Styland Holdings Limited — Proxy Solicitation & Information Statement 2017

Sep 8, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Carrianna Group Holdings Company Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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佳寧娜集團控股有限公司 CARRIANNA GROUP HOLDINGS COMPANY LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00126)

VERY SUBSTANTIAL DISPOSAL – PROPOSED DISPOSAL OF EQUITY INTEREST IN CARRIANNA (HUNAN) ENTERPRISE CO., LTD.* AND

NOTICE OF SPECIAL GENERAL MEETING

A notice convening a special general meeting of Carrianna Group Holdings Company Limited to be held at 26/F., Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong on Wednesday, 27 September 2017 at 10:00 a.m. is set out on pages 140 to 141 of this circular. A form of proxy for use at the special general meeting is enclosed with this circular. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk.

Whether or not you are able to attend the special general meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and deposit the same at the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjournment thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

11 September 2017

• for identification purposes only

CONTENTS

				Page
Definitions . .	. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from Yiyang Lingyun Asset Appraisal Company			. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Appendix I	–	Financial information of the Group	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	54
Appendix II	–	Unaudited Consolidated Financial information
		of the Target Group . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	55
Appendix III	–	Management discussion and analysis	and financial review
		of the Remaining Group . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	64
Appendix IV	–	Unaudited pro forma financial information
		of the Remaining Group . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	84
Appendix V	–	Valuation Report on the Sale Equity	. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	101
Appendix VI	–	General information . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	133
Notice of Special		General Meeting . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	140

– i –

DEFINITIONS

In this circular and the appendices to it, the following expressions have the meanings set out below unless the context requires otherwise:

• ‘‘associate(s)’’ has the meaning ascribed to it in the Listing Rules

• ‘‘Board’’ the board of Directors

‘‘Business Day(s)’’ means a day on which banks in Hong Kong are open for general business, excluding Saturdays, Sundays and Hong Kong public holidays

• ‘‘Bye-laws’’ the bye-laws of the Company

• ‘‘Company’’ Carrianna Group Holdings Company Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 00126)

• ‘‘Completion’’ completion of the Disposals

• ‘‘Conditions’’ the conditions precedent to the Completion

• ‘‘connected person(s)’’ has the meaning ascribed to it in the Listing Rules

• ‘‘Consideration’’ the First Disposal Consideration and the Second Disposal Consideration

• ‘‘Country Garden Group’’ the Purchaser Guarantor and its subsidiaries from time to time

• ‘‘Custodian’’ a bank in the PRC with which the Escrow Account is maintained

• ‘‘Directors’’ the director(s) of the Company

• ‘‘Disposals’’

• the First Disposal and the Second Disposal

• ‘‘Equity Transfer Agreement’’

• the agreement dated 18 July 2017 made among the Parties in respect of the First Disposal, the Second Disposal and the Properties Handover

• ‘‘Escrow Account’’ the escrow account maintained with the Custodian in the name of the Purchaser

– 1 –

DEFINITIONS

• ‘‘Escrow Agreement’’

• ‘‘Escrow Amount’’

• ‘‘First Disposal’’

• ‘‘First Disposal Consideration’’

• ‘‘First Disposal Registration’’

• ‘‘First Disposal Remaining Payment’’

• ‘‘First Sale Equity’’

• ‘‘Group’’

• ‘‘HK$’’

• ‘‘Hong Kong’’

• an escrow agreement dated 21 July 2017 and entered into between the Purchaser, the Vendor and the Custodian in respect of the Escrow Amount

• a sum of RMB100,000,000, being part of the First Disposal Consideration, representing approximately 22.6% of the First Disposal Consideration, to be held in escrow by the Custodian for a period of 90 days

• the proposed disposal of the First Sale Equity contemplated under the Equity Transfer Agreement

• the total consideration for the First Disposal, being RMB442,500,000

• the successful registration of the change in equity interests in respect of the First Disposal with the SAIC as evidenced by the SAIC search system

• a sum of RMB342,500,000, being approximately 77.4% of the First Disposal Consideration

• 51% equity interests in the Target Company legally and beneficially owned by the Vendor

• the Company and its subsidiaries from time to time

• Hong Kong dollars, the lawful currency of Hong Kong

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

– 2 –

DEFINITIONS

• ‘‘Hunan Wancheng’’

• Hunan Wancheng Commercial Investment Operations Management Co., Ltd.*（湖南萬城商業投資經營管理有限 公司）, a company established under the laws of the PRC, owned as to 60% by Zhang Jiyong, 13% by Li Guanghui, 14% by Zhang Fanliang and 13% by Liao Jianhua, other than Zhang Jiyong, who is the managing director of the Target Company and hence a connected person of the Company, each of Li Guanghui, Zhang Fanliang and Liao Jianhua is an Independent Third Party. As Hunan Wancheng is an associate of Zhang Jiyong, Hunan Wancheng is also a connected person of the Company

• ‘‘Independent Third Party(ies)’’

• any individual or company and their respective ultimate beneficial owner(s), who or which is independent of and not connected with the Company and the connected persons of the Company within the meaning of the Listing Rules

• ‘‘Latest Practicable Date’’ 8 September 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Parties’’ the parties to the Equity Transfer Agreement, namely the Vendor, the Purchaser, Hunan Wancheng and the Target Company

• ‘‘PRC’’

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

• ‘‘Properties’’

• the land under construction with a total land area of approximately 491.8 acres situated at Zishan Lake and the land where construction has not yet commenced with a total land use area of approximately 265.84 acres situated at Zishan Lake, all of which are owned by the Target Company

– 3 –

DEFINITIONS

• ‘‘Properties Handover’’

the proposed handover of the Properties contemplated under the Equity Transfer Agreement

• ‘‘Purchaser’’ Hunan Country Garden Real Estate Co., Ltd.*（湖南省碧桂 園地產有限公司）, a company established under the laws of the PRC, an indirect non-wholly owned subsidiary of the Purchaser Guarantor

• ‘‘Purchaser Guarantor’’ Country Garden Holdings Company Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 2007), and a controlling shareholder of the Purchaser

• ‘‘Remaining Group’’ the Group after Completion

• ‘‘RMB’’ Renminbi, the lawful currency of the PRC

• ‘‘SAIC’’ State Administration for Industry and Commerce of the PRC

• ‘‘Sale Equity’’ the First Sale Equity and the Second Sale Equity

‘‘Second Disposal’’ the proposed disposal of the Second Sale Equity contemplated under the Equity Transfer Agreement ‘‘Second Disposal the total consideration for the Second Disposal, being Consideration’’ RMB357,500,000 ‘‘Second Disposal a sum of RMB60,000,000, being approximately 16.78% of First Payment’’ the Second Disposal Consideration ‘‘Second Disposal the successful registration of the change in equity interests Registration’’ in respect of the Second Disposal with the SAIC as evidenced by the SAIC search system

• ‘‘Second Disposal a sum of RMB297,500,000, being approximately 83.22% Remaining Payment’’ of the Second Disposal Consideration

• ‘‘Second Sale Equity’’ 41.21% equity interests in the Target Company legally and beneficially owned by the Vendor

– 4 –

DEFINITIONS

The Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong, as amended from time to time

‘‘SFO’’ The Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong, as amended from time to time ‘‘SGM’’ the special general meeting of the Company to be convened and held at 26/F., Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong on Wednesday, 27 September 2017 at 10:00 a.m. to consider and, if thought fit, approve the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals)

• ‘‘Share(s)’’ ordinary share(s) with par value of HK$0.1 each in the issued share capital of the Company

• ‘‘Shareholder(s)’’ holder(s) of the Share(s) ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Target Company’’ Carrianna (Hunan) Enterprise Co., Ltd.*（佳寧娜（湖南）實 業有限公司）, a company established under the laws of the PRC which, as at the Latest Practicable Date was held as to 92.21% and 7.79% by the Vendor and Hunan Wancheng, respectively

• ‘‘Target Group’’ The Target Company and its subsidiaries ‘‘Valuer’’ Yiyang Lingyun Asset Appraisal Company*（益陽淩雲資 產評估事務所）, PRC Certified Public Valuer

• ‘‘Vendor’’ Tak Sing Alliance Limited（達成有限公司*）, a company incorporated under the laws of Hong Kong, and an indirect wholly-owned subsidiary of the Company

• Zishan Lake Zishan Lake*（梓山湖）, located at Yiyang City, Hunan ‘‘sq.m.’’ Square meters

– 5 –

LETTER FROM THE BOARD

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佳寧娜集團控股有限公司 CARRIANNA GROUP HOLDINGS COMPANY LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00126)

Executive Directors: Ma Kai Yum, PhD (Chairman) Leung Pak Yan (Chief Executive Officer) Ng Yan Kwong Ma Hung Ming, John, PhD, BBS

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Non-Executive Director: Ma Kai Cheung, PhD, SBS, BBS (Honorary Chairman) Independent Non-executive Directors: Lo Ming Chi, Charles Lo Man Kit, Sam Wong See King

Principal Place of Business in Hong Kong: 26th Floor Wyler Centre, Phase II, 200 Tai Lin Pai Road Kwai Chung New Territories Hong Kong

11 September 2017

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL – PROPOSED DISPOSAL OF EQUITY INTEREST IN CARRIANNA (HUNAN) ENTERPRISE CO., LTD.* AND NOTICE OF SPECIAL GENERAL MEETING

A. INTRODUCTION

Reference is made to the announcement of the Company dated 24 July 2017 in relation to the Disposals. The purpose of this circular is to provide you with further information in respect of the Disposals and the notice of the SGM.

– 6 –

LETTER FROM THE BOARD

B. THE DISPOSALS

On 18 July 2017 (after trading hours), the Vendor (an indirect wholly-owned subsidiary of the Company), the Purchaser, Hunan Wancheng and the Target Company entered into the Equity Transfer Agreement, pursuant to which the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire (i) the First Sale Equity for a cash consideration of RMB442,500,000, and (ii) the Second Sale Equity for a cash consideration of RMB357,500,000. The principal terms of the Equity Transfer Agreement are set out below.

The Equity Transfer Agreement

Date

18 July 2017 (after trading hours)

Parties

• (1) The Purchaser:

• Hunan Country Garden Real Estate Co., Ltd.*（湖南省碧 桂園地產有限公司）, a company established under the laws of the PRC, an indirect non-wholly owned subsidiary of the Purchaser Guarantor.

• (2) The Vendor:

• Tak Sing Alliance Limited（達成有限公司*）, a company incorporated under the laws of Hong Kong, and an indirect wholly-owned subsidiary of the Company.

• (3) Hunan Wancheng:

Hunan Wancheng Commercial Investment Operations Management Co., Ltd*（湖南萬城商業投資經營管理有 限公司）, a company established under the laws of the PRC, owned as to 60% by Zhang Jiyong, 13% by Li Guanghui, 14% by Zhang Fanliang and 13% by Liao Jianhua, other than Zhang Jiyong, who is the managing director of the Target Company and hence a connected person of the Company, each of Li Guanghui, Zhang Fanliang and Liao Jianhua is an Independent Third Party. As Hunan Wancheng is an associate of Zhang Jiyong, Hunan Wancheng is also a connected person of the Company.

– 7 –

LETTER FROM THE BOARD

(4) The Target Company:

Carrianna (Hunan) Enterprise Co., Ltd.*（佳寧娜（湖南） 實業有限公司）, a company established under the laws of the PRC which, as at Latest Practicable Date, was held as to 92.21% and 7.79% by the Vendor and Hunan Wancheng respectively.

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, the Purchaser, its ultimate beneficial owners and the Purchaser Guarantor are Independent Third Parties.

Sale Equity

The First Sale Equity and the Second Sale Equity, being 51% and 41.21% respectively of the equity interests in the Target Company are legally and beneficially owned by the Vendor, together represent approximately 92.21% of the total equity interest of the Target Company.

Pursuant to the Equity Transfer Agreement, the Purchaser may transfer not more than 15% of the equity interests held by it in the Target Company to the platform companies which are owned by the employees of the Country Garden Group. For the purpose of the aforesaid transfer, Hunan Wancheng undertakes to waive its rights of first refusal and to procure the registration of any change in equity interests in the Target Company. Save as the abovementioned circumstance, no Party may transfer or pledge any of their respective equity interests in the Target Company to any third party, except for any transfer to their respective associated companies. It is mutually understood between the Parties that the restriction on transfer by the Purchaser shall cease to apply upon Completion.

– 8 –

LETTER FROM THE BOARD

Properties Handover

Details of the Properties subject to the Properties Handover, being the land under construction with an area of approximately 491.8 acres situated at Zishan Lake (including land no. 1-4) and the land where construction has not yet commenced with an area of approximately 265.84 acres situated at Zishan Lake (including land no. 5-7) are set out in the table below:

			Status of the			Expected
Land	no.	Location	Property Land area	(acres)	Usage	completion date
1		A parcel of land located on	Under construction –	46.92	Commercial and	Year 2022
		Hang Yuan Road to the East,	at planning stage		residential
		Tuan Yuan Road to the West,
		Huangjia Alley to the South,
		Yiyang City, Hunan Province, the PRC
2		A commercial and residential development	Under construction –	155.48	Commercial and	Third quarter of 2018
		located on Tuan Yuan Road to	at superstructure		residential
		the West, Carrianna School Land to	stage
		the North, Hang Yuan Road to
		the East, Yiyang City,
		Hunan Province, the PRC
3		A parcel of land located on	Under construction –	144.59	Commercial and	Year 2022
		Tuan Yuan Road to the West,	at planning stage		residential
		Yiyang City, Hunan Province, the PRC
4		A parcel of land located on	Under construction –	144.81	Commercial and	Year 2022
		Tuan Yuan Road to the West,	at planning stage		residential
		Yiyang City, Hunan Province, the PRC
5		A parcel of land located on	Construction not yet	62.45	Commercial and	–
		Tuan Yuan Road to the West,	commenced		residential
		Yiyang City, Hunan Province, the PRC
6		A parcel of land located on	Construction not yet	180.24	Commercial and	–
		Yang Wu Ling Village and	commenced		residential
		Lu Ci Qiao Village, Yiyang City,
		Hunan Province, the PRC
7		A parcel of land located on	Construction not yet	23.15	Commercial and	–
		Qi Li Qiao Village,	commenced		residential
		Yuen Heshan Dangxiao Xiaoqu,
		Heshan District, Yiyang City,
		Hunan Province, the PRC

– 9 –

LETTER FROM THE BOARD

Upon the First Disposal Registration, the Vendor and the Target Company shall, without transferring the ownership of the Properties, hand over the Properties to the Purchaser based upon the following standard:

• (i) the title and ownership of the Properties are defined and clear;

• (ii) the Properties are free from liens, mortgages and other encumbrances (except the mortgages set out under the Equity Transfer Agreement);

• (iii) there is no outstanding dispute and litigation in relation to the title and ownership of the Properties; and

• (iv) there is no outstanding and unpaid land transfer fees, tax and penalty imposed by governmental authorities.

Consideration and Payment Schedule

The First Disposal Consideration and the Second Disposal Consideration were determined after arm’s length negotiations between the Purchaser and the Vendor with reference to the value of the Properties (including land and buildings constructed thereon), other properties and intangible assets owned by the Target Company based on the valuation conducted by the Valuer on 30 June 2017. The valuation of the Target Company as conducted by the Valuer adopting the valuation methods including the market approach and asset-based approach is at approximately RMB849,808,000. The valuation does not involve a profit forecast as defined in Rule14.61 of the Listing Rules. The Directors are of the view that the First Disposal Consideration and the Second Disposal Consideration are fair and reasonable and on normal commercial terms.

Payment schedule

The First Disposal Consideration shall be settled in cash in accordance with the following payment schedule:

• (a) the Escrow Amount of RMB100,000,000, being approximately 22.60% of the First Disposal Consideration, shall be credited to the Escrow Account within 5 Business Days after setting up of the Escrow Account by the Purchaser pursuant to the Escrow Agreement. The Escrow Amount shall be released to the Vendor upon the First Disposal Registration pursuant to the terms of the Escrow Agreement; and

– 10 –

LETTER FROM THE BOARD

• (b) the First Disposal Remaining Payment of RMB342,500,000, being approximately 77.40% of the First Disposal Consideration, shall be paid to the Vendor by 6 instalments pursuant to the Equity Transfer Agreement as follows:

• (i) 1st instalment: a sum of RMB57,080,000 within 6 months of the First Disposal Registration;

• (ii) 2nd instalment: a sum of RMB57,080,000 within 12 months of the First Disposal Registration;

• (iii) 3rd instalment: a sum of RMB57,080,000 within 18 months of the First Disposal Registration;

• (iv) 4th instalment: a sum of RMB57,080,000 within 24 months of the First Disposal Registration;

• (v) 5th instalment: a sum of RMB57,080,000 within 30 months of the First Disposal Registration; and

• (vi) 6th instalment: a sum of RMB57,100,000 within 36 months of the First Disposal Registration.

The Second Disposal Consideration shall be settled in cash in accordance with the following:

• (a) the Second Disposal First Payment of RMB60,000,000, being approximately 16.78% of the Second Disposal Consideration, shall be credited to the Vendor’s account as deposit within 6 months of the First Disposal Registration, which shall become part of the Second Disposal Consideration upon completion of the Second Disposal Registration; and

• (b) the Second Disposal Remaining Payment of RMB297,500,000, being approximately 83.22% of the Second Disposal Consideration, shall be paid to the Vendor by 5 equal instalments pursuant to the Equity Transfer Agreement as follows:

• (i) 1st instalment: a sum of RMB59,500,000 within 6 months of the Second Disposal Registration and 12 months of the First Disposal Registration, whichever is earlier;

– 11 –

LETTER FROM THE BOARD

• (ii) 2nd instalment: a sum of RMB59,500,000 within 18 months of the First Disposal Registration;

• (iii) 3rd instalment: a sum of RMB59,500,000 within 24 months of the First Disposal Registration;

• (iv) 4th instalment: a sum of RMB59,500,000 within 30 months of the First Disposal Registration; and

• (v) 5th instalment: a sum of RMB59,500,000 within 36 months of the First Disposal Registration.

On 4 August 2017, the Escrow Amount was paid by the Purchaser to the Escrow Account in accordance with the Equity Transfer Agreement.

Deferred payment of the First Disposal Remaining Payment and/or the Second Disposal Remaining Payment

In the event that the Purchaser fails to pay in full the First Disposal Remaining Payment and/or the Second Disposal Remaining Payment in accordance with the abovementioned payment schedules, the Purchaser shall pay default interest accrued on the unpaid sum from the due date up to the date of the actual payment at a daily interest rate of 0.05%, which was determined based on the normal commercial practice for an overdue account interest rate, which was based on the short term People’s Bank of China’s benchmark lending rate of 4.35% × 4.2 or approximately 18.25% per annum. The outstanding First Disposal Remaining Payment and/or the Second Disposal Remaining Payment and any accrued interests shall be paid no later than one month after the respective due dates, failing which the Vendor shall have the right to commence legal proceedings against the Purchaser Guarantor to recover the relevant amounts owed, or alternatively, if the Escrow Amount and/or the First Disposal Remaining Payment and/or the Second Disposal First Payment and/or the Second Disposal Remaining Payment remain(s) unpaid over 30 days after the due date, the Vendor shall have the right to request the Purchaser to pay an additional default payment of RMB100,000,000, and to commence legal proceedings in court against the Purchaser for specific performance of the Equity Transfer Agreement.

– 12 –

LETTER FROM THE BOARD

The settlement process and payment schedules were proposed by the Purchaser and agreed to by the Company through arm’s length discussions. The Company has been considering disposing of the Sale Equity for some time but has not received offers attractive enough. So far, the Company has only received two offers to purchase the Sale Equity, one from the Purchaser and the other from a local PRC developer. The factors considered by the Board in determining which of the offers to accept include, but are not limited to, (i) the consideration, where the consideration proposed by the Purchaser is 33.3% higher than the other prospective buyer, (ii) the reputation of the prospective buyer and its group, (iii) the security, being the guarantee provided by the Purchaser Guarantor, which is not offered by the other prospective buyer. As such, the Board considers even though the payment schedule of the Consideration spreads out over the course of three years, the terms of the Disposals are still in the best interests of the Company and the Shareholders as a whole.

Conditions Precedent

Completion of the Disposals is conditional upon fulfilment of the following Conditions:

• (i) the Purchaser has credited the Escrow Amount to the Escrow Account pursuant to the Escrow Agreement;

• (ii) Shareholders’ approval in respect of the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals) have been obtained by the Company at the SGM;

• (iii) a corporate guarantee has been provided by the Purchaser Guarantor in favour of the Vendor guaranteeing the performance of all payment obligations in relation to the Disposals under the Equity Transfer Agreement; and

• (iv) a co-operation agreement has been entered into between the Purchaser and Hunan Wancheng, the other shareholder of the Target Company, in relation to the Target Company.

The Parties have not agreed on a long stop date for the Disposals.

As at the Latest Practicable Date, the Conditions set out in paragraphs (i), (iii) and (iv) above have been fulfilled.

– 13 –

LETTER FROM THE BOARD

Completion

The First Disposal Registration

The Vendor shall, within 3 Business Days after the satisfaction of the Conditions, transfer the First Sale Equity to the Purchaser, and proceed with the First Disposal Registration together with the Purchaser, including the change of legal representative and relevant officers to the appointed persons designated by the Purchaser.

The Second Disposal Registration

If the Vendor has, within 6 months of the First Disposal Registration and within 5 Business Days of the payment of the Second Disposal First Payment into the account designated by the Vendor, transferred the Second Sale Equity to the Purchaser, on the basis that the Vendor has executed all relevant equity transfer documents in relation to the Second Disposal, the Second Sale Equity is deemed to have been transferred to the Purchaser. The Vendor is obligated to procure the Second Disposal Registration together with the Purchaser, but the Vendor is not responsible for the timing of completion of the Second Disposal Registration.

In the event the Vendor fails to procure the Second Disposal Registration due to the failure to submit any relevant equity transfer documents in relation to the Second Disposal within 5 Business Days of the payment of the Second Disposal First Payment, the Vendor shall pay a daily default payment to the Purchaser in the sum of RMB178,750, being 0.05% of the Second Disposal Consideration accrued until the day on which all relevant equity transfer documents in relation to the Second Disposal are submitted to the Purchaser, and if the Vendor fails to procure the registration of the change of the Second Sale Equity 30 days after the due date for registration i.e. within 5 Business Days of the payment of the Second Disposal First Payment, the Purchaser shall have the right to request the Vendor to return an amount equivalent to two times the amount of the Second Disposal First Payment paid by the Purchaser, and to commence legal proceedings in court for specific performance of the Equity Transfer Agreement.

The Target Company shall bear all fees, charges and costs incurred from the First Disposal Registration and the Second Disposal Registration, while the Vendor and the Purchaser shall be responsible for their respective taxes arising from the Disposals.

– 14 –

LETTER FROM THE BOARD

Completion shall take place upon completion of the Second Disposal Registration. It is expected that Completion will take place before the First Disposal Remaining Payment and the Second Disposal Remaining Payment have been settled in full. As the Purchaser Guarantor will provide the Company with a guarantee guaranteeing all obligations of the Purchaser under the Equity Transfer Agreement, the Board considers the Company has sufficient protection and security against any potential default by the Purchaser under the Equity Transfer Agreement, therefore, the arrangement with the prolonged payment schedule is still regarded by the Board as being in the best interests of the Company and the Shareholders as a whole.

Upon Completion, the Target Company will be owned as to 92.21% by the Purchaser, and the following properties which are, as at the Latest Practicable Date, held by the Target Company will be transferred to the Purchaser along with the Disposals.

		Status of the	Gross
	Location	Property Land area	floor area	Usage
			(sq.m.)
1	The unsold portion of Zishan Lake	Property held for sale	9,709.62	Commercial, residential
	Gongguan New Town Mini Space,			and carpark
	No. 539 Yiyang Road, Chaoyang Office,
	Gaoxin District, Yiyang City,
	Hunan Province, the PRC
2	The 53% interest of unsold portion	Property held for sale	20,826.31	Commercial, residential
	and 158 car parking spaces			and carpark
	located on Zishan Lake to the
	north and Yiyang Road to the south,
	Gaoxin District, Yiyang City,
	Hunan Province, the PRC (Note 1)
3	247 car-parking spaces located on	Property held for sale	95,832.00	Carpark
	Grand Lake Bay Yiyang City,		(Note 2)
	Hunan Province, the PRC
4	Various commercial units on	Property held for sale	30,956.71	Commercial
	Levels 1, 2, 3 and 4 Grand Lake
	City Development, located on
	various parcels bounded by
	Yiyang Road to the North,
	Tuanyuan Road to the East and
	Yingbin Road to the South,
	Gaoxin District, Yiyang City,
	Hunan Province, the PRC (Note 3)

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LETTER FROM THE BOARD

Notes:

1. According to the cooperation agreement signed between the Target Company and Yiyang Fei Xiang Property Development Co Ltd, the main contractor of this property, Yiyang Fei Xiang Property Development Co Ltd. and the Target Company are entitled to profit sharing in the property market value of a 4-storey shopping arcade, 8 residential units (cooperated units) and 100 car-parking spaces in the proportion of 47% and 53% respectively. According to the Valuer, the car-parking spaces were attributed with no commercial value in the valuation of the properties comprising the Properties Handover.

2. Since no Real Estate Ownership Certificates were provided for this property, the total gross floor area stated here refers to the total site area for the land use rights of this property pursuant to the Stateowned Land Use Rights Certificates in relation to this property.

3. The 277 commercial units of this property, with a floor area of 20,666.24 sq.m. were pledged to Hunan Yiyang Chang Sha Bank for a value of RMB70,000,000.

Guarantee provided by the Purchaser Guarantor

The Purchaser Guarantor shall provide an irrevocable guarantee in favour of the Vendor, guaranteeing the Purchaser’s obligations to pay the Escrow Amount, the First Disposal Remaining Payment, the Second Disposal First Payment and the Second Disposal Remaining Payment in the aggregate amount of RMB800,000,000 and any amount under the Equity Transfer Agreement (including but not limited to any default interests and additional default payment). The Vendor shall have the right to claim against the Purchaser Guarantor for any breach relating to payment of the Escrow Amount, the First Disposal Remaining Payment, the Second Disposal First Payment and the Second Disposal Remaining Payment without first having recourse against the Purchaser. The Purchaser Guarantor has executed the guarantee in favour of the Vendor on 27 July 2017.

