541) 301,753,759 – 6,299,669 6,299,669 295,454,090 100 295,453,990 295,454,090

Appendix II(B) - 7

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the year ended 31 March 2016

At 1 April 2015 Loss and total comprehensive loss for the year At 31 March 2016	Share capital HK$ 100 – 100	Accumulated losses HK$ (15,283,146) (2,612,506) (17,895,652)*	Total HK$ (15,283,046) (2,612,506) (17,895,552)

For the year ended 31 March 2017

At 1 April 2016 Loss and total comprehensive loss for the year At 31 March 2017	Share capital HK$ 100 – 100	Accumulated losses HK$ (17,895,652) (1,680,109) (19,575,761)*	Total HK$ (17,895,552) (1,680,109) (19,575,661)

For the year ended 31 March 2018

At 1 April 2017 Loss for the year Other comprehensive income for the year: Gain on property revaluation, net of tax Total comprehensive income/(loss) for the year At 31 March 2018	Share capital HK$ 100 – – – 100	Leasehold land and building revaluation reserve HK$ – – 179,668,828 179,668,828 179,668,828*	Accumulated losses HK$ (19,575,761) (1,059,867) – (1,059,867) (20,635,628)*	Total HK$ (19,575,661) (1,059,867) 179,668,828 178,608,961 159,033,300

Appendix II(B) - 8

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

For the six months ended 30 September 2017 (unaudited)

At 1 April 2017 Loss and total comprehensive loss for the period At 30 September 2017 For the six months ended 30 September 2018	Share capital HK$ 100 – 100	Accumulated losses HK$ (19,575,761) (1,107,019) (20,682,780)	Total HK$ (19,575,661) (1,107,019)
			(20,682,680)

At 1 April 2018 Profit and total comprehensive income for the period At 30 September 2018	Share capital HK$ 100 – 100	Leasehold land and building revaluation reserve HK$ 179,668,828 – 179,668,828*	Retained profit/ (accumulated losses HK$ (20,635,628) 136,420,790 115,785,162*	Total HK$ 159,033,300 136,420,790
				295,454,090

• These reserve accounts comprise the consolidated reserves/(consolidated debit reserves) of HK$(17,895,652), HK$(19,575,761), HK$159,033,200 and HK$295,453,990 in the consolidated statements of financial position as at 31 March 2016, 2017 and 2018 and 30 September 2018, respectively.

Appendix II(B) - 9

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before tax: From continuing operations From a discontinued operation Adjustments for: Finance costs 5,9 Depreciation 6,9 Interest income 4 Gain arising from changes in fair value of an investment property 6 Loss on disposal of items of property, plant and equipment Impairment of items of property, plant and equipment Decrease/(increase) in accounts receivable Decrease/(increase) in prepayments and deposits Decrease/(increase) in inventories Increase/(decrease) in trade payables Increase/(decrease) in other payables and accruals Decrease/(increase) in an amount due from a related company Increase/(decrease) in an amount due to a related company Cash generated from/(used in) operations Interest received Hong Kong profits tax refunded, net Net cash flows from/(used in) operating activities	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ (6,112,097) (6,042,918) (5,439,974) 3,725,048 4,719,810 5,005,731 2,057,851 1,871,317 1,668,331 7,533,524 5,953,800 5,153,299 (828,414) (654,913) (434,422) – – – 3,472 – – – – 1,005,283 6,379,384 5,847,096 6,958,248 (143,461) (282,447) 692,050 (79,559) 86,380 (72,797) 1,533 14,122 47,606 310,094 50,531 (1,064,686) 42,580 40,913 (195,022) 3,171,586 (31,954,913) (42,057,122) – – 291,239 9,682,157 (26,198,318) (35,400,484) 828,414 654,913 434,422 6,083 – 35,533 10,516,654 (25,543,405) (34,930,529)	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) (2,956,450) 136,790,471 1,995,275 (4,029) 783,903 3,530,420 2,944,743 – (262,734) – – (134,574,400) – – – – 2,504,737 5,742,462 377,024 (6,365,000) 142,142 306,357 (44,511) – 244,580 (154,831) 3,163 118,332 (1,066,240) 5,486,037 – (266,189) 2,160,895 4,867,168 262,734 – 234,326 – 2,657,955 4,867,168	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) (2,956,450) 136,790,471 1,995,275 (4,029) 783,903 3,530,420 2,944,743 – (262,734) – – (134,574,400) – – – – 2,504,737 5,742,462 377,024 (6,365,000) 142,142 306,357 (44,511) – 244,580 (154,831) 3,163 118,332 (1,066,240) 5,486,037 – (266,189) 2,160,895 4,867,168 262,734 – 234,326 – 2,657,955 4,867,168
			5,742,462 (6,365,000) 306,357 – (154,831) 118,332 5,486,037 (266,189)
			4,867,168 – –
			4,867,168

Appendix II(B) - 10

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Notes CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of items of property, plant and equipment Purchase of items of property, plant and equipment Additions to an investment property Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES New bank loans Increase in shareholders’ loans Repayments of bank loans Decrease in an amount due to the holding company Interest paid Net cash flows from/(used in) financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year/period CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Bank balance Bank overdrafts 17 Cash attributable to a discontinued operation 9 Cash and cash equivalents as stated in the statement of cash flows	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 10,454 – – (281,833) (249,218) (840,524) – – – (271,379) (249,218) (840,524) – – 242,100,000 42,000,000 12,000,000 95,078,890 (15,939,360) (15,939,360) (104,627,720) – – (197,500,000) (2,059,078) (1,864,537) (1,703,890) 24,001,562 (5,803,897) 33,347,280 34,246,837 (31,596,520) (2,423,773) 3,373,456 37,620,293 6,023,773 37,620,293 6,023,773 3,600,000 37,623,636 6,086,743 3,600,000 (3,343) (62,970) – – – – 37,620,293 6,023,773 3,600,000	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) – – (164,859) – – (425,600) (164,859) (425,600) – – 3,999,860 – (7,969,680) – – (297,921) (868,139) (3,532,222) (4,837,959) (3,830,143) (2,344,863) 611,425 6,023,773 3,600,000 3,678,910 4,211,425 3,449,116 4,202,928 – – 229,794 8,497 3,678,910 4,211,425	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) – – (164,859) – – (425,600) (164,859) (425,600) – – 3,999,860 – (7,969,680) – – (297,921) (868,139) (3,532,222) (4,837,959) (3,830,143) (2,344,863) 611,425 6,023,773 3,600,000 3,678,910 4,211,425 3,449,116 4,202,928 – – 229,794 8,497 3,678,910 4,211,425
			(425,600)
			– – – (297,921) (3,532,222)
			(3,830,143)
			611,425 3,600,000
			4,211,425
			4,202,928 – 8,497
			4,211,425

Appendix II(B) - 11

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

STATEMENTS OF FINANCIAL POSITION OF NIGON

Notes NON-CURRENT ASSETS Investment in the subsidiary 21 Investment property 11 Utility and other deposits 13 Total non-current assets CURRENT ASSETS Accounts receivables 12 Prepayments and deposits 13 Due from a related company 14 Bank balance Total current assets CURRENT LIABILITIES Other payables and accruals 15 Due to the subsidiary 21 Due to the holding company 16 Interest-bearing bank and other borrowings 17 Total current liabilities NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Other payable 15 Deferred tax liabilities 18 Total non-current liabilities Net assets EQUITY Share capital 19 Retained profits 20 Total equity	2016 HK$ 10,000 315,000,000 448,536 315,458,536 – 33,770 49,122,157 37,580,136 86,736,063 87,456 4,761,871 – 325,559,985 330,409,312 (243,673,249) 71,785,287 120,000 4,916,227 5,036,227 66,749,060 100 66,748,960 66,749,060	As at 31 March 2017 2018 HK$ HK$ 10,000 10,000 366,000,000 395,000,000 447,000 516,100 366,457,000 395,526,100 – 60,000 33,016 82,500 81,077,070 40,822,700 6,043,243 3,600,000 87,153,329 44,565,200 94,236 204,006 5,739,063 7,693,278 – 32,260,303 321,620,625 242,100,000 327,453,924 282,257,587 (240,300,595) (237,692,387) 126,156,405 157,833,713 120,000 – 5,472,461 5,934,017 5,592,461 5,934,017 120,563,944 151,899,696 100 100 120,563,844 151,899,596 120,563,944 151,899,696	As at 30 September 2018 HK$ 10,000 530,000,000 421,300 530,431,300 6,425,000 14,629 35,336,663 4,202,928 45,979,220 232,755 7,693,278 31,760,303 242,100,000 281,786,336 (235,807,116) 294,624,184 – 6,299,669 6,299,669 288,324,515 100 288,324,415 288,324,515

Appendix II(B) - 12

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE AND GROUP INFORMATION

Nigon Hong Kong Limited (‘‘Nigon’’) is a limited liability company incorporated in Hong Kong. The registered office of Nigon is located at Shop 13, G/F, 98A-D, Argyle Street, Kowloon, Hong Kong.

Nigon is a wholly-owned subsidiary of Jetco (H.K.) Limited, a company incorporated in Hong Kong, which is considered by the directors to be Nigon’s holding company and ultimate holding company. The registered office of the holding company is also located at Shop 13, G/F, 98A-D, Argyle Street, Kowloon, Hong Kong.

Nigon is an investment and property holding company. During the Relevant Periods, Nigon’s subsidiary was principally involved in hotel operation prior to 15 February 2018, after which Nigon’s subsidiary became inactive.

Information about the subsidiary

As at 30 September 2018, Nigon had a direct interest in the subsidiary, which is a private limited liability company, the particulars of which are set out below:

		Issued	Percentage
		ordinary	of equity
	Place of	share	attributable to	Principal
Name	incorporation	capital	Nigon	activity
		HK$	Direct
Lead Creation Development	Hong Kong	10,000	100	Inactive
Limited (‘‘Lead Creation’’) #

The statutory financial statements of Lead Creation for the years ended 31 March 2016 and 2017 prepared under Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations) issued by the HKICPA were audited by Sky Base Partners CPA Limited, certified public accountants registered in Hong Kong, and the statutory financial statements for the year ended 31 March 2018 prepared under HKFRSs were audited by Sino Corp CPA Limited, certified public accountants registered in Hong Kong.

2.1 BASIS OF PREPARATION

The Historical Financial Information has been prepared in accordance with HKFRSs and accounting principles generally accepted in Hong Kong. All HKFRSs effective for the accounting period commencing from 1 April 2018, together with the relevant transitional provisions, have been consistently applied by the Nigon Group in the preparation of the Historical Financial Information throughout the Relevant Periods and in the period covered by the Interim Comparative Financial Information, except for HKFRS 9 Financial Instruments (‘‘HKFRS 9’’) which is adopted by the Nigon Group from 1 April 2018 as the standard does not allow the use of hindsight if it is adopted retrospectively.

Appendix II(B) - 13

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

HKFRS 9 introduces new requirements for classification and measurement, impairment and hedge accounting of financial instruments. The Nigon Group has adopted the standard from 1 April 2018. The Nigon Group recognised transition adjustments against the opening balance of equity at 1 April 2018 and has not restated prior years’ financial information. Therefore, the financial information from 1 April 2016 to 31 March 2018 which is reported under HKAS 39 Financial Instruments: Recognition and Measurement (‘‘HKAS 39’’) is not comparable to the information presented for the six months ended 30 September 2018. The adoption of HKFRS 9 has had no significant impact on the classification and measurement, and the impairment of the Nigon Group’s financial instruments.

The Historical Financial Information has been prepared under the historical cost convention except for an investment property which has been measured at fair value.

The Historical Financial Information has been prepared on the going concern basis, notwithstanding the Nigon Group had net current liabilities of HK$228,667,541, at the end of the Relevant Periods, because the ultimate beneficial owner has agreed to provide continuous financial support to enable the Nigon Group to meet its liabilities and obligations as and when they fall due and to continue its operations, until the date on which he ceases to have any direct or indirect ownership interest in the Nigon Group.

CNT has undertaken, from the date that CNT becomes the controlling shareholder of the Nigon Group, to provide continuous financial support to enable the Nigon Group to meet its liabilities and obligations as and when they fall due and to continue its operations.

Basis of consolidation

The Historical Financial Information includes the financial statements of Nigon and its subsidiary now comprising the Nigon Group for the Relevant Periods and the period covered by the Interim Comparative Financial Information.

A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by Nigon. Control is achieved when the Nigon Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Nigon Group the current ability to direct the relevant activities of the investee).

When Nigon has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Nigon Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• (a) the contractual arrangement with the other vote holders of the investee;

• (b) rights arising from other contractual arrangements; and

• (c) the Nigon Group’s voting rights and potential voting rights.

The financial statements of the subsidiary are prepared for the same reporting period as Nigon, using consistent accounting policies. The results of the subsidiary are consolidated from the date on which the Nigon Group obtains control, and continue to be consolidated until the date that such

Appendix II(B) - 14

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

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

The Nigon Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Nigon Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Nigon Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or accumulated losses, as appropriate, on the same basis as would be required if the Nigon Group had directly disposed of the related assets or liabilities.

2.2 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Nigon Group has not applied the following new and revised HKFRSs that have been issued but are not yet effective, in the Historical Financial Information:

Amendments to HKFRS 3	Definition of a Business2
Amendments to HKFRS 9	Prepayment Features with Negative Compensation1
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor and
HKAS 28 (2011)	its Associate or Joint Venture4
HKFRS 16	Leases1
HKFRS 17	Insurance Contracts3
Amendments to HKAS 1 and HKAS 8	Definition of Material2
Amendments to HKAS 19	Plan Amendment, Curtailment or Settlement1
Amendments to HKAS 28	Long-term Interests in Associates and Joint Ventures1
HK(IFRIC)-Int 23	Uncertainty over Income Tax Treatments1
Annual Improvements 2015–2017 Cycle	Amendments to HKFRS 3, HKFRS 11, HKAS 12 and
	HKAS 231

• 1 Effective for annual periods beginning on or after 1 January 2019

• 2 Effective for annual periods beginning on or after 1 January 2020

• 3 Effective for annual periods beginning on or after 1 January 2021

• 4 No mandatory effective date yet determined but available for adoption

Appendix II(B) - 15

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Further information about those HKFRSs that are expected to be applicable to the Nigon Group is described below:

HKFRS 16, issued in May 2016, replaces HKAS 17 Leases, HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases – Incentives and HK(SIC)-Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise assets and liabilities for most leases. The standard includes two elective recognition exemptions for lessees – leases of low-value assets and short-term leases. At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). The right-of-use asset is subsequently measured at cost less accumulated depreciation and any impairment losses unless the right-of-use asset meets the definition of investment property in HKAS 40, or relates to a class of property, plant and equipment to which the revaluation model is applied. The lease liability is subsequently increased to reflect the interest on the lease liability and reduced for the lease payments. Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will also be required to remeasure the lease liability upon the occurrence of certain events, such as change in the lease term and change in future lease payments resulting from a change in an index or rate used to determine those payments. Lessees will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. HKFRS 16 requires lessees and lessors to make more extensive disclosures than under HKAS 17.

Lessees can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Nigon Group expects to adopt HKFRS 16 from 1 April 2019. The interpretation is not expected to have any significant impact on the Historical Financial Information.

HK(IFRIC)-Int 23, issued in July 2017, addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of HKAS 12 (often referred to as ‘‘uncertain tax positions’’). The interpretation does not apply to taxes or levies outside the scope of HKAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. The interpretation is to be applied retrospectively, either fully retrospectively without the use of hindsight or retrospectively with the cumulative effect of application as an adjustment to the opening equity at the date of initial application, without the restatement of comparative information. The Nigon Group expects to adopt the interpretation from 1 April 2019. The interpretation is not expected to have any significant impact on the Nigon Group’s Historical Financial Information.

Appendix II(B) - 16

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fair value measurement

The Nigon Group measures its investment property at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Nigon Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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

The Nigon Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

• Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the Historical Financial Information on a recurring basis, the Nigon Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of non-financial assets

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

Appendix II(B) - 17

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

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

Related parties

A party is considered to be related to the Nigon Group if:

• (a) the party is a person or a close member of that person’s family and that person

• (i) has control or joint control over the Nigon Group;

• (ii) has significant influence over the Nigon Group; or

• (iii) is a member of the key management personnel of Nigon or of a parent of the Nigon Group;

or

• (b) the party is an entity where any of the following conditions applies:

• (i) the entity and the Nigon Group are members of the same group;

• (ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

• (iii) the entity and the Nigon Group 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 Nigon Group or an entity related to the Nigon Group;

• (vi) the entity is controlled or jointly controlled by a person identified in (a);

Appendix II(B) - 18

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

• (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; and

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

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Nigon Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write-off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Hotel land and building Over the shorter of 50 years and the remaining lease term Leasehold improvements 20% Machinery and equipment 20% Furniture and fixtures 20%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Investment property

Investment property is an interest in hotel building held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such property is measured initially at cost, including transaction costs. Subsequent to initial recognition, the investment property is stated at fair value, which reflects market conditions at the end of the reporting period.

Appendix II(B) - 19

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Gains or losses arising from changes in the fair value of the investment property are included in profit or loss in the year/period in which they arise.

Any gains or losses on the retirement or disposal of the investment property are recognised in profit or loss in the year/period of the retirement or disposal.

Disposal group held for sale

A disposal group is classified as held for sale if its carrying amount will be recovered principally through a sales transaction rather than through continuing use. For this to be the case, the disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such disposal group and its sale must be highly probable. All assets and liabilities of a subsidiary classified as a disposal group are reclassified as held for sale regardless of whether the Nigon Group retains a non-controlling interest in its former subsidiary after the sale.

A disposal group (other than financial assets) classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell. Property, plant and equipment classified as held for sale are not depreciated or amortised.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Assets leased by the Nigon Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss on the straight-line basis over the lease terms.

Financial assets (policies under HKFRS 9 applicable from 1 April 2018)

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Nigon Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Nigon Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Nigon Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Nigon Group has applied the practical expedient are measured at the transaction price determined under HKFRS 15 in accordance with the policies set out for ’’Revenue recognition’’ below.

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are solely payments of principal and interest (’’SPPI’’) on the principal amount outstanding.

Appendix II(B) - 20

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

The Nigon Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Nigon Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

The Nigon Group measures financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Financial assets (policies under HKAS 39 applicable before 1 April 2018)

Initial recognition and measurement

Financial assets are classified, at initial recognition, as loans and receivables. When financial assets are recognised initially, they are measured at fair value plus transaction costs that are attributable to the acquisition of the financial assets.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Nigon Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement of loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest rate. The

Appendix II(B) - 21

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

effective interest rate amortisation is included in other income in profit or loss. The loss arising from impairment is recognised in profit or loss in finance costs for loans and in other operating expenses for receivables.

Derecognition of financial assets (policies under HKFRS 9 applicable from 1 April 2018 and policies under HKAS 39 applicable before 1 April 2018)

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Nigon Group’s combined statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Nigon Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘‘pass-through’’ arrangement; and either (a) the Nigon Group has transferred substantially all the risks and rewards of the asset, or (b) the Nigon Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Nigon Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Nigon Group continues to recognise the transferred asset to the extent of the Nigon Group’s continuing involvement in the asset. In that case, the Nigon Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Nigon Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Nigon Group could be required to repay.

Impairment of financial assets (policies under HKFRS 9 applicable from 1 April 2018)

The Nigon Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Nigon Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit

Appendix II(B) - 22

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Nigon Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Nigon Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Nigon Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Nigon Group may also consider a financial asset to be in default when internal or external information indicates that the Nigon Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Nigon Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for accounts receivables which apply the simplified approach as detailed below.

• Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12month ECLs

• Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

• Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For accounts receivables that do not contain a significant financing component or when the Nigon Group applies the practical expedient of not adjusting the effect of a significant financing component, the Nigon Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Nigon Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Nigon Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Appendix II(B) - 23

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Impairment of financial assets (policies under HKAS 39 applicable before 1 April 2018)

The Nigon Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that occurred after the initial recognition of the asset have an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Nigon Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Nigon Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition).

The carrying amount of the asset is reduced either directly or through the use of an allowance account and the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Nigon Group.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to other expenses in profit or loss.

Appendix II(B) - 24

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Financial liabilities (policies under HKFRS 9 applicable from 1 April 2018 and HKAS 39 applicable before 1 April 2018)

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as loans and borrowings and payables, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Subsequent measurement of loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

Derecognition of financial liabilities (policies under HKFRS 9 applicable from 1 April 2018 and HKAS 39 applicable before 1 April 2018)

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

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

Offsetting of financial instruments (policies under HKFRS 9 applicable from 1 April 2018 and HKAS 39 applicable before 1 April 2018)

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

Inventories

Inventories are stated at the lower of cost and net realisable value. The costs of inventories are determined on a first-in-first-out basis. Costs include all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Appendix II(B) - 25

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Nigon Group’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration of the interpretations and practices prevailing in the countries in which the Nigon Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred tax liability arises from the initial recognition of goodwill or an asset or a liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, an associate and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Appendix II(B) - 26

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or a liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, an associate and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

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

Deferred tax assets and deferred tax liabilities are offset if and only if the Nigon Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Revenue recognition

Property rental income

Property rental income is recognised on a time proportion basis over the lease terms.

Hotel income (discontinued operation)

Hotel operation income is recognised upon the provision of services and the utilisation by guests of the hotel facilities.

