RemeGen Co., Ltd. — Proxy Solicitation & Information Statement 2018

Sep 21, 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Overseas Chinese Town (Asia) Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司 (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

MAJOR TRANSACTION

CORNERSTONE INVESTMENT IN E-HOUSE (CHINA) ENTERPRISE HOLDINGS LIMITED

24 September 2018

CONTENTS

			Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
**LETTER FROM **	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
APPENDIX I	–	FINANCIAL INFORMATION OF THE GROUP. . . . . . . .	16
APPENDIX II	–	ACCOUNTANTS’ REPORT AND FINANCIAL
		INFORMATION OF THE TARGET GROUP. . . . . . . . .	19
APPENDIX III	–	MANAGEMENT DISCUSSION AND ANALYSIS OF
		THE TARGET GROUP . . . . . . . . . . . . . . . . . . . . . . . . . .	143
APPENDIX IV	–	UNAUDITED PRO FORMA FINANCIAL
		INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . .	174
APPENDIX V	–	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	180

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DEFINITIONS

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

• “Aggregate Subscription Price”

• the amount equal to the aggregate of (i) the Offer Price multiplied by the number of Investor Shares to be purchased by City Legend pursuant to the Cornerstone Investment Agreement; and (ii) the related brokerage and transaction levies in respect of the Investor Shares

• “Announcement”

• the announcement made by the Company on 5 July 2018 in relation to the Cornerstone Investment in E-House Enterprise

• “Board” the board of Directors

• “China International Capital”

• China International Capital Corporation Hong Kong Securities Limited, a licensed corporation holding a license under the SFO for type 1 (dealing in securities), type 2 (dealing in future contracts), type 4 (advising on securities), type 5 (advising on futures contracts) and type 6 (advising on corporate finance) regulated activities under the SFO

• “City Legend”

• City Legend International Limited (華昌國際有限公司), a company incorporated in Hong Kong with limited liability and wholly-owned by the Company

• “close associates”

• has the meaning ascribed to it under the Listing Rules

• “Company”

• Overseas Chinese Town (Asia) Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 03366)

• “controlling shareholder(s)”

• has the meaning ascribed to in the Listing Rules

• “Cornerstone Investment”

• the subscription of the Investor Shares by City Legend contemplated under the Cornerstone Investment Agreement

• “Cornerstone Investment Agreement”

• the cornerstone investment agreement entered into among City Legend, E-House Enterprise and China International Capital on 5 July 2018

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DEFINITIONS

• “Director(s)”

the directors of the Company

• “E-House Enterprise” or

• “Target Company”

• E-House (China) Enterprise Holdings Limited (易居(中 國)企業控股有限公司) (Stock Code: 2048), an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange on 20 July 2018

• “Global Offering”

• the global offering of the shares of E-House Enterprise comprising the Hong Kong Public Offering and the International Offering

• “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

• “Hong Kong Public Offering”

• the offer for subscription of the shares of E-House Enterprise by the public in Hong Kong

• “Independent Third Party(ies)”

• parties independent of and not connected with the Company and its connected persons

• “Interim Results Announcement”

• the interim results announcement of E-House Enterprise for the six months ended 30 June 2018 published on the website of the Stock Exchange on 31 August 2018

• “International Offering”

• a conditional offering of its ordinary shares outside the United States (including placing to professional and institutional investors in Hong Kong) in reliance on Regulation S under the Securities Act and in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act or any other available exemption from registration under the Securities Act

• “Investor Shares”

• the shares of E-House Enterprise to be purchased by City Legend pursuant to the Cornerstone Investment Agreement, which is 73,371,900 shares of E-House Enterprise

• “Joint Representatives”

• China International Capital and Credit Suisse (Hong Kong) Limited

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DEFINITIONS

• “Latest Practicable Date” 19 September 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Listing Date” 20 July 2018, the date which the shares of E-House Enterprise are listed on the Main Board of the Stock Exchange

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Offer Price” the final HK$ price per share of E-House Enterprise (exclusive of brokerage, transaction levies and trading fees) at which the shares of E-House Enterprise are to be offered and sold pursuant to the Global Offering

• “Pacific Climax” Pacific Climax Limited, a company incorporated in the British Virgin Islands with limited liability, which is a controlling shareholder of the Company

• “PRC” the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purposes of this circular

• “Prospectus” the prospectus of E-House Enterprise dated 10 July 2018 published on the website of the Stock Exchange

• “RMB” Renminbi, the lawful currency of the PRC

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

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Group” E-House Enterprise together with its subsidiaries “%” per cent.

In this circular, the English names of the PRC entities or enterprises are translations of their Chinese names. In the event of any inconsistency, the Chinese names shall prevail.

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LETTER FROM THE BOARD

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Overseas Chinese Town (Asia) Holdings Limited 華僑城（亞洲）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 03366)

Executive Directors: Mr. He Haibin (Chairman) Ms. Xie Mei (Chief Executive Officer) Mr. Lin Kaihua

Non-executive Director: Mr. Zhang Jing

Registered Office: Clifton House 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands

Independent Non-executive Directors: Mr. Lu Gong Ms. Wong Wai Ling Professor Lam Sing Kwong Simon

Principal Place of Business in Hong Kong: Suites 3203-3204, Tower 6 The Gateway, Harbour City Canton Road Tsim Sha Tsui Kowloon, Hong Kong

24 September 2018

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

CORNERSTONE INVESTMENT IN E-HOUSE (CHINA) ENTERPRISE HOLDINGS LIMITED

INTRODUCTION

Reference is made to the Announcement.

On 5 July 2018, City Legend (as investor), a wholly-owned subsidiary of the Company, E-House Enterprise (as issuer) and China International Capital (as representative of the joint global coordinators) entered into the Cornerstone Investment Agreement, pursuant to which City Legend agreed to acquire the Investor Shares at the Offer Price as part of the International Offering and the maximum Aggregate Subscription Price for the Investor Shares payable by City Legend under the Cornerstone Investment Agreement will not exceed HK$1,750,000,000.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, further details of the Cornerstone Investment Agreement and the transactions contemplated thereunder and such other information as required by the Listing Rules.

CORNERSTONE INVESTMENT AGREEMENT

The principal terms of the Cornerstone Investment Agreement are as follows:

Date:

5 July 2018 (after trading hours)

Parties:

• (1) City Legend, as investor;

• (2) China International Capital, as one of the Joint Representatives, joint global coordinators, joint bookrunners, joint sponsors and joint lead managers to the Global Offering; and

• (3) E-House Enterprise, as issuer.

Cornerstone Investment:

Subject to the conditions set out in the paragraph headed “Conditions precedent” below being fulfilled (or waived by the parties, except that the conditions (a), (b) and (c) cannot be waived and condition (e) can only be waived by the Joint Representatives) and other terms and conditions of the Cornerstone Investment Agreement, City Legend has agreed to:

• (1) subscribe for, and E-House Enterprise has agreed to allot and issue to City Legend, the Investor Shares at the Offer Price as part of the International Offering. The number of the Investor Shares shall be 73,371,900 shares of E-House Enterprise; and

• (2) pay the aggregate Offer Price and the related brokerage, transaction levies and trading fees in respect of the Investor Shares on the Listing Date.

The Investor Shares shall, when issued and delivered, be fully paid and free from all options, liens, charges, mortgages, pledges, claims, equities, encumbrances and other third party rights and shall rank pari passu with the shares of E-House Enterprise then in issue and to be listed on the Stock Exchange.

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LETTER FROM THE BOARD

As at the date of the Cornerstone Investment Agreement, E-House Enterprise was seeking it shares to be listed on the Main Board of the Stock Exchange by way of Global Offering comprising (i) the Hong Kong Public Offering and (ii) the International Offering. The Cornerstone Investment was deemed as part of the International Offering.

Consideration and payment:

The aggregate consideration payable by City Legend under the Cornerstone Investment Agreement (i.e. the Aggregate Subscription Price) comprises (i) the Offer Price multiplied by the number of the Investor Shares to be purchased by City Legend pursuant to the Cornerstone Investment Agreement; and (ii) the related brokerage and transaction levies in respect of the Investor Shares. As at the date of the Cornerstone Investment Agreement, the Board estimated that the maximum Aggregate Subscription Price for the Investor Shares would not exceed HK$1,750,000,000 and would be settled in cash.

As at the Latest Practicable Date, the listing application of E-House Enterprise has been approved and its shares are listed on the Main Board of the Stock Exchange on the Listing Date (i.e. 20 July 2018). Accordingly, City Legend settled the Aggregate Subscription Price of HK$1,065,720,042.99 (comprising (i) the subscription price of HK$1,055,087,922 (i.e. 73,371,900 Investor Shares x the Offer Price of HK$14.38) and (ii) the related brokerage and transaction levies of HK$10,632,120.99) to China International Capital on the Listing Date in cash pursuant to the Cornerstone Investment Agreement. The Aggregate Subscription Price was financed from the internal resources of the Group.

Basis of Consideration

The Aggregate Subscription Price was agreed between the parties to the Cornerstone Investment Agreement after arm’s length negotiations based on the size of the Cornerstone Investment, the prospects of E-House Enterprise and the market conditions at the time when the parties entered into the Cornerstone Investment Agreement.

In determining whether the Aggregate Subscription Price is fair and reasonable and whether the Group should enter into the Cornerstone Investment Agreement, the Board obtained from E-House Enterprise various materials for investors, including but not limited to the draft Prospectus of E-House Enterprise (which is substantially in the form as the application proof Prospectus (the “Application Proof Prospectus”) published by E-House Enterprise on the website of the Stock Exchange on 26 April 2018), and conducted various in-depth analyses on the following factors:

(a) Shareholding structure:

As a leading enterprise in the sector of real estate agency service, E-House Enterprise has introduced twenty five Top 100 PRC real estate developers as its shareholders, which include four Top 5 PRC real estate developers. According to the Application Proof Prospectus, with reference to the sale volume, the market share of the Top 100 PRC real estate developers has increased from approximately 39.1% in 2015 to

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LETTER FROM THE BOARD

approximately 56.8% in 2017, and is expected to increase to 62.8%-65.8% in 2020. It is submitted that such shareholding structure has a fostering effect on the business development of E-House Enterprise.

(b) Future stability of the business operation and income:

According to the Application Proof Prospectus, the Target Group ranked the first in both city coverage and income generated from the first-hand real estate agency services, with the aggregate first-hand real estate sale volume of RMB433 billion and the aggregate sale floor area of 37.2 million sq.m. in 2017. In light of the Target Group’s first-hand real estate agency service being its most profit generating business and the existing agency agreements entered into between the Target Group and the real estate developers, stable business operation and profit of the Target Group are expected.

(c) Sound financial position and good repayment ability:

According to the Application Proof Prospectus, the debt-asset ratio of the Target Group is 20.8% in 2017. Since the Target Group has deeply engaged in the real estate agency services market, its profitability is relatively more outstanding than that of its counterparts in the market. The Target Group recorded a profit ratio of 20.7%, a return on asset ratio of 14.4% and a return on net asset ratio of 42.2% in 2017.

(d) Fair and reasonable valuation:

According to the data on the valuation level adopted by the comparable companies in the market generated by Bloomberg, in respect of the H-shares (e.g. Greentown Service Group Co. Ltd. (2869.hk), A-Living Services Co Ltd (3319.hk), and China Overseas Property Holdings Limited (2669.hk)), the comparable average price-earning ratio corresponding to the net profit level in 2018 is 23.8 times; in respect of the A-shares (e.g. Shenzhen Worldunion Properties Consultancy Incorporation (002285.sz), 5I5J Holdings Group Co., Ltd. (00560.sz), Hubei Guochuang Hi-tech Material Co., Ltd (002377.sz) and Nacity Property Service Co Ltd (603506.sh)), the comparable average price-earning ratio corresponding to the net profit level in 2018 is 25.1 times. As the Offer Price of E-House Enterprise corresponding to the audited net profit in 2017 does not exceed 23 times, the Board believed such valuation level is fair and reasonable.

As stated above, apart from the business development, core business competition edges, financial position of the Target Group, the comparable companies’ development, the financial indicators and valuation level of the comparable companies in the secondary market, the Board has also considered the fostering effect on the Target Group’s business development brought along by its shareholding structure and senior management of E-House Enterprise; the market status of the Target Group; financial position and repayment ability of the Target Group; and the competitiveness arising from the valuation adopted by E-House Enterprise, as compared to the comparable issuers in the market in determining whether the Aggregate Subscription Price is fair and reasonable.

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LETTER FROM THE BOARD

Having considered the above information, the Board is of the view that E-House Enterprise is the leading enterprise in the real estate transaction service sector with an optimistic development prospect and believes the Cornerstone Investment is a good investment opportunity to the Group and compatible with the Company’s development strategy. Therefore the Group expressed its interest in conducting the Cornerstone Investment after the IPO roadshow of E-House Enterprise and provided its proposed subscription price range to E-House Enterprise for its consideration.

Despite the Group did not have a decisive power on the final Subscription Price, given City Legend’s investment size in E-House Enterprise was much significant than the other potential cornerstone investors, E-House Enterprise and the representative of its joint global coordinators, China International Capital, had placed considerable weight on City Legend’s suggested subscription price range in their price determining process.

To the best knowledge, belief and information of the Company and having made references to the previous cornerstone investments made by the Group and other precedents available in the market, the above price determination process of the Cornerstone Investment Agreement was in line with market practice.

In light of the size of the Cornerstone Investment, the Board believe the Group has obtained all information it could reasonably obtain and the decision making process above conforms to the market practice and is also in compliance with the relevant rules and regulations.

Conditions precedent:

The parties’ respective obligations under the Cornerstone Investment Agreement are conditional upon, the following conditions having been satisfied (or waived by the parties, except that the conditions (a), (b) and (c) cannot be waived and condition (e) can only be waived by the Joint Representatives) at or prior to the closing:

• (a) the Hong Kong underwriting agreement and the international underwriting agreement in respect of the Global Offering having been entered into and having become unconditional (in accordance with their respective original terms, as subsequently varied by agreement of the parties thereto or waived, to the extent it may be waived, by the relevant parties) by no later than the time and date as specified in those underwriting agreements, and not having been terminated or lapsed;

• (b) the Offer Price having been agreed upon among E-House Enterprise and the Joint Representatives (for themselves and on behalf of the underwriters in respect of the Global Offering);

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LETTER FROM THE BOARD

• (c) the Listing Committee of the Stock Exchange having granted the approval for the listing of, and permission to deal in, the shares of E-House Enterprise in issue and to be issued pursuant to the Global Offering and that such approval or permission having not been revoked prior to the commencement of dealings in the shares of E-House Enterprise on the Stock Exchange;

• (d) no laws shall have been enacted or promulgated by any governmental authority which prohibit the consummation of the transactions contemplated under the Global Offering or hereunder and there shall be no orders or injunctions from a court of competent jurisdiction in effect precluding or prohibiting consummation of the transactions contemplated under the Global Offering or under the Cornerstone Investment Agreement; and

• (e) the respective representations, warranties, acknowledgements, undertakings and confirmations of City Legend and E-House Enterprise in the Cornerstone Investment Agreement remaining accurate and true in all respects and not misleading and that there is no breach of the Cornerstone Investment Agreement on the part of City Legend.

In the event that (i) any of the conditions precedent set out above have not been fulfilled (or jointly waived by E-House Enterprise and the Joint Representatives except that the conditions set out in conditions (a), (b) and (c) cannot be waived and condition (e) can only be waived by the Joint Representatives) on or before the date which is 180 days after the date of the Cornerstone Investment Agreement (or such other date as may be agreed in writing among the parties); or (ii) the Global Offering is not completed as contemplated in the Cornerstone Investment Agreement:

• (1) the obligation of City Legend to subscribe for, E-House Enterprise’s and the joint global coordinators’ obligation to issue, place, allocate and deliver (as the case may be), the Investor Shares shall cease;

• (2) any amount paid by City Legend hereunder shall be repaid to City Legend (as soon as reasonably practicable) without interest;

• (3) the Cornerstone Investment Agreement will terminate and be of no effect;

• (4) none of E-House Enterprise or China International Capital or any of their respective affiliates, associates, directors or employees shall owe any liability to City Legend upon such full repayment to City Legend; and

• (5) all obligations or liabilities on the part of E-House Enterprise or China International Capital or City Legend shall cease and terminate, provided that termination of the Cornerstone Investment Agreement pursuant to this clause shall be without prejudice to the accrued rights or liabilities of any party to the other parties in respect of the terms herein at or before such termination.

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LETTER FROM THE BOARD

All the conditions precedent to the Cornerstone Investment Agreement were already fulfilled on or before the Listing Date, and the Closing of the Cornerstone Investment Agreement had taken place on the Listing Date.

Restrictions on City Legend:

City Legend undertook to E-House Enterprise and the Joint Representatives that it will not, and will not procure that its subsidiaries, at any time during the period of six months from the Listing Date, being the locking-up period:

• (1) dispose of any of the Investor Shares or any interest in any company or entity (directly or indirectly) holding any of the Investor Shares;

• (2) allow itself to undergo a change of control (as defined in The Code of Takeovers and Mergers and Share Buy-backs);

• (3) enter into any transactions directly or indirectly with the same economic effect as the Cornerstone Investment;

• (4) publicly announce any intention to enter into the Cornerstone Investment; or

• (5) agree or contract to do any of the aforesaid transactions.

Closing:

The Closing of the Cornerstone Investment Agreement had already taken place on the Listing Date, on which City Legend had settled the Aggregate Subscription Price to China International Capital and was allotted and issued with the 73,371,900 Investor Shares, representing approximately 5.00% of the total issued share capital of E-House Enterprise on the Listing Date and approximately 4.99% of the total issued share capital of E-House Enterprise as at the Latest Practicable Date.

INFORMATION OF CITY LEGEND AND THE COMPANY

The principal business activity of the Company is investment holding. The Group is principally engaged in the comprehensive development business and investment in the urbanisation industrial ecosphere business.

City Legend is a wholly-owned subsidiary of the Company, which is incorporated under the laws of Hong Kong with limited liability. It is principally engaged in investment holding.

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LETTER FROM THE BOARD

INFORMATION ON E-HOUSE ENTERPRISE AND CHINA INTERNATIONAL CAPITAL

E-House Enterprise is an exempted company incorporated in the Cayman Islands with limited liability. It is a comprehensive real estate transaction service provider in the PRC with its principal business being offering primary real estate agency services, real estate big data and consulting services and secondary real estate brokerage platform services. Its shares were listed on the Main Board of the Stock Exchange on 20 July 2018.

According to the Prospectus, the audited financial information of the Target Group for the three years ended 31 December 2015, 2016 and 2017 in accordance with International Financial Reporting Standards (“IFRS”) issued by International Accounting Standard Board (“IASB”) is as follow:

		**For the year ended 31 **	**For the year ended 31 **	December
		2015	2016	2017
		RMB’000	RMB’000	RMB’000
Profit	before taxation	289,225	788,805	971,257
Profit	after taxation	177,154	572,169	765,306

The audited net asset value of E-House Enterprise as at 31 December 2017 was approximately RMB2,162,623,000.

China International Capital is a licensed corporation holding a license under the SFO for type 1 (dealing in securities), type 2 (dealing in future contracts), type 4 (advising on securities), type 5 (advising on futures contracts) and type 6 (advising on corporate finance) regulated activities under the SFO.

To the best information, knowledge and belief of the Directors after having made all reasonable enquiries, E-House Enterprise, China International Capital and their respective ultimate beneficial owners are Independent Third Parties.

REASONS FOR AND BENEFIT OF ENTERING INTO THE CORNERSTONE INVESTMENT AGREEMENT

Considering the current business scale and market share of E-House Enterprise, the Group is optimistic about the development prospect of E-House Enterprise. As E-House Enterprise’s expertise in real estate agency services, the big data services it provided in the first and second-hand housing agency markets and the real estate markets, together with the Group’s comprehensive development business are all belong to the real estate industry. As such, despite City Legend is not a majority shareholder of E-House Enterprise after the Closing, the Company believes the Cornerstone Investment can bring along synergy with the existing business of the Group, being in line with the Company’s development strategy of investing in the new urbanisation industrial ecosphere.

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LETTER FROM THE BOARD

Having considered the above, the Directors are of the view that the terms of the Cornerstone Investment Agreement are on normal commercial terms that are fair and reasonable, and the Cornerstone Investment is in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF CORNERSTONE INVESTMENT AGREEMENT

There would be no financial effect of the Cornerstone Investment on the total assets, total liabilities and earnings of the Group upon the completion of the Cornerstone Investment. Based on the unaudited pro forma financial information of the Group as set out in Appendix IV of this circular, assuming the Cornerstone Investment had completed on 30 June 2018, the non-current assets of the Group as at 30 June 2018 would have increased by RMB908,569,000 and the current assets of the Group as at 30 June 2018 would have decreased by RMB908,569,000.

After completion of the Cornerstone Investment, the Investor Shares have been accounted for as financial assets of the Group. The E-House Enterprise will not become a subsidiary, associate or joint venture of the Company, accordingly its financial results will not be consolidated into or equity accounted for in the consolidated financial statements of the Group.

LISTING RULES IMPLICATIONS

As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Cornerstone Investment Agreement is/are more than 25% but less than 100%, the Cornerstone Investment Agreement and the transactions contemplated thereunder constitute a major transaction of the Company for the purpose of the Listing Rules and are subject to the announcement requirement and the approval of the Shareholders under Chapter 14 of the Listing Rules.

SHAREHOLDERS’ WRITTEN APPROVAL

As no Shareholder has material interest in the Cornerstone Investment Agreement and the transactions contemplated thereunder, none of the Shareholders is required to abstain from voting if the Company were to convene a general meeting for the approval of the Cornerstone Investment Agreement and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, the controlling shareholder of the Company which held 530,894,000 Shares as at the date of this circular (representing approximately 70.94% of the issued share capital of the Company) for the approval of the Cornerstone Investment Agreement and the transactions contemplated thereunder. As such, no extraordinary general meeting will be convened by the Company to approve the Cornerstone Investment Agreement and the transactions contemplated thereunder.

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LETTER FROM THE BOARD

WAIVER FROM STRICT COMPLIANCE WITH REQUIREMENTS UNDER THE LISTING RULES

Waiver from strict compliance with Rules 14.67(6)(a)(i) of the Listing Rules

Pursuant to Rule 14.67(6)(a)(i) of the Listing Rules, the Company is required to include in this circular an accountants’ report of the Target Group prepared in accordance with Chapter 4 of the Listing Rules. The accounts on which such report is based must relate to a financial period ended 6 months or less before the date of this circular, and the financial information on the business, company or companies being acquired must be prepared using accounting policies which should be materially consistent with those of the Company.

Reasons for the application

The Company has applied to the Stock Exchange for a waiver in relation to Rule 14.67(6)(a)(i) of the Listing Rules, since due to the size of the Cornerstone Investment and pursuant to the Cornerstone Investment Agreement, the Company is not entitled to full access to the financial information of the Target Group together with the supporting documents required to prepare an accountants’ report on it under Rule 14.67(6)(a)(i) of the Listing Rules, save for mere reference to the Prospectus.

Having reviewed the accountants’ report for the three years ended 31 December 2015, 2016, 2017 and the three months ended 31 March 2018, and the unaudited financial information for the six months ended 2018 of E-House Enterprise as disclosed in the Prospectus and the Interim Results Announcement (the same have been reproduced in Appendix II to this Circular), the Company understands that the historical financial information of the Target Company for the years ended 31 December 2015, 2016, 2017 and the three months ended 31 March 2018 included in the Accountants’ Report and the unaudited financial information for the six months ended 2018 included in the Interim Results Announcement (the “Historical Financial Information”) has been prepared in accordance with IFRS, which are materially consistent with Hong Kong Financial Reporting Standards (“HKFRS”) adopted by the Company.

As disclosed in note 3 of the accountants’ report and note 1b of the unaudited financial information in the Interim Results Announcement of E-House Enterprise, it applies the merger accounting for business combination involving entities under common control, while the Company elects to apply the acquisition method for all business combinations, including business combinations under common control in accordance with the Company’s accounting policies. It is an acceptable accounting choice for applying the merger accounting or acquisition method to account for business combination under common control in accordance with IFRS and HKFRS.

Based on the above, the Board of the view that the Historical Financial Information of E-House Enterprise has been prepared on a basis materially consistent with the accounting policies normally adopted by the Company.

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LETTER FROM THE BOARD

Alternative Disclosure

In order to facilitate the Shareholders and potential investors of the Company to evaluate the transaction contemplated under the Cornerstone Investment Agreement, the Company has make alternative disclosures in this circular to enable Shareholders to assess the transaction pursuant to Rule 14.67 of the Listing Rules by disclosing the accountants’ report of the Target Group for the years ended 31 December 2015, 2016 and 2017 and the three months ended 31 March 2018 prepared by its auditor (which is independent of the Company) and the unaudited financial information for the six months ended 30 June 2018 prepared by the Target Company, which is extracted from the Prospectus and the Interim Results Announcement and set out in Appendices II and III to this circular respectively.

The full text of the Prospectus was published on http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0710/LTN20180710029.pdf.

The full text of the Interim Results Announcement was published on http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0831/LTN201808311512.pdf.

The Directors are of the view that the Company had taken reasonable steps to ensure sufficient information was provided to its Shareholders to make a properly informed assessment of the Target Company under Rule 14.67 of the Listing Rules. The granting of the waiver from strict compliance with Rule 14.67(6)(a)(i) of the Listing Rules would not result in an omission of material information in this circular and would not result in undue risks to its Shareholders.

In light of the above, the Directors are of the view this circular is not materially incomplete, misleading or deceptive and would not deprive the Shareholders of the necessary information to assess the transaction contemplated under the Cornerstone Investment Agreement and its impact on the Company.

The Stock Exchange has granted a waiver to the Company to waive the requirements under Rule 14.67(6)(a)(i) of the Listing Rules in this circular.

RECOMMENDATION

The Board (including the independent non-executive Directors) considers that the terms of the Cornerstone Investment Agreement are fair and reasonable and the transaction contemplated thereunder is in the best interests of the Company and the Shareholders as a whole.

Although a general meeting will not be convened by the Company to approve the Cornerstone Investment Agreement and the transactions contemplated therein, if such a general meeting were to be convened by the Company, the Board would recommend the Shareholders to vote in favour of the resolutions to approve the Cornerstone Investment Agreement and the transactions contemplated therein.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

By Order of the Board

Overseas Chinese Town (Asia) Holdings Limited He Haibin

Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY OF THE GROUP

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

The audited consolidated financial statements of the Group for the year ended 31 December 2015 has been set out in pages 59 to 138 of the annual report 2015 of the Company which was posted on 7 April 2016 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0407/LTN20160407369.pdf).

The audited consolidated financial statements of the Group for the year ended 31 December 2016 has been set out in pages 77 to 172 of the annual report 2016 of the Company which was posted on 26 April 2017 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0426/LTN20170426481.pdf). The audited consolidated financial statements of the Group for the year ended 31 December 2017 has been set out in pages 77 to 178 of the annual report 2017 of the Company which was posted on 13 April 2018 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0413/LTN20180413403.pdf).

The unaudited consolidated financial statements of the Group for the six months ended 30 June 2018 has been set out in pages 28 to 72 of the interim report 2018 of the Company which was posted on 12 September 2018 on the Stock Exchange’s website (http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0912/LTN20180912604.pdf).

2. SUFFICIENCY OF WORKING CAPITAL

The Directors are of the opinion that, taking into account the financial resources available to the Group including the internally generated funds and the present available bank facilities, the Group will have sufficient working capital for its requirements for at least the next 12 months from the date of this circular.

3. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 July 2018, being the date of this indebtedness statement prior to the printing of this circular, the Group had a total borrowings of approximately RMB7,300.89 million, comprising secured and guaranteed bank and related party loans of approximately RMB1,809.08 million, unsecured bank and related party loans of approximately RMB5,491.61 million, and bills payable of approximately RMB0.20 million.

As at 31 July 2018, the Group’s secured and guaranteed bank loans and bills payable were secured by pledged deposits with total carrying values of approximately RMB750.02 million, and guarantee provided by an intermediate parent of the Company.

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FINANCIAL INFORMATION OF THE GROUP

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As at 31 July 2018, save for the guarantees of approximately RMB833.21 million given to financial institutions for mortgage loan facilities granted to purchasers of the Group’s properties, the Group had no other material contingent liabilities.

Foreign currency amounts have been, for the purposes of this indebtedness statement, translated into Renminbi at the approximate rates of exchange applicable at the close of business on 31 July 2018.

Save as aforesaid and apart from intra-group liabilities and normal trade payables in the ordinary course of business, at the close of business on 31 July 2018, the Group did not have any other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, other similar indebtedness, finance lease or hire purchase lease commitments, liabilities under acceptance or acceptance credit, guarantees or other material contingent liabilities.

4. MATERIAL ADVERSE CHANGE

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

5. FINANCIAL AND TRADING PROSPECT OF THE GROUP

For the year ended 31 December 2017, the Group realised revenue of approximately RMB4,905 million, representing a year-on-year decrease of approximately 8.5%. For the year ended 31 December 2017, profit attributable to equity holders of the Group was approximately RMB1,107 million, representing a significant year-on-year increase of approximately 187.1%. For the year ended 31 December 2017, gross profit margin of the Group was approximately 34.0%, representing a year-on-year increase of approximately 3.3 percentage points. As at 31 December 2017, total assets and total equity of the Group amounted to approximately RMB23,746 million and approximately RMB13,313 million, representing a year-on-year increase of approximately 15.6% and approximately 96.7% respectively.

Looking forward, for the comprehensive development businesses, the Group will pay close attention to the real estate policies stipulated by the central and local governments and optimise its development strategies based on market conditions. The Group will continue to adhere to advanced development philosophy and clear market orientation and stay on the outlook for diversified investment opportunities. More quality lands will be acquired and the project reserve pool will be expanded through mergers and acquisitions, cooperation and other approaches, with the aim of propelling the growth of the comprehensive development business.

Shanghai Suhewan, as a riverside city comprehensive project featuring a fusion of cultural heritage, art, fashion, commercial and residential properties as well as urban recreational facilities, will continue the sales activities of waterfront multi-storey residential properties and high-rise residential towers that have highly sought-after landscape resources. It will also launch a new apartment project, Bulgari Residence for lease while at the same time roll out the leasing of commercial properties. The much anticipated Bulgari Hotel has

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APPENDIX I

commenced operation in June 2018. Regarding the Chengdu OCT Project, high-end customised villas in the only eyot of the Chengdu downtown and a new phase of high-rise residential properties will be launched, and sales activities of low-density residential properties and high-end office products will proceed along as well. With combined location advantages and integrated surrounding resources, the Group will continue to proactively research innovative development modes for existing industrial lands, in order to explore and push forward timely planning, development and construction of idle lands.

OCT Group, the controlling shareholder of the Group, has confirmed that it participates in the national new urbanisation construction with the development mode of “culture + tourism + urbanisation”, the compensation mode of “tourism + internet + finance”, and through its five industries focus, namely “cultural industry sector, tourism industry sector, new urbanisation, financial investment and electronic industry sector”.

Looking forward, as OCT Group’s only offshore listed platform, the Group’s new development mode will be “comprehensive development + investment in the urbanisation industrial ecosphere”. The Group will develop the comprehensive development business with added vigour and on a larger scale by fully leveraging OCT’s brand equity and financial strength, and by securing high-quality projects from the areas of prime cities and OCT urbanisation projects. The Group’s investment business will focus on areas such as cultural tourism, education, healthcare and urbanization. It will also actively leverage the domestic and overseas capital markets along with financial products, helping OCT Group to create a new urbanisation industrial ecosphere through domestic and overseas investments, mergers and acquisitions, industrial funds, financial leasing and others methods.

The Board is very confident about the future development prospects of the Group. With the support of OCT Group, the Group will continue to forge ahead with innovative development and endeavor to generate ideal investment returns for shareholders.

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ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The followings are the extracts of the text of the Prospectus and the Interim Results Announcement of E-House Enterprise, enclosing, among others, the audited historical financial information of E-House Enterprise and its subsidiaries (the “Target Group”) for the three years ended 31 December 2015, 2016 and 2017 and for the three-month period ended 31 March 2017 and 2018, which were prepared by the reporting accountants of E-House Enterprise and published on the website of the Stock Exchange at http://www.hkexnews.hk/APP/SEHK/2018/2018062001/a15792/ETEHL20180620-29.PDF; and the unaudited financial information of the Target Group for the six months ended 30 June 2018 prepared by the management of E-House Enterprise and published on the website of the Stock Exchange at http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0831/LTN201808311512.pdf. For the avoidance of doubt, references in the Financial Information on the Target Group in this Appendix II to “the Company” are to E-House Enterprise and not to the Company.

The Financial Information on the Target Group was not prepared for the Company or its shareholders, nor for the purpose of incorporation in this circular. Neither E-House Enterprise nor its reporting accountants shall take or assume any responsibility or liability for the contents of the Financial Information on the Target Group as reproduced in this circular towards the Company, its Shareholders or any other persons making use of this circular.

The contents of the Financial Information on the Target Group has also not been independently verified by the Group or any of its affiliates, advisers, agents, directors, employees, officers or representatives. Neither the Group nor any of its affiliates, advisers, agents, directors, employees, officers or representatives make any representation as to the accuracy, completeness or fairness of the contents of the Financial Information on the Target Group, nor shall take or assume any responsibility for the contents of the Financial Information on the Target Group.

• I. AUDITED FINANCIAL INFORMATION OF THE TARGET GROUP FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2016 AND 2017 ANDTHE THREE MONTHS ENDED 31 MARCH 2018 EXTRACTED FROM THE PROSPECTUS

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF E-HOUSE (CHINA) ENTERPRISE HOLDINGS LIMITED (FORMERLY KNOWN AS “FANGYOU INFORMATION TECHNOLOGY COMPANY LIMITED”), CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED AND CREDIT SUISSE (HONG KONG) LIMITED

Introduction

We report on the historical financial information of E-House (China) Enterprise Holdings Limited (formerly known as “Fangyou Information Technology Company Limited”) (the “Company”), its subsidiaries and the real estate agency services in the primary market business carried out by E-House (China) Enterprise Management Group Co., Ltd.[#] (易居(中國)企業管

# English name is for identification purpose only

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理集團有限公司) (formerly known as Shanghai Real Estate Consultancy & Sales (Group) Co., Limited (上海房屋銷售(集團)有限公司)) (“E-House Management”) and Beijing EJU Enterprise Management Consulting Co., Ltd.[#] (北京易杰優企業管理諮詢有限公司) (formerly known as Beijing Jinyue Real Estate Brokerage Co., Ltd.[#] (北京金岳房地產經紀有限公司)) (“Beijing EJU”) (the “Primary Business”) (together, the “Group”) set out on pages I-4 to I-101, which comprises the consolidated statements of financial position of the Group as at 31 December 2015, 2016 and 2017 and 31 March 2018, the statements of financial position of the Company as at 31 December 2015, 2016 and 2017 and 31 March 2018, and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows of the Group for each of the three years ended 31 December 2017 and the three-month period ended 31 March 2018 (the “Track Record Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages I-4 to I-101 forms an integral part of this report, which has been prepared for inclusion in the prospectus of the Company dated 10 July 2018 (the “Prospectus”) in connection with the initial listing of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in note 1b to the Historical Financial Information, and for such internal control as the directors of the Company 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. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

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

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work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors of the Company, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, true and fair view of the Company’s and the Group’s financial position as at 31 December 2015, 2016 and 2017 and 31 March 2018 and of the Group’s financial performance and cash flows for the Track Record Period in accordance with the basis of preparation and presentation set out in note 1b to the Historical Financial Information.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Group which comprises the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the three-month period ended 31 March 2017 and other explanatory information (the “Stub Period Comparative Financial Information”). The directors of the Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in note 1b to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the International Auditing and Assurance Standards Board. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in note 1b to the Historical Financial Information.

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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 I-4 have been made.

Dividends

We refer to note 13 to the Historical Financial Information which contains information about the dividends paid by the entities now comprising the Group in respect of the Track Record Period. No dividends have been paid by the Company in respect of the Track Record Period.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong 10 July 2018

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ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION OF THE TARGET GROUP

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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 consolidated financial statements of the Group for the Track Record Period, on which the Historical Financial Information is based, have been prepared in accordance with accounting policies which conform with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) and were audited by us in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (“Underlying Financial Statements”).

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes Revenue 5 Staff costs Advertising and promotion expenses Operating lease charges in respect of office premises Depreciation and amortisation expenses Loss allowance on financial assets measured at amortised cost 8A Consultancy expenses Distribution expenses Other operating costs Other income 7 Other gains and losses 8B Other expenses Listing expenses Share of result of associates Finance costs 9 Profit before taxation Income tax expense 10 Profit and total comprehensive income for the year/period 11 Profit and total comprehensive income for the year/period attributable to: Owners of the Company Non-controlling interests Earnings per share 14 – Basic (RMB cents) – Diluted (RMB cents)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 2,716,446 3,996,129 4,633,360 (1,736,714) (2,401,923) (2,623,332) (125,551) (130,539) (236,053) (86,837) (94,133) (105,571) (27,258) (24,190) (27,870) (63,441) (103,959) (119,866) (158,180) (176,464) (224,424) – (24,967) (51,726) (215,794) (253,812) (284,539) 22,219 39,270 38,256 (4,432) (2,519) 3,355 (4,877) (3,801) (8,831) – – – 92 (531) 148 (26,448) (29,756) (21,650) 289,225 788,805 971,257 (112,071) (216,636) (205,951) 177,154 572,169 765,306 165,209 486,969 352,020 11,945 85,200 413,286 177,154 572,169 765,306 16.52 53.20 70.40 N/A N/A N/A	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 854,794 930,202 (500,588) (503,388) (29,231) (30,378) (25,248) (26,613) (9,308) (6,291) (10,673) (12,143) (37,003) (29,801) (9,174) (20,676) (53,741) (52,735) 1,612 17,586 496 (21,726) (4,126) (1) – (17,406) 158 (1,638) (6,642) (5,551) 171,326 219,441 (36,228) (67,066) 135,098 152,375 56,000 93,875 79,098 58,500 135,098 152,375 11.20 13.54 N/A 8.81

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APPENDIX II

STATEMENTS OF FINANCIAL POSITION

Notes Non-current assets Property and equipment 15 Investment properties 16 Goodwill 17 Intangible assets 18 Interests in associates 19 Amounts due from related parties 21 Deferred tax assets 26 Other non-current assets 20 Investment in a subsidiary 38(a) Current assets Accounts receivables and bills receivables 20 Other receivables 20 Amounts due from related parties 21 Financial assets mandatorily measured at fair value through profit or loss 22 Restricted bank balances 23 Cash and cash equivalents 23 Current liabilities Accounts payables 24 Advance from customers Accrued payroll and welfare expenses Other payables 24 Tax payables Amounts due to related parties 21 Bank borrowings 25 Net current assets (liabilities) Total assets less current liabilities Non-current liabilities Bank borrowings 25 Deferred tax liabilities 26 Net assets (liabilities) Capital and reserves Paid-in/share capital 27 Share premium Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 55,802 65,148 62,249 5,266 12,581 18,688 5,109 5,109 5,109 16,895 11,206 5,744 4,893 5,962 11,015 84,978 85,495 – 208,255 350,179 504,234 15,396 17,663 31,669 – – – 396,594 553,343 638,708 1,392,244 2,290,708 3,308,002 25,259 40,668 71,590 470,241 365,040 379,070 – – 20,000 500 63,623 131,264 465,756 974,946 1,791,290 2,354,000 3,734,985 5,701,216 68,484 109,614 174,561 36,255 64,541 83,468 536,728 961,546 1,161,640 124,146 253,518 1,604,386 301,891 567,929 405,733 331,557 478,606 297,294 160,000 390,000 450,000 1,559,061 2,825,754 4,177,082 794,939 909,231 1,524,134 1,191,533 1,462,574 2,162,842 290,000 – – 513 366 219 290,513 366 219 901,020 1,462,208 2,162,623 226,263 330,007 330,076 – – – 620,998 376,023 695,034 847,261 706,030 1,025,110 53,759 756,178 1,137,513 901,020 1,462,208 2,162,623	As at 31 March 2018 RMB’000 57,541 18,213 5,109 4,488 9,377 15,868 470,842 25,811 – 607,249 2,231,579 87,951 1,319,609 20,000 82,720 3,182,165 6,924,024 119,493 105,967 806,523 2,162,229 372,027 312,855 550,000 4,429,094 2,494,930 3,102,179 – 182 182 3,101,997 76 1,229,977 1,756,215 2,986,268 115,729 3,101,997	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – 7 7 7 7 7 7 – – – – – 42 631 674 167,815 – – – – – – 1 2 1,086,692 632 676 1,254,549 – – – – – – – – – – – 1,253,850 – – – 726 790 768 – – – 726 790 1,254,618 (94) (114) (69) (87) (107) (62) – – – – – – – – – (87) (107) (62) 7 7 76 – – – (94) (114) (138) (87) (107) (62) – – – (87) (107) (62)	As at 31 March 2018 RMB’000 – – – – – – – – 9,318,225
				9,318,225
				– 4,879 160,871 – – 93,255
				259,005
				– – – 21,487 – 778 –
				22,265
				236,740
				9,554,965
				– –
				–
				9,554,965
				76 1,229,977 8,324,912
				9,554,965 –
				9,554,965

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APPENDIX II

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 January 2015 Profit and total comprehensive income for the year Dividend recognised as distribution (note 13) Dividend recognised as distribution to non-controlling shareholders Transferred to statutory surplus reserve Recognition of equity-settled share- based payment expenses issued by E-House (China) Holdings Limited (“E-House (China) Holdings”) and Leju Holdings Limited (“Leju”) (note 28) Capital injection by non-controlling shareholders of a subsidiary of the Group (note d) Disposal of subsidiaries under common control (note 32) Effect of Group Reorganisation (as defined in note 1b) (note e & i) Deemed distribution upon completion of Business Transfer (note f) At 31 December 2015 Profit and total comprehensive income for the year Dividend recognised as distribution to non-controlling shareholders Transferred to statutory surplus reserve Recognition of equity-settled share- based payment expenses issued by E-House (China) Holdings and Leju (note 28) Proportional capital contribution by non-controlling shareholder Disposal of equity interest in E-House Enterprise (China) Group Co., Ltd.# (易居企業(中國)集團有 限公司) (“PRC Holdco”) without losing control (note g) Capitalisation of retained earnings and statutory surplus reserve of PRC Holdco into a joint stock company (note h) At 31 December 2016	Share capital RMB’000 226,263 – – – – – – – – – 226,263 – – – – – (113,128) 216,872 330,007	Attributable to owners of the Company Share premium Merger reserve Statutory surplus reserve Other reserves RMB’000 RMB’000 RMB’000 RMB’000 (note a) (note b) (note c) – 749,827 129,665 175,205 – – – – – – – – – – – – – – 14,457 – – – – 18,019 – – – 15,826 – – – 10,876 – (118,223) – – – (640,423) – – – (8,819) 144,122 219,926 – – – – – – – – – – 23,838 – – – – 7,696 – – – – – – – – – – (45,438) – – (8,819) 122,522 227,622	Retained profits RMB’000 764,894 165,209 (600,000) – (14,457) – – – – (49,877) 265,769 486,969 – (23,838) – – (522,768) (171,434) 34,698	Sub-total Non- controlling interests RMB’000 RMB’000 2,045,854 52,606 165,209 11,945 (600,000) – – (21,966) – – 18,019 – 15,826 11,174 10,876 – (118,223) – (690,300) – 847,261 53,759 486,969 85,200 – (19,167) – – 7,696 – – 490 (635,896) 635,896 – – 706,030 756,178	Total RMB’000 2,098,460 177,154 (600,000) (21,966) – 18,019 27,000 10,876 (118,223) (690,300)
					901,020 572,169 (19,167) – 7,696 490 – –
					1,462,208

# English name is for identification purpose only

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ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

At 1 January 2017 Profit and total comprehensive income for the year Dividend recognised as distribution to non-controlling shareholders Transferred to statutory surplus reserve Issue of shares of the Company Effect of Group Reorganisation (note i) At 31 December 2017 Profit and total comprehensive income for the period Capital contribution received from the immediate parent of the Company (note j) Effect of Group Reorganisation (note j) Conversion of conditional investment fund received into share premium (note j) At 31 March 2018 For the three-month period ended 31 March 2017 (unaudited) At 1 January 2017 Profit and total comprehensive income for the period At 31 March 2017	Share capital RMB’000 330,007 – – – 69 – 330,076 – – (330,000) – 76 330,007 – 330,007	Attributable to owners of the Company Share premium Merger reserve Statutory surplus reserve Other reserves RMB’000 RMB’000 RMB’000 RMB’000 (note a) (note b) (note c) – (8,819) 122,522 227,622 – – – – – – – – – – 14,264 – – – – (9) – (33,000) – – – (41,819) 136,786 227,613 – – – – – 8,357,013 – – – (7,389,716) – – 1,229,977 – – 9 1,229,977 925,478 136,786 227,622 – (8,819) 122,522 227,622 – – – – – (8,819) 122,522 227,622	Retained profits RMB’000 34,698 352,020 – (14,264) – – 372,454 93,875 – – – 466,329 34,698 56,000 90,698	Sub-total Non- controlling interests RMB’000 RMB’000 706,030 756,178 352,020 413,286 – (28,951) – – 60 – (33,000) (3,000) 1,025,110 1,137,513 93,875 58,500 8,357,013 – (7,719,716) (1,080,284) 1,229,986 – 2,986,268 115,729 706,030 756,178 56,000 79,098 762,030 835,276	Total RMB’000 1,462,208 765,306 (28,951) – 60 (36,000)
					2,162,623
					152,375 8,357,013 (8,800,000) 1,229,986
					3,101,997
					1,462,208 135,098
					1,597,306

note a: Merger reserve represents (1) the difference in the fair value of the consideration paid or payable/received or receivable to/from its related parties under common control for the acquisition/disposal of subsidiaries/businesses controlled by E-House (China) Holdings and the share capital of the acquired/disposed subsidiaries/businesses, (2) the deemed contribution by E-House (China) Holdings of the assets and liabilities related to the Primary Business of E-House Management and Beijing EJU and (3) the deemed contribution by CRE Corp (as defined in note 1a).

