Wang On Group Limited — Proxy Solicitation & Information Statement 2019

Nov 11, 2019

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 adviser.

If you have sold or transferred all your securities in Wang On Group Limited (宏安集團有限公司)[*] , 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.

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WANG ON GROUP LIMITED ( 宏安集團有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

(1) POSSIBLE MAJOR ACQUISITION IN RELATION TO PRE-CONDITIONAL VOLUNTARY PARTIAL CASH OFFER TO ACQUIRE CERTAIN SHARES IN AND CONVERTIBLE NOTES ISSUED BY CHINA AGRI-PRODUCTS EXCHANGE LIMITED;

(2) MAJOR TRANSACTION IN RELATION TO PROVISION OF LOAN TO CHINA AGRI-PRODUCTS EXCHANGE LIMITED; AND

(3) NOTICE OF SPECIAL GENERAL MEETING

A letter from the Board is set out on pages 7 to 22 of this circular.

A notice convening the SGM to be held at 20/F., Alexandra House, 18 Chater Road, Central, Hong Kong on Wednesday, 27 November 2019 at 10:30 a.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, you are required to 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 Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, 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.

11 November 2019

• For identification purpose only

CONTENTS

			Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			7
Appendix I	–	Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial Information of the CAP Group. . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	Unaudited Pro Forma Consolidated Financial Information of
		the Enlarged Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Notice of the SGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

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

“2017 CAP Rights Issue” has the meaning ascribed to the term of “Rights Issue” in the prospectus issued by CAP dated 27 November 2017 “2017 CAP Rights Issue has the meaning ascribed to the term of “Subscription Price” in the Subscription Price” prospectus issued by CAP dated 27 November 2017 “2019 Bonds” the unlisted five-year 10.0% coupon bonds issued by CAP on 28 November 2014

“acting in concert” has the meaning ascribed to it in the Takeovers Code “associates” has the meaning ascribed to it in the Takeovers Code “Board” the board of the Directors “Business Day” a day on which the Stock Exchange is open for the transaction of business (excluding Saturday and Sunday) “Bye-laws” the bye-laws of the Company, as amended from time to time “CAP” 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, the ordinary shares of which are listed and traded on the main board of the Stock Exchange (Stock Code: 0149), which is held as to approximately 20.17% indirectly by EOG as at the Latest Practicable Date

“CAP Board” the board of directors of CAP “CAP Group” CAP and its subsidiaries “CAP Share(s)” the ordinary share(s) of HK$0.01 each in the issued share capital of CAP “CAP Shareholder(s)” the holder(s) of the CAP Share(s) “close associate(s)” has the meaning ascribed to it in the Listing Rules “Company” Wang On Group Limited (宏安集團有限公司[*] ), an exempted company incorporated in Bermuda with limited liability, the ordinary shares of which are listed and traded on the main board of the Stock Exchange (Stock Code: 1222)

• For identification purpose only

– 1 –

DEFINITIONS

• “Composite Document” the composite offer and response document to be issued by or on behalf of the Offeror and CAP to all CAP Shareholders and Convertible Noteholders in accordance with the Takeovers Code containing, among other things, details of the Partial Offers and the acceptance and transfer forms in respect of the Partial Offers

• “Conditions” the conditions to the Partial Share Offer as set out in the section headed “The Partial Offers – Conditions” in Part A of this letter from the Board in this circular

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

• “Convertible Note(s)” 7.5% convertible note(s) due 2021 issued by CAP on 19 October 2016

• “Convertible Noteholder(s)” the holder(s) of the Convertible Note(s)

• “Despatch Date” the date of despatch of the Composite Document to the CAP Shareholders and Convertible Noteholders as required by the Takeovers Code

• “Director(s)” the director(s) of the Company

• “Double Leads” Double Leads Investments Limited, an indirect wholly-owned subsidiary of the Company and a company incorporated in the British Virgin Islands with limited liability which is principally engaged in investment holding

• “Enlarged Group” the Group immediately after completion of the Partial Offers

• “EOG” Easy One Financial Group Limited 易易壹金融集團有限公司 a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the ordinary shares of which are listed and traded on the main board of the Stock Exchange (Stock Code: 221), which is held as to approximately 29.06% indirectly by WYT as at the Latest Practicable Date

• “EOG Irrevocable Undertaking” the irrevocable undertaking dated 26 September 2019 entered into between the Offeror, Onger Investments and Peony Finance in respect of the Partial Offers

• “Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegate thereof

– 2 –

DEFINITIONS

“Final Closing Date”

“First Closing Date”

• “Group”

• “HK$” or “HKD”

• “Hong Kong”

“Independent Shareholders”

• “Joint Announcement”

• “Joint Announcement Date”

• “Kingston CF”

“Kingston Securities”

• “Last Trading Day”

“Latest Practicable Date”

“Listing Rules”

the date which is the 14th day after (i) the date on which the Partial Share Offer is declared unconditional as to acceptances; or (ii) the First Closing Date, whichever is the earlier, provided that the Partial Share Offer shall be open for acceptance for at least 21 days following the Despatch Date

the date to be stated in the Composite Document as the first closing day of the Partial Share Offer, which shall be at least 21 days following the Despatch Date, or such later date as may be extended by the Offeror in accordance with the Takeovers Code

the Company and its subsidiaries

• Hong Kong dollar(s), the lawful currency of Hong Kong

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

• (a) in the case of the Partial Offers, the Shareholders other than Suntech Investments Limited, Billion Trader Investments Limited and their respective associates; and (b) in the case of the provision of the Loan, the Shareholders other than WYT and its associates

• the announcement dated 26 September 2019 jointly issued by the Company, the Offeror, WYT, EOG and CAP

• 26 September 2019, being the date of the Joint Announcement

• Kingston Corporate Finance Limited, a corporation licensed by the SFC to carry on business in Type 6 (advising on corporate finance) regulated activity under the SFO, being the financial adviser to the Offeror in respect of the Partial Offers

• Kingston Securities Limited, a corporation licensed by the SFC to carry on business in Type 1 (dealing in securities) regulated activity under the SFO, being the agent making the Partial Offers on behalf of the Offeror

• 26 September 2019, being the last trading day prior to the publication of the Joint Announcement

• 8 November 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

the Rules Governing the Listing of Securities on the Stock Exchange

– 3 –

DEFINITIONS

• “Loan” the loan in the aggregate principal amount of HK$710.0 million to be granted by Double Leads as to HK$89.0 million and Winning Rich as to HK$621.0 million, as the lenders, to CAP, as the borrower, for a period of three years

• “Loan Agreement” two sets of the loan agreements, both dated 26 September 2019, entered into between CAP, as the borrower, and (i) Double Leads; and (ii) Winning Rich, as the lenders, pursuant to which, Double Leads and Winning Rich agreed to grant the Loan to CAP

• “Model Code” Model Code for Securities Transaction by Directors of Listed Issuers

• “Offer Convertible Note(s)” the Convertible Note(s) subject to the Partial CN Offer, being a maximum of 54.83% of the outstanding principal amount of the Convertible Notes (subject to adjustment in the event of a change in the issued share capital of CAP)

• “Offer Share(s)” the CAP Shares held by the CAP Shareholders subject to the Partial Share Offer, being such number of CAP Shares which would result in the Offeror and parties acting in concert with it holding a maximum of 75% of the CAP Shares in issue as at the Final Closing Date (including any CAP Share for which a valid conversion notice has been delivered in respect of the Convertible Notes on or after the Joint Announcement Date and prior to the Final Closing Date)

• “Offeror” Goal Success Investments Limited, an indirect wholly-owned subsidiary of WYT and a company incorporated in the British Virgin Islands with limited liability which is engaged in investment holding

• “Onger Investments” Onger Investments Limited, an indirect wholly-owned subsidiary of EOG and a company incorporated in the British Virgin Islands with limited liability which is principally engaged in investment holding, being the CAP Shareholder holding 2,007,700,062 CAP Shares, representing approximately 20.17% of the CAP Shares in issue as at the Latest Practicable Date

• “Partial CN Offer” the conditional voluntary partial cash offer to be made by Kingston Securities on behalf of the Offeror to the Convertible Noteholders to acquire a maximum of 54.83% of the outstanding principal amount of the Convertible Notes (subject to adjustment in the event of a change in the issued share capital of CAP) on the terms and conditions set out in this circular and to be set out in the Composite Document and in compliance with the Takeovers Code

– 4 –

DEFINITIONS

• “Partial CN Offer Price” HK$0.2275 for each HK$1 face value of the Convertible Notes payable by the Offeror to the Convertible Noteholders accepting the Partial CN Offer

• “Partial Offers” collectively, the Partial Share Offer and the Partial CN Offer

• “Partial Share Offer” the conditional voluntary partial cash offer to be made by Kingston Securities on behalf of the Offeror to the CAP Shareholders to acquire such number of CAP Shares which would result in the Offeror and parties acting in concert with it holding a maximum of 75% of the CAP Shares in issue as at the Final Closing Date (including any CAP Share for which a valid conversion notice has been delivered in respect of the Convertible Notes on or after the Joint Announcement Date and prior to the Final Closing Date) on the terms and conditions set out in this circular and to be set out in the Composite Document and in compliance with the Takeovers Code

• “Partial Share Offer Price” HK$0.091 for each Offer Share payable by the Offeror to the CAP Shareholders accepting the Partial Share Offer

• “Peony Finance” Peony Finance Limited, a company incorporated in the British Virgin Islands with limited liability, which is an indirect wholly-owned subsidiary of EOG and the registered holder of the Convertible Notes in the principal amount of HK$103.0 million

• “PRC” the People’s Republic of China, and for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan

• “Pre-Conditions” the pre-conditions to the Partial Offers as set out in the section headed “The Partial Offers – Pre-Conditions” in Part A of this letter from the Board in this circular

• “RMB” Renminbi, the lawful currency of the PRC

• “SFC” the Securities and Futures Commission of Hong Kong

• “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, if thought fit, approve, among other things, the making of the Partial Offers and the provision of the Loan

• “Shareholder(s)” the holder(s) of the ordinary shares of HK$0.01 each in the issued share capital of the Company

– 5 –

DEFINITIONS

• “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiaries” has the meaning ascribed to it in the Listing Rules “substantial shareholder(s)” has the meaning ascribed to it in the Listing Rules “Takeovers Code” the Code on Takeovers and Mergers of Hong Kong “US$” United States dollar(s), the lawful currency of the United States of America

• “Winning Rich” Winning Rich Investments Limited, an indirect wholly-owned subsidiary of WYT and a company incorporated in the British Virgin Islands with limited liability which is principally engaged in investment holding

• “WOG Group” the Company and its subsidiaries and, for the purpose of this circular, excludes the WOP Group, the WYT Group and the CAP Group

• “WOP” Wang On Properties Limited 宏安地產有限公司, an exempted company incorporated in Bermuda with limited liability, the ordinary shares of which are listed and traded on the main board of the Stock Exchange (Stock Code: 1243), a 75%-owned listed subsidiary of the Company

• “WOP Group” WOP and its subsidiaries “WYT” Wai Yuen Tong Medicine Holdings Limited (位元堂藥業控股有 限公司[*] ), an exempted company incorporated in Bermuda with limited liability, the ordinary shares of which are listed and traded on the main board of the Stock Exchange (Stock Code: 897), a 58.08%-owned listed subsidiary of the Company

• “WYT Group” WYT and its subsidiaries “WYT Independent Shareholders” the WYT Shareholders, other than the Company and its associates “WYT SGM” the special general meeting of WYT to be convened and held to consider and, if thought fit, approve, among other things, the making of the Partial Offers and the provision of the Loan

• “WYT Shareholder(s)” the holder(s) of the ordinary shares of HK$0.01 each in the issued share capital of WYT

• “%” per cent.

• For identification purpose only

– 6 –

LETTER FROM THE BOARD

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WANG ON GROUP LIMITED ( 宏安集團有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

Executive Directors: Mr. Tang Ching Ho, SBS, JP (Chairman) Ms. Yau Yuk Yin (Deputy Chairman) Mr. Chan Chun Hong, Thomas (Managing Director)

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Independent non-executive Directors:

Dr. Lee Peng Fei, Allen, CBE, BS, FHKIE, JP Mr. Wong Chun, Justein, BBS, MBE, JP Mr. Siu Kam Chau

Head office and principal place of business: Suite 3202, 32/F., Skyline Tower 39 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

11 November 2019

To Shareholders and Independent Shareholders

Dear Sir or Madam,

(1) POSSIBLE MAJOR ACQUISITION IN RELATION TO PRE-CONDITIONAL VOLUNTARY PARTIAL CASH OFFER TO ACQUIRE CERTAIN SHARES IN AND CONVERTIBLE NOTES ISSUED BY CHINA AGRI-PRODUCTS EXCHANGE LIMITED; (2) MAJOR TRANSACTION IN RELATION TO PROVISION OF LOAN TO CHINA AGRI-PRODUCTS EXCHANGE LIMITED; AND

(3) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Joint Announcement dated 26 September 2019.

The purpose of this circular is to provide you with, among other things, (i) further details regarding the Partial Offers and the Loan; (ii) the financial information of the Group and the CAP Group; and (iii) the notice of the SGM.

• For identification purpose only

– 7 –

LETTER FROM THE BOARD

PART A: THE PARTIAL OFFERS

THE PARTIAL OFFERS

On 26 September 2019, the Offeror announced, among other things, that Kingston Securities, on behalf of the Offeror, will (subject to the satisfaction of the Pre-Conditions):

• (a) make the Partial Share Offer to the CAP Shareholders to acquire such number of Offer Shares which would result in the Offeror and parties acting in concert with it holding a maximum of 75% of the CAP Shares in issue as at the Final Closing Date (including any CAP Share for which a valid conversion notice has been delivered in respect of the Convertible Notes on or after the Joint Announcement Date and prior to the Final Closing Date) at the Partial Share Offer Price of HK$0.091 per CAP Share; and

• (b) pursuant to Rule 13.1 of the Takeovers Code, extend an appropriate offer to acquire a maximum of 54.83% of the outstanding principal amount of the Convertible Notes (subject to adjustment in the event of a change in the issued share capital of CAP) (for illustrative purposes only, as at the Latest Practicable Date and assuming no Convertible Notes are converted into the CAP Shares, the maximum amount of the Convertible Notes that may be acquired would be approximately HK$145.19 million of the outstanding principal amount of the Convertible Notes).

The Partial Offers are expected to be made on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.091 in cash

For each HK$1 face value of the Offer Convertible Notes . . . . . . . . . . . . . . . . . HK$0.2275 in cash

As at the Latest Practicable Date, CAP had 9,953,067,822 CAP Shares in issue and EOG, a party acting in concert with the Offeror, held indirectly 2,007,700,062 CAP Shares, representing approximately 20.17% of the CAP Shares in issue. As at the Latest Practicable Date, there were outstanding Convertible Notes in the principal amount of HK$264.8 million, HK$103.0 million of which was held indirectly by EOG.

Other than such CAP Shares and Convertible Notes, to the knowledge of the Board, there were no options, derivatives, warrants or other securities issued by CAP that are convertible or exchangeable into CAP Shares as at the Latest Practicable Date.

The Partial Share Offer Price of HK$0.091 per CAP Share was determined after taking into account, among other things, the following factors:

• (a) the potential benefits that the Offeror and the WYT Group may derive from the prospects of the business of the CAP Group (including but not limited to the property investment in the PRC by the CAP Group) and the Partial Share Offer which are more particularly described in the section headed “The Offeror’s reasons for the Partial Share Offer” in Part A of this letter from the Board;

– 8 –

LETTER FROM THE BOARD

• (b) the financial performance of the CAP Group, including but not limited to the recent improved financial performance of the CAP Group as indicated by, among other things, (i) unaudited net profit of approximately HK$14.8 million for the CAP Group for the six months ended 30 June 2019 (compared to unaudited net loss of approximately HK$59.7 million for the corresponding period in 2018 and audited net loss of approximately HK$179.3 million for the year ended 31 December 2018) and (ii) cash inflow generated from operating activities for the CAP Group of approximately HK$451.1 million for the year ended 31 December 2018 (compared to cash outflow used in operating activities of approximately HK$40.4 million for the year ended 31 December 2017);

• (c) the historical share prices of CAP, which are more particularly described in the section headed “Comparison of value” in Part A of this letter from the Board;

• (d) the 2017 CAP Rights Issue Subscription Price of HK$0.088 – the 2017 CAP Rights Issue was the last capital raising by CAP under which a large proportion of the CAP Shares were allotted and issued to the CAP Shareholders at the 2017 CAP Rights Issue Subscription Price. After considering the historical prices of the CAP Shares since the 2017 CAP Rights Issue which had largely remained below the 2017 CAP Rights Issue Subscription Price, the Offeror takes the view that the slight premium of the Partial Share Offer Price over the 2017 CAP Rights Issue Subscription Price will incentivise the CAP Shareholders to accept the Partial Share Offer, and is justifiable taking into account the improved financial performance of the CAP Group since the 2017 CAP Rights Issue as set out in paragraph (b) above and in particular, as shown by, among other things, (i) the improved gearing ratio of the CAP Group of approximately 0.95 as at 30 June 2019 (compared to the higher gearing ratios of approximately 1.04 and 1.00 as at 31 December 2017 and 31 December 2018, respectively); (ii) unaudited profit from operations of the CAP Group of approximately HK$158.3 million for the six months ended 30 June 2019 (compared to audited loss from operations of approximately HK$29.5 million for the year ended 31 December 2017 and audited profit from operations of approximately HK$97.6 million for the year ended 31 December 2018); and (iii) the increased interest coverage ratio of the CAP Group of approximately 1.69 for the six months ended 30 June 2019 (compared to the negative ratio of approximately 0.11 for the year ended 31 December 2017 and the positive ratio of approximately 0.46 for the year ended 31 December 2018); and

• (e) the unaudited consolidated net assets attributable to owners of CAP per CAP Share – the Partial Share Offer Price represents a discount of approximately 25.41% to the unaudited consolidated net assets attributable to owners of CAP per CAP Share of approximately HK$0.122 as at 30 June 2019.

The Partial CN Offer Price of HK$0.2275 for each outstanding HK$1 face value of the Offer Convertible Notes is determined in accordance with Rule 13 of the Takeovers Code as the “see-through” price for the Offer Convertible Notes, being (i) the number of CAP Shares to be issued upon exercise of conversion rights attached to each outstanding HK$1 face value of the Convertible Note at the conversion price of HK$0.4 per Offer Convertible Note; multiplied by (ii) the Partial Share Offer Price of HK$0.091 per CAP Share.

The Partial Offers will be made in compliance with the Takeovers Code.

– 9 –

LETTER FROM THE BOARD

Pre-Conditions

The making of the Partial Offers will be subject to the satisfaction of the following Pre-Conditions:

• (a) consent from the Executive in respect of the Partial Share Offer pursuant to Rule 28.1 of the Takeovers Code (the “ SFC Consent Condition ”);

• (b) approval by the WYT Shareholders at the WYT SGM; and

• (c) approval by the Independent Shareholders at the SGM.

The Pre-Conditions cannot be waived by the Offeror. If the Pre-Conditions are not satisfied by 31 December 2019, the Partial Offers will not be made.

Pursuant to a letter from the Executive dated 15 October 2019, the Executive granted its consent in respect of the Partial Offers. Accordingly, the SFC Consent Condition has been fulfilled.

Conditions

The Partial Share Offer, if made, will be subject to the following Conditions:

• (i) valid acceptances of the Partial Share Offer having been received (and not, where permitted, withdrawn) in respect of a minimum number of CAP Shares which would result in the Offeror and parties acting in concert with it holding 50.01% of the CAP Shares in issue by 4:00 p.m. (Hong Kong time) on the First Closing Date (or such later time(s) and/or date(s) as the Offeror may decide and the Executive may approve), provided that the Offeror shall purchase from the CAP Shareholders as many CAP Shares as are tendered by the CAP Shareholders up to a maximum number of CAP Shares which would result in the Offeror and parties acting in concert with it holding 75% of the CAP Shares in issue as at the Final Closing Date (including any CAP Share for which a valid conversion notice has been delivered in respect of the Convertible Notes on or after the Joint Announcement Date and prior to the Final Closing Date); and

• Note: As of the Latest Practicable Date, based on the total number of 9,953,067,822 CAP Shares in issue, and 2,007,700,062 (or approximately 20.17%) CAP Shares held indirectly by EOG, the minimum number of CAP Shares tendered for valid acceptance that is required for the acceptance condition above would be 2,969,829,156 CAP Shares, representing approximately 29.84% of the CAP Shares in issue; and the maximum number of CAP Shares to be purchased by the Offeror from the CAP Shareholders would be 5,457,100,804 CAP Shares, representing approximately 54.83% of the CAP Shares in issue.

• (ii) approval of the Partial Share Offer pursuant to Rule 28.5 of the Takeovers Code by registered CAP Shareholders as at the First Closing Date (unless the First Closing Date is extended in accordance with the Takeovers Code) holding over 50% of the CAP Shares not held by the Offeror and parties acting in concert with it, signified by means of a separate box on the form of acceptance specifying the number of CAP Shares in respect of which the Partial Share Offer is approved.

– 10 –

LETTER FROM THE BOARD

In the event that valid acceptances are received:

• (a) for less than the number of CAP Shares which would result in the Offeror and parties acting in concert with it holding 50.01% of the CAP Shares in issue by the First Closing Date, unless the First Closing Date is extended in accordance with the Takeovers Code, the Partial Offers will not proceed and will lapse immediately; and

• (b) for not less than the number of CAP Shares which would result in the Offeror and parties acting in concert with it holding 50.01% of the CAP Shares in issue on or before the First Closing Date, the Offeror will declare the Partial Share Offer unconditional as to acceptances on or before the First Closing Date PROVIDED THAT approval of the Partial Share Offer pursuant to Rule 28.5 of the Takeovers Code as more particularly set out in Condition (ii) above has also been obtained.

The Partial CN Offer will be subject to and conditional upon the Partial Share Offer becoming or being declared unconditional in all respects.

As at the Latest Practicable Date, if the Partial CN Offer becomes unconditional, the Offeror can acquire a maximum of 54.83% of the outstanding principal amount of the Convertible Notes. However, in the event that there is a change to the issued share capital of CAP, the maximum percentage of the outstanding principal amount of the Convertible Notes which the Offeror can acquire will be adjusted. Further announcement will be made if such change occurs.

Pursuant to Rule 28.4 of the Takeovers Code, if the Partial Share Offer has been declared unconditional as to acceptances on the First Closing Date, the Offeror cannot extend the Final Closing Date to a day beyond the 14th day after the First Closing Date.

WARNING: Shareholders and prospective investors should note that the Pre-Conditions must be satisfied before the Partial Offers will be made. The making of the Partial Offers is therefore a possibility only. Further, Shareholders and prospective investors should note that the Partial Offers will be subject to the satisfaction of the Conditions. The Partial Offers may or may not become unconditional and will lapse if it does not become unconditional. Shareholders and prospective investors are advised to exercise caution when dealing in the securities of the Company. If they are in any doubt about their positions, they should consult their professional advisers.

– 11 –

LETTER FROM THE BOARD

Comparison of value

The Partial Share Offer Price of HK$0.091 per CAP Share under the Partial Share Offer represents:

• (i) a premium of approximately 65.45% over the closing price of HK$0.055 per CAP Share as quoted on the Stock Exchange on the date immediately preceding the date of the commencement of the offer period (as defined under the Takeovers Code), being 11 September 2019;

• (ii) a premium of approximately 44.44% over the closing price of HK$0.063 per CAP Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a premium of approximately 37.88% over the average closing price of approximately HK$0.066 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day;

• (iv) a premium of approximately 65.45% over the average closing price of approximately HK$0.055 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 30 trading days up to and including the Last Trading Day;

• (v) a premium of approximately 85.71% over the average closing price of approximately HK$0.049 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 60 trading days up to and including the Last Trading Day;

• (vi) a premium of approximately 78.43% over the average closing price of approximately HK$0.051 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 90 trading days up to and including the Last Trading Day;

• (vii) a premium of approximately 78.43% over the average closing price of approximately HK$0.051 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 120 trading days up to and including the Last Trading Day;

• (viii) a premium of approximately 93.62% over the average closing price of approximately HK$0.047 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the 180 trading days up to and including the Last Trading Day;

• (ix) a premium of approximately 37.88% over the closing price of HK$0.066 per CAP Share as quoted on the Stock Exchange as at the Latest Practicable Date;

• (x) a premium of approximately 28.17% over the highest closing price of HK$0.071 per CAP Share based on the daily closing prices as quoted on the Stock Exchange for the twelve-month period preceding the Joint Announcement Date;

• (xi) a discount of approximately 24.79% to the audited consolidated net assets attributable to owners of CAP per CAP Share of approximately HK$0.121 as at 31 December 2018, calculated based on the audited consolidated net assets attributable to owners of CAP of approximately HK$1,208.97 million as at 31 December 2018 divided by the total number of 9,953,067,822 CAP Shares in issue as at the Latest Practicable Date; and

– 12 –

LETTER FROM THE BOARD

• (xii) a discount of approximately 25.41% to the unaudited consolidated net assets attributable to owners of CAP per CAP Share of approximately HK$0.122 as at 30 June 2019, calculated based on the unaudited consolidated net assets attributable to owners of CAP of approximately HK$1,213.50 million as at 30 June 2019 divided by the total number of 9,953,067,822 CAP Shares in issue as at the Latest Practicable Date.

Highest and lowest CAP Share prices

During the six-month period preceding the date of the commencement of the offer period (as defined under the Takeovers Code), being 12 September 2019 and up to the Last Trading Day, the highest and lowest closing prices of the CAP Shares as quoted on the Stock Exchange were HK$0.071 on 12 September 2019 and HK$0.038 on 6 August 2019, respectively.

Value of the Partial Offers

As at the Latest Practicable Date, CAP had 9,953,067,822 CAP Shares in issue and EOG, a party acting in concert with the Offeror, held indirectly 2,007,700,062 CAP Shares, representing approximately 20.17% of the CAP Shares in issue. As at the Latest Practicable Date, there were outstanding Convertible Notes in the principal amount of HK$264.8 million, HK$103.0 million of which was held indirectly by EOG.

Assuming full valid acceptances of the Partial Share Offer, the cash consideration payable by the Offeror for the Offer Shares, being a maximum number of CAP Shares which would result in the Offeror and parties acting in concert with it holding 75% of the CAP Shares in issue as at the Final Closing Date, under the Partial Share Offer will be approximately HK$496.60 million (assuming no Convertible Notes are converted into the CAP Shares) or approximately HK$524.20 million (assuming all Convertible Notes that are not subject to the EOG Irrevocable Undertaking (being approximately HK$161.8 million or approximately 61.10%) are converted into the CAP Shares).

Assuming full valid acceptances of the Partial CN Offer, the cash consideration payable by the Offeror under the Partial CN Offer will be approximately HK$33.03 million.

Accordingly, the maximum total cash consideration payable by the Offeror under the Partial Offers will amount to approximately HK$529.63 million.

The Offeror intends to finance the cash consideration required for the Partial Offers by internal resources including those generated from early repayment of the 2019 Bonds since 31 March 2019 and sale proceeds from recent sale of several investment properties of the WYT Group completed after 31 March 2019. It is also believed that CAP’s business (management and sales of properties in agricultural produce exchange markets) is capable of generating financial resources to support its own operations. Together with existing banking facilities available to the Group, the WYT Group and the CAP Group and the continual disposal of properties stock by CAP, the Board considers there to be sufficient resources to support the operations of the Enlarged Group upon completion of the Partial Offers.

– 13 –

LETTER FROM THE BOARD

EOG IRREVOCABLE UNDERTAKING

On 26 September 2019, Onger Investments, an existing CAP Shareholder holding 2,007,700,062 CAP Shares, representing approximately 20.17% of the CAP Shares in issue as at the Latest Practicable Date, gave an irrevocable undertaking to the Offeror that (among other things):

• (a) it will not sell, transfer, encumber, grant any option over or otherwise dispose of any interest in the CAP Shares held by it; and

• (b) it will not tender any CAP Share held by it for acceptance of the Partial Share Offer.

On 26 September 2019, Peony Finance, a Convertible Noteholder holding the Convertible Notes in the principal amount of HK$103.0 million as at the Latest Practicable Date, gave an irrevocable undertaking to the Offeror that (among other things):

• (a) it will not sell, transfer, encumber, grant any option over or otherwise dispose of any interest in the Convertible Notes held by it;

• (b) it will not tender any Convertible Note held by it for acceptance of the Partial CN Offer; and

• (c) it will not exercise the conversion rights attaching to the Convertible Notes held by it to convert the Convertible Notes held by it into the CAP Shares.

The EOG Irrevocable Undertaking will only terminate: if the Partial Offers lapse; if the Partial Offers are withdrawn without having become wholly unconditional in circumstances permitted under the Takeovers Code; or if the offer period (as defined under the Takeovers Code) ends.

As at the Latest Practicable Date, apart from the EOG Irrevocable Undertaking, the Offeror and parties acting in concert with it had not received any indication or irrevocable commitment from any CAP Shareholder and Convertible Noteholder to accept or reject the Partial Offers.

INTENTION OF THE OFFEROR IN RESPECT OF CAP GROUP

The Company understands that the Offeror intends to continue with the existing businesses and the employment of the employees of the CAP Group and that it has no intention to change the composition of the CAP Board, or introduce any major changes to the existing businesses of the CAP Group and material redeployment of fixed assets of CAP.

LISTING STATUS

The Company understands that the Offeror intends to maintain the listing status of CAP on the Stock Exchange upon completion of the Partial Offers. As at the Latest Practicable Date, CAP had a public float of approximately 79.83% of the CAP Shares in issue. In the event the Partial Offers become unconditional, upon completion of the Partial Offers, it is expected that the Offeror and parties acting in concert with it will be holding at least 50.01% and not more than 75% in CAP. Assuming full valid acceptances of the Partial Share Offer by all CAP Shareholders, CAP will have a public float of approximately 25% of the CAP Shares in issue immediately following completion of the Partial Offers (assuming there are no changes to the issued share capital of CAP after the Latest Practicable Date) and accordingly the number of CAP Shares in public hands will continue to meet the public float requirement under Rule 8.08 of the Listing Rules.

– 14 –

LETTER FROM THE BOARD

THE OFFEROR’S REASONS FOR THE PARTIAL SHARE OFFER

As stated in WYT’s annual report for the year ended 31 March 2019, property investment is one of the WYT Group’s three operating segments in which the WYT Group owned 16 retail properties. Majority of the properties were self-used as retail shops while some were leased out for generating rental income.

Double Leads and Winning Rich held the 2019 Bonds which amounted to HK$100.0 million and HK$700.0 million respectively as at 31 March 2019.

As at the Latest Practicable Date, Double Leads and Winning Rich held the 2019 Bonds amounted to HK$89.0 million and HK$621.0 million respectively.

Positive prospects of the CAP Group’s property investment

As stated in the interim results announcement of the CAP Group for the six months ended 30 June 2019, investment properties and stock of properties accounted for approximately 86.24% of the CAP Group’s total assets.

The investment properties and stock of properties of the CAP Group are located in Hubei Province, Henan Province, Guangxi Zhuang Autonomous Region, Jiangsu Province, and Liaoning Province of the PRC. These provinces are highly supported by the PRC government policies including but not limited to the following:

• (a) 國家新型城鎮化規劃(2014至2020年) (National New Urbanisation Planning (2014–2020)[#] ), which planned out the urbanisation process of major PRC provinces from 2014 to 2020 through, among others things, agricultural modernisation by (i) coordinating planning of the agricultural produce market network, supporting produce distribution centers and improving construction of wholesale produce markets and produce futures markets; (ii) strengthening the agricultural produce cold chain logistics covering collection, storage, processing, transportation and sales; and (iii) promoting convergence between production and marketing and accelerating development of agricultural produce e-commerce;

• (b) 中原城市群發展規劃(Central Plains Urban Agglomeration Development Planning[#] ), which mapped out a development plan from 2016 to 2020 for developing provinces in the central area of the PRC including Hubei Province and Henan Province. It advocates the development and expansion of agricultural cluster through supporting leading enterprises in agricultural industrialisation and building modern industrialised agricultural bases by extending the agricultural industrial chain and promoting the integrated development of agricultural production, processing, logistics and marketing; and

• (c) 促進中部地區崛起規劃(2016至2025年) (Central Area Promotion Planning (2016 to 2025)[#] ), which also places an emphasis on developing provinces in the central area of the PRC, including Hubei Province and Henan Province. It promised to, among other things, (i) enhance the produce wholesale market and cold chain logistics infrastructure; and (ii) strengthen the construction of agricultural produce futures markets and improve the modern agricultural risk management system.

• # Denotes English translation of Chinese names is provided for identification purpose only

– 15 –

LETTER FROM THE BOARD

The Company understands that WYT and the Offeror are of the view that the investment properties and properties stock of the CAP Group will benefit from the aforementioned policies.

In view of the above, the Company understands that WYT and the Offeror consider the Partial Share Offer to be a good opportunity to make additional investments in properties by having direct shareholding of a majority stake in CAP, which is also in line with part of the WYT Group’s existing business focus. In light of the prospects of the CAP Group, the Group has been investing in CAP by way of subscribing the 2019 Bonds since 2014. Furthermore, in view of the CAP Group’s positive prospects, the recent improvement in its financial position, and the other reasons as stated in this section and the basis of determination of the Partial Share Offer Price, the Company considers the Partial Offers to be an opportunity to turn the Group’s investment in CAP from debt into equity investment so as to participate in CAP’s future growth.

Improving financial performances of the CAP Group

The CAP Group’s profitability for the financial years ended 31 December 2018 and 2017 was affected mainly by the high interest expenses of the bonds. However, the Company understands that WYT and the Offeror are optimistic in the financial performance of the CAP Group on the basis of the following:

• a) agricultural issue is the PRC central government’s first priority policy for the next consecutive years. In 2019, the Central Committee of Communist Party of China and the State Council of China released the 二零一九年中央一號文件 (Number 1 Policy of 2019[#] ), which promised to: (i) promote investments in agricultural produce markets; (ii) expand agricultural produce network; (iii) build logistic infrastructure and storage facilities of agriculture; and (iv) improve regional cold storage infrastructure. On the other hand, it is expected that the “One Belt, One Road” policy will drive the overall growth of the PRC economy and provide a sustainable way for the PRC’s continuing development. WYT and the Offeror expect that the CAP Group’s operation will benefit from these government policies in the future;

• b) the bonds of the CAP Group decreased from approximately HK$1.34 billion as at 31 December 2016 to approximately HK$0.97 billion as at 30 June 2019 as a result of bonds redemption using proceeds raised by the CAP Group from a rights issues exercise in December 2017, disposal of subsidiaries holding land bank in August 2018 and internally generated working capital. The Company understands that the CAP Group will continue to explore various options in order to restructure its outstanding 2019 Bonds balance, so as to scale down its interest expenses and hence indirectly improve the CAP Group’s financial performance; and

• c) the CAP Group’s revenue from property sales increased from approximately HK$278.1 million in 2016 to approximately HK$400.0 million in 2018. Furthermore, the CAP Group has an increasing portfolio of properties stock, with values amounting from approximately HK$938.5 million as at 31 December 2016 to approximately HK$1.8 billion as at 30 June 2019. The CAP Group is expected to implement a systematic approach to its properties sales to capture better values at opportune time in order to generate further income from such sales, which will be supported by its current properties stock and the government policies as aforementioned.

# Denotes English translation of Chinese name is provided for identification purpose only

– 16 –

LETTER FROM THE BOARD

Analysis on the Partial Share Offer Price

The Partial Share Offer Price of HK$0.091 per CAP Share represents an approximately 25.41% discount to the unaudited consolidated net asset value per CAP Share attributable to owners of CAP as at 30 June 2019. It also represents a premium of approximately 28.17% over the highest closing price of CAP Share of HK$0.071 as quoted on the Stock Exchange for the past one year. The Company understands that in view of the positive prospects of CAP as aforementioned, the Offeror considers that the Partial Share Offer Price, which is set at a premium to the market price of CAP demonstrates the Offeror’s confidence in the CAP Group, which would send a positive signal to CAP stakeholders including its staff and customers. The Company also notes that the recent low trading prices and volume in the CAP Shares may not be indicative of the willingness of the CAP Shareholders to tender their shares for acceptance under the Partial Share Offer, and is of the view that setting the Partial Share Offer Price at a slight premium over the 2017 CAP Rights Issue Price may also be attractive to the CAP Shareholders who participated in the 2017 CAP Rights Issue and is conducive to the successful fulfilment of the acceptance condition under the Partial Share Offer.

In addition, the Partial Share Offer represents a good opportunity for the CAP Shareholders (other than EOG and its relevant wholly-owned subsidiary due to the EOG Irrevocable Undertaking) to realise at least approximately 54.83% (assuming there are no changes to the issued share capital of CAP after the Latest Practicable Date) of their investment at a premium to the recent share price of the CAP Shares.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, WYT was held as to approximately 58.08% by the Company. The making of the Partial Offers by the Offeror will constitute a transaction for the Company under Chapter 14 of the Listing Rules. As the highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the Partial Offers (if they proceed) is 25% or more, but less than 100% for the Company, the Partial Offers will constitute a major transaction for the Company under Chapter 14 of the Listing Rules and are therefore subject to the requirements of notification, publication and approval from the Independent Shareholders at the SGM.

Approval by the Independent Shareholders of the Partial Offers is one of the Pre-Conditions to the Partial Offers. The Pre-Conditions cannot be waived by the Offeror. If the Pre-Conditions are not satisfied by 31 December 2019, the Partial Offers will not be made.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, CAP Shareholders and Convertible Noteholders (other than EOG) and their respective ultimate beneficial owners are third parties independent of and not connected with the Company.

SGM

The SGM will be held for the purpose of considering and, if thought fit, approving, among other things, the Partial Offers by the Independent Shareholders by way of a poll. Shareholders who have a material interest in the Partial Offers and their respective close associates (as defined in the Listing Rules) are required to abstain from voting on the relevant resolution(s) at the SGM. Suntech Investments Limited, an indirect wholly-owned subsidiary of WYT holding, and controls the voting right in respect of, 423 million shares in the Company, representing approximately 2.43% in the equity interest in the Company as at the Latest Practicable Date, and Billion Trader Investments Limited, an indirect wholly-owned subsidiary of EOG holding, and controls the voting right in respect of, 531 million shares in the Company, representing approximately 3.05% in the equity interest in the Company as at the Latest Practicable Date, are required to abstain from voting on the relevant resolution(s) at the SGM.

– 17 –

LETTER FROM THE BOARD

GENERAL

Information on the Offeror and WYT

Goal Success Investments Limited, the Offeror, is a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of WYT. It is principally engaged in investment holding.

WYT is an exempted company incorporated in Bermuda with limited liability, the shares of which are listed and traded on the main board of the Stock Exchange. The WYT Group is principally engaged in (i) the manufacturing and retailing of traditional Chinese pharmaceutical and health food products, including Chinese medicinal products sold under the brand name of “Wai Yuen Tong”, mainly in the PRC and Hong Kong; (ii) the manufacturing and retailing of Western pharmaceutical and health food and personal care products under the brand names of “Madame Pearls” and “Pearls”; and (iii) property investment.

As at the Latest Practicable Date, WYT was an approximately 58.08%-owned listed subsidiary of the Company.

Information on CAP

CAP is an exempted company incorporated in Bermuda with limited liability and the CAP Shares are listed and traded on the main board of the Stock Exchange. The CAP Group is principally engaged in the business of management and sales of properties in agricultural produce exchange markets in the PRC.

Based on the published unaudited consolidated financial information of CAP for the six months ended 30 June 2019, the unaudited total asset value and net asset value of CAP as at 30 June 2019 were approximately HK$5,421,167,000 and HK$1,605,971,000, respectively. Based on the published audited consolidated financial statements of CAP for the two financial years ended 31 December 2017 and 2018 and the published unaudited consolidated financial information of CAP for the six months ended 30 June 2019, the audited and unaudited consolidated net profit/(loss) of CAP before and after taxation for the two financial years ended 31 December 2017 and 2018 and the six months ended 30 June 2019, respectively, were as follows:

			Six months
	Year ended 31 December		ended 30 June
	2017	2018	2019
	(HKD’000)	(HKD’000)	(HKD’000)
	(audited)	(audited)	(unaudited)
Net profit/(loss) before taxation	(301,257)	(114,079)	64,494
Net profit/(loss) after taxation	(337,571)	(179,319)	14,821

– 18 –

LETTER FROM THE BOARD

Information on the Company

The Company is an exempted company incorporated in Bermuda with limited liability, the shares of which are listed and traded on the main board of the Stock Exchange. The Group is principally engaged in (i) management and sub-licensing of fresh markets and treasury management in Hong Kong and the PRC; (ii) property investment and property development in Hong Kong through WOP, a 75.0%-owned listed subsidiary of the Company; and (iii) manufacturing and/or retailing of pharmaceutical and health food products through WYT.

WARNING

As the making of the Partial Offers is subject to the satisfaction of the Pre-Conditions, the Partial Offers may or may not be made. Further, completion of the Partial Offers is subject to the Conditions being fulfilled. Accordingly, Shareholders and prospective investors are advised to exercise caution when dealing in the securities of the Company. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

PART B: THE LOAN

THE LOAN AGREEMENT

On 26 September 2019, CAP, Double Leads and Winning Rich entered into the Loan Agreement, pursuant to which, Double Leads and Winning Rich agreed to grant the Loan to CAP in the aggregate principal amount of HK$710.0 million for the purpose of refinancing the outstanding indebtedness of CAP owed to Double Leads as to a principal amount of HK$89.0 million and Winning Rich as to a principal amount of HK$621.0 million under the 2019 Bonds. To the best of the knowledge and belief of the Directors after having made all reasonable enquiries, apart from Double Leads and Winning Rich, no other member of the Group held any of the 2019 Bonds as at the Latest Practicable Date.

Principal terms

The principal terms of the Loan Agreement are set forth below:

Date: 26 September 2019 Parties: (1) CAP as the borrower; (2) Double Leads as the lender; and (3) Winning Rich as the lender.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, CAP and its ultimate beneficial owner(s) (other than the Company, EOG, WYT and their respective ultimate beneficial owners) are third parties independent of the Company and are not its connected persons.

– 19 –

LETTER FROM THE BOARD

Principal amount of the Loan:

HK$710.0 million, of which HK$89.0 million and HK$621.0 million will be provided by Double Leads and Winning Rich, respectively

Term:

Three (3) years

Purpose: Refinancing the outstanding indebtedness of CAP owed to Double Leads and Winning Rich under the 2019 Bonds

Interest rate: 10% per annum

The accrued interest shall be repaid on a half-yearly basis.

Repayment:

36 months from the date of the Loan Agreement and it is repayable any time by CAP with three-day prior notice

Conditions Precedent:

Completion of the provision of the Loan is conditional upon the Independent Shareholders having passed the ordinary resolution(s) at the SGM to approve the provision of the Loan.

Completion of the provision of the Loan by Winning Rich is also conditional upon the WYT Independent Shareholders having passed the ordinary resolution(s) at the WYT SGM to approve the provision of the Loan by Winning Rich as it constitutes a major transaction for WYT.

REASONS AND BENEFITS OF ENTERING INTO THE LOAN AGREEMENT

The Directors consider that the Loan Agreement is relatively short term in nature and a relatively high return can be generated to the Shareholders. In addition, as at the Latest Practicable Date, WYT was the single largest shareholder of EOG, which in turn was the single largest shareholder of CAP. In view of the funding need of CAP, the Directors consider that it is in the interests of the Shareholders to continue to provide financial support to CAP with an aim to generate return to the Shareholders in long run. Assuming full valid acceptances of the Partial Share Offer, it is expected CAP would become a subsidiary of each of the Company and WYT, hence the provision of the Loan would become an intra-group loan and align with the interests of the Company and WYT.

The provision of the Loan is not conditional on the Partial Offers being approved, or the outcome of the Partial Offers. Should the Partial Offers not proceed, the Loan will generate a stable revenue and cash flow stream to the Group after the 2019 Bonds expire in November 2019 by bringing to the Group an annual interest income of HK$71.0 million. There is no impact to the assets and liabilities statement arising from the provision of the Loan.

The Loan is provided for the sole purpose of refinancing the 2019 Bonds, therefore provision of the Loan would not have any impact on the cash flow or cash position of Double Leads and Winning Rich. The Board is of the view that the terms of the Loan Agreement are on normal commercial terms and fair and reasonable so far as the Company and the Shareholders are concerned and thus the entering into of the Loan Agreement is in the interests of the Company and the Shareholders as a whole.

– 20 –

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Double Leads was an indirect wholly-owned subsidiary of the Company. The provision of the Loan by Double Leads, when aggregate with the provision of the Loan by Winning Rich, will constitute a transaction for the Company under Chapter 14 of the Listing Rules on an aggregated basis. As the highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the provision of the Loan is 25% or more, but less than 100% for the Company, it will constitute a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the requirements of notification, publication and approval from the Independent Shareholders at the SGM. The provision of the Loan is not conditional on the Partial Offers being approved, or the outcome of the Partial Offers.

THE SGM

The SGM will be held for the purpose of considering and, if thought fit, approving, among other things, the provision of the Loan pursuant to the Loan Agreement by the Independent Shareholders by way of a poll. Shareholders who have a material interest in the Loan Agreement and their respective close associates (as defined in the Listing Rules) are required to abstain from voting on the relevant resolution(s) at the SGM. As Winning Rich, an indirect wholly-owned subsidiary of WYT, is one of the lenders and WYT is a Shareholder holding, and controls the voting right in respect of, approximately 2.43% equity interest in the Company (as at the Latest Practicable Date), WYT is considered to have a material interest in the Loan Agreement which is different from other Shareholders. Accordingly, WYT and its associates will abstain from voting on the relevant resolution(s) in relation to the provision of the Loan.

INFORMATION ON DOUBLE LEADS AND WINNING RICH

As at the Latest Practicable Date, Double Leads was an indirect wholly-owned subsidiary of the Company and a company incorporated in the British Virgin Islands with limited liability. It is principally engaged in investment holding.

As at the Latest Practicable Date, Winning Rich was an indirect wholly-owned subsidiary of WYT and a company incorporated in the British Virgin Islands with limited liability. It is principally engaged in investment holding.

FINANCIAL IMPACTS OF THE PARTIAL OFFERS AND THE PROVISION OF THE LOAN

Assuming full valid acceptances of the Partial Share Offer, the CAP Group will become non whollyowned subsidiaries of the Company and the financial results of the CAP Group will be consolidated into the consolidated financial statements of the Group and the WYT Group, hence the provision of the Loan would become an intra-group loan and in line with the interests of the Company and WYT.

Earnings

Assuming full valid acceptances of the Partial Share Offer take place on 31 March 2019, approximately HK$74.0 million would be recognised in profit and loss of the Group on a pro forma basis. The unaudited net profit of the Enlarged Group would become approximately HK$967.4 million.

– 21 –

LETTER FROM THE BOARD

Assets and liabilities

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular, upon completion of the Partial Offers and provision of the Loan, the total assets, total liabilities and net assets of the Enlarged Group are expected to increase by approximately HK$4,418.8 million, HK$3,078.2 million and HK$1,340.6 million, respectively.

The unaudited pro forma combined statement of assets and liabilities of the Enlarged Group as at 31 March 2019 was prepared based on the historical cost basis except for certain properties and financial instruments, which are measured at fair values, as appropriate.

Further details of the unaudited pro forma financial information of the Enlarged Group immediately following completion of the Partial Offers and the provision of the Loan are set out in Appendix III to this circular.

THE SGM

A notice convening the SGM of the Company to be held at 20/F., Alexandra House, 18 Chater Road, Central, Hong Kong on Wednesday, 27 November 2019 at 10:30 a.m. is set out on pages SGM-1 to SGM-3 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend and vote in person at the SGM, you are requested to complete the enclosed 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 Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, 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.

RECOMMENDATION

The Board considers that the terms of the Partial Offers, the provision of the Loan and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the ordinary resolutions set out in the notice of the SGM on pages SGM-1 to SGM-3 of this circular to be proposed at the SGM to approve the Partial Offers, the Loan Agreement and the transactions 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 WANG ON GROUP LIMITED (宏安集團有限公司)[*] Tang Ching Ho Chairman

• For identification purpose only

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION

The audited consolidated financial information of the Group for each of the three financial years ended 31 March 2017, 2018 and 2019 are disclosed in the annual reports of the Company for the financial years ended 31 March 2017 (pages 72 to 193), 2018 (pages 75 to 206), and 2019 (pages 141 to 369), respectively, which are published on both the websites of HKEXnews ( www.HKEXnews.hk ) and the Company ( www.wangon.com ). The auditor of the Company has not issued any qualified opinion on the Group’s consolidated financial statements for the three financial years ended 31 March 2017, 2018 and 2019.

Quick links

Annual reports of the Company for the three financial years ended 31 March 2017, 2018 and 2019 are available at the following internet links:

http://www1.hkexnews.hk/listedco/listconews/sehk/2017/0727/ltn20170727393.pdf

http://www1.hkexnews.hk/listedco/listconews/sehk/2018/0726/ltn20180726510.pdf

http://www1.hkexnews.hk/listedco/listconews/sehk/2019/0730/ltn20190730780.pdf

Save as disclosed above, the Board is not aware of any material change in the Company’s operation and financial position since 31 March 2019, being the date on which the latest published audited consolidated financial statements of the Group were made up.

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 30 September 2019, 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 the following indebtedness:

(A) The Group

• (a) outstanding bank and other loans of approximately HK$5,616.4 million, of which bank loans with an aggregate amount of approximately HK$3,735.1 million were secured by the Group’s land and buildings, investment properties and certain rental income generated therefrom, properties under development, properties held for sale, financial assets at fair value through other comprehensive income, financial assets at fair value through profit or loss and share charges in respect of the entire interests of certain subsidiaries of the Group, which are engaged in property development;

• (b) lease liabilities amounting to approximately HK$777.1 million; and

• (c) the Group also provided guarantee(s) to banks in respect of banking facilities extended to joint ventures in an amount not exceeding approximately HK$2,478.1 million and which were utilised to the extent of HK$1,314.3 million as at 30 September 2019.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(B) The CAP Group

• (a) outstanding bank and other borrowings, bonds, convertible bonds and promissory note of approximately HK$1,950.7 million, of which bank loans with an aggregate amount of approximately HK$429.4 million were secured by the CAP Group’s equipment, stock of properties and investment properties;

• (b) lease liabilities amounting to approximately HK$19.7 million; and

• (c) the CAP Group also provided guarantee(s) to banks in respect of loans provided by the bank to the customers of CAP Group in an amount not exceeding approximately HK$59.7 million.

Save as otherwise disclosed above, and apart from intra-group liabilities and normal trade payables, the Enlarged Group did not have, at the close of business on 30 September 2019, any other debt securities issued and outstanding, or authorised or otherwise created but unissued, any other term loans, any other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptance (other than normal trade bills) or acceptance credits or hire purchase commitments, any other mortgages and charges or any guarantees or material contingent liabilities.

3. WORKING CAPITAL STATEMENT

Taking into account the financial resources available to the Enlarged Group, including internally generated funds and available banking facilities of the Enlarged Group, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of publication of this circular, in the absence of unforeseeable circumstances, such as any event of force majeure occurs including without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out.

4. MATERIAL ADVERSE CHANGE

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

5. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

Despite the market keeps on changing and more uncertainties over the trade dispute that has been clouding global economic prospects and heightening financial market volatility, with the formation of Guangdong-Hong Kong-Macao Greater Bay Area which accommodates an estimated total population of 70 million with a total GDP of HK$10.9 trillion, it marks a new era of economic cooperation of the region. The quicken pace of pushing forward a common market with free flows of human and capital resources, goods and services and information in Greater Bay Area should further boost Hong Kong’s growth prospects.

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On property development and investment front, the Group remains positive about the Hong Kong residential property market in the coming few years and will continue to take full advantage of the prosperous property market. The Group will continue exploring opportunities in property acquisition and further enhance its operational efficiency and effectiveness to strengthen the real estate business. The Group’s fresh market segment maintains its growing momentum. The Group is confident that it will continue to provide stable recurring income and cash flow. It is expected to further expand our fresh market portfolio by collaboration with landlords from both public sectors and private investors. The Group will continue to work with our partners to identify opportunities for acquiring fresh markets to strengthen our recurring income.

Despite the retail market is slowing down due to the recent political chaos, with the Hong Kong government actively promoting traditional Chinese Medicine in local market and co-operation with cities in Greater Bay Area, it is believed that the market for Chinese pharmaceutical products and supplementation manufactured in Hong Kong is set to expand rapidly over the coming decade, spurred by the trend of preferential policies from the Chinese government. It is believed that the Group’s sales will be ahead of 2020 levels as a result of effective promotion activities and sales channel development. A number of the Group’s newly launched products have quickly gained leading market share and are still growing in a fast pace. The Group will continue to push sales growth through effective marketing strategy and apply the selling expense wisely with highlighting on giving customers more direct benefits. It will continue to utilise our manufacturing and logistic support capabilities to protect our margins. The overall strong financial position of the Group enables us to have a high degree of flexibility and agility for our treasury management segment. The Group will continue its proactive and prudent investment approach to drive business growth on all business segments.

In respect of the financial and trading prospects of the CAP Group, agricultural issue is the PRC central government’s first priority policy for the next consecutive years. In 2019, the Central Committee of Communist Party of China and the State Council of PRC released the “Number 1 Policy of 2019”. The document promises to promote investments in agricultural produce markets, expand agricultural produce network, build logistic infrastructure and storage facilities of agriculture and improve regional cold storage infrastructure. On the other hand, it is expected that the “One Belt, One Road” policy will drive the overall growth of the PRC economy and provide a sustainable way for the PRC’s continuing development.

Looking ahead, CAP 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. Once again, agricultural issue is the PRC central government’s first priority policy for the next consecutive years. As the investment properties and properties stock of the CAP Group will benefit from these policies and supportive government policies implemented in the PRC provinces where they are located, the Group is optimistic that they will bring favourable returns to its shareholders. Rental income from the investment properties will also provide a steady stream of income to the Enlarged Group.

In order to sustain further growth, the Enlarged Group will continue to explore various forms of strategic business opportunities, and will develop or invest in new businesses whenever it generates attractive return to the Enlarged Group and the Shareholders.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. MAJOR ACQUISITION AFTER 31 MARCH 2019 BEING THE DATE ON WHICH THE LATEST PUBLISHED AUDITED CONSOLIDATED ACCOUNTS OF THE GROUP WERE MADE UP

References are made to (i) the announcement dated 1 May 2019 jointly issued by the Company and WOP; and (ii) the circular of the Company dated 26 July 2019 in respect of the provisional agreement (the “ Provisional Agreement ”) dated 30 April 2019 entered into between Milesville Limited (“ Milesville ”, an indirect wholly-owned subsidiary of WOP as at the relevant time the Provisional Agreement was entered into), as the purchaser, and Topaz Limited (“ Topaz ”), as the vendor, for the acquisition of the entire issued share capital of Pearl Limited (carrying on business in Hong Kong as Pearl Park Limited), at the aggregate cash consideration of HK$780 million (subject to adjustment).

Milesville is a company incorporated in the British Virgin Islands with limited liability principally engaged in property investment and was formerly an indirect wholly-owned subsidiary of WOP as at the relevant time the Provisional Agreement was entered into. Upon completion on 21 June 2019 of the disposal of 50% equity interest in Milesville by an indirect wholly-owned subsidiary of WOP, Milesville became a joint venture owned as to 50% by each of an indirect wholly-owned subsidiary of WOP and an independent third party. Further details of the disposal are set out in the announcement dated 21 June 2019 jointly issued by the Company and WOP.

Pearl Limited is a company incorporated in the British Virgin Islands with limited liability engaged in holding Hermitage Investments Limited (“ Hermitage Investments ”), which is the sole legal and beneficial owner of a property comprising the commercial accommodation of the complex named “The Parkside” located at No.18 Tong Chun Street, Tseung Kwan O, New Territories, Hong Kong together with 49 car parking spaces and 5 motor cycle parking spaces on the basement floor, with a total lettable area of approximately 32,564 square feet. As at the date of the Provisional Agreement, the leases, tenancy agreements or licence agreements in respect of such property are all under a fixed term with the earliest and latest end date falling on 2019 and 2021, respectively. Pursuant to a lease dated 5 July 2019 entered into between Hermitage Investments and an affiliate of WOP, Hermitage Investments granted a lease of certain parts of the property to be designated as a retail area operated by Hermitage Investments to an affiliate of WOP.

Completion of such acquisition has taken place on 4 July 2019. Details of the financial information of Pearl Limited for each of the three years ended 31 December 2016, 2017 and 2018 and the three months ended 31 March 2019 have been set out in the Company’s circular dated 26 July 2019 (from pages II-1 to II-46), which has been posted on both the websites of HKEXnews ( www.HKEXnews.hk ) and the Company ( www.wangon.com ). The aggregate of the remuneration payable to and benefits in kind receivable by the Directors will not be varied in consequence of such acquisition.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

CONSOLIDATED FINANCIAL INFORMATION OF THE CAP GROUP FOR THE THREE YEARS ENDED 31 DECEMBER 2016, 2017 AND 2018 AND THE SIX MONTHS ENDED 30 JUNE 2019

The consolidated financial information, together with the accompanying notes to the financial statements, of the CAP Group for each of the three financial years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019 are disclosed on pages 71 to 165 of the annual report of CAP for the year ended 31 December 2016, pages 68 to 153 of the annual report of CAP for the year ended 31 December 2017, pages 70 to 173 of the annual report of CAP for the year ended 31 December 2018 and pages 27 to 80 of the interim report of CAP for the six months ended 30 June 2019 respectively, all of which are published on both the websites of the Stock Exchange ( www.HKEXnews.hk ) and CAP ( http://www.cnagri-products.com ).

MANAGEMENT DISCUSSION AND ANALYSIS ON THE CAP GROUP

Set out below is the management discussion and analysis of the results of the CAP Group for each of the financial years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019. The information is extracted from and based on the annual reports and interim report of CAP for the relevant periods. The management discussion and analysis should be read in conjunction with the financial information of the CAP Group included in the respective annual reports and interim report.

BUSINESS REVIEW

The CAP Group is principally engaged in the business of management and sales of properties in agricultural produce exchange markets in the PRC. For further details of the CAP Group, please refer to the section headed “Information on CAP” in the letter from the Board in this circular.

In order to cope with future growth and provide more comprehensive services to customers, the CAP Group strives for diversification of income streams in order to align its corporate mission and goals with the aim to delivering a long term benefit to the shareholders of CAP. From traditional operation of the CAP Group’s wholly-owned agricultural produce markets to cooperation projects with local partners, the CAP Group took a further step to adopt the light assets model. With the benefit of the CAP Group’s reputation in the industry, the CAP Group had started the provision of management service in recent years. As at the Latest Practicable Date, the CAP Group operates the following 11 agricultural produce exchange markets in the PRC:

Agricultural Produce Markets

Hubei Province

1. Wuhan Baisazhou Market

Located in the provincial capital of Hubei Province, the PRC, Wuhan Baisazhou Agricultural and ByProduct Exchange Market (“ Wuhan Baisazhou Market ”) is one of the largest agricultural produce exchange operators in the PRC. Wuhan Baisazhou Market is situated in the Hongshan District of Wuhan City, the PRC with a site area of approximately 310,000 square metres and a total gross floor area of approximately 190,000 square metres. In 2019, Wuhan Baisazhou Market was awarded top 10 of agricultural produce exchange markets by China Agricultural Wholesale Market Association. The award was a sign to the market contribution being made by the CAP Group’s effort and expertise as an agricultural produce exchange market operator

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

in the PRC. The turnover of Wuhan Baisazhou Market remained steady during the financial years ended 31 December 2016 and 2017. In 2018, the turnover of Wuhan Baisazhou Market increased significantly due to the rise in rental rate. During the six months ended 30 June 2019, the performance of Wuhan Baisazhou Market was steady and satisfactory. As a mature market in Wuhan, the PRC, Wuhan Baisazhou Market has established its reputation and track record to customers and tenants and continued to make significant contribution to the community.

2. Huangshi Market

Following the completion of acquisition of Huangshi Hongjin Agricultural and By-Product Exchange Market (“ Huangshi Market ”) in January 2015, Huangshi Market had become one of the CAP Group’s joint venture projects in Hubei Province, the PRC. The contracted operating space of Huangshi Market was approximately 23,000 square metres. Huangshi city is a county level city in Hubei and around 100 kilometres away from Wuhan Baisazhou Market. Huangshi Market, as a second-tier agricultural produce exchange market, created synergy effect with Wuhan Baisazhou Market by increasing vegetables and by-products trading. During the financial years ended 31 December 2016, 2017 and 2018, the operating performance of Huangshi Market was satisfactory, bringing positive operating cash flow to the CAP Group. During the six months ended 30 June 2019, Huangshi Market underperformed when compared to the corresponding period of the prior financial year due to keen competition from a new market.

3. Suizhou Market

In March 2018, the CAP Group formed a joint venture company with an independent third party in Suizhou City, Hubei Province, the PRC, to operate Suizhou Baisazhou Agricultural and By-Product Exchange Market (“ Suizhou Market ”), which is the third project of the CAP Group in Hubei Province, the PRC, which occupied approximately 240,000 square metres. Phase one of Suizhou Market focused on vegetables and fruits transactions. The CAP Group pursued asset light business model by taking up the contract management rights to operate this new market in Hubei Province, the PRC. In 2018, Suizhou Market was in its early stage of development and was expected to grow gradually. During the six months ended 30 June 2019, the operating performance of Suizhou Market was satisfactory and is expected to grow gradually.

4. Luoyang Market

Luoyang Hongjin Agricultural and By-Product Exchange Market (“ Luoyang Market ”) was the flagship project of the CAP Group in Henan Province, the PRC, with a site area and gross floor area of approximately 255,000 square metres and approximately 223,000 square metres, respectively. After several years of operations, the business performance of Luoyang Market had gradually improved during the financial years ended 31 December 2016 and 2017, while both occupancy rate and vehicles traffic were satisfactory. In 2018, the operation income of Luoyang Market changed from loss to profit and it was awarded “The Most Influential Market” by the Market Development Committee of the Marketing Association of the PRC and the “Model Market of Modern and Reliability” by the Industrial and Commercial Bureau of Luoyang City, the PRC. During the six months ended 30 June 2019, the operating performance of Luoyang Market was satisfactory and contributed positive cash flow to the CAP Group.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

5. Puyang Market

Puyang Hongjin Agricultural and By-Product Exchange Market (“ Puyang Market ”) is one of the CAP Group’s joint venture projects in cooperation with a local partner in Henan Province, the PRC. While Puyang Market recorded a decrement of approximately 9% in turnover in 2016 as compared to the prior financial year, during 2017 and 2018, its operating performance improved and resulted in an increase of approximately 10% and 22% in turnover as compared to the respective prior financial years. During the six months ended 30 June 2019, Puyang Market recognised property sales and resulted in a growth at a double digit rate in turnover as compared to the corresponding period of the prior financial year.

6. Kaifeng Market

Kaifeng Hongjin Agricultural and By-Product Exchange Market (“ Kaifeng Market ”), with a gross floor construction area of approximately 120,000 square metres, was the third point of market operations for facilitating the CAP Group to build an agricultural produce market network in Henan Province, the PRC. During the financial years ended 31 December 2016, 2017 and 2018, the business of Kaifeng Market was behind expectations and CAP had implemented various operating strategies to improve the market performance of Kaifeng Market. During the six months ended 30 June 2019, Kaifeng Market performed steadily and is expected to grow gradually.

Guangxi Zhuang Autonomous Region

7. Yulin Market

Yulin Hongjin Agricultural and By-Product Exchange Market (“ Yulin Market ”) is one of the largest agricultural produce exchange markets in Guangxi Zhuang Autonomous Region, the PRC (“ Guangxi Region ”) with a site area of approximately 415,000 square metres and a total gross floor area of approximately 196,000 square metres. It consists of various types of market stalls and multi-storey godowns. Phase two development of Yulin Market became a new growth driver for the CAP Group. In 2018, Yulin Market was awarded the “Food Safety Model Wholesale Market of Guangxi Region” by the Food and Medicine Supervision and Management Authority, the Guangxi Region. As an energetic agricultural produce exchange market, Yulin Market’s continuously remarkable performance proved it having become one of the key agricultural produce exchange markets in the Guangxi Region. Yulin Market’s operation performance was encouraging, achieving a revenue growth of approximately 164%, 184% and 27% for the financial years ended 31 December 2016, 2017 and 2018, as compared to the respective prior financial years. One of the main reasons for the revenue growth was the continuous increase in property sales recognition during the said periods. The performance of Yulin Market was satisfactory during the six months ended 30 June 2019, achieving property sales recognition contributed to the CAP Group.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

8. Qinzhou Market

Qinzhou Hongjin Agricultural and By-Product Exchange Market (“ Qinzhou Market ”), with a gross floor construction area of approximately 180,000 square metres, was the second point of market operations and facilitated the CAP Group to build an agricultural produce market network in the Guangxi Region. During the financial year ended 31 December 2016, approximately HK$200 million were recognized as property sales income of Qinzhou Market. Although a decrease of approximately 81% was recorded in the turnover of Qinzhou Market for the financial year ended 31 December 2017 as compared to the prior financial year, the CAP Group focused on enhancing the market’s operation performance and it resulted in an increase of approximately 18% in operation turnover of Qinzhou Market in 2018. The performance of Qinzhou Market remained satisfactory during the six months ended 30 June 2019.

Jiangsu Province

9. Xuzhou Market

Xuzhou Agricultural and By-Product Exchange Market (“ Xuzhou Market ”) occupies approximately 200,000 square metres and is located in the northern part of Jiangsu Province, the PRC. The market houses various market stalls, godowns and cold storage. Xuzhou Market is a major marketplace for the supply of fruit and seafood in the city and the northern part of Jiangsu Province, the PRC. Xuzhou Market recorded a decrease in income in 2016 by approximately 19% to approximately HK$47,571,000 as compared to the prior financial year. A slight decrease of approximately 3% in revenue was recorded in 2017 and approximately HK$46 million of revenue was recorded in 2018. The operating performance of Xuzhou Market continued to remain steady during the six months ended 30 June 2019.

10. Huai’an Market

Huai’an Hongjin Agricultural and By-Product Exchange Market (“ Huai’an Market ”), with contracted operating area of approximately 100,000 square metres, is located at Huai’an City of Jiangsu Province, the PRC. Phase one of Huai’an Market had been in operation since October 2015 and it was expected that the performance of Huai’an Market will gradually improve after the market has become more mature. As at the Latest Practicable Date, CAP is under a legal dispute with the partner of the joint venture founded in September 2017, the details of which were disclosed in note 19 to the condensed consolidated financial statements of the interim report of CAP for the six months ended 30 June 2019.

Liaoning Province

11. Panjin Market

Panjin Hongjin Agricultural and By-Product Exchange Market (“ Panjin Market ”), with a construction area of around 50,000 square metres, is the first attempt of the CAP Group’s investment in Liaoning Province, the PRC. Panjin Market focused on the trading of river crabs and was still in the preliminary stage of operation development during the financial years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019. In 2018, CAP expanded the business scope by holding regular market fairs in Panjin Market to improve its performance. It is expected that the performance of Panjin Market will gradually improve after the market has become more mature.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Food and agricultural by-products merchandising

As more and more projects had become mature with stable operation, the CAP Group saw robust demand for food and agricultural by-products merchandising services in their markets. Therefore, the CAP Group has been strategically extending its footprints to the business of food and agricultural by-products merchandising. Leveraging on their advantages in market penetration, products knowledge, price, quality sensitivity and suppliers’ network, the CAP Group launched its first pilot site in Wuhan Baisazhou Market. This new business was gradually improving. The management of the CAP Group would closely monitor the performance of this new business and would launch this new service to other markets when the business model becomes mature.

E-commerce development

With the robust mobile network and widespread use of intelligent mobile devices in the PRC, the CAP Group has put limited resources into e-commerce development linking online and offline customers in their agricultural exchange markets together. The CAP Group takes cautious cost control on e-business operations and will also explore opportunities to cooperate with other business partners in this area.

FINANCIAL REVIEW

Turnover, gross profit and segment result

The below table summarises the key financial performance of the CAP Group for the periods indicated below:

	For the year ended	For the year ended		For the year ended	For the year ended		For the year ended	For the year ended		For the six months ended	For the six months ended	For the six months ended
	31 December 2016			31 December 2017			31 December 2018				30 June 2019
	Agricultural			Agricultural			Agricultural			Agricultural
	Produce			Produce			Produce			Produce
	Exchange			Exchange			Exchange			Exchange
HK$ million and	Market	Property		Market	Property		Market	Property		Market	Property
approximate %	Operation	Sales	Total	Operation	Sales	Total	Operation	Sales	Total	Operation		Sales	Total
Turnover	325	278	603	341	449	790	379	400	779	196		266	462
Gross Profit	216	93	309	238	103	341	278	113	391	136		83	219
Segment Result	58	77	135	102	77	179	126	73	199	91		43	134
Gross Profit to Turnover	66%	33%	51%	70%	23%	43%	73%	28%	50%	69%		31%	47%
Segment Result to Turnover	18%	28%	22%	30%	17%	23%	33%	18%	26%	46%		16%	29%

For the financial year ended 31 December 2017, the CAP Group recorded a turnover of approximately HK$790 million, an increase of approximately HK$187 million or approximately 31% increase from approximately HK$603 million for the corresponding period in 2016. The increase in income was mainly due to the increase in properties sales of recognition of the agricultural and by-product exchange markets in Yulin City and Kaifeng City in the PRC. For the financial year ended 31 December 2017, the CAP Group recorded a gross profit and a segment result of approximately HK$341 million and approximately HK$179 million, respectively, as compared to approximately HK$309 million and approximately HK$135 million, respectively, for the financial year ended 31 December 2016, representing an increase of approximately 10% and approximately 33%, respectively, due to the abovementioned increase in property sales recognition.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

The CAP Group recorded a turnover of approximately HK$779 million for the financial year ended 31 December 2018, representing a decrease of approximately 1% as compared to approximately HK$790 million for the corresponding period in 2017 mainly due to the decrease in property sales recognition. The CAP Group recorded a gross profit and a segment result of approximately HK$391 million and approximately HK$199 million, respectively, for the financial year ended 31 December 2018, as compared to approximately HK$341 million and approximately HK$179 million, respectively, for the prior financial year, representing an increase of approximately 15% and an increase of approximately 11%, respectively. This increase in gross profit and segment result was mainly due to increase in rental income and implementation of effective cost saving policies.

For the six months ended 30 June 2019, the CAP Group recorded a turnover of approximately HK$462 million, representing an increase of approximately HK$135 million or approximately 41% from approximately HK$327 million for the corresponding period of the prior financial year as property sales recognition was higher than that of the same period of prior financial year. The CAP Group recorded a gross profit and a segment result of approximately HK$219 million and approximately HK$134 million, respectively, representing an increase of approximately 7% and a decrease of approximately 1%, respectively, as compared to the corresponding period of the prior financial year mainly due to higher property sales recognition with a lower gross profit ratio.

Other revenue and other net income

Other revenue and other net income recorded by the CAP Group decreased from HK$65 million to HK$15 million for the financial year ended 31 December 2017 as compared to the prior financial year. The decrease was mainly due to the decrease in government subsidies from Huai’an Market and Kaifeng Market in 2017 as compared to the prior financial year.

The CAP Group recorded other revenue and other net income of approximately HK$21 million for the financial year ended 31 December 2018, as compared to approximately HK$15 million for the prior financial year. The increase was mainly due to increase in interest income.

General and administrative expenses, selling expenses and finance costs

For the financial year ended 31 December 2017, general and administrative expenses recorded by the CAP Group were approximately HK$239 million (2016: approximately HK$288 million). The decrease was mainly due to tight control of operating expenses in various projects. Selling expenses were approximately HK$44 million (2016: approximately HK$50 million). The decrease in selling expenses was mainly due to the implementation of cost saving policies in the CAP Group’s marketing and promotion events in 2017. Finance costs were approximately HK$272 million (2016: approximately HK$269 million) and such increase was mainly due to the slight increase in effective interest rate of interest-bearing debts.

For the financial year ended 31 December 2018, general and administrative expenses recorded by the CAP Group were approximately HK$235 million (2017: approximately HK$239 million). The decrease was mainly due to the implementation of cost saving policies. Selling expenses were approximately HK$50 million (2017: approximately HK$44 million). The increase in selling expenses was mainly due to the increase in the sales and promotion activities in 2018. Finance costs were approximately HK$212 million (2017: approximately HK$272 million) and such decrease was mainly due to the early repayments of debts.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

The CAP Group recorded general and administrative expenses of approximately HK$92 million for the six months ended 30 June 2019 (for the six months ended 30 June 2018: approximately HK$90 million). The increase was mainly due to the loss on exchange rate arising from repaying outstanding debts. Selling expenses were approximately HK$39 million (for the six months ended 30 June 2018: approximately HK$11 million), which was mainly due to the increase in marketing and promotion expenses of promoting property sales. Finance costs were approximately HK$94 million (for the six months ended 30 June 2018: approximately HK$111 million) and such decrease was mainly due to the repayment of bank and other borrowings.

Net gain/loss in fair value of investment properties and written down of stock of properties

For the financial year ended 31 December 2017, the net gain in fair value of investment properties amounted to approximately HK$52 million (2016: net loss of approximately HK$594 million), mainly due to the improvement of agri-products exchange markets income in the PRC. Stock of properties value was written down for approximately HK$83 million (2016: approximately HK$17 million), mainly due to the decrease in property value in Panjin Market.

For the financial year ended 31 December 2018, the net gain in fair value of investment properties was approximately HK$5 million (2017: net gain of approximately HK$52 million). The decrease in the net gain was mainly due to decrease in fair value of Kaifeng Market and Huai’an Market. Stock of properties value was written down for approximately HK$67 million (2017: approximately HK$83 million) mainly due to written down of stock of properties of Kaifeng Market, Huai’an Market and Panjin Market.

For the six months ended 30 June 2019, the net change in fair value of investment properties was approximately HK$60 million (for the six months ended 30 June 2018: net change of approximately HK$6 million). Such increase was mainly due to the improvement of income derived from Wuhan Baisazhou Market and Luoyang Market. No stock of properties value was impaired during the six months ended 30 June 2019 (for the six months ended 30 June 2018: approximately HK$32 million). The fair value was arrived at based on the valuations carried out by an independent firm of qualified professional valuers. The professional valuers are professional members of The Hong Kong Institute of Surveyors and the valuations conform to the Valuation Standard of The Hong Kong Institute of Surveyors.

Change in fair value of derivative financial instruments

During the financial year ended 31 December 2017, net loss in fair value of derivative financial instruments was approximately HK$77 million (2016: approximately HK$2 million) due to the exercise of conversion rights under the Convertible Notes and the drop of share price of CAP during the year of 2017.

During the financial year ended 31 December 2018, net loss in fair value of derivative financial instruments was approximately HK$18 million (2017: approximately HK$77 million) due to the drop of share price of CAP during the year of 2018.

During the six months ended 30 June 2019, net gain in fair value of derivative financial instruments was approximately HK$69,000 (for the six months ended 30 June 2018: net loss of approximately HK$13 million) due to the rise of share prices of CAP during the period.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Profit/loss attributable to owners of CAP

The loss attributable to owners of CAP for the financial year ended 31 December 2017 was approximately HK$341 million as compared to the prior financial year’s loss of approximately HK$741 million. The CAP Group recorded profit from operations before fair value changes and impairment of approximately HK$74 million and loss from operations of approximately HK$30 million (2016: profit of approximately HK$37 million and loss of approximately HK$583 million, respectively) for the financial year ended 31 December 2017. The decrease in loss attributable to owners of CAP was mainly due to a turnaround from net loss in 2016 to net gain in 2017 attributable to fair value of investment properties.

The loss attributable to owners of CAP for the financial year ended 31 December 2018 was approximately HK$213 million as compared to the loss of approximately HK$341 million in the prior financial year. Profit from operations before fair value changes and impairment, interest and tax was approximately HK$127 million and the profit from operations was approximately HK$98 million (2017: profit of approximately HK$74 million and loss of approximately HK$30 million, respectively) for the financial year ended 31 December 2018. The decrease in loss attributable to owners of CAP was mainly due to (i) an increase in gain from disposal of subsidiaries holding a parcel of land; (ii) a decrease in finance costs by early repayment of debts during 2018; and (iii) a decrease in loss in fair value of derivative financial instruments arising from the Convertible Notes, as compared to the financial year ended 31 December 2017.

The profit attributable to owners of CAP for the six months ended 30 June 2019 was approximately HK$8 million as compared to loss attributable to owners of CAP of approximately HK$87 million in the corresponding period of the prior financial year. The CAP Group recorded profit from operations before fair value change of investment properties and impairment of approximately HK$98 million and profit from operations of approximately HK$158 million for the six months ended 30 June 2019 (for the six months ended 30 June 2018: approximately HK$111 million and approximately HK$81 million, respectively). The profit attributable to owners of CAP was mainly due to the net gain in fair value of investment properties and derivative financial assets and decrease in impairment of stock of properties.

Liquidity and financial resources

As at 31 December 2016, 2017 and 2018 and 30 June 2019, the CAP Group had total cash and cash equivalents amounting to approximately HK$330 million, HK$514 million, HK$488 million and HK$397 million, respectively. As at 31 December 2016, 2017 and 2018 and 30 June 2019, the total assets of the CAP Group were approximately HK$5,957 million, HK$6,111 million, HK$5,604 million and HK$5,421 million, respectively, whilst total net assets of the CAP Group amounted to approximately HK$1,159 million, HK$1,958 million, HK$1,595 million and HK$1,606 million, respectively. The gearing ratio of the CAP Group as at 31 December 2016, 2017 and 2018 and 30 June 2019 were approximately 2.3, 1.0, 1.0 and 1.0, respectively, being a ratio of total bank and other borrowings, bonds and promissory notes of approximately HK$2,993 million, HK$2,553 million, HK$2,085 million and HK$1,920 million, respectively, net of cash and cash equivalents and/or pledged bank deposits of approximately HK$330 million, HK$514 million, HK$488 million and HK$397 million, respectively, to shareholders’ funds of approximately HK$1,159 million, HK$1,958 million, HK$1,595 million and HK$1,606 million, respectively.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

As at 31 December 2016, 2017 and 2018 and 30 June 2019, the ratio of total interest-bearing debts of approximately HK$2,993 million, HK$2,553 million, HK$2,085 million and HK$1,920 million, respectively, to total assets of approximately HK$5,957 million, HK$6,111 million, HK$5,604 million and HK$5,421 million, respectively, was approximately 50%, 42%, 37% and 35%, respectively.

Convertible Notes

As at 31 December 2016, 2017 and 2018 and 30 June 2019, the Convertible Notes with the outstanding principal amount of HK$500.0 million, HK$264.8 million, HK$264.8 million and HK$264.8 million was in issue, respectively.

Listed notes due in 2024 (the “Listed Notes”)

In May 2014, CAP established a HK$1,000 million medium term note program. The Listed Notes issued under the program are listed on the Stock Exchange by way of debt issue to professional investors only (stock code: 5755). As at 31 December 2016, 2017 and 2018 and 30 June 2019, Listed Notes in the principal amount of HK$400 million, HK$400 million, HK$290 million and HK$290 million, respectively, remained outstanding.

Capital commitments, pledges and contingent liabilities

As at 31 December 2016, 2017 and 2018 and 30 June 2019, outstanding capital commitments, contracted but not provided for, amounted to approximately HK$194 million, HK$260 million, HK$214 million and HK$247 million, respectively, in relation to the purchase of property, plant and equipment, construction contracts and operating lease agreements. As at 31 December 2016, 2017 and 2018 and 30 June 2019, the CAP Group had significant contingent liabilities in the amount of approximately HK$15 million, HK$8 million, HK$0.2 million and HK$0.2 million, respectively, in relation to the guarantees provided by a wholly-owned subsidiary of CAP to customers of the CAP Group in favor of a bank for the loans provided by the bank to the customers of the CAP Group’s project.

As at 31 December 2016, 2017 and 2018 and 30 June 2019, certain investment properties and stock of properties with carrying amount of approximately HK$2,269 million, HK$2,345 million, HK$1,669 million and HK$1,623 million were pledged to secure certain bank borrowings.

The CAP Group did not have any outstanding foreign exchange contracts, interest or currency swaps or other financial derivatives as at 31 December 2016, 2017 and 2018 and 30 June 2019, respectively. The revenue, operating costs and bank deposits of the CAP Group were mainly denominated in RMB and Hong Kong dollars. The activities of the CAP Group are exposed to foreign currency risks mainly arising from its operations in mainland China and certain bank deposits denominated in RMB. Currently, the CAP Group does not have a foreign currency hedging policy. During the financial years ended 31 December 2016, 2017 and 2018 and the six months ended 30 June 2019, due to the currency fluctuation of RMB against Hong Kong dollars, the CAP Group has been considering, from time to time, alternative risk hedging tools to mitigate RMB currency exchange risk.

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APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Debt profiles and financial planning

As at 31 December 2016, 2017 and 2018 and 30 June 2019, the interest-bearing debts of the CAP Group were analyzed as follows:

Bonds Issuance Convertible Notes Financial Institution Borrowings Non-Financial Institution Borrowings Promissory Notes Total	2016 Carrying amount Approximate effective interest rate HK$ million (per annum) 1,336 11% 413 12% 707 6% 161 11% 376 5% 2,993	31 December 2017 Carrying amount Approximate effective interest rate HK$ million (per annum) 1,255 11% 226 12% 672 6% 24 10% 376 5% 2,553	2018 Carrying amount Approximate effective interest rate HK$ million (per annum) 1,026 11% 235 12% 448 6% 0 0% 376 5% 2,085	30 June 2019 Carrying amount Approximate effective interest rate HK$ million (per annum) 968 11% 239 12% 337 6% 0 0% 376 5% 1,920

Note: Save as the financial institution borrowings which were made in RMB with floating or fixed interest rates, other items as mentioned in the above table were made in Hong Kong dollars or RMB with fixed interest rates.

As at 31 December 2018, the bonds issued by CAP will mature during the period from November 2019 to September 2024; the Convertible Notes will mature in October 2021; the financial institution borrowings of CAP will mature during the period from January 2019 to November 2023; and the holders of the promissory notes have given an undertaking not to indorse, assign, transfer or negotiate the promissory notes and enforce payment by presentation of the promissory notes until the final determination of a court action or further court order. Under the said undertaking, the promissory notes will no longer fall due for payment by CAP on 5 December 2012. Details of the undertaking and the court case were disclosed in note 36 to the consolidated financial statements in the annual report of CAP for the financial year ended 31 December 2018. In order to meet interest-bearing debts and business capital expenditure, the CAP Group is, from time to time, considering various financing alternatives, as and when appropriate, including equity and debt financing including but not limited to new share placing, rights issue of new shares, financial institution borrowings, non-financial institution borrowings, bonds issuance, convertible notes, other debt financial instruments, disposal of investment properties and sales of stock of properties.

– II-10 –

APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Treasury policy

The CAP Group’s treasury policy includes diversifying the funding sources. Internally generated cash flow, issuance of shares and interest-bearing bank/non-financial institution loans are the general source of funds to finance the operation of the CAP Group. The CAP Group regularly reviews its major funding positions to ensure that it has adequate financial resources in meeting its financial obligations. In order to meet interest-bearing debts and business capital expenditure, the CAP Group is from time to time considering various alternatives including equity and debt financing including but not limited to new share placing, rights issue of new shares, financial institution borrowings, non-financial institution borrowings, bonds issuance, convertible notes, other debt financial instruments, disposal of investment properties and sales of stock of properties.

Contractual arrangement of e-commerce business

Shenzhen Gudeng Technology Limited (“ Shenzhen Gudeng ”), established in 2015, was an indirectlyowned subsidiary of the CAP Group carrying out the business of e-commerce and electronic trading platform of the CAP Group. For the compliance of the PRC regulatory requirements, on 11 July 2016, the CAP Group entered into an agreement to transfer its entire interest in Shenzhen Gudeng to a nominee shareholder and further entered into a series of contractual arrangements after obtaining the Internet Content Provider license issued by the Communication Authority of Guangdong Province to enable the CAP Group to manage and operate the Internet Content Provider services of Shenzhen Gudeng. Details of the disposal and the contractual arrangements were disclosed in CAP’s announcements dated 11 July 2016 and 11 October 2016, respectively. As at the Latest Practicable Date, the above said contractual arrangements were still valid and effective between the nominee shareholder and the CAP Group.

Fund raising activities

Issue of the Convertible Notes in 2016

On 23 August 2016, CAP entered into a notes placing agreement with Kingston Securities in relation to the placing of the Convertible Notes in the aggregate principal amount of HK$360 million convertible into 900,000,000 convertible shares at the conversion price of HK$0.40 per convertible share in CAP (the “ Notes Placing ”). On the same date, CAP entered into a note subscription agreement with Peony Finance, pursuant to which CAP agreed to issue to Peony Finance the Convertible Notes in the principal amount of HK$140 million convertible into 350 million convertible shares at the conversion price of HK$0.40 per convertible share in CAP (the “ EOG Note Subscription ”). The total net proceeds of approximately HK$488 million were utilized as intended, of which (i) approximately HK$200 million was utilized for the repayment of the bonds due in 2016; (ii) approximately HK$40 million was utilized for offsetting part of the principal amount of the 2019 Bonds; (iii) approximately HK$100 million was utilized towards the offsetting of the outstanding principal amounts and interest of loan from a subsidiary of EOG; (iv) approximately HK$100 million was utilized for the repayment of principal amount and interest of interest-bearing debts; and (v) approximately HK$48 million was utilized for general working capital of the CAP Group, major components of which were operating expenses, such as rental expenses, marketing expenses and salary expenses. Further details of the Notes Placing and the EOG Note Subscription were set out in the announcement of CAP dated 23 August 2016 and the circular of CAP dated 15 September 2016.

– II-11 –

APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

During the financial year ended 31 December 2017, the principal amount of HK$198.2 million of the Convertible Notes were converted into 495,500,000 CAP Shares by the Convertible Noteholders and the principal amount of HK$37 million of the Convertible Notes held by Peony Finance was offset by part of the net proceeds from the 2017 CAP Rights Issue.

2017 CAP Rights Issue

On 4 October 2017, CAP announced a rights issue on the basis of five rights shares for every one existing share at a price of HK$0.088 per rights share. The aggregate net proceeds of approximately HK$697 million were utilized as intended, of which (i) approximately HK$110 million was utilized for offsetting of outstanding principal amounts of the 2019 Bonds issued by CAP to Peony Finance as intended; (ii) approximately HK$37 million was utilized for offsetting of outstanding principal amounts of the Convertible Notes held by Peony Finance as intended; (iii) approximately HK$100 million was utilized for repayment of outstanding principal amounts on loans of the CAP Group due to a subsidiary of the Company as intended; (iv) approximately HK$205 million was utilized for repayment of outstanding interests accrued on the bonds, loans and the Convertible Notes held by/owed to the subsidiaries of EOG, WYT and the Company as intended; (v) approximately HK$235 million was utilized for repayment of outstanding indebtedness of the CAP Group owed to independent third parties as intended and; (vi) approximately HK$10 million was utilized for the general working capital of the CAP Group as intended. Further details of the 2017 CAP Rights Issue were set out in the announcements of CAP dated 4 October 2017, 26 October 2017, 14 November 2017, 15 November 2017 and 18 December 2017 and the circular of CAP dated 26 October 2017 and the prospectus of CAP dated 27 November 2017, respectively.

Significant investments held, material acquisitions and disposals of subsidiaries

Repurchase and cancellation of notes

During the period from January to March 2018, CAP completed the purchase of and subsequently cancelled part of the outstanding Listed Notes in the aggregate principal amount of HK$110 million. As at 30 June 2019, the Listed Notes in the principal amount of HK$290 million remained outstanding.

Disposal of subsidiaries holding a parcel of land in Yulin city

On 23 August 2018, an indirect wholly-owned subsidiary of CAP entered into a sale and purchase agreement with an independent third party to sell the entire issued share capital of an indirect wholly-owned subsidiary of CAP at the consideration of RMB78 million (equivalent to approximately HK$88 million). This subsidiary indirectly held a parcel of land with a total site planned area of 73,333.51 square metres in Yulin City, the PRC. The disposal was completed on 10 October 2018, in which the CAP Group recorded a gain of approximately HK$40 million arising from the disposal. The net proceeds (after deducting other expenses in relation thereto and the relevant tax) arising from such disposal were approximately RMB72.7 million (equivalent to approximately HK$82.4 million), in which approximately HK$70 million was utilized for repayment of indebtedness and related interest and approximately HK$12.4 million was utilized for general working capital.

– II-12 –

APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Litigation

References were made to the announcements of CAP dated 11 January 2011, 22 May 2012, 19 June 2014, 4 July 2014, 13 January 2015, 14 January 2015, 28 May 2015, 8 January 2016, 11 January 2016, 24 May 2016, 31 August 2016, 19 April 2017, 11 May 2017 and 27 December 2018 in relation to the civil proceedings (the “ Legal Proceedings ”) in the PRC initiated by Ms. Wang Xiu Qun (“ Ms. Wang ”) and Wuhan Tian Jiu Industrial and Commercial Development Co., Ltd (“ Tian Jiu ”) as plaintiffs against CAP as defendant and joined Wuhan Baisazhou Agricultural By-Product Grand Market Company Limited (“ Baisazhou Agricultural ”) as third party.

Ms. Wang and Tian Jiu alleged that the share transfer agreements in relation to the acquisition of an aggregate of 90% interest in Baisazhou Agricultural by CAP from Ms. Wang as to 70% thereof and Tian Jiu as to 20% thereof (the “ Contended Agreements ”) were forged. They sought an order from the Higher People’s Court of Hubei Province, the PRC (the “ Hubei Court ”) that the Contended Agreements were void and invalid from the beginning and should be terminated and claimed against CAP and Baisazhou Agricultural all relevant profits of Baisazhou Agricultural which were attributable to Ms. Wang and Tian Jiu, together with costs of the Legal Proceedings.

CAP received the judgment from the Hubei Court in relation to the Legal Proceedings (the “ Hubei Court Judgment ”) in June 2014. By the Hubei Court Judgment, the Hubei Court dismissed the claims of Ms. Wang and Tian Jiu, and ordered Ms. Wang and Tian Jiu to bear the legal costs of the Legal Proceedings. Ms. Wang and Tian Jiu filed an appeal notice to the Supreme People’s Court of the PRC (the “ Supreme Court ”). On 13 January 2015, CAP received the judgment (the “ Beijing Judgment ”) handed down from the Supreme Court in relation to Ms. Wang and Tian Jiu’s appeal against the Hubei Court Judgment. The Supreme Court ordered that (i) the Hubei Court Judgment be revoked; (ii) the Contended Agreements were void; and (iii) acknowledged that the HK$1,156 million sale and purchase agreement (the “ SPA ”) shall be the actual agreement being performed by CAP, Ms. Wang and Tian Jiu.

In May 2015, Ms. Wang and Tian Jiu jointly commenced legal proceedings against the Ministry of Commerce (“ MOFCOM ”) of the PRC alleging that MOFCOM failed to discharge its statutory duties for handling their application submitted in January 2015 for revoking the certificate of approval and letter of approval in relation to the Contended Agreements (the “ Application ”). The cases were accepted by the Beijing Second Intermediate People’s Court (the “ Beijing Court ”) in May 2015. CAP and Baisazhou Agricultural then made an application to join the cases as third party. CAP received a judgment dated 31 December 2015 on 8 January 2016 issued by the Beijing Court, by which the Beijing Court demanded MOFCOM to handle the Application again within 30 days.

CAP received a decision (the “ Decision ”) on 23 May 2016 issued by MOFCOM dated 19 May 2016 to the effect, among other things, that its approval issued in November 2007 (the “ Approval ”) in relation to the Contended Agreements shall not be revoked and shall remain to be in force. In making the Decision, MOFCOM considered that the revocation of the Approval as requested by Ms. Wang and Tian Jiu may cause serious damage to the public interest.

– II-13 –

APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

Upon the making of the Decision by MOFCOM that the Approval shall not be revoked and shall remain in force in August 2016, CAP noted that Ms. Wang and Tian Jiu had brought another administrative proceedings (the “ Administrative Proceedings ”) to the Beijing Court. According to a writ dated 3 August 2016, Ms. Wang and Tian Jiu requested the Beijing Court to revoke the Decision and to order MOFCOM to make a decision to revoke the Approval. According to a notice issued by the Beijing Court dated 26 August 2016 together with the writ which was served to CAP on 30 August 2016, each of CAP and Baisazhou Agricultural has been added as third party by the Beijing Court to the Administrative Proceedings.

On 18 April 2017, CAP received the judgment of the Beijing Court dated 31 March 2017 (the “ 31 March Judgment ”) stating that the request made by Ms. Wang and Tian Jiu to revoke the Decision lacked both legal and factual basis and was not supported by the Beijing Court. Accordingly, the Beijing Court dismissed the application of Ms. Wang and Tian Jiu.

On 10 May 2017, CAP received a notice of appeal dated 8 May 2017 (the “ Notice of Appeal ”). By the Notice of Appeal, Ms. Wang and Tian Jiu appealed against the 31 March Judgment and requested for an order that (a) the 31 March Judgment be set aside and (b) MOFCOM to make a decision to revoke the Approval.

The hearing for the appeal against the 31 March Judgment took place on 30 August 2017. CAP received the judgment of the Beijing High People’s Court dated 20 December 2018 (the “ 20 December Judgment ”) on 24 December 2018. By the 20 December Judgment, the Beijing High People’s Court dismissed the appeal of Ms. Wang and Tian Jiu and upheld the ruling of the Beijing Second Intermediate People’s Court as set out in the 31 March Judgment. In other words, the Approval shall not be revoked and remain to be in force, and CAP continues to be the legal and beneficial owner of Baisazhou Agricultural under the PRC Laws.

Separately, in May 2015, in view of the Beijing Judgment, CAP issued a writ against Ms. Wang and Tian Jiu which was accepted by the Hubei Court. CAP sought an order from the Hubei Court that Ms. Wang and Tian Jiu shall assist Baisazhou Agricultural to discharge its contractual duties under the SPA to make the necessary filing with MOFCOM.

On 10 May 2017, Ms. Wang and Tian Jiu applied to the Hubei Court for a freezing order in respect of CAP’s 70% interest in Baisazhou Agricultural. According to the order of the Hubei Court dated 26 May 2017 (the “ 26 May Order ”), the Hubei Court granted a freezing order as against CAP’s 70% interest in Baisazhou Agricultural. CAP then applied for review of the 26 May Order which was dismissed by the Hubei Court on 12 June 2017.

On 26 May 2017, Ms. Wang and Tian Jiu applied to add a counterclaim for return of CAP’s 90% interest in Baisazhou Agricultural (70% for Ms. Wang and 20% for Tian Jiu).

On 10 April 2019, in light of the outcome of the legal proceedings against MOFCOM by Ms. Wang and Tian Jiu, CAP applied to the Hubei Court for withdrawal of its claim. On 11 April 2019, CAP’s application was granted. The counterclaim made by Ms. Wang and Tian Jiu on 26 May 2017 is still being heard by the Hubei Court.

– II-14 –

APPENDIX II FINANCIAL INFORMATION OF THE CAP GROUP

As advised by the PRC legal advisors of CAP, (i) the Supreme Court only ordered the Contended Agreements void, but it did not make any ruling regarding the acquisition; and (ii) the Beijing Judgment will not directly lead to any immediate change of ownership of Baisazhou Agricultural. CAP continues to be the legal owner of Baisazhou Agricultural until and unless the revocation of: (a) the Approval; and (b) the registration of the transfer of shareholding by the Hubei Province Administration for Industry and Commerce. CAP will take all necessary actions in the PRC as advised by its PRC legal advisors in response to the Beijing Judgment.

For other detailed information of the litigation cases, please refer to note 19 to the condensed consolidated financial statements in the interim report of CAP for the six months ended 30 June 2019.

Number of employees and remuneration policy

As at 31 December 2016, 2017 and 2018 and 30 June 2019, the CAP Group had 1,698, 1,355, 1,229 and 1,183 employees, respectively, approximately 98% of whom were located in the PRC. The CAP Group’s remuneration policy was reviewed periodically by the remuneration committee of CAP and the remuneration of the CAP Board is determined by reference to market terms, company performance, and individual qualifications and performance. The CAP Group aimed to recruit, retain and develop competent individuals who were committed to the CAP Group’s long-term success and growth. Remunerations and other benefits of the employees were reviewed annually in response to both market conditions and trends, and were based on qualifications, experience, responsibilities and performance. CAP has adopted a share option scheme on 3 May 2012 for the primary purpose of providing incentive to selected eligible persons to take up options for their contribution to the CAP Group. During the financial years ended 31 December 2016, 2017 and 2018 and six months ended 30 June 2019, no share option had been granted.

– II-15 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is an illustrative unaudited pro forma consolidated statement of financial position (the “ Unaudited Pro Forma Financial Information ”) of Wang On Group Limited (the “ Company ” and together with its subsidiaries, the “ Group ”), as enlarged by the proposed acquisition of a maximum of 54.83% equity interest in China Agri-Products Exchange Limited (“ CAP ”) and its subsidiaries (collectively, “ CAP Group ”), proposed acquisition of a maximum of 54.83% of the outstanding principal amount of the convertible notes issued by CAP (“ CN ”) and provision of loans of a principal amount of HK$710,000,000 to CAP for a period of three years for the purpose of refinancing the outstanding amount of the five-year 10.0% coupon bonds issued by CAP on 28 November 2014 (“ CAP Bonds ”) held by the Group (collectively, the “ Proposed Transactions ”). The Group as enlarged by the Proposed Transactions are hereafter collectively referred to as the (“ Enlarged Group ”). The Unaudited Pro Forma Financial Information of the Enlarged Group has been prepared by the directors of the Company (the “ Directors ”) in accordance with rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of illustrating the effect of the Proposed Transactions to the Group.

The Unaudited Pro Forma Financial Information presented below is prepared to illustrate the financial position of the Enlarged Group as if the Proposed Transactions had been completed on 31 March 2019.

The Unaudited Pro Forma Financial Information has been prepared by the Directors for illustrative purposes only, based on their judgments, estimations and assumptions, and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Proposed Transactions been completed on 31 March 2019 or any future date.

The Unaudited Pro Forma Financial Information is prepared based on the audited consolidated statement of financial position of the Group as at 31 March 2019, which have been extracted from the published 2019 annual report of the Company, and the audited consolidated statement of financial position of the CAP Group as at 31 December 2018, which have been extracted from annual report of CAP, after giving effect to the unaudited pro forma adjustments as described in the accompanying notes.

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

– III-1 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE ENLARGED GROUP

NON-CURRENT ASSETS Property, plant and equipment Investment properties Properties under development Intangible assets Investments in joint ventures Investment in associates Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Loans and interest receivables Prepayments, other receivables and other assets Deferred tax assets Total non-current assets CURRENT ASSETS Properties under development Properties held for sale Inventories Trade and bills receivables Loans and interest receivables Prepayments, deposits and other receivables Cost of obtaining contracts Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Tax recoverable Cash and cash equivalents Assets classified as held for sale Total current assets	The Group as at 31 March 2019 CAP Group as at 31 December 2018 HK$’000 HK$’000 Note 1 Note 1 1,292,739 52,768 1,367,500 3,165,921 1,355,318 – – 6,061 1,481,855 – 105,164 – 648,410 – 95,934 – 184,761 – 433,692 – 35,313 – 7,000,686 3,224,750 3,328,595 – 687,167 1,597,574 161,508 – 109,303 7,907 1,044,284 40,327 454,171 242,524 115,779 – 925,251 56,262 2,175 1,448 – 2,318,224 488,415 9,201,992 2,378,922 215,176 – 9,417,168 2,378,922	Pro-forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note 2(a) Note 2(b) Note 2(c) Note 2(d) (218) 3,579 210,392 (23,753) (785,002) (1,156) (529,627) (51,032) (8,030)	Unaudited pro forma of the Enlarged Group HK$’000 1,345,289 4,533,421 1,355,318 9,640 1,481,855 105,164 648,410 95,934 184,761 433,692 35,313
			10,228,797
			3,328,595 2,495,133 161,508 117,210 1,084,611 672,942 115,779 140,249 57,281 1,448 2,217,950
			10,392,706 215,176
			10,607,882

– III-2 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

CURRENT LIABILITIES Trade payables Other payables and accruals Deposits received and receipts in advance Contract liabilities Bonds Promissory notes Interest-bearing bank and other borrowings Provision for onerous contracts Tax payable Liabilities directly associated with the assets classified as held for sale Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Bonds Convertible bonds Deferred tax liabilities Other payables Deposits received Total non-current liabilities Net assets	The Group as at 31 March 2019 CAP Group as at 31 December 2018 HK$’000 HK$’000 Note 1 Note 1 195,570 – 340,796 687,232 7,623 88,961 1,963,026 652,362 – 844,055 – 376,000 2,124,043 328,036 18,613 – 260,461 73,639 4,910,132 3,050,285 361 – 4,910,493 3,050,285 4,506,675 (671,363) 11,507,361 2,553,387 3,397,719 120,003 – 182,192 – 234,747 36,678 421,081 13,184 – 54,254 – 3,501,835 958,023 8,005,526 1,595,364	Pro-forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note 2(a) Note 2(b) Note 2(c) Note 2(d) 39 (7,913) 22,976 (867,031) (16,687) 7,996 (133,096) 63,573	Unaudited pro forma of the Enlarged Group HK$’000 195,570 1,020,154 96,584 2,615,388 – 376,000 2,452,079 18,613 334,100
			7,108,488 361
			7,108,849
			3,499,033
			13,727,830
			3,517,722 165,505 109,647 521,332 13,184 54,254
			4,381,644
			9,346,186

– III-3 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

EQUITY Equity attributable to owners of the parent Share Capital Reserve Non-controlling interests Total Equity	The Group as at 31 March 2019 CAP Group as at 31 December 2018 HK$’000 HK$’000 Note 1 Note 1 178,675 99,531 5,712,371 1,109,440 5,891,046 1,208,971 2,114,480 386,393 8,005,526 1,595,364	Pro-forma adjustments HK$’000 HK$’000 HK$’000 HK$’000 Note 2(a) Note 2(b) Note 2(c) Note 2(d) (99,531) 120,550 (1,037,590) 9,403 (5,061) 15,306 739,434 5,754 (2,969)	Unaudited pro forma of the Enlarged Group HK$’000 178,675 5,909,113
			6,087,788
			3,258,398
			9,346,186

– III-4 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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

Notes:

1. The consolidated financial information of the Group is extracted from the annual report of the Company for the year ended 31 March 2019.

The financial year end of CAP is 31 December. As described in note 2 of the interim report of CAP for the six months ended 30 June 2019, CAP has adopted the new and revised Hong Kong Financial Reporting Standards (“ HKFRSs ”) that are mandatorily effective for annual periods beginning on or after 1 January 2019. However, the financial year end of the Company is 31 March and the Company will only adopt these new and revised HKFRSs from 1 April 2019. For the purpose of preparation of the Unaudited Pro Forma Financial Information in a manner consistent with both the format and accounting policies adopted by the Company in its consolidated financial statements for the year ended 31 March 2019, the Directors prepared the Unaudited Financial Information based on the consolidated financial information of CAP Group for the year ended 31 December 2018, which is extracted from the annual report of CAP for the year ended 31 December 2018.

1. Notes to the pro forma adjustments

2. (a) The adjustment represents the fair value adjustment of identified assets and liabilities arising from purchase price allocation upon completion of the Proposed Transactions. The identifiable assets and liabilities of the CAP Group will be accounted for in the consolidated financial statements of the Enlarged Group at their fair values under the acquisition method of accounting in accordance with Hong Kong Financial Reporting Standard (“ HKFRS ”) 3 (Revised) Business Combinations . For the illustrative purpose of the unaudited pro forma consolidated statement of financial position of the Enlarged Group, the allocation of the purchase consideration is determined based on the estimates of the fair values of the identifiable assets and liabilities of the CAP Group made by the directors of the Company, and by reference to a valuation report issued by RHL Appraisal Limited (the “ Valuer ”), an independent professionally qualified valuer, to measure the fair value of each of the identified assets and liabilities of CAP Group as at 31 December 2018.

The fair values of the identifiable assets and liabilities of CAP Group, as extracted from the valuation reports prepared by the Valuer are as follow:

	Carrying value		Fair value
	as at		as at
	31 December 2018	Adjustment	31 December 2018
	HK$’000	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	52,768	(218)	52,550
Investment properties	3,165,921		3,165,921
Intangible assets	6,061	3,579	9,640
Total non-current assets	3,224,750		3,228,111
CURRENT ASSETS
Stock of properties	1,597,574	210,392	1,807,966
Trade and bills receivables	7,907		7,907
Loans and interest receivables	40,327		40,327
Prepayments, deposits and other receivables	242,524		242,524
Financial assets at fair value through profit or loss	2,175		2,175
Cash and cash equivalents	488,415		488,415
Total current assets	2,378,922		2,589,314

– III-5 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

	Carrying value		Fair value
	as at		as at
	31 December 2018	Adjustment	31 December 2018
	HK$’000	HK$’000	HK$’000
CURRENT LIABILITIES
Other payables and accruals	776,193	39	776,232
Contract liabilities	652,362		652,362
Bonds	844,055	22,976	867,031
Promissory notes	376,000		376,000
Interest-bearing bank and other borrowings	328,036		328,036
Tax payable	73,639		73,639
Total current liabilities	3,050,285		3,073,300
NET CURRENT LIABILITIES	(671,363)		(483,986)
TOTAL ASSETS LESS CURRENT LIABILITIES	2,553,387		2,744,125
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings	120,003		120,003
Bonds	182,192	(16,687)	165,505
Convertible bonds	234,747	7,996	242,743
Deferred tax liabilities	421,081	63,573	484,654
Total non-current liabilities	958,023		1,012,905
Net assets	1,595,364		1,731,220
Non-controlling interests	386,393	15,306	401,699

– III-6 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

• (b) The adjustment represents the elimination of the share capital of CAP, CN, derivative financial instruments associated with the CN acquired and pre-acquisition reserves of CAP Group and recognition of non-controlling interests, assuming that the Proposed Transactions had taken place on 31 March 2019. The Proposed Transactions will result in the Group’s interest in CAP raise beyond 51% and as a result, the assets and liabilities of CAP Group will be consolidated into the consolidated statement of financial position of the Group.

A pro forma gain on bargain purchase arising on the date of acquisition of CAP Group is calculated as follows:

Aggregated cash consideration for the Proposed Transactions Cash consideration for the acquisition of CAP shares Cash consideration for the acquisition of CN Less: Pro forma assumed fair value of the identifiable net assets of the CAP Group Add: CN acquired Less: derivative financial instruments associated with the CN acquired Less: recognition of non-controlling interest Gain on bargain purchase Gain on bargain purchase attributable to: Owners of the Company Non-controlling interests	HK$’000 496,596 33,031 1,329,521 133,096 (1,156) (600,567)	HK$’000 529,627
		860,894
		331,267
		192,400 138,867
		331,267

The gain on bargain purchase arising from the Proposed Transactions is credited to profit or loss. Actual goodwill or gain on bargain purchase arising from the Proposed Transactions depend on fair value of net identifiable assets of the CAP Group at the completion date and shall be different to the amount calculated in the above table.

• (c) The adjustments represent the elimination of the CAP Bonds held by the Group and outstanding interest associated with CAP Bonds held by the Group as at 31 March 2019.

• (d) This adjustment represents the estimated direct legal and professional costs related to the Proposed Transactions, among others, the preparation of this Circular, which amounts to approximately HK$8,030,000.

• (e) No other adjustment has been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group and CAP Group entered into subsequent to 31 March 2019 and 31 December 2018, respectively.

• (f) Among the new and revised HKFRSs that are mandatorily effective for the annual period beginning on or after 1 January 2019, other than the adoption of HKFRS 16 Leases which is expected to have an impact to the financial information of the Enlarged Group by recognising right-of-use assets and corresponding lease liabilities in respect of the non-cancellable leases, the new and revised HKFRSs are not expected to have any significant impact to the financial information of the Enlarged Group.

– III-7 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT IN THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

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

==> picture [86 x 70] intentionally omitted <==

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

11 November 2019

To the Directors of Wang On Group Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Wang On Group Limited (the “ Company ”) and its subsidiaries (hereinafter collectively referred to as the “ Group ”) as enlarged by the proposed acquisition of a maximum of 54.83% equity interest in China Agri-Products Exchange Limited (“ CAP ”) and its subsidiaries (collectively, “ CAP Group ”), proposed acquisition of a maximum of 54.83% of the outstanding principal amount of the convertible notes of CAP and provision of loans of a principal amount of HK$710,000,000 to CAP for a period of three years for the purpose of refinancing the outstanding amount of the five-year 10.0% coupon bonds issued by CAP on 28 November 2014 held by the Group (collectively, the “ Proposed Transactions ”) by the directors of the Company (the “ Directors ”) for illustrative purpose only.

The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of financial position of the Group as enlarged by the Proposed Transactions as at 31 March 2019 and the related notes set out on pages III-2 to III-7 of the circular dated 11 November 2019 (the “ Circular ”) issued by the Company (the “ Unaudited Pro Forma Financial Information ”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on page III-1 of the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Proposed Transactions on the Group’s financial position as at 31 March 2019 as if the Proposed Transactions had taken place on 31 March 2019. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Company’s published annual report for the year ended 31 March 2019. Information about the CAP Group’s financial position as at 31 December 2018 has been extracted by the Directors from CAP’s published annual report for the year ended 31 December 2018.

– III-8 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Directors’ responsibility for the Unaudited Pro Forma Financial Information

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

Our independence and quality control

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

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

Reporting Accountants’ responsibilities

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

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and 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.

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 Proposed Transactions on unadjusted financial information of the Group as if the Proposed Transactions had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the transaction would have been as presented.

– III-9 –

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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 transaction, and to obtain sufficient appropriate evidence about whether:

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

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

The procedures selected depend on the reporting 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.

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

– III-10 –

GENERAL INFORMATION

APPENDIX IV

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) Directors’ interests

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 10 to the Listing Rules, to be notified to the Company and the Stock Exchange:

Long positions in the Shares:

							Approximate
							percentage
							of the
							Company’s
							total issued
	Number of Shares		held, capacity	and nature of interest			share capital
	Personal	Family	Corporate	Other
Name of Directors	interest	interest	interest	interest		Total	(Note f)
							%
Mr. Tang Ching Ho	28,026,339	28,026,300	4,938,375,306	4,989,928,827	9,984,356,772		57.39
(“Mr. Tang”)		(Note a)	(Note b)	(Note c)
Ms. Yau Yuk Yin	28,026,300	4,966,401,645	–	4,989,928,827	9,984,356,772		57.39
(“Ms. Yau”)		(Note d)		(Note e)

– IV-1 –

GENERAL INFORMATION

APPENDIX IV

Notes:

• (a) Mr. Tang was taken to be interested in those Shares in which his spouse, Ms. Yau, was interested.

• (b) Mr. Tang was taken to be interested in those Shares in which Caister Limited, a company which is wholly and beneficially owned by him, was interested. Mr. Tang is also the sole director of Caister Limited.

• (c) Mr. Tang was taken to be interested in those Shares by virtue of being the founder of a discretionary trust, namely Tang’s Family Trust.

• (d) Ms. Yau was taken to be interested in those Shares in which her spouse, Mr. Tang, was interested.

• (e) Ms. Yau was taken to be interested in those Shares by virtue of being a beneficiary of Tang’s Family Trust.

• (f) The percentage represented the number of Shares over the total issued share capital of the Company as at the Latest Practicable Date was 17,397,520,047 Shares.

Long positions in the underlying shares of shares options of EOG, an associated corporation of the Company:

						Approximate
						percentage of
						EOG’s total
		Exercise	Number of		Number of	issued share
		price	share options	Exercisable	underlying	capital
Name of Director	Date of grant	per share	outstanding	period	shares	(Note)
		HK$				%
Mr. Chan Chung Hong,	23.2.2018	0.48	4,600,000	23.2.2018–	4,600,000	0.83
Thomas				22.2.2025

Note: The percentage represented the number of shares over the total issued share capital of EOG as at the Latest Practicable Date was 556,432,500 Shares.

– IV-2 –

GENERAL INFORMATION

APPENDIX IV

• (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, as at the Latest Practicable Date, no person 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:

Long Positions in the Shares:

			Approximate
			percentage of
			the Company’s
			total issued
			share capital
Name of Shareholders	Capacity	Number of Shares	(Note 5)
			%
Caister Limited_(Note 1)_	Beneficial owner	4,938,375,306	28.39
Accord Power Limited	Beneficial owner –	4,989,928,827	28.68
(Note 2)	Tang’s Family Trust
Fiducia Suisse SA_(Note 3)_	Interest of controlled	4,989,928,827	28.68
	corporation – Trustee
Mr. David Henry	Interest of controlled	4,989,928,827	28.68
Christopher Hill_(Note 3)_	corporation
Ms. Rebecca Ann Hill	Family interest	4,989,928,827	28.68
(Note 4)

Notes:

• (1) Caister Limited is beneficially wholly owned by Mr. Tang, who is an executive Director and the sole director of Caister Limited.

• (2) Accord Power Limited is wholly owned by Fiducia Suisse SA in its capacity as the trustee of Tang’s Family Trust. Accordingly, Fiducia Suisse SA was taken to be interested in those Shares held by Accord Power Limited.

• (3) Fiducia Suisse SA is the trustee of the Tang’s Family Trust. Fiducia Suisse SA is wholly owned by Mr. David Henry Christopher Hill, and accordingly, Mr. David Henry Christopher Hill was taken to be interested in those Shares in which Fiducia Suisse SA was interested.

• (4) Ms. Rebecca Ann Hill is the spouse of Mr. David Henry Christopher Hill and was therefore taken to be interested in those Shares in which her spouse, Mr. David Henry Christopher Hill, was interested.

• (5) The percentage represented the number of Shares over the total issued share capital of the Company as at the Latest Practicable Date of 17,397,520,047 Shares.

– IV-3 –

GENERAL INFORMATION

APPENDIX IV

3. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

• (i) There is no contract or arrangement entered into by any member of the Enlarged Group, subsisting as at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Enlarged Group as a whole.

• (ii) As at the Latest Practicable Date, none of the Directors or their respective associates had any interest, direct or indirect, in any assets which had been, since 31 March 2019, being the date on 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 Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Mr. Chan Chun Hong, Thomas, the managing Director, is currently the chairman and managing director of EOG, which has been principally engaged in financing business since November 2015, which were overlapping with the financing business of the Group, and thus may compete, or is likely to compete, either directly or indirectly, with the financing business of the Group.

For safeguarding the interests of the Group, the independent non-executive Directors and the audit committee of the Company would on a regular basis review the business and operational results of the Group to ensure, inter alia , that the Group’s financing business is and continues to be run on the basis that they are independent of, and at arm’s length from, those operated by members of EOG.

Save as disclosed above, 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.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, any service contract with the Company or any other member(s) of the Group (excluding contracts expiring or which may be terminated by the Company within a year without payment of any compensation (other than statutory compensation)).

6. LITIGATION

Save as disclosed in the paragraph headed “Management discussion and analysis of the CAP Group – Financial Review – Litigation” in Appendix II to this circular, as at the Latest Practicable Date, no member of the Enlarged 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 Enlarged Group.

– IV-4 –

GENERAL INFORMATION

APPENDIX IV

7. MATERIAL CONTRACTS

The WOG Group

Within the two years immediately preceding 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 WOG Group which are or may be material:

• (a) the Loan Agreement entered into by Double Leads;

• (b) a loan agreement dated 24 September 2019 entered into between Fulling Limited (“ Fulling ”), an indirect wholly-owned subsidiary of the Company, as the lender, and independent third party customers, as the borrowers, in relation to the grant of a secured loan in the principal amount of HK$80.0 million for a term of two months with a monthly interest of HK$1.35 million for the first month and a monthly interest of HK$1.2 million for the second month, the details of which were set out in the announcement of the Company dated 24 September 2019;

• (c) on 20 September 2019, the Company and Twist Pioneer Limited, an indirect wholly-owned subsidiary of WOP, placed an order to acquire in aggregate US$27.0 million 11.50% senior notes due 26 September 2021 issued by Zhongliang Holdings Group Company Limited, a company incorporated in the Cayman Islands whose shares are listed and traded on the main board of the Stock Exchange (Stock Code: 2772), in the secondary market for a total consideration of approximately US$26.77 million (equivalent to approximately HK$210.41 million), the details of which were set out in the announcement of the Company dated 20 September 2019;

• (d) a subscription form dated 18 April 2019 and executed by each of Trade Capture Investments Limited (“ Trade Capture ”), an indirect wholly-owned subsidiary of the Company, and accepted by Rockpool Capital SPC in respect of the investment of an aggregate of US$17.5 million in Class C Shares in Rockpool Alpha Credit Strategy SP, a segregated portfolio created by Rockpool Capital SPC, together with a related side letter dated 18 April 2019 entered into (as supplemented on 30 August 2019) between, among others, Trade Capture, Key High Limited (“ Key High ”) and Rockpool Capital SPC, the details of which were set out in the announcement of the Company jointly issued with WYT dated 18 April 2019;

• (e) a renewal agreement dated 31 January 2019 entered into between Fulling, as the lender, and an independent third party customer, as the borrower, in relation to the renewal of a secured loan of a principal amount of HK$100.0 million for further three months at an interest rate of 18.0% per annum, the details of which were set out in the announcement of the Company dated 31 January 2019; and

• (f) two loan agreements dated 19 January 2018 entered into between Fulling, as the lender, and an independent third party customer, as the borrower, in relation to the grant of two secured loans of an aggregate principal amount of HK$145.0 million for a term of 12 months with an interest rate of 9.25% per annum, the details of which were set out in the announcement of the Company dated 19 January 2018.

– IV-5 –

GENERAL INFORMATION

APPENDIX IV

The WOP Group

Within the two years immediately preceding the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of the WOP Group which are or may be material:

• (a) the share sale agreement dated 21 June 2019 entered into between Caesar Holding II Limited (“ Caesar ”), Bancroft Ville Limited (“ Bancroft ”), an indirect wholly-owned subsidiary of WOP, and Milesville in respect of the disposal of 50% equity interest in Milesville (the “ Disposal ”) for an aggregate consideration of approximately HK$39.0 million; a share subscription agreement dated 21 June 2019 entered into between Caesar, Bancroft and Milesville in relation to the subscription of new shares in Milesville by each of Caesar and Bancroft for an aggregate consideration of approximately HK$129.8 million; and a lease of certain parts of a property comprising the commercial accommodation of the complex named “The Parkside” located at Tong Chun Street, Tseung Kwan O together with 49 car parking spaces and 5 motor cycle parking spaces on the basement floor (the “ Tong Chun Street Property ”) dated 4 July 2019, entered into between Hermitage Investments, an indirect wholly-owned subsidiary of Milesville and the sole legal beneficial owner of such property, and Wang On Majorluck Limited, an affiliate of WOP, for a term commencing tentatively on 5 July 2019 and 1 December 2019, respectively, and expiring on 30 June 2030 at an aggregate rent of approximately HK$402.7 million, the details of which were set out in the announcement dated 21 June 2019 jointly issued by the Company and WOP;

• (b) a provisional agreement (as amended and supplemented by a supplemental deed dated 28 June 2019 entered into between Milesville (then an indirect wholly-owned subsidiary but now a joint venture indirectly owned as to 50% by WOP after the Disposal) and Topaz dated 30 April 2019 entered into between Milesville, as the purchaser, and Topaz, as the vendor, in relation to the acquisition of the entire issued share capital in, and the assignment of the shareholder loan of, Pearl Limited (carrying on business in Hong Kong as Pearl Park Limited) holding the Tong Chun Street Property through Hermitage Investments, at a consideration of HK$780 million (subject to adjustment), the details of which were set out in the announcement jointly issued by the Company and WOP dated 1 May 2019 and the circular of the Company dated 26 July 2019;

• (c) a tenancy agreement dated 2 May 2019 entered into between Wai Yuen Tong (Retail) Limited (“ WYTR ”), as the tenant, and Vincent Investments Limited (“ Vincent Investments ”), an indirect wholly-owned subsidiary of WOP, as the landlord, in respect of the lease of a property located at Nathan Road, Kowloon for a term of three years commencing from 1 May 2019 and expiring on 30 April 2022 for a monthly rental of HK$0.38 million (exclusive of rates and management charge), the details of which were set out in the announcement jointly issued by WYT and WOP dated 2 May 2019;

– IV-6 –

GENERAL INFORMATION

APPENDIX IV

• (d) a binding term sheet dated 29 April 2019 executed by WOP and Metal Jacket Holding III Limited (“ KKR ”) in relation to, among other things, (i) the sale of 50% equity interest in Oriental Sunlight Limited (“ Oriental Sunlight ”), an indirect wholly-owned subsidiary of WOP, by WOP or its wholly-owned subsidiary (“ WOP JV Partner ”) as vendor, and KKR or an affiliate of KKR which is directly or indirectly controlled by funds and/or investment vehicles managed and/or advised by Kohlberg Kravis Roberts & Co. L.P. (“ KKR JV Partner ”) as purchaser; and (ii) the subscription of new shares in Oriental Sunlight by each of the WOP JV Partner and the KKR JV Partner for an aggregate consideration of approximately HK$180.0 million; (iii) the formation of a joint venture between the WOP JV Partner and the KKR JV Partner in respect of Oriental Sunlight; and (iv) the grant of a lease of certain parts of the property held by Oriental Sunlight indirectly (such property as referred to in paragraph (g) below) to an affiliate of WOP by Oriental Sunlight, details of which were set out in the announcement of the Company jointly issued with WOP dated 29 April 2019;

• (e) a preliminary sale and purchase agreement dated 26 April 2019 entered into between Cannex Limited, an indirect wholly-owned subsidiary of WOP, as the purchaser, and First Trading Company Limited, as the vendor, in relation to the sale and purchase of properties comprising of 45 workshops and 18 car parking spaces of the building known as “EW International Tower” at a consideration of HK$306.8 million, the details of which were set out in the announcement of the Company dated 26 April 2019;

• (f) a provisional sale and purchase agreement (as amended by a supplemental agreement dated 18 April 2019) dated 18 April 2019 entered into between City Target Limited, an indirect wholly-owned subsidiary of WOP, as the vendor, and Globe Power Limited, as the purchaser, in relation to the acquisition of Shop 1 & 2 on the Ground Floor, “726 Nathan Road” No. 726 Nathan Road, Kowloon at a consideration of HK$135.0 million, the details of which were set out in the announcement of the Company dated 18 April 2019;

• (g) the offer submitted by Wellion Limited, an indirect wholly-owned subsidiary of WOP, in the tender process for the acquisition of the retail podium comprising car parking spaces and the retail podium of the ground floor and the level one of the residential accommodation known as “Lake Silver” from Kowloon-Canton Railway Corporation at a total consideration of HK$653 million, the details of which were set out in the announcement of the Company jointly issued with WOP dated 24 January 2019;

• (h) a sale and purchase agreement dated 19 April 2018 entered into between Silver Surplus Limited, an indirect wholly-owned subsidiary of WOP, as the vendor, and Kam Wah Ever Rich Limited, as the purchaser, in relation to the sale of 30% of the entire issued share capital of, and assignment of the shareholder loan of, Golden Noble Investments Limited holding a property development project at a consideration of HK$103.8 million, the details of which were set out in the announcement of the Company jointly issued with WOP dated 19 April 2018;

– IV-7 –

GENERAL INFORMATION

APPENDIX IV

• (i) a provisional sale and purchase agreement dated 12 April 2018 entered into between Joyful Lake Limited, an indirect wholly-owned subsidiary of WOP, as the vendor, and Fong’s Manufacturers Company Limited, as the purchaser, in relation to the sale and assignment of the entire issued share capital of, and assignment of the shareholder loan of, PT Harvest Holdings Limited holding a commercial properties at an initial consideration of approximately HK$324.5 million, the details of which were set out in the announcement of the Company jointly issued with WOP dated 12 April 2018;

• (j) a provisional sale and purchase agreement dated 29 March 2018 entered into between Goldland Enterprises Limited, as the purchaser, and East Run Investments Limited (“ East Run ”), an indirect wholly-owned subsidiary of WOP, as the vendor, in relation to the disposal of share, and assignment of the relevant shareholder loan, of a subsidiary of WOP holding a retail property at a consideration of approximately HK$83.8 million, the details of which were set out in the announcement of the Company dated 29 March 2018; and

• (k) a sale and purchase agreement dated 7 February 2018 entered into between Guidepost Investments Limited (“ Guidepost ”), as the purchaser, and East Run, as the vendor, in relation to the sale of share(s), and assignment of the relevant shareholder loan(s), of four respective subsidiaries of WOP holding four retail properties at a consideration of approximately HK$350.0 million, the details of which were set out in the announcement jointly issued by WOP and WYT dated 7 February 2018 and the circular of WOP dated 29 March 2018.

The WYT Group

Within the two years immediately preceding the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of the WYT Group which are or may be material:

• (a) the Loan Agreement entered into by Winning Rich;

• (b) on 3 June 2019, Suntech Investments Limited, an indirect wholly-owned subsidiary of WYT, placed an order to acquire US$4.0 million 7.875% senior notes due 15 February 2022 issued by Sunac China Holdings Limited, a company incorporated in the Cayman Islands whose shares are listed and traded on the main board of the Stock Exchange (Stock Code: 1918), in the secondary market for a total consideration of approximately US$4.08 million (equivalent to approximately HK$32.10 million), the details of which were set out in the announcement of WYT dated 18 April 2019;

• (c) a formal agreement dated 17 May 2019 and a conditional provisional agreement dated 28 March 2019 entered into between Precious Investments Limited, an indirect whollyowned subsidiary of WYT, as the vendor, and Gloryway Capital Investment Limited, as the purchaser, in relation to the disposal of the property located at Sai Yeung Choi Street South, Kowloon at a consideration of HK$102.8 million subject to the existing lease expiring on 31 January 2022, the details of which were set out in the announcement of WYT dated 28 March 2019 and the circular dated 24 May 2019;

– IV-8 –

GENERAL INFORMATION

APPENDIX IV

• (d) a conditional provisional agreement dated 9 May 2019 entered into between Guidepost, an indirect wholly-owned subsidiary of WYT, as the vendor, and Rich Faith Holdings Limited, as the purchaser, in relation to the disposal of the entire issued share capital of, and the assignment of the shareholder loan in, Shiny World Investment Limited, an indirect wholly-owned subsidiary of WYT, holding a retail shop at a consideration of HK$52.8 million, the details of which were set out in the announcement of WYT dated 9 May 2019;

• (e) a tenancy agreement dated 2 May 2019 entered into between WYTR, an indirect subsidiary of WYT, as the tenant, and Vincent Investments, as the landlord, in respect of the lease of a property located at Nathan Road which has a total value of the right of use of approximately HK$12.06 million, for a term of three years commencing from 1 May 2019 and expiring on 30 April 2022 for a monthly rental of HK$0.38 million (exclusive of rates and management charge), the details of which were set out in the announcement jointly issued by WYT and WOP dated 2 May 2019;

• (f) a conditional provisional agreement dated 30 April 2019 entered into between Guidepost, as the vendor, and an individual person, as the purchaser, in relation to the disposal of the entire issued share capital of, and the assignment of the shareholder loan in, Wang To Investments Limited, an indirect wholly-owned subsidiary of WYT, holding a retail shop at a consideration of HK$47.0 million, the details of which were set out in the announcement of WYT dated 30 April 2019;

• (g) a subscription form dated 18 April 2019 and executed by Key High, an indirect whollyowned subsidiary of WYT, and accepted by Rockpool Capital SPC in respect of the investment of an aggregate of US$7.5 million in Class C Shares in Rockpool Alpha Credit Strategy SP, a segregated portfolio created by Rockpool Capital SPC, together with a related side letter dated 18 April 2019 entered into between, among others, Trade Capture, Key High and Rockpool Capital SPC, the details of which were set out in the announcement of WYT jointly issued with the Company dated 18 April 2019;

• (h) a conditional provisional sale and purchase agreement dated 18 April 2019 and a binding supplemental agreement dated 19 April 2019 entered into between Sky Success Limited (“ Sky Success ”), an indirect wholly-owned subsidiary of WYT, as the vendor, and Asia Bright Enterprises Limited, as the purchaser, in relation to the disposal of the property located at To Kwa Wan Road at a consideration of HK$60.5 million and a licence agreement dated 18 April 2019 entered into between Sky Success and the purchaser for the grant of a right to Sky Success to use certain part of the shop for a term of 12 months commencing from the date of completion of such disposal (i.e. on 28 June 2019) by setting aside HK$6.05 million as a security deposit which will be refunded to Sky Success upon delivery of vacant possession of such property to the purchaser, the details of which were set out in the announcement of WYT dated 19 April 2019;

– IV-9 –

GENERAL INFORMATION

APPENDIX IV

• (i) a conditional provisional sale and purchase agreement dated 28 February 2019 entered into between Guidepost, as the vendor, and individual third parties, as the purchaser, in relation to the disposal of the entire issued share capital of, and the assignment of the shareholder loan of, Union Target Limited holding a retail property at a consideration of HK$53,088,000, the details of which were set out in the announcement of WYT dated 28 February 2019;

• (j) a loan agreement dated 18 September 2018 entered into between Able Trend Limited (“ Able Trend ”), an indirect wholly-owned subsidiary of WYT, as the lender, and EOG, as the borrower, pursuant to which Able Trend agreed to grant an unsecured revolving credit facility of not exceeding a sum of HK$65.0 million at an interest rate of 7.0% per annum for a term of 36 months commencing from 18 September 2018, the details of which were set out in the announcement of WYT dated 18 September 2018; and

• (k) a sale and purchase agreement dated 7 February 2018 entered into between Guidepost, as the purchaser, and East Run, as the vendor, in relation to the sale of share(s), and assignment of the relevant shareholder loan(s), of four respective subsidiaries of WOP holding four retail properties at the consideration of approximately HK$350.0 million, the details of which were set out in the announcement jointly issued by WOP and WYT dated 7 February 2018 and the circular of WYT dated 29 March 2018.

The CAP Group

Within the two years immediately preceding the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of the CAP Group which are or may be material:

• (a) the Loan Agreement; and

• (b) a sale and purchase agreement dated 23 August 2018 entered into between Super Treasure Holdings Limited, an indirect wholly-owned subsidiary of CAP, as the vendor, and an individual third party, as the purchaser, in relation to the disposal of the entire issued share capital of, and the assignment of the shareholder loan of, Jackmax Investment Limited holding a parcel of land at a consideration of RMB78 million (equivalent to approximately HK$89.6 million), the details of which were set out in the announcement of CAP dated 23 August 2018.

– IV-10 –

GENERAL INFORMATION

APPENDIX IV

8. EXPERT AND CONSENT

The following is the qualification of the expert whose statements have been included in this circular:

Name Qualification

Ernst & Young Certified Public Accountants

The above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter or opinion or report or reference to its name in the form and context in which it appears.

As at the Latest Practicable Date, the above expert had not had any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert had not had any direct or indirect interests in any assets which have been, since 31 March 2019 (being the date on which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Enlarged Group, or which are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

9. 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. Mak Yuen Ming, Anita. She is an associate member of both The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (c) The share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited, Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The English texts of this circular and the accompanying form of proxy shall prevail over their Chinese texts in case of inconsistencies.

– IV-11 –

GENERAL INFORMATION

APPENDIX IV

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Suite 3202, 32/F., Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong on any Business Day from the date of this circular up to and including 27 November 2019:

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

• (b) the material contracts disclosed in the paragraph under the heading “Material Contracts” in this Appendix;

• (c) the letter of consent referred to in the paragraph headed “Expert and Consent” in this Appendix;

• (d) the annual reports of CAP for the three financial years ended 31 December 2016, 2017 and 2018 and the interim report of CAP for the six months ended 30 June 2019;

• (e) the report by the auditors on the unaudited pro forma consolidated financial information of the Enlarged Group as set out in Appendix III to this circular;

• (f) the annual reports of the Company for the three financial years ended 31 March 2017, 2018 and 2019;

• (g) a copy of the circular dated 26 July 2019 issued by the Company pursuant to the requirements set out in Chapter 14 of the Listing Rules; and

• (h) this circular.

– IV-12 –

NOTICE OF THE SGM

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WANG ON GROUP LIMITED ( 宏安集團有限公司 )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of Wang On Group Limited (宏安集團有限公司)[] (the “ Company* ”) will be held at 20/F., Alexandra House, 18 Chater Road, Central, Hong Kong on Wednesday, 27 November 2019 at 10:30 a.m. for the purpose of considering and, if thought fit, passing, with or without amendment, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (a) the (i) conditional voluntary partial cash offer to be made by Kingston Securities Limited (“ Kingston Securities ”) on behalf of Goal Success Investments Limited (“ Offeror ”), an indirect wholly-owned subsidiary of Wai Yuen Tong Medicine Holdings Limited (“ WYT ”, a non wholly-owned subsidiary of the Company), to the shareholders of China Agri-Products Exchange Limited (“ CAP ”) to acquire such number of ordinary shares of HK$0.01 each in the issued share capital of CAP (“ CAP Shares ”) which would result in the Offeror and parties acting in concert with it holding a maximum of 75% of the CAP Shares in issue (the “ Partial Share Offer ”); and (ii) conditional voluntary partial cash offer to be made by Kingston Securities on behalf of the Offeror to the holders of the 7.5% convertible notes due 2021 issued by CAP on 19 October 2016 (the “ Convertible Notes ”) to acquire a maximum of 54.83% of the outstanding principal amount of the Convertible Notes subject to adjustment in the event of a change in the issued share capital of CAP (the “ Partial CN Offer ”, and together with the Partial Share Offer, the “ Partial Offers ”), the details of which are set out in the announcement dated 26 September 2019 jointly issued by the Company, the Offeror, WYT, CAP and Easy One Financial Group Limited, and the transactions contemplated thereunder, be and are hereby approved and confirmed; and

3. (b) any director of the Company be and is authorised to take, on behalf of the Company, all steps necessary or expedient in their opinion to implement and/or give effect to the terms of the Partial Offers and the transactions contemplated thereunder.”

• For identification purpose only

– SGM-1 –

NOTICE OF THE SGM

1. “ THAT :

2. (a) the entering of the loan agreements both dated 26 September 2019 between CAP as the borrower and (i) Double Leads Investments Limited, an indirect wholly-owned subsidiary of the Company; and (ii) Winning Rich Investments Limited, an indirect wholly-owned subsidiary of WYT, as the lenders (the “ Loan Agreement ”, a copy of which has been produced to this meeting marked “A” and initialled by the chairman of the meeting for identification purpose), in relation to the grant of an unsecured and interest-bearing loan in the aggregate principal amount of HK$710.0 million for a period of three years, and the transactions contemplated thereunder, be and are hereby approved and confirmed; and

3. (b) any director of the Company be and is authorised to take, on behalf of the Company, all steps necessary or expedient in their opinion to implement and/or give effect to the terms of the Loan Agreement and the transactions contemplated thereunder.”

By Order of the board of WANG ON GROUP LIMITED (宏安集團有限公司)[*] Mak Yuen Ming, Anita Company Secretary

Hong Kong, 11 November 2019

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

• For identification purpose only

– SGM-2 –

NOTICE OF THE SGM

Notes:

1. The register of members of the Company will be closed from Friday, 22 November 2019 to Wednesday, 27 November 2019, both dates inclusive, during which period no transfer of shares of the Company (“ Shares ”) will be registered. In order to be entitled to attend and vote at the SGM, all transfers of Shares accompanied by the relevant share certificates and properly completed and signed transfer forms must be lodged with the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Thursday, 21 November 2019.

2. Any member of the Company (“ Member ”) entitled to attend and vote at the SGM is entitled to appoint another person as his proxy to attend and vote instead of him. A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the SGM. A proxy need not be a Member.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

4. 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 or authority, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, Level 54, Hopewell Centre, 183 Queen’s Road East, 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.

5. Where there are joint holders of any shares, 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 holders.

6. The above resolutions will be voted by way of a poll at the SGM.

– SGM-3 –