Appendix II(B) - 27

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Interest income

Interest income is recognised on an accrual basis using the effective interest rate method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, that is, assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when 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 capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Historical Financial Information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and their accompanying disclosures, and the disclosure of contingent liability, at the end of the reporting period. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimation uncertainty

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

Useful lives of property, plant and equipment

The Nigon Group determines the estimated useful lives and related depreciation charges and amortisation charges, respectively, for its items of property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of items of property, plant and equipment of similar nature and functions. Management will revise the depreciation charge and amortisation charge where useful lives are different to the ones previously estimated, and it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

Appendix II(B) - 28

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Impairment of accounts receivables

Before 1 April 2018

The Nigon Group maintains an allowance for estimated loss arising from the inability of its customers to make the required payments. The Nigon Group makes its estimates based on the ageing of its accounts receivable balances, customers’ creditworthiness, and historical write off experience. If the financial condition of its customers was to deteriorate so that the actual impairment loss might be higher than expected, the Nigon Group would be required to revise the basis of making the allowance and its future results would be affected.

From 1 April 2018

The provision rate of receivables is made based on assessment of their recoverability and ageing analysis of the receivables as well as other quantitative and qualitative information and on management’s judgement and assessment of the forward-looking information. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Nigon Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. Information about the ECLs on the Nigon Group’s accounts receivables is disclosed in note 12 to the Historical Financial Information.

4. REVENUE, OTHER INCOME AND GAIN

Revenue from continuing operations represents gross rental income received and receivable from an investment property during the Relevant Periods.

An analysis of the Nigon Group’s other income and gain is as follows:

Interest income on amount due from a related company Fair value gain of an investment property Others	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 828,414 654,913 434,422 – – – 3,000 – 2,300 831,414 654,913 436,722	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 262,734 – – 134,574,400 140 1,100 262,874 134,575,500	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 262,734 – – 134,574,400 140 1,100 262,874 134,575,500
			134,575,500

Appendix II(B) - 29

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

5. FINANCE COST

An analysis of finance cost is as follows:

Interest on bank loans	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 1,884,838 1,709,861 1,503,935	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 711,636 3,530,417

6. PROFIT/(LOSS) BEFORE TAX

The Nigon Group’s profit/(loss) before tax from continuing operations is arrived at after charging/ (crediting):

Note Auditor’s remuneration Depreciation# Fair value gain of an investment property 11	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 10,000 10,000 35,000 5,414,037 5,414,037 4,737,282 – – –	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 17,500 17,500 2,707,019 – – (134,574,400)

The hotel land and building was leased to Nigon’s subsidiary to operate the hotel business for the years ended 31 March 2016, 2017 and up to 14 February 2018, and then was leased to a related company to continue the hotel operation afterwards. The related depreciation for that periods prior to 14 February 2018 was recorded under the continuing operation and no reclassification was made to the discontinued operation.

7. DIRECTORS’ REMUNERATION

No directors received any fees or emoluments in respect of their services rendered to the Nigon Group during the Relevant Periods and the period covered by the Interim Comparative Financial Information.

8. INCOME TAX

No provision for Hong Kong profits tax has been made for Nigon as Nigon did not generate any assessable profits arising in Hong Kong during the years ended 31 March 2016, 2017 and 2018 and the six months ended 30 September 2017 and had available tax losses brought forward from prior years to offset the assessable profits arising in Hong Kong generated during the six months ended 30 September 2018.

Appendix II(B) - 30

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

No provision for Hong Kong profits tax has been made for Nigon’s subsidiary as Nigon’s subsidiary did not generate any assessable profits arising in Hong Kong during the year ended 31 March 2016 and the six months ended 30 September 2017 and 2018. Hong Kong profits tax has been provided for Nigon’s subsidiary at the rate of 16.5% on the estimated assessable profits arising in Hong Kong during the years ended 31 March 2017 and 2018.

Deferred tax Total tax charge for the year/ period from continuing operations Total tax charge/(credit) for the year/period from a discontinued operation	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 258,821 270,235 211,307 258,821 270,235 211,307 (33,364) 86,766 414,317 225,457 357,001 625,624	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 145,844 365,652 145,844 365,652 – – 145,844 365,652	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) 145,844 365,652 145,844 365,652 – – 145,844 365,652
			365,652 –
			365,652

Appendix II(B) - 31

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

A reconciliation of the tax expense applicable to profit/(loss) before tax at the statutory tax rate for the jurisdiction in which Nigon and its subsidiary are domiciled to the tax charge/(credit) at the Nigon Group’s effective tax rate is as follows:

Profit/(loss) before tax from continuing operations Profit/(loss) before tax from a discontinued operation Tax at the Hong Kong statutory tax rate Tax effect of non-taxable income Tax effect of non-deductible expenses Tax effect of temporary difference not recognised Tax losses not recognised Others Tax charge at Nigon’s effective rate Tax charge from continuing operations at effective rate Tax charge/(credit) from a discontinued operation at effective rate	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ (6,112,097) (6,042,918) (5,439,974) 3,725,048 4,719,810 5,005,731 (2,387,049) (1,323,108) (434,243) (393,863) (218,313) (71,650) – – – 607,316 607,316 531,402 – – 165,872 – – – 12,004 (32,002) – 225,457 357,001 625,624 258,821 270,235 211,307 (33,364) 86,766 414,317	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) (2,956,450) 136,790,471 1,995,275 (4,029) (961,175) 136,786,442 (158,594) 22,569,763 – (22,204,776) 303,658 – – – 780 665 – – 145,844 365,652 145,844 365,652 – –

Appendix II(B) - 32

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

9. ASSETS AND LIABILITIES OF A DISPOSAL GROUP CLASSIFIED AS A DISCONTINUED OPERATION

Lead Creation was engaged in the business of hotel operation for the years ended 31 March 2016 and 2017 and up to 14 February 2018 after which Lead Creation ceased the hotel operation and became inactive. The disposal of Lead Creation was subsequently completed on 30 November 2018. As at 31 March 2018 and 30 September 2018, the negotiation for the sale was in progress and Lead Creation was classified as a disposal group held for sale and as a discontinued operation.

The results of Lead Creation for each of the Relevant Periods and the period covered by the Interim Comparative Financial Information are presented below:

Hotel operation revenue Other income Depreciation Impairment of items of property, plant and equipment Other expenses Finance costs Profit/(loss) before tax from the discontinued operation Income tax Profit/(loss) for the year/period from the discontinued operation	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 16,058,419 14,469,662 13,573,259 119,839 77,479 632,020 (2,119,487) (539,763) (416,017) – – (1,005,283) (10,160,710) (9,126,112) (7,613,852) (173,013) (161,456) (164,396) 3,725,048 4,719,810 5,005,731 33,364 (86,766) (414,317) 3,758,412 4,633,044 4,591,414	Six months ended 30 September 2017 2018 HK$ HK$ 6,580,996 – 50,678 2,164 (237,724) – – – (4,326,408) (6,190) (72,267) (3) 1,995,275 (4,029) – – 1,995,275 (4,029)

Appendix II(B) - 33

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

The major classes of assets and liabilities of Lead Creation classified as held for sale as at 31 March 2018 and 30 September 2018 are as follows:

Assets Prepayments and deposits Cash and cash equivalents Assets classified as held for sale Liabilities Trade payables Other payables and accruals Due to the ultimate holding company Due to related company Tax payable Deferred tax liabilities Liabilities directly associated with the assets classified as held for sale Net liabilities directly associated with the disposal group	31 March 2018 HK$ 183,808 – 183,808 (154,831) – – (291,239) (251,808) (35,604) (733,482) (549,674)	30 September 2018 HK$ 40,122 8,497 48,619 – (87,781) (202,079) (25,050) (251,808) (35,604) (602,322) (553,703)

The net cash flows incurred by Lead Creation are as follows:

Operating activities Investing activities Financing activities Net cash inflow/(outflow)	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ 256,627 351,047 1,024,390 (267,907) (249,218) (840,524) (173,013) (161,456) (164,396) (184,293) (59,627) 19,470	Six months ended 30 September 2017 2018 HK$ HK$ 486,390 (193,579) (164,859) – (72,267) 202,076 249,264 8,497

Appendix II(B) - 34

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

10. PROPERTY, PLANT AND EQUIPMENT

31 March 2016 At 1 April 2015: Cost Accumulated depreciation Net carrying amount At 1 April 2015, net of accumulated depreciation Additions Depreciation provided during the year Disposal At 31 March 2016, net of accumulated depreciation At 31 March 2016: Cost Accumulated depreciation Net carrying amount 31 March 2017 At 1 April 2016: Cost Accumulated depreciation Net carrying amount At 1 April 2016, net of accumulated depreciation Additions Depreciation provided during the year At 31 March 2017, net of accumulated depreciation At 31 March 2017: Cost Accumulated depreciation Net carrying amount	Hotel land and building HK$ 270,701,868 (43,312,296) 227,389,572 227,389,572 – (5,414,037) – 221,975,535 270,701,868 (48,726,333) 221,975,535 270,701,868 (48,726,333) 221,975,535 221,975,535 – (5,414,037) 216,561,498 270,701,868 (54,140,370) 216,561,498	Leasehold improvements HK$ 11,542,804 (9,430,221) 2,112,583 2,112,583 185,300 (1,791,860) – 506,023 11,728,104 (11,222,081) 506,023 11,728,104 (11,222,081) 506,023 506,023 12,000 (349,783) 168,240 11,740,104 (11,571,864) 168,240	Machinery and equipment HK$ 2,163,400 (1,806,261) 357,139 357,139 36,438 (232,649) (7,696) 153,232 2,190,218 (2,036,986) 153,232 2,190,218 (2,036,986) 153,232 153,232 235,150 (105,376) 283,006 2,425,368 (2,142,362) 283,006	Furniture and fixtures HK$ 1,118,225 (865,046) 253,179 253,179 60,095 (94,978) (6,230) 212,066 1,169,651 (957,585) 212,066 1,169,651 (957,585) 212,066 212,066 2,068 (84,604) 129,530 1,171,719 (1,042,189) 129,530	Total HK$ 285,526,297 (55,413,824)
					230,112,473
					230,112,473 281,833 (7,533,524) (13,926)
					222,846,856
					285,789,841 (62,942,985)
					222,846,856
					285,789,841 (62,942,985)
					222,846,856
					222,846,856 249,218 (5,953,800)
					217,142,274
					286,039,059 (68,896,785)
					217,142,274

Appendix II(B) - 35

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Note 31 March 2018 and 30 September 2018 At 1 April 2017: Cost Accumulated depreciation Net carrying amount At 1 April 2017, net of accumulated depreciation Additions Depreciation provided during the year Surplus on revaluation Reclassified to disposal group held for sale Transfer to investment property 11 At 31 March 2018, 1 April 2018, and 30 September 2018, net of accumulated depreciation At 31 March 2018, 1 April 2018, and 30 September 2018: Cost Accumulated depreciation Net carrying amount	Hotel land and building HK$ 270,701,868 (54,140,370) 216,561,498 216,561,498 – (4,737,282) 183,175,784 – (395,000,000) – – – –	Leasehold improvements HK$ 11,740,104 (11,571,864) 168,240 168,240 19,800 (85,480) – (102,560) – – – – –	Machinery and equipment HK$ 2,425,368 (2,142,362) 283,006 283,006 785,964 (256,072) – (812,898) – – – – –	Furniture and fixtures HK$ 1,171,719 (1,042,189) 129,530 129,530 34,760 (74,465) – (89,825) – – – – –	Total HK$ 286,039,059 (68,896,785)
					217,142,274
					217,142,274 840,524 (5,153,299) 183,175,784 (1,005,283) (395,000,000)
					–
					– –
					–

At 31 March 2016 and 2017, the hotel land and building with a net carrying amount of HK$221,975,535 and HK$216,561,498, respectively, was pledged to secure general banking facilities granted to the Nigon Group and Nigon (note 17).

Appendix II(B) - 36

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

11. INVESTMENT PROPERTY

Nigon Group

Notes Carrying amount at beginning of year/period Additions Fair value gain 6 Transfer from owner-occupied property 10 Carrying amount at the end of year/period	2016 HK$ – – – – –	As at 31 March 2017 2018 HK$ HK$ – – – – – – – 395,000,000 – 395,000,000	As at 30 September 2018 HK$ 395,000,000 425,600 134,574,400 –
			530,000,000

Nigon

Carrying amount at beginning of year/period Additions Fair value gain/(loss) Carrying amount at the end of year/period	2016 HK$ 323,000,000 – (8,000,000) 315,000,000	As at 31 March 2017 2018 HK$ HK$ 315,000,000 366,000,000 – – 51,000,000 29,000,000 366,000,000 395,000,000	As at 30 September 2018 HK$ 395,000,000 425,600 134,574,400
			530,000,000

The Nigon Group’s investment property was revalued as at 30 September 2018 at HK$530,000,000 whereas Nigon’s investment property was revalued as at 31 March 2016 and 2017 and 30 September 2018 at HK$315,000,000, HK$366,000,000 and HK$530,000,000, respectively, based on valuations performed by an independent professionally qualified valuer, Centaline Surveyors Limited. The criteria for the selection of the valuer were based on market knowledge, reputation, independence and maintenance of professional standards. Nigon’s management also has discussions with the valuer to understand the assumptions and methodology adopted for the valuations.

The Nigon Group’s and Nigon’s investment property was revalued as at 31 March 2018 at HK395,000,000 based on a recent arm’s length transaction’s market value.

The investment property was leased by the Nigon Group to a third party and a related company under operating leases during the year ended 31 March 2018 and the six months ended 30 September 2018, further summary details of which are included in note 23 to the Historical Financial Information.

Appendix II(B) - 37

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

The investment property was leased by Nigon to its subsidiary and a third party under operating leases during the years ended 31 March 2016 and 2017, and a third party and a related company under operating leases during the year ended 31 March 2018 and the six months ended 30 September 2018.

Details of the investment property as at 31 March 2016, 2017 and 2018 and 30 September 2018 are as follows:

	Group’s		Gross	Existing
Location	interest	Tenure	floor area	use
No.11 Morrison Hill Road, Hong Kong	100%	Long term	24,283	Hotel
		lease	square feet	operation

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Nigon Group’s and Nigon’s investment property:

Nigon

Recurring fair value measurement for: Investment property Recurring fair value measurement for: Investment property	Fair value measurement as at 31 March 2016 using Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) HK$ HK$ HK$ – – 315,000,000 Fair value measurement as at 31 March 2017 using Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) HK$ HK$ HK$ – – 366,000,000	Total HK$ 315,000,000
		Total HK$ 366,000,000

Appendix II(B) - 38

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

Nigon Group and Nigon

Recurring fair value measurement for: Investment property Recurring fair value measurement for: Investment property	Fair value measurement as at 31 March 2018 using Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) HK$ HK$ HK$ – – 395,000,000 Fair value measurement as at 30 September 2018 using Quoted prices in active market (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) HK$ HK$ HK$ – – 530,000,000	Total HK$ 395,000,000
		Total HK$ 530,000,000

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3.

Appendix II(B) - 39

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy:

Carrying amount at 1 April 2015 Fair value loss Carrying amount at 31 March 2016 and 1 April 2016 Fair value gain Carrying amount at 31 March 2017 and 1 April 2017 Fair value gain Transfer from owner-occupied property Carrying amount at 31 March 2018 and 1 April 2018 Additions Fair value gain Carrying amount at 30 September 2018	Nigon Group Commercial property HK$ – – – – – – 395,000,000 395,000,000 425,600 134,574,400 530,000,000	Nigon Commercial property HK$ 323,000,000 (8,000,000) 315,000,000 51,000,000 366,000,000 29,000,000 – 395,000,000 425,600 134,574,400 530,000,000

Fair value measurements and valuation processes

In estimating the fair value of the Nigon Group’s/Nigon’s investment property, the Nigon Group/ Nigon’s uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Nigon Group/Nigon engages a third party qualified valuer to perform valuation of the Nigon Group’s/Nigon investment property. At the end of each reporting period, the management of the Nigon Group/Nigon works closely with the qualified external valuer to establish and determine the appropriate valuation techniques and inputs for Level 2 and Level 3 fair value measurements. The Nigon Group/Nigon will first consider and adopt Level 2 inputs where inputs cannot be derived from observable quoted prices in the active market. When Level 2 inputs are not available, the Nigon Group/Nigon will adopt valuation techniques that include Level 3 inputs. Where there is a material change in the fair value of the asset, the causes of the fluctuations will be reported to the board of directors of Nigon.

Appendix II(B) - 40

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Below is a summary of the valuation techniques used and the key inputs to the valuation of investment property:

				Range for	Range for
				31 March		30 September
	Valuation technique	Significant unobservable inputs	2016	2017	2018	2018
Commercial property	Direct comparison approach	Market value	N/A	N/A	HK$395,000,000	N/A
Commercial property	Direct capitalisation method	Estimated rental (per month)	N/A	N/A	N/A	HK$1,285,000
(hotel portion)		Capitalisation rate	N/A	N/A	N/A	2.4%
	Discounted cash flow method	Average daily rate (per occupied room)	HK$700	HK$766	N/A	HK$1,050
		Occupancy rate	87%	91%	N/A	91%
		Growth rate (per annum)	5.0%	5.0%	N/A	5.5%
		Discount rate	3.0%	3.0%	N/A	3.0%
		Gross operating profit (as a % of	60%	60%	N/A	60%
		revenue) (approximately)
Commercial property	Direct capitalisation method	Estimated rental (per month)	HK$97,500	HK$118,950	N/A	HK$40,000 -
(retail portion)						HK$131,625
		Capitalisation rate	2.6%	2.5%	N/A	2.4%

Under the direct capitalisation method, a significant increase (decrease) in the estimated rental in isolation would result in a significant increase (decrease) in the fair value of the investment property. A significant increase (decrease) in the capitalisation rate in isolation would result in a significant decrease (increase) in the fair value of the investment property.

Under the discounted cash flow method, a significant increase (decrease) in the average daily rate per occupied room, the occupancy rate, the growth rate per annum and the gross operating profit as a percentage of revenue in isolation would result in a significant increase (decrease) in the fair value of the investment property. A significant increase (decrease) in the discount rate in isolation would result in a significant decrease (increase) in the fair value of the investment property.

As at 31 March 2016, 2017, 2018 and 30 September 2018, Nigon’s investment property was pledged to secure general banking facilities granted to Nigon and a related company.

As at 31 March 2018 and 30 September 2018, the Nigon Group’s investment property was pledged to secure general banking facilities granted to the Nigon Group and a related company (notes 17 and 25).

Appendix II(B) - 41

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

12. ACCOUNTS RECEIVABLE

Nigon Group

Accounts receivable Nigon Accounts receivable	2016 HK$ 469,603 2016 HK$ –	As at 31 March 2017 2018 HK$ HK$ 752,050 60,000 As at 31 March 2017 2018 HK$ HK$ – 60,000	As at 30 September 2018 HK$ 6,425,000
			As at 30 September 2018 HK$ 6,425,000

The Nigon Group’s trading terms with its customers are mainly on credit, except for tenants of the Nigon Group’s investment property, where payment in advance is normally required. The Nigon Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. As at 31 March 2016 and 2017, in view of the aforementioned and the fact that the Nigon Group’s accounts receivables related to a number of customers, there is no significant concentration of credit risk. As at 31 March 2018 and 30 September 2018, the outstanding balance represented a rental receivable from a tenant. The Nigon Group does not hold any collateral or other credit enhancements over its accounts receivable balances, except for an amount of HK$60,000 as at 31 March 2018 where the Nigon Group held a rental deposit as collateral. Accounts receivables are non-interest-bearing and repayable on demand.

As at 31 March 2016, 2017 and 2018, the ageing of accounts receivable based on the invoice date, and the ageing of accounts receivable that were not individually or collectively considered to be impaired under HKAS 39 were within one year, respectively. As at 30 September 2018, the ageing of accounts receivable based on the invoice date was within six months.

No impairment for accounts receivable is provided during the Relevant Periods. Receivables that were past due but not impaired relate to an independent customer that has a good track record with the Nigon Group, and a related company. Based on past experience, the directors of Nigon are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

As at 30 September 2018, included in the accounts receivable is an amount due from a related company of HK$6,425,000 which is non-interest-bearing and repayable on demand. A director of Nigon is the beneficiary owner of the related company. The maximum amount outstanding during the six months ended 30 September 2018 amounted to HK$6,425,000.