Termination

The Equity Transfer Agreement may not be terminated other than upon an occurrence of an event of force majeure.

The Escrow Agreement

On 21 July 2017, the Vendor, the Purchaser and the Custodian entered into the Escrow Agreement, pursuant to which the Vendor, the Purchaser and the Custodian agreed that the Escrow Amount be credited to the Escrow Account before 7 August 2017 to be held in escrow by the Custodian for a period of 90 days.

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LETTER FROM THE BOARD

If the Purchaser fails to credit or credit in full amount of the Escrow Amount to the Escrow Account on or before 7 August 2017, the Purchaser will be regarded as in breach of the Escrow Agreement, and the Custodian shall have the right to issue a notice of breach of agreement to the Purchaser and the Vendor within 5 PRC business days of such breach. The Purchaser has credited the full Escrow Amount to the Escrow Account on 4 August 2017.

Right of first refusal

Pursuant to the Equity Transfer Agreement, Hunan Wancheng shall prior to the First Disposal issue a waiver of its rights of first refusal for the First Disposal, and shall cooperate fully to procure the First Disposal Registration. Hunan Wancheng shall prior to the Second Disposal issue a waiver of its right of first refusal for the Second Disposal, and such waiver has been issued on 18 July 2017, and shall co-operate fully to procure the Second Disposal Registration.

Information on the Group

The Group principally engages in investment holdings, property investment and development, and the operation of hotel, restaurant and food businesses in Hong Kong and Mainland China.

Please refer to Appendices I and VI to this circular for further information on the Group.

Information on the Purchaser

To the best of the Director’s knowledge, information and belief, the Purchaser, being an indirect wholly-owned subsidiary of the Purchaser Guarantor, is a company engaging in, inter alia, property development, property investment and property management. The ultimate beneficial owners of the Purchaser are shareholders of the Purchaser Guarantor, which is a company listed on the Stock Exchange.

Information on the Purchaser Guarantor

To the best of the Director’s knowledge, information and belief, the Purchaser Guarantor is a controlling shareholder of the Purchaser, indirectly owning 100% of the equity interests of the Purchaser. The Purchaser Guarantor carries on businesses relating to property development.

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LETTER FROM THE BOARD

Information on the Target Company

The Target Company is a company established under the laws of the PRC which, as at the Latest Practicable Date, was held as to 92.21% and 7.79% by the Vendor and Hunan Wancheng, respectively. The principal activities of the Target Company are, inter alia, property development, property rental and management. As the Vendor is an indirect wholly-owned subsidiary of the Company and it owns 92.21% of the equity interests in the Target Company, the Target Company is an indirect non-wholly owned subsidiary of the Company. Upon Completion, the Target Company will cease to be a subsidiary of the Company.

Set out below is the audited financial information of the Target Company for each of the years ended 31 March 2017 and 31 March 2016 as shown in its annual report for the year ended 31 March 2017:

	For the year ended 31 March	For the year ended 31 March
	2017	2016
	HK$’000	HK$’000
Net profit before taxation and extraordinary
items	882	44,476
Net profit after taxation and extraordinary items	4,792	68,168

Net profit before tax and extraordinary items for the year ended 31 March 2017 decreased by 98% from the prior year because approximately two-third of the residential units in Phase 3 of Grand Lake City Project of Yiyang in Hunan Province were sold and recorded as revenue for the year ended 31 March 2016, while only one third of the remaining residential units were sold and recorded as revenue for the year ended 31 March 2017. Net profit after taxation and extraordinary items for the year ended 31 March 2017 decreased by 93% because there was an one-off extraordinary gain of HK$20,885,000 arising from the disposal of a subsidiary by the Target Company for the year ended 31 March 2016 and the reduction of operating profit after tax by HK$42,491,000 for the year ended 31 March 2017.

Please refer to Appendix I to this circular for further information on the Group’s interest in the Sale Equity.

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LETTER FROM THE BOARD

Property interests of the Target Group

Yiyang Lingyun Asset Appraisal Company an independent valuer, has valued the property interests of the Target Group as at 30 June 2017. Please refer to the property valuation report in the Letter form Yiyang Lingyun Asset Appraisal Company of this circular for further details.

As at 31 March 2017, the net book value of the Property interests held by the Target Group amounted to HK$998,325,000 as set out in the Unaudited Consolidated Financial Information of the Target Group in Appendix II of this circular, in which. As at 30 June 2017, the total market value in existing state of the property interests held by the Target Group amounted to RMB723,632,000 (equivalent to approximately HK$834,348,000).

The reconciliation statement from the net book value of the property interests of the Target Group as at 31 March 2017 to the valuation of the property interests of the Target Group as at 30 June 2017 is shown below:

Net book value of property interests as of 31 March 2017 Property under development (Non Current Asset) Property under development (Current Asset) Property held for sale Net changes during the period from 1 April 2017 to 30 June 2017 (1) (unaudited) Net book value of property interests as of 30 June 2017 (unaudited) Difference between net book value and appraised value (2) Construction cost not included in the property valuation report which is classified as construction work in progress Decrease in valuation when not recorded at cost Total market value in existing state of the property interest held by the Target Group as of 30 June 2017 as set out in the property valuation report from the Valuer

HK$’000 546,768 101,746 349,811 998,325 7,485 1,005,810 (130,752) (40,710) 834,348

• (1) The changes include net additions, amounts recognised as revenue, amortisation and public property interest transferred to fixed asset during the period.

• (2) The difference comprises the value of construction cost incurred in the property under development which is classified as construction work in progress that not included in the property valuation report and decrease in valuation arising from recording properties at fair value instead of cost.

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LETTER FROM THE BOARD

Reasons for the Disposals and use of proceeds

Notwithstanding a loss of approximately HK$100,852,000 is expected to incur as a result of the Disposals, the Board still considers the Disposals represent a good opportunity to realise the value of the Sale Equity because the Board is of the view that the development process undertaken by the Target Company in Hunan Province is much slower than it had expected and that the average selling prices of the properties in Yiyang（益陽）at approximately RMB3,586 per sq.m. are not achieving a return comparable to that of the Group’s other investments in Dongguan Hometown and Shenzhen Maguling（馬古嶺）at approximately RMB12,800 and RMB60,000 per sq.m., respectively. Hence, the Group considers it the best opportunity to dispose of the Sale Equity. Moreover, the proceeds from the Disposals will increase the cash resources of the Group, allowing the Group to redeploy and relocate its resources to other investment opportunities, including property development, in the Pearl River Delta region which the Directors believe may bring better and more attractive returns. The Directors are of the view that bringing the investments of the Group back to the region closer to Hong Kong will reduce its management costs and improve management efficiency. The Directors also consider that the Disposals are on normal commercial terms, and that the terms of the Equity Transfer Agreement are fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

The net proceeds from the Disposals will be approximately RMB765,000,000 which are intended to be used by the Company:-

• (i) as to approximately RMB150,000,000, being 19.61% of the net proceeds, to fund the Group’s Maguling*（馬古嶺）project located in Shenzhen; and

• (ii) as to approximately RMB615,000,000, being 80.39% of the net proceeds, to fund new investments and acquisitions in the future as and when suitable opportunities arise and for general working capital of the Group.

The new projects which the Company expects to invest in with the proceeds from the Disposals will mainly be property development projects in the Guangdong Province of the PRC. Other than the Maguling*（馬古嶺）project in Shenzhen, the Company has not yet identified any particular new projects for investment as at the Latest Practicable Date.

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LETTER FROM THE BOARD

The Company does not currently have any detailed or concrete plan on the improvement of the Group’s scale of operations.

The Board and the Company currently do not have any intention, arrangement, agreement, understanding, negotiation (concluded or otherwise) on:

• (i) any disposal/termination/scaling-down of the Company’s existing businesses apart from the Disposals;

• (ii) injection of any new business to the Group; and/or

• (iii) any change in the shareholding structure of the Company.

Financial effects of the Disposals

The Board considers that the return from the investment in the Sale Equity is much slower than it had originally expected, where since the acquisition of the Target Company in 2007, the Target Company sold approximately 273,110 sq.m. of properties making a total revenue of approximately RMB979,242,000, in which the average selling price was about RMB3,586 per sq.m.. Even the average selling price of the latest phase III development of the project was only approximately RMB4,500 per sq.m.. Besides, the Target Company has only declared dividends in 2016 and 2017 in the amount of approximately RMB38,500,000 and RMB34,700,000, respectively and it will take more than ten years for the Company to be able to realise its investment if the Target Company continues to pay out dividends in similar amounts. Given the historical performance of the Target Company as aforementioned, the Company does not expect the Target Company to be able to pay out dividends in significantly higher amounts in the future. If the Company disposes of the Sale Equity pursuant to the Disposals and reallocate the resources to Pearl River Delta region like the Group’s Hometown Project in Dongguan (recent average property selling price was about RMB12,800 per sq.m.) and the Maguling*（馬古嶺）project in Shenzhen (expected average property selling price about RMB60,000 per sq.m.), it will be able to realise its investment in a much quicker way. The Group has been carrying on its remaining business of property development and investment in the PRC since 2007. If the Group redeploys its resources to other property investment projects in the Pearl River Delta region, the Group expects there to be an increase in its scale of operations in this aspect and hence will have a positive impact on the revenue and profit in the future.

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LETTER FROM THE BOARD

It is expected that the Group will record a loss as a result of the Disposals of approximately HK$100,852,000. The present value of the Consideration, being RMB779,919,000 (approximately HK$899,247,000), is used to calculate the loss on the Disposals. The loss is estimated based on and includes (a) the difference of RMB32,901,000 (approximately HK$37,935,000) between the Consideration of RMB800,000,000 (approximately HK$922,400,000) and the attributable net asset value of the Target Company and its subsidiaries of RMB832,901,000 (approximately HK$960,335,000), which is estimated based on the unaudited net asset value of the Target Company and its subsidiaries as at 30 June 2017 and the release of the relevant reserve, (b) the relevant estimated tax of RMB32,960,000 (approximately HK$38,003,000), (c) direct attributable expenses of approximately HK$1,761,000 expected to be incurred in connection with the Disposals, and (d) the effect of discounting the First Disposal Consideration and the Second Disposal Consideration of HK$23,153,000. The difference of the approximated loss of HK$100,852,000 and the estimated loss on the Disposals after taxation as if the Disposals had taken place on 31 March 2017 of HK$129,320,000 as set out in Note 3(v) to Appendix IV to this circular was mainly attributable to (i) the expected impairment of goodwill; (ii) share of dividend by the non-controlling interest of the Target Group; and (iii) the loss after tax of the Target Group during the three months ended 30 June 2017. The actual loss arising from the Disposals depends on the actual amount of net assets of the Target Group and actual amount of exchange fluctuation reserve of the Target Group to be released to profit or loss on the completion date. Therefore, the actual loss on disposal shall be different to the approximated loss of HK$100,852,000.

The Board considers that discounted cash flow method is an appropriate method to calculate the value of the Sale Equity as at the date of the Equity Transfer Agreement as it is a generally adopted accounting practice. The discounted present value of the Consideration of RMB779,919,000 (approximately HK$899,247,000) is only 0.5% lower than the valuation of the Sale Equity of RMB783,608,000 (approximately HK$903,500,000). The Sale Equity value is 92.21% of valuation amount of the Target Company of RMB849,808,000 (approximately HK$979,829,000). The tax on the Disposals is the PRC Corporate Income Tax estimated based on the cost of purchase of the First Sale Equity and Second Sale Equity recorded in the book of Vendor, which is different from the attributable net asset value of the Target Company and its subsidiaries recorded in the consolidated accounts of the Group. The effect of discounting RMB20,081,000 (approximately HK$23,153,000) is the difference between the total Consideration RMB800,000,000 (approximately HK$922,400,000) and its discounted present value RMB779,919,000 (approximately HK$899,247,000). It has no profit or loss effect on the Disposals since upon

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LETTER FROM THE BOARD

receipt of the First and Second Disposal Consideration, the RMB20,081,000 (approximately HK$23,153,000) will be released and recognised as finance income, of which RMB6,095,000 (approximately HK$7,027,000) will be recognised as finance income in the second financial year and RMB13,986,000 (approximately HK$16,126,000) in the third financial year. The Group considers that the disposal value, which represents the total value of the Disposal, is a fair and reasonable amount which is in the best interest of the Company and the Shareholders as a whole.

Net Assets

As at 31 March 2017, the audited consolidated net assets of the Group amounted to HK$3,529,584,000. As set out in Appendix IV to this circular, assuming the Disposals had been fully completed on 31 March 2017, the unaudited pro forma consolidated net assets, unaudited pro forma consolidated total assets and unaudited pro forma consolidated total liabilities of the Remaining Group would have been decreased from HK$3,529,584,000, HK$6,084,115,000 and HK$2,554,531,000 to HK$3,301,732,000, HK$5,480,239,000 and HK$2,178,507,000 respectively.

Earnings

The Group recorded audited consolidated profit of HK$149,725,000 for the year ended 31 March 2017. As set out in Appendix IV to this circular, assuming the Disposals had been fully taken place on 1 April 2016, the unaudited pro forma consolidated loss of the Remaining Group for the year ended 31 March 2017 would have been HK$60,645,000.

Upon Completion, the Company will no longer hold any equity interest in the Target Company and the Target Company will cease to be an indirect non-wholly owned subsidiary of the Company.

C. IMPLICATIONS OF THE LISTING RULES

As one or more of the applicable ratios under Rule 14.07 of the Listing Rules in respect of the Disposals exceed 75%, the Disposals constitute a very substantial disposal by the Company under the Listing Rules and is therefore subject to the reporting, announcement and Shareholders’ approval requirements under the Listing Rules.

The SGM will be convened and held for the Shareholders to consider and, if thought fit, approve the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals). The aforesaid approvals shall be obtained by way of a poll. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, no Shareholder is required to abstain from voting in the SGM for the approval of the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals).

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LETTER FROM THE BOARD

D. THE SGM

A notice convening the SGM to be held at 26/F., Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong on Wednesday, 27 September 2017 at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without amendments, the resolution to approve the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals) is set out on pages 140 to 141 of this circular.

A form of proxy for use by the Shareholders at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same at the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

Voting by poll

Pursuant to rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll except where the chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The Chairman of the SGM will therefore demand voting on the resolution set out in the Notice of the SGM be taken by way of poll pursuant to bye-law 70 of the Bye-laws.

On a poll, every Shareholder present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy shall have one vote for each Share registered in his name in the register. A Shareholder entitled to more than one vote is under no obligation to cast all his votes in the same way.

E. RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the opinion that the terms of the Equity Transfer Agreement and the transactions contemplated thereunder (including but not limited to the Disposals) are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend all Shareholders to vote in favour of the resolution to be proposed at the SGM.

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LETTER FROM THE BOARD

F. ADDITIONAL INFORMATION

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

The English text of this circular, the notice of the SGM and the form of proxy for use at the SGM shall prevail over the Chinese text in case of inconsistency.

For and on behalf of the Board Carrianna Group Holdings Company Limited Dr. Ma Kai Yum Chairman

– 25 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

The following is the text of the letter received from Yiyang Lingyun Asset Appraisal Company* in connection with its valuation of the equity interest of Carrianna (Hunan) Enterprise Co Ltd as at 30 June 2017, which forms part of the valuation report included in Appendix V.

YIYANG LINGYUN ASSET APPRAISAL COMPANY

2nd Floor, 5 Yongan Road, Yuanjiang City, Yiyang, Hunan, PRC

Date: 5 July 2017

The Directors

Carrianna Group Holdings Company Limited 26th Floor, Wyler Centre Phase II, No. 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong

Dear Sirs/Madams,

VALUATION OF THE EQUITY INTEREST OF CARRIANNA (HUNAN) ENTERPRISE COMPANY LIMITED

In accordance with the request from Tak Sing Alliance Limited (a subsidiary of Carrianna Group Holdings Company Limited), we have carried out a valuation of the equity interest of Carrianna (Hunan) Enterprise Co. Ltd. (‘‘Carrianna (Hunan)’’ or the ‘‘Company’’) as at 30 June 2017 (the ‘‘Valuation Date’’). The purpose of this report is to provide our opinion on the fair value of the equity interest of the Company as at 30 June 2017 based on the net asset value (‘‘NAV’’) of the Company as per balance sheet dated 30 June 2017. We understand this valuation is required for the purpose of incorporation in the circular of Carrianna Group Holdings Company Limited in respect of its equity transfer of the 92.21% equity interest of Carrianna (Hunan).

SCOPE OF VALUATION

Carrianna (Hunan) is principally engaged in the property development, property management and property investment. The objective of this report is to access the equity interest of the Company (the ‘‘Sale Equity’’) based on the reported figures as set out on the Company’s balance sheet (‘‘Balance Sheet’’), together with the consideration of property revaluation adjustment, dividend payables, asset impairment and contingency liabilities as a result of the property revaluation.

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LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

BACKGROUND INFORMATION AND CORE ASSETS OF THE COMPANY

As per our discussion with the management, Carrianna (Hunan) currently owns properties located in Yiyang City of Jiangxi Province, the PRC (the ‘‘Property’’). The Property details are set out in our Property Valuation Report dated 5 June 2017.

Based on our discussion with the management, except the 589.55 Acres land acquisition right premium from Yiyang of Hunan Province, the Company owned no trademarks, technologies, intangibles or other liabilities that were not reflected on the Balance Sheet provided by Carrianna (Hunan).

VALUATION THEORY

In arriving at our Opinion of Value, we make reference to three generally accepted approaches to value, namely: the Market Approach, the Asset/Cost Approach and the Income Approach.

Market Approach considers prices recently paid for similar assets, with adjustments made to indicate market prices to reflect the condition and utility of the appraised assets relative to the comparable market transactions.

Asset based Approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation as condition or obsolescence present, whether arising from physical, functional or economic causes.

Income Approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for an asset than an amount equal to the present worth of anticipated future benefits (income) from the same or equivalent asset with similar risk.

DETERMINATION OF THE VALUATION METHOD

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The valuation of the NAV of the Company will be assessed in two phases. In phase one, the value of the property interests were assessed by our property valuer. We have been provided the market value of the property interests that were based on the same scope of valuation as at 30 June 2017.

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LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

In phase two, we assess the fair value of the Sales Equity. Given that the primary asset of Carrianna (Hunan) is the property interest, the asset approach will be adopted. The fair value of Carrianna (Hunan) was assessed by the adjusted NAV that incorporated revaluation change due to the fair value of property interests, dividend payable, asset impairment and other contingency liabilities of the Sale Equity.

Based on the information available to us, the book value of equity interest of Carrianna (Hunan) (the ‘‘Adjusted NAV’’) is obtained from the NAV of Carrianna (Hunan) as at 30 June 2017. We have considered the upward adjustment of the property valuation in the NAV adjustment. With reference to the Balance Sheet dated 30 June 2017 provided by Carrianna (Hunan, the original net book value of the property was RMB352.96 million. According to the Property Valuation Report dated 5 July 2017, the aggregate valuation of the property was RMB681.07 million), which representing an upward adjustment of RMB328.11 million.

According to the information provided to us, Carrianna (Hunan) signed a supplementary agreement 《Overall Development of Hunan Yiyang Zishan Lake Park Operation Contract》on 11 April 2011 with Yiyang Government of Hunan province, in which the Company entitled to acquire 694.37 acres of land from Yiyang’s Government amid the provincial land use quota, at 73%-100% of standard commercial and residential land price of the land lot location. Because the standard land price is lower than the market price, the expected land acquisition right has a land premium. As at 30 June 2017, the company has 589.55 acres expected land acquisition right premium not been exercised and Carrianna (Hunan) does not include the 589.55 acres expected land acquisition right premium as an intangible asset in the 30 June 2017 balance sheet. According to the property valuation report dated 5 July 2017, the expected land acquisition costs was RMB 366 million and the land market price was RMB 652 million, the expected land acquisition right premium was about RMB286 million, which representing an upward adjustment RMB286 million.

As we are not tax expert, we have relied on Carrianna (Hunan) to assess the provision on deferred tax liabilities due to property revaluation. The amount of the deferred tax liabilities is estimated to be RMB160.78 million. It is also assumed that information provided to us is correctly calculated and free from misrepresentation. Since we are not expert nor in a position to provide tax advice, we can only rely on the information provided and we cannot verify the reasonableness of the assumption.

Based on the information available to us, we inspected the real situation of fixed assets and inventory and decided to make impairment for some obsolete assets. The carrying amount of fixed assets and inventory were reduced by about RMB10.38 thousand and RMB78.46 thousand respectively. As per information provided, there is no adjustment required for account receivables, payables, other liabilities or other assets.

– 28 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

INFORMATION AND FACTORS CONSIDERED

Our valuation requires consideration of all relevant factors affecting the operation of the business and its ability to generate future investment returns. The factors considered in the valuation included, but were not limited to, the following:

• The business nature, business contracts, project plan and related documents, if applicable, of the Company provided by Carrianna (Hunan);

• The property valuation report which states the market value of the property interests as at 30 June 2017;

• The latest available Balance Sheet and the NAV of the Company as at 30 June 2017 provided by Carrianna (Hunan);

• The dividend payables and deferred tax liabilities provided by Carrianna (Hunan);

• The economic outlook of the PRC and the general outlook of the property industry in the PRC;

• Specific economic related to this project and specific risks associated with the Company.

ASSUMPTIONS

Assumptions considered to have significant sensitivity effects in this valuation were evaluated and validated in order to provide a more accurate and reasonable basis for arriving at our assessed value. Based on our experience in valuing businesses of similar nature, we consider the assumptions made in this valuation report to be reasonable.

Major assumptions are listed as follows:

• There will be no material adverse change in the political, legal, fiscal or economic condition in the PRC and the regions in which the fixed assets located;

• The Company will retain its key management, competent personnel and technical staff to support its ongoing operation;

• Market trend and conditions for the property industry in the PRC will not deviate significantly from the economic forecasts in general;

– 29 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

• The valuation considered only the value of property interests which owned by the Company. As per information available to us, no other business operation/assets/ investment was held by the Company that may generate future economic benefit;

• Except for the 589.55 acres expected land acquisition right premium of Hunan Yiyang land, the Company holds no contracts, trademark, or any other intangible that provide economic benefit to the Company;

• The property’ value is based on the assumption that the land use right is clear, and is freely transferable. The property value is based on our property valuation performed on the valuation date as at 30 June 2017;

• As per discussion with the Company, the long term equity investment in Zishan Lake Property Management Co. Ltd, Carrianna Commercial Operation Management Co. Ltd, Grand Lake Bay Property Co. Ltd and Zilin Real Estate Co. Ltd did not make any economic contribution to Carrianna (Hunan). In this regard, we considered its cost value, i.e. the book value, in our valuation;

• As we are not tax expert, we have relied on Carrianna (Hunan) with regard to the provision on tax liabilities. It is also assumed that information provided to us is correctly calculated and free from misrepresentation. The taxation is solely based on such information provided and we cannot verify the reasonableness of the assumption;

We have assumed the reasonableness of information provided and relied to a considerable extent on such information in arriving at our Opinion of Value.

OPINION OF VALUE

With the above considerations, we have restated the balance sheet of the Company and concluded that the Sale Equity with the adjustment of the market value of the property interests, expected land acquisition right premium and contingency liabilities as a result of the property revaluation. Based on the aforesaid investigation, analysis and appraisal method employed, it is our opinion that, as at Valuation Date, the Sale Equity can be reasonably and approximately stated as RMB Eight Hundred Forty Nine Million Eight Hundred and Eight Thousand (RMB849,808,000) only.

The opinion of value was based on generally accepted appraisal procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

In accordance with our standard practice, this report is for the use of the party to whom it is addressed, and no responsibility is accepted to any third party for the whole or any part of the contents of this report.

– 30 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

We hereby certify that we have neither present nor prospective interests in the assets or the value reported.

Yours faithfully, For and on behalf of

YIYANG LINGYUN ASSET APPRAISAL COMPANY Wu Xin Ping Liu Yi Asset Valuer Asset Valuer China Certified Public Valuer China Certified Public Valuer

– 31 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

Yiyang Lingyun Asset Appraisal Company

2nd Floor, 5 Yongan Road, Yuanjiang City

Yiyang, Hunan, PRC

5 July, 2017

The Directors

Carrianna Group Holdings Company Limited 26th Floor

Wyler Centre Phase II No. 200 Tai Lin Pai Road Kwai Chung New Territories Hong Kong

Dear Sirs,

In accordance with your instructions of Tak Sing Alliance Limited (a subsidiary of Carrianna Group Holdings Company Limited) to value the property interests 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 value of such property interests as at 30 June 2017 (‘‘valuation date’’) for the purpose of incorporation in the circular.

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

In valuing the property Nos. 1-5, we have valued on the basis that the property will be developed and completed in accordance with the latest development proposal as provided to us by the Group. We have assumed that all consents, approvals and licences from relevant government authorities for the development proposal have been obtained or will be obtained without onerous conditions or undue time delays. We have also assumed that the design and construction of the development are in compliance with the local planning regulations and have been approved by the relevant authorities. In arriving at our opinion of value, we have adopted the direct comparison approach by making reference to comparable sales evidences as available in the relevant market and have also taken into account the expended construction costs and the costs that will be expended to complete the development to reflect the quality of the completed development.

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LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

In valuing the property Nos. 6-8, we have assessed the market value of the property interests by adopting the direct comparison approach and made reference to the recent transactions for similar premises in the proximity. Adjustments have been made for the differences in transaction dates, building age, floor area etc. between the comparable properties and the property.

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests. In addition, no forced sale situation in any manner is assumed in our valuation.

We have not caused title searches to be made for the property interests at the relevant government bureau in the PRC. We have been provided with certain extracts of title documents relating to the property interests. However, we have not inspected the original documents to verify the ownership, encumbrances or the existence of any subsequent amendments which may not appear on the copies handed to us. In undertaking our valuation for the property interests, we have relied on the legal opinion (the ‘‘PRC legal opinion’’) provided by the Company’s PRC legal adviser, Hunan Yi Jian Law Firm.

