THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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 Shanghai Zendai Property Limited, you should at once hand this circular and the accompanying proxy form 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.

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司

(Incorporated in Bermuda with limited liability) (Stock code: 755)

PROPOSED MANDATE

IN RELATION TO THE POSSIBLE VERY SUBSTANTIAL DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY IN HAIMEN AND THE SALE LOANS;

RE-ELECTION OF DIRECTOR;

AND

NOTICE OF SGM

Financial adviser to the Company

==> picture [141 x 42] intentionally omitted <==

Unless otherwise specified, capitalised terms used herein shall have the same meanings as those deferred in the section headed ‘‘Definitions’’ of this circular.

A letter from the Board is set out on pages 4 to 16 of this circular.

A notice convening the SGM to be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong, on Wednesday, 29 April 2020 at 10:30 a.m. is set out on pages SGM-1 to SGM-4 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Such form of proxy is also published on the website of the Stock Exchange at www.hkexnews.hk. Whether or not you propose to attend the meeting, you are requested to read the notice of SGM and to complete the form of proxy enclosed in this circular in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the proxy form shall not preclude you from attending and voting at the meeting should you so wish.

14 April 2020

for identification purpose only

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

In compliance with the Hong Kong Government’s directive on social distancing, personal and environmental hygiene, and the guidelines issued by the Centre for Health Protection of the Department of Health on the prevention of novel coronavirus disease (COVID-19), the Company will implement additional precautionary measures at the SGM including, without limitation:

compulsory body temperature screening – any person with a body temperature of over 37.5 degrees Celsius may be denied entry into the SGM venue or be required to leave the SGM venue;
mandatory use of surgical face masks;
mandatory health declaration – anyone subject to quarantine, has any flu-like symptoms or has travelled overseas within 14 days immediately before the SGM (‘‘recent travel history’’), or has close contact with any person under quarantine or with recent travel history will not be permitted to attend the SGM;
no distribution of corporate gift and provision of refreshments;
anyone attending the SGM is reminded to observe good personal hygiene at all times; and
appropriate distancing and spacing in line with the guidance from the Hong Kong Government will be maintained and as such, the Company may limit the number of attendees at the SGM as may be necessary to avoid over-crowding.

In light of the continuing risks posed by the COVID-19 pandemic, the Company strongly encourages Shareholders NOT to attend the SGM in person, and advises Shareholders to appoint the chairman of the SGM as their proxy to vote according to their indicated voting instructions as an alternative to attending the SGM in person. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcements on such measures as appropriate.

			Page
Definitions . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	–	Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial information of the Haimen Group . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	Management Discussion and Analysis of
		the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Unaudited pro forma financial information of
		the Remaining Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	Valuation Report of the Properties . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI	–	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
Notice of SGM .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

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

‘‘Adjusted NAV’’

the adjusted unaudited consolidated net assets of Disposal Group as at 31 December 2019 as arrived at based on the calculations as disclosed in the section headed ‘‘Information on the Disposal Group’’

‘‘Board’’

the board of Directors of the Company

‘‘Company’’

Shanghai Zendai Property Limited, an exempt company incorporated in Bermuda, the Shares of which are listed on the Stock Exchange

‘‘Consideration’’
the final bid price with respect to the Sale Shares and the Sale Loans offered by the successful bidder, but in any event will be no less than the minimum bidding price
‘‘Director(s)’’ the director(s) of the Company
‘‘Disposal Company’’

海門証大濱江置業有限公司 (Haimen Zendai Binjiang Real Estate Co., Ltd.*), a company established in the PRC with limited liability and is an indirect wholly-owned subsidiary of the Company

‘‘Disposal Group’’
the Disposal Company and its subsidiaries (excluding the Excluded Company)
‘‘Excluded Company’’

煙台証大大拇指置業有限公司 (Yantai Zendai Thumb Property Co., Ltd.*), a company owned as to 70% by the Disposal Company as at the Latest Practicable Date

‘‘Group’’
the Company and its subsidiaries
‘‘Haimen Development Zone’’

Haimen Economic and Technological Development Zone, an area founded in 1992 is one of the first batch of Jiangsu’s provincial-level development zones

‘‘Haimen Group’’

the Disposal Company and its subsidiaries (including the Excluded Company)

‘‘Hong Kong’’

the Hong Kong Special Administrative Region of the PRC

‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong

– 1 –

DEFINITIONS

‘‘Industrial Land Parcels’’
the industrial land parcels with two office buildings and two factories erected thereon for ancillary use as owned by the Disposal Group, which collectively form parts of the Properties
‘‘Latest Practicable Date’’ 7 April 2020, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘Myway Developments’’
Myway Developments Limited, an investment holding company established in the British Virgin Islands with limited liability and is a direct wholly-owned subsidiary of the Company
‘‘PRC’’ the Peoples’ Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
‘‘PRC Legal Adviser’’
Zhong Lun Law Firm, the legal adviser to the Company as to the PRC law
‘‘Properties’’
the properties owned by the Disposal Group which comprise the Undeveloped Land Parcels, the Properties under Development and Properties for Sale, and the Industrial Land Parcels
‘‘Proposed Disposal’’
the proposed public tender for disposal of the Sale Shares and Sale Loans through SUAEE
‘‘Proposed Mandate’’
the general mandate to be granted in advance to the Directors to enter into and complete the Proposed Disposal and the transactions contemplated thereunder by the Shareholders at the SGM
‘‘Properties under Development and Properties for Sale’’
the properties under development and properties for sale as owned by the Disposal Group, which form parts of the Properties
‘‘Remaining Group’’
the Group, excluding the Disposal Group
‘‘Retiring Director’’
Mr. Wang Letian

– 2 –

DEFINITIONS

‘‘RMB’’

Renminbi, the lawful currency in the PRC

‘‘Sale Loans’’ the outstanding shareholders’ loans owed by the Disposal Group to Zendai Real Estate and its affiliated companies ‘‘Sale Shares’’ the entire equity interest of the Disposal Company (excluding the Excluded Company) ‘‘SGM’’ the special general meeting of the Company to be convened and held for the purpose of considering and, if thought fit, granting the Proposed Mandate to the Directors and the re-election of the Retiring Director ‘‘Share(s)’’ the issued share(s) of the Company ‘‘Shareholder(s)’’ the holder(s) of the Share(s) ‘‘SPA’’ the sale and purchase agreement to be entered into between the Company and the successful bidder in relation to the Proposed Disposal ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘SUAEE’’ Shanghai United Assets and Equity Exchange（上海聯合產權交易所） ‘‘Undeveloped Land Parcels’’ the undeveloped land parcels as owned by the Disposal Group, which form parts of the Properties ‘‘Zendai Real Estate’’ 上海証大置業有限公司 (Shanghai Zendai Real Estate Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company ‘‘%’’ per cent.

For the purpose of this circular, unless otherwise stated, conversion of RMB into HK$ is based on the exchange rate of RMB1 = HK$1.1186. The exchange rate is for illustration purposes only and does not constitute a representation that any amounts have been, could have been or may be exchanged at this or any other rates at all.

The Chinese names have been translated into English in this circular for reference only.

– 3 –

LETTER FROM THE BOARD

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司

(Incorporated in Bermuda with limited liability)

(Stock code: 755)

Executive Directors: Mr. Wang Letian (Chairman) Mr. Qin Renzhong Mr. Zhang Huagang Mr. Tang Jian

Non-executive Directors: Ms. Wang Zheng Mr. Gong Ping Ms. Jiang Zhengyan

Independent non-executive Directors: Mr. Chow, Alexander Yue Nong Dr. Xu Changsheng Mr. Ng Man Kung Mr. How Sze Ming Dr. Di Ruipeng

Registered office: Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda

Principal place of business in Hong Kong: Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong

14 April 2020

To the Shareholders

Dear Sir/Madam,

PROPOSED MANDATE IN RELATION TO THE POSSIBLE VERY SUBSTANTIAL DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY IN HAIMEN AND THE SALE LOANS; RE-ELECTION OF DIRECTOR; AND NOTICE OF SGM

INTRODUCTION

Reference is made to the announcements of the Company dated 2 February 2020 and 13 February 2020, respectively. On 17 January 2020, the Board resolved to seek the Proposed Mandate for conducting the Proposed Disposal by way of a public tender through SUAEE and the transactions contemplated thereunder.

For identification purpose only

– 4 –

LETTER FROM THE BOARD

Reference is also made to the announcement of the Company dated 9 November 2019 in relation to, among other things, the appointment of Mr. Wang Letian (‘‘Mr. Wang‘‘）as an executive Director of the Company, the chairman of the Board, a member and the chairman of the nomination committee of the Board, a member of remuneration committee of the Board and an authorised representative of the Company for the purposes of the Listing Rules. Pursuant to the code of corporate governance adopted by the Company, Mr. Wang shall be re-elected at the SGM.

The purpose of this circular is to provide you with, among other things, (i) further details of the Proposed Disposal; (ii) financial information of the Group; (iii) pro forma financial information of the Remaining Group; (iv) the valuation report on the Properties issued by an independent valuer; (v) details of the Retiring Director proposed to be re-elected; and (vi) a notice convening the SGM together with the form of proxy.

THE PROPOSED DISPOSAL

On 17 January 2020, the Board resolved to seek the Proposed Mandate for conducting the Proposed Disposal by way of a public tender through SUAEE.

Assets to be disposed of

(i) the Sale Shares being the entire equity interest in the Disposal Company as at the Latest Practicable Date; and
(ii) the Sale Loans owed by the Disposal Group to Zendai Real Estate and its affiliated companies as at 31 December 2019.

Basis of Consideration and payment terms for the Proposed Disposal

The minimum bidding price for the Proposed Disposal is RMB1,582.9 million (equivalent to approximately HK$1,770.6 million), comprising (i) the consideration for the Sale Shares of RMB760.0 million (equivalent to approximately HK$850.1 million); and (ii) the consideration for the Sale Loans of RMB822.9 million (equivalent to approximately HK$920.5 million).

The Consideration, i.e. the final consideration for the Proposed Disposal, will depend on the final bid price offered by the successful bidder, but in any event will be no less than the minimum bidding price.

The minimum bidding price, being the minimum total consideration for the Sale Shares and the Sale Loans, was determined with reference to (i) the Adjusted NAV as at 31 December 2019 of approximately RMB944.3 million (equivalent to approximately HK$1,056.3 million); (ii) the outstanding amount of the Sale Loans as at 31 December 2019 of approximately RMB822.9 million (equivalent to approximately HK$920.5 million); and (iii) the recent financial performance of the Disposal Group as further elaborated in the section headed ‘‘Reasons for and the benefits of the Proposed Disposal and the use of proceeds’’ below.

– 5 –

LETTER FROM THE BOARD

The minimum bidding price represents a discount of approximately 10.4% to the aggregate value of the Adjusted NAV and the Sale Loans in the amount of approximately RMB1,767.2 million (equivalent to approximately HK$1,976.8 million). The Board considers that it is common to offer a moderate discount in order to increase the attractiveness of the public tender to potential bidders for a more competitive bid and is of the view that the minimum bidding price is fair and reasonable.

The Consideration shall be settled by the successful bidder in the following manner:

(i) as to 30% of the Consideration (inclusive of the earnest money in the amount of RMB50 million to be paid prior to the closing of the tender for the Proposed Disposal in order to become a potential bidder as required by SUAEE, which would be applied towards settling part of the Consideration) to be paid within 30 days (or such other date as may be agreed by the parties to the SPA) upon entering into the SPA;
(ii) as to 30% of the Consideration to be paid within 60 days (or such other date as may be agreed by the parties to the SPA) upon entering into the SPA; and
(iii) as to 40% of the Consideration to be paid within 90 days (or such other date as may be agreed by the parties to the SPA) upon entering into the SPA.

Completion of the Proposed Disposal shall only take place after the Consideration has been settled in full by the successful bidder in the above manner.

The Proposed Disposal will be carried out through SUAEE. SUAEE is a comprehensive equity exchange service institution approved by the Shanghai People’s Government（上海市人民政府）and designated by the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government（上海市國有資產監督管理委員會）to engage in the transfer of state-owned equities of central enterprises. For the avoidance of doubts, there are no specific rules under the tendering system of SUAEE which govern the deadlines for the Company to submit the tender notice and/or enter into the SPA and the number of times for the Company to extend the publication period of the tender notice. The timing of the public tender and the entering into of the SPA is subject to certain factors, including but not limited to whether the initial publication period of tender notice shall be extended upon expiry and the amount of time required for assessing the qualifications of the interested bidders which are in turn subject to the number of interested bidders, as well as further negotiations with the successful bidder for finalising all terms prior to the entering into of the SPA. According to the relevant rules of SUAEE, the publication period of tender notice shall last for not less than five working days and not more than one year. In the event that no qualified bidder is identified during the initial publication period, the Company would consider to extend such period taking into account of the aforesaid allowed duration.

– 6 –

LETTER FROM THE BOARD

After obtaining the Shareholders’ approval for the Proposed Mandate at the SGM, it is estimated that the Group will commence the formal process of public tender for the Proposed Disposal by submission of a tender notice to SUAEE on or around 13 May 2020 setting out, inter alia, (i) the minimum bidding price for the Proposed Disposal; (ii) the principal terms of the tender; and (iii) qualification requirements of potential bidders. Once the tender notice for the Proposed Disposal is published, the publication period will commence and open for 20 days, during which the interested bidders may submit to SUAEE their applications for the bids. Upon expiry of the publication period and the receipt of the bidding prices from the qualified bidders, SUAEE will ultimately notify the Company the identity of the successful bidder who offers the highest bidding price among the interested bidders. Based on the normal tendering procedures under SUAEE, it is expected that the whole tender process for the Proposed Disposal (from the publication of the tender notice to the notification of the successful bidder) shall last for around 50 days. Subject to the uncertain factors as disclosed above and based on the Company’s estimates, it is expected that the Company will then enter into the SPA in relation to the Proposed Disposal with the successful bidder on or around 15 July 2020 and complete the Proposed Disposal in accordance with the terms and conditions of the SPA on or around 14 October 2020.

In the event that no qualified bidder is identified by the end of the tender process on or around 2 July 2020 (assuming no extension of the publication period), the Company shall (i) continue pursuing ways to dispose of the Disposal Group by private agreements through seeking suitable interested buyers or by public tender this year; (ii) look for suitable business partners to jointly develop the underlying projects of the Disposal Group; and (iii) establish a suitable plan on self-developing the underlying projects of the Disposal Group, while simultaneously look for suitable interested buyers and/or business partners.

Qualifications of bidders

The qualified bidders shall satisfy, amongst others, the following qualifications:

the qualified bidder shall be financially sound and solvent;
the qualified bidder shall have good business credibility;
the qualified bidder shall be a validly established enterprise or a natural person, who shall have full civil capacity; and
other qualifications stipulated under the laws and regulations of the PRC.

Conditions precedent to the Proposed Disposal

The entering into of the Proposed Disposal shall be conditional upon the Company having completed all filing procedures and obtained all necessary consents and approvals regarding the Proposed Disposal including the approval by the Shareholders in respect of the Proposed Mandate at the SGM. Completion of the Proposed Disposal shall be conditional upon the completion of the spin-off of the Excluded Company having been taken place.

– 7 –

LETTER FROM THE BOARD

For the avoidance of doubt, the Proposed Mandate shall expire after three months following the obtaining of the Shareholders’ approval at the SGM, where the entering into of the SPA shall be taken place by then.

Once a successful bidder for the Sale Shares and the Sale Loans has been identified, the Company will thereupon become unconditionally obliged to enter into the SPA with such successful bidder for the Proposed Disposal and, subject to the terms and conditions thereunder, complete the Proposed Disposal. As such, the Company would not be able at the time to seek the approval of the Shareholders as required under Chapter 14 of the Listing Rules. Accordingly, the Board would like to seek the approval of the Proposed Mandate from the Shareholders at the SGM in advance so as to conduct the Proposed Disposal.

Spin-off of the Excluded Company

As at the Latest Practicable Date, the Excluded Company was owned as to 70% by the Disposal Company. The Excluded Company is a company incorporated in the PRC in 2013 with limited liability and a registered capital of RMB150 million. The Excluded Company is principally engaged in property investments in Yantai city, Shandong Province, the PRC. As at 31 December 2019, the unaudited net asset value of the Excluded Company amounted to approximately HK$143.0 million. Considering that the property interest of the Excluded Company is located in Yantai city, Shandong Province, which is regionally different from that of the Disposal Group in Haimen city, Jiangsu Province, the Company considers that the exclusion of the Excluded Company may increase the attractiveness of the Proposed Disposal to those potential purchasers who are primarily interested in the development of the underlying projects of the Disposal Group in Haimen city, which is conducive to the implementation of the Proposed Disposal. Accordingly, it is intended that the Excluded Company shall be spun off from the Disposal Company in accordance with the relevant laws in the PRC for the Proposed Disposal such that the Excluded Company shall not be part of the disposal subjects under the tender.

INFORMATION ON THE DISPOSAL GROUP

The Disposal Company is a company incorporated in the PRC in 2003 with limited liability. The Disposal Group is principally engaged in the development of the Properties. The Properties are located in the Haimen Riverside New City District of Haimen city, the PRC, being in the south of Yangtze River, north of Haining Temple and east of the new administrative center and central business district in Haimen city. As at the Latest Practicable Date, the Properties comprise of (i) the Undeveloped Land Parcels with a total site area of approximately 449,799 square metres; (ii) the Properties under Development and Properties for Sale with a total gross floor area of approximately 368,598 square metres; and (iii) the Industrial Land Parcels with a total site area of 133,336 square metres.

– 8 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Disposal Group is held as to 90.91% and 9.09% by Myway Developments and Zendai Real Estate, which are direct and indirect wholly-owned subsidiaries of the Company, respectively. The following diagram sets out the structure of the Disposal Group as at the Latest Practicable Date:

==> picture [391 x 116] intentionally omitted <==

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

The Disposal Company
100% 100% 70%
海門証大濱江物業管理有限公司海門証大創意投資發展有限公司
(Haimen Zendai Binjiang Property (Haimen Zendai Creative Investment The Excluded Company
Management Co., Ltd.) Development Co., Ltd.)
Undeveloped Land Parcels and Industrial Land Parcels
Properties under Development and Properties for Sale
----- End of picture text -----

Set out below is the unaudited consolidated financial information of the Disposal Group for the two years ended 31 December 2018 and 2019 prepared according to the Hong Kong Financial Reporting Standards.

		For the year ended 31 December	For the year ended 31 December
		2019	2018
		RMB’000	RMB’000
		(approximately)	(approximately)
Loss	before taxation	(4,625)	(3,812)
Loss	after taxation	(5,694)	(4,876)

– 9 –

LETTER FROM THE BOARD

The unaudited consolidated net liabilities of the Disposal Group as at 31 December 2019 amounted to approximately RMB5.3 million (equivalent to approximately HK$5.9 million). The Adjusted NAV as at 31 December 2019, which has taken into account the unaudited consolidated net liabilities of the Disposal Group as at 31 December 2019, the net valuation gain based on the preliminary valuation of the Properties as of 31 December 2019 and the consolidation adjustment, amounted to approximately RMB944.3 million (equivalent to approximately HK$1,056.3 million). Set out below in the table shows the calculations of the abovementioned Adjusted NAV and the adjusted net asset value of the Disposal Group as at 31 December 2019 after taking into account of the valuation of the Properties of approximately RMB3,079.1 million (equivalent to approximately HK$3,444.3 million) as at 31 January 2020:

(i) Consolidated net liability of Disposal Group as at 31 December 2019 (ii) Total consolidation adjustments Capitalisation of borrowing cost allocated on the Disposal Group at the Group consolidation level Purchase price allocation adjustments on business combinations (net of the associated deferred income tax impact) (iii) Net valuation gain of the Properties Preliminary valuation of the Properties as at 31 December 2019 Amount of the Properties as at 31 December 2019 at the Group consolidation level Consolidation adjustments (as per item (ii) above but before associated deferred income tax impact) Associated land appreciation tax Associated deferred income tax derived from the appreciation value Adjusted NAV Increase in the valuation of the Properties as at 31 January 2020 as compared to the preliminary valuation as at 31 December 2019 Increase in associated land application tax Increase in associated deferred income tax derived from the appreciation value Adjusted net asset value of the Disposal Group as at 31 December 2019 taking into account of the valuation of the Properties as at 31 January 2020	RMB (Million) 63.7 8.1 3,073.1 (968.5) (74.6) (993.8) (158.4)	HK$ (Million) 71.2 9.1 3,437.6 (1,083.4) (83.5) (1,111.7) (177.1)	Subtotal RMB (Million) HK$ (Million) (5.3) (5.9) 71.8 80.3 877.8 981.9 944.3 1,056.3 6.0 6.7 (3.6) (4.0) (1.4) (1.6) 945.3 1,057.4	Subtotal RMB (Million) HK$ (Million) (5.3) (5.9) 71.8 80.3 877.8 981.9 944.3 1,056.3 6.0 6.7 (3.6) (4.0) (1.4) (1.6) 945.3 1,057.4
				1,056.3
				6.7 (4.0) (1.6)
				1,057.4

– 10 –

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL

Upon completion of the Proposed Disposal, each member of the Disposal Group will cease to be a subsidiary of the Company and each of their respective financial results, assets and liabilities will no longer be included in the consolidated financial statements of the Group. Assuming the final bid price will be equivalent to the minimum bidding price, the Group expects to record a gain from the Proposed Disposal of approximately RMB767.5 million (equivalent to approximately HK$858.5 million) (subject to audit), which is calculated with reference to (i) the difference between (a) the minimum bidding price of RMB1,582.9 million (equivalent to approximately HK$1,770.6 million) and (b) the aggregate of the unaudited net liabilities value of the Disposal Group as at 31 December 2019 of approximately RMB5.3 million (equivalent to approximately HK$5.9 million), the outstanding amount of the Sale Loans as at 31 December 2019 of approximately RMB822.9 million (equivalent to approximately HK$920.5 million) and, the consolidation adjustments including the capitalisation of borrowing cost allocated on the Disposal Group at the Group consolidation level of approximately RMB63.7 million (equivalent to approximately HK$71.2 million), and the purchase price allocation adjustments on business combinations (net of the associated deferred income tax impact) of approximately RMB8.1 million (equivalent to approximately HK$9.1 million); and (ii) the exchange gain to be released as a result of the Proposed Disposal from the foreign exchange reserve of the Group as at 31 December 2019 of approximately HK$82.8 million.

