THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or other registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in the Company, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s). This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

New Sports Group Limited 新 體 育 集 團 有 限 公 司 (Incorporated in the Cayman Islands with limited liability) (Stock code: 299) (1) MAJOR ACQUISITION IN RELATION TO ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL IN YUE JIN ASIA LIMITED INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE; (2) ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE; (3) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; (4) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND (5) NOTICE OF GENERAL MEETING

Financial Adviser to the Company

CVP Capital Limited

Placing Agent

China Yinsheng Securities Limited

A notice convening the EGM (as defined herein) of the Company to be held at Room 1804, 18/F, Tower 1, Admiralty Centre, 18 Harcourt Road, Admiralty, Hong Kong on 19 December 2016 10:30 a.m. is set out on pages EGM-1 to EGM-4 of this circular. Whether or not you are able to attend the meeting, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time fixed for the holding of the meeting 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 at the meeting or any adjournment thereof (as the case may be) should you so wish.

30 November 2016 CONTENTS

Page

DEFINITIONS ...... 1

LETTER FROM THE BOARD ...... 9

APPENDIX I — FINANCIAL INFORMATION OF THE GROUP ...... I-1

APPENDIX II — ACCOUNTANTS’ REPORT ON THE TARGET GROUP . II-1

APPENDIX III — ACCOUNTANTS’ REPORT ON THETARGETPRCGROUP ...... III-1

APPENDIX IV — MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THETARGETGROUPAND THETARGETPRCGROUP ...... IV-1

APPENDIX V — UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP ...... V-1

APPENDIX VI — VALUATION REPORT OF THE REAL PROPERTY ..... VI-1

APPENDIX VII — REPORTS IN RELATION TO THE PROFIT FORECAST MADE IN THE VALUATIONS OF THE BUSINESSES ...... VII-1

APPENDIX VIII — VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED ...... VIII-1

APPENDIX IX — VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED IX-1

APPENDIX X — GENERAL INFORMATION ...... X-1

NOTICE OF EGM ...... EGM-1

– i – DEFINITIONS

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

‘‘Acquisition’’ means the transactions contemplated under the Sale and Purchase Agreement

‘‘Acquisition Specific Mandate’’ means a specific mandate to be sought from the independent Shareholders at the EGM to satisfy the allotment and issue of the Consideration Shares

‘‘Announcement’’ the announcement of the Company dated 19 September 2016 in relation to, among other things, the Acquisition, the Subscriptions and the Placing

‘‘Board’’ means the board of Directors

‘‘Company’’ means New Sports Group Limited, a company incorporated under the laws of the Cayman Islands with limited liability andwhosesharesarelistedontheStockExchange

‘‘Completion’’ means the completion of the sale and purchase of the Target Share in the Target Company and the assignment of the Seller’s rights, title, interest and benefits in and to the Loan in accordance with the Sale and Purchase Agreement

‘‘Completion Date’’ means the date of Completion and Subscription Completion, which is the date within 10 business days after the date on which the Conditions Precedent under the Sale and Purchase Agreement and the Subscription Conditions Precedent under the Subscription Agreements are satisfied or waived or such other date as the parties to the Sale and Purchase Agreement and the Subscription Agreements may agree in writing

‘‘Conditions Precedent’’ means the conditions precedent to Completion under the Sale and Purchase Agreement

‘‘Consideration’’ means the total consideration for the sale and purchase of the Target Share and the assignment of the Loan, being initially HK$1,000,000,000, subject to adjustment as set out in the paragraph headed ‘‘Retained Consideration Adjustments’’

‘‘Consideration Shares’’ means such number of Shares to be issued and allotted by the Company at the Issue Price as settlement of part of the Consideration under the Sale and Purchase Agreement

– 1 – DEFINITIONS

‘‘Crystal Fount Investments means Crystal Fount Investments Limited (晶泉投資有限公 Limited’’ 司), a company incorporated in the British Virgin Islands, an investor of the Subscription Shares

‘‘CVP’’ CVP Capital Limited, the Company’s financial adviser in relation to the Acquisition

‘‘Director(s)’’ means the director(s) of the Company

‘‘EGM’’ means an extraordinary general meeting to be convened by the Company to consider and approve (i) the Sale and Purchase Agreement and the Acquisition contemplated thereunder and the Acquisition Specific Mandate; (ii) the Subscription Agreements and the Subscriptions contemplated thereunder and the Subscription Specific Mandate; (iii) the Placing Agreement and the Placing contemplated thereunder and the Placing Specific Mandate; and (iv) the Increase in Authorised Share Capital

‘‘Enlarged Group’’ means the Group together with the Target Group immediately after Completion

‘‘Group’’ means the Company and its subsidiaries

‘‘HK$’’ means Hong Kong dollars, the lawful currency of Hong Kong

‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC

‘‘Increase in Authorised Share the proposed increase in the authorised share capital of the Capital’’ Company from HK$100,000,000 divided into 40,000,000,000 Shares to HK$200,000,000 divided into 80,000,000,000 Shares by the creation of an additional 40,000,000,000 Shares

‘‘Indemnified Person(s)’’ means the Purchaser, each member of the Target Group and their respective successors in title, officers, directors, employees, workers and agents

‘‘Independent Third Party’’ means a person independent of the Company and its connected persons (as defined in the Listing Rules)

‘‘Initial Consideration’’ means the part of the Consideration which shall be settled at Completion, being HK$850,000,000

‘‘Issue Price’’ means the price per Share at which the Consideration Shares will be issued and initially at HK$0.062 per Share (subject to Issue Price Adjustment)

– 2 – DEFINITIONS

‘‘Issue Price Adjustment’’ has the meaning given to it under the paragraph headed ‘‘Issue Price Adjustment’’ in this circular

‘‘Latest Practicable Date’’ 29 November, 2016, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

‘‘Listing Approval’’ means the Stock Exchange having granted the listing of, and permission to deal in, the Consideration Shares on the Stock Exchange

‘‘Listing Rules’’ means the Rules Governing the Listing of Securities on the Stock Exchange

‘‘Loan’’ means the loan owing from Nayuan Development Limited, being a member of the Target Group, to the Seller as at the Completion Date (but immediately prior to Completion) in the amount of HK$882,000,000

‘‘Long Stop Date’’ means 30 June 2017 or such other date as mutually agreed by the Purchaser and the Seller

‘‘Ms. Ai Qing’’ an investor of the Subscription Shares

‘‘Ms. Zheng Kuanjian’’ an investor of the Subscription Shares

‘‘Notified Claims’’ means the amount of any claim made by the Purchaser against the Seller under any of the Transaction Documents

‘‘Operation Entrustment means the agreement dated 27 August 2014 (as Agreement’’ supplemented and amended by a supplemental agreement dated 13 October 2014) entered into between Shenzhen Yuejin Investment Company Limited* (深圳粵錦投資有限 公司) (currently known as Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)), being a member of the Target Group and Shenzhen Dapeng New District Management Committee* (深圳市大鵬新區管理委 員會) in relation to the entrustment of operation of Shenzhen Marine Sports Base and Sailing School by Shenzhen Dapeng New District Management Committee* to Shenzhen Yuejin Investment Company Limited* or its subsidiaries

‘‘Option Completion’’ means the completion of the sale and purchase of the Option Target Shares after exercise of the Put Option

‘‘Option Completion Date’’ means the date upon which an Option Completion takes place

– 3 – DEFINITIONS

‘‘Option Share Price’’ has the meaning given to it under the paragraph headed ‘‘Put Option’’ in this circular

‘‘Option Target Shares’’ means all of the issued shares in the capital of the Target Company as at the Option Completion Date

‘‘Ordinary Resolution’’ aresolutionproposedandpassedassuchbyasimple majority at the EGM convened under the articles of association of the Company, where the votes shall be taken by way of a poll

‘‘Origin Development Limited’’ means Origin Development Limited (始創有限公司), a company incorporated in the British Virgin Islands, an investor of the Subscription Shares

‘‘Placee(s)’’ means any person(s) procured by or on behalf of the Placing Agent to subscribe for any of the Placing Shares pursuant to the Placing Agent’s obligations under the Placing Agreement

‘‘Placing’’ the placing of the Placing Shares by or on behalf of the Placing Agent, on a best endeavour basis, to the Placee(s) pursuant to the Placing Agreement

‘‘Placing Agent’’ means China Yinsheng Securities Limited, a licensed corporation to carry out Type 1 (Dealing in Securities), Type 2 (Dealing in Futures Contracts), Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated activities under the SFO, being the placing agent of the Company under the Placing

‘‘Placing Agreement’’ means the placing agreement entered into between China Yinsheng Securities Limited and the Company dated 19 September 2016 in relation to the issue and allotment of up to 4,088,000,000 Shares to not less than six Placees pursuant to the Placing Specific Mandate

‘‘Placing Completion’’ means the completion of the placing of new Shares in accordance with the Placing Agreement

‘‘Placing Completion Date’’ means the date of Placing Completion, which is the date which is within 10 business days after the date on which the Placing Conditions Precedent under the Placing Agreement are satisfied or such other date as the parties to the Placing Agreement may agree in writing

‘‘Placing Condition(s) means the conditions precedent to Placing Completion Precedent’’ under the Placing Agreement

– 4 – DEFINITIONS

‘‘Placing Long Stop Date’’ means 30 June 2017 or such other date as mutually agreed by the Company and the Placing Agent

‘‘Placing Price’’ means HK$0.062 per Placing Share

‘‘Placing Shares’’ means 4,088,000,000 new Shares to be issued by the Company pursuant to the terms of the Placing Agreement

‘‘Placing Specific Mandate’’ means a specific mandate to be sought from the independent Shareholders at the EGM to satisfy the allotment and issue of the Placing Shares

‘‘PRC’’ means the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan

‘‘Purchaser’’ means New Sports Investment Holding Limited, a company incorporated under the laws of the British Virgin Islands, and a wholly-owned subsidiary of the Company

‘‘Put Option’’ has the meaning given to it under the paragraph headed ‘‘Put Option’’ in this circular

‘‘Real Property’’ means 2 blocks (block number 1 and 4) of the 6-storey apartments and 5 blocks (block number 16, 17, 18, 19 and 20) of the 2-storey commercial blocks in a composite development situated at Chenyu Road East, Pingluo Road, Yuhong District, Shenyang City, Liaoning Province, the PRC

‘‘Retained Consideration’’ means the part of the Consideration which shall be settled post-Completion and on or before the Retained Consideration Release Date, being initially HK$150,000,000, which is subject to the Retained Consideration Adjustment

‘‘Retained Consideration has the meaning given to it under the paragraph headed Adjustment’’ ‘‘Retained Consideration Adjustment’’ in this circular

‘‘Retained Consideration means a date in 2019 which is no later than 30 April 2019 Release Date’’

‘‘RMB’’ means Renminbi, the lawful currency of the PRC

– 5 – DEFINITIONS

‘‘Sale and Purchase Agreement’’ means the agreement dated 19 September 2016 entered into among the Company, the Purchaser, the Seller and the Seller Guarantor in relation to the acquisition of the Target Share in the Target Company and the assignment of all the Seller’s rights, title, interest and benefits in and to the Loan

‘‘School Business’’ means the business of the provision of tuition services at a school located at Shenzhen Marine Sports Base and Sailing School

‘‘Seller’’ means Yue Jin International Limited (粵錦國際有限公司), a company incorporated under the laws of the British Virgin Islands the entire issued shares of which are held by the Seller Guarantor

‘‘Seller Guarantor’’ Mr. Cheung Chun Shun (張振純)

‘‘SFO’’ means Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

‘‘Share(s)’’ means ordinary share(s) of HK$0.0025 each in the share capital of the Company

‘‘Shareholder(s)’’ means holder(s) of the Share(s)

‘‘Shenzhen Marine Sports Base means the marine sports base and sailing school located at and Sailing School’’ Judiaosha, Xindong Road, Nan’ao sub-district, Longgang District, Shenzhen (深圳市龍崗區南澳街道新東路桔釣沙片 區)

‘‘Stock Exchange’’ means The Stock Exchange of Hong Kong Limited

‘‘Subscribers’’ means Origin Development Limited, Crystal Fount Investments Limited, Ms. Ai Qing and Ms. Zheng Kuanjian

‘‘Subscription(s)’’ means the subscription of the Subscription Shares by each of Origin Development Limited, Crystal Fount Investments Limited, Ms. Ai Qing and Ms. Zheng Kuanjian pursuant to their respective Subscription Agreements

‘‘Subscription Agreement(s)’’ means the subscription agreement(s) entered into between the Company and each of Origin Development Limited, Crystal Fount Investments Limited, Ms. Ai Qing and Ms. Zheng Kuanjian dated 19 September 2016 in relation to the issue and allotment of an aggregate of 12,181,629,000 Shares

– 6 – DEFINITIONS

‘‘Subscription Completion’’ means the completion of the allotment and issue of new Shares in accordance with the Subscription Agreements

‘‘Subscription Condition(s) means the conditions precedent to Subscription Completion Precedent’’ under Subscription Agreements

‘‘Subscription Long Stop Date’’ means 30 June 2017 or such other dates as mutually agreed by the Company and the respective Subscribers

‘‘Subscription Price’’ means HK$0.062 per Subscription Share

‘‘Subscription Shares’’ means 12,181,629,000 new Shares to be subscribed by the Subscribers under their respective Subscription Agreements

‘‘Subscription Specific means a specific mandate to be sought from the independent Mandate’’ Shareholders at the EGM to satisfy the allotment and issue of the Subscription Shares

‘‘Target Company’’ means Yue Jin Asia Limited (粵錦亞洲有限公司), a company incorporated under the laws of the British Virgin Islands and a wholly owned subsidiary of the Seller

‘‘Target Group’’ means the Target Company and its subsidiaries

‘‘Target PRC Company’’ means Shenzhen Yuejin Sports Company Limited* (深圳粵 錦體育有限公司) (formerly known as Shenzhen Yuejin Investment Company Limited* (深圳粵錦投資有限公司)), a company incorporated under the laws of the PRC and an indirect wholly-owned subsidiary of Target Company

‘‘Target PRC Group’’ means the Target PRC Company and its subsidiaries

‘‘Target Share’’ means 1 share of the Target Company to be sold by the Seller to the Purchaser pursuant to the Sale and Purchase Agreement, representing the entire issued share capital of the Target Company

‘‘the 13th Five-Year Plan’’ has the meaning given to it under the paragraph headed ‘‘The Yacht Club Business and the School Business’’ in this circular

‘‘The School’’ Virdom International Academy

‘‘Transaction Documents’’ mean the Sale and Purchase Agreement, the loan assignment and the tax deed

‘‘Valuations of the Business’’ has the meaning given to it under the paragraph headed ‘‘Basis of determining Consideration’’ in this circular

– 7 – DEFINITIONS

‘‘Yacht Club’’ Dapeng Yacht Club (大鵬游艇會) located at the Shenzhen Marine Sports Base and Sailing School

‘‘Yacht Club Business’’ means the business of operating the Yacht Club

* for identification purpose only

– 8 – LETTER FROM THE BOARD

New Sports Group Limited 新 體 育 集 團 有 限 公 司 (Incorporated in the Cayman Islands with limited liability) (Stock code: 299)

Executive Directors: Registered office: Mr. Zhang Xiaodong (Chairman and Cricket Square Chief Executive Officer) Hutchins Drive Ms. Xia Lingjie P.O. Box 2681 Grand Cayman, KY1-1111 Non-executive Director Cayman Islands Mr. Lau Wan Po Head Office and Principal Place Independent Non-executive Directors: of Business in Hong Kong: Mr. Chen Zetong Unit 2001, 20/F., Lippo Centre Mr. Chui Man Lung, Everett Tower 2, No.89 Queensway Ms. He Suying Admiralty Dr. Tang Lai Wah Hong Kong

30 November 2016

To the Shareholders

Dear Sir or Madam,

(1) MAJOR ACQUISITION IN RELATION TO ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL IN YUE JIN ASIA LIMITED INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE; (2) ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE; (3) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; (4) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND (5) NOTICE OF GENERAL MEETING

– 9 – LETTER FROM THE BOARD

INTRODUCTION

Reference is made to the Announcement. On 19 September 2016 (after trading hours),

(i) the Company and the Purchaser, being a direct wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement with the Seller and the Seller Guarantor, pursuant to which, subject to the fulfillment of the Conditions Precedent,

(a) the Purchaser has agreed to purchase, and the Seller has agreed to sell, the Target Share, representing the entire issued share capital in the Target Company, and

(b) the Purchaser has agreed to accept, and the Seller has agreed to assign, all of the Seller’s rights, title, interest and benefits in and to the Loan;

(ii) each of Subscribers entered into a separate Subscription Agreement with the Company, pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, a total of 12,181,629,000 Subscription Shares at the Subscription Price of HK$0.062 per Subscription Share; and

(iii) the Company and the Placing Agent entered into the Placing Agreement, pursuant to which, subject to the fulfillment of the Placing Conditions Precedent, the Company agreed to place, through the Placing Agent, on a best endeavour basis, up to 4,088,000,000 new Shares to not less than six independent Placees at the Placing Price of HK$0.062 per Placing Share.

The purpose of this circular is to provide you with, among other things, (i) further details of the Sale and Purchase Agreement and the Acquisition contemplated thereunder; (ii) further details of each of the Subscription Agreements and the Subscriptions contemplated thereunder; (iii) further details of the Placing Agreement and the Placing contemplated thereunder; (iv) financialinformationinrelationtotheTargetGroup; (v) financial information in relation to the Target PRC Group; (vi) the pro forma statement of the assets and liabilities of the Enlarged Group; (vii) a valuation report of the Real Property; (viii) a valuation report of Shenzhen Dapeng Yacht Club Company Limited; (ix) a valuation report of Shenzhen Dapeng International Education Company Limited; and (x) the notice of the EGM.

As the Target Company was only incorporated on 17 March 2016, the accountant’sreport on the Target Group for the period from 17 March 2016 to 31 August 2016 may not be sufficient for the Shareholders to fully appreciate the financial information of the Target Group. An accountant’s report on the Target PRC Group for each of the period from 21 July 2014 (the date of establishment of the Target PRC Company) to 31 December 2014, the year ended 31 December 2015 and the eight months ended 31 August 2016 has also been set out in Appendix III to this circular for Shareholder’s information.

– 10 – LETTER FROM THE BOARD

SALE AND PURCHASE AGREEMENT

The information of the Sale and Purchase Agreement is summarized as below:

Date

19 September 2016 (after trading hours)

Parties

Buyer: the Company (through the Purchaser)

Seller: the Seller

Seller guarantor: the Seller Guarantor, being the sole legal and beneficial owner of the Seller

Asset to be acquired: the Target Share, representing the entire issued share capital in the Target Company and all of the Seller’s rights, title, interest and benefits in and to the Loan

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, as at the Latest Practicable Date, each of the Seller and its ultimate beneficial owners is an Independent Third Party.

In November 2015, Mr. Zhang Xiaodong, the current chairman of the Company, met the deputy general manager of the Yacht Club, Mr. Liang Xiaodong at a match of the China Cup International Regatta* (中國杯帆船賽), which was held at the Yacht Club in Shenzhen. Mr. Zhang Xiaodong was impressed by the serenity of Dapeng Bay in Shenzhen and the rapid development of yacht club business in Shenzhen. Mr. Zhang Xiaodong was later introduced to Mr Cheung Chun Shun (the Seller Guarantor) by Mr. Liang Xiaodong and in August 2016, Mr Zhang Xiaodong expressed to Mr Cheung Chun Shun the Company’s interest in acquiring the Yacht Club Business and the School Business. The Board confirms that the Seller and its ultimate beneficial owner has no prior business relationship with the Company.

Assets to be acquired

Pursuant to the terms and conditions of the Sale and Purchase Agreement, subject to the fulfilment or waiver (as the case may be) of the Conditions Precedent,

(i) the Purchaser has agreed to buy and the Seller has agreed to sell the Target Share, representing the entire issued share capital in the Target Company; and

(ii) the Purchaser has agreed to accept, and the Seller has agreed to assign all of the Seller’s rights, title, interest and benefits in and to the Loan.

Accordingtotheinformationprovidedbythe Seller, at the Latest Practicable Date, the Target Group is holding (i) the Yacht Club Business, (ii) the School Business and (iii) the Real Property in the PRC.

– 11 – LETTER FROM THE BOARD

The following diagram shows the shareholding and corporate structure of the Target Group as at the Latest Practicable Date:

The Seller Guarantor

100%

The Seller

100%

The Target Company

100%

Nayuan Development Limited (納元發展有限公司)

100%

Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)

100%

Shenzhen Ruiteng Enterprise Management Shenzhen Qianhai Virdom Education Company Limited* Investments Company Limited* (深圳瑞騰企業管理有限公司) (深圳前海唯致教育投資有限公司)

100%

Shenzhen Dapeng International Education 100% Company Limited* (深圳大鵬國際教育有限公司)

100%

Shenzhen Dapeng Yacht Club Shenzhen Dapeng Xinqu Virdom Company Limited* International Academy* (深圳大鵬遊艇會有限公司) (深圳市大鵬新區唯致培訓學校)

– 12 – LETTER FROM THE BOARD

Consideration

Pursuant to the Sale and Purchase Agreement, the Consideration, being HK$1,000,000,000, shall be satisfied in the following manner:

(i) the Initial Consideration shall be payable at Completion as follows:

(a) HK$700,000,000 shall be paid by the Purchaser to the Seller by way of cash;

(b) HK$150,000,000 shall be satisfied by the allotment and issue by the Company of 2,419,354,838 Consideration Shares at the Issue Price to the Seller (or its nominee as designated by the Seller); and

(ii) the Retained Consideration, being initially HK$150,000,000, subject to Retained Consideration Adjustment as set out in the paragraph headed ‘‘Retained Consideration Adjustments’’ in this circular, shall be satisfied by the allotment and issue by the Company of such number of Consideration Shares at the Issue Price to the Seller (or its nominee as designated by the Seller) on the Retained Consideration Release Date, provided that in the event that the Put Option (as defined below) has been exercised, the Purchaser shall no longer be obliged to pay the Retained Consideration.

Retained Consideration Adjustments

The Retained Consideration is subject to the following adjustments (the ‘‘Retained Consideration Adjustment’’):

(i) provided that Completion duly takes place in accordance with the Sale and Purchase Agreement, in the event that the 2018 Yacht Profit (as defined below) is less than HK$60,000,000, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by such amount as determined in accordance with the following formula:

Retained Consideration = HK$150,000,000 – 2018 Yacht Profit Shortfall x 9

Where,

(a) ‘‘2018 Yacht Profit Shortfall’’ = HK$60,000,000 – 2018 Yacht Profit;

(b) ‘‘2018 Yacht Profit’’ = the net profit after tax generated from the Yacht Club Business for the financial year ending 31 December 2018 as referred to in the accounts thereof audited by the auditors of the Company, provided that if the Yacht Club Business records nil profit or a net loss for the financial year ending 31 December 2018, the 2018 Yacht Profit shall be deemed to be zero,

for the avoidance of doubt, there will be no adjustment to the Retained Consideration if the 2018 Yacht Profit is more than HK$60,000,000.

– 13 – LETTER FROM THE BOARD

The above ratio of 9 was arrived after arm’s length negotiation between the Company and the Seller after taking into consideration (i) the preliminary valuation of the Yacht Club Business; (ii) 2018 Yacht Profit; and (iii) the historical price to earnings ratios of other companies listed on other stock exchanges such as the Montenegro Stock Exchange, New York Stock Exchange and Zagreb Stock Exchange engaging in similar business as the Yacht Club Business (the ‘‘Yacht Comparables’’). Due to wide business scope of the Yacht Club Business, there is no direct comparable company listed on the Stock Exchange in Hong Kong. Therefore, the Company has selected the Yacht Comparables after taking into consideration the following factors: 1) similar business to or having certain similar business scope to the Yacht Club Business; and 2) sufficient trading and operating data. Set out below is list of the Yacht Comparables and its details:

Trading Historical Company Name Stock Code Location Business Description PE Kiriakoulis Mediterranean KYRI.GA Greece Kiriakoulis Mediterranean Cruises N/A* Cruises Shipping SA Shipping SA, a yachting company, leases leisure vessels. The company leases catamarans and other sailboats. Marina a.d. Bar MARB.ME Montenegro Marina a.d. Bar provides tourist 8.6x service. The company operates a marina offering services as the links for the yachts and boats, renting of yachts, boats, and cars, supply of water, fuel, and food, among others. ClubCorp Holdings, Inc. MYCC.US United States ClubCorp Holdings, Inc. operates 59.2x as a membership-based leisure business. The company owns and operates private golf, country, business, sports and alumni clubs in North America. Camper & Nicholsons CNMI.LN London Camper & Nicholsons Marina N/A* Marina Investments Investments Limited acquires, Limited develops, redevelops and operates marinas and marina related real estate. Adriatic Croatia ACIRA.CZ Croatia Adriatic Croatia International Club 27.7x International Club dd dd Opatija operates marinas along Opatija the Adriatic coast of Croatia.

Source: Bloomberg

* Both Kiriakoulis Mediterranean Cruises Shipping SA and Camper & Nicholsons Marina Investments Limited publicly reported net loss for the trailing 12 months. Therefore, the historical PE ratios for these two companies are not applicable.

Note: The Yacht Comparables are the same comparable companies as identified by the independent valuer, Roma Appraisals Limited, as set out in Appendix VIII of this Circular

– 14 – LETTER FROM THE BOARD

Without comparable 2018 forward price to earnings ratios, the Company took into account the historical price to earnings ratios of the Yacht Comparables as at 31 August 2016, which ranged from approximately 8.6 times to 59.2 times (the ‘‘Comparable Yacht PEs’’). The price to earnings ratio of the preliminary valuation of the Yacht Club Business and the 2018 Yacht Profit is approximately 9 times which is at the lower end of the Comparable Yacht PEs.

The 2018 Yacht Profit Shortfall was arrived at after arm’s length negotiations on normal commercial terms between the Group and the Seller having taken into account the following considerations (the following considerations, the ‘‘Yacht’sPotential’’):

1. Development of the business model of the Yacht Club Business

As at the Latest Practicable Date, the Yacht Club Business was in its preliminary stage and only commenced its operation in 2016. With the gradual developments of its business model, details of which are mentioned in the section headed ‘‘Business model of the Target Group’’ in this Circular, the Board is of the view that the Yacht Club Business will become profitable.

2. As at the Latest Practicable Date, approximately 58.2% of the projected number of Yacht Club members in 2017 have signed membership subscription confirmation with the Yacht Club and confirmed that they would join the Yacht Club as a member upon introduction of the membership system in 2017. The Board is of the view that their intentions provide a foundation of the Yacht Club Business and signify future potential growth of number of members.

3. Alignment with the PRC national policies and development plans of local governments of the PRC

a. Dapeng New District Protection and Development Comprehensive Plan 2012–2020*《大鵬新區保護與發展綜合規劃(2012–2020)》

Shenzhen government plans to develop Dapeng New District* (大鵬新區) into a sports leisure coastal tourist vacation district. The Yacht Club is located in the Dapeng New District.

b. 12th Five-year Plan for Nan’ao, Dapeng New District, Shenzhen (2011– 2015)*《深圳市大鵬新區南澳十二五規劃(2011–2015年)》

Focus on developing the area into coast leisure and sports zone, seafront resort and tourism zone and downtown cultural and integrated ancillary services zone.

c. Planning Study for Industries in Dapeng New District, Shenzhen (2011– 2016)*《深圳市大鵬新區產業規劃研究(2012–2016)》

– 15 – LETTER FROM THE BOARD

With the support of the Universiade Marine Sports Base* (大運會海上運 動基地) (currently known as the Yacht Club), the local government plans to develop marine sport teaching, training and competition events, including marine sport competitions such as international surfing, parasailing, water skiing, dinghy sailing, sampan sailing, boat sailing, yacht sailing and motor boat sailing. According to the website of China Cup International Regatta* (中國杯帆船賽), the Yacht Club is one of the hosting venues for China Cup International Regatta* (中國杯帆船賽), an international yachting competition inaugurated in 2007. d. Statutory Plan of Area 403-T2-01 (Judiaosha (桔釣沙) area), Longgang (龍 崗) District, Shenzhen (2006)*《深圳市龍崗403-T2-01號片區(桔釣沙地 區)法定圖則》(2006)

To develop Judiaosha (桔釣沙) area, Longgang District (龍崗區)intoa coastal tourism and resort area with ecological protection as its emphasis, and sports and leisure as its theme. e. Development Plan for Coastal Tourism in Guangdong (2011–2020)*《廣東 省濱海旅遊發展規劃 (2011–2020年)》

Guangdong government advocates in developing coastal tourism in Guangdong province. The government suggested the development of yacht clubs in Guangzhou Nansha, Bio-Island, Zhuhai Pingsha and Shenzhen Dapang Bay. The policy also suggested promotion and development of watersports industry in the province. f. Several Opinions of the State Council on Promoting the Reform and Development of the Tourism Industry*《國務院關於促進旅遊業改革發展 的若干意見》

The State Council proposed to develop yacht travel industry in mass market by simplifying the registration procedures of yacht, lowering the cost of travelling, berthing, maintenance and encouraging the development of yacht marina.

– 16 – LETTER FROM THE BOARD

g. Invest Shenzhen (深圳市投資推廣署)

According to the website of Invest Shenzhen, as at 31 December 2011, there were 189 enterprises in the Fortune Global 500 list which have their offices located in Shenzhen (note: based on the statistics of the Science, Industry, Trade & Information Technology Commission of Shenzhen Municipality* (深圳市科工貿信委)) such number of the enterprises increased to over 260 and 270 as at 30 September 2014 and 31 December 2015 respectively. It implies growing demand for high class leisure facilities for corporate executives in Shenzhen.

(ii) provided that Completion duly takes place in accordance with the Sale and Purchase Agreement, in the event that the 2018 School Profit (as defined below) is less than HK$17,500,000, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by such amount as determined in accordance with the following formula:

Retained Consideration = HK$150,000,000 – 2018 School Profit Shortfall x 16

Where,

(a) ‘‘2018 School Profit Shortfall’’ = HK$17,500,000 – 2018 School Profit;

(b) ‘‘2018 School Profit’’ = the net profit after tax generated from the School Business for the financial year ending 31 December 2018 as referred to in the accounts thereof audited by the auditors of the Company, provided that if the School Business records nil profit or a net loss for the financial year ending 31 December 2018, the 2018 School Profit shall be deemed to be zero,

for the avoidance of doubt, there will be no adjustment to the Retained Consideration if the 2018 School Profit is more than HK$17,500,000.

The above ratio of 16 was arrived after arm’s length negotiation between the Company and the Seller after taking into consideration (i) the preliminary valuation of the School Business; (ii) 2018 School Profit; and (iii) the forward price to earnings ratios of other companies listed on other stock exchanges such as the New York Stock Exchange and Shanghai Stock Exchange engaging in similar business as the School Business (the ‘‘School Comparables’’). Due to wide business scope of the School Business, there is no direct comparable company listed on the Stock Exchange in Hong Kong. Therefore, the Company has selected the School Comparables after taking into consideration the following factors: 1) similar business to or having certain similar business

– 17 – LETTER FROM THE BOARD scope to the School Business; and 2) sufficient trading and operating data. Set out below is a list of the School Comparables and its details:

2018 Trading Forward Company Name Stock Code Location Business Description PE New Oriental Education EDU.US United States New Oriental Education & 13.4x & Technology Group, Technology Group, Inc. offers Inc. educational services. The company offers foreign language training, test preparation courses for admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online classes. Shanghai Xin Nanyang 600661.CH China Shanghai Xin Nanyang Co., Ltd., 42.6x Co., Ltd. through its subsidiaries, manufactures communication products and industrial equipment, develops cable TV network, security trading, and communication systems, provides network integration, education, and precision processing services. TAL Education Group XRS.US United States TAL Education Group provides K- 23.3x 12 afterschool tutoring services in China. The company offers comprehensive tutoring services to K-12 students covering core academic subjects, including mathematics, English, Chinese, physics, chemistry and biology.

Source: Bloomberg

Note: The School Comparables are the comparable companies as identified by the independent valuer, Roma Appraisals Limited, as set out in Appendix IX of this Circular except that China Bilingual Technology & Education Group, Inc. is not included as the company’s 2018 forward PE ratio is not available due to research coverage.

– 18 – LETTER FROM THE BOARD

The Company took into account the forward price to earnings ratios of the School Comparables for the period from January 2018 to December 2018 (the ‘‘Comparable School PEs’’), which ranged from approximately 13.4 times to 42.6 times. The price to earnings ratio of the preliminary valuation of the School Business and the 2018 School Profit is approximately 16 times which is at the lower end of the Comparable School PEs.

The 2018 School Profit Shortfall was arrived after arm’s length negotiations on normal commercial terms between the Group and the Seller having taken into account the following considerations (the following considerations, the ‘‘School’sPotential’’):

1. Development of the business model of the School Business

As at the Latest Practicable Date, the School Business was in the preliminary development stage and only commenced its operation in 2015. With the gradual developments of its business model, details of which are mentioned in the section headed ‘‘Business model of the Target Group’’,theBoardisof the view that the School Business will move into profitability position.

2. The School has entered into an agency agreement with each of the two education agencies which will assist student recruitments of the School in 2016, 2017 and 2018.

The extracted details of each agreement are as follows:

The first agreement was signed between the School and an education agency, an organization independent of the Company and the Target Group, the programs of which, according to the website of the First Agency, are approved and registered with the Education Bureau of the government of HKSAR (the ‘‘First Agency’’).

Details of the agreement The First Agency (1) assists the School to recruit students in the PRC with a fee of RMB20,000 for each referral; and (2) provide consultancy services to the students of the School enrolled in International General Certificate of Secondary Education (IGCSE) and American-Hong Kong high school courses for enrolling in the post-secondary institutions in Hong Kong with a service fee of RMB20,000 paid to the First Agency for each student.

Term 37 months from 30 July 2015 to 30 August 2018

The second agreement was signed between the School and an education agency, an organization independent of the Company and the Target Group, which is an established education platform in the Huadong region of the PRC (華東地區)(the‘‘Second Agency’’).

– 19 – LETTER FROM THE BOARD

Details of the agreement The Second Agency acts as the exclusive marketing and student recruitment agent for the School in Shanghai. The Second Agency receives a payment of RMB15,000 for the provision of one year marketing services. For recruitment service, for any student referred by the Second Agency to the School, the Second Agency will receive a referral fee of RMB20,000.

Term 12 months from 1 January 2016 to 31 December 2016

According to the Target Group, the above agreements entered into between the School and the First Agency and the Second Agency were arrived after arm’s length negotiations on normal commercial terms.

3. Alignment with the PRC national policy

a. 《Outline of China’s National Plan for Medium and Long-term Education Reform and Development (2010–2020)》《( 國家中長期教育改革和發展規 劃綱要(2010–2020年)》)

In accordance with the strategic arrangement of the 17th Communist Party of China (‘‘CPC’’) National Congress to ‘‘give priority to education and turn China into a country rich in human resources’’, the PRC government has formulated the ‘‘development missions’’ covering topics of, including but not limited to, senior middle school education, vocational education, higher education, further and continuing education, strengthening building of the teachers’ contingent and ensuring education investment in order to promote the scientific development of education, comprehensively improve the quality of people and accelerate the process of socialist modernization.

b. 《Decision of the State Council on Accelerating the Development of Modern Vocational Education (Guo Fa [2014] No. 19) 》《( 國務院關於加 快發展現代職業教育的決定(國發[2014]19號) 》)

To accelerate the development of modern vocational education is a core strategic plan made by the CPC Central Committee and State Council.

4. Alignment with statistics and research findings

a. Report on the Development of Overseas Study in China (2015) No. 4* (中 國留學發展報告(2015)No.4) issued by Center for China & Globalization (中國與全球化智庫 (CCG)) (www.ccg.org.cn), one of the most authoritative international research institutions in the PRC

– 20 – LETTER FROM THE BOARD

. More than 1/3 of students in the PRC plan to go overseas for high school/university, which implies there is a large demand in the prerequisite courses for overseas education such as preparation courses for various foreign examinations and foreign language training.

. There were nearly 350,000 students in the PRC joined international study tours in 2014 with spending amounted to approximately RMB9 billion. It was expected that around 500,000 students in the PRC will join international study tours in 2015.

. From the year 2000 to 2014, the yearly average rate of increase in the number of Chinese students studying abroad was approximately 22%.

b. XinXueShuo Research* (新學說研究) issued by XinXueShuo Education Research Platform, which is specifically engaged in research, analysis and study of the education industry, in particular, international schools in the PRC

. The growth rate on number of private international schools in the PRC increased from approximately 8.6% in 2010 to approximately 15.6% in 2015.

. It is expected that nearly 1,000 private international schools are needed to meet the demand in the coming several years in the PRC.

c. 《International Education Exchange Open Door Report 2015》*(《2015年 國際教育交流開放門戶報告》) issued by Institute of International Education (IIE) (國際教育協會)

. From 2014 to 2015, the number of Chinese students enrolled in higher education institutions in the United States increased from 274,439 to 304,040, representing an 10.8% increase.

d. National Bureau of Statistics of China (中華人民共和國國家統計局)

. The number of students receiving private education increased from approximately 11 million in 2010 to approximately 14 million in 2014. High school students in private education increased from approximately 1.5 million in 2010 to approximately 1.7 million in 2014.

(iii) if by the Retained Consideration Release Date, Notified Claim(s) shall have been notified by the Purchaser to the Seller, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by the full amount of such Notified Claim(s).

– 21 – LETTER FROM THE BOARD

In the event there is any Retained Consideration Adjustment, the Company will publish an announcement regarding the Retained Consideration Adjustment, and include in its annual report, the amount of the 2018 Yacht Profit, the 2018 School Profit and the Retained Consideration Adjustment.

Issue Price Adjustment

If, at any time between the date of the Sale and Purchase Agreement and the date of allotment and issue of the Consideration Shares, the Shares shall be consolidated or sub- divided, the Issue Price shall be adjusted by multiplying the Issue Price in force immediately before such alteration by the following fraction:

A/B

where:

—‘‘A’’ is the aggregate number of issued Shares immediately before such alteration; and

—‘‘B’’ is the aggregate number of issued Shares immediately after such alteration.

Such adjustment (the ‘‘Issue Price Adjustment’’) shall become effective on the date the alteration takes effect.

Basis of determining Consideration

The Consideration was determined after arm’s length negotiations among the parties to the Sale and Purchase Agreement. With reference to the estimated values of a) the Yacht Club Business; b) the School Business; and c) the Real Property each being HK$496,000,000, HK$280,000,000 and HK$231,000,000, respectively, as at 31 August 2016 as appraised by an independent valuer, Roma Appraisals Limited, the Consideration as agreed between the Purchaser and the Seller under the Sale and Purchase Agreement was HK$1,000,000,000, which is lower than the estimated aggregate value of HK$1,007,000,000 as stated in the valuation reports as set out in Appendices VI, VIII & IX of this circular. Accordingly, the Directors consider that the Consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The valuations on the Yacht Club Business and the School Business (the ‘‘Valuations of the Business’’) are prepared using discounted cash flow method under the income approach. Therefore, the Valuations of the Business are regarded as a profit forecast under Rule 14.61 of the Listing Rules.

– 22 – LETTER FROM THE BOARD

Details of the principal assumptions, including commercial assumptions, upon which the profit forecast is based are set out below:

. The valuations were performed based on a discounted cash flow method under the income-based approach with financial forecasts provided by the management of the Yacht Club Business and the School Business, covering a period of approximately 18 years from the valuation date with reference to the Operation Entrustment Agreement. Long-term growth rate of 2.4% was adopted based on the latest 5-year average of China’s long term inflation as sourced from International Monetary Fund;

. The valuations were mainly based on the projections of the future cash flows as provided by the management of the Yacht Club Business and the School Business. The projections outlined in the financial information provided are reasonable, reflecting market conditions and economic fundamentals, and will be materialized;

. In respect of the breach of certain terms of the Operation Entrustment Agreement, Shenzhen Dapeng New District Management Committee may (i) bring action against Shenzhen Yuejin Sports Company Limited* (formerly known as Shenzhen Yuejin Investment Company Limited*) (or its subsidiaries) for damages, (ii) terminate the Operation Entrustment Agreement, and/or (iii) revoke and cancel the entrustment of operation of Shenzhen Marine Sports Base and Sailing School to Shenzhen Yuejin Sports Company Limited* (formerly known as Shenzhen Yuejin Investment Company Limited*) (or its subsidiaries) (collectively referred to as the ‘‘Events’’). As at the date of valuation, the management was not aware of any of the above Events, the valuation was performed based on the assumption that the Events would not occur during the contractual period of the Operation Entrustment Agreement;

. The valuation was performed based on the audited financial statements of the Yacht Club Business and the School Business as at 31 August 2016;

. The revenue of the Yacht Club Business from non-members was taken into consideration in the projections of future cash flows as provided by the management of the Yacht Club Business;

. Compared to similar interest in public companies, ownership interest is not readily marketable for private companies. Hence, a marketability discount of 16.1% was applied to the valuations result. The marketability discount was adopted by making reference to the study in the FMV Restricted Stock Study Companion Guide published by FMV Opinions, Inc. in 2016;

. Discount rates of 16.0% and 17.2% were adopted for the Yacht Club Business and the School Business respectively, which were the estimated weighted average cost of capital of the Yacht Club Business and the School Business with reference to comparable companies engaged in similar businesses;

– 23 – LETTER FROM THE BOARD

. Working capital projections were estimated with reference to working capital turnover days of the comparable companies of the Yacht Club Business and the School Business;

. The businesses of the Yacht Club Business and the School Business will be operated and developed as planned;

. All relevant legal approvals and business certificates or licenses to operate the business in the localities in which the Yacht Club Business and the School Business operate or intend to operate would be officially obtained and renewable upon expiry in a timely manner;

. There will be sufficient supply of technical staff in the industry in which the Yacht Club Business and the School Business operate, and the Yacht Club Business and the School Business will retain competent management, key personnel and technical staff to support its ongoing operations and developments;

. There will be no major change in the current taxation laws in the localities in which the Yacht Club Business and the School Business operate or intend to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;

. There will be no major change in the political, legal, economic or financial conditions in the localities in which the Yacht Club Business and the School Business operate or intend to operate, which would adversely affect the revenues attributable to and profitability of the Yacht Club Business and the School Business; and

. Interest rates and exchange rates in the localities for the operation of the Yacht Club Business and the School Business will not differ materially from those presently prevailing.

A letter from the financial adviser of the Company, CVP Capital Limited, confirming that it is satisfied that the said profit forecast has been made by the Directors after due and careful enquiry, is set out in Appendix VII to this circular. A letter from RSM Hong Kong, the auditors of the Company, confirming that it has reviewed the calculations for the said profit forecast and the profit forecast does not involve the adoption of accounting policies, is set out in Appendix VII to this circular.

A valuation report on the Real Property in compliance with the requirements of Chapter 5 of the Listing Rules has been set out in Appendix VI to this circular.

Restrictions on Consideration Shares

Without the prior written consent of the Purchaser, the Seller shall not for a period of twelve months after the Completion Date, sell, transfer, pledge, charge or otherwise dispose of any of the Consideration Shares or any beneficial or other interest therein.

– 24 – LETTER FROM THE BOARD

Conditions Precedent of the Acquisition

Completion is conditional upon the fulfilment or waiver of, as the case may be, the following Conditions Precedent on or before the Long Stop Date:

(i) the passing of ordinary resolution(s) at the EGM by the Shareholders approving (a) the grant of Acquisition Specific Mandate to the Directors for the allotment andissueoftheConsiderationSharesbytheCompanytotheSeller,and(b)the Acquisition as required under Chapter 14 of the Listing Rules;

(ii) the granting of the approval for the listing of, and permission to deal in, the Consideration Shares by the Listing Committee of the Stock Exchange;

(iii) the issue of legal opinions addressed to the Purchaser and the Company (in form and substance approved by the Purchaser and the Company) issued by a law firm qualified to advise on the PRC laws;

(iv) all consents, approvals and clearance which are necessary in connection with the Acquisition having been obtained;

(v) the warranties given by the Seller in the Sale and Purchase Agreement remaining true, accurate and not misleading at all times between the date of the Sale and Purchase Agreement and the Completion;

(vi) the Purchaser satisfying with the due diligence results in respect of the Target Group;

(vii) the Seller having complied fully with and performed all of the covenants and agreements under the Sale and Purchase Agreement;

(viii) there having been no material adverse change on each of the Seller, the Seller Guarantor and the Target Group since the date of the Sale and Purchase Agreement;

(ix) no statute or decision which would reasonably be expected to prohibit, restrict or materially delay the Acquisition or the operation of the Target Group having been proposed, enacted or taken by any governmental authority; and

(x) the satisfaction and/or the waiver of all conditions to the completion of the Subscriptions as contemplated under each of the Subscription Agreements (save for the condition precedent requiring the Sale and Purchase Agreement to become unconditional).

All the Conditions Precedent above (save and except for paragraphs (i), (ii), (ix) above) may be waived by the Purchaser in writing.

– 25 – LETTER FROM THE BOARD

If the Conditions Precedent are not fulfilled or (where applicable) waived in accordance with the Sale and Purchase Agreement by the Long Stop Date, the Purchaser shall not be bound to proceed with the Acquisition and the Sale and Purchase Agreement shall cease to be of any effect except certain clauses including but not limited to confidentiality clause and save in respect of any claims arising out of any antecedent breach of the Sale and Purchase Agreement.

The Directors confirm that as at the Latest Practicable Date, none of the Conditions Precedent has been fulfilled or waived. The Company has no current intention to waive any of the Conditions Precedent as at the Latest Practicable date. The Company will only consider a grant of waiver to the above waivable Conditions Precedent only if it is fair and reasonable and in the interests of the Company and the Shareholders as a whole, and that the substance of the Acquisition will not be materially and adversely affected by such waiver in all material aspects.

Completion

Each of the Acquisition and the Subscriptions is inter-conditional with each other. The Completion shall take place simultaneously with (or in any event immediately following) the Subscription Completion on the Completion Date.

Upon Completion on the Completion Date, the Target Company will become an indirect wholly-owned subsidiary of the Company and the accounts of the Target Group will be consolidated into the financial statements of the Company.

– 26 – LETTER FROM THE BOARD

The following diagram shows the shareholding and corporate structure of the Target Group as at the Completion Date:

The Company

100%

The Purchaser

100%

The Target Company

100%

Nayuan Development Limited (納元發展有限公司)

100%

Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)

100%

Shenzhen Ruiteng Enterprise Management Shenzhen Qianhai Virdom Education Company Limited* Investments Company Limited* (深圳瑞騰企業管理有限公司) (深圳前海唯致教育投資有限公司)

100%

Shenzhen Dapeng International Education 100% Company Limited* (深圳大鵬國際教育有限公司)

100%

Shenzhen Dapeng Yacht Club Shenzhen Dapeng Xinqu Virdom Company Limited* International Academy* (深圳大鵬遊艇會有限公司) (深圳市大鵬新區唯致培訓學校)

– 27 – LETTER FROM THE BOARD

Guarantee

The Seller Guarantor irrevocably and unconditionally guarantees to the Purchaser the punctual performance of all obligations of the Seller and the payment of all amounts payable by the Seller under the Transaction Documents.

Indemnity

The Seller undertakes to indemnify each Indemnified Person against all losses (including consequential losses) (on a full indemnity basis) incurred, suffered or sustained by each Indemnified Person or asserted against each Indemnified Person, or any or all of them arising out of any of the following:

(i) the settlement of any claim that any of the warranties given by the Seller are untrue or inaccurate or any terms of the Transaction Documents have been breached;

(ii) any losses suffered by each of the Indemnified Persons arising from or in respect of the reorganisation of the Target Group carried out and completed prior to the signing of the Sale and Purchase Agreement;

(iii) any losses suffered by each of the Indemnified Persons due to any claim made or to be made by Shenzhen Dapeng New District Management Committee* (深 圳市大鵬新區管理委員會) or any person or authority in respect of or in connection with any breach of the Operation Entrustment Agreement by any member of the Target Group before the Completion; and

(iv) any losses suffered by each of the Indemnified Persons arising from or in connection with the non-compliance with or breach of any applicable laws, rules and regulations in the PRC and in Hong Kong by the Target Group before Completion or failure to obtain the necessary licences, registrations, filings, permits, authorisations, exemptions, approvals and consents required for carrying out the businesses of the Target Group before Completion.

Put Option

The Purchaser shall have the option (the ‘‘Put Option’’) to, at the Purchaser’s discretion, sell the Option Target Shares to the Seller at any time within 5 calendar years after the Completion upon the Shenzhen Dapeng New District Management Committee or any other relevant governmental authority enforcing its rights under the Operation Entrustment Agreement for any breach of the Operation Entrustment Agreement by any member of the Group before the Completion at the Option Share Price (as defined below).

The consideration for the Option Target Shares (‘‘Option Share Price’’) shall be the higher of (i) the cash equivalent of the sum of (a) the amount paid in cash by the Purchaser to the Seller and (b) the value of all the Consideration Shares (as defined

– 28 – LETTER FROM THE BOARD below) issued by the Company to the Seller as at the date when the Put Option is exercised; or (ii) the fair market value of the Option Target Shares to be determined by an independent valuer as at the date when the Put Option is exercised.

Where:

‘‘Value of all the Consideration Shares’’ = the higher of (i) Issue Price x such number of Consideration Shares issued and (ii) the closing price of such Consideration Shares as at the date when the Put Option is exercised x such number of Consideration Shares issued.