We have relied to a considerable extent on information provided by the Group and have accepted advice given to us by the Group on such matters as planning approvals or statutory notices, easements, tenure, occupation, lettings, site and floor areas and in the identification of the properties and other relevant matter. We have also been advised by the Group that no material facts had been concealed or omitted in the information provided to us. All documents have been used for reference only.

All dimensions, measurements and areas included in the valuation certificates are based on information contained in the documents provided to us by the Group and are approximations only. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible and we are therefore unable to report that any such parts of the properties are free from defect. No tests were carried out on any of the services.

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

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LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

Our valuation is prepared in accordance with the HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set out in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited.

Unless otherwise stated, all money amounts stated are in Renminbi (RMB). The exchange rate used in valuing the property interests in the PRC as at 30 June 2017 was RMB 1 = HK$1.153. There has been no significant fluctuation in the exchange rate for Renminbi against Hong Kong Dollars (HK$) between that date and the date of this letter.

We enclose herewith a summary of valuation and the valuation certificates.

Yours faithfully, For and on behalf of Yiyang Lingyun Asset Appraisal Company Wu You Zhang

China Registered Real Estate Appraiser

Note: Wu You Zhang is a member of China Institute of Real Estate Appraisers and Agents (CIREA) and has over 16 years’ experiences in valuations of properties in the PRC.

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LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

SUMMARY OF VALUATION

Property interests held by the Group in the PRC

		Market Value
	Property	in existing state
		as at
	Property held for development	30 June 2017
1.	A commercial and residential development land	RMB87,070,000
	(lot no. 4309030100120002000)
	located on Tuan Yuan Road to the West,	(equivalent to
	Carrianna School Land to the North,	approximately
	Huanyuan Road to the East,	HK$100,392,000)
	Yiyang City, Hunan Province,
	the PRC
2.	3 parcels of land (lot no. 010-013-0028, 9-67-14,	RMB188,340,000
	9-67-15) located on East side of Huanyuan Road,
	West Side of Tuan Yuan Road, and north side of Huangjia Alley	(equivalent to
	Yiyang City, Hunan Province, the PRC	approximately
		HK$217,156,000)
3.	A parcel of land (lot no. 09-018-035) located on	RMB38,460,000
	Tuan Yuan Road to the West,
	Yiyang City,	(equivalent to
	Hunan Province,	approximately
	the PRC	HK$44,344,000)
4.	A parcel of land (lot no. 9-67-9) located on	RMB77,640,000
	Yang Wu Ling Village and Lu Ci Qiao Village,
	Yiyang City,	(equivalent to
	Hunan Province,	approximately
	the PRC	HK$89,519,000)

– 35 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

• Property Property held for development

• 1. A parcel of land (lot no. 010-005-063) located on Qi Li Qiao Village, Yuan Heshan Dangxiao Xiaoqu, Heshan District, Yiyang City, Hunan Province, the PRC

Market Value in existing state as at 30 June 2017 RMB9,990,000

(equivalent to approximately HK$11,519,000)

Property held for sale

1. The unsold portion of Zishan Lake Gongguan New Town Mini Space, No. 539 Yiyang Road, Chaoyang Office, Gaoxin District, Yiyang City, Hunan Province, the PRC

259 car parking spaces located on Zishan Lake Gongguan, No. 539 Yiyang Road, Chaoyang Office, Gaoxin District, Yiyang City, Hunan Province, the PRC

1. Unsold portion located on Zishan Lake to the north and Yiyang Road to the south, Gaoxin District, Yiyang City, Hunan Province, the PRC

158 car parking spaces located on Zishan Lake to the north and Yiyang Road to the south, Gaoxin District, Yiyang City, Hunan Province, the PRC

RMB78,680,000

(equivalent to approximately HK$90,718,000)

RMB14,500,000

(equivalent to approximately HK$16,718,000

RMB84,962,000

(equivalent to approximately HK$97,961,000)

RMB8,850,000

(equivalent to approximately HK$10,204,000)

– 36 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

Property Property held for sale 8. 247 car parking spaces located on Zishan Lake Gongguan, Zishan Lake, Grand Lake Bay Yiyang City, Hunan Province, the PRC 9. Various commercial units on Levels 1, 2, 3 and 4 Grand Lake City Development, located on various parcels bounded by Yiyang Road to the North, Tuanyuan Road to the East and Yingbin Road to the South, Gaoxin District, Yiyang City, Hunan Province, the PRC Total:

Market Value in existing state as at 30 June 2017 RMB7,900,000 (equivalent to approximately HK$9,109,000) RMB127,240,000 (equivalent to approximately HK$146,708,000)

RMB723,632,000 (equivalent to approximately HK$834,348,000)

Notes:

Property 1 – 5 are property held for development and property 6 – 9 are property held for sale.

– 37 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

				Market Value in
			Particulars of	existing state as at
	Property	Description and Tenure	occupancy	30 June 2017
1.	A commercial and	The property comprises a parcel of	As per our on-site	RMB87,070,000
	residential	land having a total site area of	inspection, superstructure
	development land	approximately 103,651.25 sq.m.	works have been	(equivalent to
	(lot no. 4309030100		commenced.	approximately
	120002000) located	The property has been planned to be		HK100,392,000)
	on Tuan Yuan Road	developed into a commercial and
	to the West,	residential development. The
	Carrianna School	planned gross floor area of the
	Land to the North,	property is approximately 327,866
	Huanyuan Road	sq.m. for commercial and residential
	to the East,	uses.
	Yiyang City,
	Hunan Province,	According to the Company, the
	the PRC	development of the property is
		scheduled to be completed in 3rd
		quarter of 2018.
		The land use rights of the property
		were granted for terms expiring on
		29 August 2055 for commercial uses
		and expiring on 29 August 2085 for
		residential uses.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2015) No. D00322) lot no. 4309030100120002000 the land use rights of the property with a site area of approximately 103,651.25 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms expiring on 20 December 2053 for commercial uses and expiring on 20 December 2083 for residential uses.

2. According to a Planning Permit for Construction Land (Document No.: Jian Gui (Di) Zi No. 20150040), the construction site of a parcel of land with a site area of approximately 103,651.25 sq.m. is in compliance with the urban construction requirements.

3. According to a Planning Permit for Construction Works (Document No.: Jian Gui (Jian) Zi No. 20160096), the construction works of a parcel of land within Yi Guo Yong (2015) No. D00322 with a site area of approximately 78,243.50 sq.m. for the development of the property are in compliance with the urban construction requirements and are approved.

4. According to a Permit for Commencement of Construction Works (Document No.: 4309002016112101012016(088)), the construction works of the property with a total gross floor area of 79,722 sq.m. are in compliance with the requirements for works commencement and are approved.

– 38 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. According to the Company, the construction cost expended in the property as at the date of valuation was approximately RMB 50,000,000 and the construction cost to complete the property is estimated to be approximately RMB 260,000,000. In determining the market value of the property, we have taken into account such estimated construction cost to complete.

2. The capital value when completed of the proposed development is approximately RMB 321,300,000.

3. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

4. The PRC legal opinion states, inter alia, the following:

5. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the land use rights of the property.

6. (ii) In respect of the property, Carrianna (Hunan) Enterprise Co., Ltd has obtained 103,651.25 Planning Permits for Construction Land, 78,243.50 sq.m. Planning Permits for Construction Works and Permits for Commencement of Construction Works issued by the relevant government departments.

7. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

(i)	State-owned Land Use Rights Certificate	Yes
(ii)	Planning Permit for Construction Land	Yes
(iii)	Planning Permit for Construction Works	Yes
(iv)	Permit for Commencement of Construction Works	Yes

1. The property was inspected by Wu You Zhang, China Real Estate Appraiser, on 1 July 2017.

– 39 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

				Market Value in
			Particulars of	existing state as at
	Property	Description and Tenure	occupancy	30 June 2017
2.	3 parcels of	The property comprises 3 parcels of	The property is at present	RMB188,340,000
	land (lot no. 010-	land having a total site area of	vacant.
	013-0028, 9-67-14,	approximately 224,215.09 sq.m.		(equivalent to
	9-67-15) located on			approximately
	East side of	The land use rights of the property		HK217,156,000)
	Huanyuan Road,	were granted for terms of 40 years
	West Side of	for commercial uses and 70 years
	Tuanyuan Road,	for residential uses commencing
	and North Side of	from 14 April 2006.
	Huangjia Alley,	(Please see note 1)
	Yiyang City,
	Hunan Province,	The land use rights of the property
	the PRC	were granted for terms expiring on
		20 December 2053 for commercial
		uses and expiring on 20 December
		2083 for residential uses.
		(Please see note 2)

Notes:

1. Pursuant to 2 State-owned Land Use Rights Certificates (Document Nos.: Yi Guo Yong (2006) No. D00048 and Yi Guo Yong (2006) No. D00049) lot no. 9-67-14 and lot no 9-67-15, the land use rights of the property with a site area of approximately 192,932 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 40 years for commercial uses and 70 years for residential uses commencing from 14 April 2006.

2. Pursuant to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2014) No. D00133) lot no. 010-013-0028, the land use rights of the property with a site area of approximately 31,283.09 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms expiring on 20 December 2053 for commercial uses and expiring on 20 December 2083 for residential uses.

3. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

– 40 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. The PRC legal opinion states, inter alia, the following:

2. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the land use rights of the property.

3. (ii) According to the notice (ref 20171107) dated 7 April 2017 from Yiyang Town Planning Bureau, Carrianna (Hunan) Enterprise Co., Ltd got the consent from Yiyang Town Planning Bureau for the Construction Plan for the 3 parcels of land.

4. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

5. (i) State-owned Land Use Rights Certificate Yes

6. (ii) Planning Consent for Construction Land Yes

7. The property was inspected by Wu You Zhang, China Real Estate Appraiser, on 1 July 2017.

– 41 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

• Market Value in

• Particulars of existing state as at

• Property Description and Tenure occupancy 30 June 2017

• 1. A parcel of The property comprises a parcel of The property is at present RMB26,920,000 land (lot no.09land having a site area of vacant. 018-035) located on approximately 41,631.20 sq.m. (equivalent to Tuan Yuan Road approximately to the West, HK31,039,000) Yiyang City, Hunan Province, Parcels of land having a site area of The resumed Land is RMB11,540,000 the PRC approximately 17,846.66 sq.m. was pending for exchange. resumed and will be replaced by (equivalent to other parcels of land. approximately HK13,305,000)

The land use rights of the property were granted for terms of 40 years for commercial uses and 70 years for residential uses commencing from 14 April 2006.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2011) No. D00414) lot no. 09-018-035 the land use rights of the property with a site area of approximately 59,477.86 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 40 years for commercial uses and 70 years for residential uses commencing from 14 April 2006. Besides, the parcel of land with a site area of approximately 17,846.66 sq.m. (Resumed Land) has been resumed by the Yiyang Government.

2. According to the land exchange agreement with Yiyang Government, Resumed Land with a site area of approximately 17,846.66 sq.m has been resumed by the government and in return different parcels of land in other locations will be replaced.

3. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

– 42 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. The PRC legal opinion states, inter alia, the following:

2. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the land use rights of the property.

3. (ii) According Carrianna (Hunan) Enterprise Co., Ltd is entitled to 17,846.66 sq.m.land replacement in exchange for the 17,846.66 sq.m. land under D00414 resumed by the government.

4. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

5. (i) State-owned Land Use Rights Certificate Yes (ii) Land Use Rights Exchange Agreement Yes

6. The property was inspected by Wu You Zhang, China Real Estate Appraiser, on 1 July 2017.

– 43 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

				Market Value in
			Particulars of	existing state as at
	Property	Description and Tenure	occupancy	30 June 2017
4.	A parcel of	The property comprises a parcel of	The property is at present	RMB77,640,000
	land (lot no. 9-67-9)	land having a site area of	vacant.
	located on	approximately 120,039.79 sq.m.		(equivalent to
	Yang Wu Ling			approximately
	Village and Lu Ci	The land use rights of the property		HK89,519,000)
	Qiao Village,	were granted for terms of 40 years
	Yiyang City,	for commercial uses and 70 years
	Hunan Province,	for residential uses commencing
	the PRC	from 14 April 2006.

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2006) No. D00047) lot no. 9-67-9, the land use rights of the property with a site area of approximately 120,039.79 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 40 years for commercial uses and 70 years for residential uses commencing from 14 April 2006.

2. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

3. The PRC legal opinion states, inter alia, the following:

4. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the land use rights of the property.

5. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

6. (i) State-owned Land Use Rights Certificate Yes

7. The property was inspected by Chen Cheng, China Real Estate Appraiser, on 2 July 2017.

– 44 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

				Market Value in
			Particulars of	existing state as at
	Property	Description and Tenure	occupancy	30 June 2017
5.	A parcel of	The property comprises a parcel of	The property is at present	RMB9,990,000
	land (lot no. 010-	land having a site area of	vacant.
	005-063) located on	approximately 15,431.44 sq.m.		(equivalent to
	Qi Li Qiao Village,			approximately
	Yuan Heshan	The land use rights of the property		HK11,519,000)
	Dangxiao Xiaoqu,	were granted for terms expiring on
	Heshan District,	25 March 2054 for commercial uses
	Yiyang City,	and expiring on 25 March 2084 for
	Hunan Province,	residential uses.
	the PRC

Notes:

1. Pursuant to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2015) No. D00064) lot no. 010-005-063 the land use rights of the property with a site area of approximately 15,431.44 sq.m. were granted to Yiyang Grand Lake Bay Property Co., Ltd. for terms expiring on 25 March 2054 for commercial uses and expiring on 25 March 2084 for residential uses.

2. Grand Lake Bay Property Co., Ltd. is a 100% owned direct subsidiary of Carrianna (Hunan) Enterprise Co., Ltd, which is also a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

3. The PRC legal opinion states, inter alia, the following:

4. (i) Grand Lake Bay Property Co., Ltd has legally owned the land use rights of the property.

5. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

6. (i) State-owned Land Use Rights Certificate Yes

7. The property was inspected by Wu You Zhang, China Real Estate Appraiser, on 2 July 2017.

– 45 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

Market Value in Particulars of existing state as at Property Description and Tenure occupancy 30 June 2017 6. The unsold portion of As per the information provided by The property is subject to RMB 78,680,000 Zishan Lake the Group, the property comprises various tenancies with the Gongguan New Town the unsold portion of a 24-storey latest expiry date on 8 (equivalent to Mini Space, composite buildings completed in October 2026 at a total approximately No. 539 Yiyang Road, 2015. monthly rent of RMB HK$ 90,718,000) Chaoyang Office, 334,906 for commercial Gaoxin District, The unsold portion of the property uses. Yiyang City, comprises of 9 commercial units, Hunan Province, and 10 residential units having the The remaining portion of the PRC total gross floor area of the property is vacant. approximately 9,709.62 sq.m. and 259 car parking spaces.

The land use rights of the property were granted for terms of 70 years for residential use and 40 years for commercial use commencing from 1 August 2007.

Notes:

1. According to a State-owned Land Use Rights Certificate (Document No.: Yi Guo Yong (2007) No. D00380), the land use rights of the property with a total site area of approximately 16,026.49 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 70 years for residential use and 40 years for commercial use commencing from 1 August 2007.

2. As per the information provided by the Group, according to 9 Building Ownership Certificates (Document Nos: Yi Fang Quan Zheng Gao Xin Zi Nos. 2016006712, 2016006995, 2016006996, 2016006997, 2016006998, 2016006999, 2016007000, 2016007036 and 2016007328) were granted to Carrianna (Hunan) Enterprise Co., Ltd., the building portion of the property has a total gross floor area of approximately 9,152.87 sq.m. for commercial use.

3. As per the information provided by the Group, according to 10 Building Ownership Certificates (Document Nos: Yi Fang Quan Zheng Gao Xin Zi Nos. 2016006655, 2016006656, 2016006657, 2016006658, 2016006659, 2016006660, 2016006661, 2016006662, 2016006663 and 2016006683) were granted to Carrianna (Hunan) Enterprise Co., Ltd., the building portion of the property has a total gross floor area of approximately 556.75 sq.m. for residential use.

– 46 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. In the valuation of the property, we have attributed no commercial value to 259 car parking spaces, which have not obtained title Ownership Certificates. We have ascribed no commercial value to the car park. For reference purposes, we are of the opinion that the value of these car parking spaces as at the date of valuation would be RMB14,500,000 (equivalent to approximately HK$16,718,500) assuming relevant title ownership certificates have been obtained and they could be freely transferred.

2. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

3. The PRC legal opinion states, inter alia, the following:

4. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the Land Use Rights and Building Ownership Rights of the property.

5. (ii) The 9 commercial units and 10 residential units of Zishan Lake Gongguan are not subject to seizure and mortgage.

6. (iii) Carrianna (Hunan) Enterprise Co., Ltd is entitled to transfer, lease, pledge or otherwise dispose of the 19 units of Zishan Lake Gongguan in accordance with the law.

7. (iv) Carrianna (Hunan) Enterprise Co., Ltd has the right of use for 259 car parking spaces and is free to lease or transfer the right of use to other parties.

8. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

9. (i) State Owned Land Use Rights Certificate Yes (ii) Building Ownership Rights Certificate Yes (iii) Right of use for parking spaces Yes

10. The property was inspected by Chen Cheng, China Real Estate Appraiser, on 1 July 2017.

– 47 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

Market Value in Particulars of existing state as at Property Description and Tenure occupancy 30 June 2017 7. The unsold As per the information provided by The property is vacant. RMB84,962,000 portion located on the Group, the property comprises Zishan Lake the unsold portion of a 4-storey (equivalent to to the north and shopping arcade, 8 residential units approximately Yiyang Road and 158 car parking spaces. The HK$ 97,961,000) to the south, property was completed in 2014. Gaoxin District, Yiyang City, As advised from the Group, the Hunan Province, breakdown of gross floor areas of the PRC the shopping arcade is as following:

Levels Level 1 Level 2 Level 3 Level 4 Total	Gross Floor Area (in sq.m. approximately) 4,917.18 4,917.18 4,917.18 4,917.18
	19,884.71

The property was granted with land use rights for terms of 70 years for residential use and 40 years for commercial use commencing from 14 April 2006.

Notes:

1. According to a State-owned Land Use Rights Certificate (Document No: Yi Guo Yong (2010) No. D00008), the land use rights of the property with a total site area of approximately 25,211.77 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 70 years for residential use and 40 years for commercial use commencing from 26th January 2010.

2. According to a Building Ownership Certificate (Document No: Yi Fang Quan Zheng Gao Xin Zi No. 2015002814), the building portion of the property has a total gross floor area of approximately 19,884.71 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for commercial use.

– 48 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. According to 8 Building Ownership Certificate (Document No: Yi Fang Quan Zheng Gao Xin Zi No. 2015002983-2015002990, the building portion of the property has a total gross floor area of approximately 941.60 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for residential use.

2. According to the cooperation agreement signed by Carrianna (Hunan) Enterprise Co., Ltd with the main contractor Yiyang Fei Xiang Property Development Co., Ltd. of the property, Yiyang Fei Xiang Property Development Co., Ltd. is entitled to 47% sharing of 4-storey shopping arcade and 8 residential units (cooperated units). Carrianna (Hunan) Enterprise Co. Ltd has only 53% interest in the property market value that is RMB45,030,000 or approximately HK$51,920,000.

3. In the valuation of the property, we have attributed no commercial value to 158 car parking spaces, which have not obtained title Ownership Certificates. We have ascribed no commercial value to the car park. For reference purposes, we are of the opinion that the value of these car parking spaces as at the date of valuation would be RMB8,850,000 (equivalent to approximately HK$10,204,000) assuming relevant title ownership certificates have been obtained and they could be freely transferred. According to the cooperation agreement signed between Carrianna (Hunan) Enterprise Co., Ltd with Yiyang Fei Xiang Property Development Co., Ltd. Yiyang Fei Xiang Property Development Co., Ltd. is entitled to 47% sharing of 100 car parking spaces RMB2,630,000 amid the 158 car parking spaces. Therefore, Carrianna (Hunan) Enterprise Co., Ltd is entitled to RMB6,220,000 (RMB8,850,000 – RMB2,630,000) or approximately HK$7,172,000.

4. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

5. The PRC legal opinion states, inter alia, the following:

6. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the Land Use Rights and Building Ownership Rights of the property.

7. (ii) The 4-storey shopping arcade and 8 residential units of shopping arcade are not subject to seizure and mortgage.

8. (iii) Carrianna (Hunan) Enterprise Co., Ltd is entitled to transfer, lease, pledge or otherwise dispose of the 19 units of Zishan Lake Gongguan in accordance with the law.

9. (iv) Carrianna (Hunan) Enterprise Co., Ltd has the right of use for 158 car parking spaces and is free to lease or transfer the right of use to other parties.

10. (v) According to the cooperation agreement with Yiyang Fei Xiang Property Development Co., Ltd, Carrianna (Hunan) Enterprise Co., Ltd shares only 53% interest of 4-storey shopping arcade, 8 residential units of shopping arcade, 100 car parking spaces and 100% interest of 58 car parking spaces.

11. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

12. (i) State Owned Land Use Rights Yes (ii) Building Ownership Rights Certificate Yes (iii) Right of use for parking spaces Yes (iv) Cooperation agreement with Yiyang Fei Xiang Property Development Co., Ltd. Yes

13. The property was inspected by Chen Cheng, China Real Estate Appraiser, on 1 July 2017.

– 49 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

• Market Value in

• Particulars of existing state as at

• Property Description and Tenure occupancy 30 June 2017

• 1. 247 car parking As per the information provided by The property is vacant. No Commercial Value spaces located the Group, the property comprises on Grand Lake Bay 247 car parking spaces. The 梓湖灣, property was completed in 2009. Yiyang City, Hunan Province, The property was granted with land the PRC use rights for terms of 70 years for residential use and 40 years for commercial use commencing from 14th April 2006.

Notes:

1. We have not been provided with the Real Estate Ownership Certificates of the property. According to Stateowned Land Use Rights Certificates (Document Nos: Yi Guo Yong (2006) Nos. D00016, D00017), the land use rights of the property with a total site area of approximately 95,832.00 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 70 years for residential use and 40 years for commencing use commencing from 14 April 2006.

2. In the valuation of the property, we have attributed no commercial value to 247 car parking spaces, which have not obtained title Ownership Certificates. We have ascribed no commercial value to the car park. For reference purposes, we are of the opinion that the value of these car parking spaces as at the date of valuation would be RMB7,900,000 (equivalent to approximately HK$9,109,000) assuming relevant title ownership certificates have been obtained and they could be freely transferred.

3. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

4. The PRC legal opinion states, inter alia, the following:

5. (i) Carrianna (Hunan) Enterprise Co., Ltd has the right of use for 247 car parking spaces and is free to lease or transfer the right of use to other parties.

6. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

(i) State Owned Land Use Rights Certificate Yes (ii) Right of use for parking spaces Yes

1. The property was inspected by Chen Cheng, China Real Estate Appraiser, on 2 July 2017.

– 50 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

VALUATION CERTIFICATE

				Market Value in
			Particulars of	existing state as at
	Property	Description and Tenure	occupancy	30 June 2017
9.	Various commercial	The property comprises various	The property is subject to	RMB 127,240,000
	units on	commercial units of a	various tenancies at a
	Levels 1, 2, 3 and 4	comprehensive commercial/	total monthly rent of	(equivalent to
	Grand Lake City	residential developments to be	RMB 390,106 with the	approximately
	Development,	developed by different phases.	latest expiry date on 29	HK$ 146,708,000)
	located on various	Phase I of the development of the	April 2021 for
	parcels bounded by	property were completed in 2008	commercial uses.
	Yiyang Road	and 2009.
	to the North,		The remaining portion of
	Tuanyuan Road to the	The total gross floor area of the	the property is vacant.
	East and Yingbin	property is approximately 30,956.71
	Road to the South,	sq.m.
	Gaoxin District,
	Yiyang City,	The property was granted with land
	Hunan Province,	use rights for terms of 70 years for
	the PRC	residential use and 40 years for
		commercial use commencing from
		14th April 2006.

Notes:

1. We have not been provided with the Real Estate Ownership Certificates of the property. According to Stateowned Land Use Rights Certificates (Document Nos: Yi Guo Yong (2012) Nos. D00181, D00184), the land use rights of the property with a total site area of approximately 38,133.5 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for terms of 70 years for residential use and 40 years for commercial use commencing from 14 April 2006.

2. According to 302 Building Ownership Certificates (Document No: Yi Fang Quan Zheng Gao Xin Zi Nos. 2015020120-2015020137, 2015020214-2015020219, 2015020228, 2015020260, 2015020261, 2015020266, 2015020274, 2015020282, 2015020283, 2015020294-2015020298, 711000404-711000415, 712010036, 712010042-712010046, 712010050, 712010059-712010067, 712010069-712010093, 712010211-712010260, 712010262-712010275, 712010278, 712010284, 712010288-712010292, 712010318, 712010320-712010324, 712010326-712010339, 712010344, 712010359, 712010374, 712010381, 712010387, 712010389, 712010391, 712010398-712010438, 712010441, 712010443, 712010445-712010448, 712010451-712010454, 712010458, 712010460-712010470, 713003380-713003388, 713003390-713003397, 713013376-713013412), the building portion of the property has a total gross floor area of approximately 30,956.71 sq.m. were granted to Carrianna (Hunan) Enterprise Co., Ltd. for commercial use.

– 51 –

LETTER FROM YIYANG LINGYUN ASSET APPRAISAL COMPANY

1. Carrianna (Hunan) Enterprise Co., Ltd. is a 92.21% owned indirect subsidiary of Carrianna Group Holdings Company Limited.

2. The PRC legal opinion states, inter alia, the following:

3. (i) Carrianna (Hunan) Enterprise Co., Ltd has legally owned the Land Use Rights and Building Ownership Rights of the property.

