Sunac China Holdings Limited - Proxy Solicitation & Information Statement 2013

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 or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for independent advice.

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

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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CONNECTED AND MAJOR TRANSACTIONS (1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 5 to 16 of this circular. A letter from the Independent Board Committee is set out on pages 17 and 18 of this circular. A letter from Quam Capital is set out on pages 19 to 33 of this circular.

28 August 2013

			Page
Definitions . . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the	Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5
Letter from the	Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .		17
Letter from Quam		Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I	–	Financial Information of Sunac Group . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial Information of the Target Group. . . . . . . . . . . . . .	II-1
Appendix III	–	Management Discussion and Analysis of
		the Target Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	Unaudited Pro Forma Financial Information of
		the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V	–	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI	–	Reconciliation of Valuation of Properties . . . . . . . . . . . . . . .	VI-1
Appendix VII	–	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VII-1

– i –

DEFINITIONS

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

“Acquisition”

the acquisition of the entire indirect equity interest in certain PRC entities wholly-owned by the Liberia Company and Wisdom Collection Holding by Sunac China and Greentown China pursuant to the terms of the Framework Agreement, definitive terms of which are set forth in the Agreement

“Agreement”

the cooperation and investment agreement dated 31 May 2013 entered into among Sunac Greentown, Party A’s Guarantors, Party B and Party B’s Guarantors in relation to the Investment

“BVI”

British Virgin Islands

“Connected persons”

has the meaning ascribed to it under the Listing Rules

“Directors”
the directors of Sunac China
“Enlarged Group”

Sunac Group as enlarged upon completion of the Investment

“Everbright Property Development”

Everbright Property Development Shanghai Co., Ltd. (上海豐明房地產發展有限公司), a company established under the laws of PRC on 16 January 2012 and one of the PRC Project Companies

“Feng Chang Company”

Prosperity Property Management Shanghai Co., Ltd. (上海豐昌物業管理有限公司), a company established under the laws of PRC on 16 January 2012

“Framework Agreement”

the cooperative framework agreement dated 16 March 2013 entered into among the Purchasers, the Vendor and the Liberia Company in relation to the Acquisition

“Fung Seng (Shanghai) Company”

Fung Seng Estate Development (Shanghai) Co., Ltd. (豐盛地產發展(上海)有限公司), a company established under the laws of PRC on 22 June 1994 and one of the PRC Project Companies

– 1 –

DEFINITIONS

“Greentown China”

Greentown China Holdings Limited*, a company incorporated under the laws of the Cayman Islands with limited liability and whose shares are listed on the Stock Exchange (stock code: 3900)

“Greentown Group”
Greentown China and its subsidiaries
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“HK$” Hong Kong dollar, the lawful currency of Hong Kong
“Investment”
the development of Shanghai Huangpu Project through the cooperation with Party B through the acquisition of the indirect interests in the PRC Project Companies as contemplated under the Agreement
“Independent Board Committee”
an independent committee of the Board to be formed to advise the Independent Shareholders in respect of the Acquisition as well as the formation of Sunac Greentown
“Independent Shareholders”
Shareholders who are not prohibited from voting if general meeting were to be convened to approve the Acquisition as well as the formation of Sunac Greentown under the Listing Rules
“Independent Third Party”
an individual(s) or a company(ies) who or which is/are not connected (within the meaning of the Listing Rules) with Directors, chief executive or substantial shareholders (within the meaning of the Listing Rules) of the Company, its subsidiaries or any of their respective associates
“Latest Practicable Date”

26 August 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

“Liberia Company”

Wisdom Collection Holdings (International) Inc., a company incorporated under the laws of Liberia on 11 November 1981, which owns the entire issued share capital of Wisdom Collection

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

– 2 –

DEFINITIONS

“Party A’s Guarantors”

means collectively Sunac China and Greentown China

“Party B’s Guarantors” a company incorporated in Hong Kong and a company incorporated under the laws of PRC

“Party B” Arch Capital Success Limited (固本企業有限公司), a company incorporated in BVI, which directly owns the entire issued share capital of the Target Company and of which the ultimate beneficial owner is the same as the Vendor under the Framework Agreement
“PRC” the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region and Taiwan
“PRC Project Companies”
Richport Property Development, Everbright Property Development and Fung Seng (Shanghai) Company
“Purchasers”
Sunac China and Greentown China
“Quam Capital” or “Independent Financial Adviser”
Quam Capital Limited, a licensed corporation to carry out type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders to advice in relation to the Acquisition and the formation of Sunac Greentown
“Relevant Shareholders”
Sunac International Investment Holdings Ltd., Mr. Sun Hongbin and Bain Capital Sunac Limited, each being an existing shareholder of Sunac China
“Richport Property Development”
New Richport Property Development Shanghai Co., Ltd. (上海新富港房地產發展有限公司), a company established under the laws of PRC on 5 October 1993 and one of the PRC Project Companies
“RMB”
Renminbi, the lawful currency of the PRC
“Shanghai Huangpu Project”

the project located in Huangpu District, Shanghai, which is owned by Richport Property Development, Everbright Property Development, Fung Seng (Shanghai) Company and Feng Chang Company

– 3 –

DEFINITIONS

“Shanghai Sunac Greentown” Shanghai Sunac Greentown Real Estate Development Co., Ltd.* (上海融創綠城房地產開發有限公司), a company jointly established by Sunac China and Greentown China under the laws of PRC
“Shareholders” the shareholders of Sunac China
“Shares” Ordinary shares of HK$0.10 each in the share capital of Sunac China
“Sunac China” or the “Company” Sunac China Holdings Limited, a company incorporated under the laws of the Cayman Islands with limited liability and whose shares are listed on the Stock Exchange (stock code: 1918)
“Sunac Greentown” Sunac Greentown Investment Holdings Limited, a company incorporated in BVI on 25 April 2013 and owned as to 50% by each of Sunac China and Greentown China, respectively, being Party A to the Agreement
“Sunac Group” Sunac China and its subsidiaries
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Company” Elegant Trend Limited (優勢有限公司), a company incorporated under the laws of BVI and directly owns the entire issued share capital of the Liberia Company
“Target Group” the Target Company, the Liberia Company, Wisdom Collection Holdings and the PRC Project Companies
“Vendor”
China Gold Associates Limited, a company incorporated under the laws of BVI
“Wisdom Collection Holdings” Wisdom Collection Holdings (Hong Kong) Limited (聚智集團(香港)有限公司), a company incorporated in Hong Kong on 8 July 1981, which directly owns the entire equity interest of the PRC Project Companies
“%”
per cent.
For identification purpose only

– 4 –

LETTER FROM THE BOARD

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Executive Directors: Mr. SUN Hongbin Mr. WANG Mengde Mr. LI Shaozhong Mr. CHI Xun Mr. SHANG Yu Mr. JING Hong

Registered office: Landmark Square 3rd Floor 64 Earth Close P.O. Box 30592 Grand Cayman KY1-1203 Cayman Islands

Non-executive Directors: Ms. HU Xiaoling Mr. ZHU Jia

Independent Non-executive Directors: Mr. POON Chiu Kwok Mr. LI Qin Mr. MA Lishan Mr. TSE Chi Wai

Principal place of business in Hong Kong: 8th Floor, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

28 August 2013

To the Shareholders,

Dear Sir or Madam,

CONNECTED AND MAJOR TRANSACTIONS (1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

INTRODUCTION

Reference is made to the announcements of the Company dated 17 March 2013 and 31 May 2013 in relation to the entering into of the Framework Agreement and the Agreement and the Acquisition and Investment as contemplated thereunder, respectively.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information relating to the Agreement and the Investment contemplated thereunder.

THE INVESTMENT

On 16 March 2013, Sunac China and Greentown China entered into the Framework Agreement with the Vendor as the original vendor to the proposed acquisition under the Framework Agreement and the Liberia Company as guarantor. Pursuant to the Framework Agreement, the parties agreed to enter into a definitive agreement regarding the proposed acquisition within 45 days upon signing of the Framework Agreement. As additional time was required by the parties to finalize the terms of the definitive agreement regarding the Acquisition, the Purchasers, the Vendor and the Liberia Company entered into a supplemental agreement on 30 April 2013 to extend the time for the parties to enter into the definitive agreement regarding the Acquisition to a date within 75 days upon signing of the Framework Agreement. Further, the parties entered into an further extension letter to further extend the time for the parties to enter into the definitive agreement relating to the Investment to 6 June 2013.

On 31 May 2013, the parties entered into the Agreement, which reflects the further negotiations agreed among the parties, which contained certain terms, including the identity of the Target Company and the consideration for the Investment, being different from the terms as set forth under the Framework Agreement. Further details regarding the definitive terms as agreed among the parties under the Agreement are set out below.

THE AGREEMENT

Date: 31 May 2013

Parties: (i) Sunac Greentown as Party A; (ii) Sunac China as a Party A’s Guarantor; (iii) Greentown China as a Party A’s Guarantor;

(iv) Arch Capital Success Limited as Party B; and (v) Party B’s Guarantors.

To the best of the knowledge, information and belief of the directors of Sunac China, after having made all reasonable enquiries, Party B, Party B’s Guarantors and their respective ultimate beneficial owners are third parties independent of and not connected with Sunac China or any connected person of Sunac China.

Subject Matter

As at the date of the Agreement, Party B indirectly owned 100% of the issued share capital of the Liberia Company which in turn owned 100% of the issued share capital of Wisdom Collection Holdings which in turn owned 100% of the equity interest in each of the PRC Project Companies and Feng Chang Company.

– 6 –

LETTER FROM THE BOARD

Pursuant to the Agreement, Party B had agreed to procure that the entire equity interest in Feng Chang Company to be divested from Wisdom Collection Holdings prior to completion of the Investment. Upon completion of such divestment and upon completion of the Investment, Wisdom Collection Holdings no longer hold any equity interest in Feng Chang Company.

Pursuant to the Agreement, Sunac Greentown as Party A had conditionally agreed to acquire, and Party B had conditionally agreed to dispose of, the entire issued share capital of the Target Company, which then held the entire issued share capital of the Liberia Company, which in turn owned the entire issued share capital of Wisdom Collection Holdings, which in turn owned the entire equity interest in each of the PRC Project Companies upon the completion of the internal reorganisation. The Target Company underwent the following internal reorganisation before the completion of the Investment (the “ Reorganisation ”):

(a) the Target Company has capitalised an amount due to Party B of HK$1,621,190,363.72 (equivalent to RMB1,302 million) by issuing and allotting one new ordinary share of the Target Company of US$1.00 pursuant to a board resolution of the Target Company dated 12 July 2013;
(b) repayment of borrowing of RMB770 million from Industrial and Commercial Bank of China using the fund from a new bridging loan of RMB774.7 million from Bank of Communications;
(c) repayment of loans of RMB9.3 million and RMB20.2 million due to Party B and certain third parties, respectively; and
(d) disposal of non-property development businesses (the “ Other Businesses ”) in the entities now comprising the Target Group to a company incorporated by Party B. The value of the assets which were not considered as part of the Acquisition amounted to approximately RMB84.9 million, which was included as part of the consideration of the Investment.

The disposal of the Other Businesses as described in paragraph (d) above comprised of two parts, namely (i) the disposal of business not relating to real estate property development, namely jewellery business, which has been completed prior to the payment of the consideration for the Investment; and (ii) the disposal of assets that would not be acquired as part of the Acquisition, which is still in process and has not yet been completed but has been waived as one of the conditions precedent by Sunac Greentown to the Agreement.

Upon completion of the Investment on 17 July 2013 and as at the Latest Practicable Date, Sunac China and Greentown China each hold, through Sunac Greentown, 50% interest in the Target Company, while Sunac Greentown, the Target Company together with its subsidiaries: (i) become non-wholly owned subsidiaries of Sunac China and their financial results will be consolidated into the consolidated financial statements of the Sunac Group; and (ii) will not become subsidiaries of Greentown China and their financial results will not be consolidated into the consolidated financial statements of the Greentown Group.

– 7 –

LETTER FROM THE BOARD

Further, the liability of each of Sunac China and Greentown China as Party A’s Guarantors under the Agreement are on a several basis.

Consideration and Payment Arrangement

Consideration

The total consideration for the Investment payable by Sunac Greentown is RMB7,996,100,130.25. No adjustment has been made to the consideration since completion of the Investment.

The consideration of RMB7,996,100,130.25 consist of (i) the borrowings of PRC Project Companies amounting to RMB2,319,361,357.19 which comprise amounts due to Party B and certain other payables relevant to the property development of the Target Group and (ii) the amount of RMB5,676,738,773.06 directly paid by Sunac Greentown (or an equivalent amount in US$ or Hong Kong dollars) for equity transfer (after considering the value of the non-property development business assets amounting to RMB84.9 million in the amounts due to Party B). The payment of RMB2,319.4 million due to the Party B and certain other payables relevant to the property development of the Target Group includes:

(a) Repayment of the Target Group’s payable of RMB805.2 million to certain third parties;
(b) Repayment of the Target Group’s bridging bank loan of RMB774.7 million from Bank of Communications, as required by Party B; and
(c) Repayment of the Target Group’s payable to Party B amounting to RMB739.5 million.

Pursuant to the agreement between the Company and Greentown China, the Company and Greentown China will each pay 50% of the total consideration for the Investment to Sunac Greentown, and pursuant to which Sunac Greentown will then directly pay the consideration of RMB5,676,738,773.06. Out of the RMB5,676,738,773.06, up to an amount of USD450 million will be reflected as an amount due to the Company and Greentown China and the remaining amount represents quasi-equity investment of the Company and Greentown China in Sunac Greentown.

Basis of Consideration

The aggregate consideration for the Investment (subject to adjustment) was determined after arm’s length negotiations between Party A and Party B on normal commercial terms with reference to (i) the actual investment made by Party B to the Target Group; (ii) the market value of the assets involved. The directors of Sunac China are of the view that the aggregate consideration for the Investment is fair and reasonable. The aggregate amount of the consideration for the Investment payable by Sunac Greentown (being approximately RMB7,996,100,130.25) was funded by way of a US$400,000,000 loan facility entered into between, among others, the lending banks and Sunac Greentown, and the respective internal resources of the Sunac Group and the Greentown Group, including resources arising from their cooperative projects.

– 8 –

LETTER FROM THE BOARD

Payment Arrangement

The consideration for the Investment payable by the Sunac Group and the Greentown Group pursuant to the Agreement was paid by Sunac Greentown in the following manner:

(i) the amount of RMB1,690,862,236.23 (or an equivalent amount in US$ or Hong Kong dollars) was paid within five working days from the following day upon the signing of the Agreement (the “ First Payment ”);
(ii) the amount of RMB1,576,309,473.51 (or an equivalent amount in US$ or Hong Kong dollars) was paid on or before 15 July 2013 (the “ Second Payment ”); and
(iii) the remaining amount of the consideration for the Investment was paid within 120 days from the following day upon the signing of the Agreement (the “ Third Payment ”).

As at 17 July 2013, the consideration for the Investment was fully paid.

Completion

The Investment was completed on 17 July 2013.

FORMATION OF JOINT VENTURE

Formation of Sunac Greentown

Pursuant to the terms of the Framework Agreement, the Company and Greentown China were to establish a joint venture company to acquire the indirect interests in the PRC Target Companies. On 25 April 2013, Sunac Greentown was incorporated in the BVI with an authorised share capital of US$50,000 divided into 50,000 shares of US$1 each. As at the Latest Practicable Date, the issued share capital of Sunac Greentown was US$2 divided into two shares of US$1 each, and one of which are held by the Company and Greentown China, respectively. The Company and Greentown China have not entered into a shareholders agreement. At the time of its incorporation, Sunac Greentown was owned in equal shares by each of the Company and Greentown China and will be accounted for as a subsidiary of the Company.

As at the Latest Practicable Date, the total capital contribution made by the Company and Greentown China was RMB7,996,100,130.25, being 50% of the total consideration for the Investment (being approximately RMB3,998,050,065.12) was contributed by the Company and Greentown China in equal share.

The Company financed its capital contribution in Sunac Greentown partly by relying on a loan agreement entered into between, among others, the lending banks and Sunac Greentown where an amount of US$400,000,000 (representing approximately RMB2,448,800,000; net amount US$387,000,000) was provided to Sunac Greentown, and the Company and Greentown

– 9 –

LETTER FROM THE BOARD

China provided a guarantee to the above loan in proportion to their respective interest in Sunac Greentown. The remaining capital contribution of the Company in Sunac Greentown was financed through the Company’s internal resources in proportion to its interest in Sunac Greentown.

With respect to the Shanghai Huangpu Project, Sunac Greentown will obtain working capital by: (1) the sale proceeds generated from the Shanghai Huangpu Project, being a property development project and part of the properties thereof are already available for sale and the sales of properties successively being developed under the project itself is sufficient to support its operational needs, and (2) bank loans for development to be obtained by project companies to support any financing as required by the project development.

Board composition and management of Sunac Greentown

The board of directors of Sunac Greentown will consist of three directors, two of whom will be nominated by the Company and one of whom will be nominated by Greentown China.

CONDITIONS PRECEDENT

Pursuant to the Agreement, completion of the Investment was subject to the fulfillment of the following conditions (or, where applicable, waiver by Sunac Greentown, in writing):

(i) the signing of an agreement between Fung Seng (Shanghai) Company and a third party as designated by Party B with terms and conditions to the mutual satisfaction of both Party A and Party B relating to the disposal of certain properties of Fung Seng (Shanghai) Company;
(ii) the completion of the internal reorganization together with a new business licence of Feng Chang Company indicating that one of the Party B’s Guarantors (a Hong Kong incorporated company) being the sole shareholder of Feng Chang Company being obtained;
(iii) all the guarantees given by each of Party A’s Guarantors and Party B’s Guarantors pursuant to the Agreement remain true and accurate in all material respects and not misleading, and each of Party A’s Guarantors and Party B’s Guarantors has fully complied with its respective responsibilities under the Agreement on or prior to the date of completion of the Investment;
(iv) no orders or notices having been issued or other actions having been made by relevant courts, arbitrators, governmental or other authorities to prohibit, limit or adversely affect the transactions made by each party under the Agreement;
(v) Sunac Greentown having made the payments of the First Payment and the Second Payment and procured the provision of operating cash flow to the PRC Project Companies in accordance to the terms of the Agreement; and

– 10 –

LETTER FROM THE BOARD

(vi) Sunac China having obtained the shareholders’ approval for the transactions as contemplated under the Agreement in accordance to the requirements of the Listing Rules (if necessary).

The Investment was completed on 17 July 2013.

INFORMATION ON THE TARGET GROUP

The Target Company is a company incorporated in BVI, which owns the entire issued share capital of the Liberia Company, which in turn holds the entire issued share capital of Wisdom Collection Holdings, which in turn holds the entire equity interest of each of the PRC Project Companies. The PRC Project Companies invested in Shanghai Huangpu Project, which is located along the Huangpu River of Huangpu District, Shanghai, north to Zhongshan South Road, east to Zhizaoju Road, south to Longhua East Road, west to Mengzi Road with core river view. The PRC Project Companies has a gross floor area of approximately 674,600 sq.m.

			Interests to	Interests to
		Target	be held by	be held by	Year ended 31 December		2011		Year ended 31 December		2012
		Company’s	Sunac China	Greentown		(unaudited)				(unaudited)
		interests in	upon	China upon		RMB’000				RMB’000
		the PRC	completion	completion	Profit/(loss)	Profit/(loss)			Profit/(loss)	Profit/(loss)
	Registered	Project	of the	of the	before	after	Net	assets/	before	after	Net assets/
PRC Project Companies	capital	Companies	Investment	Investment	taxation	taxation	liabilities		taxation	taxation	liabilities
	RMB’000
Richport Property
Development	765,000	100%	50%	50%	(67,132)	(67,132)	1,396,408		(13,106)	(13,106)	783,302
Everbright Property
Development	135,000	100%	50%	50%	–	–		–	(40)	(40)	134,960
Fung Seng (Shanghai)
Company	85,351	100%	50%	50%	16,472	12,331	148,490		1,860	1,379	149,868

The impact and effect to the asset value of the Target Group and the consideration of the Investment as a result of the Reorganization had been taking into account when the Agreement was entered into (ie. the consideration of the equity transfer in the amount of RMB5,676,738,773.06 includes approximately the RMB84.9 million in relation to the disposal of the Other Business and the Target Group will receive the same consideration upon completion of the disposal), as such the consideration for the Investment will not be adjusted as a result of the Reorganization.

– 11 –

LETTER FROM THE BOARD

Upon completion of the Investment and as at the Latest Practicable Date, each of Sunac Greentown, the Target Company, the Liberia Company, Wisdom Collection Holdings and the PRC Project Companies is a non wholly-owned subsidiary of Sunac China and the financial results of Sunac Greentown, the Target Company, the Liberia Company, Wisdom Collection Holdings and the PRC Project Companies will be consolidated into the consolidated financial statements of the Sunac Group. Set out below further information in relation to the PRC Project Companies:

PROJECT PLANNING

				Total
				Gross	Current
PRC Project			Site	Floor	Land
Companies	Project Progress	Type of Project	Area	Area	Bank
			(sq.m)	(sq.m)	(sq.m)
Richport Property	Completed	High-rise apartment	24,533	118,616	105,926
Development
		Commercial and	10,651	13,899	13,899
		ancillary
		Car park and	–	75,422	75,422
		underground
		property
	Bare land	High-rise apartment	28,794	105,984	105,984
		Multi-floor	12,920	21,831	21,831
		Commercial, office	20,705	120,236	120,236
		and ancillary
		Car park and	–	172,202	172,202
		underground
		property
Everbright	Bare land	Commercial and	3,733	19,493	19,493
Property		office
Development
		Car park and	–	1,101	1,101
		underground
		property

– 12 –

LETTER FROM THE BOARD

				Total
				Gross	Current
PRC Project			Site	Floor	Land
Companies	Project Progress	Type of Project	Area	Area	Bank
			(sq.m)	(sq.m)	(sq.m)
Fung Seng	Bare land	Multi-floor	9,390	18,780	18,780
(Shanghai)
Company		Car park and	–	7,000	7,000
		underground
		property
	Sub-total of the		110,726	418,839	406,149
	above-ground area
	Sub-total of the		–	255,725	255,725
	under-ground area
	Sub-total of		35,184	207,937	195,247
	completed projects
	Sub-total of bare		75,542	466,627	466,627
	land
	Total		110,726	674,564	661,874

Note: These figures shown here are for reference which are to be approved by the Chinese government authority.