Information of the Consideration Shares and Issue Price

Subject to the Completion having occurred and the Acquisition Specific Mandate having been approved at the EGM and the Listing Approval having been obtained, the Consideration Shares will be issued initially at HK$0.062 each in settlement of:

(i) HK$150,000,000, being part of the Initial Consideration payable by the Purchaser at Completion; and

(ii) initially HK$150,000,000, being the Retained Consideration, subject to Retained Consideration Adjustment, payable by the Purchaser on the Retained Consideration Release Date.

The issue price of HK$0.062 per Consideration Share represents:

(i) a discount of approximately 47.46% to HK$0.1180, the closing price of the Shares on the Stock Exchange on the date of the Sale and Purchase Agreement, being 19 September 2016;

(ii) a discount of approximately 36.86% to HK$0.0982, being the average closing price of the Shares as quoted on the Stock Exchange for the last 5 consecutive trading days prior to the Latest Practicable Date;

(iii) a discount of approximately 37.88% to HK$0.0998, being the average closing price of the Shares as quoted on the Stock Exchange for the last 10 consecutive trading days prior to the Latest Practicable Date; and

(iv) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016).

– 29 – LETTER FROM THE BOARD

The issue price of HK$0.062 per Consideration Share was arrived by the Purchaser and the Seller after arm’s length negotiation and having taken into consideration of the following factors:

(i) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016);

(ii) the loss positions of the Group for the past four financial years ended 31 December 2015, 31 December 2014, 31 December 2013 and 31 December 2012;

(iii) the profitability potential of the Yacht Club Business, the School Business and the Real Property to the Group;

(iv) the issue price being within the range of the trading price of the Share as quoted on the Stock Exchange during a 12-month period from 18 September 2015 to 18 September 2016, which was the last trading day immediately before the date of the Sale and Purchase Agreement (the ‘‘Review Period’’). During the Review Period, according to the website of the Stock Exchange, the highest price and the lowest price of the Shares were HK$0.32 (on 4 November 2015) and HK$0.059 (on 28 January 2016), respectively; and

(v) the Subscriptions and the Placing.

The 4,838,709,676 Consideration Shares represent (i) approximately 31.50% of the issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 23.95% of the issued share capital of the Company as enlarged by the Consideration Shares; (iii) approximately 14.94% of the issued share capital of the Company as enlarged by the Consideration Shares and the Subscription Shares; and (iv) approximately 13.27% of the issued share capital of the Company as enlarged by the Consideration Shares, the Subscription Shares and the Placing Shares. The Consideration Shares, once issued, will be credited as fully paid, and shall rank pari passu in all respects with the Shares in issue on the date of allotment and issue thereof, save in respect of any distribution or other corporate action the record date for which falls before the date of allotment and issue thereof.

An application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

The issue of the Consideration Shares under the Sale and Purchase Agreement will not result in any change of control of the Company.

– 30 – LETTER FROM THE BOARD

Information relating to the Target Group

Accordingtotheinformationprovidedbythe Seller, at the Latest Practicable Date, the Target Group is holding (i) the Yacht Club Business, (ii) the School Business and (iii) the Real Property in the PRC.

The Yacht Club Business

The Yacht Club Business is the management of the yacht club, namely, Dapeng Yacht Club (大鵬遊艇會) in Dapeng Peninsula (大鵬半島), Shenzhen, which engages in the provision of services of yacht club management, yacht parking, yacht leasing, teaching courses of yacht driving and diving and members accommodations. The Yacht Club Business is operated within the site of Shenzhen Marine Sports Base and Sailing School the operation of which has been entrusted by Shenzhen Dapeng New District Management Committee* (深圳市大鵬新區管理委員會) to Shenzhen Yuejin Investment Company Limited* (currently known as Shenzhen Yuejin Sports Company Limited*) or its subsidiaries under the Operation Entrustment Agreement.

The School Business

According to the website of the Target Group the School Business involves the management of a tuition academy, namely, Virdom International Academy, in Shenzhen, which provides test preparation courses for various foreign examinations including Advanced Placement (AP Course), International General Certificate of secondary Education (IGCSE) curriculum, General Certificate of Education Advanced Level (A- Level), Scholastic Assessment Test (SAT) I and II, foreign language training and sports- related extracurricular activities such as horse riding and navigation. The School Business is operated within the site of Shenzhen Marine Sports Base and Sailing School, the operation of which has been entrusted by Shenzhen Dapeng New District Management Committee* (深圳市大鵬新區管理委員會) to Shenzhen Yuejin Investment Company Limited* (currently known as Shenzhen Yuejin Sports Company Limited*) or its subsidiaries under the Operation Entrustment Agreement.

In respect of the School Business, the Group plans to focus on developing its diversity on provision of different sports training education programs and thus, develop into a base of spreading and developing sports culture in China.

The Real Property

The Real Property is located in Chenyu Road East, Pingluo Road, Yuhong District, Shenyang City, Liaoning Province, the PRC, that is adjacent to Puhe Ecological Landscape Corridor* (蒲河生態景觀長廊) and Puhe Square Culture and Leisure Park* (蒲河廣場文化休閒公園). The Real Property comprises 2 blocks of 6-storey apartments and 5 blocks of 2-storey commercial blocks in a residential/commercial composite development, known as ‘‘水岸康城’’. About 30-minute driving distance from Shenyang’s One Ring Road* (一環路, also called 中環路), the city centre of Shenyang City, several institutions facilitated with sports infrastructure, such as Liaoning Advertising Vocational College (遼寧廣告職業學院), Puhe Campus of Liaoning University* (遼寧大學—蒲河校

– 31 – LETTER FROM THE BOARD

區) and Shenyang Aerospace University (瀋陽航空航天大學), and a commercial development, Jijia shopping center* (積家購物中心) are located within a 15-minute driving distance from the Real Property. The Real Property is in a well-established residential area which comprises residential developments of various ages. Daily necessities shopping and recreational facilities are sufficiently provided in the vicinity. The area is adequately served by a wide range of public transportation facilities, such as buses and taxis. Owners of the Real Property can freely enjoy the shuttle bus services to 2 conveniently located destinations, which are close to the sports locations that are supported by the PRC government in relation to the ‘‘Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《關於加快發展體育產 業促進體育消費的若干意見》, Liaoning province and Shenyang city introduced ‘‘Liaoning Provincial People’s Government Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《 遼寧省人民政府關於加快發展體育 產業促進體育消費的實施意見》 and ‘‘Shenyang Municipal People’s Government Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《瀋陽市人民政府關於加快發展體育產業促進體育消費的實施意見》.In addition, 14 other bus lines will be introduced within the period from 2015 to 2020; metro Lines 2, 3, 6, 9 and 10 will thread through Yuhong District* (于洪區)(the‘‘District’’). In particular, metro lines 2 started its operation in December 2011. Metro lines 3, 6, 9 and 10 are under constructions and it is expected that metro lines 9 and 10 and metro lines 3 and6tobecompletedin2018and2023respectively. Metro lines 2 and 6 are the closest metro lines to the Real Property which are about 5 km and 10 km from the Real Property respectively; and a Beijing-Shenyang high-speed rail station is expected to be completed by 2019 in the District, connecting important urban areas in western Shenyang. Meanwhile, the District is also an ecological livable hub, with around 30 km of Puhe River* (蒲河河段) and the ecological Clove Lake* (丁香湖). With reference to ‘‘ShenYang 13th Five-year Work Plan Scheme’’*《瀋陽市‘‘十三五’’規劃審批發布工作方 案》promulgated by Shenyang government in March 2016, the District will develop high- end sectors and build into high-end industrial clusters with sports centers spread around the District. Such development is in progress and will continue until 2020.

Both the residential and commercial blocks of the Real Property are vacant as at the Latest Practicable Date. According to the Seller, the ownership certificate of the residential block of the Real Property is expected to be obtained within around one month, while the inspection of the commercial block of the Real Properties is expected to be done before the end of this calendar year and the registration of the title of the commercial block is expected to be done 6 months after the said inspection. As advised by the Group’s PRC legal advisers, the fact that the ownership certificates are outstanding would not have any material impact on the acquisition of the Real Property by the Company, which would not pose any legal obstacle for the Group to acquire the Real Property, and would not adversely effect the ownerships and rights of the Company upon the transfer of the title of the Real Property. Assuming that the ownership certificate of the residential block of the Real Property can be obtained and the inspection of the commercial block of the Real Property can be done before the end of this calendar year, both the residential and commercial blocks of the Real Property are expected to be rented out after the Lunar New Year holidays in February 2017 through which rental income will be generated in compliance with the laws, rules and regulations in the PRC. The Group

– 32 – LETTER FROM THE BOARD intends to lease out its residential blocks and commercial blocks to the ordinary citizens in Shenyang and for ordinary commercial activities respectively. As at the Latest Practicable Date, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Target Group.

The Board confirms that the Directors and the senior management of the Group do not have any relevant knowledge and relevant industry experience in relation to each of the Yacht Club Business and the School Business. The Board intends to retain the current senior management of each of the Yacht Club Business and the School Business in an effort to manage such businesses and recruit additional expertise to each of the Yacht Club Business and the School Business to accommodate its future developments.

Operation Entrustment Agreement

Shenzhen Yuejin Investment Company Limited* (深圳粵錦投資有限公司) (currently known as Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)), being a member of the Target Group, has entered into the Operation Entrustment Agreement dated 27 August 2014 (as supplemented and amended by a supplemental agreement dated 13 October 2014) with Shenzhen Dapeng New District Management Committee* (深圳市大 鵬新區管理委員會). Under the Operation Entrustment Agreement, the operation of Shenzhen Marine Sports Base and Sailing School has been entrusted by Shenzhen Dapeng New District Management Committee to Shenzhen Yuejin Investment Company Limited or its subsidiaries subject to the terms of the Operation Entrustment Agreement. Some of the principal terms of the Operation Entrustment Agreement are summarized as follows:

Assets to be entrusted: Shenzhen Marine Sports Base and Sailing School

Entrustment period: 20 years from the date of handover of the Shenzhen Marine Sports Base and Sailing School by Shenzhen Dapeng New District Management Committee

Fees and Payment RMB785,000,000, of which Schedule:

(i) RMB392,500,000 is payable by Shenzhen Yuejin InvestmentCompanyLimitedtoShenzhenDapeng New District Management Committee within 30 days from the date of the Operation Entrustment Agreement, and

(ii) RMB39,250,000 is payable by Shenzhen Yuejin Investment Company Limited (or its relevant subsidiaries) to Shenzhen Dapeng New District Management Committee once every year on or before 31 January in each calendar year commencing from the 11th year of the entrustment period.

– 33 – LETTER FROM THE BOARD

AsadvisedbytheCompany’s legal adviser in the PRC, Shenzhen Dapeng New District Management Committee* handed-over the Shenzhen Marine Sports Base and Sailing School to Shenzhen Yuejin Investment Company Limited* on 11 March 2015, and RMB392,500,000, being the sum due and payable under the Operation Entrustment Agreement was paid to Shenzhen Dapeng New District Management Committee*.

In the course of due diligence in respect of the Target Group conducted by the Company’s legal adviser in the PRC, it was discovered that certain terms of the Operation Entrustment Agreement were breached by Shenzhen Yuejin Investment Company Limited* (or its subsidiaries), which Shenzhen Dapeng New District Management Committee* may (i) bring action against Shenzhen Yuejin Investment Company Limited* (or its subsidiaries) for damages, (ii) terminate the Operation Entrustment Agreement, and/ or (iii) revoke and cancel the entrustment of operation of Shenzhen Marine Sports Base and Sailing School to Shenzhen Yuejin Investment Company Limited* (or its subsidiaries). Based on the information the Company has obtained so far, no action has been taken by Shenzhen Dapeng New District Management Committee pursuant to the Operation Entrustment Agreement as at the Latest Practicable Date.

In light of the above,

(i) the Seller agrees and undertakes under the Sale and Purchase Agreement to indemnify each Indemnified Person against all losses (including consequential losses) (on a full indemnity basis) incurred, suffered or sustained by each Indemnified Person due to any claim made or to be made by Shenzhen Dapeng New District Management Committee or any person or authority in respect of or in connection with any breach of the Operation Entrustment Agreement by any member of the Target Group before the Completion;

(ii) the arrangement of Retained Consideration has been put in place under the Sale and Purchase Agreement so that if Notified Claim(s) shall have been notified by the Purchaser to the Seller, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by the full amount of such Notified Claim(s); and

(iii) the Put Option has been put in place such that at the Purchaser’s discretion, the Purchaser may sell the Option Target Shares to the Seller at any time within 5 calendar years after the Completion upon the Shenzhen Dapeng New District Management Committee or any other relevant governmental authority enforcing its rights under the Operation Entrustment Agreement for any breach of the Operation Entrustment Agreement by any member of the Group before the Completion at the Option Share Price.

Non-compliance with the Companies Ordinance (Chapter 622 of the Law of Hong Kong) — Financial Statements of Nayuan Development Limited

In the course of due diligence in respect of Nayuan Development Limited, it was discovered that no statutory financial statements of Nayuan Development Limited have been prepared since its date of incorporation. In failing to prepare so, Nayuan

– 34 – LETTER FROM THE BOARD

Development Limited may have breached s.430 of the Companies Ordinance, which requires Nayuan Development Limited to send a copy of the financial reports to every member at least 21 days before the date of the annual general meeting. If Nayuan Development Limited breaches s.430 of the Companies Ordinance, Nayuan Development Limited is liable to a fine of HK$50,000. In light of the above, the Seller agrees and undertakes under the Sale and Purchase Agreement to indemnify each Indemnified Person against all losses (including consequential losses) (on a full indemnity basis) incurred, suffered or sustained by each Indemnified Person arising from or in connection with the non-compliance with or breach of any applicable laws, rules and regulations in the PRC andinHongKongbytheTargetGroupbeforeCompletion.

Business Model of the Target Group

The Target Group is principally engaged in the Yacht Club Business, the School Business and the management of the Real Property.

The Yacht Club Business

Under this segment, the Target Group is engaged in the operation and management of the Yacht Club which provides the following major services:

Membership

There are six types of Yacht Club memberships, namely berthing single parking membership* (水上單泊位會籍), berthing double parking membership* (水上雙泊位會 籍), boat land storage individual membership* (陸地乾倉個人會籍), boat land storage corporate membership* (陸地乾倉公司會籍), clubhouse individual membership* (消費類 會籍), clubhouse corporate membership* (商務會籍), to be introduced in 2017.

One-off entry membership fee will be charged for the aforesaid six types of memberships. Annual membership fee will also be charged for the berthing single parking membership, berthing double parking membership, boat land storage individual membership and boat land storage corporate membership.

Provision of berthing and land storage space

Berthing space of approximately 43,000 square meters is available for sailboat and yacht whilst land storage space is also available for motor boat. Fee is charged for provision of such spaces.

Training course

The Yacht Club will provide training courses for navigations of yacht and sailboat. Such training courses will be introduced in 2017. Tuition fee all be charged for provision of each course.

– 35 – LETTER FROM THE BOARD

Maintenance service

The Yacht Club will provide maintenance services for yacht and sailboat and for which maintenance fee will be charged. Such service will be introduced in 2017.

Yacht leasing

The Yacht Club provides leasing service for yacht and for which leasing fee is charged. As at the Latest Practicable Date, one yacht is run by the Yacht Club and is available for leasing. Leasing service for sailboat will also be introduced in 2017.

Office space rental

The Yacht Club leases out office space to companies which provide the Yacht Club Business-related services at the Yacht Club i.e. navigation training courses, sale of diving equipments and accessories, diving course. The Target Group is entrusted to operate the Yacht Club Business pursuant to the Entrustment Operation Agreement. Such office premises are not owned by the Target Group.

Regatta and Event hosting

The Yacht Club serves as the hosting venue for international regatta. The Yacht Club is one of the hosting venues of China Cup International Regatta (中國杯帆船賽), an international regatta. Service fee will be charged by the Yacht Club for organizing promotion activities for the competition sponsors during those competitions.

Diving

The Yacht Club will provide diving-related services including training course, sale of diving equipments and accessories, rental and maintenance of diving facilities in 2017. Fees will be charged for the provision of such services.

Clubhouse

The construction work of the clubhouse of the Yacht Club is expected to be completed in 2017. Upon completion, the clubhouse will provide a variety of services including food and beverage, venue for occasions. Fees will be charged for provision of such services. The Target Group is entrusted to operate the Yacht Club Business pursuant to the Entrustment Operation Agreement. Such clubhouse is not owned by the Target Group.

Hotel accommodation

The construction work for the hotel accommodations of the Yacht Club is expected to be completed in 2017. Upon completion, the hotel accommodations will provide lodging, meals and other guest services to the existing members. Fees will be charged for provision of such services. The Target Group is entrusted to operate the Yacht Club Business pursuant to the Entrustment Operation Agreement. Such hotel accommodation is not owned by the Target Group.

– 36 – LETTER FROM THE BOARD

Water recreational center

The construction work of the water recreational centre is expected to be completed in 2017. Upon completion, such center will provide a variety of water recreational activities. Fees will be charged for provision of such services. The Target Group is entrusted to operate the Yacht Club Business pursuant to the Entrustment Operation Agreement. Such water recreational centre is not owned by the Target Group.

Beach sports center

The beach sports center is expected to commence operation in 2017. An entrance fee will be charged for provision of such service. The Target Group is entrusted to operate the Yacht Club Business pursuant to the Entrustment Operation Agreement. Such beach sports centre is not owned by the Target Group.

Crane arm leasing

The Yacht Club will commence to provide leasing service of gantry crane (龍門吊) for carrying the yachts and sailboat in 2017. Fees will be charged for provision of such service.

Reception center

The reception center of the Yacht Club provides leisure beverage service and fee will be charged for provision of such service.

The School Business

Under this segment, the Target Group manages a tuition academy, namely, Virdom International Academy, which provides the following major services:

Provision of test preparation course

The School provides test preparation courses for various foreign examinations, such as AP curriculum, A-Level curriculum (International General Certificate of Secondary Education and The General Certificate of Education Advanced Level curriculum in the United Kingdom) and American-Hong Kong high school, and foreign language training. Course registration fee and tuition fee are charged to the students.

Dormitory and related services

The School provides dormitory and its related services (i.e. meals and laundry) to its students and fee is charged for provision of such service.

Co-operation program with other foreign international schools in the PRC

Commencing 2017, the School will enter into co-operation arrangements with other foreign international schools in the PRC through which students in such schools will join the test preparation courses for various foreign examinations of the School. Tuition fee all

– 37 – LETTER FROM THE BOARD be charged for provision of such service. As at the Latest Practicable Date, according to the Target Group, the Target Group is in preliminary discussion with certain foreign international schools in the PRC on such arrangement.

The summer/winter camps international programs

Commencing 2017, the School will organize summer/winter camps international exchange programs for its students. Fee will be charged to the students, for joining each program. As at the Latest Practicable Date, according to the Target Group, the Target Group is in discussions with a renowned education counselling organisation in the PRC having more than 20 years of history, which, to the best of the Director’s knowledge, information and belief, is independent of the Company and the Target Group, in relation to the arrangements of such international programs.

Preparation for foreign examinations

Commencing 2017, the School will provide services to assist students to prepare for foreign examinations. The School will organize examination preparation course and mock examinations. Fee will be charged to the students, for joining each program.

Sports related extracurricular activities

Commencing 2017, the School will provide courses for sports-related extracurricular activities such as horse riding and navigation. Tuition fee will be charged for provision of such service.

Real Property

Both the residential and commercial blocks of the Real Property are vacant as at the Latest Practicable Date. According to the Seller, the ownership certificate of the residential block of the Real Property is expected to be obtained within around one month, while the inspection of the commercial block of the Real Properties is expected to be done before the end of this calendar year and the registration of the title of the commercial block is expected to be done 6 months after the said inspection. Assuming that the ownership certificate of the residential block of the Real Property can be obtained and the inspection of the commercial block of the Real Property can be done before the end of this calendar year, both the residential and commercial blocks of the Real Property are expected to be rented out after the Lunar New Year holidays in February 2017 through which rental income will be generated in compliance with the laws, rules and regulations in the PRC. As at the Latest Practicable Date, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Target Group.

– 38 – LETTER FROM THE BOARD

Financial Information of the Target PRC Group

Set out below is the consolidated financial information attributable to the Yacht Club Business, the School Business and the Real Property of the PRC subsidiaries within the Target Group for each of the two financial years ended 31 December 2014 and 2015 and the eight months ended 31 August 2016:

For the For the For the financial year financial year eight months ended ended ended 31 December 31 December 31 August 2014 2015 2016 (unaudited) (unaudited) (unaudited) HK$’000 HK$’000 HK$’000

Revenue — 2,454 6,392 Net loss before tax (346) (52,632) (48,097) Net loss after tax (342) (39,863) (35,951)

As at 31 August 2016, the unaudited consolidated net assets attributable to the shareholder of the Target Company amounted to approximately HK$54,967,000. The estimated aggregate value of the Yacht Club Business, School Business and the Real Property as at 31 August 2016 was HK$1,007,000,000 as stated in the valuation reports as set out in Appendix VI, VIII & IX of this circular according to the valuation by an independent valuer, Roma Appraisals Limited.

The continued net loss positions of the Target PRC Group were mainly attributable to (1) the amortisation in relation to the operating right of the Operation Entrustment Agreement of approximately HK$23.3 million and HK$18.6 million for the year ended 31 December 2015 and eight months ended 31 August 2016, respectively; (2) the imputed interest charged of approximately HK$9.6 million and HK$8.3 million for the year ended 31 December 2015 and eight months ended 31 August 2016 respectively in relation to the consideration payable regarding the operating right of the Operation Entrustment Agreement; and (3) the preliminary stage of the Yacht Club Business and the School Business that commenced its operation in 2016 and 2015 respectively.

– 39 – LETTER FROM THE BOARD

As at 31 August 2016, the Target Group had net current liabilities HK$914,942,000. This condition indicates the existence of a material uncertainty which may cast significant doubt on the Target Group’s ability to continue as a going concern. The Group has given careful consideration to the current and anticipated future liquidity of the Target Group and the ability of the Target Group to attain profitable and positive cash flows from operations in the immediate and longer term, as well as the following measures:

(i) the Group has confirmed its intention to provide financial support to the Target Group upon the Acquisition is completed, so as to enable the Target Group to meet its liabilities as and when they fall due and to carry on its business without a significant curtailment of operations for the foreseeable future; and

(ii) upon the Acquisition is completed, the amounts due to the holding company of the Target Company will be assigned to the Group.

Information relating to the Seller and the Seller Guarantor

AccordingtotheinformationprovidedbytheSeller, the Seller is principally engaged in investment holding.

According to the information provided by the Seller, the Seller Guarantor is an experienced investor. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, as at the Latest Practicable Date, each of the Seller and the Seller Guarantor is an Independent Third Party.

Reasons for and Benefits of the Acquisition under the Sale and Purchase Agreement

The Company is gradually transforming from software development and mobile game development to investments in the sports industry and the development of Internet platforms for the sports industry, particularly in the light of the PRC government’s decision in September 2014 to accelerate the development of the sports industry, promote spending on sports and fitness for the general public. Various specific measures have been established to cancel approval requirements and to optimize the environment.

There are five major trends in the future development of the sports industry in the PRC:

1. the pattern of sports will switch from the government-operated approach to the market-oriented approach;

2. price advantage will switch to brand advantage;

3. elite sporting will switch to sporting for all people;

4. domestic mega strategy will switch to international strategy; and

5. the sports industry will integrate with other industries;

– 40 – LETTER FROM THE BOARD by taking this as an opportunity, the Company will, in the future, further step up its investment and operation within the framework of major sports industries such as professional games, sports and recreation fitness as well as the manufacturing of the equipment therefor, sports and entertainment fashion and internet-based sports platform.

Based on the data from the General Administration of Sport of China, the added value of the PRC’s sports industry was approximately RMB400 billion in 2015, with the annual compound growth rate expected to reach approximately 28.7%. By 2025, the size of the PRC’s sports industry will reach RMB7 trillion. The PRC’ssportsindustrywill enter a period of unprecedented high-speed growth.

Kingworld Beijing (as defined in Appendix I of this Circular) continues to be the only Internet-based partner of the Chinese Football Association Super League* (中國足球 協會超級聯賽), with a long-term commitment to the integration of the sports Internet platforms in the PRC that is in line with the Group’s overall strategic planning for the sports industry. The business of Kingworld Beijing has a long maturity period.

Kaixin Jiuhao (as defined in Appendix I of this Circular) is engaged in the mobile game development business, and possesses mobile Internet-related expertise. By leveraging this expertise, the Company is able to boost its new business models and segments in future by means of the Internet-enabled or mobile Internet-enabled concept.

As at the Latest Practicable Date, the Company

1. has no plan to acquire any other new assets or new business; and

2. signed a non-legally binding memorandum of understanding with an independent third party on 15 August 2016 in relation to a potential disposal of the entire equity interest in Key Rich Corporation Limited for a consideration of HK$60,000,000 as disclosed on page 33 of the interim report of the Company for the period ended 30 June 2016. No definitive agreement in relation to the disposal of Key Rich Corporation Limited has been entered into as at the Latest Practicable Date. The Company will comply with relevant Listing Rules and further announcement will be made by the Company as and when necessary. Save as disclosed, as at the Latest Practicable Date, the Company has no plan to dispose and/or terminate its existing business and/or major operating assets.

The Yacht Club Business and the School Business

The sports industry in the PRC entered a high-growth period in the first half of 2016. ‘‘The 13th Five-year Plan for the development of sports industry’’ (‘‘the 13th Five-Year Plan’’) promulgated by the State General Administration of Sport of China in July 2016 formulates various development objectives to enlarge the size of the sports industry and boost the relevant consumption. It is targeted that by 2020, (i) the total size of the national sports industry will reach RMB3 trillion with its added value taking up 1% of the GDP, (ii) the per capita sports venue area will reach 1.8 square meters, (iii) 100 demonstration projects of the State regarding the sports industry will be set up and (iv) the sporting environment will be improved. The 13th Five-Year Plan also regards the

– 41 – LETTER FROM THE BOARD contest and performance industry, the fitness and leisure industry, the venue service industry, the sports intermediary industry, the sports training industry, the sports media industry and the sporting goods industry as the key development industries.

As the general public is becoming more aware of physical fitness and interested in sports, the sports cultural and creative industry — a combination of sports culture, creativity and innovative technologies, is flourishing. With an intention to create a number of high quality sophisticated sports cultural projects and sports cultural brand events which will bring significant benefits to the society, the PRC government also has actively encouraged and promoted sports education and training and the development of sports culture among young people in recent years. Reaping benefits from the PRC government’s strategies to promote development in various sectors of the sports industry, enterprises will focus on ‘‘Sports + Culture’’ to expand their sports-related businesses in the future. It is expected that the development of the sports cultural and creative industry can be promoted.

Based on the above reasons, the Group plans to focus on developing and expanding its sports-related businesses in the future.

Yacht club industry is recently supported by the PRC government’spolicy. Guangdong government published《廣東省濱海旅遊發展規劃(2011–2020年)》to show the support in developing coastal tourism in Guangdong province. The government suggested developing yacht clubs in Guangzhou Nansha, Bio-Island, Zhuhai Pingsha and Shenzhen Dapang Bay. The policy also suggested promoting and developing watersports industry in the province.

In August 2015, the State Council published《國務院關於促進旅遊業改革發展的若 干意見》. The State Council proposed to develop yacht travel industry in mass market by simplifying the registration procedures of yacht, lowering the cost of travelling, berthing, maintenance and encouraging the development of yacht marina.

According to the Dapeng New District Protection and Development Comprehensive Plan 2012–2020 (大鵬新區保護與發展綜合規劃 2012–2020), Shenzhen government plans to develop Dapeng New District* (大鵬新區) into a sports leisure coastal tourist vacation district. The Dapeng Yacht Club of the Yacht Club Business and the Virdom International Academy (which provides, among others, tuition class for sports activities such as navigation and horse riding) of the School Business are both located in the Dapeng New District. Pursuant to the Operation Entrustment Agreement, Dapeng Yacht Club agreed to organize sports events and contests every year including China Cup International Regatta* (中國盃帆船賽) the first-ever and only big boat sailing regatta initiated by the PRC. Approved by the General Administration of Sport of China (國家體育總局), this national event is held annually and it attracts over 100 boats with 1,000 sailors from more than 33 countries every year.

According to National Bureau of Statistics of China, the number of students receiving private education increased from approximately 11 million in 2010 to approximately 14 million in 2014. High school students in private education increased from approximately 1.5 million in 2010 to approximately 1.7 million in 2014.

– 42 – LETTER FROM THE BOARD

According to the research from Newschool Insight Media, 29 and 27 new international schools opened in 2014 and 2015 respectively. The growth rate on number of private international schools increased from approximately 8.6% in 2010 to approximately 15.6% in 2015.

In respect of the School Business, the Group plans to focus on developing its diversity on provision of different sports training education programs and thus, develop into a base of spreading and developing sports culture in China.

The Yacht Club Business and the School Business are in line with the policies and plans of the PRC government and the Shenzhen government. It serves as the foundation to the Group’s development of sports-related business and hence, generates future profitability to the Group.

The Real Property

The Group business development model is gradually transforming from software development and mobile game development to sports industry, sports-related businesses and the development of Internet platforms for the sports industry, particularly in the light of the PRC Government’s decision on 20 October 2014, which the State Council promulgated the Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《( 關於加快發展體育產業促進體育消費的若干意見》), pursuant to which efforts will be taken to accelerate the establishment of an effectively competitive sports industry, so as to promote sports industry to be an important driver to economic transformation and upgrade.

Liaoning province and Shenyang city introduced ‘‘Liaoning Provincial People’s Government Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《( 遼寧省人民政府關於加快發展體育產業促進體育消費的實施意 見》)and‘‘Shenyang Municipal People’s Government Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption’’ 《( 瀋陽市人民政府關於 加快發展體育產業促進體育消費的實施意見》), pursuant to which construction of sports facilities will be enhanced and sports enterprises will be supported for rapid growth during the Thirteenth Five-year Plan period. In this context, Shenyang with its own regional and resource advantages becomes one of the 35 sports-empowered cities across China. In June 2016, Shenyang municipal government set up a RMB100 million special fund for sports industry to support the public fitness consumption. The first session of Shenyang Marathon was launched in September 2016.

In addition, football is the key focus of the sports industry in Shenyang. In 2015, Shenyang officially proposed to build itself into the ‘‘Chinese Football City’’.InJuly 2016, the 2016 Chinese Football Association Youth Football Elites kicked off in Shenyang. In August 2016, ‘‘Gothic Cup’’ (China) World Youth Cup was successfully held in Shenyang. In September 2016, the national football team played in Shenyang against Iran in a World Cup qualifier. Together with 700 football grounds, over 1,000 of international football matches, the world’s only youth football theme museum, football has become the new image of Shenyang, which is set to transform the traditional industrial city and acts as a catalyst to revitalize local economy.

– 43 – LETTER FROM THE BOARD

The Group’s future focus will be on sports industry and its related business. It is also engaged in the management and operation of a football club in Shenzhen. Thus, the Group is well positioned to further develop Shenyang sports undertakings and economic development capitalizing on its industrial resource advantage; and meanwhile leverage upon the city’s hardware and software supports to sports undertakings to capture growth opportunities and upgrade the business mix of the Group’s sports-related business.

The Group considers the investment in the Real Property as a stepping stone to establish its presence in the sports industry in Shenyang. In medium to long run, with the gradual development of its sports and sports-related businesses in Shenyang, the apartments of the Real Property may be used as the dormitory for youth development of sports and the commercial blocks of the Real Property may be leased out for sports- related or other businesses. Thus, there will be gradual changes in the target groups of customers of the Real Property from ordinary citizens in Shenyang to sports-related youth development participants in relation to the residential blocks and from ordinary commercial activities to sports-related business in relation to the commercial blocks.

The Directors are of the view that Shenyang is one of the most important and stably developed city in the PRC. With the introduction of the New Property Market Policy 1.0 (樓市新政1.0), the Shenyang government is of the view that the property market in Shenyang will continue to be in the positive direction. The overall development of the real estate market in Shenyang was satisfactory in the first half of 2016. According to the statistics from a press release dated 18 July 2016 by DTZ | Cushman & Wakefield, the turnover area of new commodity residential housing in the first five months of 2016 in Shenyang was about 5.59 million sq.m.. Also, according to ‘‘JLL 2016Q3 Shenyang Property Market Review’’《仲量聯行2016年第三季度瀋陽房地產市場回顧》published by Jones Lang LaSalle on 13 October 2016, high-end property market in Shenyang recorded 11,538 transactions in the third quarter, representing an increase of 43% as compared to the number of transactions in the second quarter. The same publication also states that: (1) with the benefits of government policies and under the impact of upbeat house purchases in other first and second-tier cities, the high-end property market in Shenyang has picked up. The local government has continued to introduce real estate policies, such as the policy on allowing graduates of institutions of higher education and vocational secondary schools to purchase houses using the provident funds of their parents or spouses, boosting the sell-through rate of residential housing. Under the impact of upbeat house purchases in other first and second-tier cities, some clients who originally held a wait-and-see attitude quickly turned into actual purchasers recently, assisting in lifting the turnover of the property market in Shenyang; (2) due to the rapid price increase in the domestic property market, especially in first-tier cities and some key second-tier cities, and the further recovery in demand, the price and transaction volume of high-end residential housing in Shenyang were both on the rise in the third quarter of 2016; and (3) in future, the property market in Shenyang will continue to have new supply and price will rise steadily. Under the impacts of a better sales market as well as the upbeat land markets in other first and second-tier cities, Shenyang, as a key second-tier city with relatively lower land price, has experienced a gradual shortage in land resources in its urban core areas. It is expected that housing price will continue to surge in future. According to 每日頭條 (https://kknews.cc), one of the leading news website in the PRC,

– 44 – LETTER FROM THE BOARD

Yuhong District, the district where the Real Property is located in, is one of the most sought after district in Shenyang city for property. In September 2016, Yuhong District recorded sale of residential property of over 290,000 square meters, which is ranked the 1st district in terms of residential property sale in Shenyang City.

The Directors are of the view that the Real Property will serve as a favourable alternative investment opportunity and generate future profitability to the Group.

In spite of continued net loss positions of the Target PRC Group as disclosed in the section headed ‘‘Financial Information of the Target PRC Group’’ above, having considered the reasons for and benefits of the Acquisition as discussed above, the Yacht’s Potential and the School’s Potential as well as the preliminary stage of the Yacht Club Business and the School Business, the Board is of the view that the Acquisition is favourable to the Company.

The terms of the Sale and Purchase Agreement were determined after arm’s length negotiation among the parties to the Sale and Purchase Agreement. Having considered the reasons for and benefits of the Acquisition as discussed above, the Board is of the view that the terms of the Sale and Purchase Agreement are fair and reasonable and it is in the interest of the Company and the Shareholders as a whole for the Company and the Purchaser to enter into the Sale and Purchase Agreement.

RISK FACTORS RELATING TO THE ACQUISITIONCONTEMPLATEDUNDERTHE SALE AND PURCHASE AGREEMENT

The risk factors set out below are those that the Company believes are most relevant to the Company. The list are by no means exhaustive or comprehensive, and there may be other risks in addition to those set out below which are not known to the Company or may not be material now but turn out to be material in the future.

(i) Breach of the Operation Entrustment Agreement could adversely affect the future plans of the Group

In respect of the breach of certain terms of the Operation Entrustment Agreement, Shenzhen Dapeng New District Management Committee may (i) bring action against Target PRC Company (or its subsidiaries) for damages, (ii) terminate the Operation Entrustment Agreement, and/or (iii) revoke and cancel the entrustment of operation of Shenzhen marine sports base and sailing school to Target PRC Company (or its subsidiaries). If any of the above events occurs, the Group may have to reformulate new plans which may give rise to a material impact on the Group’s business operations and financial position.

– 45 – LETTER FROM THE BOARD

(ii) Delay in the registration of the relevant property ownership certificates and the transfer of titles of ownership for the Real Property could adversely affect the long term strategic plan of the Group

According to the Seller, the ownership certificate of the residential block of the Real Property is expected to be obtained within around one month, while the inspection of the commercial block of the Real Properties is expected to be done before the end of this calendar year and the registration of the title of the commercial block is expected to be done 6 months after the said inspection. The Target PRC Group cannot guarantee whether and when the ownership certificate and/or the inspection will be completed. Assuming that the ownership certificate of the residential block of the Real Property can be obtained and the inspection of the commercial block of the Real Property can be done before the end of this calendar year, both the residential and commercial blocks of the Real Property are expected to be rented out after the Lunar New Year holidays in February 2017 through which rental income will be generated in compliance with the laws, rules and regulations in the PRC.

The delay in obtaining the ownership certificates of the residential block of the Real Property and the inspection of the commercial block of the Real Property may adversely affect the Group’s strategic business plan, and thus may adversely impact the Group’s business and financial position.

(iii) Failure to officially obtain or renew upon expiry in a timely manner ancillary legal approvals and business certificates or licenses to operate the business in the localities in which the Yacht Club Business and the School Business operate or intend to operate could materially affect the financial performance of the Group

Some of the ancillary businesses of the Yacht Club are to commence in 2016 and 2017 upon obtaining relevant legal approvals and business certificates or licenses. The School is also required to renew its, among others,《民辦學校辦學許可證》(Permit for the Operation of Private Schools) every year. If the Target Group fails to obtain and renew all relevant legal approvals and business certificates or licenses in a timely manner, the business operations and the financial performance of the Group could be adversely affected.

(iv) Failure to retain or recruit experienced foreign teachers for the School Business could materially affect the Group’s financial performance

Maintaining an acceptable ratio of the number of experienced foreign teachers to the number of students is one of the key factors to ensure successful test preparations and foreign language training academy. As such, if the School fails to retain or recruit experienced foreign teachers, the financial performance of the Group could be adversely affected.

– 46 – LETTER FROM THE BOARD

(v) Intense competition amongst existing and new competitors of the School Business

Despite the high demand for tuition services in the PRC, the market for the provision of test preparations course is competitive. Some of its current and potential competitors may have greater financial, marketing and other resources than the Target Group has. The Target Group may face competitive pressure from new competitors.

(vi) Increases in labour costs in the PRC could adversely affect profitability

The China economy has been experiencing inflation and increases in labour costs in recent years. The average compensation level for the employees has also increased. The Target Group is required by the PRC laws and regulations to pay various statutory employee benefits to the designated government agencies for the benefit of its employees. The labour costs, including wages and employee benefits, are expected to continue to increase. Unless the Target Group is able to pass on these increased labour costs to its customers by increasing prices of the services provided, its profitability and results of operations may be materially adversely affected.

(vii) Natural disasters, adverse weather conditions, operating hazards, environmental incidents and labour disputes could materially and adversely affect the Group’s businesses

Earthquakes, floods, typhoons, power outages, labour disputes or similar events, many of which are beyond the Group’s control, may in turn affect the operations of the Target Group. The occurrences of such events could result in inferior service qualities, damages to the yachts and sailboats berthing at the Yacht Club, shutdowns or temporary halts of operations, which could significantly disrupt its business operations, cause it to incur additional costs, including but not limited to insurance costs. The occurrences of such events could also affect its ability to deliver its services to its customers as intended, which may adversely affect the businesses, financial conditions and results of operations of the Group. Moreover, such events could result in severe damage to property, personal injuries, fatalities, regulatory enforcement proceedings or in its being named as a defendant in lawsuits asserting claims for large amounts of damages, which in turn could lead to significant liabilities.

(viii)The Target Group could incur loss in the future

As the businesses of the Target Group are in a relatively preliminary stage, it requires time for improvement in quality and enhancement of market reputation of the Target Group in order to boost sales in the future. Hence the turnover may stay relatively low and losses may happen in the near future of the Target Group. This may give rise to a material adverse impact on the Group’s business and financial position.

– 47 – LETTER FROM THE BOARD

(ix) Assumptions and factors of the valuations for the Yacht Club Business and School Business may not be realized

The valuations were compiled by the independent valuer based on certain factors and assumptions estimated by the management of the Company in running the Yacht Club Business and the School Business. The said assumptions and factors may not be realized and may affect the evaluation significantly.

(x) Completion of the Acquisition is subject to the fulfillment or waiver (as the case may be) of the conditions precedent as set out in the Sale and Purchase Agreement and there is no assurance that all of the conditions precedent will be fulfilled or waived (as the case may be).

The conditions precedent to completion of the Acquisition are set out in the paragraph headed ‘‘Conditions Precedent’’ above, which include, among others, the approvals by the Shareholders at the EGM of the Company and the granting of the listing approval of the Consideration Shares by the Listing Committee of the Stock Exchange. As fulfillment of such conditions precedent is not within the control of the parties involved in the Acquisition, there is no assurance that the Acquisition will be completed in a timely manner as contemplated, or at all.

(xi) Failure to retain key qualified personnel and professionals for the operations could affect the financial performance of the Group

The businesses of Target Group are operated by teams of professionals having the relevant experience and expertise. However, there is no assurance after the Acquisition that the Enlarged Group could retain the professionals nor guarantee the parties will continue to provide services to the Enlarged Group or will honour the agreed terms and conditions of their employment contracts. Any loss of key personnel or failure to recruit and retain personnel for the future operations and development may have a material adverse impact on the businesses.

(xii) Change of laws and regulations in the PRC could materially affect the financial performance of the Group

The businesses of Target Group are subject to PRC governmental regulations, policies and controls. There is no assurance that the relevant governmental bodies will not change such laws and regulations or impose additional or more stringent laws or regulations, or otherwise undesirable to future development of the yacht club and education industry and the PRC property market.

FINANCIAL EFFECTS OF THE ACQUISITION CONTEMPLATED UNDER THE SALE AND PURCHASE AGREEMENT

Upon Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company and the consolidated financial results of the Target Group will be consolidated into the Group’s financial statement. The unaudited pro forma financial information of the Enlarged Group is prepared as if the Acquisition had taken place on 30 June 2016. The

– 48 – LETTER FROM THE BOARD accompanying unaudited pro forma statement of the assets and liabilities of the Enlarged Group has been prepared to illustrate the effect of the Acquisition. The unaudited pro forma statement of the assets and liabilities of the Enlarged Group is set out in Appendix V to this circular.

Effect on earnings

Upon Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company. Based on the consolidated statements of profit or loss of the Target PRC Group as set out in Appendix III to this Circular, it is expected that the earnings of the Enlarged Group will decrease as a result of the Acquisition. Nonetheless, after considering the outlook of the sports cultural and creative industry, the supports and developments from the PRC government and the prospects of the Target Group as stipulated above, the Directors expect that the Acquisition will likely deliver a positive impact on the future earnings of the Group.

Further information regarding the financial position and financial performance, as well as the management discussions and analysis and other financial information of the Target Group and the Target PRC Group can be found in Appendix II, III and IV to this circular respectively.

Effect on assets and liabilities

As set out in the unaudited pro forma statement of the assets and liabilities of the Enlarged Group in Appendix V to this circular, assuming that Completion were to take place on 30 June 2016, the total assets of the Enlarged Group will increase from approximately HK$1,364 million to approximately HK$2,716 million, the total liabilities of the Enlarged Group will increase from approximately HK$418 million to approximately HK$1,009 million and the net assets of the Enlarged Group will increase from approximately HK$946 million to approximately HK$1,707 million as a result of the Acquisition.

Further details of the unaudited pro forma statement of the assets and liabilities of the Enlarged Group are set out in Appendix V to this circular.

SUBSCRIPTION AGREEMENTS

The information of the Subscription Agreements are summarized as below:

Date

19 September 2016 (after trading hours)

Parties

Issuer: the Company

– 49 – LETTER FROM THE BOARD

Subscribers: Each of Origin Development Limited (the ultimate beneficial owner of which is Mr. Zheng Kanghao), Crystal Fount Investments Limited (the ultimate beneficial owner of which is Ms. Tang Ying), Ms. Ai Qing and Ms. Zheng Kuanjian entered into a separate Subscription Agreement with the Company

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, as at the Latest Practicable Date, (1) each of the Subscribers and their ultimate beneficial owners is an Independent Third Party and (2) each of the Seller and its ultimate beneficial owner and each of the Subscribers and its ultimate beneficial owner(s) are independent of each other.

Subscription Shares

The Company and each of the Subscribers entered into the Subscription Agreements pursuant to which the Company has conditionally agreed to issue and allot, and:

(a) Origin Development Limited has conditionally agreed to subscribe in cash, 7,840,000,000 Subscription Shares, credited as fully paid, at the Subscription Price of HK$0.062 per Subscription Share, representing (i) approximately 51.03% of the issued share capital of the Company as at the Latest Practicable Date, (ii) approximately 24.21% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares and the Subscription Shares, and (iii) approximately 21.50% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares;

(b) Crystal Fount Investments Limited has conditionally agreed to subscribe in cash, 1,606,000,000 Subscription Shares, credited as fully paid, at the Subscription Price of HK$0.062 per Subscription Share, representing (i) approximately 10.45% of the issued share capital of the Company as at the Latest Practicable Date, (ii) approximately 4.96% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares and the Subscription Shares, and (iii) approximately 4.40% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares;

(c) Ms. Ai Qing has conditionally agreed to subscribe in cash, 1,459,629,000 Subscription Shares, credited as fully paid, at the Subscription Price of HK$0.062 per Subscription Share, representing (i) approximately 9.50% of the issued share capital of the Company as at the Latest Practicable Date, (ii) approximately 4.51% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares and the Subscription Shares, and (iii) approximately 4.00% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares; and

– 50 – LETTER FROM THE BOARD

(d) Ms. Zheng Kuanjian has conditionally agreed to subscribe in cash, 1,276,000,000 Subscription Shares, credited as fully paid, at the Subscription Price of HK$0.062 per Subscription Share, representing (i) approximately 8.31% of the issued share capital of the Company as at the Latest Practicable Date, (ii) approximately 3.94% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares and the Subscription Shares, and (iii) approximately 3.50% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares.

The Subscription Shares will be issued under Subscription Specific Mandate to be approved by the independent Shareholders at the EGM. Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

The Subscription Shares, when allotted and issued, will rank pari passu in all respects among themselves, and with the existing Shares then in issue.

Subscription Price

The Subscription Price of HK$0.062 per Subscription Share represents:

(i) a discount of approximately 47.46% to HK$0.1180, the closing price of the Shares on the Stock Exchange on the date of the Subscription Agreements, being 19 September 2016;

(ii) a discount of approximately 36.86% to HK$0.0982, being the average closing price of the Shares as quoted on the Stock Exchange for the last 5 consecutive trading days prior to the Latest Practicable Date;

(iii) a discount of approximately 37.88% to HK$0.0998, being the average closing price of the Shares as quoted on the Stock Exchange for the last 10 consecutive trading days prior to the Latest Practicable Date; and

(iv) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016.

The issue price of HK$0.062 per Subscription Share was arrived by the Company and each of the Subscribers after arm’s length negotiation and having taken into consideration of the following factors:

(i) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016);

– 51 – LETTER FROM THE BOARD

(ii) the loss positions of the Group for the past four financial years ended 31 December 2015, 31 December 2014, 31 December 2013 and 31 December 2012;

(iii) the profitability potential of the Yacht Club Business, the School Business and the Real Property to the Group;

(iv) the issue price is within the range of the trading price of the Share during a 12- month period from 18 September 2015 to 18 September 2016, which was the last trading day immediately before the date of the Sale and Purchase Agreement (the ‘‘Review Period’’). During the Review Period, the highest trading price and the lowest trading price of the Shares were HK$0.32 (on 4 November 2015) and HK$0.059 (on 28 January 2016), respectively; and

(v) the Subscriptions and the Placing.

The gross and net proceeds from the Subscriptions are approximately HK$755,260,998 and approximately HK$755,260,998 respectively. The Subscription Price has been determined after arm’s length negotiation between the Company and the Subscribers with reference to (i) the prevailing market price of the Shares and the then current market conditions; and (ii) the Company’s funding needs for the Acquisition. The net price per Subscription Share will be approximately HK$0.062.

The Directors consider that the Subscription Price and the terms of the Subscription Agreements are fair and reasonable and in the interest of the Company and the Shareholders as awhole.

Conditions Precedent of the Subscriptions

Subscription Completion is conditional upon the fulfilment or waiver of, as the case may be, the following Subscription Conditions Precedent on or before the Subscription Long Stop Date:

(i) the passing of ordinary resolution(s) at the EGM by the Shareholders approving (a) the grant of the Subscription Specific Mandate to the Directors for the allotment and issue of the Subscription Shares by the Company to the Subscribers; and (b) the issue of the Subscription Shares to the Subscribers pursuant to the respective Subscription Agreements and the transactions contemplated under the Subscription Agreements;

(ii) the granting of the approval for the listing of, and permission to deal in the Subscription Shares by the Listing Committee of the Stock Exchange;

(iii) the warranties given by the Company and the Subscribers remaining true, accurate and not misleading in all material respects on the date of the Subscription Agreements and on Subscription Completion;

– 52 – LETTER FROM THE BOARD

(iv) the parties thereunder having complied with and performed the covenants and agreements under the respective Subscription Agreements in all material respects on or before Subscription Completion and not having breached any of the undertakings thereunder (except consent of the other party has been obtained);

(v) the Shares remaining listed and traded, and on or before Subscription Completion, the Company not having received any instruction from the Stock Exchange or the SFC, indicating that the listing of the Shares on the main board of the Stock Exchange will be or may be withdrawn or objected due to the Subscription Completion or the transactions contemplated under the Subscription Agreements (whether or not subject to conditions);

(vi) the Sale and Purchase Agreement and the Subscription Agreements (other than the Subscription Agreement in question) becoming unconditional (save for the conditions precedent requiring the Subscription Agreement in question to be unconditional) in accordance with their respective terms; and

(vii) all necessary consents and approvals (including, if applicable, the Shareholders’ approvals (with the relevant shareholders to abstain from voting as required by the Listing Rules)) required to be obtained on the part of the Company and the relevant Subscriber in respect of the Subscriptions having been obtained.

