Eforce HOLDINGS LIMITED 意科控股有限公司* (Incorporated in Bermuda with Limited Liability) (Stock Code: 943)

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealers or registered institutions in securities, bank manager, solicitor, professional accountant or other professional advisers. If you have sold or transferred all your shares in eForce Holdings Limited (the “Company”), you should at once hand this circular and the enclosed proxy form to the purchaser or the transferee, or to the stockbroker, registered dealer in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

eFORCE HOLDINGS LIMITED 意科控股有限公司* (Incorporated in Bermuda with limited liability) (Stock code: 943)

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN SHENZHEN QIANHAI CITIC HUATENG INDUSTRIAL CO., LTD.

Financial Adviser to the Company

Optima Capital Limited Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Crescendo Capital Limited

Capitalised terms used on this cover shall have the same meanings as those defined in the section headed “Definitions” in this circular unless otherwise stated. A letter from the Board is set out on pages 5 to 22 of this circular. A notice convening the SGM to be held at 11:30 a.m. on Wednesday, 9 October 2019 at Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM or any adjournment thereof (as the case may be), you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit it at the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong as soon as practicable and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) if you so wish.

* For identification purpose only 18 September 2019 CONTENTS

Page

DEFINITIONS ...... 1

LETTER FROM THE BOARD ...... 5

INDUSTRY OVERVIEW ...... 23

LETTER FROM THE INDEPENDENT BOARD COMMITTEE ...... 36

LETTER FROM CRESCENDO ...... 37

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

APPENDIX II – FINANCIAL INFORMATION OF THE TARGET GROUP . . . . . II-1

APPENDIX III – FINANCIAL INFORMATION OF THE DONGGUAN PROJECT COMPANY ...... III-1

APPENDIX IV – FINANCIAL INFORMATION OF THE NANJING PROJECT COMPANY ...... IV-1

APPENDIX V – UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP ...... V-1

APPENDIX VI – VALUATION REPORT OF THE DONGGUAN LAND AND THE NANJING LAND ...... VI-1

APPENDIX VII – GENERAL INFORMATION ...... VII-1

NOTICE OF SPECIAL GENERAL MEETING ...... SGM-1 DEFINITIONS

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

“Acquisition” the proposed acquisition of the Sale Shares by the Purchaser from the Vendor pursuant to the terms and conditions of the Acquisition Agreement

“Acquisition Agreement” the sale and purchase agreement dated 6 July 2019 entered into among the Purchaser, the Vendor, the Target Company, the Dongguan Project Company and the Nanjing Project Company in relation to the Acquisition

“Announcement” the announcement of the Company dated 7 July 2019 in relation to, among other things, the Acquisition

“Board” the board of Directors

“Business Day” a day (other than a Saturday, Sunday or a public holiday) on which commercial banks in Hong Kong and the PRC are generally open for business

“CITIC Southeast” CITIC Southeast (Hainan) Industrial Park Management Co., Ltd.* (中證東南(海南)產業園管理有限公司), a company established in the PRC with limited liability, and is held as to 51% by CITIC Zhiwei and 49% by Huoer Guosi

“CITIC Zhiwei” Shenzhen CITIC Zhiwei Investment Co., Ltd.* (深圳市中證志威投資有限公司), a company established in the PRC with limited liability, and a wholly-owned subsidiary of the Vendor

“Company” eForce Holdings Limited, a company incorporated in Bermuda with limited liability and its issued Shares are listed on the Main Board of the Stock Exchange (stock code: 943)

“Completion” completion of the Acquisition

“Completion Date” the date of Completion

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

“Consideration” the consideration payable by the Purchaser to the Vendor for the Acquisition in the aggregate amount of RMB200,000,000 (equivalent to approximately HK$220,000,000)

* For identification purpose only 1 DEFINITIONS

“Crescendo”or “Independent Crescendo Capital Limited, a corporation licensed to carry out Type 6 Financial Adviser” (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement and the transactions contemplated thereunder

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

“Dongguan Land” a parcel of land located in the north side of Guantai Avenue, Zhouxi Village, Nancheng District, Dongguan City, Guangdong Province, the PRC, on which the Dongguan Project will be developed

“Dongguan Project” a property development project on the Dongguan Land

“Dongguan Project Company” Dongguan Hexin Real Estate Development Co., Ltd.* (東莞禾信房地產開發有限公司), a company established in the PRC with limited liability

“Enlarged Group” the Group upon Completion

“Grant Sherman” Grant Sherman Appraisal Limited, an independent industry expert and independent professional valuer engaged by the Company

“Group” the Company and its subsidiaries

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

“Huoer Guosi” Huoer Guosi Kaiqi Advisory Services Co., Ltd.* (霍爾果斯開啟諮詢服務有限公司), a company established in the PRC and an Independent Third Party

“Independent Board the independent committee of the Board comprising all the independent Committee” non-executive Directors established pursuant to the Listing Rules to give recommendation to the Independent Shareholders in respect of the Acquisition

“Independent Shareholder(s) who are entitled to vote and not required to abstain from Shareholder(s)” voting in favour of the resolution in the SGM for approving the Acquisition Agreement and the transactions contemplated thereunder under the Listing Rules

“Independent Third Party(ies)” any person(s) or company(ies) and their respective ultimate beneficial owner(s) whom, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons

* For identification purpose only 2 DEFINITIONS

“Latest Practicable Date” 16 September 2019, being the latest practicable date for ascertaining certain information for the inclusion in this circular

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

“Nanjing Land” 14 parcels of land located in the south of Naishan, Tuanjie Village, Donggou Town, Liuhe District, Nanjing City, Jiangsu Province, the PRC, on which the Nanjing Project will be developed

“Nanjing Project” a property development project on the Nanjing Land

“Nanjing Project Company” Nanjing Yuanding Real Estate Co., Ltd.* (南京源鼎置業有限公司), a company established in the PRC with limited liability

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

“Purchaser” Shenzhen CITIC Securities Ruifeng Management Co., Ltd.* (深圳市中證瑞豐管理有限公司), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

“Reorganisation” an internal reorganisation to be conducted by the Vendor prior to the Completion which involves the transfer of 51% equity interest in the Nanjing Project Company held by an indirect wholly-owned subsidiary of the Vendor to the Target Company, and the debt transfer and debt clearance as stated in the paragraph headed “The Reorganisation” in this circular

“Sale Shares” the entire equity interest in the Target Company as at the Completion Date

“SFO” Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong)

“SGM” the special general meeting of the Company to be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Acquisition Agreement and the transactions contemplated thereunder

“Shareholder(s)” holder(s) of the Share(s)

“Share(s)” ordinary share(s) of HK$0.00004 each in the share capital of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

* For identification purpose only 3 DEFINITIONS

“Target Company” Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd.* (深圳市前海中證華騰實業有限公司), a company established in the PRC with limited liability

“Target Group” the Target Company and its subsidiaries

“Vendor” Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd.* (深圳市前海中證城市發展管理有限公司), a company established in the PRC with limited liability and a substantial shareholder (as defined under the Listing Rules) of the Company

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of the PRC

“sq. m.” square metre

“%” per cent.

For ease of reference and unless otherwise specified in this circular, sums in HK$ and RMB in this circular are translated at the exchange rate of RMB1 = HK$1.10. The conversion rate is for illustration purpose only and should not be taken as a representation that RMB could actually be converted into HK$ at such rate or at any other rates or at all.

* For identification purpose only 4 ETTE FO TE OD

eFORCE HOLDINGS LIMITED 意科控股有限公司* (Incorporated in Bermuda with limited liability) (Stock code: 943)

Executive Directors: Registered office: Mr. Leung Chung Shan (Chairman) Clarendon House Mr. Tam Lup Wai, Franky (Deputy Chairman) 2 Church Street, Mr. Liu Liyang (Chief Executive Officer) Hamilton HM11, Mr. Chan Tat Ming, Thomas Bermuda

Independent Non-executive Directors: Head office and principal place of Mr. Hau Chi Kit business in Hong Kong: Mr. Leung Chi Hung Suite 3008, Man Yee Building, Mr. Li Hon Kuen 68 Des Voeux Road Central, Central, Hong Kong

18 September 2019

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN SHENZHEN QIANHAI CITIC HUATENG INDUSTRIAL CO., LTD.

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the Acquisition. On 6 July 2019, the Purchaser (an indirect wholly-owned subsidiary of the Company), the Vendor, the Target Company, the Dongguan Project Company and the Nanjing Project Company entered into the Acquisition Agreement, pursuant to which, among other things, the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the Sale Shares, which represent the entire equity interest in the Target Company as at the Completion Date at the Consideration of RMB200,000,000 (equivalent to approximately HK$220,000,000).

* For identification purpose only 5 ETTE FO TE OD

The purpose of this circular is to provide the Shareholders with, among other things, (i) details of the Acquisition Agreement; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the Acquisition; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in the same regard; (iv) the financial information and other information of the Group; (v) the financial information of the Target Company; (vi) the financial information of the Dongguan Project Company; (vii) the financial information of the Nanjing Project Company; (viii) the unaudited pro forma financial information of the Enlarged Group; (ix) a valuation report of the Dongguan Land and the Nanjing Land; (x) a notice of the SGM; and (xi) other information as required under the Listing Rules.

Principal terms and conditions of the Acquisition Agreement are set out below.

THE ACQUISITION AGREEMENT

Date: 6 July 2019

Parties: (i) the Purchaser: Shenzhen CITIC Securities Ruifeng Management Co., Ltd.* (深圳市中證瑞豐管理有限公司) (an indirect wholly-owned subsidiary of the Company);

(ii) the Vendor: Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd.* (深圳市前海中證城市發展管理有限公司);

(iii) the Target Company: Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd.* (深圳市前海中證華騰實業有限公司);

(iv) the Dongguan Project Company: Dongguan Hexin Real Estate Development Co., Ltd.* (東莞禾信房地產開發有限公司); and

(v) the Nanjing Project Company: Nanjing Yuanding Real Estate Co., Ltd.* (南京源鼎置業有限公司)

The Reorganisation

Pursuant to the Acquisition Agreement, it is one of the conditions precedent to Completion that the Vendor shall complete the Reorganisation which involves (i) the transfer of 51% equity interest in the Nanjing Project Company held by an indirect wholly-owned subsidiary of the Vendor to the Target Company; and (ii) the transfer of the shareholder loans of the Dongguan Project Company and the Nanjing Project Company owe to the Vendor to the Target Company such that the Target Company will owe such amounts to the Vendor while the two project companies will owe the corresponding amounts to the Target Company, after which the Target Company will carry out debt clearance with the Vendor, to the effect that the Target Company, the Dongguan Project Company and the Nanjing Project Company will no longer owe any amount to the Vendor.

* For identification purpose only 6 ETTE FO TE OD

Upon completion of the Reorganisation, the Target Company will hold 100% equity interest in the Dongguan Project Company and 51% equity interest in the Nanjing Project Company. The remaining 49% equity interest in the Nanjing Project Company will be held by an indirect non wholly-owned subsidiary of the Vendor. The subsidiary is indirectly held as to 51% by the Vendor and as to 49% by an Independent Third Party. Details of the group structure of the Target Group before and after the Reorganisation are set out in the section headed “Information of the Target Group” below.

Assets to be acquired

Pursuant to the Acquisition Agreement, the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the Sale Shares, which represent the entire equity interest in the Target Company as at the Completion Date. Details of the Target Group are set out in the section headed “Information of the Target Group” below.

Consideration

The Consideration of RMB200,000,000 (equivalent to approximately HK$220,000,000) shall be satisfied by the way of the issue of an interest-free promissory note with a term of six months and in the principal amount of RMB200,000,000 (equivalent to approximately HK$220,000,000) by the Company to the Vendor (or its designated nominee) within three (3) Business Days from the Completion Date. The Purchaser will procure the Company to settle the promissory note by cash when it falls due. The Company intends to raise funding by either debt or equity financing for settlement of the promissory note. As at the Latest Practicable Date, the Company did not have any current plan for obtaining the abovementioned debt or equity financing.

Basis of the Consideration

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendor with reference to (i) 90% of the unaudited consolidated net liabilities of the Target Company as at 31 May 2019; (ii) 90% of the valuation surplus of the Dongguan Land which was appraised by an independent professional valuer with a preliminary valuation as at 31 May 2019 of RMB270.0 million (equivalent to approximately HK$297.0 million); (iii) 51% of the unaudited net asset value of the Nanjing Project Company as at 31 May 2019; (iv) 51% of the valuation surplus of the Nanjing Land which was appraised by an independent professional valuer with a preliminary valuation as at 31 May 2019 of RMB640.0 million (equivalent to approximately HK$704.0 million); and (v) the transfer of the shareholder loans of the Dongguan Project Company and the Nanjing Project Company owe to the Vendor to the Target Company, and to the effect that the Target Company, the Dongguan Project Company and the Nanjing Project Company will no longer owe any amount due to the Vendor.

An updated valuation of the Dongguan Land and the Nanjing Land as at 30 June 2019 was prepared by Grant Sherman and is set out in Appendix VI to this circular. The valuation of the Dongguan Land remains at RMB270.0 million (equivalent to approximately HK$297.0 million) and the valuation of the Nanjing Land is increased to RMB700.0 million (equivalent to approximately HK$770.0 million).

7 ETTE FO TE OD

Conditions precedent

Completion is conditional upon the fulfillment or waiver (as the case may be) of the following:

(i) if needed, the Company having obtained the consent and approval from the Stock Exchange in relation to the Acquisition;

(ii) if needed, the passing of the ordinary resolution(s) by the Independent Shareholders (who are entitled to vote and not required to be abstained from voting under the Listing Rules) at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder;

(iii) the due diligence review on the Target Group to be conducted by the Purchaser pursuant to the Acquisition Agreement having been completed and the results of which being reasonably satisfactory to the Purchaser;

(iv) the Reorganisation having been completed (including but not limited to the settlement of all considerations arising from any share or equity transfer in relation to the Reorganisation) and the Purchaser having received the relevant registration or supporting documents evidencing completion of the relevant transfers and other supporting documents (if needed) evidencing completion of the Reorganisation in accordance with the intentions of the parties, as the Purchaser may reasonably request;

(v) the Purchaser having received a valuation report prepared by an independent professional valuer appointed by the Purchaser in such form and substance satisfactory to the Company which shows the value of the Dongguan Land and the Nanjing Land being not less than RMB270,000,000 (equivalent to approximately HK$297,000,000) and RMB640,000,000 (equivalent to approximately HK$704,000,000) respectively, the content of which shall be included in this circular;

(vi) the equity interests and assets of the Target Company, the Dongguan Project Company and the Nanjing Project Company carrying their respective full rights, being freely transferable and not subjected to any restrictions or encumbrances save as disclosed in the Acquisition Agreement;

(vii) the information and key performance indexes of the Dongguan Project and the Nanjing Project set out in the Acquisition Agreement being consistent with the actual situation and there being no discrepancies or material changes;

(viii) all necessary consents and approvals in relation to the signing, delivery and performance of documents relating to the Acquisition Agreement and the transactions contemplated thereunder having been obtained on the part of the Vendor;

(ix) all necessary consents and approvals in relation to the signing, delivery and performance of documents relating to the Acquisition Agreement and the transactions contemplated thereunder having been obtained on the part of the Purchaser;

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(x) the Purchaser being satisfied that there has been no material adverse change on the business, assets, financial situation, performance, operations, properties and conditions (financial or other aspects) in respect of the Target Group (including the Target Company, the Dongguan Project Company and the Nanjing Project Company and their subsidiaries (if any)), since the date of the Acquisition Agreement;

(xi) there being no courts, arbitrators, government departments, or statutory or regulatory body which has restricted, prohibited or illegalised any transactions contemplated under the Acquisition Agreement, or has issued any orders, judgments, actions or legal proceedings that may reasonably have a material adverse effect on the rights of the legal and beneficial owner of the Target Company which are not subject to any encumbrances after Completion;

(xii) there being no other third party who has raised objections or claims to the Reorganisation and/or the equity interests in the Target Company, the Dongguan Project Company or the Nanjing Project Company and/or the entitlement and rights of the projects, which may hinder the Purchaser’s right to the investment, management, operations, control or income in the Target Company, the Dongguan Project Company and the Nanjing Project Company after Completion;

(xiii) the representations and warranties provided by the Vendor remaining true, accurate and not misleading, and there being no event occurring or matter arising which may render breaches to the Acquisition Agreement or in conflict with the representations and warranties in relation to the Vendor stipulated in the Acquisition Agreement;

(xiv) the representations and warranties provided by the Purchaser remaining true, accurate and not misleading, and there being no event occurring or matter arising which may render breaches to the Acquisition Agreement or in conflict with the representations and warranties in relation to the Purchaser stipulated in the Acquisition Agreement;

(xv) there being no material change to the rules, regulations and requirements of the relevant government bodies governing the signing and execution of the Acquisition Agreement, and the laws, regulations, and policies in relation to the signing and performance of the Acquisition Agreement which would make the Acquisition unable to be completed;

(xvi) the Dongguan Project Company and the Nanjing Project Company being able to carry out normal development and construction on the sites of the projects and there being no legal or practical impediment, known or potential ownership disputes, administrative penalties, resettlement disputes or other circumstances which may render the plot to be considered as idle, levied or recovered and no circumstances where the sites of the projects are occupied or leased to other parties;

(xvii) the Purchaser having received a PRC legal opinion issued by a PRC legal adviser designated by the Company in such form and substance to the satisfaction of the Purchaser in respect of the Acquisition Agreement and the transactions contemplated thereunder, the Reorganisation and the Target Group; and

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(xviii) the Vendor having performed all necessary internal approval procedures in relation to the Acquisition, its board of directors or shareholders’ meeting having approved the Acquisition Agreement or the transactions contemplated thereunder.

The Purchaser may at any time waive any of the conditions set out in (iii), (iv), (vi), (vii), (x), (xi), (xii), (xiii), (xvi) and (xvii) above by notice in writing to the Vendor. The Vendor may at any time waive the condition set out in (xiv) above by notice in writing to the Purchaser. Save for the aforementioned, none of the conditions set out above shall be waived by the parties to the Acquisition Agreement.

The Directors are of the view that the discretion of the Purchaser to waive conditions precedent (iii), (iv), (vi), (vii), (x), (xi), (xii), (xiii), (xvi) and/or (xvii) would enable the Company to have more flexibility in proceeding with the Acquisition. This is to cater for the occasions, in particular, where minor deficiencies and reasonably tolerable flaws are found during the course of due diligence review of the Target Group. Such waiver would allow the Board to have the right to consider and exercise judgment whether to proceed with the Acquisition after taking into account all other factors as a whole. The Board will only waive the relevant conditions precedent, when it is satisfied that such waiver would not have any material adverse effect on the Enlarged Group taken as a whole, and such waiver would be in the interests of the Company and its Shareholders as a whole. Since the Reorganisation has a material effect to the Enlarged Group, the Board has resolved that it will not waive condition precedent (iv). As at the Latest Practicable Date, the Board did not have any intention to waive any of the other conditions precedent.

If any of the above conditions have not been fulfilled or waived (as the case may be) at or before 12:00 p.m. on 31 December 2019 (or such later date as the Purchaser and the Vendor may agree in writing), the Acquisition Agreement shall cease and determine (save for clauses in relation to due diligence review, confidentiality, notice and governing laws and dispute resolution) and neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the Acquisition Agreement.

As at the Latest Practicable Date, condition (v) set out above had been fulfilled.

Completion

After fulfillment or waiver (as the case may be) of all the conditions precedent to the Acquisition Agreement, the Vendor and the Target Company should cooperate with the Purchaser on the registration of the transfer of equity in the Target Company from the Vendor to the Purchaser. Completion shall take place on the day of completion of the registration of transfer.

Upon Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated into the financial statements of the Enlarged Group.

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INFORMATION OF THE VENDOR

The Vendor is owned as to (i) 35% by GoldStone Investment Co., Ltd.* (金石投資有限公司) (a wholly-owned subsidiary of CITIC Securities Company Limited which is listed on the Stock Exchange (stock code: 6030)) which is principally engaged in direct investment, investment advisory and management; (ii) 25% by Shenzhen Tianji Nanlian Investment Partnership Enterprise (Limited Partnership)* (深圳市天基南聯投資合夥企業(有限合夥)) (“Tianji Nanlian”) which is principally engaged in, among other things, equity investment and investment advisory. Tianji Nanlian is ultimately beneficially owned as to 64% by Mr. Qiu Qing, 4% by Ms. Wu Rongwei and 4% by Ms. Liu Xiuling, all of whom are senior management members of the Vendor, and the remaining 28% is owned as to 20% by Mr. Zhong Shengping, 4% by Mr. Yan Zixiang and 4% by Mr. Zhu Haidong; (iii) 20% by Shenzhen Yinxin Zhongjiu Equity Investment Partnership Enterprise (Limited Partnership)* (深圳市銀信中久股權投資合夥企業(有限合夥)) (“Yinxin Zhongjiu”) which is principally engaged in, among other things, equity investment, investment advisory and management. Yinxin Zhongjiu is ultimately beneficially owned as to 99% by Mr. Wang Fumin and 1% by Mr. Zhang Wei; and (iv) 20% by Beijing Zhongcai Century Technology Company Limited* (北京中采世紀技術有限公司) (“Zhongcai Century”) which is principally engaged in, among other things, technology development and advisory and retail sale of building materials. Zhongcai Century is ultimately beneficially owned as to 50% by Ms. Han Qi through her indirect interest in Shenzhen Qianhai Guocai Wulian Technology Co., Ltd.* (深圳市前海國采物聯科技有限公司) (“Qianhai Guocai”), and the remaining 50% interest in Zhongcai Century are equally held by Ms. Deng Jinghui and Ms. Yuan Liqing through their indirect interests in Qianhai Guocai. Qianhai Guocai directly owns the entire equity interest in Zhongcai Century and its business activities include, among other things, Internet of Things technology development and technical consulting services. The Vendor is principally engaged in, among other things, investment management and provision of urban construction advisory services for projects which are predominantly located in the PRC. The projects undertaken by the Vendor are often large-scale projects in cooperation with the local government and/or private commercial entities and the projects are located in various prominent cities in the PRC. It is currently engaged by Pacific Memory Sdn Bhd, a company which is owned as to 35% by the Company, to run the overall management of the development of a parcel of leasehold land in Malaysia for commercial development purposes, details of which are disclosed in the circular of the Company dated 15 February 2018. It was also the vendor of the acquisition of Hong Kong Zhongzheng City Investment Limited, which is a wholly-owned subsidiary of the Company and an indirect holding company of the Purchaser, details of which are disclosed in the circular of the Company dated 21 December 2018.

* For identification purpose only 11 ETTE FO TE OD

INFORMATION OF THE TARGET GROUP

Group structure

Set out below is the group structure of the Target Group (i) before completion of the Reorganisation; (ii) immediately after completion of the Reorganisation; and (iii) immediately after Completion.

(i) Group structure of the Target Group before completion of the Reorganisation

Vendor 100% 100%

CITIC Zhiwei Huoer Guosi 100% 51% 49%

A wholly-owned Target Company subsidiary of CITIC Southeast CITIC Zhiwei

100% 51% 49%

Dongguan Project Nanjing Project Company Company

(ii) Group structure of the Target Group immediately after completion of the Reorganisation

100% Vendor

CITIC Zhiwei Huoer Guosi

100% 49% 51%

Target Company CITIC Southeast

100% 51% 49%

Dongguan Project Company Nanjing Project Company

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(iii) Group structure of the Target Group immediately after Completion

The Company Vendor

100% 100%

Purchaser CITIC Zhiwei Huoer Guosi

100% 51% 49%

Target Company CITIC Southeast

100% 51% 49%

Dongguan Project Company Nanjing Project Company

The Target Company is an investment holding company established in the PRC with limited liability and a wholly-owned subsidiary of the Vendor. It was established by the Vendor and the registered capital of the Target Company is RMB10.0 million. Upon completion of the Reorganisation, the Target Company will hold 100% equity interest in the Dongguan Project Company and 51% equity interest in the Nanjing Project Company. The Target Group upon completion of the Reorganisation will comprise these two project companies and will be principally engaged in property development in the PRC.

Dongguan Project Company

The Dongguan Project Company is a company established in the PRC on 6 September 2001 with limited liability and is principally engaged in the development of the Dongguan Project. It was acquired by the Target Company in September 2017 at the cost of approximately RMB133.9 million. Its principal asset is the Dongguan Land which is a parcel of land covering an aggregate land use area of approximately 6,500 sq. m. for commercial service and urban residential usage with a term of 40 years and 70 years respectively. The Dongguan Land is located in the north side of Guantai Avenue, Zhouxi Village, Nancheng District, Dongguan City, Guangdong Province, the PRC. The Dongguan Project will include the development of two 23-storey composite buildings comprising two 19-storey residential towers built over a 4-storey commercial podium with gross floor area of approximately 29,427 sq. m. and a 2-storey car park basement providing 147 car parking spaces with gross floor area of approximately 7,336 sq. m..

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RMB16 billion. The Dongguan Project Company expects to commence the selling of the residential units in July 2020 and the commercial units and the car park will be sold in 2021. Part of the sale proceeds from the sales will be used to finance the remaining construction costs. As at the Latest Practicable Date, the construction work on the Dongguan Land had not commenced.

The Vendor has entered into an arrangement with CITIC Prospects Fund (Shenzhen) Partnership (Limited Partnership)* 中證前程基金(深圳)合伙企業(有限合伙) that 10% of the net profit (after deducting all costs and taxes) generated from the Dongguan Project Company will be transferred to CITIC Prospects Fund (Shenzhen) Partnership (Limited Partnership). Due to this profit sharing arrangement, in negotiating the Consideration, the Purchaser and the Vendor only took into account 90% of the adjusted net asset value of the Dongguan Project Company.

Nanjing Project Company

The Nanjing Project Company is a company established in the PRC on 28 April 2008 with limited liability and is principally engaged in the development of the Nanjing Project. A wholly-owned subsidiary of the Vendor acquired 51% of the entire equity interest in the Nanjing Project Company in 2018 at the cost of RMB20.4 million. Its principal asset is the Nanjing Land which comprises 14 parcels of land with an aggregate land use area of approximately 240,000 sq. m., among which 2 parcels of land are for commercial service usage with a term of 40 years and 12 parcels of land are for urban residential usage with a term of 70 years. The Nanjing Land is located in the south of Naishan, Tuanjie Village, Donggou Town, Liuhe District, Nanjing City, Jiangsu Province, the PRC, which is close to the Naishan ecological scenic area.

* For identification purpose only

14 ETTE FO TE OD

Financial information of the Target Group

Before completion of the Reorganisation, the Target Company is a holding company whose only asset is the 100% equity interest in the Dongguan Project Company. Set out below is the audited consolidated financial information of the Target Group (i) for the two years ended 31 December 2017 and 2018; and (ii) as at 31 May 2019 which was prepared in accordance with Hong Kong Financial Reporting Standard as extracted from the accountants’ report of the Target Group contained in Appendix II to this circular:

For the year ended 31 December 2017 2018 RMB’000 RMB’000 (audited) (audited)

Loss before taxation 4,050 10,181 Loss after taxation 4,050 10,181

The audited consolidated net liabilities of the Target Company as at 31 May 2019 were RMB17,854,000.

Since the Dongguan Project Company was acquired by the Target Company in September 2017, the above audited consolidated financial information did not include the financial information of the Dongguan Project Company before September 2017. Therefore, the financial information of the Dongguan Project Company is presented separately as below. Set out below is the audited consolidated financial information of the Dongguan Project Company for the two years ended 31 December 2017 and 2018 which was prepared in accordance with Hong Kong Financial Reporting Standard as extracted from the accountants’ report of the Dongguan Project Company contained in Appendix III to this circular:

For the year ended 31 December 2017 2018 RMB’000 RMB’000 (audited) (audited)

Loss before taxation 308 1,269 Loss after taxation 308 1,269

15 ETTE FO TE OD

Since the Nanjing Project Company will only become a subsidiary of the Target Company upon completion of the Reorganisation, the above audited consolidated financial information did not include those of the Nanjing Project Company. Therefore, the financial information of the Nanjing Project Company is presented separately as below. Set out below is the audited consolidated financial information of the Nanjing Project Company (i) for the two years ended 31 December 2017 and 2018; and (ii) as at 31 May 2019 which was prepared in accordance with Hong Kong Financial Reporting Standard as extracted from the accountants’ report of the Nanjing Project Company contained in Appendix IV to this circular:

For the year ended 31 December 2017 2018 RMB’000 RMB’000 (audited) (audited)

(Loss)/profit before taxation (929) 108,757 (Loss)/profit after taxation (929) 108,757

The audited consolidated net assets of the Nanjing Project Company as at 31 May 2019 were RMB134,665,000.

FINANCIAL IMPACT OF THE ACQUISITION

Upon Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated into the financial statements of the Enlarged Group.

Effect on assets and liabilities

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix V to this circular, assuming Completion had taken place on 30 June 2019, the total assets of the Group would be increased from approximately HK$1,924,194,000 to approximately HK$3,020,786,000 and the total liabilities of the Group would be increased from approximately HK$406,860,000 to approximately HK$1,407,240,000. The details of the financial effect of the Acquisition on the financial position of the Group together with the bases and assumptions taken into account in preparing the unaudited pro forma financial information of the Enlarged Group are set out, for illustration purpose only, in Appendix V to this circular.

The Company expects that the net assets of the Company will be increased by approximately HK$96,212,000 upon Completion.

Effect on earnings

Following Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company and its financial results will be consolidated into the financial statements of the Enlarged Group.

16 ETTE FO TE OD

Based on the financial information of the Target Group and the Nanjing Project Company as set out in Appendix II and Appendix IV to this circular respectively, the Target Group and the Nanjing Project Company did not have any revenue and recorded a loss for the year ended 31 December 2018 and the five months ended 31 May 2019 as the construction works on the Dongguan Land and the Nanjing Land have not been commenced. The net losses of the Target Group and the Nanjing Project Company were mainly attributable to the finance costs and administrative expenses incurred.

Upon completion of the Reorganisation, (i) the Target Company will hold 100% equity interest in the Dongguan Project Company and 51% equity interest in the Nanjing Project Company; and (ii) the Target Group will comprise the Dongguan Project Company and the Nanjing Project Company and will be principally engaged in property development in the PRC.

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix V to this circular, apart from the estimated transaction cost of approximately HK$3.15 million directly attributable to the Acquisition, the Company will recognise a gain on bargain purchase of approximately HK$32.78 million upon Completion which is the excess of the fair value of the identifiable assets and liabilities of the Target Group and the Nanjing Project Company over the Consideration. The excess was mainly contributed by the accounting treatment of the amount due to an ex-shareholder in the Nanjing Project Company which is non-interest bearing and was accounted for in the financial statement of the Nanjing Project Company in its amortised cost instead of the principal amount. The principal amount of the amount due to the ex-shareholder as at 31 May 2019 was approximately HK$679.68 million while the amortised cost of this amount due to the ex-shareholder as at 31 May 2019 was approximately HK$580.84 million.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in the manufacture and sale of healthcare and household products, coal mining business and money lending business.

