RemeGen Co., Ltd. — Proxy Solicitation & Information Statement 2019

Apr 24, 2019

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, registered institution in securities, 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 (the “ Company ”), you should hand this circular together with the accompanying proxy form at once to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities 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

ACQUISITION OF 21% OF EQUITY INTEREST AND DEBT INTEREST IN ZHONGSHAN YUHONG REAL ESTATE DEVELOPMENT LIMITED

25 April 2019

CONTENTS

			Page
Definitions . . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**Letter from the **	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Accountants’ report of the Target Company. . . . . . . . . . . .	II-1
Appendix III	–	Management Discussion and Analysis
		on the Target Company . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Unaudited pro forma financial information
		of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI	–	General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1

– i –

DEFINITIONS

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

• “Acquisition” the acquisition of the Target Equity Interest in the Target Company and the Target Debt Interest by Shenzhen Huajing from Xiamen Yuzhou

• “Announcement” the announcement made by the Company dated 26 March 2019, in relation to the Acquisition

• “Board” the board of Directors

• “close associate(s)” has the meaning ascribed to it under the Listing Rules

• “Company”

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

• “connected person(s)”

• has the meaning ascribed to it under the Listing Rules

• “controlling shareholder(s)”

• has the meaning ascribed to it under the Listing Rules

• “Cooperation Agreement”

• the cooperation agreement entered into on 26 March 2019, between, Zhuhai Yiyun, Xiamen Yuzhou, Shenzhen Huajing and the Target Company

• “Debt Transfer Agreement”

• the debt transfer agreement dated 26 March 2019 and entered into between Xiamen Yuzhou and Shenzhen Huajing in respect of the acquisition of the Target Debt Interest

• “Director(s)” the director(s) of the Company

• “Equity Transfer Agreement”

• the equity transfer agreement dated 26 March 2019 and entered into between Xiamen Yuzhou and Shenzhen Huajing in respect of the acquisition of the Target Equity Interest

• “Group”

• the Company and its subsidiaries as at the Latest Practicable Date

• “HK$”

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

– 1 –

DEFINITIONS

• “Hong Kong”

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

• “Independent Third Party(ies)”

• third party(ies) independent of and not connected to the Company and any of its connected persons (as defined in the Listing Rules) or their respective associates (as defined in the Listing Rules)

• “Land”

• plot of land called “New Grass Tail” (“新草尾”) in Zhang Second Village (張二村) located in the Zhongshan Torch Development Zone* (中山市火炬開發 區) with a total site area of approximately 90,500.50 sq.m.

• “Latest Practicable Date” 23 April 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

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

• “Pacific Climax”

• Pacific Climax Limited, a company incorporated in the British Virgin Islands with limited liability, is a Controlling Shareholder and is wholly-owned by OCT (HK)

• “PRC”

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

• “RMB” the lawful currency of the PRC

• “Savills”

• Savills Valuation and Professional Services Limited, an independent property valuer

• “SFO”

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

• “Share(s)” ordinary shares of HK$0.10 each in the capital of the Company

• “Shareholder(s)” the shareholder(s) of the Company

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DEFINITIONS

• “Shenzhen Huajing”

• 深圳市華京投資有限公司 (Shenzhen Huajing Investment Limited*), a company incorporated in Shenzhen with limited liability and is wholly-owned by the Company

• “sq.m.”

• square metre(s)

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited

• “subsidiary(ies)”

• has the meaning ascribed to it under the Listing Rules

• “Target Company”

• 中山禹鴻房地產開發有限公司 (Zhongshan Yuhong Real Estate Development Limited*), a company established under the laws of the PRC with limited liability, which, as at the date of the Announcement, was owned as to 51% and 49% by Zhuhai Yiyun and Xiamen Yuzhou, respectively

• “Target Debt Interest”

• a loan owing to Xiamen Yuzhou by the Target Company in the aggregate amount of RMB331,551,594.94 together with an interest accrued thereon to Shenzhen Huajing at an annual interest rate of 8%

• “Target Equity Interest”

• the 21% equity interests in the Target Company to be acquired by Shenzhen Huajing from Xiamen Yuzhou pursuant to the Cooperation Agreement

• “Xiamen Yuzhou”

• 廈門禹洲鴻圖地產開發有限公司 (Xiamen Yuzhou Grand Future Real Estate Development Company Limited*), a company established under the laws of the PRC with limited liability and an indirectly wholly owned subsidiary of Yuzhou Properties

• “Yuzhou Properties”

• Yuzhou Properties Company Limited (禹洲地產股份有限 公司), an exempted company incorporated in the Cayman Islands on 23 April 2008 with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock code: 1628)

• “Zhuhai Yiyun”

珠海依雲房地產有限公司 (Zhuhai Yiyun Real Estate Limited*), a company established under the laws of the PRC with limited liability

• “%”

• percent

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 PO Box 1350 GT George Town Grand Cayman Cayman Islands

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

Head office and principal place of business in Hong Kong: 59/F., Bank of China Tower 1 Garden Road Hong Kong

25 April 2019

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION ACQUISITION OF 21% OF EQUITY INTEREST AND DEBT INTEREST IN ZHONGSHAN YUHONG REAL ESTATE DEVELOPMENT LIMITED

INTRODUCTION

References are made to the Announcement in relation to the acquisition of 21% of equity interest and debt interest in the Target Company.

The purpose of this circular is, among other things, (i) to provide you with further details of the Cooperation Agreement and the transactions contemplated thereunder; (ii) the financial information of the Group; (iii) financial information of the Target Company; (iv) unaudited pro forma financial information of the Group; and (v) the valuation report on the Land held by the Target Company.

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LETTER FROM THE BOARD

COOPERATION AGREEMENT

The principal terms of the Cooperation Agreement are as follows:

Date

26 March 2019

Parties

• (1) Shenzhen Huajing, a wholly-owned subsidiary of the Company, as the purchaser;

• (2) Xiamen Yuzhou, as the vendor;

• (3) Zhuhai Yiyun, as the existing shareholder of the Target Company; and

(4) the Target Company

Xiamen Yuzhou is a non-wholly owned subsidiary of Yuzhou Properties, which, as at the Latest Practicable Date, was held by the Company as to 9.98%. Save as disclosed above, to the best information, knowledge and belief of the Directors, after having made all reasonable enquiries, Xiamen Yuzhou and Zhuhai Yiyun and their respective ultimate beneficial owners are Independent Third Parties.

Assets to be acquired

The Target Company was established in the PRC on 30 November 2018 with limited liability. Its principal asset is the Land, a plot of land called “New Grass Tail” (“新草尾”) which is located in the Zhongshan Torch Development Zone (中山市火炬開發區) with a total site area of approximately 90,500.50 sq.m. and a maximum permissible gross floor area of approximately 271,501.50 sq.m.. The Target Company acquired the Real Property Ownership Certificate to the Land on 23 January 2019. The Land is purported to be used as residential purpose with a land use right of 70 years. The total consideration of the Land acquired by the Target Company was RMB1,523,123,415 (excluding the tax on the deed for land transfer).

The Land is located at the south of Huizhan East Road (會展東路) of the Zhongshan Torch Development Zone*, east of Huzhong Road (湖中路), north of Deneng East Road (得能東路) and west of Gangyi Road (港義路). The north of the Land is mainly residential homes and schools, while the east of the Land is mainly office buildings and squares. There are also residential homes and parks to the south of the Land and there is a convention centre of the Zhongshan Development Zone to the west of the Land. The Land is approximately 1.5 kilometres from the Zhongshan Port Terminal (中山港碼頭) and 9 kilometres from the Zhangshan high speed railway station.

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LETTER FROM THE BOARD

It is estimated that approximately 2,280 residential units will be developed with an average area of approximately 112 sq.m. per residential unit, which target customers who are looking for investment property or for own use property. The development is expected to be fully completed in 2022.

To finance the acquisition of the Land, Zhuhai Yiyun and Xiamen Yuzhou had advanced shareholders’ loan to the Target Company in the amount of approximately RMB1,578,817,117.45 in proportion to their respective shareholding in the Target Company at an annual interest rate of 8%.