Each of the Subscribers may in its absolute discretion waive conditions (iii) and (iv) above under its respective Subscription Agreement at any time by notice in writing to the Company. The Company may in its absolute discretion waive conditions (iii) and (iv) above under the respective Subscription Agreements at any time by notice in writing to the respective Subscriber. If conditions (iii) and (iv) above remain wholly or partially outstanding as at the Subscription Long Stop Date, the Company will only consider a grant of waiver to such waivable conditions only if it is fair and reasonable and in the interests of the Company and the Shareholders as a whole, and that the substance of the Subscription will not be materially and adversely affected by such waiver in all material aspects.

If the Subscription Conditions Precedent have not been fulfilled or waived on or before the Subscription Long Stop Date, then the Subscription Agreements shall be terminated and none of the parties thereunder shall have any claim against the other in relation thereto (save in respect of any antecedent breach of any obligation under the respective Subscription Agreements).

As at the Latest Practicable Date, none of the Subscription Conditions Precedent have been fulfilled or waived.

Completion of the Subscriptions

Each of the Acquisition and the Subscriptions is inter-conditional with each other. The Subscription Completion shall take place simultaneously with the Completion and the Subscription Completion on the Completion Date.

– 53 – LETTER FROM THE BOARD

Reasons for and benefits of the Subscriptions

The Company intends to utilise the net proceeds from the Subscription as follows:

(1) HK$700,000,000, being 92.68% of the total net proceeds of the Subscription, for the Acquisition; and

(2) the remaining amount of HK$55,261,000, being 7.32% of the total net proceeds of the Subscription, for general working capital.

The Directors consider that the Subscriptions would strengthen the Group’s cash position without incurring additional interest burden and is therefore an effective manner to raise additional funds for the Acquisition. The Subscriptions will also provide an opportunity for the Company to broaden its shareholder base.

In light of the above, the Directors are of the opinion that the Subscription Agreements were entered into after arm’s length negotiation between the Company and the respective Subscribers and that the terms of the Subscription Agreements, including but not limited to the Subscription Price, are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

PLACING AGREEMENT

The information of the Placing Agreement are summarized as below:

Date

19 September 2016 (after trading hours)

Parties

Issuer: the Company

Placing Agent: China Yinsheng Securities Limited

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, as at the Latest Practicable Date, each of the Placing Agent and its ultimate beneficial owners is an Independent Third Party.

Placees

It is expected that there shall be not less than six Placees. Such Placees and their respective ultimate beneficial owners shall be independent of and not being a connected person of the Company and not connected or related to any of the connected persons of the Company or their respective associates. It is expected that none of the Placees will become a substantial shareholder of the Company immediately after completion of the Placing.

– 54 – LETTER FROM THE BOARD

Placing Shares

The Placing Agent has conditionally agreed to place, on a best endeavour basis, a total of up to 4,088,000,000 Placing Shares to not less than six Placees at the Placing Price.

The Placing Shares represent (i) approximately 26.61% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 11.20% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares.

The Placing Shares will be issued under Placing Specific Mandate to be approved by the independent Shareholders at the EGM. Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

The Placing Shares, when allotted and issued, will rank pari passu in all respects among themselves, and with the existing Shares then in issue.

Placing Price

The Placing Price of HK$0.062 per Placing Share represents:

(i) a discount of approximately 47.46% to HK$0.1180, the closing price of the Shares on the Stock Exchange on the date of the Placing Agreement, being 19 September 2016;

(ii) a discount of approximately 36.86% to HK$0.0982, being the average closing price of the Shares as quoted on the Stock Exchange for the last 5 consecutive trading days prior to the Latest Practicable Date;

(iii) a discount of approximately 37.88% to HK$0.0998, being the average closing price of the Shares as quoted on the Stock Exchange for the last 10 consecutive trading days prior to the Latest Practicable Date; and

(iv) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016.

The issue price of HK$0.062 per Placing Share was arrived by the Company and the Placing Agent after arm’s length negotiation and having taken into consideration of the following factors:

(i) a premium of approximately 0.65% over the unaudited net asset value of approximately HK$0.0616 per Share as at 30 June 2016 (based on the consolidated net assets of the Group of approximately HK$946,189,000 as at 30 June 2016 and 15,363,151,280 Shares in issue as at 30 June 2016);

– 55 – LETTER FROM THE BOARD

(ii) the loss positions of the Group for the past four financial years ended 31 December 2015, 31 December 2014, 31 December 2013 and 31 December 2012;

(iii) the profitability potential of the Yacht Club Business, the School Business and the Real Property to the Group;

(iv) the issue price is within the range of the trading price of the Share during a 12- month period from 18 September 2015 to 18 September 2016, which was the last trading day immediately before the date of the Sale and Purchase Agreement (the ‘‘Review Period’’). During the Review Period, the highest trading price and the lowest trading price of the Shares were HK$0.32 (on 4 November 2015) and HK$0.059 (on 28 January 2016), respectively; and

(v) the Subscriptions and the Placing.

The gross and net proceeds from the Placing are approximately HK$253,456,000 and approximately HK$250,921,440 respectively. The Placing Price has been determined after arm’s length negotiation between the Company and the Placing Agent with reference to (i) the prevailing market price of the Shares and the current market conditions; and (ii) the Company’s financial position and the business prospect of the Group.

The Directors consider that the Placing Price and the terms of the Placing Agreement are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Placing Commission

The Placing Agent will receive a placing commission of 1.0% of the aggregate Placing Price of the Placing Shares placed by or on behalf of the Placing Agent on behalf of the Company pursuant to the Placing Agreement. Such placing commission was determined after arm’s length negotiation between the Company and the Placing Agent with reference to the prevailing market conditions. The Directors consider that the commission for the Placing is fair and reasonable. The net price per Placing Share will be approximately HK$0.06138.

Conditions Precedent of the Placing

Placing Completion is conditional upon the fulfilment of the following Placing Conditions Precedent on or before the Placing Long Stop Date:

(i) the granting of the approval for the listing of, and permission to deal in, the Placing Shares by the Listing Committee of the Stock Exchange;

(ii) the passing of ordinary resolution(s) at the EGM by the Shareholders approving (a) the Placing Agreement and the transactions contemplated thereunder; and (b) the grant of the Placing Specific Mandate to the Directors for the allotment and issue of the Placing Shares by the Company; and

– 56 – LETTER FROM THE BOARD

(iii) all necessary consents and approvals (including, if applicable, the Shareholders’ approvals (with the relevant shareholders to abstain from voting as required by the Listing Rules)) required to be obtained on the part of the Company in respect of the Placing having been obtained.

None of the above Placing Conditions Precedent can be waived.

If the Placing Conditions Precedent have not been fulfilled on or before the Placing Long Stop Date, all obligations of the Placing Agent and of the Company under the Placing Agreement shall cease and determine and none of the parties thereunder shall have any claim against the other in relation thereto (save in respect of any antecedent breach of any obligation under the Placing Agreement). The Placing Completion is not conditional upon the completion of the Acquisition and the Subscriptions.

Completion of the Placing

Completion of the Placing shall take place on the Placing Completion Date. The Company intends to complete the Placing within 10 business days after the date on which the Placing Conditions Precedent under the Placing Agreement are satisfied. In the event that Placing Completion does not occur within one month from the date of the EGM, the resolutions in relationtothePlacingAgreementandthePlacing contemplated thereunder and the Placing Specific Mandate will be re-submitted to the Shareholders for approval at another extraordinary general meeting to be convened by the Company for such purpose.

Reasons for and benefits of the Placing

The net proceeds from the Placing are estimated to amount to approximately HK$250,921,440. The net proceeds are intended to be applied as to 100% for the repayment of (i) the outstanding convertible bonds in the principal amount of HK$200,000,000 issued by the Company on 22 June 2015 and (ii) the outstanding bonds in the principal amount of HK$95,000,000 issued by the Company on 8 November 2016. The Directors consider that the Placing would strengthen the Group’s cash position without incurring additional interest burden and is therefore an effective manner to raise additional funds for the repayment of outstanding bonds. The Placing will also provide an opportunity for the Company to broaden its shareholder base and further consolidate the financial position of the Group to diversify its business risks.

In light of the above, the Directors are of the opinion that the Placing Agreement was entered into after arm’s length negotiation between the Company and the Placing Agent and that the terms of the Placing Agreement, including but not limited to the Placing Price, are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

– 57 – LETTER FROM THE BOARD

ISSUE OF CONSIDERATION SHARES, SUBSCRIPTION SHARES AND PLACING SHARES UNDER SPECIFIC MANDATES AND APPLICATION FOR LISTING

The Consideration Shares, the Subscription Shares and the Placing Shares will be issued under the Specific Mandates to be sought at the EGM. An application will be/has been made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares, the Subscription Shares and the Placing Shares.

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below sets forth the shareholding structure of the Company (i) as at the Latest Practicable Date and (ii) upon Placing Completion (without taking into account the effect of the Sale and Purchase Agreement and the Subscription Agreements and assuming that the number of Shares owned by each of the Shareholders below remains unchanged and that there have been no other changes to the issued share capital of the Company):

Upon Placing Completion (without taking into account the effect of the Sale and Purchase Agreement and the Subscription Agreements and assuming that the number of Shares owned by each of the Shareholders below remains unchanged and that there have been no other As at the changes to the issued share Name of Shareholder Latest Practicable Date capital of the Company)

Directors Zhang Xiaodong 2,763,500,000 17.99%# 2,763,500,000 14.20% Lau Wan Po 15,000,000 0.10% 15,000,000 0.08%

Placees (not less than 6) — 4,088,000,000 21.02%

Public shareholders 12,584,651,280 81.91% 12,584,651,280 64.70%

Total 15,363,151,280 100% 19,451,151,280 100%

#Note: rounded up to nearest 2 decimal places.

– 58 – LETTER FROM THE BOARD

The table below sets forth the shareholding structure of the Company (i) as at the Latest Practicable Date; upon allotment and issue of the Consideration Shares and the Subscription Shares (ii) as at the Completion Date and (iii) as at the Retained Consideration Release Date (assuming completion under the Sale and Purchase Agreement and the Subscription Agreements having occurred, the number of Shares owned by each of the Shareholders below remain unchanged and no other changes to the issued share capital of the Company):

Immediately after the Immediately after the allotment allotment and issue of the and issue of the Consideration Consideration Shares as at Shares as at the Retained the Completion Date Consideration Release Date (assuming Completion having (assuming Completion having occurred, the number of occurred, the number of Shares Shares owned by each of the owned by each of the Shareholders below remain Shareholders below remain unchanged and no other unchanged and no other As at the changes to the issued share changes to the issued share Name of Shareholders Latest Practicable Date capital of the Company) capital of the Company)

Directors Zhang Xiaodong 2,763,500,000 17.99% 2,763,500,000 9.22% 2,763,500,000 8.53% Lau Wan Po 15,000,000 0.10% 15,000,000 0.05% 15,000,000 0.05%

The Seller ——2,419,354,838 8.07% 4,838,709,676 14.94%

Subscribers Origin Development Limited ——7,840,000,000 26.17% 7,840,000,000 24.21% Crystal Fount Investment Limited ——1,606,000,000 5.36% 1,606,000,000 4.96% Ai Qing ——1,459,629,000 4.87% 1,459,629,000 4.51% Zheng Kuanjian ——1,276,000,000 4.26% 1,276,000,000 3.94%

Public shareholders 12,584,651,280 81.91% 12,584,651,280 42.00% 12,584,651,280 38.86%

Total 15,363,151,280 100% 29,964,135,118 100% 32,383,489,956 100%

– 59 – LETTER FROM THE BOARD

The table below sets forth the shareholding structure of the Company (i) as at the Latest Practicable Date; upon allotment and issue of the Consideration Shares, the Subscription Shares and the Placing Shares (ii) as at the Completion Date and (iii) as at the Retained Consideration Release Date (assuming completion under the Sale and Purchase Agreement, the Subscription Agreements and the Placing Agreement (where all Placing Shares are placed under the Placing Agreement) having occurred, the number of Shares owned by each of the Shareholders below remain unchanged and no other changes to the issued share capital of the Company):

Immediately after the Immediately after the allotment allotment and issue of the and issue of all the Consideration Shares, the Consideration Shares as at the Subscription Shares and the Retained Consideration Release Placing Shares as at the Date (assuming completion Completion Date (assuming under the Sale and Purchase completion under the Sale Agreement, the Subscription and Purchase Agreement, the Agreements and the Placing Subscription Agreements and Agreement (where all Placing the Placing Agreement (where Shares are placed under the all Placing Shares are placed Placing Agreement) having under the Placing Agreement) occurred, the number of Shares having occurred, the number owned by each of the of Shares owned by each of Shareholders below remain the Shareholders below unchanged and no other remain unchanged and no changes to the issued share other changes to the issued capital of the Company and no As at the share capital of the Retained Consideration Name of Shareholders Latest Practicable Date Company) Adjustment)

Directors Zhang Xiaodong 2,763,500,000 17.99% 2,763,500,000 8.12% 2,763,500,000 7.58% Lau Wan Po 15,000,000 0.10% 15,000,000 0.04% 15,000,000 0.04%

The Seller ——2,419,354,838 7.10% 4,838,709,676 13.27%

Subscribers Origin Development Limited ——7,840,000,000 23.02% 7,840,000,000 21.50% Crystal Fount Investment Limited ——1,606,000,000 4.72% 1,606,000,000 4.40% Ai Qing ——1,459,629,000 4.29% 1,459,629,000 4.00% Zheng Kuanjian ——1,276,000,000 3.75% 1,276,000,000 3.50%

Placees (not less than 6) ——4,088,000,000 12.00% 4,088,000,000 11.20%

Public shareholders 12,584,651,280 81.91% 12,584,651,280 36.96% 12,584,651,280 34.51%

Total 15,363,151,280 100% 34,052,135,118 100% 36,471,489,956 100%

– 60 – LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has conducted the following fund raising activities in the past twelve months from the Latest Practicable Date:

Date of Fund raising Intended use of announcement activities Net proceeds proceeds as announced Actual use of proceeds

28 October 2015 Placing of Bonds Approximately Intendedtoprovidethe Approximately HK$97,000,000 is HK$97,000,000 Company with sufficient unutilized as at the Latest capital for future Practicable Date. It is the current acquisition opportunities. intention of the Company that the remaining unutilized net proceeds raised from the placing of bonds will be used for funding future acquisition opportunities, which accords with the specific uses as previously announced by the Company.

11 November 2015 Placing of Shares Approximately As disclosed in the In accordance with the specific HK$157,300,000 announcement of the uses as previously announced by Company dated 11 the Company, approximately November 2015, HK$157,300,000 was paid as HK$157,000,000 is cash consideration for the intended to be fully acquisition of Key Rich utilized for future Corporation Limited, a company acquisition opportunity. engaging in the provision of a peer-to-peer financial intermediary services on 31 December 2015.

2 November 2016 Placing of Bonds Approximately To refinance the Bonds In accordance with the specific HK$92,150,000 issued by the Company on uses as previously announced by 12 November 2015. the Company, approximately HK$92,150,000 was paid to refinance the Bonds issued by the Company on 12 November 2015.

As at the Latest Practicable Date, the Company has no other fundraising plan.

INFORMATION OF THE GROUP

The Group is principally engaged in the core businesses of (i) sports-related businesses and (ii) the design, development and operationofthemobileandwebgames,andinthe affiliated businesses of (iii) P2P financial intermediary services and other relevant consultation services. According to the interim results announcement of the Company dated 29 August 2016, the Group plans to focus on developing and expanding its sports-related businesses in the future and further explore the opportunities presented by ‘‘Internet + Sports’’.

– 61 – LETTER FROM THE BOARD

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The current authorised share capital of the Company is HK$100,000,000 divided into 40,000,000,000 Shares. As at the Latest Practicable Date, 15,363,151,280 Shares were in issue. Assuming each of the Acquisition, the Subscription and the Placing has successfully completed, 21,108,338,676 Shares will be allotted and issued. Taking into account the aforesaid and in order to provide the Company with flexibility for fund raising by allotting and issuing new Shares in the future as and when appropriate for future investment opportunities and other corporate purposes, the Board proposed to increase the authorised share capital of the Company from HK$100,000,000 divided into 40,000,000,000 Shares to HK$200,000,000 divided into 80,000,000,000 Shares by the creation of additional 40,000,000,000 Shares, all of which will rank pari passu with all existing Shares. The proposed Increase in Authorised Share Capital is conditional upon the passing of an Ordinary Resolution by the Shareholders at the EGM.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined under the Listing Rules) of the Acquisition exceeds 25%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules. As the Valuations of the Business are regarded as a profit forecast under Rule 14.61 of the Listing Rules, information in compliance with Rule 14.62 of the Listing Rules in respect of the said profit forecast will be contained in the circular. A valuation report on the Real Property in compliance with the requirements of Chapter 5 of the Listing Rules has been included in this circular to be despatched to the Shareholders.

EGM

The EGM will be held for the purpose of considering and, if thought fit, approving the relevant ordinary resolution(s) in respect of (i) the Sale and Purchase Agreement and the Acquisition contemplated thereunder and the Acquisition Specific Mandate; (ii) the Subscription Agreements and the Subscriptions contemplated thereunder and the Subscription Specific Mandate; (iii) the Placing Agreement and the Placing contemplated thereunder and the Placing Specific Mandate; and (iv) the Increase in Authorised Share Capital. Any Shareholder with a material interest in the relevant transactions as contemplated under the ordinary resolutions and his close associate will abstain from voting on the relevant resolutions approving the said transactions. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, no Shareholder has a material interest in the Acquisition, the Subscriptions and the Placing and therefore no Shareholder is required to abstain from voting at the EGM.

The notice of the EGM of the Company is set out on pages EGM-1 to EGM-4 of this circular. If you do not intend to attend and vote at the EGM in person, you are requested to complete and return the enclosed form of proxy to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, on Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours

– 62 – LETTER FROM THE BOARD before the time appointed for the holding of the meeting or any adjournment thereof. The completion and delivery of a form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

VOTING BY POLL

All the resolutions set out in the notice of the EGM would be decided by poll in accordance with the Listing Rules and the articles of association of the Company. On a poll, every Shareholder present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy shall have one vote for every fully paid Share held. A Shareholder present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy who is entitled to more than one vote need not use all his/its votes or cast all his/its votes in the same way. After the conclusion of the EGM, the poll results will be published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.newsportsgp.com.

RECOMMENDATION

The Directors are of the opinion that the terms of each of the Sale and Purchase Agreement, the Subscription Agreements and the Placing Agreement, the transactions contemplated thereunder and the issue of each of the Consideration Shares, Subscription Shares and Placing Shares under the terms of each of the relevant agreement and the Increase in Authorised Share Capital are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the independent Shareholders to vote in favour of all the resolutions to be proposed at the EGM.

GENERAL

The Board wishes to emphasize that the completion of the Acquisition, the Subscriptions and the Placing are subject to the satisfaction of the conditions precedent as set out in the Sale and Purchase Agreement, the Subscription Agreements and the Placing Agreement, respectively.

As completion of each of the Acquisition, the Subscriptions and the Placing is subject to the satisfaction of the conditions precedents stated in each of the Sale and Purchase Agreement, the Subscription Agreements and the Placing Agreement, each of the Acquisition, the Subscriptions and/or the Placing may or may not proceed to completion. Accordingly, the Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.

– 63 – LETTER FROM THE BOARD

FURTHER INFORMATION

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

Your faithfully, For and on behalf of the Board of New Sports Group Limited Zhang Xiaodong Executive Director

– 64 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

FINANCIAL SUMMARY OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 December 2013, 2014 and 2015 and the unaudited consolidated financial statements of the Group for the six months ended 30 June 2016 are respectively disclosed in the following documents which have been published on the website of the Company (www.newsportsgp.com) and the website of the Stock Exchange (www.hkexnews.hk):

. the annual report of the Company (formerly known as SinoCom Software Group Limited) for the year ended 31 December 2013 published on 25 April 2014 (pages 40 to 102);

. the annual report of the Company (formerly known as SinoCom Software Group Limited) for the year ended 31 December 2014 published on 15 April 2015 (pages 36 to 96);

. the annual report of the Company for the year ended 31 December 2015 published on 25 April 2016 (pages 59 to 142); and

. the interim report of the Company for the six months ended 30 June 2016 published on 23 September 2016 (pages 13 to 52).

INDEBTEDNESS

The Group

Borrowings

As at close of business on 31 October 2016, being the Latest Practicable Date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had an outstanding secured bank borrowing of RMB18,000,000 (equivalent to approximately HK$20,635,000). The bank borrowings are secured by a charge over a property owned by a director of a subsidiary and are guaranteed by two directors of the subsidiary and their spouses.

As at close of business on 31 October 2016, the Group had available banking facilities of RMB18,000,000 (equivalent to approximately HK$20,635,000). Out of such available facilities, a total of RMB18,000,000 (equivalent to approximately HK$20,635,000) was drawn and bore interest at prevailing market rates.

Convertible bonds

As at close of business on 31 October 2016, being the Latest Practicable Date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had unsecured convertible bonds with an aggregate principal amount of HK$290,000,000 with interest payable of HK$15,157,000.

– I-1 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Contingent liabilities

At the close of business on 31 October 2016, the Group did not have any significant contingent liabilities.

The Target Group

Borrowings

As at close of business on 31 October 2016, being the Latest Practicable Date for the purpose of this indebtedness statement prior to the printing of this circular, the Target Group had outstanding unsecured and interest-free shareholder’s loan of HK$880,000,000.

An amount included in accruals and other payables

As at close of business on 31 October 2016, being the Latest Practicable Date for the purpose of this indebtedness statement prior to the printing of this circular, the Target Group had an unsecured and interest-free amount of RMB42,630,000 (equivalent to approximately HK$48,871,000) included in accruals and other payables.

Contingent liabilities

As at close of business on 31 October 2016, the Target Group did not have any significant contingent liabilities.

Disclaimer

Save as aforesaid and apart from intra-group liabilities and normal trade payables, at the close of business on 31 October 2016, the Enlarged Group did not have any loan capital issued or agreed to be issued, mortgage, charges, bank overdrafts, finance leases or hire purchase commitments, loans or other similar indebtedness, liabilities under acceptances (other than normal trade payables) or acceptance credits, debentures, guarantees or other material contingent liabilities.

Foreign currency amounts have been translated into Hong Kong dollars at the exchange rates prevailing on 31 October 2016.

FINANCIAL AND TRADING PROSPECT OF THE ENLARGED GROUP

According to the interim report of the Company for the six months ended 30 June 2016, ‘‘The 13th Five-year Plan for the development of sports industry’’ (‘‘the 13th Five-Year Plan’’) promulgated by the State General Administration of Sport of China in July 2016 formulates various development objectives to enlarge the size of the sports industry and boost the relevant consumption. It is targeted that by 2020, (i) the total size of the national sports industry will reach RMB3 trillion with its added value taking up 1% of the GDP, (ii) the per capita sports venue area will reach 1.8 square meters, (iii) 100 demonstration projects of the State regarding the sports industry will be set up and (iv) the sporting environment will be improved. Thus, the Group plans to focus on developing and expanding its sports-related businesses in the future.

– I-2 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Taking into consideration of the potential growth of the Yacht Club Business and the School Business, details of which are disclosed in the section headed ‘‘Reasons for and benefits of the Acquisition’’ under the ‘‘Letter from the Board’’ to this circular, the Board is optimistic about the future development of sports-related business and the industry in which the Target Group operates and hence, improve the profitability of the Enlarged Group.

In the long run, the Enlarged Group will continue to evaluate suitable investments that present development or synergetic opportunities and provide additional income streams.

WORKING CAPITAL

The Directors, after due and careful enquiry, are of the opinion that after taking into account the internal financial resources of the Enlarged Group, the available credit facilities and the effect of the Acquisition, the Enlarged Group will have sufficient working capital for at least the next twelve months from the date of this circular.

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2015, being the date to which the latest published audited financial statements of the Group were made up.

MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

Set out below are the management discussion and analysis of the Group for the 6 months ended 30 June 2016 and the years ended 31 December 2015, 2014 and 2013 as extracted from its respective interim report and annual reports.

(I) For the 6 Months Ended 30 June 2016

Industry and Market Overview

The sports industry in the PRC entered a high-growth period in the first half of 2016. ‘‘The 13th Five-year Plan for the development of sports industry’’ (‘‘the 13th Five-Year Plan’’), promulgated by the State General Administration of Sport of China in July 2016, formulates various development objectives to enlarge the size of the sports industry and boost the relevant consumption. It is targeted that by 2020, the total size of the national sports industry will reach RMB3 trillion with its added value taking up 1% of the GDP, the per capita sports venue area will reach 1.8 square meters, 100 demonstration projects of the State regarding the sports industry will be set up and the sporting environment will be improved. The 13th Five-Year Plan also regards the contest and performance industry, the fitness and leisure industry, the venue service industry, the sports intermediary industry, the sports training industry, the sports media industry, the sporting goods industry and the sports lottery industry as the key development industries.

Football popularization and the building of world-class football teams are the development objectives of the 13th Five-Year Plan. As the PRC government attaches great importance to football development, it is expected that the Chinese Football Association

– I-3 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Super League (‘‘CSL’’) will scale new heights in its development in 2016. According to ‘‘2016 Technology, Media and Telecommunications Industry Predictions’’ issued by Deloitte, the market value of CSL will continue to climb and reach RMB3.4 billion in 2016, representing an increase of approximately 40% over last year. The purchase price of the five-year (2016–2020) TV broadcast rights to CSL reached RMB8 billion. There are huge business opportunities in connection with CSL, including those arising from ticket sales, match broadcasting, advertising and brand licensing.

The PRC government has been proactively promoting ‘‘Internet + Sports’’ in recent years, encouraging enterprises to develop internet technology-based sports service business. Many enterprises have been developing and operating online sports platforms to seize development opportunities, seeking to deepen their market penetration. According to a research conducted by iResearch, the mainstream online sports platforms had 136 million monthly unique users in March 2016. Among these users, football is one of the most popular categories as more than 60% of them had watched football matches via these platforms. Furthermore, more than half of the platform users bought tickets and authentic team related products and paid to watch matches online through these platforms. It can be seen that there is much room for development for online sports platforms, notably in the case of football-related products and services. Mobile applications and online platforms integrating mobile internet with sports have great commercial potential.

As the general public is becoming more aware of physical fitness and interested in sports, the sports cultural and creative industry — a combination of sports culture, creativity and innovative technologies, is flourishing. With an intention to create a number of high quality sophisticated sports cultural projects and sports cultural brand events which will bring significant benefits to the society, the PRC government also has actively encouraged and promoted sports education and training and the development of sports culture among young people in recent years. Reaping benefits from the PRC government’s strategies to promote development in various sectors of the sports industry, enterprises will focus on ‘‘Sports + Culture’’ to expand their sports-related businesses in the future. It is expected that the development of the sports cultural and creative industry can be promoted.

The mobile and web-based gaming market in the PRC continued to flourish in the first half of 2016. The number of mobile and web-based game users reached approximately 400 million and 280 million, respectively. According to ‘‘the China Gaming Industry Report’’ issued by the Game Publishing Working Committee under the China Audio-video and Digital Publishing Association, the revenue generated in the mobile gaming market and the web-based gaming market were RMB37.48 billion and RMB10.06 billion, respectively, representing an increase of 79% and a slight decrease of 2% as compared with the same period last year. Benefited from the popularization of 4G technology and the enhancement of mobile devices’ functionality, competitive games, including sports games, are very popular among the game users. This drives the continuous development of midcore and hardcore games. However, along with many traditional console game developers joining the market, the competition has turned white- hot. Mobile games incorporating virtual reality (VR) technology hold the promise to attractmoregameusers.

– I-4 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Based on the above reasons, our Group plans to focus on developing and expanding its sports-related businesses, especially those which are football-related, in the future and further explore the opportunities presented by ‘‘Internet + Sports’’.

Business Review

Sports Business

Our Company has been proactively identifying good opportunities for mergers and acquisitions to further explore business opportunities in the sports industry, especially those which are football-related. In order to expand our Group’s influence in the PRC sports industry, Shenzhen Baoxin Sport Industry Limited (‘‘Shenzhen Baoxin’’), our Company’s wholly-owned subsidiary, entered into an agreement with Shenzhen City Yinling Pingan Culture Media Co., Ltd. (‘‘Yinling Pingan’’) on 15 May 2016 to establish Shenzhen Baoxin Football Club Co., Ltd., which is a joint-venture company (the ‘‘JV Company’’). Shenzhen Baoxin and Yinling Pingan made a capital contribution of RMB68,000,000 and RMB32,000,000 to the JV Company respectively. The JV Company is held as to 68% and 32% by Shenzhen Baoxin and Yinling Pingan respectively. As consideration for the capital contribution, Yinling Pingan transferred the football club registrations of 15 key football players (including a coach) and 6 backup football players of Shenzhen Pingzhian Football Club Company Limited (‘‘Shenzhen Pingzhian’’)(a wholly owned subsidiary of Yinling Pingan), valued at RMB32,010,000, to the JV Company. Accordingly, the JV Company possesses the exclusive rights to each of the football players and enters into new employment contracts with them. Pursuant to the contracts, the football players have been representing Shenzhen Baoxin Football Club (‘‘Baoxin Football Club’’), which is operated by the JV Company, since 6 June of the same year. The football club, which has potential to enter into the PRC champion league, won the Shenzhen Provincial and Municipal League Championship of the Chinese Football Association Amateur League in July 2016, and also obtained qualification for participating in the Regional League competition.

The JV Company is principally engaged in sports-related business, including the investment in the JV Football Club and other sports clubs, the operation and management of sports grounds and facilities, the provision of fitness services, sports matches planning services, sports advertising services, sports events training, ticketing agency services and consultation services relating to sports and sports economic information, the sale of sportswear and sports equipment, e-commerce, and the organisation of exhibitions.

‘‘Internet + Sports’’ Business

As the internet economy is on the rise in various consumption sectors, our Group is trying to gradually build a smart sports vertical industry chain with ‘‘Internet + Sports’’ as its theme. In order to seize development opportunities arising from the combination of internet and sports, our Group completed the acquisition of Kingworld (Beijing) Technology Co., Ltd (‘‘Kingworld Beijing’’) on 31 December 2015. Kingworld Beijing obtainedanexclusivelicenseon4June2015todevelop and operate the official wireless platform (including but not limited to WeChat) and mobile application for the Chinese Football Association Super League. The mobile application, which has currently been

– I-5 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

updated to Version 3.0, is the flagship product of Kingworld Beijing, mainly providing information on CSL matches and first-hand data and news on the 16 football teams. Its total download count reached 5.65 million.

Meanwhile, Kingworld Beijing also exclusively develops and operates official internet service platforms for a number of football clubs of China League One, including Beijing Guoan Football Club, Shanghai Greeland and Shenhua Football Club, Tianjin Teda Football Club, Hangzhou Greentown Football Club, Dalian Yifang Football Club and Beijing Renhe Football Club. As a result, social platforms connecting football teams and their fans are created. These platforms provide integrated services such as information on football clubs, ticketing and e-commerce. Kingworld Beijing’s experience in football- focused development and operation provides our Group with unique development advantages, which can help move our Group’s ‘‘Internet + Sports’’ businesses forward.

In order to follow the ‘‘Internet + Sports’’ pattern of development, ‘‘Kingworld Sports’’, an internet sports cultural service platform operated by Kingworld Beijing, mainly provides services including live broadcasts of matches, video interaction, e-sports, interactive entertainment, sports e-commerce, sports finance, sports training and sports tourism. Kingworld Beijing is also proactively involved in football training services. With a view to nurturing excellent coaches, Kingworld Beijing made a capital contribution of RMB490,000 in April 2016 to set up training courses (in collaboration with Chinese Football Association Super League Co., Ltd. and FC Cologne (which is currently a football team in the German First-Division Soccer League)) for the coaches of CSL clubs. On 20 October 2015, Kingworld Beijing and China Social Welfare Foundation (the Next Generation Fund) entered into a Close Cooperation Agreement with Real Madrid C.F. in the PRC (which is currently a football team in Liga BBVA) mainly to provide sports training for the amateur football league and junior football players.

In addition to developing and operating internet products by building on its technological strengths, which have been accumulated for many years, Kingworld Beijing also proactively expands its business towards the entire sports industry. On 24 December 2015, Kingworld Beijing entered into a 10-year cooperation agreement with the Winter Sports Management Center of the General Administration of Sport of China. Under the agreement, Kingworld Sports will develop and operate internet services and social platforms in connection with winter sports (such as skiing, skating, ice hockey and curling) in the PRC to promote winter sports to all snow lovers. Kingworld Sports will also carry out one-stop online to offline integrated marketing and services in relation to the key business such as training and tourism.

Mobile and Web-based Gaming Business

Given the huge growth potential of the mobile and web-based gaming industry, the Group has acquired game development businesses with growth potential in order to enhance its independent research and development capacities of developing games. The Group’s subsidiary Heroic Coronet Limited (‘‘Heroic Coronet’’) owns 65% equity interests of Beijing Kaixin Jiuhao Technology Company Limited (‘‘Kaixin Jiuhao’’). Kaixin Jiuhao is principally engaged in the design, development and operation of mobile

– I-6 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

and web-based games. Kaixin Jiuhao’s experienced independent research and development team is able to develop popular midcore and hardcore sophisticated games, especially those under the sports category. Thus, the Group can deepen its market penetration and stay highly competitive. The Group has a research team in the Mainland, which designs and develops high quality midcore and hardcore games under the sports category leveraging on its innovative ideas and sharp market acumen.

Outlook

Being optimistic about the potential for rapid growth in the Chinese football industry, the Group has established the JV Company and formulated a three-year development plan for Baoxin Football Club, which is under the JV Company’s operation. The football club is expected to qualify for participating in professional matches in the Chinese Football Association Division Two League (‘‘China League Two’’) by 2016 and get promoted to the Chinese Football Association Division One League (‘‘China League One’’) by 2017 and the Super League by 2018 one after another. Therefore, it is anticipated that the market value of the football club will continue to surge.

In the coming five years, Kingworld Beijing, owned by the Group and with a focus on the sports industry, will create quality internet sports cultural and creative service platforms by taking forward its initiatives in areas related to mobile applications, web portals, the WeChat platform, video broadcasting and community interaction. Kingworld Beijing will be a popular internet sports brand in the PRC. Regarding football training, Kingworld Beijing will establish close cooperation relationships with internationally renowned organizations including Real Madrid Club, and continue to strengthen its development in the areas of sports training and sports tourism in the future to boost the Company’s profitability.

Kingworld Sports has entered into a 10-year cooperation agreement with the Winter Sports Management Center of the General Administration of Sport. Kingworld Sports will create internet services and social platforms in connection with winter sports in the PRC. As the 2022 Beijing Winter Olympics happens to be held during the term of the cooperation agreement, Kingworld Beijing will make good use of its own resources and technologies to participate in projects relating to internet products and operation services for the Winter Olympics. These projects represent enormous business opportunities for Kingworld Beijing. The Group also intends to develop wireless platforms in connection with winter sports, basketball, tennis, baseball and water sports in the future.

In order to capture the future development opportunities in the sports cultural and creative industry and strengthen its leading position in such industry, the Group intends to explore various merger and acquisition opportunities. Acquiring sports centers, building large sports complexes and expanding its education and training service business are some of the Group’s business development directions. To maintain its competitiveness, the Group will also proactively source new clients and share its human resources to enhance its capacity to achieve growth in overall profit. The Group intends to put more resources

– I-7 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

on strengthening its business capability in the areas of sports, sports culture, internet sports and sports education and training, in the hope of making contributions in promoting the development of sports in the PRC.

Review of Results and Operations

The Group’s consolidated turnover for the six months ended 30 June 2016 (the ‘‘Period’’) was approximately HK$65,795,000 representing a decrease of approximately 77% when compared with HK$284,313,000 for the same period of 2015. The decrease was mainly attributable to the operation of software development in Japan market was ceased for the Period, which accounted for 89% of total turnover for 2015.

In addition, the turnover sourced from China increased by approximately 105% from approximately HK$32,020,000 for the six months ended 30 June 2015 to approximately HK$65,795,000 for the Period. Although the Group have a significant decrease in the service income derived from outsourcing software development in the PRC by approximately 97% from approximately HK$3,623,000 for the six months ended 30 June 2015 to approximately HK$119,000 for the Period, the turnover derived from online games service in the PRC increased by approximately 131% to approximately HK$65,676,000 from approximately HK$28,397,000 for the same period of 2015.

With higher gross profit margin generated from the online games business newly acquired on late 2015, the Group’s gross profit margin increased from approximately 7.2% for 2015 to approximately 32.6% for the Period. Gross profit for the Period increased to approximately HK$21,418,000 or by 4%, when compared to the gross profit of approximately HK$20,590,000 for the same period of 2015.

Accordingly, the Group recorded net loss of approximately HK$222,191,000 for the Period, when compared with the net loss of approximately HK$200,435,000 for the same period of 2015. The Group’s net loss for the Period mainly included the impairment losses on goodwill and other intangible assets of approximately HK$90,389,000 and HK$86,066,000 respectively.

Operating loss of approximately HK$192,851,000 was recorded for the Period when compared with the operating loss of approximately HK$196,062,000 for the same period of 2015. The decrease in operating loss of approximately HK$3,211,000 was mainly attributable to the decrease in the operation expenses derived from the software development business which ceased in the Period.

Income tax credit for the Period was approximately HK$3,000 as compared with an income tax expense for the same period of 2015 of approximately HK$3,604,000.

Net loss attributable to owners of the Company was approximately HK$186,277,000 for the Period whereas net loss attributable to owners of the Company was approximately HK$199,119,000 for the same period of 2015.

– I-8 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Significant Investment, Material Acquisition and Disposal

Except for those mentioned above under Business Review, the Group did not have any significant investment, material acquisition or disposal for the six months ended 30 June 2016.

Liquidity and Financial Resources

The Group did not issue convertible bonds during the Period.

As at 30 June 2016, the Company maintained a high level of cash and bank balances and the bank borrowing of approximately HK$21,061,000 as at period ended date. The borrowings are bank loans repayable within one year. The carrying amounts of the Group’s bank borrowings are denominated in RMB and arranged at fixed interest rates and expose the Group to fair value interest rate risk. The average interest rate at 30 June 2016 was 5.66% per annum.

The gearing ratio (which is calculated by dividing total debts (including bank borrowings and convertible bonds) by total assets) was 0.219 (as at 31 December 2015: 0.175).

Share Capital

On 31 March 2016, the Company issued and allotted 750,000,000 consideration shares of HK$0.0025 each to the vendor of Heroic Coronet as a settlement of the consideration for the acquisition of Heroic Coronet. The fair value of 750,000,000 new shares was HK$150,000,000 based on the bid price (HK$0.20 per consideration share) at 31 March 2016.

Pledge of Assets

As at 30 June 2016, the Group had no pledged asset.

Share Options

The Share Option Scheme was adopted on 26 March 2014. As at the Latest Practicable Date, the number of shares in respect of which options had been granted and remained outstanding was 200,000,000 representing 1.30% of the total number of issued shares of the Company as at the Latest Practicable Date.

Employee and Remuneration Policies

The Group had 253 full time staff as at 30 June 2016 (as at 31 December 2015: 182). Most of our staff were stationed in China. Their remuneration, promotion and salary review were assessed based on their respective job responsibilities, work performance, professional experiences and the prevailing industry practice. The Group maintained social insurance schemes for retirement, unemployment, personal injury and hospitalisation for all of its employees in China and a housing provident fund system has also been implemented for its employees in China.

– I-9 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Foreign Exchange and Currency Risks

Since most of the Group’s revenue and expenses was generated from online games service in the PRC, and was denominated in Renminbi, during the Period, the Group did not hedge its foreign exchange risk because the exposure was considered not significant. However, our management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

Contingent Liabilities

As at 30 June 2016, the Group had no material contingent liability.

Capital Commitments

The Group did not have any capital commitments as at 30 June 2016 (31 December 2015: approximately HK$1,000,000) in respect of the purchase of property, plant and equipment.

(II) For the Year Ended 31 December 2015

Review of Results and Operations

The Group’s consolidated turnover for the year ended 31 December 2015 was approximately HK$502,980,000, decreased by HK$79,912,000 or 13.7% when compared to approximately HK$582,892,000 for 2014. The decrease in consolidated turnover was mainly attributable to the disposal of the entire issued share interests in SinoCom BVI to NRI on 28 October 2015. The mobile gaming business contributed approximately HK$101,272,000 to the turnover for 2015, accounting for approximately 20.1% of the total turnover for the year. Turnover derived from the outsourcing software development business in Japan decreased from approximately HK$551,277,000 for 2014 to approximately HK$394,414,000 for 2015, representing a decrease of 28.5%. Turnover derived from outsourcing software development services in the PRC and Japan accounted for approximately 1.5% and 78.4% of the total turnover for 2015 respectively. The turnover contributed by the single largest customer accounted for approximately 52.2% and 62.5% of the total turnover for 2015 and 2014 respectively.

The Group recorded a gross profit of approximately HK$73,311,000 for the year ended 31 December 2015, representing an increase of 32.8% when compared to approximately HK$55,220,000 for 2014.The gross profit of the provision of online game services was approximately HK$45,944,000, which was mainly contributed by the online game operation.

The outsourcing software development business recorded a gross profit of approximately HK$27,367,000 for 2015, representing a significant decrease of HK$27,853,000 when compared to that for 2014. The significant decrease in gross profit was mainly attributable to the decrease in gross profit of software development in Japan by HK$27,017,000 as a result of decrease in turnover derived from the outsourcing software development business in Japan.

– I-10 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

The Group’s gross profit margin for the year ended 31 December 2015 was approximately 14.6%, increased from approximately 9.5% for 2014. Due to the increase in administrative expenses by HK$39,524,000, increase in research and development expenses by HK$13,577,000, increase in fair value loss on contingent consideration by HK$51,750,000 and interest on convertible bonds by HK$19,590,000, which are partly offset by the gain on disposal of subsidiaries of HK$76,400,000 in 2015, the Group recorded a net loss of approximately HK$66,321,000 in 2015, representing an increase in loss of HK$9,411,000 or 16.5% when compared to the net loss of approximately HK$56,910,000 recorded in 2014. The net loss mainly included the amortisation of other intangible assets of HK$52,928,000 (2014: Nil) and the fair value loss on contingent consideration of HK51,750,000. (2014: Nil).

Administrative expenses of the Group for the year ended 31 December 2015 increased to approximately HK$132,209,000, representing an increase of approximately 42.6% when compared to approximately HK$92,685,000 for 2014. The increase in administrative expenses is attributable to the increase in share-based payments to consultants by HK$31,548,000 (2014: Nil).

Operating loss decreased from approximately HK$45,648,000 for 2014 to approximately HK$31,503,000 for 2015, representing a decrease in loss of 31.0%.

The Group’s income tax expense for the year ended 31 December 2015 was approximately HK$15,228,000 whereas that for 2014 was approximately HK$10,921,000, representing an increase of HK$4,307,000.

Net loss attributable to owners of the Company was approximately HK$76,401,000 whereas that for 2014 was approximately HK$56,799,000.

– I-11 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

The following table is prepared by extracting certain information from the consolidated financial statements to illustrate the impact of certain significant non-cash items to the financial results of the Company during the year ended 31 December 2015 and 31 December 2014:

2015 2014 HK$’000 HK$’000

Loss for the year (66,321) (56,910) Significant non-cash items Amortisation of other intangible assets resulted from the acquisition of Kaixin Jiuhao on 30 January 2015 (1) 52,928 — Fair value loss on contingent consideration (2) 51,750 — Share-based payments to consultants resulted from the grant of share options 31,548 — Share-based payments to directors resulted from the grant of share options 27,383 —

Profit/(loss) for the year before major non-cash items 97,288 (56,910)

(1) Other intangible assets acquired were amortised over the estimated useful lives of 1–5 years.

(2) Loss on contingent consideration represents the increase in fair value of the shares to be issued for the acquisition of Kaixin Jiuhao pursuant to the Share Purchase Agreement signed on 10 December 2014.

Significant loss incurred for the year ended 31 December 2015 by the Company was mainly attributable to certain significant non-cash items including (1) the amortisation of other intangible assets and fair value loss on contingent consideration that resulted from the acquisition of Kaixin Jiuhao; and (2) share-based payment expenses recognized during the period in relation to the share options granted to the directors and consultants. The total value of the above non-cash items amounted to HK$163,609,000 were generated from the valuations and recognized in accordance with relevant HKAS. If these effects are excluded, the profit of the Company is HK$97,288,000 for the year ended 31 December 2015.

Liquidity and Financial Resources

Since inception, the Group has mainly funded its operations through equity funding andoperatingcashflow.TheGroupmanagedtomaintainthisstrongcashgenerating capability for the year ended 31 December 2015, with the net proceeds from the issue of convertible bonds and new shares amounting to HK$291,770,000 and HK$170,339,000 respectively. As at 31 December 2015, the Company maintained a high level of cash and bank balances and term deposits with initial terms of over three months of approximately HK$419,212,000 and obtained a bank borrowing of approximately HK$21,485,000 as at year ended date.

– I-12 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Share Capital

(a) Pursuant to an ordinary resolution passed on 15 September 2015, each ordinary share of HK$0.025 each in the issued and unissued share capital of the Company were subdivided into ten ordinary shares of HK$0.0025 each in the issued and unissued share capital of the Company.

(b) During the year, 9,480,000 ordinary shares of HK$0.025 each were issued before share subdivision in relation to share options exercised under the 2004 share option scheme of the Company at the exercise price of HK$1.3875 and HK$1.36 respectively for a total cash consideration of HK$13,010,000. The exercise of the subscription consideration received over the nominal values issued, which amounted to HK$12,773,000, was credited to the share premium account.

(c) On 30 October 2015, the Company issued a total of 40,000,000 conversion shares to bondholder at the conversion price of HK$0.25 per conversion share after the share subdivision.

(d) On 11 November 2015, the Company entered into a placing agreement in respect of the placement of 670,000,000 ordinary shares of HK$0.0025 each to an independent investor at a price of HK$0.236 per share. The placement was completed on 19 November 2015 and the premium on the issue of shares, amounting to approximately HK$155,654,000, net of share issue expenses of HK$791,000, was credited to the Company’s share premium account. The Company issued and allotted 670,000,000 new shares on 19 November 2015.

(e) On 31 December 2015, completion of the acquisition of Kingworld Holdings took place, and pursuant to the sale and purchase agreement, the Company issued 650,000,000 consideration shares of HK$0.0025 each to the vendor of Kingworld Holdings as a settlement of the consideration for the acquisition of Kingworld Holdings. The fair value of 650,000,000 new shares was HK$146,900,000, based on the bid price (HK$0.226 per consideration share) at 31 December 2015.

Funding Purpose

By raising additional capital through issuance of new convertible bonds and new shares, the proceed of the additional fund is used for general working capital and further development of mobile gaming and sports-related mobile applications businesses.

Share Options

(a) 2004 Share Option Scheme (the ‘‘Old Share Option Scheme’’)

The Old Share Option Scheme was adopted on 2 April 2004 and terminated with effect from 26 March 2014. However, the outstanding options granted under the Old Share Option Scheme remain to be exercisable in accordance with its terms. As at 31 December 2015, all the outstanding share options under the Old Share Option Scheme are

– I-13 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

either lapsed or fully exercised by the grantees (31 December 2014: 10,080,000, representing 0.77% of the total number of issued shares of the Company as at that date). No share option was outstanding under the Old Share Option Scheme.

(b) 2014 Share Option Scheme (the ‘‘New Share Option Scheme’’)

The New Share Option Scheme was adopted on 26 March 2014. As at 31 December 2015, the number of shares in respect of which options had been granted and remained outstanding was 622,000,000 after share subdivision, representing 4.26% of the total number of issued shares of the Company.

Pledge of Assets

As at 31 December 2015, the Group had no pledged asset.

Employee and Remuneration Policies

The Group had 182 full time staff as at 31 December 2015 (2014: 1,517), representing a decrease of 88.0%. The decrease in head counts was mainly attributable to the disposal of the entire issued share interests in SinoCom BVI to NRI on 28 October 2015. Most of our staff were engineers stationed in China. Their remuneration, promotion and salary review were assessed based on their respective job responsibilities, work performance, professional experiences and the prevailing industry practice. The Group maintained social insurance schemes for retirement, unemployment, work injury and hospitalisation for all of its employees in China and a housing provident fund system has also been implemented for its employees in China. Employees in Japan have been enrolled under the pension fund scheme and the health care plan as required by Japanese law.

Foreign Exchange and Currency Risks

Since most of the Group’s revenue was generated from the provision of outsourcing software development services in Japan, and was denominated in JPY while expenses were settled in RMB, any depreciation of JPY against RMB would reduce the Group’s incomedenominatedinHKDandhaveanadverse impact on the profitability of the Group. The management is of the view that there is no effective hedging tool suitable to reduce this exchange rate exposure.

Contingent Liabilities

As at 31 December 2015, the Group had no material contingent liabilities.

– I-14 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Capital Commitments

The Group’s capital commitments at the end of the reporting period of the year 2015 and 2014 are as follows:

2015 2014 HK$’000 HK$’000

Contracted but not provided for: Property, plant and equipment 1,000 — Acquisition of Heroic Coronet — 60,000 Acquisition of Kingworld Holdings — 315,000 Acquisition of Hangzhou Zhiwan Network Co., Ltd — 103,000

1,000 478,000

In respect of the acquisition of Heroic Coronet, HK$60,000,000 of the consideration will be settled by the Company’s shares. The Company will issue the consideration shares under a specific mandate to be obtained at an extraordinary general meeting to be convened by the Company to consider and approve the specific mandate. The consideration shares shall, upon issuance, rank pari passu in all respects with the shares in issue.