As of 1 January 2015, merger reserve mainly represented (1) paid in capital of Tianjin E-House Jinyue Real Estate Brokerage Co., Ltd[#] (天津易居金岳房地產經紀有限公司) (“Tianjin Jinyue”), an entity under common control of E-House (China) Holdings, amounted to RMB103,878,000 and Shanghai Lituo Real Estate Brokerage Co., Ltd[#] (上海勵拓房地產經紀有限公司) (“Shanghai Lituo”) amounted to RMB5,000,000, and (2) deemed contribution of the assets and liabilities related to the Primary Business amounted to RMB640,423,000.

# English name is for identification purpose only

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ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

• note b: In accordance with the Articles of Association of the subsidiaries established in the People’s Republic of China (“PRC”), the subsidiaries are required to transfer at least 10% of their profit after tax in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC before any distribution of dividends to owner each year to statutory surplus reserve until the reserve reaches 50% of their respective registered capital. The statutory surplus reserve can be used to make up for previous years’ losses, expand the existing operations or convert into additional capital of the subsidiaries.

note c: Other reserves represent:

• (i) the difference between (1) the amount by which non-controlling interests are adjusted and (2) the fair value of the consideration received and the equity attributable to owner of the Company are adjusted when the Group disposed of partial equity interest of existing subsidiaries that the Group did not result in losing control over those subsidiaries as equity transactions;

• (ii) the deemed capital contribution from E-House (China) Holdings and Leju in relation to their share options granted to the Group’s employees and directors, and pursuant to the agreements dated on 28 November 2006 and 1 December 2013, respectively, the Group was not required to repay to E-House (China) Holdings and Leju.

As of 1 January 2015, other reserves mainly represents the deemed capital contribution from E-House (China) Holdings and Leju, as a result of their share options previously issued to the Group’s employees and directors, amounted to RMB175,133,000;

• (iii) the deemed distribution of assets and liabilities of the Primary Business retained by E-House Management and Beijing EJU upon completion of the Business Transfer (as detailed in note 1b);

• (iv) the difference between the consideration received and the net assets of subsidiaries disposed to entities under common control of E-House (China) Holdings; and

• (v) the conditionally issued share capital of the Company (details in note 27(c).

• note d: During the year ended 31 December 2015, Shanghai Zhuxiang Information Technology Co., Ltd[#] (上海築 想信息科技股份有限公司) (“Shanghai Zhuxiang”), a subsidiary of the Group issued registered capital of RMB27,000,000 to an independent third party, causing the Group’s equity interests in Shanghai Zhuxiang decreased from 60% to 49.18%. On the same date, the Group entered into an act-in-concert agreement with another shareholder of Shanghai Zhuxiang in which the Group had obtained 9.02% of shareholders’ voting rights from another shareholder of Shanghai Zhuxiang, and have obtained 58.2% voting rights of Shanghai Zhuxiang in total. As at the date of capital injection by non-controlling shareholder, Shanghai Zhuxiang changed from a net liability position of RMB23,540,000 to a net asset position of RMB3,460,000, resulting in a net increase in non-controlling interests by RMB11,174,000. Accordingly, the difference in the consideration and increase in non-controlling interests amounted to RMB15,826,000 has been credited to other reserves.

note e: During the year ended 31 December 2015, the Group acquired:

• (i) 100% equity interest of Shanghai Lituo from Shanghai Ted Lituo Internet Technology Inc.[#] (上海太 德勵拓互聯網科技股份有限公司) (“TED”), a fellow subsidiary of the Group which was under common control of E-House (China) Holdings, for a consideration of RMB4,223,000. As at 1 January 2015, merger reserve included the paid in capital of Shanghai Lituo amounted to RMB5,000,000.

Prior to the Group’s acquisition, Shanghai Lituo was 100% held by Shanghai Chengxiang Commercial Real Estate Broker Co., Ltd.[#] (上海城香商用房地產經紀有限公司) (“Chengxiang”), a fellow subsidiary of the Group which was under common control of E-House (China) Holdings and Chengxiang had contributed additional RMB10,000,000 to Shanghai Lituo during the year ended 31 December 2015.

The consideration of RMB4,223,000 paid net of the additional capital contribution of RMB10,000,000 received by Shanghai Lituo, totalling RMB5,777,000 had been credited to merger reserve during the year ended 31 December 2015; and

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• (ii) 100% equity interest of Tianjin Jinyue from a fellow subsidiary of the Group which was under common control of E-House (China) Holdings for a consideration of RMB160,000,000. As at 1 January 2015, merger reserve included the paid in capital of Tianjin Jinyue amounted to RMB103,878,000. During the year ended 31 December 2015, the consideration of RMB160,000,000 had been debited to merger reserve. The Group paid RMB6,405,000 and RMB153,595,000 during the year ended 31 December 2015 and 2016, respectively.

• note f: Upon completion of the Business Transfer, the remaining assets and liabilities with net assets value of RMB618,755,000 were retained by E-House Management and Beijing EJU and have been accounted for as deemed distribution to the then shareholders of E-House Management and Beijing EJU. On 31 December 2015, the Group acquired the Primary Business of E-House Management and Beijing EJU with an aggregate net liabilities value at RMB71,545,000 as at that date. E-House Management and Beijing EJU will pay a consideration of RMB71,545,000 to the Group. Such amount has not yet been received as at the date of this report and included in “amounts due from related parties” in note 21(b).

• note g: On 31 October 2016, PRC Holdco’s immediate holding company, E-House (China) Information Technology Co., Ltd., (“CRE BVI”), had transferred its 50% equity interest of PRC Holdco in aggregate to a number of independent third parties without losing control. This transaction resulted in the recognition of 50% non-controlling interests of PRC Holdco amounting to RMB635,896,000, which RMB113,128,000 debited to share capital and RMB522,768,000 debited to retained earnings.

• note h: On 22 December 2016, pursuant to an extraordinary general meeting of PRC Holdco, it was resolved and approved PRC Holdco to convert from a limited liability company into a joint stock company. Taken into account the 50% equity interest of the PRC Holdco was transferred by CRE BVI to a number of independent third parties as detailed in note (g), it resulted in an overall effect of capitalising the retained earnings and statutory surplus reserves of RMB171,434,000 and RMB45,438,000, respectively, totalling RMB216,872,000 in share capital.

• note i: On 6 January 2015, PRC Holdco disposed of its 100% equity interests of Shanghai Fangjia Information Technology Co., Ltd.[#] (上海昉加信息科技有限公司) (“Shanghai Fangjia”) to Shanghai Fangjia Information Technique Co., Ltd.[#] (上海方加信息技術有限公司) (“Fangjia Technique”), a fellow subsidiary of the Group which was under common control of E-House (China) Holdings, for a consideration of RMB36,000,000 which had been credited to merger reserve.

On 30 September 2017, the Group acquired 100% equity interests of Shanghai Fangjia from Fangjia Technique with the consideration of RMB36,000,000. Taken into account the 50% equity interest of the PRC Holdco was transferred by CRE BVI to a number of independent third parties as detailed in note (g), it resulted in an overall effect of RMB33,000,000 and RMB3,000,000 debited to merger reserves and non-controlling interests, respectively.

• note j: In March 2018, CRE Corp (as defined in note 1a) contributed HK$10,300,000,000 (equivalent to RMB8,357,013,000) to the Company, credited to merger reserve, for the Group to complete the Group Reorganisation (as defined in note 1b). On 5 March 2018, Hong Kong Fangyou Software Technology Company Limited (香港房友軟件技術有限公司) (“Hong Kong Fangyou”), a wholly-owned subsidiary of the Company, acquired 50% equity interests of PRC Holdco from CRE BVI and 50% equity interests of PRC Holdco from a number of independent third parties for a total consideration of RMB8,800,000,000. This resulted in the derecognition of 50% non-controlling interests of PRC Holdco amounting to RMB1,080,284,000 and 50% share capital of PRC Holdco amounting to RMB330,000,000. The difference of consideration paid, derecognition of 50% non-controlling interests and 50% share capital of PRC Holdco amounting to RMB7,389,716,000 had been debited to merger reserve. The Group Reorganisation has then been completed on that date. The Group paid RMB6,908,000,000 during the three-month period ended 31 March 2018 and the remaining balance of RMB1,892,000,000 was paid before 19 April 2018.

On 5 March 2018, upon completion of acquisition of 100% equity interests in PRC Holdco by Hong Kong Fangyou, the conditional investment fund received previously classified as financial liabilities at FVTPL at a carrying amount of RMB1,229,986,000 on that day become unconditional and is then fully converted to equity, accordingly.

• # English name is for identification purpose only

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CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES Profit before taxation Adjustments for: Depreciation of property and equipment Depreciation of investment properties Amortisation of intangible assets Share of result of associates (Gain) loss on disposal of investment properties (Gain) loss on disposal of property and equipment Exchange difference Interest income Finance costs Investment gain on money market fund Impairment loss on financial assets measured at amortised cost Impairment loss on investment properties Changes in fair value of financial liabilities measured at FVTPL Equity-settled share-based payment expenses Operating cash flows before movements in working capital (Increase) decrease in amounts due from related parties (Decrease) increase in amounts due to related parties Decrease (increase) in other non-current assets (Increase) decrease in accounts receivables and bills receivables Decrease (increase) in other receivables Increase (decrease) in accounts payables Increase in advances from customers Increase (decrease) in accrued payroll and welfare expenses Increase (decrease) in other payables Cash generated from (used in) operations Interest received Income tax paid NET CASH FROM (USED IN) OPERATING ACTIVITIES

Year ended 31 December For the three-month period ended 31 March 2015 2016 2017 2017 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 289,225 788,805 971,257 171,326 219,441 17,392 18,242 21,862 7,772 4,883 4,259 238 305 101 152 5,607 5,710 5,703 1,435 1,256 (92) 531 (148) (158) 1,638 (2,181) 388 (1,787) (636) (75) (86) 47 (65) 101 (116) – – 16,651 – 45,781 (4,551) (4,191) (6,122) (1,206) (2,844) 26,448 29,756 21,650 6,642 5,551 (197) – – – – 63,441 103,959 119,866 10,673 12,143 7,290 2,053 602 42 – – – (17,027) – (23,864) 18,019 7,696 – – – 424,574 953,234 1,132,747 196,092 263,946 (2,486) (61,203) 29,321 59,834 (732) (68,539) 78,002 (40,485) (48,883) 18,476 204,322 (2,865) (16,400) (9,420) (9,970) (550,267) (1,013,053) (1,141,085) 193,383 125,921 11,549 (16,243) (35,716) (727) (11,391) 7,329 41,108 64,947 24,195 (55,068) 14,534 28,286 18,927 38,524 22,499 209,443 424,818 200,094 (229,507) (355,117) 73,624 66,063 29,427 43,716 (35,952) 324,083 498,147 241,777 267,207 (37,388) 4,551 4,191 5,553 1,206 2,844 (33,468) (92,669) (522,348) (156,980) (67,417) 295,166 409,669 (275,018) 111,433 (101,961)

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INVESTING ACTIVITIES Investment gain and proceeds on disposal of financial assets measured at FVTPL Proceeds from disposal of property and equipment Proceeds from disposal of investment properties Advance to related parties Repayments from related parties Proceeds arising from disposal of an associate Interest received Purchase of and deposits placed for property and equipment Purchase of intangible assets Capital injection to associates Purchase of convertible note measured at FVTPL NET CASH (USED IN) FROM INVESTING ACTIVITIES FINANCING ACTIVITIES New bank borrowings raised Repayments of bank borrowings Advance from related parties Repayment to related parties Proceed from conditional capital injection by independent third parties recognised as financial liabilities (note 24) Proceed from paid up capital of Shanghai Lituo contributed by Chengxiang Proceeds arising from disposal of subsidiaries (note 32) Capital injection by CRE Corp Capital injection by non-controlling shareholders Proceeds from disposal of a subsidiary to a related party under common control Proceeds from issue of shares Interest paid Issue costs paid Dividends paid Dividends paid to a non-controlling shareholder of a subsidiary Consideration paid for the acquisition of subsidiaries under common control NET CASH (USED IN) FROM FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR/PERIOD EFFECT OF EXCHANGE RATE CHANGE CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR/PERIOD REPRESENTED BY CASH AND CASH EQUIVALENTS

Year ended 31 December For the three-month period ended 31 March 2015 2016 2017 2017 2018 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) 7,211 – – – – 2,810 852 3,228 55 1,425 16,000 3,800 6,713 3,096 398 (1,402,884) (66,980) (2,520) – (12,692) 1,089,935 225,114 40,189 – 10,929 – – 96 96 – – – 569 – – (6,468) (27,106) (18,462) (7,667) (1,341) (299) (21) (241) – – (1,180) (1,600) (5,000) – – – – (20,000) – – (294,875) 134,059 4,572 (4,420) (1,281) 450,000 100,000 450,000 100,000 200,000 (220,000) (160,000) (390,000) (10,000) (100,000) 620,673 1,681,013 1,040,181 11,870 1,544 (379,814) (1,458,371) (1,163,981) (45,387) (4,459) – – 1,253,850 – – 10,000 – – – – 3,138 5,000 – – – – – – – 8,357,013 27,000 490 – – – 36,000 – – – – – – 60 – – (25,680) (29,874) (21,718) (6,523) (5,442) – – – – (758) (600,000) – – – – (21,966) (19,167) (28,951) – – (10,628) (153,595) (36,000) – (6,908,000) (111,277) (34,504) 1,103,441 49,960 1,539,898 (110,986) 509,224 832,995 156,973 1,436,656 576,766 465,756 974,946 974,946 1,791,290 (24) (34) (16,651) 3 (45,781) 465,756 974,946 1,791,290 1,131,922 3,182,165

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION, GROUP REORGANISATION AND BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

1a. General Information

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands on 22 February 2010. The addresses of the Company’s registered office and the principal place of business are disclosed in the section “Corporate Information” in the Prospectus. Pursuant to a special resolution dated 14 December 2017, the name of the Company has been changed from Fangyou Information Technology Company Limited to E-House (China) Enterprise Holdings Limited. The Historical Financial Information is presented in RMB, which is the same as the functional currency of the Company.

The Company, through its subsidiaries, offers a wide range of services to the real estate industry, including real estate agency services in the primary market, real estate data and consulting services, and real estate brokerage network services in the PRC.

The immediate parent of the Company is China Real Estate Information Corporation (“CRE Corp”), a limited liability company incorporated in the Cayman Islands on 21 August 2008, which is held and controlled by E-House (China) Holdings, a limited liability company incorporated in the Cayman Islands on 27 August 2004, and was previously listed on the New York Stock Exchange on 8 August 2007 and subsequently delisted on 12 August 2016.

1b. Group Reorganisation and Basis of Preparation and Presentation of Historical Financial Information

The Historical Financial Information has been prepared in accordance with the accounting policies set out in note 3 which conform with IFRSs and the principles of merger accounting (details are set out below).

In preparing for the initial listing of the shares of the Company on the Stock Exchange (the “Listing”), the companies comprising the Group underwent a group reorganisation as described below (“Group Reorganisation”).

The major steps of Group Reorganisation comprised the following steps:

• On 6 January 2015, PRC Holdco disposed of its 100% equity interests of Shanghai Fangjia to Fangjia Technique, a fellow subsidiary of the Group and wholly-owned subsidiary of E-House (China) Holdings. The consideration of the disposal was RMB36,000,000 and had been fully paid in 2015.

• On 17 September 2015, Shanghai E-House Xiangyue Real Estate Sales Co., Ltd.[#] (上海易居祥悅房屋 銷售有限公司) (“E-House Xiangyue”) acquired 100% equity interest of Shanghai Lituo from TED, a fellow subsidiary of the Group and wholly-owned subsidiary of E-House (China) Holdings. The consideration of the acquisition was RMB4,223,000 and had been fully paid in 2015. Prior to the Group’s acquisition, Shanghai Lituo was 100% held by Chengxiang, a fellow subsidiary of the Group which was under common control of E-House (China) Holdings, and Chengxiang had contributed additional RMB10,000,000 to Shanghai Lituo during the year ended 31 December 2015.

• On the same date, Hebei E-House Jinyue Real Estate Broker Co., Ltd[#] (河北易居金岳房地產經紀有限 公司) (“Hebei Jinyue”), a wholly-owned subsidiary of E-House Xiangyue, acquired 100% equity interest of Tianjin Jinyue from E-House (China) Management Company Limited[#] (易居(中國)管理有限 公司) (formerly known as E-House Real Estate Ltd.) (“E-House Management Holdco”), a fellow subsidiary of the Group and wholly-owned subsidiary of E-House (China) Holdings. The consideration of the acquisition was RMB160,000,000. The Group paid RMB6,405,000 and RMB153,595,000 during the year ended 31 December 2015 and 2016, respectively.

• On 31 December 2015, certain subsidiaries of the Group with E-House Management and Beijing EJU entered into a business transfer agreement, E-House Management and Beijing EJU transferred their Primary Business to certain subsidiaries of the Group and ceased to carry out any Primary Business thereafter (“Business Transfer”), except that E-House Management and Beijing EJU continued to act as a collection agent on behalf of the Group in respect of those incomplete primary real estate agency

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contracts (see note 21(b) for details). Pursuant to which the Group will assume their Primary Business, labour work force, acquired certain property and equipment and assumed the obligation in respect of the outstanding accrued payroll that are specifically identified to the Primary Business. The net liabilities being transferred to the Group amounted to RMB71,545,000. As a result, E-House Management and Beijing EJU will pay a consideration of RMB71,545,000 to the Group for this Business Transfer. The Business Transfer had been completed on 31 December 2015. The consideration receivables had not yet been received as at the date of this report and was included in amounts due from related parties of non-trade nature in note 21(b) as at 31 December 2017 and 31 March 2018. As represented by the management of the Group, the consideration receivable would be settled prior to the Listing.

• On 31 October 2016, PRC Holdco’s immediate holding company, CRE BVI has transferred its 50% equity interest of PRC Holdco in aggregate to a number of independent third parties without losing control, for a total consideration of RMB4,000,000,000. This transaction diluted the Group’s interest attributable to CRE BVI and therefore, resulted in the recognition of 50% non-controlling interests of PRC Holdco amounting to RMB635,896,000.

• On 30 September 2017, PRC Holdco acquired 100% equity interest of Shanghai Fangjia from Fangjia Technique, a fellow subsidiary of the Group and a wholly-owned subsidiary of E-House (China) Holdings. The consideration of the acquisition was RMB36,000,000 and had been fully paid in 2017.

• On 6 November 2017, it was resolved that (i) the Company subdivided its shares on the basis that every share of US$1 each into 100,000 shares of US$0.00001 each; (ii) subsequent to the share subdivision, the Company increased its total authorised share capital from US$1,000 to US$10,000 by the creation of an additional of 900,000,000 shares of US$9,000 of US$0.00001 each, each ranking pari passu with the then shares in issue in all respect and (iii) the Company issued 900,000,000 shares of US$9,000 of US$0.00001 each to CRE Corp. On 1 December 2017, (i) the authorised share capital of the Company was increased from US$10,000 to US$11,446 by the creation of an additional of 144,600,000 shares of US$0.00001 each, each ranking pari passu with the then shares in issue in all respects and (ii) the Company conditionally issued 48,200,000 number of shares to each of Captain Valley (Cayman) Limited (a subsidiary of China Vanke Co., Ltd.), Jovial Idea Developments Limited (a subsidiary of China Evergrande Group) and Heyday Surge Limited (a nominee of Country Garden Holdings Company Limited) at US$0.00001 per share. On 5 January 2018, Heyday Surge Limited transferred its 48,200,000 conditional shares of the Company to Country Garden (Hong Kong) Development Company Limited (a subsidiary of Country Garden Holdings Company Limited).

• In March 2018, CRE Corp contributed HK$10,300,000,000 (equivalent to RMB8,357,013,000) to the Company as to enable the Group to have adequate funding to complete the Group Reorganisation.

• On 5 March 2018, being the completion date of Group Reorganisation, Hong Kong Fangyou, a wholly-owned subsidiary of the Company, acquired 100% equity interests of PRC Holdco for a consideration of RMB8,800,000,000. The Group paid RMB6,908,000,000 during the three-month period ended 31 March 2018 and the remaining balance of RMB1,892,000,000 was paid before 19 April 2018. As at 31 March 2018, the unpaid amount of RMB1,892,000,000 is included in “accounts and other payables” in note 24.

In respect of the Business Transfer completed on 31 December 2015, the Historical Financial Information aims to include assets, liabilities, income and expenses that are related to and specifically identified for the Primary Business of E-House Management and Beijing EJU. During the year ended 31 December 2015, apart from the Primary Business, E-House Management and Beijing EJU also have certain function or business which are not directly related to, nor form part of, the Group’s principal businesses (the “Other Operation”). E-House Management and Beijing EJU had designated separate management structure in the Primary Business and Other Operation and maintained separate books and records for income and expenses of the Primary Business and Other Operation. Income tax expense of the Primary Business was calculated based on the tax rate of E-House Management and Beijing EJU as if a separate tax reporting entity. To the extent that the assets and liabilities that are specifically identified to the Primary Business of E-House Management and Beijing EJU, such items are included in the Historical Financial Information as at 1 January 2015 and 31 December 2015 and for the year then ended. To the extent that the assets and liabilities that are impracticable to identify specifically, these items are not included in the Historical Financial Information of the Group. The Group had segregated the relevant financial information of the Other Operation, to the extent possible, from the historical financial information of E-House Management and Beijing EJU for the preparation of the Historical Financial Information of the Group to be included in the Historical Financial Information.

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The management of the Group believes that the allocation basis presents a reasonable basis in presenting and incorporating the results, assets and liabilities of the Primary Business of E-House Management and Beijing EJU as at 1 January 2015 and 31 December 2015 and for the year then ended in the Historical Financial Information of the Group.

The abovementioned combined entities, Primary Business carried out by E-House Management and Beijing EJU and the Company are under common control of E-House (China) Holdings before and after the Group Reorganisation. Therefore, the acquisition of the abovementioned combined entities and Primary Business are accounted for as business combination under common control by applying the principles of merger accounting.

The consolidated statements of profit or loss and other comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the Track Record Period including the results, changes in equity and cash flows of the companies and the Primary Business comprising the Group, on the basis stated above, as if the Company had always been the holding company of the Group and the group structure upon completion of the Group Reorganisation had been in existence throughout the Track Record Period, or since their respective dates of establishment, incorporation or acquisition, where this is a shorter period.

The consolidated statements of financial position of the Group as at 31 December 2015, 2016 and 2017 have been prepared to present the assets and liabilities of the companies and the Primary Business comprising the Group, on the basis stated above, as if the Company had always been the holding company of the Group and the group structure upon completion of the Group Reorganisation had been in existence at those dates taking into account the respective dates of establishment, incorporation or acquisition, where applicable.

No statutory audited financial statements were issued for the Company since the Company is incorporated in a jurisdiction where there is no statutory audit requirement.

2. APPLICATION OF NEW AND REVISED IFRSs

Application of IFRSs

For the purpose of preparing and presenting the Historical Financial Information for the Track Record Period, the Group has applied all International Accounting Standards (“IASs”), IFRSs and amendments that are effective for the Group’s accounting periods beginning on 1 January 2018, consistently throughout the Track Record Period.

New and revised to IFRSs issued but not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective.

Amendments to IAS 19	Plan Amendment, Curtailment or Settlement2
Amendments to IAS 28	Long-term Interests in Associates and Joint Ventures2
Amendments to HKFRS 9	Prepayment Features with Negative Compensation2
Amendments to IFRS 10 and	Sale or Contribution of Assets between an Investor and its Associate
IAS 28	or Joint Venture1
Amendments to IFRSs	Annual Improvements to IFRS Standards 2015 – 2017 Cycle2
IFRS 16	Leases2
IFRS 17	Insurance Contracts3
IFRIC 23	Uncertainty over Income Tax Treatments2

1 Effective for annual periods beginning on or after a date to be determined.

• 2 Effective for annual periods beginning on or after I January 2019.

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

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IFRS 16 Leases

IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. IFRS 16 will supersede IAS 17 “ Leases ” and the related interpretations when it becomes effective.

IFRS 16 distinguishes lease and service contracts on the basis of whether an identified asset is controlled by a customer. Distinctions of operating leases and finance leases are removed for lessee accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for all leases by lessees, except for short-term leases and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others. For the classification of cash flows, the Group currently presents operating lease payments as operating cash flows. Upon application of IFRS 16, lease payments in relation to lease liability will be allocated into a principle and an interest portion which will be presented as financing cash flows, respectively.

In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify a lease either as an operating lease or a finance lease.

Furthermore, extensive disclosures are required by IFRS 16.

As at 31 March 2018, the Group has non-cancellable operating lease commitments of RMB153,479,000 as disclosed in note 33. A preliminary assessment indicates that these arrangements will meet the definition of a lease under IFRS 16, and hence upon application of IFRS 16, the Group will recognise a right-of-use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-term leases.

In addition, the Group currently considers refundable rental deposits paid of RMB18,064,000 as rights under leases to which IAS 17 applies. Based on the definition of lease payments under IFRS 16, such deposits are not payments relating to the right to use the underlying assets, accordingly, the carrying amounts of such deposits may be adjusted to amortised cost and such adjustments are considered as additional lease payments. Adjustments to refundable rental deposits paid would be included in the carrying amount of right-of-use assets.

Furthermore, the application of new requirements may result in changes in measurement, presentation and disclosure as indicated above. The management of the Group assessed that, if IFRS 16 had been initially adopted on 31 March 2018, such changes would increase the consolidated assets and consolidated liabilities of the Group, but would not result in a significant change to the consolidated net asset value of the Group as at 31 March 2018.

Except as described above, the management of the Group anticipates that the application of other new and revised IFRSs will have no material impact on the Group’s financial position and financial performance in the foreseeable future.

3. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared in accordance with accounting policies which conform with IFRSs issued by the IASB. In addition, the Historical Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and by the Hong Kong Companies Ordinance.

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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those

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characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the Historical Financial Information is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 “ Share-based Payment ” leasing transactions that are within the scope of IAS 17 “ Leases ”, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 “ Inventories ” or value in use in IAS 36 “ Impairment of Assets ”.

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

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

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

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

The principal accounting policies are set out below:

Basis of consolidation

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

• has power over the investee;

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

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

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

• The size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• Potential voting rights held by the Group, other vote holders and other parties; and

• Rights arising from other contractual arrangements.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

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All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on combination.

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s relevant components of equity and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the assets and liabilities of that subsidiary and non-controlling interests (if any) are derecognised. A gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the owners of the Company. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs).

Merger accounting for business combination involving entities under common control

The Historical Financial Information incorporate the financial statements items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are combined using the existing book values from the controlling party’s perspective. No amount is recognised in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

The consolidated statements of profit or loss and other comprehensive income include the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common control, where this is a shorter period, regardless of the date of the common control combination.

The Historical Financial Information are presented as if the entities or businesses had been combined at the end of the previous reporting period or when they first came under common control, whichever is shorter.

Investment in a subsidiary

Investment in a subsidiary is stated in the statement of financial position of the Company at cost less any identified impairment loss.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see the accounting policy above) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (“CGUs”) (or groups of CGUs) that is expected to benefit from the synergies of the combination, which represent the lowest level at which the goodwill is monitored for internal management purposes and not larger than an operating segment.

A CGU (or group of CGUs) to which goodwill has been allocated is tested for impairment annually or more frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the CGU (or group of CGUs) to which goodwill has been allocated is tested for impairment before the end

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of that reporting period. If the recoverable amount is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit (or group of CGUs).

On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal (or any of the CGU within group of CGUs in which the Group monitors goodwill).

The Group’s policy for goodwill arising on the acquisition of an associate is described below.

Interests in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in the Historical Financial Information using the equity method of accounting. The financial statements of associates used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate is initially recognised in the consolidated statements of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. Changes in net assets of the associates other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 “ Impairment of Assets ” as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in the investee with a resulting gain or loss being recognised in profit or loss.

When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group’s Historical Financial Information only to the extent of interests in the associate that are not related to the Group.

Revenue recognition

Revenue is recognised to depict the transfer of promised services to customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services. Specifically, the Group uses a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

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• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the services underlying the particular performance obligation is transferred to customers.

Control of the services may be transferred over time or at a point in time. Control of the services is transferred over time if:

• the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs;

• the Group’s performance creates and enhances an asset that the customer controls as the Group performs; or

• the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

If control of the services transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the services.

Revenue from real estate agency services in the primary market is recognised at a point in time when the service is rendered and (a) the property buyer has executed the sales and purchase agreement and made the required down-payment or (b) the sales and purchase agreement has been registered with the relevant government authorities according to the terms and conditions stated in different agency contracts, since only by that time the Group has a present right to payment from the property developers for the services performed. The Group’s commission rate receivable is variable based on a pre-agreed sales target. Prior to the Group’s sales met the agreed sales target, the Group will recognise revenue based on a lower commission rate. Until when the sales target is met, the Group will recognise the incremental revenue, representing the variable considerations, at the higher commission rate on the performance obligations satisfied in previous periods.

Revenue from real estate consultancy services is recognised at a point in time when the service is rendered and the customer (i.e. the property developers) has received and endorsed the consultancy report, since only by that time the Group has a present right to payment for the services performed.

Revenue from real estate data services is recognised over time (i.e. the subscription period) because the customer (i.e. the property developers) simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs.

Revenue from real estate brokerage network services is recognised at a point in time when the legal title of real estate property is transferred, since only by that time the Group has a present right to payment from the small to medium-sized secondary real estate brokerage stores for the services performed.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term.

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Leasehold land and building

When the Group makes payments for a property interest which includes both leasehold land and building elements, the Group assesses the classification of each element separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group, unless it is clear that both elements are operating leases in which case the entire property is accounted as an operating lease. Specifically, the entire consideration (including any lump-sum upfront payments) are allocated between the leasehold land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element at initial recognition.

To the extent the allocation of the relevant payments cannot be allocated reliably between the leasehold land and building elements, the entire property is generally classified as if the leasehold land is under finance lease.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.

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

Borrowing costs

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

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Short-term and other long-term employee benefits

Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognised as an expense.

A liability is recognised for benefits accruing to employees (such as wages and salaries) after deducting any amount already paid.

Retirement benefits costs

Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.

Equity-settled share-based payment transactions

Share options/restricted shares granted to employees

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.

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The fair value of the equity-settled share-based payments in respect of share options/restricted shares determined at the grant date without taking into consideration all non-market vesting conditions is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity (other reserves). At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest based on assessment of all relevant non-market vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves.

For share options/restricted shares of E-House (China) Holdings and Leju, a fellow subsidiary of the Company, granted to employees of the Group, the Group recognises services rendered and deemed capital contribution by reference to the fair value of share options/restricted shares granted at the grant date. When share options are exercised or certified or when the restricted shares are vested, the amount previously recognised in other reserves will continue to be held in other reserves.

Taxation

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

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

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

Deferred tax liabilities are recognised for taxable temporary differences associated with investment in a subsidiary and interests in associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investment and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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 profits will be available to allow all or part of the asset to be recovered.

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

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

Current and deferred tax are recognised in profit or loss.

Property and equipment

Property and equipment are stated in the consolidated statements of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

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

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

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are stated at cost less subsequent accumulated depreciation and impairment losses, if any. Depreciation is recognised so as to write off the cost of investment properties over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

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

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortisation and any accumulated impairment losses, if any. Amortisation for intangible assets with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Research expenditure

Expenditure on research activities is recognised as an expense in the year/period in which it is incurred.

Impairment on tangible and intangible assets other than goodwill (see the accounting policy in respect of goodwill above)

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated in order to determine the extent of the impairment loss, if any.

When it is not possible to estimate the recoverable amount of an asset individually, the Group estimates the recoverable amount of the CGU to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

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

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If the recoverable amount of an asset (or a CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or a CGU) is reduced to its recoverable amount. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit. The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit. An impairment loss is recognised immediately in profit or loss.

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

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets at fair value through profit or loss (“FVTPL”) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• 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.

By default, all other financial assets are subsequently measured at FVTPL.

Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses (“ECL”), through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including ECL, to the amortised cost of the debt instrument on initial recognition.

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The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

For purchased or originated credit-impaired financial assets, the Group recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

Interest income is recognised in profit or loss and is included in the “other income” line item.

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or fair value through other comprehensive income (“FVTOCI”) are measured at FVTPL. Specifically:

• Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition.

• Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. In addition, debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instruments as at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. Fair value is determined in the manner described in note 22.

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. For financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss in the “other gains and losses” line item.

Impairment of financial assets

The Group always recognises lifetime ECL for accounts receivables. The ECL on accounts receivables are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that

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financial instrument at an amount equal to 12-month ECL (“12m ECL”). The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument. In contrast, 12m ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the 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. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group’s core operations, namely real estate agency services in the primary market, real estate data and consulting services and real estate brokerage network services.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

• an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;

• significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;

• significant increases in credit risk on other financial instruments of the same debtor;

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

Despite the aforegoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if (i) the financial instrument has a low risk of default, (ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and (iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a financial asset to have low credit risk when it has an internal or external credit rating of ‘investment grade’ as per globally understood definition.

For the date that the Group becomes a party to the financial guarantee contracts is considered to be the date of initial recognition for the purposes of assessing the financial guarantee contract for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of financial guarantee contracts, the Group considers the changes in the risk that the specified debtor will default on the contract.

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The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.

• when there is a breach of financial covenants by the counterparty; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

• (a) significant financial difficulty of the issuer or the borrower;

• (b) a breach of contract, such as a default or past due event;

• (c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; or

• (d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.

Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Group’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract, as the Group is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder, the debtor or any other party.

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Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit risk at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:

• Nature of financial instruments (i.e. the Group’s accounts receivables, bills receivables, amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) and other receivables are each assessed as a separate group);

• Past-due status;

• Nature, size and industry of debtors;

• Nature of collaterals for accounts receivables; and

• External credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Derecognition of financial assets

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

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Financial liabilities and equity instruments

Classification as debt or equity

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

Equity instruments

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

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship.

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For financial liabilities measured as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the financial liability.

Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not (1) contingent consideration of an acquirer in a business combination, (2) held-for-trading, or (3) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.

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

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the “other gains and losses” line item in profit or loss in note 8 for financial liabilities that are not part of a designated hedging relationship.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if not designated as at FVTPL and do not arise from a transfer of a financial asset, are subsequently measured at the higher of:

• the amount of the loss allowance determined in accordance with IFRS 9; and

• the amount initially recognised less, where appropriate, cumulative amount of income recognised in accordance with the revenue recognition policies.

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4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

Critical judgements in applying accounting policies

The following is the critical judgements, apart from those involving estimations (see below), that the management of the Group has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the Historical Financial Information.

Judgements in determining the performance obligations and timing of satisfaction of performance obligations

Note 3 describes the revenue recognition basis to each of the Group’s revenue stream. The recognition of each of the Group’s revenue stream requires judgement by the management of the Group in determining the timing of satisfaction of performance obligations.

In making their judgement, the directors of the Company consider the detailed criteria for recognition of revenue set out in IFRS 15 and in particular, whether the Group has satisfied all the performance obligations over time or at a point in time with reference to the details terms of transaction as stipulated in the contracts entered into with its customers and counterparties.

For the real estate agency services in the primary market, although such services includes certain promotional and marketing activities (including formulating and executing marketing and sales strategies) to facilitate the sales transaction of first-hand property units for the property developers, the respective service fee was either included in the pre-determined commission rate of the transaction price of each property unit sold or the respective cost of services was repayable to the Group on reimbursement basis. Therefore, the management of the Group assessed that the promotional and marketing services were not distinct and account for all the services performed as a single performance obligation. In addition, the management of the Group has assessed that the Group has a present right to payment from property developers for the service performed and (a) when the property buyer has executed the sales and purchase agreement and made the required down-payment or (b) the sales and purchase agreement has been registered with the relevant government authorities according to the terms and conditions of different agency contracts. Therefore, the management of the Group has satisfied that the performance obligation in respective of the real estate agency services in the primary market income is satisfied at a point in time. In addition, few property developer customers may settle a minor portion of the amounts due for a period of more than 1 year. However, the management of the Group has considered that the amount of consideration, the cash price of the property agency services and the prevailing interest rate in the property market in the PRC, and have satisfied that the financing component is not significant at contract level.

For the real estate consultancy services, the management of the Group has assessed that the Group has a present right to payment from property developers for the services performed upon the time when the customer have received and endorsed the consultancy report. Therefore, the management of the Group has satisfied that there was only a single performance obligation, and the respective real estate consultancy services income is satisfied at a point in time.

For the real estate data services, the management of the Group has assessed that the customers (i.e. the property developers) simultaneously receive and consume benefit provided by the Group’s performance as the Group performs. The Group is required to provide necessary services to the customers over the subscription period. Therefore, the management of the Group have satisfied that the performance obligation in respect of the fee-based subscription income is satisfied over time and have recognised such income on a straight-line basis over the subscription period.

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For the real estate brokerage network services, the management of the Group has assessed that the Group has a present right to payment from the small and medium-sized secondary real estate brokerage stores for the services performed upon the time when the legal title of the secondary real estate property is transferred. Therefore, the directors of the Company have satisfied that there was only a single performance obligation, and the respective of the secondary real estate brokerage services income is satisfied at a point in time.