REASONS FOR AND BENEFITS OF THE INVESTMENT

Sunac China and Greentown China have cooperated in Shanghai since June 2012 and jointly established Shanghai Sunac Greentown, which primarily focused on high quality real estate development business in Shanghai. Its business progressed smoothly and achieved marvellous results of operations. The land under the Investment, located in Huangpu District, Shanghai, is a rarity land of excellent quality in the central Shanghai, enjoying the river view of the Huangpu Jiang River. The Investment of the land will assist Sunac Greentown in expanding their market share in Shanghai, and further consolidate the leadership of Shanghai Sunac Greentown in the real estate market in Shanghai and enhance the brand name of Sunac Greentown.

The Directors consider that the Investment was entered into on normal commercial terms, and the terms of which are fair and reasonable and in the interests of Sunac China and the Shareholders as a whole.

– 13 –

LETTER FROM THE BOARD

INFORMATION ON THE PARTIES TO THE FRAMEWORK AGREEMENT AND THE AGREEMENT

Sunac Greentown is an investment holding company jointly incorporated by Sunac China and Greentown China in the BVI.

Sunac China is a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the main board of the Stock Exchange. It is one of the leading real estate developers in the PRC. As at the Latest Practicable Date, Sunac Group has developed or is developing high-end and high-quality property projects in five key economic regions across the PRC, namely Beijing, Tianjin, Shanghai, Chongqing and Hangzhou.

The Vendor is an investment holding company incorporated in the BVI.

Party B is an investment holding company incorporated in the BVI.

Party B’s Guarantors comprise a company incorporated in Hong Kong and a company incorporated under the laws of PRC principally engaged in investment and property development, respectively.

FINANCIAL EFFECTS OF THE TRANSACTIONS ON THE COMPANY

Upon completion of the Acquisition and as at the Latest Practicable Date, Sunac China and Greentown China each hold, through Sunac Greentown, 50% interest in the Target Company, while Sunac Greentown, the Target Company and its subsidiaries become non wholly-owned subsidiaries of Sunac China and their financial results will be consolidated into the consolidated financial statements of the Sunac Group. The unaudited consolidated pro forma financial information of the Enlarged Group illustrating the financial impact of the Investment on the assets and liabilities of the Group is set out in Appendix IV to this circular.

The pro forma financial information of the Enlarged Group has been prepared for illustrative purpose only, based on the judgements and assumptions of the Directors, and, due to its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group as at the date of completion of the Investment or any future date.

– 14 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Investment exceed 25% but are less than 100%, the Investment constitutes a major transaction for Sunac China under Chapter 14 of the Listing Rules and is subject to reporting, announcement and shareholders’ approval requirements. Further, as Greentown China is a substantial shareholder of certain non wholly-owned subsidiaries of the Company, being a connected person of the Company at the subsidiary level holding 10% or more interest therein, Greentown China is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Accordingly, the Investment also constitutes as a connected transaction of the Company pursuant to Chapter 14A of the Listing Rules and are subject to the approval by the Independent Shareholders in accordance with the requirements of the Listing Rules.

Written Approval Waiver

To the best of the knowledge, information and belief of the directors of Sunac China, after having made all reasonable enquiries, no shareholders of Sunac China or any of their respective associates have any material interest in the Investment. As such, no shareholders of Sunac China would be required to abstain from voting in favour of the resolution approving the Investment. As at the date when the Agreement was entered into, the Relevant Shareholders of Sunac China held an aggregate of 1,742,515,088 Shares, representing approximately 51.97% of the issued share capital of Sunac China. Accordingly, pursuant to Rule 14A.43 of the Listing Rules, Sunac China may apply to the Stock Exchange for a waiver from the requirement to hold a general meeting to approve the entering of the Framework Agreement and the transactions contemplated thereunder (including the entering of the Agreement) on the basis that a written approval will be given by the Relevant Shareholders. As such, Sunac China has applied for, and the Stock Exchange has granted to Sunac China, a waiver from such requirement. As such, no Shareholders’ meeting will be convened for the purpose of approving the Acquisition and the Investment contemplated therein.

Independent Board Committee and Circular

An Independent Board Committee comprising all independent non-executive Directors has been formed to advise the Independent Shareholders as to whether the terms of the Acquisition and the formation of Sunac Greentown in this regard are fair and reasonable and in the interests of the Company and the Shareholders as a whole, taking into account the recommendation of the Independent Financial Adviser. Quam Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the Agreement and the transactions (including the Investment) as contemplated thereunder has been entered into on normal commercial terms, and the terms and conditions thereof are fair and reasonable so far as the Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

ADDITIONAL INFORMATION

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

By order of the Board Sunac China Holdings Limited Sun Hongbin Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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Executive Directors: Mr. SUN Hongbin Mr. WANG Mengde Mr. LI Shaozhong Mr. CHI Xun Mr. SHANG Yu Mr. JING Hong

Registered office: Landmark Square 3rd Floor 64 Earth Close P.O. Box 30592 Grand Cayman KY1-1203 Cayman Islands

Non-executive Directors:

Ms. HU Xiaoling Mr. ZHU Jia

Independent Non-executive Directors: Mr. POON Chiu Kwok Mr. LI Qin Mr. MA Lishan Mr. TSE Chi Wai

Principal place of business in Hong Kong: 8th Floor, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

28 August 2013

To the Shareholders,

Dear Sir or Madam,

CONNECTED AND MAJOR TRANSACTIONS

(1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

We refer to the circular dated 28 August 2013 of the Company (the “ Circular ”) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We have been appointed as members of the Independent Board Committee to consider and advise the Independent Shareholders as to whether, in our opinion, the terms and conditions of the Acquisition and the formation of Sunac Greentown in this regard are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Quam Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Investment.

We wish to draw your attention to the “Letter from the Board” set out on pages 5 to 16 of the Circular which contains, among other things, information about the Investment, and the “Letter from Quam Capital” set out on pages 19 to 33 of the Circular which contains its advice in respect of the Acquisition and the formation of Sunac Greentown in this regard.

Having considered the reasons for and the benefits of the Investment and the advice of Quam Capital regarding the Acquisition and the formation of Sunac Greentown in this regard as set out in the “Letter from Quam Capital” on pages 19 to 33 of the Circular, we consider that the terms of the Acquisition and the formation of Sunac Greentown in this regard are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

Yours faithfully,

For and on behalf of

Independent Board Committee

Poon Chiu Kwok Li Qin Independent Non-executive Independent Non-executive Director Director Ma Lishan TSE Chi Wai Independent Non-Executive Independent Non-Executive Director Director

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LETTER FROM QUAM CAPITAL

The following is the full text of a letter of advice from Quam Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the formation of Sunac Greentown and the Acquisition.

28 August 2013

To the Independent Board Committee and the Independent Shareholders Sunac China Holdings Limited

10/F, Building C7, Magnetic Plaza Binshuixi Road, Nankai District Tianjin 300381 The People’s Republic of China

Dear Sir or Madam,

CONNECTED AND MAJOR TRANSACTIONS

(1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH

ARCH CAPITAL SUCCESS LIMITED REGARDING

THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the formation of Sunac Greentown and the Acquisition, details of which are set out in the Letter from the Board (the “ Letter from the Board ”) contained in the circular issued by the Company to its Shareholders dated 28 August 2013 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meaning as defined in the Circular unless the context otherwise requires.

As Greentown China is a substantial shareholder of certain non wholly-owned subsidiaries of the Company, being a connected person of the Company at the subsidiary level holding 10% or more interest therein, Greentown China is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Accordingly, the formation of Sunac Greentown

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LETTER FROM QUAM CAPITAL

also constitutes as a connected transaction of the Company pursuant to Chapter 14A of the Listing Rules and are subject to the approval by the Independent Shareholders in accordance with the requirements of the Listing Rules.

According to the Letter from the Board, no Shareholder is materially interested in the formation of Sunac Greentown and the Acquisition. As such, no Shareholder is required to abstain from voting if general meeting were to be convened to approve the formation of Sunac Greentown and the Acquisition. Relevant Shareholders held an aggregate of 1,742,515,088 Shares, representing approximately 51.97% of the total issued share capital of the Company, as at the date when the Agreement was entered into. The Company has applied for, and the Stock Exchange has granted to the Company, the written approval waiver and accordingly, no Shareholders’ meeting will be convened for the purpose of approving the formation of Sunac Greentown and the Acquisition.

Mr. Poon Chiu Kwok, Mr. Li Qin, Mr. Ma Lishan and Mr. Tse Chi Wai, the independent non-executive Directors, have been appointed as members of the Independent Board Committee to advise the Independent Shareholders as to whether the formation of Sunac Greentown and the Acquisition were on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole. As the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders in such regard.

Quam Capital Limited is independent of and not connected with any members of the Group or any of their substantial shareholders, directors or chief executives, or any of their respective associates, and is accordingly qualified to give independent advice in respect of the formation of Sunac Greentown and the Acquisition.

BASIS OF OUR RECOMMENDATION

In formulating our recommendation, we have relied on (i) the information supplied by the Company and its advisers; (ii) the opinions expressed by and the representations of the executive Directors and management of the Group; (iii) the information and facts contained or referred to in the Circular; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects at the time they were made and continued to be so up to the date of the Circular and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of such information and representations provided to us by the executive Directors, the management of the Group and the advisers of the Company. We have also sought and received confirmation from the executive Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations regarding the Company, the formation of Sunac Greentown and the Acquisition provided to us by the Company and/or the executive Directors, the management of the Group and the advisers of the Company are true, accurate, complete and not misleading in all aspects at the time they were made and continued to be so until the date of the Circular.

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LETTER FROM QUAM CAPITAL

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular and information or representations regarding the Company, the Target Group, the formation of Sunac Greentown and the Acquisition so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Company, the Target Group or any of its respective subsidiaries and associates.

PRINCIPAL FACTOR AND REASONS CONSIDERED

In arriving at our recommendation in respect of the formation of Sunac Greentown and the Acquisition, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the formation of Sunac Greentown and the Acquisition

1.1 Background and financial information of the Group

The Group is principally engaged in the development of integrated residential and commercial property. As at the Latest Practicable Date, the Group has engaged in developing high-end and high-quality property projects in the five key economic regions across the PRC, namely Beijing, Tianjin, Shanghai, Chongqing and Hangzhou which are currently in different phases and has covered a diverse range of property types, such as high-rise and mid-rise residences, detached villas, townhouses, retail properties, offices and car parks.

According to the annual report of the Company for the year ended 31 December 2012 (the “ 2012 Annual Report ”), despite the government’s control polices on real estate industry remained tight, the Company achieved its 2012 operational tasks, enabling a continuously steady and fast growth in its results. The Company also strategically penetrated into Shanghai and Hangzhou in 2012, with an aim to optimise its regional coverage. Set out below is a summary of the consolidated financial results of the Company for each of the two years ended 31 December 2011 and 2012 and six months ended 30 June 2013 as extracted from the 2012 Annual Report and the interim results announcement of the Company for the six months ended 30 June 2013:

	Six months
	ended
	30 June	Year ended 31 December
	2013	2012	2011
	RMB’000	RMB’000	RMB’000
	(unaudited)	(audited)	(audited)
Revenue	8,562,752	20,842,592	10,604,047
Gross profit	1,778,975	5,382,450	3,566,473
Profit before income tax	1,428,970	4,684,528	3,528,292
Profit for the year/period	883,508	2,614,740	2,383,072

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LETTER FROM QUAM CAPITAL

		As at
		30 June	As at 31	December
		2013	2012	2011
		RMB’000	RMB’000	RMB’000
		(unaudited)	(audited)	(audited)
Net	assets	14,399,811	11,994,176	7,405,715

As illustrated in the table above, the revenue of the Group increased from approximately RMB10,604.0 million for the year ended 31 December 2011 to approximately RMB20,842.6 million for the year ended 31 December 2012, representing a growth of approximately RMB10,238.6 million or 96.6% comparing with the revenue for the year ended 31 December 2011. Such increase is primarily due to the revenue increase of approximately RMB3,451.9 million and approximately RMB2,761.0 million from the delivered properties of newly completed projects and projects acquired from the Greentown Real Estate Group Co., Ltd, respectively. The revenue of the Group for the six months ended 30 June 2013 of approximately RMB8,562.8 million also represents an increase of 99.0% comparing with that for the six months ended 30 June 2012, which was mainly attributable to the growth in the revenue from the sales of properties. It is further noted that the Group recorded profit for the year of approximately RMB2,614.7 million and approximately RMB2,383.1 million for each of the two years ended 31 December 2011 and 2012. The profit for the year of the Group remained relatively stable despite the increase in the revenue is mainly due to the non-recurring gains from business combination for the year ended 31 December 2011 of approximately RMB835.4 million. The profit for the six months ended 30 June 2013 also increased by approximately 69.0% as compared to that for the six months ended 30 June 2012. As at 30 June 2013, the unaudited consolidated net assets of the Group amounted to approximately RMB14,399.8 million.

According to the 2012 Annual Report, the Company believes that the property market in the PRC mainly depends on regional supply and demand as well as customers’ expectations. The Company estimates that the overall market in 2013 will maintain steady, while that market differentiation will further exacerbate and performance of different cities, property developers and projects will show clear difference. Going forward in 2013, the Company will focus on consolidating its existing cities coverage, continue to seize all opportunities in the land market and to take advantage of the opportunities arising from different cities and parcels of lands. The Company will strictly follow its rules on land acquisition to replenish its land bank provided that it has sufficient cash flows and the prices are suitable. In respect of selection of the cities, the Company will focus on consolidating its existing cities and, under prudent consideration, the Company will also take suitable chances to further optimise its regional coverage.

1.2 Reasons for the formation of Sunac Greentown and the Acquisition

On 16 March 2013, the Company and Greentown China entered into the Framework Agreement with the Vendor as the original vendor to the proposed acquisition of the PRC Project Companies under the Framework Agreement and the Liberia Company as

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LETTER FROM QUAM CAPITAL

guarantor. Pursuant to the terms of the Framework Agreement, the Company and Greentown China shall establish a joint venture company to acquire the indirect interests in the PRC Project Companies. On 25 April 2013, Sunac Greentown was incorporated in the BVI with an issued share capital of US$2 divided into two shares of US$1 each, and one share of which is held by the Company and Greentown China, respectively. On 31 May 2013, the parties entered into the Agreement, which reflects the further negotiations agreed among the parties, which contained certain terms, including the identity of the Target Company and the consideration for the Investment, being different from the terms as set forth under the Framework Agreement. The Agreement was completed on 17 July 2013. Further details regarding the definitive terms as agreed among the parties under the Agreement are set out in the Letter from the Board.

Sunac Greentown is accounted for as a subsidiary of the Company. The Target Group (including the PRC Project Companies) is accounted for as non wholly-owned subsidiaries of the Company upon completion of the Acquisition.

As stated in the Letter from the Board, both the Company and Greentown China are one of the leading real estate developers in the PRC focusing on developing quality properties. Sunac China and Greentown China have cooperated in Shanghai since June 2012 and jointly established Shanghai Sunac Greentown, which primarily focused on high quality real estate development business in Shanghai. Its business progressed smoothly and achieved marvellous results of operations. As such, the Company believes that with the well-complemented strengths and joint efforts of the two parties, as well as the track record of good cooperation relationship which delivered satisfactory result, formation of Sunac Greentown to acquire the Target Group is destined to have a sustainable and steady growth.

The land held by the PRC Project Companies, located in Huangpu District, Shanghai, is a rarity land of excellent quality in the central Shanghai, enjoying the river view of the Huangpu Jiang River. The formation of Sunac Greentown to acquire the ownership of the land will assist Sunac Greentown in expanding their market share in Shanghai, and further consolidate the leadership of Shanghai Sunac Greentown in the real estate market in Shanghai and enhance the brand name of Sunac Greentown.

Greentown China is a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the main board of the Stock Exchange. It is one of the leading property developers in the PRC with business operations in various major PRC cities and is primarily engaged in developing quality properties targeting middle and high income residents in the PRC. According to the annual report of Greentown China for the year ended 31 December 2012, Greentown China recorded approximately RMB35,392.5 million of revenue, represents approximately 61.1% year-on-year growth, and the profit for the year of Greentown China was approximately RMB6,053.1 million, with an audited net assets of approximately RMB27,488.1 million as at 31 December 2012. According to the interim result announcement of Greentown China for the six months ended 30 June 2013, Greentown China recorded approximately RMB10,214.0 million and the profit for the period was approximately RMB2,455.9 million, with an unaudited net assets of approximately RMB28,829.2 million as at 30 June 2013.

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LETTER FROM QUAM CAPITAL

Having considered the aforesaid satisfactory track record of cooperation with Greentown China for properties projects in Shanghai, the Company considers that the formation of Sunac Greentown and the Acquisition is consistent with its business strategies in seizing opportunities on land acquisition to replenish its land bank provided that the Company has sufficient cash flows and the prices and locations are suitable. As such, the Directors are of the view and we concur that the formation of Sunac Greentown and the Acquisition is entered into on normal commercial terms, and the terms of which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

2. Overview of property market in Shanghai

We notice that the property projects of the Target Group are mainly for residential use and located in Shanghai. We have researched from public domain on the information related to the residential property market in relevant provinces in the PRC. According to 上海統計局 (The Bureau of Statistics of Shanghai*), Shanghai has an area of approximately 6,340.5 square kilometers and a population of 23.8 million in 2012. GDP of Shanghai amounted to approximately RMB2,010.1 billion in 2012, representing an increase of 7.5% over the previous year. The investment in the development of residential building amounted to approximately RMB145.2 billion in 2012, representing an increase of 3.8% over the previous year. The per capita disposable income of urban household amounted to approximately RMB40,188, representing an increase of 10.9% as compared to previous year.

Having considered (i) the property projects of the Target Group are located in Shanghai; and (ii) the growth in GDP, the investment in the development of residential building and the per capita disposable income of urban household in Shanghai, we concur with the Company’s business strategy to focus on consolidating its existing cities coverage by the Investment, and expanding the market share in Shanghai through Sunac Greentown. The Company expected that the positive prospect of the Shanghai property market will be beneficial to the property projects of the Target Group and thus the Acquisition is in the interest of the Company and the Shareholders as a whole.

3. Information on the Target Group

The Target Company is a company incorporated under the laws of BVI and directly owns the entire issued share capital of the Liberia Company, which in turn holds the entire issued share capital of Wisdom Collection Holdings, which in turn holds the entire equity interest of each of the PRC Project Companies after undergoing a series of internal reorganisation (the “ Reorganisation ”). The Company considers that the Reorganisation can facilitate Sunac Greentown to acquire business and assets which are relevant to its principal business. Details of the Reorganisation are set out as follows:

(a) The Target Company has capitalised an amount due to Party B of HK$1,621,190,363.72 (equivalent to RMB1,302 million) by issuing and allotting one new ordinary share of the Target Company of US$1.00 pursuant to a board resolution of the Target Company dated 12 July 2013;

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LETTER FROM QUAM CAPITAL

(b) Repayment of borrowing of RMB770 million from Industrial and Commercial Bank of China using the fund from a new bridging loan of RMB774.7 million from Bank of Communications;
(c) Repayment of loans of RMB9.3 million and RMB20.2 million due to Party B and certain third parties, respectively; and
(d) Disposal of non-property development businesses (the “ Other Businesses ”) in the entities now comprising the Target Group to a company incorporated by Party B. The value of the assets which were not considered as part of the Acquisition amounted to approximately RMB84.9 million, which was included as part of the consideration of the Investment.

Having considered that (i) the principal business of the Company and Sunac Greentown are not related to jewellery business; and (ii) as advised by the Company, the consideration for the equity transfer include approximately RMB84.9 million in relation to the disposal of the assets which were not considered as part of the Acquisition and the Target Group will receive the same consideration upon completion of the disposal, thus, no cost will be borne by Sunac China for such disposal. As such, we concur with the Company’s view that the Reorganisation is essential for completion of the Acquisition and is in the interest of the Company and the Shareholders as a whole.

The PRC Project Companies invested in Shanghai Huangpu Project, which is located along the Huangpu Jiang River of Huangpu District, Shanghai, north to Zhongshan South Road, east to Zhizaoju Road, south to Longhua East Road, west to Mengzi Road with core river view. The PRC Project Companies has a total gross floor area of approximately 674,600 sq.m.

Upon completion of the formation of Sunac Greentown and the Acquisition, each of Sunac Greentown, the Target Company, the Liberia Company, Wisdom Collection Holdings and the PRC Project Companies will be non wholly-owned subsidiaries of the Company and the financial results of Sunac Greentown, the Target Company, the Liberia Company, Wisdom Collection Holdings and the PRC Project Companies will be consolidated into the consolidated financial statements of the Sunac Group. As at the Latest Practicable Date, the formation of Sunac Greentown and the Acquisition have been completed. Set out below further information in relation to the PRC Project Companies:

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LETTER FROM QUAM CAPITAL

==> picture [407 x 308] intentionally omitted <==

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

Interests to Interests to
Target be held by be held by
Company’s Sunac Greentown
interests in China upon China upon Current
the PRC completion completion land bank
PRC Project Registered Project of the of the Project Total gross remained Capital
Companies capital Companies Acquisition Acquisition Type of project progress Site area floor area unsold commitment
(RMB
(RMB’000) (sq.m) (sq.m) (sq.m) million)
(Note) (Note) (Note)
Richport 765,000 100% 50% 50% High-rise apartment 24,533 118,616 105,926 –
Property Commercial and 10,651 13,899 13,899 –
Development Carancillarpark andy Completed – 75,422 75,422 –
underground
property
High-rise apartment 28,794 105,984 105,984 1,175.9
Multi-floor 12,920 21,831 21,831 245.4
Commercial, office 20,705 120,236 120,236 601.4
and ancillary Bare land
Car park and – 172,202 172,202 1,399.3
underground
property
Everbright 135,000 100% 50% 50% Commercial and 3,733 19,493 19,493 340.7
Property office
Development Car park and Bare land – 1,101 1,101 19.2
underground
property
Fung Seng 85,351 100% 50% 50% Multi-floor 9,390 18,780 18,780 309.2
(Shanghai)Company Car park and Bare land – 7,000 7,000 115.3
underground
property
Total 110,726 674,564 661,874 4,206.4
----- End of picture text -----

Note: These figures shown here are for reference only which are subject to approval by the Chinese government authority.