(III) For the Year Ended 31 December 2014

Review of Results and Operations

The Group’s consolidated turnover for the year ended 31 December 2014 was approximately HK$582,892,000, representing an increase of approximately 21.2% when compared with HK$481,115,000 for 2013. The increase was mainly attributable to the increase in our service price at the beginning of 2014 and increase in customers’ services orders for the Japanese market which accounted for 94.6% of total turnover for the year ended 31 December 2014. Turnover generated from Japan increased by approximately 19.0% from approximately HK$463,065,000 for 2013 to approximately HK$551,277,000 for the year ended 31 December 2014. In addition, turnover sourced from China increased by approximately 75.2% from approximately HK$18,050,000 for 2013 to approximately HK$31,615,000 for the year ended 31 December 2014. Turnover derived from outsourcing software development work increased by approximately 20.8% to approximately HK$579,771,000 from approximately HK$479,821,000 for 2013. Turnover from the provision of technical support services increased by approximately 141.2% to approximately HK$3,121,000 from approximately HK$1,294,000 for 2013. Turnover from outsourcing software development services and from technical support services accounted for approximately 99.5% and 0.5% of the total turnover for the year ended 31 December 2014 respectively. The largest single customer accounted for approximately 62.5% and 60.9% of the total turnover for the year ended 31 December 2014 and 2013 respectively.

– I-15 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

With the sharp depreciation of JPY and the inflated direct labour cost in China, the Group’s gross profit margin decreased from approximately 11.7% for 2013 to approximately 9.5% for 2014. The Group’s performance was adversely affected by the exchange loss resulted from the continued depreciation of JPY. Accordingly, the Group recorded net loss of approximately HK$56,910,000 for the year ended 31 December 2014, when compared with the net loss of approximately HK$84,075,000 for 2013. The Group’s net loss for the year ended 31 December 2014 mainly included the net foreign exchange loss of approximately HK$31,767,000 (2013: approximately HK$73,574,000) and loss on disposal of available-for-sale financial assets of approximately HK$1,362,000 (2013: gain of approximately HK$14,251,000).

Gross profit for the year ended 31 December 2014 decreased to approximately HK$55,220,000 or by 2.1%, when compared to the gross profit of approximately HK$56,430,000 for 2013.

Operating loss of approximately HK$45,648,000 was recorded for the year ended 31 December 2014 when compared with the operating loss of approximately HK$79,220,000 for 2013. The decrease in operating loss of approximately HK$33,572,000 was mainly attributable to the decrease in gross profit by approximately HK$1,210,000 and the decrease in net exchange loss of approximately HK$41,807,000 resulting from the depreciation of JPY offset by the inclusion of compensation gain for early termination of the lease on office premises of approximately HK$10,086,000 (2013: Nil).

Income tax expense for the year ended 31 December 2014 was approximately HK$10,921,000 as compared with that for 2013 of approximately HK$2,886,000.

Net loss attributable to owners of the Company was approximately HK$56,799,000 for the year ended 31 December 2014 whereas net loss attributable to owners of the Company was approximately HK$83,518,000 for 2013.

Liquidity and Financial Resources

Since inception, the Group has no bank borrowing, and has funded its operations through equity funding and operating cash flow. The Group managed to maintain this strong cash generating capability during the year. In 2014, the Group financed its operations and acquisition activities with internally generated cash flows and the fund from placing of new shares in December 2014. As at 31 December 2014, the Company maintained a high level of cash and bank balances and term deposits with initial terms of over three months of approximately HK$196,826,000 and there was no bank borrowing as at that date.

Share Capital

As at 31 December 2014, the number of shares in respect of which options had been granted but remained outstanding under the Company’s share option scheme was 10,080,000 (31 December 2013: 13,580,000), representing 0.77% (31 December 2013: 1.21%) of total issued shares of the Company as at that date.

– I-16 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

During the final quarter ended 31 December 2014, the Company completed a placing of 200,000,000 new shares (representing approximately 15.2% of the total issued share capital of the Company) to not less than six placees at a price of HK$0.70 per placing share and successfully raised the aggregate gross and net proceeds (after deduction of applicable costs and expenses relating to the placing) from the placing of approximately HK$140 million and HK$136.5 million respectively.

Pledge of Assets

As at 31 December 2014, the Group had no pledged asset.

Employee and Remuneration Policies

The Group had 1,517 full time staff as at 31 December 2014 (2013: 1,585), representing a decrease of 4.3%. The decrease in head counts was mainly attributable to cost control in 2014. Most of our staff were engineers stationed in China. There were also 172 (2013: 160) employees in Japan, most of them were bridged system engineers working at customers’ premises in Japan. Their remuneration, promotion and salary review were assessed based on their respective job responsibilities, work performance, professional experiences and the prevailing industry practice. The Group maintained social insurance schemes for retirement, unemployment, personal injury and hospitalisation for all of its employees in China and a housing provident fund system has also been implemented for its employees in China. Staff in Japan was enrolled under the pension fund and health scheme as required by Japanese law.

Foreign Exchange and Currency Risks

Since most of the Group’s revenue was generated from software development outsourced from Japan, and was denominated in JPY while expenses were settled in Renminbi (‘‘RMB’’), any depreciation of JPY against RMB would reduce the Group’s income measured in Hong Kong and have an adverse impact on the profitability of the Group. The management is of the view that there is no effective hedging tool suitable to reduce this exchange rate exposure in consideration of the monthly recurring nature of JPY revenue.

Contingent Liabilities

As at 31 December 2014, the Group had no material contingent liability.

– I-17 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Capital Commitments

The Group’s capital commitments at the end of the reporting period of the year 2014 and 2013 are as follows:

2014 2013 HK$’000 HK$’000

Contracted but not provided for: Acquisition of Heroic Coronet 60,000 — Acquisition of Kingworld 315,000 — Acquisition of Hangzhou Zhiwan Network Co., Ltd 103,000 —

478,000 —

In respect of the acquisition of Heroic Coronet, HK$60,000,000 of the consideration will be settled by the Company’s shares. The Company will issue the consideration shares under a specific mandate to be obtained at an extraordinary general meeting to be convened by the Company to consider and approve the specific mandate. The consideration shares shall, upon issuance, rank pari passu in all respects with the shares in issue.

(IV) For the Year Ended 31 December 2013

Review of Results and Operations

The Group’s consolidated turnover for the year ended 31 December 2013 was approximately HK$481,115,000, representing a decrease of approximately 18.4% when compared with HK$589,806,000 for 2012. The decrease was mainly attributable to the depreciation of JYP in which 96.2% of total turnover for the year ended 31 December 2013 was denominated. Turnover generated from Japan decreased by approximately 18% from HK$564,546,000 for 2012 to HK$463,065,000 for the year ended 31 December 2013. In addition, turnover sourced from China decreased by approximately 28.5% from HK$25,260,000 for 2012 to HK$18,050,000 for the year ended 31 December 2013. Turnover derived from outsourcing software development work decreased by approximately 17.5% to approximately HK$479,821,000 from HK$581,624,000 for 2012. Top five customers accounted for approximately 81.9% of the total turnover. Turnover from the provision of technical support services decreased by approximately 84.2% to approximately HK$1,294,000. Turnover from outsourcing software development services and from technical support services accounted for approximately 99.7% and 0.3% of the total turnover respectively.

With the sharp depreciation of JPY and the inflated direct labour cost in China, the Group’s gross profit margin decreased from approximately 22.1% for 2012 to 11.7% for 2013. The Group’s performance was adversely affected by the exchange loss resulted from the depreciation of JPY. Accordingly, the Group recorded net loss of HK$84,075,000 for

– I-18 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

the year ended 31 December 2013, when compared with the net loss of HK$5,888,000 for 2012. The Group’s net loss for the year ended 31 December 2013 mainly included the net foreign exchange loss of approximately HK$73,574,000 (2012: HK$35,597,000) and gain on disposal of available-for-sale financial assets of approximately HK$14,251,000.

Average full time production head counts were 1,598 for the year ended 31 December 2013, representing a light increase of 32 from that of 1,566 for 2012. Increased head counts were mainly attributable to the opening of new offices in Jilin, the PRC.

Gross profit for the year ended 31 December 2013 decreased to approximately HK$56,430,000 or by 56.7%, when compared to the gross profit of approximately HK$130,443,000 for 2012.

Operating loss of approximately HK$79,220,000 was recorded for the year ended 31 December 2013 when compared with the operating profit of approximately HK$13,704,000 for 2012. The decrease in operating profit was mainly attributable to the decrease in gross profit by approximately HK$74,013,000 and the exchange loss of approximately HK$73,574,000 resulting from the depreciation of JYP.

Net loss attributable to owners of the Company was approximately HK$83,518,000 for the year ended 31 December 2013 whereas net loss attributable to owners of the Company was approximately HK$6,663,000 for 2012.

Liquidity and Financial Resources

Since inception, the Group has no bank borrowing, and has funded its operations through equity funding and operating cash flow. The Group managed to maintain this strong cash generating capability during the year. In 2013, the Group financed its operations and investing activities solely with internally generated cash flows. As at 31 December 2013, the Company maintained a high level of bank balances and cash and term deposits with initial terms of over three months of approximately HK$560,354,000 and there was no bank borrowing as at that date.

Share Capital

As at 31 December 2013, the number of shares in respect of which options had been granted but remained outstanding under the Company’s share option scheme was 13,580,000 (31 December 2012: 16,390,000), representing 1.21% (31 December 2012: 1.47%) of issued shares of the Company as at that date.

Pledge of Assets

As at 31 December 2013, the Group had no pledged asset.

– I-19 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Employee and Remuneration Policies

The Group had 1,585 full time staff as at 31 December 2013 (2012: 1,652). Most of them were engineers stationed in China. There were also 160 (2012: 169) employees in Japan, most of them were bridged system engineers working at customers’ premises in Japan. Their remuneration, promotion and salary review were assessed based on their respective job responsibilities, work performance, professional experiences and the prevailing industry practice. The Group maintained social insurance schemes for retirement, unemployment, personal injury and hospitalisation for all of its employees in China and a housing provident fund system has also been implemented for its employees in China. Staff in Japan was enrolled under the pension fund and health scheme as required by Japanese law.

Foreign Exchange and Currency Risks

Since most of the Group’s revenue was generated from software development outsourced from Japan, and was denominated in JPY while expenses were settled in Renminbi (‘‘RMB’’), any depreciation of JPY against RMB would reduce the Group’s income measured in RMB and have an adverse impact on the profitability of the Group. The management is of the view that there is no effective hedging tool suitable to reduce this exchange rate exposure in consideration of the monthly recurring nature of JPY revenue.

Contingent Liabilities

As at 31 December 2013, the Group had no material contingent liability.

Capital Commitments

As at 31 December 2013, the Group had no material capital commitment.

– I-20 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, RSM Hong Kong, Certified Public Accountants, Hong Kong.

30 November 2016

The Board of Directors New Sports Group Limited

Dear Sirs,

We set out below our report on the financial information (the ‘‘Financial Information’’)of Yue Jin Asia Limited (the ‘‘Target Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Target Group’’) for the period from 17 March 2016 (date of incorporation) to 31 August 2016 (the ‘‘Relevant Period’’) for inclusion in the circular dated 30 November 2016 issued by New Sports Group Limited (the ‘‘Company’’) in connection with the proposed acquisition of the entire issued share capital in the Target Company (the ‘‘Acquisition’’)bythe Company (the ‘‘Circular’’).

The Target Company was incorporated on 17 March 2016 in the British Virgin Islands (the ‘‘BVI’’) and is principally engaged in investment holding. At the date of this report, the Target Company has interests in the following subsidiaries:

Percentage Place and date of of ownership incorporation/ Share/registered interest held establishment and paid-up by the Target Name of subsidiary and operation capital Company Principal activity

Nayuan Development Limited Hong Kong HK$10,000,000 100% Investment holding (‘‘Nayuan Development’’) 4 June 2015

深圳粵錦體育有限公司 The PRC RMB600,000,000 100% Investment holding (前稱‘‘深圳粵錦投資有限公司’’) 21 July 2014 (Shenzhen Yuejin Sports Company Limited*, ‘‘Yuejin Sports’’)

深圳瑞騰企業管理有限公司 The PRC RMB10,000,000 100% Investment and (Shenzhen Ruiteng Enterprise 26 August 2014 property holding Management Company Limited*) (‘‘Shenzhen Ruiteng’’)

深圳前海唯致教育投資有限公司 The PRC RMB10,000,000 100% Investment and (Shenzhen Qianhai Virdom 10 July 2015 property holding Education Company Limited*) (‘‘Qianhai Virdom’’)

– II-1 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Percentage Place and date of of ownership incorporation/ Share/registered interest held establishment and paid-up by the Target Name of subsidiary and operation capital Company Principal activity

深圳大鵬國際教育有限公司 The PRC RMB30,000,000 100% Provision of (Shenzhen Dapeng International 30 September international Education Company Limited*) 2014 school education (‘‘Dapeng Education’’) services

深圳大鵬遊艇會有限公司 The PRC RMB200,000,000 100% Operation of a (Shenzhen Dapeng Yacht Club 10 September yacht club Company Limited*) (‘‘Dapeng 2014 Yacht Club’’)

深圳市大鵬新區唯致培訓學校 The PRC RMB5,000,000 100% Provision of (Shenzhen Dapeng Xinqu 18 August 2015 international Virdom International Academy*) school education (‘‘Virdom International services Academy’’)

* The English translation name is for identification purpose only. The official name of the entity is in Chinese.

All the companies of the Target Group have adopted 31 December as their financial year end date.

No statutory financial statements of subsidiaries established in the People’s Republic of China (the ‘‘PRC’’) were audited by the certified public accountants registered in the PRC for the Relevant Period.

No statutory financial statements of the Target Company and Nayuan Development have been prepared since their dates of incorporation.

For the purpose of this report, the sole director of the Target Company has prepared the consolidated financial statements of the Target Group for the Relevant Period in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’)(the‘‘HKFRS Financial Statements’’).

We have performed our independent audit on the HKFRS Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have examined the HKFRS Financial Statements in accordance with Auditing Guideline 3.340 ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA.

The Financial Information has been prepared from the HKFRS Financial Statements in accordance with HKFRSs. No adjustments were considered necessary for the purpose of preparing our report for inclusion in the Circular.

– II-2 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The sole director of the Target Company is responsible for the preparation of the HKFRS Financial Statements. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the HKFRS Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, for the purpose of this report and on the basis of preparation set out in Note 2 to the Financial Information, the Financial Information gives a true and fair view of the state of affairs of the Target Company and of the Target Group as at 31 August 2016, and of the Target Group’s results and cash flows for the Relevant Period.

Material uncertainty relating to the going concern basis

Without qualifying our opinion, we draw attention to Note 2 to the Financial Information of the Target Group which indicates that the Target Group had net current liabilities HK$914,942,000 as at 31 August 2016. This condition indicates the existence of a material uncertainty which may cast significant doubt about the Target Group’s ability to continue as a going concern.

– II-3 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Period from 17 March 2016 (date of incorporation) to 31 August 2016 Note HK$’000

Revenue 7 562 Cost of services (2,661)

Gross loss (2,099)

Gain on bargain purchase 28 68,136 Distribution costs (23) Administrative expenses (298) Impairment loss on other intangible asset 18 (13,735) Other income 8 128

Profit from operations 52,109

Finance costs 10 (977)

Profit before tax 51,132

Income tax credit 11 4,230

Profit for the period 12 55,362

Other comprehensive income: Items that may be reclassified to profit or loss: Exchange differences arising on translating foreign operations (395)

Other comprehensive income for the period, net of tax (395)

Total comprehensive income for the period 54,967

– II-4 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

B. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 August 2016 Note HK$’000

Non-current assets Property, plant and equipment 17 43,553 Other intangible asset 18 880,394 Deposits paid for non-current assets 19 211,396 Deferred tax assets 25 26,357

1,161,700

Current assets Prepayments, deposits and other receivables 1,022 Bank and cash balances 21 125,872

126,894

Current liabilities Accruals and other payables 22 52,320 Amount due to holding company 32(a) 118,000 Consideration payable 24(b) 869,565 Deferred revenue 23 1,951

1,041,836

Net current liabilities (914,942)

Total assets less current liabilities 246,758

Non-current liabilities Consideration payable 24(a) 88,638 Deferred tax liabilities 25 103,153

191,791

NET ASSETS 54,967

Capital and reserves Share capital 26 — Reserves 27(a) 54,967

TOTAL EQUITY 54,967

– II-5 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

C. STATEMENT OF FINANCIAL POSITION

As at 31 August 2016 HK$’000

Non-current assets Investments in subsidiaries 20 10,000

Current liabilities Amount due to a subsidiary 20 10,000

Net current liabilities (10,000)

Total assets less current liabilities —

NET ASSETS —

Capital and reserves Share capital 26 — Reserves 27(b) —

TOTAL EQUITY —

– II-6 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

D. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share Translation Retained capital reserve profits Total Note HK$’000 HK$’000 HK$’000 HK$’000 (Note 27(a))

Upon incorporation ———— Total comprehensive income for the period — (395) 55,362 54,967

At 31 August 2016 — (395) 55,362 54,967

– II-7 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

E. CONSOLIDATED STATEMENT OF CASH FLOWS

Period from 17 March 2016 (date of incorporation) to 31 August 2016 Note HK$’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 51,132

Adjustments for: Amortisation of other intangible asset 18 2,091 Depreciation of property, plant and equipment 17 221 Impairment loss on other intangible asset 18 13,735 Finance costs 10 977 Gain on bargain purchase 28 (68,136)

Operating profit before working capital changes 20

Decrease in prepayments, deposits and other receivables 147 Decrease in accruals and other payables (518) Decrease in deferred revenue (343)

Cash used in operations (694)

Income tax paid —

Netcashusedinoperatingactivities (694)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of subsidiaries 28 8,341 Purchases of property, plant and equipment (78)

Net cash generated from investing activities 8,263

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in amount due to holding company 118,000

Net cash generated from financing activities 118,000

NET INCREASE IN CASH AND CASH EQUIVALENTS 125,569

Effect of foreign exchange rate changes 303

CASH AND CASH EQUIVALENTS AT 31 AUGUST 125,872

ANALYSIS OF CASH AND CASH EQUIVALENTS Bank and cash balances 125,872

– II-8 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

F. NOTES TO FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Target Company was incorporated on 17 March 2016 in the BVI with limited liability. The address of its registered office is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The address of its principal place of business in the PRC is Shenzhen Dapeng New District Nanao Street Xindong Road Jidiaosha Shenzhen Marine Sports Base, Shenzhen, the PRC.

The Target Company is an investment holding company. The principal activities of its subsidiaries are set out in Note 20 to the Financial Information.

In the opinion of the sole director of the Target Company, Yue Jin International Limited, a company incorporated in the BVI, is the immediate holding company of the Target Company and Mr. Zhang Zhenchun is the ultimate controlling party of the Target Company.

2. BASIS OF PREPARATION

The Financial Information has been prepared in accordance with all applicable HKFRSs issued by HKICPA. HKFRSs comprise Hong Kong Financial Reporting Standards (‘‘HKFRS’’); Hong Kong Accounting Standards (‘‘HKAS’’); and Interpretations. The Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange Limited and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622).

As at 31 August 2016, the Target Group had net current liabilities HK$914,942,000. This condition indicates the existence of a material uncertainty which may cast significant doubt on the Target Group’s ability to continue as a going concern. The sole director of the Target Company has given careful consideration to the current and anticipated future liquidity of the Target Group and the ability of the Target Group to attain profitable and positive cash flows from operations in the immediate and longer term, as well as the following measures:

(i) the Company has confirmed its intention to provide financial support to the Target Group upon the Acquisition is completed, so as to enable the Target Group to meet its liabilities as and when they fall due and to carry on its business without a significant curtailment of operations for the foreseeable future;

(ii) the ultimate controlling party agreed to provide adequate funds for the Target Group to meet its liabilities as they fall due;

(iii) upon the Acquisition is completed, the amounts due to the holding company of the Target Company will be assigned to the Company.

3. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS AND REQUIREMENTS

(a) Application of new and revised HKFRSs

During the Relevant Period, the Target Group has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 January 2016.

(b) New and revised HKFRSs in issue but not yet effective

The Target Group has not early applied new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 January 2016. The sole director of the Target Company anticipates that the new and revised HKFRSs will be adopted in the Target Group’s Financial Information when they become effective. The Target Group is in the process of assessing, where

– II-9 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

applicable, the potential effect of all new and revised HKFRSs that will be effective in future periods but is not yet in a position to state whether these new and revised HKFRSs would have a material impact on its results of operations and financial position.

HKFRS 9 Financial Instruments1 HKFRS 15 Revenue from Contracts with Customers1 HKFRS 16 Leases2 Amendments to HKAS 16 Clarification of Acceptable Methods of Depreciation and and HKAS 38 Amortisation3 Amendments to HKAS 1 Disclosure Initiative3 Amendments to HKAS 7 Statement of Cash Flow4 Amendments to HKAS 27 Equity Method in Separate Financial Statements3 Amendments to HKFRSs Annual Improvements to HKFRSs 2012–2014 Cycle3

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted for entities that apply HKFRS 15 at or before the date of initial application of HKFRS 16. 3 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted. 4 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted.

4. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared under the historical cost convention.

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

The significant accounting policies applied in the preparation of the Financial Information are set out below.

(a) Consolidation

The Financial Information includes the financial statements of the Target Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Target Group has control. The Target Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Target Group has power over an entity when the Target Group has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity’sreturns.

When assessing control, the Target Group considers its potential voting rights as well as potential voting rights held by other parties. A potential voting right is considered only if the holder has the practical ability to exercise that right.

Subsidiaries are consolidated from the date on which control is transferred to the Target Group. They are de-consolidated from the date the control ceases.

Intragroup transactions, balances and unrealised profits are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Target Group.

– II-10 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

(b) Business combination and goodwill

The acquisition method is used to account for the acquisition of a subsidiary in a business combination. The consideration transferred in a business combination is measured at the acquisition-date fair value of the assets given, equity instruments issued, liabilities incurred and any contingent consideration. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. Identifiable assets and liabilities of the subsidiary in the acquisition are measured at their acquisition-date fair values.

The excess of the sum of the consideration transferred over the Target Group’s share of the net fair value of the subsidiary’s identifiable assets and liabilities is recorded as goodwill. Any excess of the Target Group’s share of the net fair value of the identifiable assets and liabilities over the sum of the consideration transferred is recognised in consolidated profit or loss as a gain on bargain purchase which is attributed to the Target Group.

After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (‘‘CGUs’’) or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Target Group at which the goodwill is monitored for internal management purposes. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to its recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(c) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Target Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). The Financial Information is presented in Hong Kong dollars (‘‘HK$’’), which is the Target Company’s presentation and functional currency. The functional currency of the principal operating subsidiaries of the Target Group is Renminbi (‘‘RMB’’). The sole director of the Target Company consider that choosing HK$ as the presentation currency best suits the needs of the shareholders.

(ii) Transactions and balances in each entity’s financial statements

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

Non-monetary items that are measured at fair value in foreign currencies are translated using the exchange rates at the dates when the fair values are determined.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

– II-11 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

(iii) Translation on consolidation

The results and financial position of all the Target Group entities that have a functional currency different from the Target Company’s presentation currency are translated into the Target Company’s presentation currency as follows:

— Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

— Income and expenses are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rates on the transaction dates); and

— All resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of monetary items that form part of the net investment in foreign entities are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are reclassified to consolidated profit or loss as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(d) Property, plant and equipment

Property, plant and equipment are stated in the consolidated statements of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Target Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal annual rates are as follows:

Leasehold improvements 10%–25% Office equipment 10%–20% Motor vehicles 25% Yacht 10%

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

Construction in progress represents leasehold improvements under construction, and is stated at cost less impairment losses. Depreciation begins when the relevant assets are available for use.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

– II-12 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

(e) Other intangible asset

The Operating Right for operation of a marine sports base and a sailing school

A subsidiary of the Target Company has entered into an agreement dated 27 August 2014 (the ‘‘Operation Entrustment Agreement’’) with Shenzhen Dapeng New District Management Committee, pursuant to which the operation of Shenzhen Marine Sports Base and Sailing School would be entrusted to the Target Company for a period of twenty years (the ‘‘Operating Right’’). Under the Operating Right, Target Group has developed the operations of a yacht club (‘‘Yacht Club Business’’) and a school in provision of international education services (‘‘School Business’’).

The Operating Right is initially measured at cost and subsequently at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over an initial period of 20 years.

(f) Operating leases

Leases that do not substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as operating leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

(g) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the consolidated statements of financial position when the Target Group becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Target Group transfers substantially all the risks and rewards of ownership of the assets; or the Target Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

(h) Financial assets

Financial assets are recognised and derecognised on a trade date basis where the purchase or sale of an financial asset is under a contract whose terms require delivery of the financial assets within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs except in the case of financial assets at fair value through profit or loss.

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

Loan and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are carried at amortised cost using the effective interest method (except for short-term receivables where interest is immaterial) minus any reduction for impairment or uncollectibility. Typically trade and other receivables, bank balances and cash are classified in this category.

– II-13 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

(i) Other receivables

If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

(j) Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Target Group’s cash management are also included as a component of cash and cash equivalents.

(k) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Target Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(l) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

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

(m) Other payables

Other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

(n) Equity instruments

Equity instruments issued by the Target Company are recorded at the proceeds received, net of direct issue costs.

(o) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Target Group and the amount of revenue can be measured reliably.

Tuition and boarding fees from school are generally paid in advance prior to the beginning of each academic year, and are initially recorded as deferred revenue. Tuition and boarding fees are recognised as revenue proportionately over the year. The portion of tuition and boarding payments received from students but not yet earned is recorded as deferred revenue and is reflected as a current liability as such amounts represent revenue that the Target Group expects to earn within one year. The academic year is generally from September to August of the following year.

Yacht parking fees are recognised on a straight-line basis over the lease term.

– II-14 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Rental income is recognised on a straight-line basis over the lease term.

Interest income is recognised on a time-proportion basis using the effective interest method.

(p) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

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

(ii) Pension obligations

The Target Group contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Target Group and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Target Group to the funds.

(iii) Termination benefits

Termination benefits are recognised at the earlier of the dates when the Target Group can no longer withdraw the offer of those benefits, and when the Target Group recognises restructuring costs and involves the payment of termination benefits.

(q) Borrowing costs

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

(r) Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Target Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Target Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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

– II-15 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Target Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Target Group intends to settle its current tax assets and liabilities on a net basis.

(s) Impairment of non-financial asset

The carrying amounts of non-financial assets are reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down as an expense through the consolidated statements of profit or loss to its estimated recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs. Recoverable amount is the higher of value in use and the fair value less costs of disposal of the individual asset or the cash-generating unit.

Value in use is the present value of the estimated future cash flows of the asset/cash-generating unit. Present values are computed using pre-tax discount rates that reflect the time value of money and the risks specific to the asset/cash-generating unit whose impairment is being measured.

Impairment losses for cash-generating units are allocated first against the goodwill of the unit and then pro rata amongst the other assets of the cash-generating unit. Subsequent increases in the recoverable amount caused by changes in estimates are credited to profit or loss to the extent that they reverse the impairment.

(t) Impairment of financial assets

At the end of each reporting period, the Target Group assesses whether its financial assets are impaired, based on objective evidence that, as a result of one or more events that occurred after the initial recognition, the estimated future cash flows of the (group of) financial asset(s) have been affected.

For all other financial assets, the carrying amount is directly reduced by the impairment loss.

For financial assets measured at amortised cost, if the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed (either directly or by adjusting the allowance account for trade receivables) through profit or loss. However, the reversal must not result in a carrying amount that exceeds what the amortised cost of the financial asset would have been had the impairment not been recognised at the date the impairment is reversed.

(u) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

– II-16 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(v) Events after the reporting period

Events after the reporting period that provide additional information about the Target Group’s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the Financial Information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Financial Information when material.

5. KEY ESTIMATES

Critical judgements in applying accounting policies

In the process of applying the accounting policies, the sole director has made the following judgements that have the most significant effect on the amounts recognised in the Financial Information (apart from those involving estimations, which are dealt with below).

Going concern basis

The Financial Information has been prepared on a going concern basis, the validity of which depends upon the financial support of the Company and the ultimate controlling party at a level sufficient to finance the working capital requirements of the Target Group. Details are explained in Note 2 to the Financial Information.

Key sources of estimation uncertainty

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

(a) Property, plant and equipment and depreciation

The Target Group determines the estimated useful lives, residual values and related depreciation charges for the Target Group’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives and residual values of property, plant and equipment of similar nature and functions. The Target Group will revise the depreciation charge where useful lives and residual values are different to those previously estimated, or it will write- off or write-down technically obsolete or non-strategic assets that have been abandoned.

The carrying amount of property, plant and equipment as at 31 August 2016 was HK$43,553,000.

(b) Income taxes

The Target Group is subject to income taxes in the PRC. Significant estimates are required in determining the provision for income taxes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

– II-17 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

(c) Impairment of other intangible asset

Determining whether other intangible asset is impaired requires an estimation of the value in use of the cash-generating unit to which other intangible assets has been allocated. The value in use calculation requires the Target Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. During the Relevant Period, an impairment loss of HK$13,735,000 was recognised for other intangible asset. The carrying amount of other intangible assets at the end of the Relevant Period was HK$880,394,000.

6. FINANCIAL RISK MANAGEMENT

The Target Group’s activities expose it to a variety of financial risks: foreign currency risk, credit risk, interest rate risk and liquidity risk. The Target Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target Group’s financial performance.

(a) Foreign currency risk

The Target Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currency of the Target Group entities, RMB. The Target Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Target Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The Target Group has no significant concentrations of credit risk.

The credit risk on bank and cash balances is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

(c) Liquidity risk

The Target Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The maturity analysis based on contractual undiscounted cash flows of the Target Group’s financial liabilities is as follows:

On demand or less than Between 1 Between 2 Over 1year and 2 years and 5 years 5 years Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 31 August 2016 Accruals and other payables 51,984 ———51,984 Amount due to holding company 118,000 ———118,000 Consideration payable 869,565 ——455,072 1,324,637

(d) Interest rate risk

The Target Group’s cash flow interest rate risk primarily relates to bank balances bear interests at variable rates that vary with the then prevailing market condition.

– II-18 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

At 31 August 2016, if interest rates had been 10 basis points lower with all other variables held constant, consolidated profit after tax for the period would have been HK$126,000 lower, arising mainly as a result of lower interest expense on bank balances. If interest rates had been 10 basis points higher, with all other variables held constant, consolidated profit after tax for the period would have been HK$126,000 higher, arising mainly as a result of higher interest expense on bank balances.

(e) Categories of financial instruments at the end of the Relevant Period

At 31 August 2016 HK$’000

Financial assets: Loans and receivables (including cash and cash equivalents) 126,836

Financial liabilities: Financial liabilities measured at amortised cost 1,128,186

(f) Fair values

The carrying amounts of the Target Group’s financial assets and financial liabilities as reflected in the Financial Information approximate their respective fair values.

7. REVENUE

The Target Group’s revenue is as follows:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Tuition fees 307 Boarding fees 34 Yacht parking fees 221

562

8. OTHER INCOME

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Rental income 159 Others (31)

128

– II-19 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

9. SEGMENT INFORMATION

The Target Group has two operating segments as follows:

Yacht club — Operation of a yacht club

Education — Provision of international education services

The Target Group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

The accounting policies of the operating segments are the same as those described in Note 4 to the Financial Information. Segment profits or losses do not include unallocated corporate expenses, other income and finance costs. Segment liabilities do not include unallocated other payables and deferred tax liabilities. Segment assets do not include unallocated bank and cash balances, unallocated other receivables and deferred tax assets.

Management of the Target Company has determined that the operating segments based on the reports reviews by the chief operating decision maker that are used for making strategic decisions. The chief operating decision-maker is identified as the sole director of the Target Company. The sole director considers the business from a service perspective and assess the performance of the operating segments based on a measure of adjusted profit before income tax before unallocated corporate income/(expenses) for the purposes of allocating resources and assessing performance. These reports are prepared on the same basis as this Finance Information.

Segment revenue and results

The following is an analysis of revenue and results by operating segment of the Target Group:

Period from 17 March 2016 (date of incorporation) to 31 August 2016

Yacht club Education Total HK$’000 HK$’000 HK$’000

Revenue 221 341 562 Cost of services (1,526) (1,135) (2,661)

Gross loss (1,305) (794) (2,099)

Distribution costs — (23) (23) Administrative expenses (102) (193) (295) Impairment loss on other intangible asset (4,920) (8,815) (13,735)

Segment results (6,327) (9,825) (16,152)

Gain on bargain purchase 68,136 Other income 128 Finance costs (977) Unallocated corporate expenses (3)

Profit before tax 51,132

– II-20 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Segment assets and liabilities

The following is an analysis of the assets and liabilities by operating segment of the Target Group:

At 31 August 2016

Yacht club Education Total HK$’000 HK$’000 HK$’000

Segment assets 560,145 371,659 931,804

Unallocated assets 356,790

Consolidated total 1,288,594

Segment liabilities 30,227 69,037 99,264

Unallocated liabilities 1,134,363

Consolidated total 1,233,627

Other segment information

Period from 17 March 2016 (date of incorporation) to 31 August 2016

Yacht club Education Total HK$’000 HK$’000 HK$’000

Additions to segment non-current assets 78 — 78

Depreciation and amortisation 1,305 1,007 2,312

Geographical information:

The Target Group has carried businesses in a single geographical location, which is in the PRC, and all the assets are located in the PRC.

Revenue from major customers:

The Target Group’s customer base is diversified and there are no customers with whom transactions have exceed 10% of the Target Group’s revenue during the Relevant Period.

10. FINANCE COSTS

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Imputed interest on consideration payable (Note 24(a)) 977

– II-21 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

11. INCOME TAX CREDIT

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Current tax PRC Enterprise Income Tax —

Deferred tax (Note 25) (4,230)

(4,230)

No provision for Hong Kong Profits Tax is required since the Target Group has no assessable profit for the Relevant Period.

Under the Law of PRC on Enterprise Income Tax (the ‘‘EIT Law’’) which became effective from 1 January 2008, the tax rate of the Target Company’s PRC subsidiaries is 25% for the Relevant Period.

The reconciliation between the income tax expense and the product of profit before tax multiplied by the PRC Enterprise Income Tax rate is as follows:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Profit before tax 51,132

Tax at the PRC Enterprise Income Tax rate of 25% 12,783 Tax effect of income that is not taxable (11,242) Tax effect of tax loss not recognised 20 Effect of different tax rates of subsidiaries (5,791)

Income tax credit (4,230)

– II-22 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

12. PROFITFORTHEPERIOD

The Target Group’s profit for the Relevant Period is stated after charging/(crediting) the following:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Auditors’ remuneration — Amortisation of other intangible asset (included in cost of services) 2,091 Depreciation of property, plant and equipment 221 Impairment loss on other intangible asset 13,735 Gain on bargain purchase (68,136)

13. EMPLOYEE BENEFITS EXPENSE

The Target Group’s profit for the Relevant Period is stated after charging the following:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Salaries, bonus and allowances 387 Retirement benefits schemes contributions 36

423

The five highest paid individuals in the Target Group during the Relevant Period did not include the director of the Target Company. The emoluments of the five highest paid individuals are set out below:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Salaries, bonus and allowances 98 Retirement benefits schemes contributions 6

104

– II-23 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The emoluments fell within the following band:

Number of individuals Period from 17 March 2016 (date of incorporation) to 31 August 2016

Nil to HK$1,000,000 5

14. BENEFITS AND INTERESTS OF DIRECTORS

(a) Director’s emoluments

Mr. Ma Xianwen is the sole director of the Target Company during the Relevant Period.

No emolument was paid to Mr. Ma Xianwen during the Relevant Period.

(b) Directors’ material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Target Group’sbusiness to which the Company was a party and in which a director of the Company and the director’s connected party had a material interest, whether directly or indirectly, subsisted at the end of each of the Relevant Period or at any time during the Relevant Period.

15. RETIREMENT BENEFIT SCHEMES

The employees of the Target Group are members of a central pension scheme operated by the local municipal government. The Target Group is required to contribute certain percentage of the employees’ basic salaries and wages to the central pension scheme to fund the retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of these subsidiaries. The only obligation of these subsidiaries with respect to the central pension scheme is to meet the required contributions under the scheme.

16. DIVIDENDS

The sole director of the Target Company did not recommend the payment of any dividend to its shareholders in respect of the Relevant Period.

– II-24 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

17. PROPERTY, PLANT AND EQUIPMENT

Leasehold Office Motor Construction improvements equipment vehicles Yacht in progress Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Cost Acquisition of subsidiaries (Note 28) 31,488 1,027 392 3,649 7,446 44,002 Additions ———— 78 78 Exchange differences (219) (8) (3) (25) (52) (307)

At 31 August 2016 31,269 1,019 389 3,624 7,472 43,773

Accumulated depreciation Charge for the period 196 9 — 16 — 221 Exchange differences (1) ——— — (1)

At 31 August 2016 195 9 — 16 — 220

Carrying amount At 31 August 2016 31,074 1,010 389 3,608 7,472 43,553

18. OTHER INTANGIBLE ASSET

Operating Right HK$’000

Cost Acquisition of subsidiaries (Note 28) 902,401 Exchange difference (6,278)

At 31 August 2016 896,123

Accumulated amortisation and impairment Amortisation for the period 2,091 Impairment loss 13,735 Exchange difference (97)

At 31 August 2016 15,729

Carrying amount At 31 August 2016 880,394

– II-25 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The cost of the Operating Right based on fair value upon the Acquisition of subsidiaries is attributable to the Yacht Club Business and School Business as follows:

Yacht Club School Business Business Total HK$’000 HK$’000 HK$’000

Acquisition of subsidiaries 554,449 347,952 902,401 Amortisation for the period (1,285) (806) (2,091) Impairment loss (4,920) (8,815) (13,735) Exchange difference (3,819) (2,362) (6,181)

At 31 August 2016 544,425 335,969 880,394

The average remaining amortisation period of the Operating Right are 18.5 years as at 31 August 2016.

The management of the Target Group carried out reviews of the recoverable amounts of its other intangible asset during the Relevant Period, having regard to the changes in risk free rate and market risk premium that affected the discount rate and therefore the asset’s recoverable amount. The risk free rate and market risk premium changed from 2.68% and 9.98% at 16 August 2016 to 2.81% and 10.66% respectively at 31 August 2016. As a result, the discount rate for Yacht Club Business and School Business changed from 16.70% and 17.70% at 16 August 2016 to 17.00% and 18.20% respectively at 31 August 2016.

The asset is used in the Target Group’s operation of a yacht club and provision of international education services. During the Relevant Period, the review led to the recognition of an impairment loss of HK$13,735,000 attributable to operation of a yacht club and provision of international education services for Operating Right that has been recognised in profit or loss for the eight months ended 31 August 2016. The recoverable amount of the Operating Right has been determined based on the basis of their value in use using discounted cash flow method.

19. DEPOSITS PAID FOR NON-CURRENT ASSETS

On 24 August 2016 and 30 August 2016, two subsidiaries of the Target Company entered into a sales and purchase agreements in relation to the acquisition of investment properties situated at Shenyang City, Liaoning Province, the PRC for a total cash consideration of RMB182,329,000 (equivalent to approximately HK$211,396,000). As at 31 August 2016, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Target Group.

– II-26 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

20. INVESTMENTS IN SUBSIDIARIES

The Target Company

As at 31 August 2016 HK$’000

Investments in subsidiaries 10,000

Amount due to a subsidiary 10,000

The amount due to a subsidiary is unsecured, interest-free and repayable on demand.

Particulars of the subsidiaries as at 31 August 2016 are as follows:

Percentage of Place and date of ownership interest incorporation/ Share/registered held by the Target establishment and and paid-up Company Principal Name of subsidiary operation capital Direct Indirect activity

Nayuan Development Hong Kong HK$10,000,000 100% — Investment holding 4 June 2015 Yuejin Sports The PRC RMB600,000,000 — 100% Investment holding 21 July 2014 Shenzhen Ruiteng The PRC RMB10,000,000 — 100% Investment and property 26 August 2014 holding Qianhai Virdom The PRC RMB10,000,000 — 100% Investment and property 10 July 2015 holding Dapeng Yacht Club The PRC RMB200,000,000 — 100% Operation of a yacht club 10 September 2014 Dapeng Education The PRC RMB30,000,000 — 100% Provision of international 30 September 2014 education services Virdom International The PRC RMB5,000,000 — 100% Provision of international Academy 18 August 2015 education services

21. BANK AND CASH BALANCES

The carrying amounts of bank and cash balances of the Target Group are denominated in RMB. Conversion of RMB into foreign currencies is subject to the PRC’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations.

22. ACCRUALS AND OTHER PAYABLES

As at 31 August 2016 HK$’000

Wages and salaries payables 690 Other tax payables 208 Other payables 51,422

52,320

– II-27 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

23. DEFERRED REVENUE

As at 31 August 2016 HK$’000

Tuition fees 1,951

The students are entitled to refund of the payment in relation to the proportionate service not yet provided.

24. CONSIDERATION PAYABLES

(a) As disclosed in Note 18 to the Financial Information, the consideration payable in relation to the Operating Right during the Relevant Period is set out as follows:

HK$’000

At date of acquisition (Note 28) 88,281 Imputed interest charged 977 Exchange difference (620)

As at 31 August 2016 88,638

This fair value of the consideration payable at inception has been calculated by discounting the future cash flows at an effective interest rate of 13.3% (level 3 fair value measurements).

The imputed interest charged for the Relevant Period is calculated by applying effective interest rate of 13.3%.

(b) On 16 August 2016, a subsidiary of the Target Company acquired the entire equity interests in Yuejin Sports for a cash consideration of RMB750,000,000 (equivalent to HK$875,657,000). As at 31 August 2016, the consideration payable is of RMB750,000,000 (equivalent to HK$869,565,000). Details of the acquisition are set out in Note 28 to Financial Information of the Target Group.

25. DEFERRED TAX (ASSETS)/LIABILITIES

The following are the deferred tax (assets)/liabilities recognised by the Target Group:

Deferred tax Deferred tax liabilities assets Other intangible asset Tax losses HK$’000 HK$’000

Acquisition of subsidiaries (Note 28) 107,566 (25,999) Credit to profit or loss for the period (3,688) (542) Exchange difference (725) 184

At 31 August 2016 103,153 (26,357)

– II-28 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

At the end of the Relevant Period, the Target Group has estimated unused tax losses of approximately HK$105,485,000 available for offset against future profits. A deferred tax assets have been recognised in respect of HK$105,460,000 of such loss. No deferred tax assets have been recognised in respect of remaining HK$25,000 due to the unpredictability of future profit streams. Tax losses of HK$105,460,000 will expire in 2021.

26. SHARE CAPITAL

Number of shares Amount HK$’000

Ordinary shares, issued and fully paid: Ordinary shares of US$1 each At date of incorporation and 31 August 2016 1 —

The Target Group’s objectives when managing capital are to safeguard the Target Group’s ability to continue as a going concern and to maximise the return to the shareholders through the optimisation of the debt and equity balance.

During the Relevant Period, the Target Group’s strategy, was to maintain the debt-to-equity ratio at a level of industry average.

The debt-to-capital ratios at 31 August 2016 were as follows:

As at 31 August 2016 HK$’000

Total debt (Note) 43,629 Less: Cash and cash equivalents (125,872)

Net debt (82,243)

Total equity 54,967

Adjusted net debt-to-capital ratio (149.6%)

The Target Group is not subject to any externally imposed capital requirements.

Note: Total debt comprises the amounts included in accruals and other payables.

– II-29 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

27. RESERVES

(a) The Target Group

The amounts of the Target Group’s reserves and movements therein are presented in the consolidated statements of profit or loss and other comprehensive income and consolidated statements of changes in equity.

(b) The Target Company

Accumulated losses HK$’000

At date of incorporation — Total comprehensive income for the period —

At 31 August 2016 —

(c) Statutory surplus reserve

In accordance with the Company Law of the PRC, the entities of the Target Group which are domestic enterprises are required to allocated 10% of their profit after tax, as determined in accordance with the relevant PRC accounting standards, to their respective statutory surplus reserve until the reserves reach 50% of their respective registered capital. Subject to certain restrictions set out in the Company Law of the PRC, part of the statutory surplus reserve may be converted into capital, provided that the remaining balance after the capitalisation is not less than 25% of the registered capital.

(d) Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in Note 4(c) to the Financial Information.

(e) Development fund of schools

According to the relevant PRC laws and regulations, for private schools that requires for reasonable returns, it is required to appropriate to the development fund not less than 25% of the net income of the relevant schools as determined in accordance with generally accepted accounting principles in the PRC. The development fund is for the construction or maintenance of the schools or procurement or upgrade of educational equipment.

28. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Acquisition of subsidiaries

On 16 August 2016, a subsidiary of the Target Company acquired the entire equity interests in Yuejin Sports for a cash consideration of RMB750,000,000 (equivalent to HK$875,657,000). Yuejin Sports, through its subsidiaries, is principally engaged in operation of a yacht club and provision of international education services. The acquisition is aim to develop the Yacht Club Business and School Business by the Target Company.

– II-30 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The fair value of the identifiable assets and liabilities of Yuejin Sports and its subsidiaries (hereinafter collectively refer to as ‘‘Yuejin Sports Group’’) acquired as at its date of acquisition is as follows:

HK$’000

Property, plant and equipment 44,002 Other intangible asset 902,401 Deposits paid for non-current assets 212,877 Deferred tax assets 25,999 Prepayments, deposits and other receivables 1,169 Bank and cash balances 8,341 Accruals and other payables (52,838) Deferred revenue (2,311) Consideration payable (88,281) Deferred tax liabilities (107,566)

Net identifiable assets and liabilities 943,793 Gain on bargain purchase (68,136)

Consideration payable 875,657

Net cash inflow arising on acquisition:

Cash and cash equivalents acquired 8,341

Gain on bargain purchase of HK$68,136,000 was recognised upon completion of the acquisition of Yuejin Sports. The gain on bargain purchase was mainly attributable to the increase in net identifiable assets and liabilities of the Yuejin Sports Group because of the increase in fair value of the operating right upon completion.

The fair value of the other receivables acquired is HK$1,169,000, none of which is expected to be uncollectible.

Yuejin Sports Group contributed a loss of approximately HK$2,113,000 to the Target Group’s profit for the Relevant Period between the date of acquisition and the end of the Relevant Period.

If the acquisition had been completed on 17 March 2016, total Target Group’s turnover for the Relevant Period would have been HK$4,508,000, and profit for the Relevant Period would have been HK$30,593,000. The proforma information is for illustrative purposes only and is not necessarily an indication of the turnover and results of operations of the Target Group that actually would have been achieved had the acquisition been completed on 17 March 2016, nor is intended to be a projection of future results.

– II-31 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

29. CAPITAL COMMITMENTS

The Target Group

Capital commitments contracted for at the end of the Relevant Period but not yet incurred are as follows:

As at 31 August 2016 HK$’000

Contracted but not provided for Property, plant and equipment 2,339

The Target PRC Company

As at 31 August 2016 HK$’000

Contracted but not provided for Property, plant and equipment —

30. LEASE COMMITMENTS

The total future minimum lease payments under non-cancellable operating leases are payable as follows:

As at 31 August 2016 HK$’000

Within one year 139 In the second to fifth year inclusive 527

666

31. CONTINGENT LIABILITIES

As at the end of the Relevant Period, the Target Group did not have any significant contingent liabilities.

– II-32 – APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

32. RELATED PARTY TRANSACTIONS

(a) The Target Group had the following outstanding balances at the end of the Relevant Period:

As at 31 August 2016 HK$’000

Amount due to holding company 118,000

Amount due to immediate holding company is unsecured, interest-free and repayable within one year.

(b) The remuneration of sole director of the Target Group and other members of key management during the Relevant Period is as follows:

Period from 17 March 2016 (date of incorporation) to 31 August 2016 HK$’000

Salaries, bonus and other benefits 151 Retirement benefits scheme contributions 12

163

33. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company or its subsidiaries in respect of any period subsequent to 31 August 2016.

Yours faithfully, RSM Hong Kong Certified Public Accountants Hong Kong

– II-33 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, RSM Hong Kong, Certified Public Accountants, Hong Kong.

30 November 2016

The Board of Directors New Sports Group Limited

Dear Sirs,

We set out below our report on the financial information (the ‘‘Financial Information’’)of 深圳粵錦體育有限公司 (Shenzhen Yuejin Sports Company Limited*, formerly known as ‘‘深 圳粵錦投資有限公司’’)(the‘‘Target PRC Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Target PRC Group’’) for each of the period from 21 July 2014 (date of establishment) to 31 December 2014, the year ended 31 December 2015 and the eight months ended 31 August 2016 (the ‘‘Relevant Periods’’) for inclusion in the circular dated 30 November 2016 issued by New Sports Group Limited (the ‘‘Company’’) in connection with the proposed acquisition of the entire issued share capital in the Yue Jin Asia Limited (the ‘‘Acquisition’’)bytheCompany(the‘‘Circular’’).