Key sources of estimation uncertainty

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

Estimated loss allowance of debt instruments measured at amortised cost

Management estimates the amount of loss allowance for ECL on debt instruments (including accounts receivables, bills receivables, amounts due from related parties, other receivables, other non-current assets and cash and cash equivalents) that are measured at amortised cost based on the credit risk of the respective financial instrument. The loss allowance amount is measured as the asset’s carrying amount and the present value of estimated future cash flows with the consideration of expected future credit loss of the respective financial instrument. The assessment of the credit risk of the respective financial instrument involves high degree of estimation and uncertainty. When the actual future cash flows are less than expected or more than expected, a material impairment loss or a material reversal of impairment loss may arise, accordingly. In addition, with reference to the historical settlement patterns from these related parties under common control of E-House (China) Holdings, the management estimates the expected credit loss for amounts due from related parties which were under common control of E-House (China) Holdings is insignificant.

As at 31 December 2015, 2016 and 2017 and 31 March 2018, the carrying amount of debt instruments measured at amortised cost amounted to RMB2,440,141,000 (net of loss allowance of RMB257,328,000), RMB3,817,081,000 (net of loss allowance of RMB361,237,000), RMB5,695,273,000 (net of loss allowance of RMB480,851,000) and RMB6,905,957,000 (net of loss allowance of RMB492,994,000), respectively.

Useful lives and estimated impairment on property and equipment

The Group determines the estimated useful lives and related depreciation charges for its property and equipment. These estimates are based on the historical experience of the actual useful lives of plant and equipment of similar nature and functions. The Group will increase the depreciation charge where useful lives are less than previously estimated lives.

As at 31 December 2015, 2016 and 2017 and 31 March 2018, the carrying amount of property and equipment amounted to RMB55,802,000, RMB65,148,000, RMB62,249,000 and RMB57,541,000, respectively.

Recognition of deferred tax assets

The realisation of the deferred tax assets mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future. In cases where the actual future profits generated are higher or less than expected, the deferred tax assets will be adjusted, accordingly and recognised the corresponding amount in the consolidated statements of profit or loss and other comprehensive income in the periods in which such a situation takes place.

As at 31 December 2015, 2016 and 2017 and 31 March 2018, the carrying amount of deferred tax assets was RMB208,255,000, RMB350,179,000, RMB504,234,000 and RMB470,842,000, respectively.

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5. REVENUE

The Group derives its revenue from (1) real estate agency services in the primary market at a point in time, (2) real estate data and consulting services at a point in time or over time, and (3) real estate brokerage network services at a point in time during the Track Record Period. This is consistent with the revenue information that is disclosed for each operating and reportable segment under IFRS 8:

Real estate agency services in the primary market, recognised at a point in time Real estate data and consulting services – consulting services recognised at a point in time – data services recognised over time (note) Real estate brokerage network services, recognised at a point in time	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 2,336,540 3,568,575 3,926,722 278,993 282,773 496,984 100,913 113,624 132,438 379,906 396,397 629,422 – 31,157 77,216 2,716,446 3,996,129 4,633,360	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 654,706 734,757 155,502 137,224 30,256 30,409 185,758 167,633 14,330 27,812 854,794 930,202	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 654,706 734,757 155,502 137,224 30,256 30,409 185,758 167,633 14,330 27,812 854,794 930,202
			167,633 27,812
			930,202

• Note: The Group receives fee-based subscription fee income in relation to its proprietary CRIC systems, which are a series of proprietary real estate database and analysis system developed by the Group, for a fixed amount upon entering into the subscription contract, normally for a one year subscription period contract. The transaction price allocated to performance obligations in relation to the fee-based subscription fee income that were unsatisfied was amounted to RMB20,683,000, RMB23,485,000, RMB33,113,000 and RMB29,367,000 as at 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2018, respectively, representing the contract liabilities included in “accounts and other payables” in note 24.

Respective transaction price allocated to the unsatisfied contracts, representing the contract liabilities, as at 31 December 2015 and 2016 in the corresponding amount of RMB20,683,000 and RMB23,485,000 had been recognised as revenue on a straight-line basis over the subscription period for the years ended 31 December 2016 and 2017, respectively. As at 31 December 2017, the contract liabilities arising from the transaction price allocated to the unsatisfied contracts amounted to RMB33,113,000 of which RMB7,487,000 has been recognised as revenue on a straight-line basis over the subscription period for the three-month period ended 31 March 2018. The management expects the remaining balance of RMB25,626,000 of the contract liabilities as at 31 December 2017 will be recognised as revenue during the year ending 31 December 2018. As at 31 March 2018, the contract liabilities arising from the respective transaction price allocated to the unsatisfied contracts amounted to RMB29,367,000 will be recognised in full as revenue in the coming twelve months period.

During each of three years ended 31 December 2017 and the three-month period ended 31 March 2017 and 2018, the Group recognised the variable considerations in the reporting period from performance obligation satisfied in previous period, amounted to RMB95,483,000, RMB84,174,000, RMB141,385,000, RMB36,881,000 (unaudited) and RMB38,323,000, respectively.

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APPENDIX II

6. SEGMENT INFORMATION

The Group’s operating segments are determined based on information reported to Chief Executive Officer, being the chief operating decision maker (“CODM”) of the Group for the purposes of resource allocation and assessment of segment performance focuses on types of services provided. No operating segments identified by the CODM have been aggregated in arriving at the reportable segments of the Group.

The CODM considers the Group has three operating and reportable segments which are based on the internal organisation and reporting structure. This is the basis upon which the Group is organised.

The Group’s operating and reportable segments are as follow:

• (i) Real estate agency services in the primary market

The Group provides real estate agency services that primarily include formulating and executing marketing and sales strategies for real estate projects developed by real estate developers, promoting the projects to prospective purchasers, and facilitating sales transactions.

• (ii) Real estate data and consulting services

The Group mainly provides the following services:

• providing customers with a wide range of data services, leveraging the powerful CRIC systems;

• offering real estate rating and ranking services; and

• providing real estate consulting services that are tailored to meet the needs of developer clients throughout the design, development and sales stages and address specific issues encountered by them.

• (iii) Real estate brokerage network services

The Group provides real estate brokerage network services of integrating small and medium-sized secondary real estate brokerage stores in China, and empowering them with rich resources in their business operations.

Segment revenue and results

The following is an analysis of the Group’s revenue and results by operating and reportable segment:

For the year ended 31 December 2015

REVENUE External sales Inter-segment sales Total SEGMENT PROFIT (LOSS)	Real estate agency services in the primary market RMB’000 2,336,540 – 2,336,540 358,697	Real estate data and consulting services RMB’000 379,906 53,171 433,077 (47,756)	Real estate brokerage network services RMB’000 – – – –	Elimination RMB’000 – (53,171) (53,171) –	Total RMB’000 2,716,446 –
					2,716,446
					310,941

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Real estate agency services in the primary market Real estate data and consulting services Real estate brokerage network services Elimination RMB’000 RMB’000 RMB’000 RMB’000 Unallocated expenses Unallocated net exchange loss Share of result of associates Interest income Investment gain on money market fund Finance costs Profit before taxation	Total RMB’000 (86) (22) 92 4,551 197 (26,448) 289,225

For the year ended 31 December 2016

REVENUE External sales Inter-segment sales Total SEGMENT PROFIT (LOSS) Unallocated expenses Unallocated net exchange loss Share of result of associates Interest income Finance costs Profit before taxation	Real estate agency services in the primary market RMB’000 3,568,575 – 3,568,575 885,852	Real estate data and consulting services RMB’000 396,397 52,161 448,558 54,251	Real estate brokerage network services RMB’000 31,157 3,532 34,689 (125,076)	Elimination RMB’000 – (55,693) (55,693) –	Total RMB’000 3,996,129 – 3,996,129 815,027 (92) (34) (531) 4,191 (29,756) 788,805

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For the year ended 31 December 2017

REVENUE External sales Inter-segment sales Total SEGMENT PROFIT (LOSS) Unallocated expenses Unallocated net exchange loss Fair value gain on financial liabilities at FVTPL Share of result of associates Interest income Finance costs Profit before taxation	Real estate agency services in the primary market RMB’000 3,926,722 776 3,927,498 950,424	Real estate data and consulting services RMB’000 629,422 4,601 634,023 159,327	Real estate brokerage network services RMB’000 77,216 2,659 79,875 (125,101)	Elimination RMB’000 – (8,036) (8,036) –	Total RMB’000 4,633,360 – 4,633,360 984,650 (123) (14,917) 17,027 148 6,122 (21,650) 971,257

For the three-month period ended 31 March 2017 (unaudited)

REVENUE External sales Inter-segment sales Total SEGMENT PROFIT (LOSS) Unallocated expenses Unallocated net exchange gain Share of result of associates Interest income Finance costs Profit before taxation	Real estate agency services in the primary market RMB’000 (unaudited) 654,706 – 654,706 135,483	Real estate data and consulting services RMB’000 (unaudited) 185,758 654 186,412 68,256	Real estate brokerage network services RMB’000 (unaudited) 14,330 – 14,330 (27,114)	Elimination RMB’000 (unaudited) – (654) (654) –	Total RMB’000 (unaudited) 854,794 – 854,794 176,625 (24) 3 158 1,206 (6,642) 171,326

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For the three-month period ended 31 March 2018

REVENUE External sales Inter-segment sales Total SEGMENT PROFIT (LOSS) Unallocated expenses Listing expenses Unallocated net exchange loss Fair value gain on financial liabilities at FVTPL Share of result of associates Interest income Finance costs Profit before taxation	Real estate agency services in the primary market RMB’000 734,757 90 734,847 240,479	Real estate data and consulting services RMB’000 167,633 419 168,052 57,048	Real estate brokerage network services RMB’000 27,812 1,802 29,614 (34,197)	Elimination RMB’000 – (2,311) (2,311) –	Total RMB’000 930,202 – 930,202 263,330 (222) (17,406) (45,780) 23,864 (1,638) 2,844 (5,551) 219,441

The accounting policies of the operating segments are the same as the Group’s accounting policies described in note 3. Segment profit (loss) represents the profit earned or loss incurred by each segment without allocation of unallocated expenses, unallocated net exchange gain (loss), fair value gain on financial liabilities at FVTPL, share of result of associates, interest income and finance costs. This is the measure reported to the CODM for the purpose of resource allocation and performance assessment.

Segment assets and liabilities

No segment assets and liabilities information is provided as no such information is regularly provided to the CODM of the Group on making decision for resources allocation and performance assessment.

Other segment information

For the year ended 31 December 2015

	Real estate
	agency
	services	**Real **	estate	Real estate
	in the	data and		brokerage
	primary	consulting		network
	market	services		**services **	Unallocated	Total
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Amounts included in the measure of	segment profit or	loss:
Depreciation and amortisation	12,794		14,425	–	39	27,258
Loss allowance on financial assets
measured at amortised cost	34,945		28,496	–	–	63,441
(Gain) loss on disposal of property
and equipment	(400)		314	–	–	(86)
Gain on disposal of investment
properties	(2,181)		–	–	–	(2,181)
Impairment loss of investment
properties	7,290		–	–	–	7,290

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APPENDIX II

For the year ended 31 December 2016

	Real estate
	agency
	services	**Real **	estate	Real estate
	in the	data and		brokerage
	primary	consulting		network
	market	services		**services **	Unallocated	Total
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Amounts included in the measure of	segment profit or	loss:
Depreciation and amortisation	6,718		13,784	3,644	44	24,190
Loss allowance on financial assets
measured at amortised cost	92,150		11,305	504	–	103,959
(Gain) loss on disposal of property
and equipment	(39)		86	–	–	47
Loss on disposal of investment
properties	388		–	–	–	388
Impairment loss of investment
properties	2,053		–	–	–	2,053

For the year ended 31 December 2017

	Real estate
	agency
	services	**Real **	estate	Real estate
	in the	data and		brokerage
	primary	consulting		network
	market	services		**services **	Unallocated	Total
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Amounts included in the measure of	segment profit or	loss:
Depreciation and amortisation	8,021		17,890	1,877	82	27,870
Loss allowance on financial assets
measured at amortised cost	115,766		4,053	47	–	119,866
Loss (gain) on disposal of property
and equipment	102		(167)	–	–	(65)
Gain on disposal of investment
properties	(1,787)		–	–	–	(1,787)
Impairment loss of investment
properties	602		–	–	–	602

For the three-month period ended 31 March 2017 (unaudited)

	Real estate
	agency
	services	**Real **	estate	Real estate
	in the	data and		brokerage
	primary	consulting		network
	market	services		**services **	Unallocated	Total
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
	(unaudited)	(unaudited)		(unaudited)	(unaudited)	(unaudited)
Amounts included in the measure of	segment profit or	loss:
Depreciation and amortisation	2,526		6,174	589	19	9,308
Loss allowance on financial assets
measured at amortised cost	9,612		1,289	(228)	–	10,673
Loss on disposal of property
and equipment	51		50	–	–	101
Gain on disposal of investment
properties	(636)		–	–	–	(636)
Impairment loss of investment
properties	42		–	–	–	42

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APPENDIX II

For the three-month period ended 31 March 2018

	Real estate
	agency
	services	**Real **	estate	Real estate
	in the	data and		brokerage
	primary	consulting		network
	market	services		**services **	Unallocated	Total
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Amounts included in the measure of segment profit or		loss:
Depreciation and amortisation	2,092		3,033	1,142	24	6,291
Loss allowance on financial assets
measured at amortised cost	10,545		1,242	356	–	12,143
(Gain) loss on disposal of property and
equipment	(224)		101	7	–	(116)
Gain on disposal of investment
properties	(75)		–	–	–	(75)

Geographical information

As all of the Group’s revenue is derived from customers located in the PRC and all of the Group’s identifiable non-current assets are principally located in the PRC, no geographical segment information is presented.

Information about major customers

Revenue from customer of the corresponding years/periods contributing over 10% of the total sales of the Group are as follows:

						For the three-month	For the three-month
			**Year **	ended 31 December		period ended 31 March
			2015	2016	2017	2017	2018
			RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
						(unaudited)
Customer	A	(note)	605,769	1,074,191	1,626,497	293,059	314,455

Note: Revenue over the Track Record Period included such generated from real estate agency services in the primary market, and real estate data and consulting services. Upon completion of Group Reorganisation on 5 March 2018, the property developer customer become a related party to the Group.

7. OTHER INCOME

Interest income Government grants (note) Investment gain on money market fund Others	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 4,551 4,191 6,122 17,031 34,061 31,218 197 – – 440 1,018 916 22,219 39,270 38,256	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 1,206 2,844 272 14,649 – – 134 93 1,612 17,586	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 1,206 2,844 272 14,649 – – 134 93 1,612 17,586
			17,586

Note: The amount represents government grants received from various PRC government authorities in connection with the enterprise development support and fiscal subsidy during the Track Record Period, which had no conditions imposed by the respective PRC government authorities.

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APPENDIX II

8A. LOSS ALLOWANCE ON FINANCIAL ASSETS MEASURED AT AMORTISED COST

(Provision) reversal for loss allowance on: Accounts receivables Bills receivables Amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) Other receivables and other non-current assets	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 (88,417) (99,202) (104,626) (1,404) (2,075) (7,225) 1,525 (2,753) (4,475) 24,855 71 (3,540) (63,441) (103,959) (119,866)	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) (17,504) 4,605 4,433 (12,069) 1,211 (4,994) 1,187 315 (10,673) (12,143)	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) (17,504) 4,605 4,433 (12,069) 1,211 (4,994) 1,187 315 (10,673) (12,143)
			(12,143)

8B. OTHER GAINS AND LOSSES

Impairment loss of investment properties Gain (loss) on disposal of investment properties Gain (loss) on disposal of property and equipment Net exchange gain (loss) Fair value gain on financial liabilities at FVTPL	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 (7,290) (2,053) (602) 2,181 (388) 1,787 86 (47) 65 591 (31) (14,922) – – 17,027 (4,432) (2,519) 3,355	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) (42) – 636 75 (101) 116 3 (45,781) – 23,864 496 (21,726)	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) (42) – 636 75 (101) 116 3 (45,781) – 23,864 496 (21,726)
			(21,726)

9. FINANCE COSTS

				For the three-month	For the three-month
	**Year **	ended 31 December		period ended 31 March
	2015	2016	2017	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(unaudited)
Interest on bank
borrowings	26,448	29,756	21,650	6,642	5,551

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APPENDIX II

10. INCOME TAX EXPENSE

PRC Enterprise Income Tax (“EIT”) Current tax Overprovision in prior years Deferred tax (credit) expenses (note 26)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 139,069 361,268 364,386 (719) (2,561) (4,233) 138,350 358,707 360,153 (26,279) (142,071) (154,202) 112,071 216,636 205,951	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 65,798 33,711 – – 65,798 33,711 (29,570) 33,355 36,228 67,066	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 65,798 33,711 – – 65,798 33,711 (29,570) 33,355 36,228 67,066
			33,711 33,355
			67,066

Hong Kong

No provision for Hong Kong Profits Tax was made in the Historical Financial Information as the Group had no assessable profit subject to Hong Kong Profits Tax during the Track Record Period.

PRC

Save as those PRC subsidiaries disclosed below, pursuant to the EIT Law and Implementation Regulations of the Law of the PRC (the “EIT Law”), the statutory tax rate of all other PRC subsidiaries is 25% during the Track Record Period.

PRC Holdco was qualified as High Technology Enterprise and was approved to enjoy a preferential tax rate of 15% for a period of two years from 2015 to 2016 in accordance with the EIT Law and relevant regulations. For the year ended 31 December 2017, PRC Holdco had not been granted as High Technology Enterprise after the year ended 31 December 2016. Hence, the applicable tax rate of which was 25% for the year ended 31 December 2017 and for the three-month period ended 31 March 2018.

Beijing CREA Technology Services Ltd[#] (北京中房研協技術服務有限公司) (“Zhongfangyanxie”), a PRC subsidiary of the Group, was qualified as High Technology Enterprise and was approved to enjoy a preferential tax rate of 15% for a period of three years from 2015 to 2017 in accordance with the EIT Law and relevant regulations. Zhongfangyanxie is in the progress of applying High Technology Enterprise for the year ending 31 December 2018. As at the date of this report, the relevant application is still in the progress.

Shanghai Zhuxiang Information Technology Co., Ltd[#] (上海築想信息科技股份有限公司) (“Shanghai Zhuxiang”), a PRC subsidiary of the Group, was qualified as High Technology Enterprise and was approved to enjoy preferential tax policy of a period of five years from 2015 to 2019 in accordance with EIT Law and relevant regulations, to be exempted from income tax for its first two years, followed by a 50% reduction in income tax, to a rate of 12.5%, for the subsequent three years. Hence, the applicable tax rate of Shanghai Zhuxiang was 0% for the years ended 31 December 2015 and 2016, while it was 12.5% for the year ended 31 December 2017 and the three-month period ended 31 March 2018.

Pursuant to the relevant regulations applicable to enterprises situated in the western regions of the PRC, Chongqing E-House Investment Consultancy Co., Ltd[#] (重慶易居投資顧問有限公司), a wholly-owned PRC subsidiary of the Group, enjoys a preferential tax rate of 15% for a period of six years and three months from 1 October 2014 to 31 December 2020. Certain subsidiaries of the Group also situated in the western regions of the PRC which are approved by the relevant regulations to enjoy a preferential tax rate of 15% in the year ended 31 December 2016 and 31 December 2017 and the three-month period ended 31 March 2018. In 2015, as these subsidiaries did not apply for the preferential tax rate for the western regions of the PRC, the applicable tax rate of these subsidiaries for the year ended 31 December 2015 was 25%.

# English name is for identification purpose only

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The income tax expenses over the Track Record Period can be reconciled to profit before taxation per the consolidated statements of profit or loss and other comprehensive income as follows:

Profit before taxation Tax at the applicable tax rate of 25% Tax effect at share of result of associates Tax effect of expenses not deductible for tax purposes Tax effect of income not taxable for tax purpose Overprovision in respect of prior years Tax effect of tax losses not recognised Utilisation of tax losses previously not recognised Tax effect of deductible temporary differences not recognised Utilisation of deductible temporary differences previously not recognised Tax effect of tax concession granted Increase in opening deferred tax assets resulting from an increase in applicable tax rate Tax effect of different tax rate applied to deferred tax and current tax Income tax expenses	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 289,225 788,805 971,257 72,306 197,201 242,814 (23) 133 (37) 9,205 8,497 12,133 – – (4,257) (719) (2,561) (4,233) 25,465 27,053 10,684 (2,774) – (2,037) 5,999 1,549 967 (874) (1,559) (1,598) (2,483) (13,677) (37,580) – – (10,905) 5,969 – – 112,071 216,636 205,951	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 171,326 219,441 42,832 54,860 (39) 409 1,594 16,645 – (5,966) – – 6,245 4,327 (11) (62) 481 16 (1,059) (884) (2,910) (2,279) (10,905) – – – 36,228 67,066

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11. PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR/PERIOD

Profit for the year/period over the Track Record Period has been arrived at after charging:

Directors’ remuneration: – Fees – Salaries, bonus and other allowances – Retirement benefit scheme contributions – Equity-settled share- based payment expenses Other staff costs: – Salaries, bonus and other allowances – Retirement benefit scheme contributions – Equity-settled share- based payment expenses Total staff costs Depreciation of property and equipment Depreciation of investment properties Amortisation of intangible assets Total depreciation and amortisation Auditor’s remuneration Research and development costs recognised as an expense included in: – Staff costs – Depreciation and amortisation expenses – Other operating costs Minimum operating lease rental expense in respect of rented premises	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – 2,724 4,644 7,720 165 168 147 2,681 1,606 – 5,570 6,418 7,867 1,484,673 2,131,815 2,304,116 231,133 257,600 311,349 15,338 6,090 – 1,731,144 2,395,505 2,615,465 1,736,714 2,401,923 2,623,332 17,392 18,242 21,862 4,259 238 305 5,607 5,710 5,703 27,258 24,190 27,870 7,575 5,004 5,994 27,424 34,808 37,900 2,231 505 1,507 4,498 483 1,221 34,153 35,796 40,628 86,837 94,133 105,571	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – 441 1,450 42 44 – – 483 1,494 432,601 420,908 67,504 80,986 – – 500,105 501,894 500,588 503,388 7,772 4,883 101 152 1,435 1,256 9,308 6,291 2,879 2,173 7,919 11,631 327 423 390 669 8,636 12,723 25,248 26,613	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – 441 1,450 42 44 – – 483 1,494 432,601 420,908 67,504 80,986 – – 500,105 501,894 500,588 503,388 7,772 4,883 101 152 1,435 1,256 9,308 6,291 2,879 2,173 7,919 11,631 327 423 390 669 8,636 12,723 25,248 26,613
			1,494 420,908 80,986 –
			501,894
			503,388
			4,883 152 1,256
			6,291
			2,173 11,631 423 669
			12,723
			26,613

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12. DIRECTORS’, CHIEF EXECUTIVE’S AND EMPLOYEES EMOLUMENTS

Details of the emoluments paid or payable by the entities comprising the Group to the directors and chief executive of the Company (including emoluments for services as employee/directors of the group entities prior to their becoming directors of the Company) for their services during the Track Record Period are as follows:

Date of appointment as a director of the Company Year ended 31 December 2015 Executive directors: Zhou Xin 22 February 2010 Huang Canhao 9 November 2017 Cheng Lilan 16 March 2018 Ding Zuyu 16 March 2018 Xia Hai Jun 16 March 2018 Mo Bin 16 March 2018 Zhu Jiusheng 16 March 2018 Total Date of appointment as a director of the Company Year ended 31 December 2016 Executive directors: Zhou Xin 22 February 2010 Huang Canhao 9 November 2017 Cheng Lilan 16 March 2018 Ding Zuyu 16 March 2018 Xia Hai Jun 16 March 2018 Mo Bin 16 March 2018 Zhu Jiusheng 16 March 2018 Total	Fee RMB’000 – – – – – – – – Fee RMB’000 – – – – – – – –	Salaries, bonus and other allowances RMB’000 – 1,944 – 780 – – – 2,724 Salaries, bonus and other allowances RMB’000 – 2,904 – 1,740 – – – 4,644	Retirement benefit scheme contributions RMB’000 – 82 – 83 – – – 165 Retirement benefit scheme contributions RMB’000 – 85 – 83 – – – 168	Equity- settled share- based payment expenses RMB’000 – – – 2,681 – – – 2,681 Equity- settled share- based payment expenses RMB’000 – – – 1,606 – – – 1,606	Total RMB’000 – 2,026 – 3,544 – – –
					5,570
					Total RMB’000 – 2,989 – 3,429 – – –
					6,418

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Date of appointment as a director of the Company Year ended 31 December 2017 Executive directors: Zhou Xin 22 February 2010 Huang Canhao 9 November 2017 Cheng Lilan 16 March 2018 Ding Zuyu 16 March 2018 Xia Hai Jun 16 March 2018 Mo Bin 16 March 2018 Zhu Jiusheng 16 March 2018 Total	Fee RMB’000 – – – – – – – –	Salaries, bonus and other allowances RMB’000 – 4,160 – 3,560 – – – 7,720	Retirement benefit scheme contributions RMB’000 – 58 – 89 – – – 147	Equity- settled share- based payment expenses RMB’000 – – – – – – – –	Total RMB’000 – 4,218 – 3,649 – – –
					7,867

Date of appointment as a director of the Company For the three- month period ended 31 March 2017 (unaudited) Executive directors: Zhou Xin 22 February 2010 Huang Canhao 9 November 2017 Cheng Lilan 16 March 2018 Ding Zuyu 16 March 2018 Xia Hai Jun 16 March 2018 Mo Bin 16 March 2018 Zhu Jiusheng 16 March 2018 Total	Fee RMB’000 (unaudited) – – – – – – – –	Salaries, bonus and other allowances RMB’000 (unaudited) – 246 – 195 – – – 441	Retirement benefit scheme contributions RMB’000 (unaudited) – 21 – 21 – – – 42	Equity- settled share- based payment expenses RMB’000 (unaudited) – – – – – – – –	Total RMB’000 (unaudited) – 267 – 216 – – –
					483

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Date of appointment as a director of the Company For the three- month period ended 31 March 2018 Executive directors: Zhou Xin 22 February 2010 Huang Canhao 9 November 2017 Cheng Lilan 16 March 2018 Ding Zuyu 16 March 2018 Xia Hai Jun 16 March 2018 Mo Bin 16 March 2018 Zhu Jiusheng 16 March 2018 Total	Fee RMB’000 – – – – – – – –	Salaries, bonus and other allowances RMB’000 – 800 – 650 – – – 1,450	Retirement benefit scheme contributions RMB’000 – 22 – 22 – – – 44	Equity- settled share- based payment expenses RMB’000 – – – – – – – –	Total RMB’000 – 822 – 672 – – –
					1,494

Note: Ding Zuyu is also the chief executive of the Company and his emoluments disclosed above included those for services rendered by him as the chief executive.

The executive directors’ emoluments shown above were paid for their services in connection with the management of the affairs of the Company and the Group during the Track Record Period.

The five highest paid individuals of the Group include 2, 2, 2, 1 (unaudited) and 2 directors of the Company for each of the three years ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2017 and 2018, respectively. The emoluments of the remaining 3, 3, 3, 4 (unaudited) and 3 for each of the three years ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2017 and 2018, respectively, are as follows:

Salaries, bonus and other allowances Retirement benefit scheme contributions Equity-settled share-based payment expenses	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 5,580 7,986 7,980 246 255 267 3,950 1,476 – 9,776 9,717 8,247	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 930 1,350 84 66 – – 1,014 1,416	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 930 1,350 84 66 – – 1,014 1,416
			1,416

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The emoluments of the five highest paid individuals were within the following bands:

		**Number of **	employees	employees
				For the three-month
	Year ended 31 December			period ended 31 March
	2015	2016	2017	2017	2018
				(unaudited)
HK$0 (equivalent to RMB0 for the
year ended 31 December 2015,
2016 and 2017 and the three-
month period ended 31 March
2017 and 2018, respectively) to
HK$1,000,000 (equivalent to
RMB813,000, RMB838,000,
RMB860,000, RMB888,000 and
RMB814,000 for the year ended
31 December 2015, 2016 and
2017 and the three-month period
ended 31 March 2017 and 2018,
respectively)	–	–	–	5	4
HK$1,000,001 (equivalent to
RMB813,001, RMB838,001,
RMB860,001, RMB888,001 and
RMB814,001 for the year ended
31 December 2015, 2016 and
2017 and the three-month period
ended 31 March 2017 and 2018,
respectively) to HK$1,500,000
(equivalent to RMB1,220,000,
RMB1,256,000, RMB1,290,000,
RMB1,332,000 and
RMB1,221,000 for the year ended
31 December 2015, 2016 and
2017 and the three-month period
ended 31 March 2017 and 2018,
respectively)	–	–	–	–	1
HK$1,500,001 (equivalent to
RMB1,220,001, RMB1,256,001,
RMB1,290,001, RMB1,332,001
and RMB1,221,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$2,000,000 (equivalent to
RMB1,626,000, RMB1,675,000,
RMB1,720,000, RMB1,776,000
and RMB1,628,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	–	–	–	–	–

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		**Number of **	employees	employees
				For the three-month
	Year ended 31 December			period ended 31 March
	2015	2016	2017	2017	2018
				(unaudited)
HK$2,000,001 (equivalent to
RMB1,626,001, RMB1,675,001,
RMB1,720,001, RMB1,776,001
and RMB1,628,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$2,500,000 (equivalent to
RMB2,033,000, RMB2,094,000,
RMB2,150,000, RMB2,220,000
and RMB2,035,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	1	–	1	–	–
HK$2,500,001 (equivalent to
RMB2,033,001, RMB2,094,001,
RMB2,150,001, RMB2,220,001
and RMB2,035,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$3,000,000 (equivalent to
RMB2,439,000, RMB2,513,000,
RMB2,580,000, RMB2,664,000
and RMB2,442,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	–	1	–	–	–
HK$3,000,001 (equivalent to
RMB2,439,001, RMB2,513,001,
RMB2,580,001, RMB2,664,001
and RMB2,442,001 for the year
ended
31 December 2015, 2016 and
2017 and the three-month period
ended 31 March 2017 and 2018,
respectively) to HK$3,500,000
(equivalent to RMB2,846,000,
RMB2,931,000, RMB3,010,000,
RMB3,108,000 and
RMB2,849,000 for the year ended
31 December 2015, 2016 and
2017 and the three-month period
ended 31 March 2017 and 2018,
respectively)	1	–	–	–	–

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Number of employees

				For the three-month	For the three-month
	Year ended 31 December			period ended 31 March
	2015	2016	2017	2017	2018
				(unaudited)
HK$3,500,001 (equivalent to
RMB2,846,001, RMB2,931,001,
RMB3,010,001, RMB3,108,001
and RMB2,849,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$4,000,000 (equivalent to
RMB3,252,000, RMB3,350,000,
RMB3,440,000, RMB3,552,000
and RMB3,256,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	–	1	2	–	–
HK$4,000,001 (equivalent to
RMB3,252,001, RMB3,350,001,
RMB3,440,001, RMB3,552,001
and RMB3,256,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$4,500,000 (equivalent to
RMB3,659,000, RMB3,769,000,
RMB3,870,000, RMB3,996,000
and RMB3,663,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	3	2	1	–	–
HK$4,500,001 (equivalent to
RMB3,659,001, RMB3,769,001,
RMB3,870,001, RMB3,996,001
and RMB3,663,001 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively) to
HK$5,000,000 (equivalent to
RMB4,066,000, RMB4,188,000,
RMB4,300,000, RMB4,441,000
and RMB4,070,000 for the year
ended 31 December 2015, 2016
and 2017 and the three-month
period ended 31 March 2017 and
2018, respectively)	–	1	1	–	–

During the Track Record Period, no emoluments were paid by the Group to the management of the Group or the five highest paid individuals of the Group as an inducement to join or upon joining the Group or as compensation for loss of office. None of the management of the Group and five highest paid individuals of the Group has waived any emoluments during the Track Record Period.

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13. DIVIDENDS

The Company PRC Holdco	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – 600,000 – – 600,000 – –	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – – – – –	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – – – – –
			–

The rate of dividend and number of shares ranking for dividend are not presented as such information is not meaningful having regards to the purpose of this report. No dividend has been proposed by the Company and PRC Holdco subsequent to 31 March 2018.

14. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share attributable to owners of the Company is based on the following data:

Earnings: Profit for the year/period attributable to owners of the Company for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Fair value gain on financial liabilities at FVTPL Profit for the year attributable to owners of the Company for the purpose of diluted earnings per share	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 165,209 486,969 352,020 – – – 165,209 486,969 352,020	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 56,000 93,875 – (23,864) 56,000 70,011	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 56,000 93,875 – (23,864) 56,000 70,011
			70,011

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Number of shares: Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Contingently issuable shares arising from the conditional investment fund received Weighted average number of ordinary share for the purpose of diluted earnings per share	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 ’000 ’000 ’000 1,000,000 915,301 500,000 – – – 1,000,000 915,301 500,000	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) ’000 ’000 500,000 693,380 – 101,220 500,000 794,600	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) ’000 ’000 500,000 693,380 – 101,220 500,000 794,600
			794,600

The number of ordinary shares for the purpose of calculating basic earnings per share has been determined on the assumption that the Group Reorganisation had been effective on 1 January 2015.

No diluted earnings per share for the year ended 31 December 2015 and 2016 and for the three-month period ended 31 March 2017 was presented as there were no potential ordinary shares in issue during the year ended 31 December 2015 and 2016 and for the three-month period ended 31 March 2017.

As at 31 December 2017, the Company had 144,600,000 shares of contingently issuable shares arising from the conditional investment fund received from the three prospective investors on 1 December 2017 as detailed in note 27(c). These contingently issuable shares were not treated as outstanding and were not included in the calculation of basic earnings per share for the year ended 31 December 2017, since the condition about the completion of Group Reorganisation has not yet been satisfied as at 31 December 2017.

In addition, the contingently issuable shares were also not included in the diluted earnings per share calculation for the year ended 31 December 2017, because the conditions about the Group Reorganisation had not yet been satisfied and was still in the contingency period as at 31 December 2017.

Upon the completion of Group Reorganisation completed on 5 March 2018, the conditional investment fund received had then become unconditional, and these 144,600,000 shares has become issued and outstanding, which was therefore are included in the calculation of basic earnings per share since that date for the three-month period ended 31 March 2018. As the conditional investment fund received had become unconditional during the three-month period ended 31 March 2018, these 144,600,000 shares are included in the computation of diluted earnings per share for the three-month period ended 31 March 2018.

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15. PROPERTY AND EQUIPMENT

COST At I January 2015 Additions Disposals Deemed disposal upon Business Transfer (note) Disposal of subsidiaries (note 32) At 31 December 2015 Additions Disposals At 31 December 2016 Additions Disposals At 31 December 2017 Additions Disposals At 31 March 2018 DEPRECIATION At 1 January 2015 Provided for the year Eliminated on disposals Eliminated on deemed disposal upon Business Transfer (note) Eliminated on disposal of subsidiaries (note 32) At 31 December 2015 Provided for the year Eliminated on disposals At 31 December 2016 Provided for the year Eliminated on disposals At 31 December 2017 Provided for the period Eliminated on disposals At 31 March 2018 CARRYING VALUES At 31 December 2015 At 31 December 2016 At 31 December 2017 At 31 March 2018	Leasehold improvements RMB’000 17,627 4,057 – – (11,267) 10,417 17,928 – 28,345 17,414 (516) 45,243 1,000 (1,359) 44,884 (4,027) (3,650) – – 2,607 (5,070) (6,618) – (11,688) (10,732) 33 (22,387) (2,203) 320 (24,270) 5,347 16,657 22,856 20,614	Leasehold land and building RMB’000 26,158 – (2,111) (4,683) – 19,364 – (782) 18,582 – (2,500) 16,082 – – 16,082 (3,800) (806) 319 1,207 – (3,080) (761) 233 (3,608) (470) 409 (3,669) (118) – (3,787) 16,284 14,974 12,413 12,295	Furniture, fixtures and equipment RMB’000 73,296 5,852 (7,586) – (1,274) 70,288 5,392 (4,046) 71,634 2,118 (6,430) 67,322 106 (1,013) 66,415 (37,291) (10,388) 7,025 – 250 (40,404) (9,191) 3,771 (45,824) (8,723) 6,060 (48,487) (2,050) 955 (49,582) 29,884 25,810 18,835 16,833	Motor vehicles RMB’000 22,117 2,027 (2,405) (6,999) – 14,740 5,167 (1,488) 18,419 2,594 (2,511) 18,502 378 (1,084) 17,796 (15,407) (2,548) 2,034 5,468 – (10,453) (1,672) 1,413 (10,712) (1,937) 2,292 (10,357) (512) 872 (9,997) 4,287 7,707 8,145 7,799	Total RMB’000 139,198 11,936 (12,102) (11,682) (12,541) 114,809 28,487 (6,316) 136,980 22,126 (11,957) 147,149 1,484 (3,456) 145,177 (60,525) (17,392) 9,378 6,675 2,857 (59,007) (18,242) 5,417 (71,832) (21,862) 8,794 (84,900) (4,883) 2,147 (87,636) 55,802 65,148 62,249 57,541

Note: Property and equipment of E-House Management and Beijing EJU not transferred to the Group from the Business Transfer was deemed to be an asset disposal.

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The above items of property and equipment are depreciated, taking into account their estimated residual values, on a straight-line basis over their estimated useful lives as follows:

Leasehold improvements The shorter of the term of the relevant lease or 5 years Leasehold land and building 30 years Furniture, fixtures and equipment Over 3 – 5 years Motor vehicles Over 5 years

16. INVESTMENT PROPERTIES

COST At 1 January 2015 Additions Disposals Deemed disposal upon Business Transfer (note) At 31 December 2015 Additions Disposals At 31 December 2016 Additions Disposals At 31 December 2017 Disposals At 31 March 2018 DEPRECIATION AND IMPAIRMENT At 1 January 2015 Provided for the year Impairment loss recognised in profit or loss Eliminated on disposals Eliminated on deemed disposal upon Business Transfer (note) At 31 December 2015 Provided for the year Impairment loss recognised in profit or loss Eliminated on disposals At 31 December 2016 Provided for the year Impairment loss recognised in profit or loss Eliminated on disposals At 31 December 2017 Provided for the period Eliminated on disposals At 31 March 2018 CARRYING VALUES At 31 December 2015 At 31 December 2016 At 31 December 2017 At 31 March 2018

RMB’000 136,416 18,655 (15,603) (133,995) 5,473 13,794 (4,414) 14,853 11,940 (6,503) 20,290 (348) 19,942 (8,760) (4,259) (7,290) 1,784 18,318 (207) (238) (2,053) 226 (2,272) (305) (602) 1,577 (1,602) (152) 25 (1,729) 5,266 12,581 18,688 18,213

Note: Investment properties of E-House Management and Beijing EJU not transferred to the Group from the Business Transfer were deemed to be an asset disposal.

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APPENDIX II

All of the Group’s investment properties are held for capital appreciation only and the Group did not rent out any of the investment properties during the Track Record Period.

The fair value of the Group’s investment properties as at 31 December 2015, 2016 and 2017 and 31 March 2018 was RMB5,394,000, RMB13,611,000, RMB24,891,000 and RMB24,788,000, respectively. The valuation was determined by the management of the Group by reference to recent market prices for similar properties in the same locations and conditions, and to consider if any adjustment factor necessary.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

Details of the Group’s investment properties and information about the fair value hierarchy as at the end of the reporting period are as follows:

Commercial property units located in Changsha Commercial property units located in Zhengzhou Commercial property units located in Guangzhou Commercial property units located in Changsha Commercial property units located in Tianjin Commercial property units located in Kunshan Commercial property units located in Yinchuan Commercial property units located in Chongqing Commercial property units located in Guangzhou Commercial property units located in Changsha Commercial property units located in Tianjin Commercial property units located in Yinchuan Commercial property units located in Guangzhou Commercial property units located in Wuhan Commercial property units located in Qingdao Commercial property units located in Changsha Commercial property units located in Tianjin Commercial property units located in Yinchuan Commercial property units located in Guangzhou Commercial property units located in Wuhan Commercial property units located in Qingdao	Level 3 RMB’000 799 1,747 2,848 5,394 Level 3 RMB’000 1,198 4,693 1,039 1,373 2,323 2,985 13,611 Level 3 RMB’000 1,145 3,645 1,268 4,120 9,958 4,755 24,891 Level 3 RMB’000 1,013 3,534 1,454 3,070 10,684 5,033 24,788	Fair value as at 31/12/2015 RMB’000 799 1,747 2,848
		5,394
		Fair value as at 31/12/2016 RMB’000 1,198 4,693 1,039 1,373 2,323 2,985
		13,611
		Fair value as at 31/12/2017 RMB’000 1,145 3,645 1,268 4,120 9,958 4,755
		24,891
		Fair value as at 31/3/2018 RMB’000 1,013 3,534 1,454 3,070 10,684 5,033
		24,788

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The above investment properties are depreciated on a straight-line basis at the following rates per annum:

Leasehold land Over the term of the lease Buildings The shorter of the term of the lease or 30 years

None of the Group’s investment properties are pledged for the Group’s borrowings and/or banking facilities.

17. GOODWILL

RMB’000

Cost At 1 January 2015, 31 December 2015, 31 December 2016, 31 December 2017 and 31 March 2018 5,109

For the purpose of impairment testing, goodwill has been allocated to one CGU. During the Track Record Period, management of the Group determines that there is no impairment to the CGU containing goodwill over the Track Record Period.

Goodwill was arisen from the Group’s previous acquisition of Shenzhen Fangyou Software Technology Co., Ltd.[#] (深圳市房友軟件技術有限公司) in 2009, which was related to the real estate data and consulting services. Its major business involves providing software development and information consulting service. The recoverable amount of this CGU has been determined based on a value in use calculation. That calculation uses cash flow projections based on financial budgets approved by management covering a 5-year period, and pre-tax discount rate of 19% as at 31 December 2015, 2016 and 2017 and 31 March 2018. The cash flows beyond the 5-year period are extrapolated at a steady growth rate of 3% as at 31 December 2015, 2016 and 2017 and 31 March 2018. The management believes such growth rate does not exceed the average long-term growth rate for the relevant industry. Other key assumptions for the value in use calculation relate to the estimation of cash inflows/outflows which include budgeted revenue, such estimation is based on its past performance and management’s expectations for the market development. The management determines that any reasonably possible change in any of these assumptions would not cause the carrying amount of the CGU containing such goodwill exceeds its recoverable amount.

