Rykadan Capital Limited — Proxy Solicitation & Information Statement 2017

Sep 22, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Rykadan Capital Limited 宏基資本有限公司 , you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker 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.

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2288)

(1)VERY SUBSTANTIAL DISPOSAL – DISPOSALS OF PROPERTY AND A SUBSIDIARY

(2) DISCLOSEABLE TRANSACTION – GRANT OF OPTION TO BUY BACK PROPERTY

(3) VERY SUBSTANTIAL ACQUISITION – GRANT OF OPTIONS

TO BUY BACK PROPERTY AND/OR A SUBSIDIARY

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Unless otherwise defined or the context otherwise requires, all capitalised terms used in this circular have the meanings set out in the section headed “ Definitions ” of this circular. A letter from the Board is set out on pages 6 to 23 of this circular.

A notice convening the extraordinary general meeting of the Company is set out on pages 96 to 98 of this circular. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions stated thereon and return it to the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the extraordinary general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish. In such event, the form of proxy shall be deemed to be revoked.

22 September 2017

CONTENTS

			Page
Definitions . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			6
Appendix I	–	Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . .	24
Appendix II	–	Accountants’ Report of the Target Company. . . . . . . . . . . . . . . .	34
Appendix III	–	Management Discussion and Analysis of the Target Company . .	55
Appendix IV	–	Pro Forma Financial Information of the Remaining Group . . . .	57
Appendix V	–	Valuation Report on the Property . . . . . . . . . . . . . . . . . . . . . . . .	82
Appendix VI	–	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	89
Notice of Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			96

– i –

DEFINITIONS

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

“Block 4” Block 4 of the Property with a total gross floor area of approximately 7,088.24 sq.m. which is to be disposed of by the Target Company pursuant to the Framework Agreement and the Property SPA

• “Board” the board of Directors

• “BVI” British Virgin Islands

• “Company”

Rykadan Capital Limited, an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 2288)

• “Company Disposal”

the disposal by Power City of its 100% equity interest in the Target Company pursuant to the Framework Agreement and the Target Company SPA

• “Company Disposal Consideration”

the consideration for the Company Disposal payable to Power City and to be determined pursuant to the Framework Agreement and the Target Company SPA

• “Controlling Shareholder(s)”

has the meaning ascribed thereto under the Listing Rules, and in the context of the Company, means Rykadan Holdings, Tiger Crown, Mr. Chan, Scenemay, Mr. Li and Ms. Li

• “Deposit”

the deposit in the amount of RMB2 million payable by the Purchaser as disclosed in the section headed “ Framework Agreement – Deposit ” on the letter from the Board of this circular

• “Director(s)”

the director(s) of the Company

• “Disposals”

the Property Disposal and the Company Disposal

• “EGM”

the extraordinary general meeting of the Company to be held at Function Room, 23H, Level 23, One Island East, 18 Westlands Road, Island East, Hong Kong on Tuesday, 17 October 2017 at 3:00 p.m. (or, in the event that a black rainstorm warning signal or a tropical cyclone warning signal no. 8 or above is in force in Hong Kong at 12 noon on that day, at the same time and place on Tuesday, 24 October 2017) (or any adjournment thereof)

– 1 –

DEFINITIONS

• “Environmental Assessment Procedures”

• the environmental assessment procedures for research and development of biomedicine

• “Framework Agreement”

• the framework agreement dated 5 July 2017 entered into among Power City, the Target Company and the Purchaser in relation to the Disposals and the Options

• “Group” the Company and its subsidiaries

• “HK$” or “HKD” Hong Kong dollars, the lawful currency of Hong Kong

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

• “Land”

• the land located at No. 2300 Xuanhuang Road, Huinan County, Shanghai, PRC（中國上海市惠南鎮宣黃公路2300 號）with a site area of 34,760 sq.m. where the Property is erected thereon

• “Latest Practicable Date”

• 19 September 2017, being the latest practicable date prior to the printing of this circular for ascertaining information in this circular

• “Listing Rules”

• the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Mr. Chan”

• Mr. Chan William, an executive Director, Chairman, Chief Executive Officer and one of the Controlling Shareholders

• “Mr. Li”

• Mr. Li Chu Kwan, one of the Controlling Shareholders and Ms. Li’s brother

• “Mr. Ng”

• Mr. Ng Tak Kwan, a non-executive Director and a substantial Shareholder

• “Ms. Li”

• Ms. Li Wing Yin, one of the Controlling Shareholders and Mr. Li’s sister

• “Option A”

• the right granted to the Purchaser to demand the Target Company to buy back Block 4 at the Property Disposal Consideration, as disclosed in the section headed “ Framework Agreement – Deposit ” in the letter from the Board of this circular

– 2 –

DEFINITIONS

• “Option B” the right granted to the Purchaser to demand the Target Company to buy back Block 4 at the then prevailing market price, as disclosed in the section headed “ Framework Agreement – Other principal terms – Time of signing of the Target Company SPA ” in the letter from the Board of this circular

• “Option C” the right granted to the Purchaser (i) to terminate the Target Company SPA and demand Power City to return to the Purchaser any of the Company Disposal Consideration paid and pay an amount equal to ten times of the undisclosed debt and subject to Power City making the aforesaid payment, the shares in the Target Company will be transferred back to Power City; and (ii) if the Purchaser exercises its right to terminate the Target Company SPA as aforesaid, to demand the Target Company to buy back Block 4 at the prevailing market price, as disclosed in the section headed “ Framework Agreement – Other principal terms – Undertakings ” in the letter from the Board of this circular

• “Options” Option A, Option B and Option C “Power City” Power City Investments Limited, a company incorporated in Hong Kong, and a 59%-owned indirect subsidiary of the Company

• “PRC” the People’s Republic of China “Property” Kailong Nanhui Business Park （凱龍南匯商務園）, an industrial complex comprises of five blocks of buildings, canteen and other facilities, with a total gross floor area of 52,304.07 sq.m., erected on the Land

• “Property Disposal” the disposal of Block 4 by the Target Company to the Purchaser pursuant to the Framework Agreement and the Property SPA

• “Property Disposal RMB42,529,440, being the consideration for the Consideration” Property Disposal payable by the Purchaser to the Target Company pursuant to the Framework Agreement and the Property SPA

“Property SPA” the property sale and purchase agreement dated 5 July 2017 entered into between the Purchaser and the Target Company for the Property Disposal

– 3 –

DEFINITIONS

• “Purchaser” 上海美迪西生物醫藥股份有限公司 (Shanghai Medicilon Inc.), a limited liability company established in the PRC

• “Reference Date” 5 working days before the signing of the Target Company SPA

• “Remaining Blocks” the Property excluding Block 4 “Remaining Group” the Group excluding the Target Company “RMB” Renminbi, the lawful currency of the PRC “Rykadan Holdings” Rykadan Holdings Limited, a company incorporated in the BVI with limited liability, the entire issued share capital of which is the trust asset of Rykadan Trust, a discretionary trust founded by Mr. Chan and managed by HSBC International Trustee Limited as trustee of Rykadan Trust

• “Scenemay” Scenemay Holdings Limited, a company incorporated in the BVI with limited liability and a substantial Shareholder

• “SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong, as amended, supplemented or otherwise modified from time to time

• “Share(s)” share(s) of HK$0.01 each in the Company “Shareholder(s)” holders of Share(s) “sq.m.” square metre

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Target Company” 美邦啓立光電科技（上海）有限公司 (Bestlinkage NHI Co., Ltd.), an enterprise with investment of Taiwan, Hong Kong, Macau and Overseas Chinese in the People’s Republic of China established in Shanghai, PRC with limited liability directly and wholly-owned by Power City, and, as at the Latest Practicable Date and immediately prior to completion of the Target Company SPA, an indirect non wholly-owned subsidiary of the Company

– 4 –

DEFINITIONS

• “Target Company SPA” the agreement to be entered into between Power City as vendor and the Purchaser as purchaser for the sale and purchase of the entire equity interest of the Target Company

• “Tiger Crown” Tiger Crown Limited, a company incorporated in the BVI with limited liability and a substantial Shareholder, and a controlled corporation of Mr. Chan under the SFO

• “U.K.” the United Kingdom “U.S.A.” the United States of America “%” per cent.

– 5 –

LETTER FROM THE BOARD

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2288)

Executive Directors:

Mr. Chan William（陳偉倫） (Chairman and Chief Executive Officer)

Mr. Yip Chun Kwok（葉振國）

(Chief Financial Officer)

Registered Office:

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Non-executive Director:

Mr. Ng Tak Kwan（吳德坤）

Independent Non-executive Directors:

Mr. Ho Kwok Wah, George（何國華） Mr. To King Yan, Adam（杜景仁） Mr. Wong Hoi Ki（黃開基）

Principal Place of Business in Hong Kong:

Rooms 2701 & 2801 Rykadan Capital Tower 135 Hoi Bun Road Kwun Tong, Kowloon Hong Kong

22 September 2017

To the Shareholders

Dear Sir/Madam,

(1) VERY SUBSTANTIAL DISPOSAL – DISPOSALS OF PROPERTY AND A SUBSIDIARY (2) DISCLOSEABLE TRANSACTION – GRANT OF OPTION TO BUY BACK PROPERTY (3) VERY SUBSTANTIAL ACQUISITION – GRANT OF OPTIONS TO BUY BACK PROPERTY AND/OR A SUBSIDIARY

INTRODUCTION

Disposals

Reference is made to the announcement of the Company dated 5 July 2017 in relation to the Disposals and the Options, whereby on 5 July 2017 (after trading hours of the Stock Exchange), (1) Power City and the Target Company, both being indirect subsidiaries of the

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LETTER FROM THE BOARD

Company, entered into the Framework Agreement with the Purchaser, an independent third party, in respect of the Disposals, being the Property Disposal and the Company Disposal, and (2) the Target Company and the Purchaser entered into the Property SPA in respect of the Property Disposal.

The purpose of this circular is to provide you with, among other things, (i) further details of the Disposals and the Options, and (ii) the notice of the EGM and (iii) other information as required under the Listing Rules.

FRAMEWORK AGREEMENT

Date

5 July 2017

Parties

• (1) Power City, an indirect subsidiary of the Company;

• (2) the Target Company, a direct wholly-owned subsidiary of Power City; and

• (3) the Purchaser.

Assets to be disposed of

As at the Latest Practicable Date, the Target Company owned the Property (being Block 4 and the Remaining Blocks).

Pursuant to the Framework Agreement, the Purchaser has agreed to purchase Block 4 from the Target Company by way of the Property Disposal, and then to purchase the entire equity interest in the Target Company from Power City by way of the Company Disposal, thereby effectively purchasing the Property entirely. Following completion of the Property Disposal, the Target Company will cease to own Block 4 but will continue to own the other parts of the Property (i.e. the Remaining Blocks). After completion of the Company Disposal, the Target Company will cease to be a subsidiary of the Group and the Company will cease to own any part of the Property.

Conditions precedent

• (1) Completion of the Property SPA is conditional upon the fulfilment of the condition that the Company having obtained Shareholders’ approval for the Framework Agreement, the Property SPA and the transactions contemplated thereunder (including the Company Disposal) as required under the Listing Rules; and

• (2) The signing of the Target Company SPA is conditional upon the transactions contemplated under the Property SPA having been completed.

– 7 –

LETTER FROM THE BOARD

In the event that condition (1) above is not fulfilled on or before 31 October 2017, the Framework Agreement and the Property SPA will be terminated.

Consideration

The Property Disposal Consideration is RMB42,529,440, which was arrived at on the basis of the agreed price of RMB6,000 per sq.m. and the gross floor area of Block 4 of 7,088.24 sq.m.. The Property Disposal Consideration was determined after arm’s length negotiations between the parties thereto with reference to market price of comparable properties in the PRC.

The Company Disposal Consideration is to be calculated as follows:

• (1) the agreed price of each sq.m. of the Remaining Blocks set out in the table below multiplied by the gross floor area of the Remaining Blocks of 45,215.83 sq.m.; plus

• (2) the amount of cash, bank deposit and other assets (if it is a positive amount) of the Target Company as at the Reference Date; minus

• (3) the total liabilities of the Target Company as at the Reference Date,

and for the purpose of the above calculation,

• (i) “other assets” means the amount of assets as shown in the statement of financial position of the Target Company as at the Reference Date, including accounts receivable, prepayments and other receivables; and

• (ii) “total liabilities of the Target Company” means all amounts of loans and other sums owing by the Target Company to Power City, bank loans, accounts payable, advance receipts, tax payable and other payables of the Target Company as at the Reference Date.

		Consideration of
		Company Disposal
Date of signing of the Target	Agreed price	(subject to
Company SPA	per sq.m.	adjustments)
1 January 2017 to 31 December 2017	RMB6,300	RMB284,859,729
1 January 2018 to 31 December 2018	RMB6,615	RMB299,102,715
1 January 2019 to 31 December 2019	RMB6,946	RMB314,069,155
1 January 2020 to 30 June 2020	RMB7,293	RMB329,759,048

The agreed price per sq.m. varies according to the date of signing of the Target Company SPA and such date may fall on any date in the period from (A) the satisfaction of condition (2) in the section headed “ Framework Agreement – Conditions precedent ” above to (B) 30 June 2020 (the “ Signing Period ”) and was determined based on the agreed price of Block 4 of RMB6,000 per sq.m. and applying an annual inflation rate of 5%. The Signing

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LETTER FROM THE BOARD

Period and the basis of determining the Company Disposal Consideration were determined after arm’s length negotiations between Power City and the Purchaser. The Directors believe that the Signing Period as well as the basis of determining the Company Disposal Consideration are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Terms of payment

The Property Disposal Consideration is to be paid in accordance with the provisions of the Property SPA. For details regarding payment of the Property Disposal Consideration, please refer to the section headed “ Property SPA – Terms of payment ” below.

In respect of the Company Disposal Consideration, the Purchaser is required to pay Power City (1) 50% of the Company Disposal Consideration as first instalment within two working days after the date on which the Target Company SPA is signed; and (2) the balance of the Company Disposal Consideration on the date upon the issuance of the new business licence of the Target Company by the industries and commence authority（工商主管 機關） showing the Purchaser as the sole shareholder of the Target Company (the “ New Business Licence ”). The Purchaser is required to deposit the balance of the Company Disposal Consideration into a bank account (which is to be opened in the name of the Target Company and jointly managed by Power City and the Purchaser) within three working days after the payment of the first instalment. The Purchaser and Power City are required to apply to the relevant authorities for registration of transfer of 100% of the equity interest in the Target Company within three working days after the Purchaser has deposited such balance to the bank account as mentioned above.

Deposit

Within two days from the signing of the Framework Agreement and the Framework Agreement becoming effective, the Purchaser is required to pay the Target Company a deposit of RMB2 million (the “ Deposit ”).

If after the Purchaser has paid the Deposit according to the Framework Agreement and the Target Company refuses to sign the Property SPA or breaches the obligation regarding confidentiality, the Purchaser is entitled to terminate the Framework Agreement and demand the payment by the Target Company of an amount equal to 200% of the Deposit. If the Environmental Assessment Procedures has failed to be passed and such failure is not caused by the Purchaser and the Target Company and is due to reasons including but not limited to legal, regulatory and policy, at a time when:

• (i) the transfer of Block 4 has not yet been completed, then the Purchaser has the right to demand the Target Company to return of the Deposit and all other amounts paid by the Purchaser pursuant to the Property SPA by notice in writing made within 30 days after the confirmation of such failure, and the Purchaser and the Target Company are not obliged to proceed with the Company Disposal, and are not liable to the other party; or

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LETTER FROM THE BOARD

• (ii) the transfer of Block 4 has already been completed, then the Purchaser has the right to demand the Target Company to buy back Block 4 at the Property Disposal Consideration by notice in writing made within 30 days after the confirmation of such failure (“ Option A ”).

Upon completion of the Property Disposal, and obtaining the property right certificate in respect of Block 4, the Target Company is required to transfer the Deposit to Power City as the guarantee sum for the Company Disposal. Upon completion of the Company Disposal, such guarantee sum (which carries no interest) will be refunded to the Purchaser or applied as part of the payment of the balance of the Company Disposal Consideration.

Other principal terms

Timing of signing of the Target Company SPA

Power City and the Purchaser are required to enter into the Target Company SPA on or before 30 June 2020.

If the Purchaser fails to sign and proceed to perform the Target Company SPA with Power City on or before 30 June 2020 other than as provided in the Framework Agreement, (i) the Purchaser is required to pay Power City RMB15 million as compensation; (ii) Power City is entitled to forfeit the Deposit paid by the Purchaser; and (iii) the Target Company is entitled within 30 days from 30 June 2020 in writing to purchase Block 4 back from the Purchaser at the same price at which it is sold to the Purchaser.

Provided that the Framework Agreement has been signed and the transactions contemplated under the Property SPA had been completed, if Power City fails to sign and proceed to perform the Target Company SPA on or before 30 June 2020, the Purchaser is entitled within 30 days from 30 June 2020 in writing to (i) terminate the Framework Agreement whereupon Power City is required to pay RMB15 million (inclusive of the compensation for the renovation cost of the Purchaser) as compensation and refund an amount equal to 200% of the Deposit to the Purchaser; or (ii) demand Power City to proceed to perform the Company Disposal in accordance with the Framework Agreement. In addition, if the Purchaser exercises its right to terminate the Framework Agreement as mentioned above, the Purchaser can at the same time in writing demand the Target Company to buy back Block 4 at the then prevailing market price which is to be the price as valued by one of the five surveyors, namely Colliers International, Savills, CBRE Group, Inc., Debenham Thouard Zadelhoff and Jones Lang LaSalle (“ Option B ”). The Company has been advised by its PRC legal adviser that pursuant to the relevant law, if Power City fails to sign and proceed to perform the Target Company SPA pursuant to the Framework Agreement, the Purchaser is entitled to demand Power City to bear the agreed obligation of such breach as provided in the Framework Agreement (i.e. the consequences as set out in sub-paragraphs (i) and (ii) in this paragraph) or demand the termination of the Framework Agreement and to claim for damages.

– 10 –

LETTER FROM THE BOARD

Renting of Remaining Blocks

Prior to completion of the Property Disposal and the Company Disposal, the Target Company is permitted to lease the Remaining Blocks to other parties (provided that, the lease term of Block 3 does not extend beyond 30 June 2020 and the lease term of Blocks 1, 2 and 5 does not extend beyond 31 December 2022), but before doing so, the Target Company is required to give the Purchaser advance notice. The Purchaser is required to notify the Target Company within seven days of such notice whether the Purchaser will rent the relevant units of the Remaining Blocks on the same terms and conditions.

Restriction from disposal of Block 4 by the Purchaser

The Purchaser is not allowed to dispose Block 4 prior to completion of the Company Disposal unless the purpose of the Framework Agreement cannot be achieved due to reasons caused by Power City or the Target Company. If there is a breach of such obligation by the Purchaser, the Purchaser is required to pay RMB10 million to the Target Company as compensation.

Repayment of amount owing by the Target Company to Power City and its affiliates

Within 30 days after the issuance of the New Business Licence, the Purchaser is required to cause the Target Company to repay all outstanding loans and other amounts owing by the Target Company to Power City and its affiliates. If the debt owing by the Target Company to Power City or its related companies has not been settled after 30 days from the issue of the New Business Licence of the Target Company, Power City is entitled to overdue payment surcharge of 0.5% of such outstanding debt per day until it is fully settled.

Undertakings

If without the prior consent of the Purchaser, the difference between (i) the amount of debt of the Target Company on the Reference Date as disclosed in the Target Company SPA and (ii) the amount of debt of the Target Company disclosed in the Framework Agreement is more than RMB15 million, then apart from directly adjusting the Company Disposal Consideration through net asset, the Purchaser is entitled to deduct a sum representing 5% of the amount over and above RMB15 million from the Company Disposal Consideration.