Appendix II(B) - 42

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

13. PREPAYMENTS AND DEPOSITS

Nigon Group

Prepayments Utility and other deposits Portion classified as current assets Portion classified as non-current assets Nigon Prepayments Utility and other deposits Portion classified as current assets Portion classified as non-current assets	2016 HK$ 33,770 762,221 795,991 (347,455) 448,536 2016 HK$ 33,770 448,536 482,306 (33,770) 448,536	As at 31 March 2017 2018 HK$ HK$ 33,016 – 676,595 598,600 709,611 598,600 (262,611) (82,500) 447,000 516,100 As at 31 March 2017 2018 HK$ HK$ 33,016 – 447,000 598,600 480,016 598,600 (33,016) (82,500) 447,000 516,100	As a 30 September 2018 HK$ 14,629 421,300 435,929 (14,629) 421,300 As at 30 September 2018 HK$ 14,629 421,300 435,929 (14,629) 421,300

Appendix II(B) - 43

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

14. AMOUNT DUE FROM A RELATED COMPANY

Nigon Group and Nigon

Particulars of an amount due from a related company, disclosed pursuant to section 383(1)(d) of the Hong Kong Companies Ordinance and Part 3 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, are as follows:

1 April 2015 Maximum amount outstanding during the year 31 March 2016 Maximum amount outstanding during the year 31 March 2017 Maximum amount outstanding during the year 31 March 2018 Maximum amount outstanding during the period 30 September 2018	Huge Wisdom Limited HK$ 52,293,743 53,590,169 49,122,157 83,313,442 81,077,070 82,311,492 – – –	Full Profit Trading Limited HK$ –
		–
		–
		–
		–
		40,822,700
		40,822,700
		40,822,700
		35,336,663

The then directors of Nigon prior to 15 February 2018 were the shareholders of Huge Wisdom Limited. The balance with the above related company was unsecured, repayable on demand and interest-free, except for an amount of HK$32,143,080 and HK$23,571,720 as at 31 March 2016 and 2017, respectively, that bore interest at Hong Kong Interbank Offered Rate (‘‘HIBOR’’) plus 2.0%. During the year ended 31 March 2018, the entire balance was re-arranged such that the outstanding balance was offset against the shareholders’ loans.

A director of Nigon on and subsequent to 15 February 2018 is the beneficiary owner of Full Profit Trading Limited. The balance with the above related company is unsecured, interest-free and repayable on demand.

Appendix II(B) - 44

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

15. OTHER PAYABLES AND ACCRUALS

Nigon Group

Other payables and accruals Deposits received Portion classified as current liabilities Portion classified as non-current liabilities Nigon Other payables and accruals Deposits received Portion classified as current liabilities Portion classified as non-current liabilities	2016 HK$ 266,894 120,000 386,894 (266,894) 120,000 2016 HK$ 87,456 120,000 207,456 (87,456) 120,000	As at 31 March 2017 2018 HK$ HK$ 314,587 84,006 120,000 120,000 434,587 204,006 (314,587) (204,006) 120,000 – As at 31 March 2017 2018 HK$ HK$ 94,236 84,006 120,000 120,000 214,236 204,006 (94,236) (204,006) 120,000 –	As at 30 September 2018 HK$ 112,755 120,000 232,755 (232,755) – As at 30 September 2018 HK$ 112,755 120,000 232,755 (232,755) –

16. AMOUNT DUE TO THE HOLDING COMPANY

Nigon Group and Nigon

The amount due to the holding company is unsecured, interest-free and repayable on demand.

Appendix II(B) - 45

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

17. INTEREST-BEARING BANK AND OTHER BORROWINGS

Nigon Group

			As at 31 March 2016	As at 31 March 2016				As at 31 March	As at 31 March	2017
		Effective					Effective
		interest rate					interest rate
	per	annum (%)		Maturity		HK$	per annum (%)		Maturity		HK$
Bank overdrafts – unsecured			24.0%	On demand		3,343		24.0%	On demand		62,970
Bank loans – secured	HIBOR + 0.9% and			2016-2028	120,567,080		HIBOR + 0.9% and		2017-2028		104,627,720
	HIBOR		+ 2.0%				HIBOR + 2.0%
Shareholders’ loans – unsecured			–	On demand	204,992,905			–	On demand		216,992,905
					325,563,328						321,683,595
			As at 31 March 2018						As at	30 September 2018
	Effective interest						Effective interest
	rate per		annum				rate per annum
			(%)	Maturity		HK$		(%)	Maturity		HK$
Bank loans – secured	HIBOR + 1.25%			2019-2023	242,100,000		HIBOR +	1.25%	2019-2023		242,100,000
											As at
						As at	31 March			30	September
				2016			2017		2018		2018
				HK$			HK$		HK$		HK$
Analysed into:
Bank overdrafts repayable on demand				3,343			62,970		–		–
Bank loans repayable on demand				120,567,080		104,627,720		242,100,000		242,100,000
Shareholders’ loans repayable on		demand		204,992,905		216,992,905			–		–
				325,563,328		321,683,595		242,100,000		242,100,000

Appendix II(B) - 46

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Nigon

		As at 31 March 2016	As at 31 March 2016				As at 31 March 2017	As at 31 March 2017	As at 31 March 2017
		Effective					Effective
		interest rate				interest rate
	per	annum (%)	Maturity		HK$	per annum (%)		Maturity	HK$
Bank loans – secured	HIBOR + 0.9% and		2016-2028	120,567,080		HIBOR + 0.9% and		2017-2028	104,627,720
	HIBOR + 2.0%					HIBOR + 2.0%
Shareholders’ loans – unsecured		–	On demand	204,992,905			–	On demand	216,992,905
				325,559,985					321,620,625
		As at 31 March 2018					As at 30	September 2018
		Effective					Effective
		interest rate				interest rate
	per	annum (%)	Maturity		HK$	per annum (%)		Maturity	HK$
Bank loans – secured	HIBOR + 1.25%		2019-2023	242,100,000		HIBOR + 1.25%		2019-2023	242,100,000
									As at
					As at	31 March		30 September
			2016			2017		2018	2018
			HK$			HK$		HK$	HK$
Analysed into:
Bank loans repayable on	demand		120,567,080		104,627,720		242,100,000		242,100,000
Shareholders’ loans repayable on		demand	204,992,905		216,992,905			–	–
			325,559,985		321,620,625		242,100,000		242,100,000

Note:

As at 31 March 2016, 2017, 2018 and 30 September 2018, the above bank loans of the Nigon Group and Nigon containing a repayment on-demand clause were classified in total as current liabilities. Accordingly, for the purpose of the above analysis, the bank loans due for repayment after one year is analysed into bank loans repayable on demand as at the end of each of the Relevant Periods.

Appendix II(B) - 47

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

Ignoring the effect of any repayment on-demand clause and based on the maturity terms of the bank borrowings, the bank borrowings are repayable:

Nigon Group

Analysed into: Bank overdrafts repayable on demand Bank loans repayable: Within one year In the second year In the third to fifth years, inclusive Beyond five years Shareholders’ loans repayable on demand	As at 31 March 2016 2017 HK$ HK$ 3,343 62,970 15,939,360 15,939,360 15,939,360 15,939,360 37,104,360 28,533,000 51,584,000 44,216,000 120,567,080 104,627,720 204,992,905 216,992,905 325,563,328 321,683,595	2018 HK$ – – 2,421,000 239,679,000 – 242,100,000 – 242,100,000	As at 30 September 2018 HK$ – 1,210,500 2,421,000 238,468,500 –
			242,100,000
			–
			242,100,000

Nigon

Analysed into: Bank loans repayable: Within one year In the second year In the third to fifth years, inclusive Beyond five years Shareholders’ loans repayable on demand	As at 31 March 2016 2017 HK$ HK$ 15,939,360 15,939,360 15,939,360 15,939,360 37,104,360 28,533,000 51,584,000 44,216,000 120,567,080 104,627,720 204,992,905 216,992,905 325,559,985 321,620,625	2018 HK$ – 2,421,000 239,679,000 – 242,100,000 – 242,100,000	As at 30 September 2018 HK$ 1,210,500 2,421,000 238,468,500 –
			242,100,000
			–
			242,100,000

Appendix II(B) - 48

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Nigon Group and Nigon

Notes:

• (a) As at 31 March 2016 and 2017, all the bank loans were secured by:

• (i) an all monies legal charge over Nigon’s investment property situated in Hong Kong, which had a carrying amount of HK$315,000,000 and HK$366,000,000 as at 31 March 2016 and 2017, respectively (note 11);

• (ii) a share mortgage over the entire issued share capital of Nigon;

• (iii) a subordinated agreement under which the amount owed by Nigon to the then shareholders of Nigon prior to 15 February 2018 was subordinated to the bank loans;

• (iv) an assignment of receivables of Nigon; and

• (v) personal guarantees of HK$200,000,000 provided by the then shareholders of Nigon prior to 15 February 2018.

• (b) As at 31 March 2018, all the bank loans were secured by:

• (i) an all monies first legal charge over Nigon’s investment property situated in Hong Kong, which had a carrying amount of HK$395,000,000 as at 31 March 2018 (note 11);

• (ii) an all monies charge over two properties held by a related company of Nigon, where a director of Nigon is the beneficiary owner of the related company, and a trustee of a director of Nigon, respectively;

• (iii) a first floating charge over all the assets and business undertakings of Nigon;

• (iv) a first floating charge over all the assets and business undertakings of the subsidiary of Nigon;

• (v) an assignment of receivables of Nigon;

• (vi) a charge over account provided by a related company of Nigon, where a director of Nigon is the beneficiary owner of the related company;

• (vii) an assignment of rental proceeds from the properties in note 17(b)(ii) above; and

• (viii) a joint and several personal guarantee of HK$242,100,000 plus interests and charges provided by the directors of Nigon.

• (c) As at 30 September 2018, all the bank loans were secured by:

• (i) an all monies first legal charge over Nigon’s investment property situated in Hong Kong, which had a carrying amount of HK$530,000,000 as at 30 September 2018 (note 11);

• (ii) securities listed in note 17(b)(ii) – (viii) above;

• (iii) an unlimited corporate guarantee provided by a related company of Nigon, where a director of Nigon is the beneficiary owner of the related company; and

• (iv) an all monies first legal charge over a property held by the related company of Nigon in note 17(c)(iii) above.

• (d) All borrowings are in Hong Kong dollars.

Appendix II(B) - 49

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

18. DEFERRED TAX

The movements in deferred tax liabilities and assets during the Relevant Periods are as follows:

Nigon Group

At 1 April 2015 Deferred tax charged/(credited) to the consolidated statement of profit or loss during the year At 31 March 2016 and 1 April 2016 Deferred tax charged/(credited) to the consolidated statement of profit or loss during the year At 31 March 2017 and 1 April 2017 Deferred tax charged/(credited) to the consolidated statement of profit or loss during the year Deferred tax charged to the consolidated statement of comprehensive income during the year Reclassified to the disposal group held for sale At 31 March 2018 and 1 April 2018 Deferred tax charged to the consolidated statement of profit or loss during the period At 30 September 2018	Depreciation allowance in excess of related depreciation HK$ 2,002,371 301,868 2,304,239 301,869 2,606,108 337,619 3,506,956 – 6,450,683 338,878 6,789,561	Losses available for offsetting against future taxable profits HK$ (315,673) (43,047) (358,720) (31,634) (390,354) (126,312) – – (516,666) 26,774 (489,892)	Others HK$ 18,486 (33,364) (14,878) 4,061 (10,817) 46,421 – (35,604) – – –	Total HK$ 1,705,184 225,457 1,930,641 274,296 2,204,937 257,728 3,506,956 (35,604) 5,934,017 365,652 6,299,669

Appendix II(B) - 50

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

For presentation purposes, certain deferred tax assets and liabilities have been offset in the statements of financial position. The following is an analysis of the deferred tax balances of the Nigon Group for financial reporting purposes:

Gross deferred tax assets recognised in the consolidated statements of financial position Net deferred tax liabilities recognised in the consolidated statements of financial position Nigon	2016 HK$ (14,878) 1,945,519	As at 31 March 2017 2018 HK$ HK$ (10,817) – 2,215,754 5,934,017	As at 30 September 2018 HK$ – 6,299,669

At 1 April 2015 Deferred tax charged/(credited) to the statement of profit or loss during the year At 31 March 2016 and 1 April 2016 Deferred tax charged/(credited) to the statement of profit or loss during the year At 31 March 2017 and 1 April 2017 Deferred tax charged/(credited) to the statement of profit or loss during the year At 31 March 2018 and 1 April 2018 Deferred tax charged to the statement of profit or loss during the period At 30 September 2018	Depreciation allowance in excess of related depreciation HK$ 4,687,079 587,868 5,274,947 587,868 5,862,815 587,868 6,450,683 338,878 6,789,561	Losses available for offsetting against future taxable profits HK$ (315,673) (43,047) (358,720) (31,634) (390,354) (126,312) (516,666) 26,774 (489,892)	Total HK$ 4,371,406 544,821
			4,916,227 556,234
			5,472,461 461,556
			5,934,017 365,652
			6,299,669

Appendix II(B) - 51

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Nigon Group and Nigon

The Nigon Group/Nigon had tax losses arising in Hong Kong of HK$2,174,061, HK$2,365,780, HK$3,131,310 and HK$2,969,042 as at the end of each of the Relevant Periods, subject to the agreement by the Hong Kong Inland Revenue Department, that are available indefinitely for offsetting against future taxable profits, and have been fully recognised as deferred tax assets as at the end of each of the Relevant Periods.

19. SHARE CAPITAL

Shares

Amount of issued and fully paid shares	2016 HK$ 100	As at 31 March 2017 2018 HK$ HK$ 100 100	As at 30 September 2018 HK$ 100

A summary of movements in Nigon’s share capital as follows:

At 1 April 2015, 31 March 2016, 1 April 2016, 31 March 2017, 1 April 2017, 31 March 2018, 1 April 2018 and 30 September 2018	Number of shares in issue 100	Share capital HK$ 100

20. RESERVES

• (a) The amounts of the Nigon Group’s reserves and the movements therein for each of the Relevant Periods are presented in the consolidated statements of changes in equity on pages Appendix II(B)-8 to Appendix II(B)-9 of the Historical Financial Information.

Appendix II(B) - 52

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

• (b) A summary of Nigon’s retained profits is as follows:

At 1 April 2015 Loss and total comprehensive loss for the year At 31 March 2016 and 1 April 2016 Profit and total comprehensive income for the year At 31 March 2017 and 1 April 2017 Profit and total comprehensive income for the year At 31 March 2018 and 1 April 2018 Profit and total comprehensive income for the period At 30 September 2018	HK$ 71,991,840 (5,242,880)
	66,748,960 53,814,884
	120,563,844 31,335,752
	151,899,596 136,424,819
	288,324,415

21. INVESTMENT IN THE SUBSIDIARY/AMOUNT DUE TO THE SUBSIDIARY

Unlisted investment, at cost	2016 HK$ 10,000	As at 31 March 2017 2018 HK$ HK$ 10,000 10,000	As at 30 September 2018 HK$ 10,000

Particulars of the subsidiary as at 30 September 2018 are set out in note 1 to the Historical Financial Information.

As at the end of each of the Relevant Periods, the amount due to the subsidiary is unsecured, interest-free and repayable on demand.

22. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

• (a) Other non-cash transactions

• (i) On 5 February 2018, the entire amount due from a related company was re-arranged such that the outstanding balance of HK$82,311,492 was offset against the shareholders’ loans.

• (ii) On 15 February 2018, the entire shareholders’ loans amounting to HK$229,760,303 were re-assigned to the holding company of Nigon under several deeds of assignment of loans.

Appendix II(B) - 53

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

• (b) Change in liabilities arising from financing activities

At 1 April 2015 Changes from financing cash flows At 31 March 2016 and 1 April 2016 Changes from financing cash flows At 31 March 2017 and 1 April 2017 Changes from financing cash flows Offset against an amount due from a related company Offset between shareholders’ loans and an amount due to the holding company At 31 March 2018 and 1 April 2018 Changes from financing cash flows Changes from financing cash flows attributable to a discontinued operation At 30 September 2018	Interest- bearing bank and other borrowings HK$ 299,499,345 26,060,640 325,559,985 (3,939,360) 321,620,625 232,551,170 (82,311,492) (229,760,303) 242,100,000 – – 242,100,000	Due to the holding company HK$ – – – – – (197,500,000) – 229,760,303 32,260,303 (297,921) (202,079) 31,760,303

23. OPERATING LEASE ARRANGEMENTS

As lessor

During the years ended 31 March 2016, 2017 and period up to 14 February 2018, the Nigon Group leases an insignificant portion of its hotel property (note 10) under an operating lease arrangement, with a lease negotiated for a term of three years. The term of the lease also required the tenant to pay a security deposit and provided for periodic rental adjustments according to the then prevailing market conditions.

During the year ended 31 March 2018 (commenced after 14 February 2018) and six months ended 30 September 2018, the Nigon Group leases its investment property (note 11) under operating lease arrangements, with one of the leases negotiated for a term of three years whereas no formal agreement is entered into for another lease. The term of the former lease also requires the tenant to pay a security deposit and provides for periodic rental adjustments according to the then prevailing market conditions.

Appendix II(B) - 54

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

The Nigon Group had total future minimum lease receivables under a non-cancellable operating lease with a third party falling due as follows:

Within one year In the second to fifth years, inclusive	2016 HK$ 480,000 569,333 1,049,333	As at 31 March 2017 2018 HK$ HK$ 480,000 89,333 89,333 – 569,333 89,333	As at 30 September 2018 HK$ 89,333 –
			89,333

24. CONTINGENT LIABILITY

As at 30 September 2018, a contingent liability not provided for in the financial statements included an unlimited guarantee given to a bank in connection with a facility granted to a related company where a director of Nigon is the beneficiary owner of the related company. The banking facility guaranteed by the Nigon Group to the related company was utilised to the extent of HK$75,000,000.

As at 31 March 2016, 2017 and 2018, neither the Nigon Group nor Nigon had any significant contingent liabilities.

25. RELATED PARTY TRANSACTIONS

• (a) In addition to the transactions, balances and arrangements detailed elsewhere in the Historical Financial Information, the Nigon Group had the following material transactions with related parties during the Relevant Periods and the period covered by the Interim Comparative Financial Information:

Notes Related companies Rental income (i) Interest income (ii)	Years ended 31 March 2016 2017 2018 HK$ HK$ HK$ – – – 828,414 654,913 434,422	Six months ended 30 September 2017 2018 HK$ HK$ (Unaudited) – 6,425,000 262,734 –

• (i) During the six months ended 30 September 2018, rental income was earned from a related company under mutually agreed terms. A director of Nigon is the beneficiary owner of the related company. During the year ended 31 March 2018 and six months ended 30 September 2018, no rental income was received from the related company with respect to the leased investment property for a period of 1.5 months and 1 month, respectively.

Appendix II(B) - 55

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

APPENDIX II(B)

• (ii) During the years ended 31 March 2016, 2017 and 2018 and the six months ended 30 September 2017, interest income were earned from a related company at an interest rate of HIBOR plus 2.0%. The then directors of Nigon prior to 15 February 2018, were the shareholders of the related company.

• (b) No compensation was paid to the key management personnel of Nigon in respect of their services rendered to Nigon during the Relevant Periods and the period covered by the Interim Comparative Financial Information.

26. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant Periods are as follows:

Nigon Group

Accounts receivable Financial assets included in prepayments and deposits Due from a related company Bank balance Trade payables Other payables and accruals Due to the holding company Interest-bearing bank and other borrowings	2016 HK$ 469,603 720,685 49,122,157 37,623,636 87,936,081 2016 HK$ 1,168,986 386,894 – 325,563,328 327,119,208	Loan and receivables/ Financial assets at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 752,050 60,000 6,425,000 636,595 421,300 421,300 81,077,070 40,822,700 35,336,663 6,086,743 3,600,000 4,202,928 88,552,458 44,904,000 46,385,891 Financial liabilities at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 1,219,517 – – 434,587 204,006 232,755 – 32,260,303 31,760,303 321,683,595 242,100,000 242,100,000 323,337,699 274,564,309 274,093,058	Loan and receivables/ Financial assets at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 752,050 60,000 6,425,000 636,595 421,300 421,300 81,077,070 40,822,700 35,336,663 6,086,743 3,600,000 4,202,928 88,552,458 44,904,000 46,385,891 Financial liabilities at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 1,219,517 – – 434,587 204,006 232,755 – 32,260,303 31,760,303 321,683,595 242,100,000 242,100,000 323,337,699 274,564,309 274,093,058
			274,093,058

Appendix II(B) - 56

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Nigon

Accounts receivable Financial assets included in prepayments and deposits Due from a related company Bank balance Other payables and accruals Due to the subsidiary Due to the holding company Interest-bearing bank and other borrowings	2016 HK$ – 407,000 49,122,157 37,580,136 87,109,293 2016 HK$ 207,456 4,761,871 – 325,559,985 330,529,312	Loan and receivables/ Financial assets at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ – 60,000 6,425,000 407,000 421,300 421,300 81,077,070 40,822,700 35,336,663 6,043,243 3,600,000 4,202,928 87,527,313 44,904,000 46,385,891 Financial liabilities at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 214,236 204,006 232,755 5,739,063 7,693,278 7,693,278 – 32,260,303 31,760,303 321,620,625 242,100,000 242,100,000 327,573,924 282,257,587 281,786,336	Loan and receivables/ Financial assets at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ – 60,000 6,425,000 407,000 421,300 421,300 81,077,070 40,822,700 35,336,663 6,043,243 3,600,000 4,202,928 87,527,313 44,904,000 46,385,891 Financial liabilities at amortised cost As at 31 March As at 30 September 2017 2018 2018 HK$ HK$ HK$ 214,236 204,006 232,755 5,739,063 7,693,278 7,693,278 – 32,260,303 31,760,303 321,620,625 242,100,000 242,100,000 327,573,924 282,257,587 281,786,336
			281,786,336

27. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of accounts receivable, financial assets included in prepayments and deposits, bank balance, trade payables, other payables and accruals, balances with the holding company, subsidiary and related companies and interest-bearing bank and other borrowings reasonably approximate to their carrying amounts largely due to the short term maturities of these instruments or because the effect of discounting is not material.

