THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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.

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

SUNAC CHINA HOLDINGS LIMITED 融創中國控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01918)

MAJOR TRANSACTION IN RELATION TO

(1) THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN THE TARGET COMPANY (2) THE PROVISION OF GUARANTEE AND COUNTER GUARANTEE

Capitalised terms used on this cover page have the same meaning as defined in the section headed “Definitions” in this circular, unless the context requires otherwise.

A letter from the Board is set out on pages 4 to 12 of this circular.

The Acquisition and the provision of the Guarantee and the Counter Guarantee had been approved by written shareholder’s approval obtained from Mr. Sun and Sunac International, the controlling shareholders of the Company, pursuant to Rule 14.44 of the Listing Rules in lieu of a general meeting of the Company. This circular is being dispatched to the shareholders of the Company for information only.

4 May 2017

			Page
Definitions . .	. . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	—	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	—	Accountant’s Report of the Target Company . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	—	Management Discussion and Analysis on the Target Company . . . . .	III-1
Appendix IV	—	Valuation Report on the Qingdao Shidai City Project . . . . . . . . . . . .	IV-1
Appendix V	—	Reconciliation of valuation of properties . . . . . . . . . . . . . . . . . . . . . .	V-1
Appendix VI	—	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1

— i —

DEFINITIONS

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

“Acquisition”

the proposed acquisition of the entire equity interest in the Target Company by the Purchaser from the Vendor pursuant to the terms of the Equity Transfer Agreement

“Board” the board of Directors
“Calxon Group”
China Calxon Group Company Limited* (嘉凱城集團股份有限公司), a company established under the laws of the PRC with limited liability, the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 000918)
“Company”
Sunac China Holdings Limited, a company incorporated under the laws of the Cayman Islands with limited liability, and the shares of which are listed on the main board of the Stock Exchange (Stock Code: 1918)
“Consideration”
the aggregate consideration of RMB3,662,000,000 payable by the Purchaser for the Acquisition
“Counter Guarantee”
the counter guarantee provided by the Guarantor in favour of the Vendor Related Parties pursuant to the terms of the Counter Guarantee Agreement
“Counter Guarantee Agreement”
the counter guarantee agreement dated 29 November 2016 executed by the Guarantor in favour of the Vendor Related Parties in respect of all the liabilities and expenses, including the principal and interest of the loan, any penalties, damages and expenses which may be payable by the Vendor Related Parties under the Vendor Guarantee

“Director(s)”

the director(s) of the Company
“Equity Transfer Agreement” or “Agreement”
the equity transfer agreement entered into on 29 November 2016 between the Purchaser and the Vendor in relation to the sale and purchase of the entire equity interest in the Target Company
“Evergrande”
China Evergrande Group Company Limited* (恒大地產集團有限公司), a company incorporated in the Cayman Islands, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 3333)
“First Instalment”

has the meaning given to it in the paragraph headed “Consideration” in the letter from the Board in this circular

“Group”
the Company and its subsidiaries

— 1 —

DEFINITIONS

“Guarantee” the guarantee provided by the Guarantor in favour of the Vendor pursuant to the terms of the Guarantee Agreement
“Guarantee Agreement” the guarantee agreement dated 29 November 2016 executed by the Guarantor in favour of the Vendor in respect of among other things, the obligation of the Target Company to repay the shareholder loans to the Vendor and its related parties
“Guarantor” Beijing Sunac Property Construction and Investment Limited （北京融創建投房地產有限公司）, a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Latest Practicable Date” 27 April 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Sun” Mr. Sun Hongbin, the chairman of the Board and an executive Director, and a controlling shareholder of the Company as at the Latest Practicable Date

“PRC” the People’s Republic of China (excluding, for the purpose of this circular, the Hong Kong Special Administrative Region of the People’s Republic of China, the Macao Special Administrative Region of the People’s Republic of China and Taiwan) “PRC GAAP” the Generally Accepted Accounting Principles in the PRC “Purchaser” or “Sunac Qingdao” Sunac (Qingdao) Real Estate Company Limited* (融創(青島) 置地有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

“Qingdao Shidai City Project” or “Qingdao Calxon Project”

located at Licang District, Qingdao, the PRC with a total site area of approximately 1,066,100 sq.m., a total gross floor area of approximately 1,787,900 sq.m. and a total unsold area of approximately 780,000 sq.m., which is held by the Target Company, mainly for residential and commercial purposes

“Relevant Lenders” financial institutions established in the PRC who have provided loans to the Target Company under the Relevant Loan Agreements

— 2 —

DEFINITIONS

“Relevant Loan Agreements”

the loan agreements entered into among the Relevant Lenders as lenders and the Target Company as borrower

“RMB” Renminbi, the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Stock Exchange” The Stock Exchange of Hong Kong Limited “Sunac International” Sunac International Investment Holdings Ltd, a company incorporated under the laws of the British Virgin Islands, a controlling shareholder of the Company as at the Latest Practicable Date

“Target Company” or “Qingdao Qingdao Calxon Real Estate Development Company Limited Calxon” (青島嘉凱城房地產開發有限公司), a limited liability company established under the laws of the PRC “Vendor” or “Calxon Shanghai ” Calxon Group (Shanghai) Limited Company (嘉凱城集團(上海)有限公司), a limited liability company established under the laws of the PRC

“Vendor Guarantee” the guarantee provided by the Vendor Related Parties in favour of the Relevant Lenders as beneficiaries in respect of the obligations and liabilities of the Target Company owed to Relevant Lenders under the Relevant Loan Agreements
“Vendor Related Parties” Calxon Group and Evergrande
“Zhejiang Asset Exchange” Zhejiang Asset and Equity Exchange Company Limited* (浙江產權交易所有限公司), being the property rights trading institution at which the public auction for the entire equity interest in the Target Company was convened
“%” per cent. “sq.m.” square metre(s)

* In this circular, the English names of the PRC entities are translation of their Chinese names, and are included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail.

— 3 —

LETTER FROM THE BOARD

SUNAC CHINA HOLDINGS LIMITED 融創中國控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01918)

Executive Directors : Mr. SUN Hongbin ( Chairman ) Mr. WANG Mengde ( Chief Executive Officer ) Mr. JING Hong Mr. CHI Xun Mr. TIAN Qiang Mr. SHANG Yu Mr. HUANG Shuping Mr. LI Shaozhong

Independent Non-executive Directors:

Mr. POON Chiu Kwok Mr. ZHU Jia Mr. LI Qin Mr. MA Lishan Mr. TSE Chi Wai

Registered office: 190 Elgin Avenue George Town Grand Cayman KY1- 9005 Cayman Islands

Head Office: 10/F, Building C7 Magnetic Plaza Binshuixi Road, Nankai District Tianjin 300381 PRC

Principal Place of Business in Hong Kong: 36/F, Tower Two Times Square 1 Matheson Street Causeway Bay Hong Kong

4 May 2017

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO

(1) THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN THE TARGET COMPANY (2) THE PROVISION OF GUARANTEE AND COUNTER GUARANTEE

INTRODUCTION

References are made to the announcement of the Company dated 29 November 2016 in relation to, among other things, the Acquisition and the announcements of the Company dated 24 January 2017 and 28 April 2017 in relation to the delay in despatch of this circular.

— 4 —

LETTER FROM THE BOARD

The Company announced on 29 November 2016 that Sunac (Qingdao) Real Estate Company Limited, an indirect wholly-owned subsidiary of the Company, as the Purchaser, succeeded in the bid for the entire equity interest in Qingdao Calxon Real Estate Development Company Limited, as the Target Company, through the Zhejiang Asset Exchange. On 29 November 2016, the Purchaser entered into the Equity Transfer Agreement with Calxon Group (Shanghai) Limited Company, as the Vendor, pursuant to which the Purchaser agreed to acquire, and the Vendor agreed to sell, the entire equity interest in the Target Company at a consideration of RMB3,662,000,000. In connection with the Equity Transfer Agreement, the Guarantor provided the Guarantee in favour of the Vendor in respect of the shareholder loans owed by the Target Company to the Vendor and its related parties in the amount of RMB2,347,153,200, and the Counter Guarantee in favour of the Vendor Related Parties in respect of the loans owed by the Target Company to the Relevant Lenders in the principal amount of RMB1,850,000,000.

This circular is despatched to the shareholders of the Company for information purposes only. No general meeting will be convened to approve the Acquisition and the provision of the Guarantee and the Counter Guarantee as the Company had obtained written approval for the Acquisition and the provision of the Guarantee and the Counter Guarantee in accordance with Rule 14.44 of the Listing Rules from the controlling shareholders of the Company, namely Mr. Sun and Sunac International, a company wholly owned by Mr. Sun, who collectively held 2,052,713,884 shares of the Company, representing approximately 53.22% of the issued share capital of the Company as at the date of such written approval. In addition, to the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiries, none of the shareholders of the Company had any material interest in the Acquisition and the provision of the Guarantee and the Counter Guarantee and therefore no shareholder of the Company would be required to abstain from voting if the Company were to convene a general meeting for approving the Acquisition and the provision of the Guarantee and the Counter Guarantee.

The Acquisition was completed on 29 December 2016. Upon completion of the Acquisition, the Target Company became an indirect wholly-owned subsidiary of the Company, and its financial results, assets and liabilities have been consolidated into the financial results, assets and liabilities of the Group.

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition and the provision of the Guarantee and the Counter Guarantee; (ii) financial information of the Group; and (iii) financial information of the Target Company; (iv) the valuation report on the Qingdao Shidai City Project; and (v) other information as required under the Listing Rules.

EQUITY TRANSFER AGREEMENT

Date : 29 November 2016

Parties :

(i) the Purchaser, an indirect wholly-owned subsidiary of the Company; and
(ii) the Vendor.

— 5 —

LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiries, each of the Vendor and its substantial shareholders (as defined in the Listing Rules) is independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

Assets to be acquired

Pursuant to the terms of the Equity Transfer Agreement, the Purchaser agreed to acquire the entire equity interest in the Target Company from the Vendor.

Consideration

The Consideration payable by the Purchaser for the Acquisition was RMB3,662,000,000.

The Consideration shall be paid by the Purchaser in the following manner:

(i) RMB1,831,000,000 (the “ First Instalment ”) shall be paid within one month after the date of the Equity Transfer Agreement; and
(ii) the remaining balance of RMB1,831,000,000 shall be paid within twelve months after the date of the Equity Transfer Agreement.

The Purchaser had paid the First Instalment pursuant to the terms of the Equity Transfer Agreement.

The Consideration was determined through the public auction procedure of the Zhejiang Asset Exchange. The Purchaser set the bidding price based on, among other things, (i) the long-term research analysis of the property market in Qingdao; (ii) the judgment of the relationship between supply and demand in the region; and (iii) the market value ascertained by analyzing the geographical location of the Qingdao Shidai City Project, planning indicators and comparable projects in the region, etc.

The fair value of net assets of the Target Company adjusted by valuation as at 28 February 2017 was RMB3,657,170,000. Having considered the fact that the Consideration represents only a 0.13% premium over the net asset value (adjusted by valuation) of the Target Company and the reasons and benefits set out below in the paragraph headed “ REASONS AND BENEFIT ” below, the Directors are of the view that the Consideration is fair and reasonable and is in the interest of the Company and the shareholders of the Company as a whole.

The Consideration had been funded by internal resources of the Group.

Completion of the Acquisition

Pursuant to the terms of the Equity Transfer Agreement, after full payment of the First Instalment by the Purchaser, receipt of an equity transaction certificate（產權交易憑證）, and execution of the Guarantee Agreement, the Vendor shall procure the Target Company to complete the registration procedure for the change of shareholding before 31 December 2016.

Registration of the equity transfer with the relevant authorities in the PRC had been completed on 29 December 2016, and accordingly completion of the Acquisition took place on 29 December 2016.

— 6 —

LETTER FROM THE BOARD

PROVISION OF GUARANTEE

As at 30 September 2016, the Target Company owed the Vendor and its related parties the shareholder loans in the amount of RMB2,347,153,200. During the period from 1 October 2016 to 31 December 2016, the Target Company had newly borrowed the shareholder loans in amount of RMB133,910,800, therefore, the shareholder loans owed by the Target Company amounted to RMB2,481,064,000 as at 31 December 2016, as disclosed in Note 15 of the accountant’s report as presented in Appendix II on page II-31 of this circular. On 29 November 2016, Beijing Sunac Property Construction and Investment Limited, an indirect wholly-owned subsidiary of the Company, as the Guarantor, entered into the Guarantee Agreement with the Purchaser, the Vendor and the Target Company, pursuant to which, the Guarantor shall guarantee in favour of the Vendor:

(1) the due performance of the payment obligation of the Purchaser under the Equity Transfer Agreement; and
(2) the due performance of the obligation of the Target Company to repay to the Vendor the shareholder loans. As at 30 September 2016, the shareholder loans owed by the Target Company to the Vendor and its related parties amounted to RMB2,347,153,200. The Target Company shall repay to the Vendor such shareholder loans within 365 days after the date of registration procedure for the change of shareholding at the industry and commerce authority under the Equity Transfer Agreement at the interest rate of 10% per annum accrued from 1 October 2016 to the actual repayment date; and
(3) the payment of any other compensation, damages and expenses as a result of any breach by the Purchaser or the Target Company of the Equity Transfer Agreement or the Guarantee Agreement.

PROVISION OF COUNTER GUARANTEE

The Target Company entered into the Relevant Loan Agreements with the Relevant Lenders, pursuant to which the Relevant Lenders have provided loans to the Target Company, and the Vendor Related Parties agreed to provide guarantee for the payment obligations and liabilities of the Target Company under the Relevant Loan Agreements.

As at 30 September 2016, the outstanding principal amount of the loans owed by the Target Company to the Relevant Lenders under the Relevant Loan Agreements amounted to RMB1,850,000,000.

On 29 November 2016, Beijing Sunac Property Construction and Investment Limited*, an indirect wholly-owned subsidiary of the Company, as the Guarantor, entered into the Counter Guarantee Agreement with the Vendor Related Parties, pursuant to which, the Guarantor agreed to provide the Counter Guarantee in favour of the Vendor Related Parties. The Guarantor shall guarantee in favour of the Vendor Related Parties:

(1) all liabilities and expenses which may be incurred by the Vendor Related Parties under the Vendor Guarantee; and

— 7 —

LETTER FROM THE BOARD

(2) any interests, penalty, compensation and related fees and expenses which may be payable by the Vendor Related Parties under the Vendor Guarantee.

INFORMATION ON THE PARTIES

The Company, the Purchaser and the Guarantor

The Company is a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange. As specialized in integrated development of residential and commercial properties, the Company is one of the leading real estate developers in the PRC. In line with its regional focus and high-end positioning strategy, the Company has developed or is developing many high-quality property projects ranging from high-rise residences, detached villas, retail properties and offices in first-tier cities and core second-tier cities across the PRC.

Each of the Purchaser and the Guarantor is a company established under the laws of the PRC with limited liability and is an indirect wholly-owned subsidiary of the Company. The principal business of the Purchaser is property development and house sales. The principal business of the Guarantor is property investment and investment management.

The Vendor

The Vendor is a limited liability company established under the laws of the PRC. Its principal business is property development and property management. The Vendor is a subsidiary of Calxon Group, which is in turn a subsidiary of Evergrande.

The Vendor Related Parties

Calxon Group is a company established under the laws of the PRC with limited liability, the shares of which are listed on the Shenzhen Stock Exchange (Stock Code: 000918). Calxon Group is engaged in property investment and property management business.

Evergrande is a company incorporated in the Cayman Islands, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 3333). Evergrande is principally engaged in the development of large scale residential properties and integrated commercial properties in the PRC.

To the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiries, each of the Vendor Related Parties and its respective substantial shareholders (as defined in the Listing Rules) is independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

The Target Company

The Target Company is a limited liability company established under the laws of the PRC. It is principally engaged in the development of the Qingdao Shidai City Project, which is located at Licang District, Qingdao city, with a total site area of approximately 1,066,100 sq.m., a total gross floor area

— 8 —

LETTER FROM THE BOARD

of approximately 1,787,900 sq.m. and a total unsold area of approximately 980,000 sq.m., mainly for residential and commercial purposes. Qingdao Shidai City Project comprises the unsold and completed portion, the under development portion and the land portion for future development. The under development portion is scheduled to be completed in 2017 and has a proposed gross floor area of 117,243.52 sq m. As at 28 February 2017, the total expended construction cost of the under development portion was RMB98,341,806 whilst the outstanding construction cost for completion of this portion was RMB84,658,194. The land portion for future development is scheduled to be completed between 2018 and 2020 and has a proposed gross floor area of 1,130,481.00 sq m. As at 28 February 2017, the total expended construction cost of the under development portion was RMB 172,950,000 whilst the outstanding construction cost for completion of this portion was RMB 4,590,837,000. The Qingdao Shidai City Project is now known as the Sunac Urban Center Project.

Financial information on the Target Company

Set out below is the audited financial information of the Target Company for the two financial years ended 31 December 2015 and 2016 prepared in accordance with Hong Kong Financial Reporting Standards:

		For the financial year	For the financial year
		ended 31 December
		(audited)
		2015	2016
		RMB	RMB
Net	profit/loss before taxation and extraordinary items	-177,628,000	-119,318,000
Net	profit/loss after taxation and extraordinary items	-133,469,000	-89,679,000
		As at 31 December
		2015	2016
		RMB	RMB
Net	asset value	784,847,000	695,168,000

Please also refer to Appendix II to this circular for the accountant’s report and Appendix III to this circular for the management discussion and analysis on the Target Company for the years ended 31 December 2014, 2015 and 2016.

FINANCIAL EFFECT OF THE ACQUISITION

Upon completion of the Acquisition, the Target Company became an indirectly wholly- owned subsidiary of the Company, and the financial results, assets and liabilities of the Target Company have been consolidated into the financial results, assets and liabilities of the Group for the year ended 31 December 2016.

— 9 —

LETTER FROM THE BOARD

Based on the annual report of the Group for the year ended 31 December 2016, as at 31 December 2016, the Group, together with the Target Company, had total assets, total liabilities and net assets of approximately RMB293,183.1 million, RMB257,771.9 million and RMB35,411.2 million respectively.

Based on the projected trend of the future profit of the Target Company, the Directors believe that the Acquisition would have a positive impact on the earnings of the Group. It is expected that the Acquisition would enhance the Group’s business development and broaden the Group’s earnings base. As the Guarantor has provided the Guarantee and the Counter Guarantee, the Directors believe that the transactions contemplated under the Guarantee Agreement and the Counter Guarantee Agreement would have negative impact to the cashflow but would have no material impact on the gearing ratio of the Group.

REASONS AND BENEFIT

The Company has always adhered to the regional focus development strategy and has laid out its strategic plan in tier 1 cities, surrounding cities of tier 1 cities and core cities in the PRC. Qingdao is located in the southeast coast of Shandong Peninsula, and is in the first batch of coastal open cities. In the recent years, the supply of land in Qingdao has been greatly reduced and the supply of land in the main urban area is even more scarce. At the same time, the population and the number of newborns have evidently increased, creating a huge demand for improved living and strong motivation for rising housing prices. The Company is optimistic about the development prospect of the real estate market in Qingdao. The Qingdao Shidai City Project is currently a relatively large residential project in Qingdao city area, with a superior geographical location and sufficient room for increase in the housing price.The entering into of the Equity Transfer Agreement and the transactions contemplated thereunder would further increase the Group’s land reserves and market share in Qingdao.

Based on the foregoing, the Directors consider the terms of the Equity Transfer Agreement, the Guarantee Agreement and the Counter Guarantee Agreement are normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Acquisition and the provision of the Guarantee and the Counter Guarantee, when aggregated, exceeds 25% and all of such ratios are less than 100%, the Acquisition and the provision of the Guarantee and the Counter Guarantee, when aggregated, constitute a major transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting, announcement and shareholders’ approval requirements pursuant to Chapter 14 of the Listing Rules.

WRITTEN SHAREHOLDERS’ APPROVAL

Pursuant to Rule 14.44 of the Listing Rules, in lieu of a resolution to be passed at a general meeting of the Company, written shareholders’ approval for the Acquisition and the provision of the Guarantee and the Counter Guarantee had been obtained from the controlling shareholders of the Company, namely Mr. Sun and Sunac International, a company wholly owned by Mr. Sun, who collectively held 2,052,713,884 shares of the Company, representing approximately 53.22% of the

— 10 —

LETTER FROM THE BOARD

issued share capital of the Company as at the date of such written approval. To the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiries, none of the shareholders of the Company had any material interest in the Acquisition or the provision of the Guarantee or the Counter Guarantee and therefore no shareholder was required to abstain from voting if the Company were to convene an extraordinary general meeting for the approval of the Acquisition and the provision of the Guarantee and the Counter Guarantee.

If the Company were to convene an extraordinary general meeting for the approval of the Acquisition and the provision of the Guarantee and the Counter Guarantee and voting was required, the Directors would have recommended the Shareholders to vote in favour of such resolutions based on the reasons set out in this letter.

WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES GRANTED BY THE STOCK EXCHANGE

Rule 14.41(a) of the Listing Rules

As additional time was required to prepare and finalise certain information included in this circular, the Company had applied for a waiver from strict compliance with Rule 14.41(a) of the Listing Rules to extend the deadline for despatch of this circular to a date more than 15 business days after publication of the relevant announcement. The Stock Exchange had granted such waiver on 24 January 2017 to extend the deadline to 30 April 2017. The Stock Exchange had granted a waiver on 28 April 2017 to further extend the deadline to 8 May 2017.

Rule 14.67(6)(a)(ii) of the Listing Rules

Rule 14.67(6)(a)(ii) of the Listing Rules provides that on an acquisition of any business, company or companies, the Company should include in its circular a pro forma statement of the assets and liabilities of the Group combined with the assets and liabilities of the business, company or companies being acquired on the same accounting basis as that adopted by the accountants’ report on the business, company or companies being acquired prepared in accordance with Chapter 4 of the Listing Rules (the “Pro Forma Statement”).

As set out in this circular, completion of the Acquisition took place on 29 December 2016. The Target Company became an indirect wholly-owned subsidiary of the Company, and the financial results, assets and liabilities of the Target Company have been consolidated into the financial results, assets and liabilities of the Group for the year ended 31 December 2016.

The Company applied for a waiver from the requirement to include the Pro Forma Statement in this circular in strict compliance with the requirement of Rule 14.67(6)(a)(ii) of the Listing Rules for the following reasons:

(1) the annual report of the Company containing the consolidated financial statements of the Company for the year ended 31 December 2016 would be published on or before 30 April 2017 in accordance with the Listing Rules and the Company would have incorporated by reference its consolidated financial statements, consolidating the results of the Target Company, in this circular; and

— 11 —

LETTER FROM THE BOARD

(2) as the financial effect of the Acquisition and the transactions contemplated thereunder on the assets and liabilities of the Group would have been included in the consolidated financial statements of the Company, the Pro Forma Statement would not provide additional information and it would not be necessary or meaningful to include in this circular the Pro Forma Statement in strict compliance with the requirements under Rule 14.67(6)(a)(ii) of the Listing Rules.

Based on the information provided by the Company, the Stock Exchange had granted the Company the waiver from strict compliance with the requirements under Rules 14.67(6)(a)(ii) of the Listing Rules.

GENERAL INFORMATION

Your attention is 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

— 12 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for the three years ended 31 December 2014, 2015 and 2016 together with the relevant notes thereto are disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (http://www.sunac.com.cn):

pages 58 to 140 in the annual report of the Company for the year ended 31 December 2014 published on 16 April 2015;
pages 71 to 154 in the annual report of the Company for the year ended 31 December 2015 published on 18 April 2016; and
pages 98 to 196 in the annual report of the Company for the year ended 31 December 2016 published on 18 April 2017.

Each of the said consolidated financial statements of the Group is incorporated by reference to this circular and forms part of this circular. The management discussion and analysis of the Company for the years ended 31 December 2014, 2015 and 2016 are disclosed in the published annual reports of the Company for the relevant period. Please also see below the links to the relevant annual reports of the Company:

Annual report of the Company for the year ended 31 December 2014 :

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0416/LTN20150416362.pdf

Annual report of the Company for the year ended 31 December 2015 :

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0418/LTN20160418433.pdf

Annual report of the Company for the year ended 31 December 2016 :

http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0418/LTN20170418616.pdf

2. INDEBTEDNESS

(i) Borrowings and debts

As at the close of business on 31 March 2017, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had outstanding borrowings of approximately RMB138,587.2 million, of which approximately RMB109,457.0 million were secured or jointly secured by properties under development, completed properties held for sale and certain equity interests of the Company’s subsidiaries (including those legally transferred as collateral).

— I-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s contingent liabilities at the close of business on 31 March 2017 were as follows:

	RMB million
Guarantees in respect of mortgage facilities for certain purchasers of the
Group’s properties	19,043.1
Guarantees in respect of borrowings owed by joint ventures and
associates of the Group	14,332.5

(ii) General

Save as disclosed above and apart from intra-group liabilities and normal trade payables in the normal course of business, as at the close of business on 31 March 2017, the Group did not have any debt securities issued and outstanding, and authorised or otherwise created but unissued, bank overdrafts, charges or debentures, mortgages, loans or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits or any guarantees.

The Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 31 March 2017.

3. MATERIAL ADVERSE CHANGE

The Company is not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited financial statements of the Company were made up.

4. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the financial resources available to the Group including the available credit facilities and the Group’s internally generated funds and the cash flow impact of the transactions contemplated under the Equity Transfer Agreement, the Guarantee Agreement and the Counter Guarantee Agreement, the Group will have sufficient working capital to satisfy its requirements for at least 12 months from the date of publication of this circular.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Upon completion of the Acquisition, the Company held the entire equity interest in the Target Company. The Group will continue to insist on the strategy of regional in-depth development to further consolidate and develop its market position and influence in the existing regions and cities. On the other hand, the Group will continue to focus on the development and management of high-end properties and focus on building high-end premium properties for customers in a persistent way. Based on the projected trend of the future profit of the Target Company, the Directors believe that the Acquisition would have a positive impact on the earnings of the Group. It is expected that the Acquisition would enhance the Group’s business development and broaden the Group’s earnings base.

— I-2 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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 [70 x 50] intentionally omitted <==

4 May 2017

The Directors Sunac China Holdings Limited

Dear Sirs,

We report on the financial information of Qingdao Calxon Real Estate Development Company Limited (“Qingdao Calxon”), which comprises the balance sheets of Qingdao Calxon as at 31 December 2014, 2015 and 2016, the statements of comprehensive income, the statements of changes in equity and the cash flow statements of Qingdao Calxon for each of the years ended 31 December 2014, 2015 and 2016 (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 III below for inclusion in Appendix II to the circular of the Company dated 4 May 2017 (the “Circular”) in connection with the acquisition of Qingdao Calxon by the Company.

Qingdao Calxon was incorporated in the People’s Republic of China (the “PRC”) on 4 September 2009 as a company with limited liability under The Company Law of the PRC.

The financial statements of Qingdao Calxon prepared in accordance with China Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC for each of the years ended 31 December 2014 and 2015 were audited by Zhongxingcai Guanghua Certified Public Accountants LLP.

The directors of Qingdao Calxon are responsible for the preparation of the financial statements of Qingdao Calxon 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 of Qingdao Calxon 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.

— II-1 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

The financial information has been prepared based on the Underlying Financial Statements, with no adjustment made thereon.

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 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 2016.

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, a true and fair view of the financial position of Qingdao Calxon as at 31 December 2014, 2015 and 2016 and of Qingdao Calxon’s financial performance and cash flows for the Relevant Periods.

— II-2 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

I FINANCIAL INFORMATION OF QINGDAO CALXON

The following is the financial information of Qingdao Calxon prepared by the directors of the Company as at and for each of the years ended 31 December 2014, 2015 and 2016 (the “Financial Information”):

BALANCE SHEETS

Note ASSETS Non-current assets Property, plant and equipment Deferred income tax assets 6 Current assets Properties under development 7 Completed properties held for sale 8 Amounts due from related parties 28(d) Trade and other receivables 9 Prepayments 10 Restricted cash 11 Cash and cash equivalents 12 Other current assets 13 Total assets EQUITY AND LIABILITIES Equity attributable to owner of Qingdao Calxon Paid-up capital Accumulated losses Total equity Liabilities Non-current liabilities Borrowings 16 Current liabilities Trade and other payables 15 Amounts due to related parties 28(d) Advanced proceeds from customers Borrowings 16 Total liabilities Total equity and liabilities	As 2014 RMB’000 1,884 91,218 93,102 4,919,076 511,476 28,737 372,946 127,811 149,448 270,498 4,469 6,384,461 6,477,563 1,200,000 (281,684) 918,316 1,060,000 1,060,000 1,073,489 1,484,475 581,623 1,359,660 4,499,247 5,559,247 6,477,563	at 31 December 2015 2016 RMB’000 RMB’000 998 537 135,377 165,016 136,375 165,553 5,313,436 5,796,012 434,196 912,431 12,750 — 577,812 582,607 191,437 191,042 180,844 568,770 2,922 2,055 32,266 30,834 6,745,663 8,083,751 6,882,038 8,249,304 1,200,000 1,200,000 (415,153) (504,832) 784,847 695,168 797,200 1,250,000 797,200 1,250,000 843,955 4,443,359 2,283,584 75,500 1,471,422 1,278,277 701,030 507,000 5,299,991 6,304,136 6,097,191 7,554,136 6,882,038 8,249,304

— II-3 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

STATEMENTS OF COMPREHENSIVE INCOME

Note
Revenue
17
Cost of sales
18
Gross loss
Selling and marketing costs
18
Administrative expenses
18
Other income and gains
21
Other expenses and losses
22
Operating loss
Finance income
Finance expenses
Finance expenses - net
23
Loss before income tax
Income tax credit
24
Loss for the year
Attributable to:
Equity owner of Qingdao Calxon
Other comprehensive income for the year
Total comprehensive loss for the year
Attributable to:
Equity owner of Qingdao Calxon

Year ended 31 December
2014
2015
2016
RMB’000
RMB’000
RMB’000
1,731,154
220,602
761,418
(1,757,346)
(319,047)
(774,571)
(26,192)
(98,445)
(13,153)
(24,877)
(18,060)
(12,249)
(21,642)
(22,055)
(15,396)
248
6,045
110
(2)
(354)
(2,642)
(72,465)
(132,869)
(43,330)
2,063
2,389
1,443
(38,003)
(47,148)
(77,431)
(35,940)
(44,759)
(75,988)
(108,405)
(177,628)
(119,318)
26,819
44,159
29,639
(81,586)
(133,469)
(89,679)
(81,586)
(133,469)
(89,679)
—
—
—
(81,586)
(133,469)
(89,679)
(81,586)
(133,469)
(89,679)

— II-4 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

STATEMENTS OF CHANGES IN EQUITY

Attributable to the equity own
Qingdao Calxon
Paid-up capital
Accumulated
losses
RMB’000
RMB’000
Balance as at 1 January 2014
1,200,000
(200,098)
Loss for the year
—
(81,586)
Balance as at 31 December 2014
1,200,000
(281,684)
Loss for the year
—
(133,469)
Balance as at 31 December 2015
1,200,000
(415,153)
Loss for the year
—
(89,679)
Balance as at 31 December 2016
1,200,000
(504,832)

er of
Total
RMB’000
999,902
(81,586)
918,316
(133,469)
784,847
(89,679)
695,168

— II-5 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

CASH FLOW STATEMENTS

Note
Cash flows from operating activities
Cash (used in)/generated from operations
25
Income tax paid
Net cash (used in)/generated from operating
activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from disposals of property, plant and
equipment
Loans to related parties
Repayments of loans from related parties
Net cash (used in)/generated from investing
activities
Cash flows from financing activities
Proceeds from borrowings
Borrowings from related parties
Repayment of borrowings
Repayment of borrowings to related parties
Interests paid
Restricted cash guaranteed for bank borrowings
Net cash generated from/(used in) financing
activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Year ended 31 December
2014
2015
2016
RMB’000
RMB’000
RMB’000
(948,275)
136,165
59,971
(27,689)
(27,544)
(12,966)
(975,964)
108,621
47,005
(61)
(23)
(5)
—
3
3
—
(278,024)
(25,000)
—
294,011
12,750
(61)
15,967
(12,252)
1,543,660
788,230
1,300,000
958,750
1,087,850
1,249,656
(420,000)
(1,709,660)
(1,041,230)
(820,470)
(373,526)
(1,058,703)
(189,595)
(217,012)
(189,637)
82,974
31,954
(295,706)
1,155,319
(392,164)
(35,620)
179,294
(267,576)
(867)
91,204
270,498
2,922
270,498
2,922
2,055

— II-6 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

II NOTES TO THE FINANCIAL INFORMATION

1 GENERAL INFORMATION

Qingdao Calxon is a limited liability company established on 4 September 2009 in the People’s Republic of China (the “PRC”) and principally engaged in the businesses of real estate property development in Qingdao, the PRC. The address of its registered office is No. 568-4, Middle Heilongjiang Road, Licang District, Qingdao City, Shandong Province, the PRC.

Pursuant to the equity transfer agreement (the “Agreement”) entered between Calxon Group (Shanghai) Co., Ltd. (the “Vendor” or “Calxon Shanghai”) and Sunac Real Estate (Qingdao) Co., Ltd. (“Sunac Qingdao”), a wholly owned subsidiary of the Company on 29 November 2016, Sunac Qingdao agreed to acquire and the Vendor agreed to sell the entire equity interests in Qingdao Calxon held by the Vendor. As of the date of the Agreement, Calxon Shanghai was the sole equity holder of Qingdao Calxon.

The statutory financial statements of Qingdao Calxon for the years ended 31 December 2014 and 2015, were audited by Zhongxingcai Guanghua Certified Public Accountants LLP.

The Financial Information is presented in thousand unit of Renminbi (“RMB”), unless otherwise stated.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

2.1 Basis of preparation

The principal accounting policies applied in the preparation of the financial statements of Qingdao Calxon, which are in accordance with the HKFRSs issued by the HKICPA, are set out below. The financial information has been prepared under the historical cost convention.

The preparation of the financial information 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 Qingdao Calxon’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial information are disclosed in Note 5.

— II-7 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

2.1.1 Changes in accounting policy and disclosures

Standards, amendments to standards and interpretations that are effective during the Relevant Periods have been adopted and applied by Qingdao Calxon consistently throughout the Relevant Periods.

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 2016 and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of Qingdao Calxon, except the following set out below:

HKFRS 9 ‘Financial Instruments’ addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The standard does not need to be applied until 1 January 2018 but is available for early adoption. Qingdao Calxon is currently assessing whether it should adopt HKFRS 9 before its mandatory date.

While Qingdao Calxon has yet to undertake a detailed assessment of the classification and measurement of financial assets, ‘trade and other receivables’ would appear to satisfy the conditions for classification as at amortized costs and hence there will be no change to the accounting for these assets. Accordingly Qingdao Calxon does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.

There will be no impact on Qingdao Calxon’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and Qingdao Calxon does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 ‘Financial Instruments: Recognition and Measurement’ and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under HKFRS 15 ‘Revenue from Contracts with Customers’, lease receivables, loan commitments and certain financial guarantee contracts. While Qingdao Calxon has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in earlier recognition of credit losses.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of Qingdao Calxon’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

HKFRS 15 ‘Revenue from Contracts with Customers’ has been issued by the HKICPA as a new standard for the recognition of revenue. This will replace HKAS 18 which covers revenue arising from the sale of goods and the rendering of services and HKAS 11 which covers construction contracts.

— II-8 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the adoption. The new standard is effective for first interim periods within annual reporting periods beginning on or after 1 January 2018, and will allow early adoption.

At this stage, Qingdao Calxon is not able to estimate the effect of the new rules on Qingdao Calxon’s financial information. Qingdao Calxon will make more detailed assessments of the effect over the next twelve months. Qingdao Calxon does not expect to adopt the new standard before 1 January 2018.

HKFRS 16, ‘Leases’ addresses the definition of a lease, recognition and measurement of leases and establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from HKFRS 16 is that most operating leases will be accounted for on balance sheet for lessees. The standard replaces HKAS 17 ‘Leases’, and related interpretations. An entity shall apply HKFRS 16 for annual periods beginning on or after 1 January 2019 and earlier application is permitted subject to the entity adopting HKFRS 15 ‘Revenue from Contracts with Customers’ at the same time.

Management is currently assessing the effects of applying the new standard on Qingdao Calxon’s financial information and at this stage, Qingdao Calxon is not able to estimate the effect of the new rules on Qingdao Calxon’s financial statements. Qingdao Calxon will make more detailed assessments of the effect over the next twelve months. Qingdao Calxon does not expect to adopt the new standard before 1 January 2019.

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

2.2 Functional and presentation currency

Items included in the Financial Information of Qingdao Calxon are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Financial Information is presented in RMB, which is the functional and presentation currency of Qingdao Calxon.

2.3 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 recognised as a separate asset, as appropriately when it is probable that future economic benefits associated with the item will flow to Qingdao Calxon and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the year in which they are incurred.

— II-9 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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

Vehicles 5 years Furniture and office equipment 5 years

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

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 (Note 2.5).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within ‘other income and gains’ or ‘other expenses and losses’ in the income statement.

2.4 Land use rights

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

Land use rights which are held for development for sale are inventories and measured at lower of cost and net realisable value.

2.5 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised 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 (CGUs). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.6 Financial assets

2.6.1 Classification

The classification depends on the purpose for which the financial assets were acquired. Qingdao Calxon classifies its financial assets in the category of loans and receivables. Management determines the classification of its financial assets at initial recognition.

— II-10 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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 the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets. Qingdao Calxon’s loans and receivables comprise trade and other receivables, amounts due from related companies, restricted cash and cash and cash equivalent in the balance sheet.

2.6.2 Recognition and measurement

Regular way purchases and sales of financial assets are recognised on the trade-date — the date on which Qingdao Calxon commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and Qingdao Calxon has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

2.6.3 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 recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of Qingdao Calxon or the counterparty.

2.7 Impairment of financial assets carried at amortized cost

Qingdao Calxon assesses at the end of each reporting period 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.

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 reorganisation, 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 profit

— II-11 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

or loss. If a loan 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, Qingdao Calxon 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 profit or loss.

2.8 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.

2.9 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.

2.10 Construction contracts

A construction contract is defined by HKAS 11, ‘Construction contracts’, as a contract specifically negotiated for the construction of an asset .

When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract by reference to the stage of completion. Contract costs are recognised as expenses by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

— II-12 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable.

Variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.

Qingdao Calxon uses the ‘percentage-of-completion’ method to determine the appropriate amount to recognize in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion.

On the balance sheet, Qingdao Calxon reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognised profits (less recognized losses) exceed progress billings; a contract represents a liability where the opposite is the case.

2.11 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.

2.12 Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

2.13 Paid-up capital

Capital contributed by the equity holders is classified as equity.

2.14 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables 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.

— II-13 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

2.15 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 removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless Qingdao Calxon has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

2.16 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.

2.17 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement.

(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 PRC. Management periodically evaluates positions taken in

— II-14 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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.

(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 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.

(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.

2.18 Employee benefits

(a) Employee leave entitlement

Employee entitlements to annual leave are recognized when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave are not recognized until the time of leave.

(b) Retirement benefits

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

— II-15 —

APPENDIX II

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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, Qingdao Calxon 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 Qingdao Calxon in independently administrated funds managed by the governments.

(c) Termination benefits

Termination benefits are payable when employment is terminated by Qingdao Calxon before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Qingdao Calxon recognises termination benefits at the earlier of the following dates: (a) when Qingdao Calxon can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of HKAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

2.19 Provisions

Provisions for legal claims are recognized when: Qingdao Calxon 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. 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-16 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

2.20 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied or services provided, stated net of discounts, returns and value added taxes. Qingdao Calxon 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 Qingdao Calxon’s activities, as described below. Qingdao Calxon 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 property transfer notice has been delivered to the purchase pursuant to the sales agreement and recoverability of related receivables is reasonably assured. Deposits and instalments received on properties sold prior to the date of revenue recognition are included in the balance sheets as “Advanced proceeds from customers” within current liabilities.

(b) Construction contracts

When the outcome of a fixed price construction contract can be estimated reliably, revenue is recognized on the percentage of completion method, measured by reference to the proportion that costs incurred to date to estimated total costs for each contract, after making due allowances for contingencies. Provisions are made for any foreseeable losses when they are identified. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

(c) Interest income

Interest income is recognized using the effective interest method. When a loan or receivable is impaired, Qingdao Calxon 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.

2.21 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-line basis over the year of the lease.

— II-17 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

3 FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

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

(a) Market risk

(i) Cash flow and fair value interest rate risk

Qingdao Calxon’s interest rate risk arises from borrowings, interest-bearing other payables and interest-bearing amounts due to related parties. Borrowings issued at variable rates expose Qingdao Calxon to cash flow interest-rate risk which is partially offset by cash held at variable rates. Borrowings, other payables and amounts due to related parties at fixed rates expose Qingdao Calxon to fair value interest-rate risk.

Qingdao Calxon has not used any interest rate swaps to hedge its exposure to interest rate risk.

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

RMB’ million Floating rates Less than 1 year 1 to 5 years Sub-total At 31 December 2014 Borrowings 70,000 700,000 770,000 Amounts due to related parties — — — At 31 December 2015 Borrowings 150,000 647,200 797,200 Amounts due to related parties — — — At 31 December 2016 Trade and other payable — — — Borrowings 353,200 — 353,200 Amounts due to related parties — — —	Less than 1 year 1,289,660 1,484,475 551,030 2,283,584 2,481,064 153,800 75,500	Fixed rates 1 to 5 years Sub-total 360,000 1,649,660 — 1,484,475 150,000 701,030 — 2,283,584 — 2,481,064 1,250,000 1,403,800 — 75,500	Total 2,419,660 1,484,475
			1,498,230 2,283,584
			2,481,064 1,757,000 75,500

As at 31 December 2014, 2015 and 2016, if the interest rates on borrowings had been 100 basis points higher/lower with all other variables held constant, the post-tax loss for the year would have been higher/lower by RMB0.6 million, RMB1.1 million and RMB1.2 million respectively, as a result of higher/lower interest expense on floating rate borrowings.

— II-18 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

(b) Credit risk

Qingdao Calxon has no significant concentrations of credit risk. The maximum extent of Qingdao Calxon’s credit exposure in relation to financial assets is represented by the aggregate balance of cash and cash equivalents, restricted cash, trade and other receivable, amounts due from related parties included in the consolidated balance sheets. Cash transactions are limited to high-credit-quality banks. Qingdao Calxon has policies in place to ensure that sales of properties are made to customers with an appropriate financial strength and appropriate percentage of down payment. Credit is granted to customers with sufficient financial strength. It also has continuous monitoring procedures to ensure the collection of the receivables as scheduled and follow up action is taken to recover overdue debts, if any.

Certain customers of Qingdao Calxon have arranged bank financing for their purchases of the properties. Qingdao Calxon has provided guarantees to secure obligations of such customers for repayments, normally up to the time when the customers obtain the legal certificates of the property ownership.

(c) Liquidity risk

Management aims to maintain sufficient cash to meet funding requirement for operations and monitor rolling forecasts of Qingdao Calxon’s cash on the basis of expected cash flow.

— II-19 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

The table below analyses Qingdao Calxon’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.

Less than 1 year RMB ’000 At 31 December 2014 Borrowings 1,534,984 Trade and other payables 1,060,259 Amounts due to related parties 1,484,475 4,079,718 At 31 December 2015 Borrowings 788,363 Trade and other payables 837,720 Amounts due to related parties 2,283,584 3,909,667 At 31 December 2016 Borrowings 626,254 Trade and other payables 4,395,871 Amounts due to related parties 75,500 5,097,625	Between 1 and 2 years RMB ’000 660,181 — — 660,181 832,584 — — 832,584 94,500 — — 94,500	Between 2 and 5 years RMB ’000 470,160 — — 470,160 — — — — 1,294,079 — — 1,294,079	Over 5 years RMB ’000 — — — — — — — — — — — —	Total RMB ’000 2,665,325 1,060,259 1,484,475
				5,210,059
				1,620,947 837,720 2,283,584
				4,742,251
				2,014,833 4,395,871 75,500
				6,486,204

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

3.2 Capital risk management

Qingdao Calxon’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns for equity holders.

Qingdao Calxon 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 Qingdao Calxon and capital efficiency, project operating cash flows and projected capital expenditures.

— II-20 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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

The gearing ratios of Qingdao Calxon as at 31 December 2014, 2015, 2016 were as follows:

Borrowings Less: Restricted cash Cash and cash equivalents Net debts Total equity Gearing ratio	31 2014 RMB’000 2,419,660 (149,448) (270,498) 1,999,714 918,316 218%	December 2015 RMB’000 1,498,230 (180,844) (2,922) 1,314,464 784,847 167%	2016 RMB’000 1,757,000 (568,770) (2,055) 1,186,175 695,168 171%

4 FAIR VALUE ESTIMATION

The different levels regarding fair value determination have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The carrying amounts of Qingdao Calxon’s financial assets and financial liabilities approximated their fair values.

The fair value of the financial guarantee is considered not to be significant.

— II-21 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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.

Qingdao Calxon makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal 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 discussed below.

(a) PRC corporate income taxes and deferred taxation

Qingdao Calxon is primarily subject to various PRC taxes, as it is engaged in property development in the PRC. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Qingdao Calxon recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

Deferred tax assets relating to certain temporary differences and tax losses are recognised when management considers to be probable that future taxable profit will be available against which the temporary differences or tax losses can be utilised. The outcome of their actual utilisation may be different.

(b) Estimated net realizable value of properties under development and completed properties held for sale

Qingdao Calxon assesses the carrying amounts of properties under development and completed properties held for sale based on the net realisable value of these properties, taking into account costs to completion based on past experience and net sales value based on prevailing market conditions. Provision is made when events or changes in circumstances indicate that the carrying amounts may not be realised. The assessment requires the use of judgement and estimates. If the management changes the estimated selling price and the estimated costs and expenses to completion, the estimated net realizable value would be affected; such difference will impact the provisions of inventories which have been recognized.

— II-22 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

(c) Revenue recognition for sales of properties

Qingdao Calxon has recognised revenue from the sale of properties held for sale. The assessment of when an entity has transferred the significant risks and rewards of ownership to purchasers requires the examination of the circumstances of the transaction. In most cases, the transfer of risks and rewards of ownership coincides with the date when the equitable interest in the property vests with the purchasers upon release of the respective property to the purchasers.

Qingdao Calxon provides guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain purchasers of Qingdao Calxon’s properties. These guarantees will expire when relevant property ownership certificates are mortgaged to banks by the purchasers. In order to obtain mortgage loans, the purchasers need to settle certain percentage of the total contract amount in accordance with related PRC regulations upon delivery of the properties. The directors of Qingdao Calxon are of the opinion that such settlements provide sufficient evidence of the purchasers’ commitment to honour contractual obligation of the bank loans. In addition, based on past experiences, there were no significant defaults of mortgage facilities by the purchasers resulting in the calling of the bank guarantees provided. Accordingly, the directors believe that significant risks and rewards associated to the ownership of the properties have been transferred to the purchasers.

(d) Percentage of completion of construction works

Qingdao Calxon recognises the revenue according to the percentage of completion of the individual contract of construction works. The percentage of completion is determined by the aggregated cost for the individual contract incurred at the end of the reporting period compared with the estimated budgeted cost. Management’s estimation of the cost incurred to date and the budgeted cost is primarily based on construction budget and actual cost report prepared by internal quantity surveyors, where applicable. Corresponding revenue from contract work is also estimated by management based on the percentage of completion and budgeted revenue. Because of the nature of the activities undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is completed usually fall into different accounting periods. Qingdao Calxon regularly reviews and revises the estimation of both contract revenue and contract cost in the budget prepared for each construction contract as the contract progresses.

— II-23 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

6 Deferred income tax

Deferred income tax assets (hereafter “DTA”): - to be recovered within 12 months - to be recovered after more than 12 months Deferred income tax liabilities (hereafter “DTL”): - to be settled within 12 months - to be settled after more than 12 months DTA - net	31 2014 RMB’000 20,571 124,279 144,850 31 2014 RMB’000 1,117 52,515 53,632 91,218	December 2015 RMB’000 45,063 162,723 207,786 December 2015 RMB’000 8,067 64,342 72,409 135,377	2016 RMB’000 21,277 209,606
			230,883
			2016 RMB’000 19,962 45,905
			65,867
			165,016

— II-24 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

The movement on DTA and DTL during the year, without taking into consideration of offsetting of balance within the same tax jurisdiction, is as follows:

(a) DTA

		Deferred
	Deductible	expenses for
	tax loss	tax purpose	Total
	RMB’000	RMB’000	RMB’000
At 1 January 2014	96,274	12,902	109,176
Credited to profit or loss	28,190	7,484	35,674
At 31 December 2014	124,464	20,386	144,850
Credited to profit or loss	38,371	24,565	62,936
At 31 December 2015	162,835	44,951	207,786
Credited/(charged) to profit or loss	47,816	(24,719)	23,097
At 31 December 2016	210,651	20,232	230,883

DTA are recognised for tax losses carry-forward to the extent that the realisation of the related benefit through the taxable profits for the deduction periods according to the PRC tax laws and regulations is probable.

— II-25 —

APPENDIX II

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

(b) DTL

At 1 January 2014 Charged to profit or loss At 31 December 2014 Charged to profit or loss At 31 December 2015 Credited to profit or loss At 31 December 2016	Prepaid LAT RMB’000 27,432 1,929 29,361 9,998 39,359 (3,358) 36,001	Deferred revenue for tax purpose RMB’000 17,345 6,926 24,271 8,779 33,050 (3,184) 29,866	Total RMB’000 44,777 8,855
			53,632
			18,777
			72,409
			(6,542)
			65,867

7 PROPERTIES UNDER DEVELOPMENT (“PUD”)

Land use rights costs Other development costs Capitalized financial costs Work in progress Less: Provision for loss on realisable values	31 December 2014 2015 RMB’000 RMB’000 3,259,938 3,243,903 447,259 1,002,260 605,473 853,415 606,406 316,751 4,919,076 5,416,329 — (102,893) 4,919,076 5,313,436	2016 RMB’000 3,614,229 1,029,992 835,040 316,751
		5,796,012 —
		5,796,012

The properties under development are all located in the PRC.

As at 31 December 2014, 2015, 2016, certain PUD with carrying amount of RMB1,629 million, RMB3,329 million and RMB2,827 million, respectively were pledged as collateral for Qingdao Calxon’s borrowings (Note 16).

— II-26 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

As at 31 December 2014, 2015, 2016, the amount of properties under development expected to be recovered after more than one year upon completion of construction was nil, RMB 1,094 million and RMB 1,830 million, respectively. The remaining balance is expected to be recovered within one year.

Qingdao Calxon provided substitute construction service for a Qingdao government investment project. Work in progress was the net balance sheet position for ongoing contracts, which was as follows:

Contract costs incurred plus recognised profit less foreseeable losses Less: progress billings	31 2014 RMB’000 1,124,428 (518,022) 606,406	December 2015 RMB’000 1,267,004 (950,253) 316,751	2016 RMB’000 1,267,004 (950,253)
			316,751

8 COMPLETED PROPERTIES HELD FOR SALE

						December
					2014	2015	2016
					RMB’000	RMB’000	RMB’000
Completed	properties	held	for	sale	511,476	434,196	912,431

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

As 31 December 2014, 2015, certain completed properties held for sale with carrying amount of RMB327 million and RMB51 million, respectively were pledged as collateral for Qingdao Calxon’s borrowings. As 31 December 2016, no completed properties held for sale were pledged (Note 16).

9 TRADE AND OTHER RECEIVABLES

Trade receivables (a) Other receivables (b) Amount due from a former related party	31 2014 RMB’000 53,619 319,327 — 372,946	December 2015 RMB’000 403,162 174,650 — 577,812	2016 RMB’000 401,554 156,053 25,000
			582,607

— II-27 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

As at 31 December 2014, 2015 and 2016, the carrying amounts of trade and other receivables approximate their respective fair values.

The carrying amounts of Qingdao Calxon’s trade and other receivables are denominated in RMB.

(a) Trade receivables

As at 31 December 2014, 2015 and 2016, no trade receivables were impaired. The following trade receivables were past due but not impaired. The ageing analysis of these trade receivables is as follows:

Within 90 days Between 90 and 180 days Between 181 and 365 days Over 365 days	31 December 2014 2015 RMB’000 RMB’000 3,127 — 8,707 396,304 408 — 41,377 6,858 53,619 403,162	2016 RMB’000 — — — 401,554
		401,554

Qingdao Calxon provided substitute construction service for a Qingdao government investment project. The past due receivables amounted to RMB12 million, RMB391 million, RMB391 million, respectively as at 31 December 2014, 2015 and 2016. The project was completed in 2015, and Qingdao Calxon is making final settlement with the government. The directors of the Company are of the view that this past due receivable from the government would be collected after the final settlement and no provision was made as at 31 December 2014, 2015 and 2016. Besides the substitute construction fee, the remaining past due trade receivables almost relate to numbers of independent customers for whom there is no recent history of default.

(b) As at 31 December 2014, 2015 and 2016, other receivables are mainly deposits for land bidding and expenses paid on behalf of local government, which are interest free and repayable on demand.

— II-28 —

APPENDIX II

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

10 PREPAYMENTS

Prepaid taxes - LAT - Business tax and surcharges - Corporate income tax Prepaid construction costs RESTRICTED CASH Restricted cash from property presale proceeds Guarantee deposits as reserve for bank loans Deposit for issued bank acceptance Others	31 December 2014 2015 RMB’000 RMB’000 52,594 73,349 29,722 78,466 32,333 39,122 13,162 500 127,811 191,437 31 December 2014 2015 RMB’000 RMB’000 104,293 153,693 21,262 4,308 15,000 — 8,893 22,843 149,448 180,844	2016 RMB’000 86,520 65,105 38,917 500
		191,042
		2016 RMB’000 247,301 300,014 — 21,455
		568,770

11 RESTRICTED CASH

Qingdao Calxon earns interest on restricted cash at bank, at floating bank deposit rates.

12 CASH AND CASH EQUIVALENTS

							31 December
						2014	2015	2016
						RMB’000	RMB’000	RMB’000
Cash	at	bank	and	in	hand	270,498	2,922	2,055

Qingdao Calxon earns interests on cash at bank, at floating bank deposit rates and there was no bank overdraft.

— II-29 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

13 OTHER CURRENT ASSETS

					31 December
				2014	2015	2016
				RMB’000	RMB’000	RMB’000
Commissions	for	property	presale	4,469	32,266	30,834

The other current assets were the sales commission fee for properties pre-sold by sales agencies. These pre-sold properties were expected to be delivered within one year.

14 FINANCIAL INSTRUMENTS BY CATEGORY

Loans and receivables Trade and other receivables Amounts due from related parties Cash and cash equivalents Restricted cash Financial liabilities at amortized costs Borrowings Trade and other payables Amounts due to related parties	31 December 2014 2015 RMB’000 RMB’000 372,946 577,812 28,737 12,750 270,498 2,922 149,448 180,844 821,629 774,328 2,419,660 1,498,230 1,060,259 837,720 1,484,475 2,283,584 4,964,394 4,619,534	2016 RMB’000 582,607 — 2,055 568,770
		1,153,432
		1,757,000 4,395,871 75,500
		6,228,371

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

— II-30 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

15 TRADE AND OTHER PAYABLES

Trade payables Other payables Notes payables Interests payable Other taxes payable Payroll and welfare payables Amounts due to former related parties	31 December 2014 2015 RMB’000 RMB’000 996,603 779,223 37,429 53,976 15,000 — 11,227 4,521 8,810 913 4,420 5,322 — — 1,073,489 843,955	2016 RMB’000 1,823,368 57,597 30,232 3,610 46,305 1,183 2,481,064
		4,443,359

(a) The ageing analysis of Qingdao Calxon’s trade payables is as follows:

31 December 2014 2015 RMB’000 RMB’000 Within 90 days 549,598 84,196 Between 90 and 180 days 42,739 3,425 Between 181 and 365 days 43,636 16,296 Over 365 days 360,630 675,306 996,603 779,223	2016 RMB’000 1,080,292 88,389 231,919 422,768
	1,823,368

(b) As at 31 December 2016, the amounts due to former related parties were payables to China Calxon Group Co.,Ltd. (“Calxon China”) and Calxon Shanghai amounted to RMB1,389 million and RMB1,092 million respectively, which carried interest rates at 10% per annum and repayable within one year. Calxon China and Calxon Shanghai were the related parties of Qingdao Calxon before 30 December 2016 (Note 28(a)).

— II-31 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

16 BORROWINGS

Non-current Secured: Bank borrowings Other borrowings Less: Current portion of long-term borrowings Current Secured: Bank borrowings Other borrowings Current portion of long-term borrowings Total	31 December 2014 2015 RMB’000 RMB’000 1,160,000 1,307,200 576,000 — 1,736,000 1,307,200 (676,000) (510,000) 1,060,000 797,200 300,000 109,000 383,660 82,030 683,660 191,030 676,000 510,000 1,359,660 701,030 2,419,660 1,498,230	2016 RMB’000 1,507,000 250,000
		1,757,000 (507,000)
		1,250,000
		— —
		— 507,000
		507,000
		1,757,000

Qingdao Calxon’s borrowings as at 31 December 2014, 2015 and 2016 was repayable as follows:

Within 1 year Between 1 and 2 years Between 2 and 5 years	31 December 2014 2015 RMB’000 RMB’000 1,359,660 701,030 600,000 797,200 460,000 — 2,419,660 1,498,230	2016 RMB’000 507,000 — 1,250,000
		1,757,000

The effective interest rates for the year ended 31 December 2014, 2015 and 2016 were 9.63%, 9.03% and 8.27% respectively.

— II-32 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

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

					31 December
				2014	2015	2016
				RMB’000	RMB’000	RMB’000
6	months	or	less	770,000	797,200	353,200

(b) As at 31 December 2014, 2015 and 2016, Qingdao Calxon’s bank borrowing of RMB1,979 million, RMB1,441 million and RMB1,757 million were secured by its certain properties under development and completed properties held for sale respectively.

As at 31 December 2014, 2015 and 2016, Qingdao Calxon’s bank borrowing of RMB2,420 million, RMB1,468 million and RMB1,757 million were guaranteed by Calxon China.

(c) As at 31 December 2014, 2015 and 2016, Qingdao Calxon had no committed undrawn banking facilities.
(d) The fair value of non-current borrowings approximate their carrying amount, as the impact of discounting is not significant.

17 REVENUE

Sale of properties Construction services	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 1,084,082 78,027 761,418 647,072 142,575 — 1,731,154 220,602 761,418	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 1,084,082 78,027 761,418 647,072 142,575 — 1,731,154 220,602 761,418
		761,418

— II-33 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

18 EXPENSES BY NATURE

Cost of completed properties sold Cost of construction services Impairment provision/(write back of provision) for properties Business tax and surcharges Advertisement and promotion costs Staff cost (Note 19) Other tax expenses Office and travel expenses Entertainment expense Consulting fee Depreciation Others	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 1,086,192 77,279 841,224 610,445 134,505 — — 102,893 (102,893) 60,709 4,370 36,240 16,675 12,598 8,176 14,713 16,091 10,157 4,700 4,821 3,978 3,283 2,176 1,695 2,816 1,583 571 1,648 1,641 1,825 1,862 875 449 822 330 794 1,803,865 359,162 802,216	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 1,086,192 77,279 841,224 610,445 134,505 — — 102,893 (102,893) 60,709 4,370 36,240 16,675 12,598 8,176 14,713 16,091 10,157 4,700 4,821 3,978 3,283 2,176 1,695 2,816 1,583 571 1,648 1,641 1,825 1,862 875 449 822 330 794 1,803,865 359,162 802,216
		802,216

19 EMPLOYEE BENEFIT EXPENSES

Wages and salaries Staff welfare Pension costs	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 11,904 14,017 8,207 1,351 1,233 1,048 1,458 841 902 14,713 16,091 10,157	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 11,904 14,017 8,207 1,351 1,233 1,048 1,458 841 902 14,713 16,091 10,157
		10,157

— II-34 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

20 SENIOR MANAGEMENT’S EMOLUMENTS

The five individuals whose emoluments were the highest in Qingdao Calxon for the years ended 31 December 2014, 2015 and 2016 were as follows:

			Year	ended 31 December	ended 31 December
			2014	2015	2016
			RMB’000	RMB’000	RMB’000
Salaries	and	bonuses	5,444	5,484	5,841

The emoluments fell within the following bands:

Emolument bands Less than RMB500,000 RMB500,001 - RMB1,000,000 RMB1,000,001 - RMB4,000,000	Year ended 31 December 2014 2015 2016 3 3 1 1 1 2 1 1 2 5 5 5	Year ended 31 December 2014 2015 2016 3 3 1 1 1 2 1 1 2 5 5 5
		5

21 OTHER INCOME AND GAINS

Default penalty income Others	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 147 5,777 110 101 268 — 248 6,045 110	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 147 5,777 110 101 268 — 248 6,045 110
		110

— II-35 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

22 OTHER EXPENSES AND LOSSES

Default penalty expenses Others	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 323 2,588 2 31 54 2 354 2,642	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 323 2,588 2 31 54 2 354 2,642
		2,642

23 FINANCE INCOME AND COSTS

Finance expenses Interest expense: - Bank borrowings - Other borrowings - Borrowings from related parties Less: amounts capitalised on qualifying assets Finance income - Interest income on bank deposits Finance expenses - net	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 101,894 125,111 131,238 85,013 85,195 6,786 129,903 84,785 132,729 (278,807) (247,943) (193,322) 38,003 47,148 77,431 (2,063) (2,389) (1,443) 35,940 44,759 75,988	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 101,894 125,111 131,238 85,013 85,195 6,786 129,903 84,785 132,729 (278,807) (247,943) (193,322) 38,003 47,148 77,431 (2,063) (2,389) (1,443) 35,940 44,759 75,988
		77,431
		(1,443)
		75,988

The capitalization rate used to determine the amount of the interest incurred eligible for capitalization in the years ended 31 December 2014, 2015 and 2016 were 9.63%, 9.03% and 8.27% respectively.

— II-36 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

24 INCOME TAX CREDIT

	Year	ended 31 December	ended 31 December
	2014	2015	2016
	RMB’000	RMB’000	RMB’000
Corporate income tax
- Deferred income tax	26,819	44,159	29,639

The corporate income tax on Qingdao Calxon’s loss before tax differs from the theoretical amount that would arise using the tax rate applicable to losses as follows:

Loss before income tax Income tax calculated at statutory rate of 25% Tax effect of expenses not deductible for tax purposes	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 (108,405) (177,628) (119,318) (27,101) (44,407) (29,830) 282 248 191 (26,819) (44,159) (29,639)	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 (108,405) (177,628) (119,318) (27,101) (44,407) (29,830) 282 248 191 (26,819) (44,159) (29,639)
		(29,639)

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

— II-37 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

25 CASH (USED IN)/ GENERATED FROM OPERATIONS

Loss before income tax Adjustments for: - Finance costs - Impairment provision/(write back of provision) for properties - Depreciation - Loss on disposal of property, plant and equipment Changes in working capital - Restricted cash other than guarantee deposits as reserve for bank loans and for issued bank acceptance - Properties under development and completed properties held for sale, net - Trade and other receivables - Prepayments - Other current assets - Trade and other payables - Advanced proceeds from customers Cash (used in)/ generated from operations	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 (108,405) (177,628) (119,318) 38,003 47,148 77,431 — 102,893 (102,893) 1,862 875 449 — 31 14 (17,676) (63,350) (92,220) (633,009) (172,030) (664,596) 55,890 (204,866) 20,205 29,957 (36,082) 13,361 (2,046) (27,797) 1,432 264,469 (222,828) 1,119,251 (577,320) 889,799 (193,145) (948,275) 136,165 59,971	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 (108,405) (177,628) (119,318) 38,003 47,148 77,431 — 102,893 (102,893) 1,862 875 449 — 31 14 (17,676) (63,350) (92,220) (633,009) (172,030) (664,596) 55,890 (204,866) 20,205 29,957 (36,082) 13,361 (2,046) (27,797) 1,432 264,469 (222,828) 1,119,251 (577,320) 889,799 (193,145) (948,275) 136,165 59,971
		59,971

26 COMMITMENTS

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

		31 December
	2014	2015	2016
	RMB’000	RMB’000	RMB’000
Property development expenditure
- Contracted but not provided for	749,502	1,458,030	1,237,773

— II-38 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

27 CONTINGENCIES

(a) Guarantee on mortgage facilities

Qingdao Calxon had the following contingent liabilities in respect of financial guarantees on mortgage facilities:

		31 December
	2014	2015	2016
	RMB’000	RMB’000	RMB’000
Guarantees in respect of mortgage facilities for
certain purchasers of Qingdao Calxon’s property
units	226,525	595,715	496,072

Qingdao Calxon has arranged bank financing for certain purchasers of its property units and provided guarantees to secure obligations of such purchasers for repayments. Such guarantees terminate upon the earlier of (i) the transfer of the real estate ownership certificate to the purchaser which will generally occur within an average period of six months of the properties delivery dates; or (ii) the satisfaction of mortgage loans by the purchasers of the properties.

Pursuant to the terms of the guarantees, upon default of mortgage payments by these purchasers, Qingdao Calxon is responsible to repay the outstanding mortgage principal together with accrued interest and penalties owed by the defaulting purchasers to the banks and Qingdao Calxon is entitled to take over the legal title and possession of the related properties. Qingdao Calxon’s guarantee period starts from the date of grant of the mortgage. The directors consider that the likelihood of default of payments by purchasers is minimal.

(b) Guarantees for borrowing of Sunac Qingdao

							31 December
						2014	2015	2016
						RMB’000	RMB’000	RMB’000
Guarantees	for	borrowing	of	Sunac	Qingdao	—	—	1,098,600

As at 31 December 2016, Qingdao Calxon provided guarantees in respect of facilities granted by certain bank relating to the loans arranged for Sunac Qingdao. Pursuant to the terms of the guarantees, upon default in payments by Sunac Qingdao, Qingdao Calxon is responsible to repay the outstanding principals together with accrued interest and penalty owed by Sunac Qingdao to the banks.

— II-39 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

28 RELATED PARTY TRANSACTIONS

The immediate holding company of Qingdao Calxon is the Company as at 31 December 2016.

(a) Name and relationship with other related party

Name	Relationship	Effective period
Zhejiang Commercial Group Co.,	Ultimate controlling	Before 24 April 2016
Ltd. 浙江省商業集團有限公司	party
(“Zhejiang Commercial”)
Calxon China 嘉凱城集團股份有限	Indirect controlling	Before 30 December
公司	party	2016
Evergrande Real Estate Group	Indirect controlling	From 24 April 2016 to
Limited 恒大地產集團有限公司	party	30 December 2016
Calxon Shanghai 嘉凱城集團（上海）	Parent company	Before
有限公司		30 December 2016
Zhejiang Zheneng Real Estate	Non-controlling	Before
Co.,Ltd. 浙江省浙能房地產有限公	equity holder	13 October 2016
司(“Zhejiang Zheneng”)
Qingdao Baitong Urban	Non-controlling	Before
Construction Group Co.,Ltd. 青島	equity holder	13 October 2016
百通城市建設集團股份有限公司
(“Qingdao Baitong”)
Shanghai Youshun Construction	Controlled by the	Before
Decoration Engineering Co.,Ltd.	same ultimate	30 December 2016
上海友舜建築裝飾工程有限公司	controlling party
(“Shanghai Youshun”)
Shanghai Judian Trading Co.,Ltd. 上	Controlled by the	Before
海聚典貿易有限公司(“Shanghai	same ultimate	30 December 2016
Judian”)	controlling party
Sunac Qingdao 融創（青島）置地	Parent company	From
有限公司		30 December 2016

— II-40 —

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

(b) Related party transactions

Besides the guarantee for the borrowing of Sunac Qingdao disclosed in Note 27, during the years ended 31 December 2014, 2015 and 2016, Qingdao Calxon had the following significant transactions with related parties:

(i) Funds received from

Calxon China Calxon Shanghai Zhejiang Zheneng Sunac Qingdao Qingdao Baitong	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 14,900 450,000 296,414 739,850 637,850 876,522 189,000 — — — — 75,500 15,000 — 1,220 958,750 1,087,850 1,249,656	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 14,900 450,000 296,414 739,850 637,850 876,522 189,000 — — — — 75,500 15,000 — 1,220 958,750 1,087,850 1,249,656
		1,249,656

(ii) Funds repayments

Calxon China Calxon Shanghai Zhejiang Zheneng Qingdao Baitong Zhejiang Commercial	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 21,470 117,000 214,000 794,000 251,774 185,000 — — 568,430 5,000 — 91,273 — 4,752 — 820,470 373,526 1,058,703	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 21,470 117,000 214,000 794,000 251,774 185,000 — — 568,430 5,000 — 91,273 — 4,752 — 820,470 373,526 1,058,703
		1,058,703

(iii) Interests incurred

Calxon China Calxon Shanghai Zhejiang Zheneng Qingdao Baitong	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 89,565 81,105 89,291 22,413 — 14,373 16,790 — 19,659 1,135 3,680 9,406 129,903 84,785 132,729	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 89,565 81,105 89,291 22,413 — 14,373 16,790 — 19,659 1,135 3,680 9,406 129,903 84,785 132,729
		132,729

— II-41 —

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

APPENDIX II

(iv) Interests paid to

Calxon China Zhejiang Zheneng Qingdao Baitong (v) Acceptance of guarantee on loans Calxon China (vi) Funds paid to Calxon Shanghai Shanghai Youshun Shanghai Judian	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 43,430 — — — — 36,449 — — 14,253 43,430 — 50,702 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 2,419,660 1,468,000 — Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 265,274 — — 12,750 — — — 25,000 — 278,024 25,000	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 43,430 — — — — 36,449 — — 14,253 43,430 — 50,702 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 2,419,660 1,468,000 — Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 265,274 — — 12,750 — — — 25,000 — 278,024 25,000
		25,000

— II-42 —

APPENDIX II

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

(vii) Funds received back

Calxon Shanghai Shanghai Youshun	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 294,011 — — — 12,750 — 294,011 12,750	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 — 294,011 — — — 12,750 — 294,011 12,750
		12,750

The related party transactions disclosed above were carried out at terms mutually negotiated between Qingdao Calxon entities and the respective related party.

(c) Key management compensation

Salaries and other short-term benefits *Related party balances* Amounts due from related parties Calxon Shanghai Shanghai Youshun	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 5,825 5,866 5,841 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 28,737 — — — 12,750 — 28,737 12,750 —	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 5,825 5,866 5,841 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 28,737 — — — 12,750 — 28,737 12,750 —
		2016 RMB’000 — —
		—

(d) Related party balances

(i) Amounts due from related parties

The amounts due from related parties are unsecured, interest-free and repayable on demand.

— II-43 —

APPENDIX II

ACCOUNTANT’S REPORT OF THE TARGET COMPANY

(ii) Amounts due to related parties

Calxon China Calxon Shanghai Zhejiang Zheneng Qingdao Baitong Zhejiang Commercial Sunac Qingdao	31 December 2014 2015 RMB’000 RMB’000 803,283 1,217,388 — 386,076 585,220 585,220 91,220 94,900 4,752 — — — 1,484,475 2,283,584	2016 RMB’000 — — — — — 75,500
		75,500

The amounts due to related parties carried interest rates at 9.6% to 12% per annum and repayable on demand.

29 EVENTS AFTER THE BALANCE SHEET DATE

No significant events occured after the balance sheet date.

III SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Qingdao Calxon in respect of any period subsequent to 31 December 2016 up to the date of this report. No dividend or distribution has been declared or made by Qingdao Calxon in respect of any period subsequent to 31 December 2016.

Yours faithfully,

PricewaterhouseCoopers Certified Public Accountants Hong Kong

— II-44 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Qingdao Calxon Real Estate Development Company Limited (“Qingdao Calxon”)

FINANCIAL OVERVIEW

Project portfolio

As of 31 December 2016, approximately 19% of the undelivered total GFA (“GFA”) of the Qingdao Calxon Project was completed property. Approximately 8% of the undelivered total GFA was during the construction phase. The remaining approximately 73% of the undelivered total GFA of the project was only undeveloped land. The pre-sale of the property has commenced before 31 December 2016. According to the project development plan, the construction of the undeveloped land will commence in April 2017 and will be completed between December 2018 and December 2019. According to the development plan, the property product types of the Qingdao Calxon Project will include high-rises, houses, villas, retail properties and parking spaces.

Revenue

Qingdao Calxon recorded a total revenue of RMB1,731.2 million, RMB220.6 million and RMB761.4 million for the years ended 31 December 2014, 2015 and 2016 respectively, which were attributable to the delivery of properties developed by Qingdao Calxon in amount of RMB1,084.1 million, RMB78.0 million and RMB761.4 million and the performance of substitute construction services for local government in amount of RMB647.1 million, RMB142.6 million and RMB0 million for the respective periods. The decrease in revenue for the year ended 31 December 2015 comparing with that for the year ended 31 December 2014 was mainly due to the delivery of completed properties were concentrated during the year ended 31 December 2014 and there were barely newly completed properties during the year ended 31 December 2015.

Cost of Sales

Cost of sales 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 costs and business tax, and the cost incurred in relation to the performance of substitute construction services. For the years ended 31 December 2014, 2015 and 2016, the cost of sales of Qingdao Calxon amounted to RMB1,757.3 million, RMB319.0 million and RMB774.6 million, which comprised the cost in relation to the delivery of properties in amount of RMB1,146.9 million, RMB184.5 million and RMB774.6 million, and cost in relation to the performance of substitute construction services in amount of RMB610.4 million, RMB134.5 million and RMB0 million. The decrease in cost of sales for the year ended 31 December 2015 comparing with that for the year ended 31 December 2014 was in line with the fluctuation of revenue.

— III-1 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Gross profit

For the years ended 31 December 2014, 2015 and 2016, gross profit amounted to RMB-26.2 million, RMB-98.4 million and RMB-13.2 million, with the gross profit margin of -2%, -44% and -2% respectively, which comprised the gross profit margin for property delivery of -6%, -137% and -2%, and the gross profit margin for substitute construction services of 6%, 6% and 0% for the respective periods. The huge negative gross profit margin for the year ended 31 December 2015 was due to an impairment provision for properties in amount of RMB102.9 million was recognized during that year for prudent purpose.

Selling and marketing costs

The selling and marketing costs of Qingdao Calxon 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 Qingdao Calxon amounted to RMB24.9 million, RMB18.1 million and RMB12.2 million for the years ended 31 December 2014, 2015 and 2016, respectively. The selling and marketing costs fluctuated from year to year in line with the scale of the pre-sale activities.

Administrative expenses

The administrative expenses of Qingdao Calxon during the period mainly included administrative staff costs, office and travel expenses, consulting expenses, taxes and other general and administrative expenses. For the years ended 31 December 2014, 2015 and 2016, the administrative expenses of Qingdao Calxon amounted to RMB21.6 million, RMB22.1 million and RMB15.4 million respectively. The decrease in administrative expenses for the year ended 31 December 2016 comparing with that for the year ended 31 December 2015 was mainly due to the decrease in headcount.

Headcount and policy of employee remuneration

As at 31 December 2014, 2015 and 2016, the number of employees in Qingdao Calxon was approximately 116, 90 and 83 respectively.

According to the relevant regulations in the PRC, Qingdao Calxon is required to make contribution to social insurance contribution scheme, which includes the endowment insurance, medical insurance and unemployment insurance for the employees.

— III-2 —

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

Finance expenses

Finance expenses Interest expenses for bank borrowings Interest expenses for borrowings from other financial institutions Interest expenses for borrowings from related parties Less: Capitalized finance expenses Total	Year ended 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 101,894 125,111 131,238 85,013 85,195 6,786 129,903 84,785 132,729 (278,807) (247,943) (193,322) 38,003 47,148 77,431

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

Borrowings and collateral

Non-current Secured: Bank borrowings Other borrowings Less: Current portion of long-term borrowings Current Secured: Bank borrowings Other borrowings Add: Current portion of long-term borrowings Total	As at 31 December 2014 2015 2016 RMB’000 RMB’000 RMB’000 1,160,000 1,307,200 1,757,000 576,000 — — (676,000) (510,000) (507,000) 1,060,000 797,200 1,250,000 300,000 109,000 — 383,660 82,030 — 676,000 510,000 507,000 1,359,660 701,030 507,000 2,419,660 1,498,230 1,757,000

— III-3 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Qingdao Calxon’s borrowings of RMB2,420 million, RMB1,468 million and RMB1,757 million as at 31 December 2014, 2015 and 2016 were either secured by Qingdao Calxon’s completed properties and properties under development for sale amounting to RMB1,956 million, RMB3,380 million and RMB2,827 million or secured by China Calxon Group Co., Ltd., parent of Qingdao Calxon.

Charges on the assets

As at 31 December 2014, 2015 and 2016, Qingdao Calxon’s completed properties and properties under development for sale amounting to RMB1,956 million, RMB3,380 million and RMB2,827 million respectively were pledged as collaterals for its bank borrowings.

Cash position

As at 31 December 2014, 2015 and 2016, the total balances of cash and cash equivalents of Qingdao Calxon were RMB270.5 million, RMB2.9 million and RMB2.1 million, respectively.

Foreign exchange risk

Qingdao Calxon 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 borrowings

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

	Floating rates	Floating rates	Floating rates		Fixed rates
	Less than	1 to 5		Less than	1 to 5
	1 year	years	Sub-total	1 year	years	Sub-total	Total
	(RMB	(RMB	(RMB	(RMB	(RMB	(RMB	(RMB
	million)	million)	million)	million)	million)	million)	million)
Borrowings
At 31 December 2014	120.0	650.0	770.0	1,289.7	360.0	1,649.7	2,419.7
At 31 December 2015	150.0	647.2	797.2	551.0	150.0	701.0	1,498.2
At 31 December 2016	353.2	—	353.2	153.8	1,250.0	1,403.8	1,757.0

The fluctuations in the interest rate between the financial years were mainly due to different sources of borrowings, which were affected by different factors such as the market conditions and the timing of the funds.

Qingdao Calxon did not use any interest rate swaps to hedge its exposure against interest rate risk during the three years ended 31 December 2014, 2015 and 2016.

— III-4 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

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 by adding total equities and net debt. As at 31 December 2014, 2015 and 2016, Qingdao Calxon’s gearing ratios were 69%, 63% and 63%, respectively.

The project development of Qingdao Calxon was mainly financed by capital contribution from shareholders and borrowings from banks and non-bank financial institutions. The fluctuations of the gearing ratio during the periods were due to the changes of financing structure in line with different stages of project development.

Contingent liabilities

As at 31 December 2014, 2015 and 2016, Qingdao Calxon had contingent liabilities in respect of financial guarantees on mortgage facilities in amount of RMB226.5 million, RMB595.7 million and RMB496.1 million respectively.

As at 31 December 2016, the contingent liabilities arising from the guarantees provided by Qingdao Calxon to Sunac Real Estate (Qingdao) Co., Ltd. in respect of its borrowings amounted to RMB1,098.6 million.

Material acquisition and disposal

Qingdao Calxon did not have any material acquisition or disposal of subsidiaries and associated companies for each of the three years ended 31 December 2014, 2015 and 2016.

Significant investments held and their performance

As at 31 December 2014, 2015 and 2016, Qingdao Calxon did not hold any investments.

Business prospects

Qingdao Calxon has been engaged in the businesses of real estate property development in Qingdao. It is expected that the completion of the Acquisition would not have any significant impact to the daily operation and administration of Qingdao Calxon, and Qingdao Calxon will continue to be operated and managed by the existing management team. Based on the forecast on the foreseeable future of the projects, it is believed that the project developed by Qingdao Calxon will continue to be developed as planned with a profitable outcome and positive cash flow.

— III-5 —

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET COMPANY

APPENDIX III

Future plans for capital assets

Qingdao Calxon will continue to engage in the business of development of real estate properties upon completion of the Acquisition. The present properties under development will continue to be developed as planned.

Expected sources of funding

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

— III-6 —

APPENDIX IV

VALUATION REPORT

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular, received from DTZ Cushman & Wakefield Limited, an independent property valuer, in connection with its opinion of value of the property interest acquired by the Group as at 28 February 2017.

==> picture [192 x 75] intentionally omitted <==

16/F Jardine House 1 Connaught Place Central Hong Kong 4 May 2017

The Directors Sunac China Holdings Limited 10/F, Building C7 Magnetic Plaza Binshuixi Road Nankai District Tianjin PRC

Dear Sirs,

Instructions, Purpose & Valuation date

In accordance with your instructions for us to value the properties held by Qingdao Calxon Real Estate Development Co., Ltd. which has been 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 certificate), 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 value of such properties as at 28 February 2017 (the “valuation date”).

Definition of Market Value

Our valuation of each of the property represents its Market Value. The definition of Market Value adopted in The HKIS Valuation Standards 2012 Edition follows the International Valuation Standards published by the International Valuation Standards Council (“IVSC”). Market Value is defined by the IVSC 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”.

— IV-1 —

VALUATION REPORT

APPENDIX IV

Valuation Basis and Assumptions

Our valuations exclude an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of 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 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 term 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, the Group’s PRC legal advisor, regarding the title to each of the properties and the interest of the Group in the properties. In valuing the properties, we have assumed that the owner of each of the properties has an enforceable title to the properties and has free and uninterrupted rights to use, occupy or assign the properties for the whole of the 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 licenses, in accordance with the information provided by the Group are set out in the notes of the valuation certificate.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value. In respect of the properties, we have relied on the legal opinion given to us by the Group’s PRC legal advisor.

Method of Valuation

In valuing property in Group I, property 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 properties in Group II and III, properties under development and for future development respectively 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 approach by making

— IV-2 —

VALUATION REPORT

APPENDIX IV

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 valuation date.

Source of Information

We have been provided by the Group with extracts of documents in relation to the titles to each of 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, identification of land and buildings, completion date of buildings, construction cost, site and floor areas, interest attributable to be acquired by 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 valuation. 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 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.

Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of any onerous nature which could affect their values.

Site Inspection

Mr. Hanson Han, our Qingdao office valuer, inspected the exterior and, whenever possible, the interior of the properties on 13 January 2016. Mr. Hanson Han has about 6 years’ experience in property valuation in the PRC. However, we have not carried out investigations on site to determine the suitability of the ground conditions and the services etc. for any future development. Our valuation is prepared on the assumption that these aspects are satisfactory and that no unexpected costs or delays will be incurred during the construction period. 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.

— IV-3 —

VALUATION REPORT

APPENDIX IV

Currency

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

We enclose herewith our summary of valuations and valuation certificates.

Yours faithfully, for and on behalf of

DTZ Cushman & Wakefield Limited Andrew K.F. Chan

Registered Professional Surveyor (General Practice) Registered China Real Estate Appraiser MSc, MRICS, MHKIS Regional Director Valuation & Advisory Services, Greater China

Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor who has over 29 years of experience in the valuation of properties in the PRC.

— IV-4 —

VALUATION REPORT

APPENDIX IV

SUMMARY OF VALUATIONS

	Property	Market value in existing	Market value in existing
		state as at 28 February
			2017
			(RMB)
Group I - Property for Sale in the PRC
1.	Unsold and completed portion of Shidai City on Land Plot Nos.		1,466,000,000
	D1, S1 and S2, East of Shimei’an Tourist Spots, North of Fuyu
	Road, West of Jinchuan Road, Licang District, Qingdao, Shandong
	Province, the PRC
	中國山東省青島市李滄區十梅庵景區以東、富裕路以北、金川路以西時代城項目
	D1、S1、S2地塊完工未售部分
	Sub-total of Group I :		1,466,000,000
Group II - Property under development in the PRC
2.	The under construction portion of Shidai City on Land Plot No. S2,		807,000,000
	East of Shimei’an Tourist Spots, North of Fuyu Road, West of
	Jinchuan Road, Licang District, Qingdao, Shandong Province, the
	PRC
	中國山東省青島市李滄區十梅庵景區以東、富裕路以北、金川路以西時代城項目
	S2地塊在建工程
	Sub-total of Group II :		807,000,000
Group III - Property for future development in the PRC
3.	Development site for portion of Shidai City on Land Plot Nos. D3,		6,963,000,000
	S6-3, S8, S13, S20, T1-2, T1-3 and T2 of Shidai City, East of
	Shimei’an Tourist Spots, North of Fuyu Road, West of Jinchuan
	Road, Zhengxing Town, Licang District, Qingdao, Shandong
	Province, the PRC

中國山東省青島市李滄區十梅庵景區以東、富裕路以北、金川路以西時代城項目
D3、S6-3、S8、S13、S20、T1-2、T1-3、T2地塊待建土地
Sub-total of Group III :	6,963,000,000
Grand total of Groups I to III :	9,236,000,000

— IV-5 —

VALUATION REPORT

APPENDIX IV

VALUATION CERTIFICATE

Group I - Property for Sale in the PRC

				Market value in
			Particulars of	existing state as at 28
	Property	Description and tenure	occupancy	February 2017
1.	Unsold and	Shidai City is a composite development	As at the	RMB1,466,000,000
	completed portion	developed on 11 parcels of land with a total site	valuation date,	(100% interest
	of Shidai City on	area of approximately 836,076.20 sq m.	the property	acquired by the
	Land Plot Nos. D1, S1 and S2, East of	Completed in 2016, the property comprises the	was vacant.	Group: RMB1,466,000,000)
	Shimei’an Tourist	unsold and completed portion on Land Plots
	Spots, North of	Nos. D1, S1 and S2 of Shidai City and has a
	Fuyu Road, West	total gross floor area with details as follows:
	of Jinchuan Road,	Use Approximate
	Licang District,	Gross Floor Area
	Qingdao, Shandong	(sq m)
	Province, the PRC
		Residential 73,183.92
	中國山東省青島市	Commercial 2,362.00
	李滄區十梅庵景區以東、富裕路以	Ancillary facilities 8,627.97
	北、金川路以西時	Basement 66,845.62
	代城項目	Total 151,019.51
	D1、S1、S2地塊
	完工未售部分	The property has been held with land use rights
		for various terms for residential, commercial,
		public service, and scientific uses (see Note. 1).

Notes:-

(1) According to 25 Real Estate Title Certificates issued by 青島市人民政府 (People’s Government of Qingdao), the land use rights of the property have been vested in 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) with details as follows: -

Certificate No. (2015)0039618 2013128506 2013128548 2013128654 2013128594 201264571 201258706 201258807 201258810 201485441 201485442	Date of issue 14 April 2011 24 October 2013 24 October 2013 24 October 2013 24 October 2013 11 June 2012 23 May 2012 23 May 2012 23 May 2012 21 July 2014 21 July 2014	Expiry date of land use term 27 December 2060 7 April 2053 7 April 2083 7 April 2063 7 April 2063 29 December 2050 27 December 2080 27 December 2060 27 December 2060 12 December 2083 12 December 2063	Use Residential Commercial Residential Scientific Public service Commercial Residential Public service Scientific Residential Public service	Land Plot No. S1 S2 S2 S2 S2 D1 D1 D1 D1 D3 D3	Site area (sq m)
					158,402.20 3,222.35 135,845.74 1,918.06 2,901.65 1,304.00 108,971.00 1,845.67 1,459.03 10,688.42 134.79

— IV-6 —

APPENDIX IV

VALUATION REPORT

Certificate No. 2014112512 2014112506 2014112516 2014112528 2014116191 2014116184 2014116182 2014135390 2014135403 2014135391 2014135406 201311463 20170029641 & 20170029627	Date of issue 26 September 2014 26 September 2014 26 September 2014 26 September 2014 10 October 2014 10 October 2014 10 October 2014 25 November 2014 25 November 2014 25 November 2014 25 November 2014 4 February 2013 10 April 2017	Expiry date of land use term 29 May 2083 29 May 2053 29 May 2063 29 May 2063 29 May 2083 29 May 2063 29 May 2053 12 December 2083 12 December 2063 12 December 2063 12 December 2083 27 December 2050 25 December 2056 25 December 2086	Use Residential Commercial Public service Scientific Residential Public service Commercial Residential Public service Scientific Residential Commercial Commercial Residential	Land Plot No. S8 S8 S8 S8 S13 S13 S13 T1-2 T1-2 T1-2 T1-3 T2 S20 Total:		Site area (sq m)
						74,887.35 8,376.78 874.79 530.18 4,021.79 64.99 4,915.52 61,386.42 539.49 1,387.58 5,563.80 37,769.20 90,300.10
						717,310.90

We have not been provided with Real Estate Title Certificate for land plot S6-3 of Shidai City with a site area of approximately 118,765.30 sq m, while we have been provided with Grant Contract of Land Use Right for Land plot S6-3 dated Dacember 2016. According to the PRC legal opinion, the land premium for land plot S6-3 has been fully settled in March 2017 and the Group is in the process of obtaining the Real Estate Title Certificate. According to the PRC legal opinion, there is no legal obstacle for the Group to obtain the Real Estate Title Certificate.

(2) According to 3 Grant Contracts of Land Use Rights between the 青島市國土資源局和房屋管理局 (Land Resources and Housing Management Bureau of Qingdao) and 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.), the land use rights of the property have been contracted to be granted to 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) with details as follows:-

Contract No. 2010-0156 2013-0016 2010-0185	Date of issue 28 December 2010 8 April 2013 28 December 2010	Land use term 70 years 50 years 40 years 70 years 50 years 50 years 50 years 70 years 50 years 50 years	Use Residential Public service Commercial Residential Public service Commercial Science and education Residential Public service Science and education Total:	Site area (sq m) 158,402.20 143,887.80 112,275.70 414,565.70	Land Plot No. S1 S2 D1	Above-ground Gross Floor Area (sq m)	Above-ground Gross Floor Area (sq m)
							192,496.00 187,543.00 123,124.00
							503,163.00

— IV-7 —

APPENDIX IV

VALUATION REPORT

(3) According to 12 Commodity Housing Pre-sale Permits issued by 青島市國土資源局和房屋管理局 (Land Resources and Housing Management Bureau of Qingdao), the property with a total gross floor area of 358,816.62 sq m are permitted for pre-sale.

Permit No. 2011-102 2011-111 2012-036 2012-047 2013-010 2014-078 2014-098 2015-015 2015-036 2013-095 2013-112 2014-039	Date of Issue 28 November 11 16 December 2011 24 August 2012 21 September 12 12 March 2013 25 September 2014 21 November 2014 1 April 2015 29 May 2015 25 October 2013 29 November 2013 30 May 2014	Address Building 13-18# and 29-32# Building 1-12# and 19-28# Building 35#, 36#, 41#, 42# and 44# Building 37-39# Building 33#, 34# and 46# Building 19#, 24# and 28# Building 27# Building 20# Building 21# and 25# Building 3#, 5-8#, 4#, 13#, 14#, 21#, 22# , 24# and 30-32# Building 1#, 2#, 4#, 12#, 15#, 27#, 29# and 33# Building 19#, 20# and 35# Total:	Gross	Floor Area (sq m)
				15,995.68 31,076.22 55,889.60 45,686.10 30,782.49 38,515.27 12,221.20 8,276.68 27,877.91 40,133.84 30,962.70 21,398.93
				358,816.62

(4) According to 47 Construction Works Completion Examination Certificates dated between 19 December 2012 and 20 April 2016, the construction works of the property with a total gross floor area of 392,094.69 sq m have been examined and such examination has been recorded.

As advised by the Group, the property comprises a portion of the gross floor area as stated in the Construction Works Completion Examination Certificates mentioned above.

(5) According to Business License No. 913702006937608887 dated 29 December 2016, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) was established on 4 September 2009 as a limited company with a registered capital of RMB1,200,000,000 for a valid operation period from 4 September 2009.
(6) 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) We have not been provided with Real Estate Title Certificate for land plot S6-3 of Shidai City with a site area of approximately 118,765.30 sq m, while we have been provided with Grant Contract of Land Use Right for Land plot S6-3 dated December 2016. According to the PRC legal opinion, the land premium for land plot S6-3 has been fully settled in March 2017 and the Group is in the process of obtaining the Real Estate Title Certificate. According to the PRC legal opinion, there is no legal obstacle for the Group to obtain the Real Estate Title Certificate;
(ii) The State-owned Land Use Rights Certificates of the property are valid, legal and enforceable under the PRC laws;
(iii) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development 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;

— IV-8 —

APPENDIX IV

VALUATION REPORT

(iv) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance; and
(v) All land premium stated in the Grant Contract of State-owned Land Use Rights have been paid and settled.
(7) The status of title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Real Estate Title Certificates Yes (Portion) Grant Contracts of Land Use Rights Yes Commodity Housing Pre-sale Permits Yes Construction Works Completion Examination Certificates Yes Business License Yes

— IV-9 —

VALUATION REPORT

APPENDIX IV

VALUATION CERTIFICATE

Group II - Property under development in the PRC

Property Description and tenure The under Shidai City is a composite development construction developed on 11 parcels of land with a total site portion of Shidai area of approximately 836,076.20 sq m. City on Land Plot No. S2, East of The property comprises the under construction Shimei’an Tourist portion of Shidai City on Land Plot No. S2. As Spots, North of advised by the Group, the proposed development Fuyu Road, West on the property is scheduled to be completed in of Jinchuan Road, 2017 and has a proposed gross floor area with details as follows:

The under construction portion of Shidai City on Land Plot No. S2, East of Shimei’an Tourist Spots, North of Fuyu Road, West of Jinchuan Road, Licang District, Qingdao, Shandong Province, the PRC

Use	Approximate
	Gross Floor Area
	(sq m)
Residential	53,055.96
Commercial	3,671.59
Ancillary facilities	2,536.00
Basement	57,979.97
Total	117,243.52

中國山東省青島市李滄區十梅庵景區以東、富裕路以北、金川路以西時代城項目S2地塊在建工程

	Market value in
Particulars of	existing state as at 28
occupancy	February 2017
As at the	RMB807,000,000
valuation date,	(100% interest to be
the property	acquired by the
was under	Group:
construction.	RMB807,000,000)

The property has been held with land use rights for various terms for residential, commercial, public service, and scientific uses (see Note. 1).

Notes:-

(1) According to 25 Real Estate Title Certificates issued by 青島市人民政府 (People’s Government of Qingdao), the land use rights of the property have been vested in 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) with details as follows: -

Certificate No. (2015)0039618 2013128506 2013128548 2013128654 2013128594 201264571 201258706 201258807	Date of issue 14 April 2011 24 October 2013 24 October 2013 24 October 2013 24 October 2013 11 June 2012 23 May 2012 23 May 2012	Expiry date of land use term 27 December 2060 7 April 2053 7 April 2083 7 April 2063 7 April 2063 29 December 2050 27 December 2080 27 December 2060	Use Residential Commercial Residential Scientific Public service Commercial Residential Public service	Land Plot No. S1 S2 S2 S2 S2 D1 D1 D1	Site area (sq m)
					158,402.20 3,222.35 135,845.74 1,918.06 2,901.65 1,304.00 108,971.00 1,845.67

— IV-10 —

APPENDIX IV

VALUATION REPORT

Certificate No. 201258810 201485441 201485442 2014112512 2014112506 2014112516 2014112528 2014116191 2014116184 2014116182 2014135390 2014135403 2014135391 2014135406 201311463 20170029641 & 20170029627	Date of issue 23 May 2012 21 July 2014 21 July 2014 26 September 2014 26 September 2014 26 September 2014 26 September 2014 10 October 2014 10 October 2014 10 October 2014 25 November 2014 25 November 2014 25 November 2014 25 November 2014 4 February 2013 10 April 2017	Expiry date of land use term 27 December 2060 12 December 2083 12 December 2063 29 May 2083 29 May 2053 29 May 2063 29 May 2063 29 May 2083 29 May 2063 29 May 2053 12 December 2083 12 December 2063 12 December 2063 12 December 2083 27 December 2050 25 December 2056 25 December 2086	Use Scientific Residential Public service Residential Commercial Public service Scientific Residential Public service Commercial Residential Public service Scientific Residential Commercial Commercial Residential	Land Plot No. D1 D3 D3 S8 S8 S8 S8 S13 S13 S13 T1-2 T1-2 T1-2 T1-3 T2 S20 Total:		Site area (sq m)
						1,459.03 10,688.42 134.79 74,887.35 8,376.78 874.79 530.18 4,021.79 64.99 4,915.52 61,386.42 539.49 1,387.58 5,563.80 37,769.20 90,300.10
						717,310.90

(2) According to Grant Contract of Land Use Right No. 2013-0016 between the 青島市國土資源局和房屋管理局 (Land Resources and Housing Management Bureau of Qingdao) and 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) on 8 April 2013, the land use rights of the property have been contracted to be granted to 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) with details as follows:-

Location : West of Tianshui Road, East of Hushan East Planning Road, South of Planning Tangsha Road, North of Jinshui Road, Licang District Site Area : 143,887.80 sq m Uses : Residential, Public service, Commercial, Science and education Land Use Term : 70 years for residential use 50 years for public service and science and education use 40 years for commercial use Total Gross Floor Area : 187,543.00 sq m (above-ground)

(3) According to Planning Permit for Construction Use of Land No. 0200201304048 issued by 青島市規劃局 (Planning Bureau of Qingdao) on 11 September 2013, the construction site of a parcel of land with a total site area of 143,887.80 sq m, is in compliance with the urban planning requirements.
(4) According to 2 Planning Permits for Construction Works Nos. 370200201304086 and 370200201304087 issued by 青島市規劃局 (Planning Bureau of Qingdao) on 27 November 2013, the construction works of the development with a total construction scale of 262,874.12 sq m are in compliance with the construction works requirements and have been approved.

— IV-11 —

APPENDIX IV

VALUATION REPORT

(5) According to 2 Commencement Permits for Construction Works issued by 青島市城鄉建設委員會 (Qingdao Urban and Rural Construction Commission) dated 26 October 2014, the construction works of the development with a total construction scale of 262,874.12 sq m are in compliance with the requirements for works commencement and have been permitted.
(6) As advised by the Group, portion of the property with a total gross floor area of 31,150.08 sq m have been pre-sold for a consideration of about RMB228,221,696 . In the course of our valuation, we have included such pre-sold portion and taken into account such consideration in our valuation.
(7) As advised by the Group, the total expended construction cost of the property as at the valuation date was RMB98,341,806 whilst the outstanding construction cost for completion of the property as at the valuation date was RMB84,658,194 .
(8) As at the valuation date, the estimated Market Value as if completed of the proposed development is estimated approximately RMB1,161,000,000.
(9) According to Business License No. 913702006937608887 dated 29 December 2016, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) was established on 4 September 2009 as a limited company with a registered capital of RMB1,200,000,000 for a valid operation period from 4 September 2009.
(10) 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) We have not been provided with Real Estate Title Certificate for land plot S6-3 of Shidai City with a site area of approximately 118,765.30 sq m, while we have been provided with Grant Contract of Land Use Right for Land plot S6-3 dated December 2016. According to the PRC legal opinion, the land premium for land plot S6-3 has been fully settled in March 2017 and the Group is in the process of obtaining the Real Estate Title Certificate. According to the PRC legal opinion, there is on legal obstacle for the Group to obtain the Real Estate Title Certificate;
(ii) The State-owned Land Use Rights Certificates of the property are valid, legal and enforceable under the PRC laws;
(iii) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development 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;
(iv) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance; and
(v) All land premium stated in the Grant Contract of State-owned Land Use Rights have been paid and settled.

— IV-12 —

APPENDIX IV

VALUATION REPORT

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

Real Estate Title Certificates Yes (Portion) Grant Contract of Land Use Rights Yes Planning Permit for Construction Use of Land Yes Planning Permits for Construction Works Yes Commencement Permits for Construction Works Yes Business License Yes

— IV-13 —

VALUATION REPORT

APPENDIX IV

VALUATION CERTIFICATE

Group III - Property for future development in the PRC

Property Description and tenure
1. Development site Shidai City is a composite development for the proposed developed on 11 parcels of land with a total site development area of approximately 836,076.20 sq m. known as portion of D3, S6-3, S8, The property comprises portion of Shidai City S13, S20, T1-2, on Land Plot Nos. D3, S6-3, S8, S13, S20, T1-3 and T2 of T1-2, T1-3 and T2 for future development. Shidai City, East of Shimei’an Tourist As advised by the Group, the proposed Spots, North of development on the property is scheduled to be Fuyu Road, West completed between 2018 and 2020 and has the of Jinchuan Road, proposed gross floor area with details as follows:
Licang District, Qingdao, Shandong Storey Approximate Province, the PRC Gross Floor Area (sq m)
中國山東省青島市 Above-ground 886,783.00
李滄區十梅庵景區以東、富裕路以 Under-ground 243,635.00 北、金川路以西 Total 1,130,418.00
時代城項目 D3、S6-3、S8、 The property has been held with land use rights S13、S20、T1-2、 for various terms for residential, commercial, T1-3、T2地塊待建 public service, and scientific uses (see Note. 1). 土地

	Market value in
Particulars of	existing state as at 28
occupancy	February 2017
As at the	RMB6,963,000,000
valuation date,	(100% interest to be
the property	acquired by the
was bare land.	Group:
	RMB6,963,000,000)

Notes:-

Certificate No. (2015)0039618 2013128506 2013128548 2013128654 2013128594 201264571 201258706	Date of issue 14 April 2011 24 October 2013 24 October 2013 24 October 2013 24 October 2013 11 June 2012 23 May 2012	Expiry date of land use term 27 December 2060 7 April 2053 7 April 2083 7 April 2063 7 April 2063 29 December 2050 27 December 2080	Use Residential Commercial Residential Scientific Public service Commercial Residential	Land Plot No. S1 S2 S2 S2 S2 D1 D1	Site area (sq m)
					158,402.20 3,222.35 135,845.74 1,918.06 2,901.65 1,304.00 108,971.00

— IV-14 —

APPENDIX IV

VALUATION REPORT

Certificate No. 201258807 201258810 201485441 201485442 2014112512 2014112506 2014112516 2014112528 2014116191 2014116184 2014116182 2014135390 2014135403 2014135391 2014135406 201311463 20170029641 & 20170029627	Date of issue 23 May 2012 23 May 2012 21 July 2014 21 July 2014 26 September 2014 26 September 2014 26 September 2014 26 September 2014 10 October 2014 10 October 2014 10 October 2014 25 November 2014 25 November 2014 25 November 2014 25 November 2014 4 February 2013 10 April 2017	Expiry date of land use term 27 December 2060 27 December 2060 12 December 2083 12 December 2063 29 May 2083 29 May 2053 29 May 2063 29 May 2063 29 May 2083 29 May 2063 29 May 2053 12 December 2083 12 December 2063 12 December 2063 12 December 2083 27 December 2050 25 December 2056 25 December 2086	Use Public service Scientific Residential Public service Residential Commercial Public service Scientific Residential Public service Commercial Residential Public service Scientific Residential Commercial Commercial Residential	Land Plot No. D1 D1 D3 D3 S8 S8 S8 S8 S13 S13 S13 T1-2 T1-2 T1-2 T1-3 T2 S20 Total:		Site area (sq m)
						1,845.67 1,459.03 10,688.42 134.79 74,887.35 8,376.78 874.79 530.18 4,021.79 64.99 4,915.52 61,386.42 539.49 1,387.58 5,563.80 37,769.20 90,300.10
						717,310.90

We have not been provided with Real Estate Title Certificate for land plot S6-3 of Shidai City with a site area of approximately 118,765.30 sq m, while we have been provided with Grant Contract of Land Use Right for Land plot S6-3 dated December 2016. According to the PRC legal opinion, the land premium for land plot S6-3 has been fully settled in March 2017 and the Group is in the process of obtaining the Real Estate Title Certificate. According to the PRC legal opinion, there is no legal obstacle for the Group to obtain the Real Estate Title Certificate.

(2) According to 8 Grant Contracts of Land Use Rights between the 青島市國土資源局和房屋管理局 (Land Resources and Housing Management Bureau of Qingdao) and 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.), the land use rights of the property have been contracted to be granted to 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) with details as follows:-

Contract No. 2013-0051 2016-0027	Date of issue 13 December 2013 26 December 2016	Land use term 70 years 50 years 70 years 50 years 40 years 50 years	Use Residential Public service Residential Public service Commercial Science and education	Site area (sq m) 10,823.21 118,765.30	Land Plot No. D3 S6-3	Above-ground Gross Floor Area (sq m)
						41,112.00 272,500.00

— IV-15 —

VALUATION REPORT

APPENDIX IV

Contract No. 2013-0037 2013-0038 2016-0026 2013-0049 2013-0050 2010-0184	Date of issue 30 May 2013 30 May 2013 26 December 2016 13 December 2013 13 December 2013 28 December 2010	Land use term 70 years 50 years 50 years 70 years 50 years 40 years 70 years 50 years 40 years 70 years 50 years 50 years 70 years 40 years	Use Residential Public service Science and education Residential Public service Commercial Residential Public service Commercial Residential Public service Science and education Residential Commercial Total:	Site area (sq m) 84,669.10 9,002.30 90,300.10 63,313.49 5,563.80 37,769.20 420,206.50	Land Plot No. S8 S13 S20 T1-2 T1-3 T2	Above-ground Gross Floor Area (sq m)	Above-ground Gross Floor Area (sq m)
							255,520.00 22,160.00 91,400.00 114,072.00 7,600.00 94,422.00
							898,786.00

(3) According to Planning Permit for Construction Use of Land No. 370200201504001 issued by 青島市規劃局 (Planning Bureau of Qingdao) on 19 January 2015, the construction site of a parcel of land with a total site area of 84,669.10 sq m, is in compliance with the urban planning requirements.
(4) As advised by the Group, the property has an outstanding land premium of RMB772,000,000 as at the valuation date.
(5) The market value in existing state of the property as at the valuation date was RMB7,735,000,000. The market value in existing state, after deducting the above-said outstanding land premium of RMB772,000,000, as at the valuation date, was RMB6,963,000,000.
(6) According to Business License No. 913702006937608887 dated 29 December 2016, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) was established on 4 September 2009 as a limited company with a registered capital of RMB1,200,000,000 for a valid operation period from 4 September 2009.
(7) 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) We have not been provided with Real Estate Title Certificate for land plot S6-3 of Shidai City with a site area of approximately 118,765.30 sq m, while we have been provided with Grant Contract of Land Use Right for Land plot S6-3 dated December 2016. According to the PRC legal opinion, the land premium for land plot S6-3 has been fully settled in March 2017 and the Group is in the process of obtaining the Real Estate Title Certificate. According to the PRC legal opinion, there is on legal obstacle for the Group to obtain the Real Estate Title Certificate;

— IV-16 —

VALUATION REPORT

APPENDIX IV

(ii) The State-owned Land Use Rights Certificates of the property are valid, legal and enforceable under the PRC laws;
(iii) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development 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;
(iv) 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has the rights to freely lease, transfer, mortgage and dispose of the land use rights and building ownership of the property provided that where any of the property has been mortgaged, 青島嘉凱城房地產開發有限公司 (Qingdao Calxon Real Estate Development Co., Ltd.) has to discharge the mortgage or obtain the mortgagee’s consent in advance; and
(v) All land premium stated in the Grant Contract of State-owned Land Use Rights have been paid and settled.
(8) The status of title and grant of major approvals and licenses in accordance with the information provided to us by the Group are as follows:

Real Estate Title Certificates Yes (Portion) Grant Contracts of Land Use Rights Yes Planning Permit for Construction Use of Land Yes (Portion) Business License Yes

— IV-17 —

APPENDIX V

RECONCILIATION OF VALUATION OF PROPERTIES

Net book value of the property interests of the Target Company as
presented in the accountant’s report set out in appendix II
- Properties under development
- Completed properties held for sale
Movement for the period from 1 January 2017 to 28 February 2017
- Addition
- Delivery to third parties of properties held for sale
Valuation surplus for the properties interests of the Target Company as
at 28 February 2017
Valuation of the properties interests of the Target Company as at 28
February 2017 as disclosed in the valuation report set out in appendix
IV

RMB’000
5,796,012
912,431

6,708,443
489,613
-2,582,589
4,620,533

9,236,000

— V-1 —

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Director’s interest in the securities of the Company and its associated corporation

As at the Latest Practicable Date, save as disclosed below, none of the Directors or the chief executive of the Company or their respective associates had or was deemed to have any interests and short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

(i) Interest in shares of the Company and/or associated corporation

		Relevant		Approximate
		company	Number of	percentage of
		(including	shares of the	interest in the
	Nature of	associated	relevant	relevant
Name of Director	interest	corporations)	company (1)	company(2)
Mr. Sun Hongbin	Interest in	The Company	2,091,329,884(L)	53.82%
	controlled
	corporations(3)
	Beneficial	The Company	10,090,000(L)	0.26%
	interest
	Beneficial	Sunac	1(L)	100%
	interest	International(4)
Mr. Wang Mengde	Beneficial	The Company	5,600,000(L)	0.14%
	interest

— VI-1 —

APPENDIX VI

GENERAL INFORMATION

		Relevant		Approximate
		company	Number of	percentage of
		(including	shares of the	interest in the
	Nature of	associated	relevant	relevant
Name of Director	interest	corporations)	company (1)	company(2)
Mr. Jing Hong	Beneficial	The Company	6,100,000(L)	0.16%
	interest
Mr. Chi Xun	Beneficial	The Company	784,000(L)	0.02%
	interest
Mr Tian Qiang	Beneficial	The Company	2,602,000(L)	0.07%
	interest
Mr. Shang Yu	Beneficial	The Company	1,150,000(L)	0.03%
	interest

Notes:

(1) The letter “L” denotes the person’s long position in such shares.
(2) Based on 3,885,900,901 shares of the Company in issue as at the Latest Practicable Date.
(3) These shares of the Company were held by Sunac International and 天律標的投資諮詢有限公司 (for identification only, Tianjin Biaodi Investment Consultancy Company Limited) (“ Tianjin Biaodi ”), which were wholly and beneficially owned by Mr. Sun. Mr. Sun was also the sole director of Sunac International. Mr. Sun was deemed to be interested in all these shares of the Company by virtue of the SFO.
(4) 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.

(ii) Interest in the underlying shares of the Company

			Approximate
		Number of	percentage of
		underlying shares	interest in the
Name of Director	Nature of interest	(1)	Company (2)
Mr. Sun Hongbin	Beneficial interest	1,300,000	0.03%
Mr. Wang Mengde	Beneficial interest	7,400,000	0.19%
Mr. Jing Hong	Beneficial interest	3,500,000	0.09%
Mr. Chi Xun	Beneficial interest	6,800,000	0.17%
Mr. Tian Qiang	Beneficial interest	6,600,000	0.17%
Mr. Shang Yu	Beneficial interest	6,300,000	0.16%
Mr. Huang Shuping	Beneficial interest	4,950,000	0.13%
Mr. Li Shaozhong	Beneficial interest	5,700,000	0.15%

— VI-2 —

GENERAL INFORMATION

APPENDIX VI

Note:

(1) The interests in the underlying shares are in relation to the options granted under the share option schemes of the Company.
(2) Based on 3,885,900,901 shares of the Company in issue as at the Latest Practicable Date.

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

(b) Substantial shareholders’ interest

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the Shares or underlying shares of the Company as recorded in the register kept by the Company pursuant to section 336 of the SFO which would fall to be disclosed to the Company under the provisions Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

Long positions in the shares and underlying shares of the Company

			Approximate
			% of the
			issued share
		Number of	capital of
		shares	the
Name of shareholder	Nature of interest	interested	Company(1)
Sunac International	Beneficial interest	2,091,329,884	53.82%
Ping An Bank Company Limited,	Security interest	1,589,549,451	40.91%
Shanghai Pilot Free-Trade Zone
Branch (平安銀行股份有限公司
上海自貿試驗區分行)
Ping An Bank Company Limited	Interest in a controlled	1,589,549,451	40.91%
(平安銀行股份有限公司)	corporation
Ping An Insurance (Group)	Interest in a controlled	1,589,549,451	40.91%
Company of China, Ltd. (中國平	corporation
安保險(集團)股份有限公司)

Note:

(1) Based on 3,885,900,901 shares of the Company in issue as at the Latest Practicable Date.

— VI-3 —

GENERAL INFORMATION

APPENDIX VI

Save as disclosed above, as at the Latest Practicable Date, no other person (other than the Directors or chief executives of the Company) had an interest or short position in the Shares or underlying Shares of the Company which were recorded in the register kept by the Company pursuant to section 336 of the SFO which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

3. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective associates is and was interested in any business apart from the Group’s businesses which competes, or may compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

4. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors had any interest, either directly or indirectly, in any assets which has since 31 December 2016 (being the date to which the latest published audited consolidated financial statements of the Group were made up), up to the Latest Practicable Date, been acquired or disposed of by or leased to, any member of the Group or are proposed to be acquired or disposed of by, or leased to, any member of the Group.

5. DIRECTORS’ SERVICE CONTRACTS

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

6. DIRECTORS’ INTERESTS IN CONTRACT OR ARRANGEMENT OF SIGNIFICANCE

As at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group.

— VI-4 —

GENERAL INFORMATION

APPENDIX VI

7. MATERIAL CONTRACTS

The following contracts (being contracts entered into outside the ordinary course of business carried on by the Group) have been entered into by members of the Group within the two years immediately preceding the date of this circular and up to the Latest Practicable Date:

(a) (i) the equity transfer agreement dated 1 March 2017 entered into between, among others, Beijing Sunac Raycom Real Estate Company Limited (北京融創融科地產有限公司) (“Beijing Sunac”), an indirect wholly-owned subsidiary of the Company, as purchaser, and Tianjin Bolian Investment Partnership Enterprise (Limited Partnership) (天津博聯投資合夥企業（有限合夥）), as vendor, in relation to the acquisition of 30% equity and debt interest in Beijing Rongzhi Ruifeng Investment Company Limited (北京融智瑞豐投資有限公司) at a total consideration of RMB686,812,439.55; (ii) the equity transfer agreement dated 1 March 2017 entered into between, among others, Beijing Sunac, as purchaser, and Lenovo (Beijing) Limited (聯想（北京）有限公司), as vendor, in relation to the acquisition of 49% equity interests in Chengdu Lianchuang Rongjin Investment Limited* (成都聯創融錦投資有限責任公司) at a total consideration of RMB1,617,330,459.59; the total consideration for the acquisitions was RMB2,304,142,899.14;
(b) the contractual arrangements entered into between Sunac Real Estate Group Co., Ltd. (融創房地產集團有限公司) (“Sunac Real Estate”), Tianjin Yingrui Huixin Corporate Management Co., Ltd. (天津盈瑞匯鑫企業管理有限公司), Tianjin Jiarui Huixin Corporate Management Co., Ltd.* (天津嘉睿匯鑫企業管理有限公司), Mr. Wang Peng and/or Mr. Zheng Pu, namely, (i) the exclusive technology consulting and services agreement; (ii) the entrustment agreements; (iii) the exclusive option agreements; (iv) the loan agreements with each of Mr. Wang Peng and Mr. Zheng Pu as borrowers; (v) the equity pledge agreements; and (vi) the confirmation letters from the spouse of each of Mr. Wang Peng and Mr. Zheng Pu, the details of which are set out in the paragraph headed “INFORMATION ON THE CONTRACTUAL ARRANGEMENTS” in the Company’s announcement dated 13 January 2017;
(c) the capital increase agreement dated 9 January 2017 entered into by Sunac Real Estate, Homelink Real Estate Agency Co., Ltd. (北京鏈家房地產經紀有限公司) (“ Homelink ”) and a group of 15 operation shareholders of Homelink, including eight natural persons (namely, Zuo Hui, Shan Yigang, Xu Wangang, Dang Jie, Du Xin, Chen Rong, Ruan Guangjie and Gao Jun) and seven limited partnerships (namely, 上海毓睿投資管理中心(有限合夥) (Shanghai Yurui Investment Management Centre (Limited Partnership)), 上海毓思投資管理中心(有限合夥) (Shanghai Yusi Investment Management Centre (Limited Partnership)), 上海毓揚投資管理中心(有限合夥) (Shanghai Yuyang Investment Management Centre (Limited Partnership)), 上海助鼎聰投資管理中心(有限合夥) (Shanghai Dingcong Investment Management Centre (Limited Partnership)), 上海博雋投資管理中心(有限合夥) (Shanghai Bojun Investment Management Centre (Limited Partnership)), 上海站本投資管理中心(有限合夥) (Shanghai Bojun Investment

— VI-5 —

GENERAL INFORMATION

APPENDIX VI

Management Centre (Limited Partnership)) and 北京合誠創投投資合夥企業(有限合夥) (Shanghai Hecheng Venture Capital Investment Management Centre (Limited Partnership)) in relation to the subscription of the increased registered capital of Homelink at a total consideration of RMB2,600,000,000;

(d) the equity transfer agreement dated 6 January 2017 entered into between Chengdu Sunac Hongchang Properties Development Co., Ltd. (成都融創泓昶房地產開發有限公司) (“ Chengdu Sunac ”), an indirect wholly-owned subsidiary of the Company, and Huoerguosi Bochen Investment Co., Ltd. (霍爾果斯博辰創業投資有限公司), Huoerguosi Chenghui Tantu Investment Co., Ltd. (霍爾果斯誠慧坦途創業投資有限公司), and Huoerguosi Kaige Investment Co., Ltd. (霍爾果斯凱格創業投資有限公司) in relation to the acquisition of the entire equity interest in Chengdu Zixi Commercial Management Co., Ltd. (成都紫希商業管理有限公司) (“ Chengdu Zixi* ”) at a total consideration of RMB1,352,584,598.19;
(e) the equity transfer agreement dated 6 January 2017 entered into between Chengdu Sunac, Chengdu Zixi, Xiao Miaomiao and Xiao Yongqiong in relation to the acquisition of 10% equity interest in the Second Target Company at a total consideration of RMB157,366,946.32;
(f) the cooperation framework agreement dated 20 December 2016 entered into between Hangzhou Rongxinheng Investment Co., Ltd. (杭州融鑫恒投資有限公司) (“ Hangzhou Rongxinheng ”), an indirect wholly-owned subsidiary of the Company, and Hangzhou Jinhan Investment Co., Ltd. (杭州金翰投資有限公司) (“ Hangzhou Jinhan ”) in relation to the acquisition of 17.34% equity and debt interests in Hangzhou Jinhong Properties Co., Ltd.* (杭州金泓置業有限公司) at a total consideration of RMB435,731,198.71;
(g) the cooperation framework agreement dated 20 December 2016 entered into between Hangzhou Rongxinheng and Hangzhou Jinhan in relation to the acquisition of 17.34% equity and debt interests in Hangzhou Jinhe Properties Co., Ltd.* (杭州金合置業有限公司) at a total consideration of RMB148,613,522.92;
(h) the cooperation framework agreement dated 20 December 2016 entered into between Hangzhou Rongxinheng, Jincheng Real Estate Group Co., Ltd. (金成房地產集團有限公司) and Hangzhou Jinhan in relation to the acquisition of 34% equity and debt interests in Hangzhou Ducheng Properties Co., Ltd. (杭州都城置業有限公司) at a total consideration of RMB274,306,530.51;
(i) the Equity Transfer Agreement;
(j) the Guarantee Agreement;
(k) the Counter Guarantee Agreement;

— VI-6 —

GENERAL INFORMATION

APPENDIX VI

(l) the supplemental agreement (the “ Supplemental Agreement 1 ”) dated 28 October 2016 entered into among Sunac Real Estate, Raycom (as defined below) and Legend Holdings (as defined below) to adjust the consideration payable for the equity interests of 40 target companies under the Framework Agreement 1 (as defined below);
(m) the subscription agreement dated 26 September 2016 entered into between the Company and Sunac International Investment Holdings Ltd in connection with the subscription of 453,074,433 new Shares by Sunac International Investment Holdings Ltd at a subscription price of HK$6.18 per Share;
(n) the subscription agreement dated September 2016 entered into between Tianjin Jujin Property Management Ltd. (天津聚金物業管理有限公司) (“ Jujin Property ”), an indirect wholly-owned subsidiary of the Company, and Jinke Property Group Co., Ltd. (金科地產集團股份有限公司) (“ Jinke Property ”), pursuant to which Jujin Property agreed to subscribe for 907,029,478 shares in Jinke Property at a subscription price of RMB4.41 per share, representing a total consideration of RMB3,999,999,997.98;
(o) the asset transfer framework agreement (the “ Framework Agreement 1 ”) dated 16 September 2016 entered into among Sunac Real Estate, an indirect wholly-owned subsidiary of the Company, and Raycom Real Estate Development Co., Ltd. (融科智地房地產股份有限公司) (“ Raycom ”) and Legend Holdings Corporation (聯想控股股份有限公司) (“ Legend Holdings ”) (as amended and supplemented by a supplemental agreement dated 28 October 2016 (the “ Supplemental Agreement 1* ”) entered into by the same parties) pursuant to which Raycom and Legend Holdings agreed to sell, and Sunac Real Estate agreed to purchase: (i) the relevant equity interests of 40 target companies; (ii) the loans and payables owed by the onshore target companies and their respective subsidiaries to Raycom and Legend Holdings; and (iii) the loans owed by an offshore target company to Right Lane Limited (南明有限公司), an offshore subsidiary of Legend Holdings, for a total consideration of approximately RMB13,850,820,000 (having taken into account the adjustments pursuant to the Supplemental Agreement 1, and subject to any other adjustments pursuant to the terms and conditions of the Framework Agreement 1). Pursuant to the adjustment mechanisms in the Framework Agreement I and consultation between the Sunac Real Estate, Raycom and Legend Holdings, the number of target companies finally acquired by the Group under Framework Agreement I was reduced from 40 to 35, and the adjusted total consideration for the acquisitions was approximately RMB15,623,382,700;
(p) the asset transfer framework agreement (the “ Framework Agreement 2 ”) dated 16 September 2016 entered into between Sunac Real Estate and Legend Holdings pursuant to which Legend Holdings agreed to sell and Sunac Real Estate agreed to purchase (i) 100% equity interest in Beijing EnsenCare Holdings Co., Ltd. (北京安信頤和控股有限公司) (“ EnsenCare* ”) at the consideration of RMB87,000,000; and (ii) the outstanding shareholders’ borrowings of RMB50,000,000 owed by EnsenCare to Legend Holdings and accrued but unpaid interest of RMB617,300. As such, the total consideration contemplated under the Framework Agreement 2 shall be RMB137,617,300, subject to adjustments pursuant to the terms and conditions of the Framework Agreement 2;

— VI-7 —

APPENDIX VI

GENERAL INFORMATION

(q) the equity transfer framework agreement dated 22 August 2016 entered into between Hainan Sunac Properties Co., Ltd . (海南融創基業房地產有限公司) (“ Hainan Sunac ”), an indirect wholly-owned subsidiary of the Company, and Hangzhou Jinhan Investment Co., Ltd. (杭州金翰投資有限公司) (“ Hangzhou Jinhan ”), pursuant to which Hainan Sunac agreed to acquire and Hangzhou Jinhan agreed to dispose of 50% equity and debt interests in each of 杭州禾明投資有限公司 (Hangzhou Heming Investment Co., Ltd.), 杭州融悅投資有限公司 (Hangzhou Rongyue Investment Co., Ltd.) and 浙江悅成投資有限公司 (Zhejiang Yuecheng Investment Co., Ltd.*), of which (i) the consideration for the equity interests was RMB1,954,717,510; and (ii) the relevant outstanding shareholder’s borrowings owed by the relevant target companies to Hangzhou Jinhan was RMB99,117,490. Therefore, the aggregate consideration for the acquisition was RMB2,053,835,000;
(r) the framework agreement dated 19 May 2016 (as supplemented by two supplemental agreements both dated 22 July 2016) entered into between the Company and Top Spring International Holdings Limited, pursuant to which the Company agreed to (a) acquire the entire equity interest in six target companies and (b) settle the inter-company loans among the six target companies and/or the project companies owned by such target companies, which are holding interests in property development projects in Shanghai, Nanjing, Shenzhen, Huizhou and Hangzhou in the PRC, at a total adjusted consideration of RMB4,225,230,000;
(s) the cooperation agreement dated 18 March 2016 entered into between Shanghai Sunac Property Development Co., Ltd. (“ Shanghai Sunac ”), a wholly-owned subsidiary of the Company, and Shanghai Moke Real Estate Co. Ltd (上海摩克房地產有限公司) (“ Shanghai Moke ”) in connection with the formation of a joint venture and the acquisition of two target projects. Pursuant to the cooperation agreement, the equity interests of the joint venture will ultimately be held as to 80% and 20% by Shanghai Sunac and Shanghai Moke, respectively, and the joint venture will be responsible for the development of the two target projects. The aggregate amount payable by Shanghai Sunac under the cooperation agreement is approximately RMB3,305,347,400 together with accrued interest;
(t) the cooperation agreement dated 25 February 2016 entered into between Tianjin Sunac Ao Cheng Investment Co., Ltd (“ Tianjin Sunac Ao Cheng ”), a wholly-owned subsidiary of the Company, as purchaser, Sunac Real Estate, as guarantor of the purchaser, Zhengzhou Meisheng Real Estate Development Co. Ltd. (鄭州美盛房地產開發有限公司) (“ Zhengzhou Meisheng ”) as vendor and Henan Zhaoteng Investment Co. Ltd (河南省兆騰投資有限公司), as guarantor of the vendor, pursuant to which, Tianjin Sunac Ao Cheng agreed to acquire and Zhengzhou Meisheng agreed to dispose of 70% equity and debt interests in Zhongmu Meisheng Real Estate Co., Ltd (中牟美盛置業有限公司) (“ Zhongmu Meisheng ”) at a total consideration of RMB753,916,863.21;
(u) the two equity transfer agreements dated 1 February 2016 entered into between Shanghai Sunac as purchaser and Der Group Co. Ltd. (“ Der Group ”) and Mr. HE Yonggang as vendors (collectively the “ Suzhou Vendors ”), pursuant to which (i) Shanghai Sunac agreed to acquire and the Suzhou Vendors agreed to dispose of the entire equity and debt interests

— VI-8 —

APPENDIX VI

GENERAL INFORMATION

in Suzhou Der Taihu Bay Properties Co., Ltd. (“ Suzhou Der Taihu Bay ”), of which the consideration for (a) the equity interests amounted to RMB724,459,419 (after adjustment); and (b) the entire outstanding shareholder’s loan owed by Suzhou Der Taihu Bay to the Suzhou Vendors amounted to RMB685,540,581, representing an aggregate consideration of RMB1,410,000,000 (after adjustment) (“ Acquisition I ”); and (ii) Shanghai Sunac agreed to acquire and the Suzhou Vendors agreed to dispose of the entire equity and debt interests in Suzhou Der Taihu Town Real Estate Co., Ltd. (“ Suzhou Der Taihu Town ”), of which the consideration for (a) the equity interests amounted to RMB28,308,318; and (b) the entire outstanding shareholder’s loan owed by Suzhou Der Taihu Town to the Suzhou Vendors amounted to RMB51,691,682, representing an aggregate consideration of RMB80,000,000 (“ Acquisition II ”). As such, the total consideration for the transactions contemplated under Acquisition I and Acquisition II is RMB1,490,000,000 (after adjustment);
(v) the equity transfer agreement dated 15 January 2016 entered into between Shanghai Sunac Ruifeng Investment Co., Ltd. (上海融創睿豐投資有限公司) (“ Shanghai Sunac Ruifeng ”), a wholly-owned subsidiary of the Company, as purhcaser and Beijing Fengdan Investment Management Co., Ltd. (北京楓丹投資管理有限公司) (“ Beijing Fengdan ”) as vendor in relation to the acquisition of 12.5% equity interest in Shanghai Fengdan Lishe Real Estate Development Co., Ltd. (上海楓丹麗舍房地產開發有限公司) (“ Shanghai Fengdan ”) and the outstanding shareholder’s loan owing by Shanghai Fengdan to Beijing Fengdan at a total consideration of RMB437,500,000;
(w) the equity transfer agreement dated 15 January 2016 entered into between Shanghai Sunac Ruifeng as purhcaser and Shenzhen Zhongshan Xingye Trading Co., Ltd . (深圳市仲山興業貿易有限公司) (“ Shenzhen Zhongshan ”) as vendor in relation to the acquisition of 5% equity interest in Shanghai Fengdan and the outstanding shareholder’s loan owing by Shanghai Fengdan to Shenzhen Zhongshan at a total consideration of RMB175,000,000;
(x) the equity transfer agreement dated 15 January 2016 entered into between Shanghai Sunac Ruifeng as purhcaser and Shenzhen Hua Shun Digital Technology Co., Ltd. (深圳市華順數碼科技有限公司) (“ Shenzhen Hua Shun ”) as vendor in relation to the acquisition of 12.5% equity interest in Shanghai Fengdan and the outstanding shareholder’s loan owing by Shanghai Fengdan to Shenzhen Hua Shun at a total consideration of RMB437,500,000;
(y) the equity transfer agreement dated 15 January 2016 entered into between Shanghai Sunac Ruifeng as purhcaser and Shenzhen SZITIC Property Development Co., Ltd. (深圳深國投房地產開發有限公司) (“ SZITIC Property ”) as vendor in relation to the acquisition of 7.855% equity interest in Shanghai Fengdan and the outstanding shareholder’s loan owing by Shanghai Fengdan to SZITIC Property at a total consideration of RMB274,925,000;
(z) the equity transfer agreement dated 13 January 2016 entered into between Shanghai Sunac and Jiangsu Youyi Hesheng Property Development Co., Ltd. (“ Jiangsu Youyi ”) for an aggregate consideration of RMB1,038,234,731, pursuant to which (i) Shanghai Sunac agreed to acquire and Jiangsu Youyi agreed to dispose of, 95% equity interest in Suzhou

— VI-9 —

GENERAL INFORMATION

APPENDIX VI

Xinyou Real Estate Co. Ltd. (蘇州新友置地有限公司) (“ Suzhou Xinyou ”), for RMB183,652,145, and (ii) Shanghai Sunac agreed to repay on behalf of Suzhou Xinyou the entire outstanding shareholder’s loan in the amount of RMB854,582,586 owing by it to Jiangsu Youyi;

(aa) the agreement dated 4 January 2016 entered into between Shanghai Sunac Ruifeng and Shanghai Pudong Development Group Limited (上海浦東發展(集團)有限公司) (“ Shanghai Pudong Development ”), pursuant to which Shanghai Sunac Ruifeng agreed to acquire 9.4% interest in Shanghai Huafeng for a consideration of RMB752,000,000 and Shanghai Pudong Development was entrusted to hold the 9.4% indirect interest in Shanghai Huafeng on behalf of Shanghai Sunac Ruifeng;
(bb) the supplemental agreement dated 30 November 2015 entered into between, among others, Tianjin Sunac Ao Cheng and Sunac Real Estate, which are both wholly-owned subsidiaries of the Company and Xian Titan Real Estate Group Co., Ltd (“ Xian Titan ”), pursuant to which the parties thereto agreed to amend and supplement the cooperative agreement dated 2 September 2015 with respect to the acquisition of Jinan Lihao Properties Co., Ltd. (濟南立皓置業有限公司) and Jinan Liyuan Properties Co., Ltd. (濟南立遠置業有限公司);
(cc) the supplemental agreements dated 30 November 2015 entered into between, among others, Tianjin Sunac Ao Cheng, Sunac Real Estate and Xian Titan, pursuant to which the parties thereto agreed to amend and supplement the cooperative agreement dated 2 September 2015 with respect to the acquisition of Tianmao Properties (Nanjing)., Ltd. (天茂置業
（南京）有限公司), Titan International Investment Group Limited and Nanjing Titan Technology Investment Development Co., Ltd. (南京天朗科技投資發展有限公司);
(dd) the equity transfer agreement dated 29 October 2015 entered into between Shanghai Sunac Real Estate Development Co., Ltd (“ Shanghai Sunac Real Estate ”), a wholly-owned subsidiary of the Company, as purchaser, and Shanghai Yuehua Kangjian Investment Management Co., Ltd (“ Shanghai Yuehua ”) as vendor, pursuant to which Shanghai Sunac Real Estate agreed to, or would procure its designated wholly-owned subsidiary to, acquire and Shanghai Yuehua agreed to dispose of, the entire equity interest in Shanghai Lingwu Investment Management Co., Ltd. (“ Shanghai Lingwu ”) and the outstanding shareholder’s loan owing by Shanghai Lingwu to Shanghai Yuehua at a total consideration of RMB1,400,000,000;
(ee) the cooperative agreement dated 2 September 2015 entered into between, among others, Tianjin Sunac Ao Cheng and Beijing Sunac Construction Investment Real Estate Co., Ltd (“ Sunac Zhidi ”), which are both wholly-owned subsidiaries of the Company, and Xian Titan, pursuant to which Tianjin Sunac Ao Cheng and Xian Titan agreed to cooperate to establish a joint venture company in Xian, the PRC (the “ Joint Venture ”) with a registered capital of RMB100 million, and was contributed as to 80% by Tianjian Sunac Ao Cheng and 20% by Xian Titan. Upon establishment of the Joint Venture, it (i) shall acquire the equity interest in the two property projects under development in Xian, the PRC held by Xian Titan for a total consideration of RMB187.9 million; (ii) can acquire and develop the projects to be developed by Xian Tital or its affiliated companies in Xian, the PRC by participating in

— VI-10 —

APPENDIX VI

GENERAL INFORMATION

the process of tender, auction and listing; and (iii) shall cooperate with Xian Titan in the acquisition and development of the reserve projects in Xian to be participated or intended to be acquired by Xian Titan or its affiliated companies and subsidiaries in the future by way of joint injection of funds for the establishment of project companies of which Xian Titan and the Joint Venture shall hold no more than 30% and no less than 70% equity interest in such project companies, respectively. Further, pursuant to the cooperative agreement, Tianjin Sunac Ao Cheng agreed to acquire (by itself or through its designated company) the 100% equity interest in the project companies of Xian Titan with property projects located in Jinan, Nanjing and Chengdu of the PRC for a total consideration of RMB496.17 million;
(ff) the equity transfer agreement dated 26 August 2015 entered into between Shanghai Sunac Ruifeng as purchaser and Shenzhen Shenshangzhi Management Co., Ltd. (“ SZ Shenshangzhi ”) as vendor, pursuant to which Shanghai Sunac Ruifeng agreed to acquire and SZ Shenshangzhi agreed to dispose of 14% equity interest in Shanghai Fengdan and the outstanding shareholder’s loan owing by Shanghai Fengdan to SZ Shenshangzhi at a total consideration of RMB329,000,000;
(gg) the equity transfer agreement dated 26 August 2015 entered into between Shanghai Sunac Ruifeng as purchaser and China Resources SZITIC Investment Ltd. (“ CR SZITIC Investment ”) as vendor, pursuant to which Shanghai Sunac Ruifeng agreed to acquire and CR SZITIC Investment agreed to dispose of 10.29% equity interest in Shanghai Fengdan and the outstanding shareholder’s loan owing by Shanghai Fengdan to CR SZITIC Investment at a total consideration of RMB241,815,000;
(hh) the acquisition agreement dated 24 July 2015 entered into between, among others, Ease Success Holdings Limited (“ Ease Success ”), a wholly-owned subsidiary of the Company, as purchaser, and Marvel Leader Investments Limited (“ Marvel Leader ”) as vendor, pursuant to which Ease Success conditionally agreed to acquire and Marvel Leader conditionally agreed to dispose of (i) the entire issued shares in Joyview Group Limited (“ Joyview ”) which in turn indirectly owned 80% equity interest in Chengdu Guojia Zhide Zhiye Co., Ltd. (成都國嘉志得置業有限公司) (“ Chengdu Guojia ”) and (ii) the outstanding shareholder’s loan owing by Joyview to Marvel Leader, at a total consideration of RMB2,755,553,457.92;
(ii) the acquisition agreement dated 24 July 2015 entered into between, among others, Chongqing Sunac Foundation Real Estate Development Co. Ltd. (“ Chongqing Sunac Foundation ”), a wholly-owned subsidiary of the Company, as purchaser, and Sichuan Guojia Real Estate Co. Ltd. (“ Sichuan Guojia ”) as vendor, pursuant to which Chongqing Sunac Foundation conditionally agreed to acquire and Sichuan Guojia conditionally agreed to dispose of 20% equity interest in Chengdu Guojia and the outstanding shareholder’s loan and interest owing by Chengdu Guojia to Sichuan Guojia at a total consideration of RMB450,000,000; and
(jj) the framework agreement dated 15 May 2015 between the Company and Greentown China Holdings Limited (“ Greentown China ”) pursuant to which it is conditionally agreed that

— VI-11 —

APPENDIX VI

GENERAL INFORMATION

the Group would transact with the Greentown China and its subsidiaries (the “ Greentown Group ”) in relation to the following proposed transactions: (i) disposal of 50% equity interests by Shanghai Greentown Forest Golf Villa Development Co., Ltd (“ Shanghai Forest Golf ”), and assignment of shareholder’s loan of Zhejiang Jinying Realty Co., Ltd (“ Zhejiang Jinying ”) by Sunac Zhidi to Greentown Real Estate Group Co., Ltd (“ Greentown Real Estate ”); (ii) disposal of 45% equity interests in and assignment of shareholder’s loan of Beijing Xingye Wanfa Real Estate Development Co., Ltd (“ Beijing Xingye Wanfa ”) by Sunac Zhidi to Greentown Real Estate; (iii) disposal of the return on investment of 51% equity interests in Shanghai Huazhe Bund held by Shanghai Sunac Greentown Investment Holdings Limited (上海融創綠城投資控股有限公司) (“ Shanghai Sunac Greentown ”) to Greetown Real Estate; (iv) acquisition of 50% equity interests in Shanghai Forest Golf by Sunac Zhidi from Greentown Real Estate; (v) acquisition of 25% equity interests in Hangzhou Sunac Greentown Real Estate Development Co., Ltd (“ Hangzhou Sunac Greentown ”) by Zhuo Yue Property Investment Holdings Limited (“ Zhuo Yue Property ”) from On Centuary Investment Limited (“ On Centuary Investment ”); (vi) development of the Tianjin National Game Village Project on a joint venture basis in the proportion of 49:51 by the Company and Greentown China; (vii) acquisition of 50% equity interests in Shanghai Sunac Greentown by Shanghai Sunac Real Estate from Greentown Investment; and (viii) acquisition of 50% issued share capital of Sunac Greentown by the Company from Greentown China.

8. EXPERTS’ QUALIFICATION AND CONSENT

The following is the qualification of the experts whose names/advices and/or reports are contained in this circular:

Name Qualification PricewaterhouseCoopers Certified Public Accountants DTZ Cushman & Wakefield Independent professional valuer Limited

As at the Latest Practicable Date, each of the above experts (i) had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct or indirect interest in any assets which had been, since 31 December 2016 (the date to which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and (iii) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and the reference to its name included herein in the form and context in which it appears.

— VI-12 —

GENERAL INFORMATION

APPENDIX VI

9. LITIGATION

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

10. GENERAL

(a) The address of the registered office of the Company is 190 Elgin Avenue, George Town, Grand Cayman KY1- 9005, Cayman Islands.
(b) The address of the head office of the Company is 10/F, Building C7, Magnetic Plaza, Binshuixi Road, Nankai District, Tianjin 300381 and the principal place of business of the Company in Hong Kong is 36/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.
(c) Mr. Gao Xi (“ Mr. Gao ”) is one of the joint company secretaries of the Company and the Company has engaged Ms. Mok Ming Wai (“ Ms. Mok ”) as the other joint company secretary of the Company to assist Mr. Gao.

Mr. Gao is currently the vice president of the Group and the company secretary. Since joining the Group in 2007, he had held different positions in various departments of the Group, including the capital operations centre, financial management center and financing management department. Since 2011, he began to act successively as the manager, director and general manager of the investor relations department of the Company. Mr. Gao has participated in the work in relation to the Company’s initial public offering, and upon the listing of the shares of the Company on the Stock Exchange in 2010, he contributed to establish the investor relations department, where he is mainly responsible for listing compliance, corporate governance, investor relations and offshore financing related matters. Mr. Gao graduated from Shanxi University of Finance & Economics in 2008 with a master’s degree in quantitative economics.

Ms. Mok is a director of KCS Hong Kong Limited. She has over 16 years of professional and in-house experience in the company secretarial field. She 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 Cayman Islands principal share registrar and transfer office of the Company is Royal Bank of Canada Trust Company (Cayman) Limited, at 4th Floor, Royal Bank House, 24 Shedden Road, George Town, Grand Cayman KY1-1110, Cayman Islands.
(e) The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(f) This circular is prepared in both English and Chinese. In the event of inconsistency, the English text shall prevail over its Chinese text unless otherwise specified.

— VI-13 —

GENERAL INFORMATION

APPENDIX VI

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 6:00 p.m. on any weekday (except public holidays) at the principal place of business of the Company in Hong Kong at 36/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong up to and including the date falling on 14 days from the date of this circular:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for the two years ended 31 December 2016;
(c) the accountant’s report on the Target Company from PricewaterhouseCoopers, the text of which is set out in Appendix II to this circular;
(d) the valuation report on the Qingdao Shidai City Project from DTZ Cushman & Wakefield Limited, the text of which is set out in Appendix IV to this circular;
(e) the letters of consent referred to in the paragraph headed “Experts’ Qualification and Consent” in this Appendix;
(f) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix; and
(g) this circular.

— VI-14 —

AI assistant

Sunac China Holdings Limited — Proxy Solicitation & Information Statement 2017

50266_rns_2017-05-04_8447413f-8486-42a5-abeb-2061393dbef5.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

SUNAC CHINA HOLDINGS LIMITED 融創中國控股有限公司

MAJOR TRANSACTION IN RELATION TO

(1) THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN THE TARGET COMPANY (2) THE PROVISION OF GUARANTEE AND COUNTER GUARANTEE

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

SUNAC CHINA HOLDINGS LIMITED 融創中國控股有限公司

(Stock Code: 01918)

To the Shareholders

MAJOR TRANSACTION IN RELATION TO

(1) THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN THE TARGET COMPANY (2) THE PROVISION OF GUARANTEE AND COUNTER GUARANTEE

INTRODUCTION

LETTER FROM THE BOARD

EQUITY TRANSFER AGREEMENT

Parties :

LETTER FROM THE BOARD

Assets to be acquired

Consideration

Completion of the Acquisition

LETTER FROM THE BOARD

PROVISION OF GUARANTEE

PROVISION OF COUNTER GUARANTEE

LETTER FROM THE BOARD

INFORMATION ON THE PARTIES

The Company, the Purchaser and the Guarantor

The Vendor

The Vendor Related Parties

The Target Company

LETTER FROM THE BOARD

Financial information on the Target Company

FINANCIAL EFFECT OF THE ACQUISITION

LETTER FROM THE BOARD

REASONS AND BENEFIT

LISTING RULES IMPLICATIONS

WRITTEN SHAREHOLDERS’ APPROVAL

LETTER FROM THE BOARD

WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES GRANTED BY THE STOCK EXCHANGE

Rule 14.41(a) of the Listing Rules

Rule 14.67(6)(a)(ii) of the Listing Rules

LETTER FROM THE BOARD

GENERAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS

(i) Borrowings and debts

(ii) General

3. MATERIAL ADVERSE CHANGE

4. WORKING CAPITAL

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Directors’ Responsibility for the Financial Information

Reporting Accountant’s Responsibility

Opinion

I FINANCIAL INFORMATION OF QINGDAO CALXON

BALANCE SHEETS

APPENDIX II

STATEMENTS OF COMPREHENSIVE INCOME

APPENDIX II ACCOUNTANT’S REPORT OF THE TARGET COMPANY

STATEMENTS OF CHANGES IN EQUITY

CASH FLOW STATEMENTS

II NOTES TO THE FINANCIAL INFORMATION

1 GENERAL INFORMATION

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

2.1.1 Changes in accounting policy and disclosures

New standards and interpretations not yet adopted

2.2 Functional and presentation currency

2.3 Property, plant and equipment

2.4 Land use rights

2.5 Impairment of non-financial assets

2.6 Financial assets

2.6.1 Classification

Loans and receivables

2.6.2 Recognition and measurement

2.6.3 Offsetting financial instruments

2.7 Impairment of financial assets carried at amortized cost

2.8 Properties under development

Sunac China Holdings Limited Proxy Solicitation & Information Statement 2017