Zhuhai Yiyun and Xiamen Yuzhou are all holders of equity interests in the Target Company. Their respective capital contributions subscribed and shareholders’ loans advanced to the Target Company, as at the date of the Announcement, for the acquisition and development of the Land were as follows:

Name Zhuhai Yiyun Xiamen Yuzhou Total	Registered capital and equity interests (%) RMB255,000,000 (51%) RMB245,000,000 (49%) RMB500,000,000 (100%)	Principal amount of the shareholder’s loan advanced RMB805,196,729.25 RMB773,620,388.20
		RMB1,578,817,117.45

Pursuant to the terms of the Cooperation Agreement, Shenzhen Huajing will acquire the Target Equity Interest in the Target Company and the Target Debt Interest in the principal amount of RMB331,551,594.94 together with the interest at an annual rate of 8% accrued thereon from Xiamen Yuzhou.

Immediately after completion of the Acquisition, the capital contributions and shareholders’ loans attributable to the shareholders of the Target Company are as follows:

Name Zhuhai Yiyun Xiamen Yuzhou Shenzhen Huajing Total	Registered capital and equity interests (%) RMB255,000,000 (51%) RMB140,000,000 (28%) RMB105,000,000 (21%) RMB500,000,000 (100%)	Principal amount of the shareholder’s loan advanced RMB805,196,729.25 RMB442,068,793.26 RMB331,551,594.94
		RMB1,578,817,117.45

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LETTER FROM THE BOARD

Following completion of the Acquisition, the Company will indirectly own 21% of equity interest in the Target Company. The Target Company will not be a subsidiary of the Company and its financial statements will not be consolidated into the Group.

Shenzhen Huajing also entered into the Equity Transfer Agreement and the Debt Transfer Agreement on 26 March 2019 with Xiamen Yuzhou in respect of the Acquisition.

Consideration for the Target Equity Interest

The consideration for the Target Equity Interest is RMB1,263,447, the payment of which is conditional upon the completion of the registration for the Acquisition within 15 working days, specifically:

• (a) Shenzhen Huajing be registered as the holder of 21% equity interest in the Target Company;

• (b) registration of change of directors of the Target Company (one of the directors of the Target Company be designated by Shenzhen Huajing);

• (c) the articles of association of the Target Company be amended to reflect the aforesaid changes; and

• (d) obtain a new business licence of the Target Company.

Shenzhen Huajing shall pay the consideration for the Target Equity Interest in one lump sum to the designated account of Xiamen Yuzhou within three working days from the issue of new business licence of the Target Company. The payment of the consideration for the Target Equity Interest was settled on 1 April 2019.

The consideration for the Target Equity Interest, of RMB1,263,447, was determined between the purchaser and the vendor by considering the following factors: (i) the negative net asset value based on the unaudited financial information of the Target Company prepared in accordance with the generally accepted accounting principles in the PRC; (ii) the market value of the Land based on the preliminary valuation report prepared by an independent property valuer and the expected increase in value of the Land; (iii) the expected profit or loss of the Target Company as at the completion date; and (iv) the equity holding held by the Group in the Target Company.

Consideration for the Target Debt Interest

The consideration for the Target Debt Interest is the principal amount of the Target Debt Interest, being RMB331,551,594.94 plus the interest on the Target Debt Interest accrued thereon up to the date of actual payment of the consideration for the Target Debt Interest

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LETTER FROM THE BOARD

amounting to RMB7,565,391.52, which shall be payable by Shenzhen Huajing to Xiamen Yuzhou within 20 working days from the date of signing of the Equity Transfer Agreement and the Debt Transfer Agreement. The payment of the consideration for the Target Debt Interest was settled on 27 March 2019.

Capital commitment to the Target Company

Should the Target Company require working capital and such amount cannot be fully covered by bank loans and proceeds from sale, the shareholders of the Target Company shall provide shareholders’ loan to the Target Company in proportion to their respective equity interests in the Target Company to cover the deficient amount.

The shareholders of the Target Company shall also provide corporate guarantees in proportion to their respective equity interests required for the bank loan(s) to be obtained by the Target Company.

Pursuant to the Cooperation Agreement, the total capital commitment (which includes the total amount committed to the Target Company for, but not limited to: (i) the registered capital of the Target Company, (ii) land transfer fees, (iii) capital required for land development, (iv) tax payable by the Target Company, (v) any loans from the shareholders of the Target Company required for the development of the Target Company and/or (vi) as guarantees) to the Target Company to be provided by the shareholders of the Target Company shall not exceed RMB4,500,000,000, of which RMB945,000,000 shall be attributable to Shenzhen Huajing, which is in proportion to its equity interest to be held in the Target Company after the completion of the Acquisition.

The Group intends to fund the consideration for the Acquisition and the capital commitment by its internal resources and bank loans.

The consideration for the Acquisition and the amount of capital commitment was determined upon arm’s length negotiations between the parties after taking into account: (i) financial information of the Target Company; (ii) the preliminary valuation, prepared by a Hong Kong independent valuer, on the Land (which was valued based on the direct comparison approach); (iii) the development potential of the Land; and (iv) the projected funding for the development of the Land.

The amount of projected funding for the development of the Land is approximately RMB1,688,000,000, which is expected to be applied to, but not limited to, the following: (i) surveying, design and initial construction fees; (ii) main construction fees; (iii) building facilities construction fees; (iv) exterior construction fees; and (v) other related expenses. The amount of projected funding for the development of the Land is expected to be paid from 2019 to 2023 (14% in 2019, 27% in 2020, 40% in 2021, 17% in 2022 and 2% in 2023).

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LETTER FROM THE BOARD

Board composition of the Target Company

The board of directors of the Target Company shall comprise five directors, of which three directors will be appointed by Zhuhai Yiyun, one director will be appointed by Xiamen Yuzhou and one director will be appointed by Shenzhen Huajing. The chairman (the “ Chairman ”) of the board of directors of the Target Company will be appointed by Xiamen Yuzhou. The Chairman shall also be the legal representative of the Target Company. All directors and the chairman of the Target Company shall be appointed for a term of three years, but can be re-appointed after the three years.

Profit and loss sharing

The profit and loss of the Target Company will be shared by the shareholders of the Target Company proportional to their respective capital injection in the Target Company.

REASONS FOR AND BENEFIT OF ENTERING INTO THE COOPERATION AGREEMENT

The Acquisition will enable the Group to acquire 21% equity interest in the Target Company, which holds the land use rights of the Land. Benefiting from the governmental policies and rapid development of the Guangdong-Hong Kong-Macao Greater Bay Area, the Land occupies a superior geographical location with convenient traffic and good ancillary facilities. Furthermore, the beneficial owners of Xiamen Yuzhou, Zhuhai Yiyun and Shenzhen Huajing are leading companies in their respective industries and have successful experience in property development. The Board believes that the Acquisition will bring a satisfied return and is in line with the interest of the Company.

The Directors (including the independent non-executive Directors) are of the opinion that the terms of the Acquisition and the transactions contemplated thereunder are fair and reasonable and the Acquisition is in the interest of the Company and the Shareholders as a whole.

INFORMATION OF THE GROUP

Shenzhen Huajing is a wholly-owned subsidiary of the Company. The principal business activity of the Shenzhen Huajing is investment holding. The Group is principally engaged in the comprehensive development business and investment in the new urbanisation industrial ecosphere business.

Pacific Climax is a controlling shareholder of the Company, as at the Latest Practicable Date holding approximately 70.94% of the issued share capital of the Company.

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LETTER FROM THE BOARD

INFORMATION OF THE TARGET COMPANY

The Target Company was established in the PRC with limited liability on 30 November 2018. Its principal asset is the Land.