The fair value of the non-current portion of other payables has been calculated by discounting the expected future cash flows using rates currently available for instruments on similar terms, credit risk and remaining maturities. The Nigon Group’s and Nigon’s own non-performance risk for interest-bearing bank and other borrowings was assessed to be insignificant.

Appendix II(B) - 57

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Nigon Group’s and Nigon’s principal financial instruments, comprise accounts receivable, interest-bearing bank and other borrowings and bank balance. The main purpose of these financial instruments is to provide finance for the Nigon Group’s and Nigon’s operations. The Nigon Group and Nigon have various other financial assets and liabilities including balances with the holding company, subsidiary and related companies, financial assets included in prepayments and deposits, trade payables and other payables and accruals, which arise directly from its operations.

The main risks arising from the Nigon Group’s and Nigon’s financial instruments are interest rate risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Nigon Group and Nigon are exposed to the risk of changes in market interest rates. Interest rate risk originates from changes in the floating rates with respect to the Nigon Group’s and Nigon’s interest-bearing bank and other borrowings. The Nigon Group and Nigon manage and reduce the Nigon Group’s and Nigon’s exposure to interest rate changes and the overall interest cost.

The following table summarises the sensitivity to changes in interest rates for interest-bearing bank and other borrowings with significant balances at the end of each of the Relevant Periods, with all other variables held constant, of the Nigon Group’s and Nigon’s profit/(loss) before tax.

Nigon Group

2016 HK$ HK$ 2017 HK$ HK$	Increase/ (decrease) in basis points 50 (50) 50 (50)	Increase/ (decrease) in loss before tax HK$ 602,835 (602,835) 523,139 (523,139)

Appendix II(B) - 58

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

2018 HK$ HK$ Six months ended 30 September 2018 HK$ HK$ Nigon 2016 HK$ HK$	Increase/ (decrease) in basis points 50 (50) Increase/ (decrease) in basis points 50 (50) Increase/ (decrease) in basis points 50 (50)	Increase/ (decrease) in loss before tax HK$ 1,210,500 (1,210,500) Increase/ (decrease) in loss before tax HK$ (605,250) 605,250 Increase/ (decrease) in loss before tax HK$ 602,835 (602,835)

Appendix II(B) - 59

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

2017 HK$ HK$ 2018 HK$ HK$ Six months ended 30 September 2018 HK$ HK$	Increase/ (decrease) in basis points 50 (50) 50 (50) 50 (50)	Increase/ (decrease) in loss before tax HK$ (523,139) 523,139 (1,210,500) 1,210,500 (605,250) 605,250

Credit risk

Credit risk is the risk of an economic loss resulting from the failure of one of the Nigon Group’s and Nigon’s customers to make payment when due. The Nigon Group and Nigon mitigate credit risk by formulating detailed credit policies, performing credit analysis on potential customers and where applicable, establishing risk sharing arrangements with other partners.

Maximum exposure as at 31 March 2016, 2017 and 2018

The credit risk of the Nigon Group’s and Nigon’s financial assets, which comprise bank balance, accounts receivable, financial assets included in prepayments and deposits and amount due from a related company, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Appendix II(B) - 60

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Maximum exposure as at 30 September 2018

The table below shows the credit quality and the maximum exposure to credit risk based on the Nigon Group’s and Nigon’s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 30 September 2018. The amounts presented are gross carrying amounts for financial assets.

Accounts receivable Financial assets included in prepayments and deposits – Normal Amount due from a related company – Normal* Bank balance – Not yet past due	ECLs Stage 1 HK$ – 421,300 35,336,663 4,202,928 39,960,891	Lifetime ECLs Stage 2 Stage 3 HK$ HK$ – – – – – – – – – –	Simplified approach HK$ 6,425,000 – – – 6,425,000	HK$ 6,425,000 421,300 35,336,663 4,202,928
				46,385,891

• For accounts receivable to which the Nigon Group applies the simplified approach for impairment, information is disclosed in note 12 to the Historical Financial Information.

• ** The credit quality of the financial assets included in prepayments and deposits and amount due from a related company is considered to be ‘‘normal’’ when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered to be ‘‘doubtful’’.

At the end of each of the Relevant Periods, the Nigon Group and Nigon had concentration of credit risk as 100% and 100% of the Nigon Group’s and Nigon’s accounts receivables as at 31 March 2018 and 30 September 2018, respectively, were due from the Nigon Group’s and Nigon’s third party tenant and related company.

Liquidity risk

Liquidity risk is the risk of not having access to sufficient funds to meet the Nigon Group’s and Nigon’s obligations as they become due. The Nigon Group’s and Nigon’s management monitors and maintains a level of bank balance deemed adequate by management to finance the Nigon Group’s and Nigon’s operations and mitigates the effects of fluctuations in cash flows. Its objective is to maintain a balance between the continuity of funding and the flexibility through the use of bank and other borrowings. Banking facilities have therefore been put in place for contingency purposes.

Appendix II(B) - 61

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

The maturity profile of the Nigon Group’s and Nigon’s financial liabilities as at the end of each of the Relevant Periods, based on the contractual undiscounted amounts, is as follows:

Nigon Group

Financial liabilities Trade payables Other payables and accruals Interest-bearing bank and other borrowings (note) Financial liabilities Trade payables Other payables and accruals Interest-bearing bank and other borrowings (note) Financial liabilities Other payables and accruals Amount due to the holding company Interest-bearing bank borrowings (note)	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,168,986 – 1,168,986 266,894 120,000 386,894 325,563,328 – 325,563,328 326,999,208 120,000 327,119,208 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,219,517 – 1,219,517 314,587 120,000 434,587 321,683,595 – 321,683,595 323,217,699 120,000 323,337,699 As at 31 March 2018 Within one year or on demand HK$ 204,006 32,260,303 242,100,000 274,564,309	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,168,986 – 1,168,986 266,894 120,000 386,894 325,563,328 – 325,563,328 326,999,208 120,000 327,119,208 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,219,517 – 1,219,517 314,587 120,000 434,587 321,683,595 – 321,683,595 323,217,699 120,000 323,337,699 As at 31 March 2018 Within one year or on demand HK$ 204,006 32,260,303 242,100,000 274,564,309	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,168,986 – 1,168,986 266,894 120,000 386,894 325,563,328 – 325,563,328 326,999,208 120,000 327,119,208 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,219,517 – 1,219,517 314,587 120,000 434,587 321,683,595 – 321,683,595 323,217,699 120,000 323,337,699 As at 31 March 2018 Within one year or on demand HK$ 204,006 32,260,303 242,100,000 274,564,309	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,168,986 – 1,168,986 266,894 120,000 386,894 325,563,328 – 325,563,328 326,999,208 120,000 327,119,208 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 1,219,517 – 1,219,517 314,587 120,000 434,587 321,683,595 – 321,683,595 323,217,699 120,000 323,337,699 As at 31 March 2018 Within one year or on demand HK$ 204,006 32,260,303 242,100,000 274,564,309
				323,337,699
				As at 31 March 2018 Within one year or on demand HK$ 204,006 32,260,303 242,100,000
				274,564,309

Appendix II(B) - 62

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Financial liabilities Other payables and accruals Amount due to the holding company Interest-bearing bank borrowings (note) Guarantee given to bank in connection with a facility granted to a related company	As at 30 September 2018 Within one year or on demand HK$ 232,755 31,760,303 242,100,000 75,000,000
	349,093,058

Nigon

Financial liabilities Other payables and accruals Amount due to the subsidiary Interest-bearing bank and other borrowings (note) Financial liabilities Other payables and accruals Amount due to the subsidiary Interest-bearing bank and other borrowings (note)	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 87,456 120,000 207,456 4,761,871 – 4,761,871 325,559,985 – 325,559,985 330,409,312 120,000 330,529,312 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 94,236 120,000 214,236 5,739,063 – 5,739,063 321,620,625 – 321,620,625 327,453,924 120,000 327,573,924	As at 31 March 2016 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 87,456 120,000 207,456 4,761,871 – 4,761,871 325,559,985 – 325,559,985 330,409,312 120,000 330,529,312 As at 31 March 2017 Within one year or on demand In the second to fifth years Total HK$ HK$ HK$ 94,236 120,000 214,236 5,739,063 – 5,739,063 321,620,625 – 321,620,625 327,453,924 120,000 327,573,924
		327,573,924

Appendix II(B) - 63

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

Financial liabilities Other payables and accruals Amount due to the subsidiary Amount due to the holding company Interest-bearing bank borrowings (note) Financial liabilities Other payables and accruals Amount due to the subsidiary Amount due to the holding company Interest-bearing bank borrowings (note) Guarantee given to bank in connection with a facility granted to a related company	As at 31 March 2018 Within one year or on demand HK$ 204,006 7,693,278 32,260,303 242,100,000
	282,257,587
	As at 30 September 2018 Within one year or on demand HK$ 232,755 7,693,278 31,760,303 242,100,000 75,000,000
	356,786,336

Note:

Included in the above interest-bearing bank and other borrowings of the Nigon Group and Nigon are total bank loans with carrying amounts as at 31 March 2016, 2017, 2018 and 30 September 2018 of HK$120,567,080, HK$104,627,720, HK$242,100,000 and HK$242,100,000, respectively, the banking facility letters of which contain a repayment on-demand clause giving the creditor banks of the bank loans the right to call in the bank loans at any time. Accordingly, for the purpose of the above maturity profile, the contractual undiscounted payment of such bank loans of the Nigon Group and Nigon totaling HK$120,567,080, HK$104,627,720, HK$242,100,000 and HK$242,100,000, respectively, at the end of each of the Relevant Periods are classified as ‘‘on demand’’.

Notwithstanding the above clause, the directors do not believe that such bank loans will be called in entirety within 12 months at the end of each of the Relevant Periods and they consider that the loans will be repaid in accordance with the maturity dates as set out in the banking facility letters. This evaluation was made considering: the financial position of the Nigon Group at the date of approval of the Historical Financial Information; the lack of events of defaults, and the fact that the Nigon Group has made all previously scheduled repayments on time.

Appendix II(B) - 64

APPENDIX II(B)

ACCOUNTANTS’ REPORT OF THE NIGON GROUP

In accordance with the terms of the bank loans which contain a repayment on-demand clause, the maturity profile of those loans as at the end of each of the Relevant Periods, based on the contractual undiscounted payments and ignoring the effect of any repayment on demand clause, is as follows:

Nigon Group and Nigon

31 March 2016 31 March 2017 31 March 2018 30 September 2018	Within one year HK$ 17,502,351 17,462,883 5,922,371 9,759,926	In the second to fifth years HK$ 56,736,990 48,004,409 265,345,307 270,194,944	Beyond five years HK$ 53,641,209 46,060,943 – –	Total HK$ 127,880,550 111,528,235 271,267,678 279,954,870

Capital management

The Nigon Group’s and Nigon’s main objectives of capital management are to ensure that it maintains a solid and stable financing structure to support its ongoing business growth so that it can continue to maximise shareholders’ return and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Nigon Group and Nigon manages its capital structure by taking into account various factors including future strategic investment opportunities, capital requirements, capital efficiency, projected operating profitability, cash flows and capital expenditures. The Nigon Group and Nigon manage the capital structure and make adjustments to it in light of changes in economic environment and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Nigon Group and Nigon may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Nigon Group and Nigon are not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during the Relevant Periods.

Capital of the Nigon Group and Nigon comprises all components of shareholders’ equity.

29. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Nigon or its subsidiary in respect of any period subsequent to 30 September 2018.

Appendix II(B) - 65

APPENDIX III(A)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

Following the Proposed Disposal, the Remaining Group will continue to carry out its existing businesses. Set out below are the management discussion and analysis on the Remaining Group for the three years ended 31 December 2015, 2016 and 2017 and during the six months ended 30 June 2018.

Segmental information

The Group is organised into business units based on their products and services and has four reportable operating segments as follows:

• (a) the paint products segment engages in the manufacture and sale of paint products;

• (b) the property investment segment comprises:

• (i) the investment in residential, commercial and industrial premises for their rental income potential; and

• (ii) the development and sale of properties;

• (c) the iron and steel trading segment comprises the trading of iron and steel products and related investments; and

• (d) the others segment comprises, principally, investment holding.

The chief operating decision-maker regularly reviews the operating results of the Remaining Group’s operating segments separately for the purpose of resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before tax is measured consistently with the Remaining Group’s profit before tax except that interest income, fair value gains on structured deposit, finance costs, as well as head office and corporate expenses are excluded from such measurement.

A summary of the revenue and segment profit or loss of each business segment of the Remaining Group for the three years ended 31 December 2015, 2016 and 2017 and during the six months ended 30 June 2018 is as follows:

				Iron and
		Paint	Property	steel
2015		products	investment	trading	Others	Total
		HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue		868.00	6.92	212.28	–	1,087.20
Segment	profit/(loss)	54.64	34.61	(0.66)	1.91	90.50

For the year ended 31 December 2015, revenue of the Remaining Group was approximately HK$1,087.20 million, which was mainly derived from sales of paint products and trading of iron and steel products in Hong Kong and the PRC. During 2015, the Remaining Group recorded total segment profit of approximately HK$90.50 million, which was mainly attributed by the segment profit from paint business in Hong Kong and the PRC and the net fair value gain on the investment properties.

Appendix III(A) - 1

APPENDIX III(A)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

				Iron and
		Paint	Property	steel
2016		products	investment	trading	Others	Total
		HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue		937.45	7.05	193.30	–	1,137.80
Segment	profit	69.71	14.85	4.38	0.08	89.02

For the year ended 31 December 2016, revenue of the Remaining Group increased by approximately 4.7% to HK$1,137.80 million as compared to the previous year. The increase was mainly resulted from increase in sales of paint products in Hong Kong and the PRC. During 2016, the Remaining Group recorded total segment profit of approximately HK$89.02 million, representing a decrease of about 1.6% as compared to the previous year. Despite the significant increase in segment profit from paint business by HK$15.07 million, the decrease in net fair value gains of the investment properties of approximately HK$12.45 million and the incurrence of legal and professional fees of approximately HK$6.42 million related to appealing the rejected proposed columbarium development in Au Tau, Yuen Long, Hong Kong rendered the decrease in total segment profit for 2016.

				Iron and
		Paint	Property	steel
2017		products	investment	trading	Others	Total
		HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue		995.96	7.99	198.39	–	1,202.34
Segment	profit/(loss)	21.65	16.49	3.55	(0.23)	41.46

For the year ended 31 December 2017, revenue of the Remaining Group increased by approximately 5.7% to HK$1,202.34 million as compared to the previous year. The increase was mainly resulted from the increase in sales of paint products in Hong Kong and the PRC. During 2017, the Remaining Group recorded total segment profit of approximately HK$41.46 million, representing a significant decrease of about 53.4% as compared to the previous year. The significant decrease in total segment profit was mainly due to the decrease in gross profit margin of paint business. Despite the increase in revenue by 6.2% from paint business, the gross profit margin decreased by 6.2 percentage point from 37.1% in 2016 to 30.9% in 2017. The decrease in gross profit margin was mainly due to the significant increase in the costs of major raw materials. As a result, the segment profit from paint business was decreased significantly from HK$69.71 million in 2016 to HK$21.65 million in 2017.

Appendix III(A) - 2

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

APPENDIX III(A)

			Iron and
Six months ended	Paint	Property	steel
30 June 2018	products	investment	trading	Others	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue	251.49	5.37	39.13	–	295.99
Segment profit/(loss)	(71.64)	15.81	(2.04)	(1.04)	(58.91)

For the six months ended 30 June 2018, revenue of the Remaining Group decreased by approximately 38.2% to HK$295.99 million as compared to the last corresponding period. The decrease was mainly resulted from the decrease in revenue from the trading of iron and steel products and sales of paint products. During the six months ended 30 June 2018, the Remaining Group recorded total segment loss of approximately HK$58.91 million, representing a significant increase in loss of about 361.4% as compared to the last corresponding period. The significant increase in total segment loss was mainly due to the decrease in revenue and gross profit margin of paint business. In addition to the decrease in revenue from paint business by 34.5%, the gross profit margin of paint business decreased by 5.4 percentage point from 28.0% in 2017 to 22.6% in 2018. The significant decrease in gross profit margin was mainly due to the decrease in amount of revenue and the increase in the raw materials prices and fixed production overheads incurred. As a result, the segment loss from paint business significantly increased from HK$19.48 million in 2017 to HK$71.64 million in 2018.

Liquidity, financial resources and capital commitments

The Remaining Group’s assets portfolio was mainly financed by its shareholders’ funds and bank borrowings. Details of the bank and other borrowings of the Remaining Group as at 31 December 2015, 2016 and 2017 and 30 June 2018 are set forth below. Bank and other borrowings of the Remaining Group were mainly denominated in Hong Kong dollars, United States dollars and Euro.

						As at
		As at 31 December				30 June
	2015		2016		2017	2018
	HK$ million	HK$ million		HK$	million	HK$ million
Shareholders’ funds of the Remaining
Group	1,218.12		1,201.02	1,281.84		1,169.02
Adjusted capital of the Remaining Group
(Note)	1,176.35		1,159.25	1,241.69		1,128.87
Bank and other borrowings of the
Remaining Group	205.35		165.92		133.55	231.32

Note: Adjusted capital (the ‘‘Adjusted Capital’’) of the Remaining Group is the shareholders’ funds less the unrealised leasehold land and building revaluation reserve and investment property revaluation reserve.

Appendix III(A) - 3

APPENDIX III(A)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

As at 31 December 2016, both the shareholders’ fund and adjusted capital of the Remaining Group slightly decreased by 1.4% and 1.5% respectively when compared with 2015. Such decrease was mainly due to the net-off effect on profit for the year and the exchange loss on translation of foreign operations. As at 31 December 2017, the shareholders’ fund and adjusted capital of the Remaining Group increased by 6.7% and 7.1% respectively when compared with 2016. Such increase was mainly due to the combined effect on profit for the year and the exchange gain on translation of foreign operations.

As at 30 June 2018, the shareholders’ fund and adjusted capital of Remaining Group decreased by 8.8% and 9.1% respectively when compared with 31 December 2017. Such decrease was mainly due to the combined effect on total comprehensive loss for the period, 2017 dividend declared and paid of HK$19.04 million and recognition of an additional impairment on trade receivables of HK$27.40 million and fair value adjustments of HK$15.26 million of certain unlisted equity investments previously stated as cost less impairment to fair value reserve (non-recycling) as at 1 January 2018 upon the adoption of HKFRS 9.

As at 31 December 2016, the bank and other borrowings of the Remaining Group decreased by 19.2% when compared with 2015. The decrease was mainly due to repayment of bank loans. As at 31 December 2017, the bank and other borrowings of the Remaining Group decreased by 19.5% when compared with 2016. The decrease was mainly due to repayment of bank loans. As at 30 June 2018, the bank and other borrowings of the Remaining Group increased by 73.2% when compared with 31 December 2017. The significant increase was mainly due to the new bank loan drawn for the acquisition of the entire equity interest in China Molybdenum & Vanadium Development Limited and the use of working capital during the period.

The terms of the Remaining Group’s bank and other borrowings varied from less than one year to five years. Based on the agreed scheduled repayment dates in the respective loan agreements and considering the effect of any repayment on demand clause, the Remaining Group’s bank and other borrowings were repayable:

			As at 31	December	December			As at 30	June
	2015		2016			2017		2018
	HK$		HK$			HK$		HK$
	million	%	million		%	million	%	million	%
Within one year or on
demand	189.21	92.1	154.32		93.0	132.52	99.2	178.47	77.2
In the second year	5.96	2.9	6.25		3.8	0.41	0.3	52.41	22.6
In the third to fifth
years	10.18	5.0	5.35		3.2	0.62	0.5	0.44	0.2
	205.35	100.0	165.92	100.0		133.55	100.0	231.32	100.0

The effective interest rates per annum applied to bank borrowings ranged from 0.4% to 7.2%. and the effective interest rates per annum applied to the finance lease payables ranged from 2.5% to 8.8%.

Appendix III(A) - 4

APPENDIX III(A)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

The cash and cash equivalents of the Remaining Group amounted to HK$275.18 million, HK$264.93 million, HK$378.34 million and HK$233.13 million as at 31 December 2015, 31 December 2016, 31 December 2017 and 30 June 2018 respectively, mainly denominated in Renminbi, Hong Kong dollars and United States dollars.

As at 31 December 2016, the cash and cash equivalents of the Remaining Group slightly decreased by 3.7% when compared with 2015. The increase of cash and cash equivalents of the Remaining Group in 2017 was mainly due to the net proceeds of approximately HK$162.8 million raised by the spin-off and the global offering of CPM Group on the main board of the Stock Exchange in July 2017. The proceeds has been fully utilised for financing the expansion of the Remaining Group. As at 30 June 2018, the cash and cash equivalents of the Remaining Group decreased by 38.4% when compared with 31 December 2017. The decrease of cash and cash equivalents of the Remaining Group in 2018 was mainly due to: (i) deposits paid for acquisition of property, plant and equipment; (ii) earnest money paid for acquisition of paint business or production assets; and (iii) use of working capital.

As at 31 December 2015, 2016 and 2017, capital commitments of the Remaining Group amounted to HK$25.36 million, HK$11.57 million and HK$24.00 million, respectively. These capital commitments mainly related to the construction and purchases of items of property, plant and equipment for the Remaining Group’s paint business.