As disclosed in the annual report of the Company for the year ended 31 December 2018, the Group has been identifying suitable investment opportunities to drive sustainable growth for the Group and to enhance long-term corporate value. To this end, the Company completed the acquisition of 35% equity interest in Pacific Memory Sdn Bhd in March 2018 which is principally engaged in the commercial development in Malaysia. It also completed the acquisition of Hong Kong Zhongzheng City Investment Limited in January 2019 which is principally engaged in primary land development projects in the PRC. The Board has continued to identify other appropriate investment opportunities and is of the view that the Target Group is one of such.

17 ETTE FO TE OD

The Dongguan Project is located in Dongguan Nancheng which is easily accessible by highways and is approximately 40 minutes away from Shenzhen by car. It is also approximately 5 kilometres from the subway station, Nancheng’s administrative centre and central business district. Dongguan is a major manufacturing hub, and its gross domestic product has been on the rise since 2009 according to the statistics published by the Dongguan City Government. Furthermore, the PRC government has established the development plan of the Greater Bay Area, of which Dongguan is one of the key node cities. It is expected that the development plan of the Greater Bay Area will allow Dongguan to leverage on its current strengths and through cooperating with other cities in the area, further increase its competitiveness.

As disclosed in the section headed “Industry Overview” below, the Company notes that a purchase restriction order in Dongguan property market was launched in October 2016 and further cooling policies such as restrictions in loans, price, transfer to foreigners, and sales were introduced by the PRC Government in 2017, which resulted in the fluctuation in the gross floor area (“GFA”) of residential property sold since 2016. However, it is worth noting that despite the GFA of residential property sold in Dongguan reduced to 5.9 million sq.m. in 2017 and 5.1 million sq. m. in 2018, the property prices have been on the rise. According to the statistics published by the Dongguan Municipal Bureau Statistics, the residential property prices have increased from approximately RMB9,156 per sq. m. in 2014 to approximately RMB17,271 per sq. m. in 2017, representing a 4-year compound annual growth rate (“CAGR”) of approximately 17.2%.1 In light of the recent development of Dongguan, the outline development plan of the Greater Bay Area promulgated by the PRC Government in February 2019, and the continuous growth in gross domestic products and disposable income of the residents in Dongguan, the Company believes that there is still a strong market for the Dongguan Project which is supported by the continuous increase in the residential property prices in the region.

The Nanjing Project is located in the Liuhe District which is approximately 50 minutes away from the city centre of Nanjing. Nanjing is a major city in the Yangtze River Delta, which is one of wealthiest regions in the PRC and a significant contributor to PRC’s economy. Leveraging on the economic development of the Yangtze River Delta, Nanjing has recorded a gross domestic products of over RMB1,282 billion according to the statistics published by the Nanjing Municipal Bureau Statistics and is one of the top ten gross domestic products contributing cities of the PRC.2 In light of Nanjing’s strong economic potential, its property prices are also on the surge. According to statistics published by the Nanjing Municipal Bureau Statistics, the residential property prices in Nanjing have increased from approximately RMB10,964 per sq. m. in 2014 to approximately RMB15,259 per sq. m. in 2017 representing a 4-year CAGR of approximately 8.6%.3

Upon Completion, the Company will not participate in the daily operation of the Target Group and will rely on the key management team of the Target Group to manage the Dongguan Project and the Nanjing Project. The management of the Target Group has been engaging in property development in the

1 2014: http://tjj.dg.gov.cn/website/flaArticle/art_show.html?code=nj2015&fcount=2 2015: http://tjj.dg.gov.cn/website/flaArticle/art_show.html?code=nj2016&fcount=2 2016: http://tjj.dg.gov.cn/website/flaArticle/tjnj/2017/directory/content.html?05-10 2017: http://tjj.dg.gov.cn/website/flaArticle/tjnj/2018/directory/content.html?05-10 2 http://tjj.nanjing.gov.cn/tjxx/201904/t20190402_1495115.html 3 2014: http://221.226.86.104/file/2015/gudingzichan/9-7.htm 2015: http://221.226.86.104/file/2016/gudingzichan/9-7.htm 2016: http://221.226.86.104/file/2017/gudingzichan/9-7.htm 2017: http://221.226.86.104/file/2018/gudingzichan/9-6.htm 18 ETTE FO TE OD

PRC for many years and they are experienced in the development of property projects as well as raising of funds for the projects. Set out below are the biographies of the senior management of the Target Group.

Mr. Qiu Qing (邱慶), aged about 53, is the general manager and legal representative of the Vendor, and the co-chairman of Chengde CITIC Securities Jinyu Urban and Rural Development Co., Ltd.* (承德中證金域城鄉開發有限公司) which is an associate of the Company. Mr. Qiu is also the general manager and executive director of the Target Company. Mr. Qiu has near 20 years of experience in real estate management and primary land development projects. He assumes the position of chairman for various subsidiaries of the CITIC Group where he also assumes key management roles of the companies’ property development projects. Mr. Qiu has held office in, among others, Zhongxin Property Hainan Investment Co., Ltd.* (中信地產海南投資有限公司), Zhongxin Real Estate Equity Co., Ltd.* (中信房地產股份有限公司), Zhongxin Property Shenzhen Investment Co., Ltd.* (中信地產深圳投資有限公司). The projects which involved property management and development were successfully completed under Mr. Qiu’s management and they include, among others, the Hainan Shenzhou Peninsula Project* (海南神州半島項目) and the Hainan Boao Asia Forum Project (海南博鰲亞洲論壇項目) located in the Hainan Province, the PRC and the CITIC Financial Center (中信金融中心) located in Guangdong Province, the PRC where he managed and supervised the overall development and operation, construction of residential units, hotels and/or other auxiliary facilities. The Company’s primary land development project in Luanping, the PRC is also managed by Mr. Qiu. For the Dongguan Project and the Nanjing Project, Mr. Qiu assumes the overall coordination and supervisory role.

Ms. Ma Suihong (馬遂宏), aged 50, is currently the legal representative of the Dongguan Project Company and the managing director of the Vendor. Ms. Ma has served as, among others, the office director for Zhongxin Property Shenzhen Investment Co., Ltd.* (中信地產深圳投資有限公司), the deputy general manager at Zhongxin Property Chengdu Investment Co., Ltd* (中信地產成都投資有限公司) and the general manager of Dujiangyan Zhongxin Investment Co., Ltd.* (都江堰中信投資有限公司). Ms. Ma has over ten years of experience in property management and development. The projects managed by Ms. Ma include, among others, Letoile Deselife* (中信星光名庭), CITIC Mangrove Bay* (中信紅樹灣花城) and CITIC Financial Center (中信金融中心) which are located in Shenzhen, Guangdong Province, the PRC, and CITIC Yunqi Valley (中信雲栖谷) which is a low-rise development located in Chengdu, Sichuan Province, the PRC where Ms. Ma was in charge of their prophase works, sales planning, property management and/or development. For the Dongguan Project, Ms. Ma is responsible for the planning and design, sales planning and overall development works.

Ms. Wang Li (王麗), aged 73, is currently the chairman of the Nanjing Project Company and was the general manager of Chengde CITIC Securities Jinyu Urban and Rural Development Co., Ltd.* (承德中證金域城鄉開發有限公司), an associate of the Company. Ms. Wang has over 20 years of experience in the field of property management and development. Ms. Wang possesses rich experience in engineering management and had assumed many key management roles relating to industries such as engineering, infrastructure, property management, etc, in which include, among others, chief engineer of Hainan Zhujiang Industrial Co., Ltd.* (海南珠江實業有限公司) and the general manager for its Shanghai office from August 1992 to July 1996, deputy general manager of Hainan Zhongyuan Boao Development Co., Ltd.* (海南中遠發展博鰲開發有限公司) from December 1998 to July 2004, general manager of Hainan Baoliancheng (Boao) Industrial Co., Ltd.* (海南寶蓮城(博鰲)實業有限公司) from September

* For identification purpose only 19 ETTE FO TE OD

2007 to September 2009, general manager of Hainan Boao State Guesthouse Co., Ltd.* (海南博鰲國賓館有限公司) and Party Committee Deputy Secretary from September 2009 to August 2011. Ms. Wang was also the general manager of Zhongxin Property Hainan Investment Co., Ltd.* (中信地產海南投資有限公司), a subsidiary of the CITIC Group, from August 2011 to April 2013 and became its deputy chairman during the period between April 2013 and June 2016. Over the years, certain large-scale projects led and participated by Ms. Wang include, among others, the supporting projects for the Hainan Boao Asia Forum and the Hainan Boao Asia Forum Project (海南博鰲亞洲論壇項目). Ms. Wang obtained her engineering degree with a specialisation in industrial and civil architecture from Xi’an University of Architecture and Technology in July 1970. Ms. Wang also managed the planning, land collection and infrastructure development works for the Company’s primary land development project in Luanping, the PRC. For the Nanjing Project, Ms. Wang is responsible for the overall planning and design, construction, sales planning and development works.

Mr. Hu Guoshan (胡國山), aged 46, is currently the general manager of the Nanjing Project Company and the project general manager for Lvcheng Real Estate Construction Management Group Co., Ltd.* (綠城房地產建設管理集團有限公司). Mr. Hu possesses over 10 years of experience in real estate and property development. Mr. Hu has served as, among others, the deputy general manager of the projects for Hangzhou Huazi Lvcheng Real Estate Co., Ltd.* (杭州華滋綠城房地產有限公司), the acting general manager of the projects for Lvcheng Real Estate Construction Management Group Co., Ltd.* (綠城房地產建設管理集團有限公司) and the assistant manager in the engineering division at Taizhou Jili Jiayuan Real Estate Development Co., Ltd.*(台州吉利嘉苑房地產開發有限公司). Mr. Hu is responsible for the execution of the planning and design, sales planning, construction and development works.

Although the Company will not participate in the daily operation of the Target Group, the Board believes that it can leverage on the experiences of the executive Directors, namely Mr. Leung Chung Shan, Mr. Tam Lup Wai, Franky and Mr. Liu Liyang, to oversee the Target Group’s operation and ensure that the two projects will be carried out in accordance with their plans. Mr. Leung Chung Shan, the chairman of the Board and an executive Director, has extensive experience and business interests in the PRC in the areas of infrastructure development, real estate properties and other areas. Mr. Tam Lup Wai, Franky, the deputy chairman of the Board and an executive Director, has diversified management experience in the fields of property and property acquisitions. Mr. Tam has taken part in certain substantial property projects in Hong Kong, Vancouver, Canada and Cebu, Philippines. Mr. Liu Liyang, the chief executive officer of the Company and an executive Director, has 16 years of experience in the investment banking industry and has handled more than 20 projects relating to, among others, direct investments, mergers and acquisitions and initial public offerings.

Based on the above information, the Directors consider that the prospects of the Dongguan Project and the Nanjing Project are promising and the management team of the Target Group possesses sufficient knowledge and experience in managing property development projects in the PRC which will help generate sustainable returns to the Group. As such, the Directors consider that the terms of the Acquisition Agreement are fair and reasonable, and the Acquisition is in the interests of the Company and its Shareholders as a whole.

* For identification purpose only 20 ETTE FO TE OD

LISTING RULES IMPLICATION

As at the Latest Practicable Date, the Vendor was interested in 1,938,248,881 Shares, representing approximately 18.08% of the issued share capital of the Company and accordingly is a connected person of the Company. The Acquisition therefore also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirement under the Listing Rules. As the Vendor was considered to have a material interest in the Acquisition by virtue of its interest in the Target Company and the Nanjing Project Company, the Vendor and its associates shall abstain from voting on the resolution approving the Acquisition Agreement and the transactions contemplated thereunder at the SGM. None of the Directors attended the Board meeting has a material interest in the Acquisition.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Hau Chi Kit, Mr. Leung Chi Hung and Mr. Li Hon Kuen, has been established to advise the Independent Shareholders in relation to the Acquisition Agreement and the transactions contemplated thereunder. Crescendo, the Independent Financial Adviser, has also been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

SGM

The SGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Acquisition Agreement and the transactions contemplated thereunder. A notice convening the SGM to be held at 11:30 a.m. on Wednesday, 9 October 2019 at Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save for the Vendor and its associates, no other Shareholder has a material interest in the Acquisition which is different from other Shareholders, and thus no Shareholder is required to abstain from voting at the SGM.

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM or any adjournment thereof (as the case may be), you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit it at the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong as soon as practicable and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) if you so wish.

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CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 4 October 2019 to 9 October 2019 (both dates inclusive) for determining the identity of the Shareholders who are entitled to attend and vote at the SGM. No transfer of shares of the Company will be registered during this period. Shareholders whose name appear on the register of members of the Company on 9 October 2019 shall be entitled to attend and vote at the SGM. In order to be eligible to attend and vote at the SGM, unregistered holders of the shares of the Company should ensure that all transfer forms accompanied by the relevant share certificates must be lodged with the branch share registrar and transfer office of the Company in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong for registration no later than 4:00 p.m. on 3 October 2019.

RECOMMENDATION

The Directors (excluding members of the Independent Board Committee whose view is set out below) consider that the terms of the Acquisition Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Directors (excluding members of the Independent Board Committee) therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

The Independent Board Committee, having considered the advice of Crescendo, is of the opinion that although the Acquisition is not conducted in the ordinary and usual course of business of the Group, the terms of the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned, and the Acquisition is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board eForce Holdings Limited Liu Liyang Executive Director and Chief Executive Officer

22 INDST OEIE

INTRODUCTION

The Company has commissioned Grant Sherman, an Independent Third Party, to serve as an industry expert to prepare this industry overview for the purpose of this circular. The designated market research is based on data from various government publications and landchina.com.

The information and statistics set out in this industry overview has been derived from various public sources including but not limited to official government publications. Grant Sherman believes that the sources of the information in this section are appropriate sources for such information, and reasonable care has been exercised in extracting and reproducing such information and statistics. Landchina.com is a popular and reliable source which consolidates land transaction announcements from the Land and Resources Bureau of the Provinces across the PRC. Grant Sherman has no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. However, such information and statistics has not been independently verified by Grant Sherman. Therefore, Grant Sherman does not make any representation as to the accuracy of such information and statistics, which may be inaccurate, incomplete, out-of-date or inconsistent with each other or with other information.

In conducting this industry overview, Grant Sherman has made reference to various government policies of the PRC, as there are no official English names for these policies, hence they have been translated into English according to their meaning. In case of ambiguity, the Chinese official names shall prevail.

The PRC economy

The nominal gross domestic product (“GDP”) of the PRC increased from RMB64,128.1 billion to RMB90,030.9 billion during the period between 2014 and 2018, representing a compound annual growth rate (“CAGR”) of 7.0%. In the meantime, the GDP per capita increased at a CAGR of 6.6% during the period.

The table below shows the selected economic statistics of the PRC for the years indicated.4

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Population (million) 1,367.8 1,374.6 1,382.7 1,390.1 1,395.4 0.4 Nominal GDP (RMB billion) 64,128.1 68,599.3 74,006.1 82,075.4 90,030.9 7.0 Nominal GDP per capita (RMB) 47,005 50,028 53,680 59,201 64,644 6.6 Real GDP growth (%) 7.3 6.9 6.7 6.8 6.6 6.9*

Source: National Bureau of Statistics of China Note:* the arithmetic mean of 2014 to 2018.

4 http://data.stats.gov.cn/easyquery.htm?cn=C01 23 INDST OEIE

Along with the economic growth, the per capita disposable income grew at a CAGR of 6.4% from RMB28,843.9 in 2014 to RMB39,250.8 in 2018. In the same period, retail sales increased from RMB27,189.6 billion to RMB38,098.7 billion at a CAGR of 7.0%. The table below illustrates the disposable income per capita and retail sales in China for the years indicated.4

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Per capita disposable income of urban residents (RMB) 28,843.9 31,194.8 33,616.3 36,396.0 39,250.8 6.4% Retail sales (RMB billion) 27,189.6 30,093.1 33,231.6 36,626.2 38,098.7 7.0%

Source: National Bureau of Statistics of China

Investments in fixed assets were one of the major aspects of the PRC economy. The fixed asset investments increased from RMB51,202.1 billion in 2014 to RMB64,567.5 billion in 2018, at a CAGR of 4.7%, while real estate investments grew at a CAGR of 4.8%, from RMB9,503.6 billion in 2014 to RMB12,026.4 billion in 2018. The table below illustrates the statistics of fixed asset investment and real estate investment in China for the years indicated.4

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Fixed-asset investment (RMB billion) 51,202.1 56,200.0 60,646.6 64,123.8 64,567.5 4.7% Real estate investment (RMB billion) 9,503.6 9,597.9 10,258.1 10,979.9 12,026.4 4.8%

Source: National Bureau of Statistics of China

Urbanization

According to the China Association of Mayors, China passed the historic milestone of 50 percent of its population living in cities in 2011. As part of China’s reform program, the urbanization rate increased continually from 54.8% in 2014 to 59.6% in 2018, with a target rate of 60% by 2020.

In the 13th Five-year Plan, the PRC government proposed “three 100 million people” 「三個一億( 人」計劃 ) tasks in order to accelerate the new urbanization process. Firstly, granting urban residency to about 100 million rural residents who have moved to cities to solve around 100 million people’s identity problems. Secondly, the new reforms would attempt to complete the rebuilding of rundown areas and villages in cities for about 100 million people to ensure that new urban residents have a place to live. Additionally, the plan guided the process of urbanization for around 100 million people in the central and western regions as they move to city clusters, small and medium cities, county seats, and key towns near their places of origin.

Better developed cities are associated with higher productivity and faster economic growth. It is expected that the increase in urbanization rate would drive the demand for residential properties in the future. 4 http://data.stats.gov.cn/easyquery.htm?cn=C01

24 INDST OEIE

The table below illustrates selected information on urbanization for the years indicated.4

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Urban population (million) 749.0 771.0 792.0 813.0 831 2.1% Population (million) 1,367.8 1,374.6 1,382.7 1,390.1 1,395.4 0.4% Urbanization (%) 54.8% 56.1% 57.3% 58.5% 59.6% －

Source: National Bureau of Statistics of China

REAL ESTATE MARKET IN THE PRC

As a result of accelerating economic activity and rising disposable income, property market in the PRC grew rapidly in the past years. Real estate investment in the PRC rose to RMB12,026.4 billion in 2018, as compared to RMB9,503.6 billion in 2014.

However, against the backdrop of the ‘supply-side structural reform’, the authorities included destocking in their five economic targets for 2016. The gross floor area (“GFA”) of residential properties completed decreased from 808.7 million sq. m. in 2014 to 660.2 million sq. m. in 2018, bringing it to the bottom in the past five years.

In contrast to the effects of destocking, housing prices continued to soar. Average selling price (“ASP”) for residential properties in the PRC experienced remarkable growth between 2014 and 2018, increased from RMB5,932.2 per sq. m. in 2014 to RMB8,544.2 per sq. m. in 2018. The total GFA of residential properties sold grew at a CAGR of 7.1% in the same period.

The following table sets out selected data relating to the PRC property market for the years indicated.5

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Real estate investment (RMB billion) 9,503.6 9,597.9 10,258.1 10,979.9 12,026.4 4.8% Residential Properties Investment in residential properties (RMB billion) 6,435.2 6,459.5 6,870.4 7,514.8 8,519.2 5.8% GFA of residential properties completed (million sq. m.) 808.7 737.8 771.9 718.2 660.2 -4.0% GFA of residential properties sold (million sq. m.) 1,051.9 1,124.1 1,375.4 1,447.9 1,479.3 7.1% ASP of residential properties (RMB per sq. m.) 5,932.2 6,472.3 7,202.6 7,613.8 8,544.2 7.6%

Source: National Bureau of Statistics of China

4 http://data.stats.gov.cn/easyquery.htm?cn=C01 5 http://data.stats.gov.cn/easyquery.htm?cn=C01 2014: www.stats.gov.cn/tjsj/zxfb/201501/t20150120_671070.html 2015: www.stats.gov.cn/tjsj/zxfb/201601/t20160119_1306094.html 2016: www.stats.gov.cn/tjsj/zxfb/201701/t20170120_1455967.html 2017: http://www.stats.gov.cn/tjsj/zxfb/201801/t20180118_1574923.html 2018: www.stats.gov.cn/tjsj/zxfb/201901/t20190121_1645782.html 25 INDST OEIE

According to the National Bureau of Statistics of China, investment in commercial properties suffered a downtrend after 2016, decreased from RMB1,583.8 billion in 2016 to RMB1,417.7 billion in 2018, and the GFA of commercial properties completed demonstrated a CAGR of -1.4%, falling from 120.8 million sq. m. in 2014 to 112.6 million sq. m. in 2018.

Accelerating property destocking stimulated the price of properties sold. The ASP of commercial properties increased from RMB9,813.8 per sq. m. in 2014 to RMB11,151.1 per sq. m. in 2018, demonstrating a CAGR of 2.6% during the same period where the GFA of commercial properties sold saw a steady increase from 90.7 million sq. m. in 2014 to 128.4 million sq. m. in 2017, followed by a reduction to 119.7 million sq. m. in 2018.

The following table sets out selected data relating to the commercial property market in the PRC for the years indicated.6

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Investment in commercial properties (RMB billion) 1,434.6 1,460.7 1,583.8 1,564.0 1,417.7 -0.2% GFA of commercial properties completed (million sq. m.) 120.8 120.3 125.2 126.7 112.6 -1.4% GFA of commercial properties sold (million sq. m.) 90.7 92.5 108.1 128.4 119.7 5.7% ASP of commercial properties (RMB per sq. m.) 9813.8 9,561.2 9,786.3 10,323.3 11,151.1 2.6%

Source: National Bureau of Statistics of China

REGIONAL DEVELOPMENT

Dongguan

Bordering the provincial capital of Guangzhou to the north, Huizhou to the northeast, Shenzhen to the south, and the Pearl River to the west, Dongguan is a prefecture-level city in central Guangdong Province in the PRC and administers four sub-districts and 28 towns. Falling within the Pearl River Delta megacity, the combined GDP with other eight cities was RMB8.1 trillion in 2018, which contributed 83.3% of the GDP of Guangdong Province. The GDP of Dongguan increased at a CAGR of 6.8% from RMB596.8 billion in 2014 to RMB827.9 billion in 2018. Its per capita disposable income and retail sales increased at a CAGR of 6.6% and 8.4% respectively.

6 2014: www.stats.gov.cn/tjsj/zxfb/201501/t20150120_671070.html 2015: www.stats.gov.cn/tjsj/zxfb/201601/t20160119_1306094.html 2016: www.stats.gov.cn/tjsj/zxfb/201701/t20170120_1455967.html 2017: http://www.stats.gov.cn/tjsj/zxfb/201801/t20180118_1574923.html 2018: www.stats.gov.cn/tjsj/zxfb/201901/t20190121_1645782.html

26 INDST OEIE

The table below shows selected economic indicators of Dongguan for the years indicated.7

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Population (million) 8.3 8.3 8.3 8.3 8.4 0.1% GDP (RMB billion) 596.8 637.4 693.7 758.2 827.9 6.8% GDP per capita (RMB) 71,651.0 76,812.0 84,007.0 91,329.0 98,939.0 6.7% Real estate investment (RMB billion) 41.8 40.2 43.9 51.2 NA* NA Per capita disposable income of urban residents (RMB) 36,764.0 39,793.0 43,096.0 46,739.0 50,721.0 6.6% Urbanization (%) 88.8 88.8 89.1 89.9 91.0 0.5% Retail sales (RMB billion) 194.2 218.5 247.1 268.8 290.6 8.4%

Source: DONGGUAN STATISTICAL YEARBOOK (2015-2018), Dongguan Municipal Bureau Statistics Note:* Data for 2018 are not yet available

Real estate market in Dongguan

The real estate market of Dongguan City has experienced steady growth in recent years. Total real estate investment increased at a CAGR of 5.2% from RMB41.8 billion in 2014 to RMB51.2 billion in 2017. The GFA of residential properties completed reversed the downtrend which started since 2014 and increased to 3.6 million sq. m. in 2017 from 1.7 million sq. m. in 2016.

The GFA of residential properties sold increased from 5.6 million sq. m. in 2014 to 9.5 million sq. m. in 2015. However, the GFA of residential properties sold reduced to 5.9 million sq. m. in 2017 and 5.1 million sq. m. in 2018, representing a 5-year CAGR of -1.8%.

The table below sets out key statistics related to the residential property market of Dongguan for the years indicated.7

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Fixed asset investment (RMB billion) 142.7 144.7 155.7 171.3 181.1 4.9% Real estate investment (RMB billion) 41.8 40.2 43.9 51.2 NA* NA GFA of residential properties completed (million sq. m.) 3.2 2.7 1.7 3.6 NA* NA GFA of residential properties sold (million sq. m.) 5.6 9.5 8.9 5.9 5.1 -1.8%

Source: DONGGUAN STATISTICAL YEARBOOK (2015-2018), Dongguan Municipal Bureau Statistics Note:* Data for 2018 are not yet available

7 2014: http://tjj.dg.gov.cn/website/flaArticle/art_show.html?code=nj2015&fcount=2 2015: http://tjj.dg.gov.cn/website/flaArticle/art_show.html?code=nj2016&fcount=2 2016: http://tjj.dg.gov.cn/website/flaArticle/tjnj/2017/directory/one/01-01.html 2017: http://tjj.dg.gov.cn/website/flaArticle/tjnj/2018/directory/one/01-01.html 2018: http://www.dongguan.gov.cn/007330010/0600/201904/33a9188024fc4e45a206b90a9cc5fd40.shtml

27 INDST OEIE

Land transactions in Dongguan

According to the records of landchina.com, there were 164 transactions of residential and commercial land lots in Dongguan between 2014 and 2018 in total. The number of transactions increased sharply from 28 lots in 2014 to 47 lots in 2015, and then reduced to 34 lots and 24 lots in 2016 and 2017 respectively, but rebounded to 31 lots in 2018.

The total site area of land sold swang drastically in the past five years. The total site area of land sold increased by 50.9% from 1,164,459.1 sq. m. in 2014 to 1,757,560.0 sq. m. in 2015, and recorded a downtrend until it bottomed at 857,110.7 sq. m. in 2017, followed by a rebound and reached 1,133,943.7 sq. m. in 2018, demonstrating a five-year negative CAGR of 0.5%. On average, 91.3% of land sold in Dongguan was residential land in the past five years.

The table below sets out key statistics related to the land transactions of Dongguan for the years indicated.8

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Number of land transactions in Dongguan* 28 47 34 24 31 2.1% Total site area of land sold (sq. m.) 1,164,459.1 1,757,560.0 1,147,335.6 857,110.7 1,133,943.7 -0.5%

Source: landchina.com Note: This list is not exhaustive and only includes residential and commercial land transactions.

By region in Dongguan, 38.0% of total site area of land sold in 2018 was from Songshanhu District, 19.2% from Dongnan District, 16.5% from Shuixiang District, 10.3% from Chengqu District. Binhai District and Dongbu District accounted for 9.4% and 6.6% respectively.8

% of land transaction by Districts region in 2018

Songshanhu District 38.0% Dongnan District 19.2% Shuixiang District 16.5% Chengqu District 10.3% Binhai District 9.4% Dongbu District 6.6% Total 100.0%

Source: landchina.com

The ASP of land sold in Dongguan increased at a CAGR of 26.9% to RMB23,030.7 per sq. m. in 2018 from RMB6,994.0 per sq. m. in 2014 and the ASP of residential land sold and commercial land sold grew at a CAGR of 27.2% and 23.5% respectively.

8 http://landchina.com/ 28 INDST OEIE

The average land premium per sq. m. of floor space of residential land has experienced a substantial growth, representing a CAGR of 30.5% from RMB2,705.3 per sq. m. in 2014 to RMB10,227.2 per sq. m. in 2018.

The average land premium per sq. m. of floor space of commercial land grew continuously from 2014 to 2017, which topped at RMB5,329.2 per sq. m. in 2017, however, it reduced drastically by 43.5% to RMB3,013.0 per sq. m. in 2018, representing a five-year CAGR of 5.4%.

The table below sets out key statistics related to the residential and commercial land transactions of Dongguan for the years indicated.8

2014-2018 2014 2015 2016 2017 2018 CAGR(%)

ASP of land sold (RMB per sq. m.)* 6,994.0 7,694.5 17,556.8 21,889.3 23,030.7 26.9%

Residential Land Total site area of residential land sold (sq. m.) 1,121,988.6 1,545,569.6 983,587.4 807,068.7 1,048,675.0 –1.3% ASP of residential land sold (RMB per sq. m.) 7,010.2 7,566.8 18,737.6 22,228.3 23,367.6 27.2% Average land premium per square metre of floor space (RMB per sq. m.) 2,705.3 3,232.9 7,906.1 9,762.6 10,227.2 30.5%

Commercial Land Total site area of commercial land sold (sq. m.) 42,470.5 211,990.4 163,748.1 50,042.0 85,268.8 15.0% ASP of commercial land sold (RMB per sq. m.) 6,567.1 8,625.6 10,463.8 16,422.6 18,888.4 23.5% Average land premium per square metre of floor space 2,317.8 2,721.2 4,203.6 5,329.2 3,013.0 5.4%

Source: landchina.com *Note: This list is not exhaustive and only includes residential and commercial land transactions.

8 http://landchina.com/

29 INDST OEIE

Residential property transactions in Dongguan

The total gross floor area of residential property sold increased from 5.6 million sq. m. in 2014 to 9.5 million sq. m. in 2015, then reduced to 5.9 million sq. m. in 2017 over two years, which was the lowest level since 2014, demonstrating a CAGR of 1.4% between 2014 and 2017. The purchase restriction order (限購令) in Dongguan property market was launched in October 2016 and further cooling policies such as restrictions in loans (限貸), price (限價), transfer to foreigners (限外), and sales (限售) were introduced by the PRC Government in 2017, which put pressure on the area of residential property sold. However, the ASP of residential property sold increased from RMB9,155.8 per sq. m. in 2014 to RMB17,271.3 per sq. m. in 2017, with a CAGR of 17.2% in the same period.1

2014-2017 2014 2015 2016 2017 2018 CAGR(%)

Total gross floor area of residential property sold (sq. m.) 5,562,242.0 9,485,006.0 8,870,113.0 5,888,128.0 NA* 1.4% ASP of residential property sold (RMB per sq. m.) 9,155.8 9,641.6 13,780.1 17,271.3 NA* 17.2%

Source: Dongguan Municipal Bureau Statistics Note:* Data for 2018 are not yet available

Nanjing

The capital of Jiangsu Province of the PRC, Nanjing, is the second largest city in the East China Region and one of the fifteen sub-provincial cities in the administrative structure of the PRC. Bordering Yangzhou to the northeast, Zhenjiang to the east, Changzhou to the southeast and Anhui Province to the west, Nanjing is located in the heartland of Yangtze River Delta region and made it the water and railway transport hub. The GDP of Nanjing increased at a five-year CAGR of 7.8%, from RMB882.1 billion in 2014 to RMB1,282.0 billion in 2018 with a total population of 8.4 million. Its per capita disposable income and retail sales increased at a CAGR of 6.9% and 7.0% respectively.