The financial information of the Target Company prepared in accordance with the Hong Kong Financial Reporting Standards for the period from 30 November 2018 (date of establishment) to 31 December 2018 and the unaudited financial information of the Target Company prepared in accordance with the generally accepted accounting principles in the PRC for the two months ended 28 February 2019:

For the period from 30 November 2018 (date of establishment) For the two months ended to 31 December 2018 28 February 2019 RMB RMB Loss before (and after) tax 5,901,000 21,930,915.73 As at 31 December 2018 As at 28 February 2019 RMB RMB Total assets 1,579,142,000 1,578,997,655.27 Total liabilities 1,585,043,000 1,606,801,015.54 Total deficit (5,901,000) (27,803,360.27)

INFORMATION OF XIAMEN YUZHOU

Xiamen Yuzhou is a company established in the PRC and is a non-wholly owned subsidiary of Yuzhou Properties, which, as at the Latest Practicable Date, was held by the Company as to 9.98%. It principally engages in real estate project developments and operations; property services.

INFORMATION OF ZHUHAI YIYUN

Zhuhai Yiyun is a company established in the PRC, which is principally engaged in real estate services (property management/estate brokerage).

FINANCIAL EFFECT OF THE ACQUISITION ON THE GROUP

Following completion of the Acquisition, the Company will indirectly own 21% of equity interest in the Target Company. The Target Company will become an associate of the Company, and the financial results of the Target Group will be equity accounted for in the Group’s consolidated financial statements. There would be no financial effect on the total assets, total

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LETTER FROM THE BOARD

liabilities and earnings of the Group upon the completion of the Acquisition. Based on the unaudited pro forma financial information of the Group as set out in Appendix IV to this circular, assuming the Acquisition had completed on 31 December 2018, the non-current assets of the Group as at 31 December 2018 would have increased by RMB340,380,000 and the current assets of the Group as at 31 December 2018 would have decreased by RMB340,380,000.

LISTING RULES IMPLICATION

As one or more of the relevant applicable percentage ratios calculated pursuant to the Listing Rules in respect of the Cooperation Agreement is/are more than 25% but less than 100%, the Cooperation 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.

As no Shareholder has material interest in the Cooperation 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 Cooperation Agreement and the transactions contemplated thereunder. The Company has obtained a written approval from Pacific Climax, which held 530,894,000 Shares as at the Latest Practicable Date (representing approximately 70.94% of the issued share capital of the Company) for the approval of the Cooperation Agreement and the transactions contemplated thereunder in lieu of a resolution to be passed at a general meeting of the Company pursuant to Rule 14.44 of the Listing Rules. As such, no extraordinary general meeting will be convened by the Company to approve the Cooperation Agreement and the transactions contemplated thereunder.

RECOMMENDATION

The Board (including the independent non-executive Directors) considers that the terms of the Cooperation 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 Cooperation 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 Cooperation 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 to 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 INFORMATION 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 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).

The consolidated financial information of the Group for the year ended 31 December 2018 has been set out in the Company’s announcement of its results for the year ended 31 December 2018 which was dated 29 March 2019 on the Stock Exchange’s website (http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0331/LTN20190331037.pdf). 2. INDEBTEDNESS STATEMENT As at the close of business on 28 February 2019, being the date of this indebtedness statement prior to the printing of this circular, the Group had a total borrowings of approximately RMB8,639.43 million, comprising secured and guaranteed bank and related party loans of approximately RMB2,337.07 million, unsecured and unguaranteed bank and related party loans of approximately RMB6,302.36 million.

As at 28 February 2019, the Group’s secured and guaranteed bank loans were secured by pledged deposits with total carrying values of approximately RMB735.91 million, and guarantees provided by Shenzhen Overseas Chinese Town Co., Ltd. and Overseas Chinese Town (HK) Co., Ltd.,which are intermediate parents of the Company.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 28 February 2019, the Group had outstanding obligations under operating lease with carrying amount of approximately RMB93.62 million.

As at 28 February 2019, save for the guarantees of approximately RMB847.33 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 28 February 2019.

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 28 February 2019, the Group did not have any other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, other similar indebtedness, lease liabilities under finance lease and operating lease or hire purchase lease commitments, liabilities under acceptance or acceptance credit, guarantees or other material contingent liabilities.

3. 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, and taking into account the impact of the Acquisition, the Group will have sufficient working capital for its requirements for at least the next 12 months from the date of this circular.

4. CONTINGENT LIABILITIES

Save as disclosed in this circular, the Group has no other material contingent liabilities. The Group is not involved in any current material legal proceedings, nor is the Group aware of such material legal proceedings. The Group would record any loss contingencies when, based on information then available, it is probable that a loss had been incurred and the amount of the loss can be reasonably estimated. The Group confirms that there has not been any material change in the level of its contingent liabilities since 31 December 2018 up to the Latest Practicable Date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

For the year ended 31 December 2018, the Group realised revenue from the continuing operations of approximately RMB1,585 million, representing a year-on-year decrease of approximately 61.4%. For the year ended 31 December 2018, profit attributable to equity holders of the Company was approximately RMB798.70 million, representing a year-on-year decrease of approximately 27.8%. For the year ended 31 December 2018, the Group’s gross profit margin from the continuing operations was approximately 35.2%, representing a decrease of 2.5 percentage points over the same period of 2017. As at 31 December 2018, total assets and total equity of the Group amounted to approximately RMB25.08 billion and approximately RMB12.91 billion, representing a year-on-year increase of approximately 5.6% and decrease of approximately 3.1% respectively.

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 will also actively leverage the domestic and overseas capital markets along with financial products, intensifying its project development to seek new investment opportunities through domestic and overseas investments, mergers and acquisitions, industrial funds, financial leasing and others methods.

Comprehensive development business

In 2019, the various control policies will continue to be stability-oriented assuming that such policies ensure the steady development of the real estate market, while the basic keynotes of “houses are built to be inhabited, not for speculation” and “leasing and purchasing” remain unchanged. In order to ensure reasonable housing consumption for the residents, the effects on the consumption of some improved housing arising from preceding control and upgrade may be adjusted subsequently. Meanwhile, the further release on monetary policy is expected to facilitate improvements in the aspect of real estate market demand.

In future, the various comprehensive development projects of the Group are as follows: Shanghai Suhewan Project will push forward the leasing activities for the commercial properties surrounding Bvlgari Hotel in order to consolidate the market benchmark role of Bvlgari Residence. The Chengdu OCT Project will primarily launch high-end apartments and the high-end customised villa in the only eyot of downtown Chengdu, and will continue its sale of boutique community commercial properties with a total saleable area of approximately 189,000 sq.m.. As to the Chongqing Land Project, a new batch of high-rise and multi-storey residential products with a total saleable area of approximately 176,000 sq.m. will be launched. For the OCT (Changshu) Project, the planning and design work is scheduled to be completed and the construction is expected to commence in the first half of 2019, and the project is expected to be released for leasing from 2020. With combined geographical advantages and integrated surrounding resources, the Group will explore and push forward timely planning, development and construction of idle lands for its existing industrial lands.

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group will also continue to adhere to advanced development philosophy and clear market orientation, pushing forward its comprehensive development business with enhanced strength and size. It will stay on the outlook for diversified investment opportunities, with a view to strengthening the strategic synergy with investment enterprises. Through various ways such as acquisition, cooperation and equity investment, we will acquire high-quality lands at low cost to increase resource reserve for the projects, so as to expand and enhance our comprehensive development business.

Investment in the Urbanisation Industrial Ecosphere Business

In 2019, aiming at key areas including culture, travel, education, healthcare and urbanisation, the investment business of the Group will continuously select high-quality projects that meet our strategic orientation with due care, and strive for new equity investment opportunities, so as to build the urbanisation industrial ecosphere and the industrial cooperation alliance, continuously enriching and expanding the contents and essence of the urbanisation projects. In the future, the Group’s fund management companies will be based in Guangdong-Hong Kong-Macao Greater Bay Area, radiating outwards throughout China with its main focus on industries having strong synergy with urbanisation industrial ecosphere so as to reserve high quality resources for the Company.

Finance Lease Business

In 2019, the Group will continuously engage in the finance lease business in sectors such as theme parks and the manufacturing industry with a primary focus on customer base such as large to mid-scale state-owned enterprises and high quality listed companies, improve its risk management and push forward the development of the business in order to achieve stable operating income.