3.1 Financial information of the Target Group

The financial information of the Target Group has been presented in the accountant’s reports of the Target Group as set out in Appendix II to the Circular which has been presented on a combined basis, after excluding the Other Businesses. The following tables summarises the audited combined income statement of the Target Group after excluding the Other Businesses for the three years ended 31 December 2012 and three months ended 31 March 2012 and 2013 as extracted from the accountant’s reports of the Target Group.

				For the three months	For the three months
	For the year	ended 31	December	ended 31 March
	2010	2011	2012	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(unaudited)	(audited)
Revenue	–	–	760,494	–	–
(Loss)/profit before
income tax	(80,010)	(33,442)	297,216	(9,348)	(29,733)
(Loss)/profit for the
year/period	(60,088)	(21,518)	104,840	(7,164)	(22,666)

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LETTER FROM QUAM CAPITAL

As shown in the table above, the Target Group only recorded revenue for the year ended 31 December 2012 of approximately RMB760.5 million which are derived from sales of properties completed by Richport Property Development, and such revenue also improved the financial performance of the Target Group to record profit for the year of approximately RMB104.8 million for the year ended 31 December 2012. Given that no revenue was recorded for the two years ended 31 December 2010 and 2011 and the three months ended 31 March 2012 and 2013, the Target Group recorded loss for the year of approximately RMB60.1 million and approximately RMB21.5 million, and loss for the period of approximately RMB7.2 million and RMB22.7 million, respectively. We have discussed with the Company, and noted that approximately 12,690 sq.m of completed properties of Richport Property Development has been sold as at the Latest Practicable Date, which represents approximately 6.1% of the total gross floor area of the completed properties of Richport Property Development. As such, in addition to the properties for future development, the Company expects that the remaining gross floor area of the completed properties of Richport Property Development will generate revenue for the Target Group.

As shown in the valuation report for the properties held by the Target Group (the “ Valuation Report ”) prepared and issued by DTZ Debenham Tie Leung Limited (“ DTZ ”) contained in Appendix V to the Circular, the value of the completed properties to be acquired by the Group for sale in the PRC account for only approximately 53.1% of the total value of the properties to be acquired by the Group, the remaining properties are for future development.

In view of the value of the unsold portion of the completed projects of Richport Property Development, which represents 93.9% of the completed properties to be acquired by the Group and the properties for future development in the PRC, which represents approximately 46.9% of the value of properties to be acquired by the Group as stated in the Valuation Report, the Company expects that there is considerable potential for development of the Target Group.

The following table summarises the audited combined balance sheet of the Target Group after excluding the Other Businesses as at 31 December 2010, 2011 and 2012 and 31 March 2013 as extracted from the accountant’s report of the Target Group.

				As at
	As at 31 December			31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)	(audited)
Total assets	6,958,692	7,612,093	7,281,086	7,371,364
Total liabilities	5,497,933	6,112,176	5,676,480	5,784,214
Net Assets	1,460,759	1,499,917	1,604,606	1,587,150

Total assets of the Target Group consist mainly of properties under development and/or completed properties held for sale during the review period. During the review period, the net assets of the Target Group has increased from approximately RMB1,460.8

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LETTER FROM QUAM CAPITAL

million as at 31 December 2010 to approximately RMB1,587.2 million as at 31 March 2013 which was mainly attributable to the profit for the year ended 31 December 2012. As at 31 March 2013, total liabilities of the Target Group consisted mainly of amount due to its shareholder of approximately RMB2,075 million, trade and other payables of approximately RMB1,337 million, current and deferred income tax liabilities of approximately RMB1,602 million and borrowings of RMB770 million.

The Target Group have total capital commitments of approximately RMB4,206.4 million as at 31 March 2013, which mainly comprise of the property development expenditure of the PRC Project Companies. As advised by the Company, such capital commitments will be financed by the internal resources (including the banking facilities) of the Target Group including (i) the sales proceeds generated from the Shanghai Huangpu Project, in particular that part of the properties thereof are already available for sale and the sales of properties successively being developed under the projects; and (ii) banking facilities for development to be obtained by the PRC Project Companies of the Target Group. Given that most of the property projects of the Target Group are still in the preliminary stage, detailed split of the source of funding of the aforesaid capital commitment is not available as at the Latest Practicable Date.

Having considered that (i) the positive prospect of the real estate industry in Shanghai where the property projects of the Target Group are located, as discussed in section (2) above; (ii) the high-end property projects are located in a rarity land of excellent quality in the central Shanghai, which are in line with the Company’s business strategy; (iii) the satisfactory cooperation experience with and possible synergy arising from the cooperation platform established with Greentown China; (iv) the prospect and the progress of development of the property projects of the Target Group; and (v) the financial performance of the Target Group throughout the three years ended 31 December 2012 and three months ended 31 March 2013, we concur with the Directors’ view that the Acquisition is in the interest of the Company and the Shareholders as a whole.

4. Formation of Sunac Greentown and principal terms of the Agreement

4.1 Formation of Sunac Greentown

Pursuant to the Framework Agreement, the Company and Greentown China shall establish a joint venture company to acquire the indirect interests in the PRC Project Companies. On 25 April 2013, Sunac Greentown is incorporated in the BVI with an authorised share capital of US$50,000 divided into 50,000 shares of US$1 each. As at the Latest Practicable Date, the issued share capital of Sunac Greentown was US$2 divided into two shares of US$1 each, and one of which is held by the Company and Greentown China, respectively. The Company and Greentown China have not entered into any formal agreement in respect of the formation of Sunac Greentown. The respective capital commitment of the Company and Greentown China is US$25,000. At the time of its incorporation, Sunac Greentown was owned in equal shares by each of the Company and Greentown China and will be accounted for as a subsidiary of the Company.

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LETTER FROM QUAM CAPITAL

As disclosed in the Letter from the Board, the board of directors of Sunac Greentown will consist of three directors, two of whom will be nominated by the Company and one of whom will be nominated by Greentown China. The Company and Greentown China have not entered into a joint venture agreement, and as advised by the Company, the terms of the formation of Sunac Greentown are solely in accordance with its articles and memorandum of association.

The total capital contribution made by the Company and Greentown China was RMB7,996,100,130.25, 50% of which (amounting to RMB3,998,050,065.12 was contributed by the Company and the remaining 50% was contributed by Greentown China. The Company financed its capital contribution in Sunac Greentown by (i) relying on bank loan obtained by Sunac Greentown which is guaranteed on a several basis by the Company and Greentown China in proportion to their respective interests in Sunac Greentown; and (ii) internal resources of the Company. Given that the total capital commitments of the Company in the Acquisition was equal to that of Greentown China, which is proportionate to their respective shareholding in Sunac Greentown, we are of the view that such proportional capital contribution by the Company in the formation of Sunac Greentown and the Acquisition is fair and reasonable.

As disclosed in the Letter from the Board, Sunac China and Greentown China have cooperated in Shanghai since June 2012 and jointly established Shanghai Sunac Greentown, which primarily focused on high quality real estate development business in Shanghai. Its business progressed smoothly and achieved marvellous results of operations. As such, the Company believes that with the well-complemented strengths and joint efforts of the two parties, as well as the track record of good cooperation relationship which delivered satisfactory result, formation of joint venture to engage in the formation of Sunac Greentown is expected to have a sustainable and steady growth and is beneficial to both the Company and Greentown China.

Sunac Greentown is owned by the Company and Greentown China in equal shares. The Company shall have control over the board of Sunac Greentown and the Target Group upon completion of the formation of Sunac Greentown and the Acquisition. As such, Sunac Greentown is accounted for as a subsidiary of the Company as the Company has control in Sunac Greentown.

Having considered the above and that (i) the interest obtained by the Company in Sunac Greentown is proportionate to its capital contribution in Sunac Greentown in accordance with its articles and memorandum of associations; and (ii) the Company has control over the board of Sunac Greentown and the Target Group as the majority of the directors in the board of Sunac Greentown shall be nominated by the Company, we concur with the Directors and are of the view that the formation of Sunac Greentown is in the interests of the Company and the Shareholders as a whole.

– 29 –

LETTER FROM QUAM CAPITAL

4.2 Consideration

As advised by the Company, the consideration for the equity transfer pursuant to the Agreement payable by Sunac Greentown is RMB5,676,738,773.06 which had taken into consideration of approximately RMB84.9 million in relation to the disposal of the non-property development assets. In addition, the PRC domestic related companies of Sunac Greentown shall repay the borrowings of PRC Project Companies amounting to RMB2,319,361,357.19 which comprise amounts due to Party B and certain other payables relevant to the property development of the Target Group based on the balances as at 31 May 2013. As advised by the Company, the consideration was determined after arm’s length negotiations between Party A and Party B on normal commercial terms with reference to, among other things, (i) the actual investment made by Party B to the Target Group; (ii) the market value of the assets involved; and (iii) the settlement of amounts due to the original owner in relation to the disposal of the non-property development business assets.

It is noted that the amount of the borrowings of PRC Project Companies to be repaid by the PRC domestic related companies of Sunac Greentown of RMB2,319,361,357.19 as disclosed in the Letter from the Board was equivalent to the sum of the amounts due to Party B and certain other payables relevant to the property development of the Target Group by the PRC Project Companies as at 31 May 2013 in accordance with the Agreement.

In analysing the reasonableness of the consideration of RMB7,996,100,130.25 under the Agreement, we have attempted to compare the consideration and the fair value of the Target Group after taking into account, among other things, the fair value of the underlying properties held by the Target Group with reference to the Valuation Report, the net asset value of the Target Group as at 31 March 2013 and the subsequent events which had material financial impact on the net asset value of the Target Group on or before the date of completion of the Acquisition (including the Reorganisation and the repayment of borrowings of PRC Project Companies which comprise amounts due to Party B and certain other payables relevant to the property development of the Target Group). As stated in the Valuation Report, the properties of the Target Group are classified into two groups, (i) completed properties to be acquired by the Group for sale in the PRC; and (ii) properties to be acquired by the Group for future development in the PRC. We have discussed with DTZ on the basis and assumption and methods of preparing the Valuation Report. Based on our discussion with DTZ, we consider that the methodology applied by them is in line with market practice and the underlying basis and assumptions adopted in valuing the properties of the Target Group are fair and reasonable. According to the Valuation Report, the total value of the properties held by the Target Group attributable to Sunac Greentown as at 30 June 2013 amounted to RMB11,324.0 million. As compared to the carrying value of properties under development and completed properties held for sale of approximately RMB7,200.8 million as at 31 March 2013, the valuation surplus of the properties held by the Target Group is amounted to approximately RMB4,123.2 million (the “ Valuation Surplus ”).

– 30 –

LETTER FROM QUAM CAPITAL

It is noted that the net asset values of the Target Group after excluding the Other Businesses as at 31 March 2013 is approximately RMB1,587.2 million. As advised by the Company, given that the Reorganisation has not been completed as at 31 March 2013, in order to reflect the net asset value of the business that Sunac China acquired under the Acquisition after completion of the Reorganisation, the net asset value of the Target Group is subject to the following adjustments attributable to the Reorganisation: (i) the net asset value of the Target Group will increase by approximately RMB1,302.0 million following capitalisation of the amount due to Party B; and (ii) the net asset value of the Target Group will increase by approximately RMB84.9 million following the disposal of the non-property development business assets arising from the proceeds of such disposal. The Company confirmed that there is no material adverse change on the net asset value of the Target Group since 31 March 2013 up to the completion date of the Acquisition.

After taking into account the following adjustments, which we consider to be appropriately reflect the fair value of the Target Group on the date of completion of the Acquisition, based on the events that were known to the parties to the Agreement before the entering into of the Agreement, (i) the Valuation Surplus, which increase the net asset value of the Target Group by approximately RMB4,123.2 million; (ii) the overall effect of the Reorganisation as described above which increase the net asset value of the Target Group by approximately RMB1,386.9 million; (iii) as advised by the Company, the possible additional tax attributable to the Valuation Surplus which reduce the net asset value of the Target Group by approximately RMB1,433.4 million; and (iv) the repayment of borrowings of PRC Project Companies due to Party B and its connected persons or its related companies, which increase the net asset value of the Target Group by approximately RMB2,319.4 million, the adjusted fair value of the net assets of the Target Group (the “ Adjusted Net Asset Value ”) will be approximately RMB7,983.3 million, which is approximate to the total consideration of RMB7,996,100,130.25.

Having considered the above, in particular that the consideration is approximate to the Adjusted Net Asset Value of approximately RMB7,983.3 million of the Target Group as at 31 March 2013, we concur with the view of the Directors that the consideration which takes into account, among other things, (i) the actual investment made by Party B to the Target Group; (ii) the market value of the assets involved; and (iii) the borrowings which comprise amounts due to Party B and certain other payables relevant to the property development of the Target Group by the PRC Project Companies as at 31 May 2013, is fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

– 31 –

LETTER FROM QUAM CAPITAL

5. Financial effects of the formation of Sunac Greentown and the Acquisition

Net asset value

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix IV to the Circular and further advised by the Company, taking into account the effects of the formation of Sunac Greentown and the Acquisition assuming completion had taken place on 30 June 2013, the net asset value of the Group as at 30 June 2013 amounted to approximately RMB14,399.8 million would increase by approximately RMB1,407.6 million to approximately RMB15,807.4 million. Such increase is mainly due to the consolidation of the entire equity interest of Sunac Greentown and the Target Group.

Earnings

Upon completion of the formation of Sunac Greentown and the Acquisition, the result of Sunac Greentown and the Target Group will be consolidated into the financial statement of the Group. As stated above, the Target Group has recorded profit before and after tax of approximately RMB297.2 million and RMB104.8 million, respectively, for the year ended 31 December 2012. However, the Target Group has recorded loss before and after tax of approximately RMB29.7 million and RMB22.7 million for the three months ended 31 March 2013 given that there is no revenue generated for the period.

Working capital and gearing

As at 30 June 2013, the cash and cash equivalent balance of the Group amounted to approximately RMB10,860.7 million and the gearing ratio (defined as net debt divided by total capital) of the Group was approximately 42%. According to the unaudited pro forma financial information of the Enlarged Group as set out in Appendix IV to the Circular, assuming the Acquisition has been taken place on 30 June 2013, the cash and cash equivalent balance of the Enlarged Group will reduce to approximately RMB7,014.8 million mainly as a result of the payment of the consideration, and the restricted cash of the Enlarged Group will remain at approximately RMB3,634.7 million. whereas the gearing ratio of the Enlarged Group, calculated as net debt, which is calculated as total borrowings (including current and long-term borrowings) less cash and cash equivalents (including restricted cash), divided by total capital, which is calculated as total equity plus net debt, will slightly increase to approximately 47.3%.

As advised by the Company, the future operation of the PRC Project Companies (including the future capital contribution) will be mainly financed by the proceeds from pre-sales of properties developed by the Target Group and the banking facilities available to the Target Group. As confirmed by the Company, taking into account that the consideration has been settled as at the Latest Practicable Date and the financial resources available to the Enlarged Group, the Directors are of the opinion that the Enlarged Group has sufficient working capital for at least the next 12 months from the date of the Circular.

– 32 –

LETTER FROM QUAM CAPITAL

Conclusion

Considering (i) the cash flow to be generated from the properties projects completed and to be developed by the PRC Project Companies; (ii) the Valuation; (iii) the financial position, in particular, the cash and cash equivalent balance and net asset value of the Enlarged Group upon completion of the Acquisition; and (iv) that the consideration has been settled as at the Latest Practicable Date, we concur with the view of the Company that the financial effects of the formation of Sunac Greentown and the Acquisition to be acceptable.

RECOMMENDATION

Having taken into account the principal factors and reasons discussed above and in particular the following (which should be read in conjunction with and interpreted in the full context of this letter):

the reasons for and the benefits of the formation of Sunac Greentown and the Acquisition as discussed in section (1) above;
the positive prospect of the real estate industry in Shanghai where the property projects of the Target Group are located, as discussed in section (2) above;
that the formation of Sunac Greentown and the Acquisition is in line with the Company’s stated business strategies as discussed in section (1) above;
that the Company controls the board of directors of Sunac Greentown upon completion of the formation of Sunac Greentown and the Acquisition, which is in the interests of the Company and the Shareholders;
that the Consideration is fair and reasonable having considered, among other things, the Valuation; and
the impact on the financial position of the Group as a result of the formation of Sunac Greentown and the Acquisition to be acceptable,

we are of the opinion that the formation of Sunac Greentown and the Acquisition are in the ordinary and usual course of business and the terms of the Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

Yours faithfully, For and on behalf of Quam Capital Limited Gary Mui Managing Director

– 33 –

FINANCIAL INFORMATION OF SUNAC GROUP

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 December 2010, 2011 and 2012 and for the six months ended 30 June 2013 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.sunac.com.cn):

the Company’s annual report for the year ended 31 December 2010 published on 21 March 2011 (pages 41 to 116);
the Company’s annual report for the year ended 31 December 2011 published on 18 April 2012 (pages 50 to 132);
the Company’s annual report for the year ended 31 December 2012 published on 16 April 2013 (pages 58 to 144); and
the Company’s interim results announcement for the six months ended 30 June 2013 published on 26 August 2013 (pages 7 to 19).

INDEBTEDNESS

The Group

At the close of business on 30 June 2013, the Group had total borrowings of RMB24,828 million, of which RMB23,429 million were secured or jointly secured by properties under development, completed properties held for sale, certain equity interests of the Company’s subsidiaries (including those legally transferred as collateral) and guarantee by a third party.

The Group’s contingent liabilities at the close of business on 30 June 2013 are as follows:

RMB’000

Guarantees in respect of mortgage facilities for certain purchasers of
the group entities	6,888,840

Save as aforesaid, and apart from intra-group liabilities and normal trade payables in the normal course of business, as at the close of business on 30 June 2013, the Group did not have any debt securities, issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

The Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 30 June 2013.

– I-1 –

FINANCIAL INFORMATION OF SUNAC GROUP

APPENDIX I

The Target Group

At the close of business on 30 June 2013, the Target Group had total borrowings of RMB774.7 million which were all unsecured.

Save as aforesaid, and apart from intra-group liabilities and normal trade payables in the normal course of business, as at the close of business on 30 June 2013, the Target Group did not have any debt securities, issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

WORKING CAPITAL

Taking into account the expected completion of the Acquisition and the financial resources available to the Enlarged Group, including the internally generated funds and the available banking facilities, the Directors are of the opinion that the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

FINANCIAL AND TRADING PROSPECTS FOR 2013

The Company expects that the central government’s control policies on real estate industry in 2013 will remain tight, although new policies will be more targeted and flexible. The Company believe this will be conducive to the industry’s healthy development in long run. The property market mainly depends on regional supply and demand as well as customers’ expectations. The Company estimate that the overall market in 2013 will maintain steady, while that market differentiation will further exacerbate and performance of different cities, property developers and projects will show clear difference.

In 2013, the Company will continue to keep an eye on the land market, and seize all opportunities therein, to take advantage of the opportunities arising from different cities and parcels of lands. The Company will strictly follow the Company’s rules on land acquisition to replenish its land bank provided that the Company has sufficient cash flows and the prices are suitable. In respect of selection of the cities, the Company will focus on consolidating its existing cities and, under prudent consideration, taking suitable chances to further optimize regional coverage.

In 2013, the Company will consistently emphasize on the build-up of its management capabilities so as to continuously improve the Company’s comprehensive and integrated management and control platform, and enhance its management capabilities before scaling up, to well guarantee the steady and fast development of the Company’s business.

Going forward, the Directors expect that the Group’s real estate development business will be a major contributor to the results of the Group and the Group will endeavour to focus its financial and human resources to further advance its business segments where its competitive strengths lie with the aim of maintaining the growth momentum of the Group.

– I-2 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

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

==> picture [67 x 49] intentionally omitted <==

28 August 2013

The Directors

Sunac China Holdings Limited

Dear Sirs,

We report on the combined financial information of the companies as set out in Note 1(b) of Section I below (the “Target Group”), which comprises the combined balance sheets of the Target Group as at 31 December 2010, 2011 and 2012 and 31 March 2013, the combined income statements, the combined statements of comprehensive income, the combined statements of changes in equity and the combined cash flow statements of the Target Group for each of the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2013 (the “Relevant Periods”) and a summary of significant accounting policies and other explanatory information. This financial information has been prepared by the directors of Sunac China Holdings Limited (the “Company”) and is set out in Sections I to II below for inclusion in Appendix II to the circular of the Company dated 28 August 2013 (the “Circular”) in connection with the acquisition of the Target Group by the Company.

Pursuant to a cooperation and investment agreement (the “Agreement”) entered into on 31 May 2013, Sunac Greentown Investment Holdings Ltd., a company invested in the British Virgin Islands and 50% owned by the Company, conditionally agreed to acquire the Target Group after the group reorganization as described in Note 1(b) of Section I headed “Reorganization” below. The acquisition has been completed on 17 July 2013.

The audited financial statements of the companies now comprising the Target Group as at the date of this report, for which there are statutory audit requirements, have been prepared in accordance with the relevant accounting principles generally accepted in their places of incorporation. The details of the statutory auditors of these companies are set out in Note 1(b) of Section I.

– II-1 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The directors of the Target Group are responsible for the preparation of the combined financial statements of the Target Group for the Relevant Periods that give a true and fair view in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) (the “Underlying Financial Statements”), and for such internal control as the directors determine is necessary to enable the preparation of the Underlying Financial Statements that are free from material misstatement, whether due to fraud or error. We have audited the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing (the “HKSAs”) issued by the HKICPA pursuant to separate terms of engagement.

The financial information has been prepared based on the Underlying Financial Statements, with no adjustment made thereon, and on the basis set out in Note 1(c) of Section I below.