18. INTANGIBLE ASSETS

COST At I January 2015 Additions At 31 December 2015 Additions At 31 December 2016 Additions At 31 December 2017 and 31 March 2018 AMORTISATION At 1 January 2015 Provided for the year	Software RMB’000 18,239 299 18,538 21 18,559 241 18,800 (11,134) (1,530)	Domain RMB’000 1,559 – 1,559 – 1,559 – 1,559 (630) (202)	Exclusive cooperative right RMB’000 (note) 29,855 – 29,855 – 29,855 – 29,855 (16,327) (3,732)	Others RMB’000 1,425 – 1,425 – 1,425 – 1,425 (784) (143)	Total RMB’000 51,078 299 51,377 21 51,398 241 51,639 (28,875) (5,607)

# English name is for identification purpose only

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At 31 December 2015 Provided for the year At 31 December 2016 Provided for the year At 31 December 2017 Provided for the period At 31 March 2018 CARRYING VALUES At 31 December 2015 At 31 December 2016 At 31 December 2017 At 31 March 2018	Software RMB’000 (12,664) (1,628) (14,292) (1,583) (15,875) (234) (16,109) 5,874 4,267 2,925 2,691	Domain RMB’000 (832) (207) (1,039) (245) (1,284) (53) (1,337) 727 520 275 222	Exclusive cooperative right RMB’000 (note) (20,059) (3,732) (23,791) (3,732) (27,523) (933) (28,456) 9,796 6,064 2,332 1,399	Others RMB’000 (927) (143) (1,070) (143) (1,213) (36) (1,249) 498 355 212 176	Total RMB’000 (34,482) (5,710) (40,192) (5,703) (45,895) (1,256) (47,151) 16,895 11,206 5,744 4,488

In respect of the newly acquired intangible assets during the Track Record Period, all of them were acquired from independent third parties.

• Note: The Group’s exclusive cooperative right was resulted from the prior capital injection of a 51% owned subsidiary established on 17 August 2010 by non-controlling shareholders of a subsidiary of the Group, of which was initially carried at fair value with reference to a valuation report using income approach performed by an internationally recognised independent professional valuer in the prior year. The exclusive cooperative right represents the exclusive right granted to the subsidiary by the noncontrolling shareholders to (i) host exhibition and activities sponsored by the non-controlling shareholders and (ii) access to real estate industry research reports prepared by the non-controlling shareholders.

The above items of software, domain, exclusive cooperative right and others are amortised, on a straight-line basis over their estimated useful lives as follows:

Software			Over 3 – 10 years
Domain			5 years
Exclusive	cooperative	right	8 years
Others			10 years

19. INTERESTS IN ASSOCIATES

Cost of investments, unlisted Share of post-acquisition results	At 31 December 2015 2016 RMB’000 RMB’000 3,430 5,030 1,463 932 4,893 5,962	2017 RMB’000 9,830 1,185 11,015	At 31 March 2018 RMB’000 9,830 (453) 9,377

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Details of the Group’s interests in associates are as follows:

			Paid up
			registered	Proportion of ownership						**Proportion of **		voting
			capital	**interest held by **			**the **	Group	**rights held by the **				Group
	Country of	Place of						As at					As at
Name of Company	registration	operation	RMB’000	As at 31 December				31 March	**As at **	31 December			31 March	Principal
				2015	2016	2017		2018	2015	2016	2017		2018	activity
Wuhan Zhongcheng	The PRC	The PRC	5,000	45%	45%	45%		45%	40%	40%	40%		40%	Consulting and
E-House Sales and														brokerage
Marketing Co., Ltd#														service in real
(武漢中城易居營銷策														estate industry
劃有限公司)
Xirui (Shanghai)	The PRC	The PRC	2,000	39%	39%	39%		39%	39%	39%	39%		39%	Consulting
Investment														service
Consultancy Co., Ltd#
(悉瑞(上海)投資諮詢有
限公司)
Shenzhen CRIC Huamei	The PRC	The PRC	1,000	20%	20%	20%		20%	20%	20%	20%		20%	Investment
Consultancy Co., Ltd#														holding and
(深圳市克而瑞華美顧														consulting
問有限公司)														service
Shanghai Chuangbai	The PRC	The PRC	400	20%	20%		–	–	20%	20%		–	–	Investment
Investment														holding and
Management Co., Ltd#														consulting
(上海創柏投資管理有														service
限公司) (“Chuangbai”)
(note)
Shenzhen Dahai Zhide	The PRC	The PRC	30,000	20%	20%	20%		20%	20%	20%	20%		20%	Investment
Investment														management
Management Co., Ltd#
(深圳大海智地投資管
理有限公司)
Shanghai Zhuojia	The PRC	The PRC	1,100	20%	20%	20%		20%	20%	20%	20%		20%	Computer
Information														information
Technology Co., Ltd#														technology
(上海卓家信息科技有														consulting
限公司)														service

Note: During the year ended 31 December 2017, the Group disposed of its 20% equity interest in Chuangbai to an independent third party at net carrying amount of RMB96,000 for a cash consideration of RMB96,000 equivalent to the share of the net asset value of Chuangbai on the date of disposal, with no gain or loss recognised in profit or loss.

In the opinion of the management of the Group, each individual associate of the Group and in aggregate is considered insignificant, and thus, the individual associate’s or aggregate information of associates’ summarised financial information is not disclosed.

# English name is for identification purpose only

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20. ACCOUNTS RECEIVABLES, BILLS RECEIVABLES, OTHER NON-CURRENT ASSETS AND OTHER RECEIVABLES

The Group Accounts receivables Less: Loss allowance for accounts receivables Bills receivables Less: Loss allowance for bills receivables Total accounts receivables and bills receivables Deposits paid to customers (note i) – current – non-current Prepayments (current) Deferred issue costs (note ii) Rental deposits – current – non-current Deposits paid for acquisition of property and equipment (non-current) Long-term deferred expenses (non-current) Other receivables – others (current) Less: Loss allowance for other receivables and other non-current assets measured at amortised cost Total accounts receivables, bills receivables, other non-current assets and other receivables Other non-current assets and other receivables disclosed in the consolidated statements of financial position as: – Current – Non-current	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 1,418,580 2,275,610 3,031,137 (247,539) (346,740) (451,116) 1,171,041 1,928,870 2,580,021 227,141 369,852 743,220 (5,938) (8,014) (15,239) 221,203 361,838 727,981 1,392,244 2,290,708 3,308,002 2,499 11,065 39,439 2,200 2,105 18,796 12,343 16,828 16,298 – – – 5,643 3,180 3,095 14,007 13,361 15,389 1,381 3,666 1,428 260 199 118 5,386 10,870 15,177 43,719 61,274 109,740 (3,064) (2,943) (6,481) 40,655 58,331 103,259 1,432,899 2,349,039 3,411,261 25,259 40,668 71,590 15,396 17,663 31,669 40,655 58,331 103,259	As at 31 March 2018 RMB’000 2,022,940 (415,865) 1,607,075 651,812 (27,308) 624,504 2,231,579 42,689 8,600 23,473 4,839 3,197 14,867 4,109 105 16,041 117,920 (4,158) 113,762 2,345,341 87,951 25,811 113,762

note i: Amount represents earnest deposits paid by the Group to its property developer customers enabling the Group to carry out the real estate agency services in the primary market projects, which will be released to the Group at the earlier of (i) period agreed in the respective agreements and (ii) upon completion of the respective agreements.

note ii: Deferred issue costs represent the qualifying portion of listing expenses incurred up to 31 March 2018, which will be debited to equity of the Group as share issue costs in respect of the successful issue of new shares upon listing.

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The Group allows all of its customers a credit period of 30 days upon satisfaction of the terms and conditions of the relevant agreements and relevant invoices have been issued.

The following is an aged analysis of accounts receivables, net of allowance for doubtful debts, presented based on the dates of rendering the services and the date when the sales target for higher commission was achieved at the end of the reporting period, which approximated the respective revenue recognition dates:

Within 1 year 1 – 2 years Over 2 years	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 946,910 1,750,663 2,325,803 170,587 140,538 220,797 53,544 37,669 33,421 1,171,041 1,928,870 2,580,021	As at 31 March 2018 RMB’000 1,382,610 195,331 29,134
		1,607,075

Upon maturity of the accounts receivables, certain of the Group’s customers would issue commercial bills to the Group to settle its accounts receivables. The Group’s bills receivables represent bills receivables on hand which are not yet due at the end of the reporting period. During the Track Record Period, the Group did not endorse the bills received to any counterparties and did not discount the bills to any banks and/or financial institutions.

Included in the Group’s bills receivables as at 31 December 2015, 2016 and 2017 and 31 March 2018 with carrying amounts of RMB218,326,000, RMB357,602,000, RMB715,636,000 and RMB619,496,000, respectively, are commercial bills issued by a property developer. Upon completion of Group Reorganisation on 5 March 2018, the property developer became a related party to the Group.

The following is an aged analysis of bills receivables, net of allowance for doubtful debts, presented based on the issue dates of bills receivables.

Within 180 days 181 – 365 days Over 365 days	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 213,174 361,838 727,981 8,029 – – – – – 221,203 361,838 727,981	As at 31 March 2018 RMB’000 621,319 3,185 –
		624,504

The following is a maturity analysis of bills receivables, net of allowance for doubtful debts, presented based on the remaining dates to maturity of bills receivables at the end of the reporting period.

Within 180 days 181 – 365 days Over 365 days	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 203,439 355,848 722,644 17,764 5,990 5,337 – – – 221,203 361,838 727,981	As at 31 March 2018 RMB’000 293,527 330,787 190
		624,504

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Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines credit limits by customer. Credit limits attributed to customers and credit term granted to customers are reviewed regularly. The Group has recognised ECL allowance of 100% on the outstanding balance of accounts receivables (except for those with real estate properties obtained as collateral) arising from (i) normal risk type customers of which were aged over 2 years since the revenue recognition date and (ii) higher risk type customers, because they were assessed by the management of the Group generally not recoverable based on their historical experience and settlement patterns.

Included in the Group’s accounts receivables at 31 December 2015, 2016 and 2017 and 31 March 2018 with aggregate carrying amounts of RMB98,388,000, RMB61,658,000, RMB56,420,000 and RMB40,373,000, respectively, the Group has obtained collateral of real estate properties over these balances.

When the Group’s customer uses real estate property as collateral to settle the outstanding accounts receivables in partial or in full, the Group will assess the fair value of real estate property based on the recent market prices and agree with the Group’s customer. During the year ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2018, the Group received real estate properties with fair value of RMB18,655,000, RMB13,794,000, RMB11,940,000 and nil, respectively, and recognised these real estate properties as investment properties, with the corresponding amount credited to accounts receivables.

Movement in lifetime ECL that has been recognised for accounts receivables and bills receivables in accordance with the simplified approach set out in IFRS 9.

At beginning of the year/period Net impairment losses recognised on accounts receivables and bills receivables Eliminated on deemed disposal upon Business Transfer (note i) Amounts written off Transfer to amounts due from related parties of trade nature (note ii) At end of the year/period	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 225,702 253,477 354,754 89,821 101,277 111,851 (62,046) – – – – (250) – – – 253,477 354,754 466,355	As at 31 March 2018 RMB’000 466,355 7,464 – – (30,646) 443,173

Movement in ECL that has been recognised for other receivables and other non-current assets in accordance with IFRS 9.

At beginning of the year/period Impairment losses (reversal) recognised on other receivables Eliminated on deemed disposal upon Business Transfer (note i) Amounts written off Transfer to amounts due from related parties of trade nature (note ii) At end of the year/period	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 43,672 3,064 2,943 (24,855) (71) 3,540 (15,753) – – – (50) (2) – – – 3,064 2,943 6,481	As at 31 March 2018 RMB’000 6,481 (315) – – (2,008) 4,158

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Note i: Accounts receivables, bills receivables, other receivables and other non-current assets of E-House Management and Beijing EJU not transferred to the Group from the Business Transfer was deemed to be an asset disposal. The previously recognised ECL provision of E-House Management and Beijing EJU on accounts receivables, bills receivables, other receivables and other non-current assets was therefore eliminated.

Note ii: On 5 March 2018, upon completion of the Group Reorganisation, China Vanke Co., Ltd., China Evergrande Group and Country Garden Holdings Company Limited became shareholders of the Company and exercise significant influence over the Group. As a result, the affiliates of China Vanke Co., Ltd., China Evergrande Group and Country Garden Holdings Company Limited became related parties of the Group.

The Company

The Company’s other receivables balance as at 31 December 2017 represented prepayments with aggregate carrying amount of RMB42,000.

The Company’s other receivables balance as at 31 March 2018 represented prepayments with aggregate carrying amount of RMB40,000 and deferred issue costs of RMB4,839,000.

21. AMOUNT DUE FROM (TO) RELATED PARTIES

The Group’s and the Company’s amounts due from (to) related parties comprised of amounts due from (to) shareholders and related parties, details of which are set out below.

Assets Amount due from holding companies – non-trade nature (note a) Amounts due from related parties (note b) Disclosed in the statements of financial position as: – Current assets – Non-current assets Analysed as: Trade nature: – Amounts due from related parties under common control of E-House (China) Holdings – Amounts due from other related parties Less: Loss allowance for amounts due from other related parties	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 13,950 13,950 13,950 541,269 436,585 365,120 555,219 450,535 379,070 470,241 365,040 379,070 84,978 85,495 – 555,219 450,535 379,070 16,840 79,653 50,474 4,481 2,871 2,729 (787) (3,540) (8,015) 20,534 78,984 45,188	As at 31 March 2018 RMB’000 13,950 1,321,527 1,335,477 1,319,609 15,868 1,335,477 52,042 993,453 (45,663) 999,832	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – 631 674 167,815 631 674 167,815 631 674 167,815 – – – 631 674 167,815 – – – – – – – – – – – –	As at 31 March 2018 RMB’000 – 160,871
				160,871
				160,871 –
				160,871
				– – –
				–

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Non-trade nature: – Amounts due from related parties under common control of E-House (China) Holdings – Amounts due from other related parties Liabilities Amount due to immediate holding company – non-trade nature (note c) Amounts due to related parties (note d) Disclosed in the statements of financial position as: – Current liabilities Analysed as: Trade nature: – Amounts due to related parties under common control of E-House (China) Holdings – Amounts due to other related parties Non-trade nature: – Amounts due to related parties under common control of E-House (China) Holdings	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 534,397 371,261 333,592 288 290 290 534,685 371,551 333,882 555,219 450,535 379,070 784 864 850 330,773 477,742 296,444 331,557 478,606 297,294 331,557 478,606 297,294 1,801 83,187 17,823 17,076 13,692 21,544 18,877 96,879 39,367 312,680 381,727 257,927 331,557 478,606 297,294	As at 31 March 2018 RMB’000 335,645 – 335,645 1,335,477 881 311,974 312,855 312,855 21,617 36,226 57,843 255,012 312,855	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 631 674 167,815 – – – 631 674 167,815 631 674 167,815 726 790 768 – – – 726 790 768 726 790 768 – – – – – – – – – 726 790 768 726 790 768	As at 31 March 2018 RMB’000 160,871 –
				160,871
				160,871
				778 –
				778
				778
				– –
				– 778
				778

Notes:

(a) Amounts due from holding companies – non-trade nature

Particulars of the amounts due from holding companies are disclosed as follows:

Non-trade nature E-House (China) Holdings CRE Corp	As at 1 January 2015 RMB’000 110,260 16,430 126,690	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 517 517 517 13,433 13,433 13,433 13,950 13,950 13,950	As at 31 March 2018 RMB’000 517 13,433 13,950	As at 1 January 2015 RMB’000 – – –	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – –	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – –	As at 31 March 2018 RMB’000 – – –
						–

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As at 1 January Non-trade nature 2015 RMB’000 Disclosed in the statements of financial position as: – Current assets – Non-current assets	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 517 – 13,950 13,433 13,950 – 13,950 13,950 13,950	As at 31 March As at 1 January 2018 2015 RMB’000 RMB’000 13,950 – 13,950	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – –	As at 31 March 2018 RMB’000 – –
				–

For amounts due from holding companies, the maximum amount outstanding during the Track Record Period is as follows:

		**The **	Group				The Company	The Company	The Company
					For the						For the
					three-						three-
					month						month
					period						period
					ended						ended
	**Year **	ended 31 December		31 March		**Year **	**ended 31 **	December		31 March
	2015	2016	2017		2018	2015	2016		2017		2018
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000		RMB’000	RMB’000
E-House (China)
Holdings	110,395	517	517		517	–		–	–		–
CRE Corp	16,430	13,433	13,433		13,433	–		–	–		–

The amounts due from holding companies are non-trade in nature, unsecured, interest-free and repayable on demand.

As represented by the management of the Group, the outstanding amounts due from holding companies as at 31 March 2018 would be settled prior to the Listing.

(b) Amounts due from related parties

Particulars of the amounts due from related parties of trade nature presented as current assets are disclosed as follows:

			**The **	Group			The Company	The Company
					As at				As at
	Relationship	As at 31 December			31 March	As at 31 December			31 March
Trade nature	(note)	2015	2016	2017	2018	2015	2016	2017	2018
		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Shanghai Nanzhi Investment Co., Ltd.
(上海南志投資有限公司) (“Nanzhi”)#	(i)	9,640	4,460	–	–	–	–	–	–
Hangzhou E-House Chenxin Real
Estate Broker Co., Ltd# (杭州易居臣
信房地產經紀有限公司) (“Hangzhou
Chenxin”)	(i)	4,900	–	–	–	–	–	–	–
Shanghai Urban Development (Group)
Co., Ltd (上海城開(集團)有限公司)
(“Shanghai Urban”)
– accounts receivables	(ii)	3,694	2,493	2,270	1,221	–	–	–	–
– other receivables	(ii)	–	–	–	290	–	–	–	–
China Evergrande Group’s affiliates
– accounts receivables	(iv)	–	–	–	896,943	–	–	–	–
– other non-current assets	(iv)	–	–	–	604	–	–	–	–
China Vanke Co., Ltd’s affiliates
– accounts receivables	(iv)	–	–	–	31,441	–	–	–	–

# English name is for identification purpose only

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Relationship Trade nature (note) – other non-current assets (iv) Country Garden Holdings Company Limited’s affiliates (iv) Shanghai Chenxin Real Estate Brokerage Co., Ltd# (上海臣信房地 產經紀有限公司) (“Shanghai Chenxin”) (i) E-House Chenxin Real Estate Broker (Shanghai) Co., Ltd# (易居臣信房地 產經紀(上海)有限公司) (“E-House Chenxin”) (i) Hangzhou Yisheng Leju Advertising Co., Ltd.# (杭州怡生樂居廣告有限公 司) (“Hangzhou Yisheng”) (i) E-House China R&D Institute# (上海易居房地產研究院) (“E-House Academy”) (i) Xinjiang E-House Shengshi Real Estate Marketing Co., Ltd.# (新疆易居盛世 房地產營銷有限公司) (“Xinjiang Shengshi”) (i) E-House Management – accounts receivables (i) – other receivables (i) Beijing EJU – accounts receivables (i) – other receivables (i) Chongqing Huace Education Training School# (重慶市華策職業培訓學校) (“Huace”) (i) Chongqing Anbang Real Estate Broker Co., Ltd# (重慶安邦房地產經紀有限 公司) (“Chongqing Anbang”) (i) Shanghai YiHan Investment Management Consultants Co., Ltd# (上海易漢投資管理諮詢有限公司) (“Yihan”) (i) Fujian Jinyue Real Estate Consultant Co., Ltd# (福建金岳房地 產諮詢服務有限公司) (“Fujian Jinyue”) (i) Shanghai Fangjiao Information Technology Co., Ltd# (上海房教信息 技術有限公司) (“Fangjiao”) – accounts receivables (i) – other receivables (i) Beijing Yisheng Leju Information Services Limited# (北京怡生樂居信 息服務有限公司) (“Beijing Yisheng”) (i)	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – 1,000 – – – 570 – – 10 – 330 330 – 150 – – – 60,765 38,429 – – – – 10,042 3,654 – – – – – 50 – – 123 550 – – 270 – – – 155 662 – – – – 159 – 20,534 78,984 45,188	As at 31 March 2018 RMB’000 15,264 14,655 – – – – – 33,510 87 3,246 345 – – – – – 2,226 – 999,832	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –	As at 31 March 2018 RMB’000 – – – – – – – – – – – – – – – – – –
				–

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Relationship Trade nature (note) Disclosed in the statements of financial position as: – Current assets – Non-current assets Amount due from related parties of trade nature: – Accounts receivables – Other receivables – Other non-current assets	As 2015 RMB’000 20,534 – 20,534 20,534 – – 20,534	at 31 December 2016 2017 RMB’000 RMB’000 78,984 45,188 – – 78,984 45,188 78,984 45,188 – – – – 78,984 45,188	The Group As at 31 March 2018 RMB’000 983,964 15,868 999,832 981,016 2,948 15,868 999,832	As 2015 RMB’000 – – – – – – –	The Company at 31 December As at 31 March 2016 2017 2018 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – –	The Company at 31 December As at 31 March 2016 2017 2018 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – –
						–
						– – –
						–

• Upon completion of the Business Transfer, E-House Management and Beijing EJU had ceased to carry out the Primary Business. At the completion date of the Business Transfer, as some of the real estate agency services in the primary market contracts are incomplete, the Group, E-House Management and Beijing EJU entered into two agency agreements on the same date, pursuant to which the Group will perform the Primary Business and E-House Management and Beijing EJU will continue to act as collection agents on behalf of the Group to collect the outstanding accounts receivables from the property developer customers till completion of those incomplete contracts. As at 31 December 2016 and 2017 and 31 March 2018, outstanding accounts receivables due from the property developer customers whereas E-House Management and Beijing EJU acted as collection agents and included in amounts due from E-House Management and Beijing EJU totalling RMB70,807,000, RMB42,083,000 and RMB36,756,000, respectively.

The Group allows all of its related parties a credit period of 30 days in respect of all trade nature transactions, upon the completion of the terms and conditions of the relevant agreements.

The following is an aged analysis of the amounts due from related parties of trade nature – accounts receivables, net of allowance for doubtful debts, presented based on the date of rendering the services at the end of the reporting period, which approximated the respective revenue recognition dates:

Within 1 year 1 – 2 years Over 2 years	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 11,140 74,153 29,561 555 3,643 14,440 8,839 1,188 1,187 20,534 78,984 45,188	As at 31 March 2018 RMB’000 884,159 88,886 7,971
		981,016

Before accepting any new transaction with related parties, the Group assesses the potential related party credit quality and defines credit limits by related party. Credit limits attributed to related parties and credit term granted to related parties are reviewed regularly. The Group’s amounts due from related parties of trade nature are neither past due nor impaired and have no history of defaulting on repayments.

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Movement in ECL that has been recognised for amounts due from related parties of trade nature – accounts receivables in accordance with the simplified approach under IFRS 9.

The Group

	The Group
At beginning of the year/period Impairment losses (reversed) recognised on amounts due from related parties of trade nature Transfer from accounts receivables At end of the year/period	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 2,312 787 3,540 (1,525) 2,753 4,475 – – – 787 3,540 8,015	As at 31 March 2018 RMB’000 8,015 4,994 30,646
		43,655

Movement in ECL that has been recognised for amounts due from related parties of trade nature – other receivables and other non-current assets in accordance with IFRS 9.

The Group

				As at
		As at 31 December		31 March
	2015	2016	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000
At beginning of the year/period	–	–	–	–
Transfer from accounts receivables	–	–	–	2,008
At end of the year/period	–	–	–	2,008
Particulars of the amounts due from related parties of non-trade nature are			disclosed as follows:

		As at				As at
The Group	Relationship	1 January	As at 31 December			31 March
Non-trade nature	(note)	2015	2015	2016	2017	2018
		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Shanghai Yicang Enterprise
Management Co., Ltd.# (上海易倉企業管理有限公司)
(“Yicang”)	(i)	269,544	300,238	125,000	125,000	125,000
E-House Management	(i)	19,245	158,502	180,799	176,378	186,413
Yike Internet Technology
(Shanghai) Co., Ltd# (亦可網絡科技(上海)有限公
司) (“Yike Technology”)	(i)	99,310	47,765	50,000	14,278	9,066
Beijing EJU	(i)	–	7,904	1,137	1,808	755
Fangjiao	(i)	–	–	216	1,735	18
Shanghai Chengxiang
Commercial Real Estate
Broker Co., Ltd#
(上海城香商用房地產經紀有
限公司) (“Chengxiang”)	(i)	522	160	45	–	–
E-House Academy	(i)	–	–	–	330	330
Fujian Jinyue	(i)	11,911	70	114	113	113
Shanghai Yi Fang Software
Technology Co., Ltd.# (上海易房軟件技術有限公司)
(“Yifang”)	(i)	7,370	5,000	–	–	–

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The Group Relationship Non-trade nature (note) Shanghai Lituo Enterprise Development Co., Ltd.# (上海勵拓企業發展有限公司) (“Lituo Development”) (i) Shanghai Yicheng Fortune Commercial Real Estate Consulting Co., Ltd.# (上海易城財富商用地產諮詢 顧問有限公司) (“Yicheng Fortune”) (i) Xinjiang Shengshi (i) Shanghai Weidian Information Technology Co., Ltd# (上海微點信息科技有限公司) (“Weidian”) (i) Tianjin Binmao Fortune Business Advisory Co., Ltd# (天津濱茂財富商務諮詢有限 公司) (“Binmao”) (i) E-House Chenxin Real Estate Broker (Shanghai) Co., Ltd# (易居臣信房地產經紀(上海) 有限公司) (“E-House Chenxin”) (i) Shanghai Tian Zhuo Advertising Co., Ltd.# (上海天卓廣告有限公司) (“Tianzhuo”) (i) Shanghai Shanglin Property Management Co., Ltd# (上海尚林物業管理有限公司) (“Shanglin”) (i) Guangzhou integrated residential industry supporting Co., Ltd# (廣州集成住宅產業配套有限 公司) (“Jichengzhuzhai”) (i) Shanghai Yixin Electronic Commerce Co., Ltd# (上海翊信電子商務有限公司) (“Yixin”) (i) Shanghai Urban (ii) Disclosed in the statements of financial position as: – Current assets – Non-current assets	As at 1 January 2015 RMB’000 – 31,313 4,010 – 1 100,706 56,500 20,000 10,016 11 753 631,212	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 506 – – 270 – – 6 – – 25 – – 1 – – – – – – – – – – – – – – – – – 288 290 290 520,735 357,601 319,932 449,190 286,056 319,932 71,545 71,545 – 520,735 357,601 319,932	As at 31 March 2018 RMB’000 – – – – – – – – – – –
			321,695
			321,695 –
			321,695

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As represented by the management of the Group, the outstanding amounts due from these related parties of non-trade nature as at 31 March 2018 would be settled prior to the Listing.

The Company Relationship Non-trade nature (note) Fangyou Information Technology Holdings Ltd. (iii) Disclosed in the statements of financial position as: – Current assets	As at 1 January 2015 RMB’000 595	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 631 674 167,815 631 674 167,815	As at 31 March 2018 RMB’000 160,871
			160,871

For amounts due from related parties of non-trade nature with common directorship, the maximum amounts outstanding during the Track Record Period are as follows:

The Group

Fujian Jinyue Shanglin Tianzhuo Yike Technology E-House Management Binmao E-House Chenxin Jichengzhuzhai Yixin Beijing EJU Fangyou Information Technology Holdings Ltd.	Year 2015 RMB’000 17,106 20,000 56,500 126,955 659,164 1 100,706 10,016 11 11,562 Year 2015 RMB’000 631	ended 31 December 2016 2017 RMB’000 RMB’000 20,757 201 24,000 48,793 44,675 37,675 272,538 187,684 237,538 341,879 1 – – 9,000 – – 125,011 125,011 12,026 1,808 The Company ended 31 December 2016 2017 RMB’000 RMB’000 674 167,815	For the three-month period ended 31 March 2018 RMB’000 113 – – 14,278 197,259 – – – – 1,808
			For the three-month period ended 31 March 2018 RMB’000 167,815

The amounts are non-trade nature, unsecured, interest-free and repayable on demand.

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The Group’s and the Company’s amounts due from related parties that are denominated in currencies other than the functional currency of the relevant group entities are set out below:

		**The **	Group			The Company	The Company
				As at				As at
	As at 31 December			31 March	As at 31 December			31 March
	2015	2016	2017	2018	2015	2016	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Analysis of amount due
from related parties:
Denominated in Hong
Kong Dollar (“HK$”)	–	–	–	–	631	674	167,815	160,871

(c) Amount due to immediate holding company – non-trade nature

Particulars of the amount due to immediate holding company presented as current liabilities are disclosed as follows:

CRE Corp Disclosed in the statements of financial position as: – Current liabilities	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 784 864 850 784 864 850	As at 31 March 2018 RMB’000 881 881	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 726 790 768 726 790 768	As at 31 March 2018 RMB’000 778
				778

The amount due to CRE Corp is non-trade nature, unsecured, interest-free and repayable on demand.

As represented by the management of the Group, the outstanding amount due to CRE Corp as at 31 March 2018 would be settled prior to the Listing.

The Group’s and the Company’s amounts due to shareholder that are denominated in currencies other than the functional currency of the relevant group entities are set out below:

		**The **	Group			The Company	The Company
				As at				As at
	As at 31 December			31 March	As at 31 December			31 March
	2015	2016	2017	2018	2015	2016	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Analysis of amount due to
shareholders:
Denominated in HK$	784	864	850	881	726	790	768	778

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(d) Amounts due to related parties

Particulars of the amounts due to related parties of trade nature presented as current liabilities are disclosed as follows:

Relationship Trade nature E-house Management (i) Beijing EJU (i) China Evergrande Group’s affiliates – advance from related parties (iv) China Vanke Co., Ltd’s affiliates – advance from related parties (iv) – other payables (iv) Country Garden Holdings Company Limited’s affiliates – advance from related parties (iv) Yicang (i) Yike Technology (i) Shanglin (i) Shenyang Yisheng Ruiju Media Co., Ltd.# (瀋陽怡生瑞居傳媒有 限公司) (i) Shanghai Dehu Culture Communication Co., Ltd.# (“上海 德滬文化傳播有限公司”) (Shanghai Dehu) (i) Hangzhou Chenxin (i) Shanghai Yunchuang Information Technology Co., Ltd.# (上海鋆創 信息技術有限公司) (“Yunchuang”) (i) Hebei Dehu Culture Communication Co., Ltd.# (河北德滬文化傳播有限 公司) (“Hebei Dehu”) (i) Fangjiao (i) Beijing Cheng Xin Real Estate Broker Co., Ltd_# (北京臣信房地產 經紀有限公司) (“Beijing Chenxin”) – advance from related parties (i) Hangzhou Rui Ju Real Estate Broker Co., Ltd# (杭州瑞居房地產 經紀有限公司) (“Hangzhou Ruiju”) – advance from related parties (i) Shanghai Urban – advance from related parties (ii) – other payables (ii)_ Disclosed in the statements of financial position as: – Current liabilities Trade nature amounts due to related parties: – Accounts payables – Advance from related parties – Other payables	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – 72,061 6,656 – 10,662 11,162 – – – – – – – – – – – – – – – – – – – – – 963 – – 391 – – 83 – – – 12 5 364 – – – 140 – – 300 – – 12 – 17,076 13,692 21,544 – – – 18,877 96,879 39,367 18,877 96,879 39,367 1,801 82,875 17,823 17,076 14,004 21,544 – – – 18,877 96,879 39,367	As at 31 March 2018 RMB’000 7,549 10,713 3,530 3,658 98 3,090 745 2,604 1 – – – 5 – – – – 25,825 25 57,843 57,843 21,617 36,103 123 57,843	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –	As at 31 March 2018 RMB’000 – – – – – – – – – – – – – – – – – – –
				–
				–
				– – –
				–

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Amounts due to related parties of trade nature – accounts payables mainly represent consulting fee payables to related parties of the Group’s real estate agency services in the primary market whereby no general credit terms are granted and repayable on demand consistent with liquidity risk table. The following is an aged analysis of amounts due to related parties of trade nature presented based on the receipts of services by the Group at the end of each reporting period:

The Group

	The Group
Within 1 year 1 – 2 years Over 2 years	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 755 82,875 17,823 381 – – 665 – – 1,801 82,875 17,823	As at 31 March 2018 RMB’000 21,617 – –
		21,617

Particulars of the amounts due to related parties of non-trade nature are disclosed as follows:

Relationship Non-trade nature (note) E-House Management Holdco (i) Fangjia Technique (i) E-House Chenxin (i) Yicang (i) Yike Technology (i) E-House (Macau) International Property Limited (i) Shanghai Ted Culture Communication Co., Ltd.# (上海 太德文化傳播有限公司) (“TED Culture”) (i) Xiamen Yisheng Leju Information Technology Co., Ltd.# (廈門怡生 樂居信息科技有限公司) (“Xiamen Yisheng”) (i) Hainan Zhongfangxin Information Technology Co., Ltd.# (海南中房 信信息技術有限公司) (i) E-House Management (i) Beijing Yisheng (i) Beijing EJU (i) Shanghai Sina Leju Information Co., Ltd.# (上海新浪樂居信息科 技有限公司) (i) Hangzhou Chenxin (i) CRE BVI (i) Shanglin (i) Nanzhi (i) Fujian Jinyue (i) Shanghai Shangyou Property Management Co., Ltd_# (上海尚友 物業管理有限公司) (“Shangyou”) (i)_ Disclosed in the statements of financial position as: – Current liabilities	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 153,595 – – 4,000 – – 3,101 – – 540 589 710 2,025 19,171 442 59 59 59 – – – – – – 4 4 – 51,635 266,305 156,005 258 – – 86,625 83,371 88,860 – 3,051 2,901 60 – – 8,094 8,094 8,094 – – 2 1,471 – – – 4 4 429 215 – 311,896 380,863 257,077 311,896 380,863 257,077	As at 31 March 2018 RMB’000 – – – – – – 510 1,000 – 156,006 – 85,616 2,901 – 8,094 – – 4 – 254,131 254,131	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –	As at 31 March 2018 RMB’000 – – – – – – – – – – – – – – – – – – –
				–
				–

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The amounts are non-trade nature, unsecured, interest free and repayable on demand.

As represented by the management of the Group, the outstanding amounts due to related parties of non-trade nature as at 31 March 2018 would be settled prior to the Listing.

Notes:

• (i) Fellow subsidiaries of the Group

• (ii) Non-controlling shareholder of a non-wholly owned subsidiary of the Group which exercises significant influence over the subsidiary of the Group

• (iii) A subsidiary of the Company

• (iv) Entities controlled by shareholders of the Company which exercises significant influence over the Company

22. FINANCIAL ASSETS MANDATORILY MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

As at 31 December 2014, the Group held a money market fund with principal amount of RMB7,014,000 issued by an independent financial institution, which had no guarantee on its principal and return. The return of the money market fund varied depending on the interest rates quoted by the People’s Bank of China for the underlying investments. During the year ended 31 December 2015, the Group received investment return of RMB197,000 included in “other income” in note 7. The Group had fully disposed of the money market fund at its principal amount of RMB7,014,000 during the year ended 31 December 2015.

On 15 December 2017, the Group subscribed a convertible note at a cash consideration of RMB20,000,000 issued by Beijing Youmingyun Software Company Limited[#] (北京有明雲軟件股份有限公司) (“Beijing Youmingyun”), an independent third party listed on the National Equities Exchange and Quotations (“NEEQ”). The convertible note carried at a fixed coupon rate of 10% per annum and was convertible into 3,738,333 shares of Beijing Youmingyun at a conversion price of RMB5.32 per share.

The convertible note can only be executed at the maturity date which is 24 months after the acquisition date with no early redemption right. The financial assets is mandatorily measured at fair value through profit or loss. The management of the Group considers the fair value of the convertible note as at 31 December 2017 is approximate to the acquisition consideration of RMB20,000,000. The fair value as at 31 March 2018 has been arrived at on the basis of valuation carried out by Valuelink (Beijing) Asset Valuation Co., Ltd (“Valuelink”), a firm of independent qualified professional valuers not connected with the Group, who have appropriate qualifications and recent experience in the valuation of similar financial instrument. The address of Valuelink is Room 607, 6/F, Century Business Plaza, 989 Changle Road, Shanghai. The fair value of the convertible note is determined by lattice binomial model by calculating the conversion, redemption and holding value of each binomial node.

23. RESTRICTED BANK BALANCES AND CASH AND CASH EQUIVALENTS

Cash and cash equivalents

Cash and cash equivalents comprises bank balances and cash held by the Group and the Company. Bank balances carried interest at prevailing market interest rates which were 0.35% per annum throughout the Track Record Period.

Restricted bank balances

As at 31 December 2015 and 2016, restricted bank balances of RMB500,000 represent guarantee deposits placed in designated bank accounts to carry out a real estate agency services in the primary market project, which had been released upon completion of the service project during the year ended 31 December 2017. In addition, as at 31 December 2016 and 2017 and 31 March 2018, restricted bank balances amounting to RMB63,123,000, RMB131,264,000 and RMB82,720,000, respectively, represented the receipts of bank balances from property buyers

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in respect of the real estate brokerage network services segment which had not yet been transferred to property sellers. A corresponding liability is recorded as receipts on behalf of property sellers in other payable. The restricted bank balances carried at a fixed interest rate at 0.35% per annum throughout Track Record Period.

The Group’s restricted bank balances and cash and cash equivalents that are denominated in currencies other than the functional currency of the relevant group entities are set out below:

Analysis of restricted bank balances and cash and cash equivalents by currency: Denominated in US$ Denominated in HK$	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 1 1 98,014 2 6 988,681 3 7 1,086,695	As at 31 March 2018 RMB’000 94,320 1,364,535
		1,458,855

24. ACCOUNTS AND OTHER PAYABLES

Accounts payables Other payables Interest payable Value added tax payables Business tax payables Other tax payables Receipts on behalf of property sellers (note i) Contract liabilities (note 5(note)) Acquisition consideration payable (note iii) Accrued listing expense Other payables Conditional investment fund received classified at FVTPL (note ii)	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 68,484 109,614 174,561 808 690 622 18,487 124,638 120,945 65,071 – – 11,847 19,366 19,778 – 62,823 130,963 20,683 23,485 33,113 – – – – – – 7,250 22,516 45,115 124,146 253,518 350,536 – – 1,253,850 124,146 253,518 1,604,386	As at 31 March 2018 RMB’000 119,493 731 63,371 – 22,003 82,181 29,367 1,892,000 21,487 51,089 2,162,229 – 2,162,229	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1,253,850 – – 1,253,850	As at 31 March 2018 RMB’000 –
				– – – – – – – 21,487 –
				21,487
				–
				21,487

Note i: Receipts on behalf of property sellers represent the receipts of bank balances from property buyers in respect of the real estate brokerage network services segment which had not yet been transferred to property sellers. Such bank balances received are classified as restricted bank balances in note 23.

Note ii: Conditional investment fund received represent the proceeds received by the Company for the conditional issue of new shares to three independent third parties as detailed in note 27(c). The amount was treated as FVTPL as it contained a forward conversion option as equity which was an embedded derivative. On 5 March 2018, upon completion of acquisition of 100% equity interests in

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PRC Holdco by Hong Kong Fangyou, the conditional investment fund received previously classified at financial liabilities at FVTPL at a fair amount of RMB1,229,986,000 on that day become unconditional and is then fully converted to share premium, accordingly. During the period from 1 January 2018 to 5 March 2018, the fair value loss of financial liabilities at FVTPL amounted to RMB23,864,000 is credited to other gains and losses in note 8B. The fair value of the conditional investment fund received is determined by discount cash flow method under income approach using the inputs including estimated cash flows and an appropriate discount rate and crossed checked by guideline company method under market approach, methods of which are evaluated by Valuelink, a professional third-party valuer.

• Note iii: Acquisition consideration payable represents the consideration payable by the Group for the acquisition of the 100% equity interests of PRC Holdco as detailed in note 1b amounted to RMB1,892,000,000. The amount was fully paid on 19 April 2018.

Accounts payables mainly represent consultancy fee payables to suppliers of the Group’s real estate agency services in the primary market whereby no general credit terms are granted. The Group is obliged to settle the amounts due upon the completion of or pursuant to the terms and conditions of the relevant agreements. The following is an aged analysis of accounts payables presented based on the date of receipts of services by the Group at the end of each reporting period:

Within 1 year 1 – 2 years Over 2 years	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 64,311 108,703 173,242 1,634 174 513 2,539 737 806 68,484 109,614 174,561	As at 31 March 2018 RMB’000 118,047 723 723
		119,493

There were no significant changes in the contract liabilities during the Track Record Period.

25. BANK BORROWINGS

Secured and unguaranteed Unsecured and guaranteed The carrying amounts of the above bank borrowings are repayable*: Within one year Within a period of more than one year but not exceeding two years Less: Amounts due within one year shown under current liabilities	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 350,000 290,000 – 100,000 100,000 450,000 450,000 390,000 450,000 160,000 390,000 450,000 290,000 – – 450,000 390,000 450,000 (160,000) (390,000) (450,000) 290,000 – –	As at 31 March 2018 RMB’000 – 550,000
		550,000
		550,000 –
		550,000 (550,000)
		–

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

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The ranges of effective interest rates (which are also equal to contracted interest rates) on the Group’s borrowings are as follows:

				As at
		As at 31 December		31 March
	2015	2016	2017	2018
Effective interest rate:
	5.06% –	4.84% –	4.82% –	4.35% –
Fixed-rate borrowings	6.04%	6.04%	6.04%	5.22%

Details of bank borrowings guaranteed by and/or secured by properties of related parties are set out in note 37(b).