As at 31 December 2016, the capital commitments of the Remaining Group decreased by 54.4% when compared with 2015. It was mainly due to the decrease in capital commitments for purchases of items of property, plant and equipment in respect of production plants of paint business. As at 31 December 2017, the capital commitments of the Remaining Group increased by 107.4% when compared with 2016. It was mainly due to the increase in capital commitments for purchases of items of property, plant and equipment in respect of production plants of paint business. As at 30 June 2018, capital commitments of the Remaining Group amounted to HK$39.45 million. These capital commitments mainly related to the construction, purchases of items of property, plant and equipment and acquisition of new subsidiaries for the Remaining Group’s paint business. As at 30 June 2018, the increase in capital commitments of the Remaining Group by 64.4% as compared with 2017 was mainly due to the increase in capital commitments for acquisition of new subsidiaries for paint business.

Employees and remuneration policies

The Remaining Group had 1,118, 1,050, 1,037 and 988 employees as at 31 December 2015, 2016, 2017 and 30 June 2018 respectively. The staff cost (including directors’ emoluments) of the Remaining Group for the three years ended 31 December 2015, 2016, 2017 and during the six months ended 30 June 2018 was HK$180.06 million, HK$188.20 million, HK$184.32 million and HK$83.91 million, respectively.

The Remaining Group has a comprehensive and competitive staff remuneration and benefits system which is formulated based on the performance of individual employees. In addition, the Remaining Group also provides a staff option scheme.

Appendix III(A) - 5

APPENDIX III(A)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE REMAINING GROUP

Charges on group assets

As at 31 December 2015, 2016, 2017 and 30 June 2018 the Remaining Group had pledged its assets including land and buildings, investment properties, and cash deposits with aggregate carrying value of HK$321.36 million, HK$247.27 million, HK$255.82 million and HK$259.81 million, respectively to secure banking facilities granted to subsidiaries of the Remaining Group.

Gearing ratio

Gearing ratio of the Remaining Group was expressed as a percentage of bank and other borrowings to Adjusted Capital (as defined above). As at 31 December 2015, 2016, 2017 and 30 June 2018, the gearing ratio of the Remaining Group was 17.5%, 14.3%, 10.8% and 20.5%, respectively.

Contingent liabilities

As at 31 December 2015, 2016, 2017 and 30 June 2018 the banking facilities granted to various subsidiaries subject to guarantees given to banks by the Company were utilised to the extent of approximately HK$214.53 million, HK$171.68 million, HK$42.64 million and HK$47.27 million respectively.

Funding and Treasury Policy

The Remaining Group adopts a prudent approach on its funding and treasury policy, which aims at maintaining an optimal financial position for the Remaining Group and minimising its financial risks. The Remaining Group regularly reviews the funding requirements to ensure there are adequate financial resources to support its business operations and future investments as and when needed.

Foreign Currency Exposure

The Remaining Group’s cash, bank balances and bank and other borrowings were mainly denominated in Hong Kong Dollars and Renminbi. The Remaining Group’s results can be affected by movements in the exchange rate between Hong Kong Dollars and Renminbi. The Remaining Group did not have any hedging instrument to hedge the foreign currency exposure as at 31 December 2015, 2016, 2017 and 30 June 2018. The Remaining Group will continue to monitor its foreign currency exposure and requirements closely and arrange hedging facilities when necessary.

Appendix III(A) - 6

APPENDIX III(B)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE NIGON GROUP

The following management discussion and analysis is based on the consolidated financial information for the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and during the six months ended 30 September 2018 included in the accountants’ report of Nigon Group as set forth in the Appendix II(B) headed ‘‘Accountants’ Reports of the Nigon Group’’ to this circular.

Business Review

Nigon is a company incorporated in Hong Kong with limited liability on 15 May 2007 and is principally engaged in investment holding, property investment and letting of properties. Lead Creation is a company incorporated in Hong Kong with limited liability on 25 February 2005 and is principally engaged in hotel operation. On 30 November 2018, Nigon has disposed of the entire issued share capital of Lead Creation to Mr. Tang. Since then, the Wan Chai Property has been the only major asset held by Nigon. Based on the information provided by Jetco, it acquired the entire issued share capital of Nigon in February 2018. As far as the Directors are aware of, there was no other material acquisition and/or disposal by Nigon Group during the years ended 31 March 2016, 31 March 2017 and 31 March 2018 and during the six months ended 30 September 2018 respectively.

Financial Review

(a) Segmental information

The Nigon Group was organised into business units based on their services and had two reportable operating segments as follows:

• (a) the property investment and letting of the property; and

• (b) hotel operation.

A summary of the revenue and profit or loss of each business segment of the Nigon Group for the three years ended 31 March 2016, 2017 and 2018 and during the six months ended 30 September 2018 is as follows:

				Property	Hotel
2016				investment	operation	Total
				HK$ million	HK$ million	HK$ million
Revenue				0.43	16.06	16.49
Profit/(loss)	for	the	year	(6.37)	3.76	(2.61)

Appendix III(B) - 1

APPENDIX III(B)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE NIGON GROUP

For the year ended 31 March 2016, revenue of the Nigon Group was approximately HK$16.49 million, which was derived from letting of the property and hotel operation. During the year ended 31 March 2016, the Nigon Group recorded a loss of approximately HK$2.61 million, which was mainly attributed to the loss from property investment in Hong Kong.

				Property	Hotel
2017				investment	operation	Total
				HK$ million	HK$ million	HK$ million
Revenue				0.48	14.47	14.95
Profit/(loss)	for	the	year	(6.31)	4.63	(1.68)

For the year ended 31 March 2017, revenue of the Nigon Group decreased by approximately 9.3% to HK$14.95 million as compared to the previous year. The decrease was mainly resulted from decrease of service income from hotel operation, as the average room rate decreased by 11.8% in March 2017 when compared with the rate in March 2016. During the year ended 31 March 2017, the Nigon Group recorded a loss of approximately HK$1.68 million, representing an decrease of about 35.6% as compared to the previous year. The decrease in loss was mainly due to the decrease in depreciation from hotel operation during 2017.

				Property	Hotel
2018				investment	operation	Total
				HK$ million	HK$ million	HK$ million
Revenue				0.48	13.57	14.05
Profit/(loss)	for	the	year	(5.65)	4.59	(1.06)

For the year ended 31 March 2018, revenue of the Nigon Group decreased by approximately 6.0% to HK$14.05 million as compared to the previous year. The decrease was mainly resulted from the cessation of hotel operation of the Nigon Group in February 2018, as the Wan Chai Property was operated as hotel by Tang’s Living (which was not a member of the Nigon Group) since February 2018. During the year ended 31 March 2018, the Nigon Group recorded a loss of approximately HK$1.06 million, representing a decrease of about 36.9% as compared to the previous year. The decrease in loss was mainly due to the decrease in depreciation from hotel operation during 2018.

	Property	Hotel
Six months ended 30 September 2018	investment	operation	Total
	HK$ million	HK$ million	HK$ million
Revenue	6.67	–	6.67
Profit for the period	136.42	–	136.42

For the six months ended 30 September 2018, revenue of the Nigon Group increased by approximately 2,677.1% to HK$6.67 million as compared to the last corresponding period. The increase was mainly resulted from the net effect of increase in rental income and cessation of Nigon Group’s hotel operation in February 2018. During the six months ended 30 September 2018, the

Appendix III(B) - 2

APPENDIX III(B)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE NIGON GROUP

Nigon Group recorded a profit of approximately HK$136.42 million, representing an increase of about 12,423.3% as compared to the last corresponding period. The increase in profit was mainly due to the reclassification of Nigon Group’s hotel building as an investment property when ceased its hotel operation in February 2018, pursuant to which fair value gain of HK$134.57 million has been recognised on the investment property during the six months ended 30 September 2018.

(b) Liquidity, financial resources and capital commitments

The Nigon Group’s assets portfolio was mainly financed by its shareholders’ funds and bank and other borrowings. Bank and other borrowings of the Nigon Group were all denominated in Hong Kong dollars as at 31 March 2016, 2017 and 2018, and 30 September 2018. Based on the agreed scheduled repayment dates in the respective loan agreements and considering the effect of any repayment on demand clause, all the Nigon Group’s bank and other borrowings were repayable within one year or on demand. The effective interest rates per annum applied to bank borrowings ranged from HIBOR+0.9% to HIBOR+2.0%. Details of the financial resources of the Nigon Group as at 31 March 2016, 2017 and 2018, and 30 September 2018 are set forth below.

				As at 30
		As at 31 March		September
	2016	2017	2018	2018
	HK$ million	HK$ million	HK$ million	HK$ million
Shareholders’ funds/(deficits) of
the Nigon Group	(17.90)	(19.58)	159.03	295.45
Adjusted capital/(deficits) of the
Nigon Group (Note)	(17.90)	(19.58)	(20.64)	115.78
Bank and other borrowings of the
Nigon Group	325.56	321.68	242.10	242.10

Note: Adjusted capital of the Nigon Group is the shareholders’ funds/(deficits) less the unrealised investment property revaluation reserve.

As at 30 September 2018, the significant increase in both the shareholders’ funds and adjusted capital of Nigon Group by approximately HK$136.42 million when compared with the balance as at 31 March 2018. The increase was mainly due to recognition of fair value gain on the investment property during the six months ended 30 September 2018.

Appendix III(B) - 3

APPENDIX III(B)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE NIGON GROUP

As at 31 March 2017, both the shareholders’ deficits and adjusted deficits of Nigon Group increased by approximately HK$1.68 million when compared with 2016. It was mainly due to the increase of loss for the year. As at 31 March 2018, both the shareholders’ fund of the Nigon Group significantly increased by approximately HK$178.61 million when compared with 2017. It was mainly due to the recognition of gain on property revaluation of HK$179.67 million in other comprehensive income in 2018. As at 31 March 2018, the adjusted deficits of Nigon Group increased by approximately HK$1.06 million when compared with 2017, mainly due to the increase in profit for the year.

As at 31 March 2017, the bank and other borrowings of Nigon Group slightly decreased by approximately HK$3.88 million when compared with 2016. It was mainly due to the repayment of bank loans. As at 31 March 2018, the bank and other borrowings of Nigon Group significantly decreased by approximately HK$79.58 million when compared with 2017. It was mainly due to repayment of bank loans. As at 30 September 2018, the bank and other borrowings of the Nigon Group remained as HK$242.10 million.

The cash and cash equivalents of Nigon Group amounted to HK$37.62 million, HK$6.02 million, HK$3.60 million and HK$4.21 million as at 31 March 2016, 31 March 2017, 31 March 2018 and 30 September 2018 respectively, all of which were denominated in Hong Kong dollars.

As at 31 March 2017, the cash and cash equivalents of Nigon Group significantly decreased by approximately HK$31.60 million when compared with 2016. It was mainly due to the increase in amount due from a related company. As at 31 March 2018, the cash and cash equivalents of Nigon Group decreased by approximately HK$2.42 million when compared with 2017. It was mainly due to the increase in net cash used in operating activities. As at 30 September 2018, the cash and cash equivalents of Nigon Group increased by HK$0.61 million when compared with the balance as at 31 March 2018. It was mainly due to the net effect of increase in net cash from operating activities, decrease in net cash flows used in investing activities and increase in net cash used in financing activities.

The Nigon Group did not have capital commitments as at 31 March 2016, 2017 and 2018 and 30 September 2018.

(c) Employees and remuneration policies

The Nigon Group had 22, 19, nil and nil employees as at 31 March 2016, 2017 and 2018 and 30 September 2018, respectively. The staff cost (including directors’ emoluments) of the Nigon Group for the three years ended 31 March 2016, 2017 and 2018 and 30 September 2018 was HK$4.40 million, HK$3.81 million and HK$3.14 million and HK$nil, respectively. The Nigon Group has a comprehensive and competitive staff remuneration and benefits system which is formulated on the performance of individual employees.

Appendix III(B) - 4

APPENDIX III(B)

MANAGEMENT DISCUSSION AND ANALYSIS ON THE NIGON GROUP

(d) Charges on group assets

As at 31 March, 2016, 2017, 2018 and 30 September 2018, the Nigon Group had pledged its leasehold land and building and investment property with aggregate carrying value of HK$221.98 million, HK$216.56 million, HK$395.00 million and HK$530.00 million, respectively to secure banking facilities granted to Nigon and its related company.

(e) Future plans for material capital assets

During the three years ended 31 March, 2016, 2017, 2018 and 30 September 2018, the Nigon Group did not incur any material capital expenditures. The future plans for material capital assets of the Nigon Group may include the renovation of the hotel.

(f) Gearing ratio

Gearing ratio of the Nigon Group was expressed as a percentage of bank and other borrowings to adjusted capital/(deficits) (as defined above). As at 31 March 2016, 2017, 2018 and 30 September 2018, the gearing ratio of the Nigon Group was 1,818.8%, 1,642.9%, 1,173.0% and 209.10%, respectively.

As at 31 March 2016, 2017, 2018 and 30 September 2018, the gearing ratios of Nigon Group were extremely high because the property, plant and equipment and the investment property of Nigon Group was fully financed by bank and other borrowings.

(g) Contingent liabilities

The Nigon Group did not have contingent liabilities as at 31 March 2016, 2017, 2018. As at 30 September 2018, the banking facilities guaranteed by Nigon to the related company was utilised to the extent of HK$75.00 million.

Appendix III(B) - 5

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

THE REMAINING GROUP

The accompanying unaudited pro forma financial information of the Remaining Group has been prepared, in accordance with paragraph 4.29 of the Listing Rules and on the basis of the notes set out below, to illustrate the effect of the Proposed Disposal that might have on the financial information of the Group, assuming that the Proposed Acquisition was undertaken after the completion of the Proposed Disposal.

The unaudited pro forma consolidated statement of the financial position of the Remaining Group which is prepared based on the audited consolidated statement of financial position of the Group as at 31 December 2017, after giving the effect to the pro forma adjustments as explained in the notes in section (1) of the appendix attached, for the purpose of illustrating the effect of the Proposed Disposal on the financial position of the Group as if the Proposed Disposal had taken place on 31 December 2017.

The unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group in sections (2), (3) and (4), respectively, of the appendix attached, is prepared based on the audited consolidated statement of profit or loss, the consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2017, respectively, after giving the effect to the pro forma adjustments as explained in the notes in section (2), (3) and (4), respectively, of the appendix attached, for the purpose of illustrating the effect of the Proposed Disposal on the results and cash flows, respectively, of the Group as if the Proposed Disposal had taken place on 1 January 2017. These pro forma adjustments are (i) directly attributable to the Proposed Disposal and not relating to other future events and decisions; (ii) factually supportable; and (iii) considered to be integral to the Proposed Disposal.

The unaudited pro forma financial information of the Remaining Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the financial position of the Remaining Group had the Proposed Disposal been completed as at 31 December 2017 for the financial position, or 1 January 2017 for the financial results and cash flows or at any future date.

The unaudited pro forma financial information of the Remaining Group should be read in conjunction with the audited financial statements of the Group for the year ended 31 December 2017 as set out in the annual report of the Company for the year ended 31 December 2017 and other financial information included elsewhere in this circular.

THE ENLARGED GROUP

The accompanying unaudited pro forma financial information of the Enlarged Group has been prepared, in accordance with paragraph 4.29 of the Listing Rules and on the basis of the notes set out below, to illustrate the effect of the Proposed Acquisition that might have on the financial information of the Remaining Group, assuming that the Proposed Acquisition was undertaken after the completion of the Proposed Disposal.

Appendix IV - 1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

APPENDIX IV

The unaudited pro forma consolidated statement of financial position of the Enlarged Group is prepared based on the unaudited pro forma consolidated statement of financial position of the Remaining Group as shown in the column headed ‘‘Unaudited pro forma consolidated statement of financial position of the Remaining Group after the Proposed Disposal’’ of the section (1) of the appendix attached, after giving effect to the pro forma adjustments as explained in the notes in section (1) of the appendix attached, for the purpose of illustrating the effect of the Proposed Acquisition on the financial position of the Remaining Group as if the Proposed Acquisition had taken place on 30 September 2018.

The unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Enlarged Group is prepared based on the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows, respectively, of the Remaining Group as shown in the columns headed ‘‘Unaudited pro forma consolidated statement of profit or loss of the Remaining Group after the Proposed Disposal’’ of the section (2), ‘‘Unaudited pro forma consolidated statement of comprehensive income of the Remaining Group after the Proposed Disposal’’ of the section (3) and ‘‘Unaudited pro forma consolidated statement of cash flows of the Remaining Group after the Proposed Disposal’’ of the section (4), respectively, of the appendix attached, after giving the effect to the pro forma adjustments as explained in the notes in sections (2), (3) and (4), respectively, of the appendix attached, for the purpose of illustrating the effect of the Proposed Acquisition on the results and cash flows of the Remaining Group as if the Proposed Acquisition had taken place on 1 April 2017. These pro forma adjustments are (i) directly attributable to the Proposed Acquisition and not relating to other future events and decisions; (ii) factually supportable; and (iii) considered to be integral to the Proposed Acquisition.

The unaudited pro forma financial information of the Enlarged Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Proposed Acquisition been completed as at 30 September 2018 for the financial position, or 1 April 2017 for the financial results and cash flows or at any future date.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with other financial information included elsewhere in this circular.

Appendix IV - 2

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

(1) UNAUDITED PRO FORMA

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

NON-CURRENT ASSETS Property, plant and equipment Investment properties Properties under development Prepaid land lease payments Interests in associates Available-for-sale investments Utility and other deposits Deposits for purchases of properties, plant and equipment Net pension scheme assets Deferred tax assets Total non-current assets CURRENT ASSETS Inventories Trade and bills receivables Prepayments, deposits and other receivables Tax recoverable Amount due from a related company Pledged deposits Cash and cash equivalents Assets of a disposal group classified as held for sale Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals Amount due to an associate Interest-bearing bank and other borrowings Tax payable Amount due to the holding company of Nigon Due to the Remaining Group Liabilities directly associated with the assets classified as held for sale Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Deferred tax liabilities Deferred income Total non-current liabilities Net assets Capital and Reserves Share capital Reserves Non-controlling interest Total equity	Audited consolidated statement of financial position of the Group As at 31 December 2017 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) 276,075 (9) (864) 683,923 (351,787) 11,807 28,000 19,232 15,360 92,083 – 14,228 4,421 5,617 1,138,939 79,930 724,086 60,044 (2,055) 1,233 (867) – 3,269 382,770 895,570 (7,500) – 1,251,332 (304,705) (126,500) 2,160 (2,800) (132,525) (16,892) – – – (583,422) 667,910 1,806,849 (1,026) (42,505) 11,416 (2,888) (2,215) (45,746) 1,761,103 (190,369) (1,379,116) (554,428) 7,500 (8,055) (1,569,485) (191,618) (1,761,103)	Unaudited pro forma consolidated statement of financial position of the Remaining Group after the Proposed Disposal HK$’000 275,202 343,943 28,000 19,232 15,360 92,083 – 14,228 4,421 5,617 798,086 79,930 724,086 57,989 366 – 3,269 1,270,840 – 2,136,480 (304,705) (124,340) (2,800) (132,525) (16,892) – – – (581,262) 1,555,218 2,353,304 (1,026) (33,977) (2,215) (37,218) 2,316,086 (190,369) (1,934,099) (2,124,468) (191,618) (2,316,086)	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note (5) Note (6) Note (7) Note (8) 530,000 (10,840) 421 530,421 6,439 35,337 (35,337) 4,203 10 (530,000) (2,500) 49 (49) 46,028 (233) (242,100) 242,100 (31,760) 31,760 (602) 602 (274,695) (228,667) 301,754 (6,300) 6,300 (6,300) 295,454 – (295,454) (563) 296,017 2,500 (295,454) – (295,454)	Unaudited pro forma consolidated statement of financial position of the Enlarged Group after the Proposed Acquisition HK$’000 275,202 863,103 28,000 19,232 15,360 92,083 421 14,228 4,421 5,617
				1,317,667
				79,930 724,086 64,428 366 – 3,269 742,553 –
				1,614,632
				(304,705 (124,573 (2,800 (132,525 (16,892 – – –
				(581,495
				1,033,137
				2,350,804
				(1,026 (33,977 (2,215
				(37,218
				2,313,586
				(190,369 (1,931,599
				(2,121,968
				(191,618
				(2,313,586

Appendix IV - 3

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

• (1) The amounts are extracted from the audited consolidated statement of financial position of the Group as at 31 December 2017 as set out in the published annual report of the Company for the year ended 31 December 2017.

• (2) The adjustments represent (a) the de-consolidation of assets and liabilities of the Ocean Wide Group as at 31 December 2017, which were extracted from the unaudited consolidated statement of financial position of the Ocean Wide Group as at 31 December 2017 as set out in Appendix II(A) to this circular, and (b) the estimated net gain on the Proposed Disposal as if the Proposed Disposal had taken place on 31 December 2017, which is calculated as follows:

Consideration for the Proposed Disposal Less: Total assets and liabilities of the Ocean Wide Group as at 31 December 2017 Property, plant and equipment Investment properties Prepayments, deposits and other receivables Tax recoverable Cash and cash equivalents Other payables and accruals Deferred tax liabilities Estimated net gain on the Proposed Disposal, before expenses	HK$’000 (9) (351,787) (2,055) (867) (4,430) 2,160 11,416	HK$’000 900,000 (345,572)
		554,428

The actual amount of gain on the Proposed Disposal may be different from the amount described above and would be subject to carrying amounts of net assets of the Ocean Wide Group and the shareholders’ loans balance of the Ocean Wide Group to be repaid on the date of completion of the Proposed Disposal.