4. (ii) The 277 commercial units of Grand Lake City Development, with a floor area of 20,666.24 sq.m. were pledged to Hunan Yiyang Chang Sha Bank for a value of RMB70,000,000.

5. (iii) Carrianna (Hunan) Enterprise Co., Ltd is entitled to transfer, lease, pledge or otherwise dispose of the 25 commercial units of Grand Lake City Development, with a floor area of 20,666.24 sq.m. in accordance with the law.

6. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion and information provided by the Company are as follows:

7. (i) State Owned Land Use Rights Certificate Yes (ii) Building Ownership Rights Certificate Yes

8. The property was inspected by Chen Cheng, China Real Estate Appraiser, on 2 July 2017.

– 52 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group, together with the accompanying notes, for each of the three years ended 31 March 2015, 2016 and 2017 are disclosed in the annual reports of the Company for the financial years ended 31 March 2015 (pages 58 to 221), 31 March 2016 (pages 64 to 220), and 31 March 2017 (pages 73 to 233), respectively, and are incorporated by reference into this circular.

The said reports of the Company are available on the Company’s website (www.carrianna.com) and the website of the Stock Exchange (www.hkexnews.hk).

STATEMENT OF INDEBTEDNESS

Borrowings

At the close of business on 31 July 2017, the Group had outstanding borrowings of approximately HK$1,249,136,000, details of which are set out below:

Secured bank loans Unsecured other loan Finance lease payables	HK$’000 1,226,514 22,550 72
	1,249,136

At the close of business on 31 July 2017, certain of the Group’s property, plant and equipment, investment properties, properties under development, properties held for sale, time deposits, and financial assets at fair value through profit or loss were pledged to secure certain general banking and other facilities granted to the Group. In addition, rental income generated in respect of certain investment properties of the Group was assigned to certain banks to secure certain loan facilities granted to the Group.

At the close of business on 31 July 2017, the Group had contingent liabilities relating to guarantees given to banks for mortgage loan facilities granted to purchasers of properties of approximately HK$195,919,000.

Foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 31 July 2017. The directors are not aware of any material changes in the Group’s indebtedness and contingent liabilities since the close of business on 31 July 2017.

– 53 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables, the Group did not have any debt securities issued and outstanding, or authorised or otherwise created but unissued, any term loans (secured, unsecured, guaranteed or not), any other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments (whether secured or unsecured, guaranteed or not), any mortgages or charges, or other material contingent liabilities or guarantees at the close of business on 30 June 2017.

WORKING CAPITAL

The Directors after due and careful enquiry, are of the opinion that, in the absence of unforeseeable events and after taking into account the estimated net proceeds from the Disposals to be received in the next 12 months from the date of publication of this circular, the internal resources and present banking facilities available to the Group, the Group has sufficient working capital for its present working capital requirements, that is, for at least the next 12 months from the date of publication of this circular.

MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2017, being the date to which the latest published audited consolidated accounts of the Group were made up, as at the Latest Practicable Date.

TRADING AND FINANCIAL PROSPECTS OF THE GROUP

The Disposals will provide additional funding for new investments and acquisitions in future and will substantially increase general working capital of the Group. Hence, the Directors are of the opinion that, save as disclosed elsewhere in this circular and in the absence of unforeseeable events, the trading and financial prospects of the Group will be positively affected by the Disposals.

– 54 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below are the unaudited consolidated statements of financial position of the Target Group as at 31 March 2015, 2016 and 2017 and the unaudited consolidated statements of profit or loss, unaudited consolidated statements of comprehensive income, unaudited consolidated statements of changes in equity and unaudited consolidated statements of cash flows of the Target Group for the years ended 31 March 2015, 2016 and 2017, and certain explanatory notes (the ‘‘Unaudited Consolidated Financial Information’’). The Unaudited Consolidated Financial Information has been presented on the basis set out in note 2 of the notes to the Unaudited Consolidated Financial Information of the Target Group and are prepared in accordance with the significant accounting policies adopted by the Company as shown in its annual report for the year ended 31 March 2017, and Rule 68(2)(a)(i) of Chapter 14 of the Listing Rules.

The Unaudited Consolidated Financial Information is prepared by the Directors solely for the purpose of inclusion in this circular in connection with the Disposals. The Company’s auditors, Ernst & Young, (the ‘‘reporting accountants’’) were engaged to review the Unaudited Consolidated Financial Information of the Target Group set out on pages 54 to 61 of this circular in accordance with Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ and with reference to Practice Note 750 ‘‘Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal’’ issued by the Hong Kong Institute of Certified Public Accountants.

A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountants to obtain assurance that the reporting accountants would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountants do not express an audit opinion.

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

– 55 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

1. UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

REVENUE Cost of sales Gross profit Other income and gains, net Selling and distribution expenses General and administrative expenses Other expenses, net PROFIT/(LOSS) BEFORE TAX Income tax credit PROFIT/(LOSS) FOR THE YEAR	Year ended 31 March 2017 2016 2015 HK$’000 HK$’000 HK$’000 83,681 160,774 37,728 (68,414) (103,832) (34,429) 15,267 56,942 3,299 605 21,009 1,398 (4,775) (3,576) (3,266) (9,412) (7,758) (10,998) (803) (1,256) – 882 65,361 (9,567) 3,910 2,807 7,304 4,792 68,168 (2,263)

– 56 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

2. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PROFIT/(LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME/(LOSS) Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent periods*: Exchange differences on translation to presentation currency OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR	Year ended 31 March 2017 2016 2015 HK$’000 HK$’000 HK$’000 4,792 68,168 (2,263) (30,671) (33,530) 2,780 (30,671) (33,530) 2,780 (25,879) 34,638 517

• From the perspective of the Target Group.

– 57 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

3. UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

NON-CURRENT ASSETS Property, plant and equipment Goodwill Other intangible assets Properties under development Total non-current assets CURRENT ASSETS Properties under development Properties held for sale Debtors, deposits and prepayments Due from directors Due from the Remaining Group Structured deposits Restricted cash Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade creditors Sundry creditors, accruals and deposits received Due to directors Due to the Remaining Group Interest-bearing bank borrowings Tax payable Total current liabilities	2017 HK$’000 9,666 31,390 359,394 546,768 947,218 101,746 349,811 79,060 1,003 92,208 2,593 4,392 15,539 646,352 (40,881) (52,690) – (80,661) (10,148) (22,724) (207,104)	At 31 March 2016 HK$’000 10,102 31,390 359,394 610,886 1,011,772 51,239 390,284 69,985 – 77,455 5,903 5,701 23,423 623,990 (43,799) (79,012) (15,395) (80,292) – (26,633) (245,131)	2015 HK$’000 6,786 31,390 359,394 725,182 1,122,752 186,081 303,767 101,968 – 137,033 – 5,754 16,138 750,741 (50,752) (147,726) (18,852) (79,914) (94,205) (16,474) (407,923)

– 58 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank borrowings Deposits received Deferred tax Total non-current liabilities Net assets EQUITY Issued capital Reserves Total equity	2017 HK$’000 439,248 1,386,466 (67,650) (176) (231,305) (299,131) 1,087,335 441,719 645,616 1,087,335	At 31 March 2016 HK$’000 378,859 1,390,631 – (187) (232,838) (233,025) 1,157,606 441,719 715,887 1,157,606	2015 HK$’000 342,818 1,465,570 – (198) (252,044) (252,242) 1,213,328 460,258 753,070 1,213,328

– 59 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

4. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 April 2014 Loss for the year Other comprehensive income for the year: Exchange differences on translation to presentation currency Total comprehensive income/(loss) for the year At 31 March 2015 and 1 April 2015 Profit for the year Other comprehensive loss for the year: Exchange differences on translation to presentation currency Total comprehensive income/(loss) for the year Disposal of land to a shareholder Reduction of issued capital At 31 March 2016 and 1 April 2016 Profit for the year Other comprehensive loss for the year: Exchange differences on translation to presentation currency Total comprehensive income/(loss) for the year Final 2016 dividend At 31 March 2017	Issued capital HK$’000 460,258 – – – 460,258 – – – – (18,539) 441,719 – – – – 441,719	Exchange fluctuation reserve Capital reserve HK$’000 HK$’000 45,599 15,277 – – 2,780 – 2,780 – 48,379 15,277 – – (33,530) – (33,530) – – – – – 14,849 15,277 – – (30,671) – (30,671) – – – (15,822) 15,277	Other reserve HK$’000 686,379 – – – 686,379 – – – (90,360) 18,539 614,558 – – – – 614,558*	Retained profits HK$’000 5,298 (2,263) – (2,263) 3,035 68,168 – 68,168 – – 71,203 4,792 – 4,792 (44,392) 31,603*	Total equity HK$’000 1,212,811 (2,263)
					2,780
					517
					1,213,328 68,168 (33,530)
					34,638
					(90,360) –
					1,157,606 4,792 (30,671)
					(25,879)
					(44,392)
					1,087,335

• These reserve accounts comprise the consolidated reserves of HK$753,070,000, HK$715,887,000 and HK$645,616,000 as at 31 March 2015, 2016 and 2017, respectively, in the unaudited consolidated statements of financial position.

– 60 –

APPENDIX II

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

5. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before tax Adjustments for: Gain on disposal of items of property, plant and equipment, net Gain on disposal of a subsidiary Depreciation Increase in properties under development Decrease in properties held for sale Decrease/(increase) in debtors, deposits and prepayments Increase in amounts due from directors Decrease/(increase) in amount due from the Remaining Group Decrease in trade creditors Increase/(decrease) in sundry creditors, accruals and deposits received Decrease in amounts due to directors Increase/(decrease) in amounts due to the Remaining Group Cash generated from/(used in) operations Overseas taxes paid Net cash flows from/(used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment Proceeds from disposal of items of property, plant and equipment Decrease/(increase) in restricted cash Investment in structured deposits Redemption of structured deposits Net cash flows from/(used in) investing activities

Year ended 31 March 2017 2016 2015 HK$’000 HK$’000 HK$’000 882 65,361 (9,567) (28) – – – (20,885) – 914 790 726 1,768 45,266 (8,841) (26,867) (38,023) (130,098) 46,273 86,912 10,027 (12,649) 27,506 48,832 (1,026) – – (19,410) 52,972 15,495 (539) (4,161) (23,004) (22,507) (61,694) 44,679 (14,884) (2,440) – 4,860 5,034 (10,805) (44,981) 111,372 (53,715) (673) (5,768) (7,398) (45,654) 105,604 (61,113) (412) (14) (466) 69 – – 1,020 (561) (561) – (5,903) – 3,056 – – 3,733 (6,478) (1,027)

– 61 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

CASH FLOWS FROM FINANCING ACTIVITIES New bank loans Repayment of bank loans Dividend paid to a non-controlling shareholder Dividend paid to the Remaining Group Net cash flows from/(used in) financing activities NET INCREASE/(DECREASE)IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCE OF CASH AND CASH EQUIVALENTS Cash and bank balances

Year ended 31 March 2017 2016 2015 HK$’000 HK$’000 HK$’000 80,710 – 56,673 (1,151) (90,883) (21,410) (3,460) – – (40,932) – – 35,167 (90,883) 35,263 (6,754) 8,243 (26,877) 23,423 16,138 42,940 (1,130) (958) 75 15,539 23,423 16,138 15,539 23,423 16,138

– 62 –

UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

NOTES TO THE FINANCIAL INFORMATION OF THE TARGET GROUP

For each of the years ended 31 March 2015, 2016 and 2017

1. GENERAL INFORMATION

The Target Company and its subsidiaries (together, the ‘‘Target Group’’) principally engaged in property development in the PRC.

On 18 July 2017 (after trading hours), the Vendor (an indirect wholly-owned subsidiary of the Company), the Purchaser, Hunan Wancheng and the Target Company entered into the Equity Transfer Agreement, pursuant to which the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire (i) the First Sale Equity for a cash consideration of RMB442,500,000, and (ii) the Second Sale Equity for a cash consideration of RMB357,500,000. Upon Completion, the Target Group will cease to be subsidiaries of the Company.

2. BASIS OF PREPARATION

The Unaudited Consolidated Financial Information of the Target Group has been prepared solely for the purpose of inclusion in the circular to be issued by the Company in connection with the Disposals in accordance with Rule 14.68(2)(a)(i) of the Listing Rules and in accordance with the relevant accounting policies adopted by the Company as set out in its annual report for the year ended 31 March 2017, which conform with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. The Unaudited Consolidated Financial Information of the Target Group has been prepared under the historical cost convention. The Unaudited Consolidated Financial Information of the Target Group is presented in Hong Kong dollars (HK$) and all values are rounded to the nearest thousand except when otherwise indicated. The Unaudited Consolidated Financial Information of the Target Group does not contain sufficient information to constitute a complete set of financial statements as described in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’ nor a complete condensed interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants, and that it should be read in connection with the relevant published annual financial statements of the Company.

– 63 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

The Remaining Group is principally engaged in investment holding, property investment and development, the operations of hotel, restaurant and food businesses.

Set out below is the management discussion and analysis and financial review on the Remaining Group:

(i) For the year ended 31 March 2017

Business review

For the year ended 31 March 2017, the Remaining Group’s turnover was HK$783,787,000 increased by 11% from last year. Excluding the estimated loss on disposal of the Target Group, the Remaining Group’s profit attributable to shareholders was HK$123,027,000, increased by 120% from last year. Excluding property revaluation gain and related taxes, the Remaining Group’s profit attributable to shareholders was HK$94,474,000, increased by 174% from last year. During the year, the Remaining Group’s restaurant, food and hotel businesses recorded turnover growth with a combined growth of 15%. However, such growth was partially offset by the reduction in the Remaining Group’s property segment revenue. Increase in the Remaining Group’s profit attributable to shareholders was mainly due to the increase in operating profit from restaurant, food and hotel business and the significant improvement in operating loss in the Remaining Group’s property sector. On the other hand, the depreciation of RMB by more than 5% last year partially offset the growth of the Remaining Group’s profit attributable to shareholders excluding property revaluation gain and related taxes.

– 64 –

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Scale of Operations

The table below shows the scale of operations with respect to the sales, profits attributable to shareholders (excluded the estimated loss on disposal of the Target Group) and the net asset value of the Target Group and the Remaining Group for the year ended 31 March 2017:

	Year ended
	31 March
	2017
	HK$000
The Group
Sales	867,468
Profit attributable to shareholders	127,446
NAV	3,529,584
The Target Group
Sales	83,681
Profit attributable to shareholders	4,419
NAV	227,852*
The Remaining Group
Sales	783,787
Profit attributable to shareholders	123,027
NAV	3,301,732*
Percentage of the Target Company’s operation to
the Group
Sales	9.6%
Profit attributable to shareholders	3.5%
NAV	6.5%
Percentage of the Remaining Group’s operation to
the Group
Sales	90.4%
Profit attributable to shareholders	96.5%
NAV	93.5%

• Includes the effect of the Consideration

– 65 –

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

(a) Property

The Remaining Group’s turnover for property segment for the year ended 31 March 2017 was HK$71,010,000, decreased by 16% from last year. The Remaining Group’s segment profit was HK$124,134,000, increased by 31% from last year. Excluding property revaluation gain, segment profit was HK$95,186,000, increased by 35% from last year. Decrease in turnover was mainly due to the decrease in rental income arisen by RMB depreciation. However, significant improvement of operating loss in China East City Project in Lianyungang of Jiangsu Province turned the Remaining Group’s segment profit into growth.

The Remaining Group’s 50% owned Dongguan Home Town completed construction for the east tower at the end of 2016. Export e-commerce product exhibition and trading centre located on the sixth floor and exhibition centre located at the basement floor had started operation. Other floors will be opened for business by phases together with the west and north tower from the end of 2017. A total of 789 units, 40,312 sq.m, of Home Town residential apartments had been sold with sales revenue of over RMB440,000,000. These units will be delivered to customer by September to October 2017 and booked as sales revenue. On the other hand, Home Town owned 30% share of Red Star Macalline furniture mall which had started operation in September 2016. Rent out rate was near 100%. Rental income will grow continuously from the second year of operation.

On 5 November 2016, the Remaining Group entered into an agreement to jointly develop a city renewal project at Maguling, Luohu district of Shenzhen (see the Group’s announcement on 5 November 2016). The project was recently submitted to government for redevelopment approval. If the project is successfully developed on time, it will bring in substantial property development profits to the Remaining Group in 3 to 4 year time.

– 66 –

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Rental income from the Remaining Group’s investment properties was HK$69,718,000, decreased by 10% from last year as a result of RMB devaluation of 5%. Excluding RMB devaluation effect, rental reduction was 5% from last year. The main reason for the reduction was a major tenant in Carrianna Friendship Square had new renovation, a rent free period of three months was granted which resulted in rental reduction of about RMB1 million. In April 2017, the Remaining Group sold its 6 floors, 8,398 sq.ft., commercial property in Tak Sing Alliance Building for HK$68,648,000 (see announcement on 12 April 2017). The rental growth as well as yield against selling price were low for Tak Sing Alliance Building. The proceeds for the sales was used to buy, at different dates, 3 retail shops with good growth potential at Kowloon urban area. Rental yield was improved from 2.6% to 3.2%. On the other hand, construction for the factory building in Panyu Guangdong province had been completed and was leased at a monthly rental of RMB300,000 to a tenant who will start to move in by phases from fourth quarter of 2017. For the coming year, rental income will continue to grow mildly and continue to provide steady cash contribution to the Remaining Group.

(b) Restaurant, Food and Hotel

Turnover of the Remaining Group’s restaurant, food and hotel segment for the year ended 31 March 2017 was HK$712,777,000, increased by 15% from last year. Segment profit was HK$79,830,000, increased by 14% from last year. All restaurant, food and hotel businesses recorded growth in sales revenue during the year. Operating results of restaurant and hotel recorded satisfactory growth while food business operating profit was about the same as last year. Excluding the effect of RMB devaluation, food business profit increased by 4% from last year.

The Remaining Group’s restaurant turnover for the year was HK$335,653,000, increased by 16% from last year. Carrianna restaurants turnover increased by 19% from last year. Except Shenzhen Jing Du shop, all Carrianna restaurants in mainland China as well as the Hong Kong shop recorded growth in sales revenue. Delicious Group of restaurants also recorded turnover of 13% with the growth mainly came from new shops opened during the year. Due to fierce competition, most old Delicious shops recorded reduction in turnover from last year. As at 31 March 2017, Delicious Group operated 17 restaurants in Hong Kong. In addition to Carrianna and Delicious Group of restaurants, the new ‘ShunYi（’ 順意）brand of Shunde cuisine restaurant opened in October 2016 in Shenzhen also contributed HK$8,000,000 of turnover to the Remaining Group’s restaurant business.

– 67 –

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

For the coming year, Carrianna restaurants will continue to control purchasing cost, improve operating flow to enhance efficiency and strengthen promotion of wedding banquet and business dining. Management will ensure the profit growth trend can be continued. Delicious Group plans to open 4 to 5 more shops for the coming year. As operating results for old shops started to improve in second quarter of 2017, together with profit contribution from new shops, management is cautiously optimistic about the operating results of Delicious Group for the coming year. On the other hand, the Remaining Group will open a Korean restaurant and a Vietnam/Thailand cuisine restaurant in Causeway Bay in September 2017. Together with the new Shunde cuisine restaurant in Shenzhen, the Remaining Group’s restaurant business will become even more diversified.

The Remaining Group’s food business turnover for the year was HK$319,808,000, increased by 16% from last year. Operating profit was about the same as last year. Excluding the effect of RMB devaluation, operating profit of food business increased by more than 5% from last year. Major turnover and profit contributor continued to be mooncake sales. The Remaining Group’s turnover of food business in the mainland increased by 4% from last year and increased by 10% in RMB term. The growth mainly came from Hainan province mooncake sales while sales in Kunming and Shenzhen were about the same as last year. During the year, construction progress of Hainan new food factory was satisfactory. Construction is expected to be completed by first quarter of 2018 and production at the new factory is scheduled to start in second quarter of 2018. Profit Smart Group in Hong Kong had recorded a full year of operating results for this year while last year had only recorded 9 months. As a result, turnover increased significantly from the year. However, operating profit reduced due to new shops opening expenses and significant operating loss in the Un Chau shop at Shum Shui Po. For the coming year, the current level of mooncake sales revenue and operating profit should be maintained. Profit Smart Group will close shops with large operating loss and open 4 to 5 new shops. As shops opened in recent months are contributing satisfactory profit, together with improvement in factory direct sales profit, Profit Smart Group profit will return to growth.

The Remaining Group’s turnover of hotel business for the year was HK$57,316,000, increased by 3% from last year. Carrianna Hotel in Yiyang, Hunan Province recorded growth in turnover and operating cash while operating loss also reduced by 27% from last year. Turnover of Foshan Carrianna Hotel in RMB term was about the same as last year while operating results improved by 12%. For the coming year, the management will continue to improve service quality and put more effort on sales promotion in order to continue the growth in turnover and operating cash.

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APPENDIX III

Liquidity and financial resources

As at 31 March 2017, the Remaining Group’s cash and cash equivalents amounted to HK$268,676,000, which were denominated in Hong Kong dollars, Renminbi Canadian dollars and United States dollars of HK$166,817,000, HK$92,450,000, HK$9,278,000 and HK$131,000, respectively. The Group’s free cash and bank balances, structured deposits, and derivative financial instrument were HK$278,295,000.

The Remaining Group’s total borrowings amounted to HK$1,154,546,000 comprised interest-bearing bank and other borrowings, finance lease payable and derivative financial instrument. All interest-bearing bank and other borrowings bear interest at floating rates. Netting off cash deposits pledged for borrowings, the Group’s net bank and other borrowings were HK$1,107,498,000. Net bank and other borrowings less free cash and bank balances, structured deposits and derivative financial instrument were HK$829,203,000.

The Remaining Group’s gearing ratio, which was defined as the Remaining Group’s interest-bearing bank and other borrowings, net of cash and cash equivalents, structured deposits and pledged time deposits as percentage of the Remaining Group’s total equity, was approximately 25%.

The Remaining Group adopts conservative treasury policy in cash and financial management. The objective of the Remaining Group’s treasury policy is to maintain a sound financial position by holding an appropriate level of cash to meet its operating requirements and long-term business development needs.

Foreign exchange exposure

The Remaining Group mainly operates in Hong Kong and Mainland China with most of the Remaining Group’s monetary assets, liabilities and transactions principally denominated in Hong Kong dollars and Renminbi, respectively. Majority of the sales, purchases and expenditure incurred by the operating units of the Remaining Group were denominated in the units’ functional currencies and as a result, the Remaining Group does not anticipate significant transactional currency exposures.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Contingent liabilities and future commitment

As at the end of the reporting period, the Remaining Group had contingent liabilities relating to guarantees given to banks for mortgage loan facilities granted to purchasers of properties of approximately HK$12,337,000.

Charges on the Group’ Assets

As at the end of the reporting period, certain of the Remaining Group’s property, plant and equipment, investment properties, properties held for sale, time deposits and financial assets at fair value through profit or loss with a total carrying value of approximately HK$1,463,501,000 were pledged to secure general banking, trade finance and other facilities granted to the Remaining Group. In addition, rental income generated in respect of certain investment properties of the Remaining Group was assigned to banks to secure loan facilities granted to the Remaining Group.

Material acquisition and disposal

On 5 November 2016, Carrianna (Shenzhen) Investment Co., Ltd.（佳寧娜（深 圳）投資有限公司）(‘‘Carrianna Shenzhen’’), an indirect wholly-owned subsidiary of the Remaining Group, entered into the Cooperation Agreement with Yaohuan (Shenzhen) Properties Co., Ltd.（耀桓（深圳）置業有限公司）and the Guarantor in relation to the investment by Carrianna Shenzhen into the Maguling Project (see announcement dated 5 November 2016).

Pursuant to the Cooperation Agreement, Carrianna Shenzhen has conditionally agreed that it will provide funding in the aggregate amount of RMB150,000,000 to the Project Company, which amount will be contributed in stages pursuant to the actual funding needs of the Project Company. In return for the investment of RMB150,000,000 by Carrianna Shenzhen, Carrianna Shenzhen will be entitled to 15% equity interest in the Project Company.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Post balance sheet event

On 12 April 2017, Goldfield Properties Limited, an indirect wholly-owned subsidiary of the Remaining Group, entered into the Agreement for the disposal of Shops on 1st Floor, 2nd Floor, 3rd Floor and Offices on 15th Floor, 16th Floor, 17th Floor and 18th Floor, Tak Sing Alliance Building, No. 115 Chatham Road South, Kowloon, Hong Kong (the ‘‘Properties’’) with Famous Charm Limited（亮華有限公 司）(the ‘‘Purchaser’’), at a cash consideration of HK$68,647,800 (See announcement dated 12 April 2017).

Employees and remuneration policy

The Remaining Group’s staff consists of approximately 900 employees in Hong Kong and approximately 1,130 employees outside Hong Kong. The remuneration amount of the Remaining Group was HK$190,590,000 for the year ended 31 March 2017. Employees are rewarded on a performance-related basis within the general framework of the Remaining Group’s salary and bonus system.

(ii) For the year ended 31 March 2016

Business review

For the year ended 31 March 2016, the Remaining Group’s turnover was HK$706,404,000, increased by 12% from last year. Excluding the estimated loss on disposal of the Target Group, the Remaining Group’s profit attributable to shareholders was HK$55,812,000, decreased by 55% from last year. Excluding property revaluation gain and related taxes, the Remaining Group’s profit attributable to shareholders was HK$34,485,000, decreased by 53% from last year. Increase in turnover were mainly due to the increase in revenue from Hong Kong restaurant and food businesses.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Scale of Operations

The table below shows the scale of operations with respect to the sales, profits attributable to shareholders (excluded the estimated loss on disposal of the Target Group) and the net asset value of the Target Group and the Remaining Group for the year ended 31 March 2016:

	Year ended 31	Year ended 31
	March 2016
		HK$000
The Group
Sales		867,178
Profit attributable to shareholders		121,030
NAV		3,534,592
The Target Group
Sales		160,774
Profit attributable to shareholders		65,218
NAV		298,123*
The Remaining Group
Sales		706,404
Profit attributable to shareholders		55,812
NAV		3,236,469*
Percentage of the Target Company’s operation to
the Group
Sales		18.5%
Profit attributable to shareholders		53.9%
NAV		8.4%
Percentage of the Remaining Group’s operation to
the Group
Sales		81.5%
Profit attributable to shareholders		46.1%
NAV		91.6%

• Includes the effect of the Consideration

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Property

The Remaining Group’s turnover for property segment for the year ended 31 March 2016 was HK$84,389,000, decreased by 5% from last year. Segment profit was HK$94,460,000, decreased by 28% from last year. Excluding property revaluation gain and related taxes, the Remaining Group’s segment profit was HK$70,475,000, increased by 4% from last year. Decrease in turnover was mainly due to the devaluation of RMB, while significant decrease in property revaluation gain was the main cause for the segment profit reduction.