26.

DEFERRED TAX ASSETS/LIABILITIES

For the purpose of presentation in the consolidated statements of financial position, certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balance for the financial reporting purposes:

Deferred tax assets Deferred tax liabilities	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 208,255 350,179 504,234 (513) (366) (219) 207,742 349,813 504,015	As at 31 March 2018 RMB’000 470,842 (182)
		470,660

The following are the major deferred tax movements thereon during the Track Record Period:

At 1 January 2015 Credit (charge) to profit or loss (note 10) Eliminated on deemed disposal upon Business Transfer (note i) At 31 December 2015 Credit to profit or loss (note 10) At 31 December 2016 Credit to profit or loss (note 10) Effect of change in tax rate (note 10) At 31 December 2017 (Charge) credit to profit or loss (note 10) At 31 March 2018	Accrued staff welfare and commission RMB’000 75,096 46,574 – 121,670 104,613 226,283 49,225 2,465 277,973 (87,040) 190,933	Allowance for bad and doubtful debts RMB’000 61,938 13,015 (19,450) 55,503 21,353 76,856 40,358 8,440 125,654 (432) 125,222	Tax losses RMB’000 58,849 (29,025) – 29,824 13,969 43,793 53,308 – 97,101 54,073 151,174	Other RMB’000 5,030 (4,285) – 745 2,136 2,881 406 – 3,287 44 3,331	Total RMB’000 200,913 26,279 (19,450)
					207,742 142,071
					349,813 143,297 10,905
					504,015 (33,355)
					470,660

Note i: Deferred tax of “E-House Management” and “Beijing EJU” not transferred to the Group from the Business Transfer were deemed to be disposed of.

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At 31 December 2015, 2016 and 2017 and 31 March 2018, the Group had unused tax losses of RMB260,216,000, RMB411,209,000, RMB641,536,000 and RMB880,055,000, respectively, available to offset against future profits. Deferred tax assets have been recognised in respect of tax losses of RMB128,911,000, RMB178,471,000, RMB388,405,000 and RMB609,865,000, respectively. No deferred tax asset has been recognised for the remaining tax losses of RMB131,305,000, RMB232,738,000, RMB253,131,000 and RMB270,190,000, respectively, due to the unpredictability of future profit streams. The unrecognised tax losses will expire in the following years:

2016 2017 2018 2019 2020 2021 2022 2023	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 6,781 – – 14,198 14,198 – 22,234 22,234 18,178 15,533 15,533 11,443 72,559 72,559 72,559 – 108,214 108,214 – – 42,737 – – – 131,305 232,738 253,131	As at 31 March 2018 RMB’000 – – 17,930 11,443 72,559 108,214 42,737 17,307
		270,190

At 31 December 2015, 2016 and 2017 and 31 March 2018, the Group had deductible temporary differences, mainly arising from accrued staff welfare and commission and allowance for bad and doubtful debts, totalling RMB797,168,000, RMB1,334,417,000, RMB1,657,648,000 and RMB1,314,896,000, respectively, available to offset against future profits. Deferred tax assets have been recognised in respect of deductible temporary differences of RMB770,722,000, RMB1,308,011,000, RMB1,633,766,000 and RMB1,294,486,000, respectively. No deferred tax assets have been recognised in relation to the remaining deductible temporary differences of RMB26,446,000, RMB26,406,000, RMB23,882,000 and RMB20,410,000, respectively, as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.

Under the EIT Law of the PRC, withholding tax is imposed on dividends declared in respect of profits earned by the PRC subsidiaries from 1 January 2008 onwards. As at 31 December 2015, 2016 and 2017 and 31 March 2018, deferred taxation has not been provided for in the Historical Financial Information in respect of all temporary differences attributable to undistributed profits of the PRC subsidiaries attributable to owners of the Company amounting to RMB266,229,000, RMB35,286,000, RMB371,047,000 and RMB497,751,000, respectively, as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

There were no other significant unrecognised temporary differences at the end of each reporting period.

27. PAID IN/SHARE CAPITAL

The paid in/share capital of the Group as at 31 December 2015, 2016 and 2017 represented the combined paid in/share capital attributable to owners of the Company and PRC Holdco, while the share capital of the Group as at 31 March 2018 represented the share capital of the Company following the completion of Group Reorganisation.

The Group

Name of the entities The Company (note i) PRC Holdco (note ii)	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 7 7 76 226,256 330,000 330,000 226,263 330,007 330,076	As at 31 March 2018 RMB’000 76 –* 76

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Note i: Details of movements of authorised and issued capital of the Company are as follow:

Par value per share US$ Authorised, issued and fully paid As at 1 January 2015, 31 December 2015 and 31 December 2016 1 Effect of share subdivision (note a) – Increased (note b) 0.00001 Increased (note c) 0.00001 As at 31 December 2017 and 31 March 2018 0.00001	Number of shares 1,000 99,999,000 900,000,000 144,600,000 1,144,600,000	Share capital US$’000 1 – 9 1 11	Share capital presented in RMB RMB’000 7 – 60 9
			76

Note ii: Details of movements of authorised and issued paid-in capital of PRC Holdco are as follow:

Ordinary shares of RMB1.00 each Authorised, issued and fully paid: As at 1 January 2015 and 31 December 2015 Disposal of 50% equity interests by CRE BVI (note d) Increase due to conversion to a joint stock company (note e) As at 31 December 2016 and 31 December 2017	Number of shares 226,256,500 (113,128,250) 216,871,750 330,000,000	Paid in capital RMB’000 226,256 (113,128) 216,872
		330,000

• Upon completion of the Group Reorganisation, PRC Holdco became a wholly-owned subsidiary of the Company.

• Note a: With effect from 6 November 2017, the Company subdivided its shares on the basis that every share of US$1 each into 100,000 shares of US$0.00001 each.

• Note b: On 6 November 2017, the Company increased its total authorised share capital of 900,000,000 shares with par value of US$0.00001 per share. On the same date, the Company issued 900,000,000 shares for a consideration of US$9,000 (equivalent to approximately RMB60,000) to CRE Corp.

• Note c: On 1 December 2017, the Company increased its total authorised share capital by 144,600,000 shares with par value of US$0.00001 per share. On the same date, the Company conditionally issued 48,200,000 shares to each of Captain Valley (Cayman) Limited, Jovial Idea Developments Limited and Heyday Surge Limited, totalling 144,600,000 shares for a total subscription price of HK$1,500,000,000 (equivalent to RMB1,270,877,000). The 144,600,000 conditional shares of US$0.00001 each has been issued, totalling US$1,446 (equivalent to

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RMB9,000) has been credited as share capital of the Company, with a corresponding debit to other reserve. Pursuant to the agreement entered into between the Company and these three prospective investors, the subscription of the Company’s shares is subject to the completion of Hong Kong Fangyou’s acquisition of the 100% equity interests of PRC Holdco (that is, the completion of Group Reorganisation). If the acquisition is not completed prior to 30 June 2018, the Company will need to return the total conditional investment fund of HK$1,500,000,000 to these three prospective investors. As at 31 December 2017, as Hong Kong Fangyou had not yet acquired the 100% equity interest of PRC Holdco, the subscription price of HK$1,500,000,000 (equivalent to RMB1,253,850,000 as at 31 December 2017), representing the conditional investment fund, received by the Company and is accounted for as financial liabilities at FVTPL per note 24. On 5 March 2018, the Group Reorganisation is completed and the conditional investment fund received previously classified at financial liabilities at FVTPL at a fair amount of RMB1,229,986,000 on that day become unconditional and is then fully converted to share premium, accordingly.

• Note d: On 31 October 2016, CRE BVI transferred its 50% equity interests of PRC Holdco in aggregate to a number of independent third parties without losing control, resulting in a reduction of 50% share capital of PRC Holdco attributable to the owners of the PRC Holdco.

• Note e: On 5 March 2016, PRC Holdco converted from a limited liability company into a joint stock company, together with the accounting impact as detailed in note d, it resulted in an overall impact of capitalising PRC Holdco’s retained earnings of RMB171,434,000 and statutory surplus reserves of RMB45,438,000, totalling RMB216,872,000, in paid-in capital, by increasing the total authorised paid capital by and issue of 216,871,750 shares at par value of RMB1.00 per share.

The new shares rank pari passu with the then existing shares in all respects.

28. SHARE-BASED PAYMENT TRANSACTIONS

Share Incentive Plan of E-House (China) Holdings

E-House (China) Holdings’ shares were previously listed on the New York Stock Exchange and were delisted on 12 August 2016. E-House (China) Holdings’ Share Incentive Plan was adopted pursuant to a resolution passed on 28 November 2006 for the purpose of providing incentives to directors and eligible employees, and will expire on 9 October 2021. Under E-House (China) Holdings Share Incentive Plan, the board of directors of E-House (China) Holdings may grant options or restricted shares to eligible employees, including employees and directors of the Group, to subscribe for shares in E-House (China) Holdings.

Share option

The following table discloses movements of the number of E-House (China) Holdings’ share options, which had been fully vested as at 1 January 2015, held by employees and directors of the Group during the Track Record Period.

Number of share options Exercisable at the end of the year	Outstanding at 1 January 2015 ’000 1,803	Granted during the year ’000 –	Exercised during the year ’000 (20)	Forfeited during the year ’000 –	Expired during the year ’000 (4)	Outstanding at 31 December 2015 ’000 1,779
						1,779

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Number of share options Exercisable at the end of the year/period	Outstanding at 1 January 2016 ’000 1,779	Granted during the year ended 31 December 2016 ’000 –	Exercised during the year ended 31 December 2016 ’000 –	Forfeited during the year ended 31 December 2016 ’000 (1,779)	Expired during the year ended 31 December 2016 ’000 –	Outstanding at 31 December 2016 and 2017 and 31 March 2018 ’000 –
						–

Upon E-House (China) Holdings is delisted from the New York Stock Exchange on 12 August 2016, the outstanding share options were all deemed to be forfeited on that date.

In respect of the share options exercised during the year ended 31 December 2015, the weighted average share price at the dates of exercise was US$7.2.

Restricted shares

E-House (China) Holdings granted restricted shares to eligible employees, including employees and directors of the Group. The following table discloses movement of E-House (China) Holdings’ restricted shares held by employees and directors of the Group during the Track Record Period. The weighted average fair value in respect of the restricted shares on grant date as at 1 January 2015 and 2016 was US$8.45 and US$9.14, respectively.

Number of restricted shares Number of restricted shares	Unvested at 1 January 2015 Granted during the year Vested during the year Forfeited during the year Expired during the year Outstanding at 31 December 2015 ’000 ’000 ’000 ’000 ’000 ’000 639 – (303) – – 336 Unvested At 1 January 2016 Granted during the year ended 31 December 2016 Vested during the year ended 31 December 2016 Forfeited during the year ended 31 December 2016 Expired during the year ended 31 December 2016 Outstanding at 31 December 2016 and 2017 and 31 March 2018 ’000 ’000 ’000 ’000 ’000 ’000 336 – (336) – – –	Outstanding at 31 December 2015 ’000 336

Share Incentive Plan of Leju

Leju’s shares are listed on the New York Stock Exchange. Its ultimate parent is E-House (China) Holdings. Leju’s Share Incentive Plan was adopted pursuant to a resolution passed on 1 December 2013 for the purpose of providing incentives to directors and eligible employees, and will expire on 30 November 2023. Under Leju Share Incentive Plan, the board of directors of Leju may grant options or restricted shares to eligible employees, including employees and directors of the Group, to subscribe for shares in Leju.

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Share option

Details of specific categories of options granted under the Share Incentive Plan of Leju are as follows:

				Weighted average
	Range of vesting	Range of exercise	Weighted average	fair value at
Date of grant	period	period	exercise price	grant date
1 December 2013	1 December 2013	1 December 2014	US$4.60	US$2.15
	– 1 December	– 30 November
	2016	2023

The following table discloses movements of the number of Leju’s share options held by employees and directors of the Group during the Track Record Period.

Outstanding at 1 January 2015 ’000 459 Exercisable at the end of the year Outstanding at 1 January 2016 ’000 449 Exercisable at the end of the year Outstanding at 1 January 2017 ’000 439 Exercisable at the end of the year		Granted during the year ’000 – Granted during the year ’000 – Granted during the year ended 31 December 2017 ’000 –		Exercised during the year ’000 (7) Exercised during the year ’000 – Exercised during the year ended 31 December 2017 ’000 –		Forfeited during the year ’000 – Forfeited during the year ’000 – Forfeited during the year ended 31 December 2017 ’000 –		Expired during the year Outstanding at 31 December 2015 ’000 ’000 (3) 449 126 Expired during the year Outstanding at 31 December 2016 ’000 ’000 (10) 439 282 Expired during the year ended 31 December 2017 Outstanding at 31 December 2017 and 31 March 2018 ’000 ’000 (27) 412 412	Outstanding at 31 December 2015 ’000 449	Outstanding at 31 December 2015 ’000 449
									126
									Outstanding at 31 December 2016 ’000 439
										282
										Outstanding at 31 December 2017 and 31 March 2018 ’000 412
										412

In respect of the share options exercised during the year ended 31 December 2015, the weighted average share price at the dates of exercise was US$9.44.

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Restricted shares

Leju granted restricted shares to eligible employees, including the Group’s employees and management of the Group. The following table discloses movement of Leju’s restricted shares held by employees and management of the Group during the Track Record Period. The weighted average fair value in respect of the restricted shares on grant date as at 1 January 2015 was US$16.25.

								Outstanding at
				Granted	Vested	Forfeited	Expired	31 December
				during the	during the	during the	during the	2015, 2016 and
			Unvested at	year ended	year ended	year ended	year ended	2017 and
			1 January	31 December	31 December	31 December	31 December	31 March
			2015	2015	2015	2015	2015	2018
			’000	’000	’000	’000	’000	’000
Number	of	restricted
shares			1	–	(1)	–	–	–

In respect of the share options and restricted shares granted by E-House (China) Holdings and Leju to the employees and directors of the Company prior to the Track Record Period, on each date of grant, the fair value of the share options were calculated using the Binomial model performed by an internationally recognised independent professional valuer, while such of the restricted shares were measured at the quoted closing market price. Both E-House (China) Holdings and Leju were listed on the New York Stock Exchange at the time they granted such share options and restricted shares. The fair value of the equity-settled share-based payments in respect of share options/restricted shares is then expensed on a straight-line basis over the vesting period. The Group recognised the total expense of RMB18,019,000, RMB7,696,000, nil, nil (unaudited) and nil for each of the three years ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2017 and 2018, respectively, in relation to the share options and restricted shares of both E-House (China) Holdings and Leju granted to the employees and directors of the Group by E-House (China) Holdings and Leju.

29. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that group companies in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged throughout the Track Record Period.

The capital structure of the Group consists of net debt, which includes bank borrowings, amounts due to related parties of non-trade nature and financial liability classified at FVTPL disclosed in notes 25, 21 and 24 net of cash and cash equivalent, and equity attributable to owners of the Group.

The management of the Group reviews the capital structure regularly. As part of this review, the management of the Group considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the management of the Group, the Group will balance its overall capital structure through the payment of dividends, new shares issues as well as the issue of new debt or redemption of existing debt.

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30. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

Financial assets Amortised costs (including cash and cash equivalents) Financial assets classified as at FVTPL Financial liabilities Amortised cost FVTPL	The Group As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 2,440,141 3,817,081 5,695,273 – – 20,000 2,440,141 3,817,081 5,715,273 841,023 1,050,244 1,077,012 – – 1,253,850 841,023 1,050,244 2,330,862	As at 31 March 2018 RMB’000 6,905,957 20,000 6,925,957 2,993,715 – 2,993,715	The Company As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 632 676 1,254,507 – – – 632 676 1,254,507 726 790 768 – – 1,253,850 726 790 1,254,618	As at 31 March 2018 RMB’000 254,126 –
				254,126
				778 –
				778

b. Financial risk management objectives and policies

The Group’s major financial instruments include accounts receivables, bills receivables, other receivables, other non-current assets, restricted bank balances, cash and cash equivalent, accounts payables, other payables, amounts due from (to) related parties and bank borrowings. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The management of the Group manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Currency risk

Certain cash and cash equivalent and amounts due from (to) related parties and conditional investment fund received are denominated in foreign currency of the respective group entities which are exposed to foreign currency risk.

The carrying amounts of the Group’s and the Company’s monetary assets and monetary liabilities denominated in currencies other than the respective group entities’ functional currencies at the end of each reporting period are as follows:

					**The **	Group
			Assets				Liabilities
					As at				As at
	**As **	**at **	31 December		31 March	As at 31 December			31 March
	2015		2016	2017	2018	2015	2016	2017	2018
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
US$	1		1	98,014	94,320	–	–	–	–
HK$	2		6	998,681	1,364,535	784	864	1,254,691	881

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					The Company	The Company
			Assets				Liabilities
					As at				As at
	**As **	**at **	31 December		31 March	As at 31 December			31 March
	2015		2016	2017	2018	2015	2016	2017	2018
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
US$	–		–	98,014	88,033	–	–	–	–
HK$	632		676	1,156,493	162,680	726	790	1,254,618	778

The Group and the Company currently does not have a foreign currency hedging policy as the management of the Group considers that the foreign exchange risk exposure of the Group and the Company is minimal. The Group and the Company will consider hedging significant foreign currency exposure should the need arise.

Sensitivity analysis

The following table details the Group’s and the Company’s sensitivity to a 10% decrease in the functional currency of the relevant group entities against the foreign currency. 10% is the sensitivity rate used in management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. A positive (negative) number below indicates an increase (decrease) in post-tax profit for the year/period where the functional currency of relevant group entities weakening against the relevant foreign currencies. For a 10% strengthen of the functional currency of relevant group entities, there would be an equal and opposite impact on the profit after taxation.

Foreign currency US$ HK$ Foreign currency US$ HK$	The Group For the year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – 9,801 (78) (86) (25,601) The Company For the year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – 9,801 (10) (11) (9,812)	For the three-month period ended 31 March 2018 RMB’000 9,432 136,454
		For the three-month period ended 31 March 2018 RMB’000 8,803 16,190

Interest rate risk

The Group is exposed to fair value interest rate risk in relation to fixed-rate bank borrowings (see note 25 for details). The Group currently does not have any interest rate hedging policy. The management of the Group monitors the Group’s exposure on an on-going basis and will consider hedging interest rate risk should the need arises.

The Group is also exposed to cash flow interest rate risk in relation to floating-rate bank balances.

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The Group’s exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.

Sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for bank balances at the respective reporting date. The analysis is prepared assuming the financial instruments outstanding at the respective reporting date was outstanding for the whole year/period. A 10 basis point increase or decrease in interest rate on bank balances is used which represent management’s assessment of the reasonably possible changes in interest rates.

If interest rates had been 10 basis points higher/lower for bank balances and all other variables were held constant, the Group’s post-tax profit for the year/period would increase/(decrease) by the following magnitude:

		**The **	Group			**The **	Company
				For the				For the
				three-month				three-month
				period ended				period ended
	Year ended 31 December			31 March	Year ended 31 December			31 March
	2015	2016	2017	2018	2015	2016	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Increase/(decrease) in
profit for the
year/period	364	825	627	832	–	–	98	93

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. At the end of each reporting period, the Group’s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group.

With reference to the historical settlement patterns from these related parties under common of E-House (China) Holdings, the Group has assessed that the expected credit loss for amounts due from related parties under common control of E-House (China) Holdings is insignificant. Thus, no loss allowance provision was recognised during the Track Record Period.

The Group is exposed to credit risk in relation to its accounts receivables, bills receivables, other receivables, other non-current assets, amounts due from related parties (except for related parties under common control of E-House (China) Holdings), restricted bank balances, and cash and cash equivalents which represents the Group’s maximum exposure to credit risk in relation to financial assets.

In addition, the Group is exposed to credit risk in relation to financial guarantees given to banks as detailed in note 35. The Group’s maximum exposure in this respect is the maximum amount the Group could have to pay if the guarantee is called on. No loss allowance for the financial guarantee contracts has been recognised in the consolidated statements of financial position as at 31 December 2015, 2016 and 2017 and 31 March 2018.

The Group expects that there is no significant credit risk associated with restricted bank balances and cash deposits at banks since they are substantially deposited at state-owned banks and other medium or large-sized listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.

The Group has concentration of credit risk as 30.57%, 34.93%, 49.00% and 47.20% of the total gross accounts receivables, bills receivables and amounts due from related parties of trade nature – accounts receivables (except for related parties under common control of E-House (China) Holdings) was due from the Group’s largest customer as at 31 December 2015, 2016 and 2017 and 31 March 2018, respectively, and 36.37%, 40.89%, 55.34% and 55.05% of the total gross accounts receivables, bills receivables and amounts due from related parties of trade nature – accounts receivables (except for related parties under common control of E-House (China) Holdings) was due from the five largest customers as at 31 December 2015, 2016 and 2017 and 31 March 2018, respectively.

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Trade-related balances

Included in the Group’s accounts receivables, bills receivables and of amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) as at 31 December 2015, 2016 and 2017 and 31 March 2018 with aggregate carrying amounts of RMB98,388,000, RMB61,658,000, RMB56,420,000 and RMB40,373,000, respectively, the Group has collateral of real estate properties over these balances. Details of the arrangement is set out on note 20.

The carrying amount of the Group’s financial assets at FVTPL as disclosed in note 22 best represents their respective maximum exposure to credit risk. The Group holds no collateral over any of these balances.

For accounts receivables, bills receivables and amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings), the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the ECL on these items by using a provision matrix, estimated based on historical credit loss experience based on the past default experience of the debtor, fair values of real estate properties obtained as collateral over accounts receivables, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

The Group writes off an accounts receivables and trade nature of amounts due from related parties (except for related parties under common control of E-House (China) Holdings) when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings. For the year ended 31 December 2017, the Group had written off accounts receivables of RMB250,000 as the Group had identified the debtor has financial difficulty. For the year ended 31 December 2015 and 2016 and for the three-month period ended 31 March 2018, none of the accounts receivables and amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) that had been written off as the management assessed that no counterparties were in severe financial difficulty and the prospect of recovery was still realistic.

The following table details the risk profile of accounts receivables, bills receivables and amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) based on the Group’s provision matrix. As the Group’s historical credit loss experience show significantly different loss patterns for different customer portfolio (including high risk, strategic and normal risk type), the provision for loss allowance based on past due status is further distinguished between the Group’s customer portfolio of different risk type.

As at 31 December 2015

High risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Strategic type customers (note) Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000)

Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total N/A 100.00% 100.00% 100.00% – 4,179 88,474 92,653 – (4,179) (88,474) (92,653) – – – – Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 228,962 13,636 2,488 245,086 (9,575) (570) (104) (10,249) 219,387 13,066 2,384 234,837

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Normal risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000)	Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 4.69% 20.28% 54.96% 11.53% 996,944 198,296 117,223 1,312,463 (46,720) (40,219) (64,423) (151,362) 950,224 158,077 52,800 1,161,101

As at 31 December 2016

High risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Strategic type customers (note) Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Normal risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000)

Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total N/A 100.00% 100.00% 100.00% – 15,180 131,611 146,791 – (15,180) (131,611) (146,791) – – – – Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 526,499 7,263 10,026 543,788 (17,411) (240) (332) (17,983) 509,088 7,023 9,694 525,805 Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 3.79% 25.62% 73.84% 9.52% 1,741,422 180,065 110,236 2,031,723 (65,983) (46,135) (81,402) (193,520) 1,675,439 133,930 28,834 1,838,203

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As at 31 December 2017

High risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Strategic type customers (note) Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Normal risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) As at 31 March 2018 High risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000)

Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total N/A 100.00% 100.00% 100.00% – 21,841 199,065 220,906 – (21,841) (199,065) (220,906) – – – – Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 990,833 22,008 6,517 1,019,358 (33,527) (745) (221) (34,493) 957,306 21,263 6,296 984,865 Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 3.39% 27.03% 69.68% 8.47% 2,199,863 293,228 93,371 2,586,462 (74,658) (79,254) (65,059) (218,971) 2,125,205 213,974 28,312 2,367,491 Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total N/A 100.00% 100.00% 100.00% – 21,164 202,637 223,801 – (21,164) (202,637) (223,801) – – – –

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Strategic type customers (note) Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000) Normal risk type customers Expected credit loss rate Estimated total gross carrying amount at default (RMB’000) Lifetime ECL (RMB’000)

Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 887,007 79,673 7,005 973,685 (27,918) (2,507) (221) (30,646) 859,089 77,166 6,784 943,039 Accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control of E-House (China) Holdings) – days past due Within 1 year 1-2 years Over 2 years Total 3.99% 27.16% 70.02% 9.29% 2,116,536 284,265 101,136 2,501,937 (84,353) (77,213) (70,815) (232,381) 2,032,183 207,052 30,321 2,269,556

Note: Total expected credit loss rate in respect of the strategic type customers as at 31 December 2015, 2016 and 2017 and 31 March 2018 was amounted to approximately 4.18%, 3.31%, 3.38% and 3.15% over the gross carrying amount of estimated total balances of accounts receivables, bills receivables and amounts due from related parties of trade nature representing accounts receivables (except for related parties under common control), respectively.

With reference to the historical settlement patterns from these strategic type customers, the Group assessed that the credit loss arising from them is insignificant. The expected credit loss rate applied for these strategic type customers represented solely the time value of money by taking into account the expected date of settlements to be received from the strategic type customers as at 31 December 2015, 2016 and 2017 and 31 March 2018, accordingly.

Non-trade related balances

In order to minimise credit risk on other receivables and other non-current assets, the Group has tasked its credit management committee to develop and maintain the credit risk gradings to categorise exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the credit management committee uses other publicly available financial information and the Group’s own trading records to rate its counterparties. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

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The Group’s current credit risk grading framework in respect of other receivables and other non-current assets comprises the following categories:

Category	Description		Basis for recognising ECL
Performing	The counterparty has a low risk of default		12m ECL
	and does not have any past-due amounts
	or aged within 1 year.
Doubtful	There has been a significant increase	in	Lifetime ECL – not credit-impaired
	credit risk since initial recognition (aged
	within 1 year but less than 2 years).
In default	There is evidence indicating the asset	is	Lifetime ECL – credit-impaired
	credit-impaired (aged over 2 years).
Write-off	There is evidence indicating that the debtor		Amount is written off
	is in severe financial difficulty and	the
	Group has no realistic prospect	of
	recovery.

For the purposes of impairment assessment, other receivables and other non-current assets are considered to have low credit risk as the counterparties to these financial assets have a high credit rating. Accordingly, for the purpose of impairment assessment, the loss allowance is measured at an amount equal to 12m ECL.

In determining the ECL for other receivables and other non-current assets, the management of the Group has taken into account the historical default experience and the future prospects of the industries and/or considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of the other receivables and other non-current assets occurring within their respective loss assessment time horizon, as well as the loss upon default in each case.

There has been no change in the estimation techniques or significant assumptions made throughout the Track Record Period.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management of the Group to finance the operations and mitigate the effects of fluctuations in cash flows. The management of the Group monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The maturity dates for financial liabilities are based on the agreed repayment dates.

The table includes both interest and principal cash flows.

In addition, the following table also included the Group’s liquidity analysis for the conditional investment fund received at FVTPL as at 31 December 2017, which were analysed based on the contractual terms pursuant to the investment agreements entered into with the prospective investors.

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Liquidity and interest risk table

Weighted average effective interest rate % The Group 31 December 2015 Accounts and other payables – Amounts due to related parties – Fixed-rate bank borrowings 5.88% 31 December 2016 Accounts and other payables – Amounts due to related parties – Fixed-rate bank borrowings 5.73% 31 December 2017 Accounts and other payables – Amounts due to related parties – Fixed-rate bank borrowings 5.02% Financial guarantee contracts – Conditional investment fund received at FVTPL – 31 March 2018 Accounts and other payables – Amounts due to related parties – Fixed-rate bank borrowings 4.46% Financial guarantee contracts –	On demand or less than 1 month RMB’000 76,542 314,481 – 391,023 195,643 464,601 – 660,244 351,261 275,751 – 85,301 712,313 – 712,313 2,166,963 276,752 – 52,160 2,495,875	Within 1 to 3 months RMB’000 – – 3,733 3,733 – – 3,265 3,265 – – 104,639 – 104,639 – 104,639 – – 355,434 – 355,434	Within 3 months to 1 year RMB’000 – – 171,200 171,200 – – 399,794 399,794 – – 353,304 – 353,304 1,253,850 1,607,154 – – 205,619 – 205,619	Over 1 year RMB’000 – – 318,549 318,549 – – – – – – – – – – – – – – – –	Total undiscounted cash flows RMB’000 76,542 314,481 493,482 884,505 195,643 464,601 403,059 1,063,303 351,261 275,751 457,943 85,301 1,170,256 1,253,850 2,424,106 2,166,963 276,752 561,053 52,160 3,056,928	Carrying amount RMB’000 76,542 314,481 450,000
						841,023
						195,643 464,601 390,000
						1,050,244
						351,261 275,751 450,000 –
						1,077,012 1,253,850
						2,330,862
						2,166,963 276,752 550,000 –
						2,993,715

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The amounts included above for financial guarantee contracts are the maximum amounts the Group could be forced to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Group considers that it is more likely than not that such an amount will not be payable under the arrangement. However, this estimate is subject to the change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.

The Company’s financial liabilities are non-interest bearing and repayable on demand.

c. Fair value measurements of financial instruments

The management of the Group considers that the carrying amount of the Group’s and the Company’s financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values. Such fair values have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis.

The Group’s investment in a convertible note amounted to RMB20,000,000 was accounted for as financial assets mandatorily measured at FVTPL as at 31 December 2017 and 31 March 2018 of which is under level 3 fair value hierarchy. The management of the Group assessed that there was no significant change of fair value for the year ended 31 December 2017. The fair value as at 31 March 2018 has been arrived at on the basis of valuation carried out by Valuelink. Its fair value was determined by lattice binomial model by calculating the conversion, redemption and holding value of each binomial node. The significant unobservable input to the lattice binomial model being the volatility of the share price of the investee. The higher the volatility of the investee, the higher the fair value of the convertible note will be. A 5% increase/decrease in the volatility of the share price of the investee, holding all other variables constant, would increase/decrease the carrying amount of the convertible note by RMB591,000 and RMB742,000 as at 31 December 2017 and 31 March 2018, respectively.

In addition, the Group’s and the Company’s conditional investment fund received which were classified at financial liabilities at FVTPL of RMB1,253,850,000 as at 31 December 2017 is under level 3 hierarchy. The management of the Group assessed that there was no significant change of fair value for the year ended 31 December 2017. Its fair value was determined by discount cash flow method under income approach using the inputs including estimated cash flows and an appropriate discount rate and crossed checked by guideline company method under market approach. The significant unobservable input to the discount cash flow method being the expected revenue in the estimated cash flows. The higher the expected revenue, the higher the fair value of the financial liabilities at FVTPL will be. A 5% increase/decrease in the expected revenue, holding all other variables constant, would increase/decrease the carrying amount of the financial liabilities at FVTPL by RMB67,228,000 as at 31 December 2017.

Reconciliation of Level 3 fair value measurements

The following table represents the changes in Level 3 financial asset and liability

As at 31 December 2017

At 1 January 2017 Addition Total gain recognised in profit and loss At 31 December 2017	Asset Convertible note classified as financial asset mandatorily measured at FVTPL RMB’000 – 20,000 – 20,000	(Liability) Conditional investment fund received classified as FVTPL RMB’000 – (1,270,877) 17,027 (1,253,850)

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As at 31 March 2018

At 1 January 2018 Total gain recognised in profit and loss Derecognised At 31 March 2018	Asset Convertible note classified as financial asset mandatorily measured at FVTPL RMB’000 20,000 – – 20,000	(Liability) Conditional investment fund received classified as FVTPL RMB’000 (1,253,850) 23,864 1,229,986 –

Of the total gain for the year ended 31 December 2017 and the three months period ended 31 March 2018 included in profit or loss, the respective amount of RMB23,864,000, RMB17,027,000 relates to the decrease in fair value in respect of conditional investment fund received classified as FVTPL held as at 31 December 2017 and the date of derecognition. Fair value gain on conditional investment fund received classified at FVTPL is included in “other gains and losses” in note 8B.

31. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated statements of cash flows as cash flows from financing activities.

At 1 January 2015 Financing cash flow (note ii) Finance cost recognised Dividend declared Non-cash changes Eliminated on deemed disposal upon business transfer (note i) Consideration payable for acquisition of Tianjin Jinyue under common control At 31 December 2015 Financing cash flow (note ii) Finance cost recognised Dividend declared At 31 December 2016 Financing cash flow (note ii) Finance cost recognised Dividend declared	Bank borrowing RMB’000 120,000 330,000 – – – –	Accrued interest expense RMB’000 40 (25,680) 26,448 – – –	Amounts due to related parties (non-trade nature) RMB’000 43,197 240,859 – – (124,971) 153,595	Conditional investment fund received RMB’000 – – – – – –	Dividend payable RMB’000 – (600,000) – 600,000 – –	Dividend payable to non- controlling interest RMB’000 – (21,966) – 21,966 – –	Issue cost payable RMB’000 – – – – – –	Other payables RMB’000 – – – – – –	Total RMB’000 163,237 (76,787) 26,448 621,966 (124,971) 153,595 763,488 (34,994) 29,756 19,167 777,417 1,139,381 21,650 28,951
	450,000 (60,000) – –	808 (29,874) 29,756 –	312,680 74,047 – –	– – – –	– – – –	– (19,167) – 19,167	– – – –	– – – –
	390,000 60,000 – –	690 (21,718) 21,650 –	386,727 (123,800) – –	– 1,253,850 – –	– – – –	– (28,951) – 28,951	– – – –	– – – –

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At 31 December 2017 Financing cash flow (note ii) Finance cost recognised Issue costs accrued Non-cash changes Conversion of conditional investment fund received into share premium Fair value change on financial liabilities measured through profit and loss Consideration payable for acquisition of PRC Holdco under common control At 31 March 2018 At 31 December 2016 Finance cash flow (note ii) (unaudited) Finance cost recognized (unaudited) At 31 March 2017 (unaudited)	Bank borrowing RMB’000 450,000 100,000 – – – – –	Accrued interest expense RMB’000 622 (5,442) 5,551 – – – –	Amounts due to related parties (non-trade nature) RMB’000 262,927 (2,915) – – – – –	Conditional investment fund received RMB’000 1,253,850 – – – (1,229,986) (23,864) –	Dividend payable RMB’000 – – – – – – –	Dividend payable to non- controlling interest RMB’000 – – – – – – –	Issue cost payable RMB’000 – (758) – 4,839 – – –	Other payables RMB’000 – – – – – – 1,892,000	Total RMB’000 1,967,399 90,885 5,551 4,839 (1,229,986) (23,864) 1,892,000
	550,000	731	260,012	–	–	–	4,081	1,892,000	2,706,824
	390,000 90,000 –	690 (6,523) 6,642	386,727 (33,517) –	– – –	– – –	– – –	– – –	– – –	777,417 49,960 6,642
	480,000	809	353,210	–	–	–	–	–	834,019

• Note i: Bank borrowings of E-House Management and Beijing EJU not transferred to the Group from the Business Transfer was deemed to be disposed.

• Note ii: The financing cash flows represent (i) the proceeds from and repayment of bank borrowings, (ii) the advance from and repayment to related parties, (iii) consideration paid for the acquisition of Tianjin Jinyue under common control amounted to RMB153,595,000 for the year ended 31 December 2016 and (iv) conditional investment fund received of RMB1,253,850,000 for the year ended 31 December 2017.

32. DISPOSAL OF SUBSIDIARIES UNDER COMMON CONTROL

Disposal of subsidiaries under common control for the year ended 31 December 2015

• (i) On 31 May 2015, the Group disposed of its 100% equity interest in Fangjia Technique to Yifang for a consideration of RMB5,000,000. Fangjia Technique is principally engaged in the business of technical development and technical consulting.

• (ii) On 31 October 2015, the Group disposed of its 100% equity interest in Shanghai Yijin Culture Development Co., Ltd[#] (上海易進文化發展有限公司) (“Yijin”) to Yifang whose ultimate parent is E-House (China) Holdings for a consideration of RMB10,000,000. Yijin is principally engaged in the business of planning service, business information consulting and etiquette service.

# English name is for identification purpose only

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• (iii) On 31 December 2015, the Group disposed of its 100% equity interest in Shanghai Chengshen Culture Development Co., Ltd[#] (上海城申文化發展有限公司) (“Chengshen”) to Yifang for a consideration of RMB3,000,000. Chengshen is principally engaged in the business of cultural and artistic communication, business information consulting and exhibition and display service.

Further details of the consideration, and assets and liabilities disposed of in respect of the disposed subsidiaries during the year ended 31 December 2015 are set out below:

Consideration Cash received Consideration receivable (note) Analysis of assets and liabilities over which control was lost Property and equipment Accounts receivables Other receivables Cash and cash equivalents Accounts payables Other payables Tax payables Net assets (liabilities) disposal of Gain on disposal of subsidiaries under common control recognised in other reserve as deemed contribution Consideration Net (assets) liabilities disposed of Net cash (outflow) inflow arising on disposal: Cash consideration received Less: bank balances and cash disposed of	Fangjia Technique RMB’000 – 5,000 5,000 – – – 4,998 – (2) – 4,996 5,000 (4,996) 4 – (4,998) (4,998)	Yijin RMB’000 10,000 – 10,000 8,749 228 2,831 3,723 (104) (15,592) (100) (265) 10,000 265 10,265 10,000 (3,723) 6,277	Chengshen RMB’000 3,000 – 3,000 935 – 365 1,141 – (39) (9) 2,393 3,000 (2,393) 607 3,000 (1,141) 1,859	Total RMB’000 13,000 5,000 18,000 9,684 228 3,196 9,862 (104) (15,633) (109) 7,124 18,000 (7,124) 10,876 13,000 (9,862) 3,138

Note: The consideration of RMB5,000,000 in respect of the disposal of Fangjia Technique to Yifang had been received in full during the year ended 31 December 2016.

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33. OPERATING LEASES

The Group as lessee

At the end of each reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follow:

Within one year In the second year to fifth year inclusive Over five years	As at 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 60,401 39,436 61,656 69,569 66,444 91,093 17,741 11,981 7,577 147,711 117,861 160,326	As at 31 March 2018 RMB’000 60,644 86,047 6,788
		153,479

Operating lease payments represent rentals payable by the Group for certain of its office premises and staff quarters. Leases are negotiated with fixed lease term ranged from 1 month to 10 years.

34. CAPITAL COMMITMENTS

As at 31 December 2015, 2016 and 2017, the Group had the following capital commitments:

							As at
				**As **	at 31 December		31 March
			2015		2016	2017	2018
			RMB’000		RMB’000	RMB’000	RMB’000
Contracted	but	not provided for:
Property	and	equipment	856		723	1,300	1,083

35. CONTINGENT LIABILITIES

As at 31 December 2017 and 31 March 2018, the Group provided financial guarantees to banks for individual property buyers in obtaining mortgage approval with aggregate amount of RMB85,301,000 and RMB52,160,000, respectively in relation to the secondary real estate transfer in Wuhan. For the financial guarantees as at 31 December 2017, they had been released in full in March 2018. As at the date of this report, the financial guarantees amounting to RMB51,460,000 as at 31 March 2018 had been subsequently released. No such arrangement was entered into for the years ended 31 December 2015 and 2016.

Management of the Group has, taking into account the nature of the guarantee and relevant facts and circumstances, considered that the probabilities of default to be low and therefore, the fair value of which on initial date of recognition was insignificant and also there was no provision made subsequent to initial recognition during the year ended 31 December 2017 and the three-month period ended 31 March 2018.

36. RETIREMENT BENEFIT SCHEMES

The employees of the Group in the PRC are members of the state-managed retirement benefit schemes operated by the PRC government. The Company’s subsidiaries situated in the PRC are required to contribute a specified percentage of payroll costs to the retirement benefit schemes to fund the benefits. The only obligation of the Group with respect to these retirement benefits schemes is to make the specified contributions.

During the Track Record Period, the total amounts contributed by the Group to the schemes and costs charged to the profit or loss represents contributions paid or payable to the schemes by the Group at rates specified in the rules of the schemes. The retirement benefits scheme contributions made by the Group amounted to RMB231,298,000, RMB257,768,000, RMB311,496,000, RMB67,546,000 (unaudited) and RMB81,030,000 for the years ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2017 and 2018, respectively.

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37. RELATED PARTY DISCLOSURES

(a) Related party balances

Details of the outstanding balances with related parties are set out in the consolidated statements of financial position and in note 21.

(b) Related party transactions

During the Track Record Period, the Group entered into the following transactions with its related parties.