• (3) The adjustment represents professional expenses directly attributable to the Proposed Disposal which would be recognised in the Remaining Group’s consolidated statement of financial position upon completion of the Proposed Disposal. The adjustment is not expected to have a continuing effect on the Remaining Group.

• (4) The adjustments represent the reversal of consolidation adjustments on reclassifying a portion of investment properties held by the Ocean Wide Group, which was leased to the Remaining Group, as property, plant and equipment, as if the Prosposed Disposal had taken place on 31 December 2017.

• (5) These amounts are extracted from the consolidated statement of financial position of the Nigon Group as at 30 September 2018 as set out in the accountants’ report of the Nigon Group in Appendix II(B) to this circular.

• (6) The adjustment represents the disposal of Lead Creation at a consideration of HK$10,000, which represented the nominal amount of issued share capital of Lead Creation, to Mr. Tang Shing Bor, a director of Nigon. As disclosed in the announcement of CNT Group dated 10 September 2018 and the Share Exchange Agreement, the disposal of Lead Creation will be completed before the completion of the Proposed Acquisition. A gain on disposal, as if the disposal had taken place on 30 September 2018, is calculated as:

Consideration for the disposal of Lead Creation Less: Net liabilities of Lead Creation as at 30 September 2018 Gain on disposal of Lead Creation assuming the disposal had taken place on 30 September 2018	HK$’000 10 553
	563

Appendix IV - 4

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

• (7) The adjustment represents the fair value adjustment on the Nigon Group’s non-current assets upon the Proposed Acquisition as if it had taken place on 30 September 2018, which is calculated as follows:

Consideration for the Proposed Acquisition Less: Net assets value of the Nigon Group at 30 September 2018 (note 5) Less: Increase in net assets value upon disposal of Lead Creation (note 6) Less: Increase in net assets value upon settlement of intercompany balances and bank borrowings Less: Reversal of deferred tax liability upon initial recognition of acquisition of related assets Being the excess of net asset acquired over the cash consideration

HK$’000 530,000 (295,454) (563) (238,523) (6,300) (10,840)

• (8) The adjustment represents professional expenses directly attributable to the Proposed Acquisition which would be recognised in the Enlarged Group’s consolidated statement of financial position upon completion of the Proposed Acquisition. The adjustment is not expected to have a continuing effect on the Enlarged Group.

Appendix IV - 5

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

(2) UNAUDITED PRO FORMA

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

CONTINUING OPERATION REVENUE Cost of sales Gross profit Other income and gains, net Selling and distribution expenses Administrative expenses Other expenses, net Fair value gains on investment properties, net Finance costs Share of profit and losses of associates Gain on disposal of subsidiaries PROFIT BEFORE TAX FROM CONTINUING OPERATION Income tax PROFIT FOR THE YEAR FROM CONTINUING OPERATION DISCONTINUED OPERATION Profit for the year from a discontinued operation PROFIT FOR THE PERIOD ATTRIBUTABLE TO: Owners of the parent Non-controlling interest	Audited consolidated statement of profit or loss of the Group for the year ended 31 December 2017 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note(1) Note(2) Note(3) Note(4) Note(5) Note(6) 1,228,065 (26,992) 1,260 (880,595) 347,470 14,459 (71) (171,292) (134,658) 7,817 54 (1,260) (26,494) 27,799 (17,167) 577 (2,245) 3,214 – 571,924 (7,500) 58,253 (11,335) 3,132 20 46,918 – 46,918 37,516 (33,281) 571,924 651 (7,500) 9,402 46,918	Unaudited pro forma consolidated statement of profit or loss of the Remaining Group after the Proposed Disposal Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note(7) Note(8) Note(9) Note(10) Note(11) Note(12) 1,202,333 480 3,500 (880,595) 321,738 480 14,388 437 (171,292) (128,047) (4,853) 4,737 (2,500) (26,494) (303) 11,209 (2,245) (1,504) 3,214 564,424 586,895 (5,440) (8,183) (211) 578,712 (5,651) – 4,591 (4,591) 578,712 (1,060) 569,310 (1,060) (303) (4,591) 3,500 4,737 (2,500) 9,402 578,712 (1,060)	Unaudited pro forma consolidated statement of profit or loss of the Enlarged Group after the Proposed Acquisition HK$’000 1,206,313 (880,595)
			325,718 14,825 (171,292) (130,663) (26,797) 11,209 (3,749) 3,214 564,424
			586,889 (8,394)
			578,495 –
			578,495
			569,093 9,402
			578,495

(1) The amounts are extracted from the audited consolidated statement of profit or loss of the Group for the year ended 31 December 2017 as set out in the published annual report of the Company for the year ended 31 December 2017.

• (2) These adjustments represent the de-consolidation of the results of the Ocean Wide Group for the year ended 31 December 2017, which were extracted from the unaudited consolidated statement of profit or loss and other comprehensive income of the Ocean Wide Group for the year ended 31 December 2017 as set out in Appendix II(A) to this circular, as if the Proposed Disposal had taken place on 1 January 2017.

• (3) The adjustment represents the estimated net gain on the Proposed Disposal as if it had taken place on 1 January 2017, which is calculated as follows:

Consideration for the Proposed Disposal Less: Net assets of the Ocean Wide Group as at 1 January 2017, after consolidation adjustments of HK$7,403,000 Less: Amount owed by the Ocean Wide Group to the Remaining Group, before expenses Estimated net gain on the Proposed Disposal, before expenses	HK$’000 900,000 (276,615) (51,461)
	571,924

Appendix IV - 6

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

The actual amount of gain on the Proposed Disposal may be different from the amount described above and would be subject to carrying amounts of net assets of the Ocean Wide Group and the shareholder’s loan owed by Ocean Wide to its immediate holding company to be repaid on the date of completion of the Proposed Disposal.

• (4) These adjustments represent (i) the reversal of depreciation expense recognised at the consolidation level which is related to a portion of the properties held by the Ocean Wide Group and leased to the Remaining Group; (ii) the reversal of exclusion of fair value gain that is related to the above portion of properties; and (iii) the corresponding adjustment on deferred tax expenses.

• (5) The adjustment represents professional expenses directly attributable to the Proposed Disposal which would be recognised in the Remaining Group’s consolidated statement of profit or loss upon completion of the Proposed Disposal. The adjustment is not expected to have a continuing effect on the Remaining Group.

• (6) The amount represents rental expense from the Remaining Group to the Ocean Wide Group which was previously eliminated upon the preparation of the Group’s consolidated financial statements for the year ended 31 December 2017.

• (7) These amounts are extracted from the consolidated statement of profit or loss of the Nigon Group for the year ended 31 March 2018 as set out in the accountants’ report of the Nigon Group in Appendix II(B) to the Circular, as if the Proposed Acquisition had taken place on 1 April 2017.

• (8) The adjustment represents the disposal of Lead Creation at a consideration of HK$10,000, which represented the nominal amount of issued share capital of Lead Creation, to Mr. Tang Shing Bor, a director of Nigon. As disclosed in the announcement of CNT Group dated 10 September 2018 and the Share Exchange Agreement, the disposal of Lead Creation will be completed before the completion of the Proposed Acquisition. A loss on disposal, as if the disposal had taken place on 1 April 2017, is calculated as:

Consideration for the disposal of Lead Creation Less: Net assets of Lead Creation as at 1 April 2017 Loss on disposal of Lead Creation assuming the disposal had taken place on 1 April 2017	HK$’000 10 (313) (303)

• (9) The adjustment represents the de-consolidation of the results of Lead Creation for the year ended 31 March 2018, as if the disposal of Lead Creation had taken place on 1 April 2017.

• (10) The amount represents rental income from Lead Creation to Nigon which was previously eliminated upon the preparation of the Nigon Group’s consolidated financial statements for the year ended 31 March 2018.

• (11) The adjustment represents the reversal of depreciation expense which is related to the hotel property held by Nigon and leased to Lead Creation.

• (12) The adjustment represents professional expenses directly attributable to the Proposed Acquisition which would be recognised in the Enlarged Group’s consolidated statement of profit or loss upon completion of the Proposed Acquisition. The adjustment is not expected to have a continuing effect on the Enlarged Group.

Appendix IV - 7

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

(3) UNAUDITED PRO FORMA

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

PROFIT/(LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations Share of other comprehensive income of an associate Net other comprehensive income to be reclassified to profit or loss in subsequent periods Other comprehensive income not to be reclassified to profit or loss subsequent periods: Remeasurement of net pension scheme assets Gain on property revaluation, net of tax Net other comprehensive income not to be reclassified to profit or loss in subsequent periods OTHER COMPREHENSIVE INCOME FOR THE YEAR TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO: Owners of the parent Non-controlling interest	Audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2017 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) Note (5) 46,918 (33,281) 571,924 651 (7,500) 54,883 295 55,178 2,176 – 2,176 57,354 104,272 87,403 (33,281) 571,924 651 (7,500) 16,869 104,272	Unaudited pro forma consolidated statement of comprehensive income of the Remaining Group after the Proposed Disposal Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (6) Note (7) Note (8) Note (9) Note (10) Note (11) Note (12) 578,712 (1,060) (303) (4,591) 3,500 4,737 – (2,500) 54,883 – 295 – 55,178 – 2,176 – – 179,669 (179,669) 2,176 179,669 57,354 179,669 636,066 178,609 619,197 178,609 (303) (4,591) 3,500 4,737 (179,669) (2,500) 16,869 – 636,066 178,609	Unaudited pro forma consolidated statement of comprehensive income of the Enlarged Group after the Proposed Acquisition HKS’000 578,495
			54,883 295
			55,178 2,176 –
			2,176 57,354 635,849
			618,980 16,869
			635,849

(1) The amounts are extracted from the audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2017 as set out in the published annual report of the Company for the year ended 31 December 2017.

• (2) These adjustments represent the de-consolidation of the results of the Ocean Wide Group for the year ended 31 December 2017, which were extracted from the unaudited consolidated statement of profit or loss and other comprehensive income of the Ocean Wide Group for the year ended 31 December 2017 as set out in Appendix II(A) to this circular, as if the Proposed Disposal had taken place on 1 January 2017.

• (3) The adjustment represents the estimated net gain on the Proposed Disposal as if it had taken place on 1 January 2017, which is calculated as follows:

Consideration for the Proposed Disposal Less: Net assets of the Ocean Wide Group as at 1 January 2017, after consolidation adjustments of HK$7,403,000 Less: Amount owed by the Ocean Wide Group to the Remaining Group Estimated net gain on the Proposed Disposal	HK$’000 900,000 (276,615) (51,461)
	571,924

The actual amount of gain on the Proposed Disposal may be different from the amount described above and would be subject to carrying amounts of net assets of the Ocean Wide Group and the shareholder’s loan owed by Ocean Wide to its immediate holding company to be repaid on the date of completion of the Proposed Disposal.

Appendix IV - 8

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

• (4) These adjustments represent (i) the reversal of depreciation expense recognised at the consolidation level which is related to a portion of the properties held by the Ocean Wide Group and leased to the Remaining Group; (ii) the reversal of exclusion of fair value gain that is related to the above portion of properties; and (iii) the corresponding adjustment on deferred tax expenses.

• (5) The adjustment represents professional expenses directly attributable to the Proposed Disposal which would be recognised in the Remaining Group’s consolidated statement of comprehensive income upon completion of the Proposed Disposal. The adjustment is not expected to have a continuing effect on the Remaining Group.

• (6) These amounts are extracted from the consolidated statement of comprehensive income of the Nigon Group for the year ended 31 March 2018 as set out in the accountants’ report of the Nigon Group in Appendix II(B) to the Circular, as if the Proposed Acquisition had taken place on 1 April 2017.

• (7) The adjustment represents the disposal of Lead Creation at a consideration of HK$10,000, which represented the nominal amount of issued share capital of Lead Creation, to Mr. Tang Shing Bor, a director of Nigon. As disclosed in the announcement of CNT Group dated 10 September 2018 and the Share Exchange Agreement, the disposal of Lead Creation will be completed before the completion of the Proposed Acquisition. A loss on disposal, as if the disposal had taken place on 1 April 2017, is calculated as:

Consideration for the disposal of Lead Creation Less: Net assets of Lead Creation as at 1 April 2017 Loss on disposal of Lead Creation assuming the disposal had taken place on 1 April 2017	HK$’000 10 (313) (303)

• (8) The adjustment represents the de-consolidation of the results of Lead Creation for the year ended 31 March 2018, as if the disposal of Lead Creation had taken place on 1 April 2017.

• (9) The amount represents rental income from Lead Creation to Nigon which was previously eliminated upon the preparation of the Nigon Group’s consolidated financial statements for the year ended 31 March 2018.

• (10) The adjustment represents the reversal of depreciation expense which is related to the hotel property held by Nigon and leased to Lead Creation.

• (11) The adjustment represents the reversal of the gain on property revaluation, net of tax in relation to the hotel property during the year ended 31 March 2018, which is considered a pre-acquisition gain in nature.

• (12) The adjustment represents professional expenses directly attributable to the Proposed Acquisition which would be recognised in the Enlarged Group’s consolidated statement of comprehensive income upon completion of the Proposed Acquisition. The adjustment is not expected to have a continuing effect on the Enlarged Group.

Appendix IV - 9

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

(4) UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Profit before tax from a discontinued operation Adjustments for: Finance costs Share of profits and loss of associates Bank interest income Depreciation Amortisation of prepaid land lease payments Recognition of deferred income Loss on disposal of items of property, plant and equipment Write-off of items of property, plant and equipment Write-back of inventories to net realisable value Provision for impairment of trade receivables Fair value gains on investment properties Fair value gains on structured deposits Dividend income from an available-for- sale investment Impairment of items of property, plant and equipment Impairment of an available-for-sale investment Net pension benefit expenses Gain on disposal of a discontinued operation Gain on disposal of subsidiaries Increase in inventories Increase in trade and bills receivables Decrease in prepayments, deposits and other receivables Decrease in trade and bills payables Increase in other payables and accruals Changes in balance with the Remaining Group Decrease in an amount due from a related company of Nigon Decrease in an amount due to a related company of Lead Creation Exchange realignment Cash used in operations Interest paid Interest received Interest element of finance lease rental payments Hong Kong taxes paid Overseas taxes paid Net cash flows used in operating activities	Audited consolidated statement of cash flows of the Group for the year ended 31 December 2017 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) Note (5) 58,253 (36,413) 571,924 631 (7,500) 2,245 (3,214) (1,352) 20,795 (3) (54) 513 (295) 61 558 (2,841) 7,967 (27,799) 17,167 (577) (762) (240) – 4,000 127 – – (571,924) 58,016 7,952 (199,123) (11,989) (1,996) 73,552 (29,038) (84) – 14,349 – – (6,727) (107,357) (2,163) – (78) (6,340) 4,007 (8,479) (124,417)	Unaudited pro forma consolidated statement of cash flows of the Remaining Group after the Proposed Disposal Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (6) Note (7) Note (8) Note (9) Note (10) Note (11) Note (12) 586,895 (5,440) (303) 3,500 4,737 (2,500) 5,006 (5,006) 2,245 1,668 (164) (3,214) (1,352) (434) 20,738 5,153 (416) (4,737) 513 (295) 61 558 (2,841) 7,967 (11,209) (762) (240) – 1,005 (1,005) 4,000 127 – 303 (571,924) 31,267 6,958 7,952 48 (48) (199,123) (13,985) 620 (798) 73,552 (1,065) 1,065 (29,122) (195) 2,175 14,349 – (42,057) – 291 (291) (6,727) (121,837) (35,400) (2,163) – 434 (78) (2,333) 36 (36) (8,479) (134,890) (34,930)	Unaudited pro forma consolidated statement of cash flows of the Enlarged Group after the Proposed Acquisition HK$’000 586,889 – 3,749 (3,214) (1,786) 20,738 513 (295) 61 558 (2,841) 7,967 (11,209) (762) (240) – 4,000 127 303 (571,924)
			32,634 7,952 (199,123) (14,163) 73,552 (27,142) 14,349 (42,057) – (6,727)
			(160,725) (2,163) 434 (78) (2,333) (8,479)
			(173,344)

Appendix IV - 10

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment Proceeds from disposal of items of property, plant and equipment Investments in structured deposits Proceeds from structured deposits Interest received Dividend received from an available- for-sale investment Deposits paid for purchases of property, plant and equipment, and investment properties Decrease in pledged time deposits with original maturity of more than three months when acquired Decrease/(increase) in time deposits with original maturity of more than three months when acquired Changes in balance with CNT Group Limited Acquisition of a subsidiary Proceed from disposal of a discontinued operation Proceed from disposal of subsidiaries Net cash flows from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net proceed from issue of new shares of a subsidiary New bank loans Increase in shareholders’ loans of Nigon Repayment of bank loans Interest paid Decrease in an amount due to the holding company of Nigon Dividend paid Capital element of finance lease rental payments Net cash flows from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period Effect of foreign exchange rate changes, net CASH AND CASH EQUIVALENTS AT END OF PERIOD ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Non-pledged/non-restricted time deposits Cash and cash equivalents as stated in the consolidated statement of financial position	Audited consolidated statement of cash flows of the Group for the year ended 31 December 2017 Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (1) Note (2) Note (3) Note (4) Note (5) (16,282) 79 (165,055) 266,131 1,346 240 (6,389) 961 (1,962) – (11) – – – 900,000 79,069 198,441 178,574 – (210,581) – – (19,037) (384) 147,013 101,665 266,377 (1,446) 14,728 382,770 257,169 (4,430) 900,000 (7,500) 125,601 382,770	Unaudited pro forma consolidated statement of cash flows of the Remaining Group after the Proposed Disposal Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note (6) Note (7) Note (8) Note (9) Note (10) Note (11) Note (12) (16,282) (841) 841 79 (165,055) 266,131 1,346 240 (6,389) 961 (1,962) (11) – (530,000) – 10 900,000 979,058 (841) 198,441 178,574 242,100 – 95,079 (210,581) (104,628) – (1,704) 164 – (197,500) (19,037) (384) 147,013 33,347 991,181 (2,424) 264,931 6,024 19 14,728 1,270,840 3,600 1,145,239 3,600 10 (3,500) 3,500 (530,000) (2,500) 125,601 1,270,840 3,600	Unaudited pro forma consolidated statement of cash flows of the Enlarged Group after the Proposed Acquisition HK$’000 (16,282) 79 (165,055) 266,131 1,346 240 (6,389) 961 (1,962) (11) (530,000) 10 900,000
			449,068
			198,441 420,674 95,079 (315,209) (1,540) (197,500) (19,037) (384)
			180,524
			456,248 270,974 14,728
			741,950
			616,349 125,601
			741,950

(1) The amounts are extracted from the audited consolidated statement of cash flows of the Group for the year ended 31 December 2017 as set out in the published annual report of the Company for the year ended 31 December 2017.

(2) These adjustments represent the de-consolidation of the results of the Ocean Wide Group for the year ended 31 December 2017, which were extracted from the unaudited consolidated statement of cash flows of the Ocean Wide Group for the year ended 31 December 2017 as set out in Appendix II(A) to this circular, as if the Proposed Disposal had taken place on 1 January 2017.

Appendix IV - 11

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

• (3) The adjustment represents the estimated net gain on the Proposed Disposal as if it had taken place on 1 January 2017, which is calculated as follows:

Consideration for the Proposed Disposal Less: Net assets of the Ocean Wide Group as at 1 January 2017, after consolidation adjustments of HK$7,403,000 Less: Amount owed by the Ocean Wide Group to the Remaining Group Estimated net gain on the Proposed Disposal, before expenses	HK$’000 900,000 (276,615) (51,461) 571,924

The actual amount of gain on the Proposed Disposal may be different from the amount described above and would be subject to carrying amounts of net assets of the Ocean Wide Group and the shareholder’s loan owed by Ocean Wide to its immediate holding company to be repaid on the date of completion of the Proposed Disposal.

• (4) These adjustments represent (i) the reversal of depreciation expense recognised at the consolidation level which is related to a portion of the properties held by the Ocean Wide Group and leased to the Remaining Group; (ii) the reversal of exclusion of fair value gain that is related to the above portion of properties; and (iii) the corresponding adjustment on deferred tax expenses.

• (5) The adjustment represents professional expenses directly attributable to the Proposed Disposal which would be recognised in the Remaining Group’s consolidated statement of cash flows upon completion of the Proposed Disposal. The adjustment is not expected to have a continuing effect on the Remaining Group.

• (6) These amounts are extracted from the consolidated statement of cash flows of the Nigon Group for the year ended 31 March 2018 as set out in the accountants’ report of the Nigon Group in Appendix II(B) to the Circular, as if the Proposed Acquisition had taken place on 1 April 2017.

• (7) The adjustment represents the disposal of Lead Creation at a consideration of HK$10,000, which represented the nominal amount of issued share capital of Lead Creation, to Mr. Tang Shing Bor, a director of Nigon. As disclosed in the announcement of CNT Group dated 10 September 2018 and the Share Exchange Agreement, the disposal of Lead Creation will be completed before the completion of the Proposed Acquisition. A loss on disposal, as if the disposal had taken place on 1 April 2017, is calculated as:

Consideration for the disposal of Lead Creation Less: Net assets of Lead Creation as at 1 April 2017 Loss on disposal of Lead Creation assuming the disposal had taken place on 1 April 2017	HK$’000 10 (313) (303)

• (8) The adjustment represents the de-consolidation of the results of Lead Creation for the year ended 31 March 2018 from the Nigon Group, as if the disposal of Lead Creation had taken place on 1 April 2017.