The table below shows selected economic indicators of Nanjing for the years indicated.9

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Population (million) 8.2 8.2 8.3 8.3 8.4 0.5% GDP (RMB billion) 882.1 972.1 1,050.3 1,171.5 1,282.0 7.8% GDP per capita (RMB) 107,545.0 118,171.0 127,264.0 141,103.0 152,886.0 7.3% Real estate investment (RMB billion) 79.6 108.1 139.3 157.0 154.8 14.2% Per capita disposable income of urban residents (RMB) 42,568.0 46,104.0 49,997.0 54,538.0 59,308.0 6.9% Urbanization (%) 80.9 81.4 82.0 82.3 82.5 0.4% Retail sales (RMB billion) 416.7 459.0 508.8 560.5 583.2 7.0%

Source: Nanjing Municipal Bureau Statistics

Real estate market in Nanjing

The real estate market of Nanjing City has experienced five years of explosive growth as total real estate investment increased at a CAGR of 14.2% from RMB79.6 billion in 2014 to RMB154.8 billion in 2018. For the GFA of residential properties completed, it increased to 10.6 million sq. m. in 2015 from 7.2 million sq. m. in 2014, but experienced a downtrend in 2016 and 2017.

After the GFA of residential properties sold increased from 11.2 million sq. m. in 2014 to 14.3 million sq. m. in 2015, it reduced to 14.1 million sq. m. and 12.1 million sq. m. in 2016 and 2017 respectively.

The table below sets out key statistics related to the residential property market of Nanjing for the years indicated.9

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Fixed asset investment (RMB billion) 546.0 548.4 553.4 621.5 679.9 4.5% Real estate investment (RMB billion) 79.6 108.1 139.3 157.0 154.8 14.2% GFA of residential properties completed (million sq. m.) 7.2 10.6 9.1 8.1 NA* NA GFA of residential properties sold (million sq. m.) 11.2 14.3 14.1 12.1 NA* NA

Source: Nanjing Municipal Bureau Statistics Note:* Data for 2018 are not yet available

9 2014: http://221.226.86.104/file/2015/index.htm 2015: http://221.226.86.104/file/2016/index.htm 2016: http://221.226.86.104/file/2017/index.htm 2017: http://221.226.86.104/file/2018/index.htm 2018: tjj.nanjing.gov.cn/tjxx/201904/t20190402_1495115.html 31 INDST OEIE

Land transactions in Nanjing

According to the records of landchina.com, there were 655 transactions of residential and commercial land lots recorded in Nanjing between 2014 and 2018 in total. The number of transactions had no material change each year between 2014 and 2018, with an average of 131 lots. The total site area of land sold increased from 6.4 million sq. m. in 2014 to 6.6 million sq. m. in 2018, representing a five-year CAGR of 0.8%. On average, 69.5% of land sold in Nanjing was residential in the past five years. The table below sets out key statistics related to the land transactions of Nanjing for the years indicated.8

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

Number of land transactions in Nanjing* 139 122 131 137 126 -1.9% Total site area of land sold (sq. m.) 6,353,868.9 5,798,943.7 6,535,051.1 7,233,026.1 6,618,880.1 0.8%

Source: landchina.com *Note: This list is not exhaustive and only includes residential and commercial land transactions.

By region in Nanjing, 24.8% of total site area of land sold in 2018 was from Pukou District, 17.2% from Lishui District, 16.7% from Jiangning District, 14.4% and 12.6% from Gaochun District and Luhe District respectively, and other eight regions which contributed 14.3% of total site area of land sold in 2018.8

% of land transaction by District region in 2018

Pukou District 24.8% Lishui District 17.2% Jiangning District 16.7% Gaochun District 14.4% Luhe District 12.6% Qixia District 4.8% Yuhuatai District 4.8% Xuanwu District 2.0% Jiangbei New Area 1.3% Jianye District 0.7% Baixia District 0.4% Qinhuai District 0.2% Gulou District 0.1% Total 100.0%

Source: landchina.com

The ASP of residential land sold increased from RMB10,163.2 per sq. m. in 2014 to RMB16,944.1 per sq. m. in 2018, represent a 5-year CAGR of 10.8% where the ASP of commercial land sold increased from RMB5,374.5 per sq. m. in 2014 to RMB8,693.6 per sq. m. in 2018, demonstrating a CAGR of 10.1% during the period.

8 http://landchina.com/

32 INDST OEIE

The average land premium per sq. m. of floor space of residential land first grew from RMB4,656.5 per sq. m. in 2014 to RMB13,619.8 per sq. m. in 2016, then fell significantly to RMB8,361.4 per sq. m. in the following two years, demonstrating a five-year CAGR of 12.4%.

The average land premium per sq. m. of floor space of commercial land grew continuously from 2014 to 2017, which topped at RMB8,011.2 per sq. m. in 2017. However, it was reduced by 51.5% to RMB3,883.1 per sq. m. in 2018, resulting a five-year CAGR of 10.0%. The trend in land price over the past five years is believed to be related to the housing policy in Nanjing, which is explained in the following section headed “Residential property transactions in Nanjing”.

The table below sets out the key statistics related to the residential and commercial land transactions of Nanjing for the years indicated.8

2014-2018 2014 2015 2016 2017 2018 CAGR (%)

ASP of land sold (RMB per sq. m.)* 8,847.7 14,533.6 25,903.0 22,240.6 13,977.8 9.6%

Residential Land Total site area of residential land sold (sq. m.) 4,608,364.5 4,603,075.2 4,423,193.0 4,633,927.5 4,239,218.8 –1.7% ASP of residential land sold (RMB per sq. m.) 10,163.2 16,143.7 29,849.2 23,923.7 16,944.1 10.8% Average land premium per square metre of floor space 4,656.5 6,832.1 13,619.8 11,223.1 8,361.4 12.4%

Commercial Land Total site area of commercial land sold (sq. m.) 1,745,504.4 1,195,868.5 2,111,858.1 2,599,098.6 2,379,661.3 6.4% ASP of commercial land sold (RMB per sq. m.) 5,374.5 8,336.3 17,637.7 19,239.7 8,693.6 10.1% Average land premium per square metre of floor space 2,414.5 2,876.3 6,688.0 8,011.2 3,883.1 10.0%

Source: landchina.com *Note: This list is not exhaustive and only includes residential and commercial land transactions.

8 http://landchina.com/ 33 INDST OEIE

Residential property transactions in Nanjing

The total gross floor area of residential property sold experienced a CAGR of 1.8% during 2014 and 2017. Although the total gross floor area of residential property sold increased from 11.2 million sq. m. in 2014 to 14.3 million sq. m. in 2015, it reduced to 14.1 million sq. m. in 2016 and 12.1 million sq. m. in 2017. The reason of substantial reduction in 2017 was the introduction of cooling measures including sales restriction of newly built residential properties, referring to《關於做好公證機構主持搖號方式公開銷售商品住房工作的通知》、《商品住房搖號現場監督公證業務操作指引》, and 3-year transfer restrictions. The ASP of residential property sold initially increased from RMB10,964.4 per sq. m. in 2014 to RMB17,883.9 per sq. m. in 2016, followed by a decrease of 14.7% in 2017 to RMB15,258.6 per sq. m. in 2017, resulting a CAGR of 8.6% between 2014 and 2017.10

2014-2017 2014 2015 2016 2017 2018 CAGR(%)

Total gross floor area of residential property sold (sq. m.) 11,247,311.0 14,291,841.0 14,062,893.0 12,089,774.0 N/A* 1.8% ASP of residential property sold (RMB per sq. m.) 10,964.4 11,260.3 17,883.9 15,258.6 N/A* 8.6%

Source: Nanjing Municipal Bureau Statistics Note:* Data for 2018 are not yet available

THE FUTURE OUTLOOK

China, the largest emerging economy in the world, continues its economic growth in recent years. The new urbanization policy and economic growth undoubtedly boosted the demand of residential properties in urban areas. The increasing real estate investments with an uptrend in GDP per capita and ASP of residential properties during 2014 and 2018 illustrated that there exists a strong demand in the residential properties, and the trend is expected to continue in the near future.

Moreover, the increment in disposable income and retail sales, which attributable to the economic growth, mirrors the increasing buying power and demand of commercial properties. GFA of commercial properties sold increased at a CAGR of around 5.7% from 2014 to 2018. Average transacted price of commercial properties increased at a CAGR of 2.6% in the same period. Since buying power is expected to grow continually, the demand and the price of commercial properties are anticipated to increase gradually.

Although demand of property development keeps increasing, land supply is limited especially in the first-tier cities such as Shenzhen and Shanghai, which is next to Dongguan and Nanjing respectively. Against this backdrop, the fixed asset investments in Dongguan and Nanjing demonstrated a rising trend since 2014.

10 2014: http://221.226.86.104/file/2015/index.htm 2015: http://221.226.86.104/file/2016/index.htm 2016: http://221.226.86.104/file/2017/index.htm 2017: http://221.226.86.104/file/2018/index.htm

34 INDST OEIE

The ASP of residential land sold in Dongguan and Nanjing during the period from 2014 to 2018 increased at a CAGR of 27.2% and 10.8% respectively. During the same period, the ASP of commercial land in Dongguan and Nanjing increased at a CAGR of 23.5% and 10.1% respectively, despite a downtrend in the ASP of Nanjing residential land in 2017 and 2018. Following the rising fixed asset investments in both cities and bans removal prospect of restrictions on sales and transfer, the demand of land is expected to increase.

35 ETTE FO TE INDEENDENT OD OITTEE

eFORCE HOLDINGS LIMITED 意科控股有限公司* (Incorporated in Bermuda with limited liability) (Stock code: 943)

18 September 2019 To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE ACQUISITION OF THE ENTIRE EQUITY INTEREST IN SHENZHEN QIANHAI CITIC HUATENG INDUSTRIAL CO., LTD.

We refer to the circular of the Company dated 18 September 2019 (the “Circular”) of which this letter forms part. Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board as the members of the Independent Board Committee to advise the Independent Shareholders in connection with the Acquisition Agreement and the transactions contemplated thereunder. Crescendo has been appointed as the Independent Financial Adviser to advise us in this regard. Details of their advice, together with the principal factors and reasons they have taken into account, are contained in their letter set out on pages 37 to 62 of the Circular. Your attention is also drawn to the letter from the Board and the additional information set out in the appendices to the Circular.

Having considered the advice of Crescendo, we consider that although the Acquisition is not conducted in the ordinary and usual course of business of the Group, the terms of the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned, and that the Acquisition is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. Hau Chi Kit Mr. Leung Chi Hung Mr. Li Hon Kuen Independent non-executive Independent non-executive Independent non-executive Director Director Director

* For identification purpose only 36 ETTE FO ESENDO

The following is the text of the letter from Crescendo setting out its advice to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement and the transactions contemplated thereunder, which has been prepared for the purpose of inclusion in this circular.

1506 Tai Tung Building 8 Fleming Road Wanchai, Hong Kong

18 September 2019 eForce Holdings Limited Suite 3008 Man Yee Building 68 Des Voeux Road Central Hong Kong

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with respect to the terms of the Acquisition contemplated under the Acquisition Agreement, details of which are set out in the Letter from the Board contained in the circular of the Company dated 18 September 2019 to the Shareholders (the “Circular”), of which this letter forms part. Capitalized terms used in this letter have the same meanings as defined elsewhere in the Circular unless the context requires otherwise.

On 6 July 2019, the Purchaser (an indirect wholly-owned subsidiary of the Company), the Vendor, the Target Company, the Dongguan Project Company and the Nanjing Project Company entered into the Acquisition Agreement, pursuant to which, among other things, the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the Sale Shares, which represent the entire equity interest in the Target Company as at the Completion Date, at the Consideration of RMB200,000,000 (equivalent to approximately HK$220,000,000), payable by way of issue of an interest-free promissory note with a term of six months in the principal amount of RMB200,000,000 (the “Promissory Note”).

37 ETTE FO ESENDO

The Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules. As at the Latest Practicable Date, the Vendor was interested in 1,938,248,881 Shares, representing approximately 18.08% of the issued share capital of the Company and accordingly is a connected person of the Company. The Acquisition therefore also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The SGM will be convened and held to consider and, if thought fit, approve the Acquisition Agreement and the transactions contemplated thereunder. As the Vendor was considered to have a material interest in the Acquisition by virtue of its interest in the Target Company and the Nanjing Project Company, the Vendor and its associates shall abstain from voting on the resolution approving the Acquisition Agreement and the transactions contemplated thereunder at the SGM. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save for the Vendor and its associates, no other Shareholders have a material interest in the Acquisition which is different from other Shareholders, and thus no other Shareholders are required to abstain from voting at the SGM.

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Hau Chi Kit, Mr. Leung Chi Hung and Mr. Li Hon Kuen, has been established to advise the Independent Shareholders in relation to the Acquisition Agreement and the transactions contemplated thereunder. We, Crescendo Capital Limited, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard, in particular as to whether the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned, the Acquisition is on normal commercial terms and in the ordinary and usual course of business of the Group as well as whether the Acquisition is in the interests of the Company and the Shareholders as a whole.

We are not associated with the Group and its associates and do not have any shareholding in any member of the Group or right (whether legally enforceable or not) to subscribe for, or to nominate persons to subscribe for, securities in any member of the Group. Save for acting as an independent financial adviser in this appointment, we have not acted as a financial adviser or an independent financial adviser to the Company and its associates in the past two years. Apart from normal professional fees payable to us in connection with this appointment, no arrangements exist whereby we will receive any fee or benefit from the Group and its associates. We are not aware of any relationship or interest between us and the Company or any other parties that would be reasonably considered to affect our independence to act as an independent financial adviser to the Independent Board Committee and the Independent Shareholders.

38 ETTE FO ESENDO

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the information and representations supplied, and the opinions expressed, by the Directors and management of the Company and have assumed that such information and statements, and representations made to us or referred to in the Circular are true, accurate and complete in all material respects as of the date hereof and will continue as such at the date of the SGM. The Directors have collectively and individually accepted full responsibility for the Circular, including particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group and having made all reasonable enquiries have confirmed that, to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in the Circular misleading.

We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have no reasons to suspect that any material information has been withheld by the Directors or management of the Company, or is misleading, untrue or inaccurate, and consider that they may be relied upon in formulating our opinion. We have not, however, for the purposes of this exercise, conducted any independent detailed investigation or audit into the businesses or affairs or future prospects of the Group and the related subject of, and parties to, the Acquisition Agreement. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change this opinion.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the Acquisition, we have considered the following principal factors and reasons:

1. Information on the Group

The Group is principally engaged in the manufacture and sale of healthcare and household products, coal mining business and money lending business.

39 ETTE FO ESENDO

The consolidated financial information of the Group for the six months ended 30 June 2019 and 2018 and the two years ended 31 December 2018, which was extracted from the interim report and annual report of the Company respectively, is summarized as follows:

For the six months ended For the year ended 30 June 31 December 2019 2018 2018 2017 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (audited) (audited) (restated)

Revenue 102,476 120,165 299,117 199,218 Gross profit 35,363 27,734 106,527 63,124

Loss from operations (2,857) (13,535) (10,621) (26,610)

Profit/(loss) before tax 55,755 95,011 57,277 (44,190) Profit/(loss) for the period/year attributable to owners of the Company 41,686 92,257 55,386 (43,664)

As at 30 June 2019 HK$’000 (unaudited)

Non-current assets 1,515,483 Current assets 408,711

Total assets 1,924,194

Non-current liabilities (279,322) Current liabilities (127,538)

Total liabilities (406,860)

Net assets 1,517,334

Equity attributable to owners of the Company 1,516,166

40 ETTE FO ESENDO

The revenue of the Group for the year ended 31 December 2018 amounted to approximately HK$299.1 million, of which approximately 81.4% (2017: 76.0%) was derived from the manufacture and sale of healthcare and household products (the “Manufacturing Business”), approximately 13.2% (2017: 17.1%) was derived from the production and trading of agricultural and fertilizers products and approximately 5.4% (2017: 6.9%) was interest income from the money lending business. The revenue of the Group for the year ended 31 December 2018 increased by approximately 50.2%, as compared to approximately HK$199.2 million in 2017, which was mainly attributable to the increase in revenue of the Manufacturing Business of approximately HK$92.2 million resulting from the increase in sales volume in the major markets of the Group. Sales to the United States of America increased by approximately HK$43.4 million as the customers launched new product series in 2018 and pulled ahead their orders in the second half of 2018 to avoid the threat of higher tariffs. Sales to the PRC also increased by approximately HK$30.7 million as a result of the expansion of the domestic market in oral health care products by both local and foreign brands while sales to HK and other markets increased by approximately HK$20.2 million as a long-term customer had shifted the production of one of its existing product lines to the Group temporarily in 2018. Given the increased revenue and the increase in sales for products with high gross profit margin and improvement in process and enhancement in automation, the gross profit of the Group increased by approximately 68.8% from approximately HK$63.1 million for the year ended 31 December 2017 to approximately HK$106.5 million for the year ended 31 December 2018. With the increased gross profit, the loss from operations decreased from approximately HK$26.6 million for the year ended 31 December 2017 to approximately HK$10.6 million for the year ended 31 December 2018 although the Group recorded an increase in administrative expenses of approximately HK$25.4 million for the year ended 31 December 2018.

During the year ended 31 December 2018, the Group recognized a gain on bargain purchase of approximately HK$111.7 million relating to an acquisition which was partly off-set by the recognition of impairments of unpatented technology, other assets, property, plant and equipment, goodwill and loan receivables in aggregate of approximately HK$54.7 million. The profit before tax and the profit of the Group attributable to owners of the Company for the year ended 31 December 2018 amounted to approximately HK$57.3 million and HK$55.4 million respectively while a loss before tax and a loss of the Group attributable to owners of the Company of approximately HK$44.2 million and HK$43.7 million respectively were recorded for the year ended 31 December 2017.

The Group discontinued its operation of the production and trading of agricultural and fertilizers products in May 2019. The revenue of the Group for the six months ended 30 June 2019 amounted to approximately HK$102.5 million, of which approximately 92.2% (2018: 93.5%) was derived from the Manufacturing Business and approximately 7.8% (2018: 6.5%) was interest income generated from money lending business. The revenue of the Group for the six months ended 30 June 2019 decreased by approximately 14.7%, as compared to approximately HK$120.2 million for the six months ended 30 June 2018, as the revenue of the Manufacturing Business decreased by approximately HK$17.9 million as a result of the decrease in sales volume in the major markets of the Group. Sales to the PRC reduced by approximately HK$13.2 million as a result of the stiff competition in the electric toothbrushes market in the PRC during the period while sales to HK and other markets also dropped by approximately HK$3.5 million as a customer had shifted the production of one of its existing product lines to the Group temporarily in 2018 but such production was ceased in 2019.

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Given the labour cost of the Group was relatively high for the six months ended 30 June 2018 as compared to the six months ended 30 June 2019 caused by labour shortage and tight production schedule requested by customers in 2018, the gross profit of the Group increased by approximately 27.5% from approximately HK$27.7 million for the six months ended 30 June 2018 to approximately HK$35.4 million for the six months ended 30 June 2019. With the increased gross profit, the loss from operations decreased from approximately HK$13.5 million for the six months ended 30 June 2018 to approximately HK$2.9 million for the six months ended 30 June 2019. However, with the increases in net loss on fair value changes on investments at fair value through profit or loss, share of loss of associates and finance costs of approximately HK$9.6 million, HK$16.9 million and HK$14.2 million respectively, and the reduction in gain on bargain purchase recognised by the Group of approximately HK$9.2 million for the six months ended 30 June 2019, as compared to the previous corresponding period, the profit before tax decreased from approximately HK$95.0 million for the six months ended 30 June 2018 to approximately HK$55.8 million for the six months ended 30 June 2019. Taking into account the loss from discontinued operations of approximately HK$14.6 million recorded for the six months ended 30 June 2019, the profit of the Group attributable to owners of the Company for the six months ended 30 June 2019 decreased to approximately HK$41.7 million as compared to approximately HK$92.3 million for the six months ended 30 June 2018.

As at 30 June 2019, the non-current assets of the Group amounted to approximately HK$1,515.5 million, of which approximately HK$63.5 million were property, plant and equipment, approximately HK$228.7 million were exploration and evaluation assets, approximately HK$8.7 million were right-of- use assets, approximately HK$1,212.4 million were interests in associates and approximately HK$2.2 million were investment at fair value through profit or loss. The current assets of the Group amounted to approximately HK$408.7 million as at 30 June 2019, which mainly consisted of inventories of approximately HK$28.4 million, trade and other receivables of approximately HK$226.2 million, loan and interests receivables of approximately HK$105.6 million, amount due from an associate of approximately HK$21.9 million and cash and bank balances of approximately HK$25.5 million. The current liabilities of the Group as at 30 June 2019 amounted to approximately HK$127.5 million, which comprised trade and other payables of approximately HK$99.7 million, lease liabilities of approximately HK$7.3 million, borrowings of approximately HK$13.7 million and current tax liabilities of approximately HK$6.8 million. As at 30 June 2019, the non-current liabilities of the Group amounted to approximately HK$279.3 million, which comprised lease liabilities of approximately HK$3.0 million, shareholder loan of approximately HK$265.5 million and deferred tax liabilities of approximately HK$10.8 million. As at 30 June 2019, the net current assets of the Group amounted to approximately HK$281.2 million while the net assets attributable to the owners of the Company amounted to approximately HK$1,516.2 million. The gearing ratio, as expressed as total liabilities over total assets, of the Group was approximately 0.21 as at 30 June 2019.

42 ETTE FO ESENDO

2. Information on the Target Group

The Target Company is an investment holding company established in the PRC with limited liability and a wholly-owned subsidiary of the Vendor. The Target Company acquired 100% equity interest in the Dongguan Project Company in September 2017. Pursuant to the Acquisition Agreement, it is one of the conditions precedent to Completion that the Vendor shall complete the Reorganisation which involves (i) the transfer of 51% equity interest in the Nanjing Project Company held by an indirect wholly-owned subsidiary of the Vendor to the Target Company; and (ii) the transfer and clearance of the shareholder’s loans of the Dongguan Project Company and the Nanjing Project Company to the effect that the Target Group will no longer owe any amount to the Vendor upon completion of the Reorganisation. Upon completion of the Reorganisation, the Target Company will hold 100% equity interest in the Dongguan Project Company and 51% equity interest in the Nanjing Project Company and will be principally engaged in property development in the PRC. The remaining 49% equity interest in the Nanjing Project Company will be held by an indirect non-wholly-owned subsidiary of the Vendor, which is indirectly held as to 51% by the Vendor and 49% by an Independent Third Party.

We noted that the Purchaser may, at its discretion, waive the condition precedent of completion of the Reorganisation. The Directors consider that discretion of the Purchaser to waive such condition precedent would enable the Company to have more flexibility in proceeding with the Acquisition. However, since the Reorganisation has a material effect to the Enlarged Group, the Board has resolved that it will not waive such condition precedent.

Dongguan Project Company

The Dongguan Project Company is a company established in the PRC on 6 September 2001 with limited liability and is principally engaged in the development of the Dongguan Project. Its principal asset is the Dongguan Land which is a parcel of land covering an aggregate land use area of approximately 6,500 sq. m. for commercial service and urban residential usage with a term of 40 years and 70 years respectively. The Dongguan Land is located in the north side of Guantai Avenue, Zhouxi Village, Nancheng District, Dongguan City, Guangdong Province, the PRC. The Dongguan Project will involve the development of two 23-storey composite buildings comprising two 19-storey residential towers built over a 4-storey commercial podium with gross floor area of approximately 29,427 sq. m. and a 2-storey car park basement providing 147 car parking spaces with gross floor area of approximately 7,336 sq. m..

Based on the latest development plan of the Dongguan Project, the total estimated construction cost is approximately RMB154 million. As at the Latest Practicable Date, the Dongguan Project Company has an available loan facility of RMB30 million obtained from a prominent investment company (the “Investment Company”) established in the PRC, being a company founded by 16 conglomerates and promoted by the government of Guangdong Province with a planned registered capital of RMB50 billion and an initial paid-up capital of RMB16 billion, to finance the initial development of the Dongguan Project. The Dongguan Project Company expects to commence the sale of the residential units in July 2020 and the commercial units and the car park will be sold in 2021. Part of the sale proceeds from the sales will be used to finance the remaining construction costs of the Dongguan Project. As at the Latest Practicable Date, the construction work on the Dongguan Land had not commenced yet.

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The Vendor has entered into an arrangement with CITIC Prospects Fund (Shenzhen) Partnership (Limited Partnership)* 中證前程基金(深圳)合伙企業(有限合伙), pursuant to which 10% of the net profit (after deducting all costs and taxes) generated from the Dongguan Project Company will be shared with CITIC Prospects Fund (Shenzhen) Partnership (Limited Partnership). Due to this profit sharing arrangement, in negotiating the Consideration, the Purchaser and the Vendor only took into account 90% of the adjusted net asset value of the Dongguan Project Company.

Nanjing Project Company

The Nanjing Project Company is a company established in the PRC on 28 April 2008 with limited liability and is principally engaged in the development of the Nanjing Project. Its principal asset is the Nanjing Land which comprises 14 parcels of land with an aggregate land use area of approximately 240,000 sq. m., among which 2 parcels of land are for commercial service usage with a term of 40 years and 12 parcels of land are for urban residential usage with a term of 70 years. The Nanjing Land is located in the south of Naishan, Tuanjie Village, Donggou Town, Liuhe District, Nanjing City, Jiangsu Province, the PRC, which is close to the Naishan ecological scenic area.

The Nanjing Project will include the development of low-rise comprehensive residential units with a total gross floor area of approximately 235,123 sq. m.. The Nanjing Project will also include commercial developments such as commercial buildings, hotel and other ancillary facilities covering a total gross floor area of approximately 23,458 sq. m., of which approximately 81,666 sq. m. will be basement car parking spaces. The construction work on the Nanjing Land has commenced since August 2019. Based on the latest development plan of the Nanjing Project, the construction work of phase one of the Nanjing Project, which includes certain commercial area and residential area, will be completed by the end of 2021. Once the construction work is completed, the commercial area and the residential area will be launched for sale. The Nanjing Project Company has entered into a hotel management agreement with an international hotel brand in August 2019 for the development of a contemporary, casual and creative hotel which shall contain not less than 190 rooms with room area of not less than 30 sq. m. each. The total construction area of the hotel shall be not less than 160,000 sq. m., the construction of which is expected to be completed within three years from the agreement date (i.e. August 2022). The Nanjing Project Company, as the owner of the hotel, shall share the profit from the hotel operation with the hotel management company annually and it had no present intention to sell the hotel as at the Latest Practicable Date. The remaining development area which only covers residential units will be completed by the end of 2023. The total estimated construction cost of the Nanjing Project is approximately RMB1,684 million. The Nanjing Project Company is in the process of obtaining financing from the Investment Company to finance the development of the Nanjing Project and it is expected that a loan facility of RMB500 million will be available subject to the completion of the Reorganisation. The Nanjing Project will also be financed by the sale proceeds after certain commercial and residential areas are launched for sale.

Financial information of the Target Group

Before completion of the Reorganisation, the Target Company is a holding company whose only asset is the 100% equity interest in the Dongguan Project Company. The financial information of the Target Group for the five months ended 31 May 2019 and 2018 and the two years ended 31 December 2018 and 2017, as extracted from the accountants’ report of the Target Group contained in Appendix II to the Circular, are summarized as follows: 44 ETTE FO ESENDO

Target Group

For the five months ended For the year ended 31 May 31 December 2019 2018 2018 2017 RMB’000 RMB’000 RMB’000 RMB’000 (audited) (unaudited) (audited) (audited)

Loss before tax (3,623) (1,833) (10,181) (4,050) Loss for the period/year (3,623) (1,833) (10,181) (4,050)

As at 31 May 2019 RMB’000 (audited)

Non-current assets – Current assets 148,079

Total assets 148,079

Non-current liabilities (129,429) Current liabilities (36,504)

Total liabilities (165,933)

Net liabilities (17,854)

Since the Dongguan Project Company has not commenced any development activities for the Dongguan Project, there were no revenues recorded for the Target Group for the two years ended 31 December 2017 and 2018 and the five months ended 31 May 2019. The net loss of the Target Group increased from approximately RMB4.1 million for the year ended 31 December 2017 to approximately RMB10.2 million for the year ended 31 December 2018. Such increase was mainly attributable to the increase in administrative expenses of approximately RMB8.0 million as a result of the increases in salaries, professional fee and other travelling and entertainment expenses. The finance costs reduced by approximately RMB1.8 million during the relevant period. The Target Group recorded a net loss of approximately RMB3.6 million for the five months ended 31 May 2019 while a net loss of approximately RMB1.8 million was recorded for the corresponding period in 2018. The increase in the net loss during the period in 2019 was mainly attributable to the increase in finance costs of approximately RMB2.7 million, being the interest expenses incurred for a loan due to the ultimate holding company of the Target Group, and was partially offset by a decrease in administrative expenses of approximately RMB1.0 million which mainly comprised professional fees.

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As at 31 May 2019, the current assets of the Target Group amounted to approximately RMB148.1 million, which mainly consisted of the cost of the Dongguan Land of approximately RMB146.8 million and other receivables of approximately RMB1.1 million. The current liabilities of the Target Group as at 31 May 2019 amounted to approximately RMB36.5 million, which comprised amount due to the immediate holding company of approximately RMB19.2 million and borrowings of approximately RMB17.3 million. As at 31 May 2019, the non-current liabilities of the Target Group, being borrowings, amounted to approximately RMB129.4 million. The borrowings are secured by the pledge of the equity interest in the Dongguan Project Company and a parcel of land in the PRC with an effective interest rate of 16% as at 31 May 2019. As at 31 May 2019, the Target Group had net current assets of approximately RMB111.6 million and net liabilities of approximately RMB17.9 million. The gearing ratio, as expressed as total liabilities over total assets, of the Target Group was approximately 1.12 as at 31 May 2019.

Dongguan Project Company

Since the Dongguan Project Company was acquired by the Target Company in September 2017, the audited consolidated financial information of the Target Group does not include the financial information of the Dongguan Project Company before September 2017. The financial information of the Dongguan Project Company for the five months ended 31 May 2019 and 2018 and the two years ended 31 December 2018 and 2017, as extracted from the accountants’ report of the Dongguan Project Company contained in Appendix III to the Circular, are summarized as follows:

For the five months ended For the year ended 31 May 31 December 2019 2018 2018 2017 RMB’000 RMB’000 RMB’000 RMB’000 (audited) (unaudited) (audited) (audited)

Loss before tax (2,744) (1,058) (1,269) (308) Loss for the period/year (2,744) (1,058) (1,269) (308)

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As at 31 May 2019 RMB’000 (audited)

Non-current assets – Current assets 163,665

Total assets 163,665

Non-current liabilities (129,429) Current liabilities (27,760)

Total liabilities (157,189)

Net assets 6,476

The Dongguan Project Company is principally engaged in the development of the Dongguan Project. Since the Dongguan Project Company has not commenced any development activities for the Dongguan Project, there were no revenues recorded by the Dongguan Project Company for the two years ended 31 December 2017, 2018 and the five months ended 31 May 2019. The loss incurred by the Dongguan Project Company for the two years ended 31 December 2017 and 2018 was mainly attributable to the administrative expenses while the loss incurred by the Dongguan Project Company for the five months ended 31 May 2019 was due to the interest expenses incurred of approximately RMB2.7 million.

As at 31 May 2019, the current assets of the Dongguan Project Company amounted to approximately RMB163.7 million, which mainly consisted of amount due from ultimate holding company of approximately RMB131.1 million, properties under development for sale of approximately RMB31.4 million and other receivables of approximately RMB1.1 million. The current liabilities of the Dongguan Project Company as at 31 May 2019 amounted to approximately RMB27.8 million, which comprised amount due to the immediate holding company of approximately RMB10.5 million and borrowings of approximately RMB17.3 million. As at 31 May 2019, the non-current liabilities of the Target Group, being borrowings, amounted to approximately RMB129.4 million. The borrowings are secured by the pledge of the equity interest in the Dongguan Project Company and a parcel of land in the PRC with an effective interest rate of 16% as at 31 May 2019. As at 31 May 2019, the Dongguan Project Company had net current assets of approximately RMB135.9 million and net assets of approximately RMB6.5 million. The gearing ratio, as expressed as total liabilities over total assets, of the Dongguan Project Company was approximately 0.96 as at 31 May 2019.

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Nanjing Project Company

Since the Nanjing Project Company will only become a subsidiary of the Target Company upon completion of the Reorganisation, the audited consolidated financial information of the Target Group does not include the financial information of the Nanjing Project Company. The financial information of the Nanjing Project Company for the five months ended 31 May 2019 and 2018 and the two years ended 31 December 2018 and 2017, as extracted from the accountants’ report of the Nanjing Project Company contained in Appendix IV to the Circular, are summarized as follows:

For the five months ended For the year ended 31 May 31 December 2019 2018 2018 2017 RMB’000 RMB’000 RMB’000 RMB’000 (audited) (unaudited) (audited) (audited)

(Loss)/profit before tax (430) (627) 108,757 (929) (Loss)/profit for the period/year (430) (627) 108,757 (929)

As at 31 May 2019 RMB’000 (audited)

Non-current assets 103 Current assets 736,682

Total assets 736,785

Non-current liabilities (411,509) Current liabilities (190,611)

Total liabilities (602,120)

Net assets 134,665

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The Nanjing Project Company is principally engaged in the development of the Nanjing Project. Since the Nanjing Project Company has not commenced any development activities for the Nanjing Project, there were no revenues being recorded under the Nanjing Project Company for the two years ended 31 December 2017, 2018 and the five months ended 31 May 2019. For the year ended 31 December 2018, the Nanjing Project Company recorded a net profit of approximately RMB108.8 million as compared to a net loss of approximately RMB0.9 million for the year ended 31 December 2017. The net profit recorded for the year ended 31 December 2018 was mainly attributable to the recognition of gain on fair value change on amount due to an ex-shareholder of approximately RMB119.4 million which was partly off-set by the increase in the administrative expenses of approximately RMB9.6 million resulting from the compensation fees incurred in an equity transfer dispute case in the PRC, which was settled in 2018. The Nanjing Project Company recorded a net loss of approximately RMB0.4 million for the five months ended 31 May 2019, representing a decrease of approximately 33.3% as compared to a net loss of approximately RMB0.6 million for the corresponding period in 2018.

As at 31 May 2019, the non-current assets of the Nanjing Project Company, which comprised property, plant and equipment only, amounted to approximately RMB0.1 million. The current assets of the Nanjing Project Company as at 31 May 2019 amounted to approximately RMB736.7 million, which mainly consisted of properties under development for sale of approximately RMB711.1 million, tax recoverable of approximately RMB14.0 million and other receivables of approximately RMB10.7 million. The current liabilities of the Nanjing Project Company as at 31 May 2019 amounted to approximately RMB190.6 million, which comprised accruals and other payables of approximately RMB6.9 million, amount due to the immediate holding company of approximately RMB67.2 million and amount due to an ex-shareholder of approximately RMB116.5 million. As at 31 May 2019, the non-current liabilities of the Nanjing Project Company, being amount due to an ex-shareholder, amounted to approximately RMB411.5 million. As at 31 May 2019, the Nanjing Project Company had net current assets and net assets of approximately RMB546.1 million and RMB134.7 million respectively. The gearing ratio, as expressed as total liabilities over total assets, of the Nanjing Project Company was approximately 0.82 as at 31 May 2019.

3. Reasons for the Acquisition

As disclosed in the annual report of the Company for the year ended 31 December 2018, the Group has been identifying suitable investment opportunities to drive sustainable growth for the Group and to enhance long-term corporate value. The Company completed the acquisition of 35% equity interest in Pacific Memory Sdn Bhd, a company principally engaged in the commercial development in Malaysia, in March 2018 and the acquisition of Hong Kong Zhongzheng City Investment Limited, a company principally engaged in primary land development projects in the PRC, in January 2019. The Board has continued to identify other appropriate investment opportunities and considers the prospects of the Dongguan Project and the Nanjing Project are promising and the Acquisition will help generate sustainable returns to the Group in view of the one-off income to be generated from sale of the property units of the Dongguan Project and the Nanjing Project as well as the recurring income to be generated from the hotel operation of the Nanjing Project.

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The Dongguan Project is located in Dongguan Nancheng which is easily accessible by highways and reachable in approximately 40 minutes from Shenzhen by car. It is also approximately 5 kilometres away from the subway station, Nancheng’s administrative centre and central business district. We have searched for the statistics released by the Dongguan Municipal Bureau of Statistics regarding the sales of new residential housing in Dongguan and the relevant information is summarised below:

2015 2016 2017 2018

Gross domestic product (GDP) growth rate (%) 8.0 8.1 8.1 7.4 Total sales amount (RMB) 95,944,000,000 122,179,000,000 92,119,000,000 90,600,000,000 Total sales area (sq. m.) 9,778,100 8,877,100 5,566,200 5,068,300 Average selling price (RMB/sq. m.) 9,812 13,763 16,550 17,876 Increase in average selling price (%) 40.3 20.2 8.0

The gross domestic product of Dongguan continued to grow at rates between 7.4% and 8.1% during the period from 2015 to 2018. We noted that although the total sales area of new residential housing in Dongguan showed a decreasing trend during 2015 to 2018, the average selling price of new residential housing in Dongguan increased continuously during the period from approximately RMB9,812 per sq. m. in 2015 to approximately RMB17,876 per sq. m. in 2018, representing a compound annual growth rate of approximately 22.1%.

Nanjing is the capital city of Jiangsu province which is located at the lower reaches of Yangtze River. The Nanjing Project is located in the Liuhe District which is approximately 50 minutes away from the city centre of Nanjing. We have also searched for the statistics released by the Nanjing Municipal Bureau of Statistics in respect of the sale of residential housing in Nanjing and the relevant information is summarized as follows:

2015 2016 2017 2018

Gross domestic product (GDP) growth rate (%) 9.3 8.0 8.1 8.0 Total sales amount (RMB) 160,931,000,000 251,499,000,000 184,473,000,000 193,664,000,000 Total sales area (sq.m.) 14,291,800 14,062,900 12,089,800 9,826,500 Average selling price (RMB/sq.m.) 11,260 17,884 15,259 19,708 Increase/(decrease) in average selling price (%) 58.8 (14.7) 29.2

The gross domestic product of Nanjing continued to grow with a relatively high growth rate of 8.0% to 9.3% during the period from 2015 to 2018 although the growth rate was on a decreasing trend during the period. We also noted that the total sales area of residential housing in Nanjing has been decreasing since 2016. However, the average selling price was generally on a rising trend during the period from 2015 to 2018 with a compound annual growth rate of approximately 20.5% despite a decrease of approximately 14.7% was recorded in 2017.

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We were advised by management of the Company that, upon Completion, the Company will not participate in the daily operation of the Target Group. The Dongguan Project and the Nanjing Project will be managed by the key management team of the Target Group, the members of which have been engaging in property development in the PRC for many years and are experienced in managing property development projects as well as raising funds for such projects. Meanwhile, the executive Directors, namely Mr. Leung Chung Shan, Mr. Tam Lup Wai Franky and Mr. Liu Liyang, will be responsible for overseeing the Target Group’s operation to ensure the two projects will be carried out in accordance with the Company’s plans. We have reviewed the biographies of the senior management of the Target Group, which are also set out in the Letter from the Board, and consider that the management team of the Target Group possesses the relevant experience and expertise for managing the property development projects of the Target Group. We have also discussed with management of the Company, and reviewed, the biographies of the abovementioned Directors. Mr. Leung Chung Shan has extensive experience and business interests in the areas of infrastructure development and real estate properties in the PRC. Mr. Tam Lup Wai Franky has diversified management experience in the fields of property, property acquisitions, strategic investments and hotel start-up project. Mr. Liu Liyang has 16 years of experience in investment banking industry and has handled over 20 projects relating to, among others, direct investments, mergers and acquisitions and initial public offerings. We consider that the Directors’ experiences in real estate properties, corporate management or financing shall enable them to oversee the Target Group’s operation.

We were also given to understand from management of the Company that the Target Group will be responsible for raising funds for the development of the Dongguan Project and the Nanjing Project, details of which are set out in the section headed “2. Information on the Target Group” above. It is expected that the construction costs of the Dongguan Project and the Nanjing Project will be financed by loans from the Investment Company and the sale proceeds from the sales of the property units of the Dongguan Project and the Nanjing Project. We were advised by management of the Company that given the Nanjing Land is free from mortgages or charges at the moment, it is considered that there would not be any material obstacle in obtaining funding for the development of the Nanjing Project although the Nanjing Project Company has yet to secure funding for its development as at the Latest Practicable Date.

In light of the above, we concur with the view of the Directors that the prospects of the Dongguan Project and the Nanjing Project are promising and the management team of the Target Group possesses sufficient knowledge and experience in managing property development projects in the PRC which will help generate returns to the Group in medium term and is in the interests of the Company and the Shareholders as a whole.

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4. Consideration

The Consideration is RMB200,000,000 (equivalent to approximately HK$220,000,000), which shall be satisfied by the issue of an interest-free promissory note with a term of six months in the principal amount of RMB200,000,000 (equivalent to approximately HK$220,000,000) by the Company to the Vendor (or its designated nominee) within three (3) Business Days from the Completion Date. The Purchaser will procure the Company to settle the Promissory Note by cash when it falls due.

The consideration was determined after arm’s length negotiations between the Purchaser and the Vendor with reference to (i) 90% of the unaudited consolidated net liabilities of the Target Company as at 31 May 2019; (ii) 90% of the valuation surplus of the Dongguan Land which was appraised by an independent professional valuer with a preliminary valuation as at 31 May 2019 of RMB270.0 million (equivalent to approximately HK$297.0 million); (iii) 51% of the unaudited net asset value of the Nanjing Project Company as at 31 May 2019; (iv) 51% of the valuation surplus of the Nanjing Land which was appraised by an independent professional valuer with a preliminary valuation as at 31 May 2019 of RMB640.0 million (equivalent to approximately HK$704.0 million); and (v) the transfer and clearance of the shareholder’s loans of the Dongguan Project Company and the Nanjing Project Company to the effect that the Target Group will no longer owe any amount to the Vendor upon completion of the Reorganisation.

Valuations of the Dongguan Land and the Nanjing Land

To assess the fairness and reasonableness of the Consideration, we have considered the valuations of the Dongguan Land and the Nanjing Land as at 30 June 2019 prepared by Grant Sherman, an independent professional valuer, in the amount of RMB270.0 million and RMB700.0 million respectively as set out in the valuation report (the “Valuation Report”) contained in Appendix VI to the Circular.

We have performed works as required under Note 1(d) to Rule 13.80 of the Listing Rules in respect of the valuations of the Dongguan Land and the Nanjing Land performed by Grant Sherman, which included discussion with Grant Sherman as to its experiences in valuing properties in the PRC similar to those of the Dongguan Land and the Nanjing Land and its relationship with the Group and other parties to the Acquisition Agreement, and review of the terms of Grant Sherman’s engagement for the assessment of the valuations of the Dongguan Land and the Nanjing Land, in particular to its scope of work.

52 ETTE FO ESENDO

We understand that Mr. Lawrence Chan Ka Wah, the director of Grant Sherman and the signor of the Valuation Report, is a member of the Royal Institution of Chartered Surveyors, a member of the Hong Kong Institute of Surveyors, Registered Professional Surveyors in the General Practice Section, a RICS Registered Valuer and a member of the China Institute of Real Estate Appraisers and Agents with over 16 years of experience in valuation of properties in Hong Kong, Macau, the PRC and the Asian Rim. As such, we are of the view that the signor of the Valuation Report is qualified, experienced and competent in performing the valuation of properties and to form a reliable opinion in respect of the valuations of the Dongguan Land and the Nanjing Land. We noted from the engagement letter entered into between the Company and Grant Sherman that the scope of work was appropriate for Grant Sherman to form the opinion required to be given and there were no limitations on the scope of work which might adversely impact the degree of assurance given by Grant Sherman in the Valuation Report. Grant Sherman confirmed us that apart from normal professional fees payable to it in connection with its engagement for the valuation, no arrangements exist whereby it will receive any fee or benefit from the Group and its associates. We have enquired with Grant Sherman as to its independence from the Group and the parties to the Acquisition Agreement and were given to understand that Grant Sherman is a third party independent of the Company and its connected persons. Grant Sherman also confirmed us that it was not aware of any relationship or interest between it and the Company or any other parties that would be reasonably considered to affect its independence to act as an independent valuer for the Company.

We have reviewed the Valuation Report in respect of the valuation of the Dongguan Land and the Nanjing Land prepared by Grant Sherman and discussed with Grant Sherman the methodology, basis and assumptions adopted in arriving at the valuations of the Dongguan Land and the Nanjing Land as at 30 June 2019. We understand from Grant Sherman that the Valuation Report was prepared in compliance with the HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors and the requirements as set out in Chapter 5 and Practice Note 12 of the Listing Rules and Rule 11 of the Code on Takeovers and Mergers issued by Securities and Futures Commission.

53 ETTE FO ESENDO

Grant Sherman advised us that given the Dongguan Land and the Nanjing Land are properties under development and there were sufficient market transactions available for comparison purposes, it considered market approach was the most appropriate valuation method in arriving at the valuation of the Dongguan Land and the Nanjing Land and thus it has adopted market approach in arriving at the market values of the Dongguan Land and the Nanjing Land. As set out in the Valuation Report, market approach provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available and Grant Sherman has also taken into account the expended construction costs and the construction costs that will be expended to complete the developments to reflect the quality of the completed development. We have discussed with Grant Sherman the selection criteria of, and reviewed, the comparables used by Grant Sherman for assessing the values of the Dongguan Land and the Nanjing Land and noted that the comparables are similar assets located in vicinity of the Dongguan Land and the Nanjing Land respectively for which price information is available. As such, we concur with the view of Grant Sherman that the comparables used in valuation are reasonable and comparable to the Dongguan Land and the Nanjing Land. We also understand from Grant Sherman that it had carried out on-site inspections and made relevant enquiries and searches for the purpose of the assessment and no irregularities were noted during the course of the assessment.

Given the methodology applied by Grant Sherman is one of the generally accepted procedures and practices of professional surveyors and is in compliance with HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors, we consider that the methodology and basis adopted by Grant Sherman for determining the market values of the Dongguan Land and the Nanjing Land is appropriate. Together with the fact that no unusual matters had come to our attention that led us to believe that the valuations of the Dongguan Land and the Nanjing Land were not prepared on a reasonable basis, we believe that the valuations of the Dongguan Land and the Nanjing Land fairly represent the market values of the Dongguan Land and the Nanjing Land and form a fair and reasonable basis for our further assessment on the Consideration.

54 ETTE FO ESENDO

Valuation of the Target Group

The adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company as at 31 May 2019, which is presumed to be the fair value of the Target Group and the Nanjing Project Company, amounted to approximately RMB222.4 million (equivalent to approximately HK$244.6 million), which was calculated as follows:

equivalent to RMB million HK$ million

90% of the audited consolidated net liabilities of the Target Company as at 31 May 2019 (16.1) (17.6)

51% of the audited net assets of the Nanjing Project Company as at 31 May 2019 68.7 75.5

90% of the fair value adjustment of the Dongguan Land – Valuation of the Dongguan Land as at 30 June 2019 270.0 297.0 – Carrying value of the Dongguan Land in the accounts of the Target Company as at 31 May 2019 (146.8) (161.5)

– Valuation surplus 123.2 135.5 – 90% of the valuation surplus 110.9 122.0

Deferred tax liabilities adjustment on the valuation surplus of the Dongguan Land at a tax rate of 25% (27.7) (30.5)

51% of the fair value adjustment of the Nanjing Land – Valuation of the Nanjing Land as at 30 June 2019 700.0 770.0 – Carrying value of the Nanjing Land in the accounts of the Nanjing Project Company as at 31 May 2019 (711.1) (782.3)

– Valuation surplus (11.1) (12.3) – 51% of the valuation surplus (5.7) (6.3)

The aggregate shareholder’s loans owed to the Vendor by the Target Group as at 31 May 2019 92.3 101.5

Adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company as at 31 May 2019 222.4 244.6

55 ETTE FO ESENDO

The Consideration of RMB200.0 million represents a discount of approximately 10.1% to the adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company as at 31 May 2019 of approximately RMB222.4 million.

We have conducted a research on the website of the Stock Exchange for companies which (a) are currently listed on the Stock Exchange; and (b) have conducted transactions relating to acquisition/disposal of property development and related business during the period from 6 June 2019, being one month immediately preceding the date of the Acquisition Agreement, to the Latest Practicable Date. Based on the above-mentioned criteria, we have, on our best effort, identified nine comparable transactions (the “Comparables”), which we consider are exhaustive based on the said criteria and are representative samples as those transactions involved the acquisition/disposal of property development and related business. Set out below is a summary of the nature of transaction and the basis of consideration for the Comparables.

Premium/ (discount) of consideration over/(to) the Company name Date of adjusted net (stock code) announcement Nature of transaction Basis of consideration asset value (dd/mm/yyyy) (%)

SRE Group Limited (1207) 11 June 2019 Disposal of a company With reference to the assets and (1.4) principally engaged in property liabilities of the target company, development in the PRC the shareholder loan and the valuation of the assets of the target company

C&D International Investment 17 June 2019 Acquisition of a company With reference to the valuation of (0.9) Group Limited (1908) holding a land for development the total assets and liabilities of in the PRC the target company

Prosperity International 24 June 2019 Disposal of companies With reference to the net asset 0.2 Note 1 Holdings (H.K.) Limited principally engaged in property value, the financial performance 49.4 Note 1 (803) development in the PRC and business prospects of the target companies

Shirble Department Store 26 June 2019 Disposal of shares of a company With reference to (i) the financial (30.9) Holdings (China) Limited listed on the Stock Exchange position and the value and scale (312) principally engaged in property of land bank of the target group; development and hotel and (ii) the original acquisition business in the PRC price, the prevailing market prices and the generally low trading volume of the shares of the target company

56 ETTE FO ESENDO

Premium/ (discount) of consideration over/(to) the Company name Date of adjusted net (stock code) announcement Nature of transaction Basis of consideration asset value (dd/mm/yyyy) (%)

Central China Real Estate 27 June 2019 Acquisition of a company With reference to the financial N/A Note 2 Limited (832) principally engaged in the position of the target company, real estate development the development potential of the in the PRC target land and the planning and design conditions and the branding benefits of the project

China Sandi Holdings Limited 28 June 2019 Acquisition of a company With reference to, among other 14.9 (910) engaged property development things, the net asset value of the projects in the PRC target company, the carrying value of the shareholder loan and the sale price of units presold but not yet delivered

Modern Land (China) Co., 28 June 2019 Acquisition of a company With reference to, among other N/A Note 2 Limited (1107) principally engaged in land things, the financial statements development and of the target company and the consolidation, real estate prevailing market price of the development and management land in the vicinity of the land in the PRC parcels

BGMC International Limited 25 July 2019 Acquisition of companies With reference to, among other N/A Note 3 (1693) principally engaged in property things, the market value of the development in Malaysia lands held by the target companies

57 ETTE FO ESENDO

Premium/ (discount) of consideration over/(to) the Company name Date of adjusted net (stock code) announcement Nature of transaction Basis of consideration asset value (dd/mm/yyyy) (%)

Perfect Group International 30 August 2019 Acquisition of a company With reference to the target (0.2) Holdings Limited (3326) engaged in property company’s net value of assets development in the PRC after revaluation

Minimum (30.9)

Maximum 49.4

Average 4.4

The Company (943) 7 July 2019 Acquisition of companies With reference to the net asset (10.1) engaged in property value of the target companies, development in the PRC valuation of the properties and shareholder loans

Source: the website of the Stock Exchange

Notes:

1. There were two separate acquisitions disclosed in the announcement of Prosperity International Holdings (H.K.) Limited.

2. No information regarding the valuation of the properties was disclosed in these announcements.

3. The consideration of this transaction was determined with reference to the market value of the lands held by the target companies.

We noted that save for BGMC International Limited, all the Comparables made reference to the net asset value of the target companies (taking into account property valuation, if any) as the basis of determining the consideration of the transactions. Therefore, we consider that it is not uncommon for the consideration of transactions relating to property development business making reference to the net asset value of the target companies (taking into account property valuation, if any) and it is fair and reasonable for the Consideration to make reference to the adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company.

Meanwhile, we noted that the consideration of the Comparables ranged from a discount of approximately 30.9% to a premium of approximately 49.4% to/over the respective adjusted net asset value of the target company with an average of a premium of approximately 4.4%. The discount of approximately 10.1% of the Consideration to the adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company falls within the range of the Comparables and represents a better term as compared to the average of the Comparables of a premium.

58 ETTE FO ESENDO

Having considered that (i) it is not uncommon for the consideration of transactions relating to property development business making reference to the net asset value of the target companies (taking into account property valuation, if any); (ii) the Consideration represents a discount of approximately 10.1% to the adjusted unaudited combined net asset value of the Target Group and the Nanjing Project Company as at 31 May 2019, which is presumed to be the fair value of the Target Group and the Nanjing Project Company; and (iii) the discount of approximately 10.1% falls within the range of the Comparables and represents a better term as compared to the average of the Comparables, we consider that the Consideration is fair and reasonable so far as the Independent Shareholders are concerned and it is on normal commercial terms.

5. Promissory Note

Pursuant to the Acquisition Agreement, the Company shall issue the Promissory Note in the principal amount of RMB200,000,000, which is interest-free and with a term of six months, to the Vendor (or its designated nominee) within three Business Days from the Completion Date. As disclosed in the interim report of the Company for the six months ended 30 June 2019, the Group had cash and bank balances in the amount of approximately HK$25.5 million only, which is insufficient to settle the Consideration. The Company intends to raise additional funding by either debt or equity financing for settlement of the Promissory Note when it falls due. As at the Latest Practicable Date, the Company did not have any concrete plan for obtaining the abovementioned debt or equity financing. However, Mr. Leung Chung Shan, a substantial Shareholder, shall provide financial support to the Company in the event that the Company is unable to obtain the necessary financing for settlement of the Promissory Note when it falls due.

Given that (i) the issue of the Promissory Note shall avoid any immediate cash outflow by the Group for the Acquisition; (ii) the Promissory Note is interest free; (iii) settlement by borrowings might increase the interest burden of the Group immediately; and (iv) the issue of consideration shares and/or convertible notes would introduce dilution to the existing Shareholders, we consider that it is in the interest of the Company to settle the Consideration by issuing the Promissory Note so as to expedite the Completion while deferring the cash outflow by the Group.

To evaluate the fairness and reasonableness of the terms of the Promissory Note, we have compared the terms of the Promissory Note with those of other promissory notes issued by companies listed on the Stock Exchange for full/partial settlement of the consideration for acquisitions (the “PN Comparables”) during the period from 6 April 2019, being three months immediately preceding the date of the Acquisition Agreement, to the date of the Acquisition Agreement (the “PN Comparison Period”). We have identified, on a best effort basis, 8 PN Comparables, which are considered to be exhaustive, for comparison purposes. We consider that the PN Comparison Period is sufficient and representative for comparison purposes as it covers a current period that reveals the prevailing market conditions and sentiments in the Hong Kong stock market and the recent structure of the issues of promissory notes in Hong Kong for settlement of the consideration for acquisitions and contains sufficient samples and information to enable the Shareholders to have a general understanding on the recent transactions regarding issue of promissory notes for settlement of the consideration for acquisitions being conducted in the Hong Kong stock market.

59 ETTE FO ESENDO

Shareholders should note that the comparison with the PN Comparables is for illustrative purpose only as the principal activities, market capitalisation, profitability and financial position of the PN Comparables may be different from those of the Company. All these factors may affect the terms of the promissory notes of the PN Comparables. Despite the aforementioned, since the PN Comparables can provide a general reference of the transactions involving the issue of promissory notes in the Hong Kong stock market for settlement of the consideration for acquisitions, we consider the comparison with the PN Comparables an appropriate basis for assessing the fairness and reasonableness of the terms of the Promissory Note. Moreover, in forming our opinion on the terms of the Promissory Note, we have considered the results of the comparison with the PN Comparables together with other factors stated in this letter as a whole. Details of the PN Comparables are summarized as follows:

Date of Company name (stock code) announcement Maturity Interest rate (dd/mm/yyyy) (%)

China Jucheng Holding Limited (1027) 30/04/2019 19 months 0.0 Energy International Investments Holdings Limited (353) 03/06/2019 19 months 0.0 Energy International Investments Holdings Limited (353) 03/06/2019 3 months 8.0 Mayer Holdings Limited (1116) 11/06/2019 33 months 3.0 Sino Vision Worldwide Holdings Limited (8086) 14/06/2019 12 months 0.0 Champion Technology Holdings Limited (92) 21/06/2019 1 month 6.2 (Note) Future World Financial Holdings Limited (572) 03/07/2019 24 months 8.0 Hao Tian Development Group Limited (474) 18/07/2019 18 months 5.0

Minimum 1 month 0.0 Maximum 36 months 8.0 Average 18.3 months 3.8

The Company 6 months 0.0

Source: the website of the Stock Exchange

Note: The promissory note of Champion Technology Holdings Limited bears an interest rate of 0.5% per month.

As set out in the above table, the duration of maturity of the PN Comparables ranged from 1 month to 36 months and the duration of maturity of the Promissory Note of 6 months falls within the range of the PN Comparables. It is also noted that the interest rates of the PN Comparables were in a range of nil and 8.0% per annum with an average of approximately 3.8%. Therefore, the Promissory Note, which is interest-free, also falls within the range of the interest rates of the PN Comparables and is lower than the average interest rate of the PN Comparables of 3.8%.

60 ETTE FO ESENDO

Given that (i) the interest rate and the duration of maturity of the Promissory Note fall within the range of those of the PN Comparables; and (ii) we are not aware of any term of the Promissory Note which is uncommon in normal market practice, we consider that the terms of Promissory Note are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

6. Financial effects of the Acquisition

Upon Completion, the Target Company will become an indirect wholly-owned subsidiary of the Company and its assets, liabilities and financial results will be consolidated into the consolidated financial statements of the Enlarged Group. The financial effects of the Acquisition on the Group’s earnings, cash flow, net asset value and gearing are set out below. However, it should be noted that the analysis below is for illustrative purpose only and does not purport to represent how the financial position of the Group would be upon Completion.

Earnings

Had the Acquisition been completed on 1 January 2018, the profit attributable to owners of the Company for the year ended 31 December 2018 would have decreased as each of the Target Group and the Nanjing Project Company recorded net loss for the year ended 31 December 2018.

Cash flow

The consideration of RMB200,000,000 (equivalent to approximately HK$220,000,000) shall be settled by the Promissory Note upon Completion. Therefore, the Group shall have no immediate cash outflow for the Acquisition, save for the estimated transaction costs directly attributable to the Acquisition of approximately HK$3.2 million.

Net asset value

According to the unaudited pro forma financial information of the Enlarged Group as set out in Appendix V to the Circular, had the Acquisition been completed on 30 June 2019, the total assets of the Group would have increased by approximately HK$1,096.6 million from HK$1,924.2 million to approximately HK$3,020.8 million while the total liabilities of the Group would have increased by approximately HK$1,000.3 million from HK$406.9 million to approximately HK$1,407.2 million. Therefore, the net asset value of the Group would have increased by approximately HK$96.3 million had the Acquisition been completed on 30 June 2019.

Gearing

Having considered the effects of the Acquisition on the total assets and total liabilities of the Group as mentioned above, the gearing of the Group, as expressed in the ratio of total liabilities to total assets, would have increased from 0.21 to 0.46 had the Acquisition been completed on 30 June 2019.

61 ETTE FO ESENDO

Based on the above analysis, we noted that the Acquisition would have a positive effect on the net asset value of the Group but negative effects on the Group’s earnings, cash position and gearing. However, having considered the reasons and benefits of the Acquisition and the fairness and reasonableness of the Consideration as well as the fact that the Dongguan Project and the Nanjing Project were at its initial development stage and the rewards from those projects are yet to be realized, we are of the view that the short-term adverse financial impacts of the Acquisition to the Group in respect of earnings, cash position and gearing are commercially justifiable.

RECOMMENDATION

Having considered the principal factors and reasons stated above, we consider that the terms of the Acquisition contemplated under the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned and the Acquisition is on normal commercial terms and in the interests of the Company and Shareholders as a whole although it is not conducted in the ordinary and usual course of business of the Company. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders, and we ourselves also recommend the Independent Shareholders, to vote in favor of the resolution to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Crescendo Capital Limited

Amilia Tsang Helen Fan Managing Director Director

Notes:

1. Ms. Amilia Tsang is a licensed person under the SFO permitted to engage in Type 6 (advising on corporate finance) regulated activity and has over 15 years of experience in corporate finance.

2. Ms. Helen Fan is a licensed person under the SFO permitted to engage in Type 6 (advising on corporate finance) regulated activity and has over 11 years of experience in corporate finance.

62 ENDI I FINNI INFOTION OF TE O

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 December 2016, 2017 and 2018 are disclosed in the following documents which have been published on the respective websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.eforce.com.hk):

• annual report of the Company for the year ended 31 December 2016 published on 26 April 2017 (pages 38 to 111);

• annual report of the Company for the year ended 31 December 2017 published on 26 April 2018 (pages 42 to 113); and

• annual report of the Company for the year ended 31 December 2018 published on 26 April 2019 (pages 43 to 119);

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 July 2019, being the latest practicable date for the purpose of ascertaining the indebtedness of the Enlarged Group prior to the printing of this circular, the Enlarged Group had the following liabilities:

HK$’000

Secured: Finance lease payables 1,447 Borrowings – Factoring loan 8,504 – Other loans 270,488

Unsecured: Borrowings – Loan from a shareholder 200,000 – Other loans 647,996

Total borrowings and payables 1,128,435

The secured finance lease payables of the Enlarged Group were secured by motor vehicles of the Enlarged Group.

The secured factoring loan is secured by a charge over the Enlarged Group’s certain land and building in the People’s Republic of China (the “PRC”) and personal guarantee of the related parties of the Company. The secured factoring loan is entirely denominated in Renminbi.

The secured other loans represent loans which are secured by the equity interest in the Dongguan Project Company and a parcel of land in the PRC. The secured other loans are entirely denominated in Renminbi.

I-1 ENDI I FINNI INFOTION OF TE O

As at the close of business on 31 July 2019, the Enlarged Group had no material contingent liabilities and commitments.

Save as disclosed above in the paragraph headed “Indebtedness Statement” in this appendix and apart from intra-group liabilities and normal trade payables in the ordinary course of the Enlarged Group’s business, as at the close of business 31 July 2019, the Directors are not aware of the Enlarged Group having other outstanding mortgages, charges, debentures or other loan capital, bank overdrafts or loans, other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

The Directors are of the opinion that, in the absence of unforeseen circumstances such as political or economic upheavals or material change in the laws or regulations which might cause significant market downturn and after taking into account the financial resources available to the Enlarged Group including internal resources and available banking facilities, the Enlarged Group has sufficient working capital for its present requirements for at least the next 12 months from the date of publication of this circular.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that there was no material adverse change in the financial or trading position of the Group since 31 December 2018, being the date to which the latest published audited consolidated financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

Following Completion, the Company has no intention to scale down or introduce any changes to the existing businesses of the Group. In addition to the business of the Target Group, the Group will continue to be principally engaged in the manufacture and sale of healthcare and household products, coal mining business and money lending business.

The healthcare and household business

Since the sales showed a decrease in the first half of 2019, the Group is cautious about the outlook of the global consumer market in the second half of 2019 as escalating trade war between the United States of America and the PRC shows no signs of easing. On the other hand, with the rising labour cost and the profit margins under consistent pressure, the Group will continue to improve productivity and operational efficiency to lower the production costs.

The coal mining business

As disclosed in the Company’s announcement dated 6 July 2018, PT Bara Utama Persada Raya, a non-wholly-owned subsidiary of the Company, which holds a license of a coal mine in the Central Kalimantan Province in the Republic of Indonesia (“PT Bara Mine”), has cooperated with PT Sinarjaya Mulia Kun, a party independent of the Company and its connected persons, to conduct mining activities

I-2 ENDI I FINNI INFOTION OF TE O at the PT Bara Mine. Although pre-mining construction works were completed in November 2018, the Group has been engaging in a prolonged negotiation process with the local landlord on the use of its access road and jetty (where coal is unloaded for shipment to the customers). During the first half of 2019, the Group commenced the process of license renewal and it is expected to be completed by the end of 2019.

The money lending business

The segment revenue being interest income from the Group’s money lending business for the six months ended 30 June 2019 was approximately HK$8.0 million (2018: HK$7.8 million). Depending on the nature and terms and conditions of each loan that was made, interest rate ranged from 10% per annum to 24% per annum. Total loan receivables as at 30 June 2019 was approximately HK$97.2 million (31 December 2018: HK$121.0 million). In view of the recent market sentiment, the Group does not expect further growth in its money lending business in 2019.

The acquisition of Pacific Memory Sdn Bhn

The development plan of the first phase of proposed commercial development at Port Dickson, Malaysia was submitted to the relevant government agencies for approval and part of the plan relating to the building of berths has already been approved. During the period under review, the road and drainage plan relating to the first phase, the traffic impact assessment report and the temporary building structure of hoarding have been approved. On 1 August 2019, planning approval for the first phase was obtained. The local management of Pacific Memory Sdn Bhn is awaiting for other part of the development plan to be approved before deciding how to proceed with it. Based on the latest development plan, the first phase of the proposed development is estimated to be completed in around 2021 while the second phase of the proposed development is estimated to be completed in 2023.

The acquisition of Hong Kong Zhongzheng City Investment Limited

The Company completed the acquisition of the entire equity interest in Hong Kong Zhongzheng City Investment Limited (“Hong Kong Zhongzheng”) on 21 January 2019.

There are several projects under Hong Kong Zhongzheng. The major project is located at Luanping County, Chengde, Hebei Province, the PRC (the “Luanping Project”). During the year, the operations of all the property development projects for Luanping County, including the Luanping Project, have been suspended due to adjustment of environmental policies by the local government. Based on the latest communication with the local government, the Luanping Project is expected to be resumed for work before the end of 2019. As a result, the budget of the aggregate area of developed land to be sold is revised to 600 mu for 2019.

The Acquisition

The subsidiaries of the Target Company are principally engaged in property development in the PRC. Details of the Acquisition, including the prospect of the Target Group, are set out in this circular.

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6. RECONCILIATION STATEMENT OF THE VALUE OF THE DONGGUAN LAND AND THE NANJING LAND

To comply with the Listing Rules, the Company has engaged Grant Sherman, an independent professional valuer, to value the Dongguan Land and the Nanjing Land. Details of the valuation report are set out in Appendix VI to this circular. Disclosure of the reconciliation of the net book value and the valuation as required under Rule 5.07 of the Listing Rules is set out below:

RMB’000

Net book value of the Dongguan Land as at 31 May 2019 146,818 Valuation surplus 121,182

Valuation of the Dongguan Land as at 30 June 2019 270,000

RMB’000

Net book value of the Nanjing Land as at 31 May 2019 711,144 Fair value loss (11,144)

Valuation of the Nanjing Land as at 30 June 2019 700,000

I-4 ENDI II FINNI INFOTION OF TE TET O

1. ACCOUNTANT’S REPORT OF THE TARGET GROUP

The following is the text of a report received from the independent reporting accountants, ZHONGHUI ANDA CPA Limited, Certified Public Accountants, Hong Kong, for the purpose of inclusion in this circular.

香港銅鑼灣威非路道18號萬國寶通中心7樓701室 Unit 701, 7/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong. Tel: (852) 2155 8288 Fax: (852) 2564 2297

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF EFORCE HOLDINGS LIMITED

Introduction

We report on the historical financial information of Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd. (the “Target Company”) and its subsidiary (together, the “Target Group”) set out on pages II-5 to II-25, which comprises the consolidated statements of financial position of the Target Group and the statements of financial position of the Target Company as at 31 December 2016, 2017, 2018 and 31 May 2019, and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity, the consolidated statements of cash flows and statements of changes in equity of the Target Company for the period from 23 December 2016 (date of establishment) to 31 December 2016, for each of the two years ended 31 December 2017 and 2018 and the five months ended 31 May 2019 (the “Relevant Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information forms an integral part of this report, which has been prepared for inclusion in the circular of the Company dated 18 September 2019 (the “Circular”) in connection with the proposed acquisition of the entire equity interest in the Target Company.

Directors’ responsibility for the Historical Financial Information

The directors of the Target Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Reporting accountants’ responsibility

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Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of Historical Financial Information that give a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the Target Group and Target Company’s financial position as at 31 December 2016, 2017, 2018 and 31 May 2019 and of the Target Group’s financial performance and cash flows for the Relevant Period in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Target Group which comprises the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the statement of changes in equity of the Target Company for the five months ended 31 May 2018 and other explanatory information (the “Stub Period Comparative Financial Information”). The directors of the Target Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope that an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an

II-2 ENDI II FINNI INFOTION OF TE TET O audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited

Adjustments

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

Material uncertainty relating to the going concern basis

Without qualifying our opinion, we draw attention to note 2 to the Historical Financial Information which mentions that the Target Group incurred a loss of approximately RMB3,623,000 for the five months ended 31 May 2019 and as at 31 May 2019 the Target Group had net liabilities of approximately RMB17,854,000. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Target Group’s ability to continue as a going concern.

ZHONGHUI ANDA CPA Limited Certified Public Accountants Sze Lin Tang Practising Certificate Number P03614 Hong Kong, 18 September 2019

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HISTORICAL FINANCIAL INFORMATION OF THE TARGET COMPANY

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

The Historical Financial Information in this report was prepared based on the consolidated financial statements of the Target Group for the Relevant Period in accordance with Hong Kong Financial Reporting Standards issued by 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.

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

From 23 December 2016 (date of establishment) Year ended Five months ended to 31 December 31 December 31 May 2016 2017 2018 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Revenue 8 – – – – –

Other income 8 – – 82 34 13 Administrative expenses – (90) (8,138) (1,867) (907) Finance costs 9 – (3,960) (2,125) – (2,729)

Loss before tax – (4,050) (10,181) (1,833) (3,623) Income tax expense 10 – – – – –

LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE YEAR/PERIOD 11 – (4,050) (10,181) (1,833) (3,623)

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 31 May 2016 2017 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000

CURRENT ASSETS Properties under development for sale 17 – 129,436 142,474 146,818 Other receivables – 40 40 1,148 Other tax recoverable – – – 41 Cash and bank balances – 6 37,676 72

– 129,482 180,190 148,079

CURRENT LIABILITIES Other payables 19 – 64,553 66 – Amount due to immediate holding company 20 – 68,979 194,355 19,204 Borrowings 21 – – – 17,300

– 133,532 194,421 36,504

NET CURRENT (LIABILITIES)╱ASSETS – (4,050) (14,231) 111,575

NON-CURRENT LIABILITIES Borrowings 21 – – – 129,429

– – – 129,429

NET LIABILITIES – (4,050) (14,231) (17,854)

EQUITY Capital 22 – – – – Reserves – (4,050) (14,231) (17,854)

TOTAL EQUITY – (4,050) (14,231) (17,854)

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STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 31 May 2016 2017 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000

NON-CURRENT ASSETS Investment in a subsidiary 16 – 125,936 126,036 126,036

CURRENT ASSETS Amount due from a subsidiary 18 – – 10,460 10,460 Cash and bank balances – 4 37,654 29

– 4 48,114 10,489

CURRENT LIABILITIES Other payables 19 – 60,936 66 – Amounts due to immediate holding company 20 – 68,965 186,957 150,277

– 129,901 187,023 150,277

NET CURRENT LIABILITIES – (129,897) (138,909) (139,788)

NET LIABILITIES – (3,961) (12,873) (13,752)

EQUITY Capital 22 – – – – Reserves – (3,961) (12,873) (13,752)

TOTAL EQUITY – (3,961) (12,873) (13,752)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Share Accumulated Total capital losses equity RMB’000 RMB’000 RMB’000

As at 23 December 2016 (Date of establishment) – – – Loss and total comprehensive loss for the period – – –

As at 31 December 2016 – – –

As at 1 January 2017 – – – Loss and total comprehensive loss for the year – (4,050) (4,050)

As at 31 December 2017 – (4,050) (4,050)

As at 1 January 2018 – (4,050) (4,050) Loss and total comprehensive loss for the year – (10,181) (10,181)

As at 31 December 2018 – (14,231) (14,231)

As at 1 January 2018 (audited) – (4,050) (4,050) Loss and total comprehensive loss for the period (unaudited) – (1,833) (1,833)

As at 31 May 2018 (unaudited) – (5,883) (5,883)

As at 1 January 2019 – (14,231) (14,231) Loss and total comprehensive loss for the period – (3,623) (3,623)

As at 31 May 2019 – (17,854) (17,854)

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STATEMENTS OF CHANGES IN EQUITY

Share Accumulated Total capital losses equity RMB’000 RMB’000 RMB’000

As at 23 December 2016 (Date of establishment) – – – Loss and total comprehensive loss for the period – – –

As at 31 December 2016 – – –

As at 1 January 2017 – – – Loss and total comprehensive loss for the year – (3,961) (3,961)

As at 31 December 2017 – (3,961) (3,961)

As at 1 January 2018 – (3,961) (3,961) Loss and total comprehensive loss for the year – (8,912) (8,912)

As at 31 December 2018 – (12,873) (12,873)

As at 1 January 2018 (audited) – (3,961) (3,961) Loss and total comprehensive loss for the period (unaudited) – (774) (774)

As at 31 May 2018 (unaudited) – (4,735) (4,735)

As at 1 January 2019 – (12,873) (12,873) Loss and total comprehensive loss for the period – (879) (879)

As at 31 May 2019 – (13,752) (13,752)

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CONSOLIDATED STATEMENTS OF CASH FLOWS

From 23 December 2016 (date of establishment) Year ended Five months ended to 31 December 31 December 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax – (4,050) (10,181) (1,833) (3,623)

Adjustments for: Finance costs – 3,960 2,125 – 2,729

Operating loss before working capital changes – (90) (8,056) (1,833) (894) Change in properties under development for sale – (3,767) (13,038) (7,805) (4,344) Change in other receivable – 223 (3,551) – (1,108) Change in other payables – 3,537 – 1,501 (66) Change in other tax recoverable – – – – (41)

Net cash used in operating activities – (97) (24,645) (8,137) (6,453)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of a subsidiary – (64,916) (60,936) (32,829) –

Net cash used in investing activities – (64,916) (60,936) (32,829) –

CASH FLOWS FROM FINANCING ACTIVITIES Advance from immediate holding company – 65,019 123,251 41,212 – Other loans raised – – – – 144,000 Repayment to immediate holding company – – – – (175,151)

Net cash generated from/(used in) financing activities – 65,019 123,251 41,212 (31,151)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS – 6 37,670 246 (37,604) Cash and cash equivalents at the beginning of the year/period – – 6 6 37,676

Cash and cash equivalents at the end of the year/period – 6 37,676 252 72

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances – 6 37,676 252 72

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Target Company was incorporated as a limited liability company in the People’s Republic of China (the “PRC”) on 23 December 2016. The registered office of the Target Company is located at Qianhai Complex A201, Qianwan Road 1, Qianhai Shenzhen-Hong Kong Corporation Zone, Shenzhen, the PRC.

During the Relevant Period, the Target Company was engaged in investment holding. The Target Group was engaged in property development.

In the opinion of the Directors of the Target Company, as at 31 May 2019, Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd., a company incorporated in the PRC, is the immediate and ultimate holding company.

2. BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

The Historical Financial Information has been prepared in accordance with the accounting policies set out in Note 4 below which conform with HKFRSs. In addition, the Historical Financial Information includes the applicable disclosures required by the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

The Target Group incurred a loss of approximately RMB3,623,000 for the five months ended 31 May 2019 and as at 31 May 2019, the Target Group had net liabilities of approximately RMB17,854,000. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Target Group’s ability to continue as a going concern. Therefore, the Target Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

These Historical Financial Information have been prepared on a going concern basis, the validity of which depends upon the financial support of the ultimate holding company, at a level sufficient to finance the working capital requirements of the Target Group. The ultimate holding company have agreed to provide adequate funds for the Target Group to meet its liabilities as they fall due. The directors are therefore of the opinion that it is appropriate to prepare the consolidated financial statements on a going concern basis. Should the Target Group be unable to continue as a going concern, adjustments would have to be made to the financial statements to adjust the value of the Target Group’s assets to their recoverable amounts and to provide for any further liabilities which might arise and reclassified non-current liabilities as current liabilities.

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

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 accounting periods beginning on or after 1 January 2019.

The Target Group has not early applied the new HKFRSs that have been issued but are not yet effective. The directors anticipate that the new and revised HKFRSs will be adopted in the Historical Financial Information when they become effective.

4. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information have been prepared under the historical cost convention.

The preparation of Historical Financial Information in conformity with HKFRSs requires the use of certain key assumptions and estimates. It also requires the directors to exercise its judgements in the process of applying the accounting policies. The areas involving critical judgements and areas where assumptions and estimates are significant to these financial statements, are disclosed in note 5 to the Historical Financial Information.

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

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(a) Consolidation

The consolidated financial statements include the financial statements of the Target Company and its subsidiary 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’s returns.

When assessing control, the Target Group considers its potential voting rights as well as potential voting rights held by other parties, to determine whether it has control. 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.

(b) 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 Historical Financial Information is presented in RMB, which is the Target 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 values 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.

Financial assets and financial liabilities are recognised in the statement 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 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.

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(d) Financial assets

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

Financial assets of the Target Group are classified as financial assets at amortised cost.

Financial assets at amortised cost

Financial assets (including other receivables) are classified under this category if they satisfy both of the following conditions:

– the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

– the contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

They are subsequently measured at amortised cost using the effective interest method less loss allowance for expected credit losses.

(e) Loss allowance for expected credit losses

The Target Group recognises loss allowances for expected credit losses on financial assets at amortised cost and contract assets. Expected credit losses are the weighted average of credit losses with the respective risks of a default occuring as the weights.

At the end of each reporting period, the Target Group measures the loss allowance for a financial instrument at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument (“lifetime expected credit losses”) for trade receivables, or if the credit risk on that financial instrument has increased significantly since initial recognition.

If, at the end of the reporting period, the credit risk on a financial instrument (other than trade receivables) has not increased significantly since initial recognition, the Target Group measures the loss allowance for that financial instrument at an amount equal to the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on that financial instrument that are possible within 12 months after the reporting period.

The amount of expected credit losses or reversal to adjust the loss allowance at the end of the reporting period to the required amount is recognised in profit or loss as an impairment gain or loss.

(f) 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.

(g) 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. II-13 ENDI II FINNI INFOTION OF TE TET O

(h) Borrowing

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.

(i) Other payables

Other payables are stated 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.

(j) Equity instruments

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

(k) Properties under development for sale

Properties under development for sale are stated at the lower of cost and net realisable value. Costs include acquisition costs, prepaid land lease payments, construction costs, borrowing costs capitalised and other direct costs attributable to such properties. Net realisable value is determined by reference to sale proceeds received after the reporting period less selling expenses, or by estimates based on prevailing market condition. On completion, the properties are reclassified to properties held for sale at the then carrying amount.

(l) Other revenue

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

(m) 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.

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(n) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Target Group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

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

(o) 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 it excludes items of income or expense that are taxable or deductible in other years and it further excludes 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 statements 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 investment in a subsidiary, except where the Target Company 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 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.

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(p) Related parties

A related party is a person or entity that is related to the Target Group.

(A) A person or a close member of that person’s family is related to the Target Group if that person:

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

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

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

(B) An entity is related to the Target Group if any of the following conditions applies:

(i) The entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Target Group or an entity related to the Target Group. If the Target Group is itself such a plan, the sponsoring employers are also related to the Target Group.

(vi) The entity is controlled or jointly controlled by a person identified in (A).

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

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

(q) Segment reporting

Operating segments, and the amounts of each segment item reported in this Historical Financial Information, are identified from the financial information provided regularly to the Target Group’s directors, being the chief operating decision maker, for the purposes of allocating resources to, and assessing the performance of, the Target Group’s various lines of business.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

(r) Impairment of assets

At the end of each reporting period, the Target Group reviews the carrying amounts of its assets except receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Target Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

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Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(s) 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.

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.

(t) 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 Historical Financial Information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Historical 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 director of Target Company has made the following judgement that have the most significant effect on the amounts recognised in the Historical Financial Information (apart from those involving estimations, which are dealt with below).

Going concern basis

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

Net realisable value of properties under development for sale

The Target Group determines the net realisable value of properties under development for sale based on estimation of future selling price less costs to be incurred in relation to the sale, with reference to the valuation report from independent property valuers.

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6. FINANCIAL RISK MANAGEMENT

The Target Group’s activities expose it to a variety of financial risks: foreign currency risk, credit risk, liquidity risk and interest rate 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 currency risk as most of its transactions, assets and liabilities are denominated in the functional currency of the entity to which they are related. The Target Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Target Group will monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The carrying amount of the cash and bank balances and other receivables included in the statement of financial position represents the Target Group’s maximum exposure to credit risk in relation to the Target Group’s financial assets.

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

The Target Group’s exposure to interest-rate risk arises from its bank deposits. These deposits bear interests at variable rates varied with the then prevailing market condition.

(d) 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 of the Target Group’s financial liabilities is as follows:

Carrying Within 1 year Within Amounts or on demand 2 to 5 years RMB’000 RMB’000 RMB’000

As at 31 December 2017 Other payables 64,553 64,553 – Amount due to immediate holding company 68,979 68,979 –

133,532 133,532 –

As at 31 December 2018 Amount due to immediate holding company 194,355 194,355 –

194,355 194,355 –

As at 31 May 2019 Amount due to immediate holding company 19,204 19,204 – Borrowings 146,729 17,300 175,283

165,933 36,504 175,283

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(e) Categories of financial instruments

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Financial assets Financial assets at amortised cost (including cash and cash equivalents) – 46 37,716 1,220

Financial liabilities Financial liabilities at amortised cost – 133,532 194,355 165,933

(f) Fair value

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

7. SEGMENT REPORTING

The Target Group operated only in one business segment, being the engagement in property development in PRC during the Relevant Period. Accordingly, no further disclosures by reportable segment based on business segment are made.

No revenue is generated by the Target Group during the Relevant Period and all of the Target Group’s assets are located in the PRC. Accordingly, no further disclosures by reportable segment based on geographical segment are made.

8. REVENUE AND OTHER INCOME

The Target Group did not generate any revenue during the Relevant Period. An analysis of the Target Group’s other income is as follows:

From 23 December 2016 (date of establishment) to 31 December Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Bank interest income – – 82 34 13

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9. FINANCE COSTS

From 23 December 2016 (date of establishment) to 31 December Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Interests of loans wholly repayable within five years Interest to ultimate holding company – 3,960 2,125 – – Interest on borrowings – – – – 2,729

– 3,960 2,125 – 2,729

10. INCOME TAX EXPENSE

No provision of PRC Corporate Income Tax is required for the Relevant Period since the Target Group has no assessable profits for the Relevant Period.

The reconciliation between the income tax expense and the product of loss before tax multiplied by the PRC Corporate Income Tax rate is as follows:

From 23 December 2016 (date of establishment) to 31 December Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Loss before tax – (4,050) (10,181) (1,833) (3,623)

Tax at the income tax rate of 25% – (1,013) (2,545) (458) (906) Tax effect of expenses not deductible – 936 2,228 193 220 Tax effect of tax losses not recognised – 77 317 265 686

Income tax expenses – – – – –

As at 31 December 2016, 2017 and 2018 and 31 May 2019, the Target Group has unused tax losses of approximately RMBNil, RMB301,000, RMB1,467,000 and RMB4,211,000, respectively, available for offset against future profits. No deferred tax asset has been recognised due to the unpredictability of future profit streams. The unrecognised tax losses will expire in five years.

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11. LOSS FOR THE YEAR/PERIOD

The Target Group’s loss for the year/period during the Relevant Period is stated after charging the following:

From 23 December 2016 (date of establishment) to 31 December Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Staff costs including directors’ emoluments: Salaries, bonus and allowances – – 4,139 – – Retirement benefits scheme contributions – – 292 – – – – 4,431 – –

12. DIRECTORS’ EMOLUMENTS AND HIGHEST PAID INDIVIDUAL EMOLUMENTS

(a) Directors’ emoluments

The director and supervisor of the Target Company did not receive any fee or other emoluments in respect of their services provided to the Target Company for the period from 23 December 2016 (date of establishment) to 31 December 2016, year ended 31 December 2017 and five months ended 31 May 2018 and 2019.

The emoluments of the director and supervisor for the year ended 31 December 2018 are as follows:

Salaries, allowances Contributions and other to pension benefits in kind scheme Total RMB’000 RMB’000 RMB’000

Director Mr. Qiu Qing 742 29 771 Supervisor Mr. Zhou Yinggen 262 16 278

1,004 45 1,049

No emoluments paid or payable by the Target Group were waived and no emoluments were paid by the Target Group to the directors as an inducement to join or upon joining the Target Company or as compensation for loss of office during the Relevant Periods.

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(b) Five highest paid individual emoluments

The five highest paid individuals in the Target Group during year ended 31 December 2018 included one director whose emolument is reflected in the analysis above. The emoluments of the remaining four individuals are set out below:

RMB’000

Salaries, allowances and other benefits in kind 1,446 Contributions to pension scheme 91

1,537

Their emoluments fell within the following bands:

Nil to HK$1,000,000 4

During the Relevant Period, no emoluments paid or payable by the Target Group were waived and no emoluments were paid by the Target Group to the five highest paid individual as an inducement to join or upon joining the Target Group or as compensation for loss of office during the Relevant Period.

13. RETIREMENT BENEFIT SCHEMES

The employees of the Target Group’s entities established in the PRC are members of a central pension scheme operated by the local municipal government. These entities are 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 entities. The only obligation of these entities with respect to the central pension scheme is to meet the required contributions under the scheme.

14. LOSS PER SHARE

Loss per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful.

15. DIVIDENDS

The directors do not recommend any dividend for the Relevant Period.

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16. INVESTMENT IN A SUBSIDIARY

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Unlisted investment, at cost – 125,936 126,036 126,036

The particulars of the Target Company’s subsidiary are as follows:

Place of Percentage incorporation/ of equity held registration by Target Company Name and operation Registered capital Company Principal activities

Dongguan Hexin Real Estate the PRC RMB10,100,000 100% Property development Co., Ltd. (the “Dongguan Project Company”) 17. PROPERTIES UNDER DEVELOPMENT FOR SALE

The carrying amount of properties under development for sale expected to be recovered after more than twelve months from 31 December 2016, 2017, 2018 and 31 May 2019 amounted to approximately RMB nil, RMB129,436,000, RMB142,474,000 and RMB146,818,000 respectively.

As at 31 May 2019, the land use right with carrying amount of approximately RMB13,334,000 was pledged as security for the loans granted to the Target Group (note 21).

18. AMOUNT DUE FROM A SUBSIDIARY

The amounts due are unsecured, non-interest bearing and has no fixed repayment terms.

19. OTHER PAYABLES

Group As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Consideration payable (note) – 60,936 – – Other payable – 3,617 – – Other tax payable – – 66 –

– 64,553 66 –

Company As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Consideration payable (note) – 60,936 – – Other tax payable – – 66 –

– 60,936 66 –

Note:

The balance represented the consideration payable in connection with the acquisition of the Dongguan Project Company (note 23(a)).

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20. AMOUNT DUE TO IMMEDIATE HOLDING COMPANY

The amount due to immediate holding company are unsecured, non-interest bearing as at 31 December 2017 and 31 May 2019, interest-bearing at 18% as at 31 December 2018 and 31 May 2018 and has no fixed repayment terms.

21. BORROWINGS

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Other loans, secured – – – 146,729 Less: Amount due for settlement within 12 months (shown under current liabilities) – – – (17,300)

Amount due for settlement after 12 months – – – 129,429

The other loans are repayable as follows:

Within one year – – – 17,300 In the second year – – – 129,429

– – – 146,729

The effective interest rates as at 31 May 2019 is 16%.

The other loans are secured by the pledge of the equity interest in the Dongguan Project Company and a parcel of land in the PRC.

22. CAPITAL

The Target Company currently does not have any specific policies and processes for managing capital.

23. NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

a. Acquisition of the Dongguan Project Company

In September 2017, the Target Company acquired the 100% equity interests in the Dongguan Project Company (the “Acquisition”) at a cash consideration of approximately RMB125,936,000. The Dongguan Project Company did not conduct any substantial operation before it was acquired by the Target Company. Thus, the directors were of the view that the Acquisition did not constitute a business combination but for the purpose of acquiring properties in the PRC.

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The purchase consideration was allocated to the identifiable assets and liabilities of the Dongguan Project Company acquired as at the date of the Acquisition as follows:

RMB’000

Properties under development for sale 125,669 Other receivables 263 Cash and bank balances 84 Other payable (80)

Cash consideration paid and payable 125,936

Net cash outflow arising on the Acquisition Cash consideration paid and payable 125,936 Consideration payable (60,936) Cash and cash equivalent acquired (84)

64,916

b. The following table shows the Target Group’s changes in liabilities arising from financing activities during the Relevant Period:

Amount due to immediate holding company Borrowings Total RMB’000 RMB’000 RMB’000

As at 23 December 2016, 31 December 2016 and 1 January 2017 – – – Non-cash changes – interest 3,960 – 3,960 Changes in cash flows 65,019 – 65,019

As at 31 December 2017 and 1 January 2018 68,979 – 68,979 Non-cash changes – interest 2,125 – 2,125 Changes in cash flows 123,251 – 123,251

As at 31 December 2018 and 1 January 2019 194,355 – 194,355 Non-cash changes – interest – 2,729 2,729 Changes in cash flows (175,151) 144,000 (31,151)

As at 31 May 2019 19,204 146,729 165,933

As at 31 December 2017 and 1 January 2018 (audited) 68,979 – 68,979 Changes in cash flows (unaudited) 41,212 – 41,212

As at 31 May 2018 (unaudited) 110,191 – 110,191

24. CONTINGENT LIABILITIES

The Target Group did not have any significant contingent liabilities as at each of the end of reporting period.

25. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company or its subsidiary in respect of any period subsequent to 31 May 2019.

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2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

Set out below is the management discussion and analysis of the Target Group for each of the three financial years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019.

Financial and business review

The Target Company is engaged in investment holding while the Target Group is engaged in property development after the Target Company acquired the Dongguan Project Company in September 2017. Since the Dongguan Project Company has not commenced any development activities for the Dongguan Project, there was no revenue recorded for the Target Group for the three years ended 31 December 2016, 2017 and 2018 and the five months ended 31 May 2019.

The net losses of the Target Group for the two years ended 31 December 2017 and 2018 were mainly attributable to the administrative expenses and the interest expenses incurred from a loan due to the ultimate holding company of the Target Group. The administrative expenses increased substantially from RMB0.90 million (equivalent to approximately HK$0.99 million) in 2017 to RMB8.14 million (equivalent to approximately HK$8.95 million) in 2018 was mainly due to the increases in salaries expenses, professional fees incurred and other travelling and entertainment expenses.

The Target Group recorded a net loss of approximately RMB3.62 million (equivalent to approximately HK$3.98 million) for the five months ended 31 May 2019 as compared to a net loss of approximately RMB1.83 million (equivalent to approximately HK$2.01 million) in the corresponding period in 2018, representing an increase of approximately 97.81%. The increase in the net loss during the period in 2019 was primarily attributable to the increase in finance costs of approximately RMB2.73 million (equivalent to approximately HK$3.00 million) which represent the interest expenses incurred from a loan due to the ultimate holding company of the Target Group, partially offset by a decrease in administrative expenses of approximately RMB0.96 million (equivalent to approximately HK$1.06 million) which comprise professional fees.

Liquidity, financial position and capital structure

The total assets of the Target Group was approximately RMB129.48 million (equivalent to approximately HK$142.43 million) as at 31 December 2017 which comprised the properties under development for sale of approximately RMB129.40 million (equivalent to approximately HK$142.34 million), representing the cost of the Dongguan Land. As at 31 December 2017, the Target Group recorded other payables of approximately RMB64.55 million (equivalent to approximately HK$71.01 million) in which its majority represented the consideration payable when the Target Company acquired the Dongguan Project Company from its previous shareholder. It also had an amount due to the immediate holding company of approximately RMB68.98 million (equivalent to approximately HK$75.88 million).

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As at 31 December 2018, the total assets of the Target Group amounted to approximately RMB180.19 million (equivalent to approximately HK$198.21 million), representing an increase of approximately 39.16% from approximately RMB129.48 million (equivalent to approximately HK$142.43 million) as at 31 December 2017. The increase was partly due to the increase in construction cost on the Dongguan Land which increased the carrying value of the Dongguan Land to approximately RMB142.47 million (equivalent to approximately HK$156.72 million) and partly due to the increase in cash and bank balances of approximately RMB37.68 million (equivalent to approximately HK$41.45 million). As at 31 December 2018, the Target Group recorded an amount due to the immediate holding company of approximately RMB194.36 million (equivalent to approximately HK$213.80 million).

As at 31 May 2019, the total assets of the Target Group decreased to approximately RMB148.08 million (equivalent to approximately HK$162.89 million) due to the decrease in the cash and bank balances. The total assets which mainly comprise the cost of the Dongguan Land of approximately RMB146.82 million (equivalent to approximately HK$161.50 million). As at 31 May 2019, the Target Group had an amount due to the immediate holding company of approximately RMB19.20 million (equivalent to approximately HK$21.12 million). It also had borrowings of approximately RMB17.30 million (equivalent to approximately HK$19.03 million) which were current liabilities, and borrowings of approximately RMB129.43 million (equivalent to approximately HK$142.37 million) which were non-current liabilities.

The current ratio of the Target Group, represented by current assets as a percentage of current liabilities, amounted to 0 times, 0.97 times, 0.93 times and 4.06 times as at 31 December 2016, 2017 and 2018 and 31 May 2019 respectively.

No gearing ratio (represented by total interest bearing borrowings as a percentage of total equity) of the Target Group is computed as the Target Group recorded zero equity as at 31 December 2016 and net liabilities as at 31 December 2017, 2018 and 31 May 2019.

Currency and interest rate exposure

For the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019, the Target Group conducted most of its business activities in the PRC and was not exposed to any material foreign currency risk as most of its transactions, assets and liabilities were denominated in RMB. For the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019, the Target Group did not have any formal hedging policies and no financial instrument was used for hedging purpose.

Employment and remuneration policy

As at 31 December 2016, 2017, 2018 and 31 May 2019, the Target Group had nil, nil, 18 and nil employees respectively

The total amount of remuneration for the Target Group for the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019 were nil, nil, approximately RMB4.43 million (equivalent to approximately HK$4.87 million) and nil respectively.

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Significant investments, material acquisitions and disposals of subsidiaries and associated companies

Save for the acquisition of the Dongguan Project Company by the Target Group, the Target Group did not have any material acquisitions and disposals of subsidiaries and associated companies during the years/period under review.

As at 31 December 2016, 2017, 2018 and 31 May 2019, Target Group did not have any significant investments.

Charges on assets and contingent liabilities

Save for the pledge of the equity interest of the Dongguan Project Company and a parcel of land in the PRC for the interest bearing borrowings recorded as at 31 May 2019, the Target Group did not have any charges on assets as at 31 December 2016, 2017, 2018 and 31 May 2019. The Target Group did not have any material contingent liabilities as at 31 December 2017, 31 December 2018 and 31 May 2019.

Future plans for material investments and acquisition of material capital assets

The Target Group did not have any future plans as at 31 December 2016, 2017, 2018 and 31 May 2019.

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1. ACCOUNTANTS’ REPORT OF THE DONGGUAN PROJECT COMPANY

香港銅鑼灣威非路道18號萬國寶通中心7樓701室 Unit 701, 7/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong. Tel: (852) 2155 8288 Fax: (852) 2564 2297

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF EFORCE HOLDINGS LIMITED

Introduction

We report on the historical financial information of Dongguan Hexin Real Estate Development Co., Ltd. (the “Dongguan Project Company”) set out on pages III-5 to III-22, which comprises the statements of financial position of the Dongguan Project Company as at 31 December 2016, 2017, 2018 and 31 May 2019, and the statements of profit or loss and other comprehensive income, the statements of changes in equity and the statements of cash flows for each of the three years ended 31 December 2016, 2017 and 2018 and the five months ended 31 May 2019 (the “Relevant Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information forms an integral part of this report, which has been prepared for inclusion in the circular of the Company dated 18 September 2019 (the “Circular”) in connection with the proposed acquisition of the entired equity interest in Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd..

Directors’ responsibility for the Historical Financial Information

The directors of the Dongguan Project Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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Reporting accountants’ responsibility

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

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the Dongguan Project Company’s financial position as at 31 December 2016, 2017, 2018 and 31 May 2019 and of the Dongguan Project Company’s financial performance and cash flows for the Relevant Period in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

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Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Dongguan Project Company which comprises the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the five months ended 31 May 2018 and other explanatory information (the “Stub Period Comparative Financial Information”). The directors of the Dongguan Project Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope that an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited

Adjustments

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

ZHONGHUI ANDA CPA Limited Certified Public Accountants Sze Lin Tang Practising Certificate Number P03614 Hong Kong, 18 September 2019

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HISTORICAL FINANCIAL INFORMATION OF THE DONGGUAN PROJECT COMPANY

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

The Historical Financial Information in this report was prepared based on the financial statements of the Dongguan Project Company for the Relevant Period in accordance with Hong Kong Financial Reporting Standards issued by 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.

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Five months Year ended 31 December ended 31 May 2016 2017 2018 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Revenue 8 – – – – –

Other income 8 855 190 – – – Administrative expenses (1,006) (498) (1,269) (1,058) (15) Finance costs 9 – – – – (2,729)

Loss before tax (151) (308) (1,269) (1,058) (2,744) Income tax expense 10 (13) – – – –

LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE YEAR/PERIOD 11 (164) (308) (1,269) (1,058) (2,744)

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STATEMENTS OF FINANCIAL POSITION

As at As at 31 December 31 May 2016 2017 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000

NON-CURRENT ASSETS Investment properties 16 10,361 – – –

CURRENT ASSETS Properties under development for sale 17 – 13,978 27,016 31,360 Other receivables 223 40 40 1,147 Amount due from ultimate holding company 18 – – – 131,073 Other tax recoverable – – – 42 Cash and bank balances 123 2 22 43

346 14,020 27,078 163,665

CURRENT LIABILITIES Other payables 10 3,617 – – Amount due to ultimate holding company 19 – 14 7,398 – Amount due to immediate holding company 19 – – 10,460 10,460 Borrowings 20 – – – 17,300

10 3,631 17,858 27,760

NET CURRENT ASSETS 336 10,389 9,220 135,905

TOTAL ASSETS LESS CURRENT LIABILITIES 10,697 10,389 9,220 135,905

NON-CURRENT LIABILITIES Borrowings 20 – – – 129,429

NET ASSETS 10,697 10,389 9,220 6,476

EQUITY Capital 21 10,000 10,000 10,100 10,100 Reserves 697 389 (880) (3,624)

TOTAL EQUITY 10,697 10,389 9,220 6,476

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STATEMENTS OF CHANGES IN EQUITY

Accumulated Share capital losses Total equity RMB’000 RMB’000 RMB’000

As at 1 January 2016 10,000 1,341 11,341 Loss and total comprehensive loss for the year – (164) (164) Dividend paid – (480) (480)

As at 31 December 2016 10,000 697 10,697

As at 1 January 2017 10,000 697 10,697 Loss and total comprehensive loss for the year – (308) (308)

As at 31 December 2017 10,000 389 10,389

As at 1 January 2018 10,000 389 10,389 Issue of capital 100 – 100 Loss and total comprehensive loss for the year – (1,269) (1,269)

As at 31 December 2018 10,100 (880) 9,220

As at 1 January 2018 (audited) 10,000 389 10,389 Loss and total comprehensive loss for the period (unaudited) – (1,058) (1,058)

As at 31 May 2018 (unaudited) 10,000 (669) 9,331

As at 1 January 2019 10,100 (880) 9,220 Profit and total comprehensive income for the period – (2,744) (2,744)

As at 31 May 2019 10,100 (3,624) 6,476

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STATEMENTS OF CASH FLOWS

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (151) (308) (1,269) (1,058) (2,744) Adjustments for: Depreciation 487 150 – – 2,729 Gain on disposal of property, plant and equipment (43) – – – –

Operating loss before working capital changes 293 (158) (1,269) (1,058) (15) Change in properties under development for sale – (3,767) (13,038) (7,805) (4,344) Change in other receivable (112) 183 – – (1,107) Change in other payables (44) 3,607 (3,617) 1,500 – Change in other tax recoverable – – – – (42)

137 (135) (17,924) (7,363) (5,508) Tax paid (13) – – – –

Net cash generated from/(used in) operating activities 124 (135) (17,924) (7,363) (5,508)

CASH FLOWS FROM INVESTING ACTIVITIES Proceed from disposal of property, plant and equipment 84 – – – – Advance to ultimate holding company – – – – (131,073)

Net cash generated from/(used in) investing activities 84 – – – (131,073)

CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid (480) – – – – Issue of capital – – 100 – – Advance from/(repayment to) ultimate holding company – 14 7,384 7,363 (7,398) Advance from immediate holding company – – 10,460 – – New loans raised – – – – 144,000

Net cash (used in)/generated from financing activities (480) 14 17,944 7,363 136,602

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (272) (121) 20 – 21 Cash and cash equivalents at the beginning of the year/period 395 123 2 2 22

Cash and cash equivalents at the end of the year/period 123 2 22 2 43

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 123 2 22 2 43

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Dongguan Project Company was incorporated as a limited liability company in the People’s Republic of China (the “PRC”) on 6 September 2001. The registered office of the Dongguan Project Company is located at No. 200, Nancheng Section, Dongguan Avenue, Nancheng Street, Dongguan, Guangdong, the PRC.

During the Relevant Period, the Dongguan Project Company was engaged in property development.

In the opinion of the Directors of the Dongguan Project Company, as at 31 May 2019, Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd., a company incorporated in the PRC, is the immediate holding company. Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd., a company incorporated in the PRC, is the ultimate holding company.

2. BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

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

During the Relevant Period, the Dongguan Project Company has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2019.

The Dongguan Project Company has not early applied the new HKFRSs that have been issued but are not yet effective. The directors anticipate that the new and revised HKFRSs will be adopted in the Historical Financial Information when they become effective.

4. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information have been prepared under the historical cost convention.

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

(a) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Dongguan Project Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Historical Financial Information is presented in RMB, which is the Dongguan Project Company’s functional and presentation currency.

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

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

(b) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

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 Dongguan Project Company 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:

Motor vehicles 25%

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

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.

Investment properties are land and/or buildings held to earn rentals and/or for capital appreciation. An investment property is measured initially at its cost including all direct costs attributable to the property.

After initial recognition, the investment property is stated at cost less accumulated depreciation and impairment losses. The depreciation is calculated using the straight line method to allocate the cost to the residual value over its estimated useful life of 20 years.

(d) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Dongguan Project Company 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 Dongguan Project Company transfers substantially all the risks and rewards of ownership of the assets; or the Dongguan Project Company 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 is recognised in profit or loss.

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(e) Financial assets

Financial assets of the Dongguan Project Company are classified as financial assets at amortised cost.

Financial assets at amortised cost

Financial assets (including other receivables) are classified under this category if they satisfy both of the following conditions:

– the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

– the contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

They are subsequently measured at amortised cost using the effective interest method less loss allowance for expected credit losses.

(f) Loss allowance for expected credit losses

The Dongguan Project Company recognises loss allowances for expected credit losses on financial assets at amortised cost and contract assets.

At the end of each reporting period, the Dongguan Project Company measures the loss allowance for a financial instrument at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument (“lifetime expected credit losses”) for trade receivables, or if the credit risk on that financial instrument has increased significantly since initial recognition.

If, at the end of the reporting period, the credit risk on a financial instrument (other than trade receivables) has not increased significantly since initial recognition, the Dongguan Project Company measures the loss allowance for that financial instrument at an amount equal to the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on that financial instrument that are possible within 12 months after the reporting period.

The amount of expected credit losses or reversal to adjust the loss allowance at the end of the reporting period to the required amount is recognised in profit or loss as an impairment gain or loss.

(g) 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 Dongguan Project Company’s cash management are also included as a component of cash and cash equivalents.

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(h) 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 Dongguan Project Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(i) Borrowing

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 Dongguan Project Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(j) Other payables

(k) Equity instruments

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

(l) Properties under development for sale

(m) Other revenue

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

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

(n) Employee benefits

(i) Employee leave entitlements

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

(ii) Pension obligations

The Dongguan Project Company contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Dongguan Project Company 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 Dongguan Project Company to the funds.

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(iii) Termination benefits

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

(o) Borrowing costs

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Dongguan Project Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

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

(p) 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 it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Dongguan Project Company’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 statements 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 the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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

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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 Dongguan Project Company intends to settle its current tax assets and liabilities on a net basis.

(q) Related parties

A related party is a person or entity that is related to the Dongguan Project Company.

(A) A person or a close member of that person’s family is related to the Dongguan Project Company if that person:

(i) has control or joint control over the Dongguan Project Company;

(ii) has significant influence over the Dongguan Project Company; or

(iii) is a member of the key management personnel of the Dongguan Project Company or of a parent of the Dongguan Project Company.

(B) An entity is related to the Dongguan Project Company if any of the following conditions applies:

(i) The entity and the Dongguan Project Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Dongguan Project Company or an entity related to the Dongguan Project Company. If the Dongguan Project Company is itself such a plan, the sponsoring employers are also related to the Dongguan Project Company.

(vi) The entity is controlled or jointly controlled by a person identified in (A).

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

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

(r) Segment reporting

Operating segments, and the amounts of each segment item reported in this Historical Financial Information, are identified from the financial information provided regularly to the Dongguan Project Company’s directors, being the chief operating decision maker, for the purposes of allocating resources to, and assessing the performance of, the Dongguan Project Company’s various lines of business.

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(s) Impairment of assets

At the end of each reporting period, the Dongguan Project Company reviews the carrying amounts of its assets except receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Dongguan Project Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

(t) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Dongguan Project Company 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.

(u) Events after the reporting period

Events after the reporting period that provide additional information about the Dongguan Project Company’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 Historical Financial Information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Historical Financial Information when material.

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5. CRITICAL JUDGEMENTS AND KEY ESTIMATES

Key sources of estimation uncertainty

Net realisable value of properties under development for sale

The Dongguan Project Company determines the net realisable value of properties under development for sale based on estimation of future selling price less costs to be incurred in relation to the sale, with reference to the valuation report from independent property valuers.

6. FINANCIAL RISK MANAGEMENT

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

(a) Foreign currency risk

The Dongguan Project Company has minimal exposure to currency risk as most of its transactions, assets and liabilities are denominated in the functional currency of the entity to which they are related. The Dongguan Project Company currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Dongguan Project Company will monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The carrying amount of the cash and bank balances, other receivables and amount due from ultimate holding company in the statements of financial position represents the Dongguan Project Company’s maximum exposure to credit risk in relation to the Dongguan Project Company’s financial assets.

The amount due from ultimate holding company is closely monitored by the directors of the Dongguan Project Company.

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

The Dongguan Project Company’s exposure to interest-rate risk arises from its bank deposits. These deposits bear interests at variable rates varied with the then prevailing market condition.

(d) Liquidity risk

The Dongguan Project Company’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.

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The maturity analysis of the Dongguan Project Company’s financial liabilities is as follows:

Carrying Within 1 year Within amount or on demand 2 to 5 years RMB’000 RMB’000 RMB’000

As at 31 December 2016 Other payables 10 – –

As at 31 December 2017 Other payables 3,617 3,617 – Amount due to immediate holding company 14 14 –

3,631 3,631 –

As at 31 December 2018 Amount due to ultimate holding company 7,398 7,398 – Amount due to immediate holding company 10,460 10,460 –

17,858 7,398 –

As at 31 May 2019 Amount due to immediate holding company 10,460 10,460 – Borrowings 146,729 17,300 175,283

157,189 27,760 175,283

(e) Categories of financial instruments

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Financial assets Financial assets at amortised cost (including cash and cash equivalent) 346 42 62 132,263

Financial liabilities Financial liabilities at amortised cost 10 3,631 17,858 157,189

(f) Fair value

The carrying amounts of the Dongguan Project Company’s financial assets and financial liabilities as reflected in the statements of financial position approximate their respective fair values.

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7. SEGMENT REPORTING

The Dongguan Project Company operated only in one business segment, being the engagement in property development in PRC during the Relevant Period. Accordingly, no further disclosures by reportable segment based on business segment are made.

No revenue is generated by the Dongguan Project Company during the Relevant Period and all of the Dongguan Project Company’s assets are located in the PRC. Accordingly, no further disclosures by reportable segment based on geographical segment are made.

8. REVENUE AND OTHER INCOME

The Dongguan Project Company did not generate any revenue during the Relevant Period. An analysis of the Dongguan Project Company’s other income is as follows:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Rental income 812 190 – – – Gain on disposal of property, plant and equipment 43 – – – –

855 190 – – –

9. FINANCE COSTS

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Interests of loans wholly repayable within five years Interest on borrowings – – – – 2,729

10. INCOME TAX EXPENSE

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Current tax The PRC Corporate income tax 13 – – – –

PRC Corporate Income Tax has been provided at a rate of 25% for the year ended 31 December 2016.

No provision of PRC Corporate Income Tax is required for the years ended 31 December 2017 and 2018 and five months ended 31 May 2019 since the Dongguan Project Company has no assessable profits for that periods.

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The reconciliation between the income tax expense and the product of (loss)/profit before tax multiplied by the PRC Corporate Income Tax rate is as follows:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Loss before tax (151) (308) (1,269) (1,058) (2,744)

Tax at the income tax rate of 25% (38) (77) (317) (265) (686) Tax effect of expenses not deductible 51 – – – – Tax effect of tax losses not recognised – 77 317 265 686

Income tax expenses 13 – – – –

As at 31 December 2016, 2017 and 2018 and 31 May 2019, the Dongguan Project Company has unused tax losses of approximately RMBNil, RMB301,000, RMB1,467,000 and RMB4,211,000, respectively, available for offset against future profits. No deferred tax asset has been recognised due to the unpredictability of future profit streams. The unrecognised tax losses will expire in five years.

11. LOSS FOR THE YEAR/PERIOD

The Dongguan Project Company’s loss for the year/period during the Relevant Period is stated after charging the following:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Depreciation 487 150 – – –

12. DIRECTORS’ EMOLUMENTS

During the Relevant Periods, the directors of the Dongguan Project Company did not receive any fee or other emoluments in respect of their services provided to the Dongguan Project Company. In addition, no emoluments paid or payable by the Dongguan Project Company were waived and no emoluments were paid by the Dongguan Project Company to the directors as an inducement to join or upon joining the Dongguan Project Company or as compensation for loss of office during the Relevant Periods.

13. RETIREMENT BENEFIT SCHEMES

The employees of the Dongguan Project Company’s entities established in the PRC are members of a central pension scheme operated by the local municipal government. These entities are 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 entities. The only obligation of these entities with respect to the central pension scheme is to meet the required contributions under the scheme.

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14. LOSS PER SHARE

Loss per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful.

15. DIVIDENDS

Except for the dividend of RMB480,000 paid during the year ended 31 December 2016, the directors do not recommend any dividend for the Relevant Period.

16. PROPERTY, PLANT AND EQUIPMENT

Investment Motor Properties vehicles Total RMB’000 RMB’000 RMB’000

Cost

As at 1 January 2016 15,445 188 15,633 Disposal – (188) (188)

As at 31 December 2016 and 1 January 2017 15,445 – 15,445 Transfer to property under development for sale (15,445) – (15,445)

As at 31 December 2017, 2018 and 31 May 2019 – – –

Accumulated depreciation

As at 1 January 2016 4,633 111 4,744 Charged for the year 451 36 487 Disposal – (147) (147)

As at 31 December 2016 and 1 January 2017 5,084 – 5,084 Charged for the year 150 – 150 Transfer to property under development for sale (5,234) – (5,234)

As at 31 December 2017, 2018 and 31 May 2019 – – –

Carrying amount

As at 31 December 2016 10,361 – 10,361

As at 31 December 2017 – – –

As at 31 December 2018 – – –

As at 31 May 2019 – – –

17. PROPERTIES UNDER DEVELOPMENT FOR SALE

The carrying amount of properties under development for sale expected to be recovered after more than twelve months from 31 December 2016, 2017, 2018 and 31 May 2019 amounted to approximately RMB nil, RMB13,978,000, RMB27,016,000 and RMB31,360,000 respectively.

As at 31 May 2019, the land use right with carrying amount of approximately RMB13,334,000 was pledged as security for the loans granted to the Target Group (note 20).

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18. AMOUNT DUE FROM ULTIMATE HOLDING COMPANY

The amount due is unsecured, non-interest bearing and has no fixed repayment terms.

19. AMOUNTS DUE TO ULTIMATE HOLDING COMPANY/IMMEDIATE HOLDING COMPANY

The amounts due are unsecured, non-interest bearing and has no fixed repayment terms.

20. BORROWINGS

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Other loans, secured – – – 146,729 Less: Amount due for settlement within 12 months (shown under current liabilities) – – – (17,300)

Amount due for settlement after 12 months – – – 129,429

The other loans are repayable as follows:

Within one year – – – 17,300 In the second year – – – 129,429

– – – 146,729

The effective interest rates as at 31 May 2019 is 16%.

The other loans are secured by the pledge of the equity interest of the Dongguan Project Company and a parcel of land in the PRC.

21. CAPITAL

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Registered capital 10,000 10,000 10,100 10,100

On 29 June 2018, the Dongguan Project Company issued capital of RMB100,000 for cash.

The Dongguan Project Company currently does not have any specific policies and processes for managing capital.

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22. NOTE TO STATEMENTS OF CASH FLOWS

The following table shows the Dongguan Project Company’s changes in liabilities arising from financing activities during the Relevant Period:

Amount due Amount due to to ultimate immediate holding holding company company Borrowings Total RMB’000 RMB’000 RMB’000 RMB’000

As at 1 January 2016, 31 December 2016 and 1 January 2017 – – – – Changes in cash flows 14 – – 14

As at 31 December 2017 and 1 January 2018 14 – – 14 Changes in cash flows 7,384 10,460 – 17,844

As at 31 December 2018 and 1 January 2019 7,398 10,460 – 17,858 Non-cash changes – – 2,729 2,729 Changes in cash flows (7,398) – 144,000 136,602

As at 31 May 2019 – 10,460 146,729 157,189

As at 31 December 2017 and 1 January 2018 (audited) 14 – – 14 Changes in cash flows (unaudited) 7,363 – – 7,363

As at 31 May 2018 (unaudited) 7,377 – – 7,377

23. CONTINGENT LIABILITIES

The Dongguan Project Company did not have any significant contingent liabilities at each of the end of reporting period.

24. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Dongguan Project Company in respect of any period subsequent to 31 May 2019.

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2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE DONGGUAN PROJECT COMPANY

Financial and business review

The Dongguan Project Company is principally engaged in the development of the Dongguan Project. Since the Dongguan Project Company has not commenced any development activities for the Dongguan Project, there was no revenue recorded under the Dongguan Project Company for the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019. The loss incurred by the Dongguan Project Company for the three years ended 31 December 2016, 2017 and 2018 was mainly attributable to the administrative expenses while the loss incurred by the Dongguan Project Company for the five months ended 31 May 2019 was due to the interest expenses incurred from a loan due to the ultimate holding company.

Liquidity, financial position and capital structure

As at 31 December 2016, 2017, 2018 and 31 May 2019, the total assets of the Dongguan Project Company were approximately RMB10.71 million (equivalent to approximately HK$11.78 million), approximately RMB14.02 million (equivalent to approximately HK$15.42 million), approximately RMB27.08 million (equivalent to approximately HK$29.79 million) and approximately RMB163.67 million (equivalent to approximately HK$180.04 million), respectively. As at 31 December 2016, the primary asset of the Dongguan Project Company was the Dongguan Land which was recorded as investment properties and amounted to approximately RMB10.36 million (equivalent to approximately HK$11.40 million). In 2017, the Dongguan Land was reclassified as properties under development for sale. As at 31 December 2017, 2018 and 31 May 2019, the carrying amount of the properties under development for sale were RMB13.98 million (equivalent to approximately HK$15.38 million), RMB27.02 million (equivalent to approximately HK$29.72 million) and RMB31.36 million (equivalent to approximately HK$34.50 million). The Dongguan Project Company also recorded an amount due from its ultimate holding company of approximately RMB131.07 million (equivalent to approximately HK$144.18 million) as at 31 May 2019.

The Dongguan Project Company did not have material liabilities as at 31 December 2016 and 2017. As at 31 December 2018, it recorded an amount due to the ultimate holding company of approximately RMB7.40 million (equivalent to approximately HK$8.14 million) and an amount due to its immediate holding company of approximately RMB10.46 million (equivalent to approximately HK$11.51 million). As at 31 May 2019, the amount due to its ultimate holding company was settled. However, the total liabilities of the Dongguan Project Company increased due to the increase in borrowings of approximately RMB17.30 million (equivalent to approximately HK$19.03 million) which carried interest of 16%, secured and repayable within one year, and borrowings of approximately RMB129.43 million (equivalent to approximately HK$142.37 million) which also carried interest of 16%, secured and repayable in two years. The interest-bearing borrowings were secured by the pledge of the equity interest of the Dongguan Project Company and a parcel of land in the PRC.

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The current ratio of the Dongguan Project Company, represented by current assets as a percentage of current liabilities, was approximately 34.60 times, approximately 3.86 times, approximately 1.52 times and 5.90 times as at 31 December 2016, 2017, 2018 and 31 May 2019, respectively.

The gearing ratio of the Dongguan Project Company, represented by total interest-bearing borrowings as a percentage of total equity, was nil, nil, nil and approximately 22.66 times as at 31 December 2016, 2017, 2018 and 31 May 2019, respectively.

Currency and interest rate exposure

During the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019, the Dongguan Project Company conducted most of its business activities in the PRC and was not exposed to any material foreign currency risk, as most of its transactions, assets and liabilities were denominated in RMB. For the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019 the Dongguan Project Company did not have any formal hedging policies and no financial instrument was used for hedging purpose.

Employment and remuneration policy

During the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019, the Dongguan Project Company did not have any employees and total remuneration was nil.

Significant investments, material acquisitions and disposals of subsidiaries and associated companies

The Dongguan Project Company did not have any material acquisitions and disposals of subsidiaries and associated companies during the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019.

Save for the Dongguan Land, the Dongguan Project Company did not have any significant investments.

Charges on assets and contingent liabilities

Save for the pledge of the equity interest of the Dongguan Project Company and a parcel of land in the PRC for the interest-bearing borrowings recorded as at 31 May 2019, the Dongguan Project Company have any charges on assets as at 31 December 2016, 2017, 2018 and 31 May 2019. The Dongguan Project Group did not have any material contingent liabilities as at 31 December 2016, 2017, 2018 and 31 May 2019.

Future plans for material investments and acquisition of material capital assets

The Dongguan Project Company did not have any other future plans as at 31 December 2016, 2017, 2018 and 31 May 2019.

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1. ACCOUNTANTS’ REPORT OF THE NANJING PROJECT COMPANY

香港銅鑼灣威非路道18號萬國寶通中心7樓701室 Unit 701, 7/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong. Tel: (852) 2155 8288 Fax: (852) 2564 2297

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF EFORCE HOLDINGS LIMITED

Introduction

We report on the historical financial information of Nanjing Yuanding Real Estate Co., Ltd. (the “Nanjing Project Company”) set out on pages IV-5 to IV-24, which comprises the statements of financial position of the Nanjing Project Company as at 31 December 2016, 2017, 2018 and 31 May 2019, and the statements of profit or loss and other comprehensive income, the statements of changes in equity and the statements of cash flows for each of the three years ended 31 December 2016, 2017 and 2018 and the five months ended 31 May 2019 (the “Relevant Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information forms an integral part of this report, which has been prepared for inclusion in the circular of the Company dated 18 September 2019 (the “Circular”) in connection with the proposed acquisition of 100% equity interest in Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd..

Directors’ responsibility for the Historical Financial Information

The directors of the Nanjing Project Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information, and for such internal control as the directors determine is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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Reporting accountants’ responsibility

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the Nanjing Project Company’s financial position as at 31 December 2016, 2017, 2018 and 31 May 2019 and of the Nanjing Project Company’s financial performance and cash flows for the Relevant Period in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

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Review of stub period comparative financial information

We have reviewed the stub period comparative financial information of the Nanjing Project Company which comprises the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the five months ended 31 May 2018 and other explanatory information (the “Stub Period Comparative Financial Information”). The directors of the Nanjing Project Company are responsible for the preparation and presentation of the Stub Period Comparative Financial Information in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope that an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants’ report, is not prepared, in all material respects, in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited

Adjustments

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

ZHONGHUI ANDA CPA Limited Certified Public Accountants Sze Lin Tang Practising Certificate Number P03614 Hong Kong, 18 September 2019

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HISTORICAL FINANCIAL INFORMATION OF THE NANJING PROJECT COMPANY

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

The Historical Financial Information in this report was prepared based on the financial statements of the Nanjing Project Company for the Relevant Period in accordance with Hong Kong Financial Reporting Standards issued by 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.

The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.

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STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Revenue 8 – – – – –

Other income 8 30 52 11 5 6 Gain on fair value change on the amount due to an ex-shareholder – – 119,358 – – Administrative expenses (1,190) (981) (10,612) (632) (436)

(Loss)/profit before tax (1,160) (929) 108,757 (627) (430) Income tax expense 10 – – – – –

(LOSS)/PROFIT AND TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE YEAR/ PERIOD 11 (1,160) (929) 108,757 (627) (430)

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STATEMENTS OF FINANCIAL POSITION

As at 31 December As at 31 May 2016 2017 2018 2019 Notes RMB’000 RMB’000 RMB’000 RMB’000

NON-CURRENT ASSETS Property, plant and equipment 16 149 101 27 103

CURRENT ASSETS Properties under development for sale 17 516,036 642,795 670,016 711,144 Other receivables 400 19,834 10,727 10,717 Deposits and prepayments 225 20 6 25 Tax recoverable – 11,879 13,230 13,955 Cash and bank balances 3,618 3,791 77 841

520,279 678,319 694,056 736,682

CURRENT LIABILITIES Accruals and other payables 18 13,597 796 703 6,893 Amounts due to shareholders 19 479,564 25,854 – – Amounts due to ultimate holding company 19 – 615,727 – – Amounts due to immediate holding company 20 – 9,705 55,000 67,192 Amount due to an ex-shareholder 21 – – 28,846 116,526

493,161 652,082 84,549 190,611

NET CURRENT ASSETS 27,118 26,237 609,507 546,071

TOTAL ASSETS LESS CURRENT LIABILITIES 27,267 26,338 609,534 546,174

NON-CURRENT LIABILITIES Amount due to an ex-shareholder 21 – – 474,439 411,509

NET ASSETS 27,267 26,338 135,095 134,665

EQUITY Capital 22 40,000 40,000 40,000 40,000 Reserves (12,733) (13,662) 95,095 94,665

TOTAL EQUITY 27,267 26,338 135,095 134,665

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STATEMENTS OF CHANGES IN EQUITY

Accumulated Share capital losses Total equity RMB’000 RMB’000 RMB’000

As at 1 January 2016 40,000 (11,573) 28,427 Loss and total comprehensive loss for the year – (1,160) (1,160)

As at 31 December 2016 40,000 (12,733) 27,267

As at 1 January 2017 40,000 (12,733) 27,267 Loss and total comprehensive loss for the year – (929) (929)

As at 31 December 2017 40,000 (13,662) 26,338

As at 1 January 2018 40,000 (13,662) 26,338 Profit and total comprehensive income for the year – 108,757 108,757

As at 31 December 2018 40,000 95,095 135,095

As at 1 January 2018 (audited) 40,000 (13,662) 26,338 Loss and total comprehensive loss for the period (unaudited) – (627) (627)

As at 31 May 2018 (unaudited) 40,000 (14,289) 25,711

As at 1 January 2019 40,000 95,095 135,095 Loss and total comprehensive loss for the period – (430) (430)

As at 31 May 2019 40,000 94,665 134,665

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STATEMENTS OF CASH FLOWS

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before tax (1,160) (929) 108,757 (627) (430)

Adjustments for: Gain on fair value change on the amount due to an ex-shareholder – – (119,358) – – Depreciation of property, plant and equipment 68 58 74 26 3 Interest income (30) (52) (11) (5) (6)

Operating loss before working capital changes (1,122) (923) (10,538) (606) (433) Change in properties under development for sale (66,228) (126,759) (22,468) (15,534) (10,498) Change in other receivables 25,304 (19,434) 9,107 2,745 10 Change in deposits and prepayments (225) 205 14 – (19) Change in accruals and other payables 13,597 (12,801) (93) 9,429 310 Change in other tax recoverable – (11,879) (1,351) (974) (725)

Net cash used in operating activities (28,674) (171,591) (25,329) (4,940) (11,355)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of items of property, plant and equipment – (10) – – (79) Interest received 30 52 11 5 6

Net cash generated from/(used in) investing activities 30 42 11 5 (73)

CASH FLOWS FROM FINANCING ACTIVITIES Advance from shareholders 32,153 – – – – Repayment to shareholders – (453,710) (25,854) – – Repayment to immediate holding company – – (9,705) – – Advance from ultimate holding company – 615,727 2,163 2,163 – Advance from immediate holding company – 9,705 55,000 – 12,192

Net cash generated from financing activities 32,153 171,722 21,604 2,163 12,192

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,509 173 (3,714) (2,772) 764 Cash and cash equivalents at the beginning of the year/period 109 3,618 3,791 3,791 77

Cash and cash equivalents at the end of the year/period 3,618 3,791 77 1,019 841

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 3,618 3,791 77 1,019 841

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Nanjing Project Company was incorporated as a limited liability company in the People’s Republic of China (the “PRC”) on 28 April 2008. The registered office of the Nanjing Project Company is located at Fuqian Street, Donggou Town, Liuhe District, Nanjing City, Jiangsu Province, the PRC.

During the Relevant Period, the Nanjing Project Company was engaged in property development.

In the opinion of the Directors of Nanjing Project Company, as at 31 May 2019, Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd, a company incorporate in the PRC, is the ultimate holding company.

2. BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

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

During the Relevant Period, the Nanjing Project Company has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2019.

The Nanjing Project Company has not early applied the new HKFRSs that have been issued but are not yet effective. The directors anticipate that the new and revised HKFRSs will be adopted in the Historical Financial Information when they become effective.

4. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information have been prepared under the historical cost convention.

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

(a) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Nanjing Project Company is measured using the currency of the primary economic environment in which the Nanjing Project Company operates (the “functional currency”). The Historical Financial Information is presented in RMB, which is the Nanjing Project Company’s functional and presentation currency.

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

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

(b) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

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 Nanjing Project Company 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 costs less their residual values over the estimated useful lives on a straight-line basis. The principal useful lives are as follows:

Furniture and fixtures 5 years Office equipment 3 years Motor vehicles 4 years

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

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.

The Nanjing Project Company as lessee

Leases are recognised as right-of-use assets and corresponding lease liabilities when the leased assets are available for use by the Nanjing Project Company. Right-of-use assets are stated at cost less accumulated depreciation and impairment losses. Depreciation of right-of-use assets is calculated at rates to write off their cost over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease liabilities, lease payments prepaid, initial direct costs and the restoration costs. Lease liabilities include the net present value of the lease payments discounted using the interest rate implicit in the lease if that rate can be determined, or otherwise the Nanjing Project Company’s incremental borrowing rate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the lease liability.

Payments associated with short-term leases and leases of low-value assets are recognised as expenses in profit or loss on a straight-line basis over the lease terms. Short-term leases are leases with an initial lease term of 12 months or less. Low-value assets are assets of value below US$5,000.

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(d) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Nanjing Project Company 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 Nanjing Project Company transfers substantially all the risks and rewards of ownership of the assets; or the Nanjing Project Company 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 is recognised in profit or loss.

(e) Financial assets

Financial assets of the Nanjing Project Company are classified as financial assets at amortised cost.

Financial assets at amortised cost

Financial assets (including other receivables) are classified under this category if they satisfy both of the following conditions:

– the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

– the contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

They are subsequently measured at amortised cost using the effective interest method less loss allowance for expected credit losses.

(f) Loss allowance for expected credit losses

The Nanjing Project Company recognises loss allowances for expected credit losses on financial assets at amortised cost and contract assets. Expected credit losses are the weighted average of credit losses with the respective risks of a default occurring as the weights.

At the end of each reporting period, the Nanjing Project Company measures the loss allowance for a financial instrument at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument (“lifetime expected credit losses”) for trade receivables, or if the credit risk on that financial instrument has increased significantly since initial recognition.

If, at the end of the reporting period, the credit risk on a financial instrument (other than trade receivables) has not increased significantly since initial recognition, the Nanjing Project Company measures the loss allowance for that financial instrument at an amount equal to the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on that financial instrument that are possible within 12 months after the reporting period.

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The amount of expected credit losses or reversal to adjust the loss allowance at the end of the reporting period to the required amount is recognised in profit or loss as an impairment gain or loss.

(g) 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 Nanjing Project Company’s cash management are also included as a component of cash and cash equivalents.

(h) 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 Nanjing Project Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(i) Borrowing

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 Nanjing Project Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(j) Other payables

(k) Equity instruments

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

(l) Properties under development for sale

(m) Other revenue

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

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(n) Employee benefits

(i) Employee leave entitlements

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

(ii) Pension obligations

The Nanjing Project Company contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Nanjing Project Company 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 Nanjing Project Company to the funds.

(iii) Termination benefits

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

(o) Borrowing costs

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Nanjing Project Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

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

(p) 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 it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Nanjing Project Company’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 statements 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 the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Nanjing Project Company 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 Nanjing Project Company intends to settle its current tax assets and liabilities on a net basis.

(q) Related parties

A related party is a person or entity that is related to the Nanjing Project Company.

(A) A person or a close member of that person’s family is related to the Nanjing Project Company if that person:

(i) has control or joint control over the Nanjing Project Company;

(ii) has significant influence over the Nanjing Project Company; or

(iii) is a member of the key management personnel of the Nanjing Project Company or of a parent of the Nanjing Project Company.

(B) An entity is related to the Nanjing Project Company if any of the following conditions applies:

(i) The entity and the Nanjing Project Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Nanjing Project Company or an entity related to the Nanjing Project Company. If the Nanjing Project Company is itself such a plan, the sponsoring employers are also related to the Nanjing Project Company.

(vi) The entity is controlled or jointly controlled by a person identified in (A).

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

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

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(r) Segment reporting

Operating segments, and the amounts of each segment item reported in this Historical Financial Information, are identified from the financial information provided regularly to the Nanjing Project Company’s directors, being the chief operating decision maker, for the purposes of allocating resources to, and assessing the performance of, the Nanjing Project Company’s various lines of business.

(s) Impairment of assets

At the end of each reporting period, the Nanjing Project Company reviews the carrying amounts of its assets except receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Nanjing Project Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

(t) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Nanjing Project Company 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.

(u) Events after the reporting period

Events after the reporting period that provide additional information about the Nanjing Project Company’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 Historical Financial Information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Historical Financial Information when material.

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5. CRITICAL JUDGEMENTS AND KEY ESTIMATES

Key sources of estimation uncertainty

Net realisable value of properties under development for sale

The Nanjing Project Company determines the net realisable value of properties under development for sale based on estimation of future selling price less costs to be incurred in relation to the sale, with reference to the valuation report from independent property valuers.

6. FINANCIAL RISK MANAGEMENT

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

(a) Foreign currency risk

The Nanjing Project Company has minimal exposure to currency risk as most of its transactions, assets and liabilities are denominated in Renminbi. The Nanjing Project Company currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Nanjing Project Company will monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The carrying amount of the cash and bank balances, other receivables and deposit included in the statement of financial position represents the Nanjing Project Company’s maximum exposure to credit risk in relation to the Nanjing Project Company’s financial assets.

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

The Nanjing Project Company considers whether there has been a significant increase in credit risk of financial assets on an ongoing basis throughout each reporting period by comparing the risk of a default occurring as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following information is used:

– actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower’s ability to meet its obligations;

– actual or expected significant changes in the operating results of the borrower;

– significant increases in credit risk on other financial instruments of the same borrower;

– significant changes in the value of the collateral or in the quality of guarantees or credit enhancements; and

– significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of borrowers.

A significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment, unless the Company has supportable information which can demonstrate otherwise. A default on a financial asset occurs when a debtor fails to make contractual payments within 90 days when they fall due and this debtor is unlikely to repay the amount due.

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Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company normally categorises a receivable for write off when the Company determine that the debtor does not have assets or source of income that could generate sufficient cash flow to repay the amounts subject to write-off. Where receivables have been written off, the Company, if practicable and economical, continues to engage in enforcement activity to attempt to recover the receivable due.

The Company uses two categories for the amounts due from fellow subsidiaries and a subsidiary which reflect their credit risk and how the loss provision is determined for each of the categories. In calculating the expected credit loss rates, the Company considers historical loss rates for each category and adjusts for forward looking data.

Category Definition Loss provision Performing Low risk of default and strong capacity to pay 12 month expected losses Non-performing Significant increase in credit risk Lifetime expected losses

All of the other receivables are considered to have low risk and under the ‘Performing’ category because they have a low risk of default and have strong ability to meet their obligations.

The Nanjing Project Company’s exposure to interest-rate risk arises from its bank deposits. These deposits bear interests at variable rates varied with the then prevailing market condition.

(d) Liquidity risk

The Nanjing Project Company’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. All of the Nanjing Project Company’s financial liabilities are due within one year.

(e) Categories of financial instruments

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Financial assets Financial assets at amortised cost (including cash and cash equivalents) 4,020 23,630 10,810 11,583

Financial liabilities Financial liabilities at amortised cost 492,943 652,082 558,988 602,120

(f) Fair value

The carrying amounts of the Nanjing Project Company’s financial assets and financial liabilities as reflected in the statements of financial position approximate their respective fair values.

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7. SEGMENT REPORTING

The Nanjing Project Company operated only in one business segment, being the engagement in property development in PRC during the Relevant Period. Accordingly, no further disclosures by reportable segment based on business segment are made.

No revenue is generated by the Nanjing Project Company during the Relevant Period and all of the Nanjing Project Company’s assets are located in the PRC. Accordingly, no further disclosures by reportable segment based on geographical segment are made.

8. REVENUE AND OTHER INCOME

The Nanjing Project Company did not generate any revenue during the Relevant Period. An analysis of the Nanjing Project Company’s other income is as follows:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Bank interest income 30 52 11 5 6

9. FINANCE COSTS

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Interests of loans wholly repayable within five years – Interest to immediate holding company – – – – 5,880 – Imputed interest on the amount due to an ex-shareholder – – 4,753 – 24,750 Amounts capitalised – – (4,753) – (30,630)

– – – – –

Borrowing costs on funds borrowed generally are capitalised at a rate of 12% per annum.

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10. INCOME TAX EXPENSE

No provision of PRC Corporate Income Tax is required for the Relevant Period since the Nanjing Project Company has no assessable profits for the Relevant Period.

The reconciliation between the income tax expense and the product of loss/profit before tax multiplied by the PRC Corporate Income Tax rate is as follows:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

(Loss)/profit before tax (1,160) (929) 108,757 (627) (430)

Tax at the income tax rate of 25% (290) (232) 27,189 (157) (108) Tax effect of expenses not deductible – – 2,292 – – Tax effect of income not taxable – – (29,839) – – Tax effect of tax losses not recognised 290 232 358 157 108

Income tax expenses – – – – –

As at 31 December 2016, 2017 and 2018 and 31 May 2019, the Nanjing Project Company has unused tax losses of approximately RMB10,770,000, RMB11,692,000, RMB13,125,000 and RMB13,555,000, respectively, available for offset against future profits. No deferred tax asset has been recognised due to the unpredictability of future profit streams. The unrecognised tax losses will expire in five years.

11. (LOSS)/PROFIT FOR THE YEAR/PERIOD

The Nanjing Project Company’s loss/profit for the year/period during the Relevant Period is stated after charging the following:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Depreciation of property, plant and equipment 68 58 74 26 3 Staff costs including directors’ emoluments: Salaries, bonus and allowances 748 763 831 276 583 Retirement benefits scheme contributions 79 35 50 20 36 812 853 881 296 619

Properties under development for sales includes staff costs of approximately RMB308,000, RMB543,000, RMB547,000, RMB193,000, RMB396,000 for each of the years ended 31 December 2016, 2017, 2018 and five months ended 31 May 2018 and 2019 respectively which are included in the staff costs disclosed above.

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12. DIRECTORS’ EMOLUMENTS AND HIGHEST PAID INDIVIDUAL EMOLUMENTS

(a) Directors’ emoluments

During the Relevant Periods, the directors of the Nanjing Project Company did not receive any fee or other emoluments in respect of their services provided to the Nanjing Project Company. In addition, no emoluments paid or payable by the Nanjing Project Company were waived and no emoluments were paid by the Nanjing Project Company to the directors as an inducement to join or upon joining the Nanjing Project Company or as compensation for loss of office during the Relevant Periods.

(b) Five highest paid individual emoluments

For each of the years ended 31 December 2016, 2017, 2018 and five months ended 31 May 2019, the emoluments of the highest paid individual is set out below:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited)

Salaries, allowances and other benefits in kind 356 414 457 139 312 Contributions to pension scheme 75 29 50 20 28

431 443 507 159 340

Their emoluments fell within the following bands:

Year ended 31 December Five months ended 31 May 2016 2017 2018 2018 2019 (Unaudited)

Nil to HK$1,000,000 5 5 5 5 5

During the Relevant Period, no emoluments paid or payable by the Nanjing Project Company were waived and no emoluments were paid by the Nanjing Project Company to the five highest paid individual as an inducement to join or upon joining the Nanjing Project Company or as compensation for loss of office during the Relevant Period.

13. RETIREMENT BENEFIT SCHEMES

The employees of the Nanjing Project Company’s entities established in the PRC are members of a central pension scheme operated by the local municipal government. These entities are 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 entities. The only obligation of these entities with respect to the central pension scheme is to meet the required contributions under the scheme.

14. LOSS/EARNINGS PER SHARE

Loss/earnings per share information is not presented as its inclusion, for the purpose of this report, is not considered meaningful.

15. DIVIDENDS

The directors do not recommend any dividend for the Relevant Period.

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16. PROPERTY, PLANT AND EQUIPMENT

Office Furniture Motor equipment and fixture vehicles Total RMB’000 RMB’000 RMB’000 RMB’000

Cost As at 1 January 2016, 31 December 2016 and 1 January 2017 229 80 269 578 Additions 10 – – 10

As at 31 December 2017, 1 January 2018 and 31 December 2018 239 80 269 588

As at 1 January 2019 239 80 269 588 Additions 79 – – 79

As at 31 May 2019 318 80 269 667

Accumulated depreciation As at 1 January 2016 67 29 265 361 Charged for the year 53 15 – 68

As at 31 December 2016 and 1 January 2017 120 44 265 429 Charged for the year 43 15 – 58

As at 31 December 2017 and 1 January 2018 163 59 265 487 Charged for the year 57 17 – 74

As at 31 December 2018 and 1 January 2019 220 76 265 561 Charged for the period 3 – – 3

As at 31 May 2019 223 76 265 564

Carrying amounts As at 31 December 2016 109 36 4 149

As at 31 December 2017 76 21 4 101

As at 31 December 2018 19 4 4 27

As at 31 May 2019 95 4 4 103

17. PROPERTIES UNDER DEVELOPMENT FOR SALE

The carrying amount of properties under development for sale expected to be recovered after more than twelve months from 31 December 2016, 2017, 2018 and 31 May 2019 amounted to approximately RMB516,036,000, RMB642,795,000, RMB670,016,000 and RMB711,144,000 respectively.

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18. ACCRUALS AND OTHER PAYABLES

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Other payables 13,335 796 703 1,013 Accruals 44 – – – Other tax payable 218 – – – Interest payable to immediate holding company – – – 5,880

13,597 796 703 6,893

The amount due an ex-shareholder is interest free, unsecured and have no fixed term of repayment.

19. AMOUNTS DUE TO ULTIMATE HOLDING COMPANY/SHAREHOLDERS

The amounts due to ultimate holding company and shareholders are unsecured, non-interest bearing and has no fixed repayment terms.

20. AMOUNT DUE TO IMMEDIATE HOLDING COMPANY

The amount due to immediate holding company as at 31 December 2017 of approximately RMB9,705,000 is unsecured, non-interest bearing and has no fixed repayment terms.

As at 31 December 2018 and 31 May 2019, the amount due to immediate holding company of approximately RMB55,000,000 and RMB67,192,000, respectively is unsecured, interest bearing at 12% per annum and has no fixed repayment terms.

21. AMOUNT DUE TO AN EX-SHAREHOLDER

Pursuant to the agreement entered in December 2018, the amount due to an ex-shareholder is unsecured, non-interest bearing and should be repaid within 30 days after completion of the property development projects.

The difference between the principal amount and its fair value upon initial recognition was credited to profit or loss. The effective interest rate is 12% per annum.

22. CAPITAL

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Registered capital 40,000 40,000 40,000 40,000

The Nanjing Project Company currently does not have any specific policies and processes for managing capital.

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23. NOTE TO STATEMENTS OF CASH FLOWS

The following table shows the Nanjing Project Company’s changes in liabilities arising from financing activities during the Relevant Period:

Amount due Amount due Amount to ultimate to immediate Amounts due to an holding holding due to ex- company company shareholders shareholder Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

As at 1 January 2016 – – 447,411 – 447,411 Changes in cash flows – – 32,153 – 32,153

As at 31 December 2016 and 1 January 2017 – – 479,564 – 479,564 Changes in cash flows 615,727 9,705 (453,710) – 171,722

As at 31 December 2017 and 1 January 2018 615,727 9,705 25,854 – 651,286 Non-cash changes (617,890) – – 503,285 (114,605) Changes in cash flows 2,163 45,295 (25,854) – 21,604

As at 31 December 2018 and 1 January 2019 – 55,000 – 503,285 558,285 Non-cash change – – – 24,750 24,750 Changes in cash flows – 12,192 – – 12,192

As at 31 May 2019 – 67,192 – 528,035 595,227

As at 31 December 2017 and 1 January 2018 (unaudited) 615,727 9,705 25,854 – 651,286 Changes in cash flows (unaudited) 2,163 – – – 2,163

As at 31 May 2018 (unaudited) 617,890 9,705 25,854 – 653,449

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24. LEASE

As at 31 December As at 31 May 2016 2017 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000

Lease commitment of short-term leases 79 54 181 191

Five months Year ended 31 December ended 31 May 2016 2017 2018 2018 2019 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Expenses related to short-term leases 41 79 54 15 104

The Nanjing Project Company leases certain staff quarters. Lease agreements are typically made for fixed period of 1 year. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants.

25. CONTINGENT LIABILITIES

The Nanjing Project Company did not have any significant contingent liabilities at each of the end of reporting period.

26. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Nanjing Project Company in respect of any period subsequent to 31 May 2019.

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2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE NANJING PROJECT COMPANY

Set out below is the management discussion and analysis of the Nanjing Project Company for the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019.

Financial and business review

The Nanjing Project Company recorded a net loss of approximately RMB1.16 million (equivalent to approximately HK$1.28 million), approximately RMB0.93 million (equivalent to approximately HK$1.02 million) and approximately RMB0.43 million (equivalent to approximately HK$0.47 million) for the two years ended 31 December 2016 and 2017 and the five months ended 31 May 2019 respectively which were mainly attributable to the administrative expenses. It recorded a profit of approximately RMB108.76 million (equivalent to approximately HK$119.64 million) for the year ended 31 December 2018 which was mainly attributable to the gain on fair value change on amount due to an ex-shareholder. An increase in the administrative expenses was recorded for the year ended 31 December 2018 mainly due to the compensation fees incurred in an equity transfer dispute case in the PRC where the dispute case was settled in 2018.

Liquidity, financial position and capital structure

As at 31 December 2016, 2017, 2018 and 31 May 2019, the total assets of the Nanjing Project Company was approximately RMB520.43 million (equivalent to approximately HK$572.47 million), approximately RMB678.42 million (equivalent to approximately HK$746.26 million), approximately RMB694.08 million (equivalent to approximately HK$763.49 million) and approximately RMB736.79 million (equivalent to approximately HK$810.47 million), respectively. The primary asset of the Nanjing Project Company is properties under development for sale, being the Nanjing Land. As at 31 December 2016, 2017, 2018 and 31 May 2019, the carrying amount of the Nanjing Land were approximately RMB516.04 million (equivalent to approximately HK$567.64 million), approximately RMB642.80 million (equivalent to approximately HK$707.08 million), approximately RMB670.02 million (equivalent to approximately HK$737.02 million) and approximately RMB711.14 (equivalent to approximately HK$782.25 million), respectively.

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Total liabilities amounted to approximately RMB493.16 million (equivalent to approximately HK$542.48 million), approximately RMB652.08 million (equivalent to approximately HK$717.29 million), approximately RMB558.99 million (equivalent to approximately HK$614.89 million) and approximately RMB602.12 million (equivalent to approximately HK$662.33 million) as at 31 December 2016, 2017, 2018 and 31 May 2019, respectively. Majority of these amounts represented the amounts due to shareholders or an ex-shareholder, ultimate or immediate holding companies of the Nanjing Project Company which were unsecured and non-interest bearing. Except for the amount due to an ex-shareholder which is repayable within 30 days after the completion of the property development project, the amounts due to ultimate or immediate holding companies of the Nanjing Project Company are with no fixed repayment term. As at 31 December 2016, majority of the liabilities were the amounts due to the then shareholders which amounted to approximately RMB479.56 million (equivalent to approximately HK$527.52 million) and were unsecured, non-interest-bearing and with no fixed repayment terms. As at 31 December 2017, majority of the liabilities were the amount due to the then ultimate holding company which were also unsecured, non-interest-bearing and with no fixed repayment terms.

Following the acquisition of 51% of the Nanjing Project Company by the wholly-owned subsidiary of the Vendor in August 2018, the amount due to the ex-ultimate holding company were reclassified to amount due to an ex-shareholder as at 31 December 2018 and 31 May 2019, which amounted to RMB503.29 million (equivalent to approximately HK$553.62 million) and RMB528.04 million (equivalent to approximately HK$580.84 million) respectively. The Nanjing Project Company also recorded amounts due to the existing immediately holding company of approximately RMB55.00 million (equivalent to approximately HK$60.50 million) and approximately RMB67.19 million (equivalent to approximately HK$73.91 million) as at 31 December 2018 and 31 May 2019 respectively. These amounts were unsecured, interest-bearing at 12% per annum with no fixed repayment terms.

The current ratio of the Nanjing Project Company, represented by current assets as a percentage of current liabilities, was approximately 1.05 times, approximately 1.04 times, approximately 8.21 times and approximately 3.86 times as at 31 December 2016, 2017, 2018 and 31 May 2019 respectively.

The gearing ratio of the Nanjing Project Company, represented by total interest-bearing borrowings as a percentage of total equity, was nil, nil, 0.41 and approximately 0.50 times as at 31 December 2016, 2017, 2018 and 31 May 2019 respectively.

Currency and interest rate exposure

During the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019, the Nanjing Project Company conducted most of its business activities in the PRC and was not exposed to any material foreign currency risk, as most of its transactions, assets and liabilities were denominated in RMB. For the three years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019 the Nanjing Project Company did not have any formal hedging policies and no financial instrument was used for hedging purpose.

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Employment and remuneration policy

As at 31 December 2016, 2017, 2018 and 31 May 2019, the Nanjing Project Company had 19, 12, 15 and 17 employees, respectively. Total remuneration for the years ended 31 December 2016, 2017, 2018 and the five months ended 31 May 2019 was approximately RMB0.83 million (equivalent to approximately HK$0.91 million), RMB0.80 million (equivalent to approximately HK$0.88 million), RMB0.88 million (equivalent to approximately HK$0.97 million) and RMB0.62 million (equivalent to approximately HK$0.68 million) respectively.

Significant investments, material acquisitions and disposals of subsidiaries and associated companies

The Nanjing Project Company did not have any material acquisitions and disposals of subsidiaries and associated companies during the Relevant Period.

Save for the Nanjing Land, the Nanjing Project Company did not have any significant investments.

Charges on assets and contingent liabilities

The Nanjing Company did not have any charges on assets and any material contingent liabilities as at 31 December 2016, 2017, 2018 and 31 May 2019.

Future plans for material investments and acquisition of material capital assets

The Nanjing Project Company did not have any other future plans as at 31 December 2016, 2017, 2018 and 31 May 2019.

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A. UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

The accompanying unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group (the “Statement”) has been prepared to illustrate the effect of the proposed acquisition of 100% equity interest of the Target Company (the “Acquisition”), assuming the transaction had been completed as at 30 June 2019 that might have affected the financial position of the Enlarged Group.

The Statement is prepared based on the consolidated statement of financial position of the Group as at 30 June 2019 as extracted from (i) the interim report of the Company for the six months ended 30 June 2019; (ii) the audited consolidated statement of financial position of the Target Group as at 31 May 2019 as extracted from the accountants’ report as set out in Appendix II to this circular; and (iii) the audited statement of financial position of the Nanjing Project Company as at 31 May 2019 as extracted from the accountants’ report as set out in Appendix IV to this 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 Enlarged Group that would have been attained had the Acquisition actually occurred on 30 June 2019. Furthermore, the Statement does not purport to predict the Enlarged Group’s future financial position.

The Statement should be read in conjunction with other financial information included elsewhere in the Circular.

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UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Unaudited Pro forma The total for The Nanjing the The Target Project Enlarged Group Group Company Pro forma adjustment group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Audited) (Audited) (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) (Note 7) (Note 8)

Non-current assets Exploration and evaluation assets 228,690 – – 228,690 Property, plant and equipment 63,488 – 113 63,601 Right of use assets 8,686 – – 8,686 Interest in associates 1,212,397 – – 1,212,397 Intangible assets – – – – Investment at fair value through profit or loss 2,222 – – 2,222 Other assets – – – –

1,515,483 – 113 1,515,596

Current assets Inventories 28,397 – – 28,397 Property for sale under development – 161,500 782,258 123,242 1,067,000 Trade and other receivables 226,196 1,308 27,167 254,671 Investment at fair value through profit or loss 279 – – 279 Loans and interests receivables 105,567 – – 105,567 Amount due from an associate 21,881 – – 21,881 Current tax assets 905 – – 905 Cash and bank balances 25,486 79 925 26,490

408,711 162,887 810,350 1,505,190

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Unaudited Pro forma The total for The Nanjing the The Target Project Enlarged Group Group Company Pro forma adjustments group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Audited) (Audited) (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) (Note 7) (Note 8)

Current liabilities Trade and other payables (99,669) – (7,582) 6,468 (3,150) (103,933) Amount due to immediate holding company – (21,124) (73,911) (22,440) 117,475 – Amount due to an ex-shareholder – – (128,179) 128,179 – Borrowings (13,677) (19,030) – (128,179) (160,886) Promissory note – – – (220,000) (220,000) Lease liabilities (7,347) – – (7,347) Current tax liabilities (6,845) – – (6,845)

(127,538) (40,154) (209,672) (499,011)

Net current assets 281,173 122,733 600,678 1,006,179

Total assets less current liabilities 1,796,656 122,733 600,791 2,521,775

Non-current liabilities Lease liabilities (3,009) – – (3,009) Deferred tax liabilities (10,844) – – (33,875) (44,719) Shareholder loan (265,469) – – (265,469) Amount due to an ex-shareholder – – (452,660) 452,660 – Borrowings – (142,372) – (452,660) (595,032)

(279,322) (142,372) (452,660) (908,229)

NET ASSETS 1,517,334 (19,639) 148,131 1,613,546

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NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

1. The balances have been extracted from the interim report of the Company for the six months ended 30 June 2019.

2. The balances of the Target Group are extracted from the accountants’ report as set out in Appendix II to the Circular. The presentation currency of Renminbi (RMB) was translated into Hong Kong Dollar (HKD) at a rate of RMB1 to HKD1.10.

3. The balances of the Nanjing Project Company are extracted from the accountants’ report as set out in Appendix IV to the Circular. The presentation currency of Renminbi (RMB) was translated into Hong Kong Dollar (HKD) at a rate of RMB1 to HKD1.10.

4. The adjustment represents the transfer of 51% equity interest in the Nanjing Project Company by the Vendor to the Target Company at a consideration of RMB20,400,000 (equivalent to approximately HKD22,440,000).

5. The adjustment represents the capitalisation of the amounts due to and interest payable to the Vendor of approximately HK$117,475,000 and HK$6,468,000, respectively.

6. In accordance with Hong Kong Financial Reporting Standard 3 (Revised) “Business Combinations”, the Group will apply the acquisition method to account for the Acquisition. In applying the acquisition method, the identifiable assets and liabilities of the Target Group and the Nanjing Project Company will be recorded on the consolidated statement of financial position of the Group at their acquisition-date fair values.

The adjustment represents the followings:

i. The settlement of cash consideration of RMB200,000,000 (equivalent to approximately HKD220,000,000) by the issuance of promissory notes; and

ii. The net fair value gain on property under development for sale and the corresponding deferred tax liabilities.

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The gain on bargain purchase arising on the Acquisition represents the excess of the fair value of the identifiable assets and liabilities of the Target Group and the Nanjing Project Company over the consideration of the Acquisition and is calculated as follows:

HK$’000

Carrying amount of identifiable assets and liabilities of the Target Group and the Nanjing Project Company 128,492 Transfer of 51% equity interest in the Nanjing Project Company to the Target Company (Note 4) (22,440) Capitalisation of amounts due to and interest payable to the Vendor (Note 5) 123,943 Net fair value gain on properties under development for sale (Note i) 123,242 Deferred tax on the fair value gain calculated at a rate of 25% (33,875)

Net assets acquired 319,362 Less: Non-controlling interest (Note ii) (66,578) Gain on bargain purchase (32,784)

Consideration 220,000

Satisfied by: Cash consideration 220,000

Note:

i. Fair value gain:

The Target The Nanjing Group Project Company Total HK$’000 HK$’000 HK$’000

Fair value of the property under development for sale 297,000 770,000 1,067,000 Carrying amount of the property under development for sale 161,500 782,258 943,758

Fair value gain/(loss) 135,500 (12,258) 123,242

The fair value of the property under development for sale is reference to the valuation carried out by an independent valuer.

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ii. Non-controlling interest:

HK$’000

Net assets of the Nanjing Project Company 148,131 Fair value loss (12,258)

135,873

Attributable to non-controlling interest (49%) 66,578

For the purpose of compilation of this unaudited pro forma financial information, other than the property under development for sale, the carrying amounts of the other assets and liabilities of the Target Group and the Nanjing Project Company as at 31 May 2019 are assumed to be the acquisition-date fair value of each of the identifiable assets and liabilities of the Target Group and the Nanjing Project Company.

7. The adjustment represents the re-classification of an amount due to an ex-shareholder of Nanjing Project Company to borrowings.

8. The adjustment represents the direct cost relating to the Acquisition.

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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, ZHONGHUI ANDA CPA Limited, Certified Public Accountants, Hong Kong.

香港銅鑼灣威非路道18號萬國寶通中心7樓701室 Unit 701, 7/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong. Tel: (852) 2155 8288 Fax: (852) 2564 2297

18 September 2019

The Board of Directors eForce Holdings Limited Suite 3008, Man Yee Building 68 Des Voeux Road Central Central Hong Kong

Dear Sirs,

We have completed our assurance engagement to report on the compilation of pro forma financial information of eForce Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company for illustrative purposes only. The pro forma financial information consists of the pro forma statement of assets and liabilities of the Enlarged Group as at 30 June 2019 (the “Statement”) as set out on pages V-1 to V-6 of the circular issued by the Company dated 18 September 2019. The applicable criteria on the basis of which the directors have compiled the Statement are described on page V-1 in the Circular.

The Statement has been compiled by the directors to illustrate the impact of the proposed acquisition of 100% equity interest in the Target Company as if the transaction had been taken place on 30 June 2019. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s financial statements as included in the interim report of the Company for the six months ended 30 June 2019.

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 (“AG”) 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

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Our Independence and Quality Control

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

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 plan and perform 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 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” 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 2019 would have been as presented.

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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,

ZHONGHUI ANDA CPA Limited Certified Public Accountants Sze Lin Tang Practicing Certificate Number P03614 Hong Kong

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The following is the text of letter and valuation report prepared for the purpose of incorporation in this circular, received from Grant Sherman Appraisal Limited, an independent property valuer, in connection with its valuation as at 30 June 2019 of the property interests held by the Dongguan Project Company and the Nanjing Project Company respectively in the PRC.

Unit 1005, 10/F., Capital Centre, 151 Gloucester Road, Wanchai, Hong Kong 18 September 2019 eForce Holdings Limited Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong

Dear Sirs,

Re.: Valuation of various properties in Dongguan and Nanjing, the People’s Republic of China (the “Properties” and each a “Property”)

In accordance with your instructions to value the property interests held by Dongguan Hexin Real Estate Development Co., Ltd.* (東莞禾信房地產開發有限公司) (the “Dongguan Project Company”) and Nanjing Yuanding Real Estate Co., Ltd.* (南京源鼎置業有限公司) (the “Nanjing Project Company”) respectively located in the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of such property interests as at 30 June 2019 (the “Valuation Date”) for inclusion in the circular issued by eForce Holdings Limited (the “Company”) dated 18 September 2019 (the “Circular”).

Our valuation is our opinion of market value 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 a property estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

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In valuing the Properties, we have adopted the market approach on the basis that the Properties will be developed and completed in accordance with the latest development proposals provided to us by the Company. We have assumed that all necessary approvals for the proposals have been obtained. The market approach provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available. We have also taken into account the expended construction costs and the construction costs that will be expended to complete the developments to reflect the quality of the completed development. The “gross development value” represents our opinion of the aggregate selling prices of the saleable units of the development erected on the properties assuming that it had been completed and all sold out to independent third parties at their highest selling prices obtained as at the Valuation Date.

Our valuation has been made on the assumption that the owner sells the property interests in the market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the values of the property interests. In addition, no forced sale situation in any manner is assumed in our valuation.

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

We have been provided with copies of extracts of title documents relating to the Properties. However, we have not conducted land searches on the Properties and we have not inspected the original documents to verify ownership or to verify any amendments which may not appear on the copies handed to us.

We have relied to a considerable extent on the information provided by the Company and have accepted advice given to us by the Company on matters such as statutory notices, easements, tenure, occupancy, floor areas, identification of the Properties and all other relevant matters. We have no reason to doubt the truth and accuracy of the information provided to us by the Company. We have relied on the Company’s confirmation that no material fact has been omitted from the information so supplied. All documents have been used as reference only. All dimensions, measurements and areas are approximations. No on-site measurement has been taken.

In undertaking our valuation for the Properties, we have relied on the legal opinions (the “PRC legal opinion”) provided by the Group’s PRC legal adviser, Beijing Zhong Lun (Shenzhen) Law Firm.

No environmental impact study has been ordered or made. Full compliance with applicable national, provincial and local environmental regulations and laws is assumed unless otherwise stated, defined, and considered in the valuation report. It is also assumed that all required licenses, consents, or other legislative or administrative authority from any local, provincial, or national government, private entity or organization either have been or can be obtained or renewed for any use which the valuation report cover.

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We have inspected the Properties in respect of which we have been provided with such information as we have required for the purpose of our valuation. However, no structural survey has been carried out and it was not possible to inspect the wood work and other parts of the structures which were covered, unexposed or inaccessible. We are therefore, unable to report that the Properties are free of rot, infestation or any structural defect. No tests have been carried out on any of the building services.

We have not carried out investigations on site to determine the suitability of ground conditions and services etc. for any future development, nor have we undertaken any ecological or environmental surveys. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction period.

In valuing the Properties, we have fully complied with the HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set out in Chapter 5 of and Practice Note 12 to the Rule Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and Rule 11 of the Code on Takeovers and Mergers issued by Securities and Futures Commission.

Unless otherwise stated, all values are denominated in Renminbi (RMB). The exchange rates used in valuing the Properties are the rates as at the Valuation Date, which was RMB1: HK$1.10. There has been no significant fluctuation in the exchange rate for RMB against Hong Kong Dollars between that date and the date of this letter.

The English transliteration of the Chinese name(s) in this valuation report, where indicated by an asterisk (*), is included for information purpose only, and should not be regarded as the official English name(s) of such Chinese name(s).

We enclose herewith the summary of valuation together with the valuation report.

Respectfully submitted, For and on behalf of GRANT SHERMAN APPRAISAL LIMITED

Lawrence Chan Ka Wah MRICS MHKIS RPS(GP) MCIREA MHIREA RICS Registered Valuer Director Real Estate Group

Note:

Mr. Lawrence Chan Ka Wah is a member of the Royal Institution of Chartered Surveyors, a member of the Hong Kong Institute of Surveyors, Registered Professional Surveyors in the General Practice Section, a RICS Registered Valuer and a member of the China Institute of Real Estate Appraisers and Agents, who has over 16 years’ experience in the valuation of properties in Hong Kong, Macau, the PRC and the Asian Rim.

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SUMMARY OF VALUATIONS

Market value in existing Property state as at 30 June 2019 RMB

Group I – Property interests held by the Dongguan Project Company and the Nanjing Project Company for development purposes in the PRC

1. A construction site RMB270,000,000 (Real Estate No. 441903004005GB00572W00000000) (equivalent to located at the northern side of Guantai Avenue, approximately Zhouxi Community, HK$297,000,000) Nancheng Jiedao, Dongguan City, Guangdong Province, the PRC

2. A construction site (Lot Nos. 23109900012, 23109900013, RMB700,000,000 23109900014, 320116011005GB00007, 320116011005GB00008, (equivalent to 320116011005GB00011, 320116010016GB00017, approximately 320116011005GB00020, 320116011005GB00013, HK$770,000,000) 320116011005GB00012, 320116010016GB00018, 320116011005GB00006, 320116011005GB00005 and 320116011005GB00009) located at Naishan, Donggou Town, Liuhe District, Nanjing City, Jiangsu Province, the PRC

Total RMB970,000,000 (equivalent to approximately HK$1,067,000,000)

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VALUATION REPORT

Group I – Property interests held by the Dongguan Project Company and the Nanjing Project Company for development purposes in the PRC

Market value in Particulars of existing state as at Property Description and tenure occupancy 30 June 2019

1. A construction site The Property comprises a The Property was a RMB270,000,000 (Real Estate No. land parcel with a site area clear site as at the (equivalent to 441903004005GB of approximately 6,505.6 Valuation Date. approximately 00572W00000000) sq. m. HK$297,000,000) located at the northern side of Guantai Avenue, As advised by the Zhouxi Community, Company, the Property will Nancheng Jiedao, be developed into two Dongguan City, 23-storey composite Guangdong Province, development with a total the PRC estimated gross floor area of approximately 29,405.31 sq. m. (exclusive of a 2-storey basement with a total gross floor area of approximately 11,000 sq. m.).

Furthermore, the Property will be facilitated with about 295 underground car parking spaces. The development of the Property is expected to be completed in 2021.

The land use rights of the Property were granted for terms expiring on 16 January 2064 and 10 May 2058 for residential and commercial uses respectively.

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Notes:

1. Pursuant to a Real Estate Ownership Certificate (Document No. Yue (2018) Dong Guan Bu Dong Chan Quan No. 0132762), the land use rights of the Property with a site area of approximately 6,505.6 sq. m. were granted to Dongguan City Junyu Automobile Trading Limited* (東莞市駿宇汽車貿易有限公司) (subsequently renamed as Dongguan Hexin Real Estate Development Co., Ltd.*(東莞禾信房地產開發有限公司) in July 2018) for terms expiring on 16 January 2064 and 10 May 2058 for residential and commercial uses respectively.

2. Pursuant to a supplementary agreement to the State Owned Land Use Rights Grant Contract entered into between Guangzhou Province Dongguan City State Owned Land Resource Bureau (Party A) and Dongguan City Junyu Automobile Trading Limited (Party B) dated 10 October 2018, the land use rights of the Property with a total site area of 6,505.6 sq. m. were granted from Party A to Party B for terms expiring on 16 January 2064 and 10 May 2058 for residential and commercial uses respectively. The salient terms related to the development conditions of the property are as below:

Plot Ratio : Less than or equal to 4.52

Site Coverage : Less than or equal to 50%

Building Height : Not higher than 85 meters

Greenery Ratio : Not less than 30%

3. According to information provided by the Company, Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd.* (深圳市前海中證華騰實業有限公司) (the “Target Company”) acquired the 100% equity interests in the Dongguan Project Company at a consideration of approximately RMB125,936,000 in September 2017.

4. Our Mr. Cris Chan Kwan Lok (B. Sc.) has inspected the property on 3 July 2019, the condition of the Property was reasonable.

5. According to the development proposal provided by the Company, the proposed development (the “Proposed Development”) will comprise two 19-storey residential towers erected over a 4-storey commercial podium. The Proposed Development will be facilitated with 295 underground car parking spaces on a 2-storey basement.

The estimated total gross floor area of the Proposed Development is approximately 29,405.31 sq. m. (exclusive of the basement with the gross floor area of approximately 11,000 sq. m.) The detailed breakdowns are as follows:

Floor Levels No. of Storeys Designed Use(s) Approximate Total Gross Floor Area (sq. m.)

Levels B1 and B2 2 Carpark 11,000

Levels 1 to 4 4 Commercial and ancillary 5,631.24

Levels 5 to 23 19 Residential 23,774.07

Total 29,405.31 (exclusive of the levels B1 and B2)

6. The Property is situated at the junction of Guantai Avenue and Huancheng Road West in Nancheng, buildings in the locality are medium to high-rise residential/commercial buildings. Dongguan Rail Transit Hadi Station and Humen Railway Station are about 10-minute and 30-minute driving distance from the Property respectively. Rail Transit, taxis and buses are accessible to the Property.

7. According to information provided by the Company, the incurred construction cost and estimated total construction cost of the Property (excluding the land cost) as at the Valuation Date are approximately RMB5,212,517 and RMB153,630,000 respectively. VI-6 ENDI I TION EOT OF TE DONN ND ND TE NNIN ND

8. The market value of the Property after completion of the development according to the development proposal provided by the Company as at the Valuation Date is RMB626,000,000.

9. The accommodation value of residential land parcel in the locality as at the Valuation Date is in the range of RMB6,000 per sq. m. to RMB18,000 per sq. m.

10. Dongguan City Junyu Automobile Trading Limited is a company incorporated in the PRC and currently a direct wholly- owned subsidiary of Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd.* (深圳市前海中證華騰實業有限公司) (the “Target Company”) and it owns the entire interest of the Property.

11. We have been provided with a legal opinion on the Property prepared by the Company’s PRC legal adviser, Beijing Zhong Lun (Shenzhen) Law Firm, which contains, inter alia, the following information:

(a) Dongguan City Junyu Automobile Trading Limited is the current registered owner of the Property and is entitled to occupy, lease and mortgage the Property;

(b) Dongguan City Junyu Automobile Trading Limited is entitled to transfer the Property, subject to the restriction that the Property is developed in accordance with the Land Use Rights Grant Contract and the amount of investment incurred reaches 25% of the total investment amount of the Proposed Development.

(c) according to a Mortgage Agreement (Document No. 2019-003-7-1) entered into between Dongguan Hexin Real Estate Development Co., Ltd. (the Mortgagor) and Changdou City Gaoteng Enterprise Management Corporation Limited*(昌都市高騰企業管理股份有限公司) (the Mortgagee), the Property is subject to a mortgage from the Mortgagor to the Mortgagee for a term from 4 April 2019 to 4 April 2021 for a loan amount of RMB180,000,000;

(d) the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property, save and except the mortgage stated in Noted 11(c); and

(e) the following legal documents were obtained:

i. Real Estate Ownership Certificate Yes ii. Construction Land Planning Permit Yes iii. Construction Works Planning Permit No, but application in progress iv. Construction Works Commencement Permit No, but application in progress

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VALUATION REPORT

Market value in Particulars of existing state as at Property Description and tenure occupancy 30 June 2019

2. A construction site The Property comprises 14 The Property was under RMB700,000,000 (Lot Nos. 23109900012, land parcels with a total construction as at the (equivalent to 23109900013, site area of approximately Valuation Date. approximately 23109900014, 239,666.29 sq. m. HK$770,000,000) 320116011005GB00007, 320116011005GB00008, As advised by the Company, 320116011005GB00011, the Property will be 320116010016GB00017, developed into a low-rise 320116011005GB00020, comprehensive development 320116011005GB00013, with a total estimated gross 320116011005GB00012, floor area of approximately 320116010016GB00018, 258,581.55 sq. m. (exclusive 320116011005GB00006, of basement with a total gross 320116011005GB00005 floor area of approximately and 81,665.8 sq. m.). 320116011005GB00009) located at Naishan, The development of the Donggou Town, Property is expected to be Liuhe District, completed in 2021. Nanjing City, Jiangsu Province, The land use rights of the the PRC Property were granted for various terms with the latest expiry date on 23 October 2083 for residential and commercial uses.

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Notes:

1. Pursuant to 14 State Owned Land Use Rights Certificates, the land use rights of the Property with a site area of approximately 239,666.29 sq. m. were granted to Nanjing Yuanding Real Estate Co., Ltd.* (南京源鼎置業有限公司) for various terms with the latest expiry date on 23 October 2083 for residential and commercial uses. The details are as follows:

State Owned Land Use Rights Approximate Permitted Tenure Certificates (Document Nos.) site area (sq. m.) Issuing Dates land uses expiry dates

Ning Liu Guo Yong (2010) No. 00868 32,596.70 Mixed Residential 25 March 2080 Ning Liu Guo Yong (2010) No. 00869 11,549.90 31 March 2010 Commercial 25 March 2050 Ning Liu Guo Yong (2010) No. 00870 4,102.60 and finance Ning Liu Guo Yong (2014) No. 14210 23,380.00 Ning Liu Guo Yong (2014) No. 14211 8,934.08 Ning Liu Guo Yong (2014) No. 14212 4,097.06 10 September 2014 Ning Liu Guo Yong (2014) No. 14214 17,404.44 Residential: Ning Liu Guo Yong (2014) No. 14215 18,403.27 23 October 2083 Ning Liu Guo Yong (2014) No. 14320 13,796.49 Mixed Residential 12 September 2014 Commercial: Ning Liu Guo Yong (2014) No. 14399 33,374.01 23 October 2053 Ning Liu Guo Yong (2014) No. 14400 20,900.45 11 September 2014 Ning Liu Guo Yong (2014) No. 14419 15,952.58 Ning Liu Guo Yong (2014) No. 14430 9,029.03 15 September 2014 Ning Liu Guo Yong (2014) No. 14421 26,145.68

Total 239,666.29

2. Pursuant to a State Owned Land Use Rights Grant Contract entered into between the State Owned Land Resource Bureau (Liuhe Branch), Nanjing City, Jiangsu Province (Party A) and Nanjing Yuanding Real Estate Co., Ltd. (Party B) dated 18 January 2010, the land use rights of 3 land parcels of the Property with a total site area of 48,249.2 sq. m. were granted from Party A to Party B for terms of 70 years and 40 years for residential and commercial uses respectively. The salient terms related to the development conditions of the Property are as below:

Land parcel 1 Land parcel 2 Land parcel 3

Land use : Residential Commercial and finance Commercial and finance Plot Ratio : Less than or equal to 0.75 Less than or equal to 1.5 Less than or equal to 1.5 Site Coverage : Less than or equal to 20% Less than or equal to 35% Less than or equal to 35% Greenery Ratio : Not less than 50% Not less than 30% Not less than 30% Building Height : Not higher than 12 meters Not higher than 18 meters Not higher than 18 meters

3. Pursuant to a State Owned Land Use Rights Grant Contract entered into between the State Owned Land Resource Bureau (Liuhe Branch), Nanjing City, Jiangsu Province (Party A) and Nanjing Yuanding Real Estate Co., Ltd. (Party B) dated 29 July 2011, the land use rights of the remaining 11 land parcels of the Property with a total site area of 191,417.09 sq. m. were granted from Party A to Party B for terms of 70 years and 40 years for residential and commercial uses respectively. The salient terms related to the development conditions of the Property are as below:

Land use : Residential, save and except villas

Plot Ratio : More than 1 and less than or equal to 1.1

Site Coverage : Less than or equal to 35%

Building Height : Not higher than 12 meters

Greenery Ratio : Not less than 30%

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4. Our Mr. Lawrence Chan Ka Wah (MRICS MHKIS RPS(GP) MCIREA MHIREA RICS Registered Valuer) has inspected the Property on 11 July 2019, the condition of the property was reasonable.

5. According to the development proposal provided by the Company, the proposed development (the “Proposed Development”) will comprise low-rise comprehensive development, which consists of residential, commercial and hotel developments with a total estimated gross floor area of approximately 258,581.55 sq. m. (exclusive of basement with a total gross floor area of approximately 81,665.8 sq. m.).

6. According to information provided by the Company, the incurred construction cost and estimated total construction cost of the Property (excluding the land cost) as at the Valuation Date are approximately RMB234,547,526 and RMB1,684,410,000 respectively.

7. The market value of the Property after completion of the development according to the development proposal provided by the Company as at the Valuation Date is RMB3,049,000,000.

8. The Property is situated at Naishan in Liuhe District of Nanjing City, buildings in the locality are low to medium-rise residential/commercial buildings. Nanjing Liuhe Railway Station and Nanjing Lukou International Airport are about 30-minute and 1-hour driving distance from the Property respectively. Taxis and buses are accessible to the Property.

9. The accommodation value of residential land parcel in the locality as at the Valuation Date is in the range of RMB1,000 per sq. m. to RMB9,000 per sq. m.

10. Nanjing Yuanding Real Estate Co., Ltd. is a company incorporated in the PRC and will become a 51%-owned subsidiary of the Target Company upon completion of the Reorganisation and it owns the entire interest of the Property.

(a) Nanjing Yuanding Real Estate Co., Ltd. is the current registered owner of the Property and is entitled to occupy, lease and mortgage the Property;

(b) Nanjing Yuanding Real Estate Co., Ltd. is entitled to transfer the Property, subject to the restriction that the Property is developed in accordance with the Land Use Rights Grant Contract and the amount of investment incurred reaches 25% of the total investment amount of the Proposed Development;

(c) the Proposed Development has obtained the relevant approvals and fully complies with the restrictions under the State Owned Land Use Rights Grant Contract;

(d) the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property; and

(e) the following legal documents were obtained:

i. State Owned Land Use Rights Certificates Yes ii. Construction Land Planning Permit Yes iii. Construction Works Planning Permit Yes iv. Construction Works Commencement Permit Yes

VI-10 ENDI II ENE INFOTION

1. RESPONSIBILITY STATEMENT

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

2. INTERESTS OF THE DIRECTORS AND CHIEF EXECUTIVE OF THE COMPANY IN THE SECURITIES OF THE COMPANY

As at the Latest Practicable Date, the interests of the Directors and the chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (the “Associated Corporations”) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under provisions of the SFO) or the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) were as follows:

Long positions in ordinary Shares and underlying shares

Approximate percentage of Name of Director Nature of interests Number of Shares issued Shares

Mr. Leung Chung Shan Beneficial owner 4,233,534,364 39.48%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company had any interests or short positions in the Shares, underlying Shares and debentures of the Company or any of its Associated Corporations that are required to be in the register kept by the Company pursuant to section 352 of the SFO or as otherwise required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under provisions of the SFO) or the Model Code.

None of the Directors is a director or employee of a company which has an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

VII-1 ENDI II ENE INFOTION

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter into a service contract or service agreement with any member of the Enlarged Group which is not determinable by the employer within one year without payment of compensation, other than statutory compensation.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associates (as defined in the Listing Rules) was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. DIRECTORS’ INTEREST IN ASSETS, CONTRACTS OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors has, or had, any direct or indirect interest in any assets which had been or are proposed to be acquired, disposed of by or leased to, any member of the Enlarged Group since 31 December 2018, being the date to which the latest published audited financial statements of the Company were made up.

None of the Directors is materially interested in any contract or arrangement subsisting as at the date of this circular which is significant in relation to the business of the Enlarged Group.

6. LITIGATION

As at the Latest Practicable Date, no member of the Enlarged Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Enlarged Group.

7. MATERIAL CONTRACTS

Save as disclosed below, there were no material contracts (not being contracts entered into in the ordinary course of business) which have been entered into by any member of the Enlarged Group within the two years immediately preceding the date of this circular:

(i) the underwriting agreement dated 21 September 2017 entered into between the Company and Mr. Leung Chung Shan in relation to the rights issue which was completed in December 2017;

(ii) the extension letter dated 3 November 2017 entered into between the Company and Mr. Lim Kim Chai pursuant to which the parties agreed to, among others, extend the expiry date of the exclusivity period under the memorandum of understanding dated 15 May 2017 in relation to the possible acquisition of Pacific Memory Sdn Bhd;

(iii) the sale and purchase agreement dated 19 January 2018 entered into between Vision South Limited (a wholly-owned subsidiary of the Company) and Mr. Lim Kim Chai in relation to the acquisition of 35% of the sale shares and sale loan in Pacific Memory Sdn Bhd by Vision South Limited from Mr. Lim Kim Chai at the aggregate consideration of HK$662,443,657;

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(iv) the equity transfer agreement dated 20 August 2018 entered into between the Vendor and the Purchaser in relation to the acquisition of the entire registered capital of Shenzhen CITIC Securities Pengfeng Management Co., Ltd* (深圳市中證鵬豐管理有限公司) by the Purchaser from the Vendor at the consideration of RMB7,800,000;

(v) the equity transfer agreement dated 20 August 2018 entered into between the Vendor and the Purchaser in relation to the acquisition of 51% of the registered capital of Guangdong CITIC Securities City Development Co., Ltd* (廣東中證城市發展管理有限公司) by the Purchaser from the Vendor at the consideration of RMB2,500,000;

(vi) the equity transfer agreement dated 20 August 2018 entered into between the Vendor and the Purchaser in relation to the acquisition of the entire registered capital of Chengda CITIC Securities Fengda Construction Development Co., Ltd* (承德中證豐達建設開發有限公司) by the Purchaser from the Vendor at the consideration of RMB25,500,000;

(vii) the equity transfer agreement dated 20 August 2018 entered into between the Vendor and the Purchaser in relation to the acquisition of the entire registered capital of Shenzhen CITIC Securities Zhiyuan Equity Investment Fund Management Co., Ltd* (深圳市中證致遠股權投資基金管理有限公司) by the Purchaser from the Vendor at the consideration of RMB3,000,000;

(viii) the equity transfer agreement dated 20 August 2018 entered into between the Vendor and the Purchaser in relation to the acquisition of 40% of the registered capital of CITIC Securities Xinqiao Investment Fund Management (Beijing) Co., Ltd.* (中證信橋投資基金管理(北京)有限公司) by the Purchaser from the Vendor at the consideration of RMB12,000,000;

(ix) the acquisition agreement dated 14 September 2018 entered into between Grand Prominent International Limited (a direct wholly-owned subsidiary of the Company) and the Vendor in relation to the acquisition of the entire issued share capital of Hong Kong Zhongzheng City Investment Limited by Grand Prominent International Limited from the Vendor at the aggregate consideration of RMB520,000,000;

(x) the supplemental acquisition agreement dated 19 December 2018 entered into between Grand Prominent International Limited (a direct wholly-owned subsidiary of the Company) and the Vendor in relation to the acquisition of the entire issued share capital of Hong Kong Zhongzheng City Investment Limited by Grand Prominent International Limited from the Vendor;

(xi) the loan agreement dated 3 January 2019 entered into between Mr. Leung Chung Shan and the Company pursuant to which Mr. Leung Chung Shan has agreed to grant a loan facility to the Company with a principal amount of HK$300,000,000, bearing interest at a rate of 2.2% per annum and for a term of 24 months from the date of drawdown under the loan agreement;

(xii) the sale and purchase agreement dated 31 May 2019 entered into between Access Sino Investments Limited (a direct wholly-owned subsidiary of the Company), Joyful Treasure Enterprises Limited and Mr. Wong Ching Ka in relation to the disposal of the entire issued share capital of Ample One Limited by Access Sino Investments Limited to Joyful Treasure Enterprises Limited at the aggregate consideration of RMB166,400,000; and

(xiii) the Acquisition Agreement.

* For identification purpose only

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8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given their opinion or advice which are contained in this circular:

Name Qualifications

Crescendo Capital Limited A licensed corporation under the SFO to carry on type 6 (advising on corporate finance) regulated activity under the SFO

ZHONGHUI ANDA CPA Limited Certified public accountants

Grant Sherman Appraisal Limited Independent industry expert and independent professional valuer

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its report and/or letter (as the case may be) and references to its name in the form and context in which they appear.

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

As at the Latest Practicable Date, each of the above experts did not have any direct or indirect interest in any assets which had been, since 31 December 2018, the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by, or leased to, or proposed to be acquired or disposed of by, or leased to, any members of the Enlarged Group.

9. GENERAL

(i) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company in Hong Kong is situated at Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong.

(ii) The branch share registrar and transfer office of the Company in Hong Kong is Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong.

(iii) The company secretary of the Company is Mr. Situ Min, who is a fellow member of Association of Chartered Certified Accountants and is also a member of Chinese Institute of Certified Public Accountants.

(iv) The English text of this circular and the form of proxy shall prevail over the Chinese text in the case of inconsistency.

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10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong from the date of this circular up to and including the date of the SGM:

(i) the memorandum of association and bye-laws of the Company;

(ii) the annual reports of the Company for each of the two years ended 31 December 2017 and 2018;

(iii) the industry overview issued by Grant Sherman;

(iv) the letter from the Independent Board Committee, the text of which is set out on page 36 in this circular;

(v) the letter of advice from Crescendo, the text of which is set out on pages 37 to 62 of this circular;

(vi) the accountants’ report of the Target Company issued by ZHONGHUI ANDA CPA Limited, the text of which is set out in Appendix II to this circular;

(vii) the accountants’ report of the Dongguan Project Company issued by ZHONGHUI ANDA CPA Limited, the text of which is set out in Appendix III to this circular;

(viii) the accountants’ report of the Nanjing Project Company issued by ZHONGHUI ANDA CPA Limited, the text of which is set out in Appendix IV to this circular;

(ix) the report on the unaudited pro forma financial information of the Enlarged Group issued by ZHONGHUI ANDA CPA Limited, the text of which is set out in Appendix V to this circular;

(x) the valuation report of the Dongguan Land and the Nanjing Land issued by Grant Sherman, the text of which is set out in Appendix VI to this circular;

(xi) the material contracts referred to in the paragraph headed “7. Material contracts” in this appendix;

(xii) the written consents referred to in the paragraph headed “8. Experts and consents” in this appendix; and

(xiii) this circular.

VII-5 NOTIE OF SEI ENE EETIN

eFORCE HOLDINGS LIMITED 意科控股有限公司* (Incorporated in Bermuda with limited liability) (Stock code: 943)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “SGM”) of eForce Holdings Limited (the “Company”) will be held at 11:30 a.m. on Wednesday, 9 October 2019 at Suite 3008, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong for the purposes of considering and, if thought fit, passing the following resolution with or without amendments as an ordinary resolution of the Company (words and expressions that are not expressly defined in this notice shall bear the same meaning as that defined in the circular (the “Circular”) dated 18 September 2019 published by the Company):

ORDINARY RESOLUTION

1. “THAT

(a) the sale and purchase agreement (the “Acquisition Agreement”) dated 6 July 2019 and entered into among Shenzhen CITIC Securities Ruifeng Management Co., Ltd.* (深圳市中證瑞豐管理有限公司) (the “Purchaser”), an indirect wholly-owned subsidiary of the Company, Shenzhen Qianhai CITIC Securities City Development Management Co., Ltd.* (深圳市前海中證城市發展管理有限公司) (the “Vendor”), Shenzhen Qianhai CITIC Huateng Industrial Co., Ltd.* (深圳市前海中證華騰實業有限公司) (the “Target Company”), Dongguan Hexin Real Estate Development Co., Ltd.* (東莞禾信房地產開發有限公司) and Nanjing Yuanding Real Estate Co., Ltd.* (南京源鼎置業有限公司) in relation to the proposed acquisition (the “Acquisition”) of the entire issued share capital of the Target Company by the Purchaser from the Vendor (a copy of which has been marked “A” and is produced to the Meeting and signed by the chairperson of the Meeting for identification purpose), and all the transactions contemplated thereunder, be and are hereby ratified, confirmed and approved;

* For identification purpose only SGM-1 NOTIE OF SEI ENE EETIN

(b) the issue of the promissory note (the “Promissory Note”) in the principal amount of RMB200,000,000 by the Company to the Vendor for settlement of the consideration payable by the Purchaser to the Vendor (or its nominee(s)) for the Acquisition pursuant to the terms and conditions of the Acquisition Agreement be and is hereby approved; and

(c) any one or more of the directors (the “Directors” and each a “Director”) of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents (and to affix the common seal of the Company thereon, if necessary) for the purpose of, or in connection with, the implementation of and giving effect to the Acquisition Agreement and the transactions ancillary thereto, including but not limited to the issue of the Promissory Note, and of administrative nature which he/she/they consider necessary, desirable or expedient.”

By Order of the Board eForce Holdings Limited Liu Liyang Executive Director and Chief Executive Officer

Hong Kong, 18 September 2019

Notes:

1. Any shareholder (“Shareholder(s)”) of the Company entitled to attend and vote at the SGM shall be entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A Shareholder who is the holder of two or more Shares may appoint more than one proxy to represent him/her and vote on his/her behalf. A proxy need not to be a Shareholder of the Company.

2. In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof (as the case may be).

3. The register of members of the Company will be closed from Friday, 4 October 2019 to Wednesday, 9 October 2019 (both days inclusive) for the purpose of determination of the identity of the Shareholders entitled to attend and vote at the SGM. All transfers accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at Suites 3301-04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong for registration not later than 4:00 p.m. on Thursday, 3 October 2019 (Hong Kong time).

4. Completion and return of the proxy form shall not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

5. Where there are joint holders of any ordinary shares (“Shares” and each a “Share”) of HK$0.00004 each in the share capital of the Company, any one of such joint holder may vote, either in person or by proxy in respect of such Shares as if he/she/it were solely entitled hereto; but if more than one of such joint holders be present at the SGM, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company.

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6. A form of proxy for use at the SGM is attached herewith.

7. Any voting at the SGM shall be taken by poll.

8. The form of proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

9. If Typhoon Signal No. 8 or above, or a “black” rainstorm warning is in effect any time after 8:30 a.m. on the date of the SGM, the meeting will be postponed. The Company will publish an announcement on the website of the Company at www.eforce.com.hk and on the website of the Stock Exchange at www.hkexnews.hk to notify Shareholders of the date, time and venue of the rescheduled meeting.

As at the date of this notice, the Board comprises four executive Directors, namely Mr. Leung Chung Shan, Mr. Tam Lup Wai, Franky, Mr. Liu Liyang and Mr. Chan Tat Ming, Thomas; and three independent non-executive Directors, namely Mr. Hau Chi Kit, Mr. Leung Chi Hung and Mr. Li Hon Kuen.

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