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 endeavour to generate ideal investment returns for Shareholders.

– I-4 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

The following is the text of a report set out on pages II-1 to II-15, received from the Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF OVERSEAS CHINESE TOWN (ASIA) HOLDINGS LIMITED

Introduction

We report on the historical financial information of Zhongshan Yuhong Real Estate Development Limited (the “Target Company”) set out on pages II-3 to II-15, which comprises the statement of financial position of the Target Company as at 31 December 2018, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the the cash flow statement from 30 November 2018 (date of establishment) to 31 December 2018 (the “Relevant 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 II-3 to II-15 forms an integral part of this report, which has been prepared for inclusion in the circular of Overseas Chinese Town (Asia) Holdings Limited (the “Company”) dated 25 April 2019 (the “Circular”) in connection with the acquisition of 21% equity interest and debt interest in the Target Company (the “Acquisition”) by a wholly-owned subsidiary of the Company.

Directors’ responsibility for Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

The Underlying Financial Statements of the Target Company as defined on page II-3, on which the Historical Financial Information is based, were prepared by the directors of the Target Company. The directors of the Target Company are responsible for the preparation of the Underlying Financial Statements that gives a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), and for such internal control as the directors of the Target Company determine is necessary to enable the preparation of the Underlying Financial Statements 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

– II-1 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Financial Information in Investment Circulars” issued by 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 give a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purpose of the accountants’ report, a true and fair view of the Target Company’s financial position as at 31 December 2018, and of the Target Company’s financial performance and cash flows for the Relevant Period in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

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

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page II-3 have been made.

KPMG

Certified Public Accountants

8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong 25 April 2019

– II-2 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

A HISTORICAL FINANCIAL INFORMATION

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

The financial statements of the Target Company for the Relevant Period, on which the Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

Statement of profit or loss and other comprehensive income for the period from 30 November 2018 (date of establishment) to 31 December 2018

(Expressed in Renminbi)

Note Revenue 3 Interest income Administrative expenses Loss from operations Finance costs 4(a) Loss before taxation 4 Income tax expense 5 Loss for the period Other comprehensive income for the period, net of tax Total comprehensive income for the period	RMB’000 – 1 (49) (48) (5,853) (5,901) – (5,901) – (5,901)

– II-3 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Statement of financial position as at 31 December 2018

(Expressed in Renminbi)

Note Current assets Inventories 8 Deposits Cash and cash equivalents 9 Current liabilities Other payable 10 Net current assets Total assets less current liabilities Non-current liabilities Loans 11 NET LIABILITIES CAPITAL AND RESERVES Paid-in capital 12 Accumulated loss SHAREHOLDER’S DEFICIENCY	RMB’000 1,523,123 75 55,944 1,579,142 - - - - - - - - - - - - - - 373 - - - - - - - - - - - - - - 1,578,769 - - - - - - - - - - - - - - 1,578,769 - - - - - - - - - - - - - - 1,584,670 - - - - - - - - - - - - - - (5,901) – (5,901) (5,901)

– II-4 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Statement of changes in equity for the period from 30 November 2018 (date of establishment) to 31 December 2018

(Expressed in Renminbi)

==> picture [429 x 201] intentionally omitted <==

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

Paid-in Accumulated
capital losses Total
RMB’000 RMB’000 RMB’000
Balance at 30 November 2018
(date of establishment) – – –
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Changes in equity for the period:
Loss for the period – (5,901) (5,901)
Total comprehensive income – (5,901) (5,901)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at 31 December 2018 – (5,901) (5,901)
----- End of picture text -----

– II-5 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Cash flow statement for the period from 30 November 2018 (date of establishment) to 31 December 2018

(Expressed in Renminbi)

Note Operating activities Cash generated from operations Net cash generated from operating activities 9(b) Financing activities Proceeds from a shareholder’s loan 9(d) Proceeds from Zhuhai Yiyun’s loan 9(d) Repayment of a shareholder’s loan 9(d) Net cash generated from financing activities Net increase in cash and cash equivalents and cash and cash equivalents at 31 December 2018 9(a)	RMB’000 250 250 - - - - - - - - - - - - - - 27,290 805,197 (776,793) 55,694 - - - - - - - - - - - - - - 55,944

– II-6 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

B NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The Historical Financial Information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). Further details of the significant accounting policies adopted are set out in the remainder of this section B.

The HKICPA has issued a number of new and revised HKFRSs. For the purpose of preparing this Historical Financial Information, the Target Company has adopted all applicable new and revised HKFRSs to the Relevant Period, except for any new standards or interpretations that are not yet effective for the accounting period ended 31 December 2018. The revised and new accounting standards and interpretations issued but not yet effective for the accounting year ended 31 December 2018 are set out in Note 17.

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

The financial statements of the Target Company which was prepared in accordance with or Accounting Standards for Business Enterprises issued by the Ministry of Finance of The People’s Republic of China (“PRC”) was audited by Guangdong Tongyi Certificated Public Accountants.

(b) Basis of measurement

Notwithstanding the net liabilities of RMB5,901,000 as at 31 December 2018, the Historical Financial Information have been prepared on a going concern basis as Xiamen Yuzhou Grand Future Real Estate Development Company Limited (“Xiamen Yuzhou”, the shareholder of the Target Company) and Zhuhai Yiyun Real Estate Limited (“Zhuhai Yiyun”) had agreed to provide continuing financial support to the Target Company to enable it to meet its liabilities as and when they fall due. Accordingly, the directors of the Company consider it is appropriate to prepare the Historical Financial Information on a going concern basis.

The Historical Financial Information is presented in Renminbi (“RMB”) which is the functional and presentation currency of the Target Company, rounded to the nearest thousand. The measure basis used in the preparation of the Historical Financial Information is the historical cost basis.

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

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

Judgements made by management in the application of HKFRSs that have significant effect on the Historical Financial Information and major sources of estimation uncertainty are discussed in Note 2.

(c) Inventories

Inventories are carried at the lower of cost and net realisable value. Cost and net realisable values are determined as follows:

• Property held for future development

The cost of properties held for future development comprises specifically identified cost, including the acquisition cost of land, aggregate cost of development, materials and supplies, wages and other direct expenses, an appropriate proportion of overheads and borrowing costs capitalised (see note 1(i)). Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in selling the property.

– II-7 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

(d) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

(e) Trade and other payables

Trade and other payables are initially recognised at fair value. Trade and other payables are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(f) Interest-bearing borrowings

Interest-bearing borrowings are measured initially at fair value less transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method. Interest expense is recognised in accordance with the Target Company’s accounting policy for borrowing costs (see note 1(h)).

(g) Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

All deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

– II-8 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Target Company has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

• in the case of current tax assets and liabilities, the Target Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or

• in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

• the same taxable entity; or

• different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.

(h) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(i) Related parties

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

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

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

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

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

• (i) The entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

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

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

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

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

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

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

– II-9 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

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

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

2 ACCOUNTING JUDGEMENT AND ESTIMATES

The key sources of estimation uncertainty and critical accounting judgements in applying the Target Company’s accounting policies are described below:

• Provision for properties held for future development

The Target Company’s properties held for future development are stated at the lower of cost and net realisable value. Based on the Target Company’s recent experience and the nature of the subject properties, the Target Company makes estimates of the selling prices, the costs of completion in case for properties under development for sale, and the costs to be incurred in selling the properties based on prevailing market conditions.

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

Given the volatility of the PRC property market, the actual recoverable amount may be higher or lower than estimated at the end of the reporting period. Any increase or decrease in the provision would affect profit or loss in future years.

3 REVENUE

The Target Company is principally engaged in the development and sales of properties. There are no sales of properties during the Relevant Period.

4 LOSS BEFORE TAXATION

(a) Finance costs

RMB’000

==> picture [402 x 8] intentionally omitted <==

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

Interest expense 5,853
----- End of picture text -----

(b) Other item

==> picture [403 x 31] intentionally omitted <==

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

RMB’000
Operating lease charge: minimum lease payment 46
----- End of picture text -----

– II-10 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

5 INCOME TAX EXPENSE

(a) Taxation in the statement of profit or loss and other comprehensive income:

Pursuant to the income tax rules and regulations of the PRC, taxation for the Target Company is charged at the current rates of 25%.