The Remaining Group’s 50 percent owned associate company, South China International Purchasing Centre Company Limited, develops the ‘Home Town’ project in Dongguan, which includes 410,000 sq.m. of furniture, construction materials and household goods mall and services apartment. Progress of the construction of the 4 six storeys shopping malls and 2 towers of services apartment of the project during the year was satisfactory. The 110,000 sq.m. east side shopping mall has passed preliminary government construction inspection and is undergoing internal decoration work. The central shopping mall will be developed as a Red Star Macalline furniture mall by Red Star Macalline Group after the land with construction in progress was sold to their Dongguan operating company during the year. The east side shopping mall is planned to start operation at the end of 2016 together with the Red Star Macalline furniture mall.

On the other hand, the north and west side shopping malls with total construction area of 160,000 sq.m. and 43,000 sq.m. respectively, 2 towers of services apartment have also been built to roof top. These two shopping malls are planned to start operation by end of 2017 or early 2018 and the services apartment is also planned to be delivered to buyers at the same time. Home Town project has 836 services apartments. As at mid June 2016, near 600 apartments were sold and the remaining units are expected to be all sold by early 2017. Sales revenue is expected to be over RMB400 million and is expected to be booked as revenue in financial year ending 31 March 2018. During the year, Home Town sold a piece of land of roughly 61,000 sq.m. together with construction in progress to the Dongguan operating company of Red Star Macalline Group and brought in RMB21,500,000 profit to the associate company.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

During the year, investment properties of the Remaining Group continued to provide stable rental revenue. Total rental income was HK$77,647,000 reduced by 5% from last year mainly due to depreciation of RMB against HKD. Carrianna Friendship Square rental income could only maintain the same level of last year due to slow down of the Shenzhen retail market.

Hotel, Restaurant and Food

The Remaining Group’s turnover for restaurant, food and hotel segment for the year ended 31 March 2016 was HK$622,015,000, increased by 14% from last year. Segment profit was HK$69,903,000, reduced by 26% from last year. The increase in turnover were mainly due to contribution of 9 months sales HK$66,235,000 from Profit Smart Group of food factory and bakeries which the Group completed acquisition on 1 July 2015 and the increase in turnover from Delicious restaurants by HK$68,956,000 to HK$165,114,000. Increase in turnover from these two businesses was partially offset by reduction in turnover from Carrianna restaurants and hotels operated in the mainland. Reduction in segment profit was mainly due to various one time adjustments of operating profit in last year amounting to HK$32,702,000. These one time adjustments include write back of payables and provisions due to closure of Beijing, Wuhan, old Kunming and old Hainan Carrianna Restaurants, fair value gain from contingent consideration of Delicious Restaurants and other non-recurring income. Excluding these write-backs, recurring operating income of the segment actually increased by HK$8,096,000, 13% from last year. Other than the increase in profit from Delicious and Profit Smart businesses, Carrianna mooncake profit also increased by 10% from last year. Carrianna restaurants operating results was roughly the same as last year while Carrianna hotels operating losses increased due to fierce competitions and government continued to control expenses in luxury star hotels.

The Remaining Group plans to expand the Hainan food factory and to add production line for other package food products. Negotiation for purchase of Industrial land is underway and construction is expected to start in early 2017. After 2 years of restructuring, the Remaining Group operates 7 restaurants in the mainland, 2 inside Carrianna Hotels in Foshan and Yiyang, one each in major Carrianna moon cake market of Kunming and Hainan and 3 in Shenzhen as at 31 March 2016. On this foundation, new restaurants will be opened with smaller size serving specialties food, provided shops with good traffic flow and acceptable rent are available.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Growth for Hong Kong restaurants and bakeries and food factory was satisfactory in last year. Total turnover for Delicious and Profit Smart Group was HK$231,348,000 with combined operating profit of HK$11,697,000. Numbers of Delicious and Gusto restaurants increased from 12 to 16 at year end date of 31 March 2016. The Remaining Group plans to increase 4 to 5 restaurants for the coming year. For Profit Smart Group, the Group also plans to increase 4 to 5 Empery bakeries for the coming year from its existing 14 bakeries. For the coming year, the Remaining Group will be operating about 40 retail outlets of restaurants and bakeries in Hong Kong. Together with direct sales from food factory, total current monthly turnover of the two businesses are roughly HK$24,000,000 and turnover for the coming year is expected to be over HK$300,000,000.

Liquidity and financial resources

As at 31 March 2016, the Remaining Group’s cash and cash equivalents amounted to HK$134,784,000, which were denominated in Hong Kong dollars, Renminbi and United States dollars of HK$72,609,000, HK$62,051,000 and HK$124,000, respectively. The Remaining Group’s free cash and bank balances and structured deposits were HK$143,371,000.

The Remaining Group’s total borrowings amounted to HK$936,594,000 comprised interest-bearing bank and other borrowings and derivative financial instrument. All interest-bearing bank and other borrowings bear interest at floating rates. Netting off cash deposits pledged for borrowings, the Remaining Group’s net bank and other borrowings were HK$832,693,000. Net bank and other borrowings less free cash and bank balances and structured deposits were HK$689,322,000. The Remaining Group’s gearing ratio, which was defined as the Remaining Group’s interest-bearing bank and other borrowings, net of cash and cash equivalents, structured deposits and pledged time deposits as percentage of the Remaining Group’s total equity, was approximately 29%.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Foreign exchange exposure

The Remaining Group mainly operates in Hong Kong and Mainland China with most of the Remaining Group’s monetary assets, liabilities and transactions principally denominated in Hong Kong dollars and Renminbi, respectively. Majority of the sales, purchases and expenditure incurred by the operating units of the Remaining Group were denominated in the units’ functional currencies and as a result, the Remaining Group does not anticipate significant transactional currency exposures.

Contingent liabilities and future commitment

As at the end of the reporting period, the Remaining Group had contingent liabilities relating to guarantees given to banks for mortgage loan facilities granted to purchasers of properties of approximately HK$18,204,000.

Charges on the Group assets

As at the end of the reporting period, certain of the Remaining Group’s property, plant and equipment, investment properties, properties under development, properties held for sale, time deposits, structured deposits and financial assets at fair value through profit or loss with a total carrying value of approximately HK$1,412,532,000 were pledged to secure general banking, trade finance and other facilities granted to the Remaining Group. In addition, rental income generated in respect of certain investment properties of the Remaining Group was assigned to banks to secure loan facilities granted to the Remaining Group.

Material acquisition and disposal

On 28 May 2015, the Remaining Group entered into a share transfer agreement for the acquisition of 60% equity interest in Profit Smart Group Holdings Limited (formerly known as ‘‘New Sheen Holdings Limited’’) which is the holding company for operating Profit Smart Group, at a cash consideration of HK$20,400,000 (See announcement dated 28 May 2015).

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

The share transfer agreement was entered with the owner and operators of Profit Smart Group bakery business and subject to an earnout payment which was calculated by any excess to annual profits of HK$5,400,000 at a price-earnings ratio (‘‘PE’’) of 6.4. Profit Smart Group was engaged in the operation of the bakery business under the names of ‘‘Empery’’（馥軒）and ‘‘PakLok’’（百樂）. Profit Smart Group operated 10 bakeries and 1 factory in Hong Kong.

The transaction was completed on 1 July 2015 and Profit Smart Group became a subsidiary of the Remaining Group on the same date.

Employees and remuneration policy

The Remaining Group’s staff consists of approximately 900 employees in Hong Kong and approximately 1,130 employees outside Hong Kong. The remuneration amount of the Remaining Group was HK$165,946,000 for the year ended 31 March 2016. Employees are rewarded on a performance-related basis within the general framework of the Remaining Group’s salary and bonus system.

(iii) For the year ended 31 March 2015

Business review

For the year ended 31 March 2015, the Remaining Group’s turnover was HK$632,564,000, increased by 4% from last year. Excluding the estimated loss on disposal of the Target Group, the Remaining Group’s profit attributable to shareholders was HK$122,724,000, increased by 5% from last year. The increase in turnover and profit attributable to shareholders mainly came from hotel, restaurant and food division. Excluding non-recurring profit from sales of China South City shares and property revaluation gain and related tax, the Remaining Group’s operating profit attributable to shareholders was HK$73,159,000, increased by 210% from last year.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Scale of Operations

The table below shows the scale of operations with respect to the sales, profits attributable to shareholders (excluded the estimated loss on disposal of the Target Group) and the net asset value of the Target Group and the Remaining Group for the year ended 31 March 2015:

	Year ended
	31 March
	2015
	HK$000
The Group
Sales	670,292
Profit attributable to shareholders	120,744
NAV	3,817,578
The Target Group
Sales	37,728
Profit attributable to shareholders	(1,980)
NAV	353,845*
The Remaining Group
Sales	632,564
Profit attributable to shareholders	122,724
NAV	3,463,733*
Percentage of the Target Company’s operation to
the Group
Sales	5.6%
Profit attributable to shareholders	–1.6%
NAV	9.3%
Percentage of the Remaining Group’s operation to
the Group
Sales	94.4%
Profit attributable to shareholders	101.6%
NAV	90.7%

• Includes the effect of the Consideration

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Property

The Remaining Group’s turnover of property business for the year was HK$88,591,000, decreased by 27% from last year. Segment profit before tax was HK$131,083,000, decreased by 24% from last year. Excluding the effect of property revaluation gain and profit from sales of China South City shares, the Remaining Group’s segment profit before tax was HK$68,061,000, decreased by 48% from last year.

On the other hand, the Remaining Group’s 50% owned 410,000 sq.m. furniture, construction materials and household goods mall and services apartment project in Dongguan, the ‘‘Home Town’’, had good construction progress. Phase I mall, comprising 110,000 sq.m. 6 storeys above ground and two levels of basement will be completed in early 2016. Sales of shops has started in May 2015. Initial sales were slower than expected as investors in the mainland have increased their investments in the stock market recently. Management will increase effort and resources in sales promotion and expects sales to pick up in the second half of the year when investors take profit from the stock market and invest into properties. Shopping mall management team has been working hard to solicit shopping mall tenants. Progress has been satisfactory with negotiation for large anchor tenants approaching final stages.

For investment properties, the Remaining Group’s rental income for the year was HK$81,690,000, increased significantly by 6% from last year. Major contributors were Carrianna Friendship Square in Shenzhen with rental income increased by 6%. On the other hand, investment properties in Hong Kong as well as Imperial Palace shopping mall in Shenzhen also recorded satisfactory growth in rental income.

Hotel, Restaurant and Food

The Remaining Group’s turnover for hotel, restaurant and food division for the year was HK$543,973,000, increased by 11% from last year. Segment profit was HK$94,509,000, increased by 34% from last year. Increase in turnover was mainly due to 8 months turnover contribution of HK$96 million from Delicious restaurants which was acquired by the Remaining Group last year. Carrianna restaurants turnover increased by 12% while food and hotel business turnover decreased by 22% and 3% respectively. Operating profit increase was mainly due to restaurant business turned from loss to profit, together with reduction in operating loss in hotel business, were more than enough to offset decrease in profit from food business.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

During the year, to operate under a very difficult market environment, Carrianna restaurant management had made various efforts to increase sales revenue and control cost. The two loss making restaurants in Beijing and Wuhan were closed during the year. Operating areas and number of labours were reduced in restaurants in Hainan and Kunming in order to lower operating cost. Together with sales increase in the three restaurants in Shenzhen, profit contribution from Hong Kong Carrianna restaurant and reversal of prior year sales tax overprovision in Hainan and Kunming, Carrianna restaurants turned from operating loss to operating profit during the year. For the coming year, management will further control cost and improve operating efficiency in order to continue to provide operating profit to the Remaining Group.

The newly acquired Delicious ‘‘Cha Chaan Teng’’ restaurants group became a subsidiary of the Remaining Group on 1 August 2014. The first eight months turnover was HK$96,167,000 and operating profit was HK$5,656,000. ‘‘Cha Chaan Teng’’ and other low to medium price specialty restaurants is one of the key development area of the Remaining Group. Currently, Delicious group operates 10 Delicious（味皇）brand Cha Chaan Teng and 2 Gusto（嚐味）brand South East Asian food restaurants. In addition to two restaurants opened in Ma On Shan and Wanchai recently, the Remaining Group has planned to open 3 to 4 restaurants in Hong Kong and 1 to 2 restaurants in Shenzhen in the coming year. In order to support business expansion, the Remaining Group moved its central kitchen to Kwai Chung during the year. The new 6,300 sq. feet ground floor central kitchen can support up to 30 restaurants, enough for supporting restaurant expansion in the coming 2 to 3 years.

For the Remaining Group’s food business, moon cake sales revenue and profit decreased from last year for the first time mainly due to cancellation of orders from government departments and government owned enterprises. This was the result of continued tightening of government expenditure leading to cancellation of the usual practice of providing mooncake to staff for Mid-Autumn festival. For the coming year, government has restored the practice of providing employee with festival food such as mooncake. Management expects mooncake sales to be significantly higher than last year.

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APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

On the other hand, establishment of other food business is also one of the key development directions of the Remaining Group. On 28 May 2015, the Remaining Group entered into a share transfer agreement for the acquisition of 60% equity interest in New Sheen Holdings Limited. The acquisition is expected to be completed on 1 July 2015. Upon successful completion, New Sheen will become a subsidiary of the Remaining Group operating 10 bakeries under the brand name of Empery（馥軒） and Pak Lok（百樂）and a food factory for the production of bread, cakes, pastries and Chinese pastries. In addition to enter into the bakery market in Hong Kong with two well established brands, the acquisition also provide technical knowhow and business development experience for the Remaining Group’s bakery and food retail business in China which has just been started in Hainan and Shenzhen.

Liquidity and financial resources

As at 31 March 2015, the Remaining Group’s cash and cash equivalents amounted to HK$213,110,000, which was denominated in Hong Kong dollars, Renminbi and United States dollars of HK$126,982,000, HK$85,950,000 and HK$178,000, respectively. The Remaining Group’s free cash and bank balances and structured deposits were HK$287,215,000.

The Remaining Group’s total borrowings amounted to HK$912,730,000 comprised interest-bearing bank and other borrowings and derivative financial instrument. All interest-bearing bank and other borrowings bear interest at floating rates. Netting off cash deposits pledged for borrowings, the Remaining Group’s net bank and other borrowings were HK$792,917,000. Net bank and other borrowings less free cash and bank balances and structured deposits were HK$505,702,000. The Remaining Group’s gearing ratio, which was defined as the Remaining Group’s interest-bearing bank and other borrowings, net of cash and cash equivalents, structured deposits and pledged time deposits as percentage of the Remaining Group’s total equity, was approximately 19%.

Foreign exchange exposure

The Remaining Group mainly operates in Hong Kong and Mainland China with most of the Remaining Group’s monetary assets, liabilities and transactions principally denominated in Hong Kong dollars and Renminbi, respectively. Majority of the sales, purchases and expenditure incurred by the operating units of the Remaining Group were denominated in the units’ functional currencies and as a result, the Remaining Group does not anticipate significant transactional currency exposures.

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

Contingent liabilities and future commitment

As at the end of the reporting period, the Remaining Group had contingent liabilities relating to guarantees given to banks for mortgage loan facilities granted to purchasers of properties of approximately HK$18,204,000.

Charges on the Group assets

As at the end of the reporting period, certain of the Remaining Group’s property, plant and equipment, investment properties, properties under development, properties held for sale, time deposits, structured deposits and financial assets at fair value through profit or loss with a total carrying value of approximately HK$2,209,741,000 were pledged to secure general banking, trade finance and other facilities granted to the Remaining Group. In addition, rental income generated in respect of certain investment properties of the Remaining Group was assigned to banks to secure loan facilities granted to the Remaining Group.

Material acquisition and disposal

On 26 June 2014, the Remaining Group entered into a share transfer agreement for the acquisition of 60% equity interest in Sleek Treasure Ventures Limited (‘‘Sleek Treasure’’) which is the holding company for operating Delicious group of restaurants, at a cash consideration of HK$30,000,000 (See announcement dated 26 June 2014).

The share transfer agreement was entered with the owner operators of Delicious group of restaurants and subject to an earnout payment which was calculated by any excess to annual profits of HK$7,200,000 at a price-earnings ratio (‘‘PE’’) of 6.35. Sleek Treasure was engaged in the operation of chain restaurants in Hong Kong under trade names ‘‘Delicious’’（‘‘味皇’’）, ‘‘Delicious Café’’（‘‘星級味皇’’）, ‘‘Delicious City’’（‘‘味集皇城’’）and ‘‘Gusto Restaurant’’（‘‘嚐味’’）and operated 11 restaurants and 1 central kitchen in Hong Kong.

The transaction was completed on 1 August 2014 and Sleek Treasure became the subsidiary of the Remaining Group on the same date.

On 28 May 2015, the Remaining Group entered into a share transfer agreement for the acquisition of 60% equity interest in New Sheen Holdings Limited (‘‘New Sheen’’) which, upon completion will be the holding company for operating Profit Smart group, at a cash consideration of HK$20,400,000 (See announcement dated 28 May 2015).

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MANAGEMENT DISCUSSION AND ANALYSIS AND FINANCIAL REVIEW OF THE REMAINING GROUP

APPENDIX III

The share transfer agreement was entered with the owner operators of Profit Smart group, who operates a food factory and 10 bakeries under the names of Empery （馥軒）and Pak Lok（百樂）.

The transaction is expected to be completed on 1 July 2015 and New Sheen, upon successful completion, will become the subsidiary of the Remaining Group on the same date.

Employees and remuneration policy

The Remaining Group’s staff consists of approximately 500 employees in Hong Kong and approximately 1,230 employees outside Hong Kong. The remuneration amount of the Remaining Group was HK$117,248,000 for the year ended 31 March 2015. Employees are rewarded on a performance-related basis within the general framework of the Remaining Group’s salary and bonus system.

– 83 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

1. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Introduction

The accompanying unaudited pro forma consolidated statement of financial position, the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group (collectively referred to as the ‘‘Unaudited Pro Forma Financial Information’’) have been prepared by the directors of the Company in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the effects of the Disposals upon Completion.

The unaudited pro forma consolidated statement of financial position of the Remaining Group has been prepared based on the unaudited consolidated statement of financial position of the Group as at 31 March 2017 which has been extracted from the Group’s published annual report for the year ended 31 March 2017 dated 29 June 2017, after taking into account the pro forma adjustments relating to the Disposals that are (i) clearly shown and explained; (ii) directly attributable to the Disposals and not relating to future events or decisions; and (iii) factually supportable, as explained in the accompanying notes, as if the Disposals had been completed on 31 March 2017.

The unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group are prepared based on the audited consolidated statement of profit or loss, the audited consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 March 2017 which have been extracted from the Group’s published annual report for the year ended 31 March 2017 dated 29 June 2017, after taking into account the pro forma adjustments relating to the Disposals that are (i) clearly shown and explained; (ii) directly attributable to the Disposals and not relating to future events or decisions; and (iii) factually supportable, as explained in the accompanying notes, as if the Disposals had been completed on 1 April 2016.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

The accompanying Unaudited Pro Forma Financial Information of the Remaining Group is prepared by the directors of the Company based on a number of assumptions, estimates, uncertainties and currently available information to provide information of the Remaining Group upon completion of the Disposals. As the Unaudited Pro Forma Financial Information is prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the consolidated financial position and financial performance and cash flows of the Remaining Group following the completion of the Disposals and does not purport to describe the actual consolidated financial position, financial performance and cash flows of the Remaining Group that would have been attained had the Disposals been completed on the dates indicated herein. Further, the accompanying Unaudited Pro Forma Financial Information of the Remaining Group does not purport to predict the future consolidated financial position, financial performance or cash flows of the Remaining Group after the completion of the Disposals.

The Unaudited Pro Forma Financial Information of the Remaining Group does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard 1 (Revised) ‘‘Presentation of Financial Statements’’, or a complete condensed interim financial report as defined in Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants. The Unaudited Pro Forma Financial Information of the Remaining Group has been prepared in accordance with Rule 4.29 and paragraph 68(2)(a)(ii) of Chapter 14 of the Listing Rules. The Unaudited Pro Forma Financial Information of the Remaining Group should be read in conjunction with the financial information of the Group as set out in Appendix I to this circular, the Unaudited Consolidated Financial Information of the Target Group as set out in Appendix II to this circular and other financial information included elsewhere in this circular.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE REMAINING GROUP As at 31 March 2017

NON-CURRENT ASSETS Property, plant and equipment Investment properties Prepaid land lease payments Goodwill Other intangible assets Interests in associates Available-for-sale investments Derivative financial instrument Financial assets at fair value through profit or loss Properties under development Debtors, deposits and prepayments Pledged time deposits Total non-current assets CURRENT ASSETS Properties under development Properties held for sale Inventories Debtors, deposits and prepayments Due from directors Due from non-controlling shareholders Due from the Remaining Group Financial assets at fair value through profit or loss Structured deposits Restricted cash Pledged time deposits Cash and cash equivalents Investment properties held for sale Total current assets	The Group (audited) HK$’000 Note 1 587,306 1,527,202 26,384 90,318 359,394 553,644 267,447 83 83,761 860,955 25,487 42,926 4,424,907 101,746 817,869 24,308 225,300 35,539 200 – 79,785 12,129 5,077 4,122 284,215 1,590,290 68,918 1,659,208	Pro HK$’000 Note 2 (9,666) – – (31,390) (359,394) – – – – (546,768) – – (947,218) (101,746) (349,811) – (79,060) (1,003) – (92,208) – (2,593) (4,392) – (15,539) (646,352) – (646,352)	forma adjustments HK$’000 HK$’000 Note 3 Note 4 – – – – – – – – – – – – – – – – – – – – 652,321 – – – 652,321 – – – – – – – 131,626 – – – – – – 92,208 – – – – – – – – 113,539 – 245,165 92,208 – – 245,165 92,208	The Remaining Group (unaudited) HK$’000 577,640 1,527,202 26,384 58,928 – 553,644 267,447 83 83,761 314,187 677,808 42,926
				4,130,010
				– 468,058 24,308 277,866 34,536 200 – 79,785 9,536 685 4,122 382,215
				1,281,311 68,918
				1,350,229

– 86 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

CURRENT LIABILITIES Trade creditors Sundry creditors, accruals and deposits received Provisions Due to directors Due to non-controlling shareholders Due to the Remaining Group Interest-bearing bank and other borrowings Finance lease payables Deferred income Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Deferred income Deposits received Provisions Deferred tax Finance lease payable Total non-current liabilities Net assets EQUITY Equity attributable to owners of the parent Issued capital Reserves Non-controlling interests Total equity	The Group (audited) HK$’000 Note 1 (88,978) (356,814) (11,972) (5,434) (25,795) – (806,528) (18) (20,711) (199,655) (1,515,905) 143,303 4,568,210 (425,738) (151,585) (8,350) (2,318) (450,575) (60) (1,038,626) 3,529,584 125,389 3,313,467 3,438,856 90,728 3,529,584	Pro HK$’000 Note 2 40,881 52,690 – – – 80,661 10,148 – – 22,724 207,104 (439,248) (1,386,466) 67,650 176 – – 231,305 – 299,131 (1,087,335) – (1,087,335) (1,087,335) – (1,087,335)	forma adjustments HK$’000 HK$’000 Note 3 Note 4 – – – (11,547) – – – – – – – (80,661) – – – – – – (38,003) – (38,003) (92,208) 207,162 – 859,483 – – – – – – – – – – – – – – – 859,483 – – – 942,765 – 942,765 – (83,282) – 859,483 –	The Remaining Group (unaudited) HK$’000 (48,097) (315,671) (11,972) (5,434) (25,795) – (796,380) (18) (20,711) (214,934)
				(1,439,012)
				(88,783)
				4,041,227
				(358,088) (151,409) (8,350) (2,318) (219,270) (60)
				(739,495)
				3,301,732
				125,389 3,168,897
				3,294,286 7,446
				3,301,732

– 87 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS OF THE REMAINING GROUP

For the year ended 31 March 2017

REVENUE Cost of sales Gross profit Other income and gains, net Selling and distribution expenses General and administrative expenses Other expenses, net Finance costs Share of profit of an associate PROFIT/(LOSS) BEFORE TAX Income tax expense PROFIT/(LOSS) FOR THE YEAR Attributable to: Owners of the parent Non-controlling interests	The Group (audited) HK$’000 Note 1 867,468 (471,670) 395,798 78,099 (183,380) (134,597) (6,261) (36,342) 47,236 160,553 (10,828) 149,725 127,446 22,279 149,725	Pro forma adjustments HK$’000 HK$’000 Note 5 Note 6 (83,681) – 68,414 – (15,267) – (605) – 4,775 – 9,412 – 803 (167,575) – – – – (882) (167,575) (3,910) (38,003) (4,792) (205,578) (4,419) (205,578) (373) – (4,792) (205,578)	The Remaining Group (unaudited) HK$’000 783,787 (403,256)
			380,531 77,494 (178,605) (125,185) (173,033) (36,342) 47,236
			(7,904) (52,741)
			(60,645)
			(82,551) 21,906
			(60,645)