Shareholders should note that the aforementioned estimations are for illustrative purpose only and do not purport to represent how the financial position of the Remaining Group will be upon Completion. The actual amount of the gain from the Proposed Disposal to be recognized in the consolidated financial statements of the Group depends on, among others, the final bid price of the public tender, the net asset value of the Disposal Group and the then exchange rate for converting the amount of the Sale Loans dominated in RMB into HK$ on the date of completion of the Proposed Disposal, and therefore will be subject to final audit.

Based on the unaudited pro forma financial information of the Remaining Group as set out in the Appendix IV to this circular, assuming the Proposed Disposal had been completed on 31 December 2019 (i) the Remaining Group’s total assets as at 31 December 2019 would have increased by approximately 3.2% from approximately HK$18,153.3 million to approximately HK$18,726.2 million, and (ii) the Remaining Group’s total liabilities as at 31 December 2019 would have decreased by approximately 0.9% from approximately HK$16,482.7 million to approximately HK$16,329.4 million.

– 11 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE PROPOSED DISPOSAL AND THE USE OF PROCEEDS

The Group is principally engaged in property development, property investment and provision of property management and hotel operation in the PRC. The Group currently has commercial property and residential projects in various cities in the PRC and majority of which are located in Shanghai and Nanjing. As disclosed in the results announcement of the Company for the year ended 31 December 2019, the Group continued adhere to its development strategy to extensively develop the first and second tier cities while gradually stripping off its business from the third and fourth tier cities by focusing on key development areas in first and second tier cities such as Shanghai and Nanjing. With the solid domestic presence in Shanghai and Nanjing built over the years, the Group will steadily expand across the country and launch new development projects within the core strategic areas to fully explore local market demands.

The Properties which comprise of the Undeveloped Land Parcels, the Properties under Development and Properties for Sale, and the Industrial Land Parcels, are located in Haimen Development Zone, which is close to the suburban area at Haimen city, Jiangsu province of the PRC, and were planned to be developed for residential, commercial and recreational use. As at the Latest Practicable Date, the investment by the Group on the Disposal Company since its establishment in 2003 has not yet been recovered. Further, the Disposal Group has continuously been loss making over the last few years. It is expected that upon completion of the Proposed Disposal, the Company would be able to enhance its working capital position and therefore reduces negative impacts on the Group. The location of the Properties, which is outside its key development areas, enables the Company to reallocate its resources to focus on other property development projects in the first and second tier cities which is in line with its business strategy.

Based on the above and the market conditions of Haimen city, the Group has had the intention to dispose of the Disposal Group and related works including the seeking of potential buyers was initiated. Prior to seeking the Proposed Mandate, no explicit potential buyers have been identified, The Company has made reference to its previous proposed major transaction in relation to the disposal of the Disposal Company and its subsidiaries to a private company established in the PRC, the relevant resolution of which was subsequently voted down by the majority of the Shareholders at the special general meeting, further details of which are set out in the circular of the Company dated 24 February 2017 and the announcement of the Company dated 14 March 2017. Save for the subsequent development and sale of certain properties of the Properties for Sale and Properties under Development by the Group, the underlying structure and subjects proposed to be disposed of in the Proposed Disposal are substantially similar to those of the previous proposed disposal, which principally include the Disposal Group holding the Undeveloped Land Parcels with the same total site area, the Industrial Land Parcels with the same total site area, and the Properties for Sale and Properties under Development under the same property projects erecting on the respective land parcels. Save for 廊坊市証合泰房地產有限公司 (Langfang City Zhenghetai Real Estate Co., Ltd.) and 江蘇証大商業文化發展有限公司 (Jiangsu Zendai Commercial Culture Development Co., Ltd.), the two companies excluded only from the

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LETTER FROM THE BOARD

previous proposed disposal which, the then interests therein were disposed of by the Group in March 2018 and were de-registered by the Group in August 2019, respectively, the Excluded Company is excluded from both the previous proposed disposal and the Proposed Disposal. Taking into account that SUAEE is a property rights trading service institution approved by the Shanghai People’s Government and is specialised in providing a platform for the transfer of enterprise property rights, the Company is of the view that implementing the Proposed Disposal by public tender through SUAEE would allow the Group to, on one hand, leverage on the platform and network of SUAEE in order to attract more interested buyers to participate in the bid and therefore enhance the transparency and competitiveness, and on the other hand, to ensure that the identity of the final buyer as well as the Consideration would be determined on a fair and competitive basis governed by SUAEE.

On the basis that public tender is the only practical way to implement the Proposed Disposal based on the current circumstances as disclosed above, it would be impossible for the Company to seek Shareholders’ approval except by a prior mandate. As advised by the PRC Legal Adviser, based on the relevant rules for tendering non-state-owned property rights of SUAEE, transferor of the asset in the bid, being Myway Developments and Zendai Real Estate in respect of the Proposed Disposal, is required to submit its internal decision documents including the shareholders’ approval at the time of submitting its tender application through SUAEE, and therefore the Shareholders’ approval shall be obtained by the Company by then. Further, according to the standard sales and purchase contract in respect of property rights transfer through SUAEE, all procedures required for the purpose of executing the agreement being those relating to, among others, authorisations, approvals and internal decision-making of the transferor and the purchaser shall be legally valid at the time of executing the sales and purchase contract by the purchaser.

The Group’s gearing ratio recorded an increase from approximately 2.1 times as at 31 December 2018 to approximately 3.8 times as at 31 December 2019. As at 31 December 2019, the Group’s borrowings which were repayable within one year amounted to approximately HK$3,005.2 million. For the year ended 31 December 2019, the finance costs of the Group amounted to approximately HK$771.0 million of which approximately HK$243.4 million was attributable to bank borrowings. The Board considers that the proceeds from the Proposed Disposal could be used for repayment of partial bank borrowings, thereby improving the gearing of the Group, as well as reducing the relevant finance costs, which would enhance the financial performance of the Group.

Based on the minimum bidding price, the gross proceeds from the Proposed Disposal are expected to be approximately RMB1,582.9 million (equivalent to approximately HK$1,770.6 million) and net proceeds (after deducting the related transaction costs and expenses) are expected to be approximately RMB1,574.0 million (equivalent to approximately HK$1,760.7 million). The Group intends to apply the net proceeds as to approximately RMB1,270.0 million (equivalent to approximately HK$1,420.6 million) for repayment of bank borrowings and as to approximately RMB304.0 million (equivalent to approximately HK$340.1 million) for general working capital of the Group.

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LETTER FROM THE BOARD

Based on the above, the Directors considers that the public tender process would be the only practical way to dispose the Sale Shares and the Sale Loans based on the abovementioned circumstances, and in order to implement the Proposed Disposal by public tender through SUAEE, the seeking of the Proposed Mandate represents the only possible way for the Company to seek the approval from the Shareholders. The Directors also consider that the terms of the Proposed Disposal will be as normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As the highest applicable percentage ratio (as defined in Rule 14.07 of the Listing Rules) in respect of the Proposed Disposal is above 75%, the Proposed Disposal constitutes 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.

RE-ELECTION OF DIRECTOR

An ordinary resolution will be proposed at the SGM for the Shareholders to consider, and if thought fit, to approve the re-election of the Retiring Director. The following are the biography details of the Retiring Director.

Mr. Wang Letian

Mr. Wang Letian, aged 47, has been appointed as an executive Director of the Company, the chairman of the Board, a member and the chairman of the nomination committee of the Board, a member of remuneration committee of the Board and an authorised representative of the Company for the purposes of the Listing Rules on 9 November 2019. Mr. Wang obtained a master’s degree in business administration from University of Science and Technology Beijing and graduated from China Institute of Finance and Banking (the predecessor of the School of Banking & Finance of University of International Business and Economics) in 1994 with a bachelor’s degree in economics.

Mr. Wang joined China Orient Asset Management (International) Holding Limited in June 2018, and currently serves as a co-president, a member of the operating management committee and a member of the investment committee. From November 2016 to June 2018, he served as a member of the Party committee, the secretary of committee for discipline inspection, and the deputy general manager of the Chongqing Branch of China Orient Asset Management Co., Ltd. From September 2016 to November 2016, he served as the deputy general manager of the First Business Management Department of China Orient Asset Management Co., Ltd. From September 2004 to September 2016, he served as the senior director, deputy manager, manager, senior manager, and senior economist of the Asset Operation Department of China Orient Asset Management Co., Ltd. From October 2003 to September 2004, he served as the senior director of the System Management Section of the Debt and Market Development Department of China Orient Asset Management Co., Ltd. From May 2000 to October 2003, he served as the director and senior director of the Asset Operation Department of the Taiyuan Office of China Orient Asset Management Co., Ltd. From July 1994 to May 2000, he worked at the Shanxi Province Branch of Bank of China.

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LETTER FROM THE BOARD

Mr. Wang is not appointed for a specific term or any proposed length of service, but his directorship is subject to rotation and re-election at general meetings of the Company in accordance with the bye-laws of the Company. The emolument of Mr. Wang payable by the Group is zero, which is determined by mutual agreement. Mr. Wang has not entered into any service contract or contract of employment with the Group.

Save as disclosed above, (i) Mr. Wang does not have any relationship with any directors, senior management, substantial or controlling shareholder(s) of the Company and has not held any other position with the Company or the Group; (ii) in the last three years, Mr. Wang did not hold any directorship in any public companies, the securities of which are listed on the Stock Exchange or overseas; (iii) Mr. Wang does not have any interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong); (iv) there are no other matters in relation to Mr. Wang that are required to be disclosed pursuant to Rule 13.51(2)(h) to Rule 13.51(2)(v) of the Listing Rules; and (v) there are no other matters in relation to the appointment of Mr. Wang that need to be brought to the attention of the holders of securities of the Company and the Stock Exchange.

SGM

A notice convening the SGM to be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong, on Wednesday, 29 April 2020 at 10:30 a.m. is set out on pages SGM-1 to SGM-4 of this circular. Ordinary resolution(s) will be proposed at the SGM for the purpose of considering and, if thought fit, approving (1) the Proposed Disposal and the transactions contemplated thereunder and granting in advance to the Directors the Proposed Mandate to enter into and complete the Proposed Disposal; and (2) the re-election of the Retiring Director. The voting on ordinary resolution(s) to be proposed at the SGM will be taken by way of poll and an announcement will be made by the Company after the SGM on the result of the SGM with respect to whether or not the proposed ordinary resolution(s) have been passed by the Shareholders. As at the Latest Practicable Date, no Shareholder had material interest in the Proposed Disposal, the Proposed Mandate and the re-election of the Retiring Director (other than being a Shareholder) and therefore no Shareholder is required to abstain from voting on the relevant resolution(s) at the SGM.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you propose to attend the meeting, you are requested to read the notice of SGM and to complete the form of proxy enclosed in this circular in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and return of the form of proxy form shall not preclude you from attending and voting at the meeting should you so wish.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the Proposed Disposal and the Proposed Mandate are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Directors (including the independent nonexecutive Directors) also consider that the proposed resolution for the proposed re-election of the Retiring Director is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the ordinary resolution(s) as set out in the notice of SGM.

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 of Shanghai Zendai Property Limited Mr. Wang Letian Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for the year ended 31 December 2019 and each of the financial year ended 31 December 2017 and 2018 have been published in the results announcements and/or annual reports of the Company per below:

(i) the financial information of the Group for the year ended 31 December 2019 is disclosed in the results announcement of the Company for the year ended 31 December 2019 published on 26 March 2020, from pages 1 to 15, and 1 April 2020, from pages 1 to 3, respectively;
(ii) the financial information of the Group for the year ended 31 December 2018 is disclosed in the annual report of the Company for the year ended 31 December 2018 published on 30 April 2019, from pages 90 to 213; and
(iii) the financial information of the Group for the year ended 31 December 2017 is disclosed in the annual report of the Company for the year ended 31 December 2017 published on 30 April 2018, from pages 81 to 203.

All of these financial statements have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.zendaiproperty.com).

2. STATEMENT OF INDEBTEDNESS

Borrowings

As at the close of business on 29 February 2020, being the latest practicable date for the purpose of this schedule of borrowings prior to the printing of this circular, the Group had outstanding borrowings of approximately HK$7,860,714,000, details of which are set out below:

Borrowings and loans – current – unsecured – secured – non-current, secured	HK$’000 2,217,065 3,004,011 2,639,638
	7,860,714

Lease liabilities

As at 29 February 2020, the Group had lease liabilities amounting to approximately HK$106,002,000.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Properties, bank deposits and equity shares pledged as collaterals for borrowings (collectively the ‘‘Securities’’)

As at 29 February 2020, property, plant and equipment of approximately HK$944,185,000, investment properties of approximately HK$2,178,353,000, properties under development and completed properties held-for-sale of approximately HK$2,490,872,000 and bank deposits of approximately HK$1,444,918,000 were pledged to secure certain borrowings granted to the Group.

As at 29 February 2020, certain equity shares of the subsidiaries of the Group were pledged to secure certain borrowings granted to the Group.

Contingent liabilities

As at 29 February 2020, the Group provided guarantees to the extent of approximately HK$591,820,000 to banks in respect of mortgage loans provided by the banks to customers for the purchase of the properties of the Group, net of mortgages received and advances included in the contract liabilities. These guarantees provided by the Group to the banks would be released upon receiving the building ownership certificates of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

Save as aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables, the Group did not have any other loan capital issued and outstanding or agreed to be issued, debt securities issued and outstanding, authorised or otherwise created but unissued, term loans, other borrowings or indebtedness including bank overdrafts, liabilities under acceptances, acceptance credits, debentures, mortgages, charges, lease liabilities, guarantees or other material contingent liabilities outstanding at the close of business on 29 February 2020.

3. WORKING CAPITAL

Taking into account (i) the expected completion and considerations payment schedule of the Proposed Disposal, and (ii) the financial resources available to the Group, including the internally generated funds and the available banking facilities, the Directors, after due and careful enquiry, are of the opinion that the Group will have sufficient working capital for its present requirements for at least the next 12 months from the date of this circular.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited financial statements of the Group were made up.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND TRADING PROSPECTS

Upon Completion, the Remaining Group will continue to carry out its existing businesses. In order to ride on the future growing potential of the PRC’s real estate market, the Group will focus its development on the projects in Nanjing Himalayas Centre and Riverside Thumb Plaza in Nanjing. The Nanjing Himalayas Centre and Riverside Thumb Plaza in Nanjing are the key commercial property projects of the Group. The Nanjing Himalayas Centre is situated in a prime location around Nanjing South Train Station and is being developed in three phases into an integrated commercial complex comprising service apartments, commercial units, office buildings and hotels with an expected total gross floor area of approximately 619,462 square metres. The Nanjing Himalayas Centre project has obtained several awards such as the ‘‘Benchmarking Project for the Commercial Property Sector of China in 2018’’, and was ranked among the Top 10 Commercial Property Developers of China for 2018 in terms of brand value. It is expected that the last phase of the project would be delivered in the first half of 2020. The Riverside Thumb Plaza in Nanjing is to be developed in four phases into an integrated complex comprising apartments, office buildings and commercial space with an aggregate gross floor area of approximately 477,453 square metres. Construction of the fourth phase of the project commenced in January 2019. Pre-sale was planned to start in the fourth quarter of 2020 and it is expected that the properties would be delivered by second half of 2023. Nanjing, being a first-tier city with dense population, is expected to have higher consumption power and thus represents a more prosperous property market.

Going forward, the Group continued adhere to its development strategy to extensively develop the first and second tier cities while gradually stripping off its business from the third and fourth tier cities by focusing on key development areas in first and second tier cities such as Shanghai and Nanjing. With the solid domestic presence in Shanghai and Nanjing built over the years, the Group will steadily expand across the country and launch new development projects within the core strategic areas to fully explore local market demands.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

The following is the text of a report received from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [66 x 48] intentionally omitted <==

REPORT ON REVIEW OF HISTORICAL FINANCIAL INFORMATION OF HAIMEN ZENDAI BINJIANG REAL ESTATE CO., LTD.

(incorporated in the People’s Republic of China with limited liability)

To the Board of Directors of Shanghai Zendai Property Limited

Introduction

We have reviewed the historical financial information set out on pages II-3 to II-20, which comprises the consolidated balance sheets of Haimen Zendai Binjiang Real Estate Co., Ltd. (the ‘‘Disposal Company’’) and its subsidiaries (together, the ‘‘Haimen Group’’) as at 31 December 2017, 2018 and 2019, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated cash flow statements for the each of the years ended 31 December 2017, 2018 and 2019 and explanatory notes (the ‘‘Historical Financial Information’’). The Historical Financial Information has been prepared solely for the purpose of inclusion in the circular to be issued by Shanghai Zendai Property Limited (the ‘‘Company’’) in connection with the disposal of the Company’s entire equity interest in Haimen Group excluding Yantai Zendai Thumb Property Co., Ltd.（煙台証大大拇指置業有限公司）, which was owned as to 70% by the Disposal Company, in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rule’’).

The directors of the Company are responsible for the presentation and preparation of the Historical Financial Information of the Haimen Group in accordance with the basis of presentation and preparation set out in Notes 2 and 3 to the Historical Financial Information and paragraph 14.68(2)(a)(i) of the Listing Rule. The directors are also responsible for such internal control as management determines is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error. The Historical Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Our responsibility is to express a conclusion on this Historical Financial Information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by HKICPA and with reference to Practice Note 750, Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal issued by HKICPA. A review of the Historical Financial Information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Historical Financial Information of the Haimen Group for the relevant periods is not prepared, in all material respects, in accordance with the basis of presentation and preparation set out in Notes 2 and 3 to the Historical Financial Information.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 14 April 2020

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Notes Revenue 5 Cost of sales Gross (loss)/profit Other income and gains/(losses) – net 6 Selling and marketing expenses Administrative expenses Share of results of an associate Loss before income tax Income tax expense 7 Loss for the year Loss for the year attributable to: – Owners of the Disposal Company – Non-controlling interests Other comprehensive (loss)/income Items that may be reclassified to profit or loss: Currency translation differences Release of exchange reserve on disposal of an associate Items that will not be reclassified to profit or loss: Currency translation differences of the Disposal Company Other comprehensive (loss)/income for the year, net of tax Total comprehensive loss for the year Total comprehensive loss attributable to: – Owners of the Disposal Company – Non-controlling interests Total comprehensive loss for the year	Unaudited	Unaudited
	Year ended 31 December 2019 2018 2017 HK$’000 HK$’000 HK$’000 36,998 41,224 99,861 (37,491) (31,642) (96,524) (493) 9,582 3,337 395 (9,616) 157 (1,578) (1,135) (2,761) (7,743) (7,974) (9,697) – – (6,846) (9,419) (9,143) (15,810) (1,212) (1,261) (2,180) (10,631) (10,404) (17,990) (9,379) (9,111) (16,455) (1,252) (1,293) (1,535) (10,631) (10,404) (17,990) 532 1,051 381 – (1,335) – (1,941) (5,928) 6,995 (1,409) (6,212) 7,376 (12,040) (16,616) (10,614) (9,573) (11,569) (14,357) (2,467) (5,047) 3,743 (12,040) (16,616) (10,614)
		3,337 157 (2,761) (9,697) (6,846)
		(15,810) (2,180)
		(17,990)
		(16,455) (1,535)
		(17,990)
		381 – 6,995
		7,376
		(10,614)
		(14,357) 3,743
		(10,614)

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

CONSOLIDATED BALANCE SHEETS

Notes ASSETS Non-current assets Property, plant and equipment Investment in an associate 8 Total non-current assets Current assets Properties under development and completed properties held-for-sale 9 Inventories Trade, other receivables and prepayments 10 Amounts due from related companies Tax prepayments Restricted bank deposits Cash and cash equivalents Total current assets Total assets EQUITY Equity attributable to owners of the Disposal Company Paid-in capital Reserves Accumulated losses Non-controlling interests Total equity	Unaudited
	Aa at 31 December 2019 2018 HK$’000 HK$’000 4,429 5,013 – – 4,429 5,013 1,237,180 1,273,821 698 705 9,415 11,262 20 20 4,435 5,671 – 7,200 5,574 7,877 1,257,322 1,306,556 1,261,751 1,311,569 386,080 386,080 95,162 95,356 (472,693) (463,314) 8,549 18,122 66,402 68,869 74,951 86,991	2017 HK$’000 5,912 52,647
		58,559
		1,267,352 755 13,113 3,378 10,643 26,206 3,651
		1,325,098
		1,383,657
		386,080 97,814 (465,063)
		18,831 73,916
		92,747

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

CONSOLIDATED BALANCE SHEETS

Notes LIABILITIES Current liabilities Trade and other payables 11 Contract liabilities Receipts in advances from customers Amounts due to related parties 12 Amount due to the minority shareholder of a subsidiary 13 Total current liabilities Total liabilities Total equity and liabilities	Unaudited
	Aa at 31 December 2019 2018 HK$’000 HK$’000 59,124 67,798 131,842 162,096 – – 931,915 930,096 63,919 64,588 1,186,800 1,224,578 1,186,800 1,224,578 1,261,751 1,311,569	2017 HK$’000 62,939 – 250,309 910,092 67,570
		1,290,910
		1,290,910
		1,383,657

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

		Unaudited
Attribut	able to owners o	f the Disposal Company Reserves Equity attributable to owners of the Disposal Company HK$’000 HK$’000 95,716 33,188 – (16,455) 2,098 2,098 2,098 (14,357) 97,814 18,831 – 10,860 97,814 29,691 – (9,111) (1,123) (1,123) (1,335) (1,335) (2,458) (11,569) 95,356 18,122 95,356 18,122 – (9,379) (194) (194) (194) (9,573) 95,162 8,549	Non- controlling interests HK$’000 70,173 (1,535) 5,278 3,743 73,916 – 73,916 (1,293) (3,754) – (5,047) 68,869 68,869 (1,252) (1,215) (2,467) 66,402	Total equity HK$’000 103,361
Paid-in capital HK$’000 386,080 – – – 386,080 – 386,080 – – – – 386,080 386,080 – – – 386,080	Accumulated losses HK$’000 (448,608) (16,455) – (16,455) (465,063) 10,860 (454,203) (9,111) – – (9,111) (463,314) (463,314) (9,379) – (9,379) (472,693)	Reserves HK$’000 95,716 – 2,098 2,098 97,814 – 97,814 – (1,123) (1,335) (2,458) 95,356 95,356 – (194) (194) 95,162
				(17,990) 7,376
				(10,614)
				92,747
				10,860 103,607
				(10,404) (4,877) (1,335)
				(16,616)
				86,991
				86,991
				(10,631) (1,409)
				(12,040)
				74,951

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

CONSOLIDATED CASH FLOW STATEMENTS

	Unaudited
Notes 8 12(i)	Year ended 31 December 2019 2018 HK$’000 HK$’000 (17,256) (5,305) 45 91 (62) (244) (17,273) (5,458) (13) (37) – 2,382 (13) 2,345 15,152 7,201 15,152 7,201 (2,134) 4,088 7,877 3,651 (169) 138 5,574 7,877 – (31,994) – 90,811	2017 HK$’000 (20,186) 120 (1,337)
		(21,403)
		(4) 8,219
		8,215
		600
		600
		(12,588) 18,098 (1,859)
		3,651
		– –

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 General information

Shanghai Zendai Property Limited (the ‘‘Company’’) is a public limited company incorporated in Bermuda. Its shares are listed on the Main Board of the Stock Exchange of Hong Kong Limited (‘‘Stock Exchange’’). Its registered office is at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda and its principal place of business is at Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong. The Company and all of its subsidiaries are referred hereafter as the ‘‘Group’’.