If within 18 months after completion of the Target Company SPA, the Purchaser discovers that there was any undisclosed debt of the Target Company before the Reference Date, Power City is required to settle such undisclosed debt or pay an amount representing such undisclosed debt to the Purchaser within 30 days of receiving the notice and evidence of such debt from the Purchaser. Should there be any undisclosed debt of the Target Company before the Reference Date or any defect in Power City’s title over the equity interest of the Target Company after the agreed period, the Purchaser is entitled to demand Power City to pay off such undisclosed debt or to rectify such defect (as the case may be). If after the expiry of 30 days from receiving the Purchaser’s demand, Power City still fails to settle such undisclosed debts and the amount of such unsettled debts is over RMB200,000, or to rectify such defect (as the case may be), (i) the Purchaser is entitled to

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LETTER FROM THE BOARD

terminate the Target Company SPA and demand Power City to return any of the Company Disposal Consideration paid and pay the Purchaser an amount equal to ten times of the undisclosed debts subject to Power City making the aforesaid payment, the shares in the Target Company will be transferred back to Power City; and (ii) if the Purchaser exercises its right to terminate the Target Company SPA as aforesaid, the Purchaser is also entitled to demand the Target Company to buy back Block 4 at the prevailing market price which is to be the price as valued by one of the five surveyors, namely Colliers International, Savills, CBRE Group, Inc., Debenham Thouard Zadelhoff and Jones Lang LaSalle and the Target Company is responsible for the tax and the valuation of Block 4 arising from such buy back (“ Option C ”).

The Target Company irrevocability guarantees the above obligation of Power City and assumes joint and several liability. Power City irrevocability guarantees the above obligation of the Target Company and assumes joint and several liability.

Default

In addition to liabilities arising from any breach of obligations set out in the sub-sections headed “ Timing of signing of the Target Company SPA ”, “ Repayment of amount owing by the Target Company to Power City and its affiliates ” and “ Restriction from disposal of Block 4 by the Purchaser ” above, the parties agree that, in the event of non-performance of any other obligation under the Framework Agreement or performance not according to the agreements under the Framework Agreement, or in breach of any guarantee or undertaking of the Framework Agreement, the defaulting party shall (1) rectify such default within reasonable time as requested by the non-defaulting party; and (2) pay to the non-defaulting party direct economic loss incurred by the non-defaulting party.

Effectiveness

The Framework Agreement shall become effective upon (a) being signed and chopped with official seals of all parties and (b) condition (1) in section headed “ Framework Agreement – Conditions precedent ” above having been satisfied.

PROPERTY SPA

Date

5 July 2017

Parties

• (1) The Target Company, a direct wholly-owned subsidiary of Power City; and

• (2) the Purchaser.

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LETTER FROM THE BOARD

Property to be disposed of

Subject to the terms and conditions of the Property SPA, the Target Company has agreed to sell and the Purchaser has agreed to acquire Block 4.

Conditions precedent

The Property Disposal is subject to the following conditions precedent:

• (1) the Target Company and the Purchaser having signed the Framework Agreement, and the Purchaser having paid the deposit of RMB2 million to the Target Company in accordance with the terms of the Framework Agreement;

• (2) the Target Company and the Purchaser having obtained their respective internal approval and authorisation to enter into the Property SPA and any transaction documents ancillary thereto;

• (3) the Company having obtained Shareholders’ approval for the Framework Agreement, the Property SPA and the transactions contemplated thereunder (including but not limited to Company Disposal) as required under the Listing Rules;

• (4) the representations, undertakings and warranties given by the Target Company and the Purchaser respectively under the Property SPA and the annexes to the Property SPA being true, reliable and valid and there being no concealment, deception or infringement of any third party rights; and both the Target Company and the Purchaser having voluntarily borne their own legal responsibility for any breach of such warranties on its part.

In the event that condition (3) above is not fulfilled on or before 31 October 2017, the Property SPA will be terminated.

Consideration

The Property Disposal Consideration is RMB42,529,440 and is arrived at on the basis of the agreed price of RMB6,000 per sq.m. and the gross floor area of Block 4 of 7,088.24 sq.m..

The Property Disposal Consideration was determined after arm’s length negotiations between the parties thereto with reference to market price of comparable properties in the PRC.

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LETTER FROM THE BOARD

Terms of payment

The Property Disposal Consideration is payable in cash. The Purchaser is required to pay to the Target Company (1) 50% of the Property Disposal Consideration within two working days after the Property SPA is signed and becomes effective, and (2) the remaining 50% of the Property Disposal Consideration within two working days after the Target Company has obtained the Deed Tax Settlement Certificate（契稅辦理證明）.

Other principal terms

Completion and delivery of Block 4

Within three working days after the Target Company has received the remaining 50% of the Property Disposal Consideration, the Target Company is required to submit all relevant materials to the relevant bank and apply for a repayment of the part of the relevant loans and obtain a release of the mortgage over Block 4. Within three working days after the Target Company has obtained a release of the mortgage over Block 4 from the relevant bank, the Target Company and the Purchaser are required to apply for the transfer of title in respect of Block 4.

Within five working days after the receipt of Ownership Certificate in respect of Block 4, the Target Company is required to deliver possession of, and the relevant documents relating to, Block 4 to the Purchaser.

Target Company’s first right of refusal

The Target Company can make enquires from time to time to the Purchaser on the intention of the Purchaser to dispose of Block 4 (or any party thereof), and the Purchaser is required to reply to such enquires promptly. If the Target Company was notified of the Purchaser’s disposal intention, the Target Company has the first right to purchase Block 4 (or the relevant part thereof) from the Purchaser.

Effectiveness

The Property SPA shall become effective upon (a) the Property SPA being signed by the authorised person, and chopped with the official seals, of the parties and (b) the Company having obtained Shareholders’ approval for the Property SPA and the transactions contemplated thereunder as required under the Listing Rules.

INFORMATION OF POWER CITY AND THE PURCHASER

Power City is an investment holding company and holds the entire equity interest in the Target Company.

The principal business of the Purchaser is the provision of drug discovery and development services to pharmaceutical and biotechnology companies in the PRC.

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LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Purchaser and its ultimate beneficial owner are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

INFORMATION OF THE TARGET COMPANY AND THE PROPERTY

The Target Company is a property investment holding company and its major asset is its legal and beneficial interest in the Property.

Set out below is the financial information of the Target Company for the two years ended 31 March 2016 and 2017 as extracted from the accountants’ report of the Target Company as set out in Appendix II to this circular:

			For the year	For the year
			ended	ended
			31 March	31 March
			2016	2017
			RMB’000	RMB’000
Net	(loss)/profits	before taxation	(12,908)	5,750
Net	(loss)/profits	after taxation	(10,758)	3,622
			As at	As at
			31 March	31 March
			2016	2017
			RMB’000	RMB’000
Net	assets		131,157	134,779

The Land is located in the Nanhui area, an eastern part of Shanghai close to Shanghai Disney Resort, Shanghai Pudong International Airport and Shanghai Harbour City, and has excellent transport and communications network. Being in the Nanhui Industrial Zone of Shanghai, the PRC, the Land enjoys the preferential tax and subsidies policies available to state level economic and development zones. The Land has a site area of 34,760 sq.m. on which the Property, which has a total gross floor area of 52,304.07 sq.m., was erected. The period of land use rights over the Land is from 31 December 2006 to 30 December 2056.

The Property consists of five high quality buildings and a guard house, power shed and car park. Each building has four to five storeys and each storey has a gross floor area ranging from approximately 1,700 sq.m. to 4,000 sq.m.

Based on the aforesaid audited financial statements of the Target Company, as at 31 March 2017, the net asset value of the Target Company was approximately RMB135 million, including the Property (being Block 4 and the Remaining Blocks) at the fair value as approximately RMB289 million which was valued by an independent valuer.

– 15 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSALS

The Group operates and invests in real estate development, real estate investment and distribution of building materials. It has been the Company’s investment strategy to grow asset values, achieve stable yields and exit within a three-to-five year horizon for capital gain.

Acquisition of the interests of the Property in 2012

The Company has indirectly acquired the interests in the Property in 2012. As at the Latest Practicable Date, the Company held approximately 59% interest in Power City. Details relating to such acquisition were disclosed in the announcement of the Company dated 1 August 2012 and the circular of the Company dated 31 October 2012. Before such acquisition, the Company has conducted market research and study which showed that demand for industrial properties was stable in Shanghai while the vacancy rate was improving. While the prospect of the project with its then existing state was considered by the Company not good enough given that there was insufficient facilities for tenants, the Company believed that the prospect could be improved by carrying out upgrading work and implementing appropriate marketing plan and, as such, as disclosed in the Company’s announcement and circular referred to above, it was the Group’s intention to upgrade the buildings of the Property through renovation, fitting-out and furnishing works and other improvements to the greenery, amenities and interior of the existing buildings. Such upgrading works were completed in the second quarter of 2013.

After the acquisition of the interests in the Property in 2012, the local government has further promoted the development in Shanghai which brought an increase in the supply of industrial properties in Shanghai, including Nanhui District, exceeding the estimation made at the time the market research and study was conducted before the acquisition. With the increase in supply, potential tenants have more choices in different areas in Shanghai when compared to the time at which the Company contracted to acquire interest in this project. Furthermore, the entire new Metro Line was fully completed at the end of 2014, which was almost a year later than what the Company had originally anticipated. Affected by the above factors, the improvement in the development of Nanhui District which the Group had originally anticipated has failed to materialise.

It was the Company’s belief that the project would become self-contained following completion of the upgrading works, and could attract more tenants after the new Metro Line started to operate. The Company knew that there would be strong competition from other business parks but believed that with its lower level of rent when compared to other business parks with better locations, the Property could still attract tenants. Unfortunately, the prospect of the project turns out to be not as good as originally projected.

Low occupancy rate

The occupancy rate ranged from 1.58% to 26.42% (without taking into account of the portion rented by the Purchaser) since Power City’s acquisition of the interests in the Property. As at the Latest Practicable Date, there were 10 tenants (excluding the Purchaser)

– 16 –

LETTER FROM THE BOARD

renting an aggregate of 13,817.09 sq.m. of the Property, representing 26.42% of the total gross floor area of the Property (without taking into account of the portion rented by the Purchaser).

The overall occupancy rate as at 30 June 2017 of 41.8% as disclosed in the valuation report of the Property in Appendix V to this circular has taken into account the portion of the Property leased to the Purchaser (which accounted for an occupancy rate of approximately 15.38%). The Purchaser currently rents such portion of the Property for the purpose of conducting Environmental Assessment Procedures. The Board considers that the occupancy rate of 41.8% would not be reached but for the lease to the Purchaser, who leases the relevant portion of the Property with the view to purchase the Property and such lease pending completion of the Framework Agreement would facilitate the early completion of the Framework Agreement.

Continuous loss of the Target Company

The Target Company recorded net losses (before taxation) of approximately HK$1.59 million and HK$15.87 million for the year ended 31 March 2015 and 31 March 2016 respectively. As disclosed in the section headed “ Information of the Target Company and the Property ”, the Target Company recorded a net profit (after taxation) of RMB3,622,000 for the year ended 31 March 2017, compared to the net losses (after taxation) of RMB10,758,000 for the corresponding period in 2016. The change was mainly attributed to an increase in the fair value of the Property. The Board considered that the profitability of the Target Company may be affected by changes in the occupancy rate of the Property. Notwithstanding that the Target Company recorded a net profit for the year ended 31 March 2017, the Target Company recorded a loss from operations of approximately RMB836,000 for the year ended 31 March 2017.

Default by the Target Company and Power City

With regard to the Options which may seem lopsidedly favourable to the Purchaser, the Directors are of the view that the Options will only have actual consequence if the Target Company or Power City is in breach of the relevant provisions in the Framework Agreement, and take the view that the Target Company and Power City will not breach those terms and therefore does not expect the Options to become enforceable against the Target Company or Power City.

Property market fluctuations

The Company considers despite the fact that the property price in the PRC can potentially fluctuate during the Signing Period and that the risk may potentially be higher if the Signing Period is longer, there is no guarantee that the price of the Property would go up, and both Power City and the Purchaser will face the same risk of fluctuations in property price. The Company therefore does not consider the potential risk of property price fluctuations faced by the Company outweighs the benefits of the Disposals.

– 17 –

LETTER FROM THE BOARD

As disclosed in the section headed “ Framework Agreement – Consideration ” above , the Company Disposal Consideration will be determined by the date of signing of the Target Company SPA which will be agreed between Power City and the Purchaser and may fall on any date in the Signing Period. During the Signing Period, the property market in the PRC is subject to fluctuations in property prices in response to factors such as, among other things, the introduction of new regulations or measures by the PRC government, the potential over-development or market downturn in the PRC property sector, and the world economy. The Company Disposal Consideration does not represent the property value of the Remaining Blocks at the date of signing of the Target Company SPA.

“Lock-up” before completion

The Company considers that despite the terms of the Disposals would restrict the Target Company or Power City from disposing the Property, directly or indirectly, during the Signing Period to accept more attractive offers from other potential purchasers, it is normal that vendors of most sale and purchase transactions, the completion of which does not occur at the same time as the signing of the relevant sale and purchase agreement, are locked-up pending the completion of the Disposals. The Company is of the view that retaining the freedom of the Target Company or Power City in disposing the Property by not agreeing to the Signing Period or asking for a shorter period for signing would potentially risk losing the deal and having to wait for another potential purchaser when there is no evidence indicating that any better alternative offer to acquire the Property from other purchasers in the near future is likely.

The Company considers the Disposals to be the only available opportunity to exit from the investment in the Property for the investors of Power City. The Company as well as the other shareholders of Power City consider that the benefits that the Disposals can bring about outweigh the potential risk of the duration of Signing Period and the obligations imposed on Power City as set out in the section headed “ Framework Agreement – Other principal terms ” above.

Reduction of costs and new potential investment

Prior to completion of the Disposals, the Target Company finances the operation of the Property mainly by intercompany loans, bank loans and its internally generated cash flow.

In particular, the outstanding amount of the bank loans obtained to finance the Company’s investment in the Property amounted to approximately RMB32,155,000 as at 31 March 2017. Such loans bear interest at the People’s Bank of China Base Interest Rate per annum (which was 4.75% per annum for the year ended 31 March 2017), and is repayable by instalments semi-annually until July 2020.

The Company considers that the Disposals, if materialised, would allow the Company to repay the relevant loans obtained to finance the Company’s investment in the Property and thereby reduce the financial cost, and an earlier exit will allow the Company to release its investment already locked up in the Property, stop deploying its resources in financing the operation of the Property and obtain a return from such investment. Upon completion of the Property Disposals it is expected that the Group would save approximately

– 18 –

LETTER FROM THE BOARD

RMB1,825,000 of finance cost, assuming 1) the People’s Bank of China Base Interest Rate per annum remained at 4.75% and 2) the repayment of the relevant bank loans are on 31 October 2017 after receiving the remaining 50% of the Property Disposal consideration in accordance to the Property Disposal consideration outlined in page 14 of this circular. As a result, there will be an increase in the Company’s cash flow which could allow the Company to invest in other projects with better potential returns.

The Company has already contemplated off-loading the Property at an appropriate time and this is an opportunity that allows the Company to do so. The Company has decided to dispose of the Property which could enable the Company to re-allocate the resources involved to other suitable real estate investment opportunities.

FINANCIAL EFFECTS

Disposal

After completion of the Disposals, the Target Company will cease to be a subsidiary of the Group and the Company will cease to have any equity interest in the Target Company.

Assuming the Property Disposal has been completed on 31 March 2017, the Group would decrease the total comprehensive income of the Group after the Property Disposal of approximately HK$5 million for the year ended 31 March 2017 which is calculated with reference to (i) consideration for the Property Disposal of approximately HK$48 million; (ii) the fair value of Block 4 of approximately HK$47 million as at 31 March 2017; (iii) reversal of deferred tax liabilities of approximately HK$2 million; and (iv) the estimated tax effects in relation to the Property Disposal calculated at the applicable tax rates of approximately HK$8 million.

Assuming the Company Disposal has been completed on 31 March 2017, the Group would increase the total comprehensive income of the Group after the Company Disposal of approximately HK$40 million for the year ended 31 March 2017 which is calculated with reference to (i) consideration for the Company Disposal of approximately HK$321 million; (ii) adjustments to the consideration of approximately HK$93 million; (iii) net book value of the Target Company as at 31 March 2017 following the Property Disposal of approximately HK$146 million; (iv) reversal of deferred tax liabilities of approximately HK$28 million; and (v) estimated tax effects in relation to the Company Disposal calculated at the applicable tax rate of approximately HK$14 million. The gain on the Company Disposal is assumed the Target Company SPA would be signed in 2017 and therefore the agreed price of HK$7,096 per sq.m. was used as a basis of the consideration of the Company Disposal.

The Board considered that the Property Disposal and the Company Disposal should be considered together, rather than as segregated and independent transactions. Notwithstanding that there would be a decrease of the total comprehensive income of the Group after the Property Disposal of approximately HK$5 million as illustrated above, the overall financial effect should be considered and in doing so, the increase of the total comprehensive income of the Group after the Company Disposal of approximately HK$40 million should also be taken into account.

– 19 –

LETTER FROM THE BOARD

Based on the pro forma financial information of the Remaining Group as set out in Appendix IV to this circular, (i) assuming the Disposals had been completed on 31 March 2017, total assets of the Group would have been decreased by approximately HK$25 million from approximately HK$1,671 million as at 31 March 2017 to approximately HK$1,646 million, and total liabilities of the Group would have been decreased by approximately HK$60 million from approximately HK$527 million as at 31 March 2017 to approximately HK$467 million; and (ii) assuming the Disposals had been completed on 1 April 2016, the Group’s total comprehensive income for the year ended 31 March 2017 would have been improved by approximately HK$50 million from approximately HK$43 million to approximately HK$93 million.

Based on the pro forma financial information of the Remaining Group as set out in Appendix IV to this circular, assuming the Disposals had been completed on 31 March 2017, the table below shows the impact on different account captions of the pro forma consolidated statement of financial position with different dates of signing the Target Company SPA:

	Date of signing the Company SPA	Date of signing the Company SPA	Date of signing the Company SPA
	1 January	1 January	1 January
	2018 to 31	2019 to 31	2020 to
	December	December	30 June
	2018	2019	2020
Agreed price per sq.m. of the
Remaining Block	HK$7,451	HK$7,824	HK$8,215
	HK$’000	HK$’000	HK$’000
(Decrease)/increase in total assets	(10,911)	4,253	20,150
Decrease in total liabilities	59,710	59,710	59,710

Based on the pro forma financial information of the Remaining Group as set out in Appendix IV to this circular, assuming the Disposals had been completed on 1 April 2016, the table below shows the impact on different account captions of the pro forma consolidated income statement with different dates of signing the Target Company SPA:

	Date of signing the Company SPA	Date of signing the Company SPA	Date of signing the Company SPA
	1 January	1 January	1 January
	2018 to 31	2019 to 31	2020 to
	December	December	30 June
	2018	2019	2020
Decrease in total comprehensive income
resulted from Property Disposal	1,793	1,793	1,793
Estimated net gain on the Company
Disposal (total comprehensive
income)	61,207	77,363	94,299

– 20 –

LETTER FROM THE BOARD

In the event that Option B is exercised by the Purchaser

Based on the pro forma financial information of the Remaining Group as set out in Appendix IV to this circular, total assets of the Group would have been decreased by approximately HK$68 million from approximately HK$1,671 million as at 31 March 2017 to approximately HK$1,603 million, and total liabilities of the Group would have been decreased by approximately HK$39 million from approximately HK$527 million as at 31 March 2017 to approximately HK$488 million; and (ii) the Group’s total comprehensive income for the year ended 31 March 2017 would have been declined by approximately HK$32 million from approximately HK$43 million to approximately HK$11 million.

In the event that Option C is exercised by the Purchaser

Based on the pro forma financial information of the Remaining Group as set out in Appendix IV to this circular (assuming there were no undisclosed debts of the Target Company), total assets of the Group would have been decreased by approximately HK$19 million from approximately HK$1,671 million as at 31 March 2017 to approximately HK$1,652 million, and total liabilities of the Group would have been decreased by approximately HK$49 million from approximately HK$527 million as at 31 March 2017 to approximately HK$478 million; and (ii) the Group’s total comprehensive income for the year ended 31 March 2017 would have been improved by approximately HK$45 million from approximately HK$43 million to approximately HK$88 million.

USE OF PROCEEDS FROM THE DISPOSALS

The Company intends to use the net proceeds from the Disposals for general working capital purposes.

LISTING RULES IMPLICATIONS

Disposals

As one of the applicable percentage ratios (as defined in the Listing Rules) calculated under the Listing Rules in respect of the Disposals is more than 75%, the Disposals constitute a very substantial disposal of the Company and is therefore subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Options

Under Rule 14.74(1) of the Listing Rules, each of the Options constitutes an “option” within the meaning of Rule 14.72(1) of the Listing Rules and as the exercise of such options is not at the discretion of the Group, on the grant of the Options, the transactions are classified as if they had been fully exercised.