Directors’ Responsibility for the Financial Information

The directors of the Company are responsible for the preparation of the financial information that gives a true and fair view in accordance with the basis of presentation set out in Note 1(c) of Section I below and in accordance with HKFRSs and accounting policies adopted by the Company and its subsidiaries (together, the “Group”) as set out in the annual report of the Company for the year ended 31 December 2012.

Reporting Accountant’s Responsibility

Our responsibility is to express an opinion on the financial information and to report our opinion to you. We carried out our procedures in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

Opinion

In our opinion, the financial information gives, for the purpose of this report and presented on the basis set out in Note 1(c) of Section I below, a true and fair view of the combined state of affairs of the Target Group as at 31 December 2010, 2011 and 2012 and 31 March 2013 and of the Target Group’s combined results and cash flows for the Relevant Periods.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information set out in Sections I to II below included in Appendix II to the Circular which comprises combined income statement, the combined statement of comprehensive income, the combined statement of changes in equity and the combined cash flow statement of the The Target Group for the three months ended 31 March 2012 and a summary of significant accounting policies and other explanatory information (the “Stub Period Comparative Financial Information”).

The directors of the Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of presentation set out in Note 1(c) of Section I below and the accounting policies set out in Note 2 of Section I below.

– II-2 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review of Stub Period Comparative Financial Information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purpose of this report and presented on the basis set out in Note 1(c) of Section I below, is not prepared, in all material respects, in accordance with the accounting policies set out in Note 2 of Section I below.

– II-3 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

I FINANCIAL INFORMATION OF THE TARGET GROUP

The following is the financial information of the Target Group prepared by the directors of the Company as at 31 December 2010, 2011 and 2012 and 31 March 2013 and for each of the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2012 and 2013 (the “Financial Information”):

COMBINED BALANCE SHEETS

						As at
			As at 31 December			31 March
	Note	2010		2011	2012	2013
		RMB’000		RMB’000	RMB’000	RMB’000
ASSETS
Non-current assets
Property, plant and equipment	7	2,900		7,000	9,417	10,942
Intangible assets		134		101	67	59
Deferred income tax assets	8	21,771		33,695	44,586	51,653

		24,805		40,796	54,070	62,654

Current assets
Properties under development	9	6,549,922		7,209,669	3,203,489	3,203,489
Completed properties held for
sale	10	–		–	3,997,406	3,997,406
Other receivables	11	1,313		1,202	3,801	1,360
Prepayments	12	54,042		117,670	–	–
Restricted cash	13	–		11,000	11,000	–
Cash and cash equivalents	14	328,610		231,756	11,320	106,455
		6,933,887		7,571,297	7,227,016	7,308,710

Total assets		6,958,692		7,612,093	7,281,086	7,371,364

– II-4 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

						As at
			As at 31 December			31 March
	Note	2010		2011	2012	2013
		RMB’000		RMB’000	RMB’000	RMB’000
EQUITY AND LIABILITIES
Equity attributable to owner
of the Target
Ordinary shares	15	–		–	–	–
Other reserves	16	309,622		370,298	370,147	375,357
Retained earnings		1,151,137		1,129,619	1,234,459	1,211,793
Total equity		1,460,759		1,499,917	1,604,606	1,587,150


Liabilities
Non-current liabilities
Borrowing	18	1,350,000		1,350,000	–	–
Deferred income tax liabilities	8	1,438,988		1,438,988	1,359,710	1,359,710

		2,788,988		2,788,988	1,359,710	1,359,710

Current liabilities
Trade and other payables	17	1,072,265		1,546,387	1,202,800	1,337,227
Current income tax liabilities	19	11,672		–	243,132	242,313
Advanced proceeds from
customers		499,779		742,497	–	–
Amount due to the owner	29	1,125,229		1,034,304	1,520,838	2,074,964
Borrowings	18	–		–	1,350,000	770,000
		2,708,945		3,323,188	4,316,770	4,424,504

Total liabilities		5,497,933		6,112,176	5,676,480	5,784,214


Total equity and liabilities		6,958,692		7,612,093	7,281,086	7,371,364


Net current assets		4,224,942		4,248,109	2,910,246	2,884,206


Total assets less current
liabilities		4,249,747		4,288,905	2,964,316	2,946,860

– II-5 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

COMBINED INCOME STATEMENTS

							Three months ended	Three months ended	Three months ended
		Year	ended 31 December				31 March
	Note	2010		2011	2012		2012		2013
		RMB’000		RMB’000	RMB’000		RMB’000	RMB’000
						(Unaudited)
Revenue	20	–		–	760,494		–		–
Cost of sales	21	–		–	(422,293)		–		–
Gross profit		–		–	338,201		–		–
Selling and marketing costs	21	(18,016)		(11,075)	(5,044)		(741)		(1,081)
Administrative expenses	21	(22,641)		(24,266)	(28,305)		(3,178)	(10,988)
Operating (loss)/profit		(40,657)		(35,341)	304,852		(3,919)	(12,069)
Finance income	25	2,173		2,754	564		176		162
Finance costs	25	(41,526)		(855)	(8,200)		(5,605)	(17,826)
(Loss)/profit before
income tax		(80,010)		(33,442)	297,216		(9,348)	(29,733)
Income tax expenses	26	19,922		11,924	(192,376)		2,184		7,067
(Loss)/profit for the
year/period		(60,088)		(21,518)	104,840		(7,164)	(22,666)


*Attributable to:*
Equity owner of the
Target Group		(60,088)		(21,518)	104,840		(7,164)	(22,666)


Earnings per share
– basic and diluted	31	(60,088)		(21,518)	104,840		(7,164)	(22,666)
Dividends	32	–		–	–		–		–

– II-6 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

COMBINED STATEMENTS OF COMPREHENSIVE INCOME

					Three months ended	Three months ended
	Year ended 31 December				31 March
	2010	2011	2012		2012	2013
	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000
				(Unaudited)
(Loss)/profit for the
year/period	(60,088)	(21,518)	104,840		(7,164)	(22,666)
Other comprehensive
income
Currency translation
differences	44,672	60,676	(151)		151	5,210
Total comprehensive
(loss)/income for the
year/period	(15,416)	39,158	104,689		(7,013)	(17,456)


*Attributable to:*
Equity owner of the
Target Group	(15,416)	39,158	104,689		(7,013)	(17,456)

– II-7 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

COMBINED STATEMENTS OF CHANGES IN EQUITY

	Attributable to the	Attributable to the	owner of the	Target
	Ordinary	Other	Retained
	shares	reserves	earnings	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Balance as 1 January 2010	–	236,615	1,211,225	1,447,840
Comprehensive income
Loss for the year	–	–	(60,088) (60,088)
Other comprehensive income
Currency translation differences	–	44,672	–	44,672
	–	44,672	(60,088) (15,416)
Contributions by the shareholder
of the Target recognized
directly in equity	–	28,335	–	28,335
Balance as at 31 December 2010	–	309,622	1,151,137	1,460,759

Comprehensive income
Loss for the year	–	–	(21,518) (21,518)
Other comprehensive income
Currency translation differences	–	60,676	–	60,676
	–	60,676	(21,518) 39,158
Balance as at 31 December 2011	–	370,298	1,129,619	1,499,917

Comprehensive income
Profit for the year	–	–	104,840	104,840
Other comprehensive income
Currency translation differences	–	(151)	–	(151)
	–	(151)	104,840	104,689
Balance as at 31 December 2012	–	370,147	1,234,459	1,604,606

– II-8 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

	Attributable to the	Attributable to the	owner of the	Target
	Ordinary	Other	Retained
	shares	reserves	earnings		Total
	RMB’000	RMB’000	RMB’000	RMB’000
Comprehensive income
Loss for the period	–	–	(22,666)	(22,666)
Other comprehensive income
Currency translation differences	–	5,210	–		5,210
	–	5,210	(22,666)	(17,456)
Balance as at 31 March 2013	–	375,357	1,211,793	1,587,150


(Unaudited)
Balance as at 1 January 2012	–	370,298	1,129,619	1,499,917


Comprehensive income
Loss for the period	–	–	(7,164)		(7,164)
Other comprehensive income
Currency translation differences	–	151	–		151
	–	151	(7,164)		(7,013)
Balance as at 31 March 2012	–	370,449	1,122,455	1,492,904

– II-9 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

COMBINED CASH FLOW STATEMENTS

							Three months ended	Three months ended
		Year	ended 31 December				31 March
	Note	2010		2011	2012		2012	2013
		RMB’000		RMB’000	RMB’000		RMB’000	RMB’000
						(Unaudited)
Cash flows from operating
activities
Cash (used in)/generated from
operations	27	(118,645)		5,001	(125,251)		(142,538)	(35,003)
PRC income tax paid		(6,991)		(11,672)	–		–	(820)
Net cash (used in)/generated from
operating activities		(125,636)		6,671	(125,251)		(142,538)	(35,823)
Cash flows from investing
activities
Purchases of property, plant and
equipment		(1,957)		(4,774)	(5,140)		(2,730)	(1,926)
Purchases of intangible assets		(134)		–	–		–	–
Proceeds from disposals of property,
plant and equipment		7		14	1,109		–	–
Net cash used in investing activities		(2,084)		(4,760)	(4,031)		(2,730)	(1,926)
Cash flows from financing
activities
Repayment of a borrowing		(17,313)		–	–		–	(580,000)
Borrowings from the owner and
third parties for reorganization
purpose		–		–	–		–	719,357
Guarantee deposit for bank
borrowing		–		(11,000)	–		–	11,000
Interests paid		(67,917)		(74,416)	(91,154)		(5,280)	(17,473)
Net cash (used in)/generated from
financing activities		(85,230)		(85,416)	(91,154)		(5,280)	132,884
Net (decrease in)/increase in cash
and cash equivalents		(212,950)		(96,847)	(220,436)		(150,548)	95,135
Cash and cash equivalents at
beginning of year/period		541,869		328,610	231,756		231,756	11,320
Effect of foreign exchange
differences		(309)		(7)	–		–	–
Cash and cash equivalents at end
of year/period		328,610		231,756	11,320		81,208	106,455

– II-10 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

II NOTES TO THE FINANCIAL INFORMATION

1 General information

(a) General information

Elegant Trend Limited (the “Target”) was incorporated in the British Virgin Islands on 12 March 2013 as an exempted company with limited liability under the International Business Companies (Amendment) Act 2003 of the British Virgin Islands. The address of its registered office is 263 Main Street, Road Town, Tortola, the British Virgin Islands.

The Target is an investment holding company. Upon completion of a reorganization as disclosed in Note 1(b) below, the Target became the holding company of an entity named Wisdom Collection Holdings (International) Inc. (“Wisdom Collection”) and its subsidiaries (together, the “Target Group”). During the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2013 (the “Relevant Periods”), Wisdom Collection operated real estate property development business and commercial property lease business through its subsidiaries incorporated in Shanghai, the People’s Republic of China (the “PRC”) as set out in Note 1(b) below, and the equity investments in jewelry business through a subsidiary incorporated in Hong Kong.

(b) Reorganization

On 31 May 2013, the shareholder of the Target entered into a Cooperation and Investment Agreement with an independent third party, Sunac Greentown Investment Holdings Limited (“Sunac Greentown”), pursuant to which, Sunac Greentown agreed to acquire the Target and its subsidiaries engaged in real estate property development business (the “Acquisition”). For the purpose of the Acquisition, the Target Group disposed of its businesses not relating to real estate property development. Then the equity interests of the Target Group were transferred to the Target.

The Reorganization has been completed in July 2013 and Sunac Greentown has completed the Acquisition on 17 July 2013. Currently the Target has direct or indirect interests in the following subsidiaries now comprising the Target Group:

	Place of	Date of	Principal	Equity interest held	Equity interest held	Equity interest held	as at
Name of company	incorporation	incorporation	activities	31	December		31 March
				2010	2011	2012	2013
*Directly owned:*
Wisdom Collection	Liberia	11 November	Investment	100%	100%	100%	100%
		1981	holding
*Indirectly owned:*
Wisdom Collection	Hong Kong	8 July 1981	Investment	100%	100%	100%	100%
Holdings (Hong			holding
Kong) Limited
New Richport	Shanghai, the	5 October	Real estate	100%	100%	100%	100%
Property	PRC	1993	property
Development			development
Shanghai Co., Ltd.
(hereafter “New
Richport”)
Fung Seng Estate	Shanghai, the	22 June 1994	Real estate	100%	100%	100%	100%
Development	PRC		property
(Shanghai) Co.,			development
Ltd. (hereafter
“Fung Seng”)
Everbright Property	Shanghai, the	16 January	Real estate	–	–	100%	100%
Development	PRC	2012	property
Shanghai Co., Ltd.			development
(hereafter
“Everbright”)

– II-11 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The statutory financial statements of the subsidiaries for the years ended 31 December 2010, 2011 and 2012, where applicable, were audited by certified public accountants as follows:

	2010	2011	2012
Wisdom Collection	Not applicable	Not applicable	Not applicable
Wisdom Collection	C K YAU & Partners CPA	C K YAU & Partners CPA	C K YAU & Partners CPA
Holdings (Hong	Limited	Limited	Limited
Kong) Limited
New Richport	BDO China Shu Lun Pan	BDO China Shu Lun Pan	Shanghai Fuxingmingfang
	Certified Public	Certified Public	Certified Public
	Accountants LLP	Accountants LLP	Accountants
	立信會計師事務所	立信會計師事務所	上海復興明方會計師事務所
	(特殊普通合夥)	(特殊普通合夥)	有限公司
Fung Seng	BDO China Shu Lun Pan	BDO China Shu Lun Pan	BDO China Shu Lun Pan
	Certified Public	Certified Public	Certified Public
	Accountants LLP	Accountants LLP	Accountants LLP
	立信會計師事務所	立信會計師事務所	立信會計師事務所
	(特殊普通合夥)	(特殊普通合夥)	(特殊普通合夥)
Everbright	Not applicable	Not applicable	Shanghai Fuxingmingfang
			Certified Public
			Accountants
			上海復興明方會計師事務所
			有限公司

Note: The English names of the statutory auditors of the PRC subsidiaries referred to in this report represent management best effort at translating the Chinese names as no official English names have been registered for these auditors.

All entities comprising the Target Group are limited liability companies and have adopted 31 December as their financial year end date.

(c) Basis of presentation

The combined financial information has been prepared for inclusion in the circular of the Company in connection with the Acquisition of the Target Group.

Since the real estate property development business has been managed together and the ultimate owner remains the same, for the purpose of this report, the financial information has been presented on a combined basis, after excluding other business not relating to the real estate property development business. The financial information has been prepared to present the combined balance sheets as at 31 December 2010, 2011 and 2012 and 31 March 2013, the combined income statements, the combined statements of comprehensive income, the combined statements of changes in equity and the combined statements of cash flows of the Target Group for the Relevant Periods or since the respective dates of incorporation of the companies comprising the Target Group, whichever is the shorter period.

All intra-group transactions and balances have been eliminated on combination.

– II-12 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of the combined financial information are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The principal accounting policies applied in the preparation of the combined financial statements of the Target Group, which are in accordance with the Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA, are set out below. The combined financial information has been prepared under the historical cost convention.

The preparation of the combined financial statements in conformity with the HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Target Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the combined financial information are disclosed in Note 5.

(a) Going concern

The Target Group meets its day-to-day working capital requirements through its pre-sale proceeds, bank facilities and other borrowings from related parties and third parties. The current economic conditions continue to create uncertainty particularly over (a) the level of demand for the Target Group’s property products; and (b) the availability of bank finance for the foreseeable future. The Target Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Target Group should be able to operate within the level of its current facilities. After making enquiries, the directors have a reasonable expectation that the Target Group had adequate resources to continue in operational existence for the foreseeable future. The Target Group therefore continues to adopt the going concern basis in preparing its combined financial statements.

2.1.2 Changes in accounting policy and disclosures

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these combined financial statements. None of these is expected to have a significant effect on the combined financial statements of the Target Group, except the following set out below:

HKAS 32 (Amendment) “Financial instruments: Presentation – Offsetting financial assets and financial liabilities”: The amendments clarify the requirements for offsetting financial instruments on the statement of financial position:

(i) the meaning of ‘currently has a legally enforceable right of set-off’; and
(ii) that some gross settlement systems may be considered equivalents to net settlement.

Amendments to HKFRS 10, HKFRS 12 and HKFRS 27 (revised 2011) “Investment entities”: The amendments provide an exception to the consolidation requirements in HKFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendments also set out disclosure requirements for investment entities.

Amendments to HKAS 36 “Recoverable amount disclosures for non-financial assets”: The HKICPA made consequential amendments to the disclosure requirements of HKAS when it issued HKFRS 13. One of the amendments was drafted more widely than intended. The unintended result requires to disclose the recoverable amount for each CGU with significant amount of goodwill or intangible assets with indefinite useful lives no matter whether there has been impairment. HKICPA has published limited amendments to remove such requirement for CGU without impairment and introduces additional disclosures about fair value measurements when there has been impairment or a reversal of impairment. The amendments are effective from annual periods beginning on or after 1 January 2014 and please read the amendments in their entirety to determine the impact for deciding early adoption.

– II-13 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

HK (IFRIC) Interpretation 21 “Levies”: The interpretation clarifies the accounting for levies in the financial statements of the entity that is paying the levy.

HKFRS 9 “Financial Instruments”: HKFRS 9 is the first standard issued as part of a wider project to replace HKAS 39. HKFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in HKAS 39 on impairment of financial assets and hedge accounting continues to apply.

HKFRS 7 and HKFRS 9 (Amendments) “Mandatory effective date and transition disclosures”: HKFRS 7 and HKFRS 9 (Amendments) “Mandatory effective date and transition disclosures” delay the effective date to annual periods beginning on or after 1 January 2015, and also modify the relief from restating prior periods. As part of this relief, additional disclosures on transition from HKAS 39 to HKFRS 9 are required.

There are no other HKFRSs or HK (IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Target Group.

According to the Target Group’s assessment, adoption of these new standards, amendments and interpretations will have no material impact to the financial statements of the Target Group.

2.2 Subsidiaries

2.2.1 Consolidation

Subsidiaries are all entities (including structured entities) over which the management team of the Target Group has control. The Target Group controls an entity when the management team of Target Group has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. The practical ability to unilaterally direct another entity is considered when assessing whether the management team of the Target Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the management team of the Target Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between the group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Target Group.

(a) Business combination

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and the contingent consideration assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with HKAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

– II-14 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

2.2.2 Separate financial statements

(c) Disposal of subsidiaries

When the group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

Investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the company on the basis of dividend and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, which is executive director of the Target Group. The executive director of the Target Group, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Target Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). Since the majority of the assets and operations of the Target Group are located in the PRC, the combined financial statements are presented in Renminbi (“RMB”), which is the Target Group’s presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within “finance income or cost”. All other foreign exchange gains and losses are presented in the income statement within “Other (losses)/gains – net”.

The Target Group currently does not have such other foreign exchange gains or losses.

(b) Transactions and balances

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analyzed between translation differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortized cost are recognized in profit or loss, and other changes in carrying amount are recognized in other comprehensive income.

– II-15 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

(c) Group companies

The results and financial position of all the Target Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates; and
(iii) all resulting exchange differences are recognized in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognized in other comprehensive income.

2.5 Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Target Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the year in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Vehicles 5 years Leasehold improvements Shorter of 5 years or the lease periods Furniture and office equipment 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each Relevant Periods.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within “Other (losses)/gains-net” in the income statement. The Target Group had no material disposals during the Relevant Periods.

2.6 Intangible assets

Computer software

Costs of the purchases of computer software are recognized as intangible assets and are amortized over the shorter of their estimated useful lives at five years.

2.7 Land use rights

All land in the PRC is state-owned and no individual land ownership right exists. The Target Group acquired the rights to use certain land and the premiums paid for such rights are recorded as land use rights.

– II-16 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Land use rights which are held for self-use are stated at cost and amortized over the use terms of 50 to 70 years using the straight-line method. Land use rights which are used for real estate property development for sales are inventories and measured at lower of cost and net realizable value. Land use rights are transferred to properties under development upon the commencement of development.

2.8 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.9 Financial assets

2.9.1 Classification

The Target Group classifies its financial assets in the following categories: loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets at initial recognition.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the Relevant periods. These are classified as non-current assets. The Group’s loans and receivables comprise trade and other receivables, restricted cash and cash and cash equivalent in the balance sheet.

2.9.2 Recognition and measurement

Regular way purchases and sales of financial assets are recognized on the trade date – the date on which the Target Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss is initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Target Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortized cost using the effective interest method.

2.9.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

2.10 Impairment of financial assets

(a) Assets carried at amortized cost

The group assesses at the end of each Relevant Periods whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

– II-17 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in the consolidated income statement.

2.11 Properties under development

Properties under development are stated at the lower of cost and net realizable value. Net realizable value takes into account the price ultimately expected to be realized, less applicable variable selling expenses and anticipated cost to completion.

Development cost of property comprises construction costs, land use rights cost, capitalized borrowing costs and professional fees incurred during the development period. On completion, the properties are transferred to completed properties held for sale.

2.12 Completed properties held for sale

Completed properties remaining unsold as at the balance sheet dates are stated at the lower of cost and net realizable value.

Cost comprises development costs attributable to the unsold properties.

Net realizable value is determined by reference to the sale proceeds of properties sold in the ordinary course of business, less applicable variable selling expenses, or by management estimates based on prevailing marketing conditions.

2.13 Trade and other receivables

Trade receivables are amounts due from customers for properties sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

2.14 Restricted cash

Restricted cash includes guarantee deposits for the Target Group’s bank loans. The restrictions are released when the Target Group repays the bank loans.

– II-18 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

2.15 Cash and cash equivalents

In the combined statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. In the consolidated and entity balance sheets, bank overdrafts are shown within borrowings in current liabilities.

2.16 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.17 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Target Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the Relevant periods.

2.18 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

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

2.19 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

– II-19 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Outside basis differences

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.20 Employee benefits

In accordance with the rules and regulations in the PRC, the PRC based employees of the Group participate in various defined contribution retirement benefit plans organized by the relevant municipal and provincial governments in the PRC under which the Group and the PRC based employees are required to make monthly contributions to these plans calculated as a percentage of the employees’ salaries.