On 17 January 2020, the Board of Directors (the ‘‘Board’’) resolved to seek the general mandate to be granted in advance to the Board by the shareholders of the Company for conducting the disposal of the Company’s entire equity interest in Haimen Zendai Binjiang Real Estate Co. Ltd.（海門証大濱江置業有限公司, the ‘‘Disposal Company’’) and its subsidiaries excluding Yantai Zendai Thumb Property Co., Ltd.（煙台証大大拇指置業有限公司, the ‘‘Excluded Company’’), which was owned as to 70% by the Disposal Company, (together, the ‘‘Disposal Group’’) through a public offer for disposal of the Disposal Group on Shanghai United Assets and Equity Exchange (the ‘‘Proposed Disposal’’). The Disposal Company and all of its subsidiaries (including the Excluded Company) are referred hereafter as the ‘‘Haimen Group’’.

The Disposal Company is a limited liability company incorporated in the People’s Republic of China (‘‘PRC’’) in 2003. The Disposal Group is principally engaged in the development of the properties in the Haimen Riverside New City District of Haimen city, the PRC.

It is intended that the Excluded Company shall be transferred out from the Disposal Company in accordance with the relevant laws in the PRC for the Proposed Disposal such that the Excluded Company shall not be part of the tender for the Proposed Disposal. In the event that the transfer of the Excluded Company has not yet been completed prior to the submission of the related tender notice (‘‘Notice’’) and/or the entering into of the share purchase agreement (‘‘SPA’’), terms relating to the transfer out of the Excluded Company will be included in such Notice and/or the SPA.

The Company expects to complete the transfer out of the Excluded Company before 30 June 2020 through disposing the equity interest of the Excluded Company to another PRC incorporated subsidiary within the Group (other than the Disposal Company and its subsidiaries).

This unaudited consolidated financial information has been prepared to present the consolidated financial information of the Haimen Group solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Proposed Disposal (the ‘‘Historical Financial Information’’).

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APPENDIX II

FINANCIAL INFORMATION OF THE HAIMEN GROUP

Items included in the Historical Financial Information of each of the Haimen Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’), which is Renminbi. The Historical Financial Information is presented in Hong Kong dollar (HK$), which is consistent with the Group’s presentation currency and is unaudited, unless otherwise stated.

2 Basis of presentation

The Historical Financial Information include the financial information of the Haimen Group on a consolidated basis.

3 Basis of preparation

a. The Historical Financial Information has been prepared in accordance with paragraph 14.68(2)(a)(i)(A) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rule’’) and solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Proposed Disposal. It does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 ‘‘Presentation of Financial Statements’’ or an interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). It should be read in connection with the annual report of the Company for the years ended 31 December 2017 and 2018 and the interim report of the Company for the six months ended 30 June 2019.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

b. The financial information of the Excluded Company

The statements of comprehensive income of the Excluded Company for each of the years ended 31 December 2017, 2018 and 2019 are as the following:

Revenue Cost of sales Gross losses Other gains Selling and marketing expenses Administrative expenses Loss before income tax Income tax expense Loss for the year Other comprehensive (loss)/ income Items that will not be reclassified to profit or loss: Currency translation differences Other comprehensive (loss)/ income for the year, net of tax Total comprehensive (loss)/ income for the year		Unaudited ended 31 December 2018 2017 HK$’000 HK$’000 – – – – – – 1 1 (3) (638) (4,307) (4,479) (4,309) (5,116) – – (4,309) (5,116) (8,188) 11,648 (8,188) 11,648 (12,497) 6,532
	Year 2019 HK$’000 – – – 1 (18) (4,155) (4,172) – (4,172) (2,624) (2,624) (6,796)

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

The balance sheets of the Excluded Company as at 31 December 2017, 2018 and 2019 are as the following:

ASSETS Non-current assets Property, plant and equipment Total non-current assets Current assets Properties under development Amount due from a related company Other receivables Cash and cash equivalents Total current assets Total assets EQUITY Paid-in capital Reserves Accumulated losses Total equity LIABILITIES Current liabilities Trade and other payables Amounts due to related parties Amounts due to the minority shareholder Total current liabilities Total liabilities Total equity and liabilities	Unaudited	2017 HK$’000 80 80 165,037 1,159 212 351 166,759 166,839 100,238 91,129 (29,034) 162,333 3,339 – 1,167 4,506 4,506 166,839
	As at 31 December 2019 2018 HK$’000 HK$’000 48 49 48 49 157,876 159,956 20 20 365 315 91 119 158,352 160,410 158,400 160,459 100,238 100,238 80,317 82,941 (37,515) (33,343) 143,040 149,836 1,887 1,946 11,410 7,073 2,063 1,604 15,360 10,623 15,360 10,623 158,400 160,459

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

The cash flow statements of the Excluded Company for the each of the years ended 31 December 2017, 2018 and 2019 are as the following:

Cash flows from operating activities Net cash outflow from operations Interest received Cash flows used in operating activities Cash flows from investing activities Repayment from a related party Cash flows generated from investing activities Cash flows from financing activities Increase in amounts due to related parties Cash flows generated from 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		Unaudited ended 31 December 2018 2017 HK$’000 HK$’000 (8,706) (7,974) 1 1 (8,705) 7,993 1,123 8,219 1,123 8,219 7,359 – 7,359 – (223) 246 351 88 (9) 17 119 351
	Year 2019 HK$’000 (4,553) 1 (4,552) – – 4,526 4,526 (26) 119 (2) 91

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

c. The Historical Financial Information of the Haimen Group has been prepared in accordance with the accounting policies adopted by the Group as set out in the annual report of the Company for the years ended 31 December 2017 and 2018 and the interim report of the Company for the six months ended 30 June 2019. Except as described below, these policies have been consistently applied to all the years presented.
(i) New and amended standards adopted by the Haimen Group

The following new standards and amendments are mandatory for the financial year beginning on 1 January 2017 and are applicable for the Haimen Group:

Recognition of Deferred Tax Assets for Unrealised Losses – Amendments to HKAS 12; and
Disclosure initiative – amendments to HKAS 7.

The adoption of these amendments has no significant impact to this Historical Financial Information.

The following new standards and amendments are mandatory for the financial year beginning on 1 January 2018 and are applicable for the Haimen Group:

Hong Kong Financial Reporting Standards (‘‘HKFRS’’) 9 ‘‘Financial Instruments’’;
HKFRS 15 ‘‘Revenue from Contracts with Customers’’; and
Annual Improvements 2014-2016 cycle.

For details of the adoption of the HKFRS 9 and HKFRS 15, please refer to Note 4 below. The adoption of the abovementioned annual improvements has no impact on this Historical Financial Information.

The following new standards are mandatory for the financial year beginning on 1 January 2019 and are applicable for the Haimen Group:

HKFRS 16 ‘‘Leases’’.

Based on the assessment by the directors of the Haimen Group, the adoption of HKFRS 16 has no impact on this Historical Financial Information as the Haimen Group does not have any lease arrangement.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

(ii) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2019 reporting periods and have not been early adopted by the Haimen Group. These standards are not expected to have a material impact on the Haimen Group in the current or future reporting periods and on foreseeable future transactions.

4 Changes in accounting policies and disclosures

New and amended standards adopted by the Haimen Group

The Haimen Group has adopted HKFRS 9 and HKFRS 15 by using the modified retrospective approach since 1 January 2018, which led to changes in certain of the accounting policies as described below:

HKFRS 9

The Haimen Group has assessed the business model and the terms relating to the collection of contractual cash flows applicable to the financial assets held by the Group at the date of initial application of HKFRS 9 and concluded that there is no impact on classification of financial assets.

The Haimen Group has revised its impairment methodology according to HKFRS 9 for its trade and other receivables including amounts due from related companies. The Haimen Group applies the general model for expected credit losses as prescribed by HKFRS 9. The financial assets of the Haimen Group primarily comprised of other receivables and amounts due from related parties with minimal credit risk and hence the revision in the impairment methodology has not resulted in any significant financial impact on the Haimen Group.

HKFRS 15

HKFRS 15 replaces the provisions of HKAS 18 Revenue (‘‘HKAS 18’’) and HKAS 11 Construction contracts (‘‘HKAS 11’’) that relate to the recognition, classification and measurement of revenue and costs.

The effects of the adoption of HKFRS 15 are as follows:

Accounting for property development activities

In prior reporting periods, the Haimen Group accounted for property development activities when significant risk and rewards of ownership has been transferred to the customers on delivery in its entirety at a single time upon vacant possession and not continuously as construction progresses.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

Under HKFRS 15, when the properties that have no alternative use to the Haimen Group due to contractual reasons and the Haimen Group has an enforceable right to payment from the customers for performance completed to date, the Haimen Group recognises revenue as the performance obligation is satisfied over time in accordance with the input method for measuring progress.

The excess of cumulative revenue recognised in profit or loss over the cumulative billings to purchasers of properties is recognised as contract assets. The contract assets will be reclassified as receivables when the progress billings are issued or properties are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

The excess of cumulative billings to purchasers of properties over the cumulative revenue recognised in profit or loss is recognised as contract liabilities. The contract liability is recognised as revenue when the Haimen Group satisfies its performance obligations.

Accounting for significant financing component

For contracts where the period between the payment by the customer and the transfer of the promised property or service exceeds one year, the transaction price is adjusted for the effects of a financing component, if significant.

Presentation of contract liabilities

Reclassifications were made as at 1 January 2018 to be consistent with the terminology used under HKFRS 15:

Contract liabilities for progress billing recognised in relation to property development activities were previously presented as receipts in advance from customers.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

The impacts of the adoption of HKFRS 15 on the Historical Financial Information are as follows:

In summary, the following adjustments were made to the amounts recognised in the Haimen Group’s financial position at the date of initial application (1 January 2018):

	HKAS 18			HKFRS 15
	Carrying amount			Carrying amount
	31 December			1 January
	2017	Reclassifications	Remeasurements	2018
	HK$’000	HK$’000	HK$’000	HK$’000
Consolidated balance sheet (extract)
Properties under development and
completed properties held-for-sale	1,267,352	–	(38,187)	1,229,165
Trade and other receivables	13,113	–	(3,022)	10,091
Tax prepayments	10,643	–	(1,604)	9,039
Receipts in advance from customers	250,309	(196,636)	(53,673)	–
Contract liabilities	–	196,636	–	196,636
Accumulated losses	(465,063)	–	10,860	(454,203)

5 Revenue

Sales of properties Property management income		Unaudited	Unaudited
	Year 2019 HK$’000 30,369 6,629 36,998	ended 31 December 2018 2017 HK$’000 HK$’000 36,677 97,231 4,547 2,630 41,224 99,861
			99,861

For the years ended 31 December 2017, 2018 and 2019 revenue from sales of properties of HK$97,231,000, HK$33,377,000 and HK$23,562,000 respectively are recognised at a point in time. The remaining revenue from sales of properties and property management income for the years ended 31 December 2017, 2018 and 2019 are recognised over time.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

6 Other income and gains/(losses) – net

Provision for extension cost for land development (note) Gain on disposal of an associate (Note 8) Others		Unaudited	Unaudited
	Year 2019 HK$’000 – – 395 395	ended 31 December 2018 2017 HK$’000 HK$’000 (13,378) – 3,739 – 23 157 (9,616) 157
			157

Note：

The amount represents the provision for surcharge in respect of the delay in commencement of the development of certain land parcels pursuant to the terms set out in the land transfer agreement entered into with the relevant government bureau.

7 Income tax expense

The Haimen Group is subjected to the PRC enterprise income tax, which has been provided for based on the statutory income tax rate of 25% of the assessable income of each of the Haimen Group entities for each of the years ended 31 December 2017, 2018 and 2019.

In accordance with the Land Appreciation Tax Law of the PRC, Land Appreciation Tax is levied at the properties developed by the Haimen Group for sale in the PRC. Land Appreciation Tax is charged on the appreciated amount at progressive rates ranged from 30% to 60%.

Current income tax: – PRC enterprise income tax – PRC land appreciation tax	Unaudited	Unaudited
	Year ended 31 December 2019 2018 2017 HK$’000 HK$’000 HK$’000 – – – 1,212 1,261 2,180 1,212 1,261 2,180
		2,180

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APPENDIX II

FINANCIAL INFORMATION OF THE HAIMEN GROUP

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. As at 31 December 2017, 2018 and 2019, the Haimen Group did not recognise deferred income tax assets of HK$27,573,000, HK$39,309,000 and HK$40,296,000 in respect of cumulative tax losses amounting to HK$110,292,000, HK$157,236,000 and HK$161,184,000 respectively that can be carried forward against future taxable income.

8 Investment in an associate

In 2018, the Haimen Group disposed its entire equity interest in its associate, Langfang Zhenghetai Real Estate Co., Limited, to a third party at a consideration of RMB47,000,000 (equivalent to approximately HK$57,722,000) (the ‘‘Disposal Proceed’’), resulting in a net gain on disposal of approximately HK$3,739,000 (Note 6).

Part of the Disposal Proceed of RMB20,000,000 had been prepaid by the purchaser prior to December 2016. The remaining portion of the Disposal Proceed of RMB27,000,000 (equivalent to approximately HK$31,994,000) has been collected by the immediate holding company on behalf of the Haimen Group in December 2017. As agreed with the immediate holding company, the remaining proceed recoverable from the immediate holding company have been offset against the amounts due to the immediate holding company in 2018.

9 Properties under development and completed properties held-for-sale

Properties under development Completed properties held-for-sale	Unaudited
	As at 31 December 2019 2018 HK$’000 HK$’000 1,076,545 1,085,783 160,635 188,038 1,237,180 1,273,821	2017 HK$’000 1,012,071 255,281
		1,267,352

The provision for impairment provision of completed properties held-for-sale as at 31 December 2017, 2018 and 2019 amounted to HK$18,239,000, HK$2,550,000 and HK$2,070,000 respectively.

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FINANCIAL INFORMATION OF THE HAIMEN GROUP

APPENDIX II

10 Trade, other receivables and prepayments

The Haimen Group generally grants no credit period to its customers on sales of properties, except for certain significant transactions where credit terms or settlement schedules are negotiated on an individual basis.

Deposits Prepayments for turnover tax and others Other receivables	Unaudited
	As at 31 December 2019 2018 HK$’000 HK$’000 2,808 2,422 3,990 6,449 2,617 2,391 9,415 11,262	2017 HK$’000 3,979 8,019 1,115
		13,113

11 Trade and other payables

Trade payables (note) Deposits from third parties Accrued taxes other than income tax and land appreciation tax Wages, salaries and other employee benefits Other payables and accruals	Unaudited
	As at 31 December 2019 2018 HK$’000 HK$’000 31,068 35,235 11,212 14,949 1,459 2,001 778 795 14,607 14,818 59,124 67,798	2017 HK$’000 19,543 38,441 1,114 1,785 2,056
		62,939

Note:

The trade payables mainly represent accrued construction costs payable to contractors. The amounts will be paid upon the completion of cost verification process between the contractors and the Haimen Group.

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APPENDIX II

FINANCIAL INFORMATION OF THE HAIMEN GROUP

12 Amounts due to related parties

Amounts due to the immediate holding company Amounts due to fellow subsidiaries of the Company	Unaudited
	As at 31 December 2019 2018 HK$’000 HK$’000 842,349 838,872 89,566 91,224 931,915 930,096	2017 HK$’000 907,303 2,789
		910,092

Notes:

(i) During the year ended 31 December 2018, a fellow subsidiary of the Company had settled certain construction costs on behalf of the Haimen Group and the amounts due to the aforesaid fellow subsidiary of the Company have been increased by RMB76,636,000 accordingly.
(ii) The amounts due to related parties are unsecured, interest-free and have no fixed term of repayment.

13 Amount due to the minority shareholder of a subsidiary

Minority shareholder of the Excluded Company	Unaudited
	As at 31 December 2019 2018 HK$’000 HK$’000 63,919 64,588	2017 HK$’000 67,570

The amount due to the minority shareholder of the Excluded Company is unsecured, interest-free and has no fixed term of repayment.

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MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

After the Proposed Disposal, the Remaining Group will continue to carry out the existing business. Set out below is the management discussion and analysis of the Remaining Group for each of the financial years ended 31 December 2017 (‘‘FY2017’’), 31 December 2018 (‘‘FY2018’’) and 31 December 2019 (the ‘‘FY2019’’).

(I) FOR THE FY 2019

For the year ended 31 December 2019, the Remaining Group’s consolidated turnover from continuing operations amounted to approximately HK$1,311.59 million (2018: approximately HK$7,130.81 million), which mainly comprised revenue from sale of properties of approximately HK$816.64 million (2018: approximately HK$6,647.88 million), revenue from hotel operation of approximately HK$133.98 million (2018: approximately HK$159.85 million), revenue from properties rental, management and agency services of approximately HK$360.97 million (2018: approximately HK$323.09 million).

The substantial decrease in turnover of the Remaining Group for the year ended 31 December 2019 was due to that substantially less property were delivered as compared to the previous. The loss of the Remaining Group increased from approximately HK$974.19 million for the year ended 31 December 2018 to approximately HK$1,054.46 million for the year ended 31 December 2019. This was mainly attributable to a substantial decline in turnover and gross profit during the year.

Segment results

For sale of properties, segment turnover amounted to approximately HK$816.64 million, decreasing by approximately 88% from approximately HK$6,647.88 million for the year ended 31 December 2018 and segment loss before income tax expenses amounted to approximately HK$336.21 million for the year ended 31 December 2019, reversing from segment profit before income tax expenses amounted to approximately HK$145.57 million in previous year. The substantial decreases in segment turnover and the reversal from segment profit in year ended 31 December 2018 to segment loss in year ended 31 December 2019 were due to the substantial decrease in the areas of the property to be delivered to purchaser and recognised as turnover and therefore insufficient to cover the charges and expenses.

For hotel operations, segment turnover amounted to approximately HK$133.98 million, decreasing by approximately 16% from approximately HK$159.85 million for the year ended 31 December 2018. The decrease was due to the decrease in the total number of operable hotel rooms as a result of renovation of certain hotel rooms. Segment loss before income tax expenses amounted to approximately HK$15.14 million, decreasing by approximately 27% from approximately HK$20.73 million. The decreases in segment loss was due to the decrease of share of loss of an associate.

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APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For properties rental, management and agency services, segment turnover amounted to approximately HK$360.97 million, increasing by approximately 12% from approximately HK$323.09 million for the year ended 31 December 2018 and segment profit before income tax expenses amounted to approximately HK$99.04 million, increasing by approximately 23% from approximately HK$80.42 million. The increases in both segment turnover and segment profit were due to the increase in the number of chargeable properties as a result of commencement of management of ‘‘Nanjing Himalayas Center’’ and the first and second phases of ‘‘Riverside Thumb Plaza’’ since the end of year 2018.

Liquidity, financial resources and capital structure

As at 31 December 2019, the Remaining Group had a healthy financial position with net assets value of approximately HK$1,596.38 million (2018: approximately HK$2,705.95 million). Net current assets amounted to approximately HK$365.19 million (2018: approximately HK$2,557.95 million) with current ratio decreasing from 1.26 times at 31 December 2018 to approximately 1.03 times at 31 December 2019. The capital structure of the Remaining Group consists of borrowings (including current and non-current borrowings as shown in the interim condensed consolidated balance sheet), net of cash and cash equivalents, and equity attributable to owners of the Company. The Remaining Group adopted relatively prudent financial policy and closely monitored its cash flow. As at 31 December 2019, the Remaining Group had consolidated borrowings and loans of approximately HK$7,914.46 million, of which HK$4,909.25 million was repayable within one year and HK$3,005.21 million was repayable more than one year. As at 31 December 2019, borrowings of the amount of HK$6,391.91 million (2018: approximately HK$5,904.09 million) bear interest at fixed interest rates ranging from 4.77% to 18.15% per annum (2018: ranging from 5.00% to 18.15% per annum). As at 31 December 2019, the Remaining Group’s bank balances and cash including restricted bank deposits were approximately HK$1,949.72 million (2018: approximately HK$1,962.73 million).

Charges on assets

As at 31 December 2019, the Remaining Group’s property, plant and equipment, investment properties, properties under development and for sales and pledged bank deposits of approximately HK$951.73 million, approximately HK$2,178.35 million, approximately HK$2,476.44 million and approximately HK$1,444.81 million respectively had been pledged to secure bank and other loans granted to the Remaining Group.