TheTargetPRCCompanywasestablishedon21July2014inthePeople’s Republic of China (the ‘‘PRC’’) with limited liability and is principally engaged in investment holding. At thedateofthisreport,theTargetPRCCompanyhas interests in the following subsidiaries:

Percentage of ownership Place and date of interest held by establishment Registered and the Target PRC Name of subsidiary and operation paid-up capital Company Principal activity

深圳瑞騰企業管理有限公司 The PRC RMB10,000,000 100% Investment and (Shenzhen Ruiteng Enterprise 26 August 2014 property holding Management Company Limited*) (‘‘Shenzhen Ruiteng’’)

深圳前海唯致教育投資有限公司 The PRC RMB10,000,000 100% Investment and (Shenzhen Qianhai Virdom 10 July 2015 property holding Education Company Limited*) (‘‘Qianhai Virdom’’)

深圳大鵬國際教育有限公司 The PRC RMB30,000,000 100% Provision of (Shenzhen Dapeng International 30 September international Education Company Limited*) 2014 school education (‘‘Dapeng Education’’) services

– III-1 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Percentage of ownership Place and date of interest held by establishment Registered and the Target PRC Name of subsidiary and operation paid-up capital Company Principal activity

深圳大鵬遊艇會有限公司 The PRC RMB200,000,000 100% Operation of a (Shenzhen Dapeng Yacht Club 10 September yacht club Company Limited*) (‘‘Dapeng 2014 Yacht Club’’)

深圳市大鵬新區唯致培訓學校 The PRC RMB5,000,000 100% Provision of (Shenzhen Dapeng Xinqu 18 August 2015 international Virdom International Academy*) school education (‘‘Virdom International service Academy’’)

* The English translation name is for identification purpose only. The official name of the entity is in Chinese.

All the companies of the Target PRC Group have adopted 31 December as their financial year end date.

The statutory financial statements of the Target PRC Company and its subsidiaries have been prepared in accordance with the relevant accounting principles and financial regulations applicable to companies established in the PRC and were audited by the following certified public accountants registered in the PRC.

Name of company Financial year Name of auditor

The Target PRC For the period from 21 July 天健會計師事務所 (Pan-China Company 2014 (date of establishment) Certified Public to 31 December 2014 Accountants*) For the year ended 北京永拓會計師事務所 (特殊 31 December 2015 普通合夥) (Beijing Yongtuo CPAs (Special general partner)*) Shenzhen Ruiteng For the period from 26 August 天健會計師事務所 (Pan-China 2014 (date of establishment) Certified Public to 31 December 2014 Accountants*) For the year ended 北京永拓會計師事務所 (特殊 31 December 2015 普通合夥) (Beijing Yongtuo CPAs (Special general partner)*) Qianhai Virdom For the period from 10 July 北京永拓會計師事務所 (特殊 2015 (date of establishment) 普通合夥) (Beijing Yongtuo to 31 December 2015 CPAs (Special general partner)*)

– III-2 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Name of company Financial year Name of auditor

Dapeng Yacht Club For the period from 天健會計師事務所 (Pan-China 10 September 2014 (date of Certified Public establishment) to Accountants*) 31 December 2014 For the year ended 北京永拓會計師事務所 (特殊 31 December 2015 普通合夥) (Beijing Yongtuo CPAs (Special general partner)*) Dapeng Education For the period from 天健會計師事務所 (Pan-China 30 September 2014 (date of Certified Public establishment) to Accountants*) 31 December 2014 For the year ended 北京永拓會計師事務所 (特殊 31 December 2015 普通合夥) (Beijing Yongtuo CPAs (Special general partner)*) Virdom International For the period from 18 August 北京永拓會計師事務所 (特殊 Academy 2015 (date of establishment) 普通合夥) (Beijing Yongtuo to 31 December 2015 CPAs (Special general partner)*)

* The English translation name is for identification purpose only. The official name of the entity is in Chinese.

For the purpose of this report, the sole director of the Target PRC Company has prepared the consolidated financial statements of the Target PRC Group for the Relevant Periods in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’)(the‘‘Underlying Financial Statements’’).

We have performed our independent audit on the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have examined the Underlying Financial Statements in accordance with Auditing Guideline 3.340 ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA.

The Financial Information has been prepared from the Underlying Financial Statements in accordance with HKFRSs. No adjustments were considered necessary for the purpose of preparing our report for inclusion in the Circular.

The sole director of the Target PRC Company is responsible for the preparation of the Underlying Financial Statements. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

– III-3 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

In our opinion, for the purpose of this report and on the basis of preparation set out in Note 2 to the Financial Information, the Financial Information gives a true and fair view of the state of affairs of the Target PRC Company and of the Target PRC Group as at 31 December 2014 and 2015 and 31 August 2016, and of the Target PRC Group’s results and cash flows for the Relevant Periods.

Material uncertainty relating to the going concern basis

Without qualifying our opinion, we draw attention to Note 2 to the Financial Information of the Target PRC Group which indicates that during the Relevant Periods the Target PRC Group incurred a loss of RMB295,000, RMB34,382,000 and RMB31,008,000 respectively and as at 31 December 2015 and 31 August 2016, the Target PRC Group had net current liabilities of RMB19,933,000 and RMB39,138,000 respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Target PRC Group’s ability to continue as a going concern.

Comparative financial information

For the purpose of this report, the sole director of the Target PRC Company has prepared the comparative financial information of the Target PRC Group for the eight months ended 31 August 2015 (the ‘‘Comparative Financial Information’’) in accordance with same basis adopted in the respect of the Financial Information. We have reviewed the Comparative Financial Information in accordance with Hong Kong Standard on Review Engagements 2400 (Revised) ‘‘Engagements to Review Historical Financial Statements’’ issued by the HKICPA. A review consists of making enquiries primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might beidentifiedinanaudit.Accordinglywedonot express an audit opinion on the Comparative Financial Information.

Based on our review, nothing has come to our attention that causes us to believe that the Comparative Financial Information is not prepared, in all material respects, in accordance with the same basis adopted in respect of the Financial Information.

– III-4 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Period from 21 July 2014 (date of establishment) Year ended Eight months ended to 31 December 31 December 31 August 2014 2015 2015 2016 Note RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Revenue 7 — 2,117 — 5,513 Cost of services — (29,426) (13,236) (26,952)

Gross loss — (27,309) (13,236) (21,439)

Distribution costs — (1,282) (773) (627) Administrative expenses (325) (8,778) (6,157) (4,689) Impairment loss on other intangible asset 18 ———(8,929) Other income/(loss) 8 27 215 (40) 1,336

Loss from operations (298) (37,154) (20,206) (34,348)

Finance costs 10 — (8,241) (4,857) (7,136)

Loss before tax (298) (45,395) (25,063) (41,484)

Income tax credit 11 3 11,013 6,135 10,476

Loss and total comprehensive income for the period/year 12 (295) (34,382) (18,928) (31,008)

– III-5 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

B. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 31 August 2014 2015 2016 Note RMB’000 RMB’000 RMB’000

Non-current assets Property, plant and equipment 17 — 29,667 37,566 Other intangible asset 18 — 461,889 436,894 Deposits paid for non-current assets 19 392,500 376 182,329 Deferred tax assets 25 3 13,748 22,733

392,503 505,680 679,522

Current assets Prepayments, deposits and other receivables 411,486 252,356 882 Amount due from a related company 32(a) 7,930 77,930 — Bank and cash balances 21 276 2,929 6,787

419,692 333,215 7,669

Current liabilities Accruals and other payables 22 392,510 348,856 45,124 Deferred revenue 23 — 4,292 1,683

392,510 353,148 46,807

Net current assets/(liabilities) 27,182 (19,933) (39,138)

Total assets less current liabilities 419,685 485,747 640,384

Non-current liabilities Consideration payable 24 — 97,712 104,848 Deferred tax liabilities 25 — 2,732 1,241

— 100,444 106,089

NET ASSETS 419,685 385,303 534,295

Capital and reserves Paid-up capital 26 420,000 420,000 600,000 Reserves 27(a) (315) (34,697) (65,705)

TOTAL EQUITY 419,685 385,303 534,295

– III-6 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

C. STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 31 August 2014 2015 2016 Note RMB’000 RMB’000 RMB’000

Non-current assets Investments in subsidiaries 20 40,600 40,600 20,000

Current assets Other receivables 411,486 252,140 — Amounts due from subsidiaries 20 362,555 399,605 630,815 Bank and cash balances 21 61 65 683

774,102 651,810 631,498

Current liabilities Accruals and other payables 22 392,510 270,220 — Amount due to a related company 2,460 2,460 — Amounts due to subsidiaries 20 ——52,000

394,970 272,680 52,000

Net current assets 379,132 379,130 579,498

Total assets less current liabilities 419,732 419,730 599,498

NET ASSETS 419,732 419,730 599,498

Capital and reserves Paid-up capital 26 420,000 420,000 600,000 Reserves 27(b) (268) (270) (502)

TOTAL EQUITY 419,732 419,730 599,498

– III-7 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

D. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the Target PRC Company Non- Paid-up Accumulated controlling Total capital losses Total interest equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Upon establishment 420,000 — 420,000 — 420,000 Capital contributionbyanon- controlling equity holder ———29,400 29,400 Acquisition of non-controlling interests (Note 28) — (20) (20) (29,400) (29,420) Total comprehensive income for the period — (295) (295) — (295)

At 31 December 2014 and 1 January 2015 420,000 (315) 419,685 — 419,685 Total comprehensive income for the year — (34,382) (34,382) — (34,382)

At 31 December 2015 and 1 January 2016 420,000 (34,697) 385,303 — 385,303 Capital contribution 180,000 — 180,000 — 180,000 Total comprehensive income for the period — (31,008) (31,008) — (31,008)

At 31 August 2016 600,000 (65,705) 534,295 — 534,295

At 1 January 2015 420,000 (315) 419,685 — 419,685 Total comprehensive income for the period — (18,928) (18,928) — (18,928)

At 31 August 2015 (unaudited) 420,000 (19,243) 400,757 — 400,757

– III-8 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

E. CONSOLIDATED STATEMENTS OF CASH FLOWS

Period from 21 July 2014 (date of establishment) Year ended Eight months ended to 31 December 31 December 31 August 2014 2015 2015 2016 Note RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before tax (298) (45,395) (25,063) (41,484)

Adjustments for: Amortisation of other intangible asset 18 — 20,082 12,049 16,066 Bank interest income 8 (27) (285) (3) (798) Depreciation of property, plant and equipment 17 — 1,122 7 2,746 Impairment loss on other intangible asset 18 ———8,929 Finance costs 10 — 8,241 4,857 7,136

Operating loss before working capital changes (325) (16,235) (8,153) (7,405)

Increase in prepayments, deposits and other receivables — (216) (625) (666) Increase/(decrease) in accruals and other payables — 8,636 1,377 (11,142) Increase/(decrease) in deferred revenue — 4,292 4,214 (2,609)

Cash used in operations (325) (3,523) (3,187) (21,822)

Interest received 27 285 3 798 Income tax paid ————

Netcashusedinoperating activities (298) (3,238) (3,184) (21,024)

– III-9 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Period from 21 July 2014 (date of establishment) Year ended Eight months ended to 31 December 31 December 31 August 2014 2015 2015 2016 Note RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

CASH FLOWS FROM INVESTING ACTIVITIES

Deposits paid for non-current assets (392,500) (376) — (182,329) Purchases of property, plant and equipment — (30,789) (15,429) (10,275) Proceeds from disposals of property, plant and equipment ——— 6 (Increase)/decrease in other receivables (411,486) 159,346 (69,534) 252,140

Net cash (used in)/generated from investing activities (803,986) 128,181 (84,963) 59,542

CASH FLOWS FROM FINANCING ACTIVITIES

Capital contribution 420,000 ——180,000 Capital contribution by a non- controlling equity holder 29,400 ——— (Increase)/decrease in amount due from a related company (27,440) (70,000) (70,000) 77,930 Acquisition of non-controlling interests 28 90 ——— Decrease/(increase) in other payables 382,510 (52,290) 169,441 (292,590)

Net cash generated from/(used in) financing activities 804,560 (122,290) 99,441 (34,660)

– III-10 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Period from 21 July 2014 (date of establishment) Year ended Eight months ended to 31 December 31 December 31 August 2014 2015 2015 2016 Note RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

NET INCREASE IN CASH AND CASH EQUIVALENTS 276 2,653 11,294 3,858

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD/ YEAR — 276 276 2,929

CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR 276 2,929 11,570 6,787

ANALYSIS OF CASH AND CASH EQUIVALENTS Bank and cash balances 276 2,929 11,570 6,787

– III-11 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

F. NOTES TO FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Target PRC Company was established on 21 July 2014 in the PRC with limited liability. The address of its registered office and principal place of business is Shenzhen Dapeng New District Nanao Street Xindong Road Jidiaosha Shenzhen Marine Sports Base.

The Target PRC Company is an investment holding company. The principal activities of its subsidiaries are set out in Note 20 to the Financial Information.

In the opinion of the sole director of the Target PRC Company, Nayuan Development Limited, a company incorporated in the Hong Kong, is the immediate holding company of the Target PRC Company and Mr. Zhang Zhenchun is the ultimate controlling party of the Target PRC Company.

2. BASIS OF PREPARATION

The Financial Information has been prepared in accordance with all applicable HKFRSs issued by HKICPA. HKFRSs comprise Hong Kong Financial Reporting Standards (‘‘HKFRS’’); Hong Kong Accounting Standards (‘‘HKAS’’); and Interpretations. The Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange Limited and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622).

During the Relevant Periods, the Target PRC Group incurred a loss of RMB295,000, RMB34,382,000 and RMB31,008,000 respectively. As at 31 December 2015 and 31 August 2016, the Target PRC Group had net current liabilities of RMB19,933,000 and RMB39,138,000 respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Target PRC Group’s ability to continue as a going concern. The sole director of the Target PRC Company has given careful consideration to the current and anticipated future liquidity of the Target PRC Group and the ability of the Target PRC Group to attain profitable and positive cash flows from operations in the immediate and longer term, as well as the following measures:

(i) the Company has confirmed its intention to provide financial support to the Target PRC Group upon the Acquisition is completed, so as to enable the Target PRC Group to meet its liabilities as and when they fall due and to carry on its business without a significant curtailment of operations for the foreseeable future;

(ii) the ultimate controlling party agreed to provide adequate funds for the Target PRC Group to meet its liabilities as they fall due.

3. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS AND REQUIREMENTS

(a) Application of new and revised HKFRSs

During the Relevant Periods, the Target PRC Group has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 January 2016.

(b) New and revised HKFRSs in issue but not yet effective

The Target PRC Group has not early applied new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 January 2016. The sole director of the Target PRC Company anticipates that the new and revised HKFRSs will be adopted in the Target PRC Group’s Financial Information when they become effective. The Target PRC Group is in the process of

– III-12 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

assessing, where applicable, the potential effect of all new and revised HKFRSs that will be effective in future periods but is not yet in a position to state whether these new and revised HKFRSs would have a material impact on its results of operations and financial position.

HKFRS 9 Financial Instruments1 HKFRS 15 Revenue from Contracts with Customers1 HKFRS 16 Leases2 Amendments to HKAS 16 Clarification of Acceptable Methods of Depreciation and and HKAS 38 Amortisation3 Amendments to HKAS 1 Disclosure Initiative3 Amendments to HKAS 7 Statement of Cash Flow4 Amendments to HKAS 27 Equity Method in Separate Financial Statements3 Amendments to HKFRSs Annual Improvements to HKFRSs 2012–2014 Cycle3

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted for entities that apply HKFRS 15 at or before the date of initial application of HKFRS 16. 3 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted. 4 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted.

4. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared under the historical cost convention.

The preparation of Financial Information in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Target PRC Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in Note 5.

The significant accounting policies applied in the preparation of the Financial Information are set out below.

(a) Consolidation

The Financial Information includes the financial statements of the Target PRC Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Target PRC Group has control. The Target PRC Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Target PRC Group has power over an entity when the Target PRC Group has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity’sreturns.

When assessing control, the Target PRC Group considers its potential voting rights as well as potential voting rights held by other parties. A potential voting right is considered only if the holder has the practical ability to exercise that right.

Subsidiaries are consolidated from the date on which control is transferred to the Target PRC Group. They are de-consolidated from the date the control ceases.

Intragroup transactions, balances and unrealised profits are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Target PRC Group.

– III-13 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Target PRC Company. Non-controlling interests are presented in the consolidated statements of financial position and consolidated statements of changes in equity within equity. Non- controlling interests are presented in the consolidated statements of profit or loss and consolidated statements of profit or loss and other comprehensive income as an allocation of profit or loss and total comprehensive income for the year between the non-controlling shareholders and owners of the Target PRC Company.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Target PRC Company and to the non-controlling shareholders even if this results in the non- controlling interests having a deficit balance.

Changes in the Target PRC Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Target PRC Company.

(b) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Target PRC Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). The Financial Information are presented in Renminbi (‘‘RMB’’), which is the Target PRC Company’s functional and presentation currency.

(ii) Transactions and balances in each entity’s financial statements

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

Non-monetary items that are measured at fair value in foreign currencies are translated using the exchange rates at the dates when the fair values are determined.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

(c) Property, plant and equipment

Property, plant and equipment are stated in the consolidated statements of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Target PRC Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

– III-14 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal annual rates are as follows:

Leasehold improvements 10%–25% Office equipment 10%–20% Motor vehicles 25% Yacht 10%

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

Construction in progress represents leasehold improvement under construction, and is stated at cost less impairment losses. Depreciation begins when the relevant assets are available for use.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

(d) Other intangible asset

The Operating Right for operation of a marine sports base and a sailing school

The Target PRC Company has entered into an agreement dated 27 August 2014 (the ‘‘Operation Entrustment Agreement’’) with Shenzhen Dapeng New District Management Committee, pursuant to which the operation of Shenzhen Marine Sports Base and Sailing School would be entrusted to the Target PRC Company for a period of twenty years (the ‘‘Operating Right’’). Under the Operating Right, the Target PRC Group has developed the operations of a yacht club (‘‘Yacht Club Business’’) and a school in provision of international education services (‘‘School Business’’).

The Operating Right is initially measured at cost and subsequently less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over an initial period of 20 years.

(e) Operating leases

Leases that do not substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as operating leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

(f) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the consolidated statements of financial position when the Target PRC Group becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Target PRC Group transfers substantially all the risks and rewards of ownership of the assets; or the Target PRC Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, thedifferencebetweentheasset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

– III-15 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(g) Financial assets

Financial assets are recognised and derecognised on a trade date basis where the purchase or sale of an financial asset is under a contract whose terms require delivery of the financial assets within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs except in the case of financial assets at fair value through profit or loss.

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

Loan and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are carried at amortised cost using the effective interest method (except for short-term receivables where interest is immaterial) minus any reduction for impairment or uncollectibility. Typically trade and other receivables, bank and cash balances are classified in this category.

(h) Other receivables

If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

(i) Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Target PRC Group’s cash management are also included as a component of cash and cash equivalents.

(j) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Target PRC Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(k) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

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

(l) Other payables

Other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

– III-16 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(m) Equity instruments

Equity instruments issued by the Target PRC Company are recorded at the proceeds received, net of direct issue costs.

(n) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Target PRC Group and the amount of revenue can be measured reliably.

Tuition and boarding fees from school are generally paid in advance prior to the beginning of each academic year, and are initially recorded as deferred revenue. Tuition and boarding fees are recognised as revenue proportionately over the year. The portion of tuition and boarding payments received from students but not earned is recorded as deferred revenue and is reflected as a current liability as such amounts represent revenue that the Target PRC Group expects to earn within one year. The academic year is generally from September to August of the following year.

Yacht parking fees are recognised on a straight-line basis over the lease term.

Rental income is recognised on a straight-line basis over the lease term.

Interest income is recognised on a time-proportion basis using the effective interest method.

(o) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

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

(ii) Pension obligations

The Target PRC Group contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Target PRC Group and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Target PRC Group to the funds.

(iii) Termination benefits

Termination benefits are recognised at the earlier of the dates when the Target PRC Group can no longer withdraw the offer of those benefits, and when the Target PRC Group recognises restructuring costs and involves the payment of termination benefits.

(p) Borrowing costs

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

(q) Taxation

Income tax represents the sum of the current tax and deferred tax.

– III-17 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Target PRC Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Target PRC Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Target PRC Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Target PRC Group intends to settle its current tax assets and liabilities on a net basis.

(r) Impairment of non-financial asset

The carrying amounts of non-financial assets are reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down as an expense through the consolidated statements of profit or loss to its estimated recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs. Recoverable amount is the higher of value in use and the fair value less costs of disposal of the individual asset or the cash-generating unit.

Value in use is the present value of the estimated future cash flows of the asset/cash-generating unit. Present values are computed using pre-tax discount rates that reflect the time value of money and the risks specific to the asset/cash-generating unit whose impairment is being measured.

Impairment losses for cash-generating units are allocated first against the goodwill of the unit and then pro rata amongst the other assets of the cash-generating unit. Subsequent increases in the recoverable amount caused by changes in estimates are credited to profit or loss to the extent that they reverse the impairment.

– III-18 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(s) Impairment of financial assets

At the end of each reporting period, the Target PRC Group assesses whether its financial assets are impaired, based on objective evidence that, as a result of one or more events that occurred after the initial recognition, the estimated future cash flows of the (group of) financial asset(s) have been affected.

For all other financial assets, the carrying amount is directly reduced by the impairment loss.

For financial assets measured at amortised cost, if the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed (either directly or by adjusting the allowance account for trade receivables) through profit or loss. However, the reversal must not result in a carrying amount that exceeds what the amortised cost of the financial asset would have been had the impairment not been recognised at the date the impairment is reversed.

(t) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target PRC Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(u) Events after the reporting period

Events after the reporting period that provide additional information about the Target PRC Group’s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the Financial Information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Financial Information when material.

5. CRITICAL JUDGEMENTS AND KEY ESTIMATES

Critical judgements in applying accounting policies

In the process of applying the accounting policies, the sole director has made the following judgements that have the most significant effect on the amounts recognised in the Financial Information (apart from those involving estimations, which are dealt with below).

Going concern basis

The Financial Information has been prepared on a going concern basis, the validity of which depends upon the financial support of the Company and the ultimate controlling party at a level sufficient to finance the working capital requirements of the Target PRC Group. Details are explained in Note 2 to the Financial Information.

– III-19 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Key sources of estimation uncertainty

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

(a) Property, plant and equipment and depreciation

The Target PRC Group determines the estimated useful lives, residual values and related depreciation charges for the Target PRC Group’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives and residual values of property, plant and equipment of similar nature and functions. The Target PRC Group will revise the depreciation charge where useful lives and residual values are different to those previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned.

As at 31 December 2014, 2015 and 31 August 2016, the carrying amounts of property, plant and equipment were Nil, RMB29,667,000 and RMB37,566,000 respectively.

(b) Income taxes

The Target PRC Group is subject to income taxes in the PRC. Significant estimates are required in determining the provision for income taxes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(c) Impairment of other intangible asset

Determining whether other intangible asset is impaired requires an estimation of the value in use of the cash-generating unit to which other intangible assets has been allocated. The value in use calculation requires the Target PRC Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. During the Relevant Periods, an impairment loss of Nil, Nil and RMB8,929,000 were recognised for other intangible asset. As at 31 December 2014, 2015 and 31 August 2016, the carrying amounts of the other intangible asset were Nil, RMB461,889,000 and RMB436,894,000 respectively.

6. FINANCIAL RISK MANAGEMENT

The Target PRC Group’s activities expose it to a variety of financial risks: foreign currency risk, credit risk, interest rate risk and liquidity risk. The Target PRC Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target PRC Group’s financial performance.

(a) Foreign currency risk

The Target PRC Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currency of the Target PRC Group entities, RMB. The Target PRC Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Target PRC Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The Target PRC Group has no significant concentrations of credit risk.

The credit risk on bank and cash balances is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

– III-20 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(c) Liquidity risk

The Target PRC Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The maturity analysis based on contractual undiscounted cash flows of the Target PRC Group’s financial liabilities is as follows:

On demand or less than Between 1 Between 2 Over 1year and 2 years and 5 years 5 years Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 31 December 2014 Accruals and other payables 392,510 ———392,510

At 31 December 2015 Accruals and other payables 348,720 ———348,720 Consideration payable ———392,500 392,500

At 31 August 2016 Accruals and other payables 44,834 ———44,834 Consideration payable ———392,500 392,500

(d) Interest rate risk

Cash flow interest rate risk in relation to bank balances is considered insignificant. Hence, no sensitivity analysis is presented. The Target PRC Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of prevailing interest rate announced by the People’sBankofChina.

(e) Categories of financial instruments at the end of each of the Relevant Periods

At At 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Financial assets: Loans and receivables (including cash and cash equivalents) 419,692 333,215 7,619

Financial liabilities: Financial liabilities measured at amortised cost 392,510 446,432 149,682

(f) Fair values

The carrying amounts of the Target PRC Group’s financial assets and financial liabilities as reflected in the Financial Information approximate their respective fair values.

– III-21 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

7. REVENUE

The Target PRC Group’s revenue is as follows:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Tuition fees — 1,961 — 3,986 Boarding fees — 156 — 448 Yacht parking fees ———1,079

— 2,117 — 5,513

8. OTHER INCOME/(LOSS)

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Bank interest income 27 285 3 798 Rental income ———438 Examination fees — 32 — 120 Others — (102) (43) (20)

27 215 (40) 1,336

9. SEGMENT INFORMATION

The Target PRC Group has two operating segments as follows:

Yacht club — Operation of a yacht club

Education — Provision of international education services

The Target PRC Group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

The accounting policies of the operating segments are the same as those described in Note 3 to the Financial Information. Segment profits or losses do not include other income/(loss), finance costs and unallocated corporate expenses. Segment liabilities do not include unallocated other payables and deferred tax liabilities. Segment assets do not include unallocated bank and cash balances, unallocated other receivables and deferred tax assets.

– III-22 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Management of the Target PRC Company has determined that the operating segments based on the reports reviews by the chief operating decision maker that are used for making strategic decisions. The chief operating decision-maker is identified as the sole director of the Target PRC Company. The sole director considers the business from a service perspective and assess the performance of the operating segments based on a measure of adjusted profit before income tax before unallocated corporate income/(expenses) for the purposes of allocating resources and assessing performance. These reports are prepared on the same basis as this Finance Information.

Segment revenue and results

The following is an analysis of revenue and results by operating segment of the Target PRC Group:

Period from 21 July 2014 (date of establishment) to 31 December 2014

Yacht club Education Total RMB’000 RMB’000 RMB’000

Revenue ——— Cost of services ———

Gross loss ———

Distribution costs ——— Administrative expenses (19) (18) (37)

Segment results (19) (18) (37)

Other income/(loss) 27 Unallocated corporate expenses (288)

Loss before tax (298)

Year ended 31 December 2015

Yacht club Education Total RMB’000 RMB’000 RMB’000

Revenue — 2,117 2,117 Cost of services (8,200) (21,226) (29,426)

Gross loss (8,200) (19,109) (27,309)

Distribution costs (298) (984) (1,282) Administrative expenses (1,932) (6,586) (8,518)

Segment results (10,430) (26,679) (37,109)

Other income/(loss) 215 Finance costs (8,241) Unallocated corporate expenses (260)

Loss before tax (45,395)

– III-23 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Eight months ended 31 August 2015 (unaudited)

Yacht club Education Total RMB’000 RMB’000 RMB’000

Revenue ——— Cost of services (4,578) (8,658) (13,236)

Gross loss (4,578) (8,658) (13,236)

Distribution costs (298) (475) (773) Administrative expenses (1,545) (4,605) (6,150)

Segment results (6,421) (13,738) (20,159)

Other income/(loss) (40) Finance costs (4,857) Unallocated corporate expenses (7)

Loss before tax (25,063)

Eight months ended 31 August 2016

Yacht club Education Total RMB’000 RMB’000 RMB’000

Revenue 1,079 4,434 5,513 Cost of services (7,679) (19,273) (26,952)

Gross loss (6,600) (14,839) (21,439)

Distribution costs (154) (473) (627) Administrative expenses (1,003) (3,381) (4,384) Impairment loss on other intangible asset — (8,929) (8,929)

Segment results (7,757) (27,622) (35,379)

Other income/(loss) 1,336 Finance costs (7,136) Unallocated corporate expenses (305)

Loss before tax (41,484)

– III-24 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Segment assets and liabilities

The following is an analysis of the assets and liabilities by operating segment of the Target PRC Group:

At 31 December 2014

Yacht club Education Total RMB’000 RMB’000 RMB’000

Segment assets 159,517 263,014 422,531

Unallocated assets 389,664

Consolidated total 812,195

Segment liabilities ———

Unallocated liabilities 392,510

Consolidated total 392,510

At 31 December 2015

Yacht club Education Total RMB’000 RMB’000 RMB’000

Segment assets 185,510 339,099 524,609

Unallocated assets 314,286

Consolidated total 838,895

Segment liabilities 32,438 77,955 110,393

Unallocated liabilities 343,199

Consolidated total 453,592

At 31 August 2016

Yacht club Education Total RMB’000 RMB’000 RMB’000

Segment assets 160,681 320,556 481,237

Unallocated assets 205,954

Consolidated total 687,191

Segment liabilities 35,442 78,571 114,013

Unallocated liabilities 38,883

Consolidated total 152,896

– III-25 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Other segment information

Period from 21 July 2014 (date of establishment) to 31 December 2014

Yacht club Education Total RMB’000 RMB’000 RMB’000

Additions to segment non-current assets ———

Depreciation and amortisation ———

Year ended 31 December 2015

Yacht club Education Total RMB’000 RMB’000 RMB’000

Additions to segment non-current assets 2,378 28,411 30,789

Depreciation and amortisation 6,627 14,577 21,204

Eight months ended 31 August 2015 (unaudited)

Yacht club Education Total RMB’000 RMB’000 RMB’000

Additions to segment non-current assets 1,500 13,929 15,429

Depreciation and amortisation 3,977 8,079 12,056

Eight months ended 31 August 2016

Yacht club Education Total RMB’000 RMB’000 RMB’000

Additions to segment non-current assets 7,344 3,307 10,651

Depreciation and amortisation 5,432 13,380 18,812

Geographical information:

The Target PRC Group has carried businesses in a single geographical location, which is in the PRC, and all the assets are located in the PRC.

Revenue from major customers:

The Target PRC Group’s customer base is diversified and there are no customers with whom transactions have exceed 10% of the Target PRC Group’s revenue during the Relevant Periods.

– III-26 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

10. FINANCE COSTS

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Imputed interest on consideration payable (Note 24) — 8,241 4,857 7,136

11. INCOME TAX CREDIT

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Current tax PRC Enterprise Income Tax ————

Deferred tax (Note 25) (3) (11,013) (6,135) (10,476)

(3) (11,013) (6,135) (10,476)

No provision for Hong Kong Profits Tax is required since the Target PRC Group has no assessable profit for the Relevant Periods.

Under the Law of PRC on Enterprise Income Tax (the ‘‘EIT Law’’) which became effective from 1 January 2008, the tax rate of the Target PRC Company and its subsidiaries is 25% for the Relevant Periods.

– III-27 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The reconciliation between the income tax expense and the product of loss before tax multiplied by the PRC Enterprise Income Tax rate is as follows:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Loss before tax (298) (45,395) (25,063) (41,484)

Tax at the PRC Enterprise Income Tax rate of 25% (74) (11,348) (6,266) (10,372) Tax effect of income that is not taxable ———(117) Tax effect of expenses that are not deductible — 334 130 7 Tax effect of tax losses not recognised 71116

Income tax credit (3) (11,013) (6,135) (10,476)

12. LOSS FOR THE PERIOD/YEAR

The Target PRC Group’s loss for the Relevant Periods are stated after charging/(crediting) the following:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Auditors’ remuneration — 10 10 40 Amortisation of other intangible asset (included in cost of services) — 20,082 12,049 16,066 Depreciation of property, plant and equipment — 1,122 7 2,746 Impairment loss on other intangible asset ———8,929

– III-28 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

13. EMPLOYEE BENEFITS EXPENSE

The Target PRC Group’s loss for the Relevant Periods is stated after charging the following:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Salaries, bonus and allowances — 9,884 6,276 5,242 Retirement benefits schemes contributions — 532 304 454

— 10,416 6,580 5,696

The five highest paid individuals in the Target PRC Group during the Relevant Periods did not include the sole director of the Target PRC Company. The emoluments of the five highest paid individuals are set out below:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Salaries, bonus and allowances — 2,695 1,484 1,299 Retirement benefits schemes contributions — 145 99 82

— 2,840 1,583 1,381

The emoluments fell within the following band:

Number of individuals Period from 21 July 2014 (date of establishment) to 31 Year ended Eight months ended December 31 December 31 August 2014 2015 2015 2016 (unaudited)

Nil to HK$1,000,000 — 555

– III-29 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

14. BENEFITS AND INTERESTS OF DIRECTORS

(a) Director’s emoluments

The following table sets forth certain information of the directors of the Target PRC Company during the Relevant Periods:

Name Position Date of appointment Date of resignation

Ms. Wang Xiuqin Director 21 July 2014 1 February 2016 Mr. Ma Xianwen Director 1 February 2016 27 July 2016 Mr. Lin Lichao Director 27 July 2016 —

No emoluments were paid to Ms. Wang Xiuqin and Mr. Ma Xianwen during the Relevant Periods.

The emoluments paid to Mr. Lin Lichao as a director for the Relevant Periods are as follow:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Salaries ———21 Other benefits ———3 Retirement benefits schemes contributions ———3

———27

(b) Directors’ material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Target PRC Group’s business to which the Target PRC Company was a party and in which a director of the Target PRC Company and the director’s connected party had a material interest, whether directly or indirectly, subsisted at the end of each of the Relevant Periods or at any time during the Relevant Periods.

15. RETIREMENT BENEFIT SCHEMES

The employees of the Target PRC Group are members of a central pension scheme operated by the local municipal government. The Target PRC Group is required to contribute certain percentage of the employees’ basic salaries and wages to the central pension scheme to fund the retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the Target PRC Group. The only obligation of the Target PRC Group with respect to the central pension scheme is to meet the required contributions under the scheme.

16. DIVIDENDS

The sole director of the Target PRC Company did not recommend the payment of any dividend to its equity shareholders in respect of the Relevant Periods.

– III-30 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

17. PROPERTY, PLANT AND EQUIPMENT

Leasehold Office Motor Construction improvements equipment vehicles Yacht in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost At 31 December 2014 and 1 January 2015 ———— —— Additions 27,523 888 ——2,378 30,789

At 31 December 2015 and 1 January 2016 27,523 888 ——2,378 30,789 Additions 2,885 150 336 3,214 4,066 10,651 Disposals — (8) —— — (8)

At 31 August 2016 30,408 1,030 336 3,214 6,444 41,432

Accumulated depreciation At 31 December 2014 and 1 January 2015 ———— —— Charge for the year 1,081 41 —— —1,122

At 31 December 2015 and 1 January 2016 1,081 41 —— —1,122 Charge for the period 2,525 119 — 102 — 2,746 Disposals — (2) —— — (2)

At 31 August 2016 3,606 158 — 102 — 3,866

Carrying amount At 31 December 2014 ———— ——

At 31 December 2015 26,442 847 ——2,378 29,667

At 31 August 2016 26,802 872 336 3,112 6,444 37,566

– III-31 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

18. OTHER INTANGIBLE ASSET

Operating Right RMB’000

Cost At 31 December 2014 and 1 January 2015 — Additions 481,971

At 31 December 2015, 1 January 2016 and 31 August 2016 481,971

Accumulated amortisation and impairment At 31 December 2014 and 1 January 2015 — Amortisation for the year 20,082

At 31 December 2015 and 1 January 2016 20,082 Amortisation for the period 16,066 Impairment loss 8,929

At 31 August 2016 45,077

Carrying amount At 31 December 2014 —

At 31 December 2015 461,889

At 31 August 2016 436,894

On 27 August 2014, the Target PRC Company entered into the Operation Entrustment Agreement with Shenzhen Dapeng New District Management Committee, pursuant to which the operation of Shenzhen Marine Sports Base and Sailing School would be entrusted to the Target PRC Company for a period of twenty years for a total cash consideration of RMB785,000,000, 50% of which amounting to RMB392,500,000 was paid in 2014 and the balance of RMB392,500,000 will be settled by 10 equal annual instalments of RMB39,250,000 each from the eleventh year of the date on which the assets were transferred. The transfer of assets was completed on 11 March 2015.

The cost of the Operating Right comprise the up-front payment of RMB392,500,000 and deferred consideration at fair value of RMB89,471,000 at its inception, which is attributable to the Yacht Club Business and School Business as follows:

Yacht Club School Business Business Total RMB’000 RMB’000 RMB’000

At inception 159,050 322,921 481,971 Amortisation for the year ended 31 December 2015 (6,627) (13,455) (20,082)

At 31 December 2015 152,423 309,466 461,889 Amortisation for the eight months ended 31 August 2016 (5,302) (10,764) (16,066) Impairment loss on other intangible asset — (8,929) (8,929)

At 31 August 2016 147,121 289,773 436,894

The remaining amortisation period of the Operating Right are 18.5 years as at 31 August 2016.

– III-32 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The management of the Target PRC Group carried out review of the recoverable amount of its other intangible asset at the end of the Relevant Periods, having regard to the changes in risk free rate and market risk premium that affected the discount rate and therefore the asset’s recoverable amount. The risk free rate and market risk premium changed from 2.86% and 10.23% at 31 December 2015 to 2.81% and 10.66% respectively at 31 August 2016. As a result, the discount rate for Yacht Club Business and School Business changed from 17.04% and 16.59% at 31 December 2015 to 17.00% and 18.20% respectively at 31 August 2016.

The asset is used in the Target PRC Group’s operation of a yacht club and provision of international education services. During the Relevant Periods, the review led to the recognition of an impairment loss of RMB8,929,000 attributable to provision of international education services for Operating Right that has been recognised in profit or loss for the eight months ended 31 August 2016. The recoverable amount of the relevant asset has been determined on the basis of their value in use by using discounted cash flow method.

19. DEPOSITS PAID FOR NON-CURRENT ASSETS

(a) Pursuant to the Operation Entrustment Agreement as disclosed in Note 18, the Target PRC Group has paid the up-front fee of RMB392,500,000 as at 31 December 2014.

(b) On 24 August 2016 and 30 August 2016, subsidiaries of the Target PRC Group (the ‘‘Buyer’’) entered into sale and purchase agreements in relation to the acquisition of investment properties situated at Liaoning Province, the PRC for a total cash consideration of RMB182,329,000. As at 31 August 2016, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Buyer.

20. INVESTMENTS IN SUBSIDIARIES

The Target PRC Company

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Investments in subsidiaries, at cost 40,600 40,600 20,000

Amounts due from subsidiaries 362,555 399,605 630,815

Amounts due to subsidiaries ——52,000

The amounts due from/to subsidiaries are unsecured, interest-free and repayable on demand.

– III-33 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

Particulars of the subsidiaries are as follows:

Percentage of ownership interest held by the Target PRC Company Place and date of At establishment and At 31 December 31 August Name of subsidiary operation Registered capital 2014 2015 2016 Principal activity

Direct Shenzhen Ruiteng The PRC RMB10,000,000 100% 100% 100% Investment and property 26 August 2014 holding

Qianhai Virdom The PRC RMB10,000,000 — 100% 100% Investment and property 10 July 2015 holding

Dapeng Education The PRC RMB30,000,000 100% 100% — Provision of international 30 September 2014 education services

Dapeng Yacht Club The PRC RMB200,000,000 100% 100% — Operation of a yacht club 10 September 2014

Indirect Dapeng Yacht Club The PRC RMB200,000,000 ——100% Operation of a yacht club 10 September 2014

Dapeng Education The PRC RMB30,000,000 ——100% Provision of international 30 September 2014 education services

Virdom International The PRC RMB5,000,000 — 100% 100% Provision of international Academy 18 August 2015 education services

Following the reorganisation took place on 25 March 2016 and 23 May 2016, Shenzhen Ruiteng and Qianhai Virdom have become the immediate holding company of Dapeng Yacht Club and Dapeng Education respectively.

21. BANK AND CASH BALANCES

The carrying amounts of bank and cash balances of the Target PRC Company and the Target PRC Group are denominated in RMB. Conversion of RMB into foreign currencies is subject to the PRC’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations.

22. ACCRUALS AND OTHER PAYABLES

The Target PRC Group

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Wages and salaries payables — 1,333 595 Other tax payables — 89 179 Other payables 392,510 347,434 44,350

392,510 348,856 45,124

– III-34 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The Target PRC Company

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Other payables 392,510 270,220 —

23. DEFERRED REVENUE

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Tuition fees — 3,959 1,683 Boarding fees — 333 —

— 4,292 1,683

The students are entitled to refund of the payment in relation to the proportionate service not yet provided.

24. CONSIDERATION PAYABLE

As disclosed in Note 18 to the Financial Information, the consideration payable in relation to the Operating Right during the Relevant Periods is set out as follows:

RMB’000

Fair value of consideration payable at inception 89,471 Imputed interest charged 8,241

As at 31 December 2015 and 1 January 2016 97,712 Imputed interest charged 7,136

As at 31 August 2016 104,848

This fair value of the consideration payable at inception has been calculated by discounting the future cash flows at an effective interest rate of 10.62% (level 3 fair value measurements).

The imputed interest charged for the Relevant Periods is calculated by applying effective interest rate of 10.62%.

– III-35 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

25. DEFERRED TAX

The following are the deferred tax liabilities and assets recognised by the Target PRC Group:

Deferred tax Deferred tax liabilities assets Other intangible asset Tax losses RMB’000 RMB’000

At date of establishment —— Credit to profit or loss for the period — (3)

At 31 December 2014 and 1 January 2015 — (3) Charge/(credit) to profit or loss for the year 2,732 (13,745)

At 31 December 2015 and 1 January 2016 2,732 (13,748) Credit to profit or loss for the period (1,491) (8,985)

At 31 August 2016 1,241 (22,733)

At the end of each of the Relevant Periods, the Target PRC Group has estimated unused tax losses of approximately RMB318,000, RMB54,995,000 and RMB90,981,000 respectively available for offset against future profits. A deferred tax assets have been recognised in respect of RMB13,000, RMB54,980,000 and RMB35,940,000 respectively of such losses. No deferred tax assets have been recognised in respect of remaining RMB305,000, RMB2,000 and RMB22,000 due to the unpredictability of future profit streams. Tax losses of RMB13,000, RMB54,980,000 and RMB35,966,000 will expire in 2019, 2020 and 2021 respectively.

26. PAID-UP CAPITAL

Amount RMB’000

Registered and fully paid: At date of establishment, 31 December 2014, 1 January 2015, 31 December 2015 and 1 January 2016 420,000 Capital contribution 180,000

At 31 August 2016 600,000

The Target PRC Group’s objectives when managing capital are to safeguard the Target PRC Group’s ability to continue as a going concern and to maximise the return to the equity holders through the optimisation of the debt and equity balance.

The Target PRC Group monitors capital on the basis of the debt-to-equity ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total debts less cash and cash equivalents. Total equity comprises all components of equity (i.e. share capital, accumulated losses and other reserves).

During the Relevant Periods, the Target PRC Group’s strategy, which was unchanged from previous years, was to maintain the debt-to-equity ratio at a level of industry average.

– III-36 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The debt-to-capital ratios at 31 December 2014, 2015 and 31 August 2016 were as follows:

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Total debt (Note) 382,510 330,220 37,630 Less: Cash and cash equivalents (276) (2,929) (6,787)

Net debt 382,234 327,291 30,843

Total equity 419,685 385,303 534,295

Adjusted net debt-to-capital ratio 91.1% 84.9% 5.8%

The Target PRC Group is not subject to any externally imposed capital requirements.

Note: Total debt comprises the amounts included in accruals and other payables.

27. RESERVES

(a) The Target PRC Group

The amounts of the Target PRC Group’s reserves and movements therein are presented in the consolidated statements of profit or loss and other comprehensive income and consolidated statements of changes in equity.

(b) The Target PRC Company

Accumulated losses RMB’000

At date of establishment — Total comprehensive income for the year (268)

At 31 December 2014 and 1 January 2015 (268) Total comprehensive income for the year (2)

At 31 December 2015 and 1 January 2016 (270) Total comprehensive income for the period (232)

At 31 August 2016 (502)

(c) Statutory surplus reserve

In accordance with the Company Law of the PRC, the entities of the Target PRC Group which are domestic enterprises are required to allocated 10% of their profit after tax, as determined in accordance with the relevant PRC accounting standards, to their respective statutory surplus reserve until the reserves reach 50% of their respective registered capital. Subject to certain restrictions set out in the Company Law of the PRC, part of the statutory surplus reserve may be converted into capital, provided that the remaining balance after the capitalisation is not less than 25% of the registered capital.

– III-37 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(d) Development fund of schools

According to the relevant PRC laws and regulations, for private schools that requires for reasonable returns, it is required to appropriate to the development fund not less than 25% of the net income of the relevant schools as determined in accordance with generally accepted accounting principles in the PRC. The development fund is for the construction or maintenance of the schools or procurement or upgrade of educational equipment.

28. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Acquisition of non-controlling interests

On 13 October 2014, the Target PRC Company acquired the entire equity interest in Shenzhen Ruiteng for a cash consideration of RMB10,000,000. Shenzhen Ruiteng is principally engaged in investment and property holding and was then an equity holder of 49% and 49% equity interest in Dapeng Yacht Club and Dapeng Education respectively. Subsequent to the acquisition, Dapeng Yacht Club and Dapeng Education became indirect wholly-owned subsidiaries of the Target PRC Company. The acquisition is aim to enable the Target PRC Company to entirely control Dapeng Yacht Club and Dapeng Education.

RMB’000

Carrying value of non-controlling interests 29,400 Other payables assumed (19,510) Bank and cash balances acquired 90

9,980

Consideration paid for acquisition of non-controlling interests (10,000)

Loss arising from acquisition of non-controlling interests recognised directly in equity (20)

29. CAPITAL COMMITMENTS

The Target PRC Group

Capital commitments contracted for at the end of each of the Relevant Periods but not yet incurred are as follows:

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Contracted but not provided for Property, plant and equipment — 8,122 2,017

– III-38 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

The Target PRC Company

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Contracted but not provided for Property, plant and equipment ———

30. LEASE COMMITMENTS

The total future minimum lease payments under non-cancellable operating leases are receivable as follows:

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Within one year ——120 In the second to fifth year inclusive ——454

——574

31. CONTINGENT LIABILITIES

As at the end of each of the Relevant Periods, the Target PRC Group did not have any significant contingent liabilities.

32. RELATED PARTY TRANSACTIONS

(a) In addition to those related party transactions and balances disclosed elsewhere in the Financial Information, the Target PRC Group had the following outstanding balances at the end of each of the Relevant Periods:

As at As at 31 December 31 August 2014 2015 2016 RMB’000 RMB’000 RMB’000

Amount due from a related company (Note) 7,930 77,930 —

Maximum amounts outstanding during the Relevant Periods are RMB497,960,000, RMB105,000,000 and Nil respectively.

Note: The legal representative of the Target PRC Company is also the legal representative of the related company. Amount due from a related company is unsecured, interest-free and repayable on demand.

– III-39 – APPENDIX III ACCOUNTANTS’ REPORT ON THE TARGET PRC GROUP

(b) The remuneration of director and other members of key management during the Relevant Periods is as follows:

Period from 21 July 2014 (date of establishment) to Year ended Eight months ended 31 December 31 December 31 August 2014 2015 2015 2016 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited)

Salaries, bonus and other benefits — 3,620 2,322 1,871 Retirement benefits scheme contributions — 189 131 137

— 3,809 2,453 2,008

33. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target PRC Company or its subsidiaries in respect of any period subsequent to 31 August 2016.

Yours faithfully, RSM Hong Kong Certified Public Accountants Hong Kong

– III-40 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Set out below is the management discussion and analysis of the Target Group for the period from 17 March 2016 (date of incorporation of the Target Company) to 31 August 2016. The following financial information is based on the financial information of the Target Group as set out in Appendix II to this circular.

(I) FOR THE PERIOD FROM 17 MARCH 2016 (DATE OF INCORPORATION OF THE TARGET COMPANY) TO 31 AUGUST 2016

Business Review and Financial Review of Operations

Revenue and gross loss

For the period from 17 March 2016 (date of incorporation) to 31 August 2016, the Target Group recorded revenue of approximately HK$562,000 and was attributable to the Yacht Club Business and the School Business. In addition, the Target Group recorded gross loss of approximately HK$2.1 million, which was mainly attributable to the fact the Yacht Club Business just commenced operations during the period and the School Business was still in the early stage of development.

Profit for the period

The Target Group recorded a profit for the period of approximately HK$55.4 million for the period from 17 March 2016 (date of incorporation) to 31 August 2016. It was mainly attributable to the record of a gain on bargain purchase of approximately HK$68.1 million in relation to the acquisition of a subsidiary by the Target Group during the period.

On 16 August 2016, a subsidiary of the Target Company acquired the entire equity interests in Yuejin Sports for a cash consideration of RMB750,000,000 (equivalent to HK$875,657,000). The Target PRC Company, through its subsidiaries, is principally engaged in operation of the Yacht Club and provision of international education services. The acquisition is aim to develop the Yacht Club Business and School Business by the Target Company.

– IV-1 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

The fair value of the identifiable assets and liabilities of the Target PRC Group acquired as at its date of acquisition is as follows:

HK$’000

Property, plant and equipment 44,002 Other intangible asset 902,401 Deposits paid for non-current assets 212,877 Deferred tax assets 25,999 Prepayments, deposits and other receivables 1,169 Bank and cash balances 8,341 Accruals and other payables (52,838) Deferred revenue (2,311) Consideration payable (88,281) Deferred tax liabilities (107,566)

Net identifiable assets and liabilities 943,793 Gain on bargain purchase (68,136)

Consideration payable 875,657

Net cash inflow arising on acquisition:

Cash and cash equivalents acquired 8,341

Gain on bargain purchase of HK$68,136,000 was recognised upon completion of the acquisition of Yuejin Sports. The gain on bargain purchase was mainly attributable to the increase in net identifiable assets and liabilities of the Yuejin Sports Group because of the increase in fair value of the operating right upon completion.

The Yacht Club Business

For the period from 17 March 2016 (date of incorporation) to 31 August 2016, the Yacht Club Business just commenced its operations. The revenue mainly represents yacht berthing fee.