– 88 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF THE REMAINING GROUP

For the year ended 31 March 2017

PROFIT/(LOSS) FOR THE YEAR OTHER COMPREHENSIVE LOSS Other comprehensive loss to be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations Reclassification adjustment on disposal of foreign operations Share of other comprehensive loss of an associate OTHER COMPREHENSIVE LOSS FOR THE YEAR TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR Attributable to: Owners of the parent Non-controlling interests	The Group (audited) HK$’000 Note 1 149,725 (84,896) (508) (11,130) (96,534) 53,191 36,883 16,308 53,191	Pro forma adjustments HK$’000 HK$’000 Note 5 Note 6 (4,792) (205,578) 30,671 – – (3,338) – – 30,671 – 25,879 (208,916) 23,863 (208,916) 2,016 – 25,879 (208,916)	The Remaining Group (unaudited) HK$’000 (60,645) (54,225) (3,846) (11,130)
			(69,201)
			(129,846)
			(148,170) 18,324
			(129,846)

– 89 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS OF THE REMAINING GROUP

For the year ended 31 March 2017

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs Share of profit of an associate Bank interest income Investments interest income Other interest income Dividend income from available-for-sale investments Dividend income from financial assets at fair value through profit or loss Gain on disposal of investment properties Loss on disposal of items of property, plant and equipment, net Loss on the Disposals Loss/(gain) on deregistration of subsidiaries Fair value losses/(gains), net: Financial assets at fair value through profit or loss – Held for trading – Designated as such upon initial recognition Derivative instruments – Transactions not qualifying as hedges Depreciation Changes in fair value of investment properties, net Change in fair value of an investment property classified as held for sale Impairment of debtors, net Recognition of prepaid land lease payments Release of deferred income Equity-settled share option expense Increase in properties under development Decrease in properties held for sale Decrease in inventories Increase in debtors, deposits and prepayments Increase in amounts due from directors Changes in balances with the Remaining Group, net Decrease in trade creditors Increase in sundry creditors, accruals and deposits received Increase in deferred income Increase/(decrease) in amounts due to directors Decrease in provisions Cash generated from operations Hong Kong profits tax paid Overseas taxes paid Net cash flows from operating activities	The Group (audited) HK$’000 (Note 1) 160,553 36,342 (47,236) (2,828) (4,465) (10,476) (6,948) (2,585) (4,059) 246 – (530) (12,515) (209) (6) 42,036 (15,830) (13,118) 4,100 740 (54) 1,741 124,899 (28,388) 47,679 162 (3,387) (17,981) – (10,254) 18,675 181 4,243 (12,058) 123,771 (1,313) (4,412) 118,046	HK$’000 (Note 7) (882) – – – – – – – – 28 – – – – – (914) – – – – – – (1,768) 26,867 (46,273) – 12,649 1,026 14,550 539 22,507 – 14,884 – 44,981 – 673 45,654	Pro forma adjustments HK$’000 HK$’000 (Note 8) (Note 6) – (205,578) – – – – – – – – – – – – – – – – – – – 205,578 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –	HK$’000 (Note 4) – – – – – – – – – – – – – – – – – – – – – – – – – – – – (14,550) – 14,550 – – – – – – –	Remaining Group (unaudited) HK$’000 (45,907) 36,342 (47,236) (2,828) (4,465) (10,476) (6,948) (2,585) (4,059) 274 205,578 (530) (12,515) (209) (6) 41,122 (15,830) (13,118) 4,100 740 (54) 1,741
					123,131 (1,521) 1,406 162 9,262 (16,955) – (9,715) 55,732 181 19,127 (12,058)
					168,752 (1,313) (3,739)
					163,700

– 90 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

CASH FLOWS FROM INVESTING ACTIVITIES Bank interest received Other interest received Realised fair value loss on derivative financial instruments – transactions not qualifying as hedges Dividend received from available-for-sale listed investments Dividend received from financial assets at fair value through profit or loss Purchases of items of property, plant and equipment Purchase of investment properties Proceeds from disposal of items of property, plant and equipment Purchases of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Purchase of available-for-sale investments Proceeds from the Disposals received Estimated transaction costs directly attributable to the Disposals Dividend from the Target Group Proceeds from disposal of investment properties Decrease in pledged time deposits Decrease in restricted cash Investment in structured deposits Redemption of structured deposits Advances to an associate Prepayment for prepaid land lease payments Net cash flows used in investing activities	The Group (audited) HK$’000 (Note 1) 2,828 10,023 (271) 6,948 2,585 (62,123) (49,166) 3,660 (114,609) 53,733 (18,448) – – – 34,965 43,892 1,548 (12,129) 14,021 (111,683) (1,819) (196,045)	HK$’000 (Note 7) – – – – – 412 – (69) – – – – – – – – (1,020) – (3,056) – – (3,733)	Pro forma adjustments HK$’000 HK$’000 (Note 8) (Note 6) – – – – – – – – – – – – – – – – – – – – – – – 115,300 – (1,761) 40,932 – – – – – – – – – – – – – – – 40,932 113,539	HK$’000 (Note 4) – – – – – – – – – – – – – – – – – – – – – –	Remaining Group (unaudited) HK$’000 2,828 10,023 (271) 6,948 2,585 (61,711) (49,166) 3,591 (114,609) 53,733 (18,448) 115,300 (1,761) 40,932 34,965 43,892 528 (12,129) 10,965 (111,683) (1,819)
					(45,307)

– 91 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

CASH FLOWS FROM FINANCING ACTIVITIES New bank loans Repayment of bank loans Contribution by non-controlling shareholders Changes in balances with non-controlling shareholders, net Dividends paid Dividends paid to non-controlling shareholders Dividend paid to the Remaining Group Interest paid Net cash flows from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and cash equivalents as stated in the consolidated statement of financial position Time deposits with original maturity of less than three months when acquired Cash and cash equivalents as stated in the consolidated statement of cash flows	The Group (audited) HK$’000 (Note 1) 1,283,590 (981,682) 12,401 (11,136) (37,617) (34,725) – (35,522) 195,309 117,310 174,102 (3,075) 288,337 284,215 4,122 288,337	HK$’000 (Note 7) (80,710) 1,151 – – – 3,460 40,932 – (35,167) 6,754 (23,423) 1,130 (15,539) (15,539) – (15,539)	Pro forma adjustments HK$’000 HK$’000 (Note 8) (Note 6) – – – – – – – – – – – – (40,932) – – – (40,932) – – 113,539 – – – – – 113,539 – 113,539 – – – 113,539	HK$’000 (Note 4) – – – – – – – – – – – – – – – –	Remaining Group (unaudited) HK$’000 1,202,880 (980,531) 12,401 (11,136) (37,617) (31,265) – (35,522)
					119,210
					237,603 150,679 (1,945)
					386,337
					382,215 4,122
					386,337

– 92 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

• (1) The audited consolidated statement of financial position of the Group as at 31 March 2017, and the audited consolidated statement of profit or loss, the audited consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 March 2017 were extracted from the annual report of the Company for the year ended 31 March 2017 dated 29 June 2017.

• (2) These adjustments represent the exclusion of assets and liabilities of the Target Group as at 31 March 2017, assuming the Disposals had taken place on 31 March 2017. The assets and liabilities of the Target Group as at 31 March 2017 were extracted from the unaudited consolidated statement of financial position of the Target Group as at 31 March 2017 as set out in Appendix II to this circular.

• (3) These adjustments represent (i) the Consideration of RMB800,000,000 (approximately HK$922,400,000); (ii) directly attributable transaction costs of approximately HK$1,761,000 expected to be incurred in connection with the Disposals; (iii) the effect of discounting the Consideration of HK$23,153,000 based on the expected dates of receipts for 1st to 6th instalments of the First Disposal Consideration and for 1st to 5th instalments of the Second Disposal Consideration discounted by the Group’s cost of capital of 3.6%; (iv) the estimated relevant tax of RMB32,960,000 (approximately HK$38,003,000); and (v) the estimated loss on Disposals of the Target Group as if the Disposals had taken place on 31 March 2017.

The calculation of the estimated loss on disposal of the Target Group to be recognised in the statement of profit or loss, as if the Disposals had taken place on 31 March 2017, is as follows:

Notes Consideration Less: Estimated transaction costs directly attributable to the Disposals (i) Less: Effect of discounting the Consideration Net consideration (ii) Less: Net asset value of the Target Group as at 31 March 2017 (iii) Less: Non-controlling interest of the Target Group as at 31 March 2017 Add: Release of exchange fluctuation reserve as at 31 March 2017 Estimated loss on the Disposals before tax as if the Disposals had taken place on 31 March 2017 Less: Estimated tax on the Disposals (iv) Estimated loss on the Disposals after tax as if the Disposals had taken place on 31 March 2017 (v)	HK$’000 922,400 (1,761) (23,153)
	897,486 (1,087,335) 83,282 (24,494)
	(131,061) (38,003)
	(169,064)

– 93 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

Notes:

• (i) The transaction costs represent professional fees and stamp duty directly attributable to the Disposals and it is assumed that the fees and stamp duty will be settled by cash.

• (ii) The net consideration is represented by (i) Escrow Amount of RMB100,000,000 (approximately HK$115,300,000) and (ii) other receivables of HK$783,947,000 (after the effect of discounting), net of estimated transaction costs directly attributable to the Disposals of HK$1,761,000.

• (iii) The net asset value of the Target Group was extracted from the unaudited consolidated statement of financial position of the Target Group as at 31 March 2017, as further set out in Appendix II to this circular.

• (iv) The amount represents the PRC Corporate Income Tax at 25% directly attributable to the Disposals estimated by the directors of the Company based on the difference between the Consideration and cost of shares of the Target Group.

• (v) The estimated loss on the Disposals after tax as if the Disposals had taken place on 31 March 2017 does not take into account the dividends declared after 31 March 2017 of HK$39,744,000 paid by the Target Group. Had the dividends been taken into account, the estimated loss on the Disposals after tax as if the Disposals had taken place on 31 March 2017 would be HK$129,320,000.

The movement in reserves as a result of pro forma adjustments (notes (2) and (3)) represents loss on the Disposals of HK$169,064,000 and the release of exchange fluctuation reserve of the Target Group as at 31 March 2017 of HK$24,494,000, assuming the Disposals had taken place on 31 March 2017. Actual loss arising from the Disposals depends on final adjustment to the consideration, actual amount of net assets of the Target Group and actual amount of exchange fluctuation reserve of the Target Group to be released to profit or loss on the completion date. Therefore, the actual loss on the Disposals shall be different from the amount as set out in the above table.

• (4) These adjustments represent the reclassification of amounts due from/(to) the Remaining Group to sundry creditors, accruals and deposits received, as the Target Group is no longer a subsidiary of the Remaining Group after the completion of the Disposals.

• (5) These adjustments represent the exclusion of the results of the Target Group for the year ended 31 March 2017, which were extracted from the unaudited consolidated statement of profit or loss and the unaudited consolidated statement of comprehensive income of the Target Group for the year ended 31 March 2017 as set out in Appendix II to this circular, assuming the Disposals had taken place on 1 April 2016. These adjustments are not expected to have a continuing effect on the Remaining Group.

• (6) These adjustments represent (i) the Consideration of RMB800,000,000 (approximately HK$922,400,000); (ii) the estimated transaction costs of approximately HK$1,761,000 expected to be incurred in connection with the Disposals; (iii) the effect of discounting the Consideration of HK$23,153,000 based on the expected dates of receipts for 1st to 6th instalments of the First Disposal Consideration and for 1st to 5th instalments of the Second Disposal Consideration discounted by the Group’s cost of capital of 3.6%; (iv) the estimated relevant tax of RMB32,960,000 (approximately HK$38,003,000); and (iv) the estimate loss on the Disposals of the Target Group as if the Disposals had taken place on 1 April 2016.

– 94 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The calculation of the estimated loss on disposal of the Target Group to be recognised in profit or loss, as if the Disposals had taken place on 1 April 2016, is as follows:

Notes Consideration Less: Estimated transaction costs directly attributable to the Disposals (i) Less: Effect of discounting of the Consideration Net consideration (ii) Less: Net asset value of the Target Group as at 1 April 2016 (iii) Less: Non-controlling interest of the Target Group as at 1 April 2016 Add: Release of exchange fluctuation reserve at 1 April 2016 Estimated loss on the Disposals before tax as if the Disposals had taken place on 1 April 2016 Less: Estimated tax on the Disposals (iv) Estimated loss on the Disposal after tax as if the Disposals had taken place on 1 April 2016 (v) Notes:	HK$’000 922,400 (1,761) (23,153)
	897,486 (1,157,606) 89,207 3,338
	(167,575) (38,003)
	(205,578)

• (i) The transaction costs represent professional fees and stamp duty directly attributable to the Disposals and it is assumed that the fees and stamp duty will be settled by cash.

• (ii) The net consideration is represented by (i) Escrow Amount of RMB100,000,000 (approximately HK$115,300,000) and (ii) other receivables of HK$783,947,000 (after the effect of discounting), net of estimated transaction costs directly attributable to the Disposals of HK$1,761,000.

• (iii) The net asset value of the Target Group was extracted from the unaudited consolidated statement of financial position of the Target Group as at 31 March 2016, as set out in Appendix II to this circular.

• (iv) The amount represents the PRC Corporate Income Tax at 25% directly attributable to the Disposals estimated by the directors of the Company.

• (v) The estimated loss on the Disposals after tax as if the Disposals had taken place on 1 April 2016 does not take into account the dividends declared after 31 March 2017 of HK$39,744,000 paid by the Target Group. Had the dividends been taken into account, the estimated loss on the Disposals after tax as if the Disposals had taken place on 1 April 2016 would be HK$165,834,000.

– 95 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

Actual loss arising from the Disposals depends on final adjustment to the consideration, actual amount of net assets of the Target Group and actual amount of exchange fluctuation reserve of the Target Group to be released to profit or loss on the completion date. Therefore, the actual loss on the Disposals shall be different from the amount as set out in the above table.

• (7) These adjustments represent the exclusion of the cash flows of the Target Group for the year ended 31 March 2017, which were extracted from the unaudited consolidated statement of cash flows of the Target Group for the year ended 31 March 2017 as set out in Appendix II to the circular, assuming the Disposals had taken place on 1 April 2016. These adjustments are not expected to have a continuing effect on the Remaining Group.

• (8) The reclassification adjustment reflects the dividend received by the Remaining Group from the Target Group during the year ended 31 March 2017 of HK$40,932,000 as a cash flow from an investing activity from the perspective of the Remaining Group for the purpose of the unaudited pro forma consolidated statement of cash flows of the Remaining Group. If excluding such dividend, the unaudited pro forma consolidated net cash flows used in investing activities of the Remaining Group would be HK$86,239,000.

– 96 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

The following is the text of a report received from the reporting accountant, Ernst & Young, Certified Public Accountants, Hong Kong, prepared for the purpose of incorporation in this circular in respect of the unaudited pro forma financial information of the Remaining Group.

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

To the Directors of Carrianna Group Holdings Company Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Carrianna Group Holdings Company Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position as at 31 March 2017, and the unaudited pro forma consolidated statement of profit or loss, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows for the year ended 31 March 2017, and related notes as set out on pages 84 to 94 of the circular dated 11 September 2017 (the ‘‘Circular’’) issued by the Company (the ‘‘Unaudited Pro Forma Financial Information’’). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in Appendix IV of the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed disposals of the Group’s entire interests in Carrianna (Hunan) Enterprise Co., Ltd and its subsidiaries, as further detailed in the Circular (the ‘‘Disposals’’) on the Group’s financial position as at 31 March 2017, and the Group’s financial performance and cash flows for the year ended 31 March 2017, as if the Disposals had taken place at 31 March 2017 and 1 April 2016, 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 financial statements for the year ended 31 March 2017, on which an audit report has been published.

– 97 –

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 (‘‘AG’’) 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

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

Reporting accountants’ responsibilities

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

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

– 98 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX IV

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

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Disposals on unadjusted financial information of the Group as if the Disposals had occurred or the Disposals 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 Disposals 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 Disposals, and to obtain sufficient appropriate evidence about whether:

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

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

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the 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.

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Opinion

In our opinion:

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

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

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

Ernst & Young

Certified Public Accountants

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

11 September 2017

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CERTIFIED ASSET VALUER’S STATEMENT

To: TAK SING ALLIANCE LIMITED:

Yiyang Lingyun Asset Appraisal Company*（ 益陽淩雲資產評估事務所）(hereinafter referred to as ‘‘the Firm’’ or we/us/our) has accepted your entrustment and assigned our appraisal staff to conduct the valuation of the market value of the entire equity interests of Carrianna （Hunan）Enterprise Co., Ltd. as of 30 June 2017, the valuation date. The special statement made with regard to the valuation report is as follows:

1. The certified asset valuer has observed the relevant laws, regulations and standards on asset valuation and adhered to the principles of independence, objectivity and impartiality in this asset valuation. According to the facts that the certified asset valuer has acquired during the execution process and to best of our knowledge, all the statements in the valuation report are objectively made.

2. The balance sheet, historical operating results and relevant legal title information of the valuation subject are provided and confirmed under their signatures and seals by the Principal and the appraised entity. It is the responsibility of the Principal and the related parties to provide the necessary information and ensure that the information provided is true, legal and complete and the valuation report is appropriately used.

3. The certified asset valuer does not have any interests in the valuation subject of the valuation report and do not have any interests in or prejudices against any related parties.

4. The certified asset valuer and project team members have performed random check on the valuation subject in the valuation report, and we have given due consideration to the legal title status of the valuation subject and conducted essential inspection and examination regarding the information of its legal title. However, no assurance in any form will be given by us as to the legal title of the valuation subject. As for the issues noted during the course of inspection and examination, we have already required the enterprise to perfect its titles and disclosed the issues that we have discovered.

5. The certified asset valuer possesses the practical experience and qualifications as well as the relevant professional valuation experience that are required in the valuation business.

6. The analyses and judgments in this report are subject to the assumptions and restrictions in the valuation report, and the valuation conclusion is only valid under the valuation assumptions and restrictions defined in the valuation report. The users of the valuation report shall pay due attention to the special notes, valuation assumptions and restrictions and their impact on the valuation conclusion set out in the valuation report.

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1. The valuation on the value of the valuation subject conducted and the professional opinions expressed by certified asset valuer shall be used as reference for the implementation of economic behaviour, and shall not be deemed as the price assurance to be achieved for valuation purposes. The valuation institution and the certified asset valuer take no responsibility for the decisions made by related parties. The report and its valuation conclusion disclosed herein are for the stipulated purposes set out herein only and can only be used within the validity period of the valuation report. The valuation institution and certified asset valuer do not assume any responsibility for any consequences arising from inappropriate use of the valuation report.

2. The report does not take into the account the impact on the valuation conclusion arising from any restrictive factors such as the guarantee and pledge of the appraised assets and taxes generated due to their transactions. This valuation result does not form the basis for tax payment purpose. Taxable items should be determined according to the actual situation of the transaction values of the related parties.

3. The valuation takes the valid pricing standard on valuation date as the price determination standard, which is the reference for valuation when the enterprise conducts asset reorganization during the valuation date. The users of the valuation report should make adjustments to the appraised value according to asset conditions, changes in market conditions and transaction price between the effective transaction parties subsequent to the valuation date. Such upward and downward adjustments are normal decision behaviour conducted by related parties and do not negate the purpose as a reference value in the valuation report. The valuation report shall be used as reference for the implementation of economic behaviour, and shall not be deemed as the price assurance to be achieved for valuation purposes. The transaction values of the transaction parties can have upward and downward fluctuation on the basis of appraised value according to the actual conditions when the assets are transacted.

4. When conducting the land valuation of the company, we considered the assumption that the government is going to transform the 292.61-acres of land of the Company is tenable, pursuant to which such 292.61-acres of land of the Company will be downgraded from grade 2 land use to grade 3 for this occasion. The valuation conclusion drawn herein is subject to the valuation assumptions and restrictions defined in the valuation report, otherwise, the result of the valuation will be invalid.

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Asset valuation Report of TAK SING ALLIANCE LIMITED (Summary) Yi Ling Ping Suo Bao Zi (2017) No. 022

IMPORTANT

The content below is extracted from the text of the valuation report. To understand the details of the valuation subject and have a reasonable understanding of the valuation conclusion, please refer to and read the text of the valuation report

1. Introduction

We, Yiyang Lingyun Asset Appraisal Company（益陽淩雲資產評估事務所）have been engaged by Tak Sing Alliance Limited to assess the market value of the valuation of the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd.. As of valuation date, i.e. 30 June 2017, in relation to the proposed equity transfer and asset reorganization pursuant to the relevant laws, regulations, assets valuation criteria and asset valuation principles and in compliance with the necessary valuation procedures by adopting the three valuation approaches, namely the assetbased approach, market approach and income approach. The asset valuation report is set out below:

2. The Principal and Appraised Entity

The Principal: Tak Sing Alliance Limited（達成有限公司） Appraised entity: Carrianna (Hunan) Enterprise Co., Ltd.（佳寧娜（湖 南）實業有限公司）

3. Purpose of Valuation

Tak Sing Alliance Limited conducts the valuation of the value of the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd. as of 30 June 2017 in relation to the equity transfer and asset reorganization, so as to provide reference for equity transfer.

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4. Valuation Subject and Scope of Valuation

According to the economic behaviour and for specific valuation purpose involved in this valuation, the Principal confirmed that for this valuation, the valuation subject is the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd.. The scope of valuation is all the assets and liabilities of Carrianna（Hunan）Enterprise Co., Ltd. and the 589.55 acres expected land acquisition right premium as of 30 June 2017. For details of all the assets and liabilities, please refer to the detailed statement of asset valuation filled in by Carrianna（Hunan）Enterprise Co., Ltd.. As of valuation date, there is no off-balance sheet asset in the appraised entity except for the above declared assets.

5. Valuation Date

The valuation date for this asset valuation is 30 June 2017.

6. Valuation Methodology

Asset-based approach and market approach are adopted for this valuation.

7. Type of Valuation

The type of valuation for this valuation is the market value.

8. Valuation Conclusion

As at valuation date, i.e. 30 June 2017, the entire equity interests of Carrianna（Hunan） Enterprise Co., Ltd. under this valuation has an estimated value of approximately RMB849,808,000, representing an increase of 114.25% as compared with its carrying amount.

When applying the valuation conclusion, users of this valuation report shall pay attention to the impact of ‘‘12. Special Notes’’ set out in this report on the valuation conclusion and be aware of the valuation assumptions and pre-requisites in arriving at the valuation conclusion.

According to the current requirements of the relevant asset valuation, the conclusion of this valuation report shall be valid for one year from the valuation date and re-assessment is required after one year.

[End of the valuation report]

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APPENDIX V

VALUATION REPORT ON THE VALUATION OF EQUITY INTERESTS OF CARRIANNA (HUNAN) ENTERPRISE CO., LTD

Yi Ling Ping Suo Bao Zi (2017) No. 022

I. Introduction

Tak Sing Alliance Limited:

We, Yiyang Lingyun Asset Appraisal Company*（益陽淩雲資產評估事務所）have been entrusted by Tak Sing Alliance Limited to assess the market value of the valuation of the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd. as of valuation date, i.e. 30 June 2017, in relation to the equity transfer and asset reorganization pursuant to the relevant laws, regulations, assets valuation criteria and asset valuation principles and in compliance with the necessary valuation procedures by adopting asset based approach, market approach and income approach. The asset valuation report is set out below:

II Particulars of the Principal, Appraised Entity Profile and Other Users of Valuation Report

(1) About the Principal and asset beneficial owner

The Principal is Tak Sing Alliance Limited with its registered office in Hong Kong of PRC and the asset beneficial owner is Carrianna（Hunan）Enterprise Co., Ltd.. The basic information of which is as follows:

Name of enterprise: Carrianna（Hunan）Enterprise Co., Ltd Address: Zixuan Building No. 13 (T34), Zi Shanhu Community, Hi-tech Zone Office, Yiyang City Date of incorporation: 10 October 2005 Legal representative: Ma Kai Yum Registered capital: RMB385,000,000

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Corporate type: Limited Liability Company Unified social credit code: 914309007808548908 Term of operation: 10 October 2005 to 9 October 2055 Scope of business: Real estate development, operation and infrastructure construction, operation management of owned properties and property leasing.

(2) Other users of valuation report other than the Principal

According to the agreements in the asset valuation business agreement between the Principal and the valuation institution, apart from the Principal, other users of this report are the valuation report users such as the relevant parties and the competent departments specified by national laws and regulations in respect of this economic behaviour.

III. Purpose of Valuation

Valuation is conducted on the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd. as of 30 June 2017 in relation to the equity transfer and asset reorganization, so as to provide reference for equity transfer.

IV. Valuation Subject and Scope of Valuation

According to the economic behaviour and for specific valuation purpose involved in this valuation, the Principal confirmed that for this valuation, the valuation subject is the entire equity interests of Carrianna（Hunan）Enterprise Co., Ltd.. The scope of valuation is all the assets and liabilities of Carrianna（Hunan）Enterprise Co., Ltd. and the 589.55 acres expected land acquisition right premium as of 30 June 2017. For details of all the assets and liabilities, please refer to the detailed statement of asset valuation filled in by Carrianna（Hunan）Enterprise Co., Ltd.. As of valuation date, there is no off-balance sheet asset in the appraised entity except for the above declared assets.

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All the assets and liabilities under the scope of this valuation include the followings:

Carrianna (Hunan) Enterprise Co., Ltd. Balance Sheet as at 30 June 2017 Unit: In RMB

	Carrying
Items	Amount
Current assets	535,763,176
Cash and cash equivalents	14,662,559
Accounts receivable	89,786
Prepaid tax	15,906,071
Prepayments	59,883,803
Other receivables	13,396,844
Inventory	476,884
Construction work in progress	49,602,261
Expected land acquisition right premium	–
Stock-land &properties	352,964,410
Other current assets	28,780,558
Non-current assets	71,708,781
Long-term investment	47,000,000
Fixed Asset – Management Office	18,670,000
Fixed assets – Furniture & Equipment	374,714
Intangible assets	168,000
Deferred income tax asset	5,496,067
Total assets	607,471,957
Current liabilities	146,328,837
Accounts payable	3,837,721
Receipts in advance	14,074,571
Payroll payable	630,301
Other payables	93,086,243
Dividend payable	34,700,000
Deferred tax liabilities	–
Non-current liabilities	64,500,000
Long-term borrowings	64,500,000
Total liabilities	210,828,837
Net assets	396,643,120

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V. Type of Value and Its Definition

After the full communication between the appraisal staff and the Principal, and according to the purpose of valuation of the valuation items, the specific situation of the valuation subject and the collection situation of the valuation information and other related conditions, the type of valuation selected is market value.