In accordance with the accounting policy set out in note 1(g) to the Historical Financial Information, the Target Company has not recognised deferred tax assets in respect of cumulative tax losses of RMB5,901,000 as it is not probable that future taxable profits against which the loss can be utilised will be available in the relevant tax jurisdiction. These tax losses could be carried forward for a maximum of five years.

(b) Reconciliation between tax expense and accounting loss at applicable tax rates:

Loss before taxation Notional tax on loss before taxation at the applicable tax rate of 25% Tax effect of tax loss not recognised Income tax expense	RMB’000 (5,901) (1,475) 1,475
	–

6 DIRECTORS’ REMUNERATION

There is no directors’ remuneration throughout the Relevant Period.

7 INDIVIDUALS WITH HIGHEST EMOLUMENTS

There is no individual with emolument throughout the Relevant Period, as the Target Company did not have any full-time staff member.

8 INVENTORIES

					RMB’000
Properties	held	for	future	development	1,523,123

The properties held for future development are located in the PRC and the lease term is 70 years.

9 CASH AND CASH EQUIVALENTS

• (a) Cash and cash equivalents comprise:

						RMB’000
Cash	at	bank	and	on	hand	55,944

The remittance is subject to relevant rules and regulations of foreign exchange control promulgated by the PRC government.

– II-11 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

(b) Reconciliation of loss before taxation to cash generated from operations:

Loss before taxation Adjustments for: Finance costs Changes in working capital: Increase in deposits Increase in other payable Cash generated from operations	RMB’000 (5,901) 5,853 (75) 373
	250

(c) Non-cash transaction – acquisition of land use right

During the Relevant Period, cost of acquisition of land use right of RMB1,523,123,000 were settled by Xiamen Yuzhou on behalf of the Target Company.

(d) Reconciliation of liabilities arising from financing activities:

At 30 November 2018 (date of establishment) Changes from financing cash flows: Proceeds from a shareholder’s loan Proceeds from loan from Zhuhai Yiyun Repayment of a shareholder’s loan Other changes: Finance costs Non-cash transaction – acquisition of land use right At 31 December 2018 10 OTHER PAYABLE Amount due to a shareholder	Loans RMB’000 – - - - - - - - - - - - - - - 27,290 805,197 (776,793)
	55,694 5,853 1,523,123
	1,584,670
	RMB’000 373

The amount due to a shareholder is unsecured, interest-free and repayable on demand.

11 LOANS

Non-current Loan from a shareholder Loan from Zhuhai Yiyun	RMB’000 776,488 808,182
	1,584,670

– II-12 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

On 11 December 2018, the Target Company entered into a cooperate agreement with Zhuhai Yiyun Real Estate Limited (“Zhuhai Yiyun”) and Xiamen Yuzhou Grand Future Real Estate Development Company Limited (“Xiamen Yuzhou”), pursuant to which Zhuhai Yiyun agreed to lend RMB805,197,000 to the Target Company. In addition, Zhuhai Yiyun agreed to subscribe 51% equity interest of the Target Company’s enlarged registered capital. Upon completion, the registered capital of the Target Company would be RMB500,000,000 and the equity interest of the Target Company would be owned as to 51% by Zhuhai Yiyun and as to 49% by Xiamen Yuzhou, respectively. The subscription was completed in February 2019.

Both of the loan from a shareholder and the loan from Zhuhai Yiyun are unsecured, interest bearing at 8% per annum and repayable in 2021.

12 CAPITAL AND RESERVES

(a) Paid-in capital

The Target Company was established in the PRC on 30 November 2018 by Xiamen Yuzhou. The registered capital of the Target Company is RMB10,000,000. As at 31 December 2018, no registered capital has been paid-up yet.

(b) Capital management

The Target Company’s primary objectives when managing capital are to safeguard the Target Company’s ability to continue as a going concern, so that it can continue to provide returns for shareholder.

The Target Company actively and regularly reviews and manages its capital structure by monitoring its current and expected liquidity requirements. If there is a deficit in capital, the Target Company will raise additional funding from shareholders which are committed to provide financial support to the Target Company.

The Target Company is not subject to externally imposed requirements.

13 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS

Exposure to liquidity risk and interest rate risk in the normal course of the Target Company’s business.

The Target Company’s exposure to liquidity risk, interest rate risk and the financial risk management policies and practices used by the Target Company to manage these risks are described below.

(a) Liquidity risk

The Target Company’s policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from other companies to meet its liquidity requirements in the short and longer term.

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

Other payable Loans	Contractual undiscounted cash outflow Within 1 year or on demand More than 2 years but less than 5 years Total RMB’000 RMB’000 RMB’000 373 – 373 – 1,956,920 1,956,920 373 1,956,920 1,957,293	Carrying amount at 31 December RMB’000 373 1,584,670
		1,585,043

– II-13 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

(b) Interest rate risk

The interest rates and terms of repayment of the Target Company’s loans are disclosed in note 11. At the end of the Relevant Period, the Target Company does not hold any assets or liabilities which are exposed to significant interest rate risk.

(c) Fair value measurement

The carrying amount of the Target Company’s financial instruments carried at amortised cost are not materially different from their fair value as at 31 December 2018.

14 COMMITMENTS

Lease arrangements

At 31 December 2018, the total future minimum lease payments under non-cancellable operating leases in respect of land and properties were payable as follows:

Within 1 year After 1 year but within 5 years	RMB’000 419 793
	1,212

15 MATERIAL RELATED PARTY TRANSACTIONS

(a) The Target Company has a related party relationship with the following party:

Name of party

Relationship with the Target Company

Xiamen Yuzhou Shareholder

(b) Transactions with related party:

In addition to the transactions and balances disclosed elsewhere in the Historical Financial Information, major related party transaction entered by the Target Company during Relevant Period is as follows:

RMB’000

Interest expense 2,868

16 NON-ADJUSTING EVENTS AFTER THE RELEVANT PERIOD

As mentioned in note 11, on 27 February 2019, the subscription of 51% equity interest of the Target Company by Zhuhai Yiyun was completed and Zhuhai Yiyun became the controlling shareholder of the Target Company.

On 26 March 2019, Shenzhen Huajing Investment Limited (“Shenzhen Huajing”), a wholly-owned subsidiary of Overseas Chinese Town (Asia) Holdings Limited, entered a co-operation agreement with Zhuhai Yiyun, Xiamen Yuzhou and the Target Company. Pursuant to co-operation agreement, Shenzhen Huajing would acquire 21% equity interest in the Target Company and a loan owing to Xiamen Yuzhou by the Target Company in the aggregate amount approximately of RMB331,552,000 together with an interest accrued thereon up to the date of actual payment of the consideration at an annual interest rate of 8% from Xiamen Yuzhou. Upon completion, the equity interest of the Target Company would be owned as to 51% by Zhuhai Yiyun, 28% by Xiamen Yuzhou and as to 21% by Shenzhen Huajing, respectively.

– II-14 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

17 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2018

Up to the date of issue of Historical Financial Information, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 31 December 2018 and which have not been adopted in Historical Financial Information. These include the following which may be relevant to the Target Company.

	Effective for
	accounting
	periods beginning
	on or after
HKFRS 16, Leases	1 January 2019
Annual Improvements to HKFRSs 2015-2017 Cycle	1 January 2019
Revised Conceptual Framework for Financial Reporting 2018	1 January 2020
HKFRS 1 (Revised), Presentation of financial statements	1 January 2020
HKFRS 8 (Revised), Accounting policies, changes in accounting	1 January 2020
estimates and errors

The Target Company is in the process of making an assessment of what the impact of these amendments, new standards and interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Target Company’s results of operations and financial position.

C SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 31 December 2018.