• (9) The amount represents rental income from Lead Creation to Nigon which was previously eliminated upon the preparation of the Nigon Group’s consolidated financial statements for the year ended 31 March 2018.

• (10) The adjustment represents the reversal of depreciation expense recognised which is related to the hotel property held by Nigon and leased to Lead Creation.

• (11) The adjustment represents the payment of the consideration of HK$530 million for the Proposed Acquisition pursuant to the Share Exchange Agreement.

• (12) The adjustment represents professional expenses directly attributable to the Proposed Acquisition which would be recognised in the Enlarged Group’s consolidated statement of cash flows upon completion of the Proposed Acquisition. The adjustment is not expected to have a continuing effect on the Enlarged Group.

Appendix IV - 12

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong Kong.

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

==> picture [86 x 35] intentionally omitted <==

To the Directors of CNT Group Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of CNT Group Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position as at 31 December 2017, and the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2017, and related notes as set out on pages 3 to 12 in the Appendix IV to the circular dated 26 March 2019, issued by the Company (the ‘‘Circular’’) (the ‘‘Unaudited Pro Forma Financial Information’’). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on pages 1 to 2 in the Appendix IV to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of (i) the proposed disposal of the entire issued share capital of Ocean Wide Assets Limited (‘‘Ocean Wide’’) and the shareholder’s loan owed by Ocean Wide to its immediate holding company (the ‘‘Proposed Disposal’’) and (ii) the proposed acquisition of the entire issued share capital of Nigon Hong Kong Limited (‘‘Nigon’’) and the shareholder’s loan owed by Nigon to its holding company (the ‘‘Proposed Acquisition’’) (collectively, the ‘‘Proposed Transactions’’ which are inter-conditional) on (i) the Group’s consolidated financial position as at 31 December 2017 as if the Proposed Disposal had taken place on 31 December 2017 and the Proposed Acquisition had taken place on 30 September 2018 and (ii) the Group’s consolidated financial performance and cash flows for the year ended 31 December 2017 as if the Proposed Disposal had taken place on 1 January 2017 and the Proposed Acquisition had taken place on 1 April 2017. As part of this process, information about the Group’s financial position, financial performance and cash flows has been extracted by the Directors from the Group’s annual report for the year ended 31 December 2017, on which an auditor’s report has been published.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

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

Appendix IV - 13

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

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.

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

Reporting accountants’ responsibilities

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

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

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

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

Appendix IV - 14

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP AND THE ENLARGED GROUP

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

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

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

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

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

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

Opinion

In our opinion:

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

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

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

Yours faithfully,

Ernst & Young Certified Public Accountants Hong Kong

26 March 2019

Appendix IV - 15

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

The following is the text of a letter, summary of value and valuation certificate, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 31 December 2018 of the real property contracted to be disposed of by the Group located in Hong Kong.

BMI Appraisals Limited 中和邦盟評估有限公司

33/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道6-8號瑞安中心33樓 Tel電話：(852) 2802 2191 Fax傳真：(852) 2802 0863 Email電郵：info@bmintelligence.com Website網址：www.bmi-appraisals.com 26th March 2019

The Directors

CNT Group Limited

Unit E, 28th Floor CNT Tower No. 338 Hennessy Road Wanchai Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from CNT Group Limited (the ‘‘Company’’) for us to value the real property contracted to be disposed of by the Company and/or its subsidiaries (together referred to as the ‘‘Group’’) located in Hong Kong. We confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the real property as at 31 December 2018 (the ‘‘valuation date’’).

BASIS OF VALUATION

Our valuation of the real property has been based on the Market Value, which is defined by The Hong Kong Institute of Surveyors as ‘‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion’’. The Market Value is also understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

VALUATION METHODOLOGY

In valuation the real property, we adopted the comparison approach assuming sale in its existing state with the benefit of vacant possession and by making reference to comparable sales/rental evidence as available in the relevant market. Appropriate adjustments have been made to account for the differences between the real property and the comparables in terms of location, time, age, floor level, size and other relevant factors.

Appendix V(A) - 1

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

We have also cross-checked our valuation by making reference to the income approach by taking into account the current rents passing of the constituent units of the real property being held under existing tenancies and the reversionary potential of the tenancies if they have been or would be let to tenants.

TITLE INVESTIGATION

We have caused land searches to be made at the Land Registry of Hong Kong. However, we have neither examined the original documents to verify ownership nor to ascertain the existence of any amendments, which do not appear on the copies handed to us. All documents have been used for reference only.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the real property is sold in the market in its existing state without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which would serve to affect the value of the real property.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the real property and no forced sale situation in any manner is assumed in our valuation.

VALUATION CONSIDERATIONS

The real property was inspected by Ms. Joannau Chan (MRICS) and Ms. Ellen Lo (BSc in Valuation & Estate Management) in August 2017. We have inspected the real property externally and where possible, the interior of the real property. In the course of our inspection, we did not note any serious defects. However, no structural survey has been made. We are, therefore, unable to report that the real property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

In the course of our valuation, we have relied to a 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, tenures, particulars of occupancy, site/floor areas, identification of the real property and other relevant information.

We have not carried out detailed on-site measurements to verify the correctness of the site/floor areas in respect of the real property but have assumed that the site/floor areas shown on the documents handed to us are correct. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by the Group and are therefore only approximations.

We have no reason to doubt the truth and accuracy of the information provided to us by the Group and we have relied on your confirmation that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information for us to reach an informed view.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the real property or for any expenses or taxation, which may be incurred in effecting a sale.

Unless otherwise stated, it is assumed that the real property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

Appendix V(A) - 2

APPENDIX V(A) VALUATION REPORTS ON THE SAI KUNG PROPERTY

Our valuation has been prepared in accordance with The HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors and the International Valuation Standards (IVS) published by The International Valuation Standards Council.

Our valuation has been prepared under the generally accepted valuation procedures and is in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

Unless otherwise stated, all money amounts stated herein are in Hong Kong Dollars (HK$).

Our summary of value and the valuation certificate are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Joannau W.F. Chan

BSc., MSc., MRICS, MHKIS, RPS(GP) Senior Director

Note:

• Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 26 years’ experience in valuations of real properties in Hong Kong.

Appendix V(A) - 3

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

SUMMARY OF VALUE

Real property contracted to be disposed of by the Group in Hong Kong

Real property Nos. 7-9 Hong Ting Road, Sai Kung, New Territories, Hong Kong (Lot Nos. 991 and 963 in D.D. 215 and the Extension Thereto) Total:	Market Value in existing state as at 31 December 2018 HK$ 418,230,000
	418,230,000

Appendix V(A) - 4

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

VALUATION CERTIFICATE

Real property contracted to be disposed of by the Group in Hong Kong

Market Value in existing state as at Real property Description and tenure Particulars of occupancy 31 December 2018 HK$ Nos. 7-9 Hong Ting Road, The real property comprises two As at the valuation date, 418,230,000 Sai Kung, 4-storey industrial buildings portions of the real property New Territories, completed in between 1988 and with a total GFA of Hong Kong 1990 with a total gross floor area approximately 78,472 sq.ft. are (Lot Nos. 991 and 963 in (‘‘GFA’’) of approximately subject to various tenancies D.D. 215 and the Extension 143,252 sq.ft. Car parking spaces, with the latest expiry date on Thereto) loading/unloading area are 25 November 2020 at a total provided on the ground floor monthly rent of approximately level. HK$1,006,906 and a portion of the real property with a GFA The total GFA of the two of approximately 3,662 sq.ft. is buildings are as follows: owner-occupied by the Group, whilst the remaining portions Hong Ting Road GFA of the real property are vacant (sq.ft.) and available for lease. No. 7 90,094 However, we have been No. 9 53,158 instructed to value the real property on vacant possession Total: 143,252 basis.

Lot No. 991 in D.D. 215 of the real property is held under New Grant No. 7294 for a term commencing on 13 April 1989 and expiring on 30 June 2047.

Lot No. 963 in D.D. 215 of the real property is held under New Grant No. 6503 for a term of 99 years less the last 3 days commencing on 1 July 1898. The said term has been extended to 30 June 2047 by virtue of the New Territories Leases (Extension) Ordinance 1988 and at an annual Government Rent of 3% of the rateable value of the Lots.

Notes:

1. The real property is situated at Hong Ting Road which is about 5 minutes’ driving distance to the Sai Kung city centre and the neigbourhood is a mixture of industrial and residential developments.

2. The registered owner of the real property is Conley Investment Limited, which is an indirect wholly-owned subsidiary of the Company.

Appendix V(A) - 5

VALUATION REPORTS ON THE SAI KUNG PROPERTY

APPENDIX V(A)

VALUATION CERTIFICATE

1. The real property is subject to the following material encumbrances:

Re: No. 9 Hong Ting Road (Lot No. 991 in D.D. 215)

• A Mortgage in favour of the Hong Kong and Shanghai Banking Corporation Limited vide Memorial No. 18020902580824 dated 2 February 2018.

• The real property is located within an area zoned ‘‘Residential (Group E)1’’ under Sai Kung Town Outline Zoning Plan No. S/SK-SKT/6 dated 4 June 2013.

• The real property is subject to the following tenancies:

Hong Ting Road Floor No. 7 Car parking spaces Various portions on G/F – 1/F 2/F 3/F Roof Portions No. 9 G/F – 2/F 3/F Roof Portions Total:	GFA Approx. Term (sq.ft.) N/A 01 Aug 2017 to 31 Dec 2018 01 Jan 2018 to 31 Dec 2018 7,125 01 Jan 2018 to 31 Dec 2018 01 Jul 2018 to 30 Jun 2019 18,709 01 Jan 2017 to 31 Dec 2018 01 Feb 2017 to 31 Jan 2019 01 Jul 2018 to 30 Jun 2019 01 Sep 2018 to 30 Sep 2018 1,177 01 Sep 2017 to 31 Aug 2018 N/A 01 Nov 2017 to 31 Oct 2020 36,680 01 Jan 2017 to 31 Dec 2019 01 Mar 2018 to 29 Feb 2020 14,781 01 May 2018 to 30 Apr 2021 N/A 26 Nov 2017 to 25 Nov 2020 01 Mar 2016 to 31 Dec 2018 78,472	Monthly Rent (HK$) 8,400 201,092 275,214 35,000 30,800 328,600 75,000 52,800
		1,006,906

Appendix V(A) - 6

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with the valuation of the Sai Kung Property as at 31 July 2018.

BMI Appraisals Limited 中和邦盟評估有限公司

33/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道6-8號瑞安中心33樓 Tel電話：(852) 2802 2191 Fax傳真：(852) 2802 0863 Email電郵：info@bmintelligence.com Website網址：www.bmi-appraisals.com

26th March 2019

The Directors CNT Group Limited Unit E, 28th Floor CNT Tower No. 338 Hennessy Road Wanchai Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from CNT Group Limited (the ‘‘Company’’) for us to value the real property contracted to be disposed of by the Company and/or its subsidiaries (together referred to as the ‘‘Group’’) located in Hong Kong. We confirm that we have conducted inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the real property as at 31 July 2018 (the ‘‘valuation date’’).

BASIS OF VALUATION

Our valuation of the real property has been based on the Market Value, which is defined by The Hong Kong Institute of Surveyors as ‘‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion’’. The Market Value is also understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

Appendix V(A) - 7

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

VALUATION METHODOLOGY

In valuation the real property, we adopted the comparison approach assuming sale in its existing state with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant market. Appropriate adjustments have been made to account for the differences between the real property and the comparables in terms of location, time, age, floor level, size and other relevant factors.

We have also cross-checked our valuation by making reference to the income approach by taking into account the current rents passing of the constituent units of the real property being held under existing tenancies and the reversionary potential of the tenancies if they have been or would be let to tenants.

TITLE INVESTIGATION

We have caused land searches to be made at the Land Registry of Hong Kong. However, we have neither examined the original documents to verify ownership nor to ascertain the existence of any amendments, which do not appear on the copies handed to us. All documents have been used for reference only.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the real property is sold in the market in its existing state without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which would serve to affect the value of the real property.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the real property and no forced sale situation in any manner is assumed in our valuation.

VALUATION CONSIDERATIONS

The real property was inspected by Ms. Joannau Chan (MRICS) and Ms. Ellen Lo (BSc in Valuation & Estate Management) in August 2017. We have inspected the real property externally and where possible, the interior of the real property. In the course of our inspection, we did not note any serious defects. However, no structural survey has been made. We are, therefore, unable to report that the real property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services.

In the course of our valuation, we have relied to a 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, tenures, particulars of occupancy, site/floor areas, identification of the real property and other relevant information.

We have not carried out detailed on-site measurements to verify the correctness of the site/floor areas in respect of the real property but have assumed that the site/floor areas shown on the documents handed to us are correct. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by the Group and are therefore only approximations.

Appendix V(A) - 8

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

We have no reason to doubt the truth and accuracy of the information provided to us by the Group and we have relied on your confirmation that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information for us to reach an informed view.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the real property or for any expenses or taxation, which may be incurred in effecting a sale.

Unless otherwise stated, it is assumed that the real property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

Our valuation has been prepared in accordance with The HKIS Valuation Standards (2017 Edition) published by The Hong Kong Institute of Surveyors and the International Valuation Standards (IVS) published by The International Valuation Standards Council.

Our valuation has been prepared under the generally accepted valuation procedures and is in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

Unless otherwise stated, all money amounts stated herein are in Hong Kong Dollars (HK$).

Our summary of value and the valuation certificate are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Joannau W.F. Chan BSc., MSc., MRICS, MHKIS, RPS(GP)

Senior Director

Note:

Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 26 years’ experience in valuations of real properties in Hong Kong.

Appendix V(A) - 9

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

SUMMARY OF VALUE

Real property contracted to be disposed of by the Group in Hong Kong

Real property Nos. 7-9 Hong Ting Road, Sai Kung, New Territories, Hong Kong (Lot Nos. 991 and 963 in D.D. 215 and the Extension Thereto) Total:	Market Value in existing state as at 31 July 2018 HK$ 415,000,000
	415,000,000

Appendix V(A) - 10

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

VALUATION CERTIFICATE

Real property contracted to be disposed of by the Group in Hong Kong

				Market Value in
				existing state as at
Real property	Description and tenure		Particulars of occupancy	31 July 2018
				HK$
Nos. 7-9 Hong Ting Road,	The real property comprises two		As at the valuation date,	415,000,000
Sai Kung,	4-storey industrial buildings		portions of the real property
New Territories,	completed in between 1988 to		with a total GFA of
Hong Kong	1990 with a total gross floor area		approximately 81,302 sq.ft. are
(Lot Nos. 991 and 963 in	(‘‘GFA’’) of approximately		subject to various tenancies
D.D. 215 and the Extension	143,252 sq.ft. Car parking	spaces,	with the latest expiry date on
Thereto)	loading/unloading area are		25 November 2020 at a total
	provided on the ground floor		monthly rent of approximately
	level.		HK$1,006,906, whilst the
			remaining portions of the real
	The total GFA of the respective		property are vacant and
	buildings are as follows:		available for lease.
	Hong Ting Road	GFA	However, we have been
		(sq.ft.)	instructed to value the real
			property on vacant possession
	No. 7	90,094	basis.
	No. 9	53,158
	Total:	143,252
	Lot No. 991 in D.D. 215 of the
	real property is held under	New
	Grant No. 7294 for a term
	commencing on 13 April 1989 and
	expiring on 30 June 2047.
	Lot No. 963 in D.D. 215 of the
	real property is held under	New
	Grant No. 6503 for a term	of 99
	years less the last 3 days
	commencing on 1 July 1898. The
	said term has been extended to 30
	June 2047 by virtue of the	New
	Territories Leases (Extension)
	Ordinance 1988.

Notes:

1. The real property is situated at Hong Ting Road which is about 5 minutes’ driving distance to the Sai Kung city centre and the neigbourhood is a mixture of industrial and residential developments.

2. The registered owner of the real property is Conley Investment Limited, which is an indirect wholly-owned subsidiary of the Company.

Appendix V(A) - 11

APPENDIX V(A)

VALUATION REPORTS ON THE SAI KUNG PROPERTY

VALUATION CERTIFICATE

1. The real property is subject to the following material encumbrances:

Re: No. 9 Hong Ting Road (Lot No. 991 in D.D. 215)

• A Mortgage in favour of the Hong Kong and Shanghai Banking Corporation Limited vide Memorial No. 18020902580824 dated 2 February 2018.

• The real property is located within an area zoned ‘‘Residential (Group E)1’’ under Sai Kung Town Outline Zoning Plan No. S/SK-SKT/6 dated 4 June 2013.

• The real property is subject to the following tenancies:

Hong Ting Road Floor No. 7 Car parking spaces Various portions on G/F – 1/F 2/F 3/F Roof Portions No. 9 G/F – 2/F 3/F Roof Portions Total:	GFA Approx. Term (sq.ft.) N/A 01 Aug 2017 to 31 Dec 2018 01 Jan 2018 to 31 Dec 2018 7,125 01 Jan 2018 to 31 Dec 2018 01 Jul 2018 to 30 Jun 2019 19,842 01 Jan 2017 to 31 Dec 2018 01 Feb 2017 to 31 Jan 2019 01 Sep 2017 to 31 Aug 2018 01 Jul 2018 to 30 Jun 2019 01 Jul 2018 to 30 Sep 2018 1,177 01 Sep 2017 to 31 Aug 2018 N/A 01 Nov 2017 to 31 Oct 2020 38,377 01 Jan 2017 to 31 Dec 2019 01 Mar 2018 to 29 Feb 2020 14,781 01 May 2018 to 30 Apr 2021 N/A 26 Nov 2017 to 25 Nov 2020 01 Mar 2016 to 31 Dec 2018 81,302	Monthly Rent (HK$) 8,400 201,092 275,214 35,000 30,800 328,600 75,000 52,800
		1,006,906

Appendix V(A) - 12

APPENDIX V(B) VALUATION REPORTS ON THE WAN CHAI PROPERTY

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Centaline Surveyors Limited, an independent valuer, in connection with the valuation of the Wan Chai Property as at 31 December 2018:

7/F. Greenwich Centre 260 King’s Road North Point Hong Kong

26th March 2019

The Board of Directors CNT GROUP LIMITED Unit E, 28/F., CNT Tower No. 338 Hennessy Road Wan Chai, Hong Kong

Dear Sirs,

VALUATION CERTIFICATE OF WHOLE OF HOTEL BONAPARTE, NO. 11 MORRISON HILL ROAD, WAN CHAI, HONG KONG FOR CNT GROUP LIMITED

We refer to your instruction for us to value the captioned property (hereinafter referred to as the ‘‘Property’’). 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 you with our opinion of the market value of the Property as at 31st December, 2018 for public disclosure purposes.

Our valuation of the Property has been based on the Market Value which in accordance with the Valuation Standards on Properties of the Hong Kong Institute of Surveyors is defined as ‘‘the estimated amount for which an asset or liability should exchange on 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.’’

Our valuation has been made on the assumptions that the Property is sold in the open market value without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to affect its value. In addition, no account has been taken of any option or right of pre-emption concerning or effecting the sale of the Property and no forced sale situation in any manner is assumed in our valuation.

No allowance has been made in our report for any charges, mortgage 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 outgoings of an onerous nature which could affect its value.

In valuing the Property owned by the Company, we have valued the Property by using Direct Comparison Approach assuming sale of the Property in its existing state by making reference to comparable sales evidence as available in the relevant market.

Appendix V(B) - 1

APPENDIX V(B)

VALUATION REPORTS ON THE WAN CHAI PROPERTY

We have caused searches to be made at the Land Registry. However, we have not searched the original documents to verify ownership or to ascertain the existence of any lease amendments which may not appear on the information handed to us. All documents and leases have been used for reference only and all dimensions, measurements and areas are only approximate. No on-site measurement has been taken to verify the correctness of the site area of the Property.

We have inspected the exterior and, where possible, the interior of the Property. However, we have not carried out investigations on site to determine the suitability of the ground conditions and services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delay will be incurred during the construction period. Moreover, no structural survey however has been made, but in the course of our valuation, we did not note any serious defects. We are not, however, able to report whether the Property is free of rot, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out detailed on-site measurements to verify the site and floor areas of the Property and we have assumed that the areas shown on the documents handed to us are correct.

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 issued by The Stock Exchange of Hong Kong Limited and the Valuation Standards (Edition 2017) on Valuation of Properties published by The Hong Kong Institute of Surveyors.

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of

CENTALINE SURVEYORS LIMITED

Pamela W.I. Lam Chartered Valuation Surveyor MRICS MHKIS RPS (GP) Director

Note: Pamela W. I. Lam is a Chartered Surveyor who has over 20 years experience in the valuation of properties in Hong Kong.

Appendix V(B) - 2

APPENDIX V(B)

VALUATION REPORTS ON THE WAN CHAI PROPERTY

VALUATION CERTIFICATE

Market Value

Property

Description and tenure

in existing Particulars of state as at Occupancy 31st December, 2018

Whole of Hotel The Property comprises a site of 1,621 Bonaparte, No. 11 sq.ft. (or about 150.596 sq.m.). A 24Morrison Hill Road, Wan storey hotel building completed in Chai, Hong Kong 1998 was erected thereon (‘‘the Existing Building’’).