Market value refers to the estimated amount of value for which the particular assets in a transaction should normally and fairly be exchanged on valuation date between a willing buyer and a willing seller after marketing wherein both parties act knowledgeably and prudently and without compulsion.

The reasons for selecting type of value: the purpose of this valuation is to provide reference of such economic behaviour to assess the value of the entire equity interests of Carrianna （Hunan）Enterprise Co., Ltd. in respect of sales equity disposal. This economic behaviour is a normal market economic practice; a valuation according to the market value of the transaction is generally more acceptable to parties to the transaction.

VI. Valuation Date

The valuation date of this asset valuation is 30 June 2017.

According to the professional knowledge and experience, and based on the full communication with the Principal, the certified asset valuer considered the following main factors in determining the valuation date: 1. The valuation date adopted should be as close to the audit report reference date as possible, so that the appraisal staff could have a better view of the status of assets included in the appraised subject on valuation date to truly reflect the current value of the appraised subject on valuation date;

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1. The valuation date adopted should be as close to the implementation plan of the economic behaviour corresponding to the purpose of valuation as possible, so that the valuation conclusion can serve the purpose of valuation effectively;

2. The valuation date adopted should be as close to the accounting report date for the implementation plan of the economic behaviour corresponding to the purpose of valuation as possible, so that the appraisal staff can fully understand the overall situation of the assets and liabilities related to the appraised subject, so as to facilitate the appraisal staff to carry out systematic on-site investigation, collection of valuation information and other valuation works. Upon the communication with the Principal, the aforesaid date is finally selected by the Principal as the valuation date.

VII. Basis of Valuation

The basis of laws and regulations, specific basis of behaviors, basis of title and basis of pricing followed by this asset valuation are as follows:

(1) Principal laws and regulations

1. Measures for the Administration of Appraisal of State-owned Assets promulgated by the State Council (Order No. 91, 1991);

2. Asset Appraisal Law of the People’s Republic of China;

3. Company Law of the People’s Republic of China (implemented on 1 January 2006);

4. Provisional Regulations of People’s Republic of China on Value-added Tax (Order No. 538 of the State Council of the People’s Republic of China);

5. Implementation Rules for Provisional Regulations of People’s Republic of China on Value-added Tax (No.50 Order of the SAT and Ministry of Finance);

6. Other applicable laws and regulations related to asset valuation.

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• (2) Basis of standards

• Asset Valuation Standards – Basic Norms (Cai Qi [2004] No. 20 of Ministry of Finance);

• Code of Ethics for Asset Valuation – Basic Norms (Cai Qi [2004] No. 20 of Ministry of Finance);

• Asset Valuation Standards – Valuation Report (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Asset Valuation Standards – Valuation Procedures (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Asset Valuation Standards – Business Agreement (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Asset Valuation Standards – Working Paper (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Asset Valuation Standards – Machinery and Equipment (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Asset Valuation Standards – Real Estate (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society);

• Guiding Opinions of Registered Asset Valuer Concerning Legal Ownership of Valuation Subject (Provisional) ((Kuai Xie [2003] No. 18 of The Chinese Institute of Certified Public Accountants);

• Guiding Opinions of Valuation of Business Enterprise (Provisional) (Zhong Ping Xie [2004] No. 134 of China Asset Appraisal Society);

• Guiding Opinions on Type of Asset Appraisal Value (Provisional) (Zhong Ping Xie [2007] No. 189 of China Asset Appraisal Society).

(3) Documents for economic behaviour

Tak Sing Alliance Limited and Yiyang Lingyun Asset Appraisal Company*（益陽淩雲 資產評估事務所）entered into an agreement regarding the asset valuation business.

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(4) Certificates of title, major contracts and agreements

1. Business license, property registration certificate and articles of association;

2. Payment vouchers for material assets;

3. Other certificates of title.

(5) Basis of determination of prices

1. Mechanical and Electronical Products Pricing Handbook (China Machine Press);

2. Market quotation enquiry on www.pconline.com.cn;

3. Commonly Used Data and Coefficient Handbook in Assets Valuation;

4. The online market quotation for the listed price of relevant commercial & residential land in 2016 – 2017 of the land resources bureau of Yiyang;

5. Benchmark land price documents of People’s Government of Yiyang.

(6) References and Others

1. Assets list and appraisal schedules on valuation date;

2. Accounting operation information submitted by the Company;

3. Information from statistics department;

4. Relevant websites or books for equipment enquiry;

5. Legal Opinion from legal adviser for the property interests;

6. Other information related to the valuation.

VIII. Valuation Approach

(I) Introduction to Valuation Methods

Generally speaking, there are three valuation methods, namely asset based approach, market approach and income approach.

1. Asset based approach is a valuation method whereby the value of the valuation subject is determined on a reasonable assessment basis of the value of all assets and liabilities of an enterprise.

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1. Market approach is a valuation method whereby the value of the valuation subject is determined by comparing the valuation subject with reference enterprises, enterprises with market transaction records as well as equity assets such as shareholders’ interests and securities. The reference enterprises comparison method and merger and acquisition comparison method are commonly used in market approach.

2. Income approach is a valuation method whereby the value of the valuation subject is determined by capitalizing or discounting the expected revenue of the appraised enterprise. The basis of the income approach is the expected utility theory in economics, that is, for investors, the value of an enterprise lies in the expected revenue that it will generate in future.

(II) Selection of Valuation Methods and Determination Method of Valuation Conclusion

1. Application and analysis of market approach

The market approach is to evaluate the current fair market value of a valuation subject with a reference object on the real market. It is characterized with a direct evaluation angle and approach, an intuitive evaluation process, the direct drawing of evaluation data from the market and convincing evaluation findings. This valuation adopts the market approach for expected land acquisition right premium and buildings and land assigned.

1. Application and analysis of income approach

The adoption of income approach for valuation requires the fulfillment of the following three pre-conditions:

• (1) The investment amount paid by investor in a particular company shall not exceed the discounted value of the company’s future expected income.

• (2) The future income of such company can be reasonably estimated.

• (3) The income rate which corresponds to the risk level of the future income of such company can be reasonably estimated.

Carrianna (Hunan) Enterprise Co., Ltd.* is principally engaged in Real estate development, operation and infrastructure construction, operation management of owned properties and property leasing. As its performance has been unstable recently, its future operating revenue and relevant operating expenses cannot be reasonably forecasted, thus it is not eligible as the conditions of applying the income approach. Appraisal staff is of the view of not adopting the income approach for valuation purpose.

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1. Application and analysis of asset-based approach

The asset-based approach refers to the valuation methodology to determine the value of the valuation subject on the basis of reasonably assessing the value of all assets and liabilities of the subject entity. As the necessary information for adopting the asset-based approach could be provided by the appraised entities or collected by the valuer externally, in considering the purpose of this valuation and data collection situation, appraisal staffs are of the view that the asset-based approach can be adopted for this valuation purpose.

1. Determination Method of Valuation Conclusion

The asset-based approach and market approach have been adopted as the methods for this valuation.

(III) Introduction to the Valuation Methods Adopted

Asset-based approach, market approach and income approach

1. Valuation Methods for Current Assets and Other Assets

2. (1) For the valuation of monetary capital (bank deposits and cash): carry out confirmation of bank deposits, check bank statements as well as bank reconciliation statements and apply stocktaking and inspection on cash. After checking that the monetary capital is error free, the appraised value is determined according to the verified carrying amount.

3. (2) For the valuation of inventory: Inventory includes materials, low-cost consumables, development costs, buildings and land. The replacement cost method is adopted for the valuation of materials, low-cost consumables, development costs and market approach for the residential and commercial buildings, market approach for land use rights and expected land acquisition right.

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• A. There are three types of land to be appraised. The first type is the developed land under construction of Zihu Royal Garden, under Yi Guo Yong (2014) No. D00133 (of 46.92 acres), Yi Guo Yong (2015) No. D00322 (of 155.48 mu), Yi Guo Yong (2006) No. D00048 (of 144.59 acres) and Yi Guo Yong (2006) No. D00049 (of 144.81 acres) respectively, with a total area of 491.8 acres. The second type is the undeveloped land that will be replaced by the government. This includes Yi Guo Yong (2011) No. D00414 (of 89.22 acres) (the original licenced area is 89.22 acres and 26.77 acres has already been replaced), Yi Guo Yong (2006) No. D00047 (of 180.06 acres) and Yi Guo Yong (2015) No. D00064 (of 23.15 acres), covering a total area of 292.61 acres. The third type is the market premium value of the 589.55 acres expected land acquisition right.

For the land under development, we used the gross development value less development costs and developer’s profit to access the market value of these land use rights. In the course of our valuation we have employed the direct comparison method whereby comparisons based on transactions on actual sales of comparable property have been made. Comparable property with similar character, facing aspect, size, view, floor level, location and so on are analyzed and carefully weighed against all respective advantages and disadvantages of the Property in order to arrive at a fair comparison of value. Based on the aforesaid investigation, the market selling price of the property under development is about RMB4,021.92 per sq.m.

For development costs, we have made appropriate allowances including construction costs, professional fees for architects, structural engineers, quantity surveyors, legal advisors and town planners etc., interest on construction costs and professional fees, contingency and marketing costs which will be incurred. Based upon the prevailing market condition and the historical data of the company collected, the total development cost is about RMB3,248.15 per sq.m..

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After deducting the PRC corporate income tax of 25% about RMB193.44 per sq.m., the gross profit before land value is RMB580.33. The rationales of the aforesaid are summarized as follows:

	Unit
Item name	price
	(RMB)
	per sq.m.
Market selling price	4021.92
Total development cost	3248.15
Gross profit before land cost	773.78
Gross profit margin	19.24%
Corporate income tax	193.44
Net profit before land cost	580.33
Net profit margin	14.43%

Developer’s profit is about RMB230 per sq.m. 5.72% of sales revenue (i.e. RMB4,021.92 x 5.72%). Hence the market price of the land is RMB350 per sq.m. (i.e. RMB580 – RMB230). The plot ratio of the 491.8 acres developed land is 2.4 and total market value of the 491.8 acres developed land under construction is RMB275,410,000 (market price of land x plot ratio x land area).

For the valuation of the 292.61 acres undeveloped land, due to the needs of municipal construction and planning, the government has explicitly requested for land replacement. On one hand, the land grading has to be downgraded and on the other hand the land replacement will have to last for 2 years. In considering these two factor, we made a 12% discount on the land value. The market price of the land is RMB308 (i.e. RMB350 x 88%) and its plot ratio is 2.1, hence the market value of the land is market price of land × plot ratio × land area=RMB126,090,000.

The market value of the above two types of land is RMB401,500,000.

The market approach is adopted for the market value of the 589.55 acres of expected land acquisition right premium.

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Carrianna (Hunan) Enterprise Co., Ltd.* signed a supplementary agreement, 《Overall Development of Hunan Yiyang Zishan Lake Park Operation Contract》, on 11 April 2011 with Yiyang Government of Hunan Province, pursuant to which the company is entitled to acquire 694.37 acres of land from Yiyang’s Government, amid the provincial land use quota, at 73%-100% of standard commercial and residential land price of the land lot location. Owing to the fact that the standard land price is lower than market price, the expected land acquisition right has a land premium. As of Valuation Date, the company has 589.55 acres expected land acquisition right premium yet to exercise.

The basic methodology of market comparison approach is that: the principle of choice should be based on comparable cases such as consistent use, normal transaction, regional features and individual conditions, and choose more than three comparable cases similar to the valuation subjects, then integrate with the on-site inspection information from appraisal staff. And more than three comparative and corrective prices would be obtained after conducting modifications on the transactions, transaction dates, regional factors and individual factors and take the average price as its appraised market price.

Seven transaction cases are selected for this valuation, hence the assessed market price of the valuation subject = (comparative and corrective price 1 + comparative and corrective price 2+....+ comparative and corrective price 7)/7

The assessed premium of valuation subjects = appraised market price of valuation subject * floor area – total land cost of valuation subject

The valuation subjects are the commercial-residential lands of the 589.55 acres expect to be provided by Yiyang Municipal People’s Government. The expected land is situate at Carrianna Civic Plaza, eco-tourism zone and its surrounding land and is of grade two lands. Its proportion of commercial-residential land was approximately 1:5.42. The commercial grade two benchmark land price was RMB1,890/m[2] , and residential benchmark land price of RMB917/m[2] . Of which: 550.14 acres were acquired based on the 73% of the benchmark land price agreed with the government. As measured by the proportion of commercial-residential lands, the land prices for 85.65 acres of commercial land and 464.49 acres of residential land were RMB107.91 million and RMB283.95 million respectively, amounted to RMB391.86 million in total. The acquisition price was 39,186 × 73% = RMB286.05 million; and lands of 39.41 acres were acquired based on the benchmark land price agreed with the government. As measured by the proportion of commercial-residential lands, the land prices for 6.13 acres of commercial lands and 33.28 acres of residential lands were RMB7.72 million and RMB20.34 million respectively, a total of RMB28.06 million.

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The total amount of the above valuation subjects were 589.44 acres with total price of RMB314.11 million for commercial-residential lands. In addition, the relocation compensation for the lands stated in the agreement was RMB88,000/acre, with total amount of RMB52.47 million. Therefore, total acquisition costs of 589.55 acres for commercial-residential lands were approximately RMB366.00 million.

The appraisal staff collected seven relevant commercial-residential lands comparable cases in the urban district of Yiyangt during 2016-2017. Of which, specifically speaking, the 2016 (Listing) Zi-No.13 located in the south of Taohua Lunlu with 1,665.1 m[2] for commercial and residential use, and its initial listing price was RMB4.2 million; 2017 (Auction) Zi-No. 01 located in the east of Longzhou South Road with 17,260.75 m[2] for commercial and residential use, and its initial listing price was RMB36.98 million; 2017(Auction) Zi-No.06 located in Wuyi East Road, Ziyang district with 13,990.68 m[2] for commercial and residential use, and its initial listing price was RMB30.22 million; 2017(Auction) Zi-No. 07 located in Wenchang Road, Changchun Industrial Park, with 28,577.2 m[2] for commercial and residential use, and its initial listing price was RMB47.16 million; 2016 (Listing) Zi-No. C18 located in the north of West Yiyang Avenue West 39,293.61 m[2] for commercial and residential use, and its initial listing price was RMB54.82 million; 2016 (Listing) Zi-No. C20 located in West Yiyang Avenue with 26,475.66 m[2] for commercial and residential use, and its initial listing price was RMB37.75 million. The total land area for the above seven cases was 127,263 m[2] with a total listing price of RMB211.13 million. The average listing price for comprehensive commercial-residential lands in urban areas was approximately RMB1,659/m[2] . The location of appraised commercial-residential lands of 589.55 acres was at the verge of the urban Carrianna Plaza. Its location is similar to the comparable cases and could be calculated as 1,659 × 589.55 acres × 666.67 = RMB652.00 million on the basis of average listing price during 2016-2017. Thus, the valuation premium of valuation subjects = assessed market price of valuation subjects × floor area – total land costs of valuation subjects = RMB652.00 million – RMB366.00 million = RMB286.00 million.

Market value of the above three types of land has a total of RMB687,500,000.

• B. Market approach is adopted for commercial building and residential building valuation. According to the investigation of the surrounding market of the valuation subject, the information for market value is collected. The external sales value of the Company’s assets can be evaluated based on market value.

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In addition, for the valuation of the phase II buildings of Grand Lake City, we adopted the overall packaging approach. Based on the agreement signed with Fei Xiang Property Development Co., Ltd. The Company is entitled to 53% interest in the property, so the appraisal value for these property only reflects its 53% share.

From our understanding, the quantity and market value of the property as of 30 June 2017 is as follows:

							Fair	Total
							transaction	appraisal
							unit price	value
Item	No.	Project	Type	Units	Area (m	2)	(RMB/m 2)	(RMB’000)	Notes
1		Phase 3 of Grand Lake City	Commercial	20	9,152.87		8,400	76,880
2		Phase 3 of Grand Lake City	Apartment	10	538.34		3,233	1,800
3		Phase 3 of Grand Lake City	Parking spaces	259		–	56,000	14,500	Right of use only
4		Phase II of Grand Lake City	Packaging business	1	19,884.71		4,114	51,250	Including 4 storey shopping
									accade.
			Residential	8	941.6		3,346		8 residential units and 100
									underground parking lots, a
			Parking spaces	158		–	56,000		cooperative project with Fei
									Xiang Property having 47%
									interests and Carrianna having
									53% interests
5		Grand Lake Bay	Parking spaces	247		–	32,000	7,900	Right of use only
6		Carrianna Shopping Street	Commercial	302	30,956.71		4.100	127,240	277 units with a floor area of
									20,666.24 sq.m. were pledged
									to Hunan Chang Sha Bank
Total								29,824

In addition, according to international accounting standards, the valuation gain is subjected to 25% corporate income tax and 3% land value added tax. The carrying amount of the appraised land is RMB159,066,600 and the assessed value is RMB401,500,000, with a valuation gain of RMB242,433,400. The land value added tax provided is RMB7,270,000, the valuation gain of all the appraised property is RMB614,033,590 and corporate income tax provided is RMB153,510,000. Total amount for the two taxes are RMB160,780,000 which is classified as deferred tax.

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• (3) For the valuation of accounts receivables, prepayments, other receivables and other current assets: we checked the consistency between the relevant detailed ledgers and the general account; investigated on the cause, age, debtors’ creditworthiness of debtors; checked the current accounts, focused on internal related entities. In addition, through studying the ageing analysis and the particulars of receivables of enterprise, we have studied the interests of assets arising therefrom and the feasibility of collection. Specifically speaking, following the above procedures, the receivables were recognized on an individual basis. On such basis, for other unrecognizable losses from bad debts, we identify the potential bad debt loss and confirm the final valuation based on the practical conditions of the enterprise. The approved carrying amount will be regarded as the appraised value if there is no bad debt in the current account upon verification.

• Valuation method in respect of non-current assets

• (1) Valuation of long term equity investment

Cost method is adopted for long term investment valuation, and confirmed the carrying amounts of both parties upon the investigation and verification with investee.

• (2) Valuation of office and transportation equipment

According to the purpose of this valuation and combining with the on-site information collected by the appraisal staff, the replacement cost method is adopted for the valuation of office and transportation equipment. The calculation formula of replacement cost method is:

Appraisal value = Full replacement cost x depreciation rate

• 1 Determination of replacement cost

According to the types of equipment included in the valuation scope for valuation purpose, full replacement cost is determined by adopting different methods according to the different conditions of the equipment, specifying as follows:

Office facilities and equipment

For equipment with smaller value and no installation is required, the calculation formula of full replacement cost is as follows:

Full replacement cost = purchase price of equipment (tax inclusive) + transportation fee

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Office facilities and equipment

The full replacement cost is determined by market value (tax inclusive) as the value is small, and belonging to the office equipment for daily use, where transportation and installation fees are included in the purchase price.

Transportation equipment

The full replacement cost comprises the purchase price of vehicle in the market on valuation date, the purchase charge of vehicle, licensing fee etc.

Below is the calculation standard of each expense item within the full replacement costs:

Firstly: Determination of the purchase price of facilities and equipment

• A. For each kind of standard equipment, we obtained the brand new current market prices of equipment of the same or similar quality and function with the valuation subject through identifying the price in various quotation handbooks and enquire equipment manufacturer and distributor in terms of usage, function, key technical parameter indicator of equipment. On such basis, we determined the purchase price of the equipment after making amendment by taking into account the price differentiation due to functional differences and the difference between quotation and actual transaction price. For equipment that has been put out of use for years and no longer produced, its purchase price will be determined according to the adjusted reference price of alternative or similar equipment.

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• B. For non-standard equipment in which its price could not be identified, its manufacturing charge will be calculated according to the information including equipment drawing, technical requirements and manufacturing contract provided by the Principal, with reference to the current labour cost, material cost and mechanical shift costs, and applying the norm of the relevant equipment production and expenses.

For electronic equipment, the price is determined by the latest market transaction price in local electronic market on valuation date. The purchase price of transportation equipment is determined using the latest market price and transaction price in local automobiles market on valuation date.

Secondly: Determination of transportation fee

The transportation fee item of equipment includes the loading and unloading, transportation fee, purchase and custody expenses of equipment incurred from manufacturer to the place of such project. The following formula is adopted to determine the transportation and sundry fees of equipment: transportation and sundry fee of equipment = purchase price of equipment x transportation and sundry fee rate, which is determined based on the reference rate of transportation and sundry fee provided in the Commonly Used Data and Coefficient Handbook in Assets Valuation, and integrated with the actual situation of enterprise contract.

Thirdly: Determination of installation and tuning fee

The installation and tuning fee of equipment include all the expenses incurred from a series of operations including assembling, positioning, connection fixation, inspection and testing after delivering to the construction site and until in usable conditions.

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2 Determination of equipment depreciation rate

The integrated depreciation rate was determined pursuant to the relevant policies including the economic technology and finance and taxation of the government, on the basis of investigation and verification of useful life of various machines and equipment, actual technical conditions, original manufacturing quality and service condition of equipment mastered from the on-site investigation, and combination with the factors such as industrial characteristics and related functional depreciation and economic depreciation.

Specific determination is as follows:

For facilities and equipment

For general equipment, its integrated depreciation rate was determined according to the working place of equipment, existing technical condition and its economic life.

Determination of office electronic equipment and instrument

For office electronic equipment and instrument, the integrated depreciation rate is determined by adopting the straight line method, through an on-site inspection of the condition of office electronic equipment.

Determination of integrated depreciation rate of vehicle

In accordance with the provisions of ‘‘Standards on the Elimination of Outdated Automobiles’’ and ‘‘Circular on Adjusting the Standards on the Elimination of Outdated Automobiles’’ of relevant state ministries and commissions, straight-line method and the miles driven are both adopted and included respectively in the calculation of theoretical depreciation rate, the latter is determined by whichever the lower. The depreciation rate is appraised pursuant to the technical performance of the vehicle, which is determined by various standards, such as the outlook and the structure of the vehicle as examined in an on-site inspection (whether there are damages or not), the operation of the main engine and circuits (whether they work normally or not), the function of the brakes (whether they are reliable or not), and the emission standard of greenhouse gas (whether it meets the standard or not). Finally, the integrated depreciation rate is determined in accordance with theoretical depreciation rate and on-site inspection depreciation rate.

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The depreciation rate is calculated using the straight-line method = Remaining useful life/(Life used + Remaining useful life) × 100%

The depreciation rate is calculated using the mileage driven method = Remaining mileage available/(Mileage driven + Remaining mileage × 100%

The formula for equipment integrated depreciation rate is as follows:

η=η[1] × 40% + η[2] × 60%

where: η[1] : theoretical depreciation rate

η[2] : on-site inspection depreciation rate

η: integrated depreciation rate

The theoretical depreciation rate set out in the formula is determined by the economic useful life and used life of such equipment. The detailed formula is as follows:

Theoretical depreciation rate = (economic useful life – used life)/ economic useful life × 100% (as for vehicles, the lower of travelled distance depreciation rate and useful life depreciation rate should be adopted)

On-site inspection depreciation rate: In on-site inspection, our appraisal staff carries out on-site observation to find out the technical performance of the equipment by enquiring the operators. In accordance with the result of on-site equipment inspection and with reference to the used life, actual technical condition, loading level and the original production quality of the equipment, the depreciation rate of the equipment is estimated by comprehensive analysis.

Equipment with extended service determines its integrated depreciation rate by on-site inspection depreciation rate. If it could serve its function, its depreciation rate will not be less than 15%.

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For discarded equipment, its recovery of residual value is determined by its specific structural materials and after deducting reasonable handling fees from its actual realistic value. Electrical equipment is determined by having zero value. The appraised value of vehicles should be directly determined by scrap costs under the market approach according to regulations of local traffic management department.

• 3 Calculation of the Appraised Value

Appraised Value = full replacement cost × integrated depreciation rate.

1. Valuation of Liabilities:

For the valuation of various items of liabilities, including accounts payable, receipts in advance, other payables, salaries payable, dividends payable, tax payables and long-term loan, the appraised value is determined by verified carrying amounts or its actual liabilities payable after examining and verifying the carrying amounts and with banks in accordance with the breakdown provided by the enterprise.

IX. Process and Status for the Implementation of Valuation Procedures

In accordance with the State’s relevant departments’ regulations on asset valuation and pursuant to the Agreement for Asset Valuation Work which Tak Sing Alliance Limited that we entered into, the appraisal staff have conducted auditing procedures on legal documents, accounting records and relevant information provided by appraised entity, underwent on-site inspection and verification of assets, obtained relevant proof of ownership documents, conducted necessary valuation research, and underwent other valuation procedures that we considered necessary. The detailed procedures of asset valuation are as follows:

(I) Engagement Acceptance Stage

Before accepting the engagement of project, the person-in-charge shall first

1. Understand the organization structure and distributions of appraised entities;

2. Understand the business features of appraised entities;

3. Understand the internal control system and accounting system of appraised entities;

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1. Prepare valuation plan according to investigation on the appraised entities.

After having a general understanding of a project, we enter into the Agreement for Valuation Work with the Principal to definite the purpose of valuation, valuation subject and scope and valuation date.

(II) Verifying and Checking Stage

1. Project Training Stage

In respect of this project features, we conduct training for appraisal staff who are engaged in this project, so as to assure quality, standardize the valuation methods and parameters and to ensure implementation of valuation technical solutions. This mainly includes: basic background and information of project, relevant intermediaries, project organization and time arrangement, audit importance of breakdowns, key points and specific requirements of on-site inspection, valuation methods of different types of assets, connection requirements and precautions of intermediaries, audit requirements of all levels, demands of reporting cases and rules, regulatory requirements of electronic documents, worksheet requirements, responsibilities of staff, project coordination mechanism and work discipline. Therefore, we can definite situations and general requirements of projects to ensure consistency of interpretation on such common problems during the reporting of enterprise’ assets.