The School Business

For the period from 17 March 2016 (date of incorporation)) to 31 August 2016, the School Business was still in the early stage of development. The revenue mainly represents the tuition fees for the test preparations courses for foreign language examinations, such as AP curriculum, A-Level curriculum (International General Certificate of Secondary Education and The General Certificate of Education Advanced Level curriculum in the United Kingdom) and American-Hong Kong high school, and boarding fees received from students.

– IV-2 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Other intangible asset

It represents the carrying amount in relation to the operating right under the Operation Entrustment Agreement of approximately HK$880.4 million based on fair value less amortisation and impairment in relation to the acquisition of the Target PRC Companyon16August2016.

Deposits paid for non-current assets

It represents the deposit of approximately HK$211.4 million paid for the purchase of the Real Property. As at the Latest Practicable Date, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Target Group.

Amount due to holding company of the Target Company

It represents the amount due to the Seller of approximately HK$118 million.

Consideration payable

It represents the amount payable of approximately HK$869.6 million in relation to the acquisition of a subsidiary by the Target Group.

Liquidity and Financial Resources

Net current liabilities

As at 31 August 2016, the net current liabilities of the Target Group amounted to approximately HK$915 million, which mainly represents the consideration payable of approximately HK$870 million in relation to the acquisition of a subsidiary by the Target Group during the period. The current ratio, representing current assets divided by current liabilities was approximately 0.12.

As at 31 August 2016, no borrowings was recorded by the Target Group.

For the period from 17 March 2016 (date of incorporation) to 31 August 2016, the Target Group usually financed its working capital through internal funds. To manage liquidity risk, the management of the Target Group closely monitored the liquidity position to ensure that the liquidity structure of the Target Group’s assets, liabilities and commitments could meet its funding requirements.

Charges of Assets

As of 31 August 2016, none of the Target Group’sassetswaspledged.

– IV-3 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Contingent Liabilities

The Target Group did not have any material contingent liability as at 31 August 2016.

Capital Commitments

The Target Group had capital commitments of approximately HK$2,339,000 as at 31 August 2016.

Employees

The Target Group had 52 employees as at 31 August 2016.

Remunerations of approximately HK$423,000 was paid to the Target Group’s employees for the period from 17 March 2016 (date of incorporation) to 31 August 2016.

Foreign Currency Exposure

Since the Target Group’s revenue was generated within the PRC, the currency risk is considered to be insignificant. The Target Group’s functional currency is RMB.

Significant Investment, Material Acquisition and Disposal

Except disclosed above the acquisition of Yuejin Sports by the Target Group on 16 August 2016, the Target Group did not have any other significant investment, material acquisition or disposal for the period from 17 March 2016 (date of incorporation) to 31 August 2016.

Set out below is the management discussion and analysis of the Target PRC Group (i) for the period from 21 July 2014 (date of establishment of the Target PRC Company) to 31 December 2014, (ii) for the year ended 31 December 2015 and (iii) for the eight months ended 31 August 2016. The following financial information is based on the financial information of the Target PRC Group as set out in Appendix III to this circular.

– IV-4 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

(II) FOR THE PERIOD FROM 21 JULY 2014 (DATE OF ESTABLISHMENT OF THE TARGET PRC COMPANY) TO 31 DECEMBER 2014

Business Review and Financial Review of Operations

Revenue

For the period from 21 July 2014 (date of establishment) to 31 December 2014, no revenue was recorded by the Target PRC Group since both the Yacht Club Business and the School Business were in the preparation stage during the period.

Net loss

The Target PRC Group recorded a net loss of approximately RMB295,000 during the period which was primarily attributable to the corporate expenses of approximately RMB288,000.

The Yacht Club Business

For period from 21 July 2014 (date of establishment) to 31 December 2014, the Yacht Club Business was in the preparation stage and no revenue or the related cost of services were incurred during the period.

The School Business

For period from 21 July 2014 (date of establishment) to 31 December 2014, the School Business was in the preparation stage and no revenue or the related cost of services were incurred during the period.

Deposits paid for non-current assets

It represents the up-front fee of approximately RMB392.5 million paid in relation to the Operation Entrustment Agreement.

Prepayments, deposits and other receivables

It represents mainly a receivable amount from Shenzhen Chuanghang Enterprise Management Company Limited (深 圳 創 航 企 業 管 理 有 限 公 司 , ‘‘Shenzhen Chuanghang’’), an Independent Third Party, amounted to approximately RMB401.2 million. Such amount was interest-free funds transfer among Target PRC Group, Shenzhen Chuanghang and Baoneng Holdings (China) (as defined below) used as general working capital of the Target PRC Group. This amount was fully settled in May 2016.

– IV-5 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Accruals and other payables

It represents mainly a payable to Baoneng Holdings (China) Co., Ltd. (寶能控股 (中 國)有限公司, ‘‘Baoneng Holdings (China)’’), an Independent Third Party, amounted to approximately RMB382.5 million. Such amount was interest-free funds transfer among Target PRC Group, Baoneng Holdings (China) and Shenzhen Chuanghang used as general working capital of the Target PRC Group. This amount was fully settled in July 2015.

Note:

Ever since Shenzhen Yuejin Investment Company Limited* obtained the operating right of the Yacht Club and the School, it has been proactively seeking cooperation and investment opportunities with other companies in order to develop the businesses under the scope of the Operation Entrustment Agreement. Since then, Shenzhen Yuejing Investment Company Limited* has established a good business relationship with Shenzhen Chuanghang and Baoneng Holdings (China), amongst which each party was willing to provide short-term interest-free unsecured financing to each other for meeting their respective short-term liquidity needs. However, since no concrete business plan was established among these three companies, the above outstanding balances between them had been settled before May 2016.

Liquidity and Financial Resources

As at 31 December 2014, the net current assets of the Target PRC Group amounted to approximately RMB27.2 million. The current ratio, representing current assets divided by current liabilities was approximately 1.07.

As at 31 December 2014, no borrowings was recorded by the Target PRC Group.

For the period from 21 July 2014 (date of establishment) to 31 December 2014, the Target PRC Group usually financed its working capital through internal funds. To manage liquidity risk, the management of the Target PRC Group closely monitored the liquidity position to ensure that the liquidity structure of the Target PRC Group’s assets, liabilities and commitments could meet its funding requirements.

Charges of Assets

As of 31 December 2014, none of the Target PRC Group’s assets was pledged.

Contingent Liabilities

The Target PRC Group did not have any material contingent liability as at 31 December 2014.

Capital Commitments

The Target PRC Group did not have any capital commitment as at 31 December 2014.

– IV-6 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Employees

The Target PRC Group had no employees as at 31 December 2014 as the Target PRC Group was established in July 2014 and was in preparation stage during the period.

Hence, no remunerations paid to the Target PRC Group’s employees for the period from 21 July 2014 (date of establishment) to 31 December 2014.

Foreign Currency Exposure

Since the Target PRC Group’s revenue was generated within the PRC, the currency risk is considered to be insignificant. The Target PRC Group’s functional currency is RMB.

Significant Investment, Material Acquisition and Disposal

The Target PRC Group did not have any significant investment, material acquisition or disposal for the period from 21 July 2014 (date of establishment) to 31 December 2014.

(III) FOR THE YEAR ENDED 31 DECEMBER 2015

Business Review and Financial Review of Operations

Revenue

For the year ended 31 December 2015, the Target PRC Group commenced to record revenue, which was approximately RMB2.1 million and was solely attributable to the School Business. In addition, the Target PRC Group recorded gross loss of approximately RMB27.3 million, which was mainly attributable to the fact that the Yacht Club Business was in the preparation stage and the School Business just commenced operations during the period.

Net loss

The Target PRC Group recorded a net loss of approximately RMB34.4 million for the year ended 31 December 2015 as compared to the same of approximately RMB0.3 million for the period from 21 July 2014 (date of establishment) to 31 December 2014. It was mainly attributable to the Yacht Club Business which was in the preparation stage and the School Business which just commenced operations during the period.

The Yacht Club Business

For the year ended 31 December 2015, no revenue was recorded by the Yacht Club Business as it was in the preparation stage. The gross loss of approximately RMB8.2 million was mainly attributable to the amortization of other tangible asset of approximately RMB6.6 million.

– IV-7 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

The School Business

For the year ended 31 December 2015, revenue of approximately RMB2.1 million was recorded by the School Business. Such revenue mainly represents the tuition fees for the test preparations courses for foreign language examinations, such as AP curriculum, A-Level curriculum (International General Certificate of Secondary Education and The General Certificate of Education Advanced Level curriculum in the United Kingdom) and American-Hong Kong high school, and boarding fees received from students. The gross loss of approximately RMB19.1 million was mainly attributable to the fact that the School Business just commenced operations during the period.

Other intangible asset

It represents the carrying amount of approximately RMB461.9 million in relation to the operating right of the Operation Entrustment Agreement.

Prepayments, deposits and other receivables

It represents mainly a receivable amount from Shenzhen Chuanghang of approximately RMB196.6 million and an amount of approximately RMB55.6 million due from Baoneng Holdings (China). Such amounts were fully settled in May 2016 and since then, there has been no further fund transfer activities between the Target PRC Group.

Amount due from a related company

It represents the amount of approximately RMB77.9 million due from a related company.

Accruals and other payables

It represents mainly a payable to Shenzhen Jianye Engineering Group Co., Ltd. (深圳 建業工程集團股份有限公司), an Independent Third Party, amounted to approximately RMB260.2 million. Such amount was fully settled in May 2016 and since then, there has been no further fund transfer activities.

Consideration payable

It represents the amount payable of approximately RMB97.7 million in relation to the operating right of the Operation Entrustment Agreement.

Liquidity and Financial Resources

As at 31 December 2015, the net current liabilities of the Target PRC Group amounted to approximately RMB19.9 million. The current ratio, representing current assets divided by current liabilities was approximately 0.94.

As at 31 December 2015, no borrowings was recorded by the Target PRC Group.

– IV-8 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

For the year ended 31 December 2015, the Target PRC Group usually financed its working capital through internal funds. To manage liquidity risk, the management of the Target PRC Group closely monitored the liquidity position to ensure that the liquidity structure of the Target PRC Group’s assets, liabilities and commitments could meet its funding requirements.

Charges of Assets

As of 31 December 2015, none of the Target PRC Group’s assets was pledged.

Contingent Liabilities

The Target PRC Group did not have any material contingent liability as at 31 December 2015.

Capital Commitments

The Target PRC Group had capital commitments of approximately RMB8,122,000 as at 31 December 2015.

Employees

The Target PRC Group had 50 employees as at 31 December 2015.

The total remunerations paid to the Target PRC Group’s employees for the year ended 31 December 2015 was approximately RMB10.4 million.

The number of employees increased from none as at 31 December 2014 to 50 as at 31 December 2015. The increase in number of employees was in line with the development of the Yacht Club Business and the School Business.

Foreign Currency Exposure

Since the Target PRC Group’s revenue were generated within the PRC, the currency risk is considered to be insignificant. The Target PRC Group’s functional currency is RMB.

Significant Investment, Material Acquisition and Disposal

The Target PRC Group did not have any significant investment, material acquisition or disposal for the year ended 31 December 2015.

– IV-9 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

(IV) FOR THE EIGHT MONTHS ENDED 31 AUGUST 2016

Business Review and Financial Review of Operations

Revenue

For the eight months ended 31 August 2016, the Target PRC Group recorded a revenue of approximately RMB5.5 million, representing an increase of approximately 160% from approximately RMB2.1 million for the year ended 31 December 2015 (representing an increase of approximately 2.91 times on an annualized basis). The Target PRC Group’s gross loss for the eight months ended 31 August 2016 was approximately RMB21.4 million, which was mainly due to the fact that the Yacht Club Business just commenced operations during the period and the School Business was still in the early stage of development.

Net Loss

The Target PRC Group recorded a net loss of approximately RMB31 million for the eight months ended 31 August 2016, representing an improvement of approximately 35.2% on an annualized basis from approximately RMB34.4 million for the year ended 31 December 2015, which was mainly attributable to the Yacht Club Business commenced operations during the period.

The Yacht Club Business

During the period, the Yacht Club Business commenced to record revenue, which amounted to approximately RMB1.1 million and mainly represents yacht berthing fee. During the period, the gross loss attributable to the Yacht Club Business was approximately RMB6.6 million, which was mainly attributable to the amortization of other tangible asset of approximately RMB5.3 million.

The School Business

During the period, the revenue attributable to the School Business increased from approximately RMB2.1 million for the year ended 31 December 2015 to approximately RMB4.4 million for the eight months ended 31 August 2016, representing approximately 109% increase (representing an increase of approximately 2.14 times on an annualized basis). The revenue mainly represents the tuition fees for the test preparations courses for foreign language examinations, such as AP curriculum, A-Level curriculum (International General Certificate of Secondary Education and The General Certificate of Education Advanced Level curriculum in the United Kingdom) and American-Hong Kong high school, and boarding fees. The gross loss attributable to the School Business amounted to approximately RMB14.8 million for the eight months ended 31 August 2016, which was mainly attributable to (1) the amortization of other tangible asset of approximately RMB10.8 million and (2) the fact that the School Business was still in the early stage of development.

– IV-10 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Other intangible asset

It represents the carrying amount of approximately RMB436.9 million in relation to the operating right stated at cost less amortisation based on the Operation Entrustment Agreement entered into with the local government authority.

Deposits paid for non-current assets

It represents the deposit of approximately RMB182.3 million paid for the purchase of the Real Property. As at 31 August 2016, the registration of the relevant properties ownership certificates were in the progress and the titles of ownership of the investment properties have not been transferred to the Target PRC Group.

Consideration payable

It represents the amount payable of approximately RMB104.8 million in relation to the operating right of the Operation Entrustment Agreement.

Liquidity and Financial Resources

As at 31 August 2016, the net current liabilities of the Target PRC Group amounted to approximately RMB39.1 million. The current ratio, representing current assets divided by current liabilities was 0.16.

As at 31 August 2016, no borrowings of was recorded by the Target PRC Group.

For the eight months ended 31 August 2016, the Target PRC Group usually financed its working capital through internal funds. To manage liquidity risk, the management of the Target PRC Group closely monitored the liquidity position to ensure that the liquidity structure of the Target PRC Group’s assets, liabilities and commitments could meet its funding requirements.

Charges of Assets

As of 31 August 2016, none of the Target PRC Group’sassetswaspledged.

Contingent Liabilities

The Target PRC Group did not have any material contingent liability as at 31 August 2016.

Capital Commitments

The Target PRC Group had capital commitments of approximately RMB2,017,000 as at 31 August 2016.

– IV-11 – APPENDIX IV MANAGEMENT DISCUSSIONS AND ANALYSIS AND OTHER FINANCIAL INFORMATION OF THE TARGET GROUP AND THE TARGET PRC GROUP

Employees

The Target PRC Group had 52 employees as at 31 August 2016. The increase in number of employees was in line with the development of the Yacht Club Business and the School Business.

The total remunerations paid to the Target PRC Group’s employees for the eight months ended 31 August 2016 was approximately RMB5.7 million.

Foreign Currency Exposure

Since the Target PRC Group’s revenue were generated within the PRC, the currency risk is considered to be insignificant. The Target PRC Group’s functional currency is RMB.

Significant Investment, Material Acquisition and Disposal

The Target PRC Group did not have any significant investment, material acquisition or disposal for the eight months ended 31 August 2016.

– IV-12 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The accompanying unaudited pro forma statement of assets and liabilities of the Group (the ‘‘Statement’’) has been prepared to illustrate the effect of the acquisition of Yue Jin Asia Limited and its subsidiaries (collectively referred as the ‘‘Target Group’’)(the ‘‘Acquisition’’), assuming the transaction had been completed as at 30 June 2016, might have affected the financial position of the Group.

The Statement is prepared based on the unaudited consolidated statement of financial position of the Group as at 30 June 2016 as extracted from the interim report of the Group for the six months ended 30 June 2016, the audited consolidated statement of financial position of the Target Group as at 31 August 2016 as extracted from the Accountants’ Report set out in Appendix II of the circular after making certain pro forma adjustments resulting from the Acquisition.

The Statement is prepared based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes only. Accordingly, as a result of the nature of the Statement, it may not give a true picture of the actual financial position of the Group that would have been attained had the Acquisition actually occurred on 30 June 2016. Furthermore, the Statement does not purport to predict the Group’s future financial position.

The Statement should be read in conjunction with the historical financial information of the Group as set out in the published interim report of the Group for the six months ended 30 June 2016.

– V-1 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The Target The Enlarged The Group Group Group as at as at as at 30 June 31 August Pro forma 30 June 2016 2016 Total Adjustments 2016 (Unaudited) (Audited) Note 1 Note 2 Notes HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Non-current assets Property, plant and equipment 4,622 43,553 48,175 — 48,175 Investment properties ———231,000 5(a) 231,000 Goodwill 608,167 — 608,167 55,330 4,5(d) 663,497 Other intangible assets 100,223 880,394 980,617 — 980,617 Other deposits 47,123 — 47,123 — 47,123 Deposits paid for non-current assets 20,695 211,396 232,091 (211,396) 5(a) 20,695 Derivative financial assets ———38,902 5(b) 38,902 Deferred tax assets — 26,357 26,357 — 26,357

780,830 1,161,700 1,942,530 113,836 2,056,366

Current assets Trade and other receivables 415,448 1,022 416,470 — 416,470 Current tax assets 1,252 — 1,252 — 1,252 Bank and cash balances 166,424 125,872 292,296 (50,304) 9 241,992

583,124 126,894 710,018 (50,304) 659,714

Current liabilities Borrowings 21,061 — 21,061 — 21,061 Convertible bonds 277,919 — 277,919 — 277,919 Trade payables and other payables 84,053 52,320 136,373 5,000 6 141,373 Amount due to holding company — 118,000 118,000 (118,000) 5(c) — Consideration payable — 869,565 869,565 (869,565) 5(c) — Contingent consideration ———335,000 4 335,000 Deferred revenue 3,739 1,951 5,690 — 5,690 Current tax liabilities 21,071 — 21,071 — 21,071

407,843 1,041,836 1,449,679 (647,565) 802,114

Net Current Assets/(Liabilities) 175,281 (914,942) (739,661) 597,261 (142,400)

Net Assets Less Current Liabilities 956,111 246,758 1,202,869 711,097 1,913,966

– V-2 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The Target The Enlarged The Group Group Group as at as at as at 30 June 31 August Pro forma 30 June 2016 2016 Total Adjustments 2016 (Unaudited) (Audited) Note 1 Note 2 Notes HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Non-current liabilities Consideration payable — 88,638 88,638 — 88,638 Deferred revenue 638 — 638 — 638 Deferred tax liabilities 9,284 103,153 112,437 4,901 5(a) 117,338

9,922 191,791 201,713 4,901 206,614

Total Net Assets 946,189 54,967 1,001,156 706,196 1,707,352

Capital and reserves Share capital 38,408 — 38,408 36,502 4,7 74,910 4,5(a), Reserves 853,774 54,967 908,741 669,694 5(d),6,7 1,578,435

Equity attributable to owners of the Company 892,182 54,967 947,149 706,196 1,653,345 Non-controlling interests 54,007 — 54,007 — 54,007

Total Equity 946,189 54,967 1,001,156 706,196 1,707,352

Notes:

1. The financial information of the Group is extracted from the unaudited consolidated statement of financial position as at 30 June 2016, as set out in the published interim report of the Company for the six months ended 30 June 2016.

2. The financial information of the Target Group is extracted from the audited consolidated financial information of the Target Group as set out in the Appendix II to this circular. For the purpose of preparation of the unaudited pro forma financial information, all of the values of the consolidated financial information are rounded to nearest thousand (HK$’000) except otherwise indicated.

3. Pursuant to the Sale and Purchase Agreement, the total consideration of the Acquisition in HK$1,000,000,000 (the ‘‘Consideration’’) shall be satisfied by way of:

(i) HK$700,000,000 of the Consideration shall be paid by cash;

(ii) HK$150,000,000 shall be satisfied by allotting and issuing 2,419,354,838 Consideration Shares at HK$0.062 by the Company;

– V-3 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

(iii) the Retained Consideration, being initially HK$150,000,000, subject to Retained Consideration Adjustment as set out in the note (iii) (a) and (iii) (b), shall be satisfied by the allotment and issue by the Company of such number of Consideration Shares at the Issue Price to the Seller (or its nominee as designated by the Seller) on the Retained Consideration Release Date, provided that in the event that the Put Option has been exercised, the Purchaser shall no longer be obliged to pay the Retained Consideration.

(a) Retained Consideration Adjustment provided that Completion duly takes place in accordance with the Sales and Purchase Agreement, in the event that the 2018 Yacht Profit (as defined below) is less than HK$60,000,000, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by such amount as determined in accordance with the follow formula:

Retained Consideration = HK$150,000,000 – 2018 Yacht Profit Shortfall x 9

2018 Yacht Profit Shortfall = HK$60,000,000 – 2018 Yacht Profit

2018 Yacht Profit = Net profit after tax generated from the Yacht Club Business for the financial year ending 31 December 2018

(b) Retained Consideration Adjustment provided that Completion duly takes place in accordance with the Sales and Purchase Agreement, in the event that the 2018 School Profit (as defined below) is less than HK$17,500,000, the Retained Consideration to be paid by the Purchaser to the Seller shall be reduced by such amount as determined in accordance with the follow formula:

Retained Consideration = HK$150,000,000 – 2018 School Profit Shortfall x 16

2018 School Profit Shortfall = HK$17,500,000 – 2018 School Profit

2018 School Profit = Net profit after tax generated from the School Business for the financial year ending 31 December 2018

4. Hong Kong Financial Reporting Standard (‘‘HKFRS’’) 3 (Revised) ‘‘Business Combinations’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’) requires the consideration transferred in a business combination to be measured at fair value at the acquisition date. An analysis of the total estimated cost of the Acquisition assuming the Acquisition had taken place on 30 June 2016 is set out as follows:

Fair Value as at 30 June Face Value 2016 Note HK$’000 HK$’000

Cash 700,000 700,000

Consideration Shares (a) 150,000 338,710

Retained Consideration Payable (b) 150,000 335,000

Total 1,000,000 1,373,710

– V-4 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Note:

(a) For the purpose of the Statement, the fair value of the Consideration Shares at the date of completion is assumed to be HK$0.14 which represents the market share price of the Company per Consideration Share on 30 June 2016. As the fair value of the Consideration Shares at the date of completion may be substantially different from the closing price of the Company’sshares at 30 June 2016, the actual fair value of the consideration of the Acquisition may be different from those presented in the Statement.

Upon the issuance of the 2,419,354,838 Consideration Shares at value of HK$338,710,000 by the Company in connection with the Acquisition, the share capital and the reserves of the Company will be increased approximately HK$6,048,000 and HK$332,662,000 respectively.

(b) For the purpose of the Statement, the Retained Consideration Payable represented the market price of the Company’s share of HK$0.14 as at 30 June 2016 multiplied by the number of Consideration Shares (2,393,323,250 shares) to be issued under the Retained Consideration based on the assessment of the probability of the contingent consideration under various scenarios as at 30 June 2016. As the fair value of the Consideration Shares at Completion Date may be substantially different from the closing price of the Company’s shares at 30 June 2016 and the number of Consideration Shares to be issued under the Retained Consideration at Completion Date may be substantially different from the assessment of the probability of the contingent consideration under various scenarios as at 30 June 2016. As a result, the fair value of the Retained Consideration at Completion Date may be different from those presented in the Statement. The fair value of the Retained Consideration Payable at approximately HK$335,000,000 was estimated by Roma Appraisals Limited, an independent valuer, based on the assessment of the probability of the contingent consideration under various scenarios as at 30 June 2016. On Completion, the fair value of the Retained Consideration Payable will have to be reassessed at Completion Date.

5. The identifiable assets and liabilities of the Target Group acquired by the Group are accounted for in the Statement at fair value under the acquisition method in accordance with HKFRS 3 (Revised), which will also be adopted by the Group upon the Completion.

Note HK$’000

Assumed fair value of the Consideration 4 1,373,710

Presented by: Fair value of net assets acquired (a) 69,670 Put Option (b) 38,902 Assignment of an amount due to holding company (c) 882,000

Goodwill (d) 383,138

(a) Fair value of net assets to be acquired represents: HK$’000

Audited net assets of the Target Group at 31 August 2016 54,967 Fair value adjustment on: Investment properties 19,604 Deferred tax liabilities (4,901)

69,670

The above fair value adjustments as of 30 June 2016 have been determined by reference to the valuation reports issued by Roma Appraisals Limited, an independent valuer who has professional qualifications and relevant experience.

– V-5 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The other intangible asset represents the fair value of the Operating Right. The fair value of the other intangible asset is determined by discounting the projected net cash flows that are expected to be generated by the other intangible asset. The cash flows projections are based on the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. The carrying amount of the other intangible asset as of 31 August 2016 was HK$880,394,000.

For the purpose of the Statement, the Directors have assessed the other intangible asset impairment in accordance with Hong Kong Financial Reporting Standard 36 ‘‘Impairment of Assets’’. The management has estimated the recoverable amount based on the higher of fair value less costs of disposal and value in use of the underlying cash-generating units as at 31 August 2016. Based on the recoverable amount, there had no impairment loss been recognised as if the transaction had been completed as at 30 June 2016.

The deposits paid for non-current assets will be reclassified as investment properties upon Completion. As at 31 August 2016, the registration of ownership certificates of the investment properties were in the progress and the titles of ownership of the investment properties have not been transferred to the Target Group. The fair value of the investment properties is determined by open market value with reference to the valuation report issued by Roma Appraisals Limited, an independent valuer who has professional qualifications and relevant experience.

Deferred tax liabilities are calculated based on the 25% tax rate on the above fair value adjustments.

(b) Pursuant to the Sale and Purchase Agreement, the Group shall have the Put Option to, at the Group’s discretion, sell the entire issued shares in the Target Company to the Seller at any time within five calendar years after the Completion upon the Shenzhen Dapeng New District Management Committee or any other relevant governmental authority enforcing its rights under the Operation Entrustment Agreement for any breach of the Operation Entrustment Agreement by any member of the Target Group before the Completion. The fair value of the Put Option is determined with reference to the valuation report issued by Roma Appraisals Limited, an independent valuer who has professional qualifications and relevant experience.

(c) Assignment of an amount due to holding company represents the funds advanced by the holding company of the Target Company to the Target Group for the purpose of settlement of the consideration in relation to the acquisition of the entire equity interest in the Target PRC Company (the ‘‘PRC Consideration’’). As at 31 August 2016, the consideration payable to the vendor arising from the PRC Consideration (the ‘‘PRC Consideration Payable’’)is HK$869,565,000 and an amount of HK$118,000,000 has been advanced by the holding company of the Target Company to the Target Group. An aggregate amount of HK$762,000,000 has been further advanced and an additional amount of HK$2,000,000 will be advanced by the holding company of the Target Company to the Target Group for settlement of the PRC Consideration Payable. Pursuant to the Sale and Purchase Agreement, the amount of HK$882,000,000 (HK$118,000,000 + HK$762,000,000 + HK$2,000,000) due to the holding company of the Target Company will be assigned to the Company upon Completion Date. As if the transaction had been completed as at 30 June 2016, the advance of HK$764,000,000, the settlement of HK$869,565,000 and the assignment of HK$882,000,000 had been made.

(d) The adjustment represents the goodwill arising from the Acquisition provisionally determined based on the fair value of the identifiable assets and liabilities of the Target Group, the fair value of the Consideration Shares and the Retained Consideration on the Completion Date. For the purpose of the Statement, the goodwill of HK$383,138,000 arising from the Acquisition, which represents the amount by which the purchase consideration exceeds the fair value of the identifiable assets and liabilities of the Target Group to be acquired, is computed as if the transaction had been completed at 30 June 2016.

– V-6 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

AccordingtotheGroup’s accounting policy, after initial recognition, the goodwill will be measured at cost less any accumulated impairment losses. The goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, the goodwill is, from the Completion Date, allocated to the Group’s cash-generating units irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Further, impairment is determined by assessing the recoverable amount of the cash-generating units to which the goodwill relates. Where the recoverable amount of the cash-generating units is less than the carrying amount of the units, an impairment loss will be recognised by reducing the carrying amount of any goodwill allocated to the units at first.

For the purpose of the Statement, the Directors have assessed the goodwill impairment in accordance with Hong Kong Financial Reporting Standard 36 ‘‘Impairment of Assets’’.The management has estimated the recoverable amount based on the higher of fair value less costs of disposal and value in use of the underlying cash-generating units as at 31 August 2016. Based on the recoverable amount, an impairment loss on goodwill of HK$327,808,000 (HK$1,334,808,000, excluding the fair value of the Put Option, less HK$1,007,000,000) has been included in the Statement. The impairment loss was attributable to the difference between the Company’sissue price of the Consideration Shares stipulated in the Sale and Purchase Agreement compared to the share price as if completed on 30 June 2016. The Consideration Shares and Retained Consideration at issue price of HK$0.062 was arrived by the wholly-owned subsidiary of the Company and the seller after arm’s length negotiation and have been taken into consideration of various factors including the Subscriptions, the Placing, the prevailing share prices and the current market conditions. The Directors consider that the issue price to be fair and reasonable. As at 30 June 2016, the market price of the Company’s share was HK$0.14 which is significantly higher than the Company’s issue price of HK$0.062 as determined in the Sale and Purchase Agreement. The fair value of the Consideration Shares, Retained Consideration and the identifiable net assets of the Target Group will be reassessed at the Completion Date and accordingly, the goodwill amount and goodwill impairment loss (if any) may be different from the amounts presented in the Statement.

The recoverable amount of the 100% equity interest of the operating companies of the Target Group plus the fair value of the investment properties shall be HK$1,007,000,000 as at 31 August 2016 with reference to the valuation report issued by Roma Appraisals Limited, an independent valuer.

The Company will adopt consistent accounting policies and principal assumptions to assess the impairment of assets and goodwill of the Enlarged Group in the financial statements in the future.

6. The direct expenses of audit, legal, valuation and other professional services related to the Acquisition and for the purpose of the preparation of the circular are estimated to be HK$5,000,000.

7. On 19 September 2016, each of Origin Development Limited, Crystal Fount Investments Limited, Ms. Ai Qing and Ms. Zheng Kuanjian entered into a separate Subscription Agreement with the Company, pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, a total of 12,181,629,000 Subscription Shares at the Subscription Price of HK$0.062 per Subscription Share.

Each of the Acquisition and the Subscriptions is inter-conditional with each other. The Completion shall take place simultaneously with (or in any event immediately following) the Subscription Completion on the Completion Date.

Upon the issuance of the 12,181,629,000 Subscription Shares at value of HK$755,261,000 by the Company in connection with the Subscription, the share capital and the reserves of the Company will be increased approximately HK$30,454,000 and HK$724,807,000 respectively.

– V-7 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

8. The adjustment represents the settlement of cash consideration in HK$700,000,000 by the proceeds from issuance of Subscription Shares as if the transaction had been completed at 30 June 2016.

9. Reconciliation of pro forma adjustment on bank and cash balances:

Notes HK$’000

Further advanced from holding company of the Target Company 5(c) 764,000 Repayment of the PRC Consideration Payable in September 2016 5(c) (869,565) Issuance of Subscription Shares 7 755,261 Settlement of Cash Consideration 8 (700,000)

As per pro forma adjustment (50,304)

– V-8 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

B. ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, from the independent reporting accountant, RSM Hong Kong, Certified Public Accountants, Hong Kong.

29th Floor Lee Garden Two 28YunPingRoad Causeway Bay Hong Kong

30 November 2016

The Board of Directors New Sports Group Limited

Dear Sirs,

We have completed our assurance engagement to report on the compilation of pro forma financial information of New Sports Group Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The pro forma financial information consists of the pro forma statement of assets and liabilities as at 30 June 2016 (the ‘‘Statement’’)assetout on pages V-1 to V-8 of the investment circular issued by the Company. The applicable criteria on the basis of which the Directors have compiled the Statement are described in Appendix V on page V-1.

The Statement has been compiled by the Directors to illustrate the impact of the proposed acquisition of the 100% interest in Yue Jin Asia Limited and its subsidiaries on the Group’s financial position as at 30 June 2016 as if the transaction had been taken place at 30 June 2016. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s condensed financial statements as included in the interim report for the six months ended 30 June 2016, on which no audit or review report has been published.

– V-9 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Directors’ Responsibility for the Statement

The Directors are responsible for compiling the Statement in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (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 Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 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 Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Statement 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 Statement beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant plans and performs procedures to obtain reasonable assurance about whether the Directors have compiled the Statement in accordance with paragraph 29 of Chapter 4 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 Statement, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Statement.

The purpose of the Statement included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 June 2016 would have been as presented.

– V-10 – APPENDIX V UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

A reasonable assurance engagement to report on whether the Statement 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 Statement provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

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

. The Statement reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the Statement.

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 Statement 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 purposes of the Statement as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Yours faithfully, RSM Hong Kong Certified Public Accountants Hong Kong

– V-11 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

The following is the text of a letter, and valuation certificate, prepared for the purpose of incorporation in this Circular received from Roma Appraisals Limited, an independent valuer, in connection with its valuation as at 31 August 2016 of the Real Property to be acquired by New Sports Group Limited.

Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail [email protected] http://www.romagroup.com

30 November 2016

New Sports Group Limited Unit 2001, 20/F., Lippo Centre, Tower Two, No. 89 Queensway, Admiralty, Hong Kong

Dear Sir/Madam,

Re: Property Valuation of Blocks Nos. 1, 4, 16, 17, 18, 19 and 20 in a Composite Development situated at Chenyu Road East, Pingluo Road, Yuhong District, Shenyang City, Liaoning Province, the People’s Republic of China

In accordance with your instruction for us to value the property intended to be acquired by New Sports Group Limited (the ‘‘Company’’) and/or its subsidiaries (together with the Company referred to as the ‘‘Group’’)inthePeople’s Republic of China (the ‘‘PRC’’), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 31 August 2016 (the ‘‘Date of Valuation’’) for public documentation purpose.

1. BASIS OF VALUATION

Our valuation of the property is our opinion of the market value of the concerned property which we would define as intended to mean ‘‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’’.

Market value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

– VI-1 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

2. VALUATION METHODOLOGY

We have valued the property by the direct comparison approach assuming sale of the property in its existing state with the benefit of vacant possession and by making reference to comparable transactions as available in the relevant market.

3. TITLE INVESTIGATION

For the property in the PRC, we have been shown copies of extracts of various title documents and have been advised by the Group that no further relevant documents have been produced. However, we have not examined the original documents to verify the existing title to the property or any amendment, which may not appear on the copies handed to us. We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of your legal adviser. In the course of our valuation of the properties in the PRC, we have relied to a very considerable extent on the information given by the Group and the Group’s PRC legal advisor, Allbright Law Offices regarding the title to the property in the PRC. All documents have been used for reference only.

We have relied on the advice given by the Group that the Group has valid and enforceable title to the property which is freely transferable, and has free and uninterrupted right to use the same, for the whole of the unexpired term granted subject to the payment of annual government rent/land use fees and all requisite land premium/purchase consideration payable have been fully settled.

4. VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the owner sell the property in the market in its existing state without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to affect the value of such property.

In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the property and no allowance has been made for the property to be sold in one lot or to a single purchaser.

5. SOURCE OF INFORMATION

In the course of our valuation, we have relied to a very considerable extent on the information provided by the Group and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, identification of property, particulars of occupation, site/floor areas, ages of buildings and all other relevant matters which can affect the value of the property. All documents have been used for reference only.

We have no reason to doubt the truth and accuracy of the information provided to us. We have also been advised that no material facts have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

– VI-2 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

6. VALUATION CONSIDERATION

We have inspected the exterior and, where possible, the interior of certain property. No structural survey has been made in respect of the property. However, in the course of our inspection, we did not note any serious defects. We are not, however, able to report that the property is free from rot, infestation or any other structural defects. No tests were carried out on any of the building services.

We have not carried out on-site measurement to verify the site/floor areas of the property under consideration but we have assumed that the site/floor areas shown on the documents handed to us are correct. Except as otherwise stated, all dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by the Group and are therefore approximations.

No allowance has been made in our valuation for any charges, mortgages or amounts owingonthepropertynorforanyexpensesortaxationwhichmaybeincurredineffectinga sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

Our valuation is prepared in compliance with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, and in accordance with the HKIS Valuation Standards (2012 Edition) published by The Hong Kong Institute of Surveyors.

7. REMARKS

Unless otherwise stated, all monetary amounts stated in our valuation are in Renminbi (‘‘RMB’’) and Hong Kong Dollars (‘‘HK$’’). Where appropriate, the exchange rates we have adopted are HK$1.1617 to RMB1 as at the Date of Valuation.

Our Valuation Certificate is attached.

Yours faithfully, For and on behalf of Roma Appraisals Limited

Dr. Alan W K Lee Nancy Chan BCom (Property) MFin PhD(BA) BSc (Hons) MHKIS MRICS MHKIS RPS(GP) AAPI CPV CPV(Business) Senior Manager Director

Notes:

Dr. Alan W K Lee is a Registered Professional Surveyor (General Practice), a member of Hong Kong Institute of Surveyors and an Associate of Australian Property Institute. He has over 12 years’ valuation experience in Hong Kong, Macau, the PRC, the Asia Pacific Region, European countries and American countries.

Ms. Nancy Chan is a member of Hong Kong Institute of Surveyors and a member of the Royal Institution of Chartered Surveyors. She has over 6 years’ experience in real estate industry and property and asset valuation in Hong Kong, Macau, the PRC, Singapore, United Kingdom and other overseas countries.

– VI-3 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

VALUATION CERTIFICATE

Property intended to be acquired by the Group

Market Value in Existing State as at Particulars of 31 August Property Description and Tenure Occupancy 2016

Blocks Nos. 1, 4, 16, The property comprises 2 blocks of 6-storey Asadvisedbythe HK$231,000,000. 17, 18, 19 and 20 in a apartments and 5 blocks of 2-storey Group, the property composite development commercial blocks in a residential/commercial is currently vacant. situated at Chenyu composite development, known as ‘‘水岸康 Road East, Pingluo 城’’, erected on 2 parcels of land with a total Road, Yuhong District, site area of about 71,756.40 sq.m., completed Shenyang City, in about 2015 to 2016. Liaoning Province, The PRC The total gross floor area (‘‘GFA’’)ofthe property is about 18,848.85 sq.m.. Details of 中國 which are as follows: 遼寧省 瀋陽市 于洪區 Block No. GFA (sq.m.) 平羅街道 瀋于路東 1 3,270.40 之一個綜合發展項目中 4 3,247.32 第1、4、16、17、 16 3,648.32 18、19及20幢 17 1,280.82 18 1,280.82 19 2,837.92 20 3,283.25

Total 18,848.85

The land use rights of 2 parcel of lands of the property have been granted for mixed and urban residential uses for a term expiring on 6 December 2082. The land use rights of the commercial portion of the property has been granted for a term of 40 years expiring on 6 December 2052.

Notes:

1. Pursuant to 2 Land Use Rights Certificates, Shenyang Guo Yong (2013) Di Nos. 0000006 and 0000007 (瀋陽 國用(2013)第0000006及0000007號) both dated 24 January 2013 issued by The People’s Government of Shenyang City (瀋陽市人民政府), the property with a total site area of about 71,756.40 has been granted to Shenyang Baoneng Taisheng Estate Co. for a term expiring on 6 December 2082 for mixed and urban residential uses. The land use rights of the commercial portion of the property has been granted for a term of 40 years expiring on 6 December 2052.

2. Pursuant to Planning Permit of Construction Land, De Zi Di No. 210114201300002 (地字第 210114201300002號) dated 23 January 2013 issued by Yuhong Branch of Shenyang City Planning, Land and Resources Bureau (瀋陽市規劃和國土資源局于洪分局), the planning permit of the property with a site area of about 114,446.02 sq.m. has been granted to Shenyang Baoneng Taisheng Estate Co..

– VI-4 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

3. Pursuant to 2 Planning Permits of Construction Works, Jian Zi Di Nos. 210114201300026 and 210114201300040 (建字第210114201300026 及210114201300040號) dated 10 April 2013 and 25 June 2013 respectively issued by Yuhong Branch of Shenyang City Planning, Land and Resources Bureau (瀋陽市規劃 和國土資源局于洪分局), the planning permits of the property with a total construction area of about 149,973.15 sq.m. have been granted to Shenyang Baoneng Taisheng Estate Co..

4. Pursuant to 2 Commencement of Construction Works Permits, Nos. 210100201304221201 and 210100201308301301 dated 22 April 2013 and 30 August 2013 respectively issued by Yuhong Branch of Shenyang Urban and Rural Construction Committee (瀋陽市城鄉建設委員會), the construction permits of the property with a total construction area of about 149,973.15 sq.m. have been granted to Shenyang Baoneng Taisheng Estate Co..

5. Pursuant to 5 Commodity Housing Pre-Sale Permits issued by Shenyang City Real Estate Bureau, a total gross floor area of about 12,331.13 sq.m. and 72,803.17 sq.m. of the subject development, including the property were allowed to pre-sale for commercial use and residential use respectively.

6. Pursuant to 48 Sales and Purchase Agreements of Commodity Housing (商品房買賣合同) dated 24 August 2016 and 30 August 2016 respectively, the residential portion of the property with a total GFA of about 6,517.72 sq.m. is contracted to be purchased by Shenzhen Qianhai Virdom Education Investments Company Limited (深圳前海唯致教育投資有限公司), a wholly-owned subsidiary of the Target PRC Company (i.e. Shenzhen Yuejin Sports Company Limited), from Shenyang Baoneng Taisheng Estate Co. with a total consideration of RMB34,351,386.

7. Pursuant to 29 Sales and Purchase Agreements of Commodity Housing (商品房買賣合同) all dated 30 August 2016, the commercial portion of the property with a total GFA of about 12,331.13 sq.m. is contracted to be purchased by Shenzhen Ruiteng Enterprise Management Company Limited (深圳瑞騰企業管理有限公司), a wholly-owned subsidiary of the Target PRC Company, from Shenyang Baoneng Taisheng Estate Co. with a total consideration of RMB147,977,877.

8. The status of the title and grant of major approvals and licenses in accordance with the information provided to us are as follows:

Land Use Rights Certificates Yes Planning Permit of Construction Land Yes Planning Permits of Construction Works Yes Commencement of Construction Works Permits Yes Commodity Housing Pre-Sale Permits Yes Sales and Purchase Agreements of Commodity Housing Yes

9. Our inspection was performed by Ms. Nancy Chan, MHKIS, MRICS, B.Sc. (Surv) in August 2016.

10. We have been provided with a legal opinion on the title to the property issued by the Group’sPRClegal advisers, Allbright Law Offices, which contains, inter alia, the following information:

a. Shenzhen Ruiteng Enterprise Management Company Limited and Shenzhen Qianhai Virdom Education Investments Company Limited have been fulfilled the payment obligation under the Sales and Purchase Agreement of Commodity Housing (商品房買賣合同) on 13 July 2016 and agreed with Shenyang Baoneng Taisheng Estate Co. to register for real estate legal title transfer based on the recorded Sales and Purchase Agreement of Commodity Housing.

b. Shenyang Baoneng Taisheng Estate Co. has obtained the initial registration of the ownership for 48 residential properties on June 2016. As advised by the Shenzhen Yuejin Sports Company Limited, a Company within the Target Group, the 48 residential properties are in the process of real estate legal title transfer registration. The Certificates for Construction Completion of 29 commercial properties have not been obtained, therefore these properties could not have the condition to obtain initial registration of the ownership. However, the 29 commercial properties have completed the notice of the registration on October 2016. Therefore, there is no legal obstacle for Shenzhen Ruiteng Enterprise Management Company Limited and Shenzhen Qianhai Virdom Education Investments Company Limited to obtain a proper legal title of the property.

– VI-5 – APPENDIX VI VALUATION REPORT OF THE REAL PROPERTY

c. On 24 August 2016 and 30 August 2016, Shenyang Baoneng Taisheng Estate Co. Limited signed the sale and purchase agreements with Shenzhen Qianhai Virdom Education Investments Company and Shenzhen Ruiteng Enterprise Management Company Limited, each being a subsidiary of the Target PRC Company, pursuant to which:

i. Shenyang Baoneng Taisheng Estate Co. Limited has agreed to sell and Shenzhen Qianhai Virdom Education Investments Company has agreed to buy 2 blocks of 6 storey residential apartments in a residential/commercial composite development, known as ‘‘水岸康城’’;and

ii. Shenyang Baoneng Taisheng Estate Co. Limited has agreed to sell and Shenzhen Ruiteng Enterprise Management Company Limited has agreed to buy 5 blocks of 2 storey commercial blocks in a residential/commercial composite development, known as ‘‘水岸康城’’.

d. According to the Seller, the ownership certificate of the residential block of the Real Property is expected to the obtained by December 2016, while the inspection of the commercial block of the Real Properties is expected to be done before the end of 2016 and the registration of the title of the commercial block is expected to be done 6 months after the said inspection.

– VI-6 – APPENDIX VII REPORTS IN RELATION TO THE PROFIT FORECAST MADE IN THE VALUATIONS OF THE BUSINESSES

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, RSM Hong Kong, Certified Public Accountants, Hong Kong.

30 November 2016

INDEPENDENT ASSURANCE REPORT ON CALCULATIONS OF VALUATION OF 100% EQUITY INTERESTS IN DAPENG YACHT CLUB AND DAPENG EDUCATION AS AT 31 AUGUST 2016

TO THE DIRECTORS OF NEW SPORTS GROUP LIMITED

Dear Sirs,

We have examined the calculations of the discounted future estimated cash flows on which the valuation prepared by Roma Appraisals Limited dated 30 November 2016 of Shenzhen Dapeng Yacht Club Company Limited (‘‘Dapeng Yacht Club’’) and Shenzhen Dapeng International Education Company Limited (‘‘Dapeng Education’’) (hereinafter collectively referred to as the ‘‘Target Operating Companies’’) as at 31 August 2016 (the ‘‘Valuation’’) is based. The Valuation, based on the discounted future estimated cash flows, is regarded as a profit forecast under paragraph 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and will be included in a circular to be issued by New Sports Group Limited (the ‘‘Company’’)dated30 November 2016 (the ‘‘Circular’’).

Directors’ Responsibilities for the Discounted Estimated Future Cash Flows

The directors of the Company are responsible for the preparation of the discounted future estimated cash flows in accordance with the bases and assumptions determined by the directors as set out in Appendix VIII and IX of the Circular (the ‘‘Assumptions’’). This responsibility includes carrying out appropriate procedures relevant to the preparation of the discounted future estimated cash flows for the Valuation and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

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 Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

– VII-1 – APPENDIX VII REPORTS IN RELATION TO THE PROFIT FORECAST MADE IN THE VALUATIONS OF THE BUSINESSES

The firm applies Hong Kong Standard on Quality Control 1 issued by the HKICPA 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 Accountant’s Responsibilities

Our responsibility is to form an opinion on the arithmetical accuracy of the calculations of the discounted future estimated cash flows on which the Valuation is based and to report solely to you, as a body, as required by paragraph 29(2) of Appendix 1B of the Listing Rules, and for no other purpose. We accept no responsibility to any other person in respect of our work, or arising out of or in connection with our work. We are not reporting on the appropriateness and validity of the Assumptions on which the Valuation is based and our work does not constitute any valuation of the Target Operating Companies.

We conducted our work in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’ issued by the HKICPA. This standard requires that we plan and perform the assurance engagement to obtain reasonable assurance on whether the discounted future estimate cash flows, so far as the calculations are concerned, have been properly compiled in accordance with the Assumptions. We reviewed the arithmetical calculations and the compilation of the discounted future estimated cash flows in accordance with the Assumptions.

Because the Valuation relates to the discounted estimated future cash flows, no accounting policies of the Company have been adopted in its preparation. The Assumptions include hypothetical assumptions about future events and management actions which cannot be confirmed and verified in the same way as past results and these may or may not occur. Even if the events and actions anticipated do occur, actual results are still likely to be different from those used in the Valuation and the variation may be material. Accordingly we have not reviewed, considered or conducted any work on the completeness, reasonableness and the validity of the Assumptions and do not express any opinion whatsoever thereon.

Opinion

In our opinion, based on the foregoing, the discounted future estimated cash flows, so far as the calculations are concerned, has been properly compiled, in all material respects, in accordance with the Assumptions made by the directors of the Company.

Yours faithfully,

RSM Hong Kong Certified Public Accountants Hong Kong

– VII-2 – APPENDIX VII REPORTS IN RELATION TO THE PROFIT FORECAST MADE IN THE VALUATIONS OF THE BUSINESSES

The following is the text of the report prepared by the financial advisor to the Company, CVP Capital Limited, for the purpose of incorporation in this circular.

CVP Capital Limited 28/F., BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong

30 November 2016

To: The Directors New Sports Group Ltd. Unit 2001, 20/F Lippo Centre, Tower Two No 89 Queensway Admiralty, Hong Kong

Dear Sir or Madam,

We refer to the business valuations prepared by Roma Appraisals Limited in relation to the fair value of the entire equity interest in Shenzhen Dapeng International Education Company Limited and Shenzhen Dapeng Yacht Club Company Limited as at 31 August 2016 (the ‘‘Total Fair Value’’). Capitalised terms used herein shall have the same meanings as those defined in the circular of New Sports Group Limited dated 30 November 2016 (the ‘‘Circular’’) in this letter unless the context herein requires otherwise.

We note that the Total Fair Value, which has been developed based on discounted cash flow analysis, is regarded as a profit forecast under Chapter 14 of the Listing Rules.

We have reviewed the forecast upon which the Total Fair Value has been made and has discussed with the Company, the Target Group and Roma Appraisals Limited the information and documents provided by you which formed part of the basis and assumptions upon which the forecast has been prepared. We have also considered the independent assurance report from RSM Hong Kong, Certified Public Accountants, dated 30 November 2016 addressed to you as set out in Appendix VII to the Circular regarding the calculations upon which the forecast has been made.