– II-15 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY ZHONGSHAN YUHONG

Financial Highlights

As the Target Company was newly established in China in 2018, the audited loss recorded during the period from 30 November 2018 (date of establishment) to 31 December 2018 was approximately RMB5,901,000. As at 31 December 2018, the total deficit of the Target Company as extracted from the accountants’ report was approximately RMB5,901,000.

The Directors confirm that the accounting policies adopted by the Target Company in its accountants’ report are consistent with those of the Group in respect of material aspects. The following is a summary of certain financial information in the audited financial statements of the Target Company during the period from 30 November 2018 (date of establishment) to 31 December 2018, which is set out in Appendix I to this circular:

Operating income Gross profit Loss before tax Loss and comprehensive income for the period attributable to shareholders of the Target Company Current assets Inventories Deposits Cash and cash equivalents Current liabilities Other payable	Period from 30 November 2018 (date of establishment) to 31 December 2018 RMB’000 – – (5,901) (5,901) As at 31 December 2018 RMB’000 1,523,123 75 55,944 1,579,142 373

– III-1 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

As at 31 December 2018 RMB’000

Non-current liabilities Loans Net liabilities Capital and reserves Paid-in capital Accumulated loss Shareholder’s deficiency Current ratio (based on current assets over current liabilities) Gearing ratio (based on total liabilities over total assets)	1,584,670 (5,901) – (5,901) (5,901) 4,233.62 1.00

Segment Information

As the Target Company is still in its early stage of development, there is no turnover classified by business segments.

Significant Investment, Material Acquisition and Disposal

Save for the Land, the Target Company did not have any significant investment, material acquisition and disposal for the period from 30 November 2018 (date of establishment) to 31 December 2018.

Prospects and Future Plans

The Target Company owns a parcel of land in the Zhongshan Torch Development Zone* (中山市火炬開發區). As at the date of this circular, the land has not been developed and is planned to be developed into a residential property. Details of the land are set out in the section headed “Information of the Target Company” of the Letter from the Board of this circular.

– III-2 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Liquidity, Financial Resources, Gearing Ratio and Capital Structure

The Target Company generally finances its operations with internal capital, bank borrowings and related party loans.

As at 31 December 2018, the Target Company had no bank borrowings but had interest bearing loans of RMB1,578,817,117.45 obtained from Zhuhai Yiyun and Xiamen Yuzhou.

As at 31 December 2018, the Target Company had cash and cash equivalent of RMB55,944,056, mainly denominated in RMB.

Please refer to the table set out on pages III-1 to III-2 of this circular for information of the nature of major assets and liabilities, gearing ratio 1.00 (based on total liabilities over total assets) and liquidity of the Target Company as at 31 December 2018.

Charge on Assets

The Target Company did not pledge any assets as at 31 December 2018.

Treasury Policies and Foreign Currency Exposure

For the period from 30 November 2018 (date of establishment) to 31 December 2018, there were no formal treasury policies for the Target Company. The transactions and monetary assets of the Target Company are principally denominated in RMB. The Target Company has not experienced any material difficulties or effects on its operations or liquidity as a result of fluctuations in currency exchange rates during the period from 30 November 2018 (date of establishment) to 31 December 2018. The Target Company did not employ any material financial instrument for hedging purposes.

Capital Commitments

For construction of Zhongshan Yuhong project, the Target Company had no capital commitment as at 31 December 2018.

Employees and Remuneration Policy

As at 31 December 2018, the Target Company did not have any full-time staff member. If the Target Company did employ staff members, the basic remuneration of the employees will be determined with reference to the industry’s remuneration benchmark, the individual experience and performance of employees. It will be the policy of the Target Company to maintain salaries of employees at a competitive level and to review salaries regularly, with close reference to the relevant conditions of the labour market and economic situation. Directors’ remuneration will be determined based on a variety of factors such as market conditions and responsibilities assumed by each directors of the Target Company. Apart from the basic remuneration and statutory benefits required by laws, the Target Company may also provide discretionary bonuses based upon its results and the individual performance of the staff.

– III-3 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

For the period from 30 November 2018 (date of establishment) to 31 December 2018 and as of the Latest Practicable Date, the Target Company has not experienced any significant problems with its employees or disruption to its operations due to labour disputes nor has it experienced any difficulty in the recruitment and retention of experienced staff.

Contingent Liabilities

The Target Company did not have any contingent liabilities as at 31 December 2018. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, as of the Latest Practicable Date, the Target Company was not involved in any litigation or arbitration of material importance and no litigation or arbitration of material importance was known to the Directors to be pending or threatened against the Target Company.

– III-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

• (A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP FOLLOWING THE ACQUISITION OF 21% OF EQUITY INTEREST AND DEBT INTEREST IN ZHONGSHAN YUHONG REAL ESTATE DEVELOPMENT 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 acquisition of 21% of equity interest and debt interest in the Target Company (the “Acquisition”) 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 Acquisition on the Group’s financial position as at 31 December 2018 as if the Acquisition had been completed on 31 December 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 Acquisition.

Narrative descriptions of the unaudited pro forma adjustments that are directly attributable to the Acquisition 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 Acquisition 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 31 December 2018, which has been extracted from the Company’s preliminary announcement of annual results for the year then ended and adjusted on a pro forma basis to reflect the effect of the Acquisition. These pro forma adjustments are directly attributable to the Acquisition 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 preliminary announcement of annual results of the Company for the year ended 31 December 2018 and other financial information included elsewhere in this circular.

– IV-1 –

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 31 December 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 joint ventures Other financial assets Finance lease receivables Trade and other receivables Deferred tax assets Current assets Inventories and other contract costs Finance lease receivables Trade and other receivables Cash at bank and on hand Current liabilities Trade and other payables Contract liabilities Bank and other loans Related party loans Current taxation Net current assets Total assets less current liabilities Non-current liabilities Bank and other loans Deferred tax liabilities NET ASSETS	The Group as at 31 December 2018 Pro forma adjustments RMB’000 RMB’000 Notes 2,877,838 2,074,898 1,483,911 6,436,647 6,273 570 4,919,831 1,263 (a), (b) 287,330 1,437,525 230,870 2,476 339,117 (a) 191,012 13,512,534 - - - - - - - - - - - - - 7,055,723 65,342 1,222,255 3,222,953 (340,380) (a) 11,566,273 - - - - - - - - - - - - - 2,657,446 143,949 4,979,886 2,037,700 748,884 10,567,865 - - - - - - - - - - - - - 998,408 - - - - - - - - - - - - - 14,510,942 - - - - - - - - - - - - - 1,410,771 194,514 1,605,285 - - - - - - - - - - - - - 12,905,657	Unaudited pro forma consolidated statement of assets and liabilities of the Group RMB’000 2,877,838 2,074,898 1,483,911
		6,436,647 6,273 570 4,921,094 287,330 1,437,525 230,870 341,593 191,012
		13,852,914 - - - - - - - - - - - - - - 7,055,723 65,342 1,222,255 2,882,573
		11,225,893 - - - - - - - - - - - - - - 2,657,446 143,949 4,979,886 2,037,700 748,884
		10,567,865 - - - - - - - - - - - - - -
		658,028 - - - - - - - - - - - - - -
		14,510,942 - - - - - - - - - - - - - - 1,410,771 194,514
		1,605,285 - - - - - - - - - - - - - -
		12,905,657

– IV-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX IV

3. Notes to the Unaudited Pro Forma Financial Information of the Group

• (a) The adjustments represent the total consideration approximately of RMB340,380,000, comprising consideration approximately of RMB1,263,000 for acquisition of 21% equity interest in the Target Company and consideration approximately of RMB339,117,000 for acquisition of the debt interest in the principal amount of RMB331,552,000 owing by the Target Company to Xiamen Yuzhou Grand Future Real Estate Development Company Limited (“Xiamen Yuzhou”) together with the interest accrued thereon up to 27 March 2019 (the date of actual payment of the consideration) amounting to RMB7,565,000 at an annual rate of 8% pursuant to the cooperation agreement between Zhuhai Yiyun Real Estate Limited, Xiamen Yuzhou, Shenzhen Huajing Investment Limited (a wholly-owned subsidiary of the Group), and the Target Company.