The appraisal staff instructs the appraised entities to conduct checking on assets and prepare for valuation materials in accordance with consistency of project requirements.

2. On-site Checking Stage

The appraisal staff conducts checking of assets and liabilities that are included into valuation scope on the basis of truthful declaration of assets and implementation of full self-inspection on appraised assets by enterprise. The time of assets checking is from 30 June 2017 to 3 July 2017.

Asset checking tasks mainly comprises:

• (1) Investigation on the authenticity and legality of valuation subject

According to Asset Valuation Reporting Checklist provided by the appraised entity, the appraisal staff should conduct spot check and verification on site to confirm their objective existence.

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• (2) Investigation on the composition of the book value

Examine the enterprise’s relevant accounting evidence, books of accounts and final accounts according to the features of the assets of the appraised entity to understand the value composition of the assets reported by the enterprise for appraisal purpose.

• (3) Collection of appraisal information

An information checklist for the valuation was provided to the company to guide its collection and preparation of related information.

• (4) An in-depth understanding was made on the production, management and operation of the company, such as human resources deployment, material resources supply, management system and direction, financial plan and operating plan. Analysis was made on the company’s financial information of previous years and also on operational conditions and development plans.

(III) Stage of valuation and estimation

According to the various standards and the state’s laws and regulations relating to the valuation, the appraisal staff determined the valuation methods by integrating the conditions of the appraised assets. Based on the pricing plans of various assets, the appraisal staff clearly determined the valuation parameters and pricing criteria, collected relevant pricing information and carried out the valuation and estimation tasks.

(IV) Stage of summary

The project team completed the draft and finally summarized and determined the valuation results. The working period of this stage was from 3 July 2017 to 4 July 2017.

(V) Stage of auditing

After an initial valuation result was achieved, we carried out a comprehensive auditing on the valuation checklist, notes to valuation, valuation report and relevant working papers submitted by the project team and gave specific opinions and advices on amendment in accordance with our internal three-tier review procedures.

After completion of auditing works at all levels, the project team made corresponding amendments, supplements and improvements to the valuation checklist, notes to valuation and valuation report based on the opinions and advices from different levels, and the valuation report (draft for comments), after being reviewed, was submitted by us to the Principal for comments.

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(VII) Stage of issuing the report

The official valuation report was issued on 5 July 2017 after we had exchanged our opinions on the valuation results with the Principal.

X. Valuation Assumptions

(I) Basic Assumptions

1. Open market assumption: It is a hypothetical description or stipulation of the conditions for the assets to access into the market and the influence that will be imposed on the assets under such conditions. The open market, which has been fully developed and perfected, is a competitive market with a willing buyer and seller on an equal basis. In the market, both the buyer and seller have adequate opportunity and time to obtain market information and transact on a willing and rational basis without being forced or perform under restriction.

2. Assumption of continuous use: Firstly, it is assumed that the appraised assets are in usable state, including assets that are in use and those as standby. Secondly, judging from related data and information, the assets in usable state will continue to be used. Assumption of continuous use describes the market conditions or environment for the appraised assets and particularly describes the asset’s status of continuance, which includes continuing to be used as existing use, continuing to be used with a change of usage, and continuing to be used at a different location or space. Continuing to be used as existing use refers to the case of which the appraised assets in use will continue to be used in accordance under the existing usage and form after the ownership is changed or asset business is incurred. Continuing to be used with a change of usage refers to the case of which the appraised assets in use will continue to be used with a change of existing usage and by replacing a new usage after the ownership is changed or asset business is incurred. Continuing to be used at a different location or space refers to the case of which the appraised assets in use will continue to be used with a change of location or space and continue to be used at another location or space after the ownership is changed or asset business is incurred. In line with the purpose of this valuation, the operating assets within the valuation scope are all assumed to be in use and will continue to be used.

(II) General assumptions:

1. It is expected that there will be no significant changes in the laws, regulations and policies of the State in relation to the industry which the appraised entity is in;

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1. It is expected that there will be no other significant changes in the social and economic environment and economic development except those changes which are publicly-known;

2. Changes in the current bank lending rate and foreign exchange rate of the State could be maintained in a reasonable range;

3. There are no other significant changes in the State’s current taxation system except those changes that are publicly known;

4. There will not be any material adverse effect of other force majeure and unpredictable factors;

(III) Specific Assumptions

1. In regard to the legal description or legal issues (including titles or encumbrances) of the appraised assets in this valuation report, we have conducted general inspection as required by the regulations. Unless otherwise disclosed in this report, the title of the appraised assets are assumed to be good and tradable in the market, and not subject to any lien and easements, and there is no violation and other encumbrances on the titles of the appraised assets.

2. In regard to the information provided by the Principal and other parties in which the whole or any part of the valuation conclusion in this valuation report relies upon, we have only conducted independent auditing pursuant to the valuation procedures. We make no representation as to the authenticity and accuracy of such information.

3. Assumption of no defect issues, contingent issues nor other issues: in regard to the defect issues, contingent issues or other issues regarding the company having possible impact on the valuation conclusion of the assets, in case that the appraised entity and other parties has not provided the relevant data required by the appraisal staff whereas the appraisal staff still unable to know the relevant information despite having fulfilled the valuation procedures, the appraised entity is deemed to have no defect issue, contingent issue nor other issues, and the valuation institution and the appraisal staff assume no responsibility therefor.

4. Assumption of true and complete information: it refers to the financial statements, accounting vouchers, asset checklist and other relevant information regarding the valuation furnished by the appraised entity are true and complete.

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1. In regard to all the licenses, permits, approvals or other legal or administrative authorization documents signed or issued by related local, state and government organizations, private organizations or groups which are needed by the user of the assets, in which the valuation in this valuation report relies upon, it is assumed that they have been or could be obtained or updated at any time.

2. It is assumed that all operations on the relevant assets performed by Carrianna (Hunan) Enterprise Co., Limited are in compliance with relevant laws and other legal, planning and construction requirements promulgated by relevant competent departments at higher levels.

3. Estimations in this valuation report are made based on the assumptions that all significant or potential factors which may affect the value analysis have been fully disclosed to us by the appraised entity.

XI. Valuation Conclusion

For this valuation, the appraised value of the entire shareholders’ interests of Tak Sing Alliance Limited as of valuation date (i.e. 30 June 2017) amounted to RMB849,807,868, representing a growth of 114.25% when compared to its carrying amount.

For particulars of the valuation conclusion, please refer to the summary of result of valuation using the asset-based approach and the valuation breakdown

Summary of Result of Valuation Using Asset-based Approach

Valuation Date: 30 June 2017

Appraised Entity: Tak Sing Alliance Limited Unit: In RMB

Items	Items				Appreciation Rate %	Appreciation Rate %
	Items	Carrying Amount	Appraisal Value	Appreciation/ Depreciation	Appreciation Rate %
		A	B	C=B-A	D=C/A × 100
	Current assets	535,763,176	1,149,718,308	613,955,132	114.59%
	Non-current assets	71,708,781	71,698,397	–10,384	0.01%
	Total assets	607,471,957	1,221,416,705	613,944,748	101.07%
	Current liabilities	146,328,837	307,108,837	160,780,000	109.88%
	Non-current liabilities	64,500,000	64,500,000	–	–
	Total liabilities	210,828,837	371,608,837	160,780,000	76.26%
	Net asset	396,643,120	849,807,868	453,164,748	114.25%

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XII. Special Issues

The following issues are beyond the practicing standards and capabilities that can be estimated by our registered asset valuer, but these issues may actually have impact on the valuation conclusion. Users of this valuation report should pay particular attention regarding this:

• (i) For any defects regarding the enterprise having possible effects on the appraised value of the assets in which the enterprise has not specifically advised the appraisal staff upon engagement and are not known to the appraisal staff after execution of the valuation process, the valuation institution and the appraisal staff assume no responsibility therefor.

• (ii) This report is compiled based on the economic behaviour documents, business licenses, property ownership documents, financial statements, accounting vouchers, assets breakdown and other relevant information concerning this valuation and supplied by the Principal and the appraised entity. The Principal, the appraised entity and relevant stakeholders are responsible for the authenticity, legality and integrity of the original valuation information supplied in relation to the abovementioned valuation. We have conducted independent inspection of the information such as economic behaviour documents, business licenses, property ownership documents and accounting vouchers provided by the Principal and the appraised entity, but we are not responsible for the authenticity of the aforementioned information.

• (iii) The result of this valuation reflects the current value of the valuation subject for the purpose of this valuation and on an open market basis. This report takes no account of the impact of special additional costs that may be contributed by the parties on the appraised value, and without taking into account of the changes in the state’s macroeconomic policies, as well as acts of nature and other force majeure on the value of the assets. Should there be changes in the aforementioned conditions and the going concern basis adopted in this valuation, the valuation result would generally become invalid.

• (iv) We have not taken into account the factors such as the charges and taxes generated by the transactions that are still to be undertaken by the valuation subject and other assets being included in the valuation scope when realizing the purposes of the valuation that could have possible impact on the value of the reported assets, nor have we made any tax considerations on the appreciation in value upon revaluation of each type of asset.

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• (v) It is the registered asset valuer’s responsibility to give professional opinions on the valuation of the valuation subject in accordance with the laws, regulations and assets valuation standards. The Principal and the related parties are responsible for the authenticity, legality and integrity of the materials provided, and the proper use of the valuation report. The valuation conclusion shall not be construed as an assurance of the realizable value of the valuation subject. When assets transactions are occurred, the transaction value transacted by the parties can be changed by adding and subtracting on the basis of the valuation value as the case may be.

• (vi) In case the quantity of assets changes after the valuation date, the users of this valuation report shall take due consideration and make adjustment accordingly during actual valuation; in case the pricing standard of assets changes and has an obvious impact on the appraised value of assets, the Principal shall engage a qualified valuation institution to re-determine the appraisal value in a timely manner.

• (vii) The valuation report could only be used for the asset reorganization of the company. Its appraised value could only be used for value reference purpose instead of an assurance of the realizable value. The valuation conclusion of this report does not serve for tax purposes and it should be determined by considering the price of actual transaction deal by the parties if for tax item purposes.

• (viii) When conducting the land valuation of the company, we considered the assumption that the government is going to transform the 292.61-acres land of the Company is tenable, pursuant to which the 292.61-acres land of the Company will be considered to be downgraded from land use of grade 2 to grade 3 for this occasion. The valuation conclusion drawn hereafter are subject to the valuation assumptions and restrictions defined in the valuation report, otherwise, the results of valuation will be invalid, therefore, we will make adjustment by eliminating this assumption factor when redetermining the appraisal results.

XIII. RESTRICTIONS ON THE USAGE OF THE VALUATION REPORT

• (i) The usage of this valuation report shall be limited to the purpose of valuation and its usage as specified herein;

• (ii) The valuation report may only be used by users of the valuation report as specified herein;

• (iii) The valuation conclusion shall not be used if the valuation report is not approved or filed for records;

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• (iv) Unless provided for by the provisions of laws and regulations or otherwise agreed by the relative parties, none of the content of this valuation report can be extracted, quoted or disclosed in public media without the prior consent from the valuation institution;

• (v) In case that any policy adjustment has major impact on the valuation conclusion, the valuation date shall be re-determined for valuation purpose;

• (vi) The conclusion of this valuation report shall be valid for one year from the valuation date, i.e. 30 June 2017, and re-assessment is required after one year.

XIV. DATE OF VALUATION REPORT

This valuation report was issued on 5 July 2017.

• [End of the valuation report]

Yiyang Lingyun Asset Appraisal Company*

Certified Public Valuer: Wu Xin Ping Certified Public Valuer: Liu Yi

5 July 2017

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GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DIRECTORS’ INTERESTS IN THE SECURITIES OF THE GROUP

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 or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) 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 (b) were required pursuant to Section 352 of the SFO to be entered in the register referred therein; or which (c) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the ‘‘Model Code’’) under the Listing Rules, were as follows:

Long position in the Shares

(a) The Company

		Number	of ordinary shares	held and		Underlying		Percentage of
			nature of interest			shares		the Company’s
		Personal	Family		Other	pursuant to		issued share
Name of director	Capacity	interests	interests	interests		share options	Total	capital
						(note 1)
Ma Kai Cheung	Beneficial owner, interest	252,280,172	9,300,000	259,129,025		–	520,709,197	41.51
	of spouse and		(note 2)	(note 3)
	beneficiary of trust
Ma Kai Yum	Beneficial owner, interest	68,230,260	3,200,000	101,201,040		1,200,000	173,831,300	13.86
	of spouse and		(note 4)	(notes	5 & 6)
	beneficiary of trust
Leung Pak Yan	Beneficial owner	–	–		–	9,000,000	9,000,000	0.72
Ng Yan Kwong	Beneficial owner	13,000,000	–		–	3,500,000	16,500,000	1.32
Ma Hung Ming,	Beneficial owner,	1,022,000	2,044,000		–	1,000,000	4,066,000	0.32
John	interest of spouse		(note 7)

Notes:

• (1) The underlying shares represent interests of options granted to the Directors and senior executive under the share option schemes to acquire shares of the Company.

• (2) The shares were owned by Cheung Lin Kiu, the spouse of Ma Kai Cheung.

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• (3) Ma Kai Cheung and his family are the objects of a discretionary trust which effectively owns the entire issued share capital of Regent World Investments Limited (‘‘Regent World’’) and 70% of the entire issued share capital of Bond Well Investments Limited (‘‘Bond Well’’). At the Latest Practicable Date, Regent World owned 184,121,625 shares and Bond Well owned 75,007,400 shares of the Company.

• (4) The shares were owned by Kwok Kit Mei, the spouse of Ma Kai Yum.

• (5) Ma Kai Yum and his family are the objects of a discretionary trust which effectively owns the entire issued share capital of Grand Wealth Investments Limited (‘‘Grand Wealth’’) and Peaceful World Limited (‘‘Peaceful World’’). At the Latest Practicable Date, Grand Wealth and Peaceful World owned 74,651,040 and 19,050,000 shares of the Company, respectively.

• (6) Peaceful World owns the entire issued share capital of Real Potential Limited (‘‘Real Potential’’). At the Latest Practicable Date, Real Potential owned 7,500,000 shares of the Company. The interests of Real Potential in the Company are therefore deemed to be the interests of Peaceful World in which Ma Kai Yum is also deemed to have interests for the reason as stated in note 5 above.

• (7) The shares were owned by Choi Ka Man, Carmen, the spouse of Ma Hung Ming, John.

(b) Subsidiaries

					Percentage of
					the subsidiary’s
					issued share
			Number of	Type of	capital (ordinary
Name of subsidiary	Name of director	Capacity	shares held	shares	shares)
Ginza Development	Ma Kai Cheung	Beneficial owner	15	Ordinary	2.5
Company Limited
Ginza Development	Ma Kai Yum	Beneficiary of trust	18	Ordinary	3
Company Limited
Gartrend Development Limited	Ma Kai Cheung	Beneficial owner	500,000	Non-voting	N/A
				deferred
Gartrend Development Limited	Ma Kai Yum	Beneficial owner	500,000	Non-voting	N/A
				deferred
Tak Sing Alliance Limited	Ma Kai Cheung	Beneficial owner	9,000	Non-voting	N/A
				deferred
Tak Sing Alliance Limited	Ma Kai Yum	Beneficial owner	1,000	Non-voting	N/A
				deferred
昆明佳寧娜食品有限公司	Ma Kai Cheung	Beneficial owner	N/A	N/A	15

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APPENDIX VI

In addition to the above, Dr. Ma Kai Cheung and Mr. Ma Kai Yum have nonbeneficial personal equity interests in certain subsidiaries held for the benefit of the Group solely for the purpose of complying with their minimum company membership requirements.

All the interests stated above represent long positions. Save as disclosed above, as at the Latest Practicable Date, none of the directors or chief executives of the Company, nor their associates had any interests or short positions in the shares, underlying shares or debentures of the Company, or any associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company under Section 336 of the SFO and so far as was known to the Directors, the following persons or corporations (other than a Director or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long position in the Shares

				Percentage of
				the
			Number of	Company’s
			ordinary	issued share
Name of shareholder	Capacity	Notes	shares held	capital
East Asia International Trustees Limited	Trustee	a	360,330,065	28.74
Golden Yield Holdings Limited	Interest in controlled	b	259,129,025	20.67
	corporations
Regent World Investments Limited	Holding corporation	b	184,121,625	14.68
Wealthy Platform Limited	Interest in controlled	c	101,201,040	8.07
	corporations
Bond Well Investments Limited	Holding corporation	b	75,007,400	5.98
Grand Wealth Investments Limited	Holding corporation	c	74,651,040	5.95

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GENERAL INFORMATION

APPENDIX VI

Notes:

• a. East Asia International Trustees Limited (‘‘EAIT’’) is the trustee of a discretionary trust of which Mr. Ma Kai Cheung and his family are the objects and through its wholly-owned subsidiary, Golden Yield Holdings Limited (‘‘Golden Yield’’), EAIT was indirectly interested in 259,129,025 shares of the Company. EAIT is also the trustee of a discretionary trust of which Mr. Ma Kai Yum and his family are the objects and through its wholly-owned subsidiary, Wealthy Platform Limited (‘‘Wealthy Platform’’), EAIT was indirectly interested in 101,201,040 shares in the Company. As at the Latest Practicable Date, EAIT was effectively interested in a total of 360,330,065 shares of the Company.

• b. Golden Yield owns the entire issued share capital of Regent World and 70% of the entire issued share capital of Bond Well, thus indirectly interested in a total of 259,129,025 shares of the Company. The total shares held by both Regent World and Bond Well are the same block of shares as disclosed in ‘‘Other interests’’ of Mr. Ma Kai Cheung under the section headed ‘‘Directors’ Interests in the Securities of the Group’’ set out above.

• c. Wealthy Platform owns the entire issued share capital of Grand Wealth and Peaceful World and indirectly owns the entire issued share capital of Real Potential through Peaceful World, thus indirectly interested in 101,201,040 shares of the Company. The total shares held by Grand Wealth, Peaceful World and Real Potential are the same block of shares as disclosed in ‘‘Other interests’’ of Mr. Ma Kai Yum under the section headed ‘‘Directors’ Interests in the Securities of the Group’’ set out above.

Save as disclosed above, the Directors are not aware of any other persons who, as at the Latest Practicable Date, had registered an interest or short position in the shares or underlying shares of the Company in the register that was required to be kept under Section 336 of the SFO.

4. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective associates had any interest in any business which competes or may compete, either directly or indirectly, with the business of the Group, or has or may have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules.

5. DIRECTORS’ SERVICE CONTRACTS

Mr. Leung Pak Yan and Mr. Ng Yan Kwong had entered into a service contract with the Company. The contract has no fixed terms of engagement and is subject to retirement by rotation as required by the Company’s Bye-laws and termination by either party giving three months’ notice in writing.

Mr. Ma Kai Cheung, Mr. Ma Kai Yum and Mr. Ma Hung Ming, John had no service contract with the Company as at the Latest Practicable Date.

The non-executive Directors of the Company have been appointed for a term subject to retirement by rotation as required by the Company’s Bye-laws.

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GENERAL INFORMATION

APPENDIX VI

Save as disclosed above, none of the Directors had any existing or proposed service contract with the Group or associated companies which is not expired or determinable by the employer within one year without payment of compensation (other than statutory compensation).

6. DIRECTOR’S INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group. As at the Latest Practicable Date, none of the Directors has any interest, directly or indirectly, in any assets which have been, since 31 March 2017 (being the date to which the latest published audited consolidated financial statements of the Company were made up), acquired or disposed of or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

7. MATERIAL CONTRACTS

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

• (a) the Equity Transfer Agreement;

• (b) the Escrow Agreement.

8. LITIGATION

As at the Latest Practicable Date, neither the Company nor any other member of the Group is engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against the Company or any of its members.

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GENERAL INFORMATION

APPENDIX VI

9. EXPERT

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

Name

Qualification

• Yiyang Lingyun Asset Appraisal Company*

• （益陽淩雲資產評估事務所）

• Certified Public Valuer (PRC)

• Ernst & Young

Certified Public Accountants

• Hunan Yi Jian Law Firm* （湖南義劍律師事務所）

• PRC Legal adviser to the Valuer

• (b) As at the Latest Practicable Date, each of Yiyang Lingyun Asset Valuer and Ernst & Young had no shareholding interest 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 of any member of the Group.

• (c) Each of Yiyang Lingyun Asset Appraisal Company, Ernst & Young and Hunan Yi Jian Law Firm has, on 14 August 2017, 11 September 2017 and 14 August 2017 respectively, given and has not withdrawn its written consent to the issue of this circular, with inclusion of its letter and references to its name in the form and context in which it is included.

• (d) As at the Latest Practicable Date, each of Yiyang Lingyun Asset Appraisal Company, Ernst & Young and Hunan Yi Jian Law Firm was not interested, directly or indirectly, in any assets which had since 31 March 2017 (being the date to which the latest published audited accounts of the Company were made up) been acquired or disposed of by or leased to any member of the Group or which are proposed to be acquired or disposed of by or leased to any member of the Group.

10. GENERAL

• (a) The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

• (b) The head office and principal place of business of the Company is situated at 26/F, Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories in Hong Kong and 5/F Carrianna Friendship Square, 2002 Renminnan Road, Lo Wu District, Shenzhen, China.

• (c) The Hong Kong share registrars and transfer office is Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

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APPENDIX VI

GENERAL INFORMATION

• (d) The company secretary of the Company is Mr. NG, Yan Kwong. Mr. Ng holds a Bachelor’s degree in Commerce from the University of Newcastle in Australia and is a member of the Hong Kong Institute of Certified Public Accountants and CPA Australia. Before joining the Group, Mr. Ng was the finance director of a US beverage company operating in Mainland China. Mr. Ng has more than 10 years corporate and financial management experience with multinational consumer product companies in South East Asia and the Greater China region. He also has substantial working experience in public accountancy practice with a major international accounting firm.

• (e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text thereof.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at 26/F, Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong, during normal business hours from 9:00 a.m. to 6:00 p.m. on any Business Day from the date of this circular up to and including the date of the SGM:

• (a) the memorandum of association of the Company and Bye-laws;

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

• (c) the letter from Ernst & Young on the unaudited pro forma financial information of the Remaining Group, the text of which is set out in Appendix III to this circular;

• (d) the letter of consent from Ernst & Young referred to in the paragraph ‘‘Expert’’ in this appendix;

• (e) the valuation report prepared by Yiyang Lingyun Asset Appraisal Company*（益陽淩 雲資產評估事務所）;

• (f) the letter of consent from Yiyang Lingyun Asset Appraisal Company*（益陽淩雲資產 評估事務所）referred to in the paragraph ‘‘Expert’’ in this appendix;

• (g) the letter of consent from Hunan Yi Jian Law Firm*（湖南義劍律師事務所）referred to in the paragraph ‘‘Expert’’ in this appendix;

• (h) the service contracts referred to in the paragraph headed ‘‘Directors’ Service Contracts’’ and the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix; and

• (i) this circular.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [53 x 52] intentionally omitted <==

佳寧娜集團控股有限公司

CARRIANNA GROUP HOLDINGS COMPANY LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 00126)

NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘Meeting’’) of Carrianna Group Holdings Company Limited (the ‘‘Company’’) will be held at 26/F., Wyler Centre, Phase II, 200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong on Wednesday, 27 September 2017 at 10:00 a.m. for the purposes of considering and, if thought fit, passing with or without modifications, the following ordinary resolution of the Company:

‘‘That

• (a) the terms of an equity transfer agreement dated 18 July 2017 (the ‘‘Agreement’’) and entered into between Tak Sing Alliance Limited（達成有限公司）(the ‘‘Vendor’’), an indirectly wholly-owned subsidiary of the Company, as vendor, Hunan Country Garden Real Estate Co., Ltd.（湖南省碧桂園地產有限公司）(the ‘‘Purchaser’’), an indirect non-wholly owned subsidiary of Country Garden Holdings Company Limited, as purchaser, Hunan Wancheng Commercial Investment Operations Management Co., Ltd（湖南萬城商業投資經營管理有限公司）(‘‘Hunan Wancheng’’) and Country Garden Holdings Company Limited, a controlling shareholder of the Purchaser as purchaser’s guarantor in relation to the disposal of approximately 92.21% of the total equity interest of Carrianna (Hunan) Enterprise Co., Ltd.（佳寧娜（湖南）實業有限公 司）, a company established under the laws of the PRC, a copy of the Agreement is tabled at the Meeting, marked ‘‘A’’ and initialled by the chairman of the Meeting for identification, the transactions contemplated thereunder and the execution and the performance thereof by the Vendor be and are hereby approved, confirmed and ratified in all respects; and

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NOTICE OF SPECIAL GENERAL MEETING

• (b) any director of the Company be and is hereby authorised generally to do all acts, deeds and things, to take all steps, and to approve, sign and execute all documents (including the affixation of the common seal of the Company where execution under seal is required), as he/she may in his/her sole and absolute discretion consider necessary, desirable or expedient for the purpose of or in connection with carrying into effect, giving effect to, implementing or completing any of the transactions relating to or contemplated under the Agreement, and any and all actions heretofore taken by any one director of the Company that are consistent with the aforesaid be and are hereby approved, confirmed and ratified in all respects.’’

By order of the Board Carrianna Group Holdings Company Limited Dr. Ma Kai Yum Chairman

• For identification purposes only.

Hong Kong, 11 September 2017

Notes:

1. A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxy to attend and, subject to the provisions of the bye-laws of the Company, to vote on his/her/its behalf. A proxy need not be a member of the Company but must be present in person at the Meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the Meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the Meeting or any adjournment thereof, should he/she/it so wish and in such event, the form of proxy shall be deemed to be revoked.

3. In the case of joint holders of shares, any one of such holders may vote at the Meeting, either personally or by proxy, in respect of such share(s) as if he/she/it was solely entitled thereto, but if more than one of such joint holders are present at the Meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share(s) shall alone be entitled to vote in respect thereof.

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