The grant of Option A constitutes a discloseable transaction of the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules but exempt from shareholders’ approval requirement.

– 21 –

LETTER FROM THE BOARD

The grant of each of Option B and Option C constitutes a very substantial acquisition of the Company and is therefore subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

EGM

A notice convening the EGM to be held at Function Room, 23H, Level 23, One Island East, 18 Westlands Road, Island East, Hong Kong on Tuesday, 17 October 2017 at 3:00 p.m. (or, in the event that a black rainstorm warning signal or tropical cyclone warning signal no. 8 or above is in force in Hong Kong at 12 noon on that day, at the same time and place on Tuesday, 24 October 2017) is set out on pages 96 and 98 of this circular.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions stated thereon and return it to the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

The resolutions to be proposed at the EGM to approve the transactions contemplated under the Framework Agreement and the Property SPA (including pursuant to any exercise of Options) will be voted by way of a poll at the EGM.

To the best knowledge, information and belief of the Directors having made all reasonable enquires, no Shareholder or its close associate (as defined in the Listing Rules) has any material interest in the Disposals and no Shareholder is required to abstain from voting on the resolution(s).

RECOMMENDATION

The Directors are of the opinion that the terms of the transactions contemplated under the Framework Agreement and the Property SPA are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the transactions contemplated under the Framework Agreement and the Property SPA (including pursuant to any exercise of the Options).

Completion of the Company Disposal and the Property Disposal is conditional upon, among other things, the satisfaction of the conditions set out in the section headed “ Framework Agreement – Conditions precedent ” and the section headed “ Property SPA – Conditions precedent ” above respectively. Accordingly, the Disposals may or may not be materialised. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company.

– 22 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board Rykadan Capital Limited 宏基資本有限公司 Chan William

Chairman and Chief Executive Officer

– 23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 March 2015, 2016 and 2017 are disclosed in the following documents:

• The 2015 annual report of the Company for the year ended 31 March 2015 published on 28 July 2015 (pages 30 to 105);

• The 2016 annual report of the Company for the year ended 31 March 2016 published on 29 July 2016 (pages 30 to 99);

• The 2017 annual report of the Company for the year ended 31 March 2017 published on 28 July 2017 (pages 43 to 107).

All of the financial statements mentioned above have been published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.rykadan.com).

3. INDEBTEDNESS

At the close of business on 31 July 2017, being the latest practicable date for the purpose of preparing this statement of indebtedness prior to the printing of this circular, the Group had total borrowings of approximately HK$531,509,000, details of which are set out below:

Secured bank loans Unsecured bank loans Loans from non-controlling shareholders Total borrowings	HK$’000 399,194 54,494 77,821
	531,509

At 31 July 2017, the secured bank loans of the Group were secured by mortgages over certain assets of the Group with an aggregate carrying value of approximately HK$944,037,000, details of which are set out below:

Investment properties Buildings held for own use Properties for sale Pledged bank deposit	HK$’000 486,922 42,727 413,966 422
	944,037

– 24 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

In addition, as at 31 July 2017, the Company has issued guarantees to banks in respect of banking facilities granted to certain indirect subsidiaries of HK$919,913,000. The banking facilities were utilised to the extent of HK$345,477,000, including the bank guarantee in favour of a utility service provider to secure the payment obligation of a subsidiary of Quarella Holdings Limited, a joint venture company, for an amount up to Euro 370,000 (equivalent to HK$3,411,400, converted at the rate of Euro 1 = HK$9.22).

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables in the ordinary course of business of the Group, as at 31 July 2017, the Group did not have any debt securities issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchase or finance lease commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that after due and careful enquiry, taking into account the financial resources available to the Group (including internally generated funds and the available banking facilities) and the effect of the Disposals, the Group has sufficient working capital to meet its current known requirements for at least the next 12 months from the date of this circular in the absence of unforeseeable circumstances.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Looking ahead, the Group will continue to focus on property development and investment in the coming years. Similar to the Group’s ongoing investments in the property sectors in the Greater China, the United States of America and the United Kingdom, the new projects will continue to align with the Group’s strategy of securing high-potential investments, growing asset values and exiting within a three-to-five-year horizon.

The Group will continue to leverage on its experienced management team and business partners to evaluate future real estate investment opportunities and further diversify the Group’s investment portfolio in order to maximise future returns for shareholders. The Group will also continue to actively manage its ongoing investments in the Greater China region and overseas to support its future performance and unlock value for shareholders in a timely manner.

The Group hopes that through the acquisition of the business and certain assets of Quarella S.p.A. (via a joint venture company of the Company), a world-leading producer of quartz and marble based stone composite services products, based in Italy, will expand the Group’s investment portfolio and the Group believes that this investment has potential for value growth to provide a decent return to the Shareholders in the medium term.

The Directors expect that the financial position of the Group will remain solid taking into account the financial resources available to and the strong assets base of the Group.

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. MATERIAL ADVERSE CHANGE

The Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2017 (being the date which the latest published audited consolidated financial statements of the Group had been made up) up to the Latest Practicable Date.

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Set out below is the management discussion and analysis of the Remaining Group’s business and performance for each of the three financial years ended 31 March 2017, 2016 and 2015.

Liquidity, Financial Resources and Capital Structure

The management and control of the Remaining Group’s financial, capital management and external financing functions are centralised at its headquarters in Hong Kong. The Remaining Group adheres to the principle of prudent financial management to minimise financial and operational risks. The Remaining Group mainly relies upon internally generated funds and bank borrowings to finance its operations and expansion.

As at 31 March 2017, the Remaining Group has total bank borrowings of HK$331 million which were mainly to finance the two floors of Rykadan Capital Tower, Maple Street Project and the U.S.A. properties.

As at 31 March 2016, the Remaining Group has total bank borrowings of HK$397 million which were mainly to finance the two floors of Rykadan Capital Tower, The Paseo (formerly known as Kwun Chung Street Property Project), Maple Street Project and the U.S.A. properties.

As at 31 March 2015, the Remaining Group has total bank borrowings of HK$213 million, which were mainly to finance the two floors of Rykadan Capital Tower and The Paseo.

Of the total bank borrowings, the bank loans of HK$281 million, HK$370 million and HK$192 million as at 31 March 2017, 2016 and 2015 were secured by the properties for sale, investment properties, buildings held for own use and pledged bank deposit of which HK$169 million; HK$262 million and HK$98 million as at 31 March 2017, 2016 and 2015 will be repayable upon the completion of construction of properties. Further costs for developing projects in Hong Kong, the U.S.A. and the U.K. will be financed by either unutilised banking facilities, deposits received from customers held as cash held by stakeholders designated for the projects or internally generated funds.

As at 31 March 2017, 2016 and 2015, the Remaining Group’s current assets were HK$1,279 million, HK$1,433 million and HK$1,057 million and current liabilities were HK$355 million, HK$673 million and HK$225 million respectively. The Remaining

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Group’s current ratios as at 31 March 2017, 2016 and 2015 were 3.6, 2.1 and 4.7. The internally generated funds, together with unutilised banking facilities enable the Remaining Group to meet its business development needs.

The Remaining Group will cautiously seek new investment and development opportunities in order to balance risks and opportunities and maximise shareholders’ value.

Significant Investments

The following table shows the Remaining Group’s investments as at 31 March 2017, 2016 and 2015.

			Remaining
			Group’s	Status as at	Status as at	Status as at
Investment	Location	Type	interest	31/3/2017	31/3/2016	31/3/2015
Winston	1135 Winston	Residential	100%	Under planning	Under	Under
Project	Avenue, San	property			planning	planning
	Marino, CA
	91108, the U.S.A.
265 Naomi	265 W Naomi	Residential	100%	Under planning	N/A	N/A
Project	Avenue, Arcadia,	property
	CA91007, the
	U.S.A.
263 Naomi	263 W Naomi	Residential	100%	Under planning	N/A	N/A
Project	Avenue, Arcadia,	property
	CA91007, the
	U.S.A.
Oakland	491 & 497 South	Residential	100%	N/A	Sold out	Under
Project	Oakland Avenue,	property				planning
	Pasadena, CA
	91101, the U.S.A
Hampton	957 Hampton	Residential	100%	Under	Under	Under
Project	Road, Arcadia,	property		construction.	construction	planning
	CA 91006, the			Expected to be
	U.S.A.			completed in the
				second quarter
				of 2017
Fallen Leaf	964 Fallen Leaf	Residential	100%	Under	Under	Under
Project	Road, Arcadia,	property		construction.	construction	planning
	CA 91006, the			Expected to be
	U.S.A.			completed in the
				second quarter
				of 2017
Shoreditch	79-81 Paul Street,	Commercial	100%	Completed	Under	Under
Project	Shoreditch,	property		(classified as	refurbishment	refurbishment
	London, EC2A			properties for
	4NQ, the U.K.			sale)
Le Roy	333 West Le Roy	Residential	50%	Under planning	N/A	N/A
Project	Avenue, Arcadia,	property
	CA91007, the
	U.S.A.

– 27 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Remaining
			Group’s	Status as at	Status as at	Status as at
Investment	Location	Type	interest	31/3/2017	31/3/2016	31/3/2015
The Paseo	Kowloon Inland	Residential/	100%	Completed	Under	Under
(2017: one	Lot No. 11229	Commercial		(classified as	construction	construction
residential		property		properties for
flat and				sale)
commercial
area)
Maple Street	124-126, 130, 132	Industrial	100%	Under	Under	N/A
Project	and 134 Bedford	property		construction.	planning
	Road, Tai Kok			Expected to be
	Tsui, Kowloon			completed in
				December 2018
Wing Hong	55-57 Wing Hong	Industrial	26%	Under	Under	N/A
Street	Street and 84-86	property		construction and	planning
Project	King Lam Street,			pre-sale stage.
	Kowloon			Expected to be
				completed in
				December 2018
2702 and	135 Hoi Bun	Commercial	100%	Completed	Completed	Completed
various car	Road, Kwun Tong,	property		(classified as	(classified as	(classified as
parking	Kowloon			investment	investment	investment
spaces of				properties)	properties)	properties)
Rykadan
Capital
Tower
2802 of	135 Hoi Bun	Commercial	100%	Reclassified to	Reclassified	Completed
Rykadan	Road, Kwun Tong,	property		other properties,	to other	(classified as
Capital	Kowloon			plant and	property, plant	properties for
Tower				equipment	and equipment	sale)
2803, 2804 of	135 Hoi Bun	Commercial	100%	Completed	Completed	Completed
Rykadan	Road, Kwun Tong,	property		(classified as	(classified as	(classified as
Capital	Kowloon			investment	properties for	properties for
Tower				properties)	sale)	sale)
Various car	135 Hoi Bun	Commercial	100%	Completed	Completed	Completed
parking	Road, Kwun Tong,	property		(classified as	(classified as	(classified as
spaces of	Kowloon			properties for	properties for	properties for
Rykadan				sale)	sale)	sale)
Capital
Tower

Material Acquisitions and Disposals

In June 2014, the Remaining Group acquired the remaining 20% equity interests in Centuria Global Limited (“ Centuria Global ”) and the shareholder’s loan owed to Core Elements Holdings Limited, the non-controlling shareholder of Centuria Global, at the consideration of HK$2 million and HK$22 million respectively. Upon the completion of the further acquisition, Centuria Global became a wholly-owned subsidiary of the Remaining Group.

In July 2014, the Remaining Group sold a 51% stake, the entire equity interests owned by the Remaining Group, in Wing Lok Innovative Education Organization Corporation (“ Wing Lok ”) to Mr. So Wing Lok Jonathan, the non-controlling shareholder of Wing Lok for a consideration of HK$15 million.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In August 2014, the Remaining Group sold 30% equity interests of Kailong Holdings Limited (“ KLR Holdings ”) to the remaining shareholders of KLR Holdings, Good Grace Investments Limited, Borrison (B.V.I.) Limited, Coralland Limited, Water Ocean Limited and Mr. Roth, for a consideration of US$12 million. Upon completion of the disposal, the Remaining Group’s indirect interests in the issued share capital of KLR Holdings decreased from approximately 39.74% to approximately 9.74%.

In August 2014, the Remaining Group disposed of its 100% equity interests in Century Winner Inc. and the shareholder’s loan owed to the Remaining Group to Valour Power Limited, a company owned as to 50% by each of Mr. Chan William and his wife, at a consideration of USD60,000 and USD6,118,000 respectively.

In December 2014, the Remaining Group disposed of its entire 15% equity interests in Sundart Holdings Limited to Jangho Curtain Wall Limited, the controlling shareholder of Sundart Holdings Limited, at a consideration of HK$180 million.

In May 2015, the Remaining Group and DSM Project Limited (“ DSM ”) acquired respectively 26% and 74% equity interests in Epic Quest Global Limited (“ Epic Quest ”). In September 2015, Epic Quest acquired 100% equity interests in and certain loans owing by Smart Wealth Asia Pacific Limited (an owner of a 9-storey industrial building in Hong Kong (“ Wing Hong Street Project ”)) at a total consideration of HK$339 million.

In July 2015, Keen Virtue Group Limited, a wholly-owned subsidiary of the Company, acquired an additional 35% equity interests in Wit Legend Investments Limited (“ Wit Legend ”) for a consideration of US$35 (equivalent to approximately HK$273). Upon the completion of the acquisition, Wit Legend became a wholly-owned subsidiary of the Remaining Group. The acquisition was completed on 6 July 2015.

In November 2015, Talent Step Investments Limited, an indirect wholly-owned subsidiary of the Company, sold the remaining 9.74% stake in KLR Holdings to the remaining shareholders of KLR Holdings for a total consideration of US$4 million (equivalent to approximately HK$33 million).

In December 2015, the Remaining Group disposed of 9% and 4% of the equity interests in Joint Champ International Limited, a wholly-owned subsidiary of the Company prior to the disposal, to Fine China Consultants Limited and Cultivate Shine Limited for a consideration of HK$1 million and HK$0.5 million respectively.

Save as disclosed above, the Remaining Group had no other material acquisition and disposal during the three years ended 31 March 2017, 2016 and 2015.

Segmental Information

The principal activities of the Remaining Group are property development, property investment and hospitality operations and distribution of construction and interior decorative materials.

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property Development

The Remaining Group made substantial progress in moving forward its property development investments during the three years ended 31 March 2017, 2016 and 2015. Highlights included building more high-potential overseas properties to investment portfolio since 2015, handing over of the majority of residential units of The Paseo, the Remaining Group’s first residential real estate project in Hong Kong.

During the years, the Remaining Group has been active in acquiring both Hong Kong and overseas property development sites, including the Maple Street Project and the Wing Hong Street Project in Hong Kong and several new residential properties in Los Angeles, California, the U.S.A. The Remaining Group’s strategy adheres to redevelop such sites by demolishing the existing buildings and constructing new high quality properties for reselling purposes. In addition, this segment is leading the Remaining Group to develop new revenue streams by leveraging its considerable property development experience to provide management services.

Property Investment and Hospitality Operations

For the three years ended 31 March 2017, 2016 and 2015, the Remaining Group holds several properties and hospitality operations in Hong Kong and Bhutan respectively. In Hong Kong, the Remaining Group continues to retain two floors of Rykadan Capital Tower for its own use and for rental income or potential rental income. In Bhutan, the Remaining Group has invested in a 24-suite boutique resort located in Bhutan’s Punakha Valley, for which operations and occupancy has been stable.

Distribution of Construction and Interior Decorative Materials

During the years, a subsidiary of the Remaining Group is the exclusive distributor of Quarella, a world leader in the production of quartz and marble-based stone composite surfaces products, in the PRC market. Quarella was established over 50 years ago with factories and research and development centres in Italy. Quarella’s products are popularly used for benchtops, bathroom surfaces and floor tiles. It has supplied materials for a number of prominent commercial buildings and shopping malls in many markets around the world, including the PRC and Hong Kong.

During the year ended 31 March 2017, the Remaining Group successfully tendered for the lease of the business and certain assets of Quarella, via a joint-venture. The Remaining Group has signed a shareholders’ deed with its joint-venture partner dated 28 June 2017 ahead of the acquisition which is expected to be completed in the second half of 2017.

In view of the new development with Quarella, the Remaining Group is looking for other brands to expand its construction and interior decorative materials business of the subsidiary. As at 31 March 2017, 2016 and 2015, the subsidiary had contracts on hand worth HK$124 million, HK$204 million and HK$181 million to be completed, respectively.

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employees and Remuneration Policies

As at 31 March 2017, 2016 and 2015, the total numbers of employees of the Remaining Group were 62, 67 and 74. The Remaining Group offers an attractive remuneration policy, including reward to employees on a performance basis with reference to market rate, and subsidies for job-related continuing education. Total remuneration (including the directors’ remuneration) for the three years ended 31 March 2017, 2016 and 2015 of the Remaining Group was HK$51 million, HK$53 million and HK$64 million respectively.

Charges on the Remaining Group Assets

As at 31 March, banking facilities of the Remaining Group were secured by mortgages over:

Investment properties Buildings held for own use Properties for sale Pledged bank deposit	2017 HK$’000 132,200 51,074 401,092 422 584,788	2016 HK$’000 93,370 52,761 664,543 – 810,674	2015 HK$’000 90,970 46,058 257,536 –
			394,564

Prospects

The Remaining Group is cautiously optimistic about the strength of the Hong Kong residential, commercial and industrial property markets, with its ongoing industrial property redevelopment projects remaining well placed to benefit from rising demand for commercial and industrial space outside the city’s traditional central business district. It has launched the pre-sale of its second industrial redevelopment project in the West Kowloon area – a district that is currently experiencing rapid revitalisation – in order to take advantage of this trend.

The Remaining Group is also confident about the long-term prospects of the U.S.A. and the U.K. property markets, despite ongoing risks associated with Brexit and other political events, as well as from increasing interest rates.

Prospects for the Remaining Group’s construction and interior decorative materials business will continue to be supported by economic stimulus in the PRC, as well as other government efforts such as the Belt and Road Initiative, which should support the domestic construction industry, particularly in the second/third-tier cities and western regions of the PRC.

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group will continue to thoughtfully evaluate new investment opportunities and leverage on its experienced management team and business partners to further diversify the Remaining Group’s investment portfolio while developing its reputation as an asset manager.

The Remaining Group will also continue to actively manage its ongoing investments in the Greater China region and overseas to support its future performance and unlock value for shareholders in a timely manner.

Gearing Ratio

As at 31 March 2017 and 2015, the Remaining Group’s gearing ratio (net debts, as defined by total bank borrowings less unrestricted bank deposits and cash, to total assets) was Nil, as the Remaining Group has net cash of HK$6 million and HK$64 million respectively.

As at 31 March 2016, the Remaining Group’s gearing ratios (net debts, as defined by total bank borrowings less unrestricted bank deposits and cash, to total assets) was 15.8%.

Exposure to Fluctuations in Exchange Rates and Interest Rates and Corresponding Hedges

The Remaining Group operates in various regions with different foreign currencies including Euro, United States Dollars, British Pound and RMB.

The Remaining Group’s bank borrowings have been made at floating rates.

The Remaining Group has not implemented any foreign currencies and interest rates hedging policy. However, management of the Remaining Group will monitor foreign currencies and interest rates for each business segment and consider appropriate hedging policies in future when necessary.

Contingent Liabilities

As at 31 March 2017, 2016 and 2015, the Company had issued guarantees to banks in respect of banking facilities granted to certain indirect subsidiaries of HK$919,392,000, HK$1,133,042,000 and HK$529,054,000 respectively. Such banking facilities were utilised to the extent of HK$322,157,000, HK$376,719,000 and HK$239,024,000 as at 31 March 2017, 2016 and 2015 respectively. Including in the utilised banking facilities as at 31 March 2017, a guarantee in favour of a utility service provider to secure the payment obligation of a subsidiary of Quarella Holdings Limited, a joint venture, for an amount up to Euro 370,000 was issued by an indirect subsidiary of the Company.

The directors do not consider it probable that a claim will be made against the Company under any of the guarantees.

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APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Company has not recognised any deferred income in respect of these guarantees as their fair values cannot be reliably measured using observable market data and no transaction price was incurred.

Capital Commitments

Authorised and not contracted for Contracted for	2017 HK$’000 228,147 16,589 244,736	2016 HK$’000 250,684 71,856 322,540	2015 HK$’000 184,537 17,044
			201,581

The above commitments include mainly the construction related costs to be incurred in respect of the Remaining Group’s development of its properties in various locations.