The Remaining Group pledged certain percent interests in several subsidiaries to secure bank and other loans granted to the Remaining Group.

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MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

Gearing ratio

The gearing ratio of the Remaining Group increased from 2.11 times at 31 December 2018 to 4.03 times at 31 December 2019 (basis: net debts, which is defined as total amounts of borrowings and loans, amounts due to minority owners of subsidiaries and lease liabilities less cash and cash equivalent and pledged bank deposits, divided by equity attributable to owners of the Company). The increase in the gearing ratio was mainly due to decrease in shareholders’ fund as a result of the continuing record of loss for the year ended 31 December 2019.

Exchange rate and interest rate risks exposure

The Remaining Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The Remaining Group’s cash and cash equivalents are also exposed to such foreign currency risk. Cash and cash equivalents held by the Remaining Group as at 31 December 2019 were mainly denominated in RMB and HK$. Bank borrowings of the Remaining Group as at 31 December 2019 were mainly denominated in RMB. The Remaining Group currently does not use any financial instruments to hedge against its exposure to currency risk. The Remaining Group manages its foreign currency risk by closely monitoring the movement of the foreign currency rate.

The Remaining Group’s cash flow interest rate risk arises from long-term borrowings with prevailing market interest rates. Such risk is partly offset by cash held at prevailing market interest rates. The Remaining Group’s fair value interest rate risk relates primarily to its fixed rate borrowings and payables and restricted bank deposits. The Remaining Group currently does not utilize any financial instruments to hedge its exposure to interest rate risk. However, management will consider hedging significant interest rate exposure should the need arise.

Contingent liabilities

The Remaining Group provided guarantees of approximately HK$561.88 million as at 31 December 2019 (2018: approximately HK$958.20 million) for customers in favour of banks in respect of the mortgage loans provided by the banks to customers for the purchase of the Remaining Group’s developed properties.

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APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

As at 31 December 2019 and 31 December 2018, the Remaining Group provided guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain purchasers of the Remaining Group’s properties, net of mortgages received and included in contract liabilities. Pursuant to the terms of the guarantees, upon default in mortgage payments by the respective purchasers, the Remaining Group is responsible to repay the outstanding mortgage principals together with accrued interest and penalty owed by the defaulted purchasers to the banks, and the Remaining Group is entitled to take over the legal title and possession of the related properties. The Remaining Group’s guarantee period starts from the dates of grant of the relevant mortgage loans and ends when the property purchasers obtain the ‘‘property title certificate’’ which is then to be pledged with the banks.

Save as disclosed above, the Remaining Group did not have any material contingent liabilities outstanding.

Material acquisitions or disposals of subsidiaries and associated companies

On 12 August and 24 August 2015, the Remaining Group entered into an equity transfer agreement and a supplementary agreement respectively (collectively, the ‘‘Agreements’’) to acquire the equity interest of 6 companies which hold land parcels (the ‘‘Land Parcels’’) in Gulou District, Nanjing (the ‘‘Acquisitions’’). The aggregate site area of the Land Parcels was approximately 110,489 square metres and the total consideration for the Acquisitions was RMB4,513.61 million (equivalent to approximately HK$5,389.38 million). Details of the Acquisitions were disclosed in the Company’s announcement dated 25 August 2015. As a result of the regulatory land plan adjustment to the district where the Land Parcels are located since late 2015, the Land Parcels are also subject to land plan adjustment. As at 31 December 2019, 4 out of 13 land title certificates of the Land Parcels have been obtained. The parties to the Agreements have been making efforts to proceed the completion of the Acquisitions.

During the year ended 31 December 2019, save for the above, the Remaining Group did not acquire or dispose of any material subsidiary or associated company.

Employees and remuneration policies

As at 31 December 2019, the Remaining Group employed approximately 945 employees (2018: 1,192 employees) in Hong Kong and the PRC. They were remunerated according to the nature of the job and market conditions. Other staff benefits include a mandatory provident fund scheme, local municipal government retirement scheme, insurance and medical insurance and share option scheme.

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APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(II) FOR THE FY2018

For the year ended 31 December 2018, the Remaining Group’s consolidated turnover was approximately HK$7,130.81 million (2017: approximately HK$2,927.88 million), which mainly comprised revenue from sale of properties of approximately HK$6,647.88 million (2017: approximately HK$2,414.92 million), revenue from hotel operation of approximately HK$159.85 million (2017: approximately HK$166.26 million) and revenue from properties rental, management and agency services of approximately HK$323.09 million (2017: approximately HK$346.69 million).

The increase in turnover of the Remaining Group for the year ended 31 December 2018 was mainly due to the acquisition of the remaining equity interests of 南京証大大拇指商業發展有限公司 (Nanjing Thumb Commercial Development Co., Ltd*, ‘‘Nanjing Zendai’’) by the Remaining Group in December 2017, in which the turnover of Nanjing Zendai of approximately HK$2,564.95 million was consolidated during the year (2017: approximately HK$23.09 million) and the initial delivery of the second phase of Riverside Thumb Plaza in Nanjing. In December 2017, the Remaining Group acquired the remaining ownership interest of Nanjing Zendai which constituted a business combination. The carrying value of the Remaining Group’s previously held equity interests in Nanjing Zendai which was accounted for using the equity method was remeasured to fair value at the acquisition date and a fair value gain on remeasurement of HK$1,193 million was recognized as other income and gains. The absence of the one-off gain in 2018 led to a reversal from profit in 2017 amounted to approximately HK$143.98 million to loss in 2018 amounted to approximately HK$974.19 million on the Remaining Group.

Segment results

For sale of properties, segment turnover amounted to approximately HK$6,647.88 million, increasing by approximately 175% from approximately HK$2,414.92 million for the year ended 31 December 2017 and segment profit before income tax expenses amounted to approximately HK$145.57 million, reversing from segment loss before income tax expenses amounted to approximately HK$269.11 million. The substantial increases in segment turnover and the reversal from segment loss in 2017 to segment profit in 2018 were due to the increase of turnover to be recognized as a result of the consolidation of Nanjing Zendai at the end of 2017.

For hotel operations, segment turnover amounted to approximately HK$159.85 million, decreasing by approximately 4% from approximately HK$166.26 million for the year ended 31 December 2017 which remained stable. Segment loss before income tax expenses amounted to approximately HK$20.73 million, reversing from segment profit before income tax expenses amounted to approximately HK$8.37 million. The increase of share of loss of associates led to a reversal from segment profit in 2017 to segment loss in 2018.

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APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

For properties rental, management and agency services, segment turnover amounted to approximately HK$323.09 million, decreasing by approximately 7% from approximately HK$346.69 million for the year ended 31 December 2017 and segment profit before income tax expenses amounted to approximately HK$80.42million, remain stable when comparing to prior year amounted to approximately HK$80.09 million. The segment profit remained stable even though the turnover decreased was mainly due to the decrease of investment properties available for leasing and properties managed by the Remaining Group after the disposal of subsidiaries which were loss making.

Liquidity, financial resources and capital structure

As at 31 December 2018, the Remaining Group had a healthy financial position with net assets value of approximately HK$2,705.95 million (2017: approximately HK$3,840.69 million). Net current assets amounted to approximately HK$2,557.95 million (2017: approximately HK$6,012.63 million) with current ratio decreased from 1.48 times at 31 December 2017 to approximately 1.26 times at 31 December 2018. The capital structure of the Remaining Group consists of borrowings (including current and non-current borrowings as shown in the consolidated balance sheet), net of cash and cash equivalents, and equity attributable to owners of the Company. The Remaining Group adopted relatively prudent financial policy and closely monitored its cash flow. As at 31 December 2018, the Remaining Group had consolidated borrowings and loans of approximately HK$6,968.79 million, in which HK$3,140.23 million was repayable within one year and HK$3,828.56 million was repayable more than one year. As at 31 December 2018, borrowings of the amount of HK$5,904.09 million (2017: approximately HK$6,604.18 million) bear interest at fixed interest rates ranging from 5.00% to 18.15% per annum (2017: ranging from 3.30% to 12.10% per annum). As at 31 December 2018, the Remaining Group’s bank balances and cash including restricted cash were approximately HK$1,962.73 million (2017: approximately HK$2,248.06 million).

Charges on assets

As at 31 December 2018, the Remaining Group’s property, plant and equipment, payment for leasehold land held for own use under operating leases, investment properties, properties under development and for sales and pledged bank deposits of approximately HK$541.69 million, approximately HK$454.45 million, approximately HK$2,680.35 million, approximately HK$4,483.74 million and approximately HK$568.34 million respectively had been pledged to banks to secure bank and other loans granted to the Remaining Group.

The Remaining Group pledged certain percent interests in several subsidiaries to secure bank and other loans granted to the Remaining Group.

III – 6

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

Gearing ratio

The gearing ratio of the Remaining Group increased from 2.50 times at 31 December 2017 to 2.77 times at 31 December 2018 (basis: net debts, which is defined as total amounts of borrowings and loans and amounts due to minority owners of subsidiaries less total amounts due from an associate, divided by shareholders’ funds). The increase in the gearing ratio was mainly due to decrease in shareholders’ fund as a result of the record of loss for the year ended 31 December 2018.

Exchange rate and interest rate risks exposure

The Remaining Group undertakes certain transactions denominated in foreign currencies, hence exposures to risks arised from exchange rate fluctuations. The Remaining Group’s cash and cash equivalents are also exposed to such foreign currency risk. Cash and cash equivalents held by the Remaining Group as at 31 December 2018 were mainly denominated in RMB, USD and HK$. Bank borrowings of the Remaining Group as at 31 December 2018 were mainly denominated in USD and RMB. The Remaining Group currently does not use any derivative contracts to hedge against its exposure to currency risk. The Remaining Group manages its foreign currency risk by closely monitoring the movement of the foreign currency rate.

The Remaining Group’s cash flow interest rate risk arises from long-term borrowings with prevailing market interest rates. Such risk is partly offset by cash held at prevailing market interest rates. The Remaining Group’s fair value interest rate risk relates primarily to its fixed rate borrowings and payables and pledged bank deposits. The Remaining Group currently does not utilize any derivative contracts to hedge its exposure to interest rate risk. However, management will consider hedging significant interest rate exposure should the need arise.

Contingent liabilities

As at 31 December 2018, the Remaining Group provided guarantees to the extent of approximately HK$958.20 million (2017: approximately HK$670.25 million) to banks in respect of mortgage loans provided by the banks to customers for the purchase of the developed properties of the Remaining Group, net of mortgages received and included in receipts in advance from customers. These guarantees provided by the Remaining Group to the banks would be released upon receiving the property title certificate of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

Save as disclosed above, the Remaining Group did not have any material contingent liabilities outstanding.

III – 7

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Material acquisitions or disposals of subsidiaries and associated companies

(a) On 12 August and 24 August 2015, the Remaining Group entered into an equity transfer agreement and a supplementary agreement respectively (collectively, the ‘‘Agreements’’) to acquire the equity interest of 6 companies which hold land parcels (the ‘‘Land Parcels’’) in Gulou District, Nanjing (the ‘‘Acquisitions’’). The aggregate site area of the Land Parcels was approximately 110,489 square metres and the total consideration for the Acquisitions was RMB4,513.61 million (equivalent to approximately HK$5,389.38 million). Details of the Acquisitions were disclosed in the Company’s announcement dated 25 August 2015.

As a result of the regulatory land plan adjustment to the district where the Land Parcels are located since late 2015, the Land Parcels are also subject to land plan adjustment. As at 31 December 2018, 4 out of 13 land title certificates of the Land Parcels have been obtained. The parties to the Agreements have been making efforts to proceed the completion of the Acquisitions.

(b) On 12 February 2018, the Remaining Group entered into an agreement with a purchaser to dispose of an indirect wholly owned subsidiary of the Company, which owns certain office and commercial areas and carpark spaces in 海墾國際金融中心 (Haiken International Finance Centre*) located in Haikou, Hainan Province, at a total consideration of RMB126.80 million (equivalent to approximately HK$142.71 million). The details of disposal were set out in the announcement of the Company dated 12 February 2018. The transaction has been completed in November 2018.

During the year ended 31 December 2018, save for the above, the Remaining Group did not acquire or dispose of any material subsidiary or associated company.

Employees and remuneration policies

As at 31 December 2018, the Remaining Group employed approximately 1,192 employees (the corresponding period in 2017: approximately 1,227 employees) in Hong Kong and the PRC. They were remunerated according to the nature of the job and market conditions. Other staff benefits include a mandatory provident fund scheme, local municipal government retirement scheme, insurance and medical insurance and share option scheme.

III – 8

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

(III) FOR THE FY2017

For the year ended 31 December 2017, the Remaining Group’s consolidated turnover was approximately HK$2,927.88 million (2016: approximately HK$1,762.08 million), which mainly comprised revenue from sale of properties of approximately HK$2,414.92 million (2016: approximately HK$1,202.33 million), revenue from hotel operation of approximately HK$ 166.26 million (2016: approximately HK$190.37 million) and revenue from properties rental, management and agency services of approximately HK$346.69 million (2016: approximately HK$369.38 million).

The increase in turnover of the Remaining Group for the year ended 31 December 2017 was mainly due to the delivery of properties from the projects acquired during the period from 2012 to 2015. In December 2017, the Remaining Group acquired the remaining ownership interest of Nanjing Zendai, which constituted a business combination. The carrying value of the Remaining Group’s previously held equity interests in Nanjing Zendai which was accounted for using the equity method was re-measured to fair value at the acquisition date and a fair value gain on remeasurement of a joint venture amounting to HK$1,192.85 million was recognized as other income and gains which led to the turnaround from loss in 31 December year ended 2016 at approximately HK$1,040.46million to profit in 31 December year ended 2017 at approximately HK$143.98 million.

Segment results

For sale of properties, segment turnover amounted to approximately HK$2,414.92 million, increasing by approximately 101% from approximately HK$1,202.33 million for the year ended 31 December 2016 and segment loss before income tax expenses amounted to approximately HK$269.11 million, decreasing by approximately 23% from approximately HK$347.82 million. The increase in segment turnover and decrease in segment loss were due to the initial delivery of the apartments and commercial units of Riverside Thumb Plaza in Nanjing and increase of share of profit of a joint venture respectively during the year.

For hotel operations, segment turnover amounted to approximately HK$166.26 million, decreasing by approximately 13% from approximately HK$190.37 million for the year ended 31 December 2016 were due to the drop of room-rate of Grand Mercure Shanghai Century Park as a marketing strategy after the change of the brand in January 2017. Segment profit before income tax expenses amounted to approximately HK$8.37 million, reversing from segment loss before income tax expenses amounted to approximately HK$73.45 million. The substantial decrease of share of loss of associates led to a reveral from segment loss in 2016 to segment profit in 2017.

For properties rental, management and agency services, segment turnover amounted to approximately HK$346.69 million, decreasing by approximately 6% from approximately HK$369.38 million for the year ended 31 December 2016 and segment profit before income tax expenses amounted to approximately HK$80.09 million, decreasing by approximately 40% from approximately HK$132.86 million. The decreases in both segment turnover and segment profit were mainly due to less properties were available for leasing and managed by the Remaining Group after the disposal of subsidiaries and investment properties during the year.

III – 9

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

Liquidity, financial resources and capital structure

As at 31 December 2017, the Remaining Group had a healthy financial position with net assets value of approximately HK$3,840.69 million (2016: approximately HK$3,176.61 million). Net current assets amounted to approximately HK$6,012.63 million (2016: approximately HK$212.41 million) with current ratio increased from 1.01 times in 31 December 2016 to approximately 1.48 times at 31 December 2017. The capital structure of the Remaining Group consists of borrowings (including current and non-current borrowings), net of cash and cash equivalents, and equity attributable to owners of the Company. The Remaining Group adopted relatively prudent financial policy and has closely monitored its cash flow. As at 31 December 2017, the Remaining Group had consolidated borrowings and loans of approximately HK$9,516.15 million, in which HK$3,668.50 million was repayable within one year and HK$5,847.65 million was repayable more than one year. As at 31 December 2017, borrowings of the amount of HK$6,604.18 million (2016: approximately HK$4,695.38 million) bear interest at fixed interest rates ranging from 3.30% to 12.10% per annum (2016: ranging from 3.30% to 12.00% per annum). As at 31 December 2017, the Remaining Group’s bank balances and cash including restricted cash were approximately HK$2,248.06 million (2016: approximately HK$2,121.09 million).

Charges on assets

As at 31 December 2017, the Remaining Group’s property, plant and equipment, payment for leasehold land held for own use under operating leases, investment properties, properties under development and for sales and pledged bank deposits of approximately HK$596.00 million, approximately HK$518.00 million, approximately HK$1,848.20 million, approximately HK$2,843.64 million and approximately HK$857.49 million respectively had been pledged to banks to secure bank and other loans granted to the Remaining Group.

The Remaining Group pledged certain percent interests in several subsidiaries to secure bank and other loans granted to the Remaining Group.

Gearing ratio

The gearing ratio of the Remaining Group (total of amounts due to related companies, bank and other loans, senior loan notes and other borrowing divided by Shareholders’ funds) decreased from approximately 3.01 times as at 31 December 2016 to approximately 2.50 times as at 31 December 2017. The decrease in the gearing ratio was mainly due to the increase in shareholders’ fund as a result of the record of profit for the year ended 31 December 2017.

III – 10

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

APPENDIX III

Exchange rate and interest rate risks exposure

The Remaining Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The Remaining Group’s cash and cash equivalents are also exposed to such foreign currency risk. Cash and cash equivalents held by the Remaining Group as at 31 December 2017 were mainly denominated in RMB, USD and HK$. Bank borrowings of the Remaining Group as at 31 December 2017 are mainly denominated in USD and RMB. The Remaining Group currently does not use any derivative contracts to hedge against its exposure to currency risk. The Remaining Group manages its foreign currency risk by closely monitoring the movement of the foreign currency rate.

The Remaining Group’s cash flow interest rate risk arises from long-term borrowings with prevailing market interest rates. Such risk is partly offset by cash held at prevailing market interest rates. The Remaining Group’s fair value interest rate risk relates primarily to its fixed rate borrowings and payables and pledged bank deposits. The Remaining Group currently does not utilize any derivative contracts to hedge its exposure to interest rate risk. However, management will consider hedging significant interest rate exposure should the need arise.

Contingent liabilities

As at 31 December 2017, the Remaining Group provided guarantees to the extent of approximately HK$670.25 million (2016: approximately HK$0 million) to banks in respect of mortgage loans provided by the banks to customers for the purchase of the developed properties of the Remaining Group, net of mortgages received and included in receipts in advance from customers. These guarantees provided by the Remaining Group to the banks would be released upon receiving the property title certificate of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

Save as disclosed above, the Remaining Group did not have any material contingent liabilities outstanding.

III – 11

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

Material acquisitions or disposals of subsidiaries and associated companies

(a) On 12 August and 24 August 2015, the Remaining Group entered into an equity transfer agreement and a supplementary agreement respectively (collectively, the ‘‘Agreements’’) to acquire the equity interest of 6 companies (the ‘‘Target Companies’’) which holds 6 parcels of land in Gulou District, Nanjing (the ‘‘Acquisitions’’). The aggregate site area of the land parcels was approximately 110,489 square metres and the total consideration for the Acquisitions was RMB4,513.61 million (equivalent to approximately HK$5,389.38 million). Details of the Acquisitions were disclosed in the Company’s announcement dated 25 August 2015.

Pursuant to the Agreements, in the event that the delivery confirmations and land title certificates of the land parcels cannot be obtained by the Target Companies within one year after 12 August 2015 (or such other date as the parties may agree in writing), the Agreements shall terminate. As at the date of this circular, the delivery confirmations and land title certificates have not been fully obtained and the Acquisitions by the Remaining Group have not been completed, the Remaining Group is still negotiating with the vendor the time schedule for the delivery of land title certificates.

(b) In December 2016, the Remaining Group entered into an agreement with a purchaser to dispose of its real estate development project, which located in Johannesburg, South Africa, with total consideration of ZAR1,750.00 million (equivalent to approximately HK$1,047.23 million). The transaction was completed in July 2017.

Details of the disposal were disclosed in the Company’s announcement dated 3 December 2016 and circular dated on 19 January 2017. The ordinary resolution in relation to this transaction was passed by the shareholders at the special general meeting of the Company held on 9 February 2017.

(c) In January 2017, the Remaining Group has entered into an agreement with an independent third party for the disposal of its 100% equity interests in and shareholder’s loans to 海門証大濱江置業有限公司 (Haimen Zendai Binjiang Real Estate Co. Ltd.*). The total consideration was approximately RMB700.00 million (equivalent to approximately HK$813.89 million). Details of the transaction were disclosed in the Company’s announcement dated 25 January 2017 and circular dated 24 February 2017. The ordinary resolution in relation to this transaction was not passed by the shareholders at the special general meeting of the Company held on 14 March 2017. The transaction has been terminated.

III – 12

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

(d) In September 2017, the Remaining Group entered into an agreement with a purchaser to dispose the sale shares and the sale loans of 鄂爾多斯市証大房地產開發有限公司 (Ordos Zendai Real Estate Development Co., Ltd.*), at the consideration of RMB215.00 million (equivalent to approximately HK$258.00 million). Detail of the disposal was disclosed in the Company’s announcement dated 11 September 2017. As at the date of this report, the transaction has not yet completed.

During the year ended 31 December 2017, save for the above, the Remaining Group did not acquire or dispose of any material subsidiary or associated company.

Employees and remuneration policies

As at 31 December 2017, the Remaining Group employed approximately 1,227 employees (the corresponding period in 2016: approximately 1,471 employees) in Hong Kong and the PRC. They were remunerated according to the nature of the job and market conditions. Other staff benefits include a mandatory provident fund scheme, local municipal government retirement scheme, insurance and medical insurance and share option scheme.