The municipal and provincial governments undertake to assume the retirement benefit obligations of all existing and future retired PRC based employees’ payable under the plans described above. Other than the monthly contributions, the Group has no further obligation for the payment of retirement and other post retirement benefits of its employees. The assets of these plans are held separately from those of the Group in independently administrated funds managed by the governments.

2.21 Provisions

Provisions for restructuring costs and legal claims are recognized when: the Target Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

– II-20 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

2.22 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Target Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Target Group’s activities, as described below. The Target Group bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(a) Sales of properties

Revenue from sales of properties is recognized when the risks and rewards of properties are transferred to the purchasers, which is when the construction of relevant properties has been completed and the properties have been delivered to the purchasers and recoverability of related receivables is reasonably assured. Deposits and installments received on properties sold prior to the date of revenue recognition are included in the consolidated balance sheets as advanced proceeds received from customers under current liabilities.

2.23 Interest income

Interest income is recognized using the effective interest method. When a loan or receivable is impaired, the Target Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan or receivables is recognized using the original effective interest rate.

2.24 Dividend distribution

Dividend distributions to the Target’s shareholder is recognized as liabilities in the Target Group’s combined financial statements in the period in which the dividends are approved by the Target’s shareholder or directors, where appropriate.

3 Financial risk management

3.1 Financial risk factors

The Target Group’s activities expose it to a variety of financial risks: market risk (including currency risk and cash flow and fair value interest rate risk), credit risk and liquidity risk. The Target Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Target Group’s financial performance. Risk management is carried out by the management team of the operating entities.

(a) Market risk

(i) Foreign exchange risk

The Target Group’s normal operating activities are principally conducted in RMB since all of the operating entities are based in the PRC. The Target Group is keeping a timely monitoring and may carry out necessary actions to manage the exchange risks.

(ii) Cash flow and fair value interest rate risk

As the Target Group has no significant interest-bearing assets, the Target Group’s income and operating cash flows are substantially independent from changes in market interest rates.

The Target Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Target Group to cash flow interest-rate risk which is partially offset by cash held at variable rates. Borrowings issued at fixed rates expose the Target Group to fair value interest-rate risk.

The Target Group has not used any interest rate swaps to hedge its exposure to interest rate risk.

– II-21 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The table below sets out the Target Group’s exposure to interest rate risks. Included in the tables are the liabilities at carrying amounts, categorized by maturity dates.

RMB’million		Floating rates	Floating rates
	Less than
	1 year	1	to 5 years	Total
Borrowing
At 31 December 2010	–		1,350	1,350

At 31 December 2011	–		1,350	1,350

At 31 December 2012	1,350		–	1,350

At 31 March 2013	770		–	–

As at 31 March 2013, if the interest rates on borrowings had been 100 basis points higher/lower with all other variables held constant, the post-tax profit and capitalized interest for the period would have been lower/higher by RMB2.0 million and zero respectively.

(b) Credit risk

Letting of commercial properties is limited to high-credit-quality institutions. The extent of the Target Group’s credit exposure is represented by the aggregate balance of cash in bank and other receivables.

Credit risk is managed by the management team of the operating entities. Credit risk arises from cash and cash equivalents, restricted cash deposited with banks, other receivables. Residential and commercial property sales are paid for through up-front cash transactions.

With respect to banks, the State-owned banks in the PRC are mainly used for holding bank accounts in the Target Group.

(c) Liquidity risk

Cash flow forecasting is performed in the operating entities of the group in and aggregated by group finance. Group finance monitors rolling forecasts of the group’s liquidity requirements to ensure it has sufficient cash to meet operational needs so that the group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements – for example, currency restrictions.

The table below analyses the Target Group’s non-derivative financial liabilities into relevant maturity grouping based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

		Between	Between
	Less than	1 and 2	2 and 5
In RMB’million	1 year	years	years	Total
At 31 December 2010
Borrowings	–	–	1,350	1,350
Amount due to the owner	1,125	–	–	1,125
Trade and other payables (Note 17)	1,065	–	–	1,065
At 31 December 2011
Borrowings	–	1,350	–	1,350
Amount due to the owner	1,034	–	–	1,034
Trade and other payables (Note 17)	1,539	–	–	1,539

– II-22 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

		Between	Between
	Less than	1 and 2	2 and 5
In RMB’million	1 year	years	years	Total
At 31 December 2012
Borrowings	1,350	–	–	1,350
Amount due to the owner	1,521	–	–	1,521
Trade and other payables (Note 17)	1,200	–	–	1,200
At 31 March 2013
Borrowings	770	–	–	770
Amount due to the owner	2,075	–	–	2,075
Trade and other payables (Note 17)	1,334	–	–	1,334

Note: Trade and other payables in this analysis do not include the taxes payables and payroll & welfare payables.

3.2 Capital risk management

In managing its capital risk, management considers capital to include paid up capital from equity holders and borrowings. The Target Group’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns for equity holders.

In order to maintain or adjust the capital structure, the Target Group may adjust the amount of dividends paid to equity holder, return capital to equity holder, issue new shares to reduce debt.

The Target Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Target Group and capital efficiency, project operating cash flows, projected capital expenditures and projected strategic investment opportunities.

Consistent with others in the industry, the Target Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the consolidated balance sheet, plus net debt.

The gearing ratios of the Target Group as at 31 December 2010, 2011, 2012 and 31 March 2013 were as follows:

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Borrowing	1,350,000	1,350,000	1,350,000	770,000
Amount due to the owner	1,125,229	1,034,304	1,520,838	2,074,964
Restricted cash	–	(11,000)	(11,000)	–
Cash and cash equivalents	(328,610)	(231,756)	(11,320)	(106,455)
Net debts	2,146,619	2,141,548	2,848,518	2,738,509
Total equity	1,460,759	1,499,917	1,604,606	1,587,150
Total capital	3,607,378	3,641,465	4,453,124	4,325,659
Gearing ratio	60%	59%	64%	63%

4 Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Target Group is the current bid price.

– II-23 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The fair value of financial instruments that are not traded in an active is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates.

The carrying value less impairment provisions of other receivables and the nominal value of trade and other payables approximate their fair values due to their short maturities. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Target Group for similar financial instruments.

5 Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

5.1 Critical accounting estimates and assumptions

The Target Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Construction costs estimation for revenue recognition

In the Target Group, each project is divided into several phases according to the development and delivery plan. Cost of sales including construction costs specific to the phases and common costs allocable to the phases are calculated based on management best estimation of the total development costs for the whole project and the allocation to each phase at the time when the costs incurred.

(b) PRC land appreciation taxes

The Target Group’s property project in the PRC is subject to land appreciation tax (“LAT”). However, since the implementation and settlement of these taxes varies among various tax jurisdictions in cities of the PRC, significant judgment is required in determining the amount of the land appreciation and its related taxes. The Target Group recognized these land appreciation taxes based on management’s best estimates according to its understanding of the interpretation of tax rules by various tax authorities. The final tax outcome could be different from the amounts that were initially recorded, and these differences will impact the income taxes and deferred income tax provisions in the years in which such taxes have been finalized with local tax authorities.

6 Segment information

The executive director of the Target Group regularly reviews the operating results by property development projects. Currently the Target Group has a single segment as it has only one property project in Shanghai, the PRC.

7 Property, plant and equipment

				Furniture
			Leasehold	and office
	Vehicles	improvements		equipment	Others	Total
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
Year ended 31 December
2010
Opening net book amount	103		–	600	626	1,329
Additions	1,344		–	613	–	1,957
Disposals	–		–	(7)	–	(7)
Depreciation	(161)		–	(185)	(33)	(379)
Closing net book amount	1,286		–	1,021	593	2,900

– II-24 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

				Furniture
			Leasehold	and office
	Vehicles	improvements		equipment	Others	Total
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
At 31 December 2010
Costs	1,568		–	1,539	736	3,843
Accumulated depreciation	(281)		–	(518)	(144)	(943)
Net book amount	1,287		–	1,021	592	2,900


Year ended 31 December
2011
Opening net book amount	1,287		–	1,021	592	2,900
Additions	792		2,793	1,189	–	4,774
Disposals	–		–	(20)	–	(20)
Depreciation	(286)		–	(335)	(33)	(654)
Closing net book amount	1,793		2,793	1,855	559	7,000


At 31 December 2011
Costs	2,360		2,793	2,708	736	8,597
Accumulated depreciation	(567)		–	(853)	(177)	(1,597)
Net book amount	1,793		2,793	1,855	559	7,000


Year ended 31 December
2012
Opening net book amount	1,793		2,793	1,855	559	7,000
Additions	–		4,526	614	–	5,140
Disposals	(22)		–	(1,036)	–	(1,058)
Depreciation	(385)		(910)	(337)	(33)	(1,665)
Closing net book amount	1,386		6,409	1,096	526	9,417


At 31 December 2012
Costs	2,338		7,319	2,286	736	12,679
Accumulated depreciation	(952)		(910)	(1,190)	(210)	(3,262)
Net book amount	1,386		6,409	1,096	526	9,417

Three months ended
31 March 2013
Opening net book amount	1,386		6,409	1,096	526	9,417
Additions	–		1,921	5	–	1,926
Disposals	–		–	(8)	–	(8)
Depreciation	(87)		(227)	(54)	(25)	(393)
Closing net book amount	1,299		8,103	1,039	501	10,942


At 31 March 2013
Costs	2,338		9,240	2,283	736	14,597
Accumulated depreciation	(1,039)		(1,137)	(1,244)	(235)	(3,655)
Net book amount	1,299		8,103	1,039	501	10,942

– II-25 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

				Furniture
			Leasehold	and office
	Vehicles	improvements		equipment	Others	Total
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
(Unaudited)
Three months ended
31 March 2012
Opening net book amount	1,793		2,793	1,855	559	7,000
Additions	2,723		–	7	–	2,730
Disposals	–		–	(5)	–	(5)
Depreciation	(74)		(96)	(108)	(8)	(286)
Closing net book amount	4,442		2,697	1,749	551	9,439


At 31 March 2012
Costs	5,083		2,793	2,710	736	11,322
Accumulated depreciation	(641)		(96)	(961)	(185)	(1,883)
Net book amount	4,442		2,697	1,749	551	9,439

8 Deferred income tax

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Deferred income tax assets
recoverable:
– within 12 months	1,058	33,695	–	7,067
– after 12 months	20,713	–	44,586	44,586

	21,771	33,695	44,586	51,653


Deferred income tax liabilities to be
settled:
– within 12 months	–	79,278	610,534	653,009
– after 12 months	1,438,988	1,359,710	749,176	706,701

	1,438,988	1,438,988	1,359,710	1,359,710

The movements in deferred income tax assets and liabilities are as follows:

(a) Deferred income tax assets

	Costs and
	expenses
	without
	sufficient tax		Deductible
	documents	Unpaid LAT	tax loss	Total
	RMB’000	RMB’000	RMB’000	RMB’000
At 1 January 2010	–	–	1,849	1,849
Credited to income statement,
net	1,058	–	18,864	19,922

At 31 December 2010	1,058	–	20,713	21,771
Credited/(charged) to income
statement, net	(1,058)	–	12,982	11,924

– II-26 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

	Costs and
	expenses
	without
	sufficient tax		Deductible
	documents	Unpaid LAT	tax loss	Total
	RMB’000	RMB’000	RMB’000	RMB’000
At 31 December 2011	–	–	33,695	33,695
Credited/(charged) to income
statement, net	–	44,586	(33,695)	10,891

At 31 December 2012	–	44,586	–	44,586


Credited to income statement,
net	–	–	7,067	7,067

At 31 March 2013	–	44,586	7,067	51,653


(Unaudited)
At 1 January 2012	–	–	33,695	33,695
Credited to income statement,
net	–	–	2,184	2,184

At 31 March 2012	–	–	35,879	35,879

(b) Deferred income tax liabilities

		Deferred
		corporate
		income tax for
		fair value on
	Deferred LAT	acquisitions	Total
	RMB’000	RMB’000	RMB’000
At 1 January 2010, 31 December 2010
and 2011	816,313	622,675	1,438,988
Credited to income statement, net	–	(34,067)	(34,067)
Transfer to LAT payable	(45,211)	–	(45,211)
At 31 December 2012 and 31 March 2013	771,102	588,608	1,359,710


(Unaudited)
At 1 January 2012 and 31 March 2012	816,313	622,675	1,438,988

– II-27 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

9 Properties under development (“PUD”)

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Comprising:
Land use rights costs	4,853,258	4,818,310	2,647,389	2,647,389
Other development costs	1,633,914	2,254,690	556,100	556,100
Capitalized financial costs	62,750	136,669	–	–
	6,549,922	7,209,669	3,203,489	3,203,489


Including:
PUD to be completed within
12 months	–	4,154,374	–	–
PUD to be completed after
12 months	6,549,922	3,055,295	3,203,489	3,203,489

	6,549,922	7,209,669	3,203,489	3,203,489

The properties under development are all located in the PRC.

As at 31 December 2010 and 2011, certain PUD with balance totaling RMB1,895 million and RMB2,093 million were pledged as collateral for the Target Group’s borrowing (Note 18). As at 31 December 2012 and 31 March 2013, no PUD was pledged as collateral for the Target Group’s borrowing.

10 Completed properties held for sale

						December		31 March
					2010	2011	2012	2013
					RMB’000	RMB’000	RMB’000	RMB’000
Completed	properties	held	for	sale	–	–	3,997,406	3,997,406

The completed properties held for sale are all located in the PRC.

As at 31 December 2012 and 31 March 2013, certain completed properties held for sale with balances totaling RMB3,873 million and RMB3,873 million were pledged as collateral for the Target Group’s borrowing (Note 18).

11 Other receivables

			December		31 March
		2010	2011	2012	2013
		RMB’000	RMB’000	RMB’000	RMB’000
Guarantee	deposits	976	538	1,034	1,360
Others		337	664	2,767	–

		1,313	1,202	3,801	1,360

Note:

(a) As at 31 December 2010, 2011 and 2012 and 31 March 2013, the fair values of other receivables approximated their carrying amounts.
(b) The carrying amounts of the Target Group’s other receivables are all denominated in RMB.

– II-28 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

12 Prepayments

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Prepayments for construction costs	–	40,000	–	–
Prepaid business tax and surcharges	25,361	39,021	–	–
Prepaid income tax	18,663	18,663	–	–
Prepaid LAT	10,018	19,986	–	–
	54,042	117,670	–	–

13 Restricted cash

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Guarantee cash deposits for a bank
borrowing	–	11,000	11,000	–

14 Cash and cash equivalents

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Cash at bank and in hand
– Denominated in RMB	326,976	231,615	11,189	106,333
– Denominated in US$	1,483	–	–	–
– Denominated in HK$	151	141	131	122

	328,610	231,756	11,320	106,455

The Target Group earns interests on cash at bank, at floating bank deposit rates.

15 Ordinary shares

The Target was incorporated on 12 March 2013. The share capital of the Target is as follows:

	Number of	Number of	Nominal value of	Nominal value of	Equivalent value of	Equivalent value of	Equivalent value of
	ordinary shares		ordinary shares		ordinary	shares
			(US$)			(RMB)
*Authorized:*
Ordinary shares	50,000		50,000		313,730


*Issued:*
Ordinary shares		1		1			6

– II-29 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

16 Other reserves

Movement of other reserves of the Target Group:

	Contribution		Statutory
	from the	Exchange	reserves
	owner	reserve	(Note i)	Total
	RMB’000	RMB’000	RMB’000	RMB’000
At 1 January 2010	234,982	–	1,633	236,615
Currency translation differences	–	44,672	–	44,672
Contributions by the owner of the
Target Group recognized directly
in equity	28,335	–	–	28,335
At 31 December 2010	263,317	44,672	1,633	309,622
Currency translation differences	–	60,676	–	60,676
At 31 December 2011	263,317	105,348	1,633	370,298
Currency translation differences	–	(151)	–	(151)
At 31 December 2012	263,317	105,197	1,633	370,147
Currency translation differences	–	5,210	–	5,210
At 31 March 2013	263,317	110,407	1,633	375,357


(Unaudited)
At 1 January 2012	263,317	105,348	1,633	370,298
Currency translation differences	–	151	–	151
At 31 March 2012	263,317	105,499	1,633	370,449

Note i:

In accordance with the relevant government regulations in the PRC and the provisions of the articles of association of the PRC subsidiaries of the Target Group, 10% of its net profit as shown in the accounts prepared under PRC accounting regulations is required to be appropriated to statutory common reserve, until the reserve reaches 50% of the registered capital. Appropriation of statutory reserve must be made before distribution of dividends to equity holders. This statutory reserve shall only be used to make up losses; to expand the Target Group entities’ production operation; or to increase the capital.

Upon approval by a resolution of an equity holders’ general meeting, the PRC subsidiaries of the Target Group may convert this reserve into registered capital, provided that the unconverted remaining amount of reserve is not less than 25% of the registered capital.

– II-30 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

17 Trade and other payables

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Trade payables	724,673	624,801	503,615	491,984
Other payables (Note i)	338,034	911,772	693,544	839,251
Other taxes payable	7,420	7,317	3,167	3,165
Interest payables	2,138	2,497	2,474	2,827
	1,072,265	1,546,387	1,202,800	1,337,227

Note i:

Other payables are unsecured, have no fixed term of repayment, and are mainly cash advance in nature, of which, amounts of RMB562 million, RMB54 million and RMB213 million born interests at 2.5% to 4% per annum as at 31 December 2011, 2012 and 31 March 2013 respectively. No balances of other payables as at 31 December 2010 born interests.

(a) The ageing analysis of the Target Group’s trade payables is as follows:

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
0 – 365 days	724,673	497,778	260,063	243,157
Over 365 days	–	127,023	243,552	248,827
	724,673	624,801	503,615	491,984


Borrowing
		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Non-current
Secured, borrowed from a bank	1,350,000	1,350,000	1,350,000	770,000
Less: Current portion of long-term
borrowing	–	–	(1,350,000)	(770,000)
	1,350,000	1,350,000	–	–


Current
Current portion of long-term
borrowing	–	–	1,350,000	770,000
	–	–	1,350,000	770,000

18 Borrowing

– II-31 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

The Target Group’s borrowing as at 31 December 2010, 2011, 2012 and 31 March 2013 was repayable as follows:

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Within 1 year	–	–	1,350,000	770,000
Between 1 and 2 years	–	1,350,000	–	–
Between 2 and 5 years	1,350,000	–	–	–
	1,350,000	1,350,000	1,350,000	770,000

The effective interest rates for the year ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2013 were 5.18%, 5.60%, 6.31% and 5.94% respectively.

(a) The exposure of the Target Group’s borrowing with variable interest rates to interest-rate changes and the contractual re-pricing dates are as follows:

					December		31 March
				2010	2011	2012	2013
				RMB’000	RMB’000	RMB’000	RMB’000
6	months	or	less	1,350,000	1,350,000	1,350,000	770,000

(b) As at 31 December 2010, 2011 and 2012, the Target Group’s bank borrowing of RMB1,350 million and as at 31 March 2013, the bank borrowing of RMB770 million were secured by its certain properties under development and completed properties held for sale totaling RMB1,895million, RMB2,093 million and RMB3,873 million and RMB3,873 million respectively.
(c) As at 31 December 2010, 2011 and 2012 and 31 March 2013, the Target Group had no committed undrawn banking facilities.
(d) The fair values of the long-term borrowing were almost the same with the initial recognition amount at 31 December 2010 and 2011.

19 Current income tax liabilities

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
LAT payable	2,289	–	178,345	178,345
Corporate income tax payable	9,383	–	64,787	63,968
	11,672	–	243,132	242,313

20 Revenue

							Three months ended	Three months ended
			Year	ended 31 December			31 March
			2010		2011	2012	2012	2013
			RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
							(Unaudited)
Sales	of	properties	–		–	760,494	–		–

– II-32 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

21 Expenses by nature

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Costs of properties sold:
– Business tax and related
surcharges (Note 22)	–		–	40,730	–		–
– Land use rights costs	–		–	24,635	–		–
– Other development costs	–		–	338,171	–		–
– Capitalized finance costs	–		–	18,757	–		–
Employee benefit expenses
(Note 23)	16,523		7,090	10,414	1,723	5,927
Advertisement and
promotion costs	13,198		5,510	1,337	18		247
Office and travel expenses	6,412		9,049	10,435	1,246	3,244
Other tax expenses	1,941		1,898	3,544	203		797
Consulting expenses	1,271		1,508	1,868	110		102
Entertainment expenses	746		1,762	676	325		366
Depreciation and
amortization	379		687	1,698	294		401
Others	187		7,837	3,377	–		985

Total cost of sales, selling
and marketing costs and
administrative expenses	40,657		35,341	455,642	3,919	12,069

22 Business tax and related surcharges

The PRC companies now comprising the Target Group are subject to the following sales tax and surcharges on their revenues:

Types		Tax rate	Tax bases
(a)	Business tax	5%	– Sales of properties
(b)	Urban construction and maintenance tax	7%	– Business tax paid
(c)	Education surcharge	3%	– Business tax paid
(d)	Local education surcharge	0%-2%	– Business tax paid
(e)	Anti-flood fund	0%-1%	– Business tax paid

23 Employee benefit expenses

				Three months	ended 31
	Year	ended 31 December			March
	2010	2011	2012	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
				(Unaudited)
Wages and salaries	14,418	5,879	8,321	1,479	5,248
Pension costs	2,070	897	1,315	222	515
Staff welfare costs	35	314	778	22	164

	16,523	7,090	10,414	1,723	5,927

– II-33 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

24 Senior management’s emoluments

(a) Senior management’s emoluments

The five individuals whose emoluments were the highest in the Target Group for the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2012 and 2013 are as follows:

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Basic salaries,
housing
allowance,
pensions and other
benefits in kind	9,478		7,733	7,544	2,117	2,117
Bonuses	834		368	455	114	40

	10,312		8,101	7,999	2,231	2,157

The emoluments fell within the following bands:

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Emolument bands
HK$0-
HK$1,500,000	2		1	2	5		5
HK$1,500,000-
HK$3,500,000	3		4	3	0		0

	5		5	5	5		5

– II-34 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

25 Finance income and costs

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Finance income:
– Interest income on bank
deposits	2,173		2,754	564	176		162


Finance costs:
– Interest costs for bank
borrowing	69,725		69,875	85,267	21,834	15,727
– Interest costs for
amounts due to
third parties	330		4,900	5,864	1,372	2,099
	70,055		74,775	91,131	23,206	17,826
Less: Capitalized finance
costs	(28,529)		(73,920)	(82,931)	(17,601)		–

	41,526		855	8,200	5,605	17,826

The capitalization rate used to determine the amount of the interest incurred eligible for capitalization in the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2012 and 2013 were 2.11%, 5.48%, 5.24%, 5.22% and zero respectively.

26 Income tax expenses

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Corporate income tax
– Current income tax	–		–	38,864	–		–
– Deferred income tax	(19,922)		(11,924)	(372)	(2,184)	(7,067)

	(19,922)		(11,924)	38,492	(2,184)	(7,067)

LAT	–		–	153,884	–		–

	(19,922)		(11,924)	192,376	(2,184)	(7,067)

– II-35 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(a) Corporate income tax

The tax on the Target Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
(Loss)/profit before
income tax	(80,010)		(33,442)	297,216	(9,348)	(29,733)
Income tax
calculated at
statutory rate
of 25%	(20,003)		(8,361)	74,304	(2,337)	(7,433)
LAT deduction	–		–	(38,471)	–		–
Non-deductible
expenses	207		344	1,182	124		346
Others	(126)		(3,907)	1,477	29		20

	(19,922)		(11,924)	38,492	(2,184)	(7,067)

The operating entities of the Target Group incorporated in the PRC are subject to the statutory corporate income tax rate of 25% during the Relevant Periods.

(b) LAT

PRC LAT is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less deductible expenditures including lease charges for land use rights and all property development expenditures. LAT is included in the consolidated income statements as income tax expense.

– II-36 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

27 Cash used in operations

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
(Loss)/profit before income
taxes	(80,010)		(33,442)	297,216	(9,348)	(29,733)
Adjustments for:
– Finance costs	41,526		855	8,200	5,605	17,826
– Amortization of
intangible assets	–		33	34	8		8
– Loss/(gain) on disposal
of property, plant and
equipment	–		6	(51)	5		8
– Depreciation	379		654	1,665	286		393
Changes in working capital
– Properties under
development and
completed properties
held for sale	(444,690)		(659,747)	8,774	(80,230)		–
– Other receivables and
prepayments	52,800		(63,524)	94,492	(1,030)	2,441
– Trade and other payables	311,350		760,166	(535,581)	(57,834)	(25,946)
Cash (used in)/generated
from operations	(118,645)		5,001	(125,251)	(142,538)	(35,003)

28 Commitments

Property development expenditure at the balance sheet date but not yet incurred is as follows:

		31 December		31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Property development expenditure
– Contracted but not provided for	1,042,868	860,972	730,841	730,841
– Authorized but not contracted	4,260,210	3,877,368	3,475,563	3,475,563

	5,303,078	4,738,340	4,206,404	4,206,404

29 Related party transactions

The immediate holding company of the Target is Arch Capital Success Limited.

(a) Name and relationship with other related party

Name Relationship Arch Capital Success Limited Parent company

Name

– II-37 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX II

(b) Related party transactions

During the years ended 31 December 2010, 2011 and 2012 and the three months ended 31 March 2012 and 2013, the Target Group had the following significant transactions with related party:

						Three months ended	Three months ended
		Year	ended 31 December			31 March
		2010		2011	2012	2012	2013
		RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
						(Unaudited)
(i)	Borrowings	–		–	486,534	2,127	554,126
(ii)	Repayment of
	borrowings	30,239		90,925	–	–		–

The directors of the Target Group are of the view that the related party transactions disclosed above were carried out at terms mutually negotiated between the Target Group entities and the respective related party.

(c)

Key management compensation

The key management compensation has been disclosed in Note 24 to the financial statements.

(d) Related party balances

			31 December		31 March
		2010	2011	2012	2013
		RMB’000	RMB’000	RMB’000	RMB’000
(i)	Amounts due to the owner
	Arch Capital Success
	Limited	1,125,229	1,034,304	1,520,838	2,074,964

The amounts due to related party were unsecured, interest free, had no fixed terms of repayment, and were cash advance in nature.

30 Financial instruments by category

		Loans and	receivables
	31 December	31 December	31 December	31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Assets as per balance sheet
Other receivables	1,313	1,202	3,801	1,360
Restricted cash	–	11,000	11,000	–
Cash and cash equivalents	328,610	231,756	11,320	106,455
	329,923	243,958	26,121	107,815

– II-38 –

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET GROUP

	Financial liabilities	Financial liabilities	at amortized costs	at amortized costs
	31 December	31 December	31 December	31 March
	2010	2011	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000
Liabilities as per balance sheet
Borrowings	1,350,000	1,350,000	1,350,000	770,000
Amounts due to the owner	1,125,229	1,034,304	1,520,838	2,074,964
Trade and other payables	1,064,845	1,539,070	1,199,633	1,334,062
	3,540,074	3,923,374	4,070,471	4,179,026

Note: Trade and other payables in this analysis do not include the taxes payables and payroll & welfare payables.

31 Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the equity owner of the Target Group by the weighted average number of ordinary shares in issue during the year/period.

					Three months ended	Three months ended
	Year	ended 31 December			31 March
	2010		2011	2012	2012	2013
	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
					(Unaudited)
Profit attributable to
the equity owner of
the Target Group	(60,088)		(21,518)	104,840	(7,164)	(22,666)
Weighted average number
of ordinary shares
in issue	1		1	1	1		1

32 Dividends

No dividend has been paid or declared by the Target or any of the companies now comprising the Target Group in the Relevant Periods.

33 Events after the balance sheet date

The Target Group has no significant events subsequent to 31 March 2013.

– II-39 –

APPENDIX II FINANCIAL INFORMATION OF THE TARGET GROUP

III SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target or any of the companies now comprising the Target Group in respect of any period subsequent to 31 March 2013 up to the date of this report. No dividend or distribution has been declared or made by the Target or any of the companies now comprising the Target Group in respect of any period subsequent to 31 March 2013.

Yours faithfully,

PricewaterhouseCoopers

Certified Public Accountants Hong Kong

– II-40 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue

The Target Group recorded total revenue of RMB760.5 million for the year ended 31 December 2012 from the delivery of properties developed by New Richport Property Development Shanghai Co., Ltd. (“New Richport Project”).

Apart from New Richport Project which commenced to deliver properties at the end of 2012, all the other projects had not ever recorded any revenue from the sales of properties because they were all still in the construction stage.

The following table sets out certain details of the revenue:

				Three months	Three months
	Year	ended 31	December	ended 31 March
	2010	2011	2012	2012	2013
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	–	–	760,494	–	–
GFA delivered (sq.m)	–	–	12,692	–	–
Average selling prices
(“ASP”) per sq.m
sold (RMB)	–	–	59,919	–	–

Cost of sales

Cost of sales during the period comprised the costs incurred in relation to direct development activities for the properties delivered during the period, such as land use rights costs, construction costs, capitalized finance costs and business tax.

The cost of sales of the Target Group for the year ended 31 December 2012 amounted to RMB422.3 million, which was totally attributable to the delivery of properties of New Richport Project.

Gross profit

The gross profit amounted to RMB338.2 million for the year ended 31 December 2012 with the gross profit margin of 44% all deriving from the delivery of the properties of New Richport Project.

– III-1 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Selling and marketing costs

The selling and marketing costs of the Target Group during the period comprised primarily the advertisement and promotion costs relating to the pre-sale of properties, sales and marketing staff costs, travel expenses, office expenses and other expenses relating to pre-sales and marketing activities. The advertisement and promotion costs were recorded as expenses immediately in the period when they took place.

The selling and marketing costs of the Target Group amounted to RMB18.0 million, RMB11.1 million, RMB5.0 million for the year ended 31 December 2010, 2011 and 2012, respectively, which were primarily due to the decrease year by year in the advertisement and promotion costs with the slowdown in the space of sales.

The selling and marketing costs of the Target Group slightly increased to RMB1.1 million for the three months ended 31 March 2013 from RMB0.7 million for the three months ended 31 March 2012.

Administrative expenses

The administrative expenses of the Target Group during the period mainly included administrative staff costs, office and travel expenses, consulting expenses, taxes and other general and administrative expenses.

The administrative expenses of the Target Group amounted to RMB22.6 million, RMB24.3 million, RMB28.3 million, RMB3.2 million and RMB11.0 million for the year ended 31 December 2010, 2011 and 2012, and for the three months ended 31 March 2012 and 2013, respectively. The fluctuations of administrative expenses were in line with the project development and promotion schedule.

Headcount and policy of employee remuneration

As at 31 March 2013, the number of employees in the Target Group was approximately 93.

The Target Group is required to make contribution to the social insurance contribution scheme, which includes the endowment insurance, medical insurance and unemployment insurance for the employees according to the relevant regulations in the PRC. The Target Group is also required to pay housing funds to the employees.

– III-2 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

Finance costs

					Three months	Three months
	Year ended 31		December		ended 31 March
	2010	2011		2012	2012	2013
	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Finance costs
−Interest costs for
bank borrowing	69,725	69,875		85,267	21,834	15,727
−Interest costs for
amounts due to third
parties	330	4,900		5,864	1,372	2,099
	70,055	74,775		91,131	23,206	17,826
Less: Capitalized
finance costs	(28,529)	(73,920)		(82,931)	(17,601)	–
Total	41,526	855		8,200	5,605	17,826

The fluctuations of finance costs during the years/period were mainly due to the changes of borrowings in line with the funding demands in different stages of the project development and the fluctuation of capitalized finance costs during the construction periods.

Borrowings and collateral

						31
			31 December			March
		2010		2011	2012	2013
		RMB’000	RMB’000		RMB’000	RMB’000
Non-current
Secured, borrowed from a
bank		1,350,000	1,350,000		1,350,000	770,000
Less:	Current portion of
	long-term borrowing	–		–	(1,350,000)	(770,000)
		1,350,000	1,350,000		–	–


Current
Current portion of long-term
borrowing		–		–	1,350,000	770,000


Total		1,350,000	1,350,000		1,350,000	770,000

– III-3 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

The Target Group’s borrowings of RMB1,350.0 million, RMB1,350.0 million, RMB1,350.0 million and RMB 770.0 million as at 31 December 2010, 2011 and 2012 and 31 March 2013 were jointly secured by the Target Group’s properties under development and completed properties held for sale amounting to RMB1,895.1 million, RMB2,093.0 million, RMB3,873.4 million and RMB3,873.4 million, respectively.

Cash position

The Target Group operated in a capital intensive industry and had historically financed, and expected to continue to finance its working capital, capital expenditures and other capital requirements through the proceeds from pre-sale and sale of properties, borrowings from commercial banks and other funds and capital contributions from the shareholders. The Target Group’s short-term liquidity requirements related to servicing its debt and funding its working capital requirements and its sources of short-term liquidity included cash balances, the proceeds from pre-sale and sale of properties and new borrowings. The Target Group’s long-term liquidity requirements related to funds required for the development of its new property projects and repaying its long-term debts and its sources of long-term liquidity included loans and capital contributions from shareholders.

As at 31 December 2010, 2011 and 2012 and 31 March 2013, the total balances of cash and cash equivalents and restricted cash of the Target Group were RMB328.6 million, RMB242.8 million, RMB22.3 million and RMB106.5 million, respectively.

Foreign exchange risk

The Target Group mainly operates in the PRC. All transactions are principally conducted in RMB and the assets and liabilities are all denominated in RMB. Therefore, it is not exposed to material foreign exchange risk.

Interest rate of the borrowings

The table below sets out the Target Group’s exposure to interest rate risks, including the liabilities at carrying amounts (categorized by maturity dates).

RMB’million		Floating	rates
	Less than
	1 year	1 to 5 years		Total
Borrowings
At 31 December 2010	–	1,350		1,350

At 31 December 2011	–	1,350		1,350

At 31 December 2012	1,350		–	1,350

At 31 March 2013	770		–	770

– III-4 –

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

APPENDIX III

The Target Group did not use any interest rate swaps to hedge its exposure against interest rate risk for the year ended 31 December 2010, 2011 and 2012 and for the three months ended 31 March 2013. The Target Group analyzed its interest rate exposure monthly by considering refinancing, renewal of existing positions and alternative financing.

Gearing ratios

Gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and long-term borrowings) less restricted cash and cash and cash equivalent. Total capital is calculated as total equity plus net debt. As at 31 December 2010, 2011 and 2012 and 31 March 2013, the Target Group’ gearing ratios were 41%, 42%, 45% and 29%, respectively.

Contingent liabilities

As at 31 December 2010, 2011 and 2012 and 31 March 2013, the Target Group has not ever arranged bank financing for any purchaser of the properties developed by the Target Group and never provided guarantees to secure repayment obligations of such purchasers.

Material acquisition and disposal

The Target Group did not have any material acquisition and disposal of subsidiaries and associated companies for each of the years ended 31 December 2010, 2011 and 2012 and for the three months ended 31 March 2013.

Prospects of the Target Group

The Target Group has been engaging in property development in the PRC and will continue to focus on the high-end property strategy, maintaining a fast and steady pace of development with an objective of profit-making.

Future plans for capital assets

The Target Group will continue to engage in the business of development of real estate properties upon completion of the Investment. The present properties under development will continue to be developed as planned.

Expected sources of funding

The future operation of the Target Group will be mainly financed by the proceeds from pre-sale of properties developed by the Target Group.

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

A. Unaudited Pro Forma Financial Information

The following is an illustrative unaudited pro forma statement of assets and liabilities of Sunac Group (“Unaudited Pro Forma Financial Information”), which has been prepared on the basis of the notes set forth below for the purpose of illustrating the effects of the Acquisition, as if it has taken place on 30 June 2013.

This Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of Sunac Group had the Acquisition been completed on 30 June 2013 or any future date.

The Unaudited Pro Forma Financial Information has been prepared based on the unaudited condensed consolidated balance sheet as at 30 June 2013 included in the published interim results announcement of Sunac China for the six months ended 30 June 2013 dated 26 August 2013 and the audited combined balance sheet of the Target Group as at 31 March 2013 as set out in the Accountant’s Report in Appendix II to this Circular after giving effect to the unaudited pro forma adjustments as described in the accompanying notes.

The Unaudited Pro Forma Financial Information should be read in conjunction with other financial information included elsewhere in this Circular.

																		Unaudited
																		pro forma
	Unaudited																	consolidated
	consolidated																	statement of
	statement of						Pro forma adjustments											assets and
	assets and		Carrying															liabilities of
	liabilities of		value of the															the enlarged
	Sunac Group	Target Group															Sunac Group
	as at 30 June		as at 31															after the
	2013		March 2013				Other pro forma				adjustments							Acquisition
	(Note 1)		(Note 2)		(Note 3)		(Note 4)		(Note 5)		_(Note _	6)		(Note 7)		(Note 8)
	RMB’000		RMB’000	RMB’000		RMB’000		RMB’000		RMB’000			RMB’000		RMB’000			RMB’000
ASSETS
Non-current assets
Property, plant and equipment	52,772		10,942		–		–		–			–		–		–		63,714
Investment properties	248,000		–		–		–		–			–		–		–		248,000
Intangible assets	319,584		59		–		–		–			–		12,954		–		332,597
Investments in jointly
controlled entities	2,035,185		–		–		–		–			–		–		–		2,035,185
Investments in associates	3,069,271		–		–		–		–			–		–		–		3,069,271
Prepayments for equity
transactions	2,080,862		–		–		–		–			–		–		–		2,080,862
Deferred income tax assets	1,050,708		51,653		–		–		–			–		–		–		1,102,361

	8,856,382		62,654		–		–		–			–		12,954		–		8,931,990

Current assets
Properties under development	39,306,174		3,203,489		–		–		–			–	2,110,511			–		44,620,174
Completed properties held for
sale	9,708,902		3,997,406		–		–		–			–	2,012,594			–		15,718,902
Trade and other receivables	334,561		1,360		–		–		–			–		–		–		335,921
Amounts due from jointly
controlled entities	1,427,001		–		–		–		–			–		–		–		1,427,001
Amounts due from associates	1,625,399		–		–		–		–			–		–		–		1,625,399
Prepayments	4,678,700		–		–		–		–			–		–		–		4,678,700
Restricted cash	3,634,669		–		–		–		–			–		–		–		3,634,669
Cash and cash equivalents	10,860,726		106,455		(24,805)		70,507	3,998,050		(7,996,100)				–		–		7,014,833

	71,576,132		7,308,710		(24,805)		70,507	3,998,050		(7,996,100)			4,123,105			–		79,055,599


Total assets	80,432,514		7,371,364		(24,805)		70,507	3,998,050		(7,996,100)			4,136,059			–		87,987,589

– IV-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

																	Unaudited
																	pro forma
	Unaudited																consolidated
	consolidated																statement of
	statement of						Pro forma adjustments										assets and
	assets and		Carrying														liabilities of
	liabilities of		value of the														the enlarged
	Sunac Group	Target Group														Sunac Group
	as at 30 June		as at 31														after the
	2013		March 2013				Other pro forma				adjustments						Acquisition
	(Note 1)		(Note 2)		(Note 3)		(Note 4)		(Note 5)		(Note 6)		(Note 7)		(Note 8)
	RMB’000		RMB’000	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000		RMB’000			RMB’000
LIABILITIES
Non-current liabilities
Borrowings	(18,257,285)		–		–		–		–		–		–		–		(18,257,285)
Long-term payable	–		–		–		–		–		–		–		–		–
Deferred income tax
liabilities	(4,309,354)		(1,359,710)		–		–		–		–	(1,433,371)			–		(7,102,435)

	(22,566,639)		(1,359,710)		–		–		–		–	(1,433,371)			–		(25,359,720)

Current liabilities
Trade and other payables	(6,959,175)		(1,337,227)		20,164		(9,718)		–		805,151		–		(1,500)		(7,482,305)
Advanced proceeds from
customers	(19,352,443)		–		–		–		–		–		–		–		(19,352,443)
Amounts due to jointly
controlled entities	(281,360)		–		–		–		–		–		–		–		(281,360)
Amounts due to associates	(1,362,696)		–		–		–		–		–		–		–		(1,362,696)
Amounts due to non-
controlling interests	(4,495,527)		–		–		–	(2,589,298)			–		–		–		(7,084,825)
Amounts due to the owner	–		(2,074,962)	1,311,346			(60,789)		–		824,405		–		–		–
Current income tax liabilities	(4,444,460)		(242,313)		–		–		–		–		–		375		(4,686,398)
Borrowings	(6,570,403)		(770,000)		(4,700)		–		–		774,700		–		–		(6,570,403)

	(43,466,064)		(4,424,502)	1,326,810			(70,507)	(2,589,298)		2,404,256			–		(1,125)		(46,820,430)


Total liabilities	(66,032,703)		(5,784,212)	1,326,810			(70,507)	(2,589,298)		2,404,256		(1,433,371)			(1,125)		(72,180,150)

Notes:

The balances are extracted from the unaudited condensed consolidated balance sheet of Sunac China included in the published interim results announcement of Sunac China for the six months ended 30 June 2013 dated 26 August 2013.
The balances are extracted from the combined balance sheet of the Target Group as at 31 March 2013 included in the Accountant’s Report of the Target Group as set out in Appendix II of this Circular. The financial position of the Target Group as presented in the Accountant’s Report only included the property development business to be acquired by Sunac China and excluded those non-property development businesses.
The adjustment represents the aggregated effects of changes in assets and liabilities of the Target Group resulted from the internal reorganization procedures set out below for the purposes of the Acquisition:
(a) The Target Company has capitalized an amount due to the original owner, Arch Capital Success Limited, of HK$1,621,190,363.72 (equivalent to approximately RMB1,302 million) by issuing and allotting 1 new ordinary share in the capital of the Target Company of US$1.00 pursuant to a board resolution of the Target Company dated 12 July 2013. A loan of RMB9.3 million due to the original owner has also been repaid;
(b) Repayment of borrowing of RMB770 million from Industrial and Commercial Bank of China using the fund from a new bridging loan of RMB774.7 million from Bank of Communications; and
(c) Repayment of loan of RMB20.2 million due to certain third parties.

The decrease in cash and cash equivalents amounting to RMB24.8 million represented the repayment of the loans due to the original owner of RMB9.3 million and due to certain third parties of RMB20.2 million,which was set off by the net increase in bank borrowing of RMB4.7 million.

– IV-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

The internal reorganization procedures include a series of disposals (the “Disposals”) of non-property development businesses in the entities now comprising the Target Group to third parties designated by the original owner. The original owner is entitled to the net proceeds from the Disposals, net of related tax liabilities. As of 31 March 2013, certain disposals have been completed and the net amount due to the original owner amounting to RMB24.1 million has been included in the carrying value of the Target Group.

This adjustment represents the financial effects of the remaining part of the Disposals, which has yet to be completed as of the date of the Circular. It is estimated that the remaining Disposals will result in a cash proceed of RMB70.5 million, an estimated tax payable on the Disposals of RMB9.7 million and accordingly an additional amount due to the original owner of RMB60.8 million. This additional amount of RMB60.8 million due to the original owner will not result in any additional payment or liability as the total amount from the Disposal, which is estimated to be RMB84.9 million, is included in the total consideration of the Acquisition according to the Agreement (please see Note 6(i)).

The total consideration of RMB7,996.1 million of the Acquisition (the “Consideration”) was paid by Sunac Greentown Investment Holdings Limited (“Sunac Greentown Investment”), a 50% owned subsidiary of Sunac China newly established for the purpose of the Acquisition. The other 50% interest in Sunac Greentown Investment was owned by Greentown China. The Consideration was contributed by Sunac China and Greentown China according to their respective equity interest in Sunac Greentown Investment. Greentown China has contributed 50% of the total consideration amounting to RMB3,998.1 million to Sunac Greentown Investment.

According to further agreement entered into between Sunac China and Greentown China, out of the contribution of RMB3,998.1 million from Greentown China, RMB1,408.8 million represents a quasi-equity loan to Sunac Greentown Investment and was reflected as non-controlling interest in the consolidated financial statements of Sunac Group. The remaining contribution of RMB2,589.3 million will be reflected as an amount due to non-controlling interest, according to HKFRS.

This adjustment represents the payment of the Consideration for the Acquisition. According to the Agreement, the total consideration is RMB7,996.1 million. As a matter of fact, the total consideration comprises of RMB5,676.7 million for the acquisition of equity interests in the Target Group (including the value of the non-property development business assets amounting to RMB84.9 million as explained in Note 4 above), and an aggregate settlement amount of RMB2,319.4 million due to the original owner and certain other payables relevant to the property development business of the Target Group.

The payment is made as set out below:

(i) Payment of consideration of RMB5,676.7 million for the acquisition of equity interest (after considering the value of the non-property development business assets amounting to RMB84.9 million in the amounts due to the owner) and,
(ii) Payment of RMB2,319.4 million to the original owner and the third parties, including:
- (a) Repayment of the Target Group’s payable of RMB805.2 million to certain third parties;
- (b) Repayment of the Target Group’s bridging bank loan of RMB774.7 million (Note 3(b)), as required by the original owner;
- (c) Repayment of the Target Group’s payable to the original owner amounting to RMB739.5 million (together with the non-property development business assets amounting to RMB84.9 million as stated above, included in the adjustment to the payable to the owner amounted to RMB824.4 million).
Upon completion of the Acquisition, the identifiable assets and liabilities of the Target Group will be accounted for in the consolidated financial statements of Sunac Group at fair value under the purchase method of accounting in accordance with Hong Kong Financial Reporting Standard 3 “Business Combinations” (“HKFRS 3”). For the purposes of this Unaudited Pro Forma Financial Information, Sunac China has estimated the fair value of the identifiable assets and liabilities of the Target Group with reference to the properties valuation as at 30 June 2013 (the “Valuation Date”) performed by DTZ Debenham Tie Leung Limited, an independent valuer. The management of Sunac Greentown Investment estimated that all the assets and liabilities of the Target Group were approximately the same as their carrying value, except for properties under development and completed propertied held for sale.

The fair value adjustments are made based on the assumption that no material changes in the properties under development and the completed properties held for sales between 31 March 2013 and the Valuation Date, and comprise the following:

– IV-3 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(a) The valuation surplus attributable to properties under development and completed properties held for sale amounting RMB2,110.5 million and RMB2,012.6 million, being the difference between the properties valuation as shown in the valuation report included in Appendix V to this circular of RMB5,314 million and RMB6,010 million and the respective carrying amount of RMB3,203.5 million and RMB3,997.4 million, respectively; and
(b) Related deferred tax liabilities of RMB1,433.4 million arising from the fair value surplus on properties under development and completed properties held for sale, based on the applicable corporate income tax rate of 25% and applicable land appreciation tax rate according to the relevant PRC tax laws.

Since the fair values of the identifiable assets and liabilities of the Target Group as at the date of Completion may be different from their respective fair values used in the preparation of the above Unaudited Pro Forma Financial Information, the actual amount of the identifiable assets and liabilities and the income to be recognized in Sunac Group’s financial statements may be different from the estimated amount shown in this Unaudited Pro Forma Financial Information.

The excess amount of the consideration over the Sunac Group’s share of the fair value of the net identifiable assets of the Target Group is recognized as goodwill.

The goodwill arising in the Acquisition of the Target Group is calculated as follows:

	RMB Million
Amount for acquisition of the equity interests
Total cash consideration for the acquisition of equity interests	5,676.7
Less: The value of the non-property development business assets	(84.9)
	5,591.8
Adjusted equity of the Target Group
Carrying value of the net assets of the Target Group as
at 31 March 2013	(1,587.2)
Capitalization of an amount due to the original owner (Note 3)	(1,302.0)
Fair value surplus of properties under development (Note 7)	(2,110.5)
Fair value surplus of completed properties held for sale (Note 7)	(2,012.6)
Effect on deferred tax liabilities arising from the fair value surplus
of properties under development and completed properties
held for sale (Note 7)	1,433.4

	5,578.9

Goodwill	12.9

For the purpose of this Unaudited Pro Forma Financial Information, Sunac China has ensured the steps taken on the assessment of impairment on property, plant and equipment, properties under development and completed properties held for sale have been properly performed in accordance with Hong Kong Accounting Standard 36 “Impairment of Assets” which is consistent with the accounting policies of Sunac China. On that basis, Sunac China concluded that no impairment in the valuation of property, plant and equipment, properties under development and completed properties held for sale is considered necessary.

Sunac China will adopt consistent accounting policies for impairment tests in future. Sunac China’s auditor will review Sunac China’s assessment on impairment of goodwill in accordance with International Standards on Auditing at the end of each reporting period for the purposes of its audit in future.

The adjustment represents the transactions costs of RMB1.5 million and the related tax effect of RMB375,000.
No adjustments have been made to reflect any trading results or other transactions of the Sunac Group and the Target Group entered into subsequent to 30 June 2013 and 31 March 2013 respectively.

– IV-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

B. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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

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

TO THE DIRECTORS OF SUNAC CHINA HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Sunac China Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”), and Elegant Trend Limited, Wisdom Collection Holdings (International) Inc., Wisdom Collection Holdings (Hong Kong) Limited, New Richport Property Development Shanghai Co., Ltd., Everbright Property Development Shanghai Co., Ltd., Fung Seng Estate Development (Shanghai) Co., Ltd. (collectively referred to the “Target Group” and together with the Group, the “Enlarged Group”) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of assets and liabilities as at 30 June 2013, and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages IV-1 to IV-4 of the Company’s circular dated 28 August 2013, in connection with the proposed acquisition of the Target Group (the “Transaction”) by the Company. The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on page IV-1 to IV-4.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Transaction on the Group’s financial position as at 30 June 2013 as if the Transaction had taken place at 30 June 2013. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s published interim results announcement dated 26 August 2013 that is based on the unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 June 2013, on which a review report has been issued and will soon be published.

– IV-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

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

Reporting Accountant’s Responsibilities

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

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

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

The purpose of unaudited pro forma financial information included in a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Transaction at 30 June 2013 would have been as presented.

– IV-6 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

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

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

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

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

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

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 28 August 2013

– IV-7 –

VALUATION REPORT

APPENDIX V

The following is the text of a letter, summary of valuations and valuation certificates prepared for the purpose of incorporation in the Circular, received from DTZ Debenham Tie Leung Limited, an independent property valuer, in connection with its opinion of values of the property interest to be acquired by the Group as at 30 June 2013.

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==> picture [96 x 45] intentionally omitted <==

16th Floor Jardine House 1 Connaught Place Central Hong Kong 28 August 2013

The Directors Sunac China Holdings Ltd. 10th Floor, Building C7 Magnetic Plaza Binshuixi Road Nankai District Tianjin The People’s Republic of China

Dear Sirs,

Instructions, Purpose & Date of Valuation

In accordance with your instructions for us to value the properties to be acquired by Sunac China Holdings Limited (referred to as the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) in the People’s Republic of China (the “PRC”) (as more particularly described in the valuation certificates), we confirm that we have inspected the properties, made relevant enquiries and obtained such further information as we consider necessary to provide you with our opinion of the market values of such properties as at 30 June 2013 (the “date of valuation”).

Definition of Market Value

Our valuation of each of the properties is our opinion of its market value which in accordance with The HKIS Valuation Standards 2012 Edition published by the Hong Kong Institute of Surveyors is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

– V-1 –

VALUATION REPORT

APPENDIX V

Valuation Basis and Assumptions

Our valuations exclude any estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value. In valuing the properties, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, The Code on Takeovers and Mergers and Share Repurchases of Securities and Future Commission and the HKIS Valuation Standards 2012 Edition issued by the Hong Kong Institute of Surveyors.

In the course of our valuation of the properties in the PRC, we have assumed that, unless otherwise stated, the transferable land use rights of the properties for their respective terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid.

We have relied on the information provided by the Group and the advice provided by Jincheng Tongda & Neal Law Firm, the Group’s legal advisor, regarding the title to each of the properties and the interests of the Group in the properties. In valuing the properties, we have assumed that the Group has an enforceable title to each of the properties and has free and uninterrupted rights to use, occupy or assign the properties for the whole of the respective unexpired land use term as granted.

In respect of the properties situated in the PRC, the status of titles and grant of major certificates approvals and licences, in accordance with the information provided by the Group are set out in the notes of the respective valuation certificates.

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

Our valuations are each on an entire interest basis.

For the properties situated in the PRC, we have been advised by the Group that the potential tax liabilities include Land Appreciation Tax (土地增值稅) at progressive tax rates from 30% to 60%, Business Tax (營業稅) at 5% of sales amount and Income Tax (所得稅) at 25% on profit before tax. The exact amount of tax payable upon realization of the relevant properties in the PRC will be subject to the formal tax advice issued by the relevant tax authorities at the time of disposal of relevant properties upon representation of the relevant transaction documents.

In respect of the properties to be acquired by the Group for sale in the PRC under Group I, the likelihood of the relevant tax liability being crystallized is high. As advised by the Group, the potential tax liabilities is estimated to be approximately RMB2,793.1 million would arise if such properties were to be sold at the amount of the valuation. The above amount is for indicative purpose and is calculated based on prevailing rules and information available as at the Latest Practicable Date.

– V-2 –

VALUATION REPORT

APPENDIX V

In respect of the properties to be acquired by the Group for future development in the PRC under Group II, the likelihood of the relevant tax liability being crystallized is remote as the Group has no plan for the disposal of such properties yet.

Method of Valuation

In valuing property in Group I, which is to be acquired by the Group for sale in the PRC, we have used the direct comparison approach assuming sale of these properties in its existing state with the benefit of vacant possession by making reference to comparables sales transactions as available in the relevant market.

In valuing property in Group II, which is to be acquired by the Group for future development in the PRC, we have valued them on the basis that they will be developed and completed in accordance with the latest development proposals provided to us by the Group (if any). We have assumed that all consents, approvals and licences from relevant government authorities for the development proposals have been or will be obtained without onerous conditions or delays. We have also assumed that the design and construction of the developments are in compliance with the local planning and other relevant regulations and have been or will be approved by the relevant authorities. In arriving at our valuations, we have adopted the Direct Comparison Method by making reference to comparable sales evidence as available in the relevant market and have also taken into account the expended construction costs as well as the costs that will be expended to complete the developments. The “market value when completed” represents our opinion of the aggregate selling prices of the development assuming that it were completed as at the date of valuation.

Source of Information

We have been provided by the Group with extracts of documents in relation to the titles to the properties. However, we have not inspected the original documents to ascertain any amendments which may not appear on the copies handed to us.

In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group in respect of the properties in the PRC and have accepted advice given by the Group on such matters as planning approvals or statutory notices, easements, tenure, identification of land and buildings, completion date of buildings, number of car parking spaces, particulars of occupancy, site and floor areas, interest attributable to the Group and all other relevant matters.

Dimensions, measurements and areas included in the valuation certificates are based on information provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuations. We were also advised by the Group that no material facts have been omitted from the information provided.

Title Investigation

We have been provided with extracts of documents relating to the titles of the properties in the PRC, but no searches have been made in respect of the properties. We have not searched the original documents to verify ownership or to ascertain any amendment which may not

– V-3 –

VALUATION REPORT

APPENDIX V

appear on the copies handed to us. We are also unable to ascertain the title of the properties in the PRC and we have therefore relied on the advice given by the Group regarding the Group’s interests in the PRC properties.

Site Inspection

Our DTZ Shanghai office valuer Jack Sun inspected the exterior and, whenever possible, the interior of the properties in April 2013. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defects. No test was carried out on any of the services. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the area shown on the documents handed to us are correct. For those properties which are under or held for future development, we have not carried out any soil investigations to determine the suitability of soil conditions and services for any future development. Moreover, we have not undertaken any environmental survey for the properties. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction.

Currency

Unless otherwise stated, all money amounts indicated herein our valuations are in Renminbi (RMB), official currency of the PRC.

We enclose herewith a summary of our valuations and our valuation certificates.

Yours faithfully, for and on behalf of

DTZ Debenham Tie Leung Limited

Andrew K.F. Chan

Registered Professional Surveyor (GP) Registered China Real Estate Appraiser MSc., M.H.K.I.S., M.R.I.C.S.

Senior Director

Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor (GP) who has over 26 years’ of experience in the valuation of properties in Hong Kong and the PRC.

– V-4 –

VALUATION REPORT

APPENDIX V

			Market value
			in existing
			state
	Market value		attributable to
	in existing	Interest	the Group as
	state as at	attributable	at 30 June
Property	30 June 2013	to the Group	2013
	(RMB)	(%)	(RMB)

Group I – Completed property to be acquired by the Group for sale in the PRC

Unsold portion of Block Nos. 8, 6,010,000,000 50% 3,005,000,000 9, 10, 14, 15, 16, 17 and 23 of Feng Sheng Dynasty, No. 500 Zhongshan Nanyi Road, Huangpu District, Shanghai, the PRC 中國上海市黃浦區中山南一路500號豐盛皇朝第8 號、9號、10號、14號、15號、 16號、17號及23號樓未售部份 Sub-total of Group I: 6,010,000,000 3,005,000,000

Group II – Property to be acquired by the Group for future development in the PRC

Development site for the 5,314,000,000 50% 2,657,000,000 proposed development known as Block Nos. 2 to 7, 11 to 13, 18 to 22 and 24 to 26 of Feng Sheng Dynasty, No. 500 Zhongshan Nanyi Road, Huangpu District, Shanghai, the PRC

中國上海市黃浦區中山南一路500號豐盛皇朝第2至 7號、11至13號、18至22號及24 至26號樓待建土地

Sub-total of Group II: 5,314,000,000 2,657,000,000 Grand total of Groups I to II: 11,324,000,000 5,662,000,000

– V-5 –

VALUATION REPORT

APPENDIX V

VALUATION CERTIFICATE

Group I – Completed property to be acquired by the Group for sale in the PRC

Property Description and Tenure
1. Unsold portion of The properties comprises the Block Nos. 8, 9, unsold portions of high-rise 10, 14, 15, 16, 17 residential units and retail and 23 of Feng properties of Block Nos. 8, 9, 10, Sheng Dynasty, 14, 15, 16, 17 and 23 of Feng No. 500 Sheng Dynasty erected on a Zhongshan Nanyi parcel of land with a total site Road, Huangpu area of approximately 99,187.1 District, Shanghai, sq m. the PRC

Market Value in existing state as at 30 June 2013

Particular of Occupancy

RMB6,010,000,000

As at the date of RMB6,010,000,000 valuation, the property was vacant. (50% interest attributable to the Group: RMB3,005,000,000)

No. 500 Zhongshan Nanyi Road, Huangpu District, Shanghai, the PRC	Sheng Dynasty erected on a parcel of land with a total site area of approximately 99,187.1 sq m.	Sheng Dynasty erected on a parcel of land with a total site area of approximately 99,187.1 sq m.
	Completed in 2012, the property
中國上海市黃浦區	has the gross floor	areas with
中山南一路500號	details as follows:
豐盛皇朝第8號、9
號、10號、14號、	Type of	Approximate
15號、16號、17號	Property	Gross Floor
及23號樓未售部份		Area
		(sq m)
	High-rise	105,926.00
	apartments
	Retail properties	13,708.40
	Basement car	74,637.50
	parking spaces
	Ancillary facilities	975.00
	Total	195,246.90

The property is located on the south of Zhongshan Nanyi Road, Huangpu District, which is urban area of Shanghai. Developments nearby are mainly residential and commercial developments.

The property is held with land use rights for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.

Notes:

According to Supplementary Agreement of Shanghai Grant Contract of State-owned Land Use Rights No. (2010) 19 entered into between Shanghai Planning and Land Administration Bureau (“the Grantor”) and 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) (“the Grantee”) on 5 July 2010, the Grantor has granted the land use rights of the property to the Grantee with the particulars as follows:

– V-6 –

VALUATION REPORT

APPENDIX V

(i) Site area: : 99,187.1 sq m
(ii) Land use term: 40, 50 and 70 years for commercial, office and residential uses respectively
(iii) Permitted gross floor area: total gross floor area not more than 389,030.33 sq m
According to Shanghai Certificate of Real Estate Ownership No. (2010) 002216 issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 19 July 2010, the land use rights of the property, comprising a total site area of approximately 99,187.1 sq m, have been vested in 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.
According to Shanghai Certificate of Real Estate Ownership No. (2012) 052700 issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 21 December 2012, the title ownership of the property, comprising a total gross floor area of 122,322.96 sq m, have been vested in 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.
According to Shanghai Certificate of Real Estate Ownership No. (2012) 052727 issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 25 December 2012, the title ownership of the property, comprising a total gross floor area of 61,569.70 sq m, have been vested in 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.
According to Planning Permit for Construction Use of Land No. (2008) 00080423B00441 issued by Shanghai Planning Bureau on 21 April 2008, the construction site of a parcel of land with an area of 99,187.1 sq m, is in compliance with the requirements of urban planning.
According to 7 Completion and Acceptance Certificates of Construction Works issued on the period between 4 August 2010 and 7 November 2012, the development of the property with a total gross floor area of approximately 302,104.36 sq m was completed.
According to Business Licence No. 310000400061616, 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) has been established on 5 October 1993 as a limited company with a registered capital of RMB765,000,000 and a valid operation period from 5 October 1993 to 5 October 2043.
We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, which contains, inter alia, the following information:
(i) Shanghai Certificates of Real Estate Ownership of the property are valid, legal and enforceable under the PRC laws;
(ii) 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) is the sole legal land user of the property and has obtained the relevant certificates and approval from the government in respect of the construction of the property;
(iii) 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) has the right to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property;
(iv) All land premium stated in the Grant Contract of State-owned Land Use Rights have been paid and settled; and
(v) The property is subject to no encumbrances.

– V-7 –

APPENDIX V

VALUATION REPORT

The status of the title and grant of major approvals and licences in accordance with the information provided to us by the Group are as follows:

Supplementary Agreement of Shanghai Grant Contract of State-owned Land Use Rights	Yes
Shanghai Certificates of Real Estate Ownership	Yes
Planning Permit for Construction Use of Land	Yes
Completion and Acceptance Certificates of Construction Works	Yes
Business Licence	Yes

– V-8 –

VALUATION REPORT

APPENDIX V

VALUATION CERTIFICATE

Group II – Property to be acquired by the Group for future development in the PRC

	Property	Description and Tenure
2.	Development site	The property comprises land for
	for the proposed	the proposed development known
	development	as Block Nos. 2 to 7, 11 to 13,
	known as Block	18 to 22 and 24 to 26 of Feng
	Nos. 2 to 7, 11 to	Sheng Dynasty which is a
	13, 18 to 22 and	composite development
	24 to 26 of Feng	developed on 3 parcels of land
	Sheng Dynasty,	with a total site area of
	No. 500	approximately 114,435.1 sq m.
	Zhongshan Nanyi
	Road, Huangpu	The proposed development has
	District, Shanghai,	the planned gross floor areas
	the PRC	with details as follows:

Market Value in existing state Particular of as at Occupancy 30 June 2013 As at the date of RMB5,314,000,000 valuation, the property was land. (50% interest attributable to the Group: RMB2,657,000,000)

中國上海市黃浦區中山南一路500號豐盛皇朝第2至7 號、 11 至13號、 18 至22號及24至 26號樓待建土地

Type of		Approximate
Property		Gross Floor
		Area
		(sq m)
High-rise		105,984.00
apartments
Low-rise		40,611.00
residential
Retail properties		36,952.02
Office		120,625.00
Basement car		160,718.08
parking spaces
Ancillary facilities		1,736.90
Total		466,627.00

As advised by the Group, the proposed development is scheduled to be completed between 2016 and 2017.

The property is located on the south of Zhongshan Nanyi Road, Huangpu District, which is urban area of Shanghai. Developments nearby are mainly residential and commercial developments.

For details of expiry date of land use term, please see Note (2).

– V-9 –

VALUATION REPORT

APPENDIX V

Notes:

According to Supplementary Agreement of Shanghai Grant Contract of State-owned Land Use Rights No. (2010) 19 entered into between Shanghai Planning and Land Administration Bureau (“the Grantor”) and 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) (“the Grantee”) on 5 July 2010, the Grantor has granted the land use rights of the property to the Grantee with the particulars as follows:
(i) Site area: : 99,187.1 sq m
(ii) Land use term: 40, 50 and 70 years for commercial, office and residential uses respectively
(iii) Permitted gross floor area: total gross floor area not more than 389,030.33 sq m

According to Supplementary Agreement of Shanghai Grant Contract of State-owned Land Use Rights No. (2012) 12 entered into between Shanghai Planning and Land Administration Bureau (“the Grantor”) and 上海豐明房地產發展有限公司 (Everbright Property Development Shanghai Co., Ltd.) (“the Grantee”) on 26 March 2012, the land use rights of the property, comprising a total site area of approximately 5,858 sq m, have been granted to the grantee for a term of 50 years for composite use.

According to Grant Contract of State-owned Land Use Rights entered into between Shanghai Planning and Land Administration Bureau (“the Grantor”) and 豐盛地產發展(上海)有限公司 (Fung Seng Estate Development (Shanghai) Co., Ltd.) (“the Grantee”) on 20 December 1994, the land use rights of the property, comprising a total site area of approximately 9,786 sq m, have been granted to the grantee for residential use.

According to Shanghai Certificate of Real Estate Ownership No. (2010) 002216 which is issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 19 July 2010, the land use rights of the property, comprising a total site area of approximately 99,187.1 sq m, have been vested in 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.

According to Shanghai Certificate of Real Estate Ownership No. (2012) 051027 which is issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 31 May 2012, the land use rights of the property, comprising a total site area of approximately 5,858 sq m, have been vested in 上海豐明房地產發展有限公司 (Everbright Property Development Shanghai Co., Ltd.) for terms of 40 years, 50 years and 70 years for uses of commercial, office and residential from 1 May 1999 respectively.

According to Shanghai Certificate of Real Estate Ownership No. (2009) 002974 which is issued by Shanghai Planning Land and Resources Administration Bureau (上海市規劃和國土資源管理局) and Shanghai Housing Security and Administration Bureau (上海住房保障和房屋管理局) on 21 September 2009, the land use rights of the property, comprising a total site area of approximately 9,786 sq m, have been vested in 豐盛地產發展 (上海)有限公司 (Fung Seng Estate Development (Shanghai) Co., Ltd.) for a term due to expire on 25 February 2065 for residential use.

As advised by the Group, the site area of the above parcel of land has been reduced from 9,786 sq m to 9,390 sq m.

According to Planning Permit for Construction Use of Land No. (2008) 00080423B00441 issued by Shanghai Planning Bureau on 21 April 2008, the construction site of a parcel of land with an area of 99,187.1 sq m, is in compliance with the requirements of urban planning.

According to Planning Permit for Construction Use of Land No. (2008) 00080423E00437 issued by Shanghai Planning Bureau on 21 April 2008, the construction site of a parcel of land with an area of 5,858 sq m, is in compliance with the requirements of urban planning.

According to Planning Permit for Construction Use of Land No. (2008) 00080508E00505 issued by Shanghai Planning Bureau on 6 May 2008, the construction site of a parcel of land with an area of 9,786 sq m, is in compliance with the requirements of urban planning.

– V-10 –

VALUATION REPORT

APPENDIX V

According to 3 Planning Permits for Construction Works Nos. (2011) FA31000020111625, (2011) FA31000020111803 and (2011) FA31000020111305 dated between 6 July 2011 and 18 August 2011, the constructions works of portion of the property with a total gross floor area of 5,382.40 sq m, are in compliance with the construction works requirement and have been permitted.
As advised by the Group, the total expended construction cost for the proposed development as at the date of valuation was RMB924,909,869 whilst the outstanding cost for completion of the proposed development as at the date of valuation was RMB4,206,404,987. We have taken into account such amounts in our valuation.
The market value when completed of the proposed development as at 30 June 2013 was approximately RMB15,224,000,000.
According to Business Licence No. 310000400061616, 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.) has been established on 5 October 1993 as a limited company with a registered capital of RMB765,000,000 and a valid operation period from 5 October 1993 to 5 October 2043.

According to Business Licence No. 310000400672844, 上海豐明房地產發展有限公司 (Everbright Property Development Shanghai Co., Ltd.) has been established on 16 January 2012 as a limited company with a registered capital of RMB135,000,000 and a valid operation period from 16 January 2012 to 15 January 2062.

According to Business Licence No. 310000400086517, 豐盛地產發展(上海)有限公司 (Fung Seng Estate Development (Shanghai) Co., Ltd.) has been established on 22 June 1994 as a limited company with a registered capital of USD100,00,000 and a valid operation period from 22 June 1994 to 21 June 2044.

We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, which contains, inter alia, the following information:
(i) Shanghai Certificates of Real Estate Ownership of the property are valid, legal and enforceable under the PRC laws;
(ii) 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.), 上海豐明房地產發展有限公司 (Everbright Property Development Shanghai Co., Ltd.) and 豐盛地產發展(上海)有限公司 (Fung Seng Estate Development (Shanghai) Co., Ltd.) are the sole legal land user of the property and has obtained the relevant certificates and approval from the government in respect of the construction of the proposed development;
(iii) 上海新富港房地產發展有限公司 (New Richport Property Development Shanghai Co., Ltd.), 上海豐明房地產發展有限公司 (Everbright Property Development Shanghai Co., Ltd.) and 豐盛地產發展(上海)有限公司 (Fung Seng Estate Development (Shanghai) Co., Ltd.) have the right to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property;
(iv) All land premium stated in the Grant Contract of State-owned Land Use Rights have been paid and settled; and
(v) The property is subject to no encumbrances.
The status of the title and grant of major approvals and licences in accordance with the information provided to us by the Group are as follows:

Supplementary Agreements of Shanghai Grant Contract of State-owned Land Use Rights	Yes
Grant Contract of State-owned Land Use Rights	Yes
Shanghai Certificates of Real Estate Ownership	Yes
Planning Permits for Construction Use of Land	Yes
Planning Permits for Construction Works	Yes
Business Licences	Yes

– V-11 –

RECONCILIATION OF VALUATION OF PROPERTIES

APPENDIX VI

DTZ Debenham Tie Leung Limited , an independent firm of professional valuer, has valued the property interests held by the Target Group as at 30 June 2013. The text of the letter, summary of valuation and the valuation certificate are set out in Appendix V to this circular. The reconciliation between valuation of the property interests held by the Target Group as at 30 June 2013 and the net book value of such property interest as at 31 March 2013 is as follow:

Carrying value of properties as of 31 March 2013 per accountant’s report:

	RMB’000
– Properties under development	3,203,489
– Properties held for sale	3,997,406
	7,200,895
Valuation surplus	4,123,105
Valuation as at 31 March 2013	11,324,000
Addition/Disposal during the period from 1 April 2013 to
30 June 2013	–
Valuation surplus for period from 1 April 2013 to 30 June 2013	–
Valuation as of 30 June 2013 per valuation report	11,324,000

– VI-1 –

GENERAL INFORMATION

APPENDIX VII

1 RESPONSIBILITY STATEMENT

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

2 DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executives of the Company in the Shares, underlying shares and debentures of the Company or its associated corporations (within the meanings of Part XV of the SFO) which were 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 have taken or deemed to have taken under such provisions of the SFO), or which were required to be recorded in the register to be kept by the Company pursuant to Section 352 of the SFO or is otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Listing Rules were as follows:

(a) Interest in Shares of the Company and/or associated corporation

		Relevant		Approximate
		company	Number of	percentage of
		(including	shares of the	interest in the
Name of	Nature of	associated	relevant	relevant
Director	Interest	corporations)	company(1)	company
Mr. Sun Hongbin	Interest in a	the Company	1,569,408,451 (L)	47.31%
	controlled
	corporation(2)
	Beneficial	Sunac		100%
	interest	International
		Investment
		Holdings Ltd.
		(“Sunac
		International”)

Notes:

(1) The letter “L” denotes the person’s long position in such Shares.

(2) Mr. Sun is the beneficial owner of 100% of the issued share capital of Sunac International and is deemed to be interested in the Shares held by Sunac International.

(3) Sunac International is the holding company of the Company and therefore an “associated corporation” of the Company within the meaning of Part XV of the SFO.

– VII-1 –

GENERAL INFORMATION

APPENDIX VII

(b) Interest in the underlying shares of our Company

			Approximate
			percentage
			of interest
		Number of	in the
Name of Director	Nature of Interest	Shares	company
Mr. Sun Hongbin	Beneficial interest(1)	6,600,000	0.21%
Mr. Wang Mengde	Beneficial interest(1)	8,500,000	0.26%
Mr. Li Shaozhong	Beneficial interest(1)	8,400,000	0.25%
Mr. Jing Hong	Beneficial interest(1)	7,500,000	0.23%
Mr. Chi Xun	Beneficial interest(1)	8,500,000	0.26%
Mr. Shang Yu	Beneficial interest(1)	8,100,000	0.24%

Note:

(1) The interests in the underlying shares are in relation to the options granted under the Pre-IPO Share Option Scheme and the Post-IPO Share Option Scheme.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors and the chief executive of the Company, no other person had interests or short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have taken under such provisions of the SFO); or were required, pursuant to Section 352 of the SFO, to be recorded in the register referred to therein; or were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

3 SERVICE CONTRACTS

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

4 COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective associates had any competing interests in a business which competes or is likely to compete with the business of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controlling shareholder).

– VII-2 –

GENERAL INFORMATION

APPENDIX VII

5 DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS

As at the Latest Practicable Date, none of the Directors has had any direct or indirect interest in any assets which have since 31 December 2012 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

There was no contract or arrangement subsisting as at the Latest Practicable Date in which any of the Directors was materially interested and which was significant in relation to the business of the Group.

6 LITIGATION

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

7 MATERIAL ADVERSE CHANGES

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2012, the date to which the latest published audited financial statements of the Group were made up.

8 EXPERTS

(a) The followings are the qualification of the experts which have given opinions or advices which are contained in this circular:

Name Qualifications

Jincheng Tongda & Neal PRC Legal Advisors

Quam Capital a licensed corporation to carry out type 6 (advising on corporate finance) regulated activity under the SFO PricewaterhouseCoopers Certified public accountants DTZ Debenham Tie Leung Limited Independent property valuers (“ DTZ ”) (collectively, the “ Experts ”)

(b) As at the Latest Practicable Date, each of the Experts had no shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

– VII-3 –

GENERAL INFORMATION

APPENDIX VII

(c) As at the Latest Practicable Date, each of the Experts had given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter, statements and references to its name in the form and context in which they are included. Such letter and statements from each of the Experts are given as of the date of this circular for incorporation herein.
(d) As at the Latest Practicable Date, none of the Experts had no interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, nor which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2012, the date to which the latest published audited financial statements of the Group were made up.

9 MATERIAL CONTRACTS

Saved as disclosed below, no material contracts (not being contract entered into in the ordinary course of business carried out by the Group), have been entered into by any member of the Group within the two years immediately preceding the date of this circular:

a. cooperation framework agreement dated 7 September 2011 entered into between Tianjing Sunac Zhidi Co., Ltd. (天津融創置地有限公司) (“Sunac Zhidi”) and Poly (Tianjin) Real Estate Development Co., Ltd. (保利(天津)房地產開發有限公司) (“Poly Tianjin”), an Independent Third Party, pursuant to which Sunac Zhidi and Poly Tianjin agreed to establish an equity joint venture enterprise in the PRC, Tianjin Poly Sunac Investment Company Limited* (天津保利融創投資有限公司) (“Poly Sunac”), in the shareholdings of 49% and 51%, respectively, to engage in property development in the PRC. Poly Tianjin and Sunac Zhidi agreed to make cash contributions of RMB1,020,000,000 and RMB980,000,000, respectively, to the registered capital of Poly Sunac;
b. equity transfer agreement dated 27 September 2011 entered into between Beijing Shougang and Sunac Zhidi, pursuant to which Beijing Shougang agreed to transfer the 50% equity interest in Shougang Sunac to Sunac Zhidi for a cash consideration of RMB1.45 billion;
c. co-operation framework agreement dated 15 November 2011 entered into among Sunac Zhidi, Sunac Yingrun (an indirect wholly-owned subsidiary of the Company) and Daye Trust, where Sunac Zhidi is required to subscribe 200 million subordinated trust units of the Trust Fund Scheme for a total subscription price of RMB200 million by way of debt. Sunac Yingrun is also required to subscribe subordinated trust units, of such amount equal to no less than 10% of the total number of units in the Trust Fund Scheme for RMB1 per trust unit, which would be settled in cash;
d. equity transfer agreement dated 5 January 2012 entered into between Sunac Zhidi and Greentown Real Estate, pursuant to which Sunac Zhidi had agreed to acquire, and Greentown Real Estate had agreed to dispose of 51% equity interest in Hubin Real Estate, at a cash consideration of RMB51 million;

– VII-4 –

GENERAL INFORMATION

APPENDIX VII

e. equity cooperative agreement dated 21 March 2012 entered into among Daye Trust, Sunac Zhidi and Tianjin Sunac Mingxiang Investment Development Co. Ltd.* (天津融創名翔投資有限公司) (an indirect wholly-owned subsidiary of the Company) (“Sunac Mingxiang”), pursuant to which the key terms in respect of the investment in Sunac Mingxiang to be made by the Trust Fund Scheme were set out, the parties also agreed to enter into the Equity Transfer Agreement, the Account Receivable Transfer Agreement, the Repayment Agreement and other ancillary agreements on the same day to implement the terms of the equity cooperative agreement;
f. equity transfer agreement dated 21 March 2012 entered into between Daye Trust and Sunac Zhidi, pursuant to which Daye Trust has agreed to acquire 49.5586% of Sunac Mingxiang (“Equity Transfer”) for a cash consideration of RMB594,703,200 from Sunac Zhidi;
g. account receivable transfer agreement dated 21 March 2012 entered into among Daye Trust, Sunac Zhidi and Sunac Mingxiang, Sunac Zhidi agreed to assign an account receivable of a principal amount of RMB200 million originally due from Sunac Mingxiang to Sunac Zhidi before completion of this agreement (“Account Receivable”) to Daye Trust;
h. repayment agreement dated 21 March 2012 entered into between Sunac Mingxiang and Daye Trust, pursuant to which Sunac Mingxiang agreed to repay the Account Receivable to Daye Trust, where an amount of RMB23.0 million of the Account Receivable shall be repaid within 12 months of the date of establishment of the Trust Fund Scheme and the balance to be settled on the earlier of: (i) the date when Sunac Zhidi has paid the consideration for the Equity Transfer in full after exercising the first right of refusal aforesaid; (ii) the date when Sunac Zhidi renounces the first right of refusal; or (iii) the third anniversary of the date of establishment of the Trust Fund Scheme;
i. pledge agreements dated 21 March 2012 entered into between Sunac Zhidi and Daye Trust, pursuant to which a security over land use rights of two parcels of land located in Nankai District in Tianjin were created in favour of Daye Trust;
j. pledge agreement dated 21 March 2012 entered into between Sunac Zhidi and Daye Trust, pursuant to which a security over the Group’s 49.5586% equity interest in Sunac Mingxiang was created in favour of Daye Trust;
k. framework agreement dated 22 June 2012 entered into between Sunac Zhidi and Greentown Real Estate, pursuant to which: (1) Sunac Zhidi conditionally agreed to acquire, and Greentown Real Estate conditionally agreed to dispose of, an effective 50% interest in 8 entities then wholly-owned by Greentown China by way of (i) the establishment of a joint venture company to be owned as to 50% by Sunac Zhidi and 50% by Greentown Real Estate; and (ii) the acquisition of such 8 entities by such joint venture company from Greentown Real Estate; and (2) upon formation of such joint venture company, Sunac Zhidi conditionally agreed to acquire, and Greentown Real Estate conditionally agreed to dispose of, an effective 50% interest in an entity then wholly-owned by Greentown China;

– VII-5 –

GENERAL INFORMATION

APPENDIX VII

l. equity transfer agreement dated 7 August 2012 entered into between Sunac Zhidi and Greentown Real Estate, pursuant to which Greentown Real Estate agreed to transfer 50% equity interest in an entity then wholly-owned by Greentown China to Sunac Zhidi;
m. land development cooperative framework agreement dated 10 October 2012 entered into between Shanghai Lvshun Real Estate Development Co., Ltd., a subsidiary of Shanghai Sunac Greentown and Longrun Property Development (Chengdu) Co., Ltd. (龍潤房地產(成都)有限公司), an independent third party, pursuant to which both parties agreed to jointly make land biddings on an equal shares basis and establish a joint venture company for project development after the successful bidding;
n. equity transfer agreement dated 21 December 2012 and equity and debt transfer agreement dated 7 January 2013, both entered into between Sunac Zhidi and Beijing Vantone, pursuant to which Beijing Vantone agreed to transfer to Sunac Zhidi the 47% equity interest in Tianjin Teda City Development and the debt owing by such target company to Beijing Vantone. The aggregate consideration payable by Sunac Zhidi for such acquisition is RMB821,996,300;
o. On 14 Mar 2013, Yingzi Real Estate (a wholly-owned subsidiary of the Company) entered into an agreement with Shimao Property Holdings Limited to subscribe for 49% equity interest in Hangzhou Zhijiang River Holiday Village Project indirectly, the aggregate consideration was HK dollar 49. In accordance with the agreement, the total investment for this project attributable to Sunac China was approximately RMB907 million;
p. On 30 May 2013, Shanghai Greentown Golf and Jindu Real Estate entered into an equity transfer agreement and a creditor’s right transfer agreement, pursuant to which, Shanghai Greentown Golf would acquire 50% of equity interest (capital contribution of RMB200 million) and its creditor’s right of approximately RMB1,670 million from Jindu Real Estate in Zhejiang Jinying Realty Co., Ltd. (浙江金盈置業有限公司). The aggregate consideration of the acquisition was RMB1,200 million. Upon the completion of the transfer, Sunac China would indirectly hold 25% equity interest in Zhejiang Jinying Realty;
q. On 10 July 2013, Tianjin Sunac Dingsheng Land Co., Ltd. (“Sunac Dingsheng”), an indirect wholly-owned subsidiary of Sunac China, entered into an equity transfer agreement with Tianjin Zhenglin Investment Group Co., Ltd., (“Zhenglin Investment”) and Mr. Zhou Zhonghai (“Mr. Zhou”). Pursuant to which, Sunac Dingsheng agreed to acquire, and Zhenglin Investment and Mr. Zhou agreed to dispose of 100% equity interest held in Tianjin Rongzheng Investment Co., Ltd., (“Tianjin Rongzheng”) at a cash consideration of RMB1.148 billion. Upon completion of the equity transfer, Tianjin Rongzheng will be accounted for as a wholly-owned subsidiary of the Company;

– VII-6 –

GENERAL INFORMATION

APPENDIX VII

r. On 6 August 2013, Tianjin Sunac Ao Cheng Investment Co., Ltd. (“Sunac Ao Cheng”) entered into an equity transfer agreement with Lizi Holding Group Hangzhou Industrial Co., Ltd. (“Lizi Holding”); an equity transfer agreement with Mr. Guo Xiangchun (“Mr. Guo”); and a creditor’s right transfer agreement with Lizi Holding, Mr. Guo and Hangzhou Guorong Realty Co., Ltd. (“Hangzhou Guorong”), pursuant to which, Sunac Ao Cheng agreed to acquire, and Lizi Holding and Mr. Guo agreed to dispose, of their respective equity interests in Hangzhou Guorong and the Creditors’ Right for a total consideration of approximately RMB508,000,000. Following the completion of the Transfers, Hangzhou Guorong will be held as to 60% by Sunac Ao Cheng and 40% by Geely Group, respectively, and Hangzhou Guorong will become a non wholly-owned subsidiary of the Company;
s. the Framework Agreement; and
t. the Agreement.

10 MISCELLANEOUS

(a) The registered office of the Company is at Landmark Square, 3rd Floor, 64 Earth Close P.O. Box 30592, Grand Cayman KY1-1203, Cayman Islands, and the head office and the principal place of business in Hong Kong is at 8th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.
(b) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited located at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(c) The joint company secretaries of the Company are Mr. Huang Shuping and Ms. Ma Sau Kuen Gloria. Ms. Ma Sau Kuen Gloria is a fellow member of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators in the United Kingdom.
(d) The English text of this circular shall prevail over the Chinese text.

– VII-7 –

GENERAL INFORMATION

APPENDIX VII

11 DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents of the Group are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at 39/F, Two International Finance Centre, Central, Hong Kong, except public holidays, up to and including for 14 days from the date of this circular:

(a) the memorandum and articles of association of the Company;
(b) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;
(c) the Framework Agreement;
(d) the Agreement;
(e) the letter from Quam Capital, the text of which is set out in the section headed “Letter from the Quam Capital” of this circular;
(f) the accountant’s reports on the Target Group, the text of which is set out in Appendix II to this circular;
(g) the report from PricewaterhouseCoopers on unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III to this circular;
(h) the annual reports of the Company for the three financial years ended 31 December 2010, 2011 and 2012;
(i) a valuation report from DTZ in relation to the property interests held by the Target Group as at 30 June 2013;
(j) the letter of consent as referred to in the paragraph headed “Experts” in this appendix; and
(k) this circular.

– VII-8 –

AI assistant

Sunac China Holdings Limited — Proxy Solicitation & Information Statement 2013

50266_rns_2013-08-28_eb5e8ee0-0e70-4818-8a14-cc41714234a5.pdf

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

INTRODUCTION

THE INVESTMENT

THE AGREEMENT

Subject Matter

LETTER FROM THE BOARD

Consideration and Payment Arrangement

Consideration

Basis of Consideration

Payment Arrangement

Completion

FORMATION OF JOINT VENTURE

Formation of Sunac Greentown

Board composition and management of Sunac Greentown

CONDITIONS PRECEDENT

INFORMATION ON THE TARGET GROUP

LETTER FROM THE BOARD

PROJECT PLANNING

REASONS FOR AND BENEFITS OF THE INVESTMENT

INFORMATION ON THE PARTIES TO THE FRAMEWORK AGREEMENT AND THE AGREEMENT

FINANCIAL EFFECTS OF THE TRANSACTIONS ON THE COMPANY

LISTING RULES IMPLICATIONS

Written Approval Waiver

Independent Board Committee and Circular

RECOMMENDATION

ADDITIONAL INFORMATION

CONNECTED AND MAJOR TRANSACTIONS

(1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH ARCH CAPITAL SUCCESS LIMITED REGARDING THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully,

For and on behalf of

CONNECTED AND MAJOR TRANSACTIONS

(1) FORMATION OF JOINT VENTURE; AND (2) ENTERING INTO THE COOPERATION AND

INVESTMENT AGREEMENT WITH

ARCH CAPITAL SUCCESS LIMITED REGARDING

THE COOPERATION TO DEVELOP SHANGHAI HUANGPU PROJECT

INTRODUCTION

BASIS OF OUR RECOMMENDATION

PRINCIPAL FACTOR AND REASONS CONSIDERED

1.2 Reasons for the formation of Sunac Greentown and the Acquisition

2. Overview of property market in Shanghai

3. Information on the Target Group

LETTER FROM QUAM CAPITAL

3.1 Financial information of the Target Group

4. Formation of Sunac Greentown and principal terms of the Agreement

4.1 Formation of Sunac Greentown

4.2 Consideration

LETTER FROM QUAM CAPITAL

5. Financial effects of the formation of Sunac Greentown and the Acquisition

Net asset value

Earnings

Working capital and gearing

Conclusion

RECOMMENDATION

FINANCIAL INFORMATION OF THE GROUP

INDEBTEDNESS

The Group

The Target Group

WORKING CAPITAL

FINANCIAL AND TRADING PROSPECTS FOR 2013

The Directors

Dear Sirs,

APPENDIX II

Directors’ Responsibility for the Financial Information

Reporting Accountant’s Responsibility

Opinion

Review of stub period comparative financial information

I FINANCIAL INFORMATION OF THE TARGET GROUP

COMBINED BALANCE SHEETS

COMBINED INCOME STATEMENTS

Sunac China Holdings Limited Proxy Solicitation & Information Statement 2013