– 33 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

The following is the text of a report set out on pages 34 to 54, received from the Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [81 x 33] intentionally omitted <==

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION OF BESTLINKAGE NHI CO., LTD. TO THE DIRECTORS OF RYKADAN CAPITAL LIMITED

Introduction

We report on the historical financial information of Bestlinkage NHI Co., Ltd. (the “Target Company”) set out on pages 36 to 54, which comprises the statements of financial position of the Target Company as at 31 March 2015, 2016 and 2017 and the statements of profit or loss and other comprehensive income, the statements of changes in equity and the cash flow statements, for each of the years ended 31 March 2015, 2016 and 2017 (the “Relevant Periods”), and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages 36 to 54 forms an integral part of this report, which has been prepared for inclusion in the circular dated 22 September 2017 (the “Circular”) issued by Rykadan Capital Limited (the “Company”) in connection with the very substantial disposal in relation to the disposal of Block 4 of Kailong Nanhui Business Park (the “Block 4”) held by the Target Company and the entire interests of the Target Company and the very substantial acquisition in relation to the grant of options to buy back the Block 4 and/or the Target 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, and for such internal control as the directors of the Company determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (“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.

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ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

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 March 2015, 2016 and 2017 and of the Target Company’s financial performance and cash flows for the Relevant Periods 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 36 have been made.

Dividends

No dividends have been paid by the Target Company in respect of the Relevant Periods.

KPMG

Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong 22 September 2017

– 35 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

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 Periods, on which the Historical Financial Information is based, were audited by KPMG under separate terms of engagement with the Target Company in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

Statements of profit or loss and other comprehensive income

(Expressed in Renminbi)

Note Revenue 4 Direct costs Gross (loss)/profit Other revenue 5(a) Other net (loss)/income 5(b) Administrative and other operating expenses Loss from operations Increase/(decrease) in fair value of investment properties 8(a) Finance costs 6(a) (Loss)/profit before taxation 6 Income tax 7 (Loss)/profit and total comprehensive income for the year	Year 2015 RMB’000 2,182 (2,610) (428) 11 (30) (3,580) (4,027) 6,419 (3,652) (1,260) (1,605) (2,865)	ended 31 March 2016 2017 RMB’000 RMB’000 1,459 2,507 (2,070) (2,308) (611) 199 7 15 338 – (1,225) (1,050) (1,491) (836) (8,600) 8,511 (2,817) (1,925) (12,908) 5,750 2,150 (2,128) (10,758) 3,622

– 36 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Statements of financial position

(Expressed in Renminbi)

Note Non-current asset Investment properties 8 Current assets Other receivables, deposits and prepayments Cash at bank 9 Current liabilities Payables and accruals 10 Amount due to a related company 11 Amount due to immediate holding company 11 Bank loans 12 Net current liabilities Total assets less current liabilities Non-current liabilities Bank loans 12 Deferred tax liabilities 13 NET ASSETS CAPITAL AND RESERVE 14 Share capital Retained profits TOTAL EQUITY	At 31 March 2015 2016 RMB’000 RMB’000 288,600 280,000 ------------ ------------ 3,124 3,029 1,056 4,943 4,180 7,972 ------------ ------------ 6,663 6,402 1,406 2,137 63,604 72,804 9,700 9,700 81,373 91,043 ------------ ----------------------- ------------ ----------------------- (77,193) (83,071) ------------ ----------------------- ------------ ----------------------- 211,407 196,929 ------------ ------------ 41,855 32,155 35,767 33,617 77,622 65,772 ------------ ----------------------- ------------ ----------------------- 133,785 131,157 78,410 86,540 55,375 44,617 133,785 131,157	2017 RMB’000 288,600 ------------ 3,034 1,354 4,388 ------------ 9,018 787 80,504 9,700 100,009 ------------ ----------------------- (95,621) ------------ ----------------------- 192,979 ------------ 22,455 35,745 58,200 ------------ ----------------------- 134,779 86,540 48,239 134,779

– 37 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Statements of changes in equity

(Expressed in Renminbi)

Balance at 1 April 2014 Change in equity for the year ended 31 March 2015: Loss and total comprehensive income for the year Capital contributions (note 14(a)) Balance at 31 March 2015 and 1 April 2015 Change in equity for the year ended 31 March 2016: Loss and total comprehensive income for the year Capital contributions (note 14(a)) Balance at 31 March 2016 and 1 April 2016 Change in equity for the year ended 31 March 2017: Profit and total comprehensive income for the year Balance at 31 March 2017	Share capital RMB’000 71,548 ------------ – ------------ 6,862 ------------ ----------------------- 78,410 ------------ – ------------ 8,130 ------------ ----------------------- 86,540 – 86,540	Retained profits RMB’000 58,240 ------------ (2,865) ------------ – ------------ ----------------------- 55,375 ------------ (10,758) ------------ – ------------ ----------------------- 44,617 3,622 48,239	Total RMB’000 129,788 ------------ (2,865) ------------ 6,862 ------------ ----------------------- 133,785 ------------ (10,758) ------------ 8,130 ------------ ----------------------- 131,157 3,622 134,779

– 38 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

Cash flow statements

(Expressed in Renminbi)

Note Operating activities (Loss)/profit before taxation Adjustments for: Interest income 5(a) Finance costs 6(a) (Increase)/decrease in fair value of investment properties 8(a) Changes in working capital: (Increase)/decrease in other receivables, deposits and prepayments (Decrease)/increase in payables and accruals Decrease in amount due to a fellow subsidiary Cash (used in)/generated from operations Interest expenses paid Net cash used in operating activities Investing activities Additions to investment properties Interest received Net cash (used in)/generated from investing activities Financing activities Advance from immediate holding company Repayments of bank loans Proceeds from capital contributions Increase/(decrease) in amount due to a related company Net cash generated from/(used in) financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	Year 2015 RMB’000 (1,260) (11) 3,652 (6,419) (95) (37) (281) (4,451) (3,652) (8,103) ------------ (181) 11 (170) ------------ 7,950 (9,700) 6,862 1,406 6,518 ------------ ----------------------- (1,755) 2,811 1,056	ended 31 March 2016 2017 RMB’000 RMB’000 (12,908) 5,750 (7) (15) 2,817 1,925 8,600 (8,511) 95 (5) (261) 2,616 – – (1,664) 1,760 (2,817) (1,925) (4,481) (165) ------------ ------------ – (89) 7 15 7 (74) ------------ ------------ 9,200 7,700 (9,700) (9,700) 8,130 – 731 (1,350) 8,361 (3,350) ------------ ----------------------- ------------ ----------------------- 3,887 (3,589) 1,056 4,943 4,943 1,354

– 39 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 Basis of preparation and presentation of Historical Financial Information

Bestlinkage NHI Co., Ltd. (the “Target Company”) was established in the People’s Republic of China (the “PRC”) on 29 November 2007 with limited liability under the Company Law of the PRC. The registered capital is USD12,700,000. The principal activity of the Target Company is property holding. Its ultimate holding company is Rykadan Capital Limited (“the Company”), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). Its immediate holding company is Power City Investments Limited (“Power City”), a subsidiary of the Company incorporated in Hong Kong.

The statutory financial statements of the Target Company for the years ended 31 December 2014, 2015 and 2016 were prepared in accordance with the relevant accounting rules and regulations applicable in the PRC, and were audited by Shanghai Linfang Certified Public Accountants Company Limited（上海琳方會計師事務所有限公司）, a firm of certified public accountants registered in the PRC.

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 HKICPA. Further details of the significant accounting policies adopted are set out in note 2.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange.

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 Periods, except for any new standards or interpretations that are not yet effective for the accounting period ended 31 March 2017. The revised and new accounting standards and interpretations issued but not yet effective for the Relevant Periods are set out in note 18.

The Historical Financial Information of the Target Company for the Relevant Periods is presented in Renminbi (“RMB”), which is also the functional currency of the Target Company. All values are rounded to the nearest thousand (RMB’000) except where otherwise indicated.

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

2 Significant accounting policies

(a) Going concern

Notwithstanding the net current liabilities of the Target Company at 31 March 2015, 2016 and 2017, the Historical Financial Information has been prepared on a going concern basis as Rykadan Capital Limited, the ultimate holding company, has confirmed that it will continue to provide such financial assistance as is necessary to maintain the Target Company as a going concern and to enable it to meet its liabilities as and when they fall due over the next twelve months from the end of the Relevant Periods.

(b) Basis of measurement

The measurement basis used in the preparation of the Historical Financial Information is the historical cost basis except where stated otherwise in the accounting policies set out below.

(c) Use of estimates and judgements

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

– 40 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

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 3.

(d) Investment properties

Investment properties are land and/or buildings which are owned or held under a leasehold interest (see note 2(e)) to earn rental income and/or for capital appreciation. These include land held for a currently undetermined future use and property that is being constructed or developed for future use as investment property.

Investment properties are stated at fair value, unless they are still in the course of construction or development at the end of the reporting period and their fair value cannot be reliably measured at that time. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in profit or loss. Rental income from investment properties is accounted for as described in note 2(l)(i).

When the Target Company holds a property interest under an operating lease to earn rental income and/or for capital appreciation, the interest is classified and accounted for as an investment property on a property-by-property basis. Any such property interest which has been classified as an investment property is accounted for as if it were held under a finance lease (see note 2(e)), and the same accounting policies are applied to that interest as are applied to other investment properties leased under finance leases. Lease payments are accounted for as described in note 2(e).

(e) Leased assets

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Target Company determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

(i) Classification of assets leased to the Target Company

Assets that are held by the Target Company under leases which transfer to the Target Company substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Target Company are classified as operating leases, with the following exception:

• property held under operating leases that would otherwise meet the definition of an investment property is classified as investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease (see note 2(d)).

(ii) Operating leases

Where the Target Company has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of

– 41 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the period of the lease term except where the property is classified as an investment property (see note 2(d)) or is held for development for sale.

(f) Receivables

Receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less allowance for impairment of doubtful debts.

Impairment losses for bad and doubtful debts are recognised when there is objective evidence of impairment and are measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the asset’s original effective interest rate where the effect of discounting is material. Objective evidence of impairment includes observable data that comes to the attention of the Target Company about events that have an impact on the asset’s estimated future cash flows such as significant financial difficulty of the debtor.

(g) Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

(h) Payables

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

(i) 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. Bank overdrafts that are repayable on demand and form an integral part of the Target Company’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.

(j) Income tax

Income tax for the Relevant Periods 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 Relevant Periods, 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.

– 42 –

APPENDIX II

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

Where investment properties are carried at their fair value in accordance with the accounting policy set out in note 2(d), the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. In all other cases, 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.

(k) Provisions and contingent liabilities

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

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

(l) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Target Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

• (i) Rental income from operating leases

Rental income receivable under operating leases is recognised in profit or loss in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are recognised in profit or loss as an integral part of the aggregate net lease payments receivable. Contingent rentals are recognised as income in the accounting period in which they are earned. Rental income is recognised net of business tax.

• (ii) Interest income

Interest income is recognised as it accrues using the effective interest method.

(m) 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.

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APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

(n) Related parties

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

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

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

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

• (2) 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 (1).

• (vii) A person identified in (1)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

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

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.

• 3

Accounting judgements and estimates

Sources of estimation uncertainty

The methods, estimates and judgements the directors used in applying the Target Company’s accounting policies have a significant impact on the Target Company’s financial position and operating results. Some of the accounting policies require the Target Company to apply estimates and judgements on matters that are inherently uncertain. The critical accounting judgements in applying the Target Company’s accounting policies are described below.

Valuation of investment properties

Investment properties are included in the statement of financial position at their market value, unless they are still in the course of construction or development at the end of the reporting period and their fair value cannot be reliably determined at that time. The market value of investment properties is assessed semi-annually by independent qualified valuers, after taking into consideration the net rental income and other available market survey reports.

The assumptions adopted in the property valuation include market rents of properties with similar characteristic within the vicinity, expected market rental growth of the properties, appropriate discount rate and stabilised occupancy rate.

– 44 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

4 Revenue

The principal activity of the Target Company is property holding. Revenue represents rental income from leasing of investment properties.

5 Other revenue and other net (loss)/income

(a) Other revenue

2015 RMB’000 Interest income 11 (b) Other net (loss)/income Net exchange (loss)/gain (30) (Loss)/profit before taxation (Loss)/profit before taxation is arrived at after charging/(crediting): 2015 RMB’000 (a) Finance costs: Interest on bank loans 3,652 (b) Other items: Auditors’ remuneration 21 Directors’ remuneration (notes (i) and (ii)) – Rental receivables from investment properties less direct outgoing of RMB2,610,000, RMB2,070,000 and RMB2,308,000 for the years ended 31 March 2015, 2016 and 2017 respectively 428	2016 RMB’000 7 338 2016 RMB’000 2,817 21 – 611	2017 RMB’000 15 – 2017 RMB’000 1,925 25 – (199)

6 (Loss)/profit before taxation

Notes:

• (i) During the Relevant Periods, no emoluments, retirement benefits, payments or benefits in respect of termination of directors’ services were paid or made, directly or indirectly, to the directors, nor are any payable. No consideration was provided to or receivable by third parties for making available directors’ services.

• (ii) There are no loans, quasi-loans or other dealings in favour of directors, their controlled bodies corporate and connected entities.

– 45 –

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

7 Income tax

• (a) Taxation in income statements represents:

	2015	2016	2017
	RMB’000	RMB’000	RMB’000
Deferred tax
Origination and reversal of temporary differences
(note 13(a))	1,605	(2,150)	2,128

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the PRC EIT tax rate is 25% for the years ended 31 March 2015, 2016 and 2017. No provision for the PRC Enterprise Income Tax has been made during the Relevant Periods as the Target Company sustained a loss for taxation purposes for the years ended 31 March 2015, 2016 and 2017.

(b) Reconciliation between tax expense charged/(credited) to profit or loss and (loss)/profit before taxation at applicable tax rate:

(Loss)/profit before taxation Notional tax on (loss)/profit before taxation Tax effect of non-deductible expenses Tax effect of unused tax losses not recognised Actual tax expense charged/(credited) to profit or loss 8 Investment properties (a) At valuation: At the beginning of the year Additions Revaluation surplus/(deficit) At the end of the year	2015 RMB’000 (1,260) (315) – 1,920 1,605 2015 RMB’000 282,000 181 6,419 288,600	2016 RMB’000 (12,908) (3,227) 1 1,076 (2,150) 2016 RMB’000 288,600 – (8,600) 280,000	2017 RMB’000 5,750
			1,438 – 690
			2,128
			2017 RMB’000 280,000 89 8,511
			288,600

All investment properties are held in the PRC under medium-term leases.

At 31 March 2015, 2016 and 2017, the investment properties were pledged as securities for bank loans (note 12).

– 46 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

(b) Fair value hierarchy

• (i) The Target Company’s investment properties measured at fair value at the end of the reporting periods on a recurring basis are categorised into three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement . The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

• Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.

• Level 3 valuations: Fair value measured using significant unobservable inputs.

At 31 March 2015, 2016 and 2017, the Target Company’s investment properties fall into Level 3 of the fair value hierarchy as described above.

The Target Company’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur. During the years ended 31 March 2015, 2016 and 2017, there were no transfers between Level 1 and Level 2 or transferred into or out of Level 3.

The investment properties in the PRC were revalued as at 31 March 2015, 2016 and 2017 by Colliers International (Hong Kong) Limited, an independent firm of surveyors who has among their staff Fellows of the Hong Kong Institute of Surveyors with recent experience in the location and category of properties being valued.

Valuation processes

The senior management of the Target Company reviews the valuation performed by the independent valuer for financial reporting purposes by verifying all major inputs and assessing the reasonableness of the property valuation. A valuation report with an analysis of changes in fair value measurement is prepared at each annual reporting date, and is reviewed and approved by the senior management.

Valuation methodologies

The fair value of investment properties in the PRC is determined by discounting a projected cash flow series associated with the properties using discount rate, takes into account expected market rental growth of the properties and stabilised occupancy rate. The discount rate used has been adjusted for the quality and location of the buildings and the tenant credit quality. The fair value measurement is positively correlated to the expected market rental growth and negatively correlated to the discount rate.

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ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

• (ii) Information about Level 3 fair value measurements

		Significant
	Valuation	unobservable	Range (weighted
	technique	inputs	average)
Investment properties in	Discounted cash	Expected market	2015: 2%-3%
the PRC	flow method	rental growth	2016: 2%-3%
			2017: 2%-3%
		Discount rate	2015: 9%
			2016: 9%
			2017: 9%
		Stabilised	2015: 90%
		occupancy rate	2016: 90%
			2017: 90%

The revaluation surplus or deficit arising on revaluation of investment properties is recognised as “increase/decrease in fair value of investment properties” in the statements of profit or loss and other comprehensive income.

• (c) The Target Company leases out investment properties under operating leases. The leases typically run for an initial period of 6 months to 5 years, with an option to renew the leases after that date at which time all terms are renegotiated. None of the leases includes contingent rentals.

The Target Company’s total minimum lease payments under non-cancellable operating leases are receivable as follow:

			2015	2016	2017
			RMB’000	RMB’000	RMB’000
Within	1	year	416	325	1,736

9 Cash at bank

At 31 March 2015, 2016 and 2017, cash at bank of RMB972,000, RMB4,943,000 and RMB1,354,000 respectively are denominated in RMB, the remittance of which is subject to relevant rules and regulations of foreign exchange control promulgated by the PRC government.

10 Payables and accruals

Receipts in advance Deposits received from tenants Other payables and accruals	2015 RMB’000 316 263 6,084 6,663	2016 RMB’000 140 263 5,999 6,402	2017 RMB’000 1,284 1,824 5,910
			9,018

Except for certain deposits received from tenants of RMB263,000, RMB120,000 and RMB1,754,000 as at 31 March 2015, 2016 and 2017 respectively which are expected to be settled after more than one year, the remaining payables and accruals are expected to be settled within one year.

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APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

11 Amounts due to a related company and immediate holding company

The amounts due to a related company and immediate holding company are unsecured, interest-free and repayable on demand.

12 Bank loans

The secured bank loans were repayable as follows:

Within 1 year or on demand After 1 year but within 2 years After 2 years but within 5 years After 5 years	2015 RMB’000 9,700 - - - - - - - - - - - - 9,700 29,100 3,055 41,855 ------------ --------------------------------------------- 51,555	2016 RMB’000 9,700 - - - - - - - - - - - - 9,700 22,455 – 32,155 ------------ --------------------------------------------- 41,855	2017 RMB’000 9,700 - - - - - - - - - - - - 9,700 12,755 –
			22,455 ------------ --------------------------------------------- 32,155

• (a) At 31 March 2015, 2016 and 2017, the bank loans bear interest at The People’s Bank of China Base Interest Rate per annum.

• (b) At 31 March 2015, 2016 and 2017, bank loans are secured by mortgages over investment properties with an aggregate carrying value of RMB288,600,000, RMB280,000,000 and RMB288,600,000 respectively (note 8).

13 Deferred tax liabilities

(a) Deferred tax liabilities/(assets) recognised:

The components of deferred tax liabilities/(assets) recognised in the statements of financial position and the movements during the Relevant Periods are as follows:

At 1 April 2014 Charged/(credited) to profit or loss At 31 March 2015 and 1 April 2015 Charged/(credited) to profit or loss At 31 March 2016 and 1 April 2016 Charged/(credited) to profit or loss At 31 March 2017	Depreciation allowances in excess of the related depreciation RMB’000 4,247 1,663 5,910 1,674 7,584 1,675 9,259	Tax losses recognised RMB’000 (4,247) (1,663) (5,910) (1,674) (7,584) (1,675) (9,259)	Revaluation of investment properties RMB’000 34,162 1,605 35,767 (2,150) 33,617 2,128 35,745	Total RMB’000 34,162 1,605
				35,767 (2,150)
				33,617 2,128
				35,745

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ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

APPENDIX II

(b) Deferred tax assets not recognised:

At 31 March 2015, 2016 and 2017, the Target Company has not recognised deferred tax assets of RMB10,945,000, RMB12,021,000 and RMB10,097,000 respectively in respect of tax losses of RMB43,780,000, RMB48,084,000 and RMB40,390,000 respectively as it is not probable that sufficient future taxable profits will be available against which the assets can be utilised. The tax losses can be carried forward to offset against taxable profits of subsequent years for up to five years from the year in which they arose.