III – 13

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

The following is the text of a report received from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Shanghai Zendai Property Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Shanghai Zendai Property Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) excluding Haimen Zendai Binjiang Real Estate Co., Ltd. (the ‘‘Disposal Company’’) and its subsidiaries (collectively the ‘‘Haimen Group’’) while including Yantai Zendai Thumb Property Co., Ltd., which was owned as to 70% by the Disposal Company (collectively the ‘‘Remaining Group’’) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated balance sheet as at 31 December 2019, the unaudited pro forma consolidated income statement and statement of comprehensive income for the year ended 31 December 2019, the unaudited pro forma consolidated cash flow statement for the year ended 31 December 2019, and related notes (the ‘‘Unaudited Pro Forma Financial Information’’) as set out on pages IV-4 to IV-17 of the Company’s circular dated 14 April 2020, in connection with the proposed disposal of the Haimen Group excluding Yantai Zendai Thumb Property Co., Ltd. (the ‘‘Proposed Disposal’’) by the Company. The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on pages IV-11 to IV-17.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Proposed Disposal on the Group’s financial position as at 31 December 2019 and the Group’s financial performance and cash flows for the year ended 31 December 2019 as if the Proposed Disposal had taken place at 31 December 2019 and 1 January 2019 respectively. As part of this process, information about the Group’s financial position, financial performance and cash flows has been extracted by the directors from the Group’s consolidated financial statements for the year ended 31 December 2019 as set out in the published annual results announcement and the supplemental announcement in relation to the annual results announcement. An audit report has been issued on the Group’s consolidated financial statements for the year ended 31 December 2019.

IV – 1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

The directors are responsible for compiling the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 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’’).

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 behaviour.

Our firm applies Hong Kong Standard on Quality Control 1 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 Accountant’s Responsibilities

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

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

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

IV – 2

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The purpose of unaudited pro forma financial information included in a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity 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 Proposed Disposal at 31 December 2019 and 1 January 2019 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related pro forma adjustments give appropriate effect to those criteria; and
The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

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

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company 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 Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 14 April 2020

IV – 3

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is an illustrative unaudited pro forma consolidated balance sheet, unaudited pro forma consolidated income statement and statement of comprehensive income and unaudited pro forma consolidated cash flow statement of the Remaining Group (the ‘‘Unaudited Pro Forma Financial Information’’), which have been prepared in accordance with paragraph 4.29 of the Listing Rules and on the basis of the notes set out below, for the purpose of illustrating the effect of the Proposed Disposal as if it had taken place on 31 December 2019 for the unaudited pro forma consolidated balance sheet and 1 January 2019 for the unaudited pro forma consolidated income statement and statement of comprehensive income and the unaudited pro forma consolidated cash flow statement.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not give a true picture of the financial position, financial performance or cash flows of the Remaining Group had the Proposed Disposal been completed as at 31 December 2019 for the financial position or 1 January 2019 for the financial performance and cash flows or at any future date.

IV – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

ASSETS Non-current assets Property, plant and equipment Investment properties Financial assets at fair value through other comprehensive income Amounts due from an associate Deferred income tax assets Pledged bank deposits Total non-current assets Current assets Properties under development and completed properties held-for-sale Inventories Contract assets Trade, other receivables and prepayments Deposits for properties under development Amounts due from an associate Amounts due from related parties Financial assets at fair value through profit or loss Tax prepayments Pledged bank deposits Cash and cash equivalents Total current assets Total assets	Consolidated balance sheet of the Group as at 31 December 2019 HK$’000 (Note 1) 1,004,676 3,250,502 37,304 244,797 3,302 549,957 5,090,538 10,982,091 2,749 18,242 344,136 1,836 10,386 – 24,049 274,003 895,094 510,151 13,062,737 18,153,275	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 2(a)) (Note 2(b)) (Note 2(c)) (Note 2(d)) (4,429) 48 (1,237,180) 157,876 (83,473) (698) (9,415) 365 (20) 20 (4,435) (5,574) 91 1,759,764	Unaudited pro forma consolidated balance sheet of the Remaining Group as at 31 December 2019 HK$’000 1,000,295 3,250,502 37,304 244,797 3,302 549,957
			5,086,157
			9,819,314 2,051 18,242 335,086 1,836 10,386 – 24,049 269,568 895,094 2,264,432
			13,640,058
			18,726,215

IV – 5

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (Continued)

EQUITY Equity attributable to owners of the Company Share capital Reserves Accumulated losses Non-controlling interests Total equity LIABILITIES Non-current liabilities Borrowings and loans Lease liabilities Deferred income tax liabilities Other payables Total non-current liabilities Current liabilities Trade and other payables Contract liabilities Amounts due to minority owners of subsidiaries Amounts due to related parties Borrowings and loans Lease liabilities Tax payables Total current liabilities Total liabilities Total equity and liabilities	Consolidated balance sheet of the Group as at 31 December 2019 HK$’000 (Note 1) 297,587 2,722,719 (1,410,893) 1,609,413 61,143 1,670,556 3,005,212 76,244 708,807 5,855 3,796,178 2,670,050 4,665,769 112,857 – 4,909,250 36,066 292,549 12,686,541 16,482,719 18,153,275	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 2(a)) (Note 2(b)) (Note 2(c)) (Note 2(d)) (82,843) 809,117 (3,065) (59,124) 1,887 (131,842) (63,919) 2,063 61,856 (931,915) 11,410 920,505 38,810	Unaudited pro forma consolidated balance sheet of the Remaining Group as at 31 December 2019 HK$’000 297,587 2,639,876 (601,776)
			2,335,687 61,143
			2,396,830
			3,005,212 76,244 705,802 5,855
			3,793,113
			2,612,813 4,533,927 112,857 – 4,909,250 36,066 331,359
			12,536,272
			16,329,385
			18,726,215

IV – 6

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

Revenue Cost of sales Gross profit Other income and gains/(losses) – net Net impairment losses on financial assets Selling and marketing expenses Administrative expenses Change in fair value of investment properties Share of results of an associate Finance costs – net Loss before income tax Income tax credit/(expense) Loss for the year Loss for the year attributable to: – Owners of the Company – Non-controlling interests Other comprehensive loss: Items that may be reclassified to profit or loss: Exchange differences arising on translation of foreign operations Release of exchange reserve on disposal of subsidiaries Other comprehensive loss from the year, net of tax	Consolidated income statement and statement of comprehensive income of the Group for the year ended 31 December 2019 HK$’000 (Note 1) 1,348,592 (1,030,595) 317,997 18,213 (102,669) (137,763) (375,339) (12,560) (18,916) (771,034) (1,082,071) 20,673 (1,061,398) (1,058,026) (3,372) (1,061,398) (56,289) – (56,289)	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 3(a)) (Note 3(b)) (Note 3(c)) (Note 3(d)) (36,998) 37,491 600 (395) 1 870,581 1,578 (18) 7,743 (4,155) 1,212 (150) (40,814) 9,379 (2,920) 450 829,767 1,252 (1,252) 1,409 (2,624) (84,037)	Unaudited pro forma consolidated income statement and statement of comprehensive income of the Remaining Group for the year ended 31 December 2019 HK$’000 1,311,594 (992,504)
			319,090 888,400 (102,669) (136,203) (371,751) (12,560) (18,916) (771,034)
			(205,643) (19,079) (224,722) (221,350) (3,372)
			(224,722) (57,504) (84,037)
			(141,541)

IV – 7

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME (Continued)

Total comprehensive loss for the year Total comprehensive loss for the year attributable to: – Owners of the Company – Non-controlling interests Total comprehensive loss for the year	Consolidated income statement and statement of comprehensive income of the Group for the year ended 31 December 2019 HK$’000 (Note 1) (1,117,687) (1,104,444) (13,243) (1,117,687)	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 3(a)) (Note 3(b)) (Note 3(c)) (Note 3(d)) 9,573 (4,329) 450 745,730 2,467 (2,467)	Unaudited pro forma consolidated income statement and statement of comprehensive income of the Remaining Group for the year ended 31 December 2019 HK$’000 (366,263)
			(353,020) (13,243)
			(366,263)

IV – 8

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED CASH FLOW STATEMENT

Cash flows from operating activities Cash generated from operations Interest received Interest paid Income tax paid Net cash inflow from operating activities Investing activities Payment to the Disposal Group Purchases of property, plant and equipment Additions to investment properties Purchases of financial assets at fair value through profit and loss Proceeds from disposal of property, plant and equipment Dividends received from financial assets at fair value through other comprehensive income Net proceeds on disposal of financial assets at fair value through profit and loss Net proceeds from disposals of subsidiaries Net cash (outflow)/inflow from investing activities	Consolidated cash flow statement of the Group for the year ended 31 December 2019 HK$’000 (Note 1) 1,035,083 4,938 (765,928) (207,251) 66,842 – (3,713) (7,867) (16,193) 4,872 3,403 5,117 – (14,381)	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 3(a)) (Note 3(b)) (Note 3(e)) (Note 3(d)) 17,256 (4,553) (45) 1 62 (10,626) 13 1,791,861	Unaudited pro forma consolidated cash flow statement of the Remaining Group for the year ended 31 December 2019 HK$’000 1,047,786 4,894 (765,928) (207,189)
			79,563
			(10,626) (3,700) (7,867) (16,193) 4,872 3,403 5,117 1,791,861
			1,766,867

IV – 9

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED CASH FLOW STATEMENT

(Continued)

Financing activities Increase in amounts due to minority owners of subsidiaries Proceeds from borrowings and loans Repayment of borrowings and loans Increase in pledged bank deposits Principal elements of lease payments Increase in amounts due to related parties and a minority shareholder Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes Cash and cash equivalents at end of year	Consolidated cash flow statement of the Group for the year ended 31 December 2019 HK$’000 (Note 1) 2,269 3,083,096 (3,056,860) (357,363) (40,172) – (369,570) (317,109) 843,049 (15,789) 510,151	Pro forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 (Note 3(a)) (Note 3(b)) (Note 3(e)) (Note 3(d)) (15,152) 4,526 10,626 2,134 (26) 1,791,861 (7,877) 119 169 (2)	Unaudited pro forma consolidated cash flow statement of the Remaining Group for the year ended 31 December 2019 HK$’000 2,269 3,083,096 (3,056,860) (357,363) (40,172) –
			(369,570)
			1,476,860 835,291 (15,622)
			2,296,529

IV – 10

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The amounts are extracted from the consolidated balance sheet as at 31 December 2019, the consolidated income statement, consolidated statement of comprehensive income and the consolidated cash flow statement of the Group for the year ended 31 December 2019 as set out in the published annual results announcement and the supplemental announcement in relation to the annual results announcement of the Group for the year ended 31 December 2019.
The following pro forma adjustments have been made to the unaudited pro forma consolidated balance sheet, assuming the Proposed Disposal had taken place on 31 December 2019:
(a) The adjustments represent the de-recognition of assets and liabilities of the Haimen Group as at 31 December 2019, assuming the Proposed Disposal had taken place on 31 December 2019. The assets and liabilities of the Haimen Group are extracted from the unaudited consolidated balance sheet of the Haimen Group as at 31 December 2019.
(b) The adjustments represent the add-back of assets and liabilities of the Excluded Company as at 31 December 2019 which are not included in the Proposed Disposal, assuming the Proposed Disposal had taken place on 31 December 2019. The assets and liabilities of the Excluded Company are extracted from the unaudited balance sheet of the Excluded Company as at 31 December 2019.
(c) The amounts represent the impact of the following consolidation adjustments which were previously recognised by the Group at consolidation level and should be reflected as pro forma adjustments for the purpose of the Proposed Disposal:
- (i) the capitalisation of Group’s general borrowing costs on the qualifying assets of the Disposal Company (i.e. properties under development and completed properties held-for-sale) at the Group consolidation level; and
- (ii) the purchase price allocation adjustments in increasing the carrying amounts of the qualifying assets of the Disposal Company (i.e. properties under development and completed properties held-for-sale) as arised from the Group’s acquisition of the controlling interests in the Disposal Company in 2005, net of the associated deferred income tax liabilities.

IV – 11

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

(d) The adjustments represent the estimated gain and estimated net cash inflow from the Proposed Disposal assuming the Proposed Disposal had taken place on 31 December 2019 and are calculated as follows:

Consideration
Note (i)
Add: Release of exchange reserve
Less: Net assets of the Disposal Group as at
31 December 2019
Note (ii)
Amount due to the Remaining Group
Note (vii)
Estimated transaction costs attributable to
the Proposed Disposal
Note (viii)
Estimated stamp duty in relation to the
Proposed Disposal
Note (ix)
Estimated income tax in relation to
the gain on the Proposed Disposal
Note (x)
Estimated net gain on the Proposed Disposal
Consideration received in cash
Note (i)
Estimated transaction costs attributable to
the Proposed Disposal paid in cash
Note (viii)
Estimated stamp duty in relation to
the Proposed Disposal paid in cash
Note (ix)
Estimated net cash inflow from
the Proposed Disposal

HK$’000
1,770,582
82,843
(74,175)
(920,505)
(9,933)
(885)
(38,810)
809,117
1,770,582
(9,933)
(885)
1,759,764

Notes:

(i) The minimum bidding price for the Proposed Disposal is RMB1,582.9 million (equivalent to approximately HK$1,770.6 million as at 31 December 2019) (the ‘‘Consideration’’).

IV – 12

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(ii) Net assets of the Disposal Group as at 31 December 2019 is determined as follows:

Carrying amount of the net assets of the Haimen Group as at 31 December 2019 Note (iii) Less: Net assets of the Excluded Company as at 31 December 2019 Note (iv) Add: Amount due to the minority shareholder of the Excluded Company Note (v) Capitalised borrowing costs as allocated to the Disposal Group at the Group consolidation level Note 2(c)(i) Purchase price allocation adjustments on business combinations, net of the associated deferred income tax impact Note 2(c)(ii) Net assets of the Disposal Group as at 31 December 2019	HK$’000 74,951 (143,040) 61,856 71,215 9,193
	74,175

Carrying amount of the net assets of
the Haimen Group as at 31 December 2019
Note (iii)
Less: Net assets of the Excluded Company
as at 31 December 2019
Note (iv)
Add: Amount due to the minority shareholder of
the Excluded Company
Note (v)
Capitalised borrowing costs as allocated to
the Disposal Group at the Group
consolidation level
Note 2(c)(i)
Purchase price allocation adjustments on
business combinations, net of the associated
deferred income tax impact
Note 2(c)(ii)
Net assets of the Disposal Group as at 31 December
2019

HK$’000
74,951
(143,040)
61,856
71,215
9,193

74,175

(iii) The amount represents the carrying amount of net assets of the Haimen Group as at 31 December 2019, which is extracted from the unaudited consolidated balance sheet of the Haimen Group as at 31 December 2019.
(iv) The amount represents the carrying amount of net assets of the Excluded Company as at 31 December 2019, which is extracted from the unaudited balance sheet of the Excluded Company as at 31 December 2019.
(v) The amount represents the balance of amounts due to the minority shareholder of the Excluded Company as included in the liabilities of the Haimen Group as at 31 December 2019, which will not be included in the Proposed Disposal.
(vi) Assume that the Company completed the transfer out of the Excluded Company through disposing the equity interest of the Excluded Company owned by the Disposal Company to another PRC incorporated subsidiary within the Remaining Group at Nil cost (the ‘‘Transfer’’) prior to the Proposed Disposal. Given the Disposal Company has sufficient available unrecognised tax losses brought forward to offset any taxable profit arising from the Transfer, no additional tax cost has been reflected as a pro forma adjustment for such intra-group transfer of the Excluded Company within the Group.
(vii) The amount due to the Remaining Group as recognised in the books of the Disposal Group as at 31 December 2019 is unsecured, interest-free and has no fixed term of repayment. The amount will become an amount due to the new owner of the Disposal Group upon the completion of the Proposal Disposal and hence have to be considered in calculating the estimated net gain on the Proposed Disposal.

IV – 13

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

  - (viii) The estimated transaction costs attributable to the Proposed Disposal represent the costs and expenses directly incurred for the Proposed Disposal, which will be borne by the Group and are assumed to be settled in cash.

  - (ix) The estimated stamp duty in relation to the Proposed Disposal represents the PRC stamp tax duty, which is calculated by applying the tax rate of 0.05% to the Consideration.

  - (x) Estimated income tax in relation to the gain on the Proposed Disposal represents the PRC enterprise income tax as calculated based on a tax rate of 25% (applicable to the PRC incorporated shareholder of the Disposal Company) and the withholding tax as calculated based on a tax rate of 10% (applicable to the foreign incorporated shareholder of the Disposal Company) on the estimated taxable disposal gain attributable to the respective shareholders of the Disposal Company arising from the disposal of their equity interests in the Disposal Company.

(e) Apart from notes above, no other adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 31 December 2019 for the purpose of preparation of the unaudited pro forma consolidated balance sheet of the Remaining Group.
(f) For the purpose of presentation of the unaudited pro forma consolidated balance sheet, Renminbi is translated into Hong Kong dollars at the approximate exchange rate of RMB1 to HK$ 1.1186 on 31 December 2019.
The following pro forma adjustments have been made to the unaudited pro forma consolidated income statement and statement of comprehensive income and the unaudited pro forma consolidated cash flow statement, assuming the Proposed Disposal had taken place on 1 January 2019:
(a) The adjustments represent the exclusion of the financial performance and cash flows of the Haimen Group for the year ended 31 December 2019, assuming the Proposed Disposal had taken place on 1 January 2019. The comprehensive income (including profit or loss) and cash flows of the Haimen Group are extracted from the unaudited consolidated income statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Haimen Group for the year ended 31 December 2019.
(b) The adjustments represent the add-back of financial performance and cash flows of the Excluded Company for the year ended 31 December 2019 which are not included in the Proposed Disposal, assuming the Proposed Disposal had taken place on 1 January 2019. The comprehensive income (including profit or loss) and cash flows of the Excluded Company are extracted from the unaudited income statement, statement of comprehensive income and cash flow statement of the Excluded Company for the year ended 31 December 2019.

IV – 14

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

(c) The amount represents related impact of the purchase price allocation adjustments (together with the related impact on deferred income tax liabilities) as mentioned in (Note 2(c)(ii)) for those properties as sold by the Disposal Group during the year ended 31 December 2019.
(d) The adjustments represent the estimated gain and estimated net cash inflow from the Proposed Disposal assuming the Propsed Disposal had taken place on 1 January 2019 and is calculated as follows:

Consideration
Note (i)
Add: Release of exchange reserve
Less: Net assets of the Disposal Group as at
1 January 2019
Note (ii)
Amount due to the Remaining Group
Note (vii)
Estimated transaction costs attributable
to the Proposed Disposal
Note 2(d)(viii)
Estimated stamp duty in relation to
the Proposed Disposal
Note 2(d)(ix)
Estimated income tax in relation to
the gain on the Proposed Disposal
Note 2(d)(x)
Estimated net gain on the Proposed Disposal
Consideration received in cash
Note (i)
Estimated transaction costs attributable to
the Proposed Disposal paid in cash
Note 2(d)(viii)
Estimated stamp duty in relation to
the Proposed Disposal paid in cash
Note 2(d)(ix)
Estimated cash inflow from
the Proposed Disposal

HK$’000
1,802,847
84,037
(82,294)
(923,023)
(10,085)
(901)
(40,814)
829,767
1,802,847
(10,085)
(901)
1,791,861

Notes:

(i) The minimum bidding price for the Proposed Disposal is RMB1,582.9 million (equivalent to approximately HK$1,802.8 million as at 1 January 2019).

IV – 15

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(ii) Net assets of the Disposal Group as at 1 January 2019 is determined as follows:

Carrying amount of net assets of the Haimen Group as at 1 January 2019 Note (iii) Less: Net assets of the Excluded Company as at 1 January 2019 Note (iv) Add: Amount due to the minority shareholder of the Excluded Company Note (v) Capitalised borrowing costs as allocated to the Disposal Group at the Group consolidation level Note 2(c)(i) Purchase price allocation adjustments on business combinations, net of the associated deferred income tax impact Note 2(c)(ii) Net assets of the Disposal Group as at 1 January 2019	HK$’000 86,991 (149,836) 62,984 72,512 9,643
	82,294

Carrying amount of net assets of the Haimen Group as at
1 January 2019
Note (iii)
Less: Net assets of the Excluded Company
as at 1 January 2019
Note (iv)
Add: Amount due to the minority shareholder of the
Excluded Company
Note (v)
Capitalised borrowing costs as allocated to the
Disposal Group at the Group consolidation level
Note 2(c)(i)
Purchase price allocation adjustments on business
combinations, net of the associated deferred
income tax impact
Note 2(c)(ii)
Net assets of the Disposal Group as at 1 January 2019

HK$’000
86,991
(149,836)
62,984
72,512
9,643

82,294

(iii) The amount represents the carrying amount of net assets of the Haimen Group as at 1 January 2019, which is extracted from the unaudited consolidated balance sheet of the Haimen Group as at 1 January 2019.
(iv) The amount represents the carrying amount of net assets of the Excluded Company as at 1 January 2019, which is extracted from the unaudited balance sheet of the Excluded Company as at 1 January 2019.
(v) The amount represents the balance of amounts due to the minority shareholder of the Excluded Company as included in the liabilities of the Haimen Group as at 1 January 2019, which will not be included in the Proposed Disposal.
(vi) Assume that the Company completed the Transfer as mentioned in Note 2(d)(vi) prior to the Proposed Disposal. Given the Disposal Company has sufficient available unrecognised tax losses brought forward to offset any taxable profit arising from the Transfer, no additional tax cost has been reflected as a pro forma adjustment for such intra-group transfer of the Excluded Company within the Group.
(vii) The amount due to the Remaining Group as recognised in the books of the Disposal Group as at 1 January 2019 is unsecured, interest-free and has no fixed term of repayment. The amount will become an amount due to the new owner of the Disposal Group upon the completion of the Proposal Disposal and hence have to be considered in calculating the estimated net gain on the Proposed Disposal.
(e) The adjustments represent balances need to be eliminated upon the consolidation of the Remaining Group or to be reclassified to illustrate the Remaining Group’s net payment to the Disposal Group during the year ended 31 December 2019.