• (b) Upon completion of the Acquisition, the Group is expected to own as to 21% equity interest of the Target Company. The Group would be able to exercise significant influence over the relevant activities of the Target Company and then the Target Company is accounted for as an associate of the Group.

No adjustment has been made to the Unaudited Pro Forma Financial Information for acquisition-related costs as the directors determined that such costs are insignificant.

• (c) Apart from the adjustments as stated above, 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 31 December 2018.

– IV-3 –

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.

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 31 December 2018 and related notes as set out in Part A of Appendix IV to the circular dated 25 April 2019 (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 acquisition of 21% of equity interest and debt interest in Zhongshan Yuhong Real Estate Development Limited (the “Acquisition”) on the Group’s financial position as at 31 December 2018 as if the Acquisition had taken place on 31 December 2018. As part of this process, information about the Group’s financial position as at 31 December 2018 has been extracted by the Directors from the Group’s annual results announcement for the year ended 31 December 2018 dated 29 March 2019.

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”).

– IV-4 –

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 31 December 2018 would have been as presented.

– IV-5 –

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.

KPMG

Certified Public Accountants Hong Kong 25 April 2019

– IV-6 –

VALUATION REPORT

APPENDIX V

The following is the text of a letter and valuation report prepared for the purpose of incorporation in this circular received from Savills Valuation and Professional Services Limited, an independent property valuer, in connection with their opinion of value of the Property to be acquired by the Group as at 28 February 2019.

The Directors

Overseas Chinese Town (Asia) Holdings Limited 59/F, Bank of China Tower 1 Garden Road Hong Kong

==> picture [71 x 71] intentionally omitted <==

==> picture [96 x 100] intentionally omitted <==

25 April 2019

Dear Sirs,

• RE: LAND LOT NO. W15-18-0053, “NEW GRASS TAIL (新草尾)” OF ZHANG SECOND VILLAGE, ZHONGSHAN TORCH DEVELOPMENT ZONE, ZHONGSHAN, GUANGDONG PROVINCE, THE PEOPLE’S REPUBLIC OF CHINA (THE “PROPERTY”)

INSTRUCTIONS

In accordance with the instructions from Overseas Chinese Town (Asia) Holdings Limited (the “Company”) for us to value the Property situated in the People’s Republic of China (the “PRC”) on a 100% interest basis, we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing the Company with our opinion of the market value of the Property as at 28 February 2019 (the “Valuation Date”) for inclusion in a circular.

– V-1 –

VALUATION REPORT

APPENDIX V

BASIS OF VALUATION

Our valuation of the Property is our opinion of its market value which we would define as intended to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion”.

Moreover, market value is understood as the value of an asset or liability estimated without regarding to the costs of sale and purchase (or transaction) and without offset for any associated taxes or potential taxes.

Our valuation has been undertaken in accordance with the HKIS Valuation Standards 2017 of the Hong Kong Institute of Surveyors (“HKIS”), which incorporates the International Valuation Standards (“IVS”), and (where applicable) the relevant HKIS or jurisdictional supplement.

IDENTIFICATION AND STATUS OF THE VALUER

The subject valuation exercise is handled by Mr. Anthony C.K. Lau, who is the Director of Savills Valuation and Professional Services Limited (“SVPSL”) and a Member of the HKIS with over 25 years’ experience in valuation of properties in the PRC and has sufficient knowledge of the relevant market, the skills and understanding to handle the subject valuation exercise competently.

Prior to your instructions for us to provide this valuation exercise in respect of the Property, SVPSL had not been involved in valuation of the Property in the last 12 months.

We are independent of the Company and its subsidiaries. We are not aware of any instances which would give rise to potential conflict of interest from SVPSL or Mr. Anthony C.K. Lau in the subject exercise. We confirm SVPSL and Mr. Anthony C.K. Lau are in the position to provide objective and unbiased valuation for the Property.

VALUATION METHODOLOGY

The Property is to be held by the Group for future development. In undertaking our valuation, we have adopted the direct comparison approach by making reference to sales of comparable properties as available in the market.

For the purpose of this valuation, property held for future development is that Construction Works Commencement Permit is not issued while Realty Title Certificate has been obtained.

– V-2 –

VALUATION REPORT

APPENDIX V

TITLE INVESTIGATION

We have been provided with copies of extracts of title documents relating to the Property. However, we have not searched the original documents to verify ownership or to ascertain the existence of any amendments which may not appear on the copies provided to us. In the course of our valuation, we have relied to a very considerable extent on information given by the Company and the legal opinion issued by the PRC’s legal adviser to the Company, JunZeJun Law Offices, regarding the title to the Property in the PRC.

SOURCE OF INFORMATION

In the course of our valuation, we have relied to a considerable extent on information provided by the Company and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, particulars of occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us and are therefore only approximations. No on-site measurements have been taken. We have no reason to doubt the truth and accuracy of the information provided to us by the Company, which is material to our valuation. We are also advised by the Company that no material facts have been omitted from the information supplied.

VALUATION ASSUMPTIONS

In the course of our valuation, unless otherwise stated, we have assumed that transferable land use rights in respect of the Property for its specific term at nominal annual land use fee have been granted and that any premium payable has been fully paid. We have also assumed that the owner of the Property has a good legal title to the Property and has free and uninterrupted rights to occupy, use, transfer, lease or mortgage the Property for the whole of the unexpired term as granted.

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

SITE INSPECTION

We have inspected the Property. Site inspection was carried out on 11 March 2019 by our Ms. Karen Li, who has over 3 years’ experience in valuation of properties in the PRC. During the course of our inspection, we did not note any serious defects. Moreover, no structural survey has been made and we are therefore unable to report that the Property is free from rot, infestation or any other structural defects. No tests were carried out on any of the services. We

– V-3 –

VALUATION REPORT

APPENDIX V

have also not carried out investigations on site to determine the suitability of the ground conditions and services for future development. Our valuation is prepared on the assumption that these aspects are satisfactory and no extraordinary expenses or delay will be incurred during the development period.

CURRENCY

Unless otherwise stated, all money amounts stated are in Renminbi (“RMB”).

We enclose herewith our valuation report.

Yours faithfully,

For and on behalf of Savills Valuation and Professional Services Limited

Anthony C.K. Lau MRICS MHKIS RPS(GP) Director

• Note: Mr. Anthony C.K. Lau is a professional surveyor who has over 25 years’ experience in valuation of properties in the PRC.

– V-4 –

VALUATION REPORT

APPENDIX V

VALUATION REPORT

Description and tenure

Property

Land Lot The Property comprises a parcel of No. W15-18-0053, land with a site area of “New Grass Tail approximately 90,500.50 sq.m. (新草尾)” of Zhang Second Village, The Property is located at “New Zhongshan Torch Grass Tail (新草尾)” of Zhang Development Zone, Second Village, Zhongshan Torch Zhongshan, Development Zone. Developments in Guangdong Province, the vicinity are dominated by PRC various residential developments and public facilities. It takes about a 10-minute drive from the Property to Zhongshan Port and a 40-minute drive to the downtown of Zhongshan.

Market value in Particulars of existing state as at occupancy 28 February 2019 As at the valuation RMB1,600,000,000 date, the Property was (Renminbi vacant pending for One Billion and future development. Six Hundred Million)

According to the State-owned Land Use Rights Grant Contract, the maximum permissible gross floor area of the Property is approximately 271,501.50 sq.m.

The land use rights of the Property have been granted for a term expiring on 3 January 2089 for residential use.

Notes:

1. Pursuant to the State-owned Land Use Rights Grant Contract – No. 442000-2018-001912 dated 22 November 2018 and two Supplementary Contracts dated 6 December 2018, the land use rights of the Property with a site area of approximately 90,500.50 sq.m. have been granted to Zhongshan Yuhong Real Estate Development Limited (中山禹鴻房地產開發有限公司) (“Target Company”) for a term of 70 years for residential use, at a land grant fee of RMB1,523,123,415. The said contracts contain, inter-alia, the salient conditions as follows:

Usage : Residential Plot ratio : Not more than 3 and not less than 1 Building density : Not more than 30% Greenery ratio : Not less than 38% Building covenant : Construction works are required to be commenced by 6 January 2020 and to be completed by 5 January 2023

1. Pursuant to the Realty Title Certificate – Yue (2019) Zhongshan Shi Bu Dong Chan Quan Di No. 0028133 dated 23 January 2019, the land use rights of the Property with a site area of approximately 90,500.50 sq.m. have been granted to the Target Company for a term expiring on 3 January 2089 for residential use.

2. Pursuant to the Construction Land Planning Permit – Di Zi Di No. 271122018120002 issued by the Zhongshan Urban and Rural Planning Bureau dated 14 December 2018, the Target Company was permitted to use a parcel of land with a site area of approximately 90,500.50 sq.m. for residential (R2) development.

– V-5 –

VALUATION REPORT

APPENDIX V

1. We have been provided with a legal opinion on the title to the Property issued by the Company’s PRC legal adviser, which contains, inter-alia, the following information:

2. i. the Target Company has fully paid the land grant fee;

3. ii. the Target Company has obtained Realty Title Certificate and Construction Land Planning Permit;

4. iii. the Target Company has the rights to occupy, use, transfer, lease, mortgage or by other means dispose of the Property in accordance with the relevant laws and regulations, and the stipulations in the State-owned Land Use Rights Grant Contract; and

5. iv. the Property is free from any seizures, mortgages or other third party rights.

6. In undertaking our valuation of the Property, we have made reference to various land transactions which have characteristics comparable to the Property. The accommodation values of the land transactions are in a range between RMB7,250 to RMB8,000 per sq.m. Due adjustments to the unit rates of these transactions have been made to reflect factors such as accessibility, location, usage, size and time in arriving at the key assumptions.

In our valuation, we have adopted an accommodation value of about RMB5,890 per sq.m., which is consistent with the relevant comparables.

– V-6 –

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DIRECTORS’ INTERESTS

Directors’ and chief executive’s interests and short positions in the 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 ”).

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%
			of issued share
Name of Substantial		Number of	capital of the
Shareholder	Capacity/Nature	Shares held	Company
Pacific Climax	Beneficial owner	530,894,000	70.94%
	(note 1)	(long position)

– VI-1 –

GENERAL INFORMATION

APPENDIX VI

			Approximate%
			of issued share
Name of Substantial		Number of	capital of the
Shareholder	Capacity/Nature	Shares held	Company
Overseas Chinese	Interest of a controlled	530,894,000	70.94%
Town (HK)	corporation (note 2)	(long position)
Company Limited
(“OCT (HK)”)
Shenzhen Overseas	Interest of a controlled	530,894,000 (long	70.94%
Chinese Town	corporation (note 3)	position)
Holding Company
Limited
(“OCT Ltd.”)
Overseas Chinese	Interest of a controlled	530,894,000 (long	70.94%
Town Group	corporation (note 4)	position)
Company Limited
(“OCT Group”)

Notes:

• (1) The interests held by Pacific Climax consist of interests (long position) in 530,894,000 Shares. 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. OCT Ltd. is deemed, or taken to be interested in all the Shares which are beneficially owned by OCT (HK) and Pacific Climax pursuant to 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.

– VI-2 –

GENERAL INFORMATION

APPENDIX VI

3. 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.

4. 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).

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 2018 (being the date to which the latest published 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. 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 2018 (being the date to which the latest published accounts of the Company were made up).

7. EXPERT AND CONSENT

The qualifications of the experts who have been named in this circular or have given opinions or advice which are contained herein are set out below:

Name			Qualification
KPMG			Certified Public Accountants
Savills			Professional surveyors and valuers
JunZeJun	Law	Offices	PRC legal advisers

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As at the Latest Practicable Date, each of the experts named above did not have 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.

Each of the experts named above has given and has not withdrawn their respective written consent to the issue of this circular, with the inclusion of its letter, opinion, report or references to its name in the form and context in which they are included.

Each of the experts named above did not have any direct or indirect interest in any assets which have been, since 31 December 2018 (being the date to which the latest published financial statements of the Group were made up), acquired or disposed of by or leased to any member of the Group, or were 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 date of this circular and are or may be material:

• (a) 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 at a consideration of RMB164,673,100;

• (b) 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) at a consideration in the sum equals the USD equivalent of RMB1,395,249,891.13;

• (c) 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);

• (d) the equity transfer agreements (together with the supplemental agreement thereto) entered into between City Legend International Limited (“ 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 5.11% equity interest in Tongcheng-Elong Holdings Limited by City Legend at a consideration of approximately RMB1.18 billion;

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• (e) the cornerstone investment agreement entered into between City Legend and Tianli Education International Holdings Limited (“ Tianli Education ”) and China International Capital Corporation Limited on 26 June 2018 in relation to subscription of 4.82% of the issued share capital of Tianli Education at a subscription price of approximately HK$266 million;

• (f) the cornerstone investment agreement entered into among City Legend, E-House (China) Enterprise Holdings Limited and China International Capital Corporation Hong Kong Securities Limited on 5 July 2018 in relation to the subscription of 73,371,900 shares in E-House (China) Enterprise Holdings Limited at the subscription price of approximately HK$1,055 million;

• (g) the subscription agreement entered into between City Legend and Yuzhou Properties on 31 August 2018 in relation to the subscription of 460,489,606 new shares in Yuzhou Properties at the aggregate subscription price of HK$1,823,538,839.76;

• (h) 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.;

• (i) the equity transfer agreement dated 24 December 2018 entered into between Chengdu Tianfu OCT Industry Development Company Limited (成都天府華僑城實 業發展有限公司, “ Chengdu OCT ”), a non-wholly owned subsidiary of the Company, Zhongbao Investment Overseas Chinese Town (Shenzhen) Tourism Cultural City Renewal Equity Investment Fund Partnership (Limited Partnership) (中保投華僑城(深圳)旅遊文化城市更新股權投資基金合夥企業(有限合夥), “ Zhongbao Investment Fund ”) and Chengdu Tianfu OCT Lakeside Business Management Co. Ltd. (成都天府華僑城湖濱商業管理有限公司, “ OCT Lakeside ”) in relation to the disposal of 51% equity interest in OCT Lakeside by Chengdu OCT to Zhongbao Investment Fund at the consideration of approximately RMB60.53 million;

• (j) the equity transfer agreement dated 27 December 2018 entered into between Wantex Investment Limited (榮添投資有限公司), an indirectly wholly-owned subsidiary of the Company, and Shenzhen Quande Investment Company Limited (深圳市全德投 資有限公司) and Shenzhen Zhijie Investment Company Limited (深圳智捷投資有 限公司) in relation to the disposal of 100% equity interest in Zhongshan Huali Packaging Co., Ltd.* (中山華力包裝有限公司) at the total consideration of approximately RMB150.29 million;

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• (k) the Cooperation Agreement;

• (l) the Equity Transfer Agreement; and

• (m) the Debt Transfer Agreement.

9. 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.

10. 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, 75 Fort Street, PO Box 1350 GT, George Town, Grand Cayman, Cayman Islands. The head office and principal place of business is at 59/F., Bank of China Tower, 1 Garden Road, Hong Kong.

• (c) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text.

11. 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 59/F., Bank of China Tower, 1 Garden Road, Hong Kong from the date of this circular up to and including 9 May 2019:

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

• (b) the annual reports of the Company for the years ended 31 December 2015, 2016 and 2017 and the interim report of the Company for the six months ended 30 June 2018;

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

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• (d) the report from the reporting accountants, KPMG, on unaudited pro forma financial information of the Group, the text of which is set out in Appendix IV to this circular;

• (e) the valuation report on the Land as prepared by Savills as set out in Appendix V to this circular;

• (f) the written consents as referred to under the section headed “Experts and Consents” in this Appendix;

• (g) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix;

• (h) a copy of each circular issued pursuant to the requirements set out in Chapters 14 and/or 14A of the Listing Rules which has been issued since 31 December 2018 (being the date of which the last published accounts); and

• (i) this circular.

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