According to the information provided in the approved A&A plans approved on 7th August 2006 as obtained from the Buildings Department, the total gross floor area of the Existing Building is about 24,282.72 sq.ft. (or about 2,255.92 sq.m.) and the number of rooms is 80. The Property is held under Government Lease of The Remaining Portion of Inland Lot Nos. 3983 and 3984 for a lease term of 999 years commencing from 18th December 1893.

As informed by the HK$530,000,000.00 instructing party, the hotel rooms are under operation and the shop on ground floor is tenanted at a monthly rent of HK$40,000.00 until 7th December 2019.

Notes:

• 1) The registered owner of the Property is Nigon Hong Kong Limited (力運香港有限公司).

• 2) The Property is subject to a Mortgage in favour of United Overseas Bank Limited vide Memorial No. 18062102640323 dated 30th May, 2018.

• 3) The Property is zoned under the Draft Wan Chai Outline Zoning Plan No. S/H5/28 for ‘‘Other Specified Uses’’ purposes.

• 4) The inspection was undertaken by Mr. Jack Au Yeung on 31st December, 2018 under the supervision of the Qualified Valuer in accordance with the Valuation Standards and the Listing Rules.

On-site inspections were carried out at the subject building and the surroundings area for the investigation of the physical attributes of the Property and the nature of the locality. The Property was available for our inspection and the internal condition and external condition of the subject building was seen to be reasonably good.

Mr. Jack Au Yeung is currently a valuer of this professional practice and a member in the General Practice Division of The Royal Institution of Chartered Surveyors.

Appendix V(B) - 3

APPENDIX V(B) VALUATION REPORTS ON THE WAN CHAI PROPERTY

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Centaline Surveyors Limited, an independent valuer, in connection with the valuation of the Wan Chai Property as at 31 July 2018:

7/F. Greenwich Centre 260 King’s Road North Point Hong Kong

26th March 2019

The Board of Directors CNT GROUP LIMITED Unit E, 28/F., CNT Tower No. 338 Hennessy Road Wan Chai, Hong Kong

Dear Sirs,

VALUATION CERTIFICATE OF WHOLE OF HOTEL BONAPARTE, NO. 11 MORRISON HILL ROAD, WAN CHAI, HONG KONG FOR CNT GROUP LIMITED

We refer to your instruction for us to value the captioned property (hereinafter referred to as the ‘‘Property’’). 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 you with our opinion of the market value of the Property as at 31st July, 2018 for public disclosure purposes.

Our valuation of the Property has been based on the Market Value which in accordance with the Valuation Standards on Properties of the Hong Kong Institute of Surveyors is defined as ‘‘the estimated amount for which an asset or liability should exchange on 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.’’

Our valuation has been made on the assumptions that the Property is sold in the open market value without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to affect its value. In addition, no account has been taken of any option or right of pre-emption concerning or effecting the sale of the Property and no forced sale situation in any manner is assumed in our valuation.

No allowance has been made in our report for any charges, mortgage 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 outgoings of an onerous nature which could affect its value.

Appendix V(B) - 4

VALUATION REPORTS ON THE WAN CHAI PROPERTY

APPENDIX V(B)

In valuing the Property owned by the Company, we have valued the Property by using Direct Comparison Approach assuming sale of the Property in its existing state by making reference to comparable sales evidence as available in the relevant market.

We have caused searches to be made at the Land Registry. However, we have not searched the original documents to verify ownership or to ascertain the existence of any lease amendments which may not appear on the information handed to us. All documents and leases have been used for reference only and all dimensions, measurements and areas are only approximate. No on-site measurement has been taken to verify the correctness of the site area of the Property.

We have inspected the exterior and, where possible, the interior of the Property. However, we have not carried out investigations on site to determine the suitability of the ground conditions and services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delay will be incurred during the construction period. Moreover, no structural survey however has been made, but in the course of our valuation, we did not note any serious defects. We are not, however, able to report whether the Property is free or not, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out detailed on-site measurements to verify the site and floor areas of the Property and we have assumed that the areas shown on the documents handed to us are correct.

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 issued by The Stock Exchange of Hong Kong Limited and the Valuation Standards (Edition 2017) on Valuation of Properties published by The Hong Kong Institute of Surveyors.

We enclose herewith our valuation certificate.

Yours faithfully, For and on behalf of

CENTALINE SURVEYORS LIMITED

Pamela W.I. Lam Chartered Valuation Surveyor MRICS MHKIS RPS (GP) Director

Note: Pamela W. I. Lam is a Chartered Surveyor who has over 20 years experience in the valuation of properties in Hong Kong.

Appendix V(B) - 5

APPENDIX V(B)

VALUATION REPORTS ON THE WAN CHAI PROPERTY

VALUATION CERTIFICATE

Property

Description and tenure

Market Value in existing Particulars of state as at Occupancy 31st July, 2018

Whole of Hotel The Property comprises a site of As informed by the HK$530,000,000.00 Bonaparte, No. 11 1,621 sq.ft. (or about 150.596 sq.m.). instructing party, the Morrison Hill Road, A 24-storey hotel building hotel rooms are under Wan Chai, Hong Kong completed in 1998 was erected operation and the shop thereon (‘‘the Existing Building’’). on ground floor is tenanted at a monthly According to the information rent of HK$40,000.00 provided in the approved A&A plans until 7th December approved on 7th August 2006 as 2019. obtained from the Buildings Department, the total gross floor area of the Existing Building is about 24,282.72 sq.ft. (or about 2,255.92 sq.m.) and the number of rooms is 80. The Property is held under Government Lease of The Remaining Portion of Inland Lot Nos. 3983 and 3984 for a lease term of 999 years commencing from 18th December 1893.

Notes:

• 1) The registered owner of the Property is Nigon Hong Kong Limited (力運香港有限公司).

• 2) The Property is subject to a Mortgage in favour of United Overseas Bank Limited vide Memorial No. 18062102640323 dated 30th May, 2018.

• 3) The Property is zoned under the Draft Wan Chai Outline Zoning Plan No. S/H5/28 for ‘‘Other Specified Uses’’ purposes.

• 4) The inspection was undertaken by Mr. Jack Au Yeung on 31st July, 2018 under the supervision of the Qualified Valuer in accordance with the Valuation Standards and the Listing Rules.

On-site inspections were carried out at the subject building and the surroundings area for the investigation of the physical attributes of the Property and the nature of the locality. The Property was available for our inspection and the internal condition and external condition of the subject building was seen to be reasonably good.

Mr. Jack Au Yeung is currently a valuer of this professional practice and a member in the General Practice Division of The Royal Institution of Chartered Surveyors.

Appendix V(B) - 6

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests and short positions in Shares, underlying shares and debentures

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

		Number of Shares	Percentage of the
		or underlying	total number of
Name of Director	Capacity	shares	Shares in issue
Tsui Ho Chuen,	Interest of controlled	498,053,620 (Note)	26.16%
Philip	corporation

Note: The 498,053,620 Shares were beneficially owned by Prime Surplus Limited. Mr. Tsui Ho Chuen, Philip is the sole director and shareholder of Prime Surplus Limited.

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

Appendix VI - 1

GENERAL INFORMATION

APPENDIX VI

• (b) Companies which have interests and short positions in Shares and underlying shares of the Company in which any Director or proposed Director is a director or an employee

As at the Latest Practicable Date, 498,053,620 Shares were beneficially owned by Prime Surplus Limited. Mr. Tsui Ho Chuen, Philip, a non-executive Director, is the sole director of Prime Surplus Limited.

As at the Latest Practicable Date, save as disclosed above, none of the companies in which any Director or proposed Director is a director or employee had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

• (c) Interests of substantial shareholders in Shares and underlying shares

Name of		Number of Shares	Percentage of the
substantial		or underlying	total number of
shareholder	Capacity	shares	Shares in issue
Prime Surplus Limited	Beneficial owner	498,053,620 (Note 1)	26.16%
Ho Mei Po, Mabel	Interest of spouse	498,053,620 (Note 2)	26.16%
Chinaculture.com	Beneficial owner	364,689,655 (Note 3)	19.16%
Limited
Chuang’s China	Interest of controlled	364,689,655 (Note 3)	19.16%
Investments Limited	corporation
Profit Stability	Interest of controlled	364,689,655 (Note 3)	19.16%
Investments Limited	corporations
Chuang’s Consortium	Interest of controlled	364,689,655 (Note 3)	19.16%
International Limited	corporations
Evergain Holdings	Interest of controlled	364,689,655 (Note 3)	19.16%
Limited	corporations
Chong Shaw Swee,	Interest of controlled	364,689,655 (Note 3)	19.16%
Alan	corporations
Chong Ho Pik Yu	Interest of spouse	364,689,655 (Note 3)	19.16%

Appendix VI - 2

GENERAL INFORMATION

APPENDIX VI

Name of		Number of Shares	Percentage of the
substantial		or underlying	total number of
shareholder	Capacity	shares	Shares in issue
Broadsino Investment	Beneficial owner	98,000,000 (Note 4)	5.15%
Company Limited
Rapid Growth Ltd.	Trustee	98,000,000 (Note 5)	5.15%
Polygold Holdings	Interest of controlled	98,000,000 (Note 5)	5.15%
Limited	corporation
Xie Jian Ming	Interest of controlled	98,000,000 (Note 5)	5.15%
	corporations

Notes:

1. The 498,053,620 Shares were beneficially owned by Prime Surplus Limited. This interest is duplicated in the interests of Mr. Tsui Ho Chuen, Philip as disclosed in the section headed ‘‘Directors’ and chief executives’ interests and short positions in Shares, underlying shares and debentures’’ above.

2. Ms. Ho Mei Po, Mabel is the wife of Mr. Tsui Ho Chuen, Philip and was taken to be interested in 498,053,620 Shares in which her spouse was interested under the SFO.

3. The references to the 364,689,655 Shares relate to the same block of 364,689,655 Shares beneficially interested by Chinaculture.com Limited.

Chinaculture.com Limited was a wholly-owned subsidiary of Chuang’s China Investments Limited, which in turn was a 60.71% owned subsidiary of Profit Stability Investments Limited. Chuang’s Consortium International Limited held 100% equity interest in Profit Stability Investments Limited. Evergain Holdings Limited was interested in 47.25% of the issued share capital of Chuang’s Consortium International Limited. Mr. Chong Shaw Swee, Alan was interested in 100% of the issued share capital of Evergain Holdings Limited. Mrs. Chong Ho Pik Yu is the wife of Mr. Chong Shaw Swee, Alan.

Chuang’s China Investments Limited, Profit Stability Investments Limited, Chuang’s Consortium International Limited, Evergain Holdings Limited, Mr. Chong Shaw Swee, Alan and Mrs. Chong Ho Pik Yu were all deemed under the SFO to be interested in these 364,689,655 Shares which were owned by Chinaculture.com Limited.

1. These shares were beneficially owned by Broadsino Investment Company Limited. Pursuant to an option granted by Rapid Growth Ltd., Broadsino Investment Company Limited has a right to sell all or part of these shares to Rapid Growth Ltd. exercisable at any time during the term of the option.

2. The references to the interests in 98,000,000 underlying shares of the Company relate to the same block of 98,000,000 underlying shares of the Company interested by Rapid Growth Ltd. by virtue of an option granted by Rapid Growth Ltd. to Broadsino Investment Company Limited as disclosed in note (4) above.

Rapid Growth Ltd. was a wholly-owned subsidiary of Polygold Holdings Limited, which in turn was wholly owned by Mr. Xie Jian Ming.

Polygold Holdings Limited and Mr. Xie Jian Ming were all deemed under the SFO to be interested in these 98,000,000 underlying shares of the Company which were taken to be interested by Rapid Growth Ltd.

Appendix VI - 3

GENERAL INFORMATION

APPENDIX VI

As at the Latest Practicable Date, save as disclosed above, the Directors and the chief executive of the Company were not aware of any other persons other than a Director or chief executive of the Company, who had interests or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group.

3. MATERIAL CONTRACTS

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

• (i) the conditional deed of indemnity dated 9 June 2017 entered into by the Company in favour of CPM Group and its subsidiaries in respect of, among other matters, Hong Kong estate duty, Hong Kong profits tax and any payment made or required to be made by any member of CPM Group and its subsidiaries, any non-compliance with any applicable laws and regulation of CPM Group and its subsidiaries and any litigation, arbitration or claim of material importance against CPM Group and its subsidiaries;

• (ii) the underwriting agreement dated 16 June 2017 relating to the Hong Kong public offering of CPM Group entered into among, the Company, CNT Enterprises Limited, CPM Group, the executive directors of CPM Group, Innovax Capital Limited, Innovax Securities Limited, Sinolink Securities (Hong Kong) Company Limited, Gransing Securities Co., Limited, China Finance KAB Limited, ZMF Asset Management Limited, Guotai Junan Securities (Hong Kong) Limited, Pacific Foundation Securities Limited, RHB Securities Hong Kong Limited and Long Asia Securities Limited;

• (iii) the international underwriting agreement dated 26 June 2017 relating to the international offering of CPM Group entered into among, the Company, CNT Enterprises Limited, CPM Group, the executive directors of CPM Group, Innovax Capital Limited, Innovax Securities Limited, Sinolink Securities (Hong Kong) Company Limited, Gransing Securities Co., Limited, China Finance KAB Limited, ZMF Asset Management Limited, Guotai Junan Securities (Hong Kong) Limited, Pacific Foundation Securities Limited, RHB Securities Hong Kong Limited and Long Asia Securities Limited;

• (iv) the price determination agreement dated 26 June 2017 entered into between CPM Group on the one hand and Innovax Securities Limited and Sinolink Securities (Hong Kong) Company Limited (for themselves and on behalf of the other underwriters in the global offering of CPM Group) on the other hand for the determination of the offer price of such global offering;

• (v) the sale and purchase agreement dated 7 May 2018 entered into between Top Dreamer Limited (an indirect non-wholly owned subsidiary of the Company) as the purchaser and Wong Fan Cheong as the vendor in respect of the acquisition of the entire equity interest in

Appendix VI - 4

GENERAL INFORMATION

APPENDIX VI

China Molybdenum & Vanadium Development Limited (中國鉬業有限公司), a company incorporated in Hong Kong with limited liability on 9 May 2007 for a consideration of RMB83 million;

• (vi) the Share Exchange Agreement; and

• (vii) the Supplemental Deed.

4. DIRECTORS’ SERVICE CONTRACTS

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

5. LITIGATION

The Company has been named as a nominal defendant in a derivative action initiated by Chinaculture.com Limited, a substantial shareholder of the Company, against certain Directors and the Company. Details of the derivative action are set forth in the announcements of the Company dated 22 June 2017, 25 June 2017, 30 June 2017, 7 July 2017, 19 September 2017, 16 November 2017, 28 November 2017, 13 December 2017 and 10 January 2018 respectively. Save as disclosed above, none of the member of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

6. COMPETING INTERESTS OF DIRECTORS AND THEIR ASSOCIATES

Mr. Hung Ting Ho, Richard, a non-executive Director, holds directorship in Chuang’s Consortium International Limited, a company listed on the Stock Exchange, and directorships in certain private companies (the ‘‘Private Companies’’). Chuang’s Consortium International Limited and the Private Companies engage in the businesses of property development and investment in Hong Kong and the PRC. As the above-mentioned businesses are managed by separate companies with independent management and the properties owned by Chuang’s Consortium International Limited and the Private Companies are of different types and/or in different locations from those of the Group, the Group is capable of operating its businesses independently of, and at arm’s length from, the businesses of the above-mentioned companies.

As at the Latest Practicable Date, saved as disclosed above, none of the Directors or any of their respective associates has any interest in business which competes or are likely to compete, either directly or indirectly, with the business of the Group or has any other conflict of interests which any person has or may have with the Group.

Appendix VI - 5

GENERAL INFORMATION

APPENDIX VI

7. EXPERTS

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

Name Qualification Ernst & Young Certified Public Accountants BMI Appraisals Limited Independent professional valuer Centaline Surveyors Limited Independent professional valuer

As at the Latest Practicable Date, each of the experts named above did not have any interests, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2017, the date to which the latest published audited consolidated financial statements of the Group were made up.

As at the Latest Practicable Date, each of the above experts was not interested beneficially or non-beneficially in any Shares or any of its subsidiaries or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

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

8. MISCELLANEOUS

• (a) There is no contract or arrangement entered into by any member of the Group subsisting at the date of this circular in which any Director is materially interested and which is significant to the business of the Remaining Group.

• (b) As at the Latest Practicable Date, no Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2017, the date to which the latest published audited consolidated financial statements of the Group were made up.

• (c) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and the principal office is at Unit E, 28th Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong Kong.

• (d) The share registrar of the Company in Hong Kong is Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The company secretary of the Company is Ms. Fok Pik Yi, Carol, who is a fellow member of both The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

Appendix VI - 6

GENERAL INFORMATION

APPENDIX VI

• (f) The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

9. DOCUMENTS FOR INSPECTION

Copies of the following documents are available for inspection at the principal office of the Company in Hong Kong at Unit E, 28th Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong Kong during normal business hours on any business day for a period of 14 days from the date of this circular:

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

• (b) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this Appendix;

• (c) the written consents of experts referred to in the paragraph headed ‘‘Experts’’ in this Appendix;

• (d) the financial information of the Ocean Wide Group, the text of which is set out in Appendix II(A) to this circular;

• (e) the accountants’ report of the Nigon Group, the text of which is set out in Appendix II(B) to this circular;

• (f) the unaudited pro forma financial information of the Remaining Group and the Enlarged Group and the Comfort Letter from Ernst & Young on pro forma financial information, the text of which is set out in Appendix IV to this circular;

• (g) the valuation reports on the Sai Kung Property, the text of which is set out in Appendix V(A) to this circular;

• (h) the valuation reports on the Wan Chai Property, the text of which is set out in Appendix V(B) to this circular;

• (i) the annual reports of the Company for each of the two financial years ended 31 December 2016 and 31 December 2017; and

• (j) this circular.

Appendix VI - 7

NOTICE OF SPECIAL GENERAL MEETING

CNT GROUP LIMITED 北海集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 701)

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘Special General Meeting’’) of CNT Group Limited (the ‘‘Company’’) will be held at 31st Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong Kong on Thursday, 9 May 2019 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT:

• (a) the conditional share exchange agreement dated 8 September 2018 (the ‘‘Share Exchange Agreement’’) and entered into between Tatpo Corporation Limited (‘‘Tatpo’’), Jetco (H.K.) Limited (‘‘Jetco’’) and Mr. Tang Shing Bor (a copy of which has been produced to the Special General Meeting and marked ‘‘A’’ and initialled by the chairman of the Special General Meeting for the purpose of identification) (as amended and supplemented by the supplemental deed dated 20 March 2019 (the ‘‘Supplemental Deed’’), a copy of which has been produced to the Special General Meeting and marked ‘‘B’’ and initialled by the chairman of the Special General Meeting for the purpose of identification) in relation to, among other things, the disposal by Tatpo of the entire issued share capital of Ocean Wide Assets Limited (‘‘Ocean Wide’’) and the entire amount of shareholder’s loan owed by Ocean Wide to Tatpo as at the date of completion at an aggregate consideration of HK$900 million which will be satisfied (i) as to HK$370 million (subject to adjustment in accordance with the terms and conditions of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) by cash to be paid to Tatpo; and (ii) as to HK$530 million by the entire issued share capital of Nigon Hong Kong Limited (‘‘Nigon’’) and the entire amount of shareholder’s loan owed by Nigon to Jetco as at the date of completion to be transferred by Jetco to Tatpo (or its nominee) under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) be and are hereby approved, ratified and confirmed; and

• (b) any one or more director(s) of the Company (the ‘‘Director(s)’’) be and is/are hereby authorised for and on behalf of the Company to execute all such documents (including under seal, where applicable), to do all other acts and things deemed by him/them to be incidental to, ancillary to or in connection with the matter contemplated in and completion of the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), and take such action as may in the opinion of the Director(s) be necessary, desirable or expedient to implement and give effect to or in connection with the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed) and any other transactions contemplated under the Share Exchange Agreement (as amended and supplemented by the Supplemental Deed), and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver

N - 1

NOTICE OF SPECIAL GENERAL MEETING

of such documents or any terms thereof) as is/are, in the opinion of such Director(s) or the duly authorised committee of the board of Directors, in the interest of the Company and its shareholders as a whole.’’

By order of the Board CNT Group Limited Fok Pik Yi, Carol Company Secretary

Hong Kong, 26 March 2019

Notes:

1. Any member entitled to attend and vote at the Special General Meeting is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A proxy need not be a member of the Company.

2. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of such power of attorney or authority shall be delivered to the Company’s share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the Special General Meeting at which the person named in the instrument proposes to vote or any adjourned thereof (as the case may be).

3. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the Special General Meeting or any adjournment thereof, should he/she so wish, and in such event, the form of proxy shall be deemed to be revoked.

4. The register of members of the Company will be closed from Monday, 6 May 2019 to Thursday, 9 May 2019, both days inclusive, during the period no transfer of shares will be effected. In order to be entitled to attend and vote at the Special General Meeting, all transfers accompanied by the relevant share certificates must be lodged for registration with the Company’s share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:30 p.m. on Friday, 3 May 2019.

5. The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

N - 2