IV – 16

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

(f) Apart from notes above, no other adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 1 January 2019 for the purpose of preparation of the unaudited pro forma consolidated income statement and statement of comprehensive income and the unaudited pro forma consolidated cash flow statement of the Remaining Group.
(g) The above adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated income statement and statement of comprehensive income and unaudited pro forma consolidated cash flow statement of the Remaining Group.
(h) For the purpose of presentation of the unaudited pro forma consolidated income statement and statement of comprehensive income and the unaudited pro forma consolidated cash flow statement, Renminbi is translated into Hong Kong dollars at the approximate exchange rate of RMB1 to HK$1.1390 on 1 January 2019.
Since the net assets value of the Disposal Group at the transaction closing date (the ‘‘Closing’’) and the net assets of the Remaining Group prior to the Closing may be different from the amounts used in the Unaudited Pro Forma Financial Information of the Remaining Group, the final amounts of value of net assets of the Disposal Group, and the estimated gain on the Proposed Disposal may be different from the amounts presented above.

IV – 17

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

The following is the text of valuation report of the Properties received from Cushman & Wakefield Limited, an independent valuer, prepared for the purpose of incorporation in this circular.

==> picture [121 x 45] intentionally omitted <==

16/F Jardine House 1 Connaught Place Central Hong Kong

14 April 2020

The Board of Directors Shanghai Zendai Property Limited Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hongkong

Dear Sirs,

Re: The Properties comprise of Undeveloped Land Parcels, the Properties under Development and Properties for Sale, and the Industrial Land Parcels owned by Disposal Group located in Haimen Riverside New City District of Haimen city, the PRC, being in the south of Yangtze River, north of Haining Temple and east of the new administrative centre and central business district in Haimen city（中國海門市海門濱江新城區，即長江以南、海寧寺以北及海門市新行政中心及商業中心區以東海門集團擁有之物業，包括未開發地塊、在建工程、待售物業以及工業地塊）(the ‘‘Properties’’ – Details refers to Summary of Valuations)

Instructions, Purpose & Valuation Date

In accordance with the instructions from Shanghai Zendai Property Limited (the ‘‘Company’’) for us to value the Properties held by 海門証大濱江置業有限公司 (Haimen Zendai Binjiang Real Estate Co., Ltd.) (‘‘Disposal Company’’) and its subsidiaries (excluding the Excluded Company) (‘‘Disposal Group’’), indirect wholly-owned by the Company, in the People’s Republic of China (the ‘‘PRC’’), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values in existing state of the Properties as at 31 January 2020 (the ‘‘Valuation Date’’).

V – 1

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

Definition of Market Value

Our valuations of each of the Properties represent its Market Value which in accordance with HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors (‘‘HKIS’’) is defined as ‘‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and ’’ without compulsion .

Valuation Basis & Assumptions

Our valuations exclude an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of value available to a specific owner or purchaser.

In the course of our valuations of the Properties held by Disposal Group, with reference to the PRC legal opinion dated 14 April 2020 of the Company’s legal adviser, Zhong Lun Law Firm （中倫律師事務所）, we have prepared our valuations on the basis that transferable land use rights in respect of the Properties for its specific term at nominal annual land use fee has been granted and that any premium payable has already been fully paid. We have relied on the information and advice given by the Company and the PRC legal opinion, regarding the titles to the Properties and the interests in the Properties. In valuing the Properties, we have prepared our valuation on the basis that the owners have enforceable titles to the Properties and have free and uninterrupted rights to use, occupy or assign the Properties for the whole of the unexpired terms as granted.

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

We have valued the whole interest of the Properties.

V – 2

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

Method of Valuation

In valuing the Properties in Group I, which are held by Disposal Group for sale in the PRC, we have adopted Direct Comparison Approach by making reference to comparable sales evidences as available in the relevant market; or where appropriate, by Investment Approach by capitalisation of the rental derived from the existing tenancies with due allowance for reversionary rental potential of the Properties; or where appropriate, by Depreciated Replacement Cost Approach which requires valuation of the market value of the land in existing use and an estimate of the new replacement cost of the buildings and structures, from which deductions are made to allow for the age, condition and functional obsolescence.

In valuing the Properties in Group II, which are held by Disposal Group for development in the PRC, we have adopted Direct Comparison Approach by making reference to comparable sales evidences as available in the relevant market; or where appropriate, we have also taken into account the expended construction costs as provided to us.

In valuing the Properties, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and HKIS Valuation Standards 2017.

Source of Information

We have been provided by the Company with extracts of documents in relation to the title to the Properties. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us. In the course of our valuations, we have relied to a considerable extent on the information given by the Company in respect of the Properties in the PRC and have accepted advice on such matters as planning approvals or statutory notices, easements, tenure, identification of the Properties, tenancy details, development scheme, construction cost, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation report are based on the information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation. We were also advised by the Company that no material facts have been omitted from the information provided.

We would point out that the copies of documents provided to us are mainly compiled in Chinese characters and the transliteration into English represents our understanding of the contents. We would therefore advise the Company to make reference to the original Chinese edition of the documents and consult your legal adviser regarding the legality and interpretation of these documents.

V – 3

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

Title Investigation

We have been provided with copies of documents in relation to the current title to the Properties. However, we have not been able to conduct search to verify the ownership of the Properties or to ascertain any amendment which may not appear on the copies handed to us. We are also unable to ascertain the title of the Properties in the PRC and we have therefore relied on the advice given by the PRC Legal adviser and the Company.

Site Inspection

Our Shanghai Office valuer, Simon Sun, has inspected the exterior and, wherever possible, the interior of the Properties in November 2019. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not able to report whether the Properties are free of rot, infestation or any other structural defects. No test was carried out on any of the services. Moreover, we have not carried out investigation on site to determine the suitability of the soil conditions and the services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary costs or delays will be incurred during the construction period.

Unless otherwise stated, we have not carried out on-site measurements to verify the site and floor areas of the Properties and we have assumed that the areas shown on the copies of the documents handed to us are correct.

Currency

Unless otherwise stated, all monetary amounts indicated herein our valuation are in Renminbi (RMB) which is the official currency of the PRC.

We attach herewith a summary of valuations and valuation report.

Yours faithfully,

For and on behalf of

Cushman & Wakefield Limited

Philip C Y Tsang

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser

MSc, MHKIS

Director

Note: Mr. Philip C Y Tsang is Registered Professional Surveyor who has over 27 years’ experience in the valuation of properties in the PRC.

V – 4

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

SUMMARY OF VALUATIONS

					Market Value in
				Disposal	existing state as at
			Market Value in	Group’s	31 January 2020
			existing state as at	attributable	attributable to
Property			31 January 2020	interest	Disposal Group
Group I – Properties held by Disposal Group for sale in the PRC
1.	The Phase I and II of the Thumb Plaza,		RMB147,000,000	100%	RMB147,000,000
	West of Dongjiang Road,
	North of Xianggang Road,
	Haimen, Jiangsu Province,
	the PRC
2.	No. 188, 190 and No. 192 of	Spain Commercial	RMB5,500,000	100%	RMB5,500,000
	Street,
	Dongjiang Road,
	Haimen, Jiangsu Province,
	the PRC
3.	Mantingfang Villa,		RMB141,830,000	100%	RMB141,830,000
	West of Huangpujiang Road,
	South of Xianggang Road,
	Haimen, Jiangsu Province,
	the PRC
4.	The Phase I of Qinghuayuan		RMB56,950,000	100%	RMB56,950,000
	East of Sansha Road, South of Shawei Road,
	West of Sisha Road, North of Xianggang Road,
	Haimen, Jiangsu Province,
	the PRC
5.	Section One of Phase II of Shuiqingmuhua,		RMB15,230,000	100%	RMB15,230,000
	East of Sansha Road, North of Shawei Road,
	West of Sisha Road, South of Hangzhou Road,
	the PRC
6.	Hongri Technology Park, North of Tongda Road,		RMB45,550,000	100%	RMB45,550,000
	East of Hengshan Road,
	Haimen city, Jiangsu Province,
	the PRC
		Sub-total of Group I:	RMB412,060,000		RMB412,060,000

V – 5

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

SUMMARY OF VALUATIONS

Property
Market Value in
existing state as at
31 January 2020
Disposal
Group’s
attributable
interest
Group II – Properties held by Disposal Group for development in PRC
7.
Proposed development of Phase II of Dongzhoufu,
West of Dongjiang Road,
South of Xianggang Road,
Haimen, Jiangsu Province,
the PRC
RMB354,000,000
100%
8.
Proposed development of Section Two of Phase II
of Shuiqingmuhua,
East of Dongjiang Road, North of Shawei Road,
Haimen, Jiangsu Province,
the PRC
RMB490,000,000
100%
9.
11 parcels of land of the Properties,
Haimen, Jiangsu Province,
the PRC
RMB1,822,990,000
100%
Sub-total of Group II:
RMB2,666,990,000
Grand Total of Group I & II:
RMB3,079,050,000

Market Value in
existing state as at
31 January 2020
attributable to
Disposal Group
RMB354,000,000
RMB490,000,000
RMB1,822,990,000
RMB2,666,990,000
RMB3,079,050,000

V – 6

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

Group I – Properties held by Disposal Group for sale in the PRC

	Property	Description and tenure
1.	The Phase I and II of the	The Property known as ‘‘Thumb Plaza’’ is divided
	Thumb Plaza,	into two phases, erected on a parcel of land with
	West of Dongjiang Road,	a total site area of approximately 18,919.00 square
	North of Xianggang Road,	metres.
	Haimen city, Jiangsu
	Province,	The Property was completed in the year of 2013.
	the PRC
		As advised by the Company, the gross floor area
		of Phase I of the Property is approximately
		19,109.25 square metres, which are listed as
		follows:–
		Gross
		Floor Area
		Portion (square metres)
		Retail 14,275.47
		Underground and
		ancillary facility 4,833.78
		Total: 19,109.25

Market Value in existing state as at 31 January 2020

Particulars of occupancy

According to the RMB147,000,000 information provided to us, portion of the (RENMIBI ONE Property, with a total HUNDRED gross floor area of FORTY SEVEN 3,354.01 square metres, MILLION) was leased to 6 tenants at a total average monthly rental of RMB10,598 with the latest expiry date in 2024.

The remaining portion of the Property was vacant.

As advised by the Company, the gross floor area of Phase II of the Property is approximately 22,613.57 square metres, which are listed as follows:–

Portion Retail Underground and ancillary facility Total:	Gross Floor Area (square metres) 15,937.76 6,675.81
	22,613.57

The Property is located at west of Dongjiang Road, north of Xianggang Road, Haimen Riverside New City District, which is in suburban area of Haimen city. Developments nearby are mainly residential development. According to the Company, the Property is used for the commercial properties. There is no environmental issues and litigation dispute.

The Property is held with the land use rights for commercial use expiring on 5 December 2046.

V – 7

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of the Property has been vested in Disposal Company with details as follows:–

			Expiry date of land	Site area
Certificate No.	Date of issue	Use	use term	(square metres)
(2007) 420526	5 December 2007	Commercial	5 December 2046	18,919.00

(2) According to Planning Permit for Construction Use of Land No. 320684201210026 dated on 13 June 2012, the construction project on the land with a total site area of 18,919.00 square metres is in compliance with the urban planning requirements and has been approved.
(3) According to Planning Permit for Construction Works No. 320684201210048 dated on 31 July 2012, the construction works of the Property with a total proposed gross floor area of 45,692.1 square metres are in compliance with the urban planning requirements and have been approved.
(4) According to 2 Permits for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 45,692.14 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:–

Certificate No. Project Name Issue Date 320684020120068 Phase I of Zendai Thumb Plaza 13 September 2012 320684020130032 Phase II of Zendai Thumb Plaza 24 June 2013 Total:	Gross Floor Area (square metres) 21,515.92 24,176.22 45,692.14

(5) According to Pre-sale Permit No. 2012032 dated on 7 November 2012, No.1 Building of Phase I of the Property with a total gross floor area of 4,216.17 square metres is permitted for pre-sale.
(6) According to Construction Works Completion Examination Certificate dated 23 July 2013, the construction works of Phase I of the Property have been examined and such examination has been recorded.
(7) According to 2 Survey Reports, the constituent gross floor area of the construction works are summarised as follows:–

Location/Phase Building Use Phase I Commercial Phase II Commercial Total	Gross Floor Area (square metres) 19,109.25 22,613.57 41,722.82

V – 8

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(8) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(9) According to PRC legal opinion:-
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) Disposal Company has obtained the Construction Works Examination Certificate for Phase I. Disposal Company has the legal right to apply the Real Estate Ownership Certificate for Phase I;
(iv) Disposal Company has the legal right to apply the Real Estate Ownership Certificate for Phase II upon the completion date stated in No.115 Contract for Grant of Land Use Rights extended and the Construction Works Examination Certificate obtained; and
(v) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property.
(10) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Real Estate Ownership Certificate	No (under application)
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works	Yes
Permit for Commencement of Construction Work	Yes
Construction Works Completion Examination Certificate	Yes (Phase I Only)
Pre-sale Permit	Yes
Survey Report	Yes
Business Licence	Yes

V – 9

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

				Market Value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	31 January 2020
2.	No. 188, 190 and No. 192 of	The Property known as ‘‘Spain Commercial	As at the Valuation	RMB5,500,000
	Spain Commercial Street,	Street’’ is divided into two buildings, erected on a	Date, the Property was
	Dongjiang Road,	parcel of land with a total site area of	vacant.	(RENMINBI FIVE
	Haimen city, Jiangsu	approximately 5,319.00 square metres.		MILLION FIVE
	Province,			HUNDRED
	the PRC	The Property was completed in the year of 2012.		THOUSAND)
		As advised by the Company, the gross floor area
		of the Property is approximately 1,058.02 square
		metres, which are listed as follows:–

Units No. 188 & 190 Dongjiang Road No. 192 Dongjiang Road Total:	Gross Floor Area (square metres) 434.27 623.75
	1,058.02

The Property is located at east of Dongjiang Road, south of Xianggang Road, Haimen Riverside New City District, which is in suburban area of Haimen city. Developments nearby are mainly residential development. According to the Company, the Property is used for the commercial properties. There is no environmental issues and litigation dispute.

The Property is held with the land use rights for commercial use expiring on 17 March 2044.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of the Property has been vested in Disposal Company with details as follows:–

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2005) 420003	21 April 2005	Residential	17 March 2074	324,172.00

As advised by the Company, the portion of land with a total area of 5,319 square metres for commercial use expiring on 17 March 2044 has been entitled on aforesaid Certificate.

V – 10

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(2) According to Planning Permit for Construction Use of Land No. 3206842010010034 dated on 12 April 2010, the construction project on the land with a total site area of 5,319.00 square metres is in compliance with the urban planning requirements and has been approved.

As advised by the Company, the Property comprises a portion of the site area as stated in the Planning Permit for Construction Use of Land mentioned above.

(3) According to 2 Planning Permits for Construction Works, the construction works of the Property with a permitted gross floor area of 6,782.91 square metres are in compliance with the construction works requirements and have been approved with details as follows:–

Permit No. Project Name Issue Date 320684201110043 Changsha Road Commercial street 8 June 2011 320684201310062 Changsha Road Commercial street No.2 Building 8 November 2013 Total	Gross Floor Area (square metres) 7,046.63 (GFA of No.1 Building is 3,172.68 square metres) 3,610.23 6,782.91

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Planning Permits for Construction Works mentioned above.

(4) According to 2 Permits for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 6,782.91 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:–

Permit No. Project Name Issue Date 320684020110016 Changsha Road Commercial Street No.1 Building 31 October 2011 320684020130075 Changsha Road Commercial Street No.2 Building 12 November 2013 Total	Gross Floor Area (square metres) 3,172.68 3,610.23 6,782.91

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Permits for Commencement of Construction Works mentioned above.

(5) According to Pre-sale Permit No. 2011041 dated on 4 November 2011, No.1 Building of Changsha Road Commercial Street with a total gross floor area of 3,172.68 square metres is permitted for pre-sale.

V – 11

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(6) According to 2 Survey Reports, the constituent gross floor area of the construction works are summarised as follows:–

Location/Phase Building Use Changsha Road Commercial Street No.1 Building Commercial Changsha Road Commercial Street No.2 Building Commercial Total	Gross Floor Area (square metres) 3,142.59 3,341.96 6,484.55

As advised by the Company, the Property comprises a portion of the site area as stated in the Survey Reports mentioned above.

(7) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(8) According to PRC legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) Disposal Company has the legal right to apply the Real Estate Ownership Certificate upon the completion date stated in No.22 Contract for Grant of Land Use Rights extended and the Construction Works Examination Certificate obtained; and
(iv) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property.
(9) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Real Estate Ownership Certificate	No (under application)
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works	Yes
Permit for Commencement of Construction Works	Yes
Pre-sale Permit	Yes
Survey Report	Yes
Business Licence	Yes

V – 12

APPENDIX V

VALUATION REPORT OF THE PROPERTIES

VALUATION REPORT

				Market Value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	31 January 2020
3.	Mantingfang Villa,	The Property known as ‘‘Mantingfang Villa’’,	As at the Valuation Date,	RMB141,830,000
	West of Huangpujiang Road,	erected on a parcel of land with a total site area	the Property was unsold and
	South of Xianggang Road,	of approximately 324,172.00 square metres.	pre-sold.	(RENMINBI ONE
	Haimen city, Jiangsu			HUNDRED FORTY
	Province,	The Property was completed in the years of 2008		ONE MILLION
	the PRC	and 2011		EIGHT HUNDRED
				THIRTY THOUSAND)
		As advised by the Company, the gross floor area
		of the unsold portion of the Property is
		approximately 13,416.54 square metres, and the
		gross floor area of the pre-sold portion of the
		Property is 3,725.74 square metres at a total pre-
		sold consideration of RMB21,819,322. In the
		course of our valuation, we have taken into
		account the said pre-sold consideration.
		The Property is located at west of Huangpujiang
		Road, south of Xianggang Road, Haimen
		Riverside New City District, which is in suburban
		area of Haimen city. Developments nearby are
		mainly residential development. According to the
		Company, the Property is used for the residential
		properties. There is no environmental issues and
		litigation dispute.

The Property is held with the land use rights for residential use expiring on 17 March 2074.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of the Property has been vested in Disposal Company with details as follows:–

Expiry date of Site area Certificate No. Date of issue Use land use term (square metres) (2005) 420003 21 April 2005 Residential 17 March 2074 324,172.00

V – 13

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

As advised by the Company, the Property comprises a portion of the site area as stated in the State-owned Land Use Rights Certificate mentioned above.

According to the 48 State-owned Land Use Rights Certificate, the land use rights of the part of the unsold portion of the Property has been vested in Disposal Company with details as follow:

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2013) 420352	24 April 2013	Residential	17 March 2074	282.01
(2013) 420325	24 April 2013	Residential	17 March 2074	186.77
(2013) 420358	24 April 2013	Residential	17 March 2074	42.65
(2013) 420361	24 April 2013	Residential	17 March 2074	37.93
(2013) 420359	24 April 2013	Residential	17 March 2074	42.67
(2013) 420364	24 April 2013	Residential	17 March 2074	38.16
(2013) 420363	24 April 2013	Residential	17 March 2074	41.54
(2013) 420365	24 April 2013	Residential	17 March 2074	41.54
(2013) 420368	24 April 2013	Residential	17 March 2074	40.16
(2013) 420403	24 April 2013	Residential	17 March 2074	35.71
(2013) 420366	24 April 2013	Residential	17 March 2074	38.88
(2013) 420367	24 April 2013	Residential	17 March 2074	40.17
(2013) 420370	24 April 2013	Residential	17 March 2074	40.17
(2013) 420376	24 April 2013	Residential	17 March 2074	38.18
(2013) 420373	24 April 2013	Residential	17 March 2074	41.56
(2013) 420387	24 April 2013	Residential	17 March 2074	39.73
(2013) 420389	24 April 2013	Residential	17 March 2074	35.76
(2013) 420386	24 April 2013	Residential	17 March 2074	39.73
(2013) 420388	24 April 2013	Residential	17 March 2074	39.25
(2013) 420275	24 April 2013	Residential	17 March 2074	39.25
(2013) 420384	24 April 2013	Residential	17 March 2074	39.25
(2013) 420382	24 April 2013	Residential	17 March 2074	39.25
(2013) 420385	24 April 2013	Residential	17 March 2074	39.74
(2013) 420383	24 April 2013	Residential	17 March 2074	39.74
(2013) 420381	24 April 2013	Residential	17 March 2074	44.8
(2013) 420394	24 April 2013	Residential	17 March 2074	43.56
(2013) 420395	24 April 2013	Residential	17 March 2074	43.57
(2013) 420398	24 April 2013	Residential	17 March 2074	42.18
(2013) 420399	24 April 2013	Residential	17 March 2074	42.18
(2013) 420392	24 April 2013	Residential	17 March 2074	43.58
(2013) 420400	24 April 2013	Residential	17 March 2074	42.18
(2013) 420401	24 April 2013	Residential	17 March 2074	42.18
(2013) 420396	24 April 2013	Residential	17 March 2074	43.58
(2013) 420397	24 April 2013	Residential	17 March 2074	43.58
(2013) 420304	23 April 2013	Residential	17 March 2074	43.99
(2013) 420311	23 April 2013	Residential	17 March 2074	43.99
(2013) 420276	23 April 2013	Residential	17 March 2074	42.59
(2013) 420277	23 April 2013	Residential	17 March 2074	42.60
(2013) 420307	23 April 2013	Residential	17 March 2074	42.59
(2013) 420308	23 April 2013	Residential	17 March 2074	42.59
(2013) 420305	23 April 2013	Residential	17 March 2074	44.01

V – 14

APPENDIX V

VALUATION REPORT OF THE PROPERTIES

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2013) 420306	23 April 2013	Residential	17 March 2074	44.01
(2013) 420309	23 April 2013	Residential	17 March 2074	48.92
(2013) 420322	23 April 2013	Residential	17 March 2074	38.03
(2013) 420316	23 April 2013	Residential	17 March 2074	42.76
(2013) 420323	23 April 2013	Residential	17 March 2074	41.40
(2013) 420321	23 April 2013	Residential	17 March 2074	42.78
(2013) 420313	23 April 2013	Residential	17 March 2074	41.40

As advised by the Company, the aforesaid State-owned Land Use Rights Certificates are the portion of the (2005) 420003 State-owned Land Use Rights Certificate.