(i) Advertising service, agency revenue, consulting service earned

Advertising service

					For the three-month	For the three-month
					**period **	ended
		Year ended 31 December			31 March
	Relationship	2015	2016	2017	2017	2018
		RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
					(unaudited)
Shanghai Lerong
Information Technology
Co., Ltd.# (上海樂榮信息
技術有限公司) (“Lerong”)	(i)	–	–	22	–	2,537
Ningbo E-House Chenxin
Real Estate Broker Co.,
Ltd# (寧波易居臣信房地
產經紀有限公司)	(i)	–	–	1,331	–	690
Shanxi Chenxin Real Estate
Broker Co., Ltd# (陝西臣
信房地產經紀有限公司)	(i)	–	92	3,272	236	7
Beijing Chenxin	(i)	19,220	2,551	–	–	–
Chen Xin Real Estate
Economic (Changsha)
Co., Ltd# (臣信房地產經
濟(長沙)有限公司)	(i)	57	–	–	–	–
Guangzhou Xinchen Real
Estate Broker Co., Ltd#
(廣州新臣房地產經紀有限
公司)	(i)	–	492	484	16	–
Hangzhou Yisheng	(i)	–	–	1,119	–	–
Nanchang Yichen Real
Estate Broker Co., Ltd#
(南昌易臣房地產經紀有限
公司)	(i)	–	–	152	–	–
Shanghai Treasure Culture
Development Inc.# (上海
寶庫文化發展股份有限公
司) (“Baoku”)	(i)	–	295	–	–	–
Nanzhi	(i)	14	–	–	–	–
Shijiazhuang Bolei Real
Estate Broker Co., Ltd#
(石家莊博雷房產經紀有限
公司)	(i)	183	–	–	–	–
Suzhou E-House Chenxin
Real Estate Broker Co.,
Ltd# (蘇州易居臣信房地
產經紀有限公司)
(“Suzhou Chenxin”)	(i)	–	647	–	–	–

# English name is for identification purpose only

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Relationship Tianjin Chenxin Real Estate Broker Co., Ltd# (天津臣 信房地產經紀有限公司) (“Tianjin Chenxin”) (i) Wuhan Yisheng Leju Advertising Co., Ltd.# (武 漢怡生樂居廣告有限公司) (i) Wuhan E-House Chenxin Real Estate Consulting Co., Ltd.# (武漢易居臣信 地產顧問有限公司) (i) E-House Chenxin (i) Chongqing Anbang (i) Agency revenue Relationship China Evergrande Group’s affiliates (iii) China Vanke Co., Ltd’s affiliates (iii) Country Garden Holdings Company Limited’s affiliates (iii) Shanghai Urban (ii) E-House Chenxin (i) Chongqing Anbang (i) Hangzhou Yisheng (i) Zhengzhou Leju Advertising Co., Ltd.# (鄭州樂居廣告 有限公司) (i) Hangzhou Ruiju (i) Hangzhou Chenxin (i) Shanghai Chenxin (i) Lerong (i) Nanzhi (i)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 221 – – – 4,221 329 448 – – 4,493 2,051 4,736 2,585 1,241 1,138 27,221 11,590 12,583 Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – – – – 9,816 37,081 23,389 – 2,463 14,762 – – – – 45 123 – – 49 – 81 – – 391 – – 102 – – 529 – 4,801 1,143 – 14,617 41,835 38,323	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – 211 – – – 895 – 1,138 – 2,496 3,234 For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – 196,246 – 5,438 – 5,361 6,331 4,351 5,212 679 – 78 90 34 – 30 – – – – – – – – – – 11,633 212,217	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – – 211 – – – 895 – 1,138 – 2,496 3,234 For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – 196,246 – 5,438 – 5,361 6,331 4,351 5,212 679 – 78 90 34 – 30 – – – – – – – – – – 11,633 212,217
			212,217

# English name is for identification purpose only

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Consulting service

Relationship Country Garden Holdings Company Limited’s affiliates (iii) China Evergrande Group’s affiliates (iii) Shanghai Urban (ii) China Vanke Co., Ltd’s affiliates (iii) Hangzhou Yisheng (i) Zhuhai Yisheng Leju Information Technology Co., Ltd.# (珠海怡生樂居 信息科技有限公司) (i) Fangjiao (i) Beijing Chenxin (i) Beijing Lingzhi Tongcheng Education Technology Co., Ltd.# (北京凌志通成 教育科技有限公司) (i) Fuzhou E-House Chenxin Estate Broker Co., Ltd.# (福州易居臣信房地產經紀 有限公司) (i) Guangzhou Leyiju Information Technology Co., Ltd.# (廣州樂怡居信 息科技有限公司) (i) Hangzhou Ruiju (i) Jinan Yisheng Leju Advertising Co., Ltd.# (濟 南怡生樂居廣告有限公司) (i) Nanchang Xinyiju Culture Communication Co., Ltd.# (南昌新怡居文化傳媒有限 公司) (i) Nanjing Anyue Real Estate Broker Co., Ltd.# (南京安 岳房地產經紀有限公司) (i) Xiamen Yisheng (i) Baoku (i) TED (i) Shanghai Xinju Financial Information Services Co., Ltd.# (上海新居金融信息 服務有限公司) (i) Suzhou Chenxin (i) Tianjin Chenxin (i) E-House Chenxin (i) Chongqing Anbang (i)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – – – – – – 1,271 1,799 3,153 – – – – – 66 – – – – – – – 167 281 – 4 – – 56 – – – 1,412 – 35 12 – 21 – – 4 – – – 233 – 371 – – 37 – – 9 – – 2 – 61 28 – – 28 66 – 223 328 45 – 230 1,377 2,784 5,781	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – 1,299 – 344 568 235 – 138 – 75 – 11 – 2 84 – – – – – 405 – 12 – – – – – – – – – – – – – – – – – 66 – – – – – 1,135 2,104	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) – 1,299 – 344 568 235 – 138 – 75 – 11 – 2 84 – – – – – 405 – 12 – – – – – – – – – – – – – – – – – 66 – – – – – 1,135 2,104
			2,104

# English name is for identification purpose only

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(ii) Service cost incurred (including mainly staff training and development cost)

Relationship TED Culture (i) Hebei Dehu (i) Fangjiao (i) Xiamen Yisheng (i) E-House Academy (i) Yunchuang (i) Huace (i) Lerong (i) Beijing Zhongfang Zhiye Management Consulting Co., Ltd# (北京中房智業 管理諮詢有限公司) (i) Chengxiang (i) Baoku (i) Beijing Yisheng (i) E-House Management (i) Shanglin (i) Hangzhou Chenxin (i) Shanghai Yiguan Culture and Art Co., Ltd.# (上海 藝觀文化藝術有限公司) (i) Shanghai Guansong Culture Communication Co., Ltd.# (上海觀頌文化傳播有限公 司) (i) Shanghai Chenxin (i) TED (i) Shanghai Dehu (i) Shanghai Dehao Exhibition Co., Ltd# (上海德鎬展覽 有限公司) (i) Xinjiang Shengshi (i) Shanghai Weike Information Technology Co., Ltd.# (微 課聯盟信息科技有限公司) (i)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 – 1,710 4,120 1,369 619 1,985 – 3,007 1,803 – – 755 – – 185 – 51 152 – – 144 – 160 94 – 283 67 – – 58 500 272 47 1,231 604 39 – 8 15 – – 7 150 11,033 – – 566 – 194 268 – – 66 – 6,619 62 – 1,574 – – 572 – – 290 – – 20 – – 12,519 18,709 9,471	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 2,294 2,057 132 127 217 290 – 1,000 – – 75 – – 50 94 – – – – – – – 39 – – – 5 – – – – – – – – – – – – – – – – – – – 2,856 3,524	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 2,294 2,057 132 127 217 290 – 1,000 – – 75 – – 50 94 – – – – – – – 39 – – – 5 – – – – – – – – – – – – – – – – – – – 2,856 3,524
			3,524

# English name is for identification purpose only

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(iii) Rental expenses incurred

Relationship Yike Technology (i) Yicang (i) Shangyou (i)	Year ended 31 December 2015 2016 2017 RMB’000 RMB’000 RMB’000 19,429 24,333 29,929 636 2,126 1,704 852 821 – 20,917 27,280 31,633	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 6,588 6,947 329 458 – – 6,917 7,405	For the three-month period ended 31 March 2017 2018 RMB’000 RMB’000 (unaudited) 6,588 6,947 329 458 – – 6,917 7,405
			7,405

Notes:

• (i) Fellow subsidiaries of the Group.

• (ii) Non-controlling shareholder of a non-wholly owned subsidiary of the Group which exercises significant influence over the subsidiary of the Group.

• (iii) Entities controlled by shareholders of the Group which exercises significant influence over the Company.

(iv) Collection agency arrangement with E-House Management and Beijing EJU

Subsequent to the completion of the Business Transfer, E-House Management and Beijing EJU, had acted as a collection agent on behalf of the Group in respect of those incomplete primary real estate agency contracts.

(v) Guarantees and pledged of assets provided by related parties

At 31 December 2015, 2016 and 2017 and 31 March 2018, E-House Management, a fellow subsidiary of the Company, had provided corporate guarantees to banks in respect of the Group’s bank borrowings amounted to RMB100,000,000, RMB100,000,000, RMB450,000,000 and RMB550,000,000, respectively. At 31 December 2015 and 2016, certain properties of Shanghai Wanju Investment Partnership (Limited Partnership), a fellow subsidiary of the Company, were pledged to secure the Group’s bank borrowings amounted to RMB350,000,000 and RMB290,000,000, respectively. As represented by the management of the Group, the corporate guarantee provided by E-House Management to banks as at 31 March 2018 would be released prior to the Listing.

(c) Compensation of key management personnel

The remuneration of key management personnel which represents the directors of the Company and key executives of the Group during the Track Record Period was as follows:

Salaries, bonus and other allowances Retirement benefit scheme contributions Equity-settled share-based payment expenses	Year 2015 RMB’000 7,497 412 6,653 14,562	ended 31 December 2016 2017 RMB’000 RMB’000 11,997 18,660 421 503 4,064 – 16,482 19,163	For the three-month period ended 31 March 2018 RMB’000 3,210 154 –
			3,364

The remuneration of directors and key executives is determined having regard to the performance of individuals and market trends.

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38. FINANCIAL INFORMATION OF THE COMPANY

(a) Investment in a subsidiary

									As at
					**As **	**at **	31 December		31 March
				2015			2016	2017	2018
				RMB’000			RMB’000	RMB’000	RMB’000
Unlisted	shares,	at	cost	7			7	7	9,318,225

Investment in a subsidiary represents the investment cost in Fangyou (BVI).

(b) Movements of the Company’s reserves

At 1 January 2015 Loss and total comprehensive expense for the year At 31 December 2015 Loss and total comprehensive expense for the year At 31 December 2016 Loss and total comprehensive expense for the year Conditional issue of shares (note 27) At 31 December 2017 Loss and total comprehensive expense for the period Conversion of conditional investment fund received into share premium Capital contribution received from the immediate parent of the Company At 31 March 2018 For the three-month period ended 31 March 2017 (unaudited) At 1 January 2017 Profit and total comprehensive income for the period At 31 March 2017	Share premium RMB’000 – – – – – – – – – 1,229,977 – 1,229,977 – – –	Other reserves RMB’000 – – – – – – (9) (9) – 9 8,357,013 8,357,013 – – –	Accumulated losses RMB’000 (77) (17) (94) (20) (114) (15) – (129) (31,972) – – (32,101) (114) 1 (113)	Total RMB’000 (77) (17)
				(94) (20)
				(114) (15) (9)
				(138) (31,972) 1,229,986 8,357,013
				9,554,889
				(114) 1
				(113)

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39. PARTICULARS OF PRINCIPAL SUBSIDIARIES

During the Track Record Period and as at the date of this report, the Company has direct and indirect equity interests in the following principal subsidiaries.

			**Equity interest attributable **	**Equity interest attributable **	**Equity interest attributable **	**to the Group **	as at
		Issued and fully
	Date and place	paid share					Date
	of incorporation/	capital/registered		31 December		31 March	of this	Principal
Name of subsidiaries	establishment	capital	2015	2016	2017	2018	report	activities	Notes
				(note 1)	(note 1)
Directly held
Fangyou (BVI)	BVI, 8 February	USD1,000	100%	50%	50%	100%	100%	Investment	l
	2010							holding
Indirectly held
Hangzhou E-House Yongchuang	Hangzhou, The	RMB5,000,000	100%	50%	50%	100%	100%	Real estate	c
Real Estate Sales and Marketing	PRC, 18 July							agents
Co., Ltd (杭州易居永創房地產營	2008
銷策劃有限公司) (“Hangzhou
Yongchuang”)
Wuhan E-House Investment Co.,	Wuhan, The PRC,	RMB5,000,000	100%	50%	50%	100%	100%	Real estate	d
Ltd# (武漢易居投資有限公司)	15 January 2004							sales, real
(“Wuhan E-House”)								estate agent
Henan E-House Real Estate	Zhengzhou. The	RMB2,000,000	100%	50%	50%	100%	100%	Real estate	e
Consultancy Co., Ltd.# (河南易居	PRC, 7 July							agents, real
房地產顧問有限公司) (“Henan	2005							estate
Yiju”)								marketing
Tianjin Jinyue	Tianjin, The PRC,	RMB103,878,000	100%	50%	50%	100%	100%	Real estate	f
	19 February 2008							marketing,
								real estate
								agent
Shanghai E_House Xiangyue Real	Shanghai, The	RMB50,000,000	100%	50%	50%	100%	100%	Real estate	i
Estate Sales Co., Ltd (上海易居祥	PRC, 18 January							marketing
悅房地產銷售有限公司)	2010
(Yijuxiangyue)
Hainan E-House Tourism Real Estate	Hainan, The PRC,	RMB20,000,000	100%	50%	50%	100%	100%	Tourism real	g
Brokerage Co., Ltd# (海南易居旅	9 June 2010							estate agents
遊地產經紀有限公司) (“Hainan
Yiju”)
Shanxi E-House Jinyue Real Estate	Shanxi, The PRC,	RMB3,000,000	100%	50%	50%	100%	100%	Real estate	l
Brokerage Co., Ltd# (山西易居金	31 January 2013							agents, real
岳房地產經紀有限公司)								estate
								information
								consulting
PRC Holdco	Shanghai, The	RMB660,000,000	100%	50%	50%	100%	100%	Technology	j
	PRC, 3 July							development
	2006

# English name is for identification purpose only

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Equity interest attributable to the Group as at

		Issued and fully
	Date and place	paid share					Date
	of incorporation/	capital/registered		31 December		31 March	of this	Principal
Name of subsidiaries	establishment	capital	2015	2016	2017	2018	report	activities	Notes
				(note 1)	(note 1)
Nanjing Jinyue Real Estate Sales	Nanjing, The PRC,	RMB5,000,000	100%	50%	50%	100%	100%	Real estate	l
Co., Ltd# (南京金岳房地產銷售有	29 April 2004							sales agents
限公司)
Anhui E-House Jinyue Real Estate	Anhui, The PRC,	RMB5,000,000	100%	50%	50%	100%	100%	Real estate	l
Sales and Marketing Co., Ltd# (安	25 August 2015							marketing,
徽易居金岳房地產營銷策劃有限公								real estate
司)								agents
Shanghai Dacheng Real Estate	Shanghai, The	RMB50,000,000	100%	50%	50%	100%	100%	Real estate	h
Brokerage Co., Ltd# (上海大乘房	PRC, 16							marketing
地產經紀有限公司) (“Dacheng”)	November 2015
Jinan Jinyue Real Estate Brokerage	Jinan, The PRC,	RMB5,000,000	100%	50%	50%	100%	100%	Real estate	l
Co., Ltd# (濟南金岳房地產經紀有	27 May 2003							agents
限公司)
Shanxi E-House Real Estate	Shaanxi, The PRC,	RMB3,000,000	100%	50%	50%	100%	100%	Real estate	l
Investment Consultancy Co., Ltd#	4 December 2006							marketing
(陝西易居不動產投資顧問有限公								agents, real
司)								estate
								information
Zhongfangyanxie	Beijing, The PRC,	RMB30,000,000	51%	25.5%	25.5%	51%	51%	Information	k
	17 August 2010							development,
								consulting

Notes:

• (1) On 31 October 2016, PRC Holdco’s immediate holding company, CRE BVI, had transferred its 50% equity interest of PRC Holdco in aggregate to a number of independent third parties without losing control. As a result, the Group’s equity interest attributable to owner of the Company reduced by 50% as at 31 December 2016 and 2017.

On 3 March 2018, Hong Kong Fangyou, a wholly-owned subsidiary of the Company, acquired 50% equity interests of PRC Holdco from CRE BVI and 50% equity interest of PRC Holdco from a number of independent third parties. As a result, the Group’s equity interest attributable to owners of the Company increased from 50% to 100% as at 31 March 2018.

• (a) The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

• (b) Each of the Company and its subsidiaries has adopted 31 December as its financial year end date.

• (c) The statutory financial statements of Hangzhou Yongchuang for the year ended 31 December 2015 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Zhejiang Xinghe Certified Public Accountants (浙江興合會計師事務所有限公司), a certified public accountant registered in the PRC. No audited statutory financial statements have been prepared for the year ended 31 December 2016 and 2017 as they are not mandatory to issue audited financial statements under the local statutory requirements.

• # English name is for identification purpose only

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• (d) The statutory financial statements of Wuhan E-House for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Wuhan Jingwei Certified Public Accountants (武漢經緯會計師事務所有限公司), a certified public accountant registered in the PRC.

• (e) The statutory financial statements of Henan Yiju for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Henan Shengmeng Certified Public Accountants (河南勝盟聯合會計師事務所), a certified public accountant registered in the PRC.

• (f) The statutory financial statements of Tianjin Jinyue for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Tianjin Boda Certified Public Accountants (天津市博達有限責任會計師事務所), a certified public accountant registered in the PRC.

• (g) The statutory financial statements of Hainan Yiju for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Hainan BDO Shu Lun Pan Certified Public Accountants LLP (海南立信長江會計師事務所), a certified public accountant registered in the PRC.

• (h) The statutory financial statements of Dacheng for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Shanghai HDDY Certified Public Accountants (上海宏大東亞會計師事務所), a certified public accountant registered in the PRC.

• (i) The statutory financial statements of Yijuxiangyue for the year ended 31 December 2015 and 2016 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Shanghai Wenhui Certified Public Accountants LLP (上海文匯會計師事務所), a certified public accountant registered in the PRC. The statutory financial statements of Yijuxiangyue for the year ended 31 December 2017 was prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Shanghai HDDY Certified Public Accountants Co., LTD. (上海宏大東亞會計師事務所), a certified public accountant registered in the PRC.

• (j) The statutory financial statements of PRC Holdco for the year ended 31 December 2015, 2016 and 2017 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Shanghai HDDY Certified Public Accountants Co., LTD. (上海宏大東亞會計師事務所), a certified public accountant registered in the PRC.

• (k) The statutory financial statements of Zhongfangyanxie for the year ended 31 December 2015 and 2016 were prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Shanghai HDDY Certified Public Accountants Co., LTD. (上海宏大東亞會計師事務所), a certified public accountant registered in the PRC. The statutory financial statements of Zhongfangyanxie for the year ended 31 December 2017 was prepared in accordance with relevant accounting principles and financial regulations applicable to the PRC enterprises and were audited by Beijing Zhongxuan Union Certified Public Accountants Co., LTD. (北京中璿聯盟會計師事務所), a certified public accountant registered in the PRC.

• (l) No audited statutory financial statements have been prepared since the date of the establishment as there is no such statutory requirement.

None of the subsidiaries of the Group had issued any debt securities during the Track Record Period.

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40. DETAILS OF NON-WHOLLY OWNED SUBSIDIARIES THAT HAVE MATERIAL NONCONTROLLING INTERESTS

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:

Name of subsidiary Place of incorporation and principal place of business Proportion of ownership interests and voting rights held by non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2018 PRC Holdco* Shanghai, The PRC nil 50% 50% – Included in the non- controlling interests of PRC Holdco and its subsidiaries Non-wholly owned subsidiaries of PRC Holdco	Profit (loss) allocated to non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2017 31/3/2018 (unaudited) – 64,715 350,025 56,011 32,648 11,945 20,485 63,261 23,087 25,852 11,945 85,200 413,286 79,098 58,500	Profit (loss) allocated to non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2017 31/3/2018 (unaudited) – 64,715 350,025 56,011 32,648 11,945 20,485 63,261 23,087 25,852 11,945 85,200 413,286 79,098 58,500	Profit (loss) allocated to non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2017 31/3/2018 (unaudited) – 64,715 350,025 56,011 32,648 11,945 20,485 63,261 23,087 25,852 11,945 85,200 413,286 79,098 58,500	Profit (loss) allocated to non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2017 31/3/2018 (unaudited) – 64,715 350,025 56,011 32,648 11,945 20,485 63,261 23,087 25,852 11,945 85,200 413,286 79,098 58,500	Accumulated non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2018 – 700,611 1,047,636 – 53,759 55,567 89,877 115,729 53,759 756,178 1,137,513 115,729	Accumulated non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2018 – 700,611 1,047,636 – 53,759 55,567 89,877 115,729 53,759 756,178 1,137,513 115,729	Accumulated non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2018 – 700,611 1,047,636 – 53,759 55,567 89,877 115,729 53,759 756,178 1,137,513 115,729	Accumulated non-controlling interests 31/12/2015 31/12/2016 31/12/2017 31/3/2018 – 700,611 1,047,636 – 53,759 55,567 89,877 115,729 53,759 756,178 1,137,513 115,729
	11,945	85,200	413,286	79,098	53,759	756,178	1,137,513	115,729

• excluding non-controlling interests of non-wholly owned subsidiaries of PRC Holdco.

Summarised financial information in respect of the Group’s subsidiary that has material non-controlling interests is set out below.

PRC Holdco and its subsidiaries Current assets Non-current assets Current liabilities Non-current liabilities Equity attributable to owners of the Company Non-controlling interests of PRC Holdco (excluding those related to PRC Holdco’s non-wholly owned subsidiaries) Non-controlling interests of PRC Holdco’s non-wholly owned subsidiaries	As at 31 December 2016 RMB’000 3,721,949 483,171 (2,747,965) (366) 700,611 700,611 55,567	As at 31 December 2017 RMB’000 4,423,291 642,556 (2,904,479) (219) 1,023,636 1,047,636 89,877	As at 31 March 2018 RMB’000 5,339,318
			613,869
			(2,559,167)
			(183)
			3,278,108
			–
			115,729

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PRC Holdco and its subsidiaries Revenue Expenses Profit and total comprehensive income for the period/year Profit and total comprehensive income attributable to owners of the Company Profit and total comprehensive income attributable to the non- controlling interests of PRC Holdco (excluding those related to PRC Holdco’s non-wholly owned subsidiaries) Profit and total comprehensive income attributable to the non- controlling interests of PRC Holdco’s non-wholly owned subsidiaries Profit and total comprehensive income for the period/year PRC Holdco and its subsidiaries Dividends paid to non-controlling interests of PRC Holdco Net cash inflow (outflow) from operating activities Net cash inflow (outflow) from investing activities Net cash (outflow) inflow from financing activities Net cash inflow (outflow)	For the period from 1 November 2016 to 31 December 2016 RMB’000 986,924 (854,795) 132,129 64,715 64,715 2,699 132,129 For the period from 1 November 2016 to 31 December 2016 RMB’000 (15,247) 572,124 1,979 (120,207) 453,896	For the year ended 31 December 2017 RMB’000 4,633,193 (3,869,882) 763,311 350,025 350,025 63,261 763,311 For the year ended 31 December 2017 RMB’000 (28,951) (56,809) 4,572 (150,469) (202,706)	For the three-month period ended 31 March 2017 (unaudited) RMB’000 854,794 (719,685) 135,109 56,011 56,011 23,087 135,109 For the three-month period ended 2017 (unaudited) RMB’000 – 174,560 (4,420) 49,960 220,100	For the three-month period ended 31 March 2018 RMB’000 930,202 (744,989) 185,213 126,713 32,648 25,852 185,213 For the three-month period ended 31 March 2018 RMB’000 – 45,563 (1,281) 91,642 135,924

Summarised financial information of Zhongfangyanxie and its subsidiary, being a significant component of the non-wholly owned subsidiary of PRC Holdco. The summarised financial information below presented amounts before intra-group eliminations.

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Zhongfangyanxie and its subsidiary Current assets Non-current assets Current liabilities Equity attributable to owners the Company Non-controlling interests of Zhongfangyanxie Zhongfangyanxie and its subsidiary Revenue Expenses Profit and total comprehensive income for the year/period Profit and total comprehensive income attributable to owners of the Company Profit and total comprehensive income attributable to the non-controlling interests of Zhongfangyanxie Profit and total comprehensive income for the year/period Dividends paid to non- controlling interests of Zhongfangyanxie Net cash inflow from operating activities	As at 31 December 2015 RMB’000 93,644 11,501 (13,402) of 46,789 44,954 For the year ended 31 December 2015 For the year ended 31 December 2016 RMB’000 RMB’000 92,559 108,012 (63,841) (57,934) 28,718 50,078 14,646 25,540 14,072 24,538 28,718 50,078 (10,347) (15,247) 45,133 60,682		As at 31 December 2016 RMB’000 123,087 8,116 (20,499) 56,459 54,245 For the year ended 31 December 2017 RMB’000 209,099 (87,903) 121,196 61,810 59,386 121,196 (25,521) 122,192		As at 31 December 2017 RMB’000 194,395 2,840 (17,419) 91,706 88,110 For the three- month period ended 31 March 2017 (unaudited) RMB’000 71,454 (25,254) 46,200 23,562 22,638 46,200 – 37,681		As at 31 March 2018 RMB’000 281,440 3,945 (46,905) 121,625 116,855 For the three- month period ended 31 March 2018 RMB’000 81,504 (22,839) 58,665 29,919 28,746 58,665 – 87,099

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Zhongfangyanxie and its subsidiary Net cash outflow from financing activities Net cash inflow	For the year ended 31 December 2015 RMB’000 (21,291) 23,842	For the year ended 31 December 2016 RMB’000 (31,669) 29,013	For the year ended 31 December 2017 RMB’000 (52,398) 69,794	For the three- month period ended 31 March 2017 (unaudited) RMB’000 – 37,681	For the three- month period ended 31 March 2018 RMB’000 –
					87,099

41. MAJOR NON-CASH TRANSACTIONS

During the years ended 31 December 2015, 2016 and 2017 and the three-month period ended 31 March 2018, the major non-cash transactions mainly include the addition of investment properties which were collateral previously obtained and were transferred from property developer customers as settlement of the Group’s outstanding accounts receivables in the amount of RMB18,655,000, RMB13,794,000, RMB11,940,000 and nil, respectively. Details of the arrangement are set out in note 20.

42. DIRECTORS’ REMUNERATION

Under the arrangement currently in force, each of the aggregate amount of the directors’ remuneration and benefits in kind for the year ending 31 December 2018 is estimated to be approximately RMB6 million (excluding discretionary bonus).

43. EVENTS AFTER REPORTING PERIOD

Subsequent to the end of the reporting period, on 20 April 2018, the pre-IPO share option scheme was conditionally approved and adopted by the Board of Directors of the Company. In addition, the post-IPO share option scheme was conditionally adopted by the Company. The principal terms of the pre-IPO and post-IPO share option schemes are set out in the section headed “Statutory and General Information” in Appendix IV to the Prospectus.

44. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Group, the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31 March 2018 and up to the date of this report.

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APPENDIX II

II. UNAUDITED FINANCIAL INFORMATION OF THE TARGET GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2018 EXTRACTED FROM THE INTERIM RESULTS ANNOUNCEMENT

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2018

		For the six-month	For the six-month
		period ended	30 June
	Notes	2018	2017
		RMB’000	RMB’000
		(unaudited)	(unaudited)
Revenue	3	2,779,769	1,925,222
Staff costs		(1,345,223)	(1,115,012)
Advertising and promotion expenses		(131,568)	(71,221)
Operating lease charges in
respect of office premises		(55,701)	(51,140)
Depreciation and amortisation expenses		(12,331)	(12,302)
Loss allowance on financial assets measured at
amortised cost		(80,367)	(52,471)
Consultancy expenses		(76,341)	(74,427)
Distribution expenses		(135,280)	(30,016)
Other operating costs		(148,148)	(125,134)
Other income	5	45,113	10,088
Other gains and losses		(18,427)	616
Other expenses		(125)	(5,771)
Listing expenses		(39,527)	–
Share of result of associates		(2,022)	627
Finance costs		(11,641)	(10,311)
Profit before taxation		768,181	388,748
Income tax expense	6	(204,710)	(82,683)
Profit and total comprehensive income for the period	7	563,471	306,065
Profit and total comprehensive income for
the period attributable to:
Owners of the Company		467,525	131,437
Non-controlling interests		95,946	174,628
		563,471	306,065
Earnings per share	9
– Basic (RMB cents)		50.80	26.29
– Diluted (RMB cents)		45.71	N/A

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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION At 30 JUNE 2018

Notes Non-current assets Property and equipment Investment properties Goodwill Intangible assets Interests in associates Amounts due from related parties 11 Deferred tax assets Other non-current assets 10 Current assets Accounts receivables and bills receivables 10 Other receivables 10 Amounts due from related parties 11 Financial assets mandatorily measured at fair value through profit or loss Restricted bank balances Cash and cash equivalents Current liabilities Accounts payables 12 Contract liabilities 12 Advance from customers Accrued payroll and welfare expenses Other payables 12 Tax payables Amounts due to related parties 11 Bank borrowings	30 June 2018 RMB’000 (unaudited) 64,883 19,288 5,109 3,273 8,993 15,748 507,339 228,574 853,207 2,774,279 158,798 1,330,130 21,880 177,367 764,771 5,227,225 226,055 133,167 38,473 845,040 415,993 370,159 47,431 450,000 2,526,318	31 December 2017 RMB’000 (audited) 62,249 18,688 5,109 5,744 11,015 – 504,234 31,669 638,708 3,308,002 71,590 379,070 20,000 131,264 1,791,290 5,701,216 174,561 33,113 83,468 1,161,640 1,571,273 405,733 297,294 450,000 4,177,082

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		30 June	31 December
	Notes	2018	2017
		RMB’000	RMB’000
		(unaudited)	(audited)
Net current assets		2,700,907	1,524,134
Total assets less current liabilities		3,554,114	2,162,842
Non-current liability
Deferred tax liabilities		146	219
Net assets		3,553,968	2,162,623
Capital and reserves
Paid-in/share capital	13	76	330,076
Share premium		1,229,977	–
Reserves		2,174,553	695,034
Equity attributable to owners of the Company		3,404,606	1,025,110
Non-controlling interests		149,362	1,137,513
Total equity		3,553,968	2,162,623

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

1. GENERAL INFORMATION AND BASIS OF PREPARATION

1a. General information

E-House (China) Enterprise Holdings Limited (the “Company”) was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands on 22 February 2010. The addresses of the Company’s registered office and headquarters are PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands and 11/F, Qiushi Building, 383 Guangyan Road, Jing’an District, Shanghai, China, respectively.

The Company and its subsidiaries (collectively referred to as the “Group”), offers a wide range of services to the real estate industry, including real estate agency services in the primary market, real estate data and consulting services, and real estate brokerage network services in the PRC.

The immediate parent of the Company is China Real Estate Information Corporation (“CRE Corp”), a limited liability company incorporated in the Cayman Islands, which is held and controlled by E-House (China) Holdings Limited (“E-House (China) Holdings”), a limited liability company incorporated in the Cayman Islands.

These condensed consolidated financial statements are presented in Renminbi (“RMB”), which is also the functional currency of the Company.

1b. Basis of preparation

The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 (“IAS 34”) Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

The condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six months ended 30 June 2018 were prepared as if the Company had always been the holding company of the Group and the group structure upon completion of the Group Reorganisation, as detailed in the prospectus of the Company dated 10 July 2018 (the “Prospectus”), had been in existence throughout the six months ended 30 June 2018.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for financial assets mandatorily measured at FVTPL and financial liabilities at FVTPL, which are measured at fair values, as appropriate.

The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2018 are the same as those followed in the preparation of the Group’s historical financial information for the three years ended 31 December 2017 and the three-month period ended 31 March 2018 for inclusion in the Prospectus in connection with the initial listing of shares of the Company on the Main Board of The Stock Exchange.

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3. REVENUE

The Group derives its revenue from (1) real estate agency services in the primary market at a point in time, (2) real estate data and consulting services at a point in time or over time, and (3) real estate brokerage network services at a point in time during the period. This is consistent with the revenue information that is disclosed for each operating and reportable segment under IFRS 8:

Real estate agency services in the primary market, recognised at a point in time Real estate data and consulting services – consulting services recognised at a point in time – data services recognised over time Real estate brokerage network services, recognised at a point in time	For the six months ended 30 June 2018 30 June 2017 RMB’000 RMB’000 (unaudited) (unaudited) 2,228,488 1,546,084 318,209 280,403 65,376 62,793 383,585 343,196 167,696 35,942 2,779,769 1,925,222	For the six months ended 30 June 2018 30 June 2017 RMB’000 RMB’000 (unaudited) (unaudited) 2,228,488 1,546,084 318,209 280,403 65,376 62,793 383,585 343,196 167,696 35,942 2,779,769 1,925,222
		343,196 35,942
		1,925,222

4. SEGMENT INFORMATION

The following is an analysis of the Group’s revenue and results by operating and reportable segment:

Six months ended 30 June 2018 (unaudited)

Real estate agency services in the primary market Real estate data and consulting services Real estate brokerage network services Elimination RMB’000 RMB’000 RMB’000 RMB’000 REVENUE External sales 2,228,488 383,585 167,696 – Inter-segment sales 1,524 1,129 7,955 (10,608) Total 2,230,012 384,714 175,651 (10,608) SEGMENT PROFIT (LOSS) 792,588 158,352 (73,598) – Unallocated expenses Listing expenses Unallocated net exchange loss Fair value gain on financial liabilities at FVTPL Share of result of associates Interest income Finance costs Equity-settled share-based payment expenses Profit before taxation	Total RMB’000 2,779,769 –
	2,779,769
	877,342 (1,283) (39,527) (44,425) 23,864 (2,022) 5,648 (11,641) (39,775)
	768,181

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Six months ended 30 June 2017 (unaudited)

Real estate agency services in the primary market RMB’000 REVENUE External sales 1,546,084 Inter-segment sales – Total 1,546,084 SEGMENT PROFIT (LOSS) 320,699 Unallocated expenses Unallocated net exchange gain Share of result of associates Interest income Finance costs Profit before taxation	Real estate data and consulting services RMB’000 343,196 1,917 345,113 137,840	Real estate brokerage network services Elimination RMB’000 RMB’000 35,942 – 58 (1,975) 36,000 (1,975) (62,586) –	Total RMB’000 1,925,222 – 1,925,222 395,953 (40) 13 627 2,506 (10,311) 388,748

Segment assets and liabilities

No segment assets and liabilities information is provided as no such information is regularly provided to the chief operating decision maker of the Group on making decision for resources allocation and performance assessment.

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5. OTHER INCOME

	Six months ended	Six months ended
	30 June 2018	30 June 2017
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Interest income	5,648	2,506
Government grants_(note)_	39,031	6,879
Others	434	703
	45,113	10,088

Note: The amount represents government grants received from various PRC government authorities in connection with the tax rebate and fiscal subsidy during the current interim period, which had no conditions imposed by the respective PRC government authorities.

6. INCOME TAX EXPENSE

	Six months ended	Six months ended
	30 June 2018	30 June 2017
	RMB’000	RMB’000
	(unaudited)	(unaudited)
PRC Enterprise Income Tax (“EIT”)
Current tax	212,973	129,318
Overprovision in prior years	(5,085)	(4,233)
	207,888	125,085
Deferred tax credit	(3,178)	(42,402)
	204,710	82,683

Hong Kong

No provision for Hong Kong Profits Tax was made for the six months ended 30 June 2018 and 2017 as the Group had no assessable profit subject to Hong Kong Profits Tax during the period.

PRC

Save as those PRC subsidiaries disclosed below, pursuant to the EIT Law and Implementation Regulations of the Law of the PRC (the “EIT Law”), the statutory tax rate of all other PRC subsidiaries is 25% during the six months ended 30 June 2018 and 2017.

Beijing CREA Technology Services Ltd.[#] (北京中房研協技術服務有限公司) (“Zhongfangyanxie”), a PRC subsidiary of the Group, was qualified as High Technology Enterprise and was approved to enjoy a preferential tax rate of 15% for a period of three years from 2015 to 2017 in accordance with the EIT Law and relevant regulations. Zhongfangyanxie is in the progress of applying High Technology Enterprise for the year ending 31 December 2018. Subsequent to the end of the reporting period on 19 July 2018, the relevant application was approved and Zhongfangyanxie was qualified as High Technology Enterprise to enjoy a preferential tax rate of 15% for a period of three years from 2018 to 2020.

# English name is for identification purpose only.

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Shanghai Zhuxiang Information Technology Co., Ltd.[#] (上海築想信息科技股份有限公司) (“Shanghai Zhuxiang”), a PRC subsidiary of the Group, was qualified as High Technology Enterprise and was approved to enjoy preferential tax policy of a period of five years from 2015 to 2019 in accordance with EIT Law and relevant regulations, to be exempted from income tax for its first two years, followed by a 50% reduction in income tax, to a rate of 12.5%, for the subsequent three years. Hence, the applicable tax rate of Shanghai Zhuxiang was 12.5% for the six months ended 30 June 2018 (six months ended 30 June 2017:12.5%).

Pursuant to the relevant regulations applicable to enterprises situated in the western regions of the PRC, Chongqing E-House Investment Consultancy Co., Ltd.[#] (重慶易居投資顧問有限公司), a wholly-owned PRC subsidiary of the Group, enjoys a preferential tax rate of 15% for a period of six years and three months from 1 October 2014 to 31 December 2020. Certain subsidiaries of the Group also situated in the western regions of the PRC which are approved by the relevant regulations to enjoy a preferential tax rate of 15% in the six months ended 30 June 2018 (six months ended 30 June 2017: 15%).

7. PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

Profit and total comprehensive income for the period has been arrived at after charging (crediting):

Depreciation of property and equipment Depreciation of investment properties Amortisation of intangible assets Total depreciation and amortisation Provision (reversal) for loss allowance on: Accounts receivables and bills receivables Amounts due from related parties of trade nature (except for related parties under common control of E-House (China) Holdings) Other receivables and other non-current assets Total loss allowance on financial assets measured at amortised cost Impairment loss of investment properties Gain on disposal of investment properties (Gain) loss on disposal of property and equipment Net exchange loss (gain) Fair value gain on financial liabilities at FVTPL Fair value gain on financial assets mandatorily measured at FVTPL Minimum operating lease rental expense in respect of rented premises

Six months ended 30 June 2018 30 June 2017 RMB’000 RMB’000 (unaudited) (unaudited) 9,564 9,289 296 136 2,471 2,877 12,331 12,302 40,344 52,936 34,132 (6) 5,891 (459) 80,367 52,471 – 602 (75) (1,349) (179) 144 44,425 (13) (23,864) – (1,880) – 55,701 51,140

8. DIVIDENDS

No dividends were paid, declared or proposed during the current interim period (2017: nil). The directors of the Company have determined that no dividend will be declared in respect of this interim period.

# English name is for identification purpose only.

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APPENDIX II

9. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share attributable to owners of the Company is based on the following data:

Earnings: Profit for the period attributable to owners of the Company for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Fair value gain on financial liabilities at FVTPL Profit for the period attributable to owners of the Company for the purpose of diluted earnings per share Number of shares: Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares: Contingently issuable shares arising from the conditional investment fund received Weighted average number of ordinary share for the purpose of diluted earnings per share	Six months ended 30 June 2018 30 June 2017 RMB’000 RMB’000 (unaudited) (unaudited) 467,525 131,437 (23,864) – 443,661 131,437 Six months ended 30 June 2018 30 June 2017 (unaudited) (unaudited) 920,236 500,000 50,330 – 970,566 500,000	Six months ended 30 June 2018 30 June 2017 RMB’000 RMB’000 (unaudited) (unaudited) 467,525 131,437 (23,864) – 443,661 131,437 Six months ended 30 June 2018 30 June 2017 (unaudited) (unaudited) 920,236 500,000 50,330 – 970,566 500,000
		500,000

The number of ordinary shares for the purpose of calculating basic earnings per share has been determined on the assumption that the Group Reorganisation had been effective on 1 January 2017.

No diluted earnings per share for the six months period ended 30 June 2017 was presented as there were no potential ordinary shares in issue during the six months ended 30 June 2017.

As at 31 December 2017, the Company had 144,600,000 shares of contingently issuable shares arising from the conditional investment fund received from the three prospective investors on 1 December 2017.

Upon the completion of Group Reorganisation on 5 March 2018, the conditional investment fund received had then become unconditional, and these 144,600,000 shares have become issued and outstanding, which was therefore are included in the calculation of basic earnings per share since that date for the six months period ended 30 June 2018.

For the six months ended 30 June 2018, the computation of diluted earnings per share does not assume the exercise of the Company’s outstanding share options since the intrinsic value of these options (being the unrecognised share based payment expenses of the share option on date of grant plus the exercise price per share) was higher than the average fair value of the Company’s shares during the period.

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10. ACCOUNTS RECEIVABLES, BILLS RECEIVABLES, OTHER NON-CURRENT ASSETS AND OTHER RECEIVABLES

Accounts receivables Less: Loss allowance for accounts receivables Bills receivables Total accounts receivables and bills receivables Deposits paid to customers_(note i) – current – non-current Prepayments (current) Deferred issue costs(note ii)_ Rental deposits – current – non-current Deposits paid for acquisition of property and equipment (non-current) Long-term deferred expenses (non-current) Other receivables – others (current) Less: Loss allowance for other receivables and other non-current assets measured at amortised cost Total accounts receivables, bills receivables, other non-current assets and other receivables Other non-current assets and other receivables disclosed in the condensed consolidated statement of financial position as: – Current – Non-current	30 June 2018 RMB’000 (unaudited) 2,572,825 (431,667) 2,141,158 633,121 2,774,279 114,971 211,548 22,117 10,180 2,200 15,738 3,244 133 17,605 397,736 (10,364) 387,372 3,161,651 158,798 228,574 387,372	31 December 2017 RMB’000 (audited) 3,031,137 (451,116) 2,580,021 727,981 3,308,002 39,439 18,796 16,298 – 3,095 15,389 1,428 118 15,177 109,740 (6,481) 103,259 3,411,261 71,590 31,669 103,259

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APPENDIX II

• Note i: Amount represents earnest deposits paid by the Group to its property developer customers enabling the Group to carry out the real estate agency services in the primary market projects, which will be released to the Group at the earlier of (i) period agreed in the respective agreements and (ii) upon completion of the respective agreements.

• Note ii: Deferred issue costs represent the qualifying portion of listing expenses incurred up to 30 June 2018, which will be debited to equity of the Group as share issue costs in respect of the successful issue of new shares upon listing.