– VII-3 – APPENDIX VII REPORTS IN RELATION TO THE PROFIT FORECAST MADE IN THE VALUATIONS OF THE BUSINESSES

On the basis of the foregoing, we are satisfied that the forecasts underlying the valuations, for which you as the Directors of the Company and the Target Group are solely responsible, have been made by you after due and careful enquiry.

Yours faithfully, For and on behalf of CVP Capital Limited Steven Tung Executive Director

– VII-4 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail [email protected] http://www.romagroup.com

30 November 2016

New Sports Group Limited Unit 2001, 20/F., Lippo Centre Tower 2, No. 89 Queensway Admiralty Hong Kong

Case Ref: AK/BVFIPPARE3431/APR16(a)

Dear Sir/Madam,

Re: Valuation of 100% Equity Interest in Shenzhen Dapeng Yacht Club Company Limited* (‘‘深圳大鵬遊艇會有限公司’’)

In accordance with the instructions from New Sports Group Limited (hereinafter referred to as the ‘‘Company’’) to us to conduct a business valuation on 100% equity interest in Shenzhen Dapeng Yacht Club Company Limited* (‘‘深圳大鵬遊艇會有限公司’’) (hereinafter referred to as ‘‘Business Enterprise 1’’), we are pleased to report that we have made relevant enquiries and obtained other information which we considered relevant for the purpose of providing you with our opinion of the market value of 100% equity interest in Business Enterprise1asat31August2016(hereinafterreferredtoasthe‘‘Date of Valuation’’).

This report states the purpose of valuation, scope of work, economic and industry overviews, an overview of Business Enterprise 1, basis of valuation, investigation and analysis, valuation methodology, major assumptions, information reviewed, limiting conditions, remarks and opinion of value. Assumptions and estimates employed in this valuation are included in the appendix of this report.

1. PURPOSE OF VALUATION

This report is prepared solely for the use of the directors and management of the Company. In addition, Roma Appraisals Limited (hereinafter referred to as ‘‘Roma Appraisals’’) acknowledges that this report may be made available to the Company for public documentation purpose only.

Roma Appraisals assumes no responsibility whatsoever to any person other than the Company in respect of, or arising out of, the contents of this report. If others choose to rely in any way on the contents of this report they do so entirely at their own risk.

– VIII-1 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

2. SCOPE OF WORK

Our valuation conclusion is based on the assumptions stated herein and information provided by the management of the Company, the management of Business Enterprise 1 and/or their representative(s) (together referred to as the ‘‘Management’’).

In preparing this report, we have had discussions with the Management in relation to the development and prospect of the yacht club industry in China, and the development, operations and other relevant information of Business Enterprise 1. As part of our analysis, we have reviewed such financial information and other pertinent data concerning Business Enterprise 1 provided to us by the Management and have considered such information and data as attainable and reasonable.

We have no reason to believe that any material facts have been withheld from us. However, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

We do not express an opinion as to whether the actual results of the business operation of Business Enterprise 1 will approximate those projected because assumptions regarding future events by their nature are not capable of independent substantiation.

In applying these projections to the valuation of Business Enterprise 1, we are making no representation that the business expansion will be successful, or that market growth and penetration will be realized.

3. ECONOMIC OVERVIEW

3.1 Overview of the Economy in China

According to the National Bureau of Statistics of China, the nominal gross domestic product (‘‘GDP’’) of China in the second quarter of 2016 was RMB34,063.7 billion, a year over year increase of 8.5% comparing to June 2015. China was the third largest economy in the world, ranked after the European Union and the United States, in terms of nominal GDP measured by the International Monetary Fund (‘‘IMF’’) in 2014. Despite the global financial crisis in late 2008, the Chinese economy continued to be supported by the Chinese government through spending in infrastructure and real estates.

Throughout 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports. China’s economy rebounded quickly in 2010, outperforming all other major economies with robust GDP growth and the economy remained in strong growth since 2011.

– VIII-2 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Over the past five years from 2011 to 2015, compound annual growth rate of China’s nominal GDP was 11.0% whereas the Chinese government targeted to grow its GDP by around 7.0% annually for the period from 2011 to 2015. Figure 1 illustrates the nominal GDP of China from 2011 to the second quarter of 2016.

Figure 1 — China’s Nominal GDP from 2011 to Second Quarter of 2016

billion RMB

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 2011 2012 2013 2014 2015 2016 Q2

Source: National Bureau of Statistics of China, as extracted from the official website of National Bureau of Statistics of China as at 19 October 2016

3.2 Inflation in China

Tackling inflation problem has long been the top priority of the Chinese government as high prices are considered as one of the causes of social unrest. For such a fast-growing economy, the middle-class’ demand for food and commodities has been rising continuously. Inflation in China has been driven mainly by food prices, which have been stayed high in 2011. According to the National Bureau of Statistics of China, the consumer price index (‘‘CPI’’) demonstrated an uptrend in the first half of 2011. Thanks to the government’s policies in suppressing commodity prices, the inflation in CPI slowed in the second half of 2011 and first half of 2012 and maintained at around 2.0% to 3.2% during 2013. During 2014, the CPI dropped and reached 1.5% in December 2014. During first half of 2015, the CPI maintained at around 0.8% to 1.5%, and fluctuated around 1.3% to 2.0% in second half of 2015. In 2016, the CPI dropped from 2.3% to 1.9%. Figure 2 shows the year-over-year change in CPI of China from June 2013 to June 2016.

– VIII-3 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Figure 2 — Year-over-year Change in China’s CPI from June 2013 to June 2016

% 3.5

3

2.5

2

1.5

1

0.5

0 Jul Oct Jan Apr Jul Oct Jan Apr July Oct Jan Apr 2014 2015 2016

Source: Bloomberg, extracted as at 19 October 2016

China’s inflation rate was volatile during the past decade. According to the IMF, the inflation rate in China increased from 2.8% in 2006 to 6.5% in 2007, and then dropped to 1.2% and 1.9% in 2008 and 2009 respectively. The inflation rate increased to 4.6% in 2010 and maintained at 4.1% in 2011. The inflation rate dropped again to 2.5% in 2012 and 2013, and further to 1.8% in 2014. Finally, it maintained at 1.8% in 2015. Figure 3 shows the historical trend of China’s inflation rate from 2006 to 2015.

– VIII-4 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Figure 3 — China’s Inflation Rate from 2006 to 2015

% 7

6

5

4

3

2

1

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: International Monetary Fund, as extracted from Bloomberg as at 19 October 2016

4. INDUSTRY OVERVIEW

4.1 Yacht Club Industry in China

Yacht club business is correlated with the number of yachts served. According to the research from Fortune Character Institute, compared with 5 years ago, the number of yachts imported to China has increased significantly. Figure 4 illustrates the number of yachts imported to China from 2008 to 2013.

– VIII-5 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Figure 4 — Number of Yachts Imported to China from 2008 to 2013

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 2008 2009 2010 2011 2012 2013

Source: Fortune Character Institute, 2014

Note: Fortune Character Institute is a research, training and consulting group in China. It provides researches in the lifestyle of wealthy people in China and consultancy services in luxury industry. Apart from issuing the China Yacht Report 2014, it also released studies in wine, watch, automotive, aviation, health, art, real estate, jewelry, and investments area.

According to the research from Fortune Character Institute in 2014, there were 128 yacht clubs in China. Most of them are located at coastal cities with GDP per capita over USD8,000. Figure 5 and 6 show the distribution of yacht clubs in the top 5 cities in China and their respective GDP per capita in 2014.

Figure 5 — Distribution of Yacht Clubs in the Top 5 Cities in China in 2014

Shanghai Sanya Tsingtao Dalian Tianjing

Number of yacht clubs 24 15 15 11 7

Source: Fortune Character Institute, 2014

– VIII-6 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Figure 6 — GDP per Capita for Top 5 China Cities in China in 2015

USD 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Shanghai SanyaTsingtao Dalian Tianjin

Source: www.phbang.cn, as extracted as at 19 October 2016

4.2 Policy Support

Yacht club industry is recently supported by Chinese government’s policy. Guangdong government published Guang Dong Bin Hai Tourism Development Scheme (2011–2020)* (‘‘廣 東省濱海旅遊發展規劃 (2011–2020)’’) to show the support in developing coastal tourism in Guangdong province. The government suggested developing yacht clubs in Guangzhou Nansha, Bio-Island, Zhuhai Pingsha and Shenzhen Dapang Bay. The policy also suggested promoting and developing watersports industry in the province.

In August 2015, the State Council of China published Several Opinions of the State Council on Promoting the Reform and Development of the Tourism Industry* (‘‘國務院關於促 進旅遊業改革發展的若干意見’’). The State Council proposed to develop yacht travel industry in mass market by simplifying the registration procedures of yacht, lowering the cost of travelling, berthing, maintenance and encouraging the development of yacht marina.

5. BUSINESS ENTERPRISE 1

Business Enterprise 1 engaged in the management of the yacht club, namely, Dapeng Yacht Club (大鵬遊艇會)inDapengPeninsula(大鵬半島), Shenzhen, which is engaged in the provision of services of yacht club management, yacht parking, yacht leasing, teaching courses of yacht driving and diving and members accommodations. Business Enterprise 1 is operating a yacht club located at the Shenzhen Marine Sports Base and Sailing School.

An agreement dated 27 August 2014 (as supplemented and amended by a supplemental agreement dated 13 October 2014) was entered into between Shenzhen Yuejin Investment Company Limited* (深圳粵錦投資有限公司) (currently known as Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)), an indirect investment holding company of Business Enterprise 1 and Shenzhen Dapeng New District Management Committee* (深圳市大

– VIII-7 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

鵬新區管理委員會) in relation to the entrustment of operation of Shenzhen marine sports base and sailing school by Shenzhen Dapeng New District Management Committee* to Shenzhen Yuejin Investment Company Limited* or its subsidiaries (hereinafter referred to as the ‘‘Operation Entrustment Agreement’’).

Under the Operation Entrustment Agreement, the operation of Shenzhen Marine Sports Base and Sailing School has been entrusted by Shenzhen Dapeng New District Management Committee to Shenzhen Yuejin Investment Company Limited or its subsidiaries for a term of 20 years.

6. BASIS OF VALUATION

Our valuation is conducted on a market value basis. According to the International Valuation Standards established by the International Valuation Standards Council in 2011, market value is defined as ‘‘the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion’’.

7. INVESTIGATION AND ANALYSIS

Our investigation included discussions with members of the Management in relation to the development, operations and other relevant information of Business Enterprise 1. In addition, we have made relevant inquiries and obtained further information and statistical figures related to the yacht club industry in China as we considered necessary for the purpose of the valuation.

As part of our analysis, we have reviewed such financial information and other pertinent data concerning Business Enterprise 1 provided to us by the Management and have considered such information and data as attainable and reasonable.

The valuation of Business Enterprise 1 requires consideration of all pertinent factors, which may or may not affect the operation of the business and its ability to generate future investment returns. The factors considered in our valuation include, but are not necessarily limited to, the following:

. The nature and prospect of Business Enterprise 1;

. The financial condition of Business Enterprise 1;

. The economic outlook in general and the specific economic environment and market elements affecting the business, industry and market;

. Relevant licenses and agreements;

. The business risks of Business Enterprise 1 such as the ability in maintaining competent technical and professional personnel; and

– VIII-8 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

. Investment returns and market transactions of entities engaged in similar lines of business.

8. VALUATION METHODOLOGY

There are generally three accepted approaches to obtain the market value of Business Enterprise 1, namely the Market-Based Approach, Income-Based Approach and Asset-Based Approach. Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the most commonly adopted practice in valuing business entities that are similar in nature.

8.1 Market-Based Approach

The Market-Based Approach values a business entity by comparing prices at which other business entities in a similar nature changed hands in arm’s length transactions. The underlying theory of this approach is that one would not pay more than one would have to for an equally desirable alternative. By adopting this approach, the valuer will first look for valuation indication of prices of other similar business entities that have been sold recently.

The right transactions employed in analyzing indications of values need to be sold at an arm’s length basis, assuming that the buyers and sellers are well informed and have no special motivations or compulsions to buy or to sell.

8.2 Income-Based Approach

The Income-Based Approach focuses on the economic benefits due to the income producing capability of the business entity. The underlying theory of this approach is that the value of the business entity can be measured by the present worth of the economic benefits to be received over the useful life of the business entity. Based on this valuation principle, the Income-Based Approach estimates the future economic benefits and discounts them to their present values using a discount rate appropriate for the risks associated with realizing those benefits.

Alternatively, this present value can be calculated by capitalizing the economic benefits to be received in the next period at an appropriate capitalization rate. This is subject to the assumption that the business entity will continue to maintain stable economic benefits and growth rate.

8.3 Asset-Based Approach

The Asset-Based Approach is based on the general concept that the earning power of a business entity is derived primarily from its existing assets. The assumption of this approach is that when each of the elements of working capital, tangible and intangible assets is individually valued, their sum represents the value of a business entity and equals to the value of its

– VIII-9 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED invested capital (‘‘equity and long term debt’’). In other words, the value of the business entity is represented by the money that has been made available to purchase the business assets needed.

This money comes from investors who buy stocks of the business entity (‘‘equity’’)and investors who lend money to the business entity (‘‘debt’’). After collecting the total amounts of money from equity and debt, and converted into various types of assets of the business entity for its operation, their sum equals the value of the business entity.

8.4 Business Valuation

In the process of valuing Business Enterprise 1, we have taken into account the operation and financial information of Business Enterprise 1 and conducted discussions with the Management to understand the status and prospect of Business Enterprise 1 and the yacht club industry it is participating. Also, we have considered the accessibility to available data and relevant market transactions in choosing among the valuation approaches.

The Market-Based Approach was not adopted in this case because most of the important assumptions of the comparable transactions, such as discount or premium on the transaction prices or considerations, were not readily available. Also, since Business Enterprise 1 recorded net loss in the past financial years and only commenced its operation in 2016, it was in development stage as at the Date of Valuation, there would be limited track record and its historical financial performance would not be indicative for the market value of Business Enterprise 1 if price multiples (e.g. price-to-sales, price-to-earnings and price-to-book) under guideline public company method of the Market-Based Approach were adopted. Hence, the Market-Based Approach was not adopted. The Asset-Based Approach was also not adopted because it could not capture the future earning potential and thus market value of Business Enterprise 1.

We considered that adopting the Income-Based Approach could take into account of the future development and capital expenditure of Business Enterprise 1, as well as capture the growth potential of the in view of the rapid development of the yacht club industry as advised by the Management. Therefore, we considered that the Income-Based Approach would be the most appropriate approach in arriving at the market value of Business Enterprise 1.

8.4.1 Discounted Cash Flow

Under the Income-Based Approach, we have adopted the discounted cash flow (‘‘DCF’’) method, which is based on a simple reversal calculation to restate all future cash flows in present terms. Expected free cash flow is the net change in cash generated by the operations of

– VIII-10 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED a business during a reporting period, which could be calculated by adding back non-cash item(s) to its net profit, minus cash outlays for working capital and capital expenditures during the same period. The expected free cash flow for each year was determined as follows:

Expected Free Cash Flow = Net Profit + Depreciation – Change in Net Working Capital – Capital Expenditure

The present value of the expected free cash flows was calculated as follows:

PVCF = CF1 + CF2 + ... + CFn (1 + r)1 (1 + r)2 (1 + r)n

In which

PVCF = Present value of the expected free cash flows;

CF = Expected free cash flow;

r = Discount rate; and

n = Number of years.

To adopt this method, we obtained the weighted average cost of capital (‘‘WACC’’)of Business Enterprise 1 as a basic discount rate. WACC of Business Enterprise 1 is the minimum required return that Business Enterprise 1 must earn to satisfy its various capital providers including shareholders and debt holders. WACC calculation takes into account the relative weights of debt and equity. It is computed using the formula below:

WACC = We x Re + Wd x Rd x(1– Tc)

In which

Re =Costofequity;

Rd =Costofdebt;

We = Weight of equity value to enterprise value;

Wd = Weight of debt value to enterprise value; and

Tc = Corporate tax rate.

– VIII-11 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

8.4.2 Cost of Debt

The cost of debt was determined by the expected borrowing rate of Business Enterprise 1. Since the interest expenses paid on debts are tax-deductible for Business Enterprise 1, the cost of Business Enterprise 1 to get debt funds is less than the required rate of return of the suppliers of the debt capital. The after-tax cost of debt was calculated by multiplying one minus the corporate tax rate by the cost of debt.

8.4.3 Cost of Equity

The cost of equity was determined using the Capital Asset Pricing Model (‘‘CAPM’’), which describes the relationship between the risk of Business Enterprise 1 and expected return to investors. It is calculated by the following formula:

Re =Rf + b x MRP+ORP+SP

In which

Re =Costofequity;

Rf = Risk-free rate;

b = Beta coefficient;

MRP = Market Risk Premium;

ORP = Other Risk Premium; and

SP = Size Premium.

8.4.4 Discount Rate

In the process of determining the WACC, we adopted several listed companies with business scopes and operations similar to those of Business Enterprise 1 as comparable companies. The comparable companies were selected mainly with reference to the following selection criteria:

. The companies are principally engaged in the yacht businesses;

. The companies have sufficient trading and operating histories; and

. The financial information of the companies is available to the public.

Due to scarcity of comparable companies listed in Hong Kong that have similar business operations in China or Asia, we have expanded our selection criteria to companies principally engaged in the yacht businesses worldwide.

– VIII-12 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Although the comparable companies selected from the aforementioned criteria may not be operating in the same geographical segment as Business Enterprise 1, we are of the opinion that Business Enterprise 1 would be subject to similar industry risks as those comparable companies. We also noted that Business Enterprise 1 is currently in preliminary operational stage which would be different from the comparable companies; therefore other risk premium was considered in arriving at the WACC of Business Enterprise 1.

According to the aforementioned selection criteria and under best-effort basis, five comparable companies were selected and adopted. Details of the exhaustive list of the comparable companies adopted were illustrated as follows:

Trading Company Name Stock Code Location Business Description

Kiriakoulis KYRI.GA Greece Kiriakoulis Mediterranean Cruises Shipping Mediterranean SA, a yachting company, leases leisure Cruises Shipping vessels. The company leases catamarans and SA other sailboats manufactured by Gibert Marine and Fountaine Pajot.

Marina a.d. Bar MARB.ME Montenegro Marina a.d. Bar provides tourist service. The company operates a marina offering services as the links for the yachts and boats, renting of yachts, boats, and cars, supply of water, fuel, and food, among others.

ClubCorp Holdings, MYCC.US United States ClubCorp Holdings, Inc. operates as a Inc. membership-based leisure business. The company owns and operates private golf, country, business, sports and alumni clubs in North America.

Camper & CNMI.LN London Camper & Nicholsons Marina Investments Nicholsons Marina Limited acquires, develops, redevelops and Investments operates marinas and marina related real Limited estate.

Adriatic Croatia ACIRA.CZ Croatia Adriatic Croatia International Club dd Opatija International Club operates marinas along the Adriatic coast of dd Opatija Croatia.

Source: Bloomberg

– VIII-13 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

We are of the opinion that it is fair and representative to adopt the above list of the five comparable companies in the valuation.

Below is the summary of the key parameters of the WACC of Business Enterprise 1 adopted as at the Date of Valuation:

As at 31 August Key Parameters 2016

(a) Risk-free Rate 2.81% (b) Market Risk Premium 10.66% (c) Beta Coefficient 1.01 (d) Size Premium 3.58% (e) Other Risk Premium 7.00% (f) CostofEquity=(a)+(b)*(c)+(d)+(e) 24.16% (g) Cost of Debt 11.90% (h) Weight of Equity Value to Enterprise Value 46.39% (i) Weight of Debt Value to Enterprise Value 53.61% (j) Corporate Tax Rate 25.00%

WACC (Rounded) 16.00%

Notes:

(a) The risk-free rate adopted was the yield rate of the China government 10-year note as at the Date of Valuation as extracted from Bloomberg.

(b) The market risk premium adopted was the difference between the market expected return in China as at the Date of Valuation and the risk-free rate adopted, which were both extracted from Bloomberg.

(c) The beta coefficient adopted was the median adjusted beta of the comparable companies as sourced from Bloomberg.

(d) The size premium adopted was adopted with reference to the size premium study published by Duff & Phelps, LLC.

(e) The other risk premium adopted was to reflect the business risks of Business Enterprise 1, which included the future competition within the yacht club industry in China and the uncertainty in the financial forecast. A number of yacht clubs are located in area close to the yacht club operated by Business Enterprise 1. Given that Business Enterprise 1 was still in a relatively preliminary operational stage, it may be facing competition susceptible to factors such as price, brand recognition, availability and selection, which may lead to adverse impact on its profit margins and results of operations. There is also uncertainty in financial forecast as insufficient track record of Business Enterprise 1 were available in which the assumptions estimated by the Management in running the business may not be achieved as expected.

(f) The cost of equity was determined based on CAPM with reference to section 8.4.3 of this report.

(g) The cost of debt adopted was China above 5-year benchmark lending rate as sourced from Bloomberg plus other risk premium considered in (e).

– VIII-14 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

(h) The weight of equity value to enterprise value adopted was derived from the median debt-to-equity ratio of the comparable companies as at the Date of Valuation as extracted from Bloomberg.

(i) The weight of debt value to enterprise value adopted was derived from the median debt-to-equity ratio of the comparable companies as at the Date of Valuation as extracted from Bloomberg.

(j) The corporate tax rate adopted was the corporate tax rate in China.

Hence, we adopted the WACC of 16.00% as the discount rate of Business Enterprise 1 as at the Date of Valuation.

8.4.5 Marketability Discount

The marketability discount was the percentage difference between the private placement price per share and the market trading price per share. Compared to similar interest in public companies, ownership interest is not readily marketable for closely held companies. Therefore, the value of a share of stock in a privately held company is usually less than an otherwise comparable share in a publicly held company. We have made reference to the 2016 edition of the FMV Restricted Stock Study Companion Guide (the ‘‘Guide’’) by FMV Opinions, Inc., one of the national preeminent firms offering a broad range of financial advisory services to private and public companies. According to the Guide, a total of 736 private placement transactions of unregistered common stock issued by publicly traded companies from July 1980 through September 2015 were examined. With reference to the Guide, we have adopted the median marketability discount for the 736 transactions of 16.11% in arriving at the market value of Business Enterprise 1 as at the Date of Valuation.

9. MAJOR ASSUMPTIONS

We have adopted certain specific assumptions in our valuation and the major ones are as follows:

. The valuation was performed based on a discounted cash flow method under the income-based approach with financial forecasts provided by the Management, covering a period of approximately 18 years from the Date of Valuation with reference to the Operation Entrustment Agreement. Long-term growth rate of 2.4% was adopted based on the latest 5-year average of China’s long term inflation as sourced from International Monetary Fund. We are of the opinion that the valuation, based on the financial forecasts covering a period of 18 years from the Date of Valuation, is fair and reasonable, based on the following reasons:

(a) As the operating right of Business Enterprise 1 in relation to the Operation Entrustment Agreement would be up to year 2034, we are of the opinion that applying terminal value with a five-year forecast under the going concern premise, would not be appropriate for valuing the equity interest in Business Enterprise 1.

– VIII-15 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

(b) Based on our understanding of the business/operation cycle of a yacht club business in general, it is not uncommon for yacht clubs having an operation history of 18 years or above.

(c) Although the financial forecast has covered a period of around 18 years, we noted that the Management has applied a stable growth rate of 2.4% to the financial forecast since 2022, which we considered as fair and prudent.

(d) The valuation was performed based on generally accepted procedures. The basis and valuation approach adopted were considered as fair and reasonable.

. The valuation was mainly based on the projections of the future cash flows as provided by the Management. The projections outlined in the financial information provided are reasonable, reflecting market conditions and economic fundamentals, and will be materialized;

. In respect of the breach of certain terms of the Operation Entrustment Agreement, Shenzhen Dapeng New District Management Committee may (i) bring action against Shenzhen Yuejin Investment Company Limited* (or its subsidiaries) for damages, (ii) terminate the Operation Entrustment Agreement, and/or (iii) revoke and cancel the entrustment of operation of Shenzhen marine sports base and sailing school to Shenzhen Yuejin Investment Company Limited* (or its subsidiaries) (collectively referred to as the ‘‘Events’’). As at the Date of Valuation, the Management did not aware of any of the above Events, our valuation was performed based on the assumption that the Events would not occur during the contractual period of the Operation Entrustment Agreement;

. The valuation was performed based on the audited financial statements of Business Enterprise 1 as at 31 August 2016;

. The revenue of Business Enterprise 1 from non-members was taken into consideration in the projections of future cash flows as provided by the Management;

. Compared to similar interest in public companies, ownership interest is not readily marketable for private companies. Hence, a marketability discount of 16.11% was applied to the valuation result. The marketability discount was adopted by making reference to the study in the FMV Restricted Stock Study Companion Guide published by FMV Opinions, Inc. in 2016;

. Discount rate of 16.00% was adopted for Business Enterprise 1, which was the estimated weighted average cost of capital of Business Enterprise 1 with reference to comparable companies engaged in similar businesses;

. Working capital projection was estimated with reference to working capital turnover days of the comparable companies of Business Enterprise 1;

. The businesses of Business Enterprise 1 will be operated and developed as planned;

– VIII-16 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

. All relevant legal approvals and business certificates or licenses to operate the business in the localities in which Business Enterprise 1 operates or intends to operate would be officially obtained and renewable upon expiry;

. There will be sufficient supply of technical staff in the industry in which Business Enterprise 1 operates, and Business Enterprise 1 will retain competent management, key personnel and technical staff to support its ongoing operations and developments;

. There will be no major change in the current taxation laws in the localities in which Business Enterprise 1 operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;

. There will be no major change in the political, legal, economic or financial conditions in the localities in which Business Enterprise 1 operates or intends to operate, which would adversely affect the revenues attributable to and profitability of Business Enterprise 1; and

. Interest rates and exchange rates in the localities for the operation of Business Enterprise 1 will not differ materially from those presently prevailing.

10. INFORMATION REVIEWED

Our opinion requires consideration of relevant factors affecting the market value of Business Enterprise 1. The factors considered included, but were not necessarily limited to the following:

. The audited financial statements of Business Enterprise 1 dated 31 August 2016;

. Financial forecasts of Business Enterprise 1;

. Business licenses of Business Enterprise 1;

. The audited financial statements of Business Enterprise 1 in 2014 and 2015;

. Market trends of the yacht club industry in China; and

. General descriptions in relation to Business Enterprise 1.

We have discussed the details with the Management. We have also conducted research from various sources to verify the reasonableness and fairness of information provided and we believe that such information is reasonable and reliable. We have assumed the accuracy of informationprovidedandreliedonsuchinformation to a considerable extent in arriving at our opinion of value.

– VIII-17 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

11. LIMITING CONDITIONS

The valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events or circumstances have not been considered and we are not required to update our report for such events and conditions.

We would particularly point out that our valuation was based on the information such as the company background, business nature and market share of Business Enterprise 1 provided to us.

To the best of our knowledge, all data set forth in this report are reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis are gathered from reliable sources; yet, no guarantee is made nor liability assumed for their accuracy.

We have relied on the historical and/or prospective information provided by the Management and other third parties to a considerable extent in arriving at our opinion of value. The information has not been audited or compiled by us. We are not in the position to verify the accuracy of all information provided to us. However, we have had no reason to doubt the truth and accuracy of the information provided to us and to doubt that any material facts have been omitted from the information provided. No responsibilities for the operation and financial information that have not been provided to us are accepted.

We assumed that the Management is competent and perform duties under the company regulation. Also, ownership of Business Enterprise 1 was in responsible hands, unless otherwise stated in this report. The quality of the Management may have direct impact on the viability of the business as well as the market value of Business Enterprise 1.

We have not investigated the title to or any legal liabilities of Business Enterprise 1 and have assumed no responsibility for the title to Business Enterprise 1 appraised.

Our conclusion of the market value was derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. The conclusion and various estimates may not be separated into parts, and/or used out of the context presented herein, and/or used together with any other valuation or study.

We assume no responsibility whatsoever to any person other than the directors and the Management in respect of, or arising out of, the content of this report. If others choose to rely in any way on the contents of this report, they do so entirely at their own risk.

The working papers and models for this valuation are being kept in our files and would be available for further references. We would be available to support our valuation if required. The title of this report shall not pass to the Company until all professional fee has been paid in full.

– VIII-18 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

12. REMARKS

Unless otherwise stated, all monetary amounts stated in this valuation report are in Hong Kong Dollar (HKD). The exchange rate of CNY1:HKD1.1617 applied to the valuation was sourced from Bloomberg as at the Date of Valuation.

We hereby confirm that we have neither present nor prospective interests in the Company, Business Enterprise 1 and their associated companies, or the values reported herein.

13. OPINION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed, the market value of 100% equity interest in Business Enterprise 1 as at the Date of Valuation, in our opinion, was reasonably stated as HKD496,000,000 (HONG KONG DOLLARS FOUR HUNDRED AND NINETY SIX MILLION ONLY).

Yours faithfully, For and on behalf of Roma Appraisals Limited Kelvin Luk ICVS Director

Note:

Mr. Luk is a member of the International Association of Consultants, Valuators and Analysts (IACVA). Mr. Luk has over ten years of experience in valuation and consultation. Mr. Luk has conducted and supervised several valuation projects on various assets of companies for various listed companies of the Stock Exchange which are principally engaged in business sectors similar to Shenzhen Dapeng Yacht Club Company Limited and Shenzhen Dapeng International Education Company Limited.

– VIII-19 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

APPENDIX — ASSUMPTIONS AND ESTIMATES

The following assumptions were estimated by the Management:

1. BUSINESS MODEL

. The primary revenue sources of Business Enterprise 1 are as follows:

. Membership-related income;

. Clubhouse and accommodation;

. Rental service;

. Sports activities; and

. Others.

. The projection of cash flow was assumed to be covering the period from the Date of Valuation to 2034, which matched the expiry of the operating right of Business Enterprise 1.

. As advised by the Management, the development of Business Enterprise 1 would become stable since 2022. Since Business Enterprise 1 operated in China, historical average 5-year inflation rate in China of 2.4% as sourced from the International Monetary Fund was adopted for the projection since 2022.

2. REVENUE

. The projected revenue was sourced from membership-related income, clubhouse and accommodation, rental service, sports activities and others.

2.1. Membership-related Income

. Approximately 70% of revenue in 2017 came from membership-related income including membership fees, membership management fees, yacht berthing fees and maintenance fees.

. Membership fees were charged to 4 categories of members, namely (a) water berth membership, (b) land storage membership, (c) consumer card membership and (d) business membership. Membership fees were calculated from the estimated number of members and the estimated amount of membership fees for each category of members. The membership fees for each category of members were based on the draft contract provided by the Management. It was estimated to be approximately RMB49,400,000, RMB55,900,480, RMB149,742,364, RMB38,700,022 and RMB31,935,688 in 2017, 2018, 2019, 2020 and 2021 respectively.

– VIII-20 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

. According to the research performed by the Management, the membership fees of the yacht club nearby, namely Vanke Longcheer Yacht Club (‘‘萬 科浪騎遊艇會’’), Shenzhen Marina Club (‘‘大梅沙灣遊艇會’’), Shenzhen Bay Marina Club (‘‘深圳灣遊艇會’’) and Sevenstar Yacht Club (‘‘七星灣 遊艇會’’) were ranged from RMB50,000 to RMB3,000,000 in general depending on factors such as rights enjoyed by the members and years of membership.

. The expected membership fee of each category of members in Business Enterprise 1 was derived from the membership fee in the aforementioned yacht club under similar categories as determined by the Management.

Expected fees of different categories of membership in Business Enterprise 1in2017

(a) Water Berth (b) Land Storage (c) Consumer Card Member Member Member (d) Business Member (RMB) (RMB) (RMB) (RMB)

Fee 880,000 100,000 60,000 (5-year 80,000 (5-year membership) membership)

Reference of range 720,000–3,000,000 80,000–200,000 50,000–100,000 280,000 (2-year of fees of yacht (3-year membership) membership)–380,000 clubs nearby (3-year membership) with membership rights similar to categories of membership in Business Enterprise 1

Characteristics of Members have the right Members have the right Members can use the Members can use the the membership to berth their yacht on to lift their yacht for facilities with family facilities with employees the sea and use the storage and use the members but do not have but do not have the right facilities. facilities. the right to berth their to berth their yacht. yacht.

Source: the Management

As advised by the Management, the membership fees adopted were within the range of its comparable companies and it was assumed to be lower than some of the comparable companies in order to attract the expected increase in number of members in yacht clubs.

– VIII-21 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

Expected number of members of different categories

Cumulative Cumulative Cumulative Number of Cumulative Number of Number of Water Berth Number of Land Consumer Card Business Year Members Storage Members Members Members

201740507060 2018 80 100 170 160 2019 185 200 470 360 2020 185 200 770 560 2021 185 200 1,020 710 2022 185 200 1,206 798 2023 185 200 1,336 858 2024 185 200 1,376 878 2025 185 200 1,396 878 2026 185 200 1,396 898 2027 185 200 1,395 918 2028 185 200 1,399 936 2029 185 200 1,381 942 2030 185 200 1,367 952 2031 185 200 1,357 958 2032 185 200 1,346 965 2033 185 200 1,112 787 2034 185 200 790 561

As advised by the Management, based on their understanding in the yacht club industry, the industry ratio of number of water berth members to the number of water berths was approximately 1.8. As there would be 103 water berths to be provided by Business Enterprise 1, therefore the expected number of water berth members was 185. The industry ratio of land storage members to the number of land storage was approximately 1.0. As there would be 200 land storages to be provided by Business Enterprise 1, therefore Business Enterprise 1 would expect to serve 200 land storage members. It was expected that the expected number of these members would be reached in 2018.

For consumer card members and business members, the expected number of members was based on the experience of the Management and their expectation of the yacht club industry in the coming years.

. The membership fees of water berth member, consumer card member and business member would increase by 2.4% per annum after 2017, with reference to the historical average 5-year inflation rate in China of 2.4% per annum as sourced from the International Monetary Fund.

– VIII-22 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

. The membership fees of land storage member would increase to RMB150,000 in 2019 and then by 2.4% per annum after 2022, with reference to the historical average 5-year inflation rate in China of 2.4% per annum as sourced from the International Monetary Fund.

. Membership management fees were charged to water berth members and land storage members. In 2017, the membership management fees were RMB12,000 per membership per year for water berth members and RMB3,600 per membership per year for land storage members as advised by the Management. The membership fees were expected to increase with inflation rate of 2.4% afterwards with reference to historical average 5-years inflation rate in China as sourced from the International Monetary Fund.

. The yacht berthing fees were based on the size of yachts owned by water berth members and land storage members. They were estimated by the sum of fees from water berthing, land storage and use of ramp.

. Revenue from maintenance fees was related to water berth members. It was estimated by the sum of maintenance fees from yachts and sailboats. The revenue was estimated to be RMB3,900,000, RMB8,040,000, RMB19,147,500, RMB19,702,500 and RMB20,257,500 in 2017, 2018, 2019, 2020 and 2021 respectively.

2.2. Clubhouse and Accommodation

. Revenue from clubhouse and accommodation included the revenue from beverages, dining, conference, mini events, reception center and accommodation.

. As advised by the Management, the yacht club accommodation service was expected to be operated since October 2016. The accommodation service would be exclusively offered to members.

2.3. Rental Service

. Revenue from rental service included the revenue from site rental and assets rental.

. Revenue from site rental was the sum of revenue from office rental, film shooting, site rental for activities, wedding photos taking and car driving.

– VIII-23 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

. Revenue from assets rental was the sum of revenue from yachts and sailboats rental, rental of gantry crane and quay crane and designated driving.

2.4. Sports Activities

. Revenue from sports activities included the revenue from diving club, water sports center and beach sports center as advised by the Management.

. Revenue from diving club included the revenue from diving trial, diving training, rental of site and equipment, diving tour, recreational diving and sale and maintenance of equipment.

. The water sports center was expected to commence operation in 2017.

. Revenue from beach sports center consisted of entrance fees of beach and usage fees for shower rooms.

2.5. Others

. Other revenue included revenue from training services, exhibition and competition and helicopter rental service as advised by the Management.

. Revenue from training service included the revenue from driving courses for yachts, sailboats, OP sailboats and windsurfing.

. Revenue from exhibition and competition included the revenue from summer camp, winter camp, China Cup, exhibition of yacht and water sport equipment and other races.

. The helicopter rental service was expected to commence its first month operation in 2017.

3. COST OF PRODUCTION

. The cost of production included the salary expense, composite operating expense, clubhouse’s operating expense, training courses’ expense, yacht and crew service expense and other activities’ expense.

. The cost of production was estimated to be approximately RMB17,960,000, RMB28,610,000, RMB36,910,000, RMB43,660,000 and RMB45,250,000 in 2017, 2018, 2019, 2020 and 2021 respectively.

. The Management estimated that revenue will grow at 2.4% from 2022 onwards, with reference to historical average 5-years inflation rate in China as sourced from the International Monetary Fund.

– VIII-24 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

4. OPERATING EXPENSES

. Operating expenses included selling and distribution expenses, administrative expenses, depreciation of capital expenditure and amortization of operating right due to the Operation Entrustment Agreement.

. The selling and distribution expenses were assumed to increase from 2017 to 2021 since Business Enterprise 1 would be on developing stage, and they were assumedtogrowat2.4%from2022onwards.

. The administrative expenses were assumedtoincreasefrom2017to2021since Business Enterprise 1 would be on developing stage, and they were assumed to grow at 2.4% from 2022 onwards.

5. CORPORATE INCOME TAX

. China’s corporate tax rate of 25% was adopted with reference to taxation law of China as at the Date of Valuation.

6. NET WORKING CAPITAL

. Net working capital was estimated based on the expected turnover days of the accounts receivables, inventory and accounts payables of 44.9 days, 7.9 days and 42.4 days respectively, which were the median number of turnover days from the comparable companies’ data. The change in net working capital was then arrived by subtracting the net working capital in last year from that in current year.

7. CAPITAL EXPENDITURES AND DEPRECIATION

. Capital expenditure in 2017 was high since Business Enterprise 1 would be on developing stage, the capital expenditure would remain relatively stable from 2018 onwards. The capital expenditure would be related to the capital investment on pier, reception center, yacht training school, shower room, clubhouse, diving club, accommodation, water sports center, gardens and other outdoor facilities.

. The depreciation expenses in relation to the existing fixed asset and capital expenditure were estimated based on straight line depreciation with useful life of 5,10 and 20 years, depending on the nature of assets.

. The amortization of operating right was estimated based on straight line depreciation with useful life of 20 years.

– VIII-25 – APPENDIX VIII VALUATION REPORT OF SHENZHEN DAPENG YACHT CLUB COMPANY LIMITED

8. OTHERS

Based on the assumptions and estimates as disclosed in this valuation report, the HK$60,000,000 net profit after tax generated from Business Enterprise 1 for the financial year ending 31 December 2018 as referred to in the accounts thereof audited by the auditors of the Company (the ‘‘2018 Yacht Profit’’) would be achievable. However, we are making no representation that the financial projection of Business Enterprise 1 would be realized.

– VIII-26 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail [email protected] http://www.romagroup.com

30 November 2016

New Sports Group Limited Unit 2001, 20/F., Lippo Centre Tower 2, No. 89 Queensway Admiralty Hong Kong

Case Ref: AK/BVFIPPARE3431/APR16(b)

Dear Sir/Madam,

Re: Valuation of 100% Equity Interest in Shenzhen Dapeng International Education Company Limited* (‘‘深圳大鵬國際教育有限公司’’)

In accordance with the instructions from New Sports Group Limited (hereinafter referred to as the ‘‘Company’’) to us to conduct a business valuation on 100% equity interest in Shenzhen Dapeng International Education Company Limited* (‘‘深圳大鵬國際教育有限公司’’) (hereinafter referred to as ‘‘Business Enterprise 2’’), we are pleased to report that we have made relevant enquiries and obtained other information which we considered relevant for the purpose of providing you with our opinion of the market value of 100% equity interest in Business Enterprise 2 as at 31 August 2016 (hereinafter referred to as the ‘‘Date of Valuation’’).

This report states the purpose of valuation, scope of work, economic and industry overviews, an overview of Business Enterprise 2, basis of valuation, investigation and analysis, valuation methodology, major assumptions, information reviewed, limiting conditions, remarks and opinion of value. Assumptions and estimates employed in this valuation are included in the appendix of this report.

1. PURPOSE OF VALUATION

This report is prepared solely for the use of the directors and management of the Company. In addition, Roma Appraisals Limited (hereinafter referred to as ‘‘Roma Appraisals’’) acknowledges that this report may be made available to the Company for public documentation purpose only.

Roma Appraisals assumes no responsibility whatsoever to any person other than the Company in respect of, or arising out of, the contents of this report. If others choose to rely in any way on the contents of this report they do so entirely at their own risk.

– IX-1 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

2. SCOPE OF WORK

Our valuation conclusion is based on the assumptions stated herein and information provided by the management of the Company, the management of Business Enterprise 2 and/or their representative(s) (together referred to as the ‘‘Management’’).

In preparing this report, we have had discussions with the Management in relation to the development and prospect of the international school industry in China, and the development, operations and other relevant information of Business Enterprise 2. As part of our analysis, we have reviewed such financial information and other pertinent data concerning Business Enterprise 2 provided to us by the Management and have considered such information and data as attainable and reasonable.

We have no reason to believe that any material facts have been withheld from us. However, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

We do not express an opinion as to whether the actual results of the business operation of Business Enterprise 2 will approximate those projected because assumptions regarding future events by their nature are not capable of independent substantiation.

In applying these projections to the valuation of Business Enterprise 2, we are making no representation that the business expansion will be successful, or that market growth and penetration will be realized.

3. ECONOMIC OVERVIEW

According to the National Bureau of Statistics of China, the nominal gross domestic product (‘‘GDP’’) of China in the second quarter of 2016 was RMB34,063.7 billion, a year over year increase of 8.5% comparing to June 2015. China was the third largest economy in the world, ranked after the European Union and the United States, in terms of nominal GDP measured by the International Monetary Fund (‘‘IMF’’) in 2014. Despite the global financial crisis in late 2008, the Chinese economy continued to be supported by the Chinese government through spending in infrastructure and real estates.

Throughout 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years. The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports. China’s economy rebounded quickly in 2010, outperforming all other major economies with robust GDP growth and the economy remained in strong growth since 2011.

– IX-2 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Over the past five years from 2011 to 2015, compound annual growth rate of China’s nominal GDP was 11.0% whereas the Chinese government targeted to grow its GDP by around 7.0% annually for the period from 2011 to 2015. Figure 1 illustrates the nominal GDP of China from 2011 to the second quarter of 2016.

Figure 1 — China’s Nominal GDP from 2011 to Second Quarter of 2016

billion RMB

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 2011 2012 2013 2014 2015 2016 Q2

Source: National Bureau of Statistics of China, as extracted from official website of National Bureau of Statistics of China as at 19 October 2016

3.1 Inflation in China

Tackling inflation problem has long been the top priority of the Chinese government as high prices are considered as one of the causes of social unrest. For such a fast-growing economy, the middle-class’ demand for food and commodities has been rising continuously. Inflation in China has been driven mainly by food prices, which have been stayed high in 2011. According to the National Bureau of Statistics of China, the consumer price index (‘‘CPI’’) demonstrated an uptrend in the first half of 2011. Thanks to the government’s policies in suppressing commodity prices, the inflation in CPI slowed in the second half of 2011 and first half of 2012 and maintained at around 2.0% to 3.2% during 2013. During 2014, the CPI dropped and reached 1.5% in December 2014. During first half of 2015, the CPI maintained at around 0.8% to 1.5%, and fluctuated around 1.3% to 2.0% in second half of 2015. In 2016, the CPI dropped from 2.3% to 1.9%. Figure 2 shows the year-over-year change in CPI of China from June 2013 to June 2016.

– IX-3 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Figure 2 — Year-over-year Change in China’s CPI from June 2013 to June 2016

% 3.5

3

2.5

2

1.5

1

0.5

0 Jul Oct Jan Apr Jul Oct Jan Apr July Oct Jan Apr 2014 2015 2016

Source: Bloomberg, as extracted as at 19 October 2016

China’s inflation rate was volatile during the past decade. According to the IMF, the inflation rate in China increased from 2.8% in 2006 to 6.5% in 2007, and then dropped to 1.2% and 1.9% in 2008 and 2009 respectively. The inflation rate increased to 4.6% in 2010 and maintained at 4.1% in 2011. The inflation rate dropped again to 2.5% in 2012 and 2013, and further to 1.8% in 2014. Finally, it maintained at 1.8% in 2015. Figure 3 shows the historical trend of China’s inflation rate from 2006 to 2015.

– IX-4 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Figure 3 — China’s Inflation Rate from 2006 to 2015

% 7

6

5

4

3

2

1

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: International Monetary Fund, as extracted from Bloomberg as at 19 October 2016

4. INDUSTRY OVERVIEW

4.1 Students Receiving Private Fundamental Education in China

According to National Bureau of Statistics of China, the number of students receiving private education increased from 11 million in 2010 to 14 million in 2014. High school students in private education increased from 1.5 million in 2010 to 1.7 million in 2014. Figure 4 illustrates the number of students receiving private fundamental education in China from 2010 to 2014.

– IX-5 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Figure 4 — Number of Students Receiving Private Fundamental Education in China from 2010 to 2014

Number of students (in million) 16

14

12

10

8

6

4

2

0 2010 2011 2012 2013 2014 Kindagarten Primary School Secondary School High School

Source: National Bureau of Statistics of China, as extracted from official website of National Bureau of Statistics of China as at 19 October 2016

4.2 International Schools Industry in China

International schools in China are divided into three categories:

. International schools run by foreign institutions or individual, which only admit foreign students (hereinafter referred to as the ‘‘Foreigner International Schools’’);

. Schools jointly run by local public schools and foreign schools, using both Chinese and English as learning medium (hereinafter referred to as the ‘‘Public International Schools’’); and

. Schools run by local education institutions or jointly run by local and foreign education institutions, which admit both Chinese and foreign students (hereinafter referred to as the ‘‘Private International Schools’’).

– IX-6 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Foreigner International Schools and Private International Schools operate K-12 education. Public International Schools only operate high school education due to policy restrictions.

In 2015, there were 597 international schools in China, figure 5 illustrates the distribution of international schools in China in 2015.

Figure 5 — Distribution of International Schools in China in 2015

300

250

200

150

100

50

0 Foreigner International Public International School Private International School School

Source: Newschool Insight Media, as extracted as at 19 October 2016

International schools in China are concentrated in first-tier cities. According to the research from Sina Education, cities with the most international schools were Shanghai, Beijing and Guangdong accordingly. The three cities had a total of 256 international schools, which was 42% of total number of international schools in China.

According to the research from Newschool Insight Media, there were 29 and 27 new international schools opened in China in 2014 and 2015 respectively. The growth rate on number of private international schools in China increased from 8.6% in 2010 to 15.6% in 2015. Figure 6 illustrates the growth rate of number of Private International Schools in China.

– IX-7 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Figure 6 — Growth Rate on Number of Private International Schools in China

% 25

20

15

10

5

0 2010 2011 2012 2013 2014 2015 2016E

Source: Newschool Insight Media, as extracted as at 19 October 2016

5. BUSINESS ENTERPRISE 2

Business Enterprise 2 involves in the management of a tuition academy, namely, Virdom International Academy, in Shenzhen, which provides test preparation courses for various foreign examinations including IGCSE Courses, A-Level Courses, SATI and SATII, foreign language training and sports-related extracurricular activities such as horse riding and navigation. Business Enterprise 2 is operated within the site of Shenzhen Marine Sports Base and Sailing School.

An agreement dated 27 August 2014 (as supplemented and amended by a supplemental agreement dated 13 October 2014) was entered into between Shenzhen Yuejin Investment Company Limited* (深圳粵錦投資有限公司) (currently known as Shenzhen Yuejin Sports Company Limited* (深圳粵錦體育有限公司)), an investment holding company of Business Enterprise 2 and Shenzhen Dapeng New District Management Committee* (深圳市大鵬新區管 理委員會) in relation to the entrustment of operation of Shenzhen marine sports base and sailing school by Shenzhen Dapeng New District Management Committee* to Shenzhen Yuejin Investment Company Limited* or its subsidiaries (hereinafter referred to as the ‘‘Operation Entrustment Agreement’’).

Under the Operation Entrustment Agreement, the operation of Shenzhen Marine Sports Base and Sailing School has been entrusted by Shenzhen Dapeng New District Management Committee to Shenzhen Yuejin Investment Company Limited or its subsidiaries for a term of 20 years.

– IX-8 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

6. BASIS OF VALUATION

Our valuation is conducted on a market value basis. According to the International Valuation Standards established by the International Valuation Standards Council in 2011, market value is defined as ‘‘the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion’’.

7. INVESTIGATION AND ANALYSIS

Our investigation included discussions with members of the Management in relation to the development, operations and other relevant information of Business Enterprise 2. In addition, we have made relevant inquiries and obtained further information and statistical figures related to the international school industry in China as we considered necessary for the purpose of the valuation.

As part of our analysis, we have reviewed such financial information and other pertinent data concerning Business Enterprise 2 provided to us by the Management and have considered such information and data as attainable and reasonable.

