THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in China Agri-Products Exchange Limited 中國農產品交易有限公司, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司
(Incorporated in Bermuda with limited liability)
(Stock Code: 0149)

(1) MAJOR AND CONNECTED TRANSACTION SALE AND PURCHASE OF THE TARGET COMPANY AND
(2) NOTICE OF SPECIAL GENERAL MEETING

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

ALTUS CAPITAL LIMITED

A letter from the Board is set out on pages 6 to 15 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 16 to 17 of this circular. A letter from Altus Capital Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 35 of this circular.

A notice convening the SGM to be held at 17th Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong on Thursday, 20 February 2025 at 3:00 p.m. is set out on pages SGM-1 to SGM-3 of this circular.

Whether or not you are able to attend and vote in person at the SGM, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be) Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

24 January 2025

CONTENTS

Page

Definitions 1

Letter from the Board. 6

Letter from the Independent Board Committee. 16

Letter from the Independent Financial Adviser. 18

Appendix I — Financial Information of the Group. I-1

Appendix II — (a) Accountant’s Report of the Target Company. IIa-1
(b) Accountant’s Report of the PRC JV. IIb-1

Appendix III — (a) Management Discussion and Analysis of the Target Company. IIIa-1
(b) Management Discussion and Analysis of the PRC JV. IIIb-1

Appendix IV — Unaudited Pro Forma Financial Information of the Enlarged Group. IV-1

Appendix V — (a) Property Valuation Report on the Owned Properties. Va-1
(b) Property Valuation Report on the Leased Properties. Vb-1

Appendix VI — General Information. VI-1

Notice of the SGM. SGM-1

DEFINITIONS

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

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of the Directors

“Business Day” a day (other than a Saturday or a Sunday) on which licensed banks in Hong Kong are generally open for business

“Company” China Agri-Products Exchange Limited 中國農產品交易有限公司, an exempted company incorporated in Bermuda with limited liability and its shares are listed and traded on the Main Board of the Stock Exchange (Stock Code: 0149)

“Completion” the completion of the sale and purchase of the Sale Share and the assignment of the Shareholder Loan pursuant to the terms and conditions of the Sale and Purchase Agreement

“Completion Date” the date on which the Completion takes place

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“Consideration” the consideration for the Transaction of HK$150 million

“controlling shareholder(s)” has the meaning ascribed to it under the Listing Rules

“Directors” the directors of the Company

“Enlarged Group” the Group upon completion of the Transaction

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

DEFINITIONS

"Independent Board Committee"
an independent committee of the Board comprising all of the independent non-executive Directors formed for the purpose of advising the Independent Shareholder(s) on the Sale and Purchase Agreement and the Transaction contemplated thereunder

"Independent Financial Adviser"
Altus Capital Limited, a corporation licensed to carry out Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and Independent Shareholders in respect of the Sale and Purchase Agreement and the Transaction contemplated thereunder

"Independent Shareholder(s)"
the Shareholders who are independent from WOG and its associates and who are not required to abstain from voting on the resolution(s) to be proposed at the SGM

"Latest Practicable Date"
21 January 2025, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

"Leased Properties"
the properties being leased to the PRC JV as lessee as at the Latest Practicable Date, details of which are set out in the section headed "INFORMATION ON THE TARGET PROPERTIES" of this circular

"Listing Rules"
the Rules Governing the Listing of Securities on the Stock Exchange

"Long Stop Date"
31 March 2025 (or such later date as the parties may agree in writing)

"Owned Properties"
the existing landed properties owned by the PRC JV as at the Latest Practicable Date, details of which are set out in the section headed "INFORMATION ON THE TARGET PROPERTIES" of this circular

DEFINITIONS

"PRC"
the People's Republic of China, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the People's Republic of China and Taiwan

"PRC JV"
深圳市集贸市場有限公司 (Shenzhen Trading Market Company Limited*), a company established under the laws of the PRC with limited liability, details of which are set out in the section headed "INFORMATION ON THE TARGET COMPANY AND THE PRC JV" of this circular

"Purchaser"
Gain Bravery Limited (得驍有限公司), a company incorporated in the British Virgin Islands with limited liability and was ultimately and wholly-owned by the Company as at the Latest Practicable Date

"RMB"
Renminbi, the lawful currency of the PRC

"Sale and Purchase Agreement"
the conditional sale and purchase agreement dated 13 December 2024 entered into among the Vendor, WOG, the Purchaser and the Company in relation to, among other things, the Transaction

"Sale Share"
the entire issued share capital of the Target Company held by the Vendor

"SFO"
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

"SGM"
the special general meeting of the Company to be convened and held to consider and approve, among other things, the Sale and Purchase Agreement and the Transaction contemplated thereunder

"Shareholder(s)"
the holder(s) of the ordinary share(s) with a nominal value of HK$0.01 each in the issued share capital of the Company

DEFINITIONS

"Shareholder Loan"
the shareholder’s loan owed by the Target Company to the Vendor as at the Completion Date, being an interest-free loan and repayable on demand with an outstanding principal amount of approximately HK$28.3 million as at 30 September 2024 and which, subject to and on the terms and conditions of the Sale and Purchase Agreement, shall be assigned by the Vendor to the Purchaser on Completion

"Shenzhen Agricultural Power"
深圳市農產品集團股份有限公司 (Shenzhen Agricultural Power Group Co., Ltd.*), a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ

"Stock Exchange"
The Stock Exchange of Hong Kong Limited

"Target Company"
Regal Smart Investment Limited (偉駿投資有限公司), a company incorporated in Hong Kong with limited liability and was ultimately and wholly-owned by WOG as at the Latest Practicable Date

"Target Properties"
the Owned Properties and the Leased Properties collectively

"Transaction"
the purchase of the Sale Share by the Purchaser from the Vendor and the assignment of the Shareholder Loan from the Vendor to the Purchaser pursuant to the terms and conditions of the Sale and Purchase Agreement

"Vendor"
Wang On Commercial Management Limited, a company incorporated in the British Virgin Islands with limited liability and was ultimately and wholly-owned by WOG as at the Latest Practicable Date

"WOG"
Wang On Group Limited (宏安集團有限公司)*, an exempted company incorporated in Bermuda with limited liability and its shares are listed and traded on the Main Board of the Stock Exchange (Stock Code: 1222)

"WOG Group"
WOG and its subsidiaries

– 4 –

DEFINITIONS

"WOG Shareholder(s)"
the holder(s) of the ordinary share(s) with a nominal value of HK$0.01 each in the issued share capital of WOG

"sq.m."
square metres

"%
per cent

For identification propose only

For the purpose of this circular, unless otherwise specified, the conversion of HK$ into RMB is based on the approximate exchange rate from HK$1 to RMB0.92416. The exchange rate is adopted for illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be, exchanged at this rate or any other rate at all.

LETTER FROM THE BOARD

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 0149)

Executive Directors:

Mr. Tang Ching Ho, GBS, JP (Chairman)

Mr. Leung Sui Wah, Raymond

(Chief Executive Officer)

Mr. Wong Ka Kit

Ms. Luo Xu Ying

Independent non-executive Directors:

Mr. Lau King Lung

Mr. Wong Ping Yuen

Mr. Shang Hai Long

Registered office:

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

Head office and principal place of business in Hong Kong:

Suite 3202, 32/F., Skyline Tower

39 Wang Kwong Road

Kowloon Bay

Kowloon

Hong Kong

24 January 2025

To the Shareholders

Dear Sir or Madam,

(1) MAJOR AND CONNECTED TRANSACTION

SALE AND PURCHASE OF THE TARGET COMPANY

AND

(2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the joint announcement dated 13 December 2024 jointly issued by WOG and the Company in relation to, among others, the Sale and Purchase Agreement and the Transaction contemplated thereunder. On 13 December 2024 (after trading hours), the Vendor (an

LETTER FROM THE BOARD

indirect wholly-owned subsidiary of WOG), WOG (as guarantor of the Vendor), the Purchaser (an indirect wholly-owned subsidiary of the Company) and the Company (as guarantor of the Purchaser) entered into the Sale and Purchase Agreement, pursuant to which (i) the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Share; (ii) the Vendor has conditionally agreed to sell and assign, and the Purchaser has conditionally agreed to purchase and take assignment of, the Shareholder Loan, at the Consideration of HK$150 million; and (iii) WOG and the Company have agreed to respectively guarantee the performance of the obligations of the Vendor and the Purchaser under the Sale and Purchase Agreement.

The purpose of this circular is to provide you with, among other things, (a) further details of the Sale and Purchase Agreement and the Transaction contemplated thereunder; (b) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Sale and Purchase Agreement and the Transaction contemplated thereunder; (c) a letter of advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (d) a notice convening the SGM; and (e) other information as required by the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

The principal terms of the Sale and Purchase Agreement are summarized below:

Date

13 December 2024

Parties

(i) the Vendor, an indirect wholly-owned subsidiary of WOG (as vendor);
(ii) WOG (as guarantor of the Vendor);
(iii) the Purchaser, an indirect wholly-owned subsidiary of the Company (as purchaser); and
(iv) the Company (as guarantor of the Purchaser).

LETTER FROM THE BOARD

Subject matter

The subject matter of the Transaction is the Sale Share and the Shareholder Loan. The Sale Share represents the entire issued share capital of the Target Company as at the Latest Practicable Date. The Shareholder Loan is an interest-free shareholder's loan owed by the Target Company to the Vendor which is repayable on demand and which has an outstanding principal amount of approximately HK$28.3 million as at 30 September 2024.

Consideration

The Consideration shall be HK$150 million which shall be satisfied by the Purchaser in the following manner:

(i) HK$50 million shall be paid by the Purchaser to the Vendor on the Completion; and
(ii) the balance of the Consideration shall be paid, together with simple interest accrued at the rate of 5% per annum as from the Completion Date, by the Purchaser to the Vendor by no later than the date falling the first anniversary of the Completion Date or such later date as the Purchaser and the Vendor may mutually agree in writing.

The Consideration was arrived at following arm's length negotiations between the Purchaser and the Vendor taking into account (i) the net asset value of the Target Company of approximately HK$122.7 million as at 30 September 2024; and (ii) the face value of the Shareholder Loan in the amount of approximately HK$28.3 million as at 30 September 2024 to be assigned in favour of the Purchaser.

The Purchaser intends to fund the Consideration by the Group's internal resources and bank financing.

Upon Completion, the Target Company will become a wholly-owned subsidiary of the Company. The financial results of the Target Company will be consolidated into the financial statements of the Group.

The WOG Group acquired 50% equity interest in the PRC JV (through the Target Company) in December 2006 and the original acquisition cost amounted to approximately RMB65.5 million (equivalent to approximately HK$70.9 million).

LETTER FROM THE BOARD

Conditions precedent

The Completion is conditional upon the following conditions having been fulfilled (and/or waived by the Purchaser, as the case may be) on or before the Long Stop Date:

(i) the Purchaser having completed its due diligence review of the Target Company, the PRC JV and the Target Properties and the results of such due diligence being satisfactory to the Purchaser in its sole discretion;

(ii) the passing of all necessary resolutions by each of the WOG Shareholders (if required) and the Independent Shareholders at their respective general meetings approving the Sale and Purchase Agreement and the Transaction contemplated thereunder; and

(iii) the representations and warranties to be given by the Vendor under the Sale and Purchase Agreement remaining true and accurate and not misleading in all respects up to the Completion Date.

The Purchaser may only waive in writing the conditions precedent in paragraphs (i) and (iii) above whereas the condition precedent in paragraph (ii) above is not capable of being waived. As at the Latest Practicable Date, none of the conditions precedent above have been fulfilled.

Guarantee

The obligations of the Vendor and the Purchaser under the Sale and Purchase Agreement are respectively guaranteed by WOG and the Company.

Completion

The Completion shall take place on the third Business Day after satisfaction or waiver (as the case may be) of the conditions precedent set out in paragraphs (i) to (iii) in the section headed "Conditions Precedent" above or at such other time as the parties may otherwise agree.

LETTER FROM THE BOARD

INFORMATION ON THE TARGET COMPANY AND THE PRC JV

The Target Company is a company incorporated in Hong Kong with limited liability and it is principally engaged in investment holding. As at the Latest Practicable Date, the Target Company did not have any subsidiaries and the principal asset of the Target Company is the 50% equity interests in the PRC JV.

The PRC JV is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets in the Target Properties to tenants. As at the Latest Practicable Date, the PRC JV is jointly controlled by the Target Company and Shenzhen Agricultural Power, a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ, and its wholly-owned subsidiary.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, each of Shenzhen Agricultural Power and its ultimate beneficial owner(s) is a third party independent of each of the Company and its connected persons.

INFORMATION ON THE TARGET PROPERTIES

The PRC JV owns the Owned Properties, which comprise a total of 11 agricultural markets with an aggregate gross floor area of approximately 15,463 sq.m. located in Shenzhen City of Guangdong Province, the PRC. Certain units of the Owned Properties are currently leased out for generating rental income. The market value of the property interest in the Owned Properties was valued at approximately RMB277.8 million as at 31 October 2024 by an independent valuer and the amount of valuation of the Owned Properties attributable to the Target Company (by virtue of its 50% equity interests in the PRC JV) was approximately RMB138.9 million.

The PRC JV is also the lessee of the Leased Properties, which comprise a total of 5 agricultural markets with an aggregate gross floor area of approximately 9,139 sq.m. located in Shenzhen City of Guangdong Province, the PRC. Certain units of the Leased Properties are currently sub-leased out for generating rental income. The market value of the property interest of the Leased Properties as in the right to receive sublease income was valued at approximately RMB13.0 million as at 31 October 2024 by an independent valuer and the amount of valuation of the Leased Properties attributable to the Target Company (by virtue of its 50% equity interests in the PRC JV) was approximately RMB6.5 million.

10 -

LETTER FROM THE BOARD

FINANCIAL INFORMATION OF THE TARGET COMPANY

Set out below is a summary of the audited financial information of the Target Company for the financial years ended 31 March 2023 and 31 March 2024:

	For the year ended 31 March
	2024	2023
	HK$’000	HK$’000
	(audited)	(audited)
Net profit/(loss) before tax	19,591	(231)
Net profit/(loss) after tax	19,224	(750)

The net assets value of the Target Company as at 30 September 2024 was approximately HK$122.7 million.

INFORMATION ON THE VENDOR

The Vendor is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. It was ultimately and wholly-owned by WOG as at the Latest Practicable Date.

INFORMATION ON THE GROUP AND THE PURCHASER

The Group is principally engaged in the business of management and sale of properties in agricultural produce exchange markets in the PRC.

The Purchaser is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. It was ultimately and wholly-owned by the Company as at the Latest Practicable Date.

FINANCIAL EFFECTS

Assets and liabilities

Reference to Appendix IV, having taken into account (i) the net asset value of the Target Company of approximately HK$122.7 million as at 30 September 2024; and (ii) the face value of the Shareholder Loan in the amount of approximately HK$28.3 million to be assigned in favour of the Purchaser as at 30 September 2024; and (iii) related expenses of approximately HK$2.7 million, it is estimated that upon Completion, the total assets of the Group will increase by approximately HK$100 million. The total liabilities of the Group will increase by approximately HK$100 million. It is estimated that the net assets of the Group will have no material change, being the net effect of the changes of the total assets and total liabilities of the Group.

LETTER FROM THE BOARD

Earnings

Assuming completion of the Transaction on 31 March 2024, the net profit attributable to owners of the parent of the Enlarged Group for the year ended 31 March 2024 will become approximately HK$26.6 million.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The PRC JV is a well-established operator of wet markets in Shenzhen City, operating a total of 16 agricultural markets under the “Huimin Street Markets” brand in Shenzhen City.

The Group has been exploring opportunities to expand its wet market and trading operations in the PRC, with a view to maximizing the interests of shareholders and enhancing the investment value of the Group.

The Transaction is expected to create synergy between the new agricultural market in Shenzhen City with the existing agricultural markets of the Company in the PRC.

As at the Latest Practicable Date, the Group had a total of 10 agricultural markets in the PRC for wholesale operations, among which three are located in Hubei Province, three in Henan Province, two in Guangxi Zhuang Autonomous Region, one in Jiangsu Province and one in Liaoning Province. The Group did not have any agricultural markets or other businesses in Shenzhen City.

The Transaction represents a vertical integration opportunity to the Group, which is mainly an upstream operator of wholesale agricultural markets in the PRC, to diversify its business portfolio and to expand into the downstream retail operations through the Target Company. Such vertical integration may potentially enhance the overall exchange and coordination of the product resources, sales channel, logistic service and client base and may bring potential cost advantages through economies of scale across different agricultural markets of the Enlarged Group. The Transaction is in line with the direction of the Group to expand its new business sales channel (as disclosed on page 8 of its annual report for the year ended 31 March 2024). This not only allows the Group to expand its possible tenancy base to include local Shenzhen wet market retail operators, but also opens up opportunities for property leasing to the Group's operations in other parts of China where such Shenzhen retailers may also operate (or intend to operate). Through these additional interactions with the retail market operators, the Group will also be able to better understand end customer preferences for sharing to the Group's wholesale operator tenants.

It is expected that the abovementioned benefits will further enable the Group to strengthen its existing business and to broaden its revenue bases.

LETTER FROM THE BOARD

Having taken into account of the above reasons and benefits for the Group, the Directors (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) are of the view that the terms of the Sale and Purchase Agreement are fair and reasonable and the entering into of the Sale and Purchase Agreement is in the ordinary and usual course of business of the Group, is on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

WOG is the controlling shareholder of the Company and is therefore a connected person of the Company under Rule 14A.07 of the Listing Rules. As such, the entering into of the Sale and Purchase Agreement and the Transaction contemplated thereunder constitute a connected transaction for the Company under Chapter 14A of the Listing Rules, which are subject to the reporting, announcement, circular (including independent financial advice) and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Sale and Purchase Agreement and the Transaction contemplated thereunder exceeds 25% but is less than 100% for the Company, the entering into of the Sale and Purchase Agreement and the Transaction contemplated thereunder also constitute a major transaction for the Company and are also subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As Mr. Tang is the controlling shareholder of WOG, he is considered to be interested in the Sale and Purchase Agreement and had abstained from voting on the Board resolutions in relation to the approval of the Sale and Purchase Agreement and the Transaction contemplated thereunder. Save for the aforesaid, no other Director had a material interest in the Sale and Purchase Agreement and the Transaction contemplated thereunder and was required to abstain from voting on the Board resolutions of the Company to approve the same.

The Shareholders who have a material interest in the Sale and Purchase Agreement and the Transaction and their respective associates (as defined in the Listing Rules) are required to abstain from voting on the relevant resolution(s) at the SGM. WOG and its associates will abstain from voting on the relevant resolution(s) in relation to the Sale and Purchase Agreement and the Transactions contemplated thereunder.

As at the Latest Practicable Date, Onger Investments Limited and Rich Time Strategy Limited, each being an associate of WOG, held 2,007,700,062 Shares and 3,674,814,532 Shares respectively. Accordingly, each of Onger Investments Limited and Rich Time Strategy Limited will abstain from voting at the SGM in respect of 5,682,514,594 Shares, representing approximately 57.09% of the total issued Shares.

13 -

LETTER FROM THE BOARD

To the best of the knowledge, information and belief of the Directors after having made all reasonable enquiries, save as disclosed above, no other Shareholder has a material interest in relation to the Sale and Purchase Agreement and the Transaction and is required to abstain from voting at the SGM.

SPECIAL GENERAL MEETING

The SGM will be held for the purpose of considering and, if thought fit, approving, among other things, the Sale and Purchase Agreement and the Transaction contemplated thereunder.

The register of members of the Company will be closed from Monday, 17 February 2025 to Thursday, 20 February 2025 (both dates inclusive) for determining the identity of the Shareholders entitled to attend and vote at the SGM. No transfer of Shares will be registered during the book closure periods.

A notice convening the SGM at which ordinary resolution(s) will be proposed to the Independent Shareholders to consider and, if thought fit, approve, among other things, the Sale and Purchase Agreement and the Transactions contemplated thereunder, is contained on pages SGM-1 to SGM-3 of this circular.

A form of proxy for the use at the SGM is enclosed with this circular. Whether or not you intend to attend the SGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong as soon as possible and in any event not less than 48 hours before the time of the SGM (i.e. at or before 3:00 p.m. on Tuesday, 18 February 2025) or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

In accordance with Rule 13.39(4) of the Listing Rules and the bye-laws of the Company, the voting of the Shareholders at the SGM will be taken by poll. The results of the poll will be published on the websites of the Company and the Stock Exchange.

RECOMMENDATION

Your attention is drawn to: (a) the letter from the Independent Board Committee, the text of which is set out on pages 16 to 17 of this circular; and (b) the letter from Altus Capital Limited, being the Independent Financial Adviser, to advise the Independent Shareholders and the Independent Board Committee with respect to the Sale and Purchase Agreement and the Transaction, the text of which is set out on pages 18 to 35 of this circular.

The Independent Shareholders are advised to read the aforesaid letters before deciding how to vote at the SGM.

14 -

LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of the Independent Financial Advisor, considers that the terms of the Sale and Purchase Agreement are fair and reasonable and the entering into of the Sale and Purchase Agreement and the Transaction contemplated thereunder is in the ordinary and usual course of business of the Group, is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Sale and Purchase Agreement and the Transaction contemplated thereunder.

For the reasons set out above, the Directors (including the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement are fair and reasonable and the entering into of the Sale and Purchase Agreement and the Transaction contemplated thereunder is in the ordinary and usual course of business of the Group, is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors would recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Sale and Purchase Agreement and the Transaction contemplated thereunder.

ADDITIONAL INFORMATION

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

Yours faithfully,

For and on behalf of the Board

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

Leung Sui Wah, Raymond

Executive Director and Chief Executive Officer

15 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 0149)

24 January 2025

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION SALE AND PURCHASE OF THE TARGET COMPANY

We refer to the circular of the Company dated 24 January 2025 (the "Circular") of which this letter forms part. Unless specified otherwise, capitalized terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board to form the Independent Board Committee to consider, and advise you on, the terms of the Sale and Purchase Agreement and the Transaction. Altus Capital Limited has been appointed as the Independent Financial Adviser to advise you and us in this regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving their advice, are set out on pages 18 to 35 of the Circular. Your attention is also drawn to the Letter from the Board in the Circular and the additional information set out in the appendices thereto.

Having considered the terms of the Sale and Purchase Agreement and the Transaction and taking into account the independent advice of the Independent Financial Adviser set out in its letter on pages 18 to 35 of the Circular and the relevant information contained in the Letter from the Board, we consider that the terms of the Sale and Purchase Agreement are fair and reasonable and the entering into of the Sale and Purchase Agreement is in the ordinary and usual course of business of the Group, is on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we, representing the Independent Board Committee, recommend that you vote in favour of the ordinary resolution to be proposed at the SGM in relation to the Sale and Purchase Agreement and the Transaction contemplated thereunder.

Yours faithfully,

Independent Board Committee
Mr. Lau King Lung
Mr. Wong Ping Yuen
Mr. Shang Hai Long
Independent non-executive Directors

17 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice from Altus Capital Limited to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement and the Transaction contemplated thereunder, which has been prepared for the purpose of incorporation in the Circular.

ALTUS.
Altus Capital Limited
21 Wing Wo Street
Central
Hong Kong

24 January 2025

To the Independent Board Committee and the Independent Shareholders

China Agri-Products Exchange Limited
Suite 3202, 32/F., Skyline Tower
39 Wang Kwong Road
Kowloon Bay
Kowloon
Hong Kong

Dear Sir and Madam,

MAJOR AND CONNECTED TRANSACTION
SALE AND PURCHASE OF THE TARGET COMPANY

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement and the Transaction contemplated thereunder. The details are set out in the "Letter from the Board" contained in the circular of the Company dated 24 January 2025 (the "Circular"), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined herein or required by the context.

On 13 December 2024 (after trading hours), the Vendor (an indirect wholly-owned subsidiary of WOG), WOG (as guarantor of the Vendor), the Purchaser (an indirect wholly-owned subsidiary of the Company) and the Company (as guarantor of the Purchaser) entered into the Sale and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Purchase Agreement, pursuant to which (i) the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Share; (ii) the Vendor has conditionally agreed to sell and assign, and the Purchaser has conditionally agreed to purchase and take assignment of, the Shareholder Loan, at the Consideration of HK$150 million; and (iii) WOG and the Company have agreed to respectively guarantee the performance of the obligations of the Vendor and the Purchaser under the Sale and Purchase Agreement.

Upon the Completion, the Target Company will become a wholly-owned subsidiary of the Company. The financial results of the Target Company will be consolidated into the respective financial statements of the Group.

LISTING RULES IMPLICATIONS

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Lau King Lung, Mr. Wong Ping Yuen and Mr. Shang Hai Long, has been formed to advise the Independent Shareholders as to (i) whether the terms of the Sale and Purchase Agreement and the Transaction contemplated thereunder are fair and reasonable; (ii) whether the entering into of the Sale and Purchase Agreement is on normal commercial terms, in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the resolution related thereto to be proposed at the SGM, after taking into account the recommendation from the Independent Financial Adviser.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

THE INDEPENDENT FINANCIAL ADVISER

As the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether the terms of the Sale and Purchase Agreement the Transaction contemplated thereunder are fair and reasonable; (ii) whether the entering into of the Sale and Purchase Agreement is on normal commercial terms, in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the resolution related thereto to be proposed at the SGM.

We have not acted as the independent financial adviser or financial adviser in relation to any transactions of the Company or provided any other service(s) to the Company in the last two years prior to the date of the Circular. Pursuant to Rule 13.84 of the Listing Rules, and given that remuneration for our engagement to opine on the terms of the Sale and Purchase Agreement and the Transaction contemplated thereunder is at market level and not conditional upon successful passing of the resolution to be proposed at the SGM, and that our engagement is on normal commercial terms, we are independent of the Company.

BASIS OF OUR ADVICE

In formulating our opinion, we have reviewed, amongst others, (i) the Sale and Purchase Agreement; (ii) the valuation reports of the Target Properties as set out in Appendices V(a) and V(b) to the Circular; (iii) the annual report of the Company for the year ended 31 March 2024 (the "FY2024 Annual Report"); (iv) the interim report of the Company for the six months ended 30 September 2024 (the "FY2025 Interim Report"); and (v) other information as set out in the Circular.

We have also relied on the statements, information, opinions and representations contained or referred to in the Circular and/or provided to us by the Company, the Directors and the management of the Company (the "Management"). We have assumed that all the statements, information, opinions and representations contained or referred to in the Circular and/or provided to us were true, accurate and complete at the time they were made and will continue to be so up to the Latest Practicable Date. The Directors collectively and individually accept full responsibility, including particulars given in compliance with the Listing Rules for the purpose of giving information with regards to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other facts the omission of which would make any statement in the Circular misleading.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have no reason to believe that any statements, information, opinions or representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the statements, information, opinions or representations provided to us untrue, inaccurate or misleading.

We consider that we have been provided with, and have reviewed, sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent investigation into the business, financial conditions and affairs or future prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Purchaser and the Group

1.1 Principal businesses of the Purchaser and the Group

The Purchaser is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. It is ultimately and wholly-owned by the Company as at the Latest Practicable Date.

The Group is principally engaged in the business of management and sale of properties in agricultural produce exchange markets in the PRC.

1.2 Financial information of the Group

Set out below is a summary of financial information of the Group extracted from the FY2024 Annual Report and the FY2025 Interim Report.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Extract of consolidated statement of profit or loss

	For the year ended		For the six months ended
	31 March		30 September
	2024	2023	2024	2023
	(“FY2024”)	(“FY2023”)	(“1HFY2025”)	(“1HFY2024”)
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(unaudited)	(unaudited)
Revenue	579,132	596,400	303,090	324,693
Contracts with customers	375,675	376,226	202,652	222,056
Gross rental income from investment property operating leases	203,457	220,174	100,438	102,637
Other income and gains	119,261	24,918	42,634	15,412
Profit from operations before fair value changes and impairment	279,541	160,484	85,359	93,733
Fair value gains/(losses) on owned investment properties, net	(82,678)	(4,651)	(8,147)	2,737
Profit from operations	194,692	146,349	76,322	95,842
Finance costs	(111,575)	(118,446)	(47,278)	(57,982)
Profit for the year/period	26,876	18,501	25,990	15,840

FY2024 compared with FY2023

The Group recorded a revenue of approximately HK$579.1 million in FY2024, representing a decrease of approximately 3% as compared to approximately HK$596.4 million in FY2023, which was mainly due to a decrease in rental income received from agricultural produce exchange market operation in FY2024. The Group recorded gross rental income from investment property operating leases of approximately HK$220.1 million in FY2023, while approximately HK$203.5 million was recorded in FY2024.

As the limitation period of claims for aged payables have expired during FY2024, it is remote that the Group is required to settle such aged payables; therefore, reversal of aged payables amounting to approximately HK$101.8 million had been made in FY2024. As a result, the Group's other income and gains increased from approximately HK$24.9 million in FY2023 to approximately HK$119.3 million in FY2024. Such reversal also contributed to the increase in profit from operations before fair value changes and impairment from approximately HK$160.5 million in FY2023 to HK$279.5 million in FY2024.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During FY2024, the Group recorded net fair value losses on owned investment properties amounting to approximately HK$82.7 million, which was mainly due to decreases in fair value on owned investment properties of Wuhan Baisazhou Agricultural and By-Product Exchange Market and Luoyang Hongjin Agricultural and By-Product Exchange Market. In FY2023, approximately HK$4.7 million was recorded for net fair value losses on owned investment properties.

Finance costs of the Group amounted to approximately HK$118.4 million and HK$111.6 million in FY2023 and FY2024 respectively. Such decrease was mainly due to decrease of finance cost of the unsecured notes during FY2024.

As a result of the above, the Group recorded profit for the year of approximately HK$18.5 million in FY2023 and approximately HK$26.9 million in FY2024.

1HFY2025 compared with 1HFY2024

During 1HFY2025, the Group recorded a revenue of approximately HK$303.0 million, representing a decrease of approximately 7% from approximately HK$324.7 million for 1HFY2024, as a result of the decrease in the property sales recognition.

On 25 May 2024, the Group has entered into a sale and purchase agreement with an independent third party for the disposal of the entire equity interests of a subsidiary holding, among others, the property interests in the Huai'an Market. The Company recorded a gain on the disposal of approximately HK$35.8 million, which was recorded as other income and gains on the Group's consolidated statement of profit or loss. The disposal was completed on 5 September 2024. As a result, the Group's other income and gains increased from approximately HK$15.4 million in 1HFY2024 to HK$42.6 million in 1HFY2025.

During 1HFY2025, the Group recorded fair value losses on owned investment properties amounting to approximately HK$8.1 million. Such losses were derived from decreases in fair values on the Group's investment properties of Wuhan Baisazhou Agricultural and By-Product Exchange Market.

Finance costs were approximately HK$47.3 million in 1HFY2025 (1HFY2024: approximately HK$58.0 million) and such decrease is mainly due to the repayments of interest-bearing debts during the period.

As a result of the above, the Group recorded profit for the period of approximately HK$26.0 million in 1HFY2025 and approximately HK$15.8 million in 1HFY2024.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Extract of consolidated statement of financial position

	As at
	30 September	As at 31 March
	2024	2024	2023
	HK$'000 (unaudited)	HK$'000 (audited)	HK$'000 (audited)
Non-current assets	2,762,018	2,909,942	3,032,993
Investment properties	2,662,575	2,809,556	2,933,376
Current assets	1,627,744	1,728,124	1,882,200
Properties held for sale	1,091,876	1,173,590	1,187,708
Cash and cash equivalents	243,533	243,435	312,434
Current liabilities	935,127	1,082,554	1,070,683
Interest-bearing bank and other borrowings	357,265	362,624	229,173
Non-current liabilities	1,323,695	1,486,768	1,717,098
Interest-bearing bank and other borrowings	811,704	951,889	1,048,555
Net assets	2,130,940	2,068,744	2,127,412

31 March 2024 compared with 31 March 2023

The Group's non-current assets are mainly attributable to the Group's investment properties. Investment properties represented approximately 96.7% and 96.6% of the Group's non-current assets as at 31 March 2023 and 2024 respectively. The Group's investment properties consist of 11 agricultural produce exchange markets in Mainland China and are leased to third parties under operating leases.

The Group's current assets comprise mainly properties held for sale and cash and cash equivalents. Properties held for sale amounted to approximately HK$1,187.7 million and HK$1,173.6 million as at 31 March 2023 and 2024 respectively, while cash and cash equivalents amounted to approximately HK$312.4 million and HK$243.4 million as at 31 March 2023 and 2024 respectively.

The Group's interest-bearing bank and other borrowings amounted to approximately HK$1,277.7 million as at 31 March 2023 and approximately HK$1,314.5 million as at 31 March 2024. Such borrowings represent approximately 45.8% of the Group's total liabilities of approximately HK$2,787.8 million as at 31 March 2023 and approximately 51.2% of the Group's total liabilities of approximately HK$2,569.3 million as at 31 March 2024.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group's net assets remained relatively stable at approximately HK$2,127.4 million and approximately HK$2,068.7 million as at 31 March 2023 and 2024 respectively.

30 September 2024 compared with 31 March 2024

The decrease in the Group's investment properties value from approximately HK$2,809.6 million as at 31 March 2024 to approximately HK$2,662.6 million as at 30 September 2024 was mainly due to the aforementioned disposal of the Group's property interests in the Huai'an Market.

The decrease in the Group's current assets from approximately HK$1,728.1 million as at 31 March 2024 to approximately HK$1,627.7 million as at 30 September 2024 was primarily due to the decrease in properties held for sale from approximately HK$1,173.6 million as at 31 March 2024 to approximately HK$1,091.9 million as at 30 September 2024.

The composition as well as balances of the Group's liabilities as at 31 March 2024 and 30 September 2024 remained relatively stable at approximately HK$2,569.3 million and HK$2,258.8 million respectively, where the decrease was primarily attributable to the decrease in total interest-bearing bank and other borrowings from approximately HK$1,314.5 million as at 31 March 2024 to approximately HK$1,169.0 million as at 30 September 2024.

The Group's net assets remained relatively stable at approximately HK$2,068.7 million and approximately HK$2,130.9 million as at 31 March 2024 and 30 September 2024 respectively.

1.3 Outlook of the Group

Going forward, the Group will continue to build a nationwide agricultural produce exchange network by leveraging on its leading position in the industry. According to the No. 1 Document of the Central Committee of the Communist Party of China ("CPC") in 2024, national governance still focuses on agriculture, which proposes various measures to revitalize rural development, including: to ensure national food security, to eliminate large-scale poverty, to raise the standards of rural industrial development, rural construction and rural governance, and to strengthen CPC's overall leadership over the work of "agriculture, rural areas and farmers".

In order to capture new business opportunities, the Group has taken steps to expand its operations in the PRC by cooperating with different partners with an "asset light" strategy. The Group further expanded its operations to wet market and trading by leveraging on its leading position in the industry. The Group is confident that its business strategy and operation model will deliver long term benefits to the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Background information of the Vendor, the Target Company and the Target Properties

2.1 Information of Vendor

The Vendor is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding. It is ultimately and wholly-owned by WOG as at the Latest Practicable Date.

2.2 Information of the Target Company

The Target Company is a company incorporated in Hong Kong with limited liability and it is principally engaged in investment holding. As at the Latest Practicable Date, the Target Company does not have any subsidiaries and the principal asset of the Target Company is the 50% equity interests in the PRC JV.

2.3 Financial information of the Target Company

Set out below is a summary of the audited financial information of the Target Company, for the financial years ended 31 March 2023 and 2024 and the six months ended 30 September 2024.

	For the six months ended 30 September 2024 HK$’000 (audited)	For the year ended 31 March
		2024 HK$’000 (audited)	2023 HK$’000 (audited)
Net profit/(loss) before tax	638	19,591	(231)
Net profit/(loss) after tax	172	19,224	(750)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Target Company recorded net profit after tax of approximately HK$19.2 million in FY2024 as compared to net loss after tax of approximately HK$0.8 million in FY2023, primarily attributable to gain on disposal of investment properties recorded by the PRC JV in FY2024 as it shared profit or loss from the PRC JV. The Target Company also incurred nominal administrative expenses as it does not conduct operations other than holding 50% equity interests in the PRC JV.

The net asset value of the Target Company as at 30 September 2024 was approximately HK$122.7 million, which takes into account the market value of the Target Properties. The liabilities of the Target Company include the Shareholder Loan, which is an interest-free shareholder's loan owed by the Target Company to the Vendor, repayable on demand, and has an outstanding principal amount of approximately HK$28.3 million as at 30 September 2024.

The main asset of the Target Company is the 50% equity interests in the PRC JV, while the main assets of the PRC JV are the Target Properties.

2.4 Information of the Target Properties

The PRC JV owns the Owned Properties, which comprise of a total of 11 agricultural markets with an aggregate gross floor area of approximately 15,463 sq.m. located in Shenzhen City of Guangdong Province, the PRC. Certain units of the Owned Properties are currently leased out for generating rental income. The market value of the property interest in the Owned Properties was valued at approximately RMB277.8 million as at 31 October 2024 by an independent valuer and the amount of valuation of the Owned Properties attributable to the Target Company (by virtue of its 50% equity interests in the PRC JV) was approximately RMB138.9 million.

The PRC JV is also the lessee of the Leased Properties, which comprise of a total of 5 agricultural markets with an aggregate gross floor area of approximately 9,139 sq.m. located in Shenzhen City of Guangdong Province, the PRC. Certain units of the Leased Properties are currently sub-leased out for generating rental income. The market value of the property interest of the Leased Properties as in the right to receive sublease income was valued at approximately RMB13.0 million as at 31 October 2024 by an independent valuer and the amount of valuation of the Leased Properties attributable to the Target Company (by virtue of its 50% equity interests in the PRC JV) was approximately RMB6.5 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Principal terms of the Sale and Purchase Agreement

For details of the terms of the Sale and Purchase Agreement, please refer to the paragraph headed "The Sale and Purchase Agreement" in the "Letter from the Board". Major terms of the Sale and Purchase Agreement are set out below:

Date
13 December 2024

Parties
(i) the Vendor, an indirect wholly-owned subsidiary of WOG (as vendor);
(ii) WOG (as guarantor of the Vendor);
(iii) the Purchaser, an indirect wholly-owned subsidiary of the Company (as purchaser); and
(iv) the Company (as guarantor of the Purchaser)

Subject matter
The Sale Share and the Shareholder Loan

Consideration
HK$150 million:
(i) HK$50 million shall be paid by the Purchaser to the Vendor on the Completion; and
(ii) the balance of the Consideration, shall be paid, together with simple interest accrued at the rate of 5% per annum as from the Completion Date, by the Purchaser to the Vendor by no later than the date falling the first anniversary of the Completion Date or such later date as the Purchaser and the Vendor may mutually agree in writing.

3.1 Consideration

The Consideration of HK$150 million was arrived at following arm's length negotiations between the Purchaser and the Vendor taking into account (i) the net asset value of the Target Company of approximately HK$122.7 million as at 30 September 2024; and (ii) the face value of the Shareholder Loan in the amount of approximately HK$28.3 million to be assigned in favour of the Purchaser as at 30 September 2024.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness and reasonableness of the Consideration, we have conducted the following analysis.

3.1.1 Net asset value of the Target Company

As disclosed in the paragraph headed “2.3 Financial information of the Target Company” of this letter, the net asset value of the Target Company is approximately HK$122.7 million as at 30 September 2024. As the Shareholder Loan of approximately HK$28.3 million will be sold and assigned to the Group, the value of the Target Company will then be primarily based on its other existing assets and liabilities. As such, the assessment of the fairness and reasonableness of the Consideration as compared to the value of the Target Company shall be dependent on the market value of the Target Properties, being the main assets of the PRC JV, which is the main asset of the Target Company.

3.1.2 Market value of the Target Properties

We note that Cushman & Wakefield Limited (the “Property Valuer”) has been engaged to issue the property valuation reports (the “Property Valuation Reports”) in relation to (i) the market value of the 11 Owned Properties; and (ii) the market value of the 5 Leased Properties in terms of sublease earning rights for the remaining lease terms. According to the Property Valuation Reports, the details of which are set out in Appendices V(a) and V(b) to the Circular, the valuation of the Owned Properties and Leased Properties amounted to approximately RMB277.8 million and RMB13.0 million respectively (the “Appraised Values”) as at 31 October 2024. We note that the Appraised Values are approximate to the value of Owned Properties and Leased Properties adopted in deriving the unaudited net asset value of the Target Company as at 30 September 2024, which in turn, derive the Consideration for the Transaction.

We have considered the following factors in assessing the fairness and reasonableness of the Appraised Values.

3.1.3 Property Valuer's qualification

In assessing the competence and experience of the Property Valuer, we have reviewed the qualification and experience of the Property Valuer and noted that the principal signing of the Property Valuation Reports, Ms. Grace Lam, has over 30 years of experience in the professional property valuation and advisory services in the Greater China region and various overseas countries. She is a member of The Hong Kong Institute of Surveyors (“HKIS”) and a valuer on the list of property valuers for undertaking valuation for incorporation or reference in listing particulars and circulars and valuation in connection with takeovers and mergers published by the HKIS.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we are satisfied with the competence of the Property Valuer in respect of the preparation of the Property Valuation Report. Having reviewed the scope of work of the Property Valuer, we are also satisfied that the scope of work is sufficient and appropriate for the valuation of the Target Properties.

We have also conducted an independent interview with the Property Valuer where we have enquired, and the Property Valuer has confirmed, its independence from the Company.

3.1.4 Valuation methodology, basis and assumptions

According to the Property Valuation Reports, the Property Valuer has adopted the direct capitalisation method of the income approach ("Income Capitalisation Approach") to arrive at the market value of the Target Properties by capitalising the net income derived from the existing tenancies (or the existing subleases) with due allowance for the reversionary income potential of the properties.

Having discussed with the Property Valuer, we understand and concur that this method is appropriate for valuation of the Target Properties which has stable and uniform tenancy terms, and has taken into account the rental income of the Target Properties derived from existing leases and/or achievable leases in the existing market with due allowance for the reversionary income potential of the leases. Such income is then capitalised to determine the market value of the Target Properties at an appropriate capitalisation rate. We also understand from the Property Valuer that they have considered the market comparison approach; however, due to the scarcity of public transactions in the market involving assets similar to the Target Properties, there is insufficient data available for such analysis and thus, inappropriate to be adopted for valuing the Target Properties.

We note that the Property Valuation Reports have been prepared in accordance with the HKIS Valuation Standards 2020 published by the HKIS as well as the requirements set out in Chapter 5 of the Listing Rules. According to the Property Valuation Reports, the valuation is carried out on a market value basis, which is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion" according to the HKIS Valuation Standards 2020. In this regard, we note that the Sale and Purchase Agreement is entered into by the parties thereto on normal commercial terms following arm's length negotiations; and we are not aware of any unique circumstance relating to the acquisition of Target Company such as distressed or compulsory sale. We are therefore of the view that the basis adopted by the Property Valuer is fair and reasonable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Further, the valuation has been made on the assumptions that (i) there are no estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser; (ii) the owner of each of the Target Properties has an enforceable title to the respective property and has free and uninterrupted rights to use, occupy or assign the Target Properties for the whole of the unexpired land use term as granted; (iii) no allowance has been made for any charges, mortgages or amounts owing on the Target Properties nor for any expenses or taxation which may be incurred in effecting a sale; and (iv) the Target Properties are free from encumbrances, restrictions and outgoings of any onerous nature which could affect their values.

3.1.4.1 Owned Properties

The Owned Properties comprise a total of 11 agricultural markets located in Shenzhen City of Guangdong Province, the PRC, as mentioned in the paragraph headed "2.4 Information of the Target Properties" above.

In arriving at the market value of each of the Owned Properties, the Property Valuer takes into account the rental income of each of the Owned Properties derived from the existing leases and/or achievable leases in the existing market with due allowance for the reversionary income potential of the leases, which has been then capitalised to determine the market value of each of the Owned Properties at an appropriate capitalisation rate. As to the rental income, we note that the Property Valuer has considered (i) passing rent of each of the Owned Properties derived from the existing tenancy agreements with independent third parties; and (ii) market rental of retail markets in the proximity of each of the Owned Properties (the "Owned Properties Comparable Leases"). In this regard, we note that the Property Valuer has selected three Owned Properties Comparable Leases for each of the Owned Properties, and appropriate adjustments have been considered and made taking into account factors such as location, accessibility, age, quality, trade mix, size and time.

As to the capitalisation rate, the Property Valuer has adopted a term yield of 5.0% (for existing rental income) and a reversionary yield of 6.0% (for reversionary rental income) respectively. We understand from the Property Valuer that such yields have taken into account (i) its research and analysis of the retail market in Shenzhen, where the market yield is approximately 5.0%; and (ii) the specific characteristics of the Owned Properties, in which the usage is generally more restrictive and hence, a 1.0% risk premium has been applied on top of the aforesaid market yield for reversionary rental income.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have reviewed and discussed with the Property Valuer the aforesaid basis and assumptions adopted in the Income Capitalisation Approach for valuation of the Owned Properties. We have also obtained and reviewed the lists of Owned Properties Comparable Leases and considered that they have been selected by the Property Valuer in accordance to the abovementioned selection criteria. From our review, we note that the Owned Properties Comparable Leases are located in the close proximity to each of the Owned Properties, and relevant adjustments have been considered to reflect different attributes between each of the Owned Properties and the corresponding comparable leases. In addition, we also note that the historical performance of the Owned Properties (such as occupancy rate and average rent) have been fairly taken into account by the Property Valuer when conducting the valuation. Based on the above, we are of the view that the basis and assumptions made in the Income Capitalisation Approach for Owned Properties by the Property Valuer are fair and reasonable.

3.1.4.2 Leased Properties

The Leased Properties comprise a total of 5 agricultural markets located in Shenzhen City of Guangdong Province, the PRC, as mentioned in the paragraph headed "2.4 Information of the Target Properties" above.

In arriving at the market value of each of the Leased Properties in terms of sublease earning rights for the remaining lease terms, the Property Valuer takes into account the operating income of each of the Leased Properties derived from the existing subleases, if any, with due provision for the reversionary potential that would be generated for the period until the expiry of the respective head leases at an appropriate capitalisation rate. As to the rental income, we note that the Property Valuer has mainly considered the market rental of retail markets in the proximity of each of the Leased Properties (the "Leased Properties Comparable Leases"). In this regard, we note that the Property Valuer has selected three Leased Properties Comparable Leases for each of the Leased Properties, and appropriate adjustments have been considered and made taking into account factors such as location, accessibility, age, quality, trade mix, size and time. In addition, we note that the Property Valuer has assumed the sublease earning rights will cease upon the expiration of the respective head leases with no market value being considered thereafter. We believe this approach is fair and reasonable.

As to the capitalisation rate, the Property Valuer has adopted 7% for the Leased Properties. We understand from the Property Valuer that a higher yield has been applied to the Leased Properties as compared to the Owned Properties to account for the higher risk profile stemming from the sublease nature (i.e. the Leased Properties are not owned by the PRC JV).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have reviewed and discussed with the Property Valuer the aforesaid basis and assumptions adopted in the Income Capitalisation Approach for valuation of the Leased Properties. We have also obtained and reviewed the lists of Leased Properties Comparable Leases and considered that they have been selected by the Property Valuer in accordance to the abovementioned selection criteria. From our review, we note that the Leased Properties Comparable Leases are located in the close proximity to the Leased Properties, and relevant adjustments have been considered to reflect different attributes between each of the Leased Properties and the corresponding comparable leases. In addition, we also note that the sublease nature of the Leased Properties have been fairly taken into account by the Property Valuer when conducting the valuation. Based on the above, we are of the view that the basis and assumptions made in the Income Capitalisation Approach for Leased Properties by the Property Valuer are fair and reasonable.

3.1.5 Section conclusion

Taking into account that (i) the Property Valuer has sufficient qualification and experience to undertake the valuation of the Target Properties; (ii) the Property Valuer's scope of work is appropriate for performing the valuation on the Target Properties; and (iii) the valuation methodology, basis and assumptions for valuing the Target Properties are fair and reasonable, we are of the view that the valuation of the Target Properties has been fairly and reasonably determined.

3.2 Payment terms

As aforementioned, the Purchaser shall pay the remaining balance, together with simple interest accrued at the rate of 5% per annum as from the Completion Date, no later than the date falling the first anniversary of the Completion Date or such later date as the Purchaser and the Vendor may mutually agree in writing.

We noted from the FY2024 Annual Report that the Group's treasury policy includes diversification of funding sources. Internally generated cash flow and interest-bearing bank/non-financial institution loans were the general sources of fund to finance the operation of the Group during FY2024. Therefore, such payment term where the Group assumes an interest-bearing remaining balance of the Consideration for a term of three years is in-line with the Group's treasury policy. Furthermore, we noted from the FY2024 Annual Report that the effective interest rates per annum of the Group's interest-bearing bank and other borrowings and unsecured notes range from approximately 6% to 10% as at 31 March 2024. As the interest rate of 5% per annum on the remaining balance of the Consideration is lower than such effective interest rates of the Group, we are of the view that the interest rate of 5% per annum is on normal commercial terms or better and is in the interests of the Company and Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.3 Section conclusion

Taking into account all the factors and analysis above, we are of the view that the principal terms of the Sale and Purchase Agreement are on normal commercial terms and are fair and reasonable.

4. Reasons for and benefits of the Transaction

As mentioned under the paragraph headed "1.2 Financial information of the Group" above, over 30% of the Group's revenue during FY2023, FY2024 and 1HFY2025 was derived from rental income from investment property operating leases and the Group's non-current assets as at 31 March 2023 and 2024 and 30 September 2024 mostly consist of investment properties. In addition, as mentioned under the paragraph headed "1.3 Outlook of the Group" above, it is the Group's strategy to expand its operations to wet market and trading in the PRC by leveraging on its leading position in the industry. Therefore, the Transaction is in-line with the overall business direction of the Group and the entering into of the Sale and Purchase Agreement is in the ordinary and usual course of business of the Group.

Furthermore, as the Transaction enables the Group to diversify its business portfolio in the PRC and strengthen its income base, we concur with the Management that the Transaction is in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors, we are of the view that (i) the terms of the Sale and Purchase Agreement are fair and reasonable; and (ii) the entering into of the Sale and Purchase Agreement is in the ordinary and usual course of business of the Group, is on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the resolution to be proposed at the SGM to approve the Sale and Purchase Agreement and the Transaction contemplated thereunder.

Yours faithfully,

For and on behalf of

Altus Capital Limited

Leo Tam

Responsible Officer

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mr. Leo Tam (“Mr. Tam”) is a Responsible Officer of Altus Capital Limited licensed to carry on Type 6 (advising on corporate finance) regulated activity under the SFO and permitted to undertake work as a sponsor. He has over ten years of experience in corporate finance and advisory in Hong Kong, in particular, he has participated in sponsorship work for initial public offerings and acted as financial adviser or independent financial adviser in various corporate finance transactions. Mr. Tam is a certified public accountant of the Hong Kong Institute of Certified Public Accountants.

35 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 March 2022, 2023 and 2024 and the six months ended 30 September 2024 was disclosed in the annual reports of the Company for the years ended 31 March 2022 (pages 85 to 232), 31 March 2023 (pages 81 to 228), 31 March 2024 (pages 73 to 192) and the interim report of the Company for the six months ended 30 September 2024 (pages 26 to 56) respectively, all of which can be found on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (www.cnagri-products.com).

Please also see below quick links to the relevant reports:

Annual report of the Company for the year ended 31 March 2022

(https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0722/2022072200932.pdf)

Annual report of the Company for the year ended 31 March 2023

(https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0727/2023072700401.pdf)

Annual report of the Company for the year ended 31 March 2024

(https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0725/2024072500872.pdf)

Interim report of the Company for the six months ended 30 September 2024

(https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1220/2024122000683.pdf)

2. INDEBTEDNESS STATEMENT

As at the close of business on 30 November 2024, being the latest practicable date for the purpose of ascertaining information contained in this indebtedness statement set out in this circular, the Enlarged Group had outstanding bank and other borrowings and unsecured notes of approximately HK$1,168.0 million, of which bank borrowings with an aggregate amount of approximately HK$745.2 million were secured by the Enlarged Group's investment properties and properties held for sale. The Enlarged Group also provided guarantees to customers in favour of certain banks for the loans provided by the bank in an amount approximately HK$18.5 million. Moreover, the Enlarged Group's lease liabilities amounted to approximately HK$28.4 million as at 30 November 2024.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Except as disclosed above and apart from intra-group liabilities and normal trade payables, the Enlarged Group did not have, as at 30 November 2024, any other debt securities issued or outstanding, and authorised or otherwise created but unissued, any other terms loans, any other borrowings and indebtedness, bank overdrafts, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchases commitments, mortgages, charges, guarantees or other material contingent liabilities.

3. WORKING CAPITAL STATEMENT

Taking into account of the effect of the Transaction, present financial resources available to the Enlarged Group, including internally generated funds and available credit facilities of the Enlarged Group, and in absence of unforeseen circumstances, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group will have sufficient funds to meet its working capital requirements for at least the next 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

During 2024, consumer spending was in more cautious manner and the downfall of Chinese real estate hindered the economic growth. Such effects have impact on the Group's operation which is mainly focused on the PRC agricultural products market. Looking ahead, the Group will continue to build a nationwide agricultural produce exchange network by leveraging on its leading position in the industry, readily replicable business model, well-advanced management system, information technology infrastructure and quality customer services.

According to the No. 1 Document of the Central Committee of the Communist Party of China ("CPC") in 2024, national governance still focuses on agriculture, which proposes various measures to revitalize rural development, including: to ensure national food security, to eliminate large-scale poverty, to raise the standards of rural industrial development, rural construction and rural governance, and to strengthen CPC's overall leadership over the work of "agriculture rural areas and farmers" ("Three Rural"). Agricultural and rural departments and rural revitalization departments at all levels are fully implementing the spirit of the 20th National Congress of CPC and the Second Plenary Session of the 20th Central Committee of the CPC through in-depth implementation of the Three Rural work, establishing the goal of building a strong agricultural country and learning and utilizing the experience of "Zhejiang's Green Rural Revival Program", while insisting on people-oriented development that adapts to local conditions and adopts different policies as appropriate, making gradual and orderly progress to achieve long-term results and concentrating on accomplishing practical matters that are palpable to the public, in order to make substantial progress and meet milestone targets.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

In order to capture new business opportunities, the Group has taken further steps to explore electronic platform development to capture the opportunity of technology advancement brought by the promotion of data economy by the PRC government. The Group further expanded its operations to wet market and trading by leveraging on its leading position in the industry and the Group is confident that its business strategy and operation model will deliver long-term benefits to the Company and the Shareholders as a whole.

I-3 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

ACCOUNTANT'S REPORT ON HISTORICAL FINANCIAL INFORMATION OF REGAL SMART INVESTMENT LIMITED

The following is the text of a report prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, Ernst & Young, Certified Public Accountants, Hong Kong. Terms defined herein apply to this report only.

27/F, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong
24 January 2025

TO THE DIRECTORS OF CHINA AGRI-PRODUCTS EXCHANGE LIMITED

Introduction

We report on the historical financial information of Regal Smart Investment Limited (the "Target Company") set out on pages 4 to 30, which comprises the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Target Company for each of the years ended 31 March 2022, 2023 and 2024, and the six months ended 30 September 2024 (the "Relevant Periods"), and the statements of financial position of the Target Company as at 31 March 2022, 2023 and 2024 and 30 September 2024 and material accounting policy information and other explanatory information (together, the "Historical Financial Information"). The Historical Financial Information set out on pages 4 to 30 forms an integral part of this report, which has been prepared for inclusion in the circular of China Agri-Products Exchange Limited (the "Company") dated 24 January 2025 (the "Circular") in connection with the acquisition of the entire equity interest of the Target Company by a subsidiary of the Company (the "Acquisition").

Directors' responsibility for the Historical Financial Information

The directors of the Target Company (the "Directors") are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and the basis of presentation set out in note 2.1 and note 2.2 to the Historical Financial Information, respectively, and for such internal control as the Directors determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

The directors of the Company are responsible for the contents of the Circular in which the Historical Financial Information of the Target Company is included, and such information is prepared based on accounting policies materially consistent with those of the Company.

Reporting accountants' responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 Accountants' Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants' judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity's preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and the basis of presentation set out in note 2.1 and note 2.2 to the Historical Financial Information, respectively, in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants' report, a true and fair view of the financial position of the Target Company as at 31 March 2022, 2023 and 2024 and 30 September 2024 and of the financial performance and cash flows of the Target Company for each of the Relevant Periods in accordance with the basis of preparation and the basis of presentation set out in note 2.1 and note 2.2 to the Historical Financial Information, respectively.

IIa-2 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Review of interim comparative financial information

We have reviewed the interim comparative financial information of the Target Company which comprises the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six months ended 30 September 2024 and other explanatory information (the “Interim Comparative Financial Information”). The Directors are responsible for the preparation and presentation of the Interim Comparative Financial Information in accordance with the basis of preparation and the basis of presentation set out in note 2.1 and note 2.2 to the Historical Financial Information, respectively. Our responsibility is to express a conclusion on the Interim Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Interim Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and the basis of presentation set out in note 2.1 and note 2.2 to the Historical Financial Information, respectively.

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page 4 have been made.

Dividends

We refer to note 15 to the Historical Financial Information which states that no dividends have been paid or declared by the Target Company in respect of the Relevant Periods.

Ernst & Young
Certified Public Accountants
Hong Kong

IIa-3 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

I. HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants' report.

The financial statements of the Target Company for the Relevant Periods, on which the Historical Financial Information is based, were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the "Underlying Financial Statements").

The Historical Financial Information is presented in Hong Kong Dollars ("HK$") and all values are rounded to the nearest thousand (HK$'000) except when otherwise indicated.

IIa-4 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

(A) STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Notes	Year ended 31 March			Six months ended 30 September
		2022 HK$’000	2023 HK$’000	2024 HK$’000	2023 HK$’000 (unaudited)	2024 HK$’000
Administrative expenses		(2)	(3)	(2)	(2)	(8)
Share of profit/(loss) of a joint venture		3,238	(228)	19,593	(1,485)	646
Profit/(loss) before tax	4	3,236	(231)	19,591	(1,487)	638
Income tax expense	5	(329)	(519)	(367)	(367)	(466)
PROFIT/(LOSS) FOR THE YEAR/PERIOD		2,907	(750)	19,224	(1,854)	172
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income/(loss) that may be reclassified to profit or loss in subsequent periods:
Share of other comprehensive income/(loss) of a joint venture		25	(11,687)	(7,299)	(3,649)	3,399
Other comprehensive income/(loss) for the year/period		25	(11,687)	(7,299)	(3,649)	3,399
Total comprehensive income/(loss) for the year/period		2,932	(12,437)	11,925	(5,503)	3,571

– IIa-5 –

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

(B) STATEMENTS OF FINANCIAL POSITION

| | Notes | 31 March
2022 | 31 March
2023 | 31 March
2024 | 30 September
2024 |
| --- | --- | --- | --- | --- | --- |
| | | HK$'000 | HK$'000 | HK$'000 | HK$'000 |
| NON-CURRENT ASSETS | | | | | |
| Interest in a joint venture | 6 | 155,710 | 138,601 | 147,229 | 146,613 |
| CURRENT ASSETS | | | | | |
| Deposits | 7 | 6 | 6 | 6 | 6 |
| Amount due from the ultimate
holding company | 9 | 21,308 | 21,308 | 21,308 | 21,308 |
| Amounts due from fellow
subsidiaries | 9 | 13,327 | 18,017 | 21,273 | 21,268 |
| Dividend receivable | | — | — | — | 4,661 |
| Cash and cash equivalents | 8 | 132 | 114 | 155 | 152 |
| Total current assets | | 34,773 | 39,445 | 42,742 | 47,395 |
| CURRENT LIABILITY | | | | | |
| Amount due to the immediate
holding company | 9 | 70,865 | 70,865 | 70,865 | 70,865 |
| Tax payable | | — | — | — | 466 |
| Total current liabilities | | 70,865 | 70,865 | 70,865 | 71,331 |
| NET CURRENT
LIABILITIES | | | | | |
| | | (36,092) | (31,420) | (28,123) | (23,936) |
| TOTAL ASSETS LESS
CURRENT
LIABILITIES | | | | | |
| | | 119,618 | 107,181 | 119,106 | 122,677 |
| Net assets | | 119,618 | 107,181 | 119,106 | 122,677 |
| EQUITY | | | | | |
| Share capital | 10 | — | — | — | — |
| Reserves | | 119,618 | 107,181 | 119,106 | 122,677 |
| Total equity | | 119,618 | 107,181 | 119,106 | 122,677 |

Less than HK$500

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

(C) STATEMENTS OF CHANGES IN EQUITY

| | Share capital
HK$’000 | Other reserve
HK$’000
(note) | Retained profits
HK$’000 | Total
HK$’000 |
| --- | --- | --- | --- | --- |
| At 1 April 2021 | — | (12,067) | 128,753 | 116,686 |
| Profit for the year | — | — | 2,907 | 2,907 |
| Other comprehensive income for the year: | | | | |
| Share of other comprehensive income of a joint venture | — | 25 | — | 25 |
| Total comprehensive income for the year | — | 25 | 2,907 | 2,932 |
| At 31 March 2022 and 1 April 2022 | — | (12,042) | 131,660 | 119,618 |
| Loss for the year | — | — | (750) | (750) |
| Other comprehensive loss for the year: | | | | |
| Share of other comprehensive loss of a joint venture | — | (11,687) | — | (11,687) |
| Total comprehensive loss for the year | — | (11,687) | (750) | (12,437) |
| At 31 March 2023 and 1 April 2023 | — | (23,729) | 130,910 | 107,181 |
| Profit for the year | — | — | 19,224 | 19,224 |
| Other comprehensive loss for the year: | | | | |
| Share of other comprehensive loss of a joint venture | — | (7,299) | — | (7,299) |
| Total comprehensive income/(loss) for the year | — | (7,299) | 19,224 | 11,925 |
| At 31 March 2024 and 1 April 2024 | — | (31,028) | 150,134 | 119,106 |
| Profit for the period | — | — | 172 | 172 |
| Other comprehensive income for the period: | | | | |
| Share of other comprehensive income of a joint venture | — | 3,399 | — | 3,399 |
| Total comprehensive income for the period | — | 3,399 | 172 | 3,571 |
| At 30 September 2024 | — | (27,629) | 150,306 | 122,677 |

– IIa-7 –

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

| | Share capital
HK$’000
(Unaudited) | Other reserve
HK$’000
(Unaudited)
(note) | Retained profits
HK$’000
(Unaudited) | Total
HK$’000
(Unaudited) |
| --- | --- | --- | --- | --- |
| At 1 April 2023 | — | (23,729) | 130,910 | 107,181 |
| Loss for the period | — | — | (1,854) | (1,854) |
| Other comprehensive loss for the period: | | | | |
| Share of other comprehensive loss of a joint venture | — | (3,649) | — | (3,649) |
| Total comprehensive loss for the period | — | (3,649) | (1,854) | (5,503) |
| At 30 September 2023 | — | (27,378) | 129,056 | 101,678 |

Note: Other reserve comprises all other comprehensive income/(loss) shared from the PRC JV.

These reserve accounts comprise the reserves of HK$119,618,000, HK$107,181,000, HK$119,106,000, and HK$122,677,000 as at 31 March 2022, 2023, and 2024, and 30 September 2024, respectively, in the statements of financial position.

** Less than HK$500

IIa-8 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

(D) STATEMENTS OF CASH FLOWS

| | Year ended 31 March | | | Six months ended
30 September | |
| --- | --- | --- | --- | --- | --- |
| | 2022 | 2023 | 2024 | 2023 | 2024 |
| | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 |
| CASH FLOWS FROM OPERATING
ACTIVITIES | | | | | |
| Profit/(loss) before tax | 3,236 | (231) | 19,591 | (1,487) | 638 |
| Adjustments for: | | | | | |
| Share of profit and loss of
a joint venture | (3,238) | 228 | (19,593) | 1,485 | (646) |
| Cash used in operations | (2) | (3) | (2) | (2) | (8) |
| Withholding tax paid | (329) | (519) | (367) | — | — |
| Decrease in amounts due from fellow
subsidiaries | — | 20 | 60 | 20 | 5 |
| Net cash flows generated from/(used in)
operating activities | (331) | (502) | (309) | 18 | (3) |
| CASH FLOW FROM INVESTING
ACTIVITIES | | | | | |
| Dividends received from
a joint venture | 3,291 | 5,194 | 3,666 | — | — |
| Advances to fellow subsidiaries | (3,057) | (4,710) | (3,316) | — | — |
| Net cash flows generated from investing
activities | 234 | 484 | 350 | — | — |
| NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS | (97) | (18) | 41 | 18 | (3) |
| Cash and cash equivalents at beginning of
year/period | 229 | 132 | 114 | 114 | 155 |
| CASH AND CASH EQUIVALENTS AT
END OF YEAR/PERIOD | 132 | 114 | 155 | 132 | 152 |

IIa-9 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The Target Company is a limited liability company incorporated in the Hong Kong. The registered office of the Target Company is located at Suite 3202, 32/F., Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.

The Target Company is principally engaged in investment holding.

The Target Company is a wholly-owned subsidiary of Wang On Commercial Management Limited, a company incorporated in the British Virgin Islands with limited liability. In the opinion of the Directors, the Target Company is ultimately owned by Wang On Group Limited ("WOG"), a company incorporated in Bermuda and listed on The Stock Exchange of Hong Kong Limited.

2. ACCOUNTING POLICIES

2.1 Basis of preparation

The Historical Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the HKICPA. All HKFRSs effective for the accounting period commencing from 1 April 2024, together with the relevant transitional provisions, have been early adopted by the Target Company throughout the Relevant Periods and the period covered by the Interim Comparative Financial Information.

The Historical Financial Information has been prepared under the historical cost convention. The Historical Financial Information is presented in HK$ and all values are rounded to the nearest thousand except when otherwise indicated.

2.2 Basis of presentation

The Historical Financial Information has been prepared under the going concern concept because (i) WOG has agreed to provide continual financial support and adequate funds to the Target Company up to the completion date of the Acquisition to meet its liabilities as and when they fall due and not to request repayment of the amount due to WOG and its subsidiaries by the Target Company until such time as the Target Company is in a position to repay such amount without impairing its financial position; and (ii) the Company has agreed to provide continual financial support and adequate funds for the Target Company from the completion date of the

IIa-10 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Acquisition to meet its liabilities as and when they fall due and not to request repayment of any amount due to the Company and its subsidiaries by the Target Company until such time as the Target Company is in a position to repay without impairing its liquidity and financial position.

2.3 Issued but not yet effective Hong Kong financial reporting standards

The Target Company has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in the Historical Financial Information.

HKFRS 18	Presentation and Disclosure in Financial Statements^{3}
Amendments to HKFRS 9 and HKFRS 7	Amendments to the Classification and Measurement of Financial Instruments^{2}
Amendments to HKFRS 10 and HKAS 28	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture^{4}
Amendments to HKAS 21	Lack of Exchangeability^{1}
Annual Improvements to HKFRS Accounting Standards — Volume 11	Amendments to HKFRS 1, HKFRS 7, HKFRS 9, HKFRS 10, and HKAS 7^{2}

Effective for annual periods beginning on or after 1 January 2025
Effective for annual periods beginning on or after 1 January 2026
Effective for annual/reporting periods beginning on/after 1 January 2027
No mandatory effective date yet determined but available for adoption

Further information about those HKFRSs that are expected to be applicable to the Target Company is described below.

HKFRS 18 replaces HKAS 1 Presentation of Financial Statements. While a number of sections have been brought forward from HKAS 1 with limited changes, HKFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and subtotals. Entities are required to classify all income and expenses within the statement of profit or loss into one of the five categories: operating, investing, financing, income taxes and discontinued operations and to present two new defined subtotals. It also requires disclosures about management-defined performance measures in a single note and introduces enhanced requirements on the grouping (aggregation and disaggregation) and the location of information in both the primary financial statements and the notes. Some requirements previously included in HKAS 1 are moved to HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which is renamed as HKAS 8 Basis of Preparation of Financial Statements. As a consequence of the issuance of HKFRS 18, limited, but widely applicable, amendments are made to HKAS 7 Statement of Cash Flows, HKAS 33 Earnings per Share and HKAS 34 Interim Financial

IIa-11 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Reporting. In addition, there are minor consequential amendments to other HKFRSs. HKFRS 18 and the consequential amendments to other HKFRSs are effective for annual periods beginning on or after 1 January 2027 with earlier application permitted. Retrospective application is required. The Target Company is currently analysing the new requirements and assessing the impact of HKFRS 18 on the presentation and disclosure of its Historical Financial Information.

Amendments to HKFRS 9 and HKFRS 7 clarify the date on which a financial asset or financial liability is derecognised and introduce an accounting policy option to derecognise a financial liability that is settled through an electronic payment system before the settlement date if specified criteria are met. The amendments clarify how to assess the contractual cash flow characteristics of financial assets with environmental, social and governance and other similar contingent features. Moreover, the amendments clarify the requirements for classifying financial assets with non-recourse features and contractually linked instruments. The amendments also include additional disclosures for investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features. The amendments shall be applied retrospectively with an adjustment to opening retained profits (or other component of equity) at the initial application date. Prior periods are not required to be restated and can only be restated without the use of hindsight. Earlier application of either all the amendments at the same time or only the amendments related to the classification of financial assets is permitted. The amendments are not expected to have any significant impact on the Target Company's Historical Financial Information.

Amendments to HKFRS 10 and HKAS 28 address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss resulting from a downstream transaction when the sale or contribution of assets constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor's profit or loss only to the extent of the unrelated investor's interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 was removed by the HKICPA. However, the amendments are available for adoption now.

Amendments to HKAS 21 specify how an entity shall assess whether a currency is exchangeable into another currency and how it shall estimate a spot exchange rate at a measurement date when exchangeability is lacking. The amendments require disclosures of information that enable users of financial statements to understand the impact of a currency not being exchangeable. Earlier application is permitted. When applying the amendments, an entity cannot restate comparative information. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening balance of retained profits or to

IIa-12 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

the cumulative amount of translation differences accumulated in a separate component of equity, where appropriate, at the date of initial application. The amendments are not expected to have any significant impact on the Target Company's Historical Financial Information.

Annual Improvements to HKFRS Accounting Standards — Volume 11 set out amendments to HKFRS 1, HKFRS 7 (and the accompanying Guidance on implementing HKFRS 7), HKFRS 9, HKFRS 10 and HKAS 7. Details of the amendments that are expected to be applicable to the Target Company are as follows:

HKFRS 7 Financial Instruments: Disclosures: The amendments have updated certain wording in paragraph B38 of HKFRS 7 and paragraphs IG1, IG14 and IG20B of the Guidance on implementing HKFRS 7 for the purpose of simplification or achieving consistency with other paragraphs in the standard and/or with the concepts and terminology used in other standards. In addition, the amendments clarify that the Guidance on implementing HKFRS 7 does not necessarily illustrate all the requirements in the referenced paragraphs of HKFRS 7 nor does it create additional requirements. Earlier application is permitted. The amendments are not expected to have any significant impact on the Target Company's Historical Financial Information.
HKFRS 9 Financial Instruments: The amendments clarify that when a lessee has determined that a lease liability has been extinguished in accordance with HKFRS 9, the lessee is required to apply paragraph 3.3.3 of HKFRS 9 and recognise any resulting gain or loss in profit or loss. In addition, the amendments have updated certain wording in paragraph 5.1.3 of HKFRS 9 and Appendix A of HKFRS 9 to remove potential confusion. Earlier application is permitted. The amendments are not expected to have any significant impact on the Target Company's Historical Financial Information.
HKFRS 10 Consolidated Financial Statements: The amendments clarify that the relationship described in paragraph B74 of HKFRS 10 is just one example of various relationships that might exist between the investor and other parties acting as de facto agents of the investor, which removes the inconsistency with the requirement in paragraph B73 of HKFRS 10. Earlier application is permitted. The amendments are not expected to have any significant impact on the Target Company's Historical Financial Information.
HKAS 7 Statement of Cash Flows: The amendments replace the term "cost method" with "at cost" in paragraph 37 of HKAS 7 following the prior deletion of the definition of "cost method". Earlier application is permitted. The amendments are not expected to have any impact on the Target Company's Historical Financial Information.
IIa-13 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Based on the Target Company’s assessment completed to date, these revised HKFRSs are not expected to have a significant impact on the results of operations, financial position, or presentation of the Historical Financial Information.

2.4 Material accounting policy information

Interest in a joint venture

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Target Company’s interest in a joint venture is stated in the Historical Financial Information at the Target Company’s share of net assets under the equity method of accounting, less any impairment losses.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

The Target Company’s share of the post-acquisition results and other comprehensive income of a joint venture is included in statement of profit or loss and other comprehensive income. In addition, when there has been a change recognised directly in the equity of the joint venture, the Target Company recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Target Company and its joint venture are eliminated to the extent of the Target Company’s interest in a joint venture, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of the joint venture is included as part of the Target Company’s interest in the joint venture.

If an investment in a joint venture becomes an investment in an associate or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of joint control over the joint venture, the Target Company measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Related parties

A party is considered to be related to the Target Company if:

(a) the party is a person or a close member of that person’s family and that person

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

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

(iii) is a member of the key management personnel of the Target Company or of a parent of the Target Company;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Target Company are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii) the entity and the Target Company are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Target Company or an entity related to the Target Company;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

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

– IIa-15 –

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Target Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Target Company has applied the practical expedient of not adjusting the effect of a significant financing component, the Target Company initially measures a financial asset at its fair value plus in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Target Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

Purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace are recognised on the trade date, that is, the date that the Target Company commits to purchase or sell the asset.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Target Company’s statements of financial position) when:

the rights to receive cash flows from the asset have expired; or
the Target Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Target Company has transferred substantially all the risks and rewards of the asset, or (b) the Target Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Target Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Target Company continues to recognise the transferred asset to the extent of the Target Company’s continuing involvement. In that case, the Target Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Target Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Target Company could be required to repay.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Impairment of financial assets

The Target Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Target Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Target Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Target Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information. The Target Company considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Target Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Target Company may also consider a financial asset to be in default when internal or external information indicates that the Target Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Target Company.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables (including any lease receivables) which apply the simplified approach as detailed below.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as loans and borrowings and payables at amortised cost, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Target Company’s financial liabilities include amount due to the immediate holding company.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at amortised cost

After initial recognition, financial liabilities are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

Offsetting of financial liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Cash and cash equivalents

Cash and cash equivalents in the statements of financial position comprise cash on hand and at banks, and short-term highly liquid deposits with a maturity of generally within three months that are readily convertible into known amounts of cash, subject to an insignificant risk of changes in value and held for the purpose of meeting short-term cash commitments.

IIa-20 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand and at banks, and short-term deposits, as defined above, less bank overdrafts which are repayable on demand and form an integral part of the Target Company's cash management.

Income tax

Current and deferred tax are recognised in profit or loss. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if and only if the Target Company has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for a non-financial asset is required, the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In testing a cash-generating unit for impairment, a portion of the carrying amount of a corporate asset is allocated to an individual cash-generating unit if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Historical Financial Information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Impairment of interest in a joint venture

As at 31 March 2022, 2023 and 2024, and 30 September 2024, the carrying values of the Target Company's interest in a joint venture were HK$155,710,000, HK$138,601,000, HK$147,229,000 and HK$146,613,000, respectively, which are stated in the Historical Financial Information at the Target Company's share of net assets under the equity method of accounting, less any impairment losses. The Target Company has assessed at the end of each reporting period whether there is any indication that the carrying amount of interest in a joint venture is impaired. Interest in a joint venture is tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The directors of the Target Company has performed an impairment assessment of its interest in the joint venture using the fair value less costs of disposal which is dependent on the fair value of the investment properties and other assets held by the joint venture, and with reference to valuation of the related properties performed by independent professionally qualified valuers. Such valuations were based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. In making the estimation,

IIa-22 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

information from current rental value and appropriate capitalisation rates in an active market for similar properties is considered and assumptions that are mainly based on market conditions existing at the end of each reporting period are used.

4. PROFIT/(LOSS) BEFORE TAX

The Target Company’s profit/(loss) before tax is arrived at after charging:

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Unaudited)
Auditor’s remuneration	—	—	1	1	1

Note: Auditor’s remuneration for year ended 2022 and 2023 are borne by the ultimate holding company of the Target Company.

No directors received any fees or emoluments in respect of their services rendered to the Target Company during the Relevant Periods.

IIa-23 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

5. INCOME TAX

No provision of Hong Kong profit tax has been made during the Relevant Periods as the Target Company did not generate any assessable profits arising in Hong Kong during the Relevant Periods. Taxes on profits assessable in Mainland China have been calculated at that rate of tax prevailing in Mainland China.

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Current — People's Republic of China ("PRC") withholding tax	329	519	367	367	466

A reconciliation of the tax expense applicable to profit/(loss) before tax at the statutory tax rate to the tax expense at the effective tax rate is as follows:

	Year ended 31 March			Six months ended 30 September
	2022 HK$'000	2023 HK$'000	2024 HK$'000	2023 HK$'000 (Unaudited)	2024 HK$'000
Profit/(loss) before tax	3,236	(231)	19,591	(1,487)	638
Tax at the statutory tax rate of 16.5%	534	(38)	3,233	(245)	105
Withholding tax at 10% on the dividends declared by a joint venture	329	519	367	367	466
Profit and loss attributable to a joint venture	(534)	38	(3,233)	245	(105)
Tax charge for the year/period	329	519	367	367	466

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

At the end of each of Relevant Periods, subject to the agreement of the Inland Revenue Department, the estimated tax losses arising in Hong Kong that are available indefinitely for offsetting against future taxable profit of the Target Company are as follows:

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Estimated tax losses	9,220	9,220	9,220	9,220

Deferred tax assets have not been recognised in respect of these losses as it is not considered probable that sufficient taxable profits will be available against which the tax losses can be utilised.

6. INTEREST IN A JOINT VENTURE

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Share of net assets	155,710	138,601	147,229	146,613

Particulars of the joint venture, which is a Sino-foreign joint venture and directly held by the Target Company, as at the end of each of the Relevant Periods are as follows:

Name	Registered capital	Place of establishment/registration and business	Percentage of beneficial interest attributable to the Target Company	Principal activities
Shenzhen Trading Market Company Limited (深圳市集贸市場有限公司)	Paid up of RMB31,225,000	PRC/Mainland China	50%	Management and sub-licensing of Chinese wet markets

IIa-25 -

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

The following table illustrate the summarised financial information in respect of the joint venture and reconciled to the carrying amount in the Historical Financial Information.

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Cash and cash equivalents	59,732	55,251	57,749	65,166
Other current assets	3,538	4,956	8,528	9,023
Current assets	63,270	60,207	66,277	74,189
Non-current assets	351,068	299,872	307,492	305,651
Current liabilities	52,595	47,415	53,888	64,141
Non-current liabilities	50,324	35,463	25,423	22,473
Net assets	311,419	277,201	294,458	293,226
	As at 31 March			As at 30 September
---	---	---	---	---
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Reconciliation to interest in a joint venture
Proportion of ownership	50%	50%	50%	50%
Share of net assets of a joint venture	155,710	138,601	147,229	146,613

– IIa-26 –

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Revenue	49,263	40,503	45,185	22,691	21,329
Interest income	294	695	1,087	389	274
Interest expense	790	352	425	234	152
Tax expense/(credit)	2,203	(50)	13,126	(1,697)	474
Profit/(loss) and total comprehensive income/(loss) for the year/period	6,525	(23,830)	24,588	(10,268)	8,090
Dividends declared by a joint venture	3,291	5,194	3,666	3,666	4,661

DEPOSITS

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Deposits	6	6	6	6

The financial assets included in the above balances relate to receivables for which there was no recent history of default and past due amounts. As at 31 March 2022, 2023 and 2024 and 30 September 2024, the loss allowance was assessed to be minimal.

CASH AND CASH EQUIVALENTS

Cash at banks earns interest at floating rates based on daily bank deposit rates. The carrying amounts of the bank balances approximate to their fair values. All the bank balances are deposited with creditworthy banks with no recent history of default.

APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

9. AMOUNTS DUE FROM(TO) THE ULTIMATE HOLDING COMPANY/THE IMMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES

Balances with the ultimate holding company, the immediate holding company and fellow subsidiaries are unsecured, interest-free and repayable on demand. The carrying amounts of these balances are approximately to their fair values.

10. SHARE CAPITAL

	As at 30 September
	As at 31 March		30 September
	2022	2023	2024
HK$	HK$	HK$	HK$

Issued and fully paid:
1 ordinary share

1	1	1	1

11. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions disclosed elsewhere in the Historical Financial Information, the Target Company had the following transactions with a fellow subsidiary during the Relevant Periods:

Year ended 31 March			Six months ended 30 September
2022	2023	2024	2023	2024
HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
			(Unaudited)

Management fee incurred by the Target Company

—	1	1	1	—

The management fee was determined on a mutually agreed basis between the Target Company and the fellow subsidiary.

(b) Compensation of key management personnel of the Target Company

No compensation was paid to the key management personnel of the Target Company during the Relevant Periods.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

12. FINANCIAL INSTRUMENTS BY CATEGORY

The financial assets and liabilities of the Target Company as at the end of each of the Relevant Periods were financial assets stated at amortised cost and financial liabilities stated at amortised cost, respectively.

13. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and cash equivalents, deposits, dividend receivable, amount due from the ultimate holding company and amounts due from fellow subsidiaries approximate to their carrying amounts largely due to the short-term maturities of these instruments.

The fair values of the financial asset and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

During the Relevant Periods, there was no transfer of fair value measurement between Level 1 and Level 2 and no transfer into or out of Level 3 for both financial assets and financial liabilities.

14. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Target Company's financial instruments comprise cash and cash equivalents, deposits, dividend receivable, amounts due from the ultimate holding company and fellow subsidiaries and financial liabilities included the amount due to the immediate holding company. Details of these financial instruments are disclosed in the respective notes to the historical financial information.

The main risks arising from the Target Company's financial instruments are credit risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below.

Credit risk

The Target Company's bank balances are held in a major financial institution located in Hong Kong, which management believes are of high credit quality. For credit risk of the Target Company's other financial assets, which arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

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APPENDIX II(a) ACCOUNTANT'S REPORT OF THE TARGET COMPANY

Liquidity risk

The Target Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g. cash and cash equivalents) and projected cash flows from operations.

The Target Company’s objective is to maintain a balance between continuity and flexibility of funding. The maturity profile of the Target Company’s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, was within one year or on demand.

As at 31 March 2022, 2023, 2024 and 30 September 2024, the Target Company had net current liabilities and the Target Company has obtained financial support from the Target Company’s ultimate holding company in order to meet with the objective as mentioned above.

Capital management

The primary objective of the Target Company’s capital management is to safeguard the Target Company’s ability to continue as a going concern in order to provide returns to the sole shareholder, to procure adequate financial resources from the sole shareholder and to maintain an optimal capital structure to reduce the cost of capital.

15. DIVIDENDS

No dividends were declared or paid in respect of the Relevant Periods.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 30 September 2024.

IIa-30 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

ACCOUNTANT'S REPORT ON HISTORICAL FINANCIAL INFORMATION OF SHENZHEN TRADING MARKET COMPANY LIMITED (深圳市集贸市場有限公司)

27/F, One Taikoo Place

979 King's Road

Quarry Bay, Hong Kong

24 January 2025

TO THE DIRECTORS OF CHINA AGRI-PRODUCTS EXCHANGE LIMITED

Introduction

We report on the historical financial information of Shenzhen Trading Market Company Limited (the "PRC JV") set out on pages 4 to 55, which comprises the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the PRC JV for each of the years ended 31 March 2022, 2023 and 2024, and the six months ended 30 September 2024 (the "Relevant Periods"), and the statements of financial position of the PRC JV as at 31 March 2022, 2023 and 2024 and 30 September 2024 and material accounting policy information and other explanatory information (together, the "Historical Financial Information"). The Historical Financial Information set out on pages 4 to 55 forms an integral part of this report, which has been prepared for inclusion in the circular of China Agri-Products Exchange Limited (the "Company") dated 24 January 2025 (the "Circular") in connection with the acquisition of the entire equity interest of the PRC JV by a subsidiary of the Company (the "Acquisition").

JV Directors' responsibility for the Historical Financial Information

The directors of the PRC JV (the "JV Directors") are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information, and for such internal control as the JV Directors determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

The directors of the Company are responsible for the contents of the Circular in which the Historical Financial Information of the PRC JV is included, and such information is prepared based on accounting policies materially consistent with those of the Company.

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Reporting accountants' responsibility

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants' judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity's preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information, in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the JV Directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants' report, a true and fair view of the financial position of the PRC JV as at 31 March 2022, 2023 and 2024 and 30 September 2024 and of the financial performance and cash flows of the PRC JV for each of the Relevant Periods in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information.

IIb-2 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Review of interim comparative financial information

We have reviewed the interim comparative financial information of the PRC JV which comprises the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six months ended 30 September 2023 and other explanatory information (the "Interim Comparative Financial Information"). The JV Directors are responsible for the preparation and presentation of the Interim Comparative Financial Information in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Interim Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Interim Comparative Financial Information, for the purposes of the accountants' report, is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2.1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page 4 have been made.

Dividends

We refer to note 9 to the Historical Financial Information which contains information about the dividends paid or declared by the PRC JV in respect of the Relevant Periods.

Ernst & Young

Certified Public Accountants

Hong Kong

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

I. HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants' report.

The financial statements of the PRC JV for the Relevant Periods, on which the Historical Financial Information is based, were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the "Underlying Financial Statements").

The Historical Financial Information is presented in Hong Kong Dollars ("HK$") and all values are rounded to the nearest thousand (HK$'000) except when otherwise indicated.

IIb-4 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

(A) STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Year ended 31 March				Six months ended 30 September
	Notes	2022	2023	2024	2023	2024
		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
					(unaudited)
Revenue	4	49,263	40,503	45,185	22,691	21,329
Cost of services provided		(20,647)	(21,341)	(18,196)	(11,415)	(10,692)
Gross profit		28,616	19,162	26,989	11,276	10,637
Other income and gains	5	12,279	10,659	58,181	2,286	1,718
Administrative expenses		(15,258)	(16,433)	(16,151)	(6,876)	(7,176)
Finance costs	7	(790)	(352)	(425)	(234)	(152)
Fair value losses on owned investment properties		(16,169)	(13,542)	(16,282)	(11,118)	(3,261)
Profit/(loss) before tax	6	8,678	(506)	52,312	(4,666)	1,766
Income tax credit/(expense)	8	(2,203)	50	(13,126)	1,697	(474)
PROFIT/(LOSS) FOR THE YEAR/PERIOD		6,475	(456)	39,186	(2,969)	1,292
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income/(loss) that will not be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations		50	(23,374)	(14,598)	(7,299)	6,798
Other comprehensive income/(loss) for the year/period		50	(23,374)	(14,598)	(7,299)	6,798
Total comprehensive income/(loss) for the year/period		6,525	(23,830)	24,588	(10,268)	8,090

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

(B) STATEMENTS OF FINANCIAL POSITION

| | 31 March 2022
HK$'000 | 31 March 2023
HK$'000 | 31 March 2024
HK$'000 | 30 September 2024
HK$'000 |
| --- | --- | --- | --- | --- |
| NON-CURRENT ASSETS | | | | |
| Property, plant and equipment | 10 | 5,432 | 3,998 | 2,929 |
| Investment properties | 11 | 287,203 | 241,826 | 215,403 |
| Other assets | 15 | 58,433 | 54,048 | 89,160 |
| Total non-current assets | | 351,068 | 299,872 | 307,492 |
| CURRENT ASSETS | | | | |
| Trade receivables | 13 | 1,069 | 1,892 | 1,432 |
| Prepayments, deposits and other receivables | 14 | 2,469 | 3,064 | 7,096 |
| Cash and bank balances | 16 | 59,732 | 55,251 | 57,749 |
| Total current assets | | 63,270 | 60,207 | 66,277 |
| CURRENT LIABILITIES | | | | |
| Other payables and accruals | 17 | 25,277 | 20,857 | 14,239 |
| Tax payable | | 27,318 | 26,558 | 39,649 |
| Total current liabilities | | 52,595 | 47,415 | 53,888 |
| NET CURRENT ASSETS | | 10,675 | 12,792 | 12,389 |
| TOTAL ASSETS LESS CURRENT LIABILITIES | | 361,743 | 312,664 | 319,881 |
| NON-CURRENT LIABILITIES | | | | |
| Other payables | 17 | 13,439 | 6,483 | 3,432 |
| Deferred tax liabilities | 18 | 36,885 | 28,980 | 21,991 |
| Total non-current liabilities | | 50,324 | 35,463 | 25,423 |
| Net assets | | 311,419 | 277,201 | 294,458 |
| EQUITY | | | | |
| Share capital | 19 | 31,347 | 31,347 | 31,347 |
| Reserves | 20 | 280,072 | 245,854 | 263,111 |
| Total equity | | 311,419 | 277,201 | 294,458 |

– IIb-6 –

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

| | Share capital
HK$'000 | Exchange reserve
HK$'000 | Statutory reserve
HK$'000 | Retained profits
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- | --- | --- |
| At 1 April 2021 | 31,347 | 7,719 | 12,300 | 260,111 | 311,477 |
| Profit for the year | — | — | — | 6,475 | 6,475 |
| Other comprehensive income for the year: | | | | | |
| Exchanges difference on translation of the financial statements | — | 50 | — | — | 50 |
| Total comprehensive income for the year | — | 50 | — | 6,475 | 6,525 |
| Transfer to statutory reserve | — | — | 1,010 | (1,010) | — |
| Dividend declared | — | — | — | (6,583) | (6,583) |
| At 31 March 2022 and 1 April 2022 | 31,347 | 7,769 | 13,310 | 258,993 | 311,419 |
| Loss for the year | — | — | — | (456) | (456) |
| Other comprehensive loss for the year: | | | | | |
| Exchanges difference on translation of the financial statements | — | (23,374) | — | — | (23,374) |
| Total comprehensive loss for the year | — | (23,374) | — | (456) | (23,830) |
| Transfer to statutory reserve | — | — | 857 | (857) | — |
| Dividend declared | — | — | — | (10,388) | (10,388) |
| At 31 March 2023 | 31,347 | (15,605) | 14,167 | 247,292 | 277,201 |

– IIb-7 –

APPENDIX II(b)
ACCOUNTANT'S REPORT OF THE PRC JV

| | Share capital
HK$'000 | Exchange reserve
HK$'000 | Statutory reserve
HK$'000 | Retained profits
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- | --- | --- |
| At 1 April 2023 | 31,347 | (15,605) | 14,167 | 247,292 | 277,201 |
| Profit for the year | — | — | — | 39,186 | 39,186 |
| Other comprehensive loss for the year: | | | | | |
| Exchanges difference on translation of the financial statements | — | (14,598) | — | — | (14,598) |
| Total comprehensive income/(loss) for the year | — | (14,598) | — | 39,186 | 24,588 |
| Transfer to statutory reserve | — | — | 1,036 | (1,036) | — |
| Dividend declared | — | — | — | (7,331) | (7,331) |
| At 31 March 2024 and 1 April 2024 | 31,347 | (30,203) | 15,203 | 278,111 | 294,458 |
| Profit for the period | — | — | — | 1,292 | 1,292 |
| Other comprehensive income for the period: | | | | | |
| Exchanges difference on translation of the financial statements | — | 6,798 | — | — | 6,798 |
| Total comprehensive income for the period | — | 6,798 | — | 1,292 | 8,090 |
| Dividend declared | — | — | — | (9,322) | (9,322) |
| At 30 September 2024 | 31,347 | (23,405) | 15,203 | 270,081 | 293,226 |

– IIb-8 –

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

| | Share capital
HK$'000
(Unaudited) | Exchange reserve
HK$'000
(Unaudited) | Statutory reserve
HK$'000
(Unaudited) | Retained profits
HK$'000
(Unaudited) | Total
HK$'000
(Unaudited) |
| --- | --- | --- | --- | --- | --- |
| At 1 April 2023 | 31,347 | (15,605) | 14,167 | 247,292 | 277,201 |
| Loss for the period | — | — | — | (2,969) | (2,969) |
| Other comprehensive loss for the period: | | | | | |
| Exchanges difference on translation of the financial statements | — | (7,299) | — | — | (7,299) |
| Total comprehensive loss for the period | — | (7,299) | — | (2,969) | (10,268) |
| Dividend declared | — | — | — | (7,331) | (7,331) |
| At 30 September 2023 | 31,347 | (22,904) | 14,167 | 236,992 | 259,602 |

These reserve accounts comprise the reserves of HK$280,072,000, HK$245,854,000, HK$263,111,000, and HK$261,879,000 as at 31 March 2022, 2023, and 2024, and 30 September 2024, respectively, in the statements of financial position.
IIb-9 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

(D) STATEMENTS OF CASH FLOWS

	Notes	Year ended 31 March			Six months ended 30 September
		2022 HK$’000	2023 HK$’000	2024 HK$’000	2023 HK$’000 (unaudited)	2024 HK$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before tax		8,678	(506)	52,312	(4,666)	1,766
Adjustments for:
Depreciation for property, plant and equipment		1,292	1,419	1,612	806	626
Losses on disposal of items of property, plant and equipment		—	10	34	14	1
Fair value losses on owned investment properties		16,169	13,542	16,282	11,118	3,261
Gain on disposal of investment properties		—	—	(52,588)	—	—
Fair value losses on sub-leased investment properties		6,188	10,240	8,394	4,552	4,027
Finance costs	7	790	352	425	234	152
Bank interest income	5	(294)	(695)	(1,087)	(389)	(274)
Operating cash flows before movements in working capital		32,823	24,362	25,384	11,669	9,559
Decrease/(increase) in trade receivables		(1,069)	(823)	460	1,891	(149)
Decrease/(increase) in prepayments, deposit and other receivables		778	(595)	(4,032)	(608)	(346)
Increase/(decrease) in other payables and accruals		(500)	(202)	(1,522)	(6,388)	4,820
Cash generated from operations		32,032	22,742	20,290	6,564	13,884
Tax paid		(3,406)	(5,356)	(4,974)	(399)	(740)
Net cash flows generated from operating activities		28,626	17,386	15,316	6,165	13,144
CASH FLOW FROM INVESTING ACTIVITIES
Bank interest received	5	294	695	1,087	389	274
Purchase of items of property, plant and equipment		(1,051)	(573)	(993)	(421)	(82)
Additions to investment properties		(2,410)	(9)	—	—	—
Proceed from disposal of property, plant and equipment		—	169	215	14	3
Placement of non-pledged time deposits with original maturity of over three months		—	(30,000)	—	—	—
Net cash flows generated from/(used in) investing activities		(3,167)	(29,718)	309	(18)	195

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(unaudited)
CASH FLOW FROM FINANCING ACTIVITIES
Interest paid	(790)	(352)	(425)	(234)	(152)
Dividends paid	(6,583)	(10,388)	(7,331)	—	—
Principal portion of lease payments	(2,266)	(1,742)	(2,482)	(1,296)	(1,335)
Net cash flows used in financing activities	(9,639)	(12,482)	(10,238)	(1,530)	(1,487)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	15,820	(24,814)	5,387	4,617	11,852
Cash and cash equivalents at beginning of year/period	50,672	59,732	25,251	25,251	27,749
Effect of foreign exchange rate changes	(6,760)	(9,667)	2,889	(1,096)	(4,435)
CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD	59,732	25,251	27,749	28,772	35,166
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances	59,732	25,251	27,749	28,772	35,166
Non-pledged time deposits	—	30,000	30,000	30,000	30,000
Cash and bank balances as stated in the statement of financial position	59,732	55,251	57,749	58,772	65,166
Less: Non-pledged time deposits with original maturity of over three months	—	(30,000)	(30,000)	(30,000)	(30,000)
Cash and cash equivalents as stated in the statement of cash flows	59,732	25,251	27,749	28,772	35,166

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The PRC JV is a limited liability company established in the People's Republic of China (the "PRC"). The registered office of the PRC JV is located at the 7th Floor of Wenjin Building, No. 10 Beidou Road, Luohu District, Shenzhen.

The PRC JV is principally engaged in management and sub-licensing of Chinese wet markets in Shenzhen.

The PRC JV is owned as to 50% by Regal Smart Investment Limited ("Regal Smart"), 40.79% by Shenzhen Agricultural Power Group Co., Ltd. ("Shenzhen Agricultural Power"), a joint stock company established in the PRC with limited liability and its shares are listed on the Shenzhen Stock Exchange, and 9.21% by Shenzhen Fruit and Vegetable Trading Co., Ltd. ("SZ Fruit"). Regal Smart is an indirect wholly-owned subsidiary of Wang On Group Limited which is a company incorporated in Bermuda with limited liability and its shares are listed on the Stock Exchange of Hong Kong Limited. SZ Fruit is a directly wholly-owned subsidiary of Shenzhen Agricultural Power.

2. ACCOUNTING POLICIES

2.1 Basis of preparation

The Historical Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the HKICPA. All HKFRSs effective for the accounting period commencing from 1 April 2024, together with the relevant transitional provisions, have been early adopted by the PRC JV throughout the Relevant Periods and the period covered by the Interim Comparative Financial Information.

The Historical Financial Information has been prepared under the historical cost convention, except for investment properties which has been measured at fair value. The Historical Financial Information is presented in HK$ and all values are rounded to the nearest thousand except when otherwise indicated.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

2.2 Issued but not yet effective Hong Kong financial reporting standards

The PRC JV has not applied the following new and revised HKFRSs that have been issued but are not yet effective, in the Historical Financial Information.

HKFRS 18	Presentation and Disclosure in Financial Statements^{3}
Amendments to HKFRS 9 and HKFRS 7	Amendments to the Classification and Measurement of Financial Instruments^{2}
Amendments to HKAS 21	Lack of Exchangeability^{1}
Annual Improvements to HKFRS Accounting Standards — Volume 11	Amendments to HKFRS 1, HKFRS 7, HKFRS 9, HKFRS 10, and HKAS 7^{2}

Effective for annual periods beginning on or after 1 January 2025
Effective for annual periods beginning on or after 1 January 2026
Effective for annual/reporting periods beginning on/after 1 January 2027

Further information about those HKFRSs that are expected to be applicable to the PRC JV is described below.

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

HKFRS 7 Financial Instruments: Disclosures: The amendments have updated certain wording in paragraph B38 of HKFRS 7 and paragraphs IG1, IG14 and IG20B of the Guidance on implementing HKFRS 7 for the purpose of simplification or achieving consistency with other paragraphs in the standard and/or with the concepts and terminology used in other standards. In addition, the amendments clarify that the Guidance on implementing HKFRS 7 does not necessarily illustrate all the requirements
IIb-14 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

in the referenced paragraphs of HKFRS 7 nor does it create additional requirements. Earlier application is permitted. The amendments are not expected to have any significant impact on the PRC JV's Historical Financial Information.

HKFRS 9 Financial Instruments: The amendments clarify that when a lessee has determined that a lease liability has been extinguished in accordance with HKFRS 9, the lessee is required to apply paragraph 3.3.3 of HKFRS 9 and recognise any resulting gain or loss in profit or loss. In addition, the amendments have updated certain wording in paragraph 5.1.3 of HKFRS 9 and Appendix A of HKFRS 9 to remove potential confusion. Earlier application is permitted. The amendments are not expected to have any significant impact on the PRC JV's Historical Financial Information.
HKFRS 10 Consolidated Financial Statements: The amendments clarify that the relationship described in paragraph B74 of HKFRS 10 is just one example of various relationships that might exist between the investor and other parties acting as de facto agents of the investor, which removes the inconsistency with the requirement in paragraph B73 of HKFRS 10. Earlier application is permitted. The amendments are not expected to have any significant impact on the PRC JV's Historical Financial Information.
HKAS 7 Statement of Cash Flows: The amendments replace the term "cost method" with "at cost" in paragraph 37 of HKAS 7 following the prior deletion of the definition of "cost method". Earlier application is permitted. The amendments are not expected to have any impact on the PRC JV's Historical Financial Information.

Based on the PRC JV's assessment completed to date, these revised HKFRSs are not expected to have a significant impact on the results of operations, financial position, or presentation of the financial statements.

2.3 Material accounting policy information

Fair value measurement

The PRC JV measures its investment properties at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

most advantageous market must be accessible by the PRC JV. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The PRC JV uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the Historical Financial Information on a recurring basis, the PRC JV determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Investment properties

Investment properties are interests in land and buildings (including right-of-use assets) held to earn rental income and/or for capital appreciation. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of the retirement or disposal.

Related parties

A party is considered to be related to the PRC JV if:

(a) the party is a person or a close member of that person's family and that person

(i) has control or joint control over the PRC JV;

(ii) has significant influence over the PRC JV; or

(iii) is a member of the key management personnel of the PRC JV or of a parent of the PRC JV;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the PRC JV are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii) the entity and the PRC JV are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the PRC JV or an entity related to the PRC JV;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the PRC JV or to the parent of the PRC JV.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Property, plant and equipment and depreciation

Property, plant and equipment included owned assets which meet the definition of property, plant and equipment and are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the PRC JV recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of owned property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for depreciation are as follows:

Owned assets

Office equipment	20%
Motor vehicles	12.5%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at the end of each reporting period.

An item of property, plant and equipment including significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Leases

The PRC JV assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The PRC JV as a lessee

The PRC JV applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The PRC JV recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. The right-of-use assets which meet the definition of investment property are initially measured at cost and subsequently measured at fair value in accordance with the PRC JV's policy for "Investment properties".

When the right-of-use asset meets the definition of investment property, it is included in investment properties. The corresponding right-of-use asset is initially measured at cost, and subsequently measured at fair value, in accordance with the PRC JV's policy for "Investment properties".

Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the PRC JV and payments of penalties for termination of a lease, if the lease term reflects the PRC JV exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the PRC JV uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

The PRC JV's lease liabilities are included in other payables and accruals.

The PRC JV as a lessor

When the PRC JV acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease. Leases in which the PRC JV does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the PRC JV allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying assets to the lessee are accounted for as finance leases. At the commencement date, the cost of the leased asset is capitalised at the present value of the lease payments and related payments (including the initial direct costs), and presented as a receivable at an amount equal to the net investment in the lease. The finance income on the net investment in the lease is recognised in profit or loss so as to provide a constant periodic rate of return over the lease terms.

When the PRC JV is an intermediate lessor, a sublease is classified as a finance lease or operating lease with reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to which the PRC JV applies the on-balance sheet recognition exemption, the PRC JV classifies the sublease as an operating lease.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the PRC JV's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the PRC JV has applied the practical expedient of not adjusting the effect of a significant financing component, the PRC JV initially measures a financial asset at its fair value plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables

IIb-20 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

that do not contain a significant financing component or for which the PRC JV has applied the practical expedient are measured at the transaction price determined under HKFRS 15 Revenue from Contracts with Customers.

The PRC JV's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

IIb-21 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the PRC JV's statements of financial position) when:

the rights to receive cash flows from the asset have expired; or
the PRC JV has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the PRC JV has transferred substantially all the risks and rewards of the asset, or (b) the PRC JV has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the PRC JV has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the PRC JV continues to recognise the transferred asset to the extent of the PRC JV's continuing involvement. In that case, the PRC JV also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the PRC JV has retained.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Impairment of financial assets

The PRC JV recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the PRC JV expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

At each reporting date, the PRC JV assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the PRC JV compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information. The PRC JV considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The PRC JV considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the PRC JV may also consider a financial asset to be in default when internal or external information indicates that the PRC JV is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the PRC JV.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

IIb-23 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Debt investments at fair value through other comprehensive income and financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and net investments in sublease which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Simplified approach

For trade receivables (including lease receivables) that do not contain a significant financing component or when the PRC JV applies the practical expedient of not adjusting the effect of a significant financing component, the PRC JV applies the simplified approach in calculating ECLs. Under the simplified approach, the PRC JV does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The PRC JV has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as loans and borrowings and payables at amortised cost, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The PRC JV's financial liabilities include financial liabilities are included in other payables and accruals.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at amortised cost (other payables)

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

Offsetting of financial liabilities

Cash and bank balances

Cash and bank balances in the statements of financial position comprise cash on hand and at banks, and short-term highly liquid deposits with a maturity of generally within three months that are readily convertible into known amounts of cash, subject to an insignificant risk of changes in value and held for the purpose of meeting short-term cash commitments.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand and at banks, and short-term deposits, as defined above.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the PRC JV operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences; and
in respect of taxable temporary differences associated with interests in subsidiaries, associates and joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences; and
in respect of deductible temporary differences associated with interests in subsidiaries, associates and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the PRC JV has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the PRC JV expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the PRC JV will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the PRC JV and the customer at contract inception. When the contract contains a financing component which provides the PRC JV with a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in HKFRS 15.

Property management and ancillary services

Revenue from the provision of property management and ancillary services is recognised over the scheduled period on a straight-line basis because the customer simultaneously receives and consumes the benefits provided by the PRC JV.

Revenue from other sources

Rental income and sub-licensing fee is recognised on a time proportion basis over the lease terms.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument to the net carrying amount of the financial asset.

Translation of foreign currencies

The Historical Financial Information is presented in Hong Kong dollars, while the functional currency of the PRC JV is RMB. The PRC JV determines its own functional currency and items included in the Historical Financial Information are measured using that functional currency. Foreign currency transactions recorded by the PRC JV are initially recorded using its functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the PRC JV initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the PRC JV determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain subsidiaries are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their profit or loss are translated into Hong Kong dollars at the exchange rates that approximate to those prevailing at the dates of the transactions. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange reserve, except to the extent that

IIb-29 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

the differences are attributable to non-controlling interests. On disposal of a foreign operation, the cumulative amount in the reserve relating to that particular foreign operation is recognised in profit or loss.

For the purpose of the statements of cash flows, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates of the year.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to profit or loss by way of a reduced depreciation charge.

Other Assets

Other Assets are the rights to receive the new properties under a relocation arrangement, further details of which are given in note 15 to the Historical Financial Information. Such assets, being the consideration to be received upon disposal of the original properties under the relocation arrangement, are initially recognised at their fair value. Subsequent to the initial recognition, Other Assets are stated at cost less any impairment losses.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for a non-financial asset is required (other than investment properties), the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the PRC JV's Historical Financial Information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting periods, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are, described below.

Valuation of investment properties

Investment properties are revalued at the end of the reporting period on a market value, existing use basis by independent professionally qualified valuers. Such valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

results. In making the estimation, information from the estimated rental value of the relevant properties and appropriate capitalisation rates are considered and assumptions that are mainly based on market conditions existing at the end of the reporting period are used. Further details of the valuation are included in note 11 to the Historical Financial Information.

Valuation of Other Assets

Other Assets are initially recognised at their fair values according to the valuation performed by independent professionally qualified valuers on existing use basis. Such valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. In making the estimation, information from the estimated rental value of the relevant properties and appropriate gross market yield are considered and assumptions that are mainly based on market conditions existing at the initial recognition of the Other Assets are used. Further details of the valuation are included in note 15 to the Historical Financial Information.

Impairment assessment of non-financial assets

The PRC JV assesses whether there are any indicators of impairment of all non-financial assets at the end of each reporting period. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The directors of the PRC JV conducts the impairment assessment by comparing the net carrying amount of other assets with its fair value as determined based on the valuation which involved certain assumptions, including the rental value per square metre. The assumptions used in the valuation have involved significant management judgement. For calculation of value in use of other non-financial assets, management estimates the expected future cash flows from the asset or cash-generating unit and chooses a suitable discount rate in order to calculate the present value of those cash flows.

IIb-32 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

4. REVENUE

An analysis of the PRC JV's revenue is as follows:

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Revenue from contracts with customers:	17,189	14,405	15,868	7,893	8,019
Revenue from other sources:
Sub-licensing fee income	10,742	7,386	10,692	4,348	4,256
Gross rental income from investment property operating leases	21,332	18,712	18,625	10,450	9,054
	32,074	26,098	29,317	14,798	13,310
Total revenue	49,263	40,503	45,185	22,691	21,329

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

(a) Disaggregated revenue information from contracts with customers

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Type of services
Revenue from property management and ancillary services	17,189	14,405	15,868	7,893	8,019
Timing of revenue recognition
Services transferred over time	17,189	14,405	15,868	7,893	8,019

(b) Performance obligations

Information about the PRC JV's performance obligations is summarised below:

Revenue from property management and ancillary services

The performance obligation is satisfied over time as services are rendered and short-term advances are normally required before rendering the services.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

5. OTHER INCOME AND GAINS

An analysis of the PRC JV’s other income and gains is as follows:

	Year ended 31 March			Six months ended 30 September
	2022 HK$’000	2023 HK$’000	2024 HK$’000	2023 HK$’000 (Unaudited)	2024 HK$’000
Bank interest income	294	695	1,087	389	274
PRC government grant (note)	10,234	5,627	3,195	1,302	598
Gain on disposal of investment properties	—	—	52,588	—	—
Others	1,751	4,337	1,311	595	846
Total other income and gains	12,279	10,659	58,181	2,286	1,718

Note:

PRC government grants represent various form of subsidies granted to the PRC JV by the local governmental authorities in the PRC for compensation and expenses incurred by the PRC JV. These grants are generally made for business support and awarded to enterprises on a discretionary basis. The PRC JV received these government grants for the business support on its investments in the Chinese wet markets in Shenzhen. There are no unfulfilled conditions or contingencies relating to these grants.

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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

6. PROFIT/(LOSS) BEFORE TAX

The PRC JV’s profit/(loss) before tax is arrived at after charging/(crediting):

	Year ended 31 March			Six months ended 30 September
	2022 HK$’000	2023 HK$’000	2024 HK$’000	2023 HK$’000 (Unaudited)	2024 HK$’000
Other cost of services provided*	13,697	10,525	9,029	6,427	6,193
Fair value losses of sub-leased investment properties*	6,188	10,240	8,394	4,552	4,027
Depreciation of property, plant and equipment	1,292	1,419	1,612	806	626
Losses on disposal of items of property, plant and equipment	—	10	34	14	1
Directors’ remuneration	172	151	127	63	66
Staff costs	18,651	18,391	16,782	8,229	7,060
Less: Amounts included in cost of services provided	(8,707)	(8,428)	(7,339)	(3,835)	(3,209)
Total	9,944	9,963	9,443	4,394	3,851
Direct operating expenses arising from rental-earning investment properties*	762	576	773	436	472

These expenses are included in “Cost of services provided” on the face on the statements of profit or loss and other comprehensive income.
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APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

7. FINANCE COSTS

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Interest on lease liabilities	790	352	425	234	152

8. INCOME TAX

The PRC JV is subject to the PRC corporate income tax ("CIT") at a rate of 25% during the Relevant Periods.

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Current — CIT	7,559	4,596	18,089	1,649	1,852
Deferred (note 18)	(5,356)	(4,646)	(4,963)	(3,346)	(1,378)
Total tax charge/(credit) for the year/period	2,203	(50)	13,126	(1,697)	474

IIb-37 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

A reconciliation of the tax expense/(credit) applicable to profit/(loss) before tax at the statutory tax rate to the tax expense at the effective tax rate is as follows:

	Year ended 31 March			Six months ended 30 September
	2022 HK$’000	2023 HK$’000	2024 HK$’000	2023 HK$’000 (Unaudited)	2024 HK$’000
Profit/(loss) before tax	8,678	(506)	52,312	(4,666)	1,766
Tax at the statutory tax rate of 25%	2,170	(127)	13,078	(1,167)	442
Income not subject to tax	(1,621)	(2,805)	(2,370)	(1,235)	(1,075)
Expenses non-deductible for tax	1,654	2,882	2,418	705	1,107
Tax charge/(credit) for the year/period	2,203	(50)	13,126	(1,697)	474

9. DIVIDENDS

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$’000	HK$’000	HK$’000	HK$’000 (Unaudited)	HK$’000
Dividends	6,583	10,388	7,331	7,331	9,322

IIb-38 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

10. PROPERTY, PLANT AND EQUIPMENT

| | Motor vehicle
HK$'000 | Office equipment
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- |
| 31 March 2022 | | | |
| At 1 April 2021: | | | |
| Cost | 599 | 7,047 | 7,646 |
| Accumulated depreciation | (178) | (1,791) | (1,969) |
| Net carrying amount | 421 | 5,256 | 5,677 |
| At 1 April 2021, net of accumulated depreciation | | | |
| Additions | — | 1,051 | 1,051 |
| Depreciation provided during the year | (70) | (1,222) | (1,292) |
| Exchange realignment | (1) | (3) | (4) |
| At 31 March 2022, net of accumulated depreciation | 350 | 5,082 | 5,432 |
| At 31 March 2022: | | | |
| Cost | 599 | 8,111 | 8,710 |
| Accumulated depreciation | (249) | (3,029) | (3,278) |
| Net carrying amount | 350 | 5,082 | 5,432 |
| 31 March 2023 | | | |
| At 1 April 2022: | | | |
| Cost | 599 | 8,111 | 8,710 |
| Accumulated depreciation | (249) | (3,029) | (3,278) |
| Net carrying amount | 350 | 5,082 | 5,432 |
| At 1 April 2022, net of accumulated depreciation | | | |
| Additions | — | 573 | 573 |
| Depreciation provided during the year | (66) | (1,353) | (1,419) |
| Disposals | — | (179) | (179) |
| Exchange realignment | (26) | (383) | (409) |
| At 31 March 2023, net of accumulated depreciation | 258 | 3,740 | 3,998 |
| At 31 March 2023: | | | |
| Cost | 554 | 7,758 | 8,312 |
| Accumulated depreciation | (296) | (4,018) | (4,314) |
| Net carrying amount | 258 | 3,740 | 3,998 |

IIb-39 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

| | Motor vehicle
HK$'000 | Office equipment
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- |
| 31 March 2024 | | | |
| At 1 April 2023: | | | |
| Cost | 554 | 7,758 | 8,312 |
| Accumulated depreciation | (296) | (4,018) | (4,314) |
| Net carrying amount | 258 | 3,740 | 3,998 |
| At 1 April 2023, net of accumulated depreciation | | | |
| Additions | — | 993 | 993 |
| Depreciation provided during the year | (63) | (1,549) | (1,612) |
| Disposals | — | (249) | (249) |
| Exchange realignment | (13) | (188) | (201) |
| At 31 March 2024, net of accumulated depreciation | 182 | 2,747 | 2,929 |
| At 31 March 2024: | | | |
| Cost | 525 | 7,302 | 7,827 |
| Accumulated depreciation | (343) | (4,555) | (4,898) |
| Net carrying amount | 182 | 2,747 | 2,929 |
| 30 September 2024 | | | |
| At 1 April 2024: | | | |
| Cost | 525 | 7,302 | 7,827 |
| Accumulated depreciation | (343) | (4,555) | (4,898) |
| Net carrying amount | 182 | 2,747 | 2,929 |
| At 1 April 2024, net of accumulated depreciation | | | |
| Additions | — | 82 | 82 |
| Depreciation provided during the period | (31) | (595) | (626) |
| Disposals | — | (4) | (4) |
| Exchange realignment | 4 | 29 | 33 |
| At 30 September 2024, net of accumulated depreciation | 155 | 2,259 | 2,414 |
| At 30 September 2024: | | | |
| Cost | 537 | 7,360 | 7,897 |
| Accumulated depreciation | (382) | (5,101) | (5,483) |
| Net carrying amount | 155 | 2,259 | 2,414 |

IIb-40 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

11. INVESTMENT PROPERTIES

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Carrying amount at beginning of year/period	295,298	287,203	241,826	215,403
Additions for owned properties	2,410	9	—	—
Additions for sub-leased properties (note 15)	—	—	11,136	—
Net losses from fair value adjustments for owned properties	(16,169)	(13,542)	(16,282)	(3,261)
Net losses from fair value adjustments for sub-leased properties	(6,188)	(10,240)	(8,394)	(4,027)
Exchange realignment	11,852	(21,604)	(12,883)	4,002
Carrying amount at end of year/period	287,203	241,826	215,403	212,117

The PRC JV's investment properties represent retail properties situated in the Mainland China.

The investment properties were revalued by Cushman & Wakefield Limited, an independent professionally qualified valuer, on 31 March 2022, 2023 and 2024 and 30 September 2024. The JV Directors decide which external valuer to be responsible for the external valuations of the PRC JV's properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. Management has discussions with the valuer on the valuation assumptions and valuation results when the valuation is performed.

The investment properties are leased to third parties under operating leases, further summary details of which are included in note 12 to the Historical Financial Information.

Fair value hierarchy

For the Relevant Periods, the fair value measurement of the investment properties of the PRC JV was categorised within Level 3 of the fair value hierarchy.

IIb-41 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

The following table illustrates the fair value measurement of the PRC JV's investment properties:

	Fair value measurement using significant unobservable inputs (Level 3)
	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Recurring fair value measurement for:
Owned commercial properties	240,742	209,114	181,584	181,656
Sub-leased commercial properties	46,461	32,712	33,819	30,461
Total commercial properties	287,203	241,826	215,403	212,117

During the Relevant Periods, there were no transfer of fair value measurements between Level 1 and Level 2 and no transfer into or out of Level 3.

Below is a summary of the valuation techniques used and the key inputs to the valuation of investment properties as during the Relevant Periods:

	Valuation techniques	Significant unobservable inputs	Range
Commercial properties	Investment method (refer to below)	Estimated rental value per square metre and per month	31 March 2022: HK$80 to HK$540
			31 March 2023: HK$85 to HK$459
			31 March 2024: HK$75 to HK$436
			30 September 2024: HK$78 to HK$420
		Capitalisation rate	31 March 2022: 5% to 7%
			31 March 2023: 5% to 7%
			31 March 2024: 5% to 7%

The valuation of investment properties was based on the investment method by capitalisation of net rental income derived from the existing tenancies with allowance for the reversionary rental income potential of the property.

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Significant increases/(decreases) in estimated rental value in isolation would result in a significantly higher/(lower) fair value of the investment properties. Significant increases/(decreases) in the capitalisation rate in isolation would result in a significantly lower/(higher) fair value of the investment properties.

Generally, a change in the assumption made for the estimated rental value is accompanied by an opposite change in the capitalisation rate.

12. LEASES

The PRC JV as a lessee

The PRC JV has lease contracts for commercial properties which generally have lease terms of 6 years to 10 years.

(a) Right-of-use assets

The carrying amount of the PRC JV's right-of-use assets during the year are disclosed in note 11 to the Historical Financial Information.

(b) Lease liabilities

The carrying amounts of lease liabilities (included under other payables and accruals) and the movements during the year are as follows:

	As at 31 March			As at 30 September
	2022 HK$'000	2023 HK$'000	2024 HK$'000	2024 HK$'000
Carrying amount at beginning of year/period	13,990	11,689	8,456	5,553
COVID-19-related rent concessions from Lessors	—	(751)	—	—
Accretion of interest recognised during the year/period	790	352	425	152
Payments	(3,056)	(2,094)	(2,907)	(1,487)
Lease modification	—	(849)	—	—
Exchange realignment	(35)	109	(421)	98
Carrying amount at end of year/period	11,689	8,456	5,553	4,316
Analysis into:
Current portion	2,547	2,600	2,717	2,913
Non-current portion	9,142	5,856	2,836	1,403
Carrying amount at end of year/period	11,689	8,456	5,553	4,316

IIb-43 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

The PRC JV as a lessor

The PRC JV leases its investment properties (note 11) under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits and provide for periodic rent adjustments according to the then prevailing market conditions. Rental income recognised by the PRC JV during the Relevant Periods are included in note 4 to the Historical Financial Information.

At the end of the reporting period, the undiscounted lease payments receivable by the PRC JV in future periods under non-cancellable operating leases with its tenants are as follows:

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Within one year	38,818	33,518	31,991	14,500
After one year but within two years	3,952	3,380	3,511	910
After two year but within three years	2,573	2,703	1,818	947
After three year but within four years	—	1,917	945	984
After four year but within five years	—	—	983	762
After five years	—	—	249	—
Total	45,343	41,518	39,497	18,103

13. TRADE RECEIVABLES

The PRC JV's trade receivables arise from leasing of investment properties and provision of ancillary services. The PRC JV normally requires its customers to make payment of monthly charges in advance in relation to the leasing of investment properties.

Since the PRC JV's trade receivables are related to a number of diversified customers, there is no significant concentration of credit risk. The PRC JV does not hold any collateral or other credit enhancements over its trade receivable balances, except for security deposits paid by the tenants. All trade receivables are non-interest-bearing. Majority of the trade receivables that are neither past due nor impaired have no default payment history.

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

The PRC JV closely monitors trade receivables balance due more than 30 days. Those trade receivables, due more than 30 days, with financial difficulties, declining credit standing or poor historical payment pattern will be considered as default. The PRC JV will write off these unrecovered receivables after all possible means of debt recovery activities.

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date, is as follows:

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Within 30 days	1,069	1,892	1,432	1,581

The PRC JV's tenant normally settle their bills in a timely manner and the PRC JV's trade receivables as at the end of the Relevant Periods are less than 30 days past due. As such, the PRC JV's exposure to credit risk is insignificant and the JV Directors were of the opinion that the ECLs for these trade receivables are minimal.

14. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Other receivables	1,610	2,345	6,283	6,714
Deposits	761	705	668	646
Prepayments	98	14	145	82
Total prepayments, deposits and other receivables	2,469	3,064	7,096	7,442

The carrying amount of deposits and other receivables approximated to their fair value as at 31 March 2022, 2023, 2024 and 30 September 2024. Their recoverability was assessed with reference to the credit status of the debtors. Where applicable, an impairment analysis is performed

IIb-45 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

at each reporting date by considering the expected credit losses, which are estimated by applying the probability of default approach with reference to the risks of default of the counterparties. As at 31 March 2022, 2023 and 2024 and 30 September 2024, the loss allowance was assessed to be minimal.

15. OTHER ASSETS

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Rights to the New Properties	58,433	54,048	89,160	91,120

In July 2020 and November 2023, the PRC JV entered into two separated relocation compensation agreements (the "Relocation Compensation Agreements") with two domestic developers, which are independent third parties (the "Developers") for redeveloping two of the PRC JV's investment properties. Pursuant to the Relocation Compensation Agreements, the PRC JV shall surrender its investment properties. The Developers, in return, agreed to (i) compensate the PRC JV with new properties in a form of new commercial properties (the "New Properties") within 72 months; (ii) provide temporary properties for the PRC JV to continue its operations until the handover of the New Properties; (iii) compensate the PRC JV for the loss of business and relocation and decoration costs (collectively the "Cash Compensation").

The PRC JV derecognised the investment properties of HK$27,520,000 during the year ended 31 March 2021. According to the terms of the Relocation Compensation Agreements, the PRC JV recognised (i) the New Properties as "Other Assets" of HK$58,433,000 and HK$37,841,000, (ii) the receivables in relation to the Cash Compensation of HK$10,590,000 and HK$3,611,000; and (iii) investment properties in relation to the temporary properties of HK$13,998,000 and HK$11,136,000, during the year ended 31 March 2021 and 2024, respectively. Other Assets are initially recognised at their fair values and subsequently carried at cost less impairment.

Fair value hierarchy

The cost under initial recognition of the Other Assets has been determined based on its fair value according to the valuation, using the investment method performed by Cushman & Wakefield Limited, an independent professionally qualified valuer. The fair value measurement of the Other Assets of the PRC JV was categorised within Level 3 of the fair value hierarchy.

IIb-46 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

Below is a summary of the valuation technique used and the key inputs to the valuation of the initial recognition of the Other Assets:

	Valuation technique	Significant unobservable inputs	Range
Other Assets	Investment method	Estimated rental value per square metre and per month	July 2020: HK$197
November 2023: HK$180
		Gross market yield	July 2020: 6%
November 2023: 6%

The valuation of the Other Assets was based on the investment method by capitalisation of net rental income derived from existing tenancies with allowance for the potential reversionary market rent of the New Properties.

A significant increase/(decrease) in the estimated rental value per square metre in isolation would result in a significantly higher/(lower) fair value of the Other Assets. A significant increase/(decrease) in the gross market yield in isolation would result in a significantly lower/(higher) fair value of the Other Assets.

To the best of the knowledge, information and belief of the JV Directors, having made all reasonable enquiries, the PRC JV does not expect any obstacles to receive the New Properties and the Cash Compensation from the Developer throughout the Relevant Periods.

16. CASH AND BANK BALANCES

At 31 March 2022, 2023 and 2024 and 30 September 2024, the bank balances of the PRC JV denominated in RMB amounted to HK$59,732,000, HK$55,251,000, HK$57,749,000 and HK$65,166,000, respectively. RMB is not freely convertible into other currencies, however, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the PRC JV is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

IIb-47 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

17. OTHER PAYABLES AND ACCRUALS

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Deposits received	9,995	9,022	8,053	7,865
Receipts in advance	3,597	2,592	937	694
Accruals	36	21	—	—
Lease liabilities (note 12(b))	11,689	8,456	5,553	4,316
Deferred income (note (a))	10,393	3,975	596	—
Other payables (note (b))	3,006	3,274	2,532	2,508
Dividend payable	—	—	—	9,322
	38,716	27,340	17,671	24,705
Less: Other payables classified as non-current liabilities	(13,439)	(6,483)	(3,432)	(1,403)
Current portion	25,277	20,857	14,239	23,302

Notes:

(a) Deferred income represented the receipt of one-off PRC government subsidies granted to the PRC JV by the local government authority in Mainland China in relation to the renovation and upgrades of investment properties. The grants received for which related expense has not yet been undertaken are included in deferred income.

(b) Other payables are non-interest-bearing and repayable on demand.

IIb-48 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

18. DEFERRED TAX

The movements in deferred tax liabilities and assets during the Relevant Periods are as follows:

(a) Deferred tax liabilities

	Accelerated tax depreciation HK$’000	Fair value adjustments of investment properties HK$’000	Total HK$’000
Gross deferred tax liabilities at 1 April 2021	10,949	37,154	48,103
Deferred tax charged/(credited) to the statement of profit or loss during the year (note 8)	(334)	(5,589)	(5,923)
Exchange realignment	(131)	(2,242)	(2,373)
Gross deferred tax liabilities at 31 March 2022	10,484	29,323	39,807
Deferred tax charged/(credited) to the statement of profit or loss during the year (note 8)	712	(5,946)	(5,234)
Exchange realignment	(18)	(3,461)	(3,479)
Gross deferred tax liabilities at 31 March 2023	11,178	19,916	31,094
Deferred tax charged/(credited) to the statement of profit or loss during the year (note 8)	586	(6,169)	(5,583)
Exchange realignment	(634)	(1,498)	(2,132)
Gross deferred tax liabilities at 31 March 2024	11,130	12,249	23,379
Deferred tax charged/(credited) to the statement of profit or loss during the period (note 8)	110	(1,822)	(1,712)
Exchange realignment	405	77	482
Gross deferred tax liabilities at 30 September 2024	11,645	10,504	22,149

IIb-49 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

(b) Deferred tax assets

	Lease liabilities HK$'000
Gross deferred tax assets at 1 April 2021	3,359
Deferred tax charged to the statement of profit or loss during the year (note 8)	(567)
Exchange realignment	130
Gross deferred tax assets at 31 March 2022	2,922
Deferred tax charged to the statement of profit or loss during the year (note 8)	(588)
Exchange realignment	(220)
Gross deferred tax assets at 31 March 2023	2,114
Deferred tax charged to the statement of profit or loss during the year (note 8)	(620)
Exchange realignment	(106)
Gross deferred tax assets at 31 March 2024	1,388
Deferred tax charged to the statement of profit or loss during the period (note 8)	(334)
Exchange realignment	25
Gross deferred tax assets at 30 September 2024	1,079

For presentation purposes, certain deferred tax assets and liabilities have been offset in the statement of financial position. The following is an analysis of the deferred tax balances of the PRC JV for financial reporting purposes:

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	HK$'000	HK$'000	HK$'000	HK$'000
Net deferred tax liabilities recognised in the statement of financial position	36,885	28,980	21,991	21,070

IIb-50 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

19. SHARE CAPITAL

	As at 31 March			As at 30 September
	2022	2023	2024	2024
	'000	'000	'000	'000
Capital fully paid up (in RMB)	31,225	31,225	31,225	31,225
Equivalent to HK$	31,347	31,347	31,347	31,347

20. RESERVES

The amounts of the PRC JV's reserves and the movements therein for the Relevant Periods are presented in the statements of changes in equity on page 7 to 9 of the Historical Financial Information.

(a) Exchange reserve

The PRC JV's exchange fluctuation reserve comprises all relevant exchange differences arising from the translation of the financial statements of the PRC JV. The reserve is dealt with in accordance with the accounting policies set out in note 2.3 to the Historical Financial Information.

(b) Statutory reserve

Pursuant to the relevant laws and regulations in PRC, a portion of the profits of the PRC JV in PRC has been transferred to the statutory reserve which are restricted to use.

21. NOTE TO THE STATEMENTS OF CASH FLOWS

Major non-cash transactions

During the year ended 31 March 2024, the Group had non-cash additions to Other Assets and investment properties of HK$37,841,000 and HK$11,136,000, respectively, in respect of the Relocation Compensation Agreements, further details of which are given in note 15 to the Historical Financial Information.

IIb-51 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

22. RELATED PARTY TRANSACTIONS

In addition to the transaction disclosed elsewhere in the Historical Financial Information, the PRC JV had the following transactions with related parties during the Relevant Periods:

(a) Outstanding balances with shareholder:

Details of the PRC JV’s dividend payable to shareholders are included in note 17 to the Historical Financial Information.

(b) Compensation of key management personnel of the PRC JV:

Details of the PRC JV’s director emoluments are included in note 6 to the Historical Financial Information.

23. FINANCIAL INSTRUMENTS BY CATEGORY

The financial assets and liabilities of the PRC JV as at the end of each of the Relevant Periods were financial assets stated at amortised cost and financial liabilities stated at amortised cost, respectively.

24. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and bank balances, trade receivables and financial assets included in prepayments, deposits and other receivables and financial liabilities included in other payables and accruals approximate to their carrying amounts largely due to the short-term maturities of these instruments.

During the Relevant Periods, there was no transfer of fair value measurement between Level 1 and Level 2 and no transfer into or out of Level 3 for both financial assets and financial liabilities.

IIb-52 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The PRC JV's financial instruments comprise cash and bank balances, trade receivables and financial assets included in prepayments, deposits and other receivables and financial liabilities included in other payables and accruals. Details of these financial instruments are disclosed in the respective notes to the Historical Financial Information.

The main risks arising from the PRC JV's financial instruments are credit risk, liquidity risk and interest rate risk. These risks are managed by the PRC JV's financial management policies and practices described below:

Credit risk

It is the PRC JV's policy that all customers are required to pay deposits in advance of the rental of properties. In addition, the PRC JV does not have any significant credit risk as the credit given to any individual or corporate entity is not significant. The PRC JV performs appropriate and sufficient credit verification procedures for every credit sale transaction to minimise credit risk. There is no significant concentration of credit risk within the PRC JV.

The credit risk of the PRC JV's financial assets, which mainly comprise bank balances, trade receivables, and financial assets included in prepayments, deposit and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Financial assets measured at amortised cost are all classified under stage 1 for measurement of ECLs except for trade receivables which apply the simplified approach in calculating ECLs. The loss allowance provision for cash and bank balances, trade receivables and financial assets included in prepayments, deposit and other receivables were not significant as at 31 March 2022, 2023 and 2024 and 30 September 2024.

Liquidity risk

The PRC JV aims to maintain sufficient cash and credit lines to meet its liquidity requirements. The PRC JV finances its working capital requirements through funds generated from operations and bank deposits.

The table below summarises the maturity profile of the PRC JV's non-derivative financial liabilities at each end of each of Relevant Periods based on contractual undiscounted payments, based on contractual and undiscounted payments.

IIb-53 -

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

	On demand or within 1 year HK$’000	1 to 2 years HK$’000	3 to 5 years HK$’000	Total HK$’000
31 March 2022
Lease liabilities	3,197	3,292	6,718	13,207
Financial liabilities included in other payables and accruals (excluding lease liabilities)	13,001	—	—	13,001
Total	16,198	3,292	6,718	26,208
	On demand or within 1 year HK$’000	1 to 2 years HK$’000	3 to 5 years HK$’000	Total HK$’000
31 March 2023
Lease liabilities	3,045	3,136	3,077	9,258
Financial liabilities included in other payables and accruals (excluding lease liabilities)	12,296	—	—	12,296
Total	15,341	3,136	3,077	21,554
	On demand or within 1 year HK$’000	1 to 2 years HK$’000	3 to 5 years HK$’000	Total HK$’000
31 March 2024
Lease liabilities	2,974	2,801	118	5,893
Financial liabilities included in other payables and accruals (excluding lease liabilities)	10,585	—	—	10,585
Total	13,559	2,801	118	16,478

– IIb-54 –

APPENDIX II(b)

ACCOUNTANT'S REPORT OF THE PRC JV

	On demand or within 1 year HK$’000	1 to 2 years HK$’000	3 to 5 years HK$’000	Total HK$’000
30 September 2024
Lease liabilities	3,085	1,423	—	4,508
Financial liabilities included in other payables and accruals (excluding lease liabilities)	19,695	—	—	19,695
Total	22,780	1,423	—	24,203

Interest rate risk

The PRC JV's exposures to interest rate risk on bank balances are considered insignificant by management. As at each of the Relevant Periods, if the interest rates had been 50 basis points higher/lower, which was considered reasonably possible by management, with all other variables held constant, there is no material impact on profit after tax for the periods/years or other components of the PRC JV's equity.

Capital management

The PRC JV's objectives for managing its capital are to ensure that the PRC JV will be able to continue as a going concern in order to provide returns for shareholders and to maintain optimal capital structure to reduce the cost of capital. The PRC JV's overall strategy remains unchanged throughout the Relevant Periods.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the PRC JV in respect of any period subsequent to 30 September 2024.

IIb-55 -

APPENDIX III(a)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Set out below is the management discussion and analysis of the Target Company for the three financial years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024 which is prepared based on the financial information of the Target Company as set out in Appendix II to this circular.

OVERVIEW

The Target Company is an investment holding company. The principal asset of the Target Company is 50% equity interest in the PRC JV which holds the Owned Properties and leases the Leased Properties in Shenzhen City of Guangdong Province, the PRC.

Financial review

Share of Result of a Joint Venture

The Target Company accounts for the result of the PRC JV using the equity method, which mainly represents the share of profits or losses of the PRC JV during the relevant periods.

For the year ended 31 March 2023, the Target Company recorded a share of net loss of approximately HK$0.2 million from the result of a joint venture, as compared to the share of net profit of approximately HK$3.2 million for the year ended 31 March 2022, which was mainly attributable to decrease in rental income of the PRC JV.

For the year ended 31 March 2024, the Target Company recorded a share of net profit of approximately HK$19.6 million from the result of a joint venture, as compared to the share of net loss of approximately HK$0.2 million for year ended 31 March 2023, which was mainly attributable to the combined effect of increase in rental income and gain on disposal of investment properties by the PRC JV.

For the six months ended 30 September 2024, the Target Company recorded a share of net profit of approximately HK$0.6 million from the result of a joint venture, as compared to the share of net loss of approximately HK$1.5 million for six months ended 30 September 2023, which was mainly attributable to decrease of cost of service provided and fair value loss on owned investment properties by the PRC JV.

IIIa-1 -

APPENDIX III(a)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Administrative Expenses

Administrative expenses of the Target Company mainly consist of bank charges, business registration fee and auditors' remuneration. For the three financial years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, the administrative expenses incurred by the Target Company amounted to approximately HK$2,000, HK$3,000, HK$2,000, HK$2,000 and HK$8,000 respectively.

Profit/(Loss) before Tax

For the three financial years ended 31 March 2022, 2023 and 2024 and the six months ended 30 September 2023 and 2024, the Target Company recorded a profit/(loss) before tax for the year/period of approximately HK$3.2 million, (HK$0.2 million), HK$19.6 million, (HK$1.5 million), and HK$0.6 million, respectively.

The profit before tax of the Target Company of approximately HK$3.2 million for the year ended 31 March 2022 changed to the loss before tax of approximately HK$0.2 million for the year ended 31 March 2023, mainly due to decrease of share of profit of the PRC JV resulting from decrease of rental income of the PRC JV.

The loss before tax of the Target Company of approximately HK$0.2 million for the year ended 31 March 2023 changed to the profit before tax of approximately HK$19.6 million for the year ended 31 March 2024, mainly due to the increase in share of profit of the PRC JV resulting from the combined effect of increase of rental income and gain on disposal of investment properties of the PRC JV.

The loss before tax of the Target Company of approximately HK$1.5 million for the six months ended 30 September 2023 changed to the profit before tax of approximately HK$0.6 million for the six months ended 30 September 2024, mainly due to the increase in the share of profit of the PRC JV resulting from decrease of cost of service provided and fair value losses on owned investment properties of the PRC JV.

Income Tax Expense

Income tax expense of the Target Company mainly represented the PRC withholding tax at 10% on the distributable profits of the PRC JV. For the three financial years ended 31 March 2022, 2023 and 2024 and the six months ended 30 September 2023 and 2024, the income tax expense incurred by the Target Company amounted to approximately HK$0.3 million, HK$0.5 million, HK$0.4 million, HK$0.4 million and HK$0.5 million respectively.

IIIa-2 -

APPENDIX III(a)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Profit/(Loss) for the Year/Period

For the three financial years ended 31 March 2022, 2023 and 2024 and the six months ended 30 September 2023 and 2024, the Target Company recorded a profit/(loss) for the year/period of approximately HK$2.9 million, (HK$0.8 million), HK$19.2 million, (HK$1.9 million), and HK$0.2 million, respectively.

Financial Position

Non-Current Assets

The non-current assets of the Target Company mainly consist of interest in the PRC JV. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company recorded non-current assets of approximately HK$155.7 million, HK$138.6 million, HK$147.2 million, and HK$146.6 million respectively.

Current Assets

The current assets of the Target Company mainly consist of amounts due from its ultimate holding company and fellow subsidiaries, dividend receivable, cash and cash equivalents. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company recorded current assets of approximately HK$34.8 million, HK$39.4 million, HK$42.7 million and HK$47.4 million, respectively.

Current Liabilities

The current liabilities of the Target Company mainly consist of amounts due to the immediate holding company and tax payable. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company recorded current liabilities of approximately HK$70.9 million, HK$70.9 million, HK$70.9 million and HK$71.3 million, respectively.

Gearing Ratio

As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the gearing ratio (calculated as total interest-bearing borrowings divided by total equity) of the Target Company were all nil.

IIIa-3 -

APPENDIX III(a)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Significant Investments and Material Acquisitions and Disposals

For the three years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2024, the Target Company did not have any significant investment or material acquisition and disposal of subsidiaries and associated companies.

Capital Management

The capital structure of the Target Company consists of net debt and equity attributable to owners of the Target Company comprising issued equity, retained profits and other reserves.

The directors of the Target Company review the capital structure occupationally. As part of this review, the directors would consider the cost of capital and the risks associated with each class of capital.

Liquidity and Financial Resources

The Target Company mainly financed its operation by dividend income from the PRC JV. As at 31 March 2022, 2023 and 2024 and 30 September 2024, the Target Company had cash and cash equivalents of approximately HK$132,000, HK$114,000, HK$155,000 and HK$152,000, respectively.

As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company did not have any outstanding interest-bearing borrowings. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company had certain balances due from the ultimate holding company and fellow subsidiaries of approximately HK$34.6 million, HK$39.3 million, HK$42.6 million and HK$42.6 million, respectively. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the Target Company had certain balance due to the immediate holding company of approximately HK$70.9 million, HK$70.9 million, HK$70.9 million and HK$70.9 million, respectively. All these balances are unsecured, interest-free and repayable on demand.

IIIa-4 -

APPENDIX III(a)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET COMPANY

Foreign Currency Exposure

The Target Company currently does not have foreign currency risk as the transactions of the Target Company are mainly within the PRC. Accordingly, during the relevant year/period, the Target Company did not have any formal hedging policies and no financial instrument was used for hedging purposes.

Contingent Liabilities and Capital Commitments

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the Target Company did not have any contingent liabilities.

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the Target Company did not have any capital commitments.

Pledge of Assets

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the Target Company did not have any pledge of assets.

Employees and Remuneration Policies

The Target Company is an investment holding company and as such, as at 31 March 2022, 2023 and 2024 and 30 September 2024, the Target Company had no employees and no emoluments were paid or payable to its staff.

Future Plans

It is the intention of the Directors to continue to lease out the Target Properties to generate rental income after Completion.

As at the Latest Practicable Date, the Target Company did not have any future plan to launch new business or make material investments or capital assets.

IIIa-5 -

APPENDIX III(b)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

OVERVIEW

The PRC JV is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets to tenants.

FINANCIAL REVIEW

Set out below is a summary of the financial information of the PRC JV extracted from Appendix II(b) of this circular.

	Year ended 31 March			Six months ended 30 September
	2022	2023	2024	2023	2024
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
				(Unaudited)
Revenue	49,263	40,503	45,185	22,691	21,329
Profit/(loss) before tax	8,678	(506)	52,312	(4,666)	1,766

Revenue

For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, the total revenue amounted to approximately HK$49.3 million, HK$40.5 million, HK$45.2 million, HK$22.7 million and HK$21.3 million, respectively, which primarily comprised the revenue derived from management and sub-licensing of Chinese wet markets to tenants.

The total revenue of the PRC JV decreased from approximately HK$49.3 million for the year ended 31 March 2022 to approximately HK$40.5 million for the year ended 31 March 2023, mainly due to the rent relief measures for the tenants due to the COVID-19 pandemic during the year.

The total revenue of the PRC JV increased from approximately HK$40.5 million for the year ended 31 March 2023 to approximately HK$45.2 million for the year ended 31 March 2024, mainly due to the relief of control measures by the PRC government during the year.

The total revenue of the PRC JV decreased from approximately HK$22.7 million for the six months ended 30 September 2023 to approximately HK$21.3 million for the six months ended 30 September 2024, mainly due to decrease in revenue from gross rental income from investment property operating leases.

IIIb-1 -

APPENDIX III(b)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

Gross Profit

For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, the gross profit was approximately HK$28.6 million, HK$19.2 million, HK$27.0 million, HK$11.3 million and HK$10.6 million, respectively.

The gross profit of the PRC JV decreased from approximately HK$28.6 million for the year ended 31 March 2022 to approximately HK$19.2 million for the year ended 31 March 2023, mainly due to the rent relief measures for the tenants due to the COVID-19 pandemic during the year.

The gross profit of the PRC JV increased from approximately HK$19.2 million for the year ended 31 March 2023 to approximately HK$27.0 million for the year ended 31 March 2024, mainly due to the relief of control measures by the PRC government during the year.

The gross profit of the PRC JV decreased from approximately HK$11.3 million for the six months ended 30 September 2023 to approximately HK$10.6 million for the six months ended 30 September 2024, mainly due to decrease in revenue from gross rental income from investment property operating leases.

Other Income and Gains

For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, other income and gains was approximately HK$12.3 million, HK$10.7 million, HK$58.2 million, HK$2.3 million and HK$1.7 million, respectively.

Other income and gains of the PRC JV decreased from approximately HK$12.3 million for the year ended 31 March 2022 to approximately HK$10.7 million for the year ended 31 March 2023, mainly due to decrease in PRC government grant.

Other income and gains of the PRC JV increased from approximately HK$10.7 million for the year ended 31 March 2023 to approximately HK$58.2 million for the year ended 31 March 2024, mainly due to gain on disposal of investment properties.

Other income and gains of the PRC JV decreased from approximately HK$2.3 million for the six months ended 30 September 2023 to approximately HK$1.7 million for the six months ended 30 September 2024, mainly due to decrease in PRC government grant.

APPENDIX III(b)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

Profit/(Loss) before Tax

For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, profit/(loss) before tax of the PRC JV was approximately HK$8.7 million, (HK$0.5 million), HK$52.3 million, (HK$4.7 million) and HK$1.8 million, respectively.

Profit before tax of the PRC JV of approximately HK$8.7 million for the year ended 31 March 2022 changed to loss before tax of approximately HK$0.5 million for the year ended 31 March 2023, mainly due to decrease in gross profit for the reasons explained above.

Loss before tax of the PRC JV of approximately HK$0.5 million for the year ended 31 March 2023 changed to profit before tax of approximately HK$52.3 million for the year ended 31 March 2024, mainly due to increase in other income and gains from the gain on disposal of investment properties.

Loss before tax of the PRC JV of approximately HK$4.7 million for the six months ended 30 September 2023 change to profit before tax of approximately HK$1.8 million for the six months ended 30 September 2024, mainly due to decrease in fair value losses on owned investment properties.

Financial Position

Non-current Assets

The non-current assets of the PRC JV mainly consist of property, plant and equipment, investment properties and other assets. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the PRC JV recorded non-current assets of approximately HK$351.1 million, HK$299.9 million, HK$307.5 million, and HK$305.7 million respectively.

Current Assets

The current assets of the PRC JV mainly consist of trade receivables, prepayment, deposits and other receivables, cash and bank balances. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the PRC JV recorded current assets of approximately HK$63.3 million, HK$60.2 million, HK$66.3 million and HK$74.2 million, respectively.

IIIb-3 -

APPENDIX III(b)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

Current Liabilities

The current liabilities of the PRC JV mainly consist of other payables and accruals and tax payable. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the PRC JV recorded current liabilities of approximately HK$52.6 million, HK$47.4 million, HK$53.9 million and HK$64.1 million, respectively.

Non-current Liabilities

The non-current liabilities of the PRC JV mainly consist of other payables and deferred tax liabilities. As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the PRC JV recorded non-current liabilities of approximately HK$50.3 million, HK$35.5 million, HK$25.4 million and HK$22.5 million, respectively.

Gearing Ratio

As at 31 March 2022, 2023 and 2024, and as at 30 September 2024, the gearing ratio (calculated as total interest-bearing borrowings divided by total equity) of the PRC JV were all nil.

Dividends

For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2024, dividends of approximately HK$6.6 million, HK$10.4 million, HK$7.3 million and HK$9.3 million, respectively, were declared.

Material Acquisition and Disposal

For the two years ended 31 March 2022, 2023 and six months ended 30 September 2024, the PRC JV did not have any significant investment or material acquisition and disposal of subsidiaries and associated companies.

For the year ended 31 March 2024, there was a disposal of investment properties.

Significant Investments Held

Save as disclosed, the PRC JV did not have other significant investments nor any material acquisitions or disposal of subsidiaries and affiliated companies during the relevant year/period.

IIIb-4 -

APPENDIX III(b)

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

Foreign Currency Exposure

The PRC JV currently does not have foreign currency risk as the transactions of the PRC JV are mainly within the PRC. Accordingly, during the relevant year/period, the PRC JV did not have any formal hedging policies and no financial instrument was used for hedging purposes.

Contingent Liabilities and Capital Commitments

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the PRC JV did not have any contingent liabilities.

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the PRC JV did not have any capital commitments.

Pledge of Assets

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the PRC JV did not have any pledge of assets.

Employees and Remuneration Policies

As at 31 March 2022, 2023 and 2024 and 30 September 2024, the PRC JV had a total of 89, 91, 93, and 94 employees, respectively. For the years ended 31 March 2022, 2023 and 2024 and six months ended 30 September 2023 and 2024, the staff costs of the PRC JV amounted to HK$18.7 million, HK$18.4 million, HK$16.8 million, HK$8.2 million and HK$7.1 million, respectively. The PRC JV remunerates its employees based on salaries, wages and other benefits.

Future Plans and Prospects

It is the intention of the Directors to continue to lease out the Target Properties to generate rental income after Completion.

As at the Latest Practicable Date, the PRC JV did not have any future plan to launch new business or make material investments or capital assets.

IIIb-5 -

APPENDIX III(b)
MANAGEMENT DISCUSSION AND ANALYSIS OF THE PRC JV

Conclusion

The acquisition of the Target Company is in line with the Company's strategy. The management discussion and analysis of the Target Company underscores the strategic rationale behind the Transaction and highlights the potential for long-term value creation for our shareholders. It is expected that the contribution of the Target Company will have a positive outlook for the future financial performance and growth of the Company.

IIIb-6 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Introduction

This unaudited pro forma consolidated statement of financial position (the “Unaudited Pro Forma Financial Information”) has been prepared for the purpose of providing shareholders of the Company with information about the impact of the acquisition of the entire share capital of and the shareholder’s loan owed by Regal Smart Investment Limited (the “Target Company”) by the Group (the “Acquisition”) (the Target Company and the Group are hereinafter collectively referred to as the “Enlarged Group”) by illustrating how the Acquisition might have affected the financial position of the Group as at 30 September 2024, had the completion of the Acquisition taken place on 30 September 2024.

The Unaudited Pro Forma Financial Information has been prepared based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Financial Information does not purport to describe the actual financial position of the Enlarged Group that would have been attained had the Acquisition been completed on 30 September 2024. Neither does the Unaudited Pro Forma Financial Information purport to predict the future financial position of the Enlarged Group.

This Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its nature, it may not give a true picture of the financial position of the Enlarged Group following the completion of the Acquisition.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2024 as set out in the published interim report of the Company for the six months ended 30 September 2024, and the audited statement of financial position of the Target Company as at 30 September 2024 as set out in the accountants’ report of the Target Company included in Appendix II to this circular, after giving effect to the pro forma adjustments described in the accompanying notes.

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

IV-1 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	The Group as at 30 September 2024 HK$’000 Note 1	The Target Company as at 30 September 2024 HK$’000 Note 2	Pro forma adjustments HK$’000 Note 3	Unaudited pro forma of the Enlarged Group HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	62,968	—		62,968
Right-of-use assets	15,327	—		15,327
Investment properties	2,662,575	—		2,662,575
Loans and interest receivables	8,331	—		8,331
Prepayments	7,614	—		7,614
Investment in a joint venture	—	146,613	1,734	148,347
Deferred tax assets	5,203	—		5,203
Total non-current assets	2,762,018	146,613	1,734	2,910,365
CURRENT ASSETS
Properties under development	6,537	—		6,537
Properties held for sale	1,091,876	—		1,091,876
Trade receivables	1,622	—		1,622
Prepayment, deposits and other receivables	265,619	6		265,625
Amount due from the ultimate holding company		21,308	(21,308)	—
Amounts due from fellow subsidiaries		21,268	(21,268)	—
Dividend receivable		4,661		4,661
Loans and interest receivables	18,458	—		18,458
Financial assets at fair value through profit or loss	99	—		99
Cash and cash equivalents	243,533	152	(52,700)	190,985
Total current assets	1,627,744	47,395	(95,276)	1,579,863
CURRENT LIABILITIES
Trade and other payables	252,816	—	100,000	352,816
Amount due to the immediate holding company	—	70,865	(70,865)	—
Contract liabilities	72,918	—		72,918
Receipts in advance	135,922	—		135,922
Interest-bearing bank borrowings	357,265	—		357,265
Lease liabilities	5,192	—		5,192
Land appreciation tax payable	29,356	—		29,356
Income tax payable	81,658	466		82,124
Total current liabilities	935,127	71,331	29,135	1,035,593

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

| | The Group as at 30 September 2024
HK$’000
Note 1 | The Target Company as at 30 September 2024
HK$’000
Note 2 | Pro forma adjustments
HK$’000
Note 3 | Unaudited pro forma of the Enlarged Group
HK$’000 |
| --- | --- | --- | --- | --- |
| NET CURRENT ASSETS/ (LIABILITIES) | 692,617 | (23,936) | (124,411) | 544,270 |
| TOTAL ASSETS LESS CURRENT LIABILITIES | 3,454,635 | 122,677 | (122,677) | 3,454,635 |
| NON-CURRENT LIABILITIES | | | | |
| Interest-bearing bank and other borrowings | 811,704 | — | | 811,704 |
| Lease liabilities | 24,676 | — | | 24,676 |
| Deferred tax liabilities | 487,315 | — | | 487,315 |
| Total non-current liabilities | 1,323,695 | — | | 1,323,695 |
| Net assets | 2,130,940 | 122,677 | (122,677) | 2,130,940 |
| EQUITY | | | | |
| Equity attributable to owners of the parent | | | | |
| Issued capital | 99,531 | —* | | 99,531 |
| Reserves | 1,589,911 | 122,677 | (122,677) | 1,589,911 |
| | 1,689,442 | 122,677 | (122,677) | 1,689,442 |
| Non-controlling interests | 441,498 | — | | 441,498 |
| Total equity | 2,130,940 | 122,677 | (122,677) | 2,130,940 |

Less than HK$500

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

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

(1) The amounts are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 September 2024 as set out in the published interim report of the Group for the six months ended 30 September 2024.

(2) The amounts are extracted from the audited statement of financial position of the Target Company as at 30 September 2024, which has been extracted from the accountants' report of the Target Company included in Appendix II to this circular.

(3) The Target Company is an investment holding company which holds an investment in a joint venture, representing 50% equity interests in Shenzhen Trading Market Company Limited (深圳市集贸市場有限公司) (the "PRC JV") established in the People's Republic of China ("PRC") with limited liability. The PRC JV is principally engaged in the management and sub-licensing of Chinese wet markets in its owned or leased properties located in Shenzhen City of Guangdong Province, the PRC, to tenants.

Other than the investment holding in the PRC JV, the Target Company did not have other operations as at 30 September 2024 and the fair value of the Target Company's assets was substantially concentrated in the investment in the PRC JV as at 30 September 2024. Accordingly, the Target Company is not considered as a business under Hong Kong Financial Reporting Standard 3 Business Combinations and the Acquisition is treated as an asset acquisition. Had the Acquisition been completed on 30 September 2024, the cost of the Acquisition is allocated to the individual identifiable assets acquired and liabilities assumed on the basis of their relative fair values as at that date. The Acquisition does not give rise to goodwill in the Unaudited Pro Forma Financial Information. The cost of acquisition allocated to the PRC JV is as illustrated below:

	HK$'000
Total considerations for the Acquisition	150,000
Directly attributable transaction costs	2,700
	152,700
Cost of the Acquisition allocated to:
Deposits	(6)
Dividend receivable	(4,661)
Cash and cash equivalents	(152)
Tax payable	466
Purchase consideration for the acquisition of the PRC JV	148,347

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

On initial recognition of the investment in the PRC JV held by the Target Company at the completion date of the Acquisition, the Group will apply the equity method under Hong Kong Accounting Standard 28 Investments in Associates and Joint Ventures. Had the Acquisition been completed on 30 September 2024, any excess of the estimated cost of the Acquisition allocated to the investment in the PRC JV of approximately HK$148,347,000 over the Group's share of the net fair value of the PRC JV's identifiable assets and liabilities is accounted for as notional goodwill relating to the PRC JV and included in the carrying amount of the investment in a joint venture in the Unaudited Pro Forma Financial Information, as illustrated below:

	HK$'000	HK$'000
Purchase consideration for the acquisition of the PRC JV		148,347
Net fair value of the PRC JV's identifiable assets and liabilities as at 30 September 2024 (note (i))	293,226
The Group's 50% effective share of the net fair value of the PRC JV's identifiable assets and liabilities		146,613
Excess of the cost of the investment over the Group's share of the net fair value of the PRC JV's identifiable assets and liabilities		1,734

Note:

(i) The net carrying amount of the assets and liabilities of the PRC JV as at 30 September 2024 was extracted from the statement of financial position of the PRC JV as at 30 September 2024, which was included in Appendix II of this circular. This net carrying amount is considered to be the net fair value of the identifiable assets and liabilities of the PRC JV for the purpose of compiling this Unaudited Pro Forma Financial Information. The Directors have assumed that the carrying amounts of the PRC JV's identifiable assets and liabilities approximate to their fair values as at 30 September 2024.

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

The pro forma adjustment represents (i) the cash payment of HK$50,000,000 for the Acquisition, and HK$2,700,000 for the directly attributable transaction costs; (ii) the recognition of the consideration payable included in “trade and other payables” of HK$100,000,000; (iii) the elimination of the shareholder’s loan of the Target Company of approximately HK$28,289,000; (iv) the elimination of the pre-acquisition reserves and share capital of the Target Company of approximately HK$122,677,000 in aggregate; and (v) the allocation of the cost of the Acquisition to the investment in a joint venture in the Unaudited Pro Forma Financial Information.

(4) No adjustments have been made to reflect any trading results or other transactions of the Group and the Target Company entered into subsequent to 30 September 2024.

IV-6 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

B. INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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

27/F, One Taikoo Place

979 King's Road

Quarry Bay, Hong Kong

24 January 2025

To the Directors of China Agri-Products Exchange Limited

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China Agri-Products Exchange Limited (the "Company") and its subsidiaries (hereinafter collectively referred to as the "Group") by the directors of the Company (the "Directors") for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position of the Group as at 30 September 2024 and the related notes set out in Appendix III(a) of the circular dated 24 January 2025 (the "Circular") issued by the Company (the "Unaudited Pro Forma Financial Information") in connection with the acquisition of the entire share capital of and the shareholder's loan owed by Regal Smart Investment Limited ("Target Company") by the Group (the "Acquisition"). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in Appendix III(a) to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Acquisition on the Group's financial position as at 30 September 2024 as if the transaction had taken place at 30 September 2024. As part of this process, information about the Group's and the Target Company's financial position have been extracted by the Directors from the Group's published interim report for the six months ended 30 September 2024 and the accountants' report of the Target Company included in Appendix II to this circular, respectively.

IV-7 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

Directors' responsibility for the Unaudited Pro Forma Financial Information

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

Our independence and quality management

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

Our firm applies Hong Kong Standard on Quality Management 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants' responsibilities

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

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

IV-8 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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

The purpose of the Unaudited Pro Forma Financial Information included in the Circular is solely to illustrate the impact of the Acquisition on unadjusted financial information of the Group as if the Acquisition had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Acquisition would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the Acquisition, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants' judgment, having regard to the reporting accountants' understanding of the nature of the Group, the transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

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

IV-9 -

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION

OF THE ENLARGED GROUP

Opinion

In our opinion:

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

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

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

Yours faithfully,

Ernst & Young

Certified Public Accountants

Hong Kong

IV-10 -

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

The following is the text of a letter, summary of valuations and valuation reports prepared for the purpose of incorporation in this circular received from Cushman & Wakefield Limited, an independent property valuer, in connection with its opinion of value of certain properties as at 31 October 2024.

27/F
One Island East
Taikoo Place
18 Westlands Road
Quarry Bay
Hong Kong

24 January 2025

The Directors
China Agri-Products Exchange Limited
Suite 3202, 32/F, Skyline Tower
No. 39 Wang Kwong Road
Kowloon Bay
Kowloon
Hong Kong

Dear Sirs,

Re : Valuation of eleven properties located in Shenzhen, Guangdong Province, the People's Republic of China

INSTRUCTIONS, PURPOSE AND VALUATION DATE

In accordance with the instructions by China Agri-Products Exchange Limited (referred to as the "Company") and its subsidiaries (together referred to as the "Group") for us to value certain properties in the People's Republic of China (the "PRC") (as more particularly described in the valuation report) (individually the "Property" or collectively the "Properties"), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the Properties as at 31 October 2024 (the "Valuation Date").

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

DEFINITION OF MARKET VALUE

Our valuation of each of the Properties represents its market value which in accordance with the HKIS Valuation Standards 2020 published by the Hong Kong Institute of Surveyors (the "HKIS") is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably. prudently and without compulsion".

VALUATION BASIS AND ASSUMPTIONS

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

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 published by The Stock Exchange of the Hong Kong Limited, and the HKIS Valuation Standards 2020 published by the HKIS.

In the course of our valuation of the Properties in the PRC, we have relied on the information and advice given by the Group and its legal adviser, 廣東卓盈律師事務所, regarding the title of the Properties. In valuing the Properties, we have prepared our valuations on the basis that the owner of each of the Properties has an enforceable title to the respective property and has free and uninterrupted rights to use, occupy or assign the Properties for the whole of the unexpired land use term as granted.

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

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

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

METHOD OF VALUATION

In valuing the Properties, we have used Income Capitalisation Method by capitalisation of net income derived from the existing tenancies with due allowance for the reversionary income potential of the Properties.

The capitalisation rates adopted in our valuations are based on our analyses of the yields of properties of similar use type after due adjustments. Such capitalisation rates are estimated with reference to the yields generally expected by the market for comparable properties of similar use type, which implicitly reflect the type and quality of the Properties, the expectation of the potential future rental growth, capital appreciation and relevant risk factors. The capitalisation rates adopted are reasonable and in line with the market norm having regard to the analyzed yields of transactions of the relevant use type.

SOURCE OF INFORMATION

In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group regarding the title of the Properties. We have accepted advice given by the Group on such matters as planning approvals or statutory notices, easements, tenure, identification of land and buildings, particulars of occupancy, site and floor areas, interest attributable to the Group as at 21 January 2025 being the latest practicable date of the report (the "Latest Practicable Date"), and all other relevant matters.

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

TITLE INVESTIGATION

We have been provided with extracts of documents relating to the title of the Properties in the PRC but no searches have been made. 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 and the PRC legal opinion prepared by the Group's legal adviser regarding the Properties.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

SITE INSPECTION

Our valuer inspected the exterior and, whenever possible, the interior or the Properties. No structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are, however, not able to report that the Properties are free of rot, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the Properties and we have assumed that the areas shown on the documents handed to us are correct.

Name of valuer	Position	Experience in property valuation (years)	Qualification	Date of inspection
Alex Wei (魏建宇)	Assistant Manager	3	Master's degree	12 November 2024

CURRENCY

Unless otherwise stated, all monetary sums stated in our valuations are in Renminbi ("RMB"), the official currency of the PRC.

We enclose herewith our summary of valuations and valuation reports.

Yours faithfully,

for and on behalf of

Cushman & Wakefield Limited

Grace Lam

MRICS, MHKIS, R.P.S. (GP)

Senior Director

Valuation & Advisory Services

Note: Ms. Grace Lam is a Member of the Royal Institution of Chartered Surveyors, a Member of the Hong Kong Institute of Surveyors and a Registered Professional Surveyor (General Practice). Ms. Lam has over 30 years of experience in the professional property valuation and advisory services in the Greater China region and various overseas countries. Ms. Lam has sufficient current knowledge of the market, and the skills and understanding to undertake the valuations competently.

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

SUMMARY OF VALUATIONS

Property	Market value in existing state as at 31 October 2024 (RMB)	Interest attributable to the Group (%)	Market value in existing state attributable to the Group as at 31 October 2024 (RMB)
Group I — Properties not affected by urban redevelopment scheme in the PRC
1. Unit No. 3, Level 1, Fenghuang Complex, Fenghuang Road, Huangbeiling, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區鳳凰路黃貝嶺鳳凰綜合樓一層3單元	13,630,000	50	6,815,000
2. Unit No. 101 of Block no. 49, Jing Bei South, Huangbei Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區黃貝路景貝南49棟市場101單元	37,730,000	50	18,865,000
3. Level 1, Beidou Wet Market Complex, Beidou Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區北斗路北斗肉菜市場綜合樓1層	5,730,000	50	2,865,000
4. Level 2, Bibo Wet Market, Huangbei Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區黃貝路碧波肉菜市場二層	17,750,000	50	8,875,000
5. Level 1, Honghu Wet Market Complex, Honghu Second Street, Wenjin North Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區文錦北路洪湖二街洪湖肉菜市場綜合樓01層	16,160,000	50	8,080,000

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

Property	Market value in existing state as at 31 October 2024 (RMB)	Interest attributable to the Group (%)	Market value in existing state attributable to the Group as at 31 October 2024 (RMB)
6. Unit No. 101, Yuanling Wet Market, Yuanling Fifth Street, Futian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市福田區園嶺五街園嶺肉菜市場101單元	No commercial value	50	No commercial value
7. Level 1, Shatou Wet Market Complex, Fuhua Road, Futian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市福田區福華路沙頭肉菜市場綜合樓一層	22,130,000	50	11,065,000
8. Level 1, Industrial and Sanitation Commercial and Residential Building No. 7-2 Shayan Road, Shatoujiao, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區沙頭角沙鹽路7-2號工商環衛商住樓一層	28,470,000	50	14,235,000
9. Level 1, Xili Market Complex, Shahe Road West, Nanshan District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市南山區沙河西路西麗市場綜合樓裙樓第01層	27,460,000	50	13,730,000
Sub-total of Group I	169,060,000		84,530,000

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

Property	Market value in existing state as at 31 October 2024 (RMB)	Interest attributable to the Group (%)	Market value in existing state attributable to the Group as at 31 October 2024 (RMB)
Group II — Properties affected by urban redevelopment schemes in the PRC
10. Level 1, Shajingtou Market Complex, Jingtou Street East, Shatoujiao, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區沙頭角井頭東街沙井頭市場綜合樓一層	63,360,000	50	31,680,000
11. Unit Nos. 101, 105 and 202, Yantian Market Complex, Beishan Road South, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區北山道南則鹽田市場綜合樓101, 105及202單元	45,330,000	50	22,665,000
Sub-total of Group II	108,690,000		54,345,000
Total of Groups I and II	277,750,000		138,875,000

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
1. Unit No. 3, Level 1, Fenghuang Complex, Fenghuang Road, Huangbeiling, Luohu District, Shenzhen, Guangdong Province, the PRC	Completed in 1986, the subject development is a 5-storey commercial complex erected on a parcel of land with a site area of 986.95 sqm.	As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB138,014. The remaining portion was vacant.	RMB13,630,000 (RENMINBI THIRTEEN MILLION SIX HUNDRED THIRTY THOUSAND ONLY)
中國廣東省深圳市羅湖區鳳凰路黃貝嶺鳳凰綜合樓一層3單元	The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 461.17 sqm.	The longest date of expiry of the above tenancies is 31 December 2024.	(50% interest attributable to the Group: RMB6,815,000)
	The Property is held with land use rights for a term due to expire on 15 January 2035 for wet market use.

Notes:

(1) According to Real Estate Title Certificate No. 200321048 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 21 July 2006, the real estate title of the Property with a site area of 986.95 sqm and a gross floor area of 461.17 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 15 January 2035 for wet market use.

As advised by the Group, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets in the owned properties and leased properties to tenants. As at the Latest Practicable Date, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) was jointly controlled by Regal Smart Investment Limited 偉駿投資有限公司, and Shenzhen Agricultural Power, a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ, and its subsidiary.

(2) According to Business Licence No. 91440300708449591J dated 8 February 2018, 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) was established on 8 September 1998 as a limited liability company.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

(5) In valuing the Property, we have adopted Income Capitalisation Method on the basis of capitalisation of net rental income derived from the existing tenancies with allowance for the reversionary rental potential of the Property.

We have made reference to various recent lettings of retail shops within the same district. The monthly rental levels of those retail shop lettings range from approximately RMB311 per sqm to RMB367 per sqm.

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	深業東嶺
(Shenye Dongling)	深業東嶺
(Shenye Dongling)	文錦大廈
(Wenjin Building)
District	Luohu District	Luohu District	Luohu District
Address	Shennan East Road	Shennan East Road	Chunfeng Road
Type of property	Retail	Retail	Retail
Date of quote	8 October 2024	1 October 2024	6 December 2024
Monthly rent	RMB28,000	RMB26,600	RMB11,000
Gross floor area	90 sqm	85 sqm	30 sqm
Monthly unit rent	RMB311 per sqm	RMB313 per sqm	RMB367 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB330 per sqm per month for the Property.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property presents a higher risk profile due to its narrower tenant base. Hence, we have applied a 1% risk premium to the typical capitalisation rate of 5%, to arrive at 6% of capitalisation rate for the Property.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
2. Unit No. 101 of Block no. 49, Jing Bei South, Huangbei Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區黃貝路景貝南49棟市場101單元	Completed in 1989, the subject development is a commercial/residential development erected on a parcel of land with a site area of 16,642.03 sqm.
The Property comprises the wet market portion on Level 1 of Block no. 49 of the development with a total gross floor area of 2,097.94 sqm.
The Property is held with land use rights for a term due to expire on 17 June 2034 for commercial and residential uses.	As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB376,227. The remaining portion was vacant.
The longest date of expiry of the above tenancies is 31 December 2024.	RMB37,730,000
(RENMINBI THIRTY SEVEN MILLION SEVEN HUNDRED THIRTY THOUSAND ONLY)
(50% interest attributable to the Group: RMB18,865,000)

Notes:

(1) According to Real Estate Title Certificate No. 200321046 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 21 July 2006, the real estate title of the Property with a site area of 16,642.03 sqm and a gross floor area of 2,097.94 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 17 June 2034 for commercial and residential uses.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

We have made reference to various recent lettings of retail shops within the same district. The monthly rental levels of those retail shop lettings range from approximately RMB167 per sqm to RMB243 per sqm.

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	翠竹大廈
(Cuizhu Building)	鳳凰路商鋪
(Fenghuang Road Shop)	華麗路商鋪
(Huali Road Shop)
District	Luohu District	Luohu District	Luohu District
Address	Cuizhu Road	Fenghuang Road	Huali Road
Type of property	Retail	Retail	Retail
Date of quote	26 November 2024	25 October 2024	17 November 2024
Monthly rent	RMB18,000	RMB50,000	RMB28,000
Gross floor area	100 sqm	300 sqm	115 sqm
Monthly unit rent	RMB180 per sqm	RMB167 per sqm	RMB243 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB210 per sqm per month for the Property.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately $5\%$. However, we consider that the Property presents a higher risk profile due to its narrower tenant base. Hence, we have applied a $1\%$ risk premium to the typical capitalisation rate of $5\%$, to arrive at $6\%$ of capitalisation rate for the Property.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
3. Level 1, Beidou Wet Market Complex, Beidou Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市藤湖區北斗路北斗肉菜市場綜合樓1層	Completed in 1990, the subject development is a 7-storey commercial complex erected on a parcel of land with a site area of 2,684.00 sqm.

The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 899.74 sqm.

The Property is held with land use rights for a term due to expire on 15 October 2028 for market/wet market use. | As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB101,281. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB5,730,000
(RENMINBI FIVE MILLION SEVEN HUNDRED THIRTY THOUSAND ONLY)

(50% interest attributable to the Group: RMB2,865,000) |

Notes:

(1) According to Real Estate Title Certificate No. (2018) 0088571 issued by 深圳市不動產登記中心 (Real Estate Registration Centre of Shenzhen) on 29 May 2018, the real estate title of the Property with a site area of 2,684.00 sqm and a gross floor area of 899.74 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 40 years due to expire on 15 October 2028 for market/wet market use.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	匯鑫花園 (Huixin Garden)	文錦花園 (Wenjin Garden)	文錦渡口岸 (Wenjindu Port)
District	Luohu District	Luohu District	Luohu District
Address	Beidou Road	Chunfeng Road	Yanhenan Road
Type of property	Retail	Retail	Retail
Date of quote	4 November 2024	4 November 2024	31 October 2024
Monthly rent	RMB80,000	RMB90,000	RMB600,000
Gross floor area	500 sqm	450 sqm	3,000 sqm
Monthly unit rent	RMB160 per sqm	RMB200 per sqm	RMB200 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB185 per sqm per month for the Property.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
4. Level 2, Bibo Wet Market, Huangbei Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市藤湖區黃貝路碧波肉菜市場二層	Completed in 1992, the subject development is a 6-storey commercial/residential complex erected on a parcel of land with a site area of 3,487.36 sqm.

The Property comprises the wet market portion on Level 2 of the subject development with a total gross floor area of 1,718.63 sqm.

The Property is held with land use rights for a term due to expire on 27 October 2035 for residential and market uses. | As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB120,460. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB17,750,000
(RENMINBI SEVENTEEN MILLION SEVEN HUNDRED FIFTY THOUSAND ONLY)

(50% interest attributable to the Group: RMB8,875,000) |

Notes:

(1) According to Real Estate Title Certificate No. 200321049 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 21 July 2006, the real estate title of the Property with a site area of 3,487.36 sqm and a gross floor area of 1,718.63 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 27 October 2035 for residential and market uses.

As advised by the Group, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets in the owned properties and leased properties to tenants. As at the Latest Practicable Date, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) was jointly controlled by Regal Smart Investment Limited 做數投資有限公司, and Shenzhen Agricultural Power, a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ, and its subsidiary.

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	華興花園
(Huaxing Garden)	集浩大廈
(Jihao Building)	京基鳳凰印象
(Jingji Phoenix Impression)
District	Luohu District	Luohu District	Luohu District
Address	Xinxiu Road	Huangbeiling South Street	Fenghuang Road
Floor Level	Level 2	Level 1	Level 1 & 2
Type of property	Retail	Retail	Retail
Date of quote	31 October 2024	5 November 2024	20 October 2024
Monthly rent	RMB10,000	RMB10,000	RMB50,000
Gross floor area	80 sqm	100 sqm	460 sqm
Monthly unit rent	RMB125 per sqm.	RMB100 per sqm	RMB109 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB110 per sqm per month for the Property.

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APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
5. Level 1, Honghu Wet Market Complex, Honghu Second Street, Wenjin North Road, Luohu District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市羅湖區文錦北路洪湖二街洪湖肉菜市場綜合樓01層	Completed in 1997, the subject development is a 5-storey commercial/residential complex erected on a parcel of land with a site area of 2,748.00 sqm.
The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 1,133.20 sqm.
The Property is held with land use rights for a term due to expire on 14 July 2044 for residential and wet market uses.	As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB90,122.
The remaining portion was vacant.
The longest date of expiry of the above tenancies is 31 December 2027.	RMB16,160,000
(RENMINBI SIXTEEN MILLION ONE HUNDRED SIXTY THOUSAND ONLY)
(50% interest attributable to the Group: RMB8,080,000)

Notes:

(1) According to Real Estate Title Certificate No. (2018) 0088975 issued by 深圳市不動產登記中心 (Real Estate Registration Centre of Shenzhen) on 27 April 2018, the real estate title of the Property with a site area of 2,748.00 sqm and a gross floor area of 1,133.20 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 14 July 2044 for residential and wet market uses.

– Va-16 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

We have made reference to various recent lettings of retail shops within the same district. The monthly rental levels of those retail shop lettings range from approximately RMB90 per sqm to RMB107 per sqm.

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	向西路商鋪
(Xiangxi Road Shops)	美景大廈
(Meijing Mansion)	德宏天下華府
(Dehong Tianxia Huafu)
District	Luohu District	Luohu District	Luohu District
Address	Xiangxi Road	Wenjin North Road	Wenjin North Road
Type of property	Retail	Retail	Retail
Date of quote	28 October 2024	5 November 2024	26 October 2024
Monthly rent	RMB15,000	RMB4,600	RMB21,200
Gross floor area	140 sqm	49.70 sqm	236 sqm
Monthly unit rent	RMB107 per sqm	RMB93 per sqm	RMB90 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB110 per sqm per month for the Property.

– Va-17 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
6. Unit No. 101, Yuanling Wet Market, Yuanling Fifth Street, Futian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市福田區園嶺五街園嶺肉菜市場101單元	Completed in 1987, the subject development is a 4-storey commercial complex erected on a parcel of land with a site area of 3,837.10 sqm.
The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 1,998.33 sqm.
The Property is held with land use rights for a term due to expire on 17 June 2024 for wet market use.	As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB273,286. The remaining portion was vacant.
The longest date of expiry of the above tenancies is 31 December 2025.	No commercial value

Notes:

(1) According to Real Estate Title Certificate No. 300667349 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 8 September 2011, the real estate title of the Property with a site area of 3,837.10 sqm and a gross floor area of 1,998.33 sqm have been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 40 years due to expire on 17 June 2024 for wet market use.

(2) According to the Real Estate Title Certificate, the term of the land use rights of the Property expired on 17 June 2024.

– Va-18 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

As advised by the Group, the Group had made application to the local government authority for renewing the term of the land use rights of the Property. The local government authority replied that the renewal exercise could not be processed because there are no clear procedures laid down by the central government authority. However, the local government authority allowed the Property can be used, occupied and let until further notice.

Since the term of land use rights of the Property expired on 17 June 2024 and has come to an end in the absence of affirmative proof of renewal or extension. Therefore, we had assigned no commercial value to the Property.

(3) According to Business Licence No. 91440300708449591J dated 8 February 2018, 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) was established on 8 September 1998 as a limited liability company.

(4) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property was valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) was the legal land user of the Property and had obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) had the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate Yes
Business Licence Yes

– Va-19 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
7. Level 1, Shatou Wet Market Complex, Fuhua Road, Futian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市福田區福華路沙頭肉菜市場綜合樓一層	Completed in 1995, the subject development is a 7-storey commercial/residential complex erected on a parcel of land with a site area of 3,507.11 sqm.

The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 1,387.40 sqm.

The Property is held with land use rights for a term due to expire on 28 October 2043 for residential and wet market uses. | As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB125,411. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB22,130,000
(RENMINBI TWENTY TWO MILLION ONE HUNDRED THIRTY THOUSAND ONLY)

(50% interest attributable to the Group: RMB11,065,000) |

Notes:

(1) According to Real Estate Title Certificate No. 3000442244 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 14 December 2006, the real estate title of the Property with a site area of 3,507.11 sqm and a gross floor area of 1,387.40 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 28 October 2043 for wet market use.

As advised by the Group, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets in the owned properties and leased properties to tenants. As at the Latest Practicable Date, 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) was jointly controlled by Regal Smart Investment Limited 做數投資有限公司, and Shenzhen Agricultural Power, a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ, and its subsidiary.

– Va-20 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	新南苑商鋪
(Xinnanyuan Shop)	新洲花園
(Xinzhou Garden)	濱河路商鋪
(Binhe Road Shops)
District	Futian District	Futian District	Futian District
Address	Xinzhou South Road	Xinzhou 11th Street	Binhe Road
Type of property	Retail	Retail	Retail
Date of quote	17 November 2024	28 October 2024	5 December 2024
Monthly rent	RMB7,000	RMB85,000	RMB40,000
Gross floor area	60 sqm	760 sqm	300 sqm
Monthly unit rent	RMB117 per sqm	RMB112 per sqm	RMB133 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB125 per sqm per month for the Property.

– Va-21 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
8. Level 1, Industrial and Sanitation Commercial and Residential Building No. 7-2 Shayan Road, Shatoujiao, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區沙頭角沙鹽路7-2號工商環衛商住樓一層	Completed in 1990, the subject development is a 2-storey commercial complex erected on a parcel of land with a site area of 1,562.00 sqm.
The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 671.50 sqm.
The Property is held with land use rights for a term due to expire on 18 April 2038 for residential use.	As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB254,878. The remaining portion was vacant.
The longest date of expiry of the above tenancies is 31 December 2024.	RMB28,470,000
(RENMINBI TWENTY EIGHT MILLION FOUR HUNDRED SEVENTY THOUSAND ONLY)
50% interest attributable to the Group: RMB14,235,000)

Notes:

(1) According to Real Estate Title Certificate No. 7000038375 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 20 July 2006, the real estate title of the Property with a site area of 1,562.00 sqm and a total gross floor area of 671.50 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 18 April 2038 for residential use.

– Va-22 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

We have made reference to various recent lettings of retail shops within the same district. The monthly rental levels of those retail shop lettings range from approximately RMB400 per sqm to RMB478 per sqm.

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	壹海城ONE MALL
(Yihai City ONE MALL)	壹海城ONE MALL
(Yihai City ONE MALL)	壹海城ONE MALL
(Yihai City ONE MALL)
District	Yantian District	Yantian District	Yantian District
Address	Haijing Second Road	Haijing Second Road	Haijing Second Road
Type of property	Retail	Retail	Retail
Date of quote	6 October 2024	6 October 2024	3 September 2024
Monthly rent	RMB10,000	RMB11,000	RMB18,000
Gross floor area	25 sqm	23 sqm	40 sqm
Monthly unit rent	RMB400 per sqm	RMB478 per sqm	RMB450 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB390 per sqm per month for the Property.

– Va-23 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group I — Properties not affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
9. Level 1, Xili Market Complex, Shahe Road West, Nanshan District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市南山區沙河西路西麗市場綜合樓裙樓第01層	Completed in 1995, the subject development is a 7-storey commercial complex erected on a parcel of land with a site area of 3,911.00 sqm.

The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 2,013.51 sqm.

The Property is held with land use rights for a term due to expire on 14 June 2043 for commercial use. | As at the Valuation Date, portions of the Property were leased under various tenancies at a total monthly rent of approximately RMB155,597. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB27,460,000
(RENMINBI TWENTY SEVEN MILLION FOUR HUNDRED SIXTY THOUSAND ONLY)

(50% interest attributable to the Group: RMB13,730,000) |

Notes:

(1) According to Real Estate Title Certificate No. 400276613 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 24 July 2006, the real estate title of the Property with a site area of 3,911.00 sqm and a gross floor area of 2,013.51 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 14 June 2043 for commercial use.

– Va-24 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	睿圆產業園商鋪
(Ruiyuan Industrial Park Shop)	西麗綜合商貿城
(Xili Comprehensive Trade City)	創智雲城
(Chuangzhi Cloud City)
District	Nanshan District	Nanshan District	Nanshan District
Address	Longzhu Third Road	Wenyuan Street	Liuxian Avenue/
Chuangke Road
Type of property	Retail	Retail	Retail
Date of quote	14 November 2024	27 November 2024	11 November 2024
Monthly rent	RMB8,000	RMB2,500	RMB30,000
Gross floor area	80 sqm	20 sqm	300 sqm
Monthly unit rent	RMB100 per sqm	RMB125 per sqm	RMB100 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB103 per sqm per month for the Property.

– Va-25 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group II — Properties affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
10. Level 1, Shajingtou Market Complex, Jingtou Street East, Shatoujiao, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區沙頭角井頭東街沙井頭市場綜合樓一層	Completed in 1993, the subject development is a 7-storey commercial/residential complex erected on a parcel of land with a site area of 2,508.80 sqm.

The Property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of 1,721.03 sqm.

The Property is held with land use rights for a term due to expire on 21 March 2040 for market use.

However, the Property is covered under an urban renewal scheme in Shenzhen. 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) entered into an agreement with the developer in July 2020 in respect of the demolition of the Property, temporary relocation for short term operation of the wet market replacement and permanent relocation to a new wet market with a gross floor area of approximately 2,206.95 sqm to the Group in the end of 2026.

As advised by the Group, the Property was demolished in July 2020. | As at the Valuation Date, portions of the temporary wet market were leased under various tenancies at a total monthly rent of approximately RMB192,971. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB63,360,000
(RENMINBI SIXTY THREE MILLION THREE HUNDRED SIXTY THOUSAND ONLY)

(50% interest attributable to the Group: RMB31,680,000) |

– Va-26 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

Notes:

(1) According to Real Estate Title Certificate No. 7000038374 issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 20 July 2006, the real estate title of the Property with a site area of 2,508.80 sqm and a gross floor area of 1,721.03 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) for a term of 50 years due to expire on 21 March 2040 for market use.

(2) However, the Property is covered under an urban renewal scheme in Shenzhen. 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) entered into an agreement with the developer in July 2020 in respect of the demolition of the Property, temporary relocation for short term operation of the wet market replacement and permanent relocation to a new wet market with a gross floor area of approximately 2,206.95 sqm to the Group in the end of 2026.

As advised by the Group, the Property was demolished in July 2020.

Our valuation result (RMB63,360,000) was composed of two parts, one was the rights of use interest of the temporary wet market operated and leased to tenants until the end of 2026 (RMB5,060,000) and the other part was the present value of the new replacement wet market with a gross floor area of approximately 2,206.95 sqm. (RMB58,300,000).

(3) According to Business Licence No. 91440300708449591J dated 8 February 2018, 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) was established on 8 September 1998 as a limited liability company.

(4) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificate of the Property is valid, legal and enforceable under the PRC laws;

(b) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificate of the Property; and

(c) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes

Business Licence
Yes

(6) In valuing the Property, we have adopted Income Capitalisation Method on the basis of capitalisation of net rental income derived from the existing tenancies with allowance for the reversionary rental potential of the Property.

– Va-27 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	旭飛華逸園
(Xufei Huayi Garden)	君臨海城
(Junlin Bay Area)	鹽田壹海城
(Yantian One Mall)
District	Yantian District	Yantian District	Yantian District
Address	Wutong Road	Haishan Road	Haishan Road
Type of property	Retail	Retail	Retail
Date of quote	13 October 2024	26 November 2024	5 November 2024
Monthly rent	RMB4,500	RMB5,000	RMB14,500
Gross floor area	27 sqm	30 sqm	72.40 sqm
Monthly unit rent	RMB167 per sqm.	RMB167 per sqm	RMB200 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB166 per sqm per month for the Property.

– Va-28 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

VALUATION REPORT

Group II — Properties affected by urban redevelopment scheme in the PRC

Property	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
11. Unit Nos. 101, 105 and 202, Yantian Market Complex, Beishan Road South, Yantian District, Shenzhen, Guangdong Province, the PRC
中國廣東省深圳市鹽田區北山道南則鹽田市場綜合樓 101, 105及202單元	Completed in 1986, the subject development is a 5-storey commercial complex erected on a parcel of land with a site area of 1,274.30 sqm.

The Property comprises the wet market portion on Levels 1 and 2 of the subject development with a total gross floor area of 1,360.22 sqm.

The Property is held with land use rights for a term due to expire on 9 August 2023 for retail, office and dormitory uses.

However, the Property is covered under an urban renewal scheme in Shenzhen. 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) entered into an agreement with the developer in November 2023 in respect of the demolition of the Property, temporary relocation for short term operation of the wet market replacement and permanent relocation to a new wet market with a gross floor area of approximately 1,632.30 sqm to the Group in the end of 2029.

As advised by the Group, the Property was demolished in December 2023. | As at the Valuation Date, portions of temporary wet market were leased under various tenancies at a total monthly rent of approximately RMB170,700. The remaining portion was vacant.

The longest date of expiry of the above tenancies is 31 December 2024. | RMB45,330,000
(RENMINBI FORTY FIVE MILLION THREE HUNDRED THIRTY THOUSAND ONLY)
(50% interest attributable to the Group: RMB22,665,000) |

– Va-29 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

Notes:

(1) According to three Real Estate Title Certificates issued by 深圳市國土資源和房產管理局 (Land Resources and Real Estate Management Bureau of Shenzhen) on 21 July 2006, the real estate title of the Property with a site area of 1,274.30 sqm has been vested in 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) with details as follow:

No.	Certificate No.	Expiry Date of Land Use Term	Use	Floor Level	Unit No.	Gross Floor Area (sqm)
1	7000038136	9 August 2023	Retail, office and dormitory	L2	202	589.52
2	7000038137	9 August 2023	Retail, office and dormitory	L1	105	134.84
3	7000038138	9 August 2023	Retail, office and dormitory	L1	101	635.86

Total: 1,360.22

(2) However, the Property is covered under an urban renewal scheme in Shenzhen. 深圳市集貿市場有限公司 (Shenzhen Trading Market Company Limited) entered into an agreement with the developer in November 2023 in respect of the demolition of the Property, temporary relocation for short term operation of the wet market replacement and permanent relocation to a new wet market with a gross floor area of approximately 1,632.30 sqm to the Group in the end of 2029.

As advised by the Group, the Property was demolished in December 2023.

Our valuation result (RMB45,330,000) was composed of two parts, one was the rights of use interest of the temporary wet market operated and leased to tenants until the end of 2029 (RMB9,130,000) and the other part was the present value of the new replacement wet market with a gross floor area of approximately 1,632.30 sqm. (RMB36,200,000).

(4) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) The Real Estate Title Certificates of the Property are valid, legal and enforceable under the PRC laws;

(b) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) is the legal land user of the Property and has obtained the Real Estate Title Certificates of the Property; and

– Va-30 –

APPENDIX V(a) PROPERTY VALUATION REPORT ON THE OWNED PROPERTIES

(c) 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.) has the right to freely use, lease, transfer and dispose of the real estate title of the Property.

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

Real Estate Title Certificate
Yes
Business Licence
Yes

The details of the exhaustive list of the rental evidence of retail comparables are tabulated below:

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	佳兆業-西山嚇庭苑
(Kaisa Xishanxiating Garden)	佳兆業-西山嚇庭苑
(Kaisa Xishanxiating Garden)	君臨海域
(Junlin Bay Area)
District	Yantian District	Yantian District	Yantian District
Address	Wutong Road	Cuitong Road	Haishan Road
Type of property	Retail	Retail	Retail
Date of quote	14 November 2024	20 September 2024	26 November 2024
Monthly rent	RMB10,600	RMB10,900	RMB5,000
Gross floor area	54 sqm	53 sqm	30 sqm
Monthly unit rent	RMB196 per sqm	RMB206 per sqm	RMB167 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB166 per sqm per month for the Property.

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

27/F
One Island East
Taikoo Place
18 Westlands Road
Quarry Bay
Hong Kong

24 January 2025

The Directors
China Agri-Products Exchange Limited
Suite 3202, 32/F, Skyline Tower
No. 39 Wang Kwong Road
Kowloon Bay
Kowloon
Hong Kong

Dear Sirs,

Re : The sublease earning rights of the remaining lease terms of five lease agreements of five premises located in Shenzhen, Guangdong Province, the People's Republic of China (the parts used by Shenzhen Trading Market Co., Ltd)

INSTRUCTIONS, PURPOSE AND VALUATION DATE

In accordance with the instructions by China Agri-Products Exchange Limited (referred to as the "Company") and its subsidiaries (together referred to as the "Group") for us to value certain sublease earning rights in the People's Republic of China (the "PRC") (as more particularly described in the valuation reports) (individually the "Property Interest" or collectively the "Property Interests"), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the Property Interests as at 31 October 2024 (the "Valuation Date").

Vb-1 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

DEFINITION OF MARKET VALUE

Our valuation of each of the sublease earning rights represents its market value which in accordance with the HKIS Valuation Standards 2020 published by the Hong Kong Institute of Surveyors (the “HKIS”) is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

VALUATION BASIS AND ASSUMPTIONS

Our valuation of each of the sublease earning rights excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser.

In valuing the sublease earning rights, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities published by The Stock Exchange of the Hong Kong Limited, and the HKIS Valuation Standards 2020 published by the HKIS.

In the course of our valuation of the sublease earning rights in the PRC, we have relied on the information and advice given by the Group and its legal adviser, 廣東卓盈律師事務所, regarding the title of the sublease earning rights. In valuing the sublease earning rights, we have prepared our valuations on the basis that the owner of each of the sublease earning rights has an enforceable title to the respective sublease earning rights and has free and uninterrupted rights to use, occupy or assign the sublease earning rights for the whole of the unexpired land use term as granted.

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

In respect of the sublease earning rights situated in the PRC, the status of title and grant of major certificates, approvals and licences, in accordance with the information provided by the Group are set out in the notes of the valuation reports.

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

METHOD OF VALUATION

In arriving at our valuations, we have adopted Income Capitalisation Method by capitalising the net operating income potential that would be generated for the period until the expiry of the respective head leases at appropriate capitalisation rates. In the assessment of the net operating income, estimated operating costs (except the rental costs payable under the head leases) are deducted from the estimated market rents. The sublease earning rights are assumed to end upon the expiry of the head leases with no income thereafter.

Transactions involving similar scale sublease earning rights of the same nature and tenancy structure in the same districts are not frequent. On the other hand, as the sublease earning rights generate rental income from letting arrangements and such rental comparables are more readily available, we consider Income Capitalisation Method, which is also commonly used in valuing properties generating income for investment purpose, to be the best method to value these sublease earning rights.

When using Income Capitalisation Method, we have mainly made reference to subleases within each of the subleased properties as well as other relevant comparable rental evidence of properties of similar use type subject to appropriate adjustments including but not limited to location, accessibility, age, quality, trade mix, size, time and other relevant factors.

The capitalisation rates adopted in our valuations are based on our analyses of the yields of properties of similar use type after due adjustments. Such capitalisation rates are estimated with reference to the yields generally expected by the market for comparable properties of similar use type, which implicitly reflect the type and quality of the properties, the expectation of the potential future rental growth, capital appreciation and relevant risk factors. The capitalisation rates adopted are reasonable and in line with the market norm having regard to the analysed yields of transactions of the relevant use type.

SOURCE OF INFORMATION

In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group regarding the title of the sublease earning rights. We have accepted advice given by the Group on such matters as planning approvals or statutory notices, easements, tenure, identification of land and buildings, particulars of occupancy, site and floor areas, interest attributable to the Group as at 21 January 2025 being the latest practicable date of the report (the "Latest Practicable Date"), and all other relevant matters.

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

TITLE INVESTIGATION

We have been provided with extracts of documents relating to the title of the sublease earning rights in the PRC but no searches have been made. 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 sublease earning rights in the PRC and we have therefore relied on the advice given by the Group and the PRC legal opinion prepared by the Group's legal adviser regarding the sublease earning rights.

SITE INSPECTION

Our valuer inspected the exterior and, whenever possible, the interior or the properties. No structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are, however, not able to report that the properties are free of rot, infestation or any other structural defects. No tests were carried out to any of the services. Unless otherwise stated, we have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the documents handed to us are correct.

Name of valuer	Position	Experience in property valuation (years)	Qualification	Date of inspection
Han Zheng (鄭涵)	Senior Manager	8	Bachelor's Degree	18 October 2024

– Vb-4 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

CURRENCY

Unless otherwise stated, all monetary sums stated in our valuations are in Renminbi ("RMB"), the official currency of the PRC.

We enclose herewith our summary of valuations and valuation reports.

Yours faithfully,
for and on behalf of
Cushman & Wakefield Limited
Grace Lam
MRICS, MHKIS, R.P.S. (GP)
Senior Director
Valuation & Advisory Services

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

SUMMARY OF VALUATIONS

Property interest	Market value in existing state as at 31 October 2024 (RMB)
1. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Building 4, Jilian Mansion, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	3,400,000
2. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Jingtian South Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	1,100,000
3. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Meilin Ercun Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	2,300,000
4. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Level 1, Lianhua Ercun Complex, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	3,000,000
5. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Building 45, Fuhua Xincun, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	3,200,000
Total	13,000,000

– Vb-6 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

VALUATION REPORT

Property interest	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
1. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Building 4, Jilian Mansion, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	Completed in about 1993, the subject development is a residential/commercial development comprising 4 residential buildings erected on a 3-storey commercial podium.
The property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of approximately 1,992.90 sqm.	Shenzhen Trading Market Co., Ltd. leased the property from Shenzhen Talent Anju Group Co., Ltd. and subleased the property to other individual tenants on yearly bases at a total monthly rent of RMB230,838 as at 31 October 2024.
The longest date of expiry of the above tenancies is 30 April 2026.	RMB3,400,000 (RENMINBI THREE MILLION FOUR HUNDRED THOUSAND ONLY)

Notes:

(1) The salient terms and conditions of Lease Agreement No. FC201603240004 dated 15 March 2016 (the head lease) and subsequent agreements provided by the Company are extracted as follows:

Lessor 深圳市人才安居集團有限公司 (Shenzhen Talent Anju Group Co., Ltd.)

Lessee 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.)

The Property Unit 00SC, Building 4, Jilian Mansion, Futian District, Shenzhen, Guangdong Province, the PRC (中國深圳市福田區蓮花北吉蓮大廈4棟00SC號房屋) (the parts used by Shenzhen Trading Market Co., Ltd.) with a total gross floor area of approximately 1,992.90 sqm.

Lease Term A term of 10 years commencing on 1 May 2016 and expiring on 30 April 2026.

Sublease Right The lessee is permitted to sublease the property to sub-lessees.

Vb-7 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

Lease term	Monthly fixed rent (RMB)
1 May 2016 to 30 April 2017	32,982.50
1 May 2017 to 30 April 2018	33,971.98
1 May 2018 to 30 April 2019	34,991.13
1 May 2019 to 30 April 2020	36,040.87
1 May 2020 to 30 April 2021	37,122.09
1 May 2021 to 30 April 2022	38,235.76
1 May 2022 to 30 April 2023	39,382.83
1 May 2023 to 30 April 2024	40,564.31
1 May 2024 to 30 April 2025	41,781.24
1 May 2025 to 30 April 2026	43,034.68

As advised by the Group, 深圳市集贸市場有限公司 (Shenzhen Trading Market Company Limited) is a company established in the PRC with limited liability and it is principally engaged in management and sub-licensing of Chinese wet markets in the owned properties and leased properties to tenants. As at the Latest Practicable Date, 深圳市集贸市場有限公司 (Shenzhen Trading Market Company Limited) was jointly controlled by Regal Smart Investment Limited 偉貌投資有限公司, and Shenzhen Agricultural Power, a company listed on the Shenzhen Stock Exchange with the stock code of 000061.SZ, and its subsidiary.

(2) According to Business Licence No. 91440300708449591J dated 8 February 2018, 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) was established on 8 September 1998 as a limited liability company.

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(a) 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) is in possession of a proper lease agreement to the property and is entitled to sub-lease and receive all rental income generated therefrom the subleases of the property for the residual term of its lease agreement at no extra land premium or other onerous payment payable to the government except subject to payment of the prescribed head lease rents; and

(b) The lease agreement and its subsequent amendments are legal, valid and enforceable under the PRC laws.

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

The Lease Agreement and subsequent agreements Yes
Business Licence Yes

(5) In valuing the Property Interest, we have adopted Income Capitalisation Method by capitalising the net operating income potential that would be generated for the period until the expiry of the head lease at an appropriate capitalisation rate.

– Vb-8 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

We have made reference to various recent lettings of retail properties within the same district. The monthly rental levels of those retail shop lettings range from approximately RMB140 per sqm to RMB144 per sqm.

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	上梅林
(Shangmeilin)	下梅林
(Xiameilin)	華強北
(Huaqiangbei)
District	Futian District	Futian District	Futian District
Address	Meilin Street	Meihua Road	Huaqiangbei
Type of property	Retail	Retail	Retail
Date of quote	3 December 2024	2 November 2024	10 December 2024
Monthly rent	RMB11,500	RMB7,000	RMB3,500
Gross floor area	80 sqm	50 sqm	25 sqm
Monthly unit rent	RMB144 per sqm	RMB140 per sqm	RMB140 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB140 per sqm per month.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property Interest presents a higher risk profile due to its short remaining term of the head lease and narrower tenant base. Hence, we have applied a 2% risk premium to the typical capitalisation rate of 5%, to arrive at 7% of capitalisation rate for the Property Interest.

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

VALUATION REPORT

Property interest	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
2. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Jingtian South Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	Completed in about 1994, the subject development is a 6-storey commercial complex.
The property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of approximately 1,062.87 sqm.	Shenzhen Trading Market Co., Ltd. leased the property from Shenzhen Talent Anju Group Co., Ltd. and subleased the property to other individual tenants at a total monthly rent of RMB83,440 as at 31 October 2024.
The longest date of expiry of the above tenancies is 31 March 2026.	RMB1,100,000 (RENMINBI ONE MILLION ONE HUNDRED THOUSAND ONLY)

Notes:

(1) The salient terms and conditions of Lease Agreement No. FC201603240001 dated 15 March 2016 (the head lease) and subsequent agreements provided by the Company are extracted as follows:

Lessor 深圳市人才安居集團有限公司 (Shenzhen Talent Anju Group Co., Ltd.)

Lessee 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.)

The Property Unit 00SC, Jingtian South Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (中國深圳市福田區景田南綜合樓 (ZHL棟) 00SC號房屋) (the parts used by Shenzhen Trading Market Co., Ltd.) with a total gross floor area of approximately 1,062.87 sqm.

Lease Term A term of 10 years commencing on 1 April 2016 and expiring on 31 March 2026.

Sublease Right The lessee is permitted to sublease the property to sub-lessees.

Vb-10 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

Lease term	Monthly fixed rent (RMB)
1 April 2016 to 31 March 2017	18,419.50
1 April 2017 to 31 March 2018	18,972.09
1 April 2018 to 31 March 2019	19,541.25
1 April 2019 to 31 March 2020	20,127.48
1 April 2020 to 31 March 2021	20,731.31
1 April 2021 to 31 March 2022	21,353.25
1 April 2022 to 31 March 2023	21,993.85
1 April 2023 to 31 March 2024	22,653.66
1 April 2024 to 31 March 2025	23,333.27
1 April 2025 to 31 March 2026	24,033.27

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(b) The lease agreement and its subsequent amendments are legal, valid and enforceable under the PRC laws.

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

The Lease Agreement and subsequent agreements Yes
Business Licence Yes

– Vb-11 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	薩花一村
(Lianhua First Village)	河背村
(Hebei Village)	下梅林
(Xiameilin Village)
District	Futian District	Futian District	Futian District
Address	Sungang West Road	Meilin Street	No. 2 Road
Type of property	Retail	Retail	Retail
Date of quote	14 October 2024	5 August 2024	2 September 2024
Monthly rent	RMB45,000	RMB5,000	RMB4,200
Gross floor area	383 sqm	45 sqm	40 sqm
Monthly unit rent	RMB117 per sqm	RMB111 per sqm	RMB105 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB105 per sqm per month.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property Interest presents a higher risk profile due to its short remaining term of the head leases and narrower tenant base. Hence, we have applied a 2% risk premium to the typical capitalisation rate of 5%, to arrive at 7% of capitalisation rate for the Property Interest.

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

VALUATION REPORT

Property interest	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
3. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Meilin Ercun Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	Completed in about 1996, the subject development is a 7-storey residential/commercial complex.
The property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of approximately 1,967.19 sqm.	Shenzhen Trading Market Co., Ltd. leased the property from Shenzhen Talent Anju Group Co., Ltd. and subleased the property to other individual tenants at a total monthly rent of RMB144,179 as at 31 October 2024.
The longest date of expiry of the above tenancies is 31 March 2026.	RMB2,300,000 (RENMINBI TWO MILLION THREE HUNDRED THOUSAND ONLY)

Notes:

(1) The salient terms and conditions of Lease Agreement No. FC201603240002 dated 15 March 2016 (the head lease) and subsequent agreements provided by the Company are extracted as follows:

Lessor 深圳市人才安居集團有限公司 (Shenzhen Talent Anju Group Co., Ltd.)

Lessee 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.)

The Property The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Meilin Ercun Complex (Building ZHL), Futian District, Shenzhen, Guangdong Province, the PRC (中國深圳市福田區梅林二村綜合樓 (ZHL棟) 00SC號房屋) (the parts used by Shenzhen Trading Market Co., Ltd.) with a total gross floor area of approximately 1,967.19 sqm.

Lease Term A term of 10 years commencing on 1 April 2016 and expiring on 31 March 2026.

Sublease Right The lessee is permitted to sublease the property to sub-lessees.

Vb-13 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

Lease term	Monthly fixed rent (RMB)
1 April 2016 to 31 March 2017	33,383.30
1 April 2017 to 31 March 2018	34,384.80
1 April 2018 to 31 March 2019	35,416.34
1 April 2019 to 31 March 2020	36,478.83
1 April 2020 to 31 March 2021	37,573.20
1 April 2021 to 31 March 2022	38,700.39
1 April 2022 to 31 March 2023	39,861.41
1 April 2023 to 31 March 2024	41,057.25
1 April 2024 to 31 March 2025	42,288.97
1 April 2025 to 31 March 2026	43,557.63

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(b) The lease agreement and its subsequent amendments are legal, valid and enforceable under the PRC laws.

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

The Lease Agreement and subsequent agreements Yes
Business Licence Yes

– Vb-14 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	薩花一村
(Lianhua First Village)	河背村
(Hebei Village)	河背村
(Hebei Village)
District	Futian District	Futian District	Futian District
Address	Sungang West Road	Meilin Street	Meilin Street
Type of property	Retail	Retail	Retail
Date of quote	14 October 2024	5 August 2024	29 October 2024
Monthly rent	RMB45,000	RMB5,000	RMB16,500
Gross floor area	383 sqm	45 sqm	140 sqm
Monthly unit rent	RMB117 per sqm	RMB111 per sqm	RMB118 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB107 per sqm per month.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property Interest presents a higher risk profile due to its short remaining term of the head leases and narrower tenant base. Hence, we have applied a 2% risk premium to the typical capitalisation rate of 5%, to arrive at 7% of capitalisation rate for the Property Interest.

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APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

VALUATION REPORT

Property interest	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
4. The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Level 1, Lianhua Ercun Complex, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	Completed in about 1989, the subject development is a 6-storey residential/commercial complex.
The property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of approximately 1,903.42 sqm.	Shenzhen Trading Market Co., Ltd. leased the property from Shenzhen Talent Anju Group Co., Ltd. and subleased the property to other individual tenants on yearly bases at a total monthly rent of RMB258,487 as at 31 October 2024.
The longest date of expiry of the above tenancies is 30 November 2025.	RMB3,000,000 (RENMINBI THREE MILLION ONLY)

Notes:

(1) The salient terms and conditions of Lease Agreement No. FC201512280001 dated 16 December 2015 (the head lease) and subsequent agreements provided by the Company are extracted as follows:

Lessor: 深圳市人才安居集團有限公司 (Shenzhen Talent Anju Group Co., Ltd.)
Lessee: 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.)
The Property: The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Level 1, Lianhua Ercun Complex, Futian District, Shenzhen, Guangdong Province, the PRC (中國深圳市福田區蓮花二村綜合樓一層00SC號房屋) (the parts used by Shenzhen Trading Market Co., Ltd.) with a total gross floor area of approximately 1,903.42 sqm.
Lease Term: A term of 10 years commencing on 1 December 2015 and expiring on 30 November 2025.
Sublease Right: The lessee is permitted to sublease the property to sub-lessees.

– Vb-16 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

Lease term	Monthly fixed rent (RMB)
1 December 2015 to 30 November 2016	45,225.30
1 December 2016 to 30 November 2017	46,582.06
1 December 2017 to 30 November 2018	47,979.52
1 December 2018 to 30 November 2019	49,418.91
1 December 2019 to 30 November 2020	50,901.47
1 December 2020 to 30 November 2021	52,428.52
1 December 2021 to 30 November 2022	54,001.37
1 December 2022 to 30 November 2023	55,621.41
1 December 2023 to 30 November 2024	57,290.06
1 December 2024 to 30 November 2025	59,008.76

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(b) The lease agreement and its subsequent amendments are legal, valid and enforceable under the PRC laws.

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

The Lease Agreement and subsequent agreements Yes
Business Licence Yes

– Vb-17 –

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	蓮花北村
(Lianhua North Village)	蓮花北村
(Lianhua North Village)	蓮花北村
(Lianhua North Village)
District	Futian District	Futian District	Futian District
Address	Lianhua Road	Lianhua Road	Lianhua Road
Type of property	Retail	Retail	Retail
Date of quote	7 October 2024	3 October 2024	3 September 2024
Monthly rent	RMB8,000	RMB6,000	RMB13,000
Gross floor area	42 sqm	32 sqm	70 sqm
Monthly unit rent	RMB190 per sqm	RMB188 per sqm	RMB186 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB184 per sqm per month.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property Interest presents a higher risk profile due to its short remaining term of the head lease and narrower tenant base. Hence, we have applied a 2% risk premium to the typical capitalisation rate of 5%, to arrive at 7% of capitalisation rate for the Property Interest.

Vb-18 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

VALUATION REPORT

	Property Interest	Description and tenure	Particulars of occupancy	Market value in existing state as at 31 October 2024
5.	The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Building 45, Fuhua Xincun, Futian District, Shenzhen, Guangdong Province, the PRC (the parts used by Shenzhen Trading Market Co., Ltd.)	Completed in about 1992, the subject development is a 7-storey residential building with retail usage on Level 1.	Shenzhen Trading Market Co., Ltd. leased the property from Shenzhen Talent Anju Group Co., Ltd. and subleased the property to other individual tenants on yearly bases at a total monthly rent of RMB238,000 as at 31 October 2024.	RMB3,200,000 (RENMINBI THREE MILLION TWO HUNDRED THOUSAND ONLY)
		The property comprises the wet market portion on Level 1 of the subject development with a total gross floor area of approximately 2,212.84 sqm.
			The longest date of expiry of the above tenancies is 31 December 2024.

Notes:

(1) The salient terms and conditions of Lease Agreement No. FC201603240003 dated 15 March 2016 (the head lease) and subsequent agreements provided by the Company are extracted as follows:

Lessor 深圳市人才安居集團有限公司 (Shenzhen Talent Anju Group Co., Ltd.)

Lessee 深圳市集貿市場有限公司 (Shenzhen Trading Market Co., Ltd.)

The Property The sublease earning right of the remaining 10-year lease agreement of Unit 00SC, Building 45, Fuhua Xincun, Futian District, Shenzhen, Guangdong Province, the PRC (中國深圳市福田區福華新村045棟00SC號房屋) (the parts used by Shenzhen Trading Market Co., Ltd.) with a total gross floor area of approximately 2,212.84 sqm.

Lease Term A term of 10 years commencing on 1 May 2016 and expiring on 30 April 2026.

Sublease Right The lessee is permitted to sublease the property to sub-lessees.

Vb-19 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

Lease term	Monthly fixed rent (RMB)
1 May 2016 to 30 April 2017	50,342.10
1 May 2017 to 30 April 2018	51,852.36
1 May 2018 to 30 April 2019	53,407.93
1 May 2019 to 30 April 2020	55,010.17
1 May 2020 to 30 April 2021	56,660.48
1 May 2021 to 30 April 2022	58,360.29
1 May 2022 to 30 April 2023	60,111.10
1 May 2023 to 30 April 2024	61,914.43
1 May 2024 to 30 April 2025	63,771.87
1 May 2025 to 30 April 2026	65,685.02

(2) According to Business Licence No. 91440300708449591J dated 8 February 2018, 深圳市集贸市場有限公司 (Shenzhen Trading Market Co., Ltd.) has been established on 8 September 1998 as a limited liability company.

(3) We have been provided with a legal opinion issued by the Group's PRC legal adviser, which contains, inter alia, the following information:

(b) The lease agreement and its subsequent amendments are legal, valid and enforceable under the PRC laws.

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

The Lease Agreement and subsequent agreements Yes
Business Licence Yes

Vb-20 -

APPENDIX V(b) PROPERTY VALUATION REPORT ON THE LEASED PROPERTIES

	Comparable no. 1	Comparable no. 2	Comparable no. 3
Name of development	福民新村
(Fumin New Village)	赤尾村
(Chiwei Village)	赤尾村
(Chiwei Village)
District	Futian District	Futian District	Futian District
Address	Fuqiang Road	Chiwei First Street	Chiwei First Street
Type of property	Retail	Retail	Retail
Date of quote	18 August 2024	18 September 2024	2 October 2024
Monthly rent	RMB13,000	RM25,000	RMB18,900
Gross floor area	95 sqm	180 sqm	130 sqm
Monthly unit rent	RMB137 per sqm	RMB139 per sqm	RMB145 per sqm

After undertaking appropriate adjustments to those comparables, we have adopted an average unit rent of approximately RMB145 per sqm per month.

Upon analysing recent sales transactions of retail properties, we noted that the capitalisation rate implied in those transactions is approximately 5%. However, we consider that the Property Interest presents a higher risk profile due to its short remaining term of the head lease and narrower tenant base. Hence, we have applied a 2% risk premium to the typical capitalisation rate of 5%, to arrive at 7% of capitalisation rate for the Property Interest.

Vb-21 -

APPENDIX VI

GENERAL INFORMATION

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) Interests of Directors

Save as disclosed below, as at the Latest Practicable Date, none of the Directors or chief executive of the Company and/or any of their respective associates had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (b) which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules, to be notified to the Company and the Stock Exchange.

Long positions in the Shares:

Name of Director	Nature of interest	Total Number of Shares and underlying Shares involved	Approximate percentage of the Company’s total issued Shares (Note a) %
Mr. Tang Ching Ho (“Mr. Tang”)	Interest of controlled corporation	5,682,514,594 (Note b)	57.09

APPENDIX VI

GENERAL INFORMATION

Name of Director	Nature of interest	Total Number of Shares and underling Shares involved	Approximate percentage of the Company's total issued Shares (Note a) %
Mr. Leung Sui Wah, Raymond (“Mr. Leung”)	Beneficial owner	50,000,000 (Note c)	0.50
Mr. Wong Ka Kit (“Mr. Wong”)	Beneficial owner	25,000,000 (Note d)	0.25
Ms. Luo Xu Ying (“Ms. Luo”)	Beneficial owner	6,000,000 (Note e)	0.06

Notes:

(a) The percentage(s) were disclosed pursuant to the relevant disclosure form(s) filed under the SFO as at the Latest Practicable Date.

(b) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, among of the 5,682,514,594 Shares, 2,007,700,062 Shares were held by Onger Investments Limited (“Onger Investments”) and 3,674,814,532 Shares were held by Rich Time Strategy Limited (“Rich Time”). Each of Onger Investments and Rich Time was directly wholly-owned by Wang On Enterprises (BVI) Limited (“WOE”), which is in turn directly wholly-owned by WOG which was owned as to approximately 42.80% by Mr. Tang, together with his associates including Accord Power Limited (of which Mr. Tang is a director), which is indirectly wholly-owned by Alpadis Trust (HK) Limited in its capacity as the trustee of Tang’s Family Trust. Alpadis Trust (HK) Limited was the trustee of Tang’s Family Trust. Alpadis Trust (HK) Limited was owned as to 20% by each of Eastwest Trading Ltd., Raysor Limited, AGH Invest Ltd., AGH Capital Ltd. and Alpadis Group Holding AG (each of Eastwest Trading Ltd., Raysor Limited, AGH Invest Ltd. and AGH Capital Ltd. was wholly owned by Alpadis Group Holding AG); Alpadis Group Holding AG was in turn held by ESSEIVA, Alain as to 91% and therefore ESSEIVA, Alain and his spouse TEO Wei Lee are both interested in the shares in WOG as held by Accord Power Limited.

(c) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, Mr. Leung held 50,000,000 underlying Shares as at the Latest Practicable Date, representing interests in share options granted to the Director under the share option scheme of the Company to subscribe for the Shares.

VI-2 -

APPENDIX VI

GENERAL INFORMATION

(d) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, Mr. Wong held 25,000,000 underlying Shares as at the Latest Practicable Date, representing interests in share options granted to the Director under the share option scheme of the Company to subscribe for the Shares.

(e) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, Ms. Luo held 6,000,000 underlying Shares as at the Latest Practicable Date, representing interests in share options granted to the Director under the share option scheme of the Company to subscribe for the Shares.

Interest in the shares and underlying shares of associated corporations of the Company:

Name of Director	Name of associated corporation	Nature of interest	Total number of shares involved (note b)	Approximate percentage of the associated corporation's total issued shares (note a) %
Mr. Tang	WYT	Interest of controlled corporation	810,322,940	72.02
	WOP	Interest of controlled corporation	11,400,000,000	75.00
	WOG	Beneficial Owner	28,026,339
		Interest of spouse	28,026,300
		Interest of controlled corporation	1,017,915,306
		Founder of a discretionary trust	4,989,928,827
		Total	6,063,896,772	42.80

Notes:

(a) The percentage(s) were disclosed pursuant to the relevant disclosure form(s) filed under the SFO as at the Latest Practicable Date.

APPENDIX VI

GENERAL INFORMATION

(b) With reference to note (b) above, as at the Latest Practicable Date, 810,322,940 shares of WYT were held by Rich Time; 11,400,000,000 shares of WOP were held by Earnest Spot Limited (a direct wholly-owned subsidiary of WOE). Amongst the 1,017,915,306 shares of WOG held under interest of controlled corporation, 531,000,000 shares were held by Billion Trader Investments Limited (a direct wholly-owned subsidiary of Loyal Fame International Limited which is in turn a direct wholly-owned subsidiary of Easy One Financial Group Limited (“Easy One”) and 486,915,306 shares were held by Caister Limited (a company wholly owned by Mr. Tang). Easy One was a direct wholly-owned subsidiary of Caister Limited.

(b) Persons who have interests or short positions in the Shares or underlying Shares which is discloseable under Divisions 2 and 3 of Part XV of the SFO

Save as disclosed below and in this circular, no person (other than a Director or chief executive of the Company) had, or were deemed or taken to have interests or short positions in the Shares or underlying Shares 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 as at the Latest Practicable Date:

Long positions in the Shares:

Name of Shareholders	Capacity	Number of Shares	Approximate percentage of the Company’s total issued share capital (Note c)
WOG	Interest of controlled corporation (Note a)	5,682,514,594	57.09
Ms. Yau Yuk Yin	Interest of spouse (Note b)	5,682,514,594	57.09

Notes:

(a) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, among of the 5,682,514,594 Shares, 2,007,700,062 Shares were held by Onger Investments and 3,674,814,532 Shares were held by Rich Time. Each of Onger Investments and Rich Time was directly wholly-owned by WOE, which is in turn directly wholly-owned by WOG.

(b) Pursuant to the disclosure of interests form published on the website of the Stock Exchange, Ms. Yau Yuk Yin was taken to be interested in the 5,682,514,594 Shares in which her spouse, Mr. Tang, was deemed to be interested under the SFO.

APPENDIX VI

GENERAL INFORMATION

(c) The percentages were disclosed pursuant to the relevant disclosure forms filed under the SFO as at the Latest Practicable Date.

As at the Latest Practicable Date, save as disclosed below and in this circular, none of the Directors or proposed Directors was a director or employee of a company which had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Name of Director	Name of company which had such discloseable interest or short position	Position with such company
Mr. Tang	WOG	director

3. COMPETING INTERESTS OF DIRECTORS AND CLOSE ASSOCIATES

As at the Latest Practicable Date, to the best knowledge and belief of the Directors after having made all reasonable enquiries, none of the Directors and their respective close associates were considered to have any interests in businesses which competed or were likely to compete, either directly or indirectly, with the businesses of the Group that need to be disclosed pursuant to Rule 8.10 of the Listing Rules.

4. DIRECTORS' INTERESTS IN THE GROUP'S ASSETS AND CONTRACTS

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest, direct or indirect, in any assets which have been, since 31 March 2024 (being the date to which the latest published audited financial statements of the Company were made up), 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.

As at the Latest Practicable Date, none of the Directors was materially interested in any subsisting contract or arrangement which is significant in relation to the business of the Group.

5. DIRECTORS' SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors has a service contract with any member of the Group which was not determinable by the Group within one year without payment of compensation (other than statutory compensation).

APPENDIX VI

GENERAL INFORMATION

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that there was no material adverse change in the financial or trading position of the Group since 31 March 2024, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. LITIGATION

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

8. MATERIAL CONTRACTS

Within the two years immediately preceding the date of this circular and up to the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group which are or may be material:

(a) the Sale and Purchase Agreement;

(b) the conditional sale and leaseback agreement dated 2 January 2025 entered into between Haier Financial Services China Co., Ltd. (海爾融資租賃股份有限公司) (“Haier”) and Luoyang Hongjin Agricultural and By-Product Exchange Market Limited (洛陽宏進農副產品批發市場有限公司) (“Luoyang Hongjin”) in respect of the sale and leaseback of certain assets between Haier and Luoyang Hongjin at a sale price of RMB51.0 million, the details of which are set out in the joint announcement of the Company and WOG dated 2 January 2025;

(c) the dealer agreement dated 11 July 2024 entered into between the Company and Wing On Securities Limited in relation to the establishment of the proposed medium term note programme with respect to the issuance of unsecured fixed interest rate notes in registered form of up to HK$1,000,000,000 of the Company as well as the appointment of Wing On Securities as arranger and dealer for a term not exceeding three years in relation thereto, the details of which are set out in the announcement dated 11 July 2024 issued by the Company and the circular dated 1 August 2024; and

VI-6 -

APPENDIX VI

GENERAL INFORMATION

(d) the conditional sale and purchase agreement dated 25 May 2024 entered into among Grandwick Limited 僑域有限公司 (the “Vendor”), 淮安市清江浦融豐農業開發有限公司 (Huai’an Qingjiangpu Rongfeng Agricultural Development Co., Ltd.) (the “Purchaser”), 淮安宏進農副產品物流有限公司 (Huai’an Hongjin Agricultural By-Products Logistics Co., Ltd.) (the “Target Company”) and 淮安市宏進清江農副產品批發市場有限公司 (Huai’an Hongjin Qingjiang Agricultural and By-Products Wholesale Market Co., Ltd.*) pursuant to which the Vendor conditionally agreed to dispose 100% of the equity interests in the Target Company to the Purchaser at a final consideration of approximately RMB66.4 million, the details of which are set out in the joint announcement of the Company and WOG dated 25 May 2024, the circular dated 17 June 2024 and page 11 of the interim report of the Company for the six months ended 30 June 2024.

9. EXPERTS AND CONSENTS

The following are the qualification of the experts who has given opinion and advice, which is contained in this circular:

Name	Qualification
Cushman & Wakefield	independent professional valuer
Ernst & Young	Certified Public Accountants & Registered Public Interest Entity Auditor
Altus Capital Limited	a corporation licensed to carry out Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

As at the Latest Practicable Date, each of experts referred to above (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 March 2024 (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.

APPENDIX VI

GENERAL INFORMATION

10. DOCUMENTS ON DISPLAY

Copy of the following documents is available on the Stock Exchange's website at www.hkexnews.hk and on the Company's website at www.cnagri-products.com for a period of 14 days from the date of this circular:--

(a) the Sale and Purchase Agreement;

(b) the accountant's report of the Target Company and the PRC JV prepared by Ernst & Young, the texts of which are set out in Appendices II(a) and II(b) to this circular;

(c) the unaudited pro forma financial information of the Enlarged Group prepared by Ernst & Young, the texts of which are set out in Appendix IV to this circular;

(d) the valuation reports on the Owned Properties and the Leased Properties prepared by Cushman & Wakefield as set out in Appendices V(a) and V(b) to this circular; and

(e) the letters of consent from the experts as referred to in the paragraph headed "9. Experts and Consents" in this appendix.

11. GENERAL

(a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company in Hong Kong is at Suite 3202, 32/F., Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.

(b) The company secretary of the Company is Ms. Ng Yee Man, Fiona. She is a fellow member of The Association of Chartered Certified Accountants, The Hong Kong Chartered Governance Institute and The Chartered Governance Institute, and an associate member of The Hong Kong Institute of Certified Public Accountants.

(c) The share registrar and transfer office of the Company in Hong Kong is Tricor Investor Services Limited, 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong.

(d) The English texts of this circular shall prevail over their Chinese texts in case of inconsistencies.

NOTICE OF THE SGM

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 0149)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the "SGM") of China Agri-Products Exchange Limited (the "Company") will be held at 17th Floor, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong on Thursday, 20 February 2025 at 3:00 p.m. for the purpose of considering and, if thought fit, passing the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

"THAT:

(a) the sale and purchase agreement (the "Sale and Purchase Agreement") dated 13 December 2024 (a copy of which has been produced in this meeting and marked "A" and initialed by the chairman of the meeting for identification purpose) entered into between Wang On Commercial Management Limited (the "Vendor"), Wang On Group Limited as guarantor to the Vendor, Gain Bravery Limited (得驗有限公司) (the "Purchaser") and the Company as guarantor to the Purchaser, in relation to the sale and purchase of the entire issued share capital of Regal Smart Investment Limited (偉駿投資有限公司) (the "Target Company") and the shareholder's loan owing by the Target Company to the Vendor, for a total consideration of HK$150,000,000 (the details of which are summarised in the circular of the Company dated 24 January 2025 of which this notice forms part) and the transactions contemplated thereunder be and are hereby approved; and

NOTICE OF THE SGM

(b) any one director of the Company (the “Director”) be and is hereby authorised to do all such acts and things as the Director in his/her sole and absolute discretion deems necessary, desirable or expedient to implement, give effect to and/or complete the Sale and Purchase Agreement and the transactions contemplated thereunder.”

By Order of the Board

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

Leung Sui Wah, Raymond

Executive Director and Chief Executive Officer

Hong Kong, 24 January 2025

Registered office:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda

Head office and principal place of
business in Hong Kong:
Suite 3202, 32/F., Skyline Tower
39 Wang Kwong Road
Kowloon Bay
Kowloon
Hong Kong

Notes:

A form of proxy for use at the SGM is enclosed.
The register of members of the Company will be closed from Monday, 17 February 2025 to Thursday, 20 February 2025 (both days inclusive) during which period no transfer of share(s) will be effected. In order to determine the eligibility to attend and vote at the SGM or any adjourned meeting thereof (as the case may be), all transfer of share(s), accompanied by the relevant share certificate(s) with the properly completed transfer form(s) either overleaf or separately, must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong for registration not later than 4:30 p.m., on Friday, 14 February 2025.
A member entitled to attend and vote at the SGM convened by the above notice is entitled to appoint one proxy or, if such member is a holder of more than one share of the Company, more than one proxy to attend and to vote in his/her stead. A proxy need not be a member of the Company.
In order to be valid, a form of proxy, together with any power of attorney or other authority, if any, under which it is signed, or a certified copy of such power of attorney or authority, must be deposited at the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, as soon as practicable and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be).
Completion and delivery of the form of proxy will not preclude members from attending and voting at the SGM or any adjournment thereof (as the case may be) should they so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.
SGM-2 -

NOTICE OF THE SGM

Where there are joint holders of any shares of the Company, any one of such holders may vote at the SGM either personally or by proxy in respect of such shares as if he/she was solely entitled thereto provided that if more than one of such joint holders be present at the SGM whether personally or by proxy, the person whose name stands first on the register of members of the Company in respect of such shares shall be accepted to the exclusion of the votes of the other joint holder.
The above resolution(s) will be voted by way of a poll at the SGM.
SGM-3 -

AI assistant

Tomson Group Limited — Proxy Solicitation & Information Statement 2025

49075_rns_2025-01-23_5598d51f-79db-4a36-859f-4c99702501cd.pdf

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

INTRODUCTION

THE SALE AND PURCHASE AGREEMENT

Date

Parties

Subject matter

Consideration

Conditions precedent

Guarantee

Completion

INFORMATION ON THE TARGET COMPANY AND THE PRC JV

INFORMATION ON THE TARGET PROPERTIES

FINANCIAL INFORMATION OF THE TARGET COMPANY

INFORMATION ON THE VENDOR

INFORMATION ON THE GROUP AND THE PURCHASER

FINANCIAL EFFECTS

Assets and liabilities

Earnings

REASONS FOR AND BENEFITS OF THE TRANSACTION

LISTING RULES IMPLICATIONS

SPECIAL GENERAL MEETING

RECOMMENDATION

ADDITIONAL INFORMATION

CHINA AGRI-PRODUCTS EXCHANGE LIMITED

中國農產品交易有限公司

MAJOR AND CONNECTED TRANSACTION SALE AND PURCHASE OF THE TARGET COMPANY

LISTING RULES IMPLICATIONS

THE INDEPENDENT BOARD COMMITTEE

THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR ADVICE

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Purchaser and the Group

1.1 Principal businesses of the Purchaser and the Group

1.2 Financial information of the Group

1HFY2025 compared with 1HFY2024

1.3 Outlook of the Group

2. Background information of the Vendor, the Target Company and the Target Properties

2.1 Information of Vendor

2.2 Information of the Target Company

2.3 Financial information of the Target Company

2.4 Information of the Target Properties

3. Principal terms of the Sale and Purchase Agreement

3.1 Consideration

3.1.1 Net asset value of the Target Company

3.1.2 Market value of the Target Properties

3.1.3 Property Valuer's qualification

3.1.4 Valuation methodology, basis and assumptions

3.1.4.1 Owned Properties

3.1.4.2 Leased Properties

3.1.5 Section conclusion

3.2 Payment terms

3.3 Section conclusion

4. Reasons for and benefits of the Transaction

RECOMMENDATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS STATEMENT

3. WORKING CAPITAL STATEMENT

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

ACCOUNTANT'S REPORT ON HISTORICAL FINANCIAL INFORMATION OF REGAL SMART INVESTMENT LIMITED

TO THE DIRECTORS OF CHINA AGRI-PRODUCTS EXCHANGE LIMITED

Introduction

Directors' responsibility for the Historical Financial Information

Reporting accountants' responsibility

Opinion

Review of interim comparative financial information

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

Dividends

I. HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

(C) STATEMENTS OF CHANGES IN EQUITY

(D) STATEMENTS OF CASH FLOWS

II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

2. ACCOUNTING POLICIES

Tomson Group Limited Proxy Solicitation & Information Statement 2025