The Group allows all of its customers a credit period of 30 days upon satisfaction of the terms and conditions of the relevant agreements and relevant invoices have been issued.

The following is an aged analysis of accounts receivables, net of allowance for doubtful debts, presented based on the dates of rendering the services and the date when the sales target for higher commission was achieved at the end of the reporting period, which approximated the respective revenue recognition dates:

Within 1 year 1 – 2 years Over 2 years	30 June 2018 RMB’000 (unaudited) 2,013,153 100,906 27,099 2,141,158	31 December 2017 RMB’000 (audited) 2,325,803 220,797 33,421
		2,580,021

The following is a maturity analysis of bills receivables, net of allowance for doubtful debts, presented based on the remaining dates to maturity of bills receivables at the end of the reporting period.

	30 June	31 December
	2018	2017
	RMB’000	RMB’000
	(unaudited)	(audited)
Within 180 days	17,454	722,644
181 – 365 days	615,667	5,337
	633,121	727,981

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APPENDIX II

11. AMOUNT DUE FROM (TO) RELATED PARTIES

The Group’s amounts due from (to) related parties are set out below.

Amounts due from related parties: – Current assets – Non-current assets Analysed as: Trade nature-accounts receivables: – Amounts due from related parties under common control of E-House (China) Holdings – Amounts due from other related parties Less: Loss allowance for amounts due from other related parties Trade nature-other receivables (note): – Amounts due from other related parties Total amounts due from related parties: – Trade nature Non-trade nature: – Amounts due from related parties under common control of E-House (China) Holdings – Amounts due from other related parties	30 June 2018 RMB’000 (unaudited) 1,330,130 15,748 1,345,878 43,428 1,354,941 (72,673) 1,325,696 19,802 1,345,498 380 – 380 1,345,878	31 December 2017 RMB’000 (audited) 379,070 – 379,070 50,474 2,729 (8,015) 45,188 – 45,188 333,592 290 333,882 379,070

Note: Amount represents earnest deposits paid by the Group to its related parties enabling the Group to carry out the real estate agency services in the primary market projects, which will be released to the Group at the earlier of (i) period agreed in the respective agreements and (ii) upon completion of the respective agreements.

The Group allows all of its related parties a credit period of 30 days in respect of all trade nature transactions, upon the completion of the terms and conditions of the relevant agreements.

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The following is an aged analysis of the amounts due from related parties of trade nature – accounts receivables, net of allowance for doubtful debts, presented based on the date of rendering the services at the end of the reporting period, which approximated the respective revenue recognition dates:

Within 1 year 1 – 2 years Over 2 years Amounts due to related parties: – Current liabilities Analysed as: Trade nature: – Amounts due to related parties under common control of E-House (China) Holdings – Amounts due to other related parties Non-trade nature: – Amounts due to related parties under common control of E-House (China) Holdings	30 June 2018 RMB’000 (unaudited) 1,247,338 70,967 7,391 1,325,696 30 June 2018 RMB’000 (unaudited) 47,431 6,871 37,659 44,530 2,901 47,431	31 December 2017 RMB’000 (audited) 29,561 14,440 1,187
		45,188
		31 December 2017 RMB’000 (audited) 297,294
		17,823 21,544
		39,367 257,927
		297,294

The following is an aged analysis of amounts due to related parties presented based on the date of receipts of services by the Group, the trade nature is:

	30 June	31 December
	2018	2017
	RMB’000	RMB’000
	(unaudited)	(audited)
Within 1 year	44,089	39,367
1 – 2 years	25	–
Over 2 years	416	–
	44,530	39,367

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APPENDIX II

12. ACCOUNTS PAYABLES, CONTRACT LIABILITIES AND OTHER PAYABLES

	30 June	31 December
	2018	2017
	RMB’000	RMB’000
	(unaudited)	(audited)
Accounts payables	226,055	174,561
Contract liabilities (note iii)	133,167	33,113
Other payables
Interest payable	530	622
Value added tax payables	124,508	120,945
Other tax payables	16,121	19,778
Receipts on behalf of property sellers_(note i)_	176,920	130,963
Accrued listing expense and issue costs	31,595	–
Other payables	66,319	45,115
	415,993	317,423
Conditional investment fund received classified at FVTPL_(note ii)_	–	1,253,850
	415,993	1,571,273

Note i: Receipts on behalf of property sellers represent the receipts of bank balances from property buyers in respect of the real estate brokerage network services segment which had not yet been transferred to property sellers. Such bank balances received are classified as restricted bank balances.

• Note ii: Conditional investment fund received represent the proceeds received by the Company for the conditional issue of new shares to three independent third parties as detailed in note 15. The amount was treated as FVTPL as it contained a forward conversion option as equity which was an embedded derivative. On 5 March 2018, upon completion of acquisition of 100% equity interests in PRC Holdco by Hong Kong Fangyou, the conditional investment fund received previously classified at financial liabilities at FVTPL at a fair amount of RMB1,229,986,000 on that day become unconditional and is then fully converted to share premium, accordingly. During the period from 1 January 2018 to 5 March 2018, the fair value loss of financial liabilities at FVTPL amounted to RMB23,864,000 is credited to other gains and losses. The fair value of the conditional investment fund received is determined by discount cash flow method under income approach using the inputs including estimated cash flows and an appropriate discount rate and crossed checked by guideline company method under market approach, methods of which are evaluated by Valuelink, a professional third-party valuer.

• Note iii: As at 30 June 2018, the contract liabilities arising from the respective transaction price allocated to the unsatisfied contracts amounted to RMB42,705,000 will be recognised in full as revenue in the coming twelve months period.

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The following is an aged analysis of accounts payables presented based on the date of receipts of services by the Group:

			30 June	31 December
			2018	2017
			RMB’000	RMB’000
			(unaudited)	(audited)
Within 1 year			225,009	173,242
1 – 2 years			323	513
Over 2 years			723	806
			226,055	174,561
PAID IN/SHARE CAPITAL
			30 June	31 December
			2018	2017
			RMB’000	RMB’000
			(unaudited)	(audited)
The Company_(note i)_			76	76
PRC Holdco_(note ii)_			–	330,000
			76	330,076
Note i
				Share capital
	Par value	Number of		presented
	per share	shares	Share capital	in RMB
	US$		US$’000	RMB’000
As at 1 January 2017 (audited) and
30 June 2017 (unaudited)	1	1,000	1	7
Effect of share subdivision_(note i)_	–	99,999,000	–	–
Increased_(note i)_	0.00001	900,000,000	9	60
Increased_(note i)_	0.00001	144,600,000	1	9
As at 31 December 2017 (audited)	0.00001	1,144,600,000	11	76
As at 1 January 2018 (audited) and
30 June 2018 (unaudited)(note i)	0.00001	1,144,600,000	11	76

13. PAID IN/SHARE CAPITAL

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ACCOUNTANTS’ REPORT AND FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Notes:

• (i) On 6 November 2017, the Company increased its total authorised share capital of 900,000,000 shares with par value of US$0.00001 per share. On the same date, the Company issued 900,000,000 shares for a consideration of US$9,000 (equivalent to approximately RMB60,000) to CRE Corp.

On 1 December 2017, the Company increased its total authorised share capital by 144,600,000 shares with par value of US$0.00001 per share. On the same date, the Company conditionally issued 48,200,000 shares to each of Captain Valley (Cayman) Limited, Jovial Idea Developments Limited and Heyday Surge Limited, totalling 144,600,000 shares for a total subscription price of HK$1,500,000,000 (equivalent to RMB1,270,877,000). The 144,600,000 conditional shares of US$0.00001 each has been issued, totalling US$1,446 (equivalent to RMB9,000) has been credited as share capital of the Company, with a corresponding debit to other reserve. Pursuant to the agreement entered into between the Company and these three prospective investors, the subscription of the Company’s shares is subject to the completion of Hong Kong Fangyou’s acquisition of the 100% equity interests of PRC Holdco (that is, the completion of Group Reorganisation). If the acquisition is not completed prior to 30 June 2018, the Company will need to return the total conditional investment fund of HK$1,500,000,000 to these three prospective investors. As at 31 December 2017, as Hong Kong Fangyou had not yet acquired the 100% equity interest of PRC Holdco, the subscription price of HK$1,500,000,000 (equivalent to RMB1,253,850,000 as at 31 December 2017), representing the conditional investment fund, received by the Company and is accounted for as financial liabilities at FVTPL at 31 December 2017. On 5 March 2018, the Group Reorganisation is completed and the conditional investment fund received previously classified at financial liabilities at FVTPL at a fair amount of RMB1,229,986,000 on that day become unconditional and is then fully converted to share premium, accordingly.

• (ii) Upon completion of the Group Reorganisation, PRC Holdco became a wholly-owned subsidiary of the Company.

The new shares rank pari passu with the then existing shares in all respects.

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MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

The followings are extracted or derived from the text of the Prospectus and the Interim Results Announcement of E-House Enterprise, enclosing, among others, the management discussion and analysis on the Target Group for the three years ended 31 December 2015, 2016 and 2017 and for the three-month period ended 31 March 2017 and 2018 (as extracted from the Prospectus), and for the six months ended 30 June 2018 (as extracted from the Interim Results Announcement), which were published on the website of the Stock Exchange.

The Management Discussion and Analysis on the Target Group was not prepared for the Company or its shareholders, nor for the purpose of incorporation in this circular. E-House Enterprise shall not take nor assume any responsibility or liability for the contents of the Management Discussion and Analysis on the Target Group as reproduced in this circular towards the Company, its Shareholders or any other persons making use of this circular.

The contents of the Management Discussion and Analysis on the Target Group has also not been independently verified by the Group or any of its affiliates, advisers, agents, directors, employees, officers or representatives. Neither the Group nor any of its affiliates, advisers, agents, directors, employees, officers or representatives make any representation as to the accuracy, completeness or fairness of the contents of the Management Discussion and Analysis on the Target Group, nor shall take or assume any responsibility for the contents of the Management Discussion and Analysis on the Target Group.

I. MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2016 AND 2017 ANDTHE THREE MONTHS ENDED 31 MARCH 2018 AS EXTRACTED FROM THE PROSPECTUS

Set out below is the management discussion and analysis on the Target Group for the three years ended 31 December 2017 as derived or extracted from the Prospectus.

LIQUIDITY AND FINANCIAL RESOURCES

Liquidity and Capital Resources

During the track record period and up to the Latest Practicable Date, the Target Group has funded its cash requirements principally from cash generated from its operations, investments from Shareholders and external borrowings. The Target Group had cash and cash equivalents of RMB465.8 million, RMB974.9 million, RMB1,791.3 million and RMB3,182.2 million as of 31 December 2015, 2016 and 2017 and 31 March 2018, respectively. It generally deposit its excess cash in interest bearing bank accounts and current accounts.

During the track record period, its principal uses of cash have been for the funding of required working capital and other recurring expenses to support the expansion of its operations.

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Cash Flows

The following table sets forth a summary of its cash flows for the periods indicated:

Net cash from/(used in) operating activities Net cash (used in)/from investing activities Net cash (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate change Cash and cash equivalents at the end of the year

For the year ended 31 December For the three months ended 31 March 2015 2016 2017 2017 2018 (in thousands of RMB) (unaudited) 295,166 409,669 (275,018) 111,433 (101,961) (294,875) 134,059 4,572 (4,420) (1,281) (111,277) (34,504) 1,103,441 49,960 1,539,898 (110,986) 509,224 832,995 156,973 1,436,656 576,766 465,756 974,946 974,946 1,791,290 (24) (34) (16,651) 3 (45,781) 465,756 974,946 1,791,290 1,131,922 3,182,165

Cash flows from/(used in) operating activities

The Target Group generates cash from operating activities primarily from the provision of real estate services to its customers. Its cash flows from operating activities can be significantly affected by factors such as the timing of receipt of trade receivables and the timing of tax payments.

Net cash used in operating activities amounted to RMB102.0 million in the three months ended 31 March 2018, primarily due to a net increase in working capital of RMB301.3 million and income tax paid of RMB67.4 million, partially offset by profit before taxation of RMB219.4 million and adjustments for certain non-cash items, primarily including the additions of exchange different of RMB45.8 million and impairment loss on financial assets measured at amortised cost of RMB12.1 million and the subtraction of change in fair value of financial liabilities measured at FVTPL of RMB23.9 million. The net increase in working capital was primarily attributable to a decrease in accrued payroll and welfare expenses of

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RMB355.1 million and a decrease in accounts payables of RMB55.1 million, partially offset by a decrease in accounts receivables and bills receivables of RMB125.9 million. Accrued payroll and welfare expenses decreased significantly because it made performance-based payments for the year 2017 to its employees before the Chinese New Year in February 2018, which is the primary reason for its net cash used in operating activities for the three months ended 31 March 2018.

Net cash used in operating activities amounted to RMB275.0 million in 2017, primarily due to income tax paid of RMB522.3 million and a net increase in working capital of RMB891.3 million. The Target Group had a significant one-off increase in income tax payment in 2017 compared with previous years because it changed its tax filing policy in 2017. The net increase in working capital was primarily attributable to an increase in accounts receivables and bills receivables of RMB1,141.1 million, partially offset by an increase in accrued payoff and welfare expenses of RMB200.1 million. The increases in accounts receivables and bills receivables as well as accrued payoff and welfare expenses were primarily due to the growth of its business. The increase in accounts receivables was also due to an increase in its average credit terms in 2017. The above cash outflows were partially offset by profit before taxation of RMB971.3 million and adjustments for certain non-cash items, primarily including impairment loss on financial assets measured at amortised cost of RMB119.9 million, depreciation of property and equipment of RMB21.9 million and finance costs of RMB21.7 million.

Net cash generated from operating activities in 2016 was RMB409.7 million, as compared with profit before taxation of RMB788.8 million for the same period. The difference between its net cash generated from operating activities and its profit before taxation was mainly due to a net increase in working capital of RMB455.1 million and income tax paid of RMB92.7 million, partially offset by adjustments for certain non-cash items, primarily including impairment loss on financial assets measured at amortised cost of RMB104.0 million, finance costs of RMB29.8 million and depreciation of property and equipment of RMB18.2 million. The net increase in working capital was primarily attributable to an increase in accounts receivables and bills receivables of RMB1,013.1 million, partially offset by an increase in accrued payroll and welfare expenses of RMB424.8 million. The increases in accounts receivables and bills receivables as well as accrued payroll and welfare expenses were primarily due to the growth of its business.

Net cash generated from operating activities in 2015 was RMB295.2 million, as compared with profit before taxation of RMB289.2 million. The difference between its net cash generated from operating activities and its profit before taxation was mainly due to a net increase in working capital of RMB100.5 million and income tax paid of RMB33.5 million, partially offset by adjustments for certain non-cash items, primarily including impairment loss on financial assets measured at amortised cost of RMB63.4 million, finance costs of RMB26.4 million, equity-settled share-based payment expenses of RMB18.0 million and depreciation of property and equipment of RMB17.4 million. The net increase in working capital was primarily attributable to an increase in accounts receivables and bills receivables of RMB550.3 million,

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partially offset by an increase in accrued payroll and welfare expenses of RMB209.4 million, and a decrease in other non-current assets of RMB204.3 million. The increase in accounts receivables and bills receivables and the increase in accrued payroll and welfare expenses were primarily due to the growth of the Target Group’s business. The decrease in other non-current assets was primarily due to the return of deposits from certain of its customers upon satisfactory performance of its contract liabilities.

Cash flows (used in)/from investing activities

Net cash used in investing activities in the three months ended 31 March 2018 was RMB1.3 million, primarily attributable to advance to related parties of RMB12.7 million, partially offset by repayments from related parties of RMB10.9 million.

Net cash generated from investing activities was RMB4.6 million in 2017, primarily attributable to repayments from related parties of RMB40.2 million and proceeds from disposal of investment properties of RMB6.7 million, partially offset by purchase of convertible note measured at fair value through profit or loss of RMB20.0 million and purchase of property and equipment of RMB18.5 million.

Net cash generated from investing activities in 2016 was RMB134.1 million, primarily attributable to repayments from related parties of RMB225.1 million, partially offset by advance to related parties of RMB67.0 million and purchase of property and equipment of RMB27.1 million.

Net cash used in investing activities in 2015 was RMB294.9 million, primarily attributable to advance to related parties of RMB1,402.9 million, partially offset by repayments from related parties of RMB1,089.9 million.

Cash flows (used in)/from financing activities

Net cash generated from financing activities in the three months ended 31 March 2018 was RMB1,539.9 million, primarily attributable to capital injection of RMB8,357.0 million by CRE Corp, one of its controlling shareholders, partially offset by consideration paid for the acquisition of subsidiaries under common control of RMB6,908.0 million in connection with its acquisition of PRC Holdco.

Net cash generated from financing activities was RMB1,103.4 million in 2017, primarily attributable to conditional capital injection of RMB1,253.9 million and advance from related parties of RMB1,040.2 million, partially offset by repayment to related parties of RMB1,164.0 million.

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Net cash used in financing activities in 2016 was RMB34.5 million, primarily attributable to repayment to related parties of RMB1,458.4 million and consideration paid for the acquisition of Tianjin E-House Jinyue Real Estate Brokerage Co., Ltd. of RMB153.6 million, partially offset by advance from related parties of RMB1,681.0 million.

Net cash used in financing activities in 2015 was RMB111.3 million, primarily attributable to dividends paid of RMB600.0 million and repayment to related parties of RMB379.8 million, partially offset by advance from related parties of RMB620.7 million and a net increase in bank borrowings of RMB230.0 million.

Working Capital

The Target Group intends to finance its future working capital requirements with cash generated from its operations, external borrowings, the net proceeds from the Global Offering and other funds raised from the capital markets from time to time. Its future working capital requirements will depend on a number of factors, including, but not limited to, its operating income, its business expansion plan and hiring qualified employees for its business operations.

Based on its available cash balance, the anticipated cash flow from operations, available facilities and the anticipated net proceeds from the Global Offering, the directors of E-House Enterprise are of the opinion that they will have sufficient funds to meet its working capital requirements and financial requirements for capital expenditure for at least the next 12 months from the date of the Prospectus.

CAPITAL EXPENDITURES

The Target Group’s capital expenditures during the track record period were primarily related to purchases of property, equipment, and intangible assets and capitalised prepayment. Leasehold improvements, mainly including capitalised decoration and maintenance costs, account for the majority of property and equipment purchases. The following table sets forth the breakdown of its capital expenditures for the periods indicated:

Purchase of and deposits placed for property and equipment Purchase of intangible assets Total	For the year ended 31 December For the three months ended 31 March 2015 2016 2017 2017 2018 (in thousands of RMB) 6,468 27,106 18,462 7,667 1,341 299 21 241 – – 6,767 27,127 18,703 7,667 1,341	For the year ended 31 December For the three months ended 31 March 2015 2016 2017 2017 2018 (in thousands of RMB) 6,468 27,106 18,462 7,667 1,341 299 21 241 – – 6,767 27,127 18,703 7,667 1,341
		1,341

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CONTRACTUAL COMMITMENTS

Capital Commitments

The Target Group’s capital commitments primarily relate to purchases of real properties and other fixed assets and decoration of such properties. The following table sets forth the breakdown of its capital commitments as of the dates indicated:

										As of
			**As **	**of **	**31 **	December			**31 **	March
			2015			2016		2017		2018
					_(in _	_thousands _	_of _	RMB)
Contracted	but	not
provided	for:
Property	and	equipment	856			723		1,300		1,083

Operating Lease Commitments

During the track record period, the Target Group leased a number of buildings under operating leases. Operating lease payments represent rentals payable by its Group for certain of its office premises and staff quarters. Leases for buildings were negotiated for a term ranging from six months to ten years. The table below sets forth its future minimum lease payments payable under non-cancellable operating leases as of the dates indicated:

Within one year In the second to fifth year inclusive Over five years Total	As of 31 December 2015 2016 2017 (in thousands of RMB) 60,401 39,436 61,656 69,569 66,444 91,093 17,741 11,981 7,577 147,711 117,861 160,326	As of 31 March 2018 60,644 86,047 6,788
		153,479

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INDEBTEDNESS

The Target Group’s indebtedness consists of short-term and long-term borrowings from commercial banks and amount due to related parties of non-trade nature. As of 31 December 2015, 2016 and 2017 and 31 March 2018, its total indebtedness amounted to RMB762.7 million, RMB771.7 million, RMB707.9 million, and RMB805.0 million. As of 31 May 2018, the latest practicable date for the purpose of the indebtedness statement, the Target Group had total indebtedness of RMB352.9 million, consisting of bank borrowings of RMB350.0 million and unsecured and unguaranteed amount due to a related party of non-trade nature of RMB2.9 million which is repayable on demand.

As of 31 December 2015, 2016 and 2017 and 31 March 2018, and 31 May 2018, being the latest practicable date for the purpose of indebtedness statement, its bank borrowings were as follows:

Secured and unguaranteed Unsecured and guaranteed Total Amounts repayable: Within one year Within a period of more than one year but not exceeding two years Total	As of 31 December As of 31 March 2015 2016 2017 2018 (in thousands of RMB) 350,000 290,000 – – 100,000 100,000 450,000 550,000 450,000 390,000 450,000 550,000 160,000 390,000 450,000 550,000 290,000 – – – 450,000 390,000 450,000 550,000	As of 31 May 2018 – 350,000
		350,000
		350,000 –
		350,000

The Target Group primarily borrows loans from commercial banks to supplement its working capital and finance its expenditures. Its bank loans as of 31 December 2015, 2016 and 2017, 31 March 2018, and 31 May 2018, were all denominated in Renminbi. As of 31 May 2018, the Target Group had no unutilised credit facilities obtained from any banks or financial institutions.

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The table below sets forth the effective interest rates (per annum) of its secured bank borrowings as of the dates indicated:

				As of	As of
	As of 31 December			31 March	31 May
	2015	2016	2017	2018	2018
Effective interest rate:
Fixed-rate borrowings	5.06% ~	4.84% ~	4.82% ~	4.35%~	4.35%~
	6.04%	6.04%	6.04%	5.22%	5.00%

During the track record period and as of 31 May 2018, all of its bank loans were either secured over certain properties of Shanghai Wanju Investment Partnership (Limited Partnership), the general partner of which is a subsidiary of one of its Controlling Shareholders, E-House (China) Holdings or guaranteed by E-House Management, a subsidiary of one of its Controlling Shareholders, E-House (China) Holdings. All guarantees and pledges provided by the Target Group’s related parties will be released before listing.

Except as aforesaid and apart from intra-group liabilities, as of 31 May 2018, the Target Group did not have any other loan issued and outstanding or any loan agreed to be issued, bank overdrafts, loans and other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges hire purchase commitments, or guarantees. Its directors confirm that there was no material covenant on any of its outstanding debt and there was no breach of any covenants during the track record period and up to the latest practicable date. Its directors further confirm that the Target Group did not experience any difficulty in obtaining bank loans and other borrowings, default in payment of bank loans and other borrowings or breach of covenants during the track record period and up to the latest practicable date.

CONTINGENT LIABILITIES

Its contingent liabilities during the track record period arose from financial guarantees it provided to commercial banks in 2017 and the three months ended 31 March 2018 for certain individual property buyers in the secondary real estate market in Wuhan. Wuhan Fangyou Century Real Estate Trading Service Co., Ltd. (“ Wuhan Fangyou ”), one of its subsidiaries providing real estate brokerage network services, entered into arrangements with several commercial banks in Wuhan to provide such transitional guarantees for property buyers.

In Wuhan, due to the specific registration procedures, the competent authorities normally require certain processing time after transfer of title (up to one to three months) before they issue the certificate of third party right in respect of the mortgage over the property. As such, in Wuhan, commercial banks providing mortgage loans generally require transitional guarantee from third parties in respect of the loans of property buyers. According to Cushman & Wakefield, it is a common industry practice for brokerage firms or third parties whose creditworthiness is acceptable to the relevant lending banks to provide transitional guarantees

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APPENDIX III

for property buyers in the Wuhan secondary real estate market so as to facilitate the transaction process. For any mortgage loan guaranteed by Wuhan Fangyou, the guarantee will be released upon receipt by the bank of the certificate of third party right in respect of the mortgage over the relevant property from the property buyer when it is issued by the relevant authorities, which in Wuhan would typically take up to one to three months. Generally, the borrower is able to provide to the mortgagee bank the certificate of third party right within one to three months from the transfer of title of the property. Until then, the mortgage loan proceeds are placed in a restricted account of the mortgagee bank and cannot be withdrawn by the borrower or the property seller. Some banks require Wuhan Fangyou to make a deposit ranging from RMB100,000 to RMB300,000. If the borrower defaults on payment of his or her mortgage loan before the guarantee is released, the mortgagee bank may deduct the payment due from the deposit and require that Wuhan Fangyou immediately repay the amount due from the borrower pursuant to the guarantee. The Target Group requires the borrower to provide an undertaking to it under which its may claim from the borrower any amount which its pays to the mortgagee banks due to the borrower’s default. In line with industry practice, its does not conduct any independent credit checks on the borrowers and rely on the credit evaluations conducted by the mortgagee banks. Its do not charge the borrowers for the guarantees provided, and therefore its did not derive any revenue from such guarantees during the track record period. However, the Target Group believes that, by providing transitional guarantees for property buyers who are customers of Fangyou-branded brokerage stores, its helps these brokerage stores more effectively compete with national brokerage chains in the Wuhan secondary real estate market. Due to their limited business scale and assets, many small and medium-sized real estate brokerage firms do not meet the standards set by the relevant lending banks for the provision of transitional guarantees. These brokerage firms often engage third parties, such as guarantee companies, to provide such guarantees for their customers, which generally requires the payment of service fees. The Target Group considers Wuhan an important market for it to expand its real estate brokerage network services. Through transitional guarantees for property buyers and other empowerment services free of charge, its aims to attract more small and medium-sized brokerage firms to join its Fangyou network. Therefore, so long as the provision of transitional guarantees remains a common industry practice, it plans to continue to provide such guarantees for property buyers who are customers of Fangyou-branded brokerage stores in Wuhan.

As of 31 December 2015, 2016, 2017 and 31 March 2018, Wuhan Fangyou provided financial guarantees to banks in a total amount of nil, nil, RMB85.3 million and RMB52.2 million, respectively. Those guarantees not released as of 31 December 2017 had been released in full by the end of March 2018. As of 31 May 2018, the latest practicable date for the purpose of contingent liabilities, its contingent liabilities in connection with financial guarantees were RMB53.3 million. Its directors confirm that during the track record period and up to the latest practicable date, the Target Group did not experience any default on mortgage guarantees by property buyers that had a material adverse effect on its financial condition and results of operations. After taking into account (i) the nature of the underlying loans, and (ii) other relevant facts and circumstances, its directors are of the view that default probabilities of those loans are relatively low, and therefore no provisions have been made.

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Save as disclosed above, during the track record period and up to the latest practicable date, its did not have any material contingent liabilities, guarantees or any litigations or claims of material importance, pending or threatened against any member of the Target Group. Its directors have confirmed that there has not been any material change in the contingent liabilities of the Target Group since 31 March 2018.

FINANCIAL RATIOS

				As of/for the	As of/for the
	As of/for the year ended 31			three months
		December		ended 31 March
	2015	2016	2017	2017	2018
				(unaudited)
Operating profit margin(1)	11.1%	19.7%	20.7%	21.0%	26.7%
Net profit margin(2)	6.5%	14.3%	16.5%	15.8%	16.4%
Return on assets(3)	5.2%	16.3%	14.4%	12.8%	8.8%
Return on equity(4)	11.8%	48.4%	42.2%	35.2%	23.2%
Current ratio(5)	151.0%	132.2%	136.5%	142.4%	156.3%
Gearing ratio(6)	49.9%	26.7%	20.8%	30.1%	17.7%

Notes:

• (1) Operating profit margin equals its operating profit for the year/period divided by revenue for the year/period. For definition of operating profit, please see the subsection headed “Non-IFRS Measures – Operating Profit and Operating Profit Margin.”

• (2) Net profit margin equals its profit and total comprehensive income for the year/period divided by revenue for the year/period.

• (3) Return on assets for the year ended 31 December 2015, 2016 and 2017 equals profit and total comprehensive income for the year divided by the average of the total assets at the beginning of the year and the total assets as of the end of the year. Return on assets for the three months ended 31 March 2017 and 31 March 2018 equals profit and total comprehensive income for the period multiplied by four, divided by the average of the total assets at the beginning of the period and the total assets as of the end of the year.

• (4) Return on equity for the year ended 31 December 2015, 2016 and 2017 equals profit and total comprehensive income for the year divided by the average of the total equity at the beginning of the year and the total equity as of the end of the year. Return on equity for the three months ended 31 March 2017 and 31 March 2018 equals profit and total comprehensive income for the period multiplied by four, divided by the average of the total equity at the beginning of the period and the total equity as of the end of the period.

• (5) Current ratio equals its current assets divided by current liabilities as of the end of the year/period.

• (6) Gearing ratio equals total debt divided by total equity as of the end of the year/period. Total debt consists of all interest-bearing bank loans.

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Analysis of Key Financial Ratios

Operating profit margin and net profit margin

Its operating profit margin increased from 11.1% in 2015 to 19.7% in 2016, and further to 20.7% in 2017. Its net profit margin increased from 6.5% in 2015 to 14.3% in 2016, and further to 16.5% in 2017. The increases in its net operating profit margin and net profit margin during the track record period was primarily due to its improved operational efficiency and increasing economies of scale, which resulted in decreases in staff costs and most other expenses as percentages of its revenue. Such increases from 2016 to 2017 were partially offset by an increase in advertising and promotion expenses as a percentage of revenue, as the Target Group provided more marketing and promotion services for its developer customers and increased marketing activities to promote its “Fangyou” brand in 2017.

Its operating profit margin increased from 21.0% for the three months ended 31 March 2017 to 26.7% for the three months ended 31 March 2018. Its net profit margin increased from 15.8% for the three months ended 31 March 2017 to 16.4% for the three months ended 31 March 2018. The increases was primarily due to a further improvement in its operational efficiency.

Return on assets and return on equity

The Target Group’s return on assets increased from 5.2% in 2015 to 16.3% in 2016, and its return on equity increased from 11.8% in 2015 to 48.4% in 2016, primarily due to a significant increase in its profit and total comprehensive income, which in turn was primarily due to the growth in revenue from its real estate agency services in the primary market as well as its improved operational efficiency. The lower return on assets and return on equity in 2015 were also due to the higher opening balances of total assets and total equity in 2015, which was before a distribution of dividends of RMB600.0 million and a deemed distribution of RMB1,280.6 million to then shareholders of E-House Management and Beijing Jinyue upon completion of certain internal corporate reorganisation of E-House (China) Holdings.

Its return on assets decreased from 16.3% in 2016 to 14.4% in 2017 and from 12.8% in the three months ended 31 March 2017 to 8.8% in the three months ended 31 March 2018. Its return on equity decreased from 48.4% in 2016 to 42.2% in 2017 and from 35.2% in the three months ended 31 March 2017 to 23.2% in the three months ended 31 March 2018. These decreases were primarily due to the significant increases in its total assets and total equity. The increase in its total assets was primarily due to investments from new Shareholders in 2017 and the three months ended 31 March 2018, and the increase in its total equity was primarily due to its increasing profit and retained earnings.

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Current ratio

Its current ratio decreased from 151.0% as of 31 December 2015 to 132.2% as of 31 December 2016 primarily due to because its current liabilities, primarily including accrued payroll and welfare expenses, tax payables and amounts due to related parties, increased by a greater percentage than its current assets. In terms of absolute amounts, however, its current assets increased faster than its current liabilities from 31 December 2015 to 31 December 2016. Its current ratio remained relatively stable at 136.5% as of 31 December 2017, compared with 132.2% as of 31 December 2016. Its current ratio increased to 156.3% as of 31 March 2018 primarily due to the increase in cash and cash equivalents as a result of capital injection by CRE Corp, one of its controlling shareholders.

Gearing ratio

Its gearing ratio decreased from 49.9% as of 31 December 2015 to 26.7% as of 31 December 2016, and further to 20.8% as of 31 December 2017 and 17.7% as of 31 March 2018 primarily due to the increases in its total equity resulting from its increasing profit and retained earnings.

PROSPECTS OF BUSINESS

Its Strategies

To strengthen its position as China’s leading real estate transaction service provider, the Target Group intends to pursue the following strategies:

Strengthen its leadership position in real estate agency services in the primary market

Real estate agency services in the primary market have traditionally been its core business and accounted for a large percentage of its revenue. The Target Group plans to further strengthen its leadership position in the industry by further expanding its geographical footprint in China. The Target Group intends to further expand its presence in third- and fourth-tier cities and achieve complete nationwide coverage. Its plan to enter into 52 additional cities (consisting of 51 third- and fourth-tier cities and one second-tier city) and further improve its service capacity in 38 of the 186 cities it currently covers. To achieve these objectives, it plans to lease additional office space for the expanded operations, purchase equipment for the daily operations of the expanded operations, and recruit additional employees for the expanded operations. In addition, it intends to seize the opportunities presented by the continued consolidation in China’s real estate development industry and further enhance its strategic cooperation with the Top 100 Real Estate Developers. It has entered into strategic cooperation agreements with 46 leading real estate developers in China. It believes its comprehensive and in-depth strategic cooperation with these real estate developers will further drive the growth in the total GFA and transaction value of properties it sells.

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Further expand its Fangyou network and the revenue source of its Fangyou brokerage network

The Target Group created the Fangyou real estate brokerage network with an innovative “S2B2C” business model in early 2016. Since then, it has created a nationwide brokerage network with 5,211 Fangyou-branded stores in 32 cities as of 31 March 2018. It plans to accelerate the expansion of its brokerage network, aiming to increase the number of Fangyou-branded stores to 10,000 and cover approximately 52 cities by the end of 2018. To attract more brokerage firms to join the Fangyou network, it plans to provide them with more and better empowerment services, helping them better serve their individual customers. It is continuously developing its E-House Fangyou Management System and related mobile apps. These tools are designed to help Fangyou-branded stores realize digitalised efficient management of their operations, make it more convenient for brokers to publish their inventories and for their prospective customers to find housing products. By increasing the efficiency and attractiveness of its brokerage network, it aims to increase the loyalty of Fangyou-branded stores.

The Target Group envisions that a nationwide brokerage network can become a large and efficient network for it to source buyers of new properties for its developer customers, further enhancing its value propositions to real estate developers. In 2017 and the three months ended 31 March 2018, it cooperated with Fangyou-branded stores and other cooperating real estate brokerage firms mainly in three cities, Hangzhou, Shanghai and Zhengzhou, to source buyers of new properties for its developer customers. Commissions received from these sales have become a new and fast growing revenue source for it. In 2017, 2,093 new property units with a total GFA of approximately 190,005 square metres were sold to buyers it sourced for its developer customers in cooperation with Fangyou-branded stores and other real estate brokerage firms. It intends to duplicate its success in more cities, and cooperate with brokerage firms in approximately 52 cities across China to source buyers of new properties for its developer customers by the end of 2018. Leveraging its internal resources and external contacts in the real estate industry, it also plans to further diversify its revenue sources through its Fangyou network, such as by offering apartment rental, real estate financing, relocation and home decoration services provided by its business partners. It will continue to expand its service offerings and are committed to be a one-stop solution provider for real estate industry participants.

Further enhance its influence in the real estate industry

Brand recognition is important to the development of its business. “E-House” and “CRIC” are among the best known and most reputable brand names in China’s real estate industry. The Target Group plans to further promote its brand recognition and industry influence by regularly organizing industry conferences, seminars, product releases and other promotional events.

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Its ratings and rankings of real estate developers are well received in China’s real estate industry. Inclusion in its rankings is often regarded as an indicator of prestige by real estate developers. It intends to further optimise its assessment methodologies to maintain and enhance the quality of its rating and ranking products, and thereby further strengthen its reputation and market influence.

Invest in research and innovation

The Target Group plans to continue to make significant investments in research and development to promote innovation in each of its major business lines.

For its real estate agency services in the primary market its plans to further optimise its marketing and management system to improve its operational efficiency.

For its real estate data and consulting services it plans to further expand the variety and scope of its databases and upgrade its core data management platform, which its believes will help it develop new and innovative data applications. In addition, it plans to explore innovative marketing channels for its real estate data and consulting services. For example, it intends to promote its research and data analytical capability through new media platforms to enhance its market influence. Moreover it aims to expand the application scenarios of its data capability to add new sources of revenue. For example it plans to explore the application of real estate data analytics in governmental activities. Specific industry sectors on which it plans to increase its research efforts include: (i) featured towns (特色小鎮), (ii) commercial properties, (iii) uses of commercial space such as shared work space and rental apartments, (iv) cultural and tourist properties, (v) health and senior care properties, and (vi) industrial properties. For each of these sectors, it plans to develop comprehensive databases as well as rating and assessment systems to serve a variety of customers, including, among others, governments, real estate developers, service providers and investors.

For its real estate brokerage network services, it plans to further improve its information management solutions for Fangyou-branded stores’ brokerage services. It has developed a real estate management system and mobile apps designed for Fangyou-branded stores and their brokers. It plans to continuously optimise these tools to meet brokers’ evolving needs and help them improve business management efficiency.

In addition to its research and innovation efforts in each of its three business lines, it has also internally established the Real Estate Innovation Centre to carry out research on innovative businesses, with a view to expanding the scope of consulting services that it provide to its clients. It primarily focuses on researching innovative businesses that combine different sectors, such as shared work space and serviced apartments, and various types of innovation through which traditional real estate companies realize their attempted business transformation.

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Invest in its employees to better serve its clients

As a service provider relies on qualified employees to provide quality services to its clients. Maintaining a team of experienced and capable employees is of great importance to its business operations and future development. Therefore its are committed to recruiting talented employees and continuously improving its employees’ service capacity through internal and external trainings. It plans to standardise its recruitment procedures and expand its recruitment channels, such as joint cultivation of prospective employees with educational institutions. It plans to cooperate with vocational colleges to establish education programs that are tailored specifically to meet its requirements for its future employees. To cultivate its potential future employees, it plans to help cooperating vocational colleges establish workplace simulation training studios and award scholarships to outstanding students. In terms of training it plans to establish training centres in major cities where its operates its business. For its management personnel, while it provides them with numerous opportunities to improve their capabilities, it will also put in place systematic evaluation and assessment procedures to ensure they are qualified to undertake more responsibilities.

MATERIAL INVESTMENTS, ACQUISITIONS, DISPOSALS AND MERGERS

Corporate reorganisation of E-House Enterprise’s businesses

On 30 July 2015, E-House Enterprise began an internal corporate reorganisation to acquire the real estate agency business in the primary market by entering into a reorganisation agreement with E-House Management Company Limited (and certain of its subsidiaries), following which certain internal reorganisation steps were taken, namely:

• on 11 August 2015, E-House Enterprise (China) Group Co., Ltd (a wholly-owned subsidiary of E-House Enterprise) entered into a share transfer agreement with E-House Enterprise Management Group Limited (a wholly-owned subsidiary of E-House Management Holdco), pursuant to which the latter agreed to sell, and the former agreed to purchase, the entire equity interests in Shanghai E-House Xiangyue Real Estate Sales Co., Ltd for a consideration of approximately RMB50 million;

• on 15 September 2015, Shanghai E-House Xiangyue Real Estate Sales Co., Ltd entered into a share transfer agreement with Shanghai TED Internet Technology Co., Ltd, pursuant to which the latter agreed to sell, and the former agreed to purchase, the entire equity interests in Shanghai Lituo Real Estate Brokerage Co., Ltd for a consideration of approximately RMB4.22 million;

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• Shanghai E-House Xiangyue Real Estate Sales Co., Ltd, by itself or through its subsidiaries, entered into further share transfer agreements with E-House Management Company Limited or its subsidiaries, pursuant to which the former acquired the latter equity interests in various subsidiaries that operated in the real estate agency business in the primary market; and

• on 31 December 2015, E-House Enterprise (China) Group Co., Ltd entered into an agreement with E-House Enterprise Management Group Limited and Beijing Yijiyeon Enterprise Management Consultancy Co., Ltd., pursuant to which the latter transferred real estate agency businesses in the primary market to the former or its subsidiaries and ceased to carry out any real estate agency businesses in the primary market thereafter (“ Business Transfer ”), except that the latter continued to act as a collection agent on behalf of the Target Group in respect of those incomplete real estate agency contracts. In addition, pursuant to such agreement the Target Group will assume the real estate agency businesses in the primary market, labour work force, acquired certain property and equipment and assumed the obligation in respect of the outstanding accrued payroll that are specifically identified to the real estate agency businesses in the primary market. The net liabilities to the real estate agency businesses in the primary market being transferred to the Target Group amounted to RMB71,545,000. As such, the latters will have to pay a consideration of RMB71,545,000 to the Target Group for this business transfer. The business transfer was completed on 31 December 2015 and the consideration receivables in relation to the business transfer will be settled before listing.

As a result of the internal corporate reorganisation, E-House Enterprise (China) Group Co., Ltd acquired from E-House (China) Management Company Limited the real estate agency business in the primary market and both its real estate agency business in the primary market and its real estate data and consulting services business were operated by the former and its subsidiaries. The internal corporate reorganisation was completed on 31 December 2015.

Privatisation of E-House Enterprise

The E-House (China) Holdings Merger Agreement

Its business was wholly-owned by E-House Enterprise at the time of its privatisation. On 15 April 2016, E-House Enterprise entered into an agreement and plan of merger with E-House Holdings Limited and E-House Merger Sub Ltd. (then a wholly-owned subsidiary of E-House Holdings) (“ E-House (China) Holdings Merger Agreement ”) pursuant to which E-House Merger Sub Ltd. would merge with and into E-House Enterprise, such that E-House Enterprise would continue as the surviving corporation and a wholly-owned subsidiary of E-House Holdings Limited.