The valuation of Business Enterprise 2 requires consideration of all pertinent factors, which may or may not affect the operation of the business and its ability to generate future investment returns. The factors considered in our valuation include, but are not necessarily limited to, the following:

. The nature and prospect of Business Enterprise 2;

. The financial condition of Business Enterprise 2;

. The economic outlook in general and the specific economic environment and market elements affecting the business, industry and market;

. Relevant licenses and agreements;

. The business risks of Business Enterprise 2 such as the ability in maintaining competent technical and professional personnel; and

. Investment returns and market transactions of entities engaged in similar lines of business.

– IX-9 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

8. VALUATION METHODOLOGY

There are generally three accepted approaches to obtain the market value of Business Enterprise 2, namely the Market-Based Approach, Income-Based Approach and Asset-Based Approach. Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the most commonly adopted practice in valuing business entities that are similar in nature.

8.1 Market-Based Approach

The Market-Based Approach values a business entity by comparing prices at which other business entities in a similar nature changed hands in arm’s length transactions. The underlying theory of this approach is that one would not pay more than one would have to for an equally desirable alternative. By adopting this approach, the valuer will first look for valuation indication of prices of other similar business entities that have been sold recently.

The right transactions employed in analyzing indications of values need to be sold at an arm’s length basis, assuming that the buyers and sellers are well informed and have no special motivations or compulsions to buy or to sell.

8.2 Income-Based Approach

The Income-Based Approach focuses on the economic benefits due to the income producing capability of the business entity. The underlying theory of this approach is that the value of the business entity can be measured by the present worth of the economic benefits to be received over the useful life of the business entity. Based on this valuation principle, the Income-Based Approach estimates the future economic benefits and discounts them to their present values using a discount rate appropriate for the risks associated with realizing those benefits.

Alternatively, this present value can be calculated by capitalizing the economic benefits to be received in the next period at an appropriate capitalization rate. This is subject to the assumption that the business entity will continue to maintain stable economic benefits and growth rate.

8.3 Asset-Based Approach

The Asset-Based Approach is based on the general concept that the earning power of a business entity is derived primarily from its existing assets. The assumption of this approach is that when each of the elements of working capital, tangible and intangible assets is individually valued, their sum represents the value of a business entity and equals to the value of its invested capital (‘‘equity and long term debt’’). In other words, the value of the business entity is represented by the money that has been made available to purchase the business assets needed.

– IX-10 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

This money comes from investors who buy stocks of the business entity (‘‘equity’’)and investors who lend money to the business entity (‘‘debt’’). After collecting the total amounts of money from equity and debt, and converted into various types of assets of the business entity for its operation, their sum equals the value of the business entity.

8.4 Business Valuation

In the process of valuing Business Enterprise 2, we have taken into account the operation and financial information of Business Enterprise 2 and conducted discussions with the Management to understand the status and prospect of Business Enterprise 2 and the international school industry it is participating. Also, we have considered the accessibility to available data and relevant market transactions in choosing among the valuation approaches

The Market-Based Approach was not adopted in this case because most of the important assumptions of the comparable transactions, such as discount or premium on the transaction prices or considerations, were not readily available. Also, since Business Enterprise 2 recorded net loss in the past financial years and only commenced its operation in 2015, it was in development stage as at the Date of Valuation, there was limited track record and its historical financial performance would not be indicative for the market value of Business Enterprise 2 if price multiples (such as price-to-sales, price-to-earnings and price-to-book) under guideline public company method of the Market-Based Approach were adopted. Hence, the Market- Based Approach was not adopted.

The Asset-Based Approach was also not adopted because it could not capture the future earning potential and thus market value of Business Enterprise 2.

We considered that adopting the Income-Based Approach could take into account of the future development and capital expenditure of Business Enterprise 2, as well as capture the growth potential of the in view of the rapid development of the international school industry as advised by the Management. Therefore, we considered that the Income-Based Approach would be the most appropriate approach in arriving at the market value of Business Enterprise 2.

8.4.1 Discounted Cash Flow

Under the Income-Based Approach, we have adopted the discounted cash flow (‘‘DCF’’) method, which is based on a simple reversal calculation to restate all future cash flows in present terms. Expected free cash flow is the net change in cash generated by the operations of

– IX-11 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED a business during a reporting period, which could be calculated by adding back non-cash item(s) to its net profit, minus cash outlays for working capital and capital expenditures during the same period. The expected free cash flow for each year was determined as follows:

Expected Free Cash Flow = Net Profit + Depreciation – Change in Net Working Capital – Capital Expenditure

The present value of the expected free cash flows was calculated as follows:

PVCF = CF1 + CF2 + ... + CFn (1 + r)1 (1 + r)2 (1 + r)n

In which

PVCF = Present value of the expected free cash flows;

CF = Expected free cash flow;

r = Discount rate; and

n = Number of years.

To adopt this method, we obtained the weighted average cost of capital (‘‘WACC’’)of Business Enterprise 2 as a basic discount rate. WACC of Business Enterprise 2 is the minimum required return that Business Enterprise 2 must earn to satisfy its various capital providers including shareholders and debt holders. WACC calculation takes into account the relative weights of debt and equity. It is computed using the formula below:

WACC = We x Re + Wd x Rd x(1– Tc)

In which

Re =Costofequity;

Rd =Costofdebt;

We = Weight of equity value to enterprise value;

Wd = Weight of debt value to enterprise value; and

Tc = Corporate tax rate.

– IX-12 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

8.4.2 Cost of Debt

The cost of debt was determined by the expected borrowing rate of Business Enterprise 2. Since the interest expenses paid on debts are tax-deductible for Business Enterprise 2, the cost of Business Enterprise 2 to get debt funds is less than the required rate of return of the suppliers of the debt capital. The after-tax cost of debt was calculated by multiplying one minus the corporate tax rate by the cost of debt.

8.4.3 Cost of Equity

The cost of equity was determined using the Capital Asset Pricing Model (‘‘CAPM’’), which describes the relationship between the risk of Business Enterprise 2 and expected return to investors. It is calculated by the following formula:

Re =Rf + b x MRP+ORP+SP

In which

Re =Costofequity;

Rf = Risk-free rate;

b = Beta coefficient;

MRP = Market Risk Premium;

ORP = Other Risk Premium; and

SP = Size Premium.

8.4.4 Discount Rate

In the process of determining the WACC, we adopted several listed companies with business scopes and operations similar to those of Business Enterprise 2 as comparable companies. The comparable companies were selected mainly with reference to the following selection criteria:

. The companies are principally engaged in the educational business in China;

. The companies have sufficient trading and operating histories; and

. The financial information of the companies is available to the public.

– IX-13 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Although the comparable companies arrived with the aforementioned criteria may not have exactly the same trading location as Business Enterprise 2, they were all operating educational business in China, we are of the opinion that Business Enterprise 2 would be subject to similar industry risks as those comparable companies. We also noted that Business Enterprise 2 is currently in preliminary operational stage which would be different from the comparable companies; therefore other risk premium was considered in arriving at the WACC of Business Enterprise 2.

According to the aforementioned selection criteria and under best-effort basis, four comparable companies were selected and adopted. Details of the exhaustive list of the comparable companies adopted were illustrated as follows:

Trading Company Name Stock Code Location Business Description

China Bilingual CBLY.US United States China Bilingual Technology & Education Technology & Group, Inc. operates schools in China. The Education Group, company operates a bilingual boarding school Inc. that includes kindergarten, elementary, middle and high school aged children, and an experimental boarding high school.

New Oriental EDU.US United States New Oriental Education & Technology Education & Group, Inc. offers educational services. The Technology Group, company offers foreign language training, test Inc. preparation courses for admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online classes.

Shanghai Xin 600661.CH China Shanghai Xin Nanyang Co., Ltd., through its Nanyang Co., Ltd. subsidiaries, manufactures communication products and industrial equipment, develops cable TV network, security trading, and communication systems, provides network integration, education, and precision processing services. (Note 1)

– IX-14 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Trading Company Name Stock Code Location Business Description

TAL Education XRS.US United States TAL Education Group provides K-12 after- Group school tutoring services in China. The company offers comprehensive tutoring services to K-12 students covering core academic subjects, including mathematics, English, Chinese, physics, chemistry and biology.

Source: Bloomberg

Note 1: The revenue from education service for Shanghai Xin Nanyang Co Ltd (600661.CH) accounted for over 75% of total revenue for the company in 2015 as sourced from Bloomberg. We therefore believe that it is an appropriate comparable company to Business Enterprise 2.

We are of the opinion that it is fair and representative to adopt the above list of the four comparable companies in the valuation.

Note 2: China Maple Leaf Education Systems Limited (1317.HK) and Virscend Education Company Limited (1565.HK) were not adopted as comparable companies since they have insufficient listing history. Their IPO dates were 28 November 2014 and 15 January 2016 respectively. With such short listing histories, their limited financial data might not reflect the industry performance.

For Hong Kong Education (International) Investments Limited (1082.HK), the major service provided is private tutoring service, which is different from the private education service provided by Business Enterprise 2, therefore we have not adopted the company as comparable company.

– IX-15 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Below is the summary of the key parameters of the WACC of Business Enterprise 2 adopted as at the Date of Valuation:

As at Key Parameters 31 August 2016

(a) Risk-free Rate 2.81% (b) Market Risk Premium 10.66% (c) Beta Coefficient 0.87 (d) Size Premium 3.58% (e) Other Risk Premium 2.00% (f) Cost of Equity = (a) + (b) * (c) + (d) + (e) 17.61% (g) Cost of Debt 6.90% (h) Weight of Equity Value to Enterprise Value 96.99% (i) Weight of Debt Value to Enterprise Value 3.01% (j) Corporate Tax Rate 25.00%

WACC (Rounded) 17.20%

Notes:

(a) The risk-free rate adopted was the yield rate of the China government 10-year note as at the Date of Valuation as extracted from Bloomberg.

(b) The market risk premium adopted was the difference between the market expected return in China as at the Date of Valuation and the risk-free rate adopted which were both extracted from Bloomberg.

(c) The beta coefficient adopted was the median adjusted beta of the comparable companies as sourced from Bloomberg.

(d) The size premium adopted was adopted with reference to the size premium study published by Duff & Phelps, LLC.

(e) The other risk premium adopted was to reflect the business risks of Business Enterprise 2, which included the future competition within the international school industry in China and the uncertainty in the financial forecast. A number of international schools are located in area close to the international school operated by Business Enterprise 2. Given that Business Enterprise 2 was still in a relatively preliminary operational stage, it may be facing competition susceptible to factors such as price, brand recognition, availability and selection, which may lead to adverse impact on its profit margins and results of operations. There is also uncertainty in financial forecast as insufficient track record of Business Enterprise 2 were available in which the assumptions estimated by the Management in running the business may not be achieved as expected.

(f) The cost of equity was determined based on CAPM with reference to section 8.4.3 of this report.

(g) The cost of debt adopted was the China above 5-year benchmark lending rate as sourced from Bloomberg plus other risk premium considered in (e).

(h) The weight of equity value to enterprise value adopted was derived from the median debt-to-equity ratio of the comparable companies as at the Date of Valuation as extracted from Bloomberg.

(i) The weight of debt value to enterprise value adopted was derived from the median debt-to-equity ratio of the comparable companies as at the Date of Valuation as extracted from Bloomberg.

(j) The corporate tax rate adopted was the corporate tax rate in China.

– IX-16 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

Hence, we adopted the WACC of 17.20% as the discount rate of Business Enterprise 2 as at the Date of Valuation.

8.4.5 Marketability Discount

The marketability discount was the percentage difference between the private placement price per share and the market trading price per share. Compared to similar interest in public companies, ownership interest is not readily marketable for closely held companies. Therefore, the value of a share of stock in a privately held company is usually less than an otherwise comparable share in a publicly held company. We have made reference to the 2016 edition of the FMV Restricted Stock Study Companion Guide (the ‘‘Guide’’) by FMV Opinions, Inc., one of the national preeminent firms offering a broad range of financial advisory services to private and public companies. According to the Guide, a total of 736 private placement transactions of unregistered common stock issued by publicly traded companies from July 1980 through September 2015 were examined. With reference to the Guide, we have adopted the median marketability discount for the 736 transactions of 16.11% in arriving at the market value of Business Enterprise 2 as at the Date of Valuation.

9. MAJOR ASSUMPTIONS

We have adopted certain specific assumptions in our valuation and the major ones are as follows:

. The valuation was performed based on a discounted cash flow method under the income-based approach with financial forecasts provided by the Management, covering a period of approximately 18 years from the Date of Valuation with reference to the Operation Entrustment Agreement. Long-term growth rate of 2.4% was adopted based on the latest 5-year average of China’s long term inflation as sourced from International Monetary Fund. We are of the opinion that the valuation, based on the financial forecasts covering a period of 18 years from the Date of Valuation, is fair and reasonable, based on the following reasons:

(a) As the operating right of Business Enterprise 2 in relation to the Operation Entrustment Agreement would be up to year 2034, we are of the opinion that applying terminal value with a five-year forecast under the going concern premise, would not be appropriate for valuing the equity interest in Business Enterprise 2.

(b) Based on our understanding of the business/operation cycle of an international school business in general, it is not uncommon for international schools having an operation history of 18 years or above.

(c) Although the financial forecast has covered a period of around 18 years, we noted that the Management has applied a stable growth rate of 2.4% to the financial forecast since 2022, which we considered as fair and prudent.

– IX-17 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

(d) The valuation was performed based on generally accepted procedures. The basis and valuation approach adopted were considered as fair and reasonable.

. The valuation was mainly based on the projections of the future cash flows as provided by the Management. The projections outlined in the financial information provided are reasonable, reflecting market conditions and economic fundamentals, and will be materialized;

. In respect of the breach of certain terms of the Operation Entrustment Agreement, Shenzhen Dapeng New District Management Committee may (i) bring action against Shenzhen Yuejin Investment Company Limited* (or its subsidiaries) for damages, (ii) terminate the Operation Entrustment Agreement, and/or (iii) revoke and cancel the entrustment of operation of Shenzhen marine sports base and sailing school to Shenzhen Yuejin Investment Company Limited* (or its subsidiaries) (collectively referred to as the ‘‘Events’’). As at the Date of Valuation, the Management did not aware of any of the above Events, our valuation was performed based on the assumption that the Events would not occur during the contractual period of the Operation Entrustment Agreement;

. The valuation was performed based on the audited financial statements of Business Enterprise 2 as at 31 August 2016;

. Compared to similar interest in public companies, ownership interest is not readily marketable for private companies. Hence, a marketability discount of 16.11% was applied to the valuation result. The marketability discount was adopted by making reference to the study in the FMV Restricted Stock Study Companion Guide published by FMV Opinions, Inc. in 2016;

. Discount rate of 17.20% was adopted for Business Enterprise 2, which was the estimated weighted average cost of capital of Business Enterprise 2 with reference to comparable companies engaged in similar businesses;

. Working capital projection was estimated with reference to working capital turnover days of the comparable companies of Business Enterprise 2;

. The businesses of Business Enterprise 2 will be operated and developed as planned;

. All relevant legal approvals and business certificates or licenses to operate the business in the localities in which Business Enterprise 2 operates or intends to operate would be officially obtained and renewable upon expiry;

. There will be sufficient supply of technical staff in the industry in which Business Enterprise 2 operates, and Business Enterprise 2 will retain competent management, key personnel and technical staff to support its ongoing operations and developments;

– IX-18 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

. There will be no major change in the current taxation laws in the localities in which Business Enterprise 2 operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;

. There will be no major change in the political, legal, economic or financial conditions in the localities in which Business Enterprise 2 operates or intends to operate, which would adversely affect the revenues attributable to and profitability of Business Enterprise 2; and

. Interest rates and exchange rates in the localities for the operation of Business Enterprise 2 will not differ materially from those presently prevailing.

10. INFORMATION REVIEWED

Our opinion requires consideration of relevant factors affecting the market value of Business Enterprise 2. The factors considered included, but were not necessarily limited to the following:

. The audited financial statements of Business Enterprise 2 dated 31 August 2016;

. Financial forecasts of Business Enterprise 2;

. Business licenses of Business Enterprise 2;

. The audited financial statements of Business Enterprise 2 in 2014 and 2015;

. Market trends of the international school in China; and

. General descriptions in relation to Business Enterprise 2.

We have discussed the details with the Management. We have also conducted research from various sources to verify the reasonableness and fairness of information provided and we believe that such information is reasonable and reliable. We have assumed the accuracy of informationprovidedandreliedonsuchinformation to a considerable extent in arriving at our opinion of value.

11. LIMITING CONDITIONS

The valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events or circumstances have not been considered and we are not required to update our report for such events and conditions.

We would particularly point out that our valuation was based on the information such as the company background, business nature and market share of Business Enterprise 2 provided to us.

– IX-19 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

To the best of our knowledge, all data set forth in this report are reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis are gathered from reliable sources; yet, no guarantee is made nor liability assumed for their accuracy.

We have relied on the historical and/or prospective information provided by the Management and other third parties to a considerable extent in arriving at our opinion of value. The information has not been audited or compiled by us. We are not in the position to verify the accuracy of all information provided to us. However, we have had no reason to doubt the truth and accuracy of the information provided to us and to doubt that any material facts have been omitted from the information provided. No responsibilities for the operation and financial information that have not been provided to us are accepted.

We assumed that the Management is competent and perform duties under the company regulation. Also, ownership of Business Enterprise 2 was in responsible hands, unless otherwise stated in this report. The quality of the Management may have direct impact on the viability of the business as well as the market value of Business Enterprise 2.

We have not investigated the title to or any legal liabilities of Business Enterprise 2 and have assumed no responsibility for the title to Business Enterprise 2 appraised.

Our conclusion of the market value was derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. The conclusion and various estimates may not be separated into parts, and/or used out of the context presented herein, and/or used together with any other valuation or study.

We assume no responsibility whatsoever to any person other than the directors and the Management in respect of, or arising out of, the content of this report. If others choose to rely in any way on the contents of this report, they do so entirely at their own risk.

The working papers and models for this valuation are being kept in our files and would be available for further references. We would be available to support our valuation if required. The title of this report shall not pass to the Company until all professional fee has been paid in full.

12. REMARKS

Unless otherwise stated, all monetary amounts stated in this valuation report are in Hong Kong Dollar (HKD). The exchange rate of CNY1:HKD1.1617 applied to the valuation was sourced from Bloomberg as at the Date of Valuation.

We hereby confirm that we have neither present nor prospective interests in the Company, Business Enterprise 2 and their associated companies, or the values reported herein.

– IX-20 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

13. OPINION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed, the market value of 100% equity interest in Business Enterprise 2 as at the Date of Valuation, in our opinion, was reasonably stated as HKD280,000,000 (HONG KONG DOLLARS TWO HUNDRED AND EIGHTY MILLION ONLY).

Yours faithfully, For and on behalf of Roma Appraisals Limited Kelvin Luk ICVS Director

Note:

Mr. Luk is a member of the International Association of Consultants, Valuators and Analysts (IACVA). Mr. Luk has over ten years of experience in valuation and consultation. Mr. Luk has conducted and supervised several valuation projects on various assets of companies for various listed companies of the Stock Exchange which are principally engaged in business sectors similar to Shenzhen Dapeng Yacht Club Company Limited and Shenzhen Dapeng International Education Company Limited.

– IX-21 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

APPENDIX — ASSUMPTIONS AND ESTIMATES

The following assumptions were estimated by the Management:

1. BUSINESS MODEL

. The primary revenue sources of Business Enterprise 2 are tuition fees from international high school, fees from international study tour and service income. Tuition fees are derived from the provision of education for AP curriculum, A-Level curriculum and American-Hong Kong high school. Another revenue source is the international study tour in which an American camp is organized for students in the school. The third key revenue source is the service income, in which Business Enterprise 2 generates income through providing training and meals to students and operating examination center.

. The projection of cash flow was assumed to cover the period from the Date of Valuation to 2034, which matched the expiry of the operating right of Business Enterprise 2.

2. REVENUE

. The projected revenue was sourced from tuition fees from international high school, fees from international study tour and service income.

2.1 Tuition Fees from International High School

. Revenue from tuition fees included fees charged to 3 categories of students, they are students from AP curriculum, A-Level curriculum (International General Certificate of Secondary Education and The General Certificate of Education Advanced Level curriculum in the United Kingdom) and American-Hong Kong high school. Tuition fees were estimated from the estimated number of students and the estimated tuition fees for each curriculum. Also, accommodation fees for students, registration fees, interview training fees and profit sharing from projects cooperated with other schools were included in the revenue. The revenue from tuition fees was estimated to be approximately RMB39,145,000, RMB82,875,250, RMB88,233,935, RMB95,795,977 and RMB108,364,951 in 2017, 2018, 2019, 2020 and 2021 respectively.

The estimated number of students in different curriculum were based on the proposed number of classes and the expected number of students in each class.

It was expected that the expected number of classes and student in Virdom International Academy would be reached in 2018. It was assumed that there will be 9 classes and 32 students per class for AP curriculum; 4 classes and 24.5 students per class for A-Level curriculum; and 2 classes and 32 students per class for American-Hong Kong High School.

Expected number of students in different curriculum

Cumulative Cumulative Cumulative Number of Number of Number of Students from Students from Students from American- AP A-Level Hong Kong Year Curriculum Curriculum High School

2017 166 40 32 2018 and onwards 288 98 64

– IX-22 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

There were two levels of estimated tuition fees per student for AP curriculum in 2017. The students transferred from Cui Yuan Middle School (‘‘翠園中學’’) will be charged with a tuition fee of RMB108,000 according to the agreements negotiated between Cui Yuan Middle School and the students transferred from Cui Yuan Middle School into Virdom International Academy. For other students studying in Virdom International Academy who newly enrolled in the courses, the estimated tuition fee for AP curriculum, A-Level curriculum and American-Hong Kong High School was RMB148,000 per student. As advised by the Management, the tuition fee for each curriculum would increase from RMB148,000 in 2017 (except for students transferred from Cui Yuan Middle School with tuition fee of RMB108,000) to RMB189,000 in 2021 due to the increase in bargaining power of Business Enterprise 2. The tuition fees were expected to grow by 5% per annum after 2021.

2.2 Fees from International Study Tour

. As advised by the Management, every student in the international high school was guaranteed to join a study tour. The revenue from international study tour was estimated to be approximately RMB1,190,000, RMB4,500,000, RMB4,725,000, RMB4,840,290 and RMB4,958,393 in 2017, 2018, 2019, 2020 and 2021 respectively.

2.3 Service Income

. The service income was estimated by the sum of revenue from training courses and meals for students, and operation of examination center. Revenue from service income was estimated to be approximately RMB2,317,445, RMB4,981,379, RMB5,195,682, RMB5,397,439 and RMB5,607,867 in 2017, 2018, 2019, 2020 and 2021 respectively.

. The revenue from sports-related extra-curricular activities and tuition fees were included in the revenue from training courses. As advised by the Management, the expected service income of RMB850 per person in 2017 was the expected average revenue from different categories of extra-curricular activities. It was expected that 30% of students would use the training service. It was expected to grow by 5% per annum from 2017 to 2021 and 2.4% per annum after 2021.

. The Management estimated that the tuition fees and accommodation fees would grow at 5% from 2022 onwards. For other revenue sources, the fees were expected to grow at 2.4% from 2022 onwards, with reference to historical average 5-years inflation rate in China as sourced from the International Monetary Fund.

3. VALUE ADDED TAX AND SURCHARGE

. The value added tax and surcharge for international school was estimated to be 6.72% of the total revenue.

4. OPERATING EXPENSES

. Operating expenses included salary expenses, course material expenses, other expenses, promotion expenses, profit sharing with Halcyon Education* (‘‘海知音教育’’)(‘‘Halcyon’’), commission for Yuanbo Education Group* (‘‘遠播教育集團等外部機構’’)(‘‘Yuanbo’’) and Excel London College* (‘‘倫敦卓越書院’’)(‘‘Excel London’’), insurance expenses and maintenance expenses.

. The salary expenses included the salary and benefit for teachers and staff. The salary expenses increased sharply from 2016 to 2018 since Business Enterprise 2 would be on development stage and they are assumed to be stable since 2019.

– IX-23 – APPENDIX IX VALUATION REPORT OF SHENZHEN DAPENG INTERNATIONAL EDUCATION COMPANY LIMITED

. The course material expenses increased sharply from 2016 to 2018 since Business Enterprise 2 would be on development stage and they are assumed to be stable since 2019.

. Other expenses were assumed to be 15% of the salary expenses.

. The promotion expenses would increase by 2.4% from 2022 onwards, with reference to historical average 5-years inflation rate in China by International Monetary Fund sourced from Bloomberg.

. The profit sharing with Halcyon would be a one-off expense incurred in 2017.

. Commission for Yuanbo was expected to be incurred in 2017 and 2018, and the commission for Excel London was expected to increase from 2017 to 2018 and it would be a constant expense from 2019 onwards.

. The insurance expenses were incurred for the fixed assets of Business Enterprise 2.

. The maintenance expenses were adopted for the maintenance of fixed asset and equipment. It was expected to grow by 10% from 2016 to 2020 and 5% from 2021 onwards.

5. CORPORATE INCOME TAX

. China’s corporate tax rate of 25% was adopted with reference to taxation law of China as at the Date of Valuation.

6. NET WORKING CAPITAL

. The net working capital was estimated based on the expected turnover days of the accounts receivables and accounts payables of 20.6 days and 16.8 days respectively, which were the median number of turnover days from the comparable companies’ data. The change in net working capital was then arrived by subtracting the net working capital in last year from that in current year.

7. CAPITAL EXPENDITURES AND DEPRECIATION

. Capital expenditure in 2016 was high since Business Enterprise 2 would be on developing stage, the capital expenditure would be relatively stable from 2017 onwards.

. The depreciation expense in relation to the existing fixed asset was estimated based on straight line depreciation with useful life of 10 years.

. The depreciation expense in relation to the newly acquired equipment was estimated based on straight line depreciation with useful life of 5 years.

. The depreciation expense in relation to renovation of school building was estimated based on straight line depreciation with useful life of 20 years.

8. OTHERS

Based on the assumptions and estimates as disclosed in the report, the HK$17,500,000 net profit after tax generated from Business Enterprise 2 for the financial year ending 31 December 2018 as referred to in the accounts thereof audited by the auditors of the Company (the ‘‘2018 School Profit’’) would be achievable. However, we are making no representation that the financial projection of Business Enterprise 2 would be realized.

– IX-24 – APPENDIX X GENERAL INFORMATION

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.

SHARE CAPITAL

Authorised Share Capital Nominal Value (HK$) Before Increase in Authorised Share Capital

40,000,000,000 Shares 100,000,000

After Increase in Authorised Share Capital

80,000,000,000 Shares 200,000,000

Issued Share Capital

Number of shares in issue as at the Latest Practicable Date

15,363,151,280 Shares 38,407,878

Consideration Shares to be allotted and issued under the Sale and Purchase Agreement

4,838,709,676 Consideration Shares 12,096,774

Subscription Shares to be allotted and issued under the Subscription Agreements

12,181,629,000 Subscription Shares 30,454,072

Placing Shares to be allotted and issued under the Placing Agreement

4,088,000,000 Placing Shares 10,220,000

Upon completion of the Acquisition, Subscriptions and Placing

36,471,489,956 Shares 91,178,724

– X-1 – APPENDIX X GENERAL INFORMATION

All existing issued Shares rank pari passu in all respects, including in particular as to dividend, voting rights and capital.

DISCLOSURE OF INTERESTS

(a) Interest of Directors and Chief Executive in the Company

As at the Latest Practicable Date, the interests and short positions, if any, of each Director and chief executive of the Company in the Shares, underlying Shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executive were deemed or taken to have under such provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the CompanypursuanttoSection352oftheSFO,or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies adopted by the Company (the ‘‘Model Code’’) were as follows:

Long positions in the Shares and underlying Shares

Total interests as to % of the issued share capital Number of Shares/underlying Shares of the Company Capacity in Interests Equity Total as at the which interests in Shares Derivative interests Latest Practicable Name of Director are held (Share Options) Date4

Zhang Xiaodong Corporate interest 2,750,000,000 — 2,763,500,000 17.98% Beneficial Owner 13,500,000 — Lau Wan Po Spouse interest 15,000,000 — 15,000,000 0.09% Chui Man Lung, Beneficial owner — 11,000,000 11,000,000 0.07% Everett

Notes:

1. Amuse Peace Limited (‘‘Amuse Peace’’) held 2,750,000,000 Shares. Amuse Peace is a company wholly and beneficially owned by Mr. Zhang Xiaodong, the Chairman, Chief Executive Officer and an Executive Director of the Company. Mr. Zhang Xiaodong is deemed to be interested in the 2,750,000,000 Shares owned by Amuse Peace for the purpose of SFO.

2. On 16 June 2016, the loan agreement was entered among Amuse Peace as Borrower, KB Credit Limited (宏基信貸有限公司)(‘‘KB Credit’’) as lender and Mr. Zhang Xiaodong as the guarantor in provision of a loan with the principal amount of HK$300 million (the ‘‘Loan Agreement’’). The loan was secured by the share charge over 2,750,000,000 shares of the Company (the ‘‘Secured Shares’’)providedby Amuse Peace. Mr. Zhang Xiaodong as the guarantor had also provided a personal guarantee in favour of KB Credit for the timely performance of all of the obligations of the borrower under the Loan Agreement. Please refer to the announcement of China Goldjoy Group Limited (Stock code: 1282) published on 16 June 2016 for the details of the Loan.

– X-2 – APPENDIX X GENERAL INFORMATION

3. 15,000,000 Shares are beneficially owned by Ms. Lui Wing Shan, the spouse of Mr. Lau Wan Po. Accordingly, Mr. Lau is deemed to be interested in all the Shares in which Ms. Lui Wing Shan is interested by virtues of SFO.

4. As at the Latest Practicable Date, the total issued share capital of the Company amount to 15,363,151,280 shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had any interests or short positions in any Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executive were deemed or taken to have under such provisions of the SFO, or which were required to be and are recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Substantial Shareholders

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

Long positions in the Shares and underlying Shares

Interests as to %ofthe issued share capital of the Number of Company as Shares/ at the Latest Name of Capacity in which underlying Practicable Shareholder interests are held Shares Date Note(s)

Zhang Xiaodong Beneficial owner 13,500,000 17.98% 2,3 Corporate interest 2,750,000,000 Amuse Peace Limited Beneficial owner 2,750,000,000 17.90% 2,3 KB Credit Limited Security interest in 2,750,000,000 17.90% 3,4 Shares Yao Jianhui Security interest in 2,750,000,000 17.90% 3,4 Shares

– X-3 – APPENDIX X GENERAL INFORMATION

Interests as to %ofthe issued share capital of the Number of Company as Shares/ at the Latest Name of Capacity in which underlying Practicable Shareholder interests are held Shares Date Note(s)

Tinmark Development Security interest in 2,750,000,000 17.90% 3,4 Limited Shares China Goldjoy Group Security interest in 2,750,000,000 17.90% 3,4 Limited Shares Great Sphere Security interest in 2,750,000,000 17.90% 3,4 Developments Shares Limited China Foresea Security interest in 2,750,000,000 17.90% 3,4 Finance Group Shares Limited Stellar Result Limited Security interest in 2,750,000,000 17.90% 3,4 Shares China Yinsheng Custodian 3,012,660,000 19.61% 5 Securities Limited

Notes:

1. Pursuant to Section 336 of the SFO, the shareholders of the Company are required to file disclosure of interests forms (the ‘‘DI Forms’’) when certain criteria are fulfilled and the full details of the requirements are available on the Stock Exchange’s official website. When a shareholder’s shareholdings in the Company changes, it is not necessary to notify the Company and the Stock Exchange unless certain criteria are fulfilled. Therefore, substantial shareholders’ latest shareholdings in the Company may be different to the shareholdings filed with the Company and the Stock Exchange. The above statements of substantial shareholders’ interests are prepared based on the information in the relevant DI Forms received by the Company. The Company may not have sufficient information on the breakdown of the relevant interests and cannot verify the accuracy of information on the DI Forms. Therefore, some substantial shareholders’ interests in Shares or short positions may not have breakdown in their relevant interests.

2. Amuse Peace held 2,750,000,000 Shares. Amuse Peace is a company wholly and beneficially owned by Mr. Zhang Xiaodong, a director of the Company. By virtue of the SFO, Mr. Zhang is deemed to be interested in the Shares in which Amuse Peace are interested in.

3. On 16 June 2016, the loan agreement was entered among Amuse Peace, KB Credit and Mr. Zhang Xiaodong in provision of a loan with the principal amount of HK$300 million secured by Secured Shares. Please refer to note 2 under the section of ‘‘Interest of Directors and Chief Executive in the Company’’ of this appendix for details.

4. KB Credit is a company wholly owned by Stellar Result Limited (‘‘Stellar Result’’). Stellar Result which in turn wholly owned by China Foresea Finance Group Limited (‘‘China Foresea’’). China Foresea is a beneficially owned as to 70% by Great Sphere Developments Limited (‘‘Great Sphere’’). Great Sphere is a company wholly owned by China Goldjoy Group Limited (‘‘China Goldjoy’’), a company listed in Hong Kong (stock code: 1282). Tinmark Development Limited (‘‘Tinmark’’) is one

– X-4 – APPENDIX X GENERAL INFORMATION

of the substantial shareholder of China Goldjoy holding 49.99% interests in China Goldjoy. Mr. Yao Jianhui holds 100% interests of Tinmark. By virtue of SFO, KB Credit, Stellar Result, China Foresea, Great Sphere, China Goldjoy, Tinmark and Mr. Yao are deemed to have security interests in the 2,750,000,000 Shares.

5. 2,750,000,000 Shares out of 3,012,660,000 Shares held by China Yinsheng Securities Limited is deemed to be interested as the custodian of Amuse Peace.

6. As at the Latest Practicable Date, the total issued share capital of the Company amount to 15,363,151,280 shares.

Save as disclosed above, so far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, no other person (other than a Director or chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or 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.

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

DIRECTORS’ SERVICE CONTRACTS

Mr. Zhang Xiaodong, an executive Director, entered into a service agreement with the Company for a term of three (3) years commencing on 1 April 2016. Mr. Zhang is entitled to receive an annual remuneration of HK$1,200,000 which is reviewed by the salary review committee of the Company and determined by the Board with reference to the prevailing market rate and his duties and responsibilities in the Company. He is not entitled to receive any variable remuneration from the Group.

Ms. Xia Lingjie, an executive Director, entered into a service agreement with the Company for a term of three (3) years commencing on 17 August 2016. Ms. Xia is entitled to receive an annual remuneration of HK$240,000 which is reviewed by the salary review committee of the Company and determined by the Board with reference to the prevailing market rate and her duties and responsibilities in the Company. Ms. Xia is also the deputy managing director of Shenzhen Baoxin Football Club Co., Ltd.* (深圳寶新足球俱樂部有限公 司), and entitled to receive a monthly salary of RMB18,600 and discretionary bonus.

Mr. Lau Wan Po, a non-executive Director, entered into a service agreement with the Company for a term of three (3) years commencing on 18 November 2016. Mr. Lau is entitled to receive an annual remuneration of HK$300,000whichisreviewedbythesalaryreview committee of the Company and determined by the Board with reference to the prevailing market rate and his duties and responsibilities in the Company. He is not entitled to receive any variable remuneration from the Group.

– X-5 – APPENDIX X GENERAL INFORMATION

As at the Latest Practicable Date, save as the service contracts disclosed above, none of the Directors had entered into any service agreement with any member of the Group nor were there any other service agreements proposed which would not expire or be determinable by the member of the Group within one year without payment of compensation (other than statutory compensation).

DIRECTORS’ INTEREST IN ASSETS/CONTRACTS AND OTHER INTERESTS

Interests in assets

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been acquired or disposed of by, or leased, or which were proposed to be acquired or disposed of by, or leased to any member of the Group since 31 December 2015 (the date to which the latest published audited consolidated financial statements of the Company was made up).

Interests in contracts

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group.

DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors nor their respective associates had any interest in any business which complete or is likely to complete, either directly or indirectly, with the businesses of the Group.

LITIGATION

As at the Latest Practicable Date, save as disclosed in the circular, no member of the Enlarged Group was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Enlarged Group.

EXPERTS’ QUALIFICATIONS AND CONSENT

The following are qualifications of the experts who have been named in this circular or have given their opinions and advice which are included in this circular:

Name Qualification

Roma Appraisals Limited Independent Professional Valuer (for both property valuation and business valuation)

RSM Hong Kong Certified Public Accountants

– X-6 – APPENDIX X GENERAL INFORMATION

CVP Capital Limited A licensed corporation to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO, acting as the financial adviser to our Company in relation to the Acquisition

As at the Latest Practicable Date, save as CVP held 20,000,000 Shares, representing 0.13% of the issued share capital of the Company, each of Roma Appraisals Limited and RSM Hong Kong and CVP did not have any shareholding in any member of the Group. Each of them did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did each of them have any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2015, being the date to which the latest published audited financial statements of the Group were made up.

Each of Roma Appraisals Limited, RSM Hong Kong and CVP has given its written consent and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or references to its name in the form and context in which they respectively appear.

MATERIAL CONTRACTS

The following material contracts, not being contracts entered into in the ordinary course of business of the Enlarged Group, have been entered into by members of the Enlarged Group within two years immediately preceding the date of the Announcement and up to the Latest Practicable Date and are or may be material:

(a) Share purchase agreement dated 31 December, 2014 entered into among Shenzhen Zhongxun Shihua Software Co. Ltd.* (深圳中訊實華軟件有限公司), Beijing Gongchuang Wanbo Investment Management Co. Ltd.* (北京共創萬博投資管理有 限公司) and Mr. Xu Qiangjun (徐強軍先生) in relation to the acquisition of Hangzhou Network Co. Ltd. (杭州智玩網絡有公司) at a consideration of HK$90,000,000;

(b) Sale and purchase agreement dated 10 December, 2014 entered into among Mr. Liu Wei, SinoCom Investment Holding Limited as buyer, Prime Castle Holdings Limited as seller and Heroic Coronet Limited in relation of the acquisition of Heroic Coronet Limited at a consideration of HK$260,000,000;

(c) Placing agreement dated 5 June, 2015 (as supplemented and amended by a supplemental placing agreement dated 11 June 2015 entered into between the same parties) entered into between the Company as issuer and Ping An Securities Limited as placing agent in relation to the placing of bonds in the principal amount of HK$200,000,000 issued by the Company;

– X-7 – APPENDIX X GENERAL INFORMATION

(d) Sale and purchase agreement dated 28 July, 2015 entered into among SinoCom Investment Holding Limited as buyer, the Company, Century Edge International Limited as seller, Kingworld Holdings Limited, Xu Rong and Zhou Xu in relation to the acquisition of Kingworld Holdings Limited at a consideration of HK$450,000,000;

(e) Sale and purchase agreement dated 17 June 2015 entered into between SinoCom Holdings (BVI) Limited, the Company and Nomura Research Institute, Ltd. in relation to the disposal of the entire issue share capital in SinoCom Development Holdings Limited to Nomura Research Institute, Ltd.;

(f) Sale and purchase agreement dated 17 June 2015 entered into between SinoCom Holdings (BVI) Limited, the Company and Nomura Research Institute, Ltd. in relation to the disposal of the entire issue share in SinoCom Japan Corporation to Nomura Research Institute, Ltd.;

(g) Sale and purchase agreement dated 1 September 2015 entered into between SinoCom Holdings (BVI) Limited and Dr. Shi Chongming in relation to the acquisition of 8% issued capital in SinoCom Japan Corporation from Dr. Shi Chongming;

(h) Placing agreement dated 27 October 2015 (as amended and restated by an amended and restated placing agreement dated 5 November 2015) entered into between the CompanyandCVPCapitalLimitedinrelationtotheplacingofthe1-year5% coupon unlisted bonds with embedded stock options in an aggregate principal amount of up to HK$100,000,000 by the Company through CVP Capital Limited;

(i) Placing agreement dated 11 November 2015 entered into between the Company and CVP Capital Limited in relation to the placing of a maximum of 670,000,000 new shares of the Company through CVP Capital Limited;

(j) Placing agreement dated 2 November 2016 entered into between the Company and Eternal Pearl Securities Limited in relation to the placing of the 3-month renewable 10% annual coupon unlisted corporate bonds in an aggregate principal amount of up to HK$95,000,000 by the Company through Eternal Pearl securities Limited.

(k) Memorandum of understanding dated 17 November 2015 entered into between the Company and Wuxi Xinyou Network Technology Co., Ltd. (無錫新游網絡科技有限 公司) in relation to the potential acquisition by Company of the entire equity interest in Wuxi Xinyou Network Technology Co., Ltd.;

(l) Joint venture agreement dated 15 May 2016 entered into between Shenzhen Baoxin Sport Industry Limited (深圳寶新體育產業有限公司), a wholly-owned subsidiary of the Company, and Shenzhen City Yinling Pingan Culture Media Co., Ltd. (深圳市引 領平安文化傳媒有限公司) in relation to the establishment of a joint venture company;

– X-8 – APPENDIX X GENERAL INFORMATION

(m) Memorandum of understanding dated 2 September 2016 entered into between New Sports Investment Holding Limited, a wholly-owned subsidiary of the Company as the potential purchaser, Yue Jin International Limited as the potential seller and Mr. Zhang Zhenchun (張振純) as the potential seller guarantor in relation to the Acquisition;

(n) the Sale and Purchase Agreement;

(o) the Subscription Agreements;

(p) the Placing Agreement;

(q) Operation entrustment agreement and its supplemental agreement dated 27 August 2014 and 13 October 2014 respectively;

(r) Equity transfer agreement dated 15 October 2014 in relation to the acquisition of 100% equity interest of Shenzhen Ruiteng Enterprise Management Company Limited by Yuejin Investment; and

(s) Equity transfer agreement dated 29 July 2016 in relation to the acquisition of 100% equity interest of Yuejin Investment by Nayuan Development.

DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at (i) Unit 2001, 20/F., Lippo Centre, Tower 2, No. 89 Queensway, Admiralty, Hong Kong from 9:15 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m. and (ii) on the website of the Company at www.newsportsgp.com, from the date of this circular up to and including the date of the GM:

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

(b) the letter from the Board, the text of which is set out on pages 9 to 64 of this circular;

(c) the written consents referred to in the paragraph headed ‘‘Experts’ Qualifications and Consent’’ in this appendix;

(d) the annual reports of the Company for each of the two years ended 31 December 2015 and 2014;

(e) the interim report of the Company for the six months ended 30 June 2016;

(f) the report from RSM Hong Kong dated 30 November 2016 in respect of the unaudited pro forma financial information on the Group, the text of which is set out in Appendix V to this circular;

(g) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;

– X-9 – APPENDIX X GENERAL INFORMATION

(h) the valuation reports on the Valuations of the Business as set out in Appendix VIII andIXtothiscircular;

(i) the report from RSM Hong Kong dated 30 November 2016 in relation to the Valuations of the Business as set out in Appendix VII to this circular;

(j) the letter from CVP dated 30 November 2016 in relation to the discounted future cash flows in connection with the Valuations of the Business, the text of which is set out in Appendix VII to this circular;

(k) the property valuation report dated 30 November 2016 in respect of the valuation of RealPropertyassetoutinAppendixVItothiscircular;

(l) the service contracts of the Directors referred to in the paragraph headed ‘‘Directors’ Service Contracts’’ in this appendix; and

(m) this circular.

MISCELLANEOUS

(a) The secretary of the Company is Ms. Foo Man Yee, Carina. She is an associate member of the Hong Kong Institute of Chartered Secretaries.

(b) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands, and the principal place of business in Hong Kong is at Unit 2001, 20/F, Lippo Centre, Tower 2, No. 89 Queensway, Admiralty, Hong Kong.

(c) The Hong Kong branch share registrar of the Company is Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(d) The English texts of this circular shall prevail over the Chinese texts.

– X-10 – NOTICE OF EGM

New Sports Group Limited 新體育集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock code: 299)

NOTICE OF EGM

NOTICE IS HEREBY GIVEN that the general meeting (the ‘‘Meeting’’)ofNewSports Group Limited (the ‘‘Company’’) will be held at Room 1804, 18/F, Tower 1, Admiralty Centre, 18 Harcourt Road, Admiralty, Hong Kong on 19 December 2016 at 10:30 a.m. for the purpose of consideration and, if thought fit, passing, with or without modifications, the following resolutions:

ORDINARY RESOLUTIONS

1. ‘‘THAT:

(a) the sale and purchase agreement (the ‘‘Sale and Purchase Agreement’’) dated 19 September 2016 entered into by the Company, News Sports Investment Holding Limited as the purchaser (the ‘‘Purchaser’’), Yue Jin International Limited (粵錦國際有限公司) as the seller (the ‘‘Seller’’) and Mr. Cheung Chun Shun (張振純) as seller guarantor in relation to (i) the acquisition of the entire issued share capital in Yue Jin Asia Limited (粵錦亞洲有限公司)(‘‘Target Company’’) and (ii) the assignment of the Seller’s rights, title, interest and benefits in and to the loan owing from Nayuan Development Limited, being a subsidiary of the Target Company to the Seller, and the transactions contemplated under the Sale and Purchase Agreement be and are hereby approved, confirmed and ratified;

(b) conditional upon ordinary resolution no. 2 below being passed and The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) having granted the listing of and permission to deal in the Consideration Shares (as defined below) on the Stock Exchange, the grant of the specific mandate (the ‘‘Acquisition Specific Mandate’’) to the directors of the Company to exercise the powers of the Company to issue and allot such number of new shares of the Company (the ‘‘Consideration Shares’’) at HK$0.062 per share (subject to adjustment in accordance with the terms of the Sale and Purchase Agreement) in settlement of initially HK$300,000,000 as part of the consideration for the sale and purchase of the entire issued share capital in the Target Company contemplated under the Sale and Purchase Agreement be and is hereby approved;

– EGM-1 – NOTICE OF EGM

(c) any one or more director(s) of the Company be and is hereby authorized to take any action and execute such other documents as he consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the issue of the Consideration Shares under the Acquisition Specific Mandate; and

(d) any director of the Company be and is hereby authorized to do all such acts and things and execute and deliver all such documents (including any supplemental agreement) whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to (i) carry out or give effect to any or all transactions contemplated under the Sale and Purchase Agreement (including but not limited to extending any long stop dates provided under the Sale and Purchase Agreement) and/or (ii) protect the interests of the Company and the Purchaser in relation to the Sale and Purchase Agreement or any or all transactions contemplated thereunder, in each case in such manner as may be deemed appropriate by such director.

2. THAT:

(a) conditional upon ordinary resolution no. 1 above being passed and the Stock Exchange having granted the listing of and permission to deal in the Subscription Shares (as defined below) on the Stock Exchange, the grant of the specific mandate (the ‘‘Subscription Specific Mandate’’) to the directors of the Company to exercise the powers of the Company to issue and allot 12,181,629,000 new shares of the Company (the ‘‘Subscription Shares’’)at HK$0.062 per share under each of the subscription agreements each dated 19 September 2016 entered into between the Company and each of Crystal Fount Investments Limited (晶泉投資有限公司), Origin Development Limited (始創有 限公司), Ms. Ai Qing and Ms. Zheng Kuanjian be and is hereby approved; and

(b) any one or more director(s) of the Company be and is hereby authorized to take any action and execute such other documents as he consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the issue of the Subscription Shares under the Subscription Specific Mandate.

3. THAT:

(a) conditional upon the Stock Exchange having granted the listing of and permission to deal in the Placing Shares (as defined below) on the Stock Exchange, the grant of the specific mandate (the ‘‘Placing Specific Mandate’’) to the directors of the Company to exercise the powers of the Company to issue and allot 4,088,000,000 new shares of the Company (the ‘‘Placing Shares’’)at HK$0.062 per share under the placing agreement dated 19 September 2016 entered into between the Company and the China Yinsheng Securities Limited (the ‘‘Placing Agent’’) to be placed by the Placing Agent to not less than six placees be and is hereby approved; and

– EGM-2 – NOTICE OF EGM

(b) any one or more director(s) of the Company be and is hereby authorized to take any action and execute such other documents as he consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the issue of the Placing Shares under the Placing Specific Mandate.

4. THAT:

(a) the authorised share capital of the Company be increased from HK$100,000,000 divided into 40,000,000,000 ordinary shares of HK$0.0025 each to HK$200,000,000 divided into 80,000,000,000 ordinary shares by the creation of an additional 40,000,000,000 new ordinary shares of HK$0.0025 each (the ‘‘Increase in Authorised Share Capital’’); and

(b) any one or more director(s) of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents which he/she/they consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Increase in Authorised Share Capital.’’

ByOrderoftheBoard New Sports Group Limited Zhang Xiaodong Chairman

Hong Kong, 30 November 2016

Principal Place of Business in Hong Kong: Registered Office: Units 2001, 20/F., Lippo Centre Cricket Square Tower 2, No. 89 Queensway Hutchins Drive Admiralty P.O. Box 2681 Hong Kong Grand Cayman, KY1-1111 Cayman Islands

Notes:

(1) A shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxy(ies) (if he/she/it is the holder of two or more shares) to attend and, on a poll, vote instead of him/her at the EGM that the appointment shall specify the number and class of shares in respect o which such proxy is so appointed. A proxy need not be a shareholder of the Company.

(2) In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, must be lodged with the Company’s branch share registrar, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be).

(3) Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoke.

– EGM-3 – NOTICE OF EGM

(4) Where there are joint registered holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she was solely entitled thereto, but if more than one of such joint holders are present at the meeting, whether in person or by proxy, the joint registered holder present whose name stands first on the register of members of the Company in respect of the shares shall be accepted to the exclusion of the votes of the other registered holders.

As at the date of this notice, the Company’s executive directors are Mr. Zhang Xiaodong and Ms. Xia Lingjie; the non-executive director is Mr. Lau Wan Po; and the independent non- executive directors are Mr. Chen Zetong, Mr. Chui Man Lung, Everett, Ms. He Suying and Dr. Tang Lai Wah.

– EGM-4 –