Yida China Holdings Limited — Proxy Solicitation & Information Statement 2021

May 31, 2021

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, other licensed corporation, bank manager, solicitor, professional accountant or professional adviser.

If you have sold or transferred all your shares in Yida China Holdings Limited, 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.

YIDA CHINA HOLDINGS LIMITED 億達中國控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3639)

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY

Capitalised terms on this cover page shall have the same meanings as those defined in “Definitions” in this circular, unless the context requires otherwise.

A letter from the Board is set out on pages 6 to 22 of this circular.

The Disposal and the Equity Transfer Agreement have been approved by way of written shareholders’ approval obtained from Jiayou in lieu of a general meeting of the Company pursuant to Rule 14.44 of the Listing Rules. This circular is being despatched to the Shareholders for information only.

31 May 2021

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**LETTER FROM **	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX I –	FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . .	I-1
APPENDIX II –	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1

– i –

DEFINITIONS

In this circular, unless otherwise defined or the context requires, the following terms and expressions shall have the following meanings:

• “Aetos Parties”

• Lorraine Investment, Ltd., Normandy Investment, Ltd., Capital Chain Holdings Limited and Better Chance Investments Limited, each of them and their ultimate beneficial owners is an Independent Third Party

• “Arbitration” the submission of arbitration applications by the Claimants relating to the exercise of the Amended Put Option stipulated in the Put Option Supplemental Agreements pursuant to an arbitration notice received by the Group on 23 October 2017

• “Amended Put Option”

• the exercise of a put option at the price determined pursuant to a formula stipulated in the Put Option Supplemental Agreements

• “associate(s)” has the meaning ascribed thereto in the Listing Rules

• “Board” the board of Directors

• “Business Days”

• a day (other than a Saturday, Sunday and Public Holiday) on which licensed banks are open for business in the PRC

• “Claimants”

• certain joint venture partners of two joint ventures, namely Dalian Yihong Property Development Co. Ltd. and Dalian Yize Property Development Co. Ltd., regarding the exercise of the Amended Put Option at the price determined pursuant to a formula stipulated in the Put Option Supplemental Agreements

• “Company”

• Yida China Holdings Limited, a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the main board of the Stock Exchange (stock code: 3639)

• “Company Share Charge”

• a share charge entered into on 11 March 2021 by Jiayou in favour of Aetos Parties, pursuant to which Jiayou agreed to charge the 20% Shares held by it in favour of Aetos Parties as security for the obligation of Yida Parties under the Settlement Agreement

• “Completion”

• the completion of the Disposal in accordance with the Equity Transfer Agreement

• “connected person”

• has the meaning ascribed to it under the Listing Rules

– 1 –

DEFINITIONS

• “Consideration” the consideration of RMB1,273 million payable by the Purchaser to the Vendors for the transfer of the Sale Interests

• “Dalian Lanwan” 大連藍灣房地產有限公司 (Dalian Lanwan Real Estate Company Limited*), a company established in the PRC with limited liability and is a wholly-owned subsidiary of the Company

• “Dalian Port” 大連航港商務服務有限公司 (Dalian Port Business Service Company Limited*), a company established in the PRC with limited liability and is owned as to 30% by the Target Company

• “Directors” the directors of the Company

• “Disposal” the disposal of the Sale Interests by the Vendors pursuant to the Equity Transfer Agreement

• “Equity Transfer Agreement” the equity transfer agreement dated 4 March 2021 entered into among the Vendors, the Purchaser and the Target Company in respect of the Disposal

• “Final Award” the final award from the Hong Kong International Arbitration Centre regarding the Arbitration on 20 October 2020

• “Group” the Company and its subsidiaries

• “Hefei Yiyun” 合肥億雲智慧產業服務有限公司 (Hefei Yiyun Intelligent Industry Service Co., Ltd.*), a company established in the PRC with limited liability and is owned as to 40% by the Target Company

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

• “Independent Third Party(ies)”

• a person/persons, or in the case of a company/ companies, the company/companies or its/their ultimate beneficial owner(s), who is/are independent of and not connected with the Company and its subsidiaries and their respective connected persons and their respective ultimate beneficial owner(s) or their respective associates

– 2 –

DEFINITIONS

“Jiayou” Jiayou (International) Investment Limited（嘉佑（國際） 投資有限公司）, a company incorporated in the British Virgin Islands and owned as to approximately 61.20% of the Shares in issue as at the Latest Practicable Date and a controlling shareholder (as defined under the Listing Rules) of the Company

• “Latest Practicable Date” 31 March 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Liaoning Yida” 遼寧億達商業服務有限公司 (Liaoning Yida Commercial Service Limited Company*), a company established in the PRC with limited liability and is owned as to 51% by the Target Company

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Longfor Group” 龍湖集團控股有限公司 (Longfor Group Holdings Limited), a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Main Board of the Stock Exchange (stock code: 0960)

• “Model Code”

• Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Listing Rules

• “Obligors” Dalian Yida Property Co., Ltd., Gang Xin Limited and King Equity Holdings Limited, all being wholly-owned subsidiaries of the Company

• “PRC” the People’s Republic of China

• “Purchaser” 龍湖嘉悅物業服務有限公司 (Longfor Jiayue Property Service Company Limited*), a company established in the PRC with limited liability and is a wholly-owned subsidiary of Longfor Group

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

• “Sale Interests”

the 32.6531% equity interest held by Yida Development, the 2.0407% equity interest held by Yida Service, the 32.6531% equity interest held by Dalian Lanwan and the 32.6531% equity interest held by True Treasure in the Target Company

– 3 –

DEFINITIONS

• “Settlement Agreement” the settlement agreement dated 5 March 2021 entered into by and among the Aetos Parties, the Obligors and the Yida Parties in relation to the settlement arrangement for the outstanding payments to be made by the Obligors under the Final Award

• “SFO” the Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong)

• “Share(s)” ordinary share(s) of US$0.01 each in the share capital of the Company

• “Shareholder(s)” the shareholder(s) of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Supplemental Agreement”

• the supplemental agreement to the Equity Transfer Agreement dated 4 March 2021 entered into among the Vendors, the Purchaser and the Target Company

• “Put Option Supplemental the supplementary agreements dated 18 December 2013 Agreements”

• “sq.m.”

• square meters

• “Target Company”

• 億達物業服務集團有限公司 (Yida Property Service Company Limited*), a company established in the PRC with limited liability and is a wholly-owned subsidiary of the Company as at the date of this circular

• “Target Group”

• the Target Company and its subsidiaries but excluding Yida Jincheng

• “True Treasure”

• 誠悅控股有限公司 (TRUE TREASURE HOLDINGS LIMITED), a company incorporated in Hong Kong with limited liability and is a wholly-owned subsidiary of the Company

• “Vendor(s)”

• Yida Development, Yida Service, Dalian Lanwan and True Treasure

• “Yida Development”

• 億達發展有限公司 (Yida Development Company Limited*), a company established in the PRC and is a wholly-owned subsidiary of the Company

– 4 –

DEFINITIONS

“Yida Jincheng” 大連億達金城開發有限公司 (Yida Jincheng Development Company Limited*), a company established in the PRC with limited liability and is a wholly-owned subsidiary of the Company

“Yida Parties” the Company, its five wholly-owned subsidiaries and its two joint ventures

• “Yida Service” 大連億達服務諮詢有限公司 (Dalian Yida Service Consulting Company Limited*), a company established in the PRC with limited liability and is a wholly-owned subsidiary of the Company

• “US$” United States dollars, the lawful currency of the United States

• “%” per cent

• For identification purpose only

– 5 –

LETTER FROM THE BOARD

YIDA CHINA HOLDINGS LIMITED 億達中國控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3639)

Executive Directors: Registered Office: Mr. Jiang Xiuwen Cricket Square Hutchins Drive Non-Executive Directors: P.O. Box 2681 Mr. Wang Gang Grand Cayman KY1-1111 Mr. Zhang Xiufeng Cayman Islands Mr. Cheng Xuezhi Mr. Ni Jie Headquarters in the PRC: 5/F, People’s Insurance Mansion Independent non-executive Directors: No. 8, Fuyou Road Mr. Yip Wai Ming Huangpu District, Mr. Guo Shaomu Shanghai Mr. PRC

Independent non-executive Directors: Mr. Yip Wai Ming Mr. Guo Shaomu Mr. Wang Yinping Mr. Han Gensheng

Principal Place of Business in Hong Kong: Room 1215, 12th Floor Building 2, Pacific Place 88 Queensway, Admiralty Hong Kong

31 May 2021

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO THE DISPOSAL OF THE ENTIRE EQUITY INTEREST IN A SUBSIDIARY

INTRODUCTION

Reference is made to the circular dated 4 March 2021 made by the Company in relation to the Disposal.

On 4 March 2021, the Vendors, the Purchaser and the Target Company entered into the Equity Transfer Agreement and the Supplemental Agreement pursuant to which the Vendors have conditionally agreed to dispose of, and the Purchaser has conditionally agreed to acquire, the Sale Interests for a consideration of RMB1,273 million.

– 6 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) details of the Equity Transfer Agreement, the Supplemental Agreement and the Disposal; (ii) financial information of the Group; and (iii) other information required under the Listing Rules.

THE DISPOSAL

The principal terms of the Equity Transfer Agreement and the Supplemental Agreement are summarised as follows:

Date: 4 March 2021

Parties: (1) the Vendors;

• (2) the Purchaser; and

• (3) the Target Company.

As at the date of this circular, the Target Company is owned as to 32.6531% by Yida Development, 2.0407% by Yida Service, 32.6531% by Dalian Lanwan and 32.6531% by True Treasure.

Assets to be Subject to the terms and conditions of the Equity Transfer disposed: Agreement and the Supplemental Agreement, the Vendors have conditionally agreed to dispose of, and the Purchaser has conditionally agreed to acquire, the Sale Interests.

Consideration: The Consideration is RMB1,273 million, which shall be payable by the Purchaser to the Vendors in the following manners:

• (1) RMB404.6 million as first payment, which shall be payable to the Vendors upon fulfillment of the following conditions:–

• (a) the registration procedures in respect of the pledge of the Sale Interests by the Vendors in favour of the Purchaser having been completed;

• (b) the authorisations to execute the Equity Transfer Agreement having been issued by Jiayou, and copies of such authorisations stamped with the company seal of the Company having been delivered to the Purchaser;

• (c) a guarantee letter provided by the Company to guarantee the performance of the Vendors’ obligations, on a joint and several basis, under the Equity Transfer Agreement having been issued;

– 7 –

LETTER FROM THE BOARD

• (d) a shareholders’ resolution approving the distribution of undistributed profits of the Target Company having been provided by the Vendors to the Purchaser simultaneously with the execution of the Equity Transfer Agreement; and payment to Yida Development and Yida Service thereof having been made; and

• (e) the Vendors having repaid the current account in the amount of RMB45 million to the Target Company.

Upon fulfillment of the conditions precedent above:–

• (i) Yida Development shall obtain a repayment notice from China Construction Bank in respect of a bank loan;

• (ii) the Purchaser shall pay the first payment in the amount of RMB404.6 million to the bank accounts designated by the Vendors; and

• (iii) the Vendors shall deliver the release of a corporate guarantee executed by the Target Company in favour of China Construction Bank to secure the repayment obligations of Yida Development in respect of the relevant bank loan mentioned in paragraph (i) above.

• (2) RMB613.80 million as second payment, which shall be payable to the Vendors upon fulfillment of the following conditions precedent:–

• (a) the registered capital of RMB160 million of the Target Company having been fully paid-up by Dalian Lanwan and True Treasure respectively; and

• (b) the Purchaser having received the original of the release stated in paragraph (1)(iii) above.

Upon fulfillment of the conditions precedent above:–

• (i) the Purchaser shall pay RMB613.80 million as second payment to an escrow account established in the name of the Purchaser;

• (ii) the Vendors and the Purchaser shall proceed to release the pledge of the Sale Interests within one Business Day after the payment of the second payment and the Vendors shall thereafter proceed with the registration procedures for the transfer of the Sale Interests to the Purchaser;

– 8 –

LETTER FROM THE BOARD

• (iii) on the same day of completion of paragraph (ii) above, as to RMB77 million shall be released to Dalian Lanwan from the above-mentioned escrow account;

• (iv) on the same day of completion of paragraph (iii) above, the Vendors and their related parties shall repay the current account in the amount of RMB77 million to the Target Company; and

• (v) on the same day of completion of paragraph (iv) above, as to RMB375.726 million shall be released to the Vendors from the above-mentioned escrow account.

• (3) RMB254.60 million as third payment, which shall be payable to the Vendors upon fulfillment of the following conditions:–

• (a) the Vendors and their related parties have repaid all the current account to the Target Company;

• (b) the Vendors and the Purchaser have obtained the tax payment certificate of True Treasure in respect of the Disposal;

• (c) the internal transfer of certain businesses in respect of leasing, elderly care services, community services and housekeeping services currently conducted by the Target Group to other members of the Group except the Vendors and the Target Group has been completed;

It is contemplated that such internal transfer will be conducted by the Group (except the Vendors) (i) through the transfer of the entire equity interest of Chengdu Yishi Baiwei Smart Food and Beverage Co., Ltd（成都億食百味 智慧餐飲有限公司） (“ Chengdu Yishi ”) from the Target Group to other members of the Group except the Vendors (the “ Transfer* ”); (ii) by terminating the existing business agreements and entering into new business agreements with the same contracting parties to replace such existing business agreements; and (iii) by entering into a tripartite business agreements to assign all the rights and obligations under the existing business agreements to the Group (except the Vendors).

• (d) the Purchaser has conducted an audit of the completion accounts of the Target Company and the net assets value of the Target Company as at Completion shall not be less than RMB255 million;

– 9 –

LETTER FROM THE BOARD

• (e) the Vendors have procured the renewal of all the existing management contracts signed by the Target Company that are due to be expired prior to the payment of the third payment;

• (f) the additional due diligence review conducted by the Purchaser in respect of the Target Company has been completed and there has been no material adverse change in the results thereof;

• (g) the Vendors have procured the release of the security over four real estate held by the Target Group within 30 days from the date of the Equity Transfer Agreement; and

• (h) agreement in respect of certain joint venture members of the Target Group (including but not limited to Liaoning Yida, Dalian Port and Hefei Yiyun) has been reached between the Vendors and the Purchaser.

Upon fulfillment of the conditions precedent above:–

• (i) the Purchaser shall pay RMB254.60 million as third payment to True Treasure on 3 September 2021 (or such later date to be determined by the Purchaser if all the conditions precedent to the third payment are fulfilled after 15 August 2021); and

• (ii) if the actual damages received by the Target Company in respect of a claim against China Telecom Corporation Limited Dalian Branch （中國電信股份有限公司大連分公司） do not reach RMB5,025,105.8 on or before 3 September 2021, the Purchaser is entitled to withhold part of the third payment in an amount equivalent to the difference between RMB5,025,105.8 and the actual damages received by the Target Company; if such threshold of RMB5,025,105.8 is not reached within two years from the date of the relevant judgment, the Vendors shall agree to waive part of the third payment in an amount equivalent to the difference between RMB5,025,105.8 and the actual damages received by the Target Company.

– 10 –

LETTER FROM THE BOARD

• Basis of the The Consideration was arrived at after arm’s length negotiations Consideration: between the Vendors and the Purchaser on normal commercial terms with reference to, among other things, (i) the net assets value of the Target Group; (ii) the proven track record and the historical financial performance of the Target Group; (iii) the business ability and prospects of the Target Group; and (iv) the benefits of the Disposal.

Based on the aforesaid, the Board considered that the Consideration is fair and reasonable and in the interest of the Company and its Shareholders as a whole.

• Conditions precedent:

Completion of the Equity Transfer Agreement shall be conditional upon the fulfillment or waiver of all of the following conditions:–

• (1) the Equity Transfer Agreement having been executed;

• (2) all necessary authorisations, consents and approvals as may be required for the Vendors to complete the Equity Transfer Agreement and the Disposal having been obtained (including but not limited to the written shareholders’ and directors’ resolution made in accordance with Rule 14.44 of the Listing Rules) and having been delivered to the Purchaser;

• (3) the internal transfer of equity interests in Yida Jincheng held by the Target Company to other members of the Group except the Vendors and the Target Group having been completed and all necessary registration procedures in respect of such equity transfer having been completed; and

• (4) the Vendors and their related parties shall procure the status quo of the existing management contracts executed by the Target Company be maintained;

• (5) the Vendors and their related parties shall procure the renewal of all of the existing management contracts entered into between the Target Company and the Vendors;

• (6) the Vendors and their related parties shall execute a new sales agency framework agreement with the Target Company in respect of the provision of certain sales agency services by the Target Company to the Vendors; and

• (7) the Vendors shall execute contracts or supplemental contracts with the Target Company in respect of the provision of certain consultancy and planning services by the Target Company to the Vendors.

– 11 –

LETTER FROM THE BOARD

Save for conditions (1) and (2) above, all other conditions precedent are waivable by the Purchaser. In the event that any of the conditions precedent has not been fulfilled or waived by the Purchaser (as the case may be) within five days from the date of the Equity Transfer Agreement, the Purchaser is entitled to terminate the Equity Transfer Agreement and the transactions contemplated thereunder. In the event that any of the conditions precedent has not been fulfilled within 60 days from the date of the Equity Transfer Agreement, the Vendors and the Purchaser are entitled to terminate the Equity Transfer Agreement and the transactions contemplated thereunder.

Completion:

Upon fulfillment or waiver (as the case may be) of all the conditions precedent in relation to Completion as set out in the Equity Transfer Agreement, the Vendors and the Target Company shall proceed with the transfer of the Sale Interests to the Purchaser and all necessary registration procedures. Completion takes place upon fulfillment of the condition precedent (2)(ii) set out in the section headed “ Consideration ” above.

Immediately upon Completion, the Company will cease to have any equity interest in the Target Company. The Target Group will then cease to be subsidiaries of the Company and the financial information of the Target Group will no longer be consolidated into the Group’s consolidated financial statements.

As of the date of Completion, the Company has received a total payment of RMB857,326,037, among which RMB404,600,000 was received on 4 March 2021, RMB415,673,963 was received on 9 March 2021 and RMB37,052,074 was received on 10 March 2021. As at the Latest Practicable Date, the Company has received a total payment of RMB984,832,600 and the first instalment and the second instalment of the Consideration had been fully settled by the Purchaser. The discrepancy between the amount actually received by the Group and the total amount of the first instalment and the second instalment pursuant to the Equity Transfer Agreement (being RMB1,018.4 million) was due to the withholding tax of sales proceeds.

As at the Latest Practicable Date, (i) the conditions precedent set out in the section headed “ Consideration ” (the “ Payment Conditions ”) as to the first instalment and the second instalment; and (ii) the conditions precedent set out in this section headed “ Completion ” have been fulfilled. Save for conditions (b) and (g) of the Payment Conditions as to the third instalment, all the other Payment Conditions as to the third instalment have not been fulfilled as at the Latest Practicable Date. Completion took place on 10 March 2021.

– 12 –

LETTER FROM THE BOARD

Performance The Vendors undertake to the Purchaser that if the net profits (the guarantee: “ Net Profit ”) as shown in the management accounts of the Target Group for each of the four years ending 31 December 2024 (the “ Relevant Periods ” and each a “ Relevant Period ”) is foreseen to be less than RMB71.47 million (the “ Guaranteed Profit ”), the Vendors will pay to the Target Company an amount equivalent to the difference (the “ Difference ”) between the estimated Net Profit for that Relevant Period and the Guaranteed Profit to ensure the Net Profit will not be less than the Guaranteed Profit.

The amount of Guaranteed Profit was calculated based on the net profit (after tax) of the Target Group for the financial year ended 31 December 2020 and the estimated growth of the business development and profits of the Target Group. This results in the difference between the amount of the Guaranteed Profit and the amount of the Target Company’s net profit for the year ended 31 December 2020, being RMB48.84 million.

– 13 –

LETTER FROM THE BOARD

The Target Group recorded a net loss of RMB14.8 million for the period up to 10 March 2021. Such net loss was primarily attributable to the intervening New Year and the Chinese New Year, during which the service fees charged by the Target Group were lower as compared to other period of the year. When determining the Guaranteed Profit of RMB71.47 million for the year ending 31 December 2021, the Group has considered (i) the 122 existing projects held by the Target Group where 21 out of which were held by the Target Group only after June 2020 and will generate net profits for the whole year of 2021; (ii) the increase in management fee for the year of 2021 in respect of 10 existing projects held by the Target Group before June 2020; (iii) the contract period of the existing management contracts in which (a) 115 contracts will subsist at the end of 2021; (b) 93 contracts will subsist at the end of 2022; and (c) 81 contracts will subsist at the end of 2023; and (d) 68 contracts will subsist at the end of 2024; (iv) the Group shall engage the Target Group to provide property management services in respect of projects delivered by the Group before 31 December 2022 as agreed in the Equity Transfer Agreement; (v) the Group shall give priority to engage the Target Group to provide property management services on the same terms and conditions with other service providers in respect of projects delivered by the Group after 1 January 2023 as agreed in the Equity Transfer Agreement; (vi) the ability of the Target Group to renew the respective management contracts entered into with independent third parties upon their expiry; and (vii) the additional 11 new projects held by the Target Group post Disposal which will generate additional net profits to the Target Group. Accordingly, the Board expected that such projects under management would allow the Target Group to realise a revenue of approximately RMB500 million. Through stringent cost control measures implemented by the Target Group, the Board expected that the Target Group would generate a net profit of approximately RMB70 million for the year ending 31 December 2021. In addition, the Board expects that the 11 new projects held by the Target Group post Disposal will result in an addition of 1 million square meter under management to the Target Group. Such new projects are expected to allow the Target Group to realise a further revenue of approximately RMB25 million and a net profit of approximately RMB1.5 million for the year ending 31 December 2021. Based on the foregoing, the Guaranteed Profit was determined as RMB71.47 million and the Board considered that the determination of the Guaranteed Profit of RMB71.47 million and its underlying assumptions are fair and reasonable.

– 14 –

LETTER FROM THE BOARD

The determination of the Guaranteed Profit of RMB71.47 million for the three years ending 31 December 2024 was based on the Guaranteed Profit for the year ending 31 December 2021 and on the assumption that the Target Group will be able to maintain its normal business operation.

The Net Profit shall be calculated on the following basis:

• (1) according to relevant accounting standards; and

• (2) the total amount of the management fees and the marketing fees of the Target Company for a Relevant Period will not be higher than 7.86% of the revenue as shown in the management accounts of the Target Company for that Relevant Period.

Pursuant to the Equity Transfer Agreement, it was agreed that the existing core management team of the Target Group immediately prior to the Disposal shall remain until 31 December 2024 despite the Disposal. The existing core management team of the Target Group will be responsible for implementing such cost control measures to ensure that no additional and redundant cost will be incurred during the normal operation of the Target Group throughout the Relevant Period. Furthermore, the Vendors are entitled to nominate one director and one supervisor to the board of directors of the Target Company for a term until 31 December 2024, whom shall be responsible for monitoring the implementation of such cost control measures. In addition, pursuant to the Equity Transfer Agreement, it was agreed that the total amount of the management fees and the marketing fees of the Target Company for a Relevant Period will not be higher than 7.86% of the revenue as shown in the management accounts of the Target Company for that Relevant Period (2020: 8.07%). In the event that such ratio is higher than 7.86% and there is a shortfall between the Net Profit and the Guaranteed Profit, the Vendors are not liable to pay the Compensation. Based on the arrangement above, the Board is of the view that the Target Group is able to meet the Profit Guarantee of RMB71.47 million for the year ending 31 December 2021.

In the event that the Vendors fail to pay the Difference, the Purchaser is entitled to claim from the Vendors a penalty (“ Penalty ”) equivalent to 14.24 times of the Difference.

For the avoidance of doubt, once the Vendors have paid the Difference to the Target Company, the Purchaser will no longer be entitled to the Penalty. Accordingly, the Penalty is not an addition to the Difference and therefore the Board considers that such arrangement is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

– 15 –

LETTER FROM THE BOARD

The agreed price-to-earnings ratio of 14.24 was determined upon arm’s length negotiations between the parties to the Equity Transfer Agreement and Supplemental Agreement. When selecting comparable companies, the Company has considered recent and similar type of transactions conducted in 2020 and 2021 publicly disclosed. Based on the search results, only the acquisition case conducted by Evergrande Property Service Group Limited in January 2021 has a similar size of transaction as compared to that of the Disposal. Due to the limited number of comparable companies, the Board has also considered other similar type of transaction with smaller size of transactions to help the Board to assess the fairness and reasonableness of the agreed price-to-earnings ratio of 14.24. Based on the analysis table below, the other six recent merger and acquisition cases in relation to property management companies, which had similar size of transactions among themselves, adopted a price-to-earnings ratio in the range of 10 to 18 and with a median of 14. The revised analysis revealed that the agreed price-to-earnings ratio of 14.24 does not deviate much from that adopted in the acquisition case conducted by Evergrande Property Service Group Limited which has a similar size of transaction and is within the range of the price-to-earnings ratios adopted in the other six cases of smaller size of transactions. Details of the seven recent merger and acquisition cases in relation to property management companies were set out below for analysis:

				Price-
				to-earnings
Date	Acquirer	Target	Consideration	ratio(1)
			(RMB
			million)
January 2021	Evergrande Property	Ningbo Yatai Hotel Property	1500	15
	Services Group	Services Co., Ltd.*（寧波
	Limited	市雅太酒店物業服務有限公司）
December 2020	Kaisa Prosperity	Zhejiang Ruiyuan Property	108	14.5
	Holdings Limited	Management Co., Ltd.*
		（浙江瑞源物業管理有限公司）
November 2020	Sichuan Languang	Shanghai Shangzhi Property	159	12.8
	Justbon Services	Group Limited Company*
	Group Co., Ltd.	（上海上置物業集團有限公司）
June 2020	Aoyuan Healthy Life	Easy Life Smart Community	248	18
	Group Company	Services Group Co., Ltd*
	Limited	（樂生活智慧社區服務集團股份
		有限公司）
June 2020	S-Enjoy Service Group	Chengdu Chengyue Times	104	10.5
	Co., Limited	Property Services Ltd*
		（成都誠悅時代物業服務有限公
		司）

– 16 –

LETTER FROM THE BOARD

				Price-
				to-earnings
Date	Acquirer	Target	Consideration	ratio(1)
			(RMB
			million)
January 2020	S-Enjoy Service Group	Dalian Hua’an Property	63	10
	Co., Limited	Management Co., Ltd.*
		（大連華安物業管理有限公司）
September 2020	Sichuan Languang	Shanghai Yizhen Property	213	14.6
	Justbon Services	Management Limited
	Group Co., Ltd.	Company*（上海益鎮物業管
		理有限公司）and Shanghai
		Huaxin Property
		Management Limited
		Company*（上海華欣物業管
		理有限公司）
			Average	13.63

Source: the announcements publicly published

Note:

• (1) Price-to-earnings ratio of the precedent transaction is calculated based on the consideration of the transaction divided by the net profit before tax of such company derived from its most recently audited financial statements.

To the best knowledge of the Directors, the Company considers that the seven selected comparable companies are exhaustive based on the aforementioned criteria, and that they are fair and representative samples.

If the Net Profit for a Relevant Period is higher than the Guaranteed Profit, the exceeding portion will be accumulated to the Net Profit for the following Relevant Period. If the average of the Net Profit for the Relevant Periods is higher than the Guaranteed Profit, the Target Company is deemed to have satisfied the performance guarantee under the Equity Transfer Agreement and any Penalty paid thereunder during the Relevant Periods shall be refunded to the Vendors within 30 days from the date of audit results.

– 17 –

LETTER FROM THE BOARD

According to a management contract entered into between the Target Company and Zhengzhou Yida New City Development Company Limited （鄭州億達科技新城發展有限公司） (“ Zhengzhou Yida ”) (the “ Management Contract ”), Zhengzhou Yida shall appoint the Target Group to provide property management services to a property project at its pre-delivery stage and shall pay a fixed fee per month per square meter under management. If the Target Group is unable to provide such property management services for a term of 15 years, which commenced from 1 January 2021, pursuant to the Management Contract due to reasons not attributable to the Target Group, the Vendors shall compensate to the Purchaser an amount (the “ Compensation* ”) calculated pursuant to the following formula:

Compensation = (15 – actual number of years of services provided by the Target Group) x RMB290,000

The amount of RMB290,000 was determined based on the net profit of the property services project operated by Zhengzhou Yida.

As at the Latest Practicable Date, the Management Contract is in force.

Prior to the Completion, the transactions contemplated under the Management Contract will be eliminated in the consolidated financial statements of the Group. Subsequent to the Disposal, the Target Group will cease to be subsidiaries of the Group. Accordingly, the payment of property management service fees to the Target Group by Zhengzhou Yida will result in an increase in the cost of services of the Group.

INFORMATION OF THE TARGET GROUP

The Target Company was established in the PRC and is principally engaged in property management services for residential, commercial and industrial parks as at the date of this circular.

Liaoning Yida was established in the PRC and is owned as to 51% by the Target Company. As at the date of this circular, Liaoning Yida is principally engaged in property management services for residential, commercial and industrial parks.

– 18 –

LETTER FROM THE BOARD

Dalian Port was established in the PRC and is owned as to 30% by the Target Company. As at the date of this circular, Dalian Port is principally engaged in property management services for residential, commercial and industrial parks.

Hefei Yiyun was established in the PRC and is owned as to 40% by the Target Company. As at the date of this circular, Hefei Yiyun is principally engaged in property management services for residential, commercial and industrial parks.

Dalian Qingyun Sky Property Service Company Limited（大連青雲天下物業服務有限公 司）(“ Service Company* ”) was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Service Company is principally engaged in property management services for residential, commercial and industrial parks.

Shenyang Yida Property Management Company Limited* （瀋陽億達物業管理有限公司） was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Shenyang Yida Property Management Company Limited is principally engaged in property management services for residential, commercial and industrial parks.

Chengdu Yixing Property Management Company Limited*（成都億興物業管理有限公司） was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Chengdu Yixing Property Management Company Limited is principally engaged in property management services for residential, commercial and industrial parks.

Zhejiang Yixing Property Service Company Limited*（浙江億興物業服務有限公司）was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Zhejiang Yixing Property Service Company Limited is principally engaged in property management services for residential, commercial and industrial parks.

Beijing Yixing Property Service Company Limited* （北京億興物業服務有限公司） was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Beijing Yixing Property Service Company Limited is principally engaged in property management services for residential, commercial and industrial parks.

Liaoning Yida City Environmental Construction Holdings Company Limited*（遼寧省億 達城市環境工程集團有限公司）was established in the PRC and is a wholly-owned subsidiary of the Target Company. As at the date of this circular, Liaoning Yida City Environmental Construction Holdings Company Limited is principally engaged in property management services for residential, commercial and industrial parks.

– 19 –

LETTER FROM THE BOARD

Set out below is the unaudited consolidated financial information of the Target Group, after carving out the financial information of Yida Jincheng and certain businesses mentioned in paragraph 3(c) in the section headed “ Consideration ”, for the financial years ended 31 December 2019 and 2020, and during the period from 1 January 2021 to 10 March 2021, respectively:

			During the
			period from
			1 January
	For the financial year		2021 to 10
	2019	2020	March 2021
	RMB’000	RMB’000	RMB’000
Revenue	445,291.4	481,024.4	46,250.5
Net profit before taxation	40,662.7	62,247.6	(14,891.7)
Net profit after taxation	32,821.9	48,839.5	(14,794.9)

Based on the unaudited consolidated financial information of the Target Group, the total assets value and net assets value of the Target Group were approximately RMB393.47 million and RMB166.70 million respectively as at 31 December 2020, and RMB473.41 million and RMB252.67 million respectively as at 10 March 2021.

INFORMATION OF THE PARTIES TO THE EQUITY TRANSFER AGREEMENT

The Group

The Group is the largest business park developer and leading business park operator in China, the main business involves the development and operation of business parks, sales of business park supporting residential buildings, office buildings and independent houses, business park entrusted operation management, provision of construction, decoration and landscaping services and property management services.

The Purchaser

The Purchaser was established in the PRC and is a wholly-owned subsidiary of Longfor Group. As at the date of this circular, Longfor Group has developed six core business arms covering property development, commercial property, rental housing, smart service, housing agency service and housing decoration nationwide.

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

– 20 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSAL

The outbreak of COVID-19 has had negative impacts on the Group’s sales of properties business. The Disposal will enable the Group, by disposing a complementary business line, to quickly recover funds and make up for the short-term liquidity shortage while establishing a collaboration with the Purchaser. The Disposal will also contribute to the Group’s stable development in the long term. Following the Disposal, the Group will continue to engage in the segment of property development and construction, decoration and landscaping and in the segment of property management services only in the areas of elderly care, community retail services, catering services and leasing. Other than aforesaid, the Company currently has no intention to pursue property management services for residential and commercial properties and industrial parks.

The terms of the Equity Transfer Agreement and the Supplemental Agreement were determined after arm’s length negotiations between the parties thereto and the Directors (including the independent nonexecutive Directors) are of the view that the terms of the Equity Transfer Agreement, the Supplemental Agreement and the Disposal are on normal commercial terms and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

FINANCIAL EFFECT AND USE OF PROCEEDS

The net proceeds from the Disposal will be used to repay the indebtedness of the Group. As at 31 March 2021, the Group had outstanding loans of approximately RMB14,539.4 million, among which RMB11,429.2 million will be due within one year, RMB775.2 million will be due within one to two years, and RMB2,335 million will be due after 2 years.

Based on the preliminary assessment, the Group will record a gain of approximately RMB870 million as a result of the Disposal, being the difference between the Consideration and the estimated net assets value of the Target Group as at the date of Completion, after deducting the estimated amount of relevant tax expenses and relevant expenses payable by the Vendors in respect of the Disposal. The actual gain or loss as a result of the Disposal to be recorded by the Group is subject to further true-up of the estimated net assets value of the Target Group as at the date of Completion. Pursuant to the terms of the Equity Transfer Agreement, an auditor will be appointed to ascertain the audited financial information of the Target Group as at the date of Completion. As at the Latest Practicable Date, the audit works are still in progress. Accordingly, no actual gain or loss of the Disposal can be ascertained.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal are more than 25% but all of which are less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting, circular and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

– 21 –

LETTER FROM THE BOARD

WRITTEN SHAREHOLDERS’ APPROVAL AND COMPLETION

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries, no Shareholders or any of their respective associates have any material interest in the Disposal. As such, no Shareholders would be required to abstain from voting in favour of the resolution approving the Disposal.

As at the date of this circular, Jiayou owns 1,581,485,750 Shares which represent approximately 61.20% of the issued share capital of the Company. Pursuant to Rule 14.44 of the Listing Rules, Jiayou has issued a written shareholder’s approval certificate to approve the Disposal and accordingly, no extraordinary general meeting will be convened and held by the Company to approve the Disposal.

As at the Latest Practicable Date, all conditions precedent to the completion of the transactions contemplated under the Equity Transfer Agreement and Supplemental Agreement have been fulfilled. Completion took place on 10 March 2021.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the Equity Transfer Agreement, the Supplemental Agreement, and the Disposal are fair and reasonable and are in the interest of the Company and the Shareholders as a whole. If a general meeting were to be convened by the Company to consider and approve the Equity Transfer Agreement, the Supplemental Agreement, and the Disposal, the Board would recommend the Shareholders to vote in favour of the resolution to approve the Equity Transfer Agreement, the Supplemental Agreement, and the Disposal.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board Yida China Holdings Limited Jiang Xiuwen Chairman and Chief Executive Officer

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP FOR EACH OF THE THREE YEARS ENDED 31 DECEMBER 2018, 2019 AND 2020

Details of the financial information of the Group for each of the three years ended 31 December 2018, 31 December 2019 and 31 December 2020 are disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (http://www.yidachina.com.cn/html/index.php) and can be accessed at the website addresses below:

For the annual report of the Company for the year ended 31 December 2018, please see: https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0429/ltn20190429571.pdf (pages 104 to 202)

For the annual report of the Company for the year ended 31 December 2019, please see: https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0515/2020051502121.pdf (pages 103 to 196)

For the annual report of the Company for the year ended 31 December 2020, please see: https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0429/2021042900647.pdf (pages 97 to 192)

2. INDEBTEDNESS STATEMENT

Debts and borrowings

As at 30 April 2021, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding (i) secured bank loans of approximately RMB5,697 million, (ii) unsecured bank loans of approximately RMB5 million, (iii) secured corporate bond and other loans of approximately RMB6,443 million, (iv) unsecured corporate bond, senior notes and other loans of approximately RMB2,329 million, and (v) lease liabilities of approximately RMB52 million.

The secured bank and other borrowings of the Group as at 30 April 2021 are secured by:–

• (i) pledges over certain of the Group’s buildings, properties under development, land held for development for sale, completed properties held for sale, and investment properties;

• (ii) pledges over certain of the Group’s other receivables;

• (iii) pledges over the Group’s equity interests in certain subsidiaries;

• (iv) guarantees given by the Company and/or its subsidiaries; and/or

• (v) pledges over certain of the Group’s time deposits.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial guarantees

As at 30 April 2021, the contingent liabilities incurred by the Group for provision of guarantees to financial institutions in respect of the mortgage loans provided by such financial institutions to the property purchasers of the Group were approximately RMB483 million. Besides, the contingent liabilities incurred by the Group for provision of guarantees to bank loans granted to a joint venture were approximately RMB595 million.

Save as aforesaid and apart from intra-group liabilities, the Group did not, as at 30 April 2021, have any other outstanding debt securities, whether issued and outstanding, authorised or otherwise created but unissued, term loans, whether guaranteed, unguaranteed, secured (whether the security is provided by the Company or by third parties) or unsecured, other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments, whether guaranteed, unguaranteed, secured or unsecured borrowings or debt, mortgages, charges, guarantees or other material contingent liabilities.

The Directors confirm that, save as disclosed above, there are no material changes in the indebtedness and contingent liabilities of the Group since 30 April 2021.

3. WORKING CAPITAL

As set out in the Company’s consolidated financial statements for the year ended 31 December 2020, the Group’s current liabilities exceeded its current assets by RMB6,227,652,000 as at 31 December 2020. At the same date, its current borrowings amounted to RMB11,869,159,000 while its cash and cash equivalents amounted to RMB572,237,000 only.

Since 2018, the financial conditions of the Group’s controlling shareholder, China Minsheng Investment Corp., Ltd. (“ China Minsheng ”) changed in such a way that triggered certain terms specified in the Group’s borrowing agreements. This resulted in certain of the Group’s borrowings amounted to RMB7,695,711,000 in total as at 31 December 2020 becoming immediately repayable if requested by the lenders, of which RMB5,703,311,000 represented borrowings with scheduled repayment dates within one year, while RMB1,992,400,000 represented non-current borrowings with original maturity dates beyond 31 December 2021 that were reclassified as current liabilities.

On 20 February 2020, the Company publicly announced that Mr. Chen Donghui, an executive director of the Company, was detained by the relevant authorities in the PRC (“ Mr. Chen Detention Matter ”). Mr. Chen was subsequently removed as an executive director of the Company with the effect from 15 June 2020. This event resulted in certain of the Group’s borrowings amounted to RMB4,124,247,000 in total as at 31 December 2020, among the above-mentioned borrowings of RMB7,695,711,000, becoming immediately repayable if requested by the lenders.

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

On 20 April 2020, the Group failed to repay USD52,854,000 of the senior notes due on 20 April 2020 (“ 2020 Senior Notes ”) and subsequently repaid in full on 24 April 2020, which constituted an event of default (“ 2020 Senior Notes Default ”). This event also resulted in the above-mentioned borrowings of RMB7,695,711,000 as at 31 December 2020 becoming immediately repayable if requested by the lenders.

On 30 October 2020, the Group failed to repay bank loans due to one commercial bank amounted to RMB138,920,000, which constituted an event of default (“ Bank Loans Default ”). This event also resulted in the above-mentioned borrowings of RMB7,695,711,000 as at 31 December 2020 becoming immediately repayable if requested by the lenders. The Group subsequently fully repaid these bank loans in certain tranches until 4 March 2021.

Subsequent to 31 December 2020, the Group failed to pay the final award amount together with interest accruing thereon to the certain joint venture partners (“Aetos Parties”) for 90 consecutive days following 20 October 2020, when Hong Kong International Arbitration Centre issued a final award in relation to the arbitration over the exercise of certain put options with the Aetos Parties. This triggered certain terms specified in the senior notes due on 27 March 2022 (“ 2022 Senior Notes ”) on 18 January 2021 (“ 2022 Senior Notes Default ”), and was subsequently waived by the respective holders with effect from 8 March 2021.

Subsequent to 31 December 2020, the Group failed to repay a tranche of 2022 Senior Notes of USD22.5 million due on 16 April 2022, which constituted an event of default (“ 2022 Senior Notes Delay Payment Matter ”). The Group subsequently fully repaid this tranche of 2022 Senior Notes of USD22.5 million on 4 May 2021.

Subsequent to 31 December 2020, the Group failed to pay a tranche of scheduled payment of USD50 million due to the Aetos Parties until 10 May 2021, which did not meet the payment obligation specified in the settlement agreement with the Aetos Parties dated on 4 March 2021 (“ Aetos Parties Delay Payment Matter ”). On 24 May 2021, the Group subsequently fully paid this tranche of payment of USD50 million together with interest accruing thereon. On 26 May 2021, the Aetos Parties provided a written confirmation to the Group that Aetos Parties Delay Payment Matter will not give rise to an event of default.

Such conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.

In preparing the working capital forecast for the Group for the 12 months from the date of this Circular, the Group was unable to obtain (i) written agreement with relevant lenders in respect of certain loans and corporate bond that they will not exercise their rights to demand immediate repayment of the relevant loans and corporate bond prior to their scheduled contractual repayment dates, as triggered by changes in financial conditions of China Minsheng, Mr. Chen Detention Matter, 2020 Senior Notes Default, Bank Loans Default, 2022 Senior Notes Default, 2022 Senior Notes Delay Payment Matter and Aetos Parties Delay Payment Matter; (ii) confirmation on the renewal of existing loans which are yet due but will be due for repayment within 12 months from the date of the Circular; and (iii) written confirmation of new loans which are yet to be negotiated with banks and

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

financial institutions within 12 months from the date of the Circular. As such, based on the existing confirmed facilities, the Group was unable to confirm that it would have sufficient working capital for its present requirements for at least the next 12 months from the date of this Circular as required under paragraph 30 of Appendix 1B to the Listing Rules. The Group has the following plans to ensure that the it would have sufficient working capital for at least the next 12 months from the date of the Circular:

• (i) The Group has constantly maintained active communication with relevant banks and financial institutions to explain changes in financial conditions of China Minsheng, Mr. Chen Detention Matter, 2020 Senior Notes Default, Bank Loans Default, 2022 Senior Notes Default, 2022 Senior Notes Delay Payment Matter and Aetos Parties Delay Payment Matter;

• (ii) The Group is also actively negotiating with serval existing financial institutions on the renewal of and extension for repayments of certain borrowings. The Group has also been negotiating with various banks and financial institutions to secure new sources of financing;

• (iii) The Group will continue to implement measures to accelerate the pre-sales and sales of its properties under development and completed properties, and to speed up the collection of outstanding sales proceeds and other receivables;

• (iv) The Group will continue to take active measures to control administrative costs and maintain containment of capital expenditures; and

• (v) The Group will continue to seek opportunities to dispose its peripheral assets or businesses.

Taking into account the financial resources available to the Group, including the internally generated funds the net proceeds from the Disposal and the existing borrowings, and based on the assumptions that the Group will be able to renew borrowings and obtain new borrowings as forecast and the relevant lenders of the existing borrowings and corporate bond will not exercise their rights to demand immediate payment of the relevant borrowings prior to their scheduled contractual repayment dates, as triggered by changes in financial conditions of China Minsheng, Mr. Chen Detention Matter, 2020 Senior Notes Default, Bank Loans Default, 2022 Senior Notes Default, 2022 Senior Notes Delay Payment Matter and Aetos Parties Delay Payment Matter, in the absence of unforeseeable circumstances, the Directors are of the opinion that the Group has sufficient working capital for its present requirements for at least the next twelve months from the date of this Circular.

In the event that none of the above plans could be effectively implemented, the Company will consider and seek for other appropriate alternative plan(s), including but not limited to potential equity or debt fund raising exercise, in order to ensure that the Group will have sufficient working capital. Further announcement(s) will be made by the Company as and when alternative plan(s) is/are implemented in the future.

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Although as the largest business park developer and leading business park operator in the PRC, the outbreak of COVID-19 has had negative impacts on the Group’s sales of properties business. The Disposal will enable the Group, by disposing a complementary business line, to quickly recover funds and repay some of the indebtedness. Under the clear market trend of growing industry concentration and declining asset expansion, the Group could control financial risk and speed up the cash inflows through optimizing asset allocation and deleveraging. And therefore, the Directors is convinced the Disposal will contribute the Group’s stable development in the long term and the ability to take advantage of future market opportunities. The Disposal, meanwhile, will enable the Group to establish a stable collaboration with the Purchaser and unleash more potentials.

Following the Disposal, the Group will continue to engage in the segment of property development and construction, decoration and landscaping and in the segment of property management services only in the areas of elderly care, community retail services, catering services and leasing. Other than aforesaid, the Company currently has no intention to pursue property management services for residential and commercial properties and industrial parks. Despite facing multiple uncertainties, the Group remains committed to the direction of “strengthening the core competitiveness of business park operation”, the implementation of the strategy of “developing asset-light and asset-heavy businesses simultaneously, leading the development of asset-light business to actuate asset-heavy business, supporting asset-light business with asset-heavy business”, and refined the development model of “city-industry integration”.

5. EFFECTS OF THE TRANSACTIONS ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE GROUP

As at 31 December 2020, the audited consolidated total assets of the Group amounted to approximately RMB45,466 million and the audited consolidated total liabilities of the Group amounted to approximately RMB33,155 million.

As at 31 December 2020, the unaudited total assets and total liabilities of the Target Group, as extracted from its unaudited financial statements as at 31 December 2020 amounted to approximately RMB393.47 million and approximately RMB226.77 million, respectively. Upon Completion, the Target Group will cease to be subsidiaries of the Company and the financial information of the Target Group will no longer be consolidated into the Group’s consolidated financial statements.

As regards earnings of the Group as a result of the Disposal, based on the preliminary assessment, it is expected that the Group will record a gain of approximately RMB870 million (equivalent to approximately HK$1,043.8 million) as a result of the Disposal, being the difference between the Consideration and the estimated net assets value of the Target Group as at the date of Completion, after deducting the estimated amount of relevant tax expenses and relevant expenses payable by the Vendors in respect of the Disposal. The

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

actual gain or loss as a result of the Disposal to be recorded by the Group is subject to further true-up of the estimated net assets value of the Target Group as at the date of Completion.

6. NO MATERIAL ADVERSE CHANGES

The Directors confirm that there are no material adverse changes in the financial or trading position of the Group since 31 December 2020 (being the date to which the latest published audited consolidated financial statements of the Company were made up).

– I-6 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations which had been 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 which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Directors’ and chief executive’s interests and short positions in the shares and underlying shares of the Company and associated corporations

(a) Long positions in the Shares and/or underlying Shares of the Company

			Approximate
			percentage in
			the Company’s
	Capacity/Nature of	Number of	issued share
Name of Director	interest	Shares held(1)	capital
Mr. Jiang Xiuwen	Interest of a controlled	68,600,000(L)(2)	2.65%
	corporation
Mr. Wang Gang	Interest of a controlled	69,200,000(L)(3)	2.68%
	corporation

Notes:

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

• (2) Mr. Jiang Xiuwen beneficially owns the entire issued share capital of Grace Excellence Limited, Everest Everlasting Limited and Wonderful High Limited, which, in total own 74.21% of the issued share capital of Keen High Keen Source Limited. Keen High Keen Source Limited owns 2.65% of the issued share capital of the Company. By virtue of the SFO, Mr. Jiang Xiuwen is deemed to be interested in the Shares held by Keen High Keen Source Limited.

– II-1 –

GENERAL INFORMATION

APPENDIX II

• (3) Mr. Wang Gang beneficially owns the entire issued share capital of Mighty Equity Limited, which in turn owns 87.21% of the issued share capital of Grace Sky Harmony Limited. Grace Sky Harmony Limited owns 2.68% of the issued share capital of the Company. By virtue of the SFO, Mr. Wang Gang is deemed to be interested in the Shares held by Grace Sky Harmony Limited.

• (b) Long positions in the shares and/or underlying shares of the Company’s associated corporations

				Percentage
				of the issued
				share capital
				of that
				associated
	Name of associated		Number of	corporation
Name of Director	corporation	Capacity	Shares(1)	held
Mr. Jiang Xiuwen	Keen High Keen	Interest of a controlled	5,180(L)(2)	74.21%
	Source Limited	corporation
Mr. Wang Gang	Grace Sky Harmony	Interest of a controlled	6,140(L)(3)	87.21%
	Limited	corporation

Notes:

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

• (2) These shares are held by Grace Excellence Limited with 3,000 shares, Everest Everlasting Limited with 180 shares and Wonderful High Limited with 2,000 shares, which are wholly-owned by Mr. Jiang Xiuwen.

• (3) These shares are held by Mighty Equity Limited which is wholly-owned by Mr. Wang Gang.

As at the Latest Practicable Date, save as disclosed herein, none of the Directors or chief executive of the Company had any interests in the underlying shares in respect of physically settled, cash settled or other equity derivatives of the Company or any of its associated corporations.

Save as disclosed herein, as at the Latest Practicable Date, to the knowledge of the Company:

• (1) none of the Directors and chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (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 the Directors and the chief executive of the Company were taken or deemed to have under such provisions of the SFO); or (b) which were required to be entered in the register kept by the

– II-2 –

GENERAL INFORMATION

APPENDIX II

Company under Section 352 of the SFO; or (c) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code; and

• (2) none of the Directors and chief executive of the Company nor their spouses or minor children (natural or adopted) were granted or had exercised any rights to subscribe for any equity or debt securities of the Company or any of its associated corporations.

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

3. INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS

So far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, the persons (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO were as follows:

			Approximate
			percentage in
			the Company’s
	Capacity/Nature of	Number of	issued share
Name of shareholder	interest	shares held(1)	capital
Jiayou(2)	Beneficial owner	1,581,485,750(L)	61.20%
Jiahuang (Holdings)	Interest of corporation	1,581,485,750(L)	61.20%
Investment	controlled by the
Limited(2)	substantial shareholder
Shanghai Pinzui	Interest of corporation	1,581,485,750(L)	61.20%
Enterprise	controlled by the
Management Ltd.(2)	substantial shareholder
China Minsheng Jiaye	Interest of corporation	1,581,485,750(L)	61.20%
Investment Co.,	controlled by the
Ltd.(2)	substantial shareholder
China Minsheng	Interest of corporation	1,581,485,750(L)	61.20%
Investment Corp.,	controlled by the
Ltd.(2)	substantial shareholder
Sun Yinhuan(3)	Founder of a	241,400,000(L)	9.34%
	discretionary trust
TMF (Cayman) Ltd.(3)	Trustee	241,400,000(L)	9.34%
Right Ying Holdings	Interest of controlled	241,400,000(L)	9.34%
Limited (3)	corporation
Right Won	Beneficial owner	241,400,000(L)	9.34%
Management
Limited(3)

– II-3 –

GENERAL INFORMATION

APPENDIX II

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

• (2) China Minsheng Investment Corp., Ltd. (“ China Minsheng ”) owns 67.26% share equity of China Minsheng Jiaye Investment Co., Ltd (“ CMIG Jiaye ”). Shanghai Pinzui Enterprise Management Ltd. (“ Pinzui ”) is beneficially owned by CMIG Jiaye. Jiahuang (Holdings) Investment Limited (“ Jiahuang ”) is beneficially wholly-owned by Pinzui. Jiayou is beneficially wholly-owned by Jiahuang. By virtue of the SFO, China Minsheng, CMIG Jiaye, Pinzui and Jiahuang are deemed to hold equity in 1,581,485,750 shares held by Jiayou. On 11 March 2021, Jiayou executed the Company Share Charge pursuant to which Jiayou agreed to charge 516,764,000 Shares in favour of the Aetos Parties.

• (3) The entire issued share capital of Right Won Management Limited is held by TMF (Cayman) Ltd. (as the trustee of The Right Ying Trust) through Right Ying Holdings Limited. The entire issued share capital of Right Ying Holdings Limited is held by TMF Cayman Ltd. The Right Ying Trust is a discretionary trust established by Mr. Sun Yinhuan on 14 November 2018. The beneficiaries of The Right Ying Trust include Mr. Sun Yinhuan and certain of his family members.

Save as disclosed above, so far as is known to the Directors or the chief executive of the Company, as at the Latest Practicable Date, no other persons (not being a Director or chief executive of the Company) had, or were deemed to have, an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept under section 336 of the SFO.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing and proposed service contract with any members of the Group other than contracts expiring or determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

5. COMPETING INTERESTS OF DIRECTORS AND CLOSE ASSOCIATES

As at the Latest Practicable Date, none of the Directors and their respective close associates were considered to have interest in any business which competes or is likely to compete, either directly or indirectly, with the businesses of the Group or have or may have any other conflicts of interest with the Group pursuant to the Listing Rules.

6. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS OF THE GROUP AND OTHER INTERESTS

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

As at the Latest Practicable Date, to the best of the knowledge of the Directors, none of the Directors had any direct or indirect interest in any asset which had been, since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by, or leased to, any member of the Group or were proposed to be acquired or disposed of by, or leased to, any member of the Group.

– II-4 –

GENERAL INFORMATION

APPENDIX II

7. MATERIAL CONTRACTS

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

• (a) a disposal agreement dated 24 October 2019 entered into between, among others, Wuhan New Software Park Development Company Limited（武漢軟件新城發展有 限公司） (being a non-wholly owned subsidiary of the Company) and Wuhan Hecheng Wenlv Development Co., Ltd.（武漢和晟文旅發展有限公司）in relation to the disposal of the entire equity interest of Wuhan Springfield Real Estate Development Co., Ltd.* （武漢春田房地產開發有限公司）, together with the shareholder’s loan and all its outstanding amount and liabilities for the total consideration of RMB870,000,000;

• (b) a loan agreement dated 3 December 2019 (the “ Loan Agreement ”) entered into between Dalian Shengyue Property Development Company Limited（大連聖躍房地 產開發有限公司） (being a wholly-owned subsidiary of the Company) (the “ Borrower ”) and Shanghai Jiayu Medical Investment Management Co., Ltd.（上海 嘉愈醫療投資管理有限公司）(the “ Lender ”) in relation to granting of the loan in a principal amount of up to RMB288,500,000;

• (c) a pledge agreement dated 3 December 2019 entered into between two wholly-owned subsidiaries of the Company, namely Dalian Software Park Zhongxing Development Co., Ltd. （大連軟件園中興開發有限公司） and Dalian Yitong Property Development Company Limited （大連益通房地產開發有限公司）, and the Lender in favour of the Lender, in relation to the charge of their certain assets to the Lender as security to the obligations of the Borrower under the Loan Agreement;

• (d) a guarantee agreement dated 3 December 2019 entered into between Yida Development and the Lender in favour of the Lender, in relation to the guarantee of due performance of the payment obligations of the Borrower under the Loan Agreement in an amount of up to RMB288,500,000;

• (e) an extension agreement dated 18 February 2020 was entered into between the Borrower and the Lender pursuant to which the repayment of RMB22,000,000 was extended from 18 February 2020 to 30 June 2020, or two working days after the Borrower has obtained other alternative financing of RMB22,000,000 (whichever is earlier), with other terms of the Loan Agreement remain unchanged;

– II-5 –

GENERAL INFORMATION

APPENDIX II

• (f) a second extension agreement dated 9 June 2020 was entered into between the Borrower and the Lender pursuant to which the loan of RMB230,000,000 was further extended to 31 March 2021 and the loan amount was revised to RMB246,020,603 by taking into account any unpaid interest prior to the original expiry of the respective portion of the loan, with other terms of the Loan Agreement remain unchanged;

• (g) a framework agreement dated 16 May 2020 was entered into among the Company, Yida Development, Dalian Yida Management Consulting Company Limited（大連 億達管理諮詢有限公司）(“ Yida Management ”), Sumitomo Realty & Development Co., Ltd.（住友不動產株式会社）(a company listed on the Tokyo Stock Exchange (stock code: 8830: TYO)) (“ Sumitomo R&D ”), Xumeifu (Shanghai) Investment Consultancy Company Limited （須美府（上海）投資諮詢有限公司） (“ Xumeifu (Shanghai) ”), Dalian Qingyun Sky Realty and Development Company Limited

• （大連青雲天下房地產開發有限公司） (a joint venture subsidiary of the Company) (“ Joint Venture ”) and Dalian Jiaguan Guangcheng Corporate Management Centre (Limited Partnership （大連嘉貫光城企業管理中心有限合夥）） (“ LLP1* ”) which sets out the principles for the transactions contemplated under this agreement and the agreements (j) to (l) below and the roles of the parties thereto for a total consideration of RMB4,020,940,000;

• (h) a contribution agreement dated 16 May 2020 entered into among Yida Management, China Orient Asset Management Co., Ltd.（中國東方資產管理股份有 限公司） (“ Dongfang ”), Shanghai Dongyuan Huixin Equity Investment Fund Management Co., Limited（上海東源匯信股權投資基金管理有限公司）(“ Dongyuan* ”) and Mr. Pang Xunting in relation to certain capital contribution made by Dongfang in the amount of RMB2,600 million and Yida Management in the amount of RMB430 million to LLP1;

• (i) a disposal agreement dated 16 May 2020 entered into among Yida Management, Dalian Jiaguan Jincheng Corporate Management Centre (Limited Partnership（大 連嘉貫錦城企業管理中心（有限合夥））(“ LLP2* ”), Dongfang and Dongyuan in relation to the disposal of 0.02475% equity interest in the Joint Venture held by Yida Management for a total consideration of RMB1 million;

• (j) an acquisition agreement dated 16 May 2020 entered into between Dongfang, China Orient Asset Management Co. Ltd. Liaoning branch, Yida Development, Yida Management and the Joint Venture in relation to the acquisition of the entire equity interests in LLP1 for a consideration of RMB2,600 million and LLP2 for a consideration of RMB1 million by Yida Development;

– II-6 –

GENERAL INFORMATION

APPENDIX II

• (k) an acquisition framework agreement dated 16 May 2020 entered into among the Company, Yida Service, Yida Development, Sumitomo R&D and Xumeifu (Shanghai) in relation to the acquisition of 50% equity interest in Service Company for a consideration of RMB2,550,000;

• (l) a third extension agreement dated 11 March 2021 was entered into between the Borrower and the Lender pursuant to which the loan of RMB230,000,000 was further extended to 31 October 2021 and the loan amount was revised to RMB251,558,851.54 by taking into account any unpaid interest prior to the original expiry of the respective portion of the loan, with other terms of the Loan Agreement remain unchanged;

• (m) the Equity Transfer Agreement; and

• (n) the Supplemental Agreement.

• For identification only

8. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, the Group was not engaged in any material litigation or arbitration proceedings nor was any material litigation or claim pending or threatened against it.

9. MISCELLANEOUS

• (a) The joint secretaries of the Company are Ms. Wang Huiting (“ Ms. Wang ”) and Ms. Kwong Yin Ping Yvonne (“ Ms. Kwong ”). Ms. Wang holds a PRC legal professional qualification certificate, whereas Ms. Kwong is a fellow member of each of The Chartered Governance Institute and The Hong Kong Institute of Chartered Secretaries.

• (b) The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

• (c) The principal place of business of the Company in Hong Kong is situated at Room 1215, 12th Floor, Building 2, Pacific Place, 88 Queensway, Admiralty, Hong Kong.

• (d) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, whose address is situated at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

– II-7 –

GENERAL INFORMATION

APPENDIX II

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours on any weekday (Saturday, Sunday and public holiday excluded) at the principal place of business of the Company at Room 1215, 12th Floor, Building 2, Pacific Place, 88 Queensway, Admiralty, Hong Kong for a period of 14 days from the date of this circular:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for the three financial years ended 31 December 2018, 2019 and 2020;

• (c) the circular of the Company dated 30 April 2021 in relation to an extension agreement dated 11 March 2021 entered into by Dalian Shengyue Property Development Company Limited （大連聖躍房地產開發有限公司）(a wholly-owned subsidiary of the Company) and Shanghai Jiayu Medical Investment Management Co., Ltd. （上海嘉愈醫療投資管理有限公司）, which constituted a connected transaction for the Company under Chapter 14A of the Listing Rules;

• (d) the material contracts referred to in the paragraph headed “7. Material Contracts” in this appendix; and

• (e) this circular.

11. LANGUAGE

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

– II-8 –