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The offer price for the cancellation of each issued and outstanding ordinary share was a cash amount of US$6.85 per share (US$6.80 per ADS after deducting US$0.05 cancellation fee per ADS), without interest and net of any applicable withholding taxes. This reflected a market capitalisation of E-House Enterprise of approximately US$987 million.

The buyer group

The buyer group to the merger, being the beneficial owners of E-House Holdings Limited, were:

• (i) Mr. Zhou Xin (周忻), together with corporations controlled by him, namely Kanrich Holdings Limited, On Chance Inc., and Jun Heng Investment Limited (holding in aggregate approximately 51.6% of E-House (China) Holdings after the merger);

• (ii) Mr. Shen Nanpeng, together with corporations he controlled, namely Smart Create Group Limited and Smart Master International Limited; and

• (iii) SINA Corporation.

On 30 December 2016, E-House Holdings Limited exercised an option pursuant to the above merger agreement to repurchase all of its shares held by SINA Corporation for a consideration of 30% of the ordinary shares of Leju and a cash payment of approximately US$129 million. Thus SINA Corporation ceased to be a shareholder of E-House Holdings Limited or its subsidiaries (including its businesses) on 30 December 2016. As at 30 December 2016, the issued share capital of E-House Holdings Limited was held as to 90.54% by Mr. Zhou and corporations controlled by him and as to 9.46% by Mr. Shen Nanpeng and corporations controlled by him.

Acquisition of Beijing Hongju

On 6 March 2018, Shanghai Urban Development (Group) Co., Ltd. (a substantial shareholder of a subsidiary of E-House Enterprise) entered into a share transfer agreement with Ms. Rui Jun, an Independent Third Party, pursuant to which Shanghai Trading acquired the entire shareholding interest in Beijing Hongju Real Estate Brokerage Co., Ltd. (“Beijing Hongju”), a company established in the PRC on 17 April 2014, for a cash consideration of RMB300,000. The registration of transfer was completed on 12 March 2018 and all relevant regulatory approvals in respect of this transaction have been obtained in accordance with PRC Laws. Beijing Hongju is a real estate brokerage business and was acquired to enhance the quality of services provided to users of the Target Group’s real estate brokerage network.

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DISCUSSION AND ANALYSIS ON BUSINESS

The Target Group is the leading real estate transaction service provider in China as it has the largest revenue from real estate agency services in the primary market in 2017, the most cities with both real estate transaction data and land data covered, and the second largest real estate brokerage network by the number of stores as of 31 December 2017, according to the Cushman & Wakefield Report. It mainly offers real estate agency services in the primary market, real estate data and consulting services and real estate brokerage network services. It serves real estate developers, buyers, brokerage firms and other industry participants, covering various aspects of the real estate value chain.

Its business benefits from its close relationships with many of China’s most prominent real estate developers, particularly in light of the continuing trend of market consolidation in the real estate development industry. It has served all of the Top 100 Real Estate Developers or their respective related companies in China. Country Garden, Vanke and Evergrande, the top three of the Top 100 Real Estate Developers and also its shareholders, reported combined contracted sales of approximately RMB1.6 trillion in 2017. It has entered into strategic cooperation agreements with 46 leading real estate developers with terms ranging from one year to six years. Its strategic relationships with these leading developers increase the stability and predictability of customer demand for its services across its three major business lines. As of 31 March 2018, it had a contracted pipeline of a total GFA of 227.2 million square meters in 1,068 projects for its real estate agency services in the primary market.

Its three major business lines complement each other, generating powerful business synergies and abundant cross-selling opportunities. It collects a large amount of real estate data from the operations of its agency and brokerage network services, which continuously strengthen its proprietary databases and allow it to provide better data and consulting services. It leverages its data capabilities to provide real estate developers with various services at the early stages of property development projects, such as market research reports, positioning analysis and feasibility studies, which better positions it to gain agency contracts. In addition, it can help its developer customers expand their sales channels by sourcing buyers of new properties through real estate brokerage firms it cooperates with. Propelled by its three business engines and its asset-light business model, it experienced significant growth during the track record period. Its revenue increased from RMB2.7 billion in 2015 to RMB4.6 billion in 2017 and its profit and total comprehensive income for the year increased from RMB177.2 million in 2015 to RMB765.3 million in 2017.

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Its results of operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following:

Its relationships with real estate developers

Real estate developers in China are its most important customers. During the track record period, it generated revenue primarily from the provision of real estate agency services in the primary market to its developer clients. Revenue from its real estate agency services in the primary market accounted for 86.0%, 89.3%, 84.7% and 79.0% of its total revenue in 2015, 2016 and 2017 and the three months ended 31 March 2018, respectively. Its business and results of operations are affected by its ability to maintain and grow the GFA it markets and sells on behalf of real estate developers and its ability to realise the sales targets set by its developer customers. Real estate developers are major customers of its real estate data and consulting services. Its real estate brokerage network services currently also generate most of the revenue from commissions paid by real estate developers for sourcing buyers of new properties through Fangyou-branded stores and other real estate brokerages firms it cooperates with.

The success of its innovative real estate brokerage service business model

In order to maintain the Target Group’s business growth, apart from strengthening its traditional real estate agency business in the primary market, it has also developed an innovative “S2B2C” business model to operate its real estate brokerage network services under its Fangyou brand. Under this new business model, it encourages small and medium-sized brokerage firms to join its Fangyou network to utilise its resources to realise their business growth. Almost all of the revenue generated from its real estate brokerage network services is from the sales of real estate property units in the primary market through its Fangyou brokerage network. It cooperates with small and medium-sized brokerage firms to source buyers of new properties for its developer customers. For every real estate unit in the primary market sold to property buyer sourced by brokerage firms, it is entitled to retain a certain percentage of the commission real estate developers pay to the brokerage firms. This type of off-site sale generates a stable source of income for its real estate brokerage network services.

Its ability to continuously upgrade its existing products and develop new products for its real estate data and consulting services that are appealing to its clients

The operation of its real estate data and consulting services relies heavily on its ability to upgrade its existing products and develop new products that are appealing to its clients. Relying on the data technology, it has developed several proprietary real estate databases, systems and software for its real estate data and consulting services, which together with its analytical capability, enable it to provide insightful data-based consulting and information services to its clients. It products provide its clients with valuable information for their business operations and enable them to make informed decisions. To make sure its real estate data and consulting services are continuously attractive to its clients, it needs to be sensitive

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to the evolving customer demand and upgrade its products to meet their demand. It also needs to keep abreast of the latest development of new technologies and develop new products to capture new opportunities for its business growth.

Its ability to manage its costs and expenses

As a service provider, it relies on qualified employees to provide services to its clients. As a result, its staff costs are the largest cost it incurs in its business operations and its ability to manage its staff costs affect its results of operations. In 2015, 2016 and 2017 and the three months ended 31 March 2018, its staff costs were RMB1,736.7 million, RMB2,401.9 million, RMB2,623.3 million and RMB503.4 million, respectively, representing approximately 63.9%, 60.1%, 56.6% and 54.1% of the total revenue in each corresponding period. Its staff costs consist primarily of salaries, bonuses, commissions and social welfare contributions paid to or on behalf of its employees. As part of its efforts to manage its staff costs and improve its profit margins while ensuring consistent service quality, it utilises various measures to control its staff costs. These measures include streamlining and standardising its real estate agency services in the primary market, organising systematic and regular staff trainings and strengthening its data capability to reduce its reliance on labour. The application of these measures not only improves its service efficiency, but also enables it to maintain a lower level of employee turnover rate.

During the track record period, the Target Group derives all of its revenue from (i) real estate agency services in the primary market, (ii) real estate data and consulting services, and (iii) real estate brokerage network services. The following table sets forth a breakdown of its revenue by income source for the periods indicated:

Real estate agency services in the primary market Real estate data and consulting services Real estate brokerage network services Total

For the year ended 31 December For the three months ended 31 March 2015 2016 2017 2017 2018 RMB % RMB % RMB % RMB % RMB % (in thousands, except percentages) (unaudited) 2,336,540 86.0 3,568,575 89.3 3,926,722 84.7 654,706 76.6 734,757 79.0 379,906 14.0 396,397 9.9 629,422 13.6 185,758 21.7 167,633 18.0 – – 31,157 0.8 77,216 1.7 14,330 1.7 27,812 3.0 2,716,446 100.0 3,996,129 100.0 4,633,360 100.0 854,794 100.0 930,202 100.0

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Real estate agency services in the primary market

Revenue from real estate agency services in the primary market mainly consists of commissions it receives from real estate developers for its marketing and sales services. Real estate agency services in the primary market historically have been its predominant revenue source, and are expected to remain as such for the foreseeable future. Revenue from real estate agency services in the primary market is determined by the total value of new properties sold and the average commission rate. The total value of new properties sold in turn is determined by the total GFA and the average selling price of new properties sold. The following table sets forth the total GFA and total value of new properties sold as well as its average commission rate during the track record period:

				**For the **	three
	For the year ended			**months **	ended
	31 December			31 March
	2015	2016	2017	2017	2018
Total GFA of new properties sold
(millions of square metres)	26.1	35.5	37.2	6.2	6.6
Total value of new properties
sold (millions of RMB)	267,468	406,078	432,982	73,480	83,306
Average commission rate(1)	0.87%	0.88%	0.91%	0.89%	0.88%

Note:

(1) Average commission rate equals revenue derived from real estate agency services in the primary market divided by total value of new properties sold.

Revenue from real estate agency services in the primary market increased during the track record period primarily due to an increase in the total value of new properties sold. Its commission rates are generally determined by the prevailing rates in the relevant local markets, which are typically affected by competitive pressure and the level of difficulty in selling properties. During the track record period, its average commission rate remained stable, in line with the average commission rate for the overall primary real estate agency industry in China.

Real estate data and consulting services

Revenue from real estate data and consulting services mainly consists of data subscription fees for its data services, marketing and brand promotion fees in connection with its rating and ranking services and consulting fees for its tailored consulting services it receives from its customers. The increase in its revenue from real estate data and consulting services during the track record period was primarily due to the growth of its rating and ranking services. The revenue growth from 2016 to 2017 was also due to the launch of its transaction advisory services. Data subscription fees are determined based on the number of subscription accounts

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and scope of subscriptions, such as number of modules and number of cities covered. Subscription fees usually are charged upfront on annual basis. Marketing and brand promotion fees are determined on a project-by-project basis depending on the scope of rating and research data needed for marketing and brand promotion activities, whether it needs plan and execute marketing activities and costs incurred in marketing and promotion activities. Consulting fees are determined based on a project-by-project basis depending on complexity of each project, human resources and time it spends in each project, as well as expenses it incurs in each project. Both marketing and brand promotion fees and consulting fees are usually are paid by its clients on instalments.

Real estate brokerage network services

Revenue from real estate brokerage network services mainly consists of commissions it receives from real estate developers for sourcing buyers of new properties through Fangyoubranded stores and other real estate brokerage firms it cooperates with. The commissions it receives is determined by the total value of new properties sold for real estate developers and the average commission rate, which is typically higher than the commission rate of its real estate agency services in the primary market. In typical cases, 80% of such commissions are then paid to the brokerages that facilitated the sales, which are recorded as distribution expenses. It launched its real estate brokerage network services in January 2016. A small portion of revenue from real estate brokerage network services is generated from the service fees it charges to brokerage firms or their individual customers for completing real estate transactions at its E-House Real Estate Transaction Service Centres.

NUMBER OF EMPLOYEES AND REMUNERATION POLICIES

The following table sets forth the number of the Target Group’s employees by function as of 31 March 2018:

Function Sales and marketing Research and development Management, general and administrative Total	Number of Employees 17,773 807 1,416 20,004	% of Total 88.9 4.0 7.1
		100.0

Its success depends on its ability to attract, retain and motivate qualified personnel. As part of its retention strategy, it offer employees performance-based cash bonuses and other incentives in addition to base salaries.

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It primarily recruits its employees through job fairs and other recruitment activities in universities, job search websites and referrals by current employees. It has established internal policies and procedures for the recruitment, training and evaluation of its employees. The Target Group places special emphasis on the training of its employees, whom it considers to be its most valuable assets. All newly hired employees must undergo intensive training during their probation. It also invites outside experts, including experts from the E-House Research and Training Institute, to provide ongoing training to its employees. It has put in place internal policies on allocating training resources, implementing training plans, and collecting feedbacks. It conducts annual performance evaluations for all employees and use both performance-based bonuses and job promotions as incentives to encourage good performance. It primarily relies on internal training provided by its in-house training professionals and senior employees. In addition, in relation to employee training programmes provided by external parties, it incurred expenses of RMB2.0 million, RMB5.2 million, RMB5.5 million and RMB0.8 million in 2015, 2016 and 2017 and the three months ended 31 March 2018, respectively.

It has established a labour union and its employees may join the labour union voluntarily. It believes that it maintains a good working relationship with its employees. To promote a healthy and vibrant working environment, it periodically organizes recreational activities, such as basketball competitions and photography exhibition. During the track record period and up to the latest practicable date, it did not experience any significant labour disputes or any difficulty in recruiting staff for its operations.

For its real estate agency services in the primary market, it relies on its sales and marketing employees to promote and facilitate the sales of property units. It cannot fully control the interactions its employees have with prospective property buyers and other relevant parties. While it has adopted internal policies and has entered into relevant contracts to regulate the behaviour of its employees, if its employees nevertheless engage in inappropriate or illegal conduct, its reputation could be harmed. Furthermore, it could be held liable for actions taken by its employees, which could expose it to regulatory investigations and penalties.

FUTURE PLANS FOR MATERIAL INVESTMENTS

The Target Group intends to carry out the following investments:

• to develop and upgrade its real estate data systems by further expanding the industry sectors and subsectors covered by its existing data systems and to expand the scope of its consulting services. For the next five years, it plans to recruit approximately 360 employees in the first year and lease a total of approximately 2,900 square metres to accommodate those new employees and as server room. The Target Group also plans to lease an additional 1,900 square metres to accommodate an additional 230 employees and servers in the fourth year;

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• to further expand the geographical coverage of its real estate agency services in the primary market in China by entering into 52 additional cities and to further improve its service capacity in 38 of the 186 cities it currently covers;

• to further expand the geographical coverage of its real estate brokerage network services by establishing 173 additional E-House Real Estate Transaction Service Centres in 40 cities in the PRC over the next three years;

• to be used for its staff training to continuously improve its service capacity to recruit approximately 200 additional employees, including heads of training centres, training managers and training specialists;

• to improve its brand recognition through a variety of marketing and brand promotion activities;

• to improve its ability to provide one-stop real estate transaction services by establishing an integrated service management platform; and

• to supplement its working capital and for general corporate purposes.

FOREIGN EXCHANGE RISK

Certain of its cash and cash equivalent, amounts due from (to) related parties, and conditional investment fund received are denominated in foreign currency and are exposed to foreign currency risk. The Target Group currently does not have a foreign currency hedging policy as its directors consider that its foreign exchange risk exposure is minimal. It will consider hedging significant foreign currency exposure if such need arises.

II. MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2018 AS EXTRACTED FROM THE INTERIM RESULTS ANNOUNCEMENT

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue

The Target Group’s revenue increased by 44.4% from RMB1,925.2 million in the six months ended 30 June 2017 to RMB2,779.8 million in the six months ended 30 June 2018. This increase was primarily due to the growth of its real estate agency services in the primary market and real estate brokerage network services.

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Revenue derived from real estate agency services in the primary market increased by 44.1% from RMB1,546.1 million in the six months ended 30 June 2017 to RMB2,228.5 million in the six months ended 30 June 2018, primarily due to an increase in the total value of new properties sold.

Revenue derived from real estate brokerage network services increased by 367.1% from RMB35.9 million in the six months ended 30 June 2017 to RMB167.7 million in the six months ended 30 June 2018. This increase was primarily due to an increase in commissions received from developers for sourcing buyers of new properties through Fangyou-branded stores and other cooperating brokerage firms, as more brokerage firms cooperated with the Target Group to sell new properties in the six months ended 30 June 2018 and the great promotion of real estate brokerage network services by the Target Group.

Revenue derived from real estate data and consulting services increased by 11.8% from RMB343.2 million in the six months ended 30 June 2017 to RMB383.6 million in the six months ended 30 June 2018 primarily due to an increase in revenue from its transaction advisory services.

Staff costs

The Target Group’s staff costs increased by 20.6% from RMB1,115.0 million in the six months ended 30 June 2017 to RMB1,345.2 million in the six months ended 30 June 2018. Staff costs as a percentage of its revenue decreased from 57.9% in the six months ended 30 June 2017 to 48.4% in the six months ended 30 June 2018 primarily due to increasing economies of scale.

Advertising and promotion expenses

The Target Group’s advertising and promotion expenses showed a great increase by 84.7% from RMB71.2 million in the six months ended 30 June 2017 to RMB131.6 million in the six months ended 30 June 2018 primarily due to an increase in revenue.

Operating lease charges in respect of office premises

The Target Group’s operating lease charges in respect of office premises increased by 8.9% from RMB51.1 million in the six months ended 30 June 2017 to RMB55.7 million in the six months ended 30 June 2018, primarily due to an increase in office leasing expenses as a result of its business expansion.

Depreciation and amortisation expenses

The Target Group’s depreciation and amortisation expenses were relatively stable, remaining at RMB12.3 million in the six months ended 30 June 2017 and the six months ended 30 June 2018.

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Loss allowance on financial assets measured at amortised cost

The Target Group’s loss allowance on financial assets measured at amortised cost increased by 53.1% from RMB52.5 million in the six months ended 30 June 2017 to RMB80.4 million in the six months ended 30 June 2018, primarily due to the increase in loss allowance on accounts receivables, bills receivables and amounts due from related parties of trade nature, resulting from the growth in its business volume.

Consultancy expenses

The Target Group’s consultancy expenses remained stable, increased by 2.6% from RMB74.4 million in the six months ended 30 June 2017 to RMB76.3 million in the six months ended 30 June 2018.

Distribution expenses

The Target Group’s distribution expenses increased by 350.7% from RMB30.0 million in the six months ended 30 June 2017 to RMB135.3 million in the six months ended 30 June 2018, primarily due to the significant growth of its real estate brokerage network services segment.

Other operating costs

The Target Group’s other operating costs increased by 18.4% from RMB125.1 million in the six months ended 30 June 2017 to RMB148.1 million in the six months ended 30 June 2018, primarily due to the increases in travelling expenses, business entertainment expense and decoration expense as a result of its business growth.

Other income

The Target Group’s other income increased by 347.2% from RMB10.1 million in the six months ended 30 June 2017 to RMB45.1 million in the six months ended 30 June 2018, primarily due to the increase in government grants, which had no conditions imposed by the respective PRC government authorities.

Other gains and losses

The Target Group recorded net other gains of RMB0.6 million in the six months ended 30 June 2017 and net other losses of RMB18.4 million in the six months ended 30 June 2018. Its net other losses in the six months ended 30 June 2018 were primarily attributable to a net exchange loss of RMB44.4 million and a fair value gain on financial liabilities at fair value through profit or loss (“ FVTPL ”) of RMB23.9 million. The net exchange loss was primarily in connection with the effect of fluctuation of the exchange rate of the Target Group’s bank balances, denominated in foreign currencies. The fair value gain on financial liabilities at FVTPL was primarily due to a fair value change of the conditional investment fund received prior to the conversion to equity.

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Other expenses

The Target Group’s other expenses decreased from RMB5.8 million in the six months ended 30 June 2017 to approximately RMB0.1 million in the six months ended 30 June 2018, primarily due to a decrease in non-operation related professional fees.

Listing expenses

The Target Group did not record any listing expenses in the six months ended 30 June 2017. It recorded listing expenses of RMB39.5 million in the six months ended 30 June 2018 in connection with the Target Company’s global offering in July 2018 (the “ Global Offering ”).

Share of result of associates

The Target Group recorded share of profits of associates of RMB0.6 million in the six months ended 30 June 2017 and share of losses of associates of RMB2.0 million in the six months ended 30 June 2018. The share of losses in the six months ended 30 June 2018 was primarily attributable to a share of loss in a new real estate data and consulting services company, partially offset by a share of profit in a real estate marketing strategy company.

Finance costs

The Target Group’s finance costs increased by 12.6% from RMB10.3 million in the six months ended 30 June 2017 to RMB11.6 million in the six months ended 30 June 2018, primarily due to an increase in its average borrowing rate.

Income tax expense

The Target Group’s income tax expense increased by 147.5% from RMB82.7 million in the six months ended 30 June 2017 to RMB204.7 million in the six months ended 30 June 2018, primarily due to an increase in its profit before taxation. Income tax expense represents the Target Group’s total current tax and deferred tax credit for the six months ended 30 June 2018.

Deferred tax credit decreased from RMB42.4 million for the six months ended 30 June 2017 to RMB3.2 million for the six months ended 30 June 2018, primarily due to the decrease of accrued payroll and welfare expenses, partially offset by the increase of tax losses, resulting from the operation of real estate brokerage network services and the increase of loss allowance on financial assets measured at amortised cost.

Profit and total comprehensive income for the period

As a result of the foregoing, the Target Group’s profit and total comprehensive income for the period increased by 84.1% from RMB306.1 million in the six months ended 30 June 2017 to RMB563.5 million in the six months ended 30 June 2018.

– 169 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Non-IFRS Measures

To supplement the Target Group’s condensed consolidated financial information which are presented in accordance with IFRS, the Target Group also use (i) operating profit and operating profit margin, (ii) adjusted profit and total comprehensive income attributable to owners of the Target Company as additional measures for illustrative purposes only. The calculation of these measures, as detailed in the prospectus of the Target Company dated 10 July 2018, is not in accordance with IFRS. The Target Company also believe that these measures provide useful information to investors and others in understanding and evaluating its condensed consolidated financial results in the same manner as its management.

	Six months	Six months
	ended 30 June	ended 30 June
	2018	2017
	RMB’000	RMB’000
	(unaudited)	(unaudited)
Operating profit	794,810	393,499
Profit and total comprehensive income
for the period attributable to:	563,471	306,065
– Owners of the Target Company	467,525	131,437
– Non-controlling interests	95,946	174,628
Non-IFRS adjusted
Profit and total comprehensive income for the
period attributable to owners of the Target
Company	500,173	262,874

Operating Profit and Operating Profit Margin

The Target Group defines its operating profit as revenue net of operating costs, which consist of staff costs, advertising and promotion expenses, operating lease charges in respect of office premises, depreciation and amortisation expenses, loss allowance on financial assets measured at amortised cost, consultancy expenses, distribution expenses, and other operating costs. The Target Group defines operating profit margin as operating profit divided by revenue for the period. The calculation of operating profit and operating profit margin is not in accordance with IFRS and may not be directly comparable with similarly named financial measures of other companies. The use of these measures has limitations as an analytical tool, and you should not consider them in isolation from other measures as reported in accordance with IFRS.

The Target Group’s operating profit margin increased from 20.4% for the six months ended 30 June 2017 to 28.6% for the six months ended 30 June 2018 primarily due to its improved operational efficiency and increasing economies of scale.

– 170 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Liquidity, Financial Resources and Gearing

During the six months ended 30 June 2018 and as at the date of the Target Company’s 2018 interim results announcement, the Target Group has funded its cash requirements principally from cash generated from its operations, investments from shareholders of the Target Company and external borrowings. The Target Group had cash and cash equivalents of RMB1,791.3 million and RMB764.8 million as of 31 December 2017 and 30 June 2018, respectively. The Target Group generally deposit its excess cash in interest bearing bank accounts and current accounts.

During the six months ended 30 June 2018 and as at the date of the Target Company’s 2018 interim results announcement, the Target Group’s principal uses of cash have been for the funding of required working capital and other recurring expenses to support the expansion of its operations. Going forward, the Target Group believe its liquidity requirements will be satisfied by using funds from a combination of internally generated cash, external borrowings, proceeds from the Global Offering and other funds raised from the capital markets from time to time.

Capital Expenditure

Purchase of and deposits placed for property and equipment Purchase of intangible assets Total	Six months ended 30 June 2018 2017 RMB’000 RMB’000 (unaudited) (unaudited) 15,710 8,762 – 241 15,710 9,003	Six months ended 30 June 2018 2017 RMB’000 RMB’000 (unaudited) (unaudited) 15,710 8,762 – 241 15,710 9,003
		9,003

The Target Group’s capital expenditures primarily related to purchases of property, equipment, and intangible assets and capitalised prepayment. Leasehold improvements, mainly including capitalised decoration and maintenance costs, account for the majority of property and equipment purchases.

Off-Balance Sheet Commitments and Arrangements

As of 30 June 2018, the Target Group had not entered into any off-balance sheet transactions.

– 171 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Gearing Ratio

As of 30 June 2018, the gearing ratio of the Target Group, which is calculated by dividing total debt (all interest-bearing bank loans) by total equity as of the end of the period, was 12.7%, representing a decrease of 8.1 percentage points as compared with 20.8% as of 31 December 2017. The decrease was primarily due to the increase of total equity results from the investment fund, which became unconditional and was then fully converted to equity upon completion of acquisition of 100% equity interests in E-House Enterprise (China) Group Co., Ltd. (“ PRC Holdco ”) on 5 March 2018.

Significant Investments Held

As of 30 June 2018, the Target Group did not hold any significant investments in the equity interests of any other companies.

Future Plans for Material Investments and Capital Assets

As of 30 June 2018, the Target Group did not have other plans for material investments and capital assets.

Material Acquisitions and/or Disposals of Subsidiaries and Affiliated Companies

During the six months ended 30 June 2018, the Target Group did not have any material acquisitions and/or disposals of subsidiaries and affiliated companies.

Employee and Remuneration Policy

As of 30 June 2018, the Target Group had 22,599 full-time employees, all of whom were based in China. The Target Group’s employees are based in its headquarters in Shanghai and various other cities in China according to its business strategies.

The Target Group’s success depends on its ability to attract, retain and motivate qualified personnel. As part of its retention strategy, the Target Group offer employees performancebased cash bonuses and other incentives in addition to base salaries. As of 30 June 2018, over 338 employees held share-based awards. The total remuneration expenses, including sharebased compensation expense, for the six months ended 30 June 2018 were RMB1,345.2 million, representing a year-on-year increase of 20.6%.

– 172 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Foreign Exchange Risk

The Target Group’s functional currency is Renminbi, but certain of its cash and cash equivalent, amounts due from (to) related parties, and conditional investment fund received are denominated in foreign currency and are exposed to foreign currency risk. The Target Group currently do not have a foreign currency hedging policy as its Directors consider that its foreign exchange risk exposure is minimal. The Target Group will consider hedging significant foreign currency exposure if such need arises.

Pledge of Assets

As of 30 June 2018, none of the Target Group’s assets were pledged.

Contingent Liabilities

As of 30 June 2018, the Target Group did not have any material contingent liabilities.

EVENTS AFTER THE REPORTING PERIOD

Save as disclosed in the Target Company’s 2018 interim results announcement, there was no other significant events that might affect the Target Group since the end of the six months ended 30 June 2018.

– 173 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

• (A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP FOLLOWING THE CORNERSTONE INVESTMENT IN E-HOUSE (CHINA) ENTERPRISE HOLDINGS LIMITED (THE “TARGET COMPANY”)

1. Introduction

The following is a summary of illustrative unaudited pro forma financial information of the Group in connection with the cornerstone investment in Target Company (the “Cornerstone Investment”) as described in the Section headed “Letter from the Board” in this circular. The unaudited pro forma financial information presented below is prepared to illustrate the effect of the Cornerstone Investment on the Group’s financial position as at 30 June 2018 as if the Cornerstone Investment had been completed on 30 June 2018 (the “Unaudited Pro Forma Financial Information”).

The Unaudited Pro Forma Financial Information is prepared by the directors of the Company in accordance with Paragraph 4.29 of the Listing Rules and has been prepared by the Directors of the Company for the purpose of illustrating the effect of the Cornerstone Investment.

Narrative descriptions of the unaudited pro forma adjustments that are directly attributable to the Cornerstone Investment and factually supportable are summarised in the accompanying notes to the Unaudited Pro Forma Financial Information.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the Cornerstone Investment been completed as of the specified dates or any other dates.

The Unaudited Pro Forma Financial Information of the Group is based upon the consolidated statement of financial position of the Group at 30 June 2018, which has been extracted from the Company’s interim financial report for the six months ended 30 June 2018 and adjusted on a pro forma basis to reflect the effect of the Cornerstone Investment. These pro forma adjustments are directly attributable to the Cornerstone Investment and not relating to other future events and decisions.

The Unaudited Pro Forma Financial Information of the Group should be read in conjunction with the historical financial information of the Group as set out in the published interim financial report of the Company for the six months ended 30 June 2018 and other financial information included elsewhere in this circular.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

2. Unaudited Pro Forma Consolidated Statement of Assets and Liabilities of the Group as at 30 June 2018

(Expressed in Renminbi)

Non-current assets Investment property Other property, plant and equipment Interests in leasehold land held for own use Intangible assets Goodwill Interests in associates Interests in a joint venture Other financial assets Deferred tax assets Current assets Inventories and other contract costs Trade and other receivables Cash and cash equivalents Assets of disposal groups classified as held for sale Current liabilities Trade and other payables Contract liabilities Bank and other loans Related party loans Current taxation	The Group as at 30 June 2018 Pro forma adjustments RMB’000 RMB’000 Notes 2,902,727 3,192,251 470,910 6,565,888 1,423 570 2,678,223 10,270 1,810,230 908,569 (a) 172,480 11,239,084 - - - - - - - - - - - - - - 6,537,546 430,671 4,104,364 (908,569) (b) 11,072,581 12,916 11,085,497 - - - - - - - - - - - - - - 2,144,493 242,936 3,391,228 1,945,700 626,324 8,350,681 - - - - - - - - - - - - - -	Unaudited pro forma consolidated statement of assets and liabilities of the Group RMB’000 2,902,727 3,192,251 470,910
		6,565,888 1,423 570 2,678,223 10,270 2,718,799 172,480
		12,147,653 - - - - - - - - - - - - - - - - - - - 6,537,546 430,671 3,195,795
		10,164,012 12,916
		10,176,928 - - - - - - - - - - - - - - - - - - - 2,144,493 242,936 3,391,228 1,945,700 626,324
		8,350,681 - - - - - - - - - - - - - - - - - - -

– 175 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Net current assets Total assets less current liabilities Non-current liabilities Bank and other loans Deferred tax liabilities NET ASSETS	The Group as at 30 June 2018 Pro forma adjustments RMB’000 RMB’000 Notes 2,734,816 - - - - - - - - - - - - - - 13,973,900 - - - - - - - - - - - - - - 861,758 195,382 1,057,140 - - - - - - - - - - - - - - 12,916,760	Unaudited pro forma consolidated statement of assets and liabilities of the Group RMB’000 1,826,247 - - - - - - - - - - - - - - - - - - -
		13,973,900 - - - - - - - - - - - - - - - - - - -
		861,758 195,382
		1,057,140 - - - - - - - - - - - - - - - - - - -
		12,916,760

3. Notes to the Unaudited Pro Forma Financial Information of the Group

• (a) The adjustments represent the fair value of 73,371,900 shares of the Target Company as if the Cornerstone Investment had taken place on 30 June 2018 for the unaudited pro forma consolidated statement of assets and liabilities. Upon the completion of the Cornerstone Investment, the investment in the Target Company would be accounted for as financial assets measured at fair value.

• (b) The adjustments represent the consideration of HK$1,065,720,042.99 (equivalent to approximately RMB908,569,000 converting with the exchange rate of HK$1 to RMB0.85254) paid by the Group on 18 July 2018 for the Cornerstone Investment pursuant to the Cornerstone Investment Agreement.

• (c) No adjustment has been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group entered into subsequent to 30 June 2018.

– 176 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

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

==> picture [106 x 43] intentionally omitted <==

24 September 2018

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

To The Directors of Overseas Chinese Town (Asia) Holdings Limited

We have completed our assurance engagement to report on the compilation of pro forma financial information of Overseas Chinese Town (Asia) Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 30 June 2018 and related notes as set out in Part A of Appendix IV to the circular dated 24 September 2018 (the “Circular”) issued by the Company. The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described in Part A of Appendix IV to the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the cornerstone investment in E-House (China) Enterprise Holdings Limited (the “Cornerstone Investment”) on the Group’s financial position as at 30 June 2018 as if the Cornerstone Investment had taken place on 30 June 2018. As part of this process, information about the Group’s financial position as at 30 June 2018 has been extracted by the Directors from the interim financial report of the Company for the six months ended 30 June 2018, on which no review report has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

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

– 177 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

Our Independence and Quality Control

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

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

Reporting Accountants’ Responsibilities

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

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

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

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events or transactions at 30 June 2018 would have been as presented.

– 178 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

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

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

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

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

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

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

Opinion

In our opinion:

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

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

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

Certified Public Accountants

Hong Kong 24 September 2018

– 179 –

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests and short positions in securities of the Company and its associated corporations

As at the Latest Practicable Date, no interests and 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) were held by the Directors and chief executives of the Company which have been 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 were taken or deemed to have under such provisions of the SFO) or have been entered in the register maintained by the Company pursuant to section 352 of the SFO, or otherwise have been notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “ Model Code ”).

(b) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, as far as is known to the Directors, the following persons (not being a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

			Approximate
			percentage of
			shareholding
Name of Substantial	Capacity/Nature	Number of	in the
Shareholder	of Interest	Shares held	Company
Pacific Climax Limited	Beneficial owner	530,894,000	70.94%
(Note 1)		(long position)

– 180 –

GENERAL INFORMATION

APPENDIX V

			Approximate
			percentage of
			shareholding
Name of Substantial	Capacity/Nature	Number of	in the
Shareholder	of Interest	Shares held	Company
Overseas Chinese Town	Interest of controlled	530,894,000	70.94%
(HK) Company Limited	corporation	(long position)
(“OCT (HK)”)	(Note 2)
Shenzhen Overseas Chinese	Interest of controlled	530,894,000	70.94%
Town Holding Company	corporation	(long position)
Limited (“OCT Ltd.”)	(Note 3)
Overseas Chinese Town	Interest of controlled	530,894,000	70.94%
Enterprises Company	corporation	(long position)
(“OCT Group”)	(Note 4)

Notes:

• (1) Ms. Xie Mei and Mr. Lin Kaihua, both being executive Directors, and Mr. Zhang Jing, being a non-executive Director, are also directors of Pacific Climax.

• (2) OCT (HK) is the beneficial owner of all the issued share capital in Pacific Climax. Therefore, OCT (HK) is deemed, or taken to be interested in all the Shares beneficially held by Pacific Climax for the purpose of the SFO. Mr. He Haibin and Ms. Xie Mei, both being executive Directors, and Mr. Zhang Jing, being a non-executive Director, are also directors of OCT (HK).

• (3) OCT Ltd. is the beneficial owner of all the issued share capital of OCT (HK), which is in turn the beneficial owner of all the issued share capital of Pacific Climax. Therefore, OCT Ltd. is deemed, or taken to be interested in all the Shares which are beneficially owned by OCT (HK) and Pacific Climax for the purpose of the SFO. OCT Ltd. is a company incorporated in the PRC, the shares of which are listed on the Shenzhen Stock Exchange. OCT Ltd. is a subsidiary of OCT Group.

• (4) OCT Group is the beneficial owner of 46.99% of the issued shares of OCT Ltd., which is the beneficial owner of all the issued shares of OCT (HK) and in turn, the beneficial owner of all the issued share capital of Pacific Climax. Therefore, OCT Group is deemed, or taken to be interested in all the Shares which are beneficially owned by OCT Ltd., OCT (HK) and Pacific Climax for the purpose of the SFO.

Save as disclosed above, no other interests required to be recorded in the register kept under section 336 of the SFO have been notified to the Company as at the Latest Practicable Date.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation (other than statutory compensation).

– 181 –

GENERAL INFORMATION

APPENDIX V

4. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective close associates has any interest in any business which competes or is likely to compete with the businesses of the Group.

5. INTEREST IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which have been, since 31 December 2017 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the date of this circular and which is significant in relation to the businesses of the Group.

6. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration or claim of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company or any member of the Group.

7. EXPERTS AND CONSENT

• (a) The following is the qualification of the experts which has given its opinions which are contained in this circular:

Name Qualification KPMG Certified Public Accountants Deloitte Touche Tohmatsu Certified Public Accountants

• (b) As at the Latest Practicable Date, neither KPMG nor Deloitte Touche Tohmatsu had any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

• (c) KPMG has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report and references to its name in the form and context in which they are included.

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GENERAL INFORMATION

APPENDIX V

• (d) Subject to the disclaimers set out in Appendix II in this circular, Deloitte Touche Tohmatsu has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter, opinion, report and references to its name in the form and context in which they are included.

• (e) The report given by KPMG is given as of the date of this circular for incorporation in this circular.

As at the Latest Practicable Date, neither KPMG nor Deloitte Touche Tohmatsu is beneficially interested in the share capital of any member of the Group or had any interest, direct or indirect, in any assets which have been, since 31 December 2017 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

8. MATERIAL CONTRACTS

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

• (a) the Shenzhen Capital Fortune Investment New Industries Investment Enterprise (LLP) (深圳遠致富海新興產業投資企業(有限合夥)) (“Limited Partnership”) agreement entered into among Shenzhen Huayou Investment Co., Ltd. (深圳市華 友投資有限公司), Shenzhen Tongbao Haina Investment Enterprise (LLP)* (深圳通 寶海納投資企業(有限合夥)) and the other partners on 30 September 2016 in relation to the establishment of the Limited Partnership;

• (b) the limited partnership agreement dated 19 December 2016 entered into among Shenzhen Huayou Investment Co., Ltd. (深圳市華友投資有限公司), an indirectly wholly-owned subsidiary of the Company, Shenzhen Capital Fortune Investment Investment Management Co., Ltd. (深圳市遠致富海投資管理有限公司), Shenzhen Jiahe Investment Management Enterprise (LLP) (深圳佳合投資管理企業(有限合 夥)) and Shenzhen Capital Fortune Investment Merger and Acquisition Investment Fund Enterprise (LLP) (深圳遠致富海併購投資基金合夥企業(有限合夥)) in relation to the establishment of Shenzhen Capital Fortune Investment No. 10 Investment Enterprise (LLP)* (深圳遠致富海十號投資企業(有限合夥)) with an aggregate capital of RMB206 million;

• (c) the investment agreement entered by City Legend on 28 December 2016 with the NCI Fund, pursuant to which City Legend agreed to invest US$50,000,000 into the NCI Fund for 500,000 fund units of US$100 each;

– 183 –

GENERAL INFORMATION

APPENDIX V

• (d) the cornerstone investment agreement dated 6 March 2017 entered into among City Legend, Minsheng Education Group Company Limited (民生教育集團有限公司), Citigroup Global Markets Asia Limited and Macquarie Capital Limited, pursuant to which City Legend agreed to to subscribe for 332,000,000 shares of Minsheng Education Group Company Limited at the offer price as part of the international offering of Minsheng Education Group Company Limited;

• (e) the equity transfer agreement dated 20 September 2017 entered into between Barwin Development Company Limited, a wholly-owned subsidiary of the Company, and Shanghai Huiyang Industry Co., Ltd. (上海匯陽實業有限公司) in relation to the disposal of 100% equity interest in Shanghai Huali Packaging Co., Ltd. (上海華勵 包裝有限公司) by Barwin Development Company Limited;

• (f) the sale and purchase agreement (the “Sale and Purchase Agreement”) dated 9 November 2017 entered into among the Company, Capital Converge Holdings Limited and New China Fund (on behalf of New China Fund SP 1) in relation to the disposal of 51 shares and 51% of the shareholder’s loan in Capital Converge Holdings Limited by the Company to New China Fund (on behalf of New China Fund SP 1);

• (g) the supplemental agreement to the Sale and Purchase Agreement dated 15 November 2017 entered into among the Company, Capital Converge Holdings Limited and New China Fund (on behalf of New China Fund SP 1);

• (h) the equity transfer agreements (together with the supplemental agreement thereto) entered into between City Legend and Suzhou Wancheng Shengda Travel Development Co., Ltd.* (蘇州萬程晟達旅遊發展有限公司) on 10 May 2018 in relation to the acquisition of approximately 5.11% equity interest in TongchengElong Holdings Limited;

• (i) the Cornerstone Investment Agreement;

• (j) the subscription agreement dated 31 August 2018 entered into between City Legend and Yuzhou Properties Company Limited in relation to the subscription of 460,489,606 shares in Yuzhou Properties Company Limited by City Legend at the subscription price of HK$3.96 per share; and

• (k) the acquisition agreement and leaseback agreement both dated 11 September 2018 entered into between OCT Financial Leasing Co., Ltd, a wholly-owned subsidiary of the Company, and Yibin Grace Co., Ltd, pursuant to which OCT Financial Leasing Co., Ltd agreed to acquire certain equipment from Yibin Grace Co., Ltd at the consideration of RMB300 million and leaseback such equipment to Yibin Grace Co., Ltd.

– 184 –

GENERAL INFORMATION

APPENDIX V

Save as disclosed above, no material contracts (not being contract entered into in the ordinary course of business) were entered into by members of the Group within two years immediately preceding up to and including the Latest Practicable Date.

9. GENERAL

• (a) The company secretary and the qualified accountant of the Company is Mr. Fong Fuk Wai, who is a fellow member of the Hong Kong Institute of Certified Public Accountants.

• (b) The Company’s registered office is at Clifton House, PO Box 1350 75 Fort Street, Grand Cayman, Cayman Islands. The head office and principal place of business is at Suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong.

• (c) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Ltd. at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the following documents are available for inspection during normal business hours except on Saturday, Sunday and public holidays at the office of the Company in Hong Kong at Suites 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong from the date of this circular up to and including a date which in any event is not less than 14 days from the date of this circular:

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

• (b) the accountants’ report of the Target Group as extracted from the Prospectus, the text of which are set out in Appendix II of this circular;

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

• (d) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;

• (e) the written consent referred to in the paragraph headed “Experts and Consents” in this appendix; and

• (f) this circular.

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