(2) According to the 48 Real Estate Ownership Certificates, the real estate ownership of the part of the unsold portion of the Property has been vested in Disposal Company with details as follows:-

					Gross floor area
Certificate	No.	Date of issue	Use	Date of issue	(square metres)
131008922		Block 124 Unit 101	Residential	26 March 2013	388.12
131008866		Block 136 Unit 102	Residential	26 March 2013	290.9
131008846		Block 150 Unit 101	Residential	26 March 2013	208.18
131008864		Block 150 Unit 102	Residential	26 March 2013	185.14
131008822		Block 150 Unit 304	Residential	26 March 2013	208.26
131008865		Block 151 Unit 102	Residential	26 March 2013	185.14
131008834		Block 151 Unit 202	Residential	26 March 2013	201.56
131008812		Block 151 Unit 403	Residential	26 March 2013	201.56
131008849		Block 152 Unit 101	Residential	26 March 2013	208.18
131008863		Block 152 Unit 102	Residential	26 March 2013	185.14
131008835		Block 152 Unit 202	Residential	26 March 2013	201.56
131008809		Block 152 Unit 501	Residential	26 March 2013	208.26
131008810		Block 152 Unit 504	Residential	26 March 2013	208.26
131008862		Block 153 Unit 102	Residential	26 March 2013	185.14
131008837		Block 153 Unit 203	Residential	26 March 2013	201.56
131008853		Block 154 Unit 101	Residential	26 March 2013	206.18
131008861		Block 154 Unit 102	Residential	26 March 2013	185.58
131008848		Block 154 Unit 104	Residential	26 March 2013	206.18
131008840		Block 154 Unit 202	Residential	26 March 2013	203.68
131008841		Block 154 Unit 203	Residential	26 March 2013	203.68
131008814		Block 154 Unit 402	Residential	26 March 2013	203.68
131008815		Block 154 Unit 403	Residential	26 March 2013	203.68
131008801		Block 154 Unit 501	Residential	26 March 2013	206.26
131008802		Block 154 Unit 504	Residential	26 March 2013	206.26

V – 15

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

					Gross floor area
Certificate	No.	Date of issue	Use	Date of issue	(square metres)
131008788		Block 154 Unit 602	Residential	26 March 2013	232.5
131008854		Block 155 Unit 101	Residential	26 March 2013	216.44
131008855		Block 155 Unit 104	Residential	26 March 2013	216.44
131008838		Block 155 Unit 202	Residential	26 March 2013	209.56
131008839		Block 155 Unit 203	Residential	26 March 2013	209.56
131008828		Block 155 Unit 304	Residential	26 March 2013	216.53
131008816		Block 155 Unit 402	Residential	26 March 2013	209.56
131008817		Block 155 Unit 403	Residential	26 March 2013	209.56
131008803		Block 155 Unit 501	Residential	26 March 2013	216.53
131008804		Block 155 Unit 504	Residential	26 March 2013	216.53
131008856		Block 156 Unit 101	Residential	26 March 2013	216.44
131008857		Block 156 Unit 104	Residential	26 March 2013	216.44
131008842		Block 156 Unit 202	Residential	26 March 2013	209.56
131008843		Block 156 Unit 203	Residential	26 March 2013	209.56
131008818		Block 156 Unit 402	Residential	26 March 2013	209.56
131008819		Block 156 Unit 403	Residential	26 March 2013	209.56
131008805		Block 156 Unit 501	Residential	26 March 2013	216.53
131008806		Block 156 Unit 504	Residential	26 March 2013	216.53
131008792		Block 156 Unit 603	Residential	26 March 2013	240.66
131008860		Block 157 Unit 102	Residential	26 March 2013	185.14
131008859		Block 157 Unit 104	Residential	26 March 2013	208.18
131008845		Block 157 Unit 203	Residential	26 March 2013	201.56
131008831		Block 157 Unit 301	Residential	26 March 2013	208.26
131008821		Block 157 Unit 403	Residential	26 March 2013	201.56

As advised by the Company, the Real Estate Ownership Certificates mentioned above are the part of unsold portion of the Property.

(3) According to Planning Permit for Construction Use of Land No. 320684201010053 dated on 21 July 2010, the construction project on the land with a total site area of 112,190 square metres is in compliance with the urban planning requirements and has been approved.

According to Planning Permit for Construction Use of Land No. 2006083 dated on 10 October 2006, the construction project on the land with a total site area of 89,730 square metres is in compliance with the urban planning requirements and has been approved.

As advised by the Company, the Property comprises a portion of the site area as stated in the Planning Permits for Construction Works mentioned above.

V – 16

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(4) According to Planning Permit for Construction Works, the construction works of the Property with a permitted gross floor area of 92,584.57 square metres are in compliance with the construction works requirements and have been approved with details as follows:–

Permit No. Project Name Issue Date 320684201010069 Haimen Zendai Phase II of lot E-1 15 September 2010 Total	Gross Floor Area (square metres) 92,584.57 92,584.57

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Planning Permit for Construction Works mentioned above.

(5) According to Permit for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 92,584.57 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:–

Permit No. Project Name Issue Date 3206842010110500001A Haimen Zendai Phase II of lot E-1 5 November 2010 Total	Gross Floor Area (square metres) 92,584.57 92,584.57

According to Permit for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 29,219.39 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:-

Permit No. Project Name Issue Date 3206842007103000004A Zendai Garden Phase I of lot F-2 (Block 40-77) 18 August 2007 Total	Gross Floor Area (square metres) 29,219.39 29,219.39

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Permit for Commencement of Construction Works mentioned above.

(6) According to Pre-sale Permit No. 2011006, 2011010, and 2010039, the Phase II of E-1 site of the development with a total gross floor area of 91,980.00 square metres is permitted for pre-sale.

According to Pre-sale Permit No. 2007025, the Phase I of F-2 (Block 40-77) site of the development with a total gross floor area of 29,314.00 square metres is permitted for pre-sale.

As advised by the Company, the Property comprises portion of the gross floor area as stipulated in the aforesaid Pre-sale Permit.

V – 17

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(7) According to Construction Works Completion Examination Certificate dated 28 November 2011, the construction works of the Property with a total gross floor area of 92,426.03 square metres have been examined and such examination has been recorded.

According to Construction Works Completion Examination Certificate dated 10 November 2008, the construction works of the Property with a total gross floor area of 29,219.39 square metres have been examined and such examination has been recorded.

As advised by the Company, the Property comprises portion of the gross floor area as stipulated in the aforesaid Certificate.

(8) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(9) According to legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) Disposal Company has obtained the Construction Works Examination Certificate and Pre-sale Permit of the Property;
(iv) Disposal Company should follow the legal procedure to apply the Real Estate Ownership Certificates for the unsold portion of the Property, and as to the pre-sold portion of the Property, Disposal Company has an obligation to go through the registration formalities to transfer the real estate ownership to the purchasers; and
(v) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property (except for the land use rights of the properties which has been sold and been completed the ownership transfer registration).
(10) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate Yes Real Estate Ownership Certificate Yes (Partly) Planning Permit for Construction Use of Land Yes Planning Permit for Construction Works Yes Permit for Commencement of Construction Works Yes Pre-sale Permit Yes Construction Works Completion Examination Certificate Yes Business Licence Yes

V – 18

APPENDIX V

VALUATION REPORT OF THE PROPERTIES

VALUATION REPORT

				Market Value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	31 January 2020
4.	The Phase I of Qinghuayuan	The Property known as ‘‘Phase I of Qinghuayuan’’	As at the Valuation Date,	RMB56,950,000
	East of Sansha Road,	is erected on a parcel of land with a total site area	the Property was unsold and
	South of Shawei Road,	of approximately 42,070.00 square metres.	pre-sold.	(RENMINBI FIFTY
	West of Sisha Road,			SIX MILLION NINE
	North of Xianggang Road,	The Property was completed in the year of 2010		HUNDRED FIFTY
	Haimen city, Jiangsu	and 2011 respectively.		THOUSAND)
	Province,
	the PRC	As advised by the Company, the gross floor area
		of the unsold portion of the Property is
		approximately 4,898.98 square metres, and the
		gross floor area of the pre-sold portion of the
		Property is approximately 4,016.86 square metres
		at a total pre-sold consideration of
		RMB14,994,840. In the course of our valuation,
		we have taken into account the said pre-sold
		consideration.
		The Property is located at east of Sansha Road,
		south of Shawei Road, west of Sisha Road and
		north of Xianggang Road, Haimen Riverside New
		City District, which is in suburban area of Haimen
		city. Developments nearby are mainly residential
		development. According to the Company, the
		Property is used for the residential properties.
		There is no environmental issues and litigation
		dispute.
		The Property is held with the land use rights for
		residential use expiring on 5 December 2076.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of the Property has been vested in Disposal Company with details as follows:–

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2007) 420519	15 October 2007	Residential	5 December 2076	42,070.00

As advised by the Company, the Property comprises portion of the site area as stipulated in the aforesaid Certificate.

(2) According to Planning Permit for Construction Use of Land No. 320684200810049 dated on 8 July 2008, the construction project on the land with a total site area of 42,070 square metres is in compliance with the urban planning requirements and has been approved.

As advised by the Company, the Property comprises a portion of the site area as stated in the Planning Permits for Construction Works mentioned above.

V – 19

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(3) According to Planning Permit for Construction Works, the construction works of the Property with a permitted gross floor area of 65,373.71 square metres are in compliance with the construction works requirements and have been approved with details as follows:–

Permit No. Project Name Issue Date 320684200910017 Haimen Zendai lot D4 (1#-15#) 3 April 2009 Total	Gross Floor Area (square metres) 65,373.71 65,373.71

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Planning Permit for Construction Works mentioned above.

(4) According to Permit for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 65,373.71 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:–

Permit No. Project Name Issue Date 3206842009070700002A Haimen Zendai lot D4 (1#-15#) 7 July 2009 Total	Gross Floor Area (square metres) 65,373.71 65,373.71

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Permit for Commencement of Construction Works mentioned above.

(5) According to Pre-sale Permit No. 201101, 2009036, 2011012, 2010018 and 2010047, the D-4 site of the development with a total gross floor area of 56,433.28.00 square metres is permitted for pre-sale.

As advised by the Company, the Property comprises portion of the gross floor area as stipulated in the aforesaid Pre-sale Permit.

(6) According to 2 Construction Works Completion Examination Certificates dated on 31 December 2010 and 30 June 2011 respectively, the construction works of the Property with a total gross floor area of 64,372.38 square metres have been examined and such examination has been recorded.

As advised by the Company, the Property comprises portion of the gross floor area as stipulated in the aforesaid Certificate.

(7) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.

V – 20

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(8) According to legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) Disposal Company has obtained the Construction Works Examination Certificate and Pre-sale Permit of the Property;
(iv) Disposal Company should follow the legal procedure to apply the Real Estate Ownership Certificates for the unsold portion of the Property, and as to the pre-sold portion of the Property, Disposal Company has an obligation to go through the registration formalities to transfer the real estate ownership to the purchasers; and
(v) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property (except for the land use rights of the properties which has been sold and been completed the ownership transfer registration).
(9) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Real Estate Ownership Certificate	No (under application)
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works	Yes
Permit for Commencement of Construction Works	Yes
Pre-sale Permit	Yes
Construction Works Completion Examination Certificate	Yes
Business Licence	Yes

V – 21

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

				Market Value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	31 January 2020
5.	The Section One of Phase II	The Property known as ‘‘Section One of Phase II	As at the Valuation Date,	RMB15,230,000
	of Shuiqingmuhua,	of Shuiqingmuhua’’ is erected on a parcel of land	the Property was unsold and
	East of Sansha Road,	with a total site area of approximately 148,059.00	pre-sale.	(RENMINBI FIFTEEN
	South of Shawei Road,	square metres.		MILLION TWO
	West of Sisha Road,			HUNDRED THIRTY
	North of Xianggang Road,	As advised by the Company, the unsold gross		THOUSAND)
	Haimen, Jiangsu Province,	floor area of the Property is approximately
	the PRC	1,578.20 square metres, and the pre-sale gross
		floor area of the Property is approximately 434.14
		square metres at a total pre-sold consideration of
		RMB1,864,102. In the course of our valuation, we
		have taken into account the said pre-sold
		consideration.
		The Property was completed in the year of 2013
		and 2015 respectively.
		The Property is located at east of Sansha Road,
		south of Shawei Road, west of Sisha Road, north
		of Xianggang Road, Haimen Riverside New City
		District, which is in suburban area of Haimen city.
		Developments nearby are mainly residential
		development. According to the Company, the
		Property is used for the residential properties.
		There is no environmental issues and litigation
		dispute.

The Property is held with the land use rights for residential use expiring on 5 December 2076.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of Section Two of Shuiqingmuhua Phase II of the Property have been vested in Disposal Company with details as follows:–

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2007) 420518	15 October 2007	Residential	5 December 2076	148,059.00

As advised by the Company, the Property comprises portion of the site area as stipulated in the aforesaid Certificate.

(2) According to Planning Permit for Construction Use of Land No. 320684201110063 dated on 18 August 2011, the construction project on the land with a total site area of 148,059 square metres is in compliance with the urban planning requirements and has been approved.

As advised by the Company, the Property comprises a portion of the site area as stated in the Planning Permits for Construction Works mentioned above.

V – 22

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(3) According to Planning Permit for Construction Works, the construction works of the Property with a permitted gross floor area of 120,688.83 square metres are in compliance with the construction works requirements and have been approved with details as follows:–

Permit No. Project Name Issue Date 320684201110080 Section One of Phase II of Shuiqingmuhua (Lot D1) 30 September 2011 Total	Gross Floor Area (square metres) 120,688.83 120,688.83

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Planning Permit for Construction Works mentioned above.

(4) According to Permit for Commencement of Construction Works, the construction works of the Property with a total proposed gross floor area of 120,271.36 square metres are in compliance with the requirements for works commencement and have been permitted with details as follows:–

Permit No. Project Name Issue Date 320684200110019 Section One of Phase II of Shuiqingmuhua (Lot D1) 14 November 2011 Total	Gross Floor Area (square metres) 120,271.36 120,271.36

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Permit for Commencement of Construction Works mentioned above.

(5) According to Pre-sale Permit No. 2013042 and 2011042, the D-1 site of Phase II Shuimuqinghua with a total gross floor area of 81,756.87 square metres is permitted for pre-sale.

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Pre-sale Permit mentioned above.

(6) According to 2 Construction Works Completion Examination Certificates dated 30 September 2013 and 22 December 2015, the construction works of the Property with a total gross floor area of 113,780.78 square metres have been examined and such examination has been recorded with details as follows:–

	GFA Above Ground	GFA Basement
Date of issue	(square metres)	(square metres)
30 September 2013	49,104.29	5,579.32
22 December 2015	34,179.17	24,918.00

As advised by the Company, the Property comprises a portion of the gross floor area as stated in the Construction Works Completion Examination Certificate mentioned above.

V – 23

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(7) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(8) According to legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) Disposal Company has obtained the Construction Works Examination Certificate and Pre-sale Permit of the Property;
(iv) Disposal Company should follow the legal procedure to apply the Real Estate Ownership Certificates for the unsold portion of the Property, and as to the pre-sold portion of the Property, Disposal Company has an obligation to go through the registration formalities to transfer the real estate ownership to the purchasers; and
(v) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property (except for the land use rights of the properties which has been sold and been completed the ownership transfer registration).
(9) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Real Estate Ownership Certificate	No (under application)
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works	Yes
Permit for Commencement of Construction Works	Yes
Pre-sale Permit	Yes
Construction Works Completion Examination Certificate	Yes
Business Licence	Yes

V – 24

APPENDIX V

VALUATION REPORT OF THE PROPERTIES

VALUATION CERTIFICATE

				Market Value in
				existing state as at
	Property	Description and tenure	Particulars of occupancy	31 January 2020
6.	Hongri Technology Park,	The Property known as ‘‘Hongri Technology	As at the Valuation Date,	RMB45,550,000
	North of Tongda Road, East	Park’’, erected on two parcels of land with a total	part of the Property, with a
	of Hengshan Road,	site area of approximately 47,448.00 square metres	total gross floor area of	(RENMINBI FORTY
	Haimen city, Jiangsu	and 85,888 square metres respectively.	approximately 1,514.88	FIVE MILLION FIVE
	Province,		square metres and a total	HUNDRED FIFTY
	the PRC	The Property was completed in the year of 2000.	land area of approximately	THOUSAND)
			10,000 square metres
		As advised by the Company, the Property is for	respectively, was leased to a
		ancillary use with the gross floor area of	tenant at an annual rental of
		approximately 4,944.52 square metres.	RMB10,000 from 1 August
			2019 to 31 July 2025; part
		The Property is located at north of Tongda Road,	of the Property, with a total
		east of Hengshan Road, Haimen city, which is in	gross floor area of
		suburban area of Haimen city. Developments	approximately 478.69 square
		nearby are mainly residential and industrial	metres and a total land area
		developments. According to the Company, the	of approximately 10,000
		Property is used for the industrial properties.	square metres respectively,
		There is no environmental issues and litigation	was leased to a tenant at an
		dispute.	annual rental of RMB20,000
			for a term from 1 August
		The Property is held with the land use rights for	2015 to 31 July 2021; part
		industrial use expiring on 25 July 2054.	of the Property, with a total
			gross floor area of 957.38
			square metres, was owner-
			occupied.
			The remaining portion of the
			Property was vacant.

Notes:

(1) According to 2 State-owned Land Use Rights Certificates and the PRC legal opinion, the land use rights of the Property has been vested in 海門証大創意投資發展有限公司 (Haimen Zendai Creative Investment Development Co., Ltd.) (‘‘Creative Investment’’), a whole-owned subsidiary of Disposal Company, with details as follows:-

			Expiry date of land	Site area
Certificate No.	Date of issue	Use	use term	(square metres)
(2005) 420001	11 January 2005	Industrial	25 July 2054	47,448.00
(2005) 420004	1 February 2005	Industrial	25 July 2054	85,888.00

(2) According to the 4 Real Estate Ownership Certificates and the PRC legal opinion, the real estate ownership of the Property has been vested in Creative Investment with details as follow:

					Gross
					Floor area
Certificate	No.	Date of issue	Total Floors	Structure	(square metres)
10100251		30 November 2005	1	Steel-concrete	1,514.88
10100252		30 November 2005	1	Steel-concrete	1,514.88
32001236		28 December 2006	2	Composite	957.38
32001237		28 December 2006	2	Composite	957.38

V – 25

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(3) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(4) According to legal opinion:-
(i) Creative Investment is the legal land user of the Property; and
(ii) Creative Investment is the legal real estate owner of the Property.
(6) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:-

State-owned Land Use Rights Certificate Yes Real Estate Ownership Certificate Yes Business Licence Yes

V – 26

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

Group II – Properties held by Disposal Group for development in the PRC

Property Description and tenure
1. Proposed development of The Property known as ‘‘Phase II of Dongzhoufu’’ Phase II of Dongzhoufu, is erected on a parcel of land with a total site area West of Dongjiang Road, of approximately 186,423.00 square metres. South of Xianggang Road, Haimen, Jiangsu Province, The proposed total gross floor areas of the the PRC Property is 147,502.74 square metres for residential use.

Market Value in existing state as at Particulars of occupancy 31 January 2020 As at the Valuation RMB354,000,000 Date, the construction of the Property was (RENMINBI suspended. THREE HUNDRED FIFTY FOUR MILLION)

Portion Residential Apartment Ancillary Facility Club Underground Total:	Proposed Gross Floor Area (square metres) 108,839.80 3,014.00 5,648.94 30,000
	147,502.74

The Property is located at west of Dongjiang Road, south of Xianggang Road, Haimen Riverside New City District, which is in suburban area of Haimen city. Developments nearby are mainly residential development. According to the Company, the Property is used for the residential properties. There is no environmental issues and litigation dispute.

The Property is held with the land use rights for residential use expiring on 17 March 2074.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of Phase II of Dongzhoufu of the Property has been vested in Disposal Company with details as follows:–

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2006) 420037	3 August 2006	Residential	17 March 2074	199,651.00

As advised by the Company, the portion of land with a total area of 186,423 square metres for residential use expiring on 17 March 2074 has been entitled on aforesaid Certificate.

V – 27

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(2) According to Contract for Grant of Land Use Rights No. HTGC(2006)115 dated 28 July 2006, Modification Grant Contract of Land Use Rights No. HTGCG (2011) 053 dated 25 August 2011, the land use rights of the Project have been granted with details as follows:

(i) Grantor : Haimen Land Resource Bureau（海門市國土資源局） (ii) Grantee : Disposal Company (iii) Location : West of Henshan Road, north of East Weijiaohe Road (iv) Site area : 792,698 square metres (v) Use : Commercial, Residential and Other usage (vi) Land Premium : RMB203,695,536

According to Contract for Grant of Land Use Rights No. HTC(2004)022 dated 18 June 2004, Modification Grant Contract of Land Use Rights No. HTGCG (2012) 041 dated 23 November 2012, the land use right of the Project have been granted with details as follows:

(viii)	Grantor	:	Haimen Land Resource Bureau（海門市國土資源局）
(ix)	Grantee	:	Disposal Company
(x)	Location	:	South of Tongda Road, North of Weijiao River, East of South Xingsha Road,
			West of Henshan Road
(xi)	Site area	:	577,485 square metres
(xii)	Use	:	Residential
(xiii)	Land Premium	:	RMB121,271,850

As advised by the Company, the Property comprises a portion of the site area as stated in the Contract for Grant of Land Use Rights mentioned above.

(3) According to Approval for Construction Use of Land No. 175 dated 30 December 2005, the construction project of the club portion of the Property on the land with a total site area of 10,000 square metres is in compliance with the urban planning requirements and has been approved.
(4) According to Planning Permit for Construction Use of Land No. 320684201410054 dated 22 September 2014, the construction project on the land with a total site area of 186,423.00 square metres is in compliance with the urban planning requirements and has been approved.
(5) According to Planning Permit for Construction Works No. 2006017 dated on 29 March 2006, the construction works of the club portion of the Property with a total proposed gross floor area of 5,527.00 square metres are in compliance with the urban planning requirements and have been approved.
(6) According to Permit for Commencement of Construction Works No. 2006021 dated on 21 April 2006, the construction works of the club portion of the Property with a total proposed gross floor area of 5,527.00 square metres are in compliance with the requirements for works commencement and have been permitted.

V – 28

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(7) According to the information provided by the Company and our site inspection, the estimated total construction cost for completion of the Property is RMB 816,377,323, and the expended construction cost as at the Valuation Date was RMB138,848,324. We have taken into account the said amounts in our valuation.
(8) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(9) According to legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) After the Target Company completes the extension construction procedures for extending the completion date under the Contract for Grant of Land Use Rights, and completes the completion inspection and filing procedures, the Target Company can apply for the registration of the corresponding real property rights for the completed project; and
(iv) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property.
(10) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Contract for Grant of Land Use Rights	Yes
Modification Grant Contract of Land Use Rights	Yes
Approval for Construction Use of Land	Yes
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works of the club portion	Yes
Permit for Commencement of Construction Works of the club portion	Yes
Business Licence	Yes

V – 29

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

Market Value in existing state as at Property Description and tenure Particulars of occupancy 31 January 2020 8. Proposed development of The Property known as ‘‘Section Two of Phase II As at the Valuation RMB490,000,000 Section Two of Phase II of of Shuiqingmuhua’’ is erected on a parcel of land Date, the construction Shuiqingmuhua, with a total site area of approximately 82,307.00 of the Property was (RENMINBI FOUR East of Dongjiang Road, square metres. suspended. HUNDRED North of Shawei Road, NINETY Haimen, Jiangsu Province, As advised by the Company, the proposed gross MILLION) the PRC floor area of the Property is approximately 145,299.93 square metres, which are listed as follows:– Proposed Gross Floor Area Portion (square metres) Residential Apartment 109,099.43 Underground Car Park 36,200.50 Total: 145,299.93 The Property is located at east of Dongjiang Road, north of Shawei Road, Haimen Riverside New City District, which is in suburban area of Haimen city. Developments nearby are mainly residential development. According to the Company, the Property is used for the residential properties. There is no environmental issues and litigation dispute.

The Property is held with the land use rights for residential use expiring on 5 December 2076.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of Section Two of Shuiqingmuhua Phase II of the Property have been vested in Disposal Company with details as follows:–

			Expiry date of	Site area
Certificate No.	Date of issue	Use	land use term	(square metres)
(2007) 420518	15 October 2007	Residential	5 December 2076	148,059.00

As advised by the Company, the portion of land with a total area of 82,308 square metres for residential use expiring on 5 December2076 has been entitled on aforesaid Certificate.

V – 30

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(2) According to Contract for Grant of Land Use Rights No. HTGC(2006)115 dated 28 July 2006, Modification Grant Contract of Land Use Rights No. HTGCG (2011) 053 dated 25 August 2011, the land use right of the Project have been granted with details as follows:

(viii) Grantor : Haimen Land Resource Bureau（海門市國土資源局） (ix) Grantee : Disposal Company (x) Location : South of Tongda Road, North of Weijiao River, East of South Xingsha Road, West of Henshan Road (xi) Site area : 577,485 square metres (xii) Use : Residential (xiii) Land Premium : RMB121,271,850

(3) According to Planning Permits for Construction Use of Land No. 320684201110063 dated on 18 August 2011, the construction project on the land with a total site area of 148,059.00 square metres is in compliance with the urban planning requirements and has been approved.

As advised by the Company, the Property comprises a portion of the site area as stated in the Planning Permits for Construction Use of Land mentioned above.

(4) According to Planning Permit for Construction Works No. 320684201510002 dated on 7 January 2015, the construction works of the Property with a total proposed gross floor area of 146,708.61 square metres are in compliance with the urban planning requirements and have been approved.
(5) According to Permit for Commencement of Construction Works No. 320684020150006 dated on 5 February 2015, the construction works of the Property with a total proposed gross floor area of 146,244.00 square metres are in compliance with the requirements for works commencement and have been permitted.
(6) According to the information provided by the Company and our site inspection, the estimated total construction cost for completion of the Property is RMB 541,107,420, and the expended construction cost as at the Valuation Date was RMB218,715,727. We have taken into account the said amounts in our valuation.
(7) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD 49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.

V – 31

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(8) According to PRC legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) Disposal Company has obtained the Planning Permit for Construction Use of Land, the Planning Permit for Construction Works and the Permit for Commencement of Construction Work. Disposal Company has the legal right to construct based on the aforesaid title documents;
(iii) After the Target Company completes the extension construction procedures for extending the completion date under the Contract for Grant of Land Use Rights, and completes the completion inspection and filing procedures, the Target Company can apply for the registration of the corresponding real property rights for the completed project; and
(iv) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property.
(9) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate	Yes
Contract for Grant of Land Use Rights	Yes
Modification Grant Contract of Land Use Rights	Yes
Planning Permit for Construction Use of Land	Yes
Planning Permit for Construction Works	Yes
Permit for Commencement of Construction Works	Yes
Business Licence	Yes

V – 32

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

VALUATION REPORT

Market Value in existing state as at Property Description and tenure Particulars of occupancy 31 January 2020 9. 11 parcels of land of the The Property comprises 11 parcels of land with a As at the Valuation Date, RMB1,822,990,000 Project, total site area of approximately 449,799.00 square the Property was vacant land Haimen, Jiangsu Province, metres. pending for development. (RENMINBI ONE the PRC BILLION EIGHT The Property is located Haimen Riverside New HUNDRED TWENTY City District, which is in suburban area of Haimen TWO MILLION NINE city. Developments nearby are mainly residential HUNDRED NINETY development. There is no environmental issues and THOUSAND) litigation dispute. The Property is held with the land use rights for residential, commercial, educational and medical purpose expiring on 5 December 2076, 5 December 2046 and 5 December 2056, respectively.

Notes:

(1) According to State-owned Land Use Rights Certificate, the land use rights of the Property have been vested in Disposal Company with details as follows:–

Certificate No.
Date of issue
Use
Expiry date of
land use term
(2007) 420524
5 December 2007
Residential
5 December 2076
(2007) 420534
6 December 2007
Residential
5 December 2076
(2007) 420525
5 December 2007
Educational
5 December 2056
(2007) 420529
6 December 2007
Commercial
5 December 2046
(2007) 420528
6 December 2007
Commercial
5 December 2046
(2007) 420527
6 December 2007
Commercial
5 December 2046
(2007) 420517
15 October 2007
Commercial
5 December 2046
(2007) 420520
6 December 2007
Commercial
5 December 2046
(2007) 420537
6 December 2007
Medical
5 December 2056
(2011) 120123
21 June 2011
Residential
5 December 2076
(2007) 420516
15 October 2007
Residential
5 December 2076
Total

Site area
(square metres)
161,322.00
47,511.00
4,962.00
6,890.00
2,085.00
2,354.00
9,658.00
8,895.00
44,657.00
117,868.00
43,597.00
449,799.00

V – 33

VALUATION REPORT OF THE PROPERTIES

APPENDIX V

(2) According to Contract for Grant of Land Use Rights No. HTGC(2006)115 dated 28 July 2006, Modification Grant Contract of Land Use Rights No. HTGCG (2011) 053 dated 25 August 2011, the land use right of the Project have been granted with details as follows:

(3) According to Business Licence No. 913206847573095605 dated 30 March 2016, Disposal Company was established with a registered capital of USD49,600,000 for a valid operation period from 19 December 2003 to 18 December 2053.
(4) According to the information provided by the Company and our site inspection, the expended construction cost as at the Valuation Date was RMB2,980,000. We have taken into account the said amounts in our valuation.
(5) According to the information provided by the Company, a parcel of land No. (2007) 420535 with a total land area of 34,986 is for ancillary use.
(6) According to PRC legal opinion:–
(i) Disposal Company is the legal land user of the Property;
(ii) After the Target Company completes the extension construction procedures for extending the completion date under the Contract for Grant of Land Use Rights, and completes the completion inspection and filing procedures, the Target Company can apply for the registration of the corresponding real property rights for the completed project; and
(iii) Disposal Company has the legal right to occupy, use and profit the land use rights of the Property.
(7) The status of title and grant of major approvals and licenses in accordance with the information provided by the Company and the opinion of the PRC legal:–

State-owned Land Use Rights Certificate Yes Contract for Grant of Land Use Rights Yes Modification Grant Contract of Land Use Rights Yes Business Licence Yes

V – 34

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 Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

Interests and short positions of the Directors in the Shares, underlying Shares and debentures of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company and 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 they were taken or deemed to have under such provisions of the SFO); or which were required pursuant to section 352 of the SFO to be entered in the register referred to therein; or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (‘‘Model Code’’) as set out in Appendix 10 to the Listing Rules as adopted by the Company, were as follows:

			Approximate
			percentage of issued
		Number of Shares/	capital as at the
Name of Directors/	Capacity and	underlying	Latest Practicable
chief executives	nature of interest	Shares	Date
Mr. Tang Jian	Beneficial owner	10,000,000 (L)	0.07%
(L) denotes long position

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or 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 any such Director was taken or deemed to have under such provisions of the SFO); or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code to be notified to the Company and the Stock Exchange.

VI – 1

GENERAL INFORMATION

APPENDIX VI

Save as disclosed above, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO.

3. COMPETING BUSINESS

As at the Latest Practicable Date, as far as the Directors are aware, none of the Directors nor their respective associates had any business which competes or may compete, either directly or indirectly, with the business of the Group.

4. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors had any interest, either directly or indirectly, in any asset which has been, since 31 December 2019 (being the date to which the latest published audited consolidated financial statements of the Group were made up), and up to the Latest Practicable Date, acquired or disposed of by or leased to, any member of the Group or are proposed to be acquired or disposed of by, or leased to, any member of the Group.

5. SERVICE CONTRACTS

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

6. DIRECTORS’ INTERESTS IN CONTRACT OR ARRANGEMENT OF SIGNIFICANCE

As at the Latest Practicable Date, none of the Directors had a material interest, either directly or indirectly, in any subsisting contract or arrangement of significance to the business of the Group to which the Company, its subsidiaries, its fellow subsidiaries or its holding company was a party.

7. LITIGATION

As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

VI – 2

GENERAL INFORMATION

APPENDIX VI

8. MATERIAL CONTRACT

Except the sale and purchase agreement dated 12 February 2018 entered into between the Company and an independent third party in relation to the sales and purchase of 100% equity interests in a then indirect wholly-owned subsidiary of the Company, details of which are set out in the announcement of the Company dated 12 February 2018, no other material contract (not being contracts in the ordinary course of business) have been entered into by members of the Group within two years immediately preceding the Latest Practicable Date and are or may be material.

9. EXPERTS AND CONSENTS

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

Name	Qualifications
Cushman & Wakefield Limited	An independent valuer
Pricewaterhouse Coopers	Certified Public Accountants
Zhong Lun Law Firm	A PRC legal adviser

The above experts have given and have not withdrawn their respective written consents to the issue of this circular with the inclusion of their letter and/or reference to their names in the form and context in which they respectively appear.

As at the Latest Practicable Date, the above experts did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, or any interests, directly or indirectly, in any assets which had been, since 31 December 2019, being the date to which the latest published audited financial statements of the Group were made up, acquired, disposed of or leased to any member of the Group, or were proposed to be acquired, disposed of or leased to any member of the Group.

10. MISCELLANEOUS

(a) The secretary of the Company and the qualified accountant of the Company is Mr. Wong Ngan Hung, who is a member of Hong Kong Institute of Certified Public Accountants.
(b) The registered office of the Company is situated at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda. The principal place of business of the Company in Hong Kong is situated at Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong.

VI – 3

GENERAL INFORMATION

APPENDIX VI

(c) The Hong Kong branch share registrar and transfer office of the Company is Tricor Secretaries Limited at Level 54, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong.
(d) The English texts of this circular and the accompanying proxy form shall prevail over the Chinese texts in case of inconsistency.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong during normal business hours, except Saturdays and public holidays, from the date of this circular up to and including the date of the SGM:

(a) the memorandum of association and the bye-laws of the Company;
(b) the annual reports of the Company for each of the two financial years ended 31 December 2018 and the results announcements of the Company for the year ended 31 December 2019 dated 26 March 2020 and 1 April 2020, respectively;
(c) the review report of the financial information of the Disposal Group, the text of which is set out in Appendix I to this circular;
(d) the accountants’ report from Pricewaterhouse Coopers in respect of the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix IV to this circular;
(e) the letter and valuation certificate relating to the Properties prepared by Cashman & Wakefield, the texts of which are set out in Appendix V to this circular;
(f) the legal opinions prepared by the PRC Legal Adviser as referred to in this circular;
(g) the material contracts referred to in the paragraph headed ‘‘8. MATERIAL CONTRACT’’ in this appendix;
(h) the written consent referred to in the paragraph headed ‘‘9. EXPERTS AND CONSENTS’’ in this appendix; and
(i) this circular.

VI – 4

NOTICE OF SGM

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司 (Incorporated in Bermuda with limited liability) (Stock code: 755)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the special general meeting (the ‘‘SGM’’) of Shanghai Zendai Property Limited (the ‘‘Company’’) will be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong on Wednesday, 29 April 2020 at 10:30 a.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

‘‘THAT:
(a) the Company be and is hereby authorised to dispose of (i) its entire equity interests in 海門証大濱江置業有限公司 (Haimen Zendai Binjiang Real Estate Co., Ltd.) (together with its subsidiaries, the ‘‘Disposal Group’’) excluding those in 煙台証大大拇指置業有限公司 (Yantai Zendai Thumb Property Co., Ltd.) (the ‘‘Excluded Company’’); and (ii) the outstanding shareholders’ loan owed by the Disposal Group to 上海証大置業有限公司 (Shanghai Zendai Real Estate Co., Ltd*) and its affiliated companies, excluding the portion owed by the Excluded Company, by way of public tender through Shanghai United Assets and Equity Exchange Co., Ltd.（上海聯合產權交易所有限公司）(or such other equity exchange as subsequently determined by the Board), in accordance with the major terms as delineated in the announcements of the Company dated 2 February 2020 and 13 February 2020 and the circular dated 14 April 2020 despatched by the Company (the ‘‘Proposed Disposal’’) and the transactions contemplated under such Proposed Disposal be and are hereby approved, ratified and confirmed; and
For identification purpose only

SGM – 1

NOTICE OF SGM

(b) any director of the Company be and is hereby granted in advance the general mandate to proceed with the Proposed Disposal and should there be a successful bidder, to complete the Proposed Disposal and to exercise all the powers of the Company and to do all such acts and things and execute and deliver all such documents whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to carry out or to give effect to any or all transactions contemplated under the Proposed Disposal.’’
‘‘To re-elect Mr. Wang Letian as an executive director of the Company and to authorise the board of directors of the Company to fix his remuneration.’’

By Order of the Board Shanghai Zendai Property Limited Mr. Wang Letian Chairman

Hong Kong, 14 April 2020

Registered office: Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda

Principal place of business in Hong Kong: Unit 6508, 65/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong

Notes:

Any member entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.
In order to be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a certified copy of such power of attorney must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at Level 54, 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 (as the case may be).
In the case of joint holders, the vote of the senior who tenders a vote, whether present in person or by proxy, will be accepted to the exclusion of the vote(s) of other joint holder(s), and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.

SGM – 2

NOTICE OF SGM

The Company notes the public preventive and control measures that the Hong Kong Government has implemented on prevention of novel coronavirus disease (COVID-19), including the implementation of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Chapter 599G of the Laws of Hong Kong) (the ‘‘Regulation’’), and the guidance issued by the Hong Kong Securities and Futures Commission and the Stock Exchange in the Joint Statement in relation to General Meetings in light of the Regulation dated 1 April 2020 (the ‘‘Joint Statement’’). As at the Latest Practicable Date, the Regulation is set to expire after 11 April 2020.

The Company supports these public preventive and control measures implemented by the Hong Kong Government. The Company notes that in the event the specified period of the Regulation is extended after Latest Practicable Date to include the date of the SGM, having considered the impact of the Regulation (based on the provisions in the Regulation as at the Latest Practicable Date) and the guidance in the Joint Statement, the SGM shall proceed as scheduled.

Reference is made to the announcement of the Company dated 13 February 2020 explaining that public tender is the only practical way to implement the Proposed Disposal and that it would be impossible for the Company to seek Shareholders’ approval except by a prior mandate. Accordingly, taking into account all facts and circumstances, the Board considers that the resolution to approve the Proposed Disposal at the SGM is urgent and important to the Company and is in line with the interests of the Company and Shareholders as a whole.

The Company will continue to monitor the situation and, if appropriate, will make further announcement(s).

In compliance with the Hong Kong Government’s directive on social distancing, personal and environmental hygiene, and the guidelines issued by the Centre for Health Protection of the Department of Health on the prevention of novel coronavirus disease (COVID-19), the Company will implement additional precautionary measures at the SGM including, without limitation:
compulsory body temperature screening – any person with a body temperature of over 37.5 degrees Celsius may be denied entry into the SGM venue or be required to leave the SGM venue;
mandatory use of surgical face masks;
mandatory health declaration – anyone subject to quarantine, has any flu-like symptoms or has travelled overseas within 14 days immediately before the SGM (‘‘recent travel history’’), or has close contact with any person under quarantine or with recent travel history will not be permitted to attend the SGM;
no distribution of corporate gift and provision of refreshments;
anyone attending the SGM is reminded to observe good personal hygiene at all times; and
appropriate distancing and spacing in line with the guidance from the Hong Kong Government will be maintained and as such, the Company may limit the number of attendees at the SGM as may be necessary to avoid over-crowding.

SGM – 3

NOTICE OF SGM

In light of the continuing risks posed by the COVID-19 pandemic, the Company strongly encourages Shareholders NOT to attend the SGM in person, and advises Shareholders to appoint the chairman of the SGM as their proxy to vote according to their indicated voting instructions as an alternative to attending the SGM in person.
Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcements on such measures as appropriate.
In view of the travelling restrictions imposed by various jurisdictions including Hong Kong to prevent the spread of the COVID-19, certain Director(s) of the Company may attend the SGM through video conference or similar electronic means.
Bad weather arrangement:

If a black rainstorm warning signal or a typhoon warning signal no. 8 or above or ‘‘extreme conditions’’ caused by super typhoons is in force in Hong Kong at any time after 7:30 a.m. (Hong Kong time) on the date of the SGM, the SGM will be automatically adjourned to a later date. When the date, time and location of the adjourned meeting has been determined by the Board, the Company will post an announcement on the website of the Stock Exchange to notify Shareholders of the date, time and location of the adjourned meeting. Shareholders should in any event exercise due care and caution when deciding to attend the Meeting in adverse weather conditions.

The SGM will be held as scheduled when an amber or red rainstorm warning signal or typhoon warning signal no. 3 or below is in force in Hong Kong at any time on that day.

As at the date of this notice, the executive Directors are Mr. Wang Letian, Mr. Qin Renzhong, Mr. Zhang Huagang and Mr. Tang Jian. The non-executive Directors are Ms. Wang Zheng, Mr. Gong Ping and Ms. Jiang Zhengyan. The independent non-executive Directors are Mr. Chow Alexander Yue Nong, Dr. Xu Changsheng, Mr. Ng Man Kung, Mr. How Sze Ming and Dr. Di Ruipeng.

SGM – 4

AI assistant

Snack Empire Holdings Limited — Proxy Solicitation & Information Statement 2020

50208_rns_2020-04-14_46f30a54-90a0-4571-a92c-e9b256ccecf2.pdf

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司

PROPOSED MANDATE

IN RELATION TO THE POSSIBLE VERY SUBSTANTIAL DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY IN HAIMEN AND THE SALE LOANS;

RE-ELECTION OF DIRECTOR;

AND

NOTICE OF SGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

‘‘RMB’’

SHANGHAI ZENDAI PROPERTY LIMITED 上海証大房地產有限公司

(Stock code: 755)

PROPOSED MANDATE IN RELATION TO THE POSSIBLE VERY SUBSTANTIAL DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY IN HAIMEN AND THE SALE LOANS; RE-ELECTION OF DIRECTOR; AND NOTICE OF SGM

INTRODUCTION

LETTER FROM THE BOARD

THE PROPOSED DISPOSAL

Assets to be disposed of

Basis of Consideration and payment terms for the Proposed Disposal

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Qualifications of bidders

Conditions precedent to the Proposed Disposal

LETTER FROM THE BOARD

Spin-off of the Excluded Company

INFORMATION ON THE DISPOSAL GROUP

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE PROPOSED DISPOSAL AND THE USE OF PROCEEDS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

RE-ELECTION OF DIRECTOR

Mr. Wang Letian

LETTER FROM THE BOARD

SGM

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

1. SUMMARY OF THE FINANCIAL INFORMATION OF THE GROUP

2. STATEMENT OF INDEBTEDNESS

Borrowings

Lease liabilities

Contingent liabilities

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS

REPORT ON REVIEW OF HISTORICAL FINANCIAL INFORMATION OF HAIMEN ZENDAI BINJIANG REAL ESTATE CO., LTD.

Introduction

Scope of Review

Conclusion

PricewaterhouseCoopers

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENTS

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1 General information

APPENDIX II

FINANCIAL INFORMATION OF THE HAIMEN GROUP

2 Basis of presentation

3 Basis of preparation

b. The financial information of the Excluded Company

(ii) New standards and interpretations not yet adopted

4 Changes in accounting policies and disclosures

New and amended standards adopted by the Haimen Group

HKFRS 9

HKFRS 15

Accounting for significant financing component

Presentation of contract liabilities

5 Revenue

6 Other income and gains/(losses) – net

7 Income tax expense

APPENDIX II

FINANCIAL INFORMATION OF THE HAIMEN GROUP

Snack Empire Holdings Limited Proxy Solicitation & Information Statement 2020