14 Capital and reserve

(a) Share capital

Paid-up capital At the beginning of the year Capital contributions At the end of the year	2015 RMB’000 71,548 6,862 78,410	2016 RMB’000 78,410 8,130 86,540	2017 RMB’000 86,540 –
			86,540

(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, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost. As the Target Company is part of a larger group, the Target Company’s sources of additional capital and policies for distribution of excess capital may also be affected by the larger group’s capital management objectives.

The Target Company defines “capital” as including all components of equity plus any loans from other group companies with no fixed terms of repayment. Trading balances that arise as a result of trading transactions with other group companies are not regarded by the Target Company as capital.

The Target Company’s capital structure is regularly reviewed and managed with due regard to the capital management practices of the larger group to which the Target Company belongs. Adjustments are made to the capital structure in light of changes in economic conditions affecting the Target Company or the larger group to which the Target Company belongs, to the extent that these do not conflict with the directors’ fiduciary duties towards the Target Company.

There has been no change in the Target Company’s capital management practices as compared to prior year and the Target Company is not subject to externally imposed capital requirements.

15 Financial risk management and fair values of financial instruments

The Target Company’s major financial instruments include cash at bank, other receivables, deposits and prepayments, payables and accruals, amounts due to a related company/immediate holding company and bank loans. The risks associated with these financial instruments include liquidity risk and interest rate risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

(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 committed lines of funding from major financial institutions and/or group companies to meet its liquidity requirements in the short and longer term.

– 50 –

APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

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

Contractual undiscounted cashflows

	Contractual undiscounted cashflows	Contractual undiscounted cashflows	Contractual undiscounted cashflows	Contractual undiscounted cashflows
Weighted average interest rate % At 31 March 2015 Payables and accruals N/A Amount due to a related company N/A Amount due to immediate holding company N/A Bank loans 6.55% Weighted average interest rate % At 31 March 2016 Payables and accruals N/A Amount due to a related company N/A Amount due to immediate holding company N/A Bank loans 4.75%	Within 1 year or on demand More than 1 year and less than 2 years More than 2 years and less than 5 years Over 5 years Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 6,400 143 120 – 6,663 1,406 – – – 1,406 63,604 – – – 63,604 12,990 12,340 33,123 3,157 61,610 84,400 12,483 33,243 3,157 133,283 Contractual undiscounted cashflows Within 1 year or on demand More than 1 year and less than 2 years More than 2 years and less than 5 years Over 5 years Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 6,282 31 89 – 6,402 2,137 – – – 2,137 72,804 – – – 72,804 11,411 10,892 23,444 – 45,747 92,634 10,923 23,533 – 127,090				Total carrying amount RMB’000 6,663 1,406 63,604 51,555
					123,228
					Total carrying amount RMB’000 6,402 2,137 72,804 41,855
	Within 1 year or on demand RMB’000 6,282 2,137 72,804 11,411 92,634	More than 1 year and less than 2 years RMB’000 31 – – 10,892 10,923	More than 2 years and less than 5 years RMB’000 89 – – 23,444 23,533	Over 5 years RMB’000 – – – – –
					123,198

– 51 –

APPENDIX II

ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

Contractual undiscounted cashflows

Weighted average interest rate % At 31 March 2017 Payables and accruals N/A Amount due to a related company N/A Amount due to immediate holding company N/A Bank loans 4.75%	Within 1 year or on demand RMB’000 7,264 787 80,504 10,950 99,505	More than 1 year and less than 2 years RMB’000 213 – – 10,427 10,640	More than 2 years and less than 5 years RMB’000 1,541 – – 13,017 14,558	Over 5 years RMB’000 – – – – –	Total RMB’000 9,018 787 80,504 34,394 124,703	Total carrying amount RMB’000 9,018 787 80,504 32,155
						122,464

(b) Interest rate risk

At 31 March 2015, 2016 and 2017, the Target Company’s interest rate risk arises primarily from variable-rate bank loans. The interest rate and terms of repayment of the bank loans are set out in note 12. The Target Company does not have an interest rate hedging policy. However, management monitors closely the interest rate exposure and will consider other necessary actions when significant interest rate exposure is anticipated.

Sensitivity analysis

For variable-rate bank loans, the analysis is prepared assuming the bank loans outstanding at the end of the reporting period were outstanding for the whole year. A 50 basis points increase or decrease in variable-rate bank loans represents management’s assessment of the reasonably possible change in interest rates. If interest rate increases/decrease by the aforesaid basis point, and all other variables were held constant, the Target Company’s post-tax results for the years ended 31 March 2015, 2016 and 2017 would be decreased/increased by approximately RMB258,000, RMB209,000 and RMB161,000 respectively. The analysis is performed on the same basis for the Relevant Periods.

In the opinion of the directors, the sensitivity analysis is unrepresentative of the inherent interest rate risk as the year end exposure does not reflect the exposure during the Relevant Periods.

(c) Fair value of financial assets and liabilities carried at other than fair values

All financial instruments carried at other than fair values are carried at amounts not materially different from their fair values as at 31 March 2015, 2016 and 2017.

16 Material related party transaction

Apart from elsewhere disclosed in the Historical Financial Information, the Target Company had entered into the following significant transactions with the related party during the Relevant Periods:

	2015	2016	2017
	RMB’000	RMB’000	RMB’000
Asset management expense paid/payable to Kailong REI
Project Investment Consulting (Shanghai) Co., Ltd.	1,125	731	337

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APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

17 Immediate and ultimate controlling party

At 31 March 2015, 2016 and 2017, the directors consider the immediate parent and ultimate controlling party of the Target Company to be Power City which is incorporated in Hong Kong, and Rykadan Capital Limited which is incorporated in the Cayman Islands. Rykadan Capital Limited produces financial statements available for public use.

18 Possible impact of amendments, new standards and interpretations issued but not yet effective for the Relevant Periods

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

	Effective for
	accounting periods
	beginning on or after
Amendments to HKAS 7, Statement of cash flows: Disclosure initiative	1 January 2017
Amendments to HKAS 12, Income taxes: Recognition of deferred tax assets for	1 January 2017
unrealised losses
HKFRS 9, Financial instruments	1 January 2018
HKFRS 15, Revenue from contracts with customers	1 January 2018
HKFRS 16, Leases	1 January 2019

The Target Company is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far the Target Company has identified some aspects of the new standards which may have a significant impact on the Historical Financial Information. Further details of the expected impacts are discussed below. As the Target Company has not completed its assessment, further impacts may be identified in due course and will be taken into consideration when determining whether to adopt any of these new requirements before their effective date and which transitional approach to take, where there are alternative approaches allowed under the new standards.

HKFRS 9, Financial instruments

HKFRS 9 will replace the current standard on accounting for financial instruments, HKAS 39, Financial instruments: Recognition and measurement . HKFRS 9 introduces new requirements for classification and measurement of financial assets, calculation of impairment of financial assets and hedge accounting. On the other hand, HKFRS 9 incorporates without substantive changes the requirements of HKAS 39 for recognition and derecognition of financial instruments and the classification of financial liabilities. Expected impacts of the new requirements on the Target Company’s Historical Financial Information are as follows:

Impairment

The new impairment model in HKFRS 9 replaces the “incurred loss” model in HKAS 39 with an “expected credit loss” model. Under the expected credit loss model, it will no longer be necessary for a loss event to occur before an impairment loss is recognised. Instead, an entity is required to recognise and measure expected credit losses as either 12-month expected credit losses or lifetime expected credit losses, depending on the asset and the facts and circumstances. This new impairment model may result in an earlier recognition of credit losses on the Target Company’s financial assets. However, a more detailed analysis is required to determine the extent of the impact.

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APPENDIX II ACCOUNTANTS’ REPORT OF THE TARGET COMPANY

19 Subsequent events

On 5 July 2017, a framework agreement has been entered into among Power City, the Target Company and Shanghai Medicilon Inc.（上海美迪西生物醫藥股份有限公司）(the “Purchaser”) in relation to (i) the disposal of the Block 4 by the Target Company to the Purchaser and (ii) the entering into of the agreement in relation to the disposal by Power City of its entire equity interest in the Target Company to the Purchaser. A property sale and purchase agreement has also been entered on the same date between the Purchaser and the Target Company in relation to the disposal of the Block 4.

SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 31 March 2017.

– 54 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Set out below is the management discussion and analysis of Target Company for the three years ended 31 March 2017, 2016 and 2015, which is based on the accountants’ report of the Target Company as set out in Appendix II to this circular.

Results

For the financial years ended 31 March 2017, 2016 and 2015, revenue in the amount of RMB2,507,000, RMB1,459,000 and RMB2,182,000 were recorded by the Target Company respectively.

Liquidity, Financial Resources and Capital Structure

As at 31 March 2017, 2016 and 2015, the Target Company’s total liabilities to total assets ratio were approximately 54.0%, 54.5% and 54.3% respectively.

The Target Company mainly relies upon its cash on hand and bank balances, bank loans and intercompany loans to finance its operations.

Significant Investment

As at 31 March 2017, 2016 and 2015, the Target Company had investment properties of RMB288,600,000, RMB280,000,000 and RMB288,600,000 respectively.

Save as disclosed above, the Target Company neither had any other significant investments nor any future plans for material investments or capital assets.

Material Acquisitions and Disposals

For the financial years ended 31 March 2017, 2016 and 2015, the Target Company had not entered into any material acquisitions and/or disposals of any its subsidiaries and associated companies.

Segment Information

The Target Company has only one operating segment which is property leasing, no segment information is presented other than the entity-wide information.

Employees and Remuneration Policy

For the financial years ended 31 March 2017, 2016 and 2015, the Target Company did not have any employees and thus no remuneration expenses were incurred.

Instead, the Target Company has outsourced the project and property management, financial reporting and daily operations and recorded such project and property management fees during the years.

– 55 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

APPENDIX III

Charges on the Target Company Assets

As at 31 March 2017, 2016 and 2015, bank loans were secured by mortgages over investment properties with an aggregate carrying value of RMB288,600,000, RMB280,000,000 and RMB288,600,000 respectively.

Prospects for New Business

For the financial years ended 31 March 2017, 2016 and 2015, the Target Company did not have any new business including new products and services introduced or announced.

Exposure to Fluctuations in Exchange Rates and Interest Rates and Corresponding Hedges

The Target Company mainly operates in RMB.

The Target Company’s bank borrowings were made at floating rates.

The Target Company has not implemented any foreign currencies and interest rates hedging policy. However, management of the Target Company will monitor foreign currencies and interest rates and consider appropriate hedging policies in future when necessary.

Contingent Liabilities and Capital Commitments

The Target Company did not have any significant contingent liabilities and capital commitment as at 31 March 2017, 2016 and 2015.

– 56 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The information set forth in this appendix does not form part of the Accountants’ Report received from KPMG, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, as set forth in Appendix II to this Circular, and is included herein for illustrative purposes only.

The unaudited pro forma financial information should be read in conjunction with the Financial Information of the Group set forth in Appendix I and the Accountants’ Report set forth in Appendix II to this Circular.

(A) THE PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. Introduction

The following is a summary of illustrative unaudited pro forma consolidated statements of financial position, unaudited pro forma consolidated income statements, unaudited pro forma consolidated statements of comprehensive income and unaudited pro forma consolidated cash flow statements (collectively referred to as the “Pro Forma Financial Information”), which have been prepared to illustrate the effects of:

• (i) the disposal of Block 4 of Kailong Nanhui Business Park (“Property Disposal”) and the disposal of 100% equity interest in Bestlinkage NHI Co., Ltd. (“Target Company”) (“Company Disposal”) (together the “Very Substantial Disposal” or “VSD”);

• (ii) possible very substantial acquisition (“Possible VSA”) in relation to the assumed exercise by the Purchaser of Option B relating to the acquisition of Block 4 of Kailong Nanhui Business Park from the Purchaser at the prevailing market price, which option B is only exercisable in the event if Power City fails to sign and proceed to perform the Target Company SPA on or before 30 June 2020 provided that the Framework Agreement has been signed and the transactions contemplated under the Property SPA had been completed, and the Purchaser terminates the Framework Agreement within 30 days from 30 June 2020 (“Possible VSA – Option B”);

• (iii) Possible VSA in relation to the assumed exercise by the Purchaser of Option C relating to the acquisition of Block 4 of Kailong Nanhui Business Park and/or 100% equity interest in the Target Company at the prevailing market price and Company Disposal Consideration respectively, which Option C is only exercisable in the event (a) if the Purchaser discovers within 18 months after the completion of the Target Company SPA that there is any undisclosed debt of the Target Company before the Reference Date and Power City fails to settle the undisclosed debts of which the amount is over RMB200,000 after the expiry of 30 days from receiving the Purchaser’s demand; or (b) there is any defect in Power City’s title over the equity interest of the Target Company and Power City fails to rectify such defect (“Possible VSA – Option C”).

– 57 –

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

Narrative descriptions of the unaudited pro forma adjustments that are directly attributable to the VSD, Possible VSA – Option B and Possible VSA – Option C and factually supportable are summarised in the accompanying notes to the unaudited pro forma financial information.

The unaudited Pro Forma Financial Information of the Group has been prepared by the directors of the Company in accordance with Paragraph 4.29 of the Listing Rules for illustrative purposes only, based on their judgements, estimations and assumptions, and because of its hypothetical nature, it may not give a true picture of the financial position of the Group as at 31 March 2017 or any future date or the financial results and cash flows of the Group for the year ended 31 March 2017 or any future period.

The preparation of the unaudited pro forma consolidated statement of financial position of the Remaining Group is based on (i) the audited consolidated statement of financial position of the Group as at 31 March 2017 which has been extracted from the published annual report of the Company for the year ended 31 March 2017; and (ii) the audited statement of financial position of the Target Company as at 31 March 2017 as extracted from the accountants’ report of the Target Company for the year ended 31 March 2017 as set out in Appendix II to this circular, as if the VSD, Possible VSA – Option B or Possible VSA – Option C had been completed on 31 March 2017.

The preparation of the unaudited pro forma consolidated income statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Remaining Group is based on (i) the audited consolidated income statement, the audited consolidated statement of comprehensive income and the audited consolidated cash flow statement of the Group for the year ended 31 March 2017 which have been extracted from the published annual report of the Company for the year ended 31 March 2017; and (ii) the audited statement of profit or loss and other comprehensive income and the audited cash flow statement of the Target Company for the year ended 31 March 2017 as extracted from the accountants’ report of the Target Company for the year ended 31 March 2017 as set out in Appendix II to this circular, as if the VSD, Possible VSA – Option B or Possible VSA – Option C had been completed on 1 April 2016.

The unaudited Pro Forma Financial Information of the Remaining Group should be read in conjunction with the historical financial information of the Group as set out in the published annual report of the Company for the year ended 31 March 2017 and other financial information included elsewhere in this circular.

– 58 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The	Remaining	The The Group as Group as at The Group as	Remaining at 31 March 31 March at 31 March	Group as at 2017 after Reversal of 2017 after 2017 after	31 March the the pro the the Property	Pro forma 2017 after Pro forma completion of forma completion of Disposal,	adjustments the adjustments the Property adjustments the Property Company	The Group as on the completion of on the Disposal and on the Disposal and Disposal and	at 31 March Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Pro forma adjustments on Possible VSA	2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal the Possible VSA – Option C – Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7		458,773 (47,308) 411,465 47,015 458,480 (47,015) (277,765) – 133,700 367,875 – 501,575	56,481 – 56,481 – 56,481 – – – 56,481 – – 56,481	106,797 – 106,797 – 106,797 – – – 106,797 – – 106,797	69,328 – 69,328 – 69,328 – – – 69,328 – – 69,328		683 – 683 – 683 – – – 683 – – 683	692,062 (47,308) 644,754 47,015 691,769 (47,015) (277,765) – 366,989 367,875 – 734,864	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -		618,438 – 618,438 – 618,438 – – – 618,438 – – 618,438	65,339 – 65,339 – 65,339 – – – 65,339 – – 65,339	136,046 – 136,046 – 136,046 – – – 136,046 – – 136,046		17,752 – 17,752 4,747 22,499 (4,747) (3,418) 90,678 105,012 4,747 (87,260) 22,499	17,023 – 17,023 – 17,023 – – – 17,023 – – 17,023	124,721 5,955 130,676 (78,503) 52,173 78,503 (1,525) 208,041 337,192 (281,182) 1,525 57,535	979,319 5,955 985,274 (73,756) 911,518 73,756 (4,943) 298,719 1,279,050 (276,435) (85,735) 916,880	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
													Non-current assets	Investment properties	Other properties, plant and equipment	Interests in associates	Interests in joint ventures	Other receivables, deposits and	prepayments			Current assets	Properties for sale	Inventories	Trade receivables	Other receivables, deposits and	prepayments	Cash held by stakeholders	Bank deposits and cash on hand

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The	Remaining	The The Group as Group as at The Group as	Remaining at 31 March 31 March at 31 March	Group as at 2017 after Reversal of 2017 after 2017 after	31 March the the pro the the Property	Pro forma 2017 after Pro forma completion of forma completion of Disposal,	adjustments the adjustments the Property adjustments the Property Company	The Group as on the completion of on the Disposal and on the Disposal and Disposal and	at 31 March Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Pro forma adjustments on Possible VSA	2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal the Possible VSA – Option C – Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7		56,803 2,253 59,056 (2,253) 56,803 2,253 (10,159) (2,253) 46,644 – 10,159 56,803		8,688 – 8,688 – 8,688 – – – 8,688 – – 8,688	229,345 (10,926) 218,419 – 218,419 – – – 218,419 – – 218,419		– – – – – – (90,678) 90,678 – – – –		76,248 – 76,248 – 76,248 – (886) – 75,362 – 886 76,248	5,492 – 5,492 – 5,492 – – – 5,492 – – 5,492	376,576 (8,673) 367,903 (2,253) 365,650 2,253 (101,723) 88,425 354,605 – 11,045 365,650	- - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------	602,743 14,628 617,371 (71,503) 545,868 71,503 96,780 210,294 924,445 (276,435) (96,780) 551,230	- - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------	1,294,805 (32,680) 1,262,125 (24,488) 1,237,637 24,488 (180,985) 210,294 1,291,434 91,440 (96,780) 1,286,094	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -		137,843 (25,293) 112,550 – 112,550 – – – 112,550 – – 112,550	12,446 (2,277) 10,169 – 10,169 – (40,262) 30,093 – – – –	150,289 (27,570) 122,719 – 122,719 – (40,262) 30,093 112,550 – – 112,550	- - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------	1,144,516 (5,110) 1,139,406 (24,488) 1,114,918 24,488 (140,723) 180,201 1,178,884 91,440 (96,780) 1,173,544
													Current liabilities	Trade and other payables	Deposits received from sale of	properties	Bank loans	Amounts due to the Remaining	Group	Loans from non-controlling	shareholders	Taxation payable			Net current assets		Total assets less current liabilities		Non-current liabilities	Bank loans	Deferred tax liabilities			NET ASSETS

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

	The Group	for the year	ended 31	March 2017	after the	Property	Disposal,	Company	Disposal and	Possible VSA	– Option C	HKD’000		599,427	(461,545)	137,882	4,588	(29,297)	(18,469)		(74,518)		36,819	57,005		23,006	80,011	(4,498)	9,240	84,753	(5,218)	79,535
							Pro forma	adjustments	on the	Possible VSA	– Option C	HKD’000	Note 14	–	–	–	–	(5,689)	–		–		–	(5,689)		–	(5,689)	–	–	(5,689)	–	(5,689)
The	Remaining	Group for	the year	ended 31	March 2017	after the	completion of	the Property	Disposal and	the Company	Disposal	HKD’000		599,427	(461,545)	137,882	4,588	(23,608)	(18,469)		(74,518)		36,819	62,694		23,006	85,700	(4,498)	9,240	90,442	(5,218)	85,224
										Pro forma adjustments on the	Company Disposal	HKD’000 HKD’000 HKD’000	Note 11 Note 12 Note 13	(2,464) – –	2,668 – –	204 – –	(17) – –	– – –	– – –		1,213 – –		– 45,833 (9,014)	1,400 45,833 (9,014)		(5,151) – –	(3,751) 45,833 (9,014)	2,225 – –	– – –	(1,526) 45,833 (9,014)	1,288 – –	(238) 45,833 (9,014)
					Reversal of	the Pro	forma	adjustments	on the	Possible VSA	– Option B	HKD’000	Note 10	–	–	–	–	26,090	–		–		–	26,090		–	26,090	–	–	26,090	–	26,090
		The Group	for the year	ended 31	March 2017	after the	completion of	the Property	Disposal and	Possible VSA	– Option B	HKD’000		601,891	(464,213)	137,678	4,605	(49,698)	(18,469)		(75,731)		–	(1,615)		28,157	26,542	(6,723)	9,240	29,059	(6,506)	22,553
							Pro forma	adjustments	on the	Possible VSA	– Option B	HKD’000	Note 9	–	–	–	–	(26,090)	–		–		–	(26,090)		–	(26,090)	–	–	(26,090)	–	(26,090)
		The	Remaining	Group for	the year	ended 31	March 2017	after the	completion of	the Property	Disposal	HKD’000		601,891	(464,213)	137,678	4,605	(23,608)	(18,469)		(75,731)		–	24,475		28,157	52,632	(6,723)	9,240	55,149	(6,506)	48,643
							Pro forma	adjustments	on the	Property	Disposal	HKD’000	Note 8	(434)	–	(434)	–	(1,793)	–		–		–	(2,227)		(4,686)	(6,913)	–	–	(6,913)	1,171	(5,742)
								The Group	for the year	ended 31	March 2017	HKD’000		602,325	(464,213)	138,112	4,605	(21,815)	(18,469)		(75,731)		–	26,702		32,843	59,545	(6,723)	9,240	62,062	(7,677)	54,385
														Revenue	Cost of sales and services	Gross profit	Other revenue	Other net loss	Selling and marketing expenses	Administrative and other operating	expenses	Gain on disposal of interest in a	subsidiary	Profit from operations	Increase in fair value of investment	properties		Finance costs	Share of profits of joint ventures	Profit before taxation	Income tax	Profit for the year

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Unaudited Pro Forma Consolidated Statement of Comprehensive Income of the Remaining Group for the year ended 31 March 2017	(Expressed in Hong Kong dollars)	The	Remaining The Group	The The Group Group for for the year	Remaining for the year the year ended 31	Group for ended 31 ended 31 March 2017	the year March 2017 Reversal of March 2017 after the	ended 31 after the the Pro after the Property	Pro forma March 2017 Pro forma completion of forma completion of Pro forma Disposal,	The Group adjustment after the adjustments the Property adjustments the Property adjustments Company	for the year on the completion of on the Disposal and on the Disposal and on the Disposal and	ended 31 Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Possible VSA Possible VSA	March 2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal – Option C – Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Note 14	Profit for the year 54,385 (5,742) 48,643 (26,090) 22,553 26,090 (238) 45,833 (9,014) 85,224 (5,689) 79,535 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	Other comprehensive income for	the year (after tax and	reclassification adjustments):	Items that may be reclassified	subsequently to profit or loss:	– Exchange differences arising on	translation of foreign operations (11,321) – (11,321) – (11,321) – 10,274 – – (1,047) – (1,047)	– Release of translation reserve upon	disposal of a subsidiary – – – – – – – – 9,014 9,014 – 9,014	Other comprehensive income for	the year (11,321) – (11,321) – (11,321) – 10,274 – 9,014 7,967 – 7,967 - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------	Total comprehensive income for the	year 43,064 (5,742) 37,322 (26,090) 11,232 26,090 10,036 45,833 – 93,191 (5,689) 87,502

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

	The Group	for the year	ended 31	March 2017	after the	Property	Disposal, the	Company	Disposal and	VSA –	Option C	HKD’000			84,753			(23,006)		4,537		480		(472)	(7,097)	(149)	4,498	(9,240)	5,302		(5,512)		1,793	(36,819)	29,374		48,442
							Pro forma	adjustment	on the	Possible VSA	– Option C	HKD’000	Note 16		(5,689)			–		–		–		–	–	–	–	–	–		–		–	–	–		(5,689)
The	Remaining	Group for	the year	ended 31	March 2017	after the	completion of	the Property	Disposal and	the Company	Disposal	HKD’000			90,442			(23,006)		4,537		480		(472)	(7,097)	(149)	4,498	(9,240)	5,302		(5,512)		1,793	(36,819)	29,374		54,131
												HKD’000	Note 13		(9,014)			–		–		–		–	–	–	–	–	–		–		–	9,014	–		–
										Pro forma adjustments on	the Company Disposal	HKD’000 HKD’000	Note 15 Note 12		(1,526) 45,833			5,151 –		– –		– –		– –	– –	17 –	(2,225) –	– –	– –		– –		– –	– (45,833)	(476) –		941 –
					Reversal of	the Pro	forma	adjustments	on the	Possible VSA	– Option B	HKD’000	Note 10		26,090			–		–		–		–	–	–	–	–	–		–		–	–	–		26,090
		The Group	for the year	ended 31	March 2017	after the	completion of	the Property	Disposal and	Possible VSA	– Option B	HKD’000			29,059			(28,157)		4,537		480		(472)	(7,097)	(166)	6,723	(9,240)	5,302		(5,512)		1,793	–	29,850		27,100
							Pro forma	adjustments	on the	Possible VSA	– Option B	HKD’000	Note 9		(26,090)			–		–		–		–	–	–	–	–	–		–		–	–	–		(26,090)
		The	Remaining	Group for	the year	ended 31	March 2017	after the	completion of	the Property	Disposal	HKD’000			55,149			(28,157)		4,537		480		(472)	(7,097)	(166)	6,723	(9,240)	5,302		(5,512)		1,793	–	29,850		53,190
							Pro forma	adjustments	on the	Property	Disposal	HKD’000	Note 8		(6,913)			4,686		–		–		–	–	–	–	–	–		–		1,793	–	12		(422)
								The Group	for the year	ended 31	March 2017	HKD’000			62,062			(32,843)		4,537		480		(472)	(7,097)	(166)	6,723	(9,240)	5,302		(5,512)		–	–	29,838		53,612
														Operating activities	Profit before taxation	Adjustments for:	Increase in fair value of investment	properties	Depreciation of other properties,	plant and equipment	Loss on disposal of other properties,	plant and equipment	Dividend income from trading	securities	Gain on disposal of trading securities	Interest income	Interest expenses	Share of profits of joint ventures	Impairment loss on trade receivables	Reversal of allowance for doubtful	debts	Loss on disposal of an investment	property	Gain on disposal of a subsidiary	Exchange loss	Operating profit before changes in	working capital

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The	Remaining The Group	The The Group Group for for the year	Remaining for the year the year ended 31	Group for ended 31 ended 31 March 2017	the year March 2017 Reversal of March 2017 after the	ended 31 after the the Pro after the Property	Pro forma March 2017 Pro forma completion of forma completion of Pro forma Disposal, the	The Group adjustments after the adjustments the Property adjustments the Property adjustment Company	for the year on the completion of on the Disposal and on the Disposal and on the Disposal and	ended 31 Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Possible VSA VSA –	March 2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal – Option C Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 8 Note 9 Note 10 Note 15 Note 12 Note 13 Note 16		53,612 (422) 53,190 (26,090) 27,100 26,090 941 – – 54,131 (5,689) 48,442		148,307 – 148,307 – 148,307 – – – – 148,307 – 148,307	2,303 – 2,303 – 2,303 – – – – 2,303 – 2,303	(94,111) – (94,111) – (94,111) – – – – (94,111) – (94,111)		50,403 – 50,403 (5,058) 45,345 5,058 6 – – 50,409 – 50,409		1,156 – 1,156 – 1,156 – – – – 1,156 – 1,156	209,039 – 209,039 – 209,039 – – – – 209,039 – 209,039	(552) 2,400 1,848 (2,400) (552) 2,400 (3,024) – – (1,176) – (1,176)		(253,303) – (253,303) – (253,303) – – – – (253,303) – (253,303)	116,854 1,978 118,832 (33,548) 85,284 33,548 (2,077) – – 116,755 (5,689) 111,066	(12,406) – (12,406) – (12,406) – 2,225 – – (10,181) – (10,181)		3,010 – 3,010 – 3,010 – – – – 3,010 – 3,010		(1,320) – (1,320) – (1,320) – – – – (1,320) – (1,320)		106,138 1,978 108,116 (33,548) 74,568 33,548 148 – – 108,264 (5,689) 102,575	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
														Operating profit before changes in	working capital	Changes in working capital:	Decrease in properties for sale	Decrease in inventories	Increase in trade receivables	Decrease in other receivables,	deposits and prepayments	Decrease in amounts due from joint	ventures	Decrease in cash held by stakeholders	Decrease in trade and other payables	Decrease in deposits received from	sale of properties	Cash generated from operations	Interest paid	Hong Kong Profits Tax refunded/	(paid), net	PRC Enterprise Income Tax and	overseas tax paid, net	Net cash generated from operating	activities

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The	Remaining The Group	The The Group Group for for the year	Remaining for the year the year ended 31	Group for ended 31 ended 31 March 2017	the year March 2017 Reversal of March 2017 after the	ended 31 after the the Pro after the Property	Pro forma March 2017 Pro forma completion of forma completion of Pro forma Disposal, the	The Group adjustments after the adjustments the Property adjustments the Property adjustment Company	for the year on the completion of on the Disposal and on the Disposal and on the Disposal and	ended 31 Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Possible VSA VSA –	March 2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal – Option C Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 8 Note 9 Note 10 Note 15 Note 12 Note 13 Note 16		(100) – (100) (50,089) (50,189) 50,089 100 – – – – –		(152) – (152) – (152) – – – – (152) – (152)		– – – – – – – 230,433 – 230,433 – 230,433			– – – – – – – – – – (303,011) (303,011)		44 – 44 – 44 – – – – 44 – 44		– 42,533 42,533 – 42,533 – – – – 42,533 – 42,533		27,570 – 27,570 – 27,570 – – – – 27,570 – 27,570	(46,331) – (46,331) – (46,331) – – – – (46,331) – (46,331)	166 – 166 – 166 – (17) – – 149 – 149		472 – 472 – 472 – – – – 472 – 472	(422) – (422) – (422) – – – – (422) – (422)		(18,753) 42,533 23,780 (50,089) (26,309) 50,089 83 230,433 – 254,296 (303,011) (48,715)	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
														Investing activities	Additions to investment properties	Purchases of other properties, plant	and equipment	Proceeds from disposal of interest in	a subsidiary	Net cash outflows from acquisition of	assets and liabilities through	acquisition of a subsidiary	Proceeds from disposal of other	properties, plant and equipment	Proceeds from disposal of an	investment property	Proceeds from disposal of trading	securities	Advances to joint ventures	Interest received	Dividend income from trading	securities	Increase in pledged bank deposit	Net cash (used in)/generated from	investing activities

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The	Remaining The Group	The The Group Group for for the year	Remaining for the year the year ended 31	Group for ended 31 ended 31 March 2017	the year March 2017 Reversal of March 2017 after the	ended 31 after the the Pro after the Property	Pro forma March 2017 Pro forma completion of forma completion of Pro forma Disposal, the	The Group adjustments after the adjustments the Property adjustments the Property adjustment Company	for the year on the completion of on the Disposal and on the Disposal and on the Disposal and	ended 31 Property the Property Possible VSA Possible VSA Possible VSA Pro forma adjustments on the Company Possible VSA VSA –	March 2017 Disposal Disposal – Option B – Option B – Option B the Company Disposal Disposal – Option C Option C	HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000 HKD’000	Note 8 Note 9 Note 10 Note 15 Note 12 Note 13 Note 16		275,367 – 275,367 – 275,367 – – – – 275,367 – 275,367	(352,811) (50,228) (403,039) – (403,039) – 11,211 – – (391,828) – (391,828)	– – – – – – (8,900) 8,900 – – – –		6,290 – 6,290 – 6,290 – – – – 6,290 – 6,290		(5,284) – (5,284) – (5,284) – 1,560 – – (3,724) – (3,724)	(14,323) – (14,323) – (14,323) – – – – (14,323) – (14,323)	(90,761) (50,228) (140,989) – (140,989) – 3,871 8,900 – (128,218) – (128,218)	- - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------ - - - - - - - - - ------------------------------------		(3,376) (5,717) (9,093) (83,637) (92,730) 83,637 4,102 239,333 – 234,342 (308,700) (74,358)		132,099 132,099 132,099		(4,424) 305 (4,119) (4,119)		124,299 362,322 53,622
														Financing activities	Proceeds from new bank loans	Repayments of bank loans	Advance from the Remaining Group	Loans from non-controlling	shareholders	Repayment of loan to a non-	controlling shareholder	Dividend paid	Net cash used in financing activities		Net (decrease)/increase in cash and	cash equivalents	Cash and cash equivalents at the	beginning of the year	Effect of foreign exchange rate	changes	Cash and cash equivalents at the	end of the year

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

Notes to the Unaudited Pro Forma Financial Information of the Remaining Group

1. The adjustments represent (i) the receipt of Deposit of RMB2,000,000 (equivalent to HKD2,253,000) within two days from the signing of the Framework Agreement and the Framework Agreement becoming effective; (ii) the disposal of Block 4 as if the Property Disposal had taken place on 31 March 2017 and (iii) assumed settlement of bank loans of the Target Company of RMB32,155,000 (equivalent to HKD36,219,000) upon the Property Disposal.

Consideration for the Property Disposal Less: Carrying amount of Block 4 as at 31 March 2017 Estimated value added tax Estimated other taxes Estimated land appreciation tax Reversal of deferred tax liabilities previously recognised Estimated loss on the Property Disposal Net loss attributable to the Remaining Group Net loss attributable to the non-controlling interests	HKD’000 47,904 (47,308) (2,281) (297) (5,405) 2,277 (5,110) (3,018) (2,092)

The estimated loss on the Property Disposal is calculated as the cash consideration for the Property Disposal of RMB42,529,000 (equivalent to HKD47,904,000), net of estimated value added tax (“VAT”), land appreciation tax and other taxes of HKD2,281,000, HKD5,405,000 and HKD297,000 respectively, reversal of deferred tax liabilities previously recognised of HKD2,277,000 and the carrying amount of Block 4 as at 31 March 2017 amounted to RMB42,000,000 (equivalent to HKD47,308,000). The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

The fair value of the options granted in connection with the transactions has not been taken into account in the above transaction. In the opinion of the directors of the Company, there are no significant fair value for the options as either their exercise prices are the considerations that have to be arrived at using fair values to be determined by independent professional valuers or the directors of the Company consider the fair value of the options is insignificant.

1. The adjustments reflect (i) the re-acquisition of Block 4 upon the assumed exercise of Option B by the Purchaser; (ii) the refund of the Deposit of HKD2,253,000 (note 1) to the Purchaser; (iii) the compensation of RMB17,000,000 (equivalent to HKD19,148,000) which comprises penalty of RMB15,000,000 and deposit compensation of RMB2,000,000, and (iv) the tax arising from the re-acquisition including VAT and other taxes of HKD4,747,000 and HKD593,000 respectively assumed for the purchase by the Company, assuming that the Possible VSA – Option B had taken place on 31 March 2017. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

The pro forma consideration for the acquisition of Block 4 at the prevailing market price is assumed to be the same as the consideration for the disposal of Block 4 of HKD45,623,000 (VAT exclusive). The carrying amount of Block 4 includes the pro forma consideration and other taxes of HKD1,392,000. VAT recoverable of HKD4,747,000 arising from the re-acquisition is included in other receivables, deposits and prepayments.

1. The adjustments represent the reversal of all of the pro forma adjustments made for the Possible VSA – Option B in order to illustrate the effects of the completion of the Property Disposal.

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. The adjustments represent the deconsolidation of the remaining assets and liabilities of the Target Company after the Property Disposal (note 1) as at 31 March 2017, as extracted from the statement of financial position of the Target Company as at 31 March 2017 as set out in Appendix II to this circular after considering the pro forma adjustment set out in note 1, as if the Company Disposal had taken place on 31 March 2017. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

The fair value of investment properties held by the Target Company at 31 March 2017 is as follows:

Fair value of the investment properties held by the Target Company Less: Fair value of Block 4 Fair value of the Remaining Blocks	HKD’000 325,073 (47,308) 277,765

1. The adjustments represent (i) the receipt of cash consideration arising from the Company Disposal; (ii) recognition of amounts due from the Target Company of HKD90,678,000, and (iii) the exclusion of deferred tax liabilities following the Company Disposal, as if it had taken place on 31 March 2017.

Pro forma consideration for the Company Disposal (note(i)) Less: Net assets of the Target Company as at 31 March 2017 after the Property Disposal Reversal of deferred tax liabilities Estimated other tax Estimated enterprise income tax Estimated net gain on the Company Disposal (total comprehensive income) Net gain attributable to the Remaining Group (total comprehensive income) Net gain attributable to the non-controlling interests (total comprehensive income)

HKD’000 227,783 (146,702) (27,816) (115) (13,672) 39,478 23,318 16,160

The estimated gain on the Company Disposal is calculated as the pro forma cash consideration for the Company Disposal of RMB202,226,000 (equivalent to HKD227,783,000), net of estimated enterprise income tax and other tax of HKD13,672,000 and HKD115,000 respectively, reversal of deferred tax liabilities of HKD27,816,000 and net assets of the Target Company as at 31 March 2017 after the Property Disposal amounted to HKD146,702,000. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

The fair value of the options granted in connection with the transactions has not been taken into account in the above transaction. In the opinion of the directors of the Company, there are no significant fair value for the options as either their exercise prices are the considerations that have to be arrived at using fair values to be determined by independent professional valuers or the directors of the Company consider the fair value of the options is insignificant.

• (i) The pro forma consideration for the Company Disposal (subject to adjustments) was calculated by assuming the agreed price per sq.m. of the Remaining Blocks to be RMB6,300 (equivalent to HKD7,096) (i.e. by assuming date of signing the Company SPA falls between 1 January 2017 and 31 December 2017) and as follows:

Agreed price per sq.m. Sq.m. of the Remaining Blocks Pro forma consideration before adjustments Adjustment on net balance of cash, bank deposits, other assets and total liabilities Pro forma consideration for the Company Disposal	HKD7,096
	45,215.83
	HKD’000 320,860 (93,077)
	227,783

The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

• (ii) The consideration for the Company Disposal varies according to the date of signing of the Target Company SPA. In order to illustrate the impact to the Pro Forma Financial Information of the Group, the directors have calculated the following pro forma consideration for the Company Disposal (subject to adjustments) based on the date of signing the Target Company SPA.

Agreed price per sq.m. Agreed price per sq.m.	Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 RMB6,615 RMB6,946 RMB7,293 HKD7,451 HKD7,824 HKD8,215	Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 RMB6,615 RMB6,946 RMB7,293 HKD7,451 HKD7,824 HKD8,215
		HKD8,215

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Pro forma consideration for the Company Disposal Less: Net assets of the Target Company as at 31 March 2017 after the Property Disposal Reversal of deferred tax liabilities Estimated other taxes Estimated enterprise income tax Estimated net gain on the Company Disposal (total comprehensive income) Net gain attributable to the Remaining Group (total comprehensive income) Net gain attributable to the non-controlling interests (total comprehensive income) Increase in bank deposits and cash on hand Increase in total equity attributable to: Equity shareholders of the Company Non-controlling interests

Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 HKD’000 HKD’000 HKD’000 243,826 260,684 278,357 (146,702) (146,702) (146,702) (27,816) (27,816) (27,816) (123) (131) (140) (15,276) (16,962) (18,729) 53,909 69,073 84,970 31,842 40,799 50,188 22,067 28,274 34,782 14,431 29,595 45,492 8,524 17,481 26,870 5,907 12,114 18,622 14,431 29,595 45,492

The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.1264.

1. The adjustments reflect the re-acquisition of Block 4 and then the Target Company, and the tax arising from the re-acquisition including VAT and other taxes of HKD4,747,000 and HKD593,000 respectively, upon the assumed exercise of Option C by the Purchaser, assuming that the Possible VSA – Option C had taken place on 31 March 2017.

The pro forma consideration for the acquisition of Block 4 at the prevailing market price is assumed to be the same as the consideration for the disposal of Block 4 of HKD45,623,000 (VAT exclusive) while the pro forma consideration for the Remaining Blocks is assumed to be arrived at the same basis of the calculation in note 5(i) of HKD320,860,000. The carrying amount of investment properties acquired includes other taxes of HKD1,392,000. VAT recoverable of HKD4,747,000 arising from the re-acquisition of Block 4 is included in other receivables, deposits and prepayments.

1. The adjustments reflect the re-acquisition of cash, bank deposit, other assets and total liabilities and elimination of amounts due from the Target Company arising from the re-acquisition of the Target Company upon the assumed exercise of Option C by the Purchaser, assuming that the Possible VSA – Option C had taken place on 31 March 2017.

The directors of the Company assumed there were no undisclosed debt of the Target Company when preparing this unaudited Pro Forma Financial Information.

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. The adjustments represent (i) receipt of Deposit of RMB2,000,000 (equivalent to HKD2,400,000) within two days from the signing of the Framework Agreement and the Framework Agreement becoming effective; (ii) the disposal of Block 4 as if the Property Disposal had taken place on 1 April 2016 and (iii) the assumed settlement of bank loans of the Target Company of RMB41,855,000 (equivalent to HKD50,228,000) upon the Property Disposal.

Consideration for the Property Disposal Less: Carrying amount of Block 4 as at 1 April 2016 Estimated VAT Estimated other taxes Estimated land appreciation tax Reversal of deferred tax liabilities previously recognised Estimated loss on the Property Disposal Net loss attributable to the Remaining Group Net loss attributable to the non-controlling interests	HKD’000 51,035 (45,536) (2,428) (316) (5,758) 1,210 (1,793) (1,059) (734)

The estimated loss on the Property Disposal is calculated as the cash consideration for the Property Disposal of RMB42,529,000 (equivalent to HKD51,035,000), net of estimated VAT, land appreciation tax and other taxes of HKD2,428,000, HKD5,758,000 and HKD316,000 respectively, reversal of deferred tax liabilities previously recognised of HKD1,210,000 and the carrying amount of Block 4 as at 1 April 2016 amounted to RMB37,945,000 (equivalent to HKD45,536,000). The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.2000.

The fair value of the options granted in connection with the transactions has not been taken into account in the above transaction. In the opinion of the directors of the Company, there are no significant fair value for the options as either their exercise prices are the considerations that have to be arrived at using fair values to be determined by independent professional valuers or the directors of the Company consider the fair value of the options is insignificant.

In addition, the net cash inflow of the proceeds from the Property Disposal of HKD42,533,000 represents the consideration of HKD48,607,000 (VAT exclusive) less (i) estimated land appreciation tax of HKD5,758,000 and (ii) estimated other taxes of HKD316,000, as if the Property Disposal had taken place on 1 April 2016.

1. The adjustments represent the compensation of RMB17,000,000 (equivalent to HKD20,401,000) which comprises penalty of RMB15,000,000 and deposit compensation of RMB2,000,000, and the tax arising from the re-acquisition including VAT and other taxes of HKD5,058,000 and HKD631,000 respectively upon the assumed exercise of Option B by the Purchaser, assuming that the Possible VSA – Option B had taken place on 1 April 2016. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.2000.

The net cash outflow represents (i) the pro forma consideration for the re-acquisition of Block 4 at the prevailing market price, which is assumed to be the same as the consideration for the disposal of Block 4 of HKD48,607,000 (VAT exclusive); (ii) other taxes directly attributable to the re-acquisition of HKD1,482,000; (iii) compensation paid of HKD20,401,000; (iv) VAT paid of HKD5,058,000 and (v) the tax arising from the re-acquisition including VAT and other taxes of HKD5,058,000 and HKD631,000 respectively and refund of the Deposit of HKD2,400,000 (note 8), as if the Possible VSA – Option B had taken place on 1 April 2016.

1. The adjustments represent the reversal of all of the pro forma adjustments made for the Possible VSA – Option B in order to illustrate the effects of the completion of the Property Disposal.

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. The adjustments represent the deconsolidation of the results attributable to the Target Company after the Property Disposal (note 8) for the year ended 31 March 2017, as extracted from the statement of comprehensive income of the Target Company for the year ended 31 March 2017 as set out in Appendix II to this circular after considering the pro forma adjustment set out in note 8, as if the Company Disposal had taken place on 1 April 2016. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.200.

The revenue, increase in fair value of investment properties and income tax of the Target Company for the year ended 31 March 2017 are as follows:

Revenue generated by the Target Company Less: Revenue generated by Block 4 Revenue generated from the Remaining Blocks Increase in fair value of the investment properties held by the Target Company Less: Increase in fair value of Block 4 Increase in fair value of the Remaining Blocks Income tax expenses from the Target Company Less: Deferred tax in respect of increase in fair value of Block 4 Income tax expenses from the Remaining Blocks

HKD’000 2,898 (434) 2,464 9,837 (4,686) 5,151 2,460 (1,172) 1,288

1. The adjustments represent the estimated gain on the Company Disposal as if it had taken place on 1 April 2016.

Pro forma consideration for the Company Disposal (note(i)) Less: Net assets of the Target Company as at 1 April 2016 after the Property Disposal Reversal of deferred tax liabilities Estimated other tax Estimated enterprise income tax Estimated net gain on the Company Disposal (total comprehensive income) Net gain attributable to the Remaining Group (total comprehensive income) Estimated net gain to the non-controlling interests (total comprehensive income)

HKD’000 246,102 (155,602) (29,635) (124) (14,908) 45,833 27,072 18,761

The estimated gain on the Company Disposal is calculated as the pro forma cash consideration for the Company Disposal of RMB205,077,000 (equivalent to HKD246,102,000), net of estimated enterprise income tax and other tax of HKD14,908,000 and HKD124,000 respectively, reversal of deferred tax liabilities of HKD29,635,000 and net assets of the Target Company as at 1 April 2016 amounted to HKD155,602,000.

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

The fair value of the options granted in connection with the transactions has not been taken into account in the above transaction. In the opinion of the directors of the Company, there are no significant fair value for the options as either their exercise prices are the considerations that have to be arrived at using fair values to be determined by independent professional valuers or the directors of the Company consider the fair value of the options is insignificant.

• (i) The pro forma consideration for the Company Disposal (subject to adjustments) was calculated by assuming the agreed price per sq.m. of the Remaining Blocks to be RMB6,300 (equivalent to HKD7,560) (i.e. by assuming date of signing the Company SPA falls between 1 January 2017 and 31 December 2017) and as follows:

Agreed price per sq.m. Sq.m. of the Remaining Blocks Pro forma consideration before adjustments Adjustment on net balance of cash, bank deposits, other assets and total liabilities Pro forma consideration for the Company Disposal	HKD7,560
	45,215.83
	HKD’000 341,845 (95,743)
	246,102

• (ii) The consideration for the Company Disposal varies according to the date of signing of the Target Company SPA. In order to illustrate the impact to the Pro Forma Financial Information of the Group, the directors have calculated the following pro forma consideration for the Company Disposal (subject to adjustments) based on the date of signing the Target Company SPA.

Agreed price per sq.m. Agreed price per sq.m.	Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 RMB6,615 RMB6,946 RMB7,293 HKD7,938 HKD8,336 HKD8,752	Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 RMB6,615 RMB6,946 RMB7,293 HKD7,938 HKD8,336 HKD8,752
		HKD8,752

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APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Pro forma consideration for the Company Disposal Less: Net assets of the Target Company as at 1 April 2016 after the Property Disposal Reversal of deferred tax liabilities Estimated other tax Estimated enterprise income tax Estimated net gain on the Company Disposal (total comprehensive income) Net gain attributable to the Remaining Group (total comprehensive income) Estimated net gain to the non-controlling interests (total comprehensive income)

Date of signing the Company SPA 1 January 2018 to 31 December 2018 1 January 2019 to 31 December 2019 1 January 2020 to 30 June 2020 HKD’000 HKD’000 HKD’000 263,194 281,155 299,983 (155,602) (155,602) (155,602) (29,635) (29,635) (29,635) (133) (142) (151) (16,617) (18,413) (20,296) 61,207 77,363 94,299 36,153 45,695 55,699 25,054 31,668 38,600

In addition, the net cash inflow of the proceeds from disposal of interest in the Target Company represents the estimated pro forma consideration of HKD246,102,000, taken into consideration of the assumed settlement of bank loans of the Target Company of RMB41,855,000 (equivalent to HKD50,228,000) upon the Property Disposal less (i) estimated other tax and enterprise income tax of HKD124,000 and HKD14,908,000 respectively; (ii) the cash balance held by the Target Company as at 1 April 2016 of RMB4,943,000 (equivalent to HKD5,932,000); (iii) the cash inflow from the Property Disposal of HKD42,533,000, as if the Company Disposal had taken place on 1 April 2016; and (iv) the Deposit of HKD2,400,000 being part of the payment of the balance of the Company Disposal Consideration.

The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.2000.

1. According to the Group’s accounting policy, the results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Statement of financial position items are translated into Hong Kong dollars at the closing foreign exchange rates at the end of each reporting period. The resulting exchange differences are recognised in other comprehensive income and accumulated separately in equity in the exchange reserve.

On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognised. The adjustments represent the cumulative amount of the exchange differences relating to the Target Company reclassified to profit or loss as if the Target Company had taken place on 1 April 2016.

1. The adjustments represent the tax arising from the re-acquisition including VAT and other taxes of HKD5,058,000 and HKD631,000 respectively.

The directors of the Company assumed there were no undisclosed debt of the Target Company when preparing this unaudited Pro Forma Financial Information.

1. The adjustments represent the exclusion of the cash flows of the Target Company after the Property Disposal (note 8) for the year ended 31 March 2017, as extracted from the cash flow statement of the Target Company for the year ended 31 March 2017 as set out in Appendix II to this circular after considering the pro forma adjustment in note 8, as if the Company Disposal had taken place on 1 April 2016. The exchange rate being used to convert RMB to HKD is RMB1 to HKD1.2000.

– 77 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

1. The adjustments represent the net cash outflow of the tax arising from the re-acquisition (note 14) and the pro forma consideration for the re-acquisition of Block 4 at the prevailing market price and Target Company at Company Disposal Consideration and VAT paid of HKD5,058,000 arising from the re-acquisition of Block 4, as if the Possible VSA – Option C had taken place on 1 April 2016.

The pro forma consideration for the re-acquisition of Block 4 at the prevailing market price is assumed to be the same as the consideration for the disposal of Block 4 of HKD48,607,000 (VAT exclusive) with other taxes directly attributable to the re-acquisition of HKD1,482,000. The pro forma consideration for the re-acquisition of the Remaining Blocks is calculated as the Company Disposal Consideration of HKD341,845,000 (note 12(i)). The pro forma cash consideration payable for the re-acquisition of Target Company and Possible VSA – Option C, as if the Possible VSA – Option C had taken place on 1 April 2016 is as follows:

Net assets acquired: Remaining Blocks Cash at bank and on hand Other receivables, deposits and prepayments Trade and other payables Amount due to a related company Amount due to the Remaining Group Cash consideration paid Block 4 VAT recoverable Pro forma cash consideration for re-acquisition of Block 4 and Target Company Add: Cash at bank and on hand acquired Net cash outflows from acquisition of assets and liabilities through acquisition of a subsidiary

HKD’000 341,845 (1,762) 3,635 (7,683) (2,565) (87,368) 246,102 50,089 5,058 301,249 301,249 1,762 303,011

1. No representation is made that RMB denominated amounts have been, could have been or could be converted to HKD, or vice versa, at the rate applied or at any other rates or at all.

2. All the above adjustments in respect of the unaudited pro forma consolidated income statement, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated cash flow statement above are not expected to have a continuing effect on the Remaining Group.

3. No adjustment has been made to reflect any trading results or other transaction of the Group entered into subsequent to 31 March 2017 for the unaudited pro forma consolidated statement of financial position and 1 April 2016 for the unaudited pro forma consolidated income statement, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated cash flow statement.

4. No adjustment has been made to this Pro Forma Financial Information for professional costs directly attributable to the VSD, Possible VSA – Option B and Possible VSA – Option C (including fees to legal advisers, reporting accountants, valuer, printer and other expenses) as the Directors determined that costs are insignificant.

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

(B) INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

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

==> picture [81 x 34] intentionally omitted <==

TO THE DIRECTORS OF RYKADAN CAPITAL LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of Rykadan Capital 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 financial position as at 31 March 2017 and the unaudited pro forma consolidated income statement, unaudited pro-forma consolidated statement of comprehensive income and unaudited pro forma consolidated cash flow statement for the year ended 31 March 2017 and related notes as set out in Part A of Appendix IV to the circular dated 22 September 2017 (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 very substantial disposal in relation to the disposal of the Block 4 of Kailong Nanhui Business Park (the “Block 4”) held by Bestlinkage NHI Co., Ltd. (the “Target Company”) and the entire interests of the Target Company and the possible very substantial acquisition in relation to the grant of options to buy back Block 4 and/or the Target Company (together, the “Proposed Transactions”) on the Group’s financial position as at 31 March 2017 and the Group’s financial performance and cash flows for the year ended 31 March 2017 as if the Proposed Transactions had taken place at 31 March 2017 and 1 April 2016, respectively. As part of this process, information about the Group’s financial position as at 31 March 2017 and the Group’s financial performance and cash flows for the year ended 31 March 2017 has been extracted by the Directors from the consolidated financial statements of the Company for the year then ended, on which an audit report has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

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

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING 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 March 2017 or 1 April 2016 would have been as presented.

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

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PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

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

8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong 22 September 2017

– 81 –

APPENDIX V

VALUATION REPORT ON THE PROPERTY

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Beijing Colliers International Real Estate Valuation Co., Ltd., an independent valuer, in connection with its valuation as at 30 June 2017 of the Property interests.

Beijing Colliers International Real Estate Valuation Co., Ltd. MAIN 86 21 6141 4350 FAX 86 21 6141 3699 Suite 502, Tower W3, Oriental Plaza EMAIL flora.he@colliers.com No. 1 East Chang’an Avenue, Dongcheng District Beijing

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22 September 2017

The Directors Rykadan Capital Limited Rooms 2701 & 2801 Rykadan Capital Tower 135 Hoi Bun Road Kwun Tong Hong Kong

Dear Sir or Madam,

• Re: Valuation of Kailong Nanhui Business Park located at No. 2300 Xuanhuang Road, Huinan Town, Pudong New District, Shanghai, the People’s Republic of China (the “Property”)

INSTRUCTIONS

Instructions have been received from Rykadan Capital Limited (the “Client”) to conduct a market value of the above mentioned Property held by Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司, the “Owner”), we confirm that we have carried out inspection, made relevant enquires and researches and obtained such further information as we consider necessary for the purpose of providing the Client with our opinion of the market value of the Property, as at 30 June 2017 (the “Date of Valuation”) to the Client for public circular purpose.

BASIS OF VALUATION

Our valuation is provided on the basis of Market Value, which we would define as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

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VALUATION REPORT ON THE PROPERTY

APPENDIX V

QUALIFICATIONS OF THE VALUER

This valuation has been prepared by Zhirong He (Flora He) (RICS Registration No.:1259301), who is a Fellow of the Royal Institution of Chartered Surveyors. Flora is head of China Valuation and Advisory Services team at Beijing Colliers International Real Estate Valuation Co., Ltd. (“Colliers International”). She is suitably qualified to carry out the valuation and has over 15 years’ experience in the valuation of properties of this magnitude and nature in China.

Neither Colliers International nor the valuer are aware of any pecuniary interest or conflict that could reasonably be regarded as being capable of affecting the ability to give an unbiased and objective, opinion of the value of the Property.

VALUATION APPROACHES

In determining the market value of the Property, we have valued the Property by using the Income Approach – the Discounted Cash Flow Method and the Market Approach.

Discounted Cash Flow Method is the process of valuing an investment property or asset by undertaking an estimation of future cash flows and taking into account the time value of money. In the Discounted Cash Flow Method, the income is projected over the investment cycle and the net income is calculated after the deduction of the capital, operating, and other necessary expenses.

Market Approach provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available. By analysing such sales, which qualify as “arm’s-length” transactions, between willing buyers and sellers, adjustments are made for size, location, time, amenities and other relevant factors when comparing such sales prices to assess the value of the subject asset. This approach is commonly used to value assets where reliable sales evidence of assets of a similar nature is available.

VALUATION STANDARDS

This valuation has been carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) Global Valuation Professional Standards, incorporating the International Valuation Standards of the International Valuation Standards Council (IVSC). Colliers International Valuation and Advisory Services department is also accredited under ISO 9001:2008.

Colliers International is regulated by the RICS and all necessary investigations, inspections, and other work carried out for the purpose of this valuation have been in accordance with its valuation standards. The RICS monitors regulated firms under its Conduct and Disciplinary regulations. Collier’s International maintains a complaint handling procedure, a copy of which is available on request.

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VALUATION REPORT ON THE PROPERTY

APPENDIX V

SOURCES OF INFORMATION

Although we have made independent enquires as much as possible, we have relied to a very considerable extent on the information provided by the Client and the Owner, and have accepted such information given to us as being true and correct for valuation purposes. This has included such matters as particulars of occupancy, ownership title, lettings, site and floor areas, statutory notices, easements, tenure, joint venture agreements, the identification of the property interests and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information provided to us by the Client and the Owner, that we assume to be true and correct for valuation purposes.

We have also been advised by the Owner that no material factors or information have been omitted or withheld from the information supplied and consider that we have been provided with sufficient information to reach an informed view. We believe that the assumptions used in preparing our valuation are reasonable and have had no reason to doubt the truth and accuracy of the information provided to us by the Owner which is material to the valuation.

TITLE DOCUMENTS

We have been provided with copies or extracts of some title documents relating to the Property and have made relevant enquiries where possible. Due to the nature of the land registration system in the PRC, we have not examined the original documents to verify the existing titles to the property interests the PRC or any material encumbrances that might be attached to the property interests or any lease amendments. We have made assumptions that the full and proper ownership title of the Property has been obtained and all payable land premium or land-use rights fees have been fully settled.

ASSUMPTIONS AND CAVEATS

Our valuation has been made on the assumption that the Owner can sell the Property on the open market without the benefit of deferred terms contracts, leasebacks, joint ventures, management agreements or any similar arrangements that would serve to affect the value of the Property.

No allowance has been made in our valuation for any charges, mortgages or amounts owing either on the Property or for any expense or taxation that may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Property is free from restrictions and outgoings of an onerous nature that could affect its value.

This certificate report and its conclusion provide value reference solely for the Client for the public circular purpose as announced by the Client on 5 July 2017 and not for other purposes. The valuation certificate of the Property prepared as at 30 June 2017 will be attached to the publications made by the Client to its shareholders.

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VALUATION REPORT ON THE PROPERTY

APPENDIX V

We have conducted the valuation assuming that:

• the information about the Property provided by the Client and the Owner is true and correct;

• the Property is free from contamination and the ground conditions are satisfactory;

• all usual utilise are connect to the Property and all associated costs have been fully paid and settled;

• the full and proper ownership title of the Property has been obtained, and all payable land premium or land-use rights fees have been fully settled;

• all required approvals and certificates necessary for the development, occupation and use of the Property have been duly obtained and are in full force and effect;

• our valuation is based on the information as advised by the Client and the Owner, such as the site area, gross floor area, completion date, floor/building plans, etc. We have had no reason to doubt the truth and accuracy of the information provided;

• other assumptions as set out in the valuation certificate;

• the Property can be freely transferred, mortgaged, sublet or otherwise disposed of in the market; and

• the tenanted property will continue to be occupied and maintained in good order.

SITE MEASUREMENT

We have not carried out detailed site measurements to verify the correctness of the site area in respect of the Property but have assumed that the site area information provided to us is true and correct in all respects, for valuation purposes. All documents and contracts have been used as references only and all dimensions, measurements and areas are approximations. No on-site measurement had been taken.

SITE INSPECTION

We have inspected the Property from the outside and the inside on 23 March 2017 upon the instruction from the Client by Ms. Zhirong He.

Please be advised that we have not carried out investigations to determine the suitability of the ground conditions and the services etc. for any future development. Our valuation has been prepared on the assumption that these aspects are satisfactory.

Moreover, we have not carried out any structural surveys or environmental assessments and are unable to report on issues such as rot, infestation or any other structural defects.

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APPENDIX V VALUATION REPORT ON THE PROPERTY

No tests were carried out on any of the services. We have assumed such are in good order for the purpose of valuation.

CURRENCY

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB).

We hereby certify that we have neither present nor a prospective interest in the Property or the value reported.

Our valuation certificate is attached hereto.

Yours faithfully,

For and on behalf of

Beijing Colliers International Real Estate Valuation Co., Ltd. Zhirong He (Flora He) FRICS MCOMFIN

Executive Director

Valuation and Advisory Services | China

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VALUATION REPORT ON THE PROPERTY

APPENDIX V

VALUATION CERTIFICATE

PROPERTY

The Property is located at No. 2300 Xuanhuang Road, in the northern part of Nanhui Industrial Park, Huinan Town, Pudong New District to the east of Shanghai’s downtown area.

DESCRIPTION AND TENURE

The Property, known as Kailong Nanhui Business Park, is a business park erected on a roughly rectangular-shaped land with a site area of approximately 34,760.40 sq m.

Completed in 2010, the Property comprises four 4-storey business park office buildings, one 5-storey business park office building and ancillary facilities. Blocks 1, 2, 4 and 5 are all four-storey business park office buildings, each served by two passenger lifts, one service lift and two staircases. Block 3 is a five-storey building with a canteen on the first floor and it is served by two passenger lifts, one service lift and two staircases. Additionally, there are 111 aboveground car spaces in the park serving the tenants.

MARKET VALUE IN EXISTING PARTICULARS OF STATE AS AT OCCUPANCY 30 JUNE 2017

According to the Total: information provided, RMB289,000,000 at the Date of Valuation, the Block 4: Property is subject to RMB42,000,000 11 tenancies with an average daily rent of Other Portion: approximately RMB247,000,000 RMB1.02 psm on GLA excl. management fee and value-add tax. The overall occupancy rate is approximately 41.8%.

According to the information provided, the Property has a total gross floor area (GFA) of approximately 52,304.07 sq m, of which gross lettable area (GLA) is about 50,040.76 sq m. The details are listed below:

Portion Block 1 Block 2 Block 3 Block 4 Block 5 Canteen Other Facilities Total	GFA (sq m) 9,510.79 9,510.79 16,842.70 7,088.24 7,088.24 1,879.90 383.41
	52,304.07

Pursuant to the real estate ownership certificate provided, the land-use rights of the Property have been granted for a term expiring on 30 December 2056 and the Property is zoned for industrial use.

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VALUATION REPORT ON THE PROPERTY

APPENDIX V

Notes:

• 1) Pursuant to five real estate ownership certificates dated 3 September 2010, the land-use rights of a parcel of land located at Qiu 87/17, Jiefang 15, Huinan Town with a site area of 34,760.40 sq m and the corresponding building ownership with a total gross floor area of 52,304.07 sq m is vested in Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司） for industrial purpose for a term commencing on 31 December 2006 and expiring on 30 December 2056. The details are listed below:

• No. Certificate No. Location GFA (sq m)

• 1 Hu Fang Di Pu Zi (2010) Di 236077 Hao Block 1, No.2300 Xuanhuang Road, 9,510.79 Huinan Town

• 2 Hu Fang Di Pu Zi (2010) Di 236078 Hao Block 2, No.2300 Xuanhuang Road, 9,510.79 Huinan Town

• 3 Hu Fang Di Pu Zi (2010) Di 236081 Hao Block 3, 6, 7 and 8, No.2300 Xuanhuang 19,106.01 Road, Huinan Town

• 4 Hu Fang Di Pu Zi (2010) Di 236080 Hao Block 4, No.2300 Xuanhuang Road, 7,088.24 Huinan Town

• 5 Hu Fang Di Pu Zi (2010) Di 236079 Hao Block 5, No.2300 Xuanhuang Road, 7,088.24 Huinan Town

Location GFA (sq m)

  - Total 52,304.07

• 2) Pursuant to the Company Business License No.15000002201702270003 dated 27 February 2017, Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司） with the address of Block 8, No. 2300 Xuanhuang Road, Pudong New District, Shanghai, has been in business in the term from 29 November 2007 to 28 November 2057 with the business scope of 光電子器件、電子傳感器的設計、開發、生產，銷售自產產 品，並提供相關技術服務及技術諮詢；在上海市浦東新區宣黃公路2300號內從事自有房屋的租賃、物業管理、停車場（庫） 的經營管理。（依法須經批准的項目，經相關部門批准後方可開展經營活動）.

• 3) The Owner holds 100% leasehold interests of the Property.

• 4) We have been provided with a copy of PRC legal opinion on the Property prepared by Deheng Fuzhou Law Office（北京德恒（福州）律師事務所）, which contains, inter alia, the following information:

• Bestlinkage NHI Co., Ltd.（美邦啟立光電科技（上海）有限公司）has obtained the necessary permits and approvals for the construction work of the Property;

• Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司） has the right to use the land in accordance to the above mentioned five real estate ownership certificates. Under the premise of complying with the mortgage contract agreement hereinafter, Bestlinkage NHI Co., Ltd.（美邦啟立光電 科技（上海）有限公司）has the right to use, transfer, lease, mortgage or other legal means to deal with the premise on the condition of adhering to the land-use and the land tenure;

• The signed lease contracts by Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司）and the lessees are effective.

• 5) Pursuant to the Certificate of Registration of Real Estate of Shanghai Municipality No. Pu 201115016005 dated 1 August 2011, the Property located at No. 2300 Xuanhuang Road, Huinan Town with a gross floor area of 52,304.07 sq m is vested in Bestlinkage NHI Co., Ltd. （美邦啟立光電科技（上海）有限公司）. The Property was mortgaged to ICBC Shanghai Nanhui Branch（中國工商銀行股份有限公司上海市南匯支行）for an amount up to RMB140,000,000 between 25 July 2011 and 23 July 2021.

• 6) Block 4 of the Property is subject to one tenancy with the term expiring on 15 February 2022. And other portion of the Property is subject to 10 tenancies with the latest expiration date on 31 January 2022.

– 88 –

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(1) Interests of Directors and chief executives

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO), or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules (the “ Model Code ”) to be notified to the Company and the Stock Exchange were as follows:

Long position

Name Nature of interest and capacity Mr. Chan Founder of a discretionary trust(1) Other interest(2) Beneficial owner Mr. Ng Beneficial owner	Total number of Shares held as at the Latest Practicable Date 97,104,000 97,104,000 18,500,000 212,708,000 68,724,000	Approximate percentage of issued share capital of the Company as at the Latest Practicable Date 20.34 20.34 3.87
		44.55
		14.39

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GENERAL INFORMATION

APPENDIX VI

Notes:

1. Tiger Crown, which beneficially owns 97,104,000 Shares, is 100% owned by Rykadan Holdings which in turn is 100% held by HSBC International Trustee Limited as the trustee of Rykadan Trust. Mr. Chan is the settlor and protector and one of the discretionary beneficiaries of Rykadan Trust.

2. Since Tiger Crown, Scenemay, Mr. Chan, Mr. Li and Ms. Li are regarded as a group of shareholders acting in concert to exercise their voting rights in the Company, pursuant to the provisions of SFO, each of them is deemed to be interested in the 97,104,000 Shares beneficially owned or deemed to be interested by each other. Hence, Mr. Chan is also deemed to be interested in the 97,104,000 Shares owned by Scenemay.

3. All the Shares shown in the table above are ordinary shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any 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) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO) or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or were required pursuant to the Model Code to be notified to the Company and the Stock Exchange.

(2) Interests of Substantial Shareholders

As at the Latest Practicable Date, the following persons (other than a Director or chief executive of the Company) and companies had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long position

			Approximate
			percentage of
		Total number	issued share
		of Shares held	capital of the
		as at the	Company as at
		Latest	the Latest
	Nature of interest and	Practicable	Practicable
Name	capacity	Date	Date
HSBC International	Corporate Trustee(1)(2)	194,208,000	40.68
Trustee Limited
Rykadan Holdings	Interest in a controlled	194,208,000	40.68
	corporation (1)(2)

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APPENDIX VI

GENERAL INFORMATION

Name Nature of interest and capacity Tiger Crown(1) Beneficial owner Other interest(2) Scenemay(3) Beneficial owner Other interest(2) Mr. Li Interest in a controlled corporation(3) Other interest(2) Ms. Li Interest in a controlled corporation(3) Other interest(2)	Total number of Shares held as at the Latest Practicable Date 97,104,000 97,104,000 194,208,000 97,104,000 97,104,000 194,208,000 97,104,000 97,104,000 194,208,000 97,104,000 97,104,000 194,208,000	Approximate percentage of issued share capital of the Company as at the Latest Practicable Date 20.34 20.34
		40.68
		20.34 20.34
		40.68
		20.34 20.34
		40.68
		20.34 20.34
		40.68

Notes:

1. Tiger Crown, which beneficially owns 97,104,000 shares of the Company, is 100% owned by Rykadan Holdings which in turn is 100% held by HSBC International Trustee Limited as the trustee of Rykadan Trust. Mr. Chan is the settlor and protector and one of the discretionary beneficiaries of Rykadan Trust.

2. Since Tiger Crown, Scenemay, Mr. Chan, Mr. Li and Ms. Li are regarded as a group of shareholders acting in concert to exercise their voting rights in the Company, pursuant to the provisions of the SFO, each of them is deemed to be interested in the 97,104,000 Shares owned or deemed to be interested by each other.

3. As the entire issued share capital of Scenemay is owned by Mr. Li and Ms. Li in equal shares, each of Mr. Li and Ms. Li is deemed to be interested in the 97,104,000 Shares beneficially owned by Scenemay.

4. All the Shares shown in the table above are ordinary shares.

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GENERAL INFORMATION

APPENDIX VI

Save as disclosed above, as at the Latest Practicable Date, so far as is known to any Director and chief executive of the Company, no other person (not being a Director or chief executive of the Company) or company had, or were deemed to have, any interests or short positions in the Shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO.

3. SERVICE CONTRACTS

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

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors and their respective associates (as defined in the Listing Rules) had any interest in any business which competes or may compete with the business of the Group or had any other conflict of interest with the Group.

5. DISCLOSURE OF OTHER DIRECTORS’ INTERESTS

As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interest in any assets acquired or disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 March 2017, the date up to which the latest published audited consolidated financial statements of the Group were made up; and

• (ii) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group taken as a whole.

6. LITIGATION

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

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) were entered into by the members of the Group within the two years immediately preceding the issue of this circular and are or may be material:

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GENERAL INFORMATION

APPENDIX VI

• (1) A supplemental shareholders’ agreement to amend the shareholders’ agreement dated 24 September 2015 between Talent Step Investments Limited (“ Talent Step ”), DSM Project Limited (“ DSM ”) and Epic Quest Global Limited (“ Epic Quest ”) in relation to the obligations of Talent Step and DSM in respect of the financing of Epic Quest and Smart Wealth Asia Pacific Limited (“ Smart Wealth ”) and amend their right to representation on the respective boards of directors of Epic Quest and Smart Wealth in the event of any failure to provide funding required by Epic Quest;

• (2) A repurchase agreement dated 23 November 2015 entered between Talent Step, an indirect wholly-owned subsidiary of the Company, the Company and Kailong Holdings Limited (“ KLR Holdings ”) whereby KLR Holdings agreed to repurchase approximately 9.74% of the entire issued share capital of KLR Holdings at the consideration of USD4,187,039;

• (3) A deed of termination and cancellation dated 31 December 2015 entered into between Q-Stone Building Materials Limited (“ Q-Stone ”) and Fine China Consultants Limited (“ Fine China ”) pursuant to which the share option agreement dated 27 June 2013 was terminated and the option granted by Q-Stone to Fine China to subscribe for unissued shares of Q-Stone was cancelled with effect from 31 December 2015;

• (4) A sale and purchase agreement dated 31 December 2015 entered into between Fine China and Cultivate Shine Limited (“ Cultivate Shine ”) as purchasers, and Mr. Wong Fung Wai and Mr. Wang Chunlei as guarantors pursuant to which the Company agreed to sell, and Fine China and Cultivate Shine agreed to purchase, shares in Joint Champ International Limited (“ Joint Champ ”), a non-wholly owned subsidiary of the Company, representing 9% and 4% respectively, of the total issued share capital of Joint Champ at a cash consideration of HK$1,047,200 and HK$465,422 respectively;

• (5) A shareholders agreement dated 31 December 2015 entered into between, the Company, Fine China, Cultivate Shine, Mr. Wong Fung Wai, Mr. Wang Chunlei and Joint Champ to, amongst others, regulate the respective rights of the Company, Fine China and Cultivate Shine as shareholders of Joint Champ;

• (6) A shareholders’ deed dated 28 June 2017 entered between Noble Stone Investments Limited (“ Noble Stone ”), an indirect non-wholly owned subsidiary of the Company, and Lead Rise International Limited (“ Lead Rise ”), to, among others, regulate the relationship of the parties with Quarella Holdings Limited (“ Quarella Holdings ”) and its group companies (the “ Quarella Group ”) and the conduct of the business and affairs of the Quarella Group;

• (7) A supplemental shareholders’ deed dated 8 August 2017 entered into between Noble Stone and Lead Rise to clarify certain procedural logistics in the exercise of shareholders’ right regarding the share of Quarella Holdings;

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GENERAL INFORMATION

APPENDIX VI

• (8) A loan agreement dated 28 June 2017 entered between the Company and Quarella Group Limited (“ QGL ”), pursuant to which the Company has agreed to continue to make available an outstanding unsecured loans in the aggregate amount of HK$180,000,000 advanced by the Company to QGL subject to and on the terms set out in the loan agreement;

• (9) The Framework Agreement; and

• (10) The Property SPA.

8. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice contained in this circular:

Name Qualification Beijing Colliers International Professional property surveyors and valuers Real Estate Valuation Co. Ltd. (“ Colliers ”) KPMG Certified Public Accountants

KPMG

As at the Latest Practicable Date, Colliers and KPMG have given and have not withdrawn their written consents to the issue of this circular with the inclusion herein of their letters and reports and references to their names in the form and context in which they appear.

As at the Latest Practicable Date, Colliers and KPMG did not have any interest, either direct or indirect, in any assets which have been, since 31 March 2017, being the date to which the latest published audited consolidated 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 nor had any shareholding in any member of the Group nor any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

9. GENERAL

• (a) The registered office of the Company is situated at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The Hong Kong head office and principal place of business of the Company is situated at Rooms 2701 & 2801, Rykadan Capital Tower, 135 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong.

• (b) The Company’s branch share registrar and transfer office in Hong Kong is Tricor Investor Services Limited situated at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

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GENERAL INFORMATION

APPENDIX VI

• (c) The company secretary of the Company is Yeung Man Yan, Megan, a qualified solicitor in Hong Kong.

• (d) In the event of inconsistency, the English text of the circular and the accompanying form of proxy shall prevail over the Chinese text thereof.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Rooms 2701 & 2801, Rykadan Capital Tower, 135 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong during normal business hours on any weekday (except public holidays) for a period of 14 days from the date of this circular:

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

• (b) the annual reports of the Company for the financial years ended 31 March 2016 and 31 March 2017;

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

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

• (e) the valuation report from Colliers, the text of which is set out in Appendix V to this circular;

• (f) the consent letters referred to in the paragraph under the heading “ Expert and Consent ” in this Appendix to this circular;

• (g) the material contracts disclosed in the paragraph under the heading “ Material Contracts ” in this Appendix to this circular;

• (h) the Company’s circular dated 10 August 2017; and

• (i) this circular.

– 95 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

RYKADAN CAPITAL LIMITED 宏基資本有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2288)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ Meeting ”) of Rykadan Capital Limited 宏基資本有限公司 (the “ Company ”) will be held at Function Room, 23H, Level 23, One Island East, 18 Westlands Road, Island East, Hong Kong on Tuesday, 17 October 2017 at 3:00 p.m. (or, in the event that a black rainstorm warning signal or tropical cyclone warning signal no. 8 or above is in force in Hong Kong at 12 noon on that day, at the same time and place on Tuesday, 24 October 2017), for the purpose of considering, and if thought fit, passing, with or without modification, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the framework agreement dated 5 July 2017 (the “ Framework Agreement ”) entered into among Power City Investments Limited (“ Power City ”), 美邦啓立光電 科技（上海）有限公司 (Bestlinkage NHI Co., Ltd.) (the “ Target Company ”), and 上 海美迪西生物醫藥股份有限公司 (Shanghai Medicilon Inc.) (the “ Purchaser ”) in relation to (i) the disposal of block 4 (“ Block 4 ”) of Kailong Nanhui Business Park （凱龍南匯商務園）, an industrial complex comprises of five blocks of buildings (the “ Property ”), by the Target Company to the Purchaser (the “ Property Disposal ”), and (ii) the disposal by Power City of its entire equity interest in the Target Company to the Purchaser (the “ Company Disposal ”) and the entering into of an agreement (the “ Target Company SPA ”) in relation to the Company Disposal, the details of which are disclosed in the circular of the Company dated 22 September 2017 (the “ Circular ”) and a copy of which is produced to the Meeting marked “A” and initialed by the chairman of the Meeting for the purpose of identification and all transactions contemplated under or incidental to the Framework Agreement (including, but not limited to, the Property Disposal and the Company Disposal) and any other agreements or documents in connection therewith be and are hereby approved, confirmed and ratified;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (b) the property sale and purchase agreement dated 5 July 2017 (the “ Property SPA ”) entered into between the Purchaser and the Target Company in relation to the Property Disposal, the details of which are disclosed in the Circular and a copy of which is produced to the Meeting marked “B” and initialed by the chairman of the Meeting for the purpose of identification and all transactions contemplated under the Property SPA and any other agreements or documents in connection therewith be and are hereby approved, confirmed and ratified;

• (c) the transactions pursuant to any exercise of the right granted to the Purchaser to demand the Target Company to buy back Block 4 at the Property Disposal Consideration (“ Option A ”) as contemplated the Framework Agreement, the details of Option A are disclosed in the Circular, be and is hereby approved;

• (d) the right granted to the Purchaser to demand the Target Company to buy back Block 4 at the then prevailing market price (“ Option B ”) as contemplated the Framework Agreement, the details of Option B are disclosed in the Circular, and the transactions pursuant to any exercise of Option B be and are hereby approved, confirmed and/or ratified;

• (e) the right granted to the Purchaser (i) to terminate the Target Company SPA and demand Power City to return to the Purchaser any of the consideration for the Company Disposal paid and pay an amount equal to ten times of the undisclosed debt and subject to Power City making the aforesaid payment, the shares in the Target Company will be transferred back to Power City; and (ii) if the Purchaser exercises its right to terminate the Target Company SPA as aforesaid, to demand the Target Company to buy back Block 4 at the prevailing market price (“ Option C ”) as contemplated the Framework Agreement, the details of Option C are disclosed in the Circular, and the transactions pursuant to any exercise of Option C be and are hereby approved, confirmed and/or ratified; and

• (f) the directors of the Company are hereby authorised for and on behalf of the Company to approve, execute any further document, waiver and/or amendment and to do all such acts and things as they may in their absolute discretion consider necessary, appropriate, desirable or expedient for the Company and/or any of its subsidiaries to give effect to any of the Framework Agreement, the Property SPA, Option A, Option B and Option C or any of the transactions contemplated thereunder and all matters incidental thereto or in connection therewith.”

By Order of the Board

Rykadan Capital Limited 宏基資本有限公司

CHAN William

Chairman and Chief Executive Officer

Hong Kong, 22 September 2017

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

1. All resolutions at the Meeting will be taken by poll pursuant to the Rules Governing the Listing of Securities (the “ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) and the results of the poll will be published on the websites of Stock Exchange and the Company in accordance with the Listing Rules.

2. A member entitled to attend and vote at the Meeting is entitled to appoint one or more (if he holds more than one share) proxies to attend and vote instead of him. If more than one proxy is appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed. A proxy need not be a member of the Company.

3. In order to be valid, the form of proxy must be deposited with the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the Meeting or any adjournment thereof. In such event, the form of proxy shall be deemed to be revoked.

4. For determining the qualification of members to attend and vote at the Meeting, the register of members of the Company will be closed from Thursday, 12 October 2017 to Tuesday, 17 October 2017 (or Tuesday, 24 October 2017 in the event that the Meeting is to be held on Tuesday, 24 October 2017 because of a black rainstorm warning signal or tropical cyclone warning signal no.8 or above (as detailed in note 5 below)), both days inclusive, during which period(s) no transfer of shares will be registered. In order to be eligible as members to attend and vote at the Meeting, investors are urged to lodge all transfers of shares accompanied by the relevant share certificates with the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on Wednesday, 11 October 2017.

5. If a black rainstorm warning signal or a tropical cyclone warning signal no. 8 or above is in force in Hong Kong at 12 noon on Tuesday, 17 October 2017, the Meeting will not be held on that day but will be automatically postponed and, by virtue of this notice, be held at the same time and place on Tuesday, 24 October 2017 instead.

As at the date of this notice, the Board comprises Mr. CHAN William (Chairman and Chief Executive Officer) and Mr. YIP Chun Kwok (Chief Financial Officer) as executive directors, Mr. NG Tak Kwan as a non-executive director and Mr. TO King Yan, Adam, Mr. WONG Hoi Ki and Mr. HO Kwok Wah, George as